Filed with the Securities and Exchange Commission on October 15, 1997.
File No. 33-13863
File No. 811-1090
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 11
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 22
The Japan Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
345 Park Avenue, New York, NY 10154
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (617) 295-2567
Thomas F. McDonough
Scudder, Stevens & Clark, Inc.
Two International Place, Boston, MA 02110
(Name and Address of Agent for Service)
It is proposed that this filing will become effective
X immediately upon filing pursuant to paragraph (b)
-----
on May 1, 1997 pursuant to paragraph (b)
-----
60 days after filing pursuant to paragraph (a)(i)
-----
on pursuant to paragraph (a)(i)
-----
75 days after filing pursuant to paragraph (a)(ii)
-----
on pursuant to paragraph (a)(ii) of Rule 485.
-----
If appropriate, check the following:
----- this post-effective amendment designates a new effective date
for a previously filed post-effective amendment
<PAGE>
THE JAPAN FUND, INC.
CROSS-REFERENCE SHEET
Items Required By Form N-1A
PART A
No. Item Caption Prospectus Caption
1. Cover Page COVER PAGE
2. Synopsis EXPENSE INFORMATION
3. Condensed FINANCIAL HIGHLIGHTS
Financial
Information
4. General INVESTMENT OBJECTIVE, POLICIES AND STRATEGIES
Description of Risk factors, Fund organization
Registrant
5. Management of the FUND ORGANIZATION-Investment advisers; Transfer
Fund agent, dividend-paying and shareholder service
agent; Distributor; Custodian and sub-custodian
SHAREHOLDER SERVICES-A team approach to
investing
5A. Management's NOT APPLICABLE
Discussion of
Fund Performance
6. Capital Stock and SHAREHOLDER SERVICES-Shareholder inquiries
Other Securities DISTRIBUTION AND PERFORMANCE INFORMATION-Dividends
and capital gain distributions
TRANSACTION INFORMATION-Tax information
SHAREHOLDER SERVICES-Dividend reinvestment plan
7. Purchase of PURCHASES AND REDEMPTIONS
Securities Being TRANSACTION INFORMATION
Offered SHAREHOLDER SERVICES-Investment flexibility,
Low minimum investment, Dividend reinvestment
plan
FUND ORGANIZATION-Distributor
8. Redemption or PURCHASES AND REDEMPTIONS
Repurchase TRANSACTION INFORMATION
9. Pending Legal NOT APPLICABLE
Proceedings
Cross Reference Page 1
<PAGE>
PART B
Caption in Statement of
Item No. Item Caption Additional Information
10. Cover Page COVER PAGE
11. Table of Contents TABLE OF CONTENTS
12. General JAPAN AND THE JAPANESE ECONOMY
Information and
History
13. Investment INVESTMENT OBJECTIVE,
Policies and POLICIES AND RESTRICTIONS
Objectives
14. Management of the FUND ORGANIZATION
Fund DIRECTORS AND OFFICERS
REMUNERATION
15. Control Persons FUND ORGANIZATION
and Principal DIRECTORS AND OFFICERS
Holders of
Securities
16. Investment INVESTMENT ADVISORY ARRANGEMENTS
Advisory and ADDITIONAL INFORMATION-Experts, Public Official
Other Services Documents, Other Information
17. Brokerage BROKERAGE AND PORTFOLIO TURNOVER
Allocation
18. Capital Stock and FEATURES AND SERVICES OFFERED BY THE
Other FUND-Dividend Reinvestment Plan
Securities FUND ORGANIZATION
19. Purchase, PURCHASES AND EXCHANGES REDEMPTIONS FEATURES
Redemption and AND SERVICES OFFERED BY THE FUND-Distribution
Pricing of Plans
Securities Being SPECIAL PLAN ACCOUNTS
Offered NET ASSET VALUE
20. Tax Status TAXES-United States Federal Income Taxation,
Japanese Taxation
21. Underwriters DISTRIBUTOR
22. Calculations of NOT APPLICABLE
Yield Quotations
of Money Market
Funds
23. Financial FINANCIAL STATEMENTS
Statements
Cross Reference Page 2
<PAGE>
Part A
Part A of this Post-Effective Amendment No. 11 to the Registration
Statement is incorporated by reference in its entirety to the The Japan Fund,
Inc.'s current Post- Effective Amendment No. 10 on Form N-1A filed on April 28,
1997 and to its definitive Rule 497(c) filing on May 9, 1997.
<PAGE>
Part B
Part B of this Post-Effective Amendment No. 11 to the Registration
Statement is incorporated by reference in its entirety to The Japan Fund, Inc.'s
current Post-Effective Amendment No. 10 on Form N-1A filed on April 28, 1996 and
to its definitive Rule 497(c) filing on May 9, 1997.
<PAGE>
THE JAPAN FUND, INC.
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
a. Financial Statements:
Included in Part A:
Financial Highlights for the ten fiscal years
ended December 31, 1996 is incorporated by
reference to Post-Effective Amendment No. 10
to the Registration Statement
Included in Part B:
Statement of Assets and Liabilities, as of December 31, 1996
Statement of Operations for the fiscal year ended December
31, 1996
Statements of Changes in Net Assets for the two
fiscal years ended December 31, 1996
Financial Highlights for the ten fiscal years ended
December 31, 1996
Notes to Financial Statements
Report of Independent Accountants are incorporated by
reference to Post-Effective Amendment No. 10 to the
Registration Statement
Statements, schedules and historical information other than those
listed above have been omitted since they are either not
applicable or are not required.
b. Exhibits:
All references are to the Registrant's Registration Statement on
Form N-1A as filed with the Securities and Exchange Commission on
April 29, 1987. File nos. 33-13863 & 811-1090 (the "Registration
Statement").
1. (a) Articles of Incorporation is filed herein.
(b) Articles of Amendment and Restatement of the Articles
of Incorporation is filed herein.
2. (a) Registrant's By-Laws is filed herein.
(b) Amendment to Registrant's By-Laws dated January 28,
1993 is filed herein.
(c) Amendment to Registrant's By-Laws dated July 23, 1993
is filed herein.
(d) Amendment to Registrant's By-Laws dated April 25, 1996.
(Incorporated by reference to Exhibit 2(d) to
Post-Effective Amendment No. 10 to the Registration
Statement.)
(e) Amendment to Registrant's By-Laws dated October 25,
1996. (Incorporated by reference to Exhibit 2(e) to
Post-Effective Amendment No. 10 to the Registration
Statement.)
3. Inapplicable.
Part C - Page 1
<PAGE>
4. Specimen of shares representing shares of capital stock
of $.33 1/3 par value. (Incorporated by reference to
Exhibit 4 to Post-Effective Amendment No. 2 to the
Registration Statement.)
5. (a) Investment Management Agreement between the
Registrant and Asia Management Corporation ("Asia
Management") dated May 24, 1991 is filed herein.
(b) Advisory Agreement between Asia Management and The
Nikko Research Center, Ltd. ("Nikko") dated July 1,
1986 is filed herein.
(c) Investment Management Agreement between Asia Management
and The Nikko International Capital Management Co.,
Ltd. dated May 24, 1991 is filed herein.
(d) Agreement between Scudder, Stevens & Clark Ltd. and
Asia Management dated July 24, 1984 is filed herein.
(e) Investment Management Agreement between the Registrant
and Scudder, Stevens & Clark, Inc. dated January 1,
1994 is filed herein.
(f) Research Agreement between Scudder and The Nikko
International Capital Management Co., Ltd. dated
January 1, 1994 is filed herein.
6. Underwriting Agreement between the Registrant and
Scudder Investor Services, Inc., formerly Scudder Fund
Distributors, Inc., dated August 14, 1987 is filed
herein.
7. Form of Directors' Retirement Plan is filed herein.
8. (a) Custodian Agreement between the Registrant and Brown
Brothers Harriman & Co. ("Brown Brothers") is filed
herein.
(b) Sub-Custodian Agreement between Brown Brothers Harriman
& Company and Citibank, N.A. is filed herein.
(c) Custodian Agreement between the Registrant and Brown
Brothers dated April 21, 1995. (Incorporated by
reference to Exhibit 8(c) to Post-Effective Amendment
No. 9 to the Registration Statement.)
9. (a) Transfer Agency and Service Agreement and Fee Schedule
between the Registrant and Scudder Service
Corporation dated May 1, 1990 is filed
herein.
(b) Shareholder Service Agreement and Fee Schedule between
the Registrant and Scudder Service Corporation dated
August 14, 1987 is filed herein.
(c) COMPASS and TRAK 2000 Service Agreement dated July 19,
1996. (Incorporated by reference to Exhibit 9(c) to
Post-Effective Amendment No. 10 to the Registration
Statement.)
Part C - Page 2
<PAGE>
10. Inapplicable.
11. Inapplicable.
12. Inapplicable.
13. Inapplicable.
14. (a) Scudder Flexi-Plan for Corporations and Self-Employed
Individuals is filed herein.
(b) Scudder Individual Retirement Plan is filed herein.
(c) Scudder Funds 403(b) Plan is filed herein.
(d) Scudder Employer - Select 403(b) Plan is filed herein.
(e) Scudder Cash or Deferred Profit
Sharing Plan under Section 401(k) is
filed herein.
15. Inapplicable.
16. Performance Information is filed herein.
17. Inapplicable.
18. Inapplicable.
Item 25. Persons Controlled by or under Common Control with Registrant
None
Item 26. Number of Holders of Securities as of October 13, 1997
(1) (2)
Title of Number of
Class Shareholders
Shares of 26,198
capital stock
($.33 1/3 par
value)
Item 27. Indemnification.
A policy of insurance covering Scudder, Stevens & Clark, Inc., its
subsidiaries including Scudder Investor Services, Inc., and all of the
registered investment companies advised by Scudder, Stevens & Clark,
Inc. insures the Registrant's Directors and officers and others
against liability arising by reason of an alleged breach of duty
caused by any negligent, error or accidental omission in the scope of
their duties.
Article Eighth of Registrant's Articles of Incorporation provides as
follows:
EIGHTH: Each director and officer (and his heirs, executors and
administrators) shall be indemnified by the Corporation against
reasonable costs and expenses incurred by him in connection with any
action, suit or proceeding to which he is made a party by reason of
his being or having been a director or officer of the Corporation,
except in relation to any action, suit or proceeding in which he has
Part C - Page 3
<PAGE>
been adjudged liable because of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of his office. In the absence of an adjudication which expressly
absolves the director or officer of liability to the Corporation or
its stockholders for willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his
office, or in the event of a settlement, each director and officer
(and his heirs, executors and administrators) shall be indemnified by
the Corporation against payment made, including reasonable costs and
expenses, provided that such indemnity shall be conditioned upon
receipt by the Corporation of a written opinion of independent counsel
selected by the Board of Directors, or the adoption by a majority of
the entire Board (in which majority there shall not be included any
director who shall have or shall at any time have had any financial
interest adverse to the Corporation in such action, suit or proceeding
or the subject matter or outcome thereof) of a resolution, to the
effect that the director or officer has no liability by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office. The indemnity
provided herein shall, in the event of the settlement of any such
action, suit or proceeding, not exceed the costs and expenses
(including attorneys' fees) which would reasonably have been incurred
if such action, suit or proceeding had been litigated to a final
conclusion. Such a determination by independent counsel or by the
Board of Directors and the payment of amounts by the Corporation on
the basis thereof shall not prevent a stockholder from challenging
such indemnification by appropriate legal proceeding on the grounds
that the director or officer was liable because of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office. The foregoing rights and
indemnification shall not be exclusive of any other right to which the
officers and directors may be entitled according to law.
Reference is hereby made to the Underwriting Agreement between
the registrant and Scudder Investor Services, Inc., formerly Scudder
Fund Distributors, Inc., filed as Exhibit 6 to the Initial
Registration Statement, with respect to the indemnification provisions
thereunder.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
Item 28. Business or Other Connections of Investment Adviser
The Adviser has stockholders and employees who are denominated
officers but do not as such have corporation-wide responsibilities.
Such persons are not considered officers for the purpose of this Item
28.
Business and Other Connections of Board
Name of Directors of Registrant's Adviser
<TABLE>
<CAPTION>
<S> <C>
Stephen R. Beckwith Director, Vice President, Treasurer, Chief Operating Officer & Chief
Financial Officer, Scudder, Stevens & Clark, Inc. (investment
adviser)**
Lynn S.Birdsong Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
President & Director, The Latin America Dollar Income Fund, Inc.
(investment company)**
Part C - Page 4
<PAGE>
President & Director, Scudder World Income Opportunities Fund, Inc.
(investment company)**
President, The Japan Fund, Inc. (investment company)**
Supervisory Director, The Latin America Income and Appreciation Fund
N.V. (investment company) +
Supervisory Director, The Venezuela High Income Fund N.V.
(investment company) xx
Supervisory Director, Scudder Mortgage Fund (investment company)+
Supervisory Director, Scudder Floating Rate Funds for Fannie Mae
Mortgage Securities I & II (investment company) + Director,
Canadian High Income Fund (investment company)# Director, Hot
Growth Companies Fund (investment company)# Director, Sovereign
High Yield Investment Company (investment
company)+
Director, Scudder, Stevens & Clark (Luxembourg) S.A. (investment
manager) #
Nicholas Bratt Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
President & Director, Scudder New Europe Fund, Inc. (investment
company)**
President & Director, The Brazil Fund, Inc. (investment company)**
President & Director, The First Iberian Fund, Inc. (investment
company)**
President & Director, Scudder International Fund, Inc. (investment
company)**
President & Director, Scudder Global Fund, Inc. (President on all
series except Scudder Global Fund) (investment company)**
President & Director, The Korea Fund, Inc. (investment company)**
President & Director, Scudder New Asia Fund, Inc. (investment
company)**
President, The Argentina Fund, Inc. (investment company)**
Vice President, Scudder, Stevens & Clark Corporation (Delaware)
(investment adviser)**
Vice President, Scudder, Stevens & Clark Japan, Inc. (investment
adviser)###
Vice President, Scudder, Stevens & Clark of Canada Ltd. (Canadian
investment adviser) Toronto, Ontario, Canada
Vice President, Scudder, Stevens & Clark Overseas Corporation oo
E. Michael Brown Director, Chief Administrative Officer, Scudder, Stevens & Clark,
Inc. (investment adviser)**
Trustee, Scudder GNMA Fund (investment company)* Trustee, Scudder
Portfolio Trust (investment company)* Trustee, Scudder U.S.
Treasury Fund (investment company)* Trustee, Scudder Tax Free
Money Fund (investment company)* Trustee, Scudder State Tax Free
Trust (investment company)* Trustee, Scudder Cash Investment
Trust (investment company)* Assistant Treasurer, Scudder Investor
Services, Inc.
(broker/dealer)*
Director & President, Scudder Realty Holding Corporation (a real
estate holding company)*
Director & President, Scudder Trust Company (a trust company)+++
Director, Scudder Trust (Cayman) Ltd.
Mark S. Casady Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Director & Vice President, Scudder Investor Services, Inc.
(broker/dealer)*
Director & Vice President, Scudder Service Corporation (in-house
transfer agent)*
Director, SFA, Inc. (advertising agency)*
Linda C. Coughlin Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Chairman & Trustee, AARP Cash Investment Funds (investment
company)**
Chairman & Trustee, AARP Growth Trust (investment company)**
Chairman & Trustee, AARP Income Trust (investment company)**
Chairman & Trustee, AARP Tax Free Income Trust (investment
company)**
Part C - Page 5
<PAGE>
Chairman & Trustee, AARP Managed Investment Portfolios Trust
(investment company)**
Director & Senior Vice President, Scudder Investor Services, Inc.
(broker/dealer)*
Director, SFA, Inc. (advertising agency)*
Margaret D. Hadzima Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Assistant Treasurer, Scudder Investor Services, Inc.
(broker/dealer)*
Jerard K. Hartman Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Vice President, Scudder California Tax Free Trust (investment
company)*
Vice President, Scudder Equity Trust (investment company)**
Vice President, Scudder Cash Investment Trust (investment company)*
Vice President, Scudder Fund, Inc. (investment company)**
Vice President, Scudder Global Fund, Inc. (investment company)**
Vice President, Scudder GNMA Fund (investment company)*
Vice President, Scudder Portfolio Trust (investment company)*
Vice President, Scudder Institutional Fund, Inc. (investment
company)**
Vice President, Scudder International Fund, Inc. (investment
company)**
Vice President, Scudder Investment Trust (investment company)*
Vice President, Scudder Municipal Trust (investment company)*
Vice President, Scudder Mutual Funds, Inc. (investment company)**
Vice President, Scudder New Asia Fund, Inc. (investment company)**
Vice President, Scudder New Europe Fund, Inc. (investment company)**
Vice President, Scudder Securities Trust (investment company)*
Vice President, Scudder State Tax Free Trust (investment company)*
Vice President, Scudder Funds Trust (investment company)**
Vice President, Scudder Tax Free Money Fund (investment company)*
Vice President, Scudder Tax Free Trust (investment company)*
Vice President, Scudder U.S. Treasury Money Fund (investment
company)*
Vice President, Scudder Pathway Series (investment company)*
Vice President, Scudder Variable Life Investment Fund (investment
company)*
Vice President, The Brazil Fund, Inc. (investment company)**
Vice President, The Korea Fund, Inc. (investment company)**
Vice President, The Argentina Fund, Inc. (investment company)**
Vice President & Director, Scudder, Stevens & Clark of Canada, Ltd.
(Canadian investment adviser) Toronto, Ontario, Canada
Vice President, The First Iberian Fund, Inc. (investment company)**
Vice President, The Latin America Dollar Income Fund, Inc.
(investment company)**
Vice President, Scudder World Income Opportunities Fund, Inc.
(investment company)**
Richard A. Holt Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Vice President, Scudder Variable Life Investment Fund (investment
company)*
John T. Packard Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
President, Montgomery Street Income Securities, Inc. (investment
company) o
Chairman, Scudder Realty Advisors, Inc. (realty investment adviser)x
Daniel Pierce Chairman & Director, Scudder, Stevens & Clark, Inc. (investment
adviser)**
Chairman, Vice President & Director, Scudder Global Fund, Inc.
(investment company)**
Chairman & Director, Scudder New Europe Fund, Inc. (investment
company)**
Chairman & Director, The First Iberian Fund, Inc. (investment
company)**
Chairman & Director, Scudder International Fund, Inc. (investment
company)**
Chairman & Director, Scudder New Asia Fund, Inc. (investment
company)**
President & Trustee, Scudder Equity Trust (investment company)**
Part C - Page 6
<PAGE>
President & Trustee, Scudder GNMA Fund (investment company)*
President & Trustee, Scudder Portfolio Trust (investment
company)* President & Trustee, Scudder Funds Trust (investment
company)** President & Trustee, Scudder Securities Trust
(investment company)* President & Trustee, Scudder Investment
Trust (investment company)* President & Director, Scudder
Institutional Fund, Inc. (investment
company)**
President & Director, Scudder Fund, Inc. (investment company)**
President & Director, Scudder Mutual Funds, Inc. (investment
company)**
Vice President & Trustee, Scudder Municipal Trust (investment
company)*
Vice President & Trustee, Scudder Variable Life Investment Fund
(investment company)*
Vice President & Trustee, Scudder Pathway Series (investment
company)*
Trustee, Scudder California Tax Free Trust (investment company)*
Trustee, Scudder State Tax Free Trust (investment company)* Vice
President, Montgomery Street Income Securities, Inc.
(investment company)o
Chairman & President, Scudder, Stevens & Clark of Canada, Ltd.
(Canadian investment adviser), Toronto, Ontario, Canada
Chairman & Director, Scudder Global Opportunities Funds (investment
company) Luxembourg
Chairman, Scudder, Stevens & Clark, Ltd. (investment adviser)
London, England
President & Director, Scudder Precious Metals, Inc. xxx
Vice President, Director & Assistant Secretary, Scudder Realty
Holdings Corporation
(a real estate holding company)*
Vice President, Director & Assistant Treasurer, Scudder Investor
Services, Inc. (broker/dealer)*
Director, Scudder Latin America Investment Trust PLC (investment
company)@
Director, Fiduciary Trust Company (banking & trust company) Boston,
MA
Director, Fiduciary Company Incorporated (banking & trust company)
Boston, MA
Trustee, New England Aquarium, Boston, MA
Incorporator, Scudder Trust Company (a trust company)+++
Kathryn L. Quirk Director, Chief Legal Officer, Chief Compliance Officer and
Secretary, Scudder, Stevens & Clark, Inc. (investment adviser)**
Director, Vice President & Assistant Secretary, The Argentina Fund,
Inc. (investment company)**
Director, Vice President & Assistant Secretary, Scudder
International Fund, Inc. (investment company)**
Director, Vice President & Assistant Secretary, Scudder New Asia
Fund (investment company)**
Director, Vice President & Assistant Secretary, Scudder Global Fund,
Inc. (investment company)**
Trustee, Vice President & Assistant Secretary, Scudder Equity Trust
(investment company)**
Trustee, Vice President & Assistant Secretary, Scudder Securities
Trust (investment company)*
Trustee, Vice President & Assistant Secretary, Scudder Funds Trust
(investment company)**
Trustee, Scudder Investment Trust (investment company)*
Trustee, Scudder Municipal Trust (investment company)*
Vice President & Trustee, Scudder Cash Investment Trust (investment
company)*
Vice President & Trustee, Scudder Tax Free Money Fund (investment
company)*
Vice President & Trustee, Scudder Tax Free Trust (investment
company)*
Vice President & Secretary, AARP Growth Trust (investment
company)** Vice President & Secretary, AARP Income Trust
(investment company)** Vice President & Secretary, AARP Tax Free
Income Trust (investment
company)**
Vice President & Secretary, AARP Cash Investment Funds (investment
company)**
Part C - Page 7
<PAGE>
Vice President & Secretary, AARP Managed Investment Portfolios Trust
(investment company)**
Vice President & Secretary, The Japan Fund, Inc. (investment
company)**
Vice President & Assistant Secretary, Scudder World Income
Opportunities Fund, Inc. (investment company)**
Vice President & Assistant Secretary, The Korea Fund, Inc.
(investment company)**
Vice President & Assistant Secretary, The Brazil Fund, Inc.
(investment company)**
Vice President & Assistant Secretary, Montgomery Street Income
Securities, Inc. (investment company)o
Vice President & Assistant Secretary, Scudder Mutual Funds, Inc.
(investment company)**
Vice President & Assistant Secretary, Scudder Pathway Series
(investment company)*
Vice President & Assistant Secretary, Scudder New Europe Fund, Inc.
(investment company)**
Vice President & Assistant Secretary, Scudder Variable Life
Investment Fund (investment company)*
Vice President & Assistant Secretary, The First Iberian Fund, Inc.
(investment company)**
Vice President & Assistant Secretary, The Latin America Dollar
Income Fund, Inc. (investment company)**
Vice President, Scudder Fund, Inc. (investment company)**
Vice President, Scudder Institutional Fund, Inc. (investment
company)**
Vice President, Scudder GNMA Fund (investment company)*
Director, Senior Vice President & Clerk, Scudder Investor Services,
Inc. (broker/dealer)*
Director, Vice President & Secretary, Scudder Fund Accounting
Corporation (in-house fund accounting agent)*
Director, Vice President & Secretary, Scudder Realty Holdings
Corporation (a real estate holding company)*
Director & Clerk, Scudder Service Corporation (in-house transfer
agent)*
Director, SFA, Inc. (advertising agency)*
Vice President, Director & Assistant Secretary, Scudder Precious
Metals, Inc. xxx
Cornelia M. Small Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
President, AARP Cash Investment Funds (investment company)**
President, AARP Growth Trust (investment company)** President,
AARP Income Trust (investment company)** President, AARP Tax Free
Income Trust (investment company)** President, AARP Managed
Investment Portfolio Trust (investment
company)**
Edmond D. Villani Director, President & Chief Executive Officer, Scudder, Stevens &
Clark, Inc. (investment adviser)**
Chairman & Director, The Argentina Fund, Inc. (investment company)**
Chairman & Director, The Latin America Dollar Income Fund, Inc.
(investment company)**
Chairman & Director, Scudder World Income Opportunities Fund, Inc.
(investment company)**
Supervisory Director, Scudder Mortgage Fund (investment company) +
Supervisory Director, Scudder Floating Rate Funds for Fannie Mae
Mortgage Securities I & II (investment company)+
Director, Scudder, Stevens & Clark Japan, Inc. (investment
adviser)###
Director, The Brazil Fund, Inc. (investment company)**
Director, Indosuez High Yield Bond Fund (investment company)
Luxembourg
President & Director, Scudder, Stevens & Clark Overseas
Corporation oo
President & Director, Scudder, Stevens & Clark Corporation
(Delaware) (investment adviser)**
Part C - Page 8
<PAGE>
Director, Scudder Realty Advisors, Inc. (realty investment adviser)x
Director, IBJ Global Investment Management S.A., (Luxembourg
investment management company) Luxembourg, Grand-Duchy of
Luxembourg
Stephen A. Wohler Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
Vice President, Montgomery Street Income Securities, Inc.
(investment company)o
</TABLE>
* Two International Place, Boston, MA
x 333 South Hope Street, Los Angeles, CA
** 345 Park Avenue, New York, NY
++ Two Prudential Plaza, 180 N. Stetson Avenue,
Chicago, IL
+++ 5 Industrial Way, Salem, NH
o 101 California Street, San Francisco, CA # Soci,t, Anonyme, 47,
Boulevard Royal, L-2449
Luxembourg, R.C. Luxembourg B 34.564
+ John B. Gorsiraweg 6, Willemstad Curacao,
Netherlands Antilles
xx De Ruyterkade 62, P.O. Box 812, Willemstad
Curacao, Netherlands Antilles
## 2 Boulevard Royal, Luxembourg
*** B1 2F3F 248 Section 3, Nan King East Road, Taipei,
Taiwan
xxx Grand Cayman, Cayman Islands, British West Indies
oo 20-5, Ichibancho, Chiyoda-ku, Tokyo, Japan
### 1-7, Kojimachi, Chiyoda-ku, Tokyo, Japan
@ c/o Sinclair Hendersen Limited, 23 Cathedral Yard,
Exeter, Devon, U.K.
Item 29. Principal Underwriters.
(a) Scudder California Tax Free Trust
Scudder Cash Investment Trust
Scudder Equity Trust
Scudder Fund, Inc.
Scudder Funds Trust
Scudder Global Fund, Inc.
Scudder GNMA Fund
Scudder Institutional Fund, Inc.
Scudder International Fund, Inc.
Scudder Investment Trust
Scudder Municipal Trust
Scudder Mutual Funds, Inc.
Scudder Pathway Series
Scudder Portfolio Trust
Scudder Securities Trust
Scudder State Tax Free Trust
Scudder Tax Free Money Fund
Scudder Tax Free Trust
Scudder U.S. Treasury Money Fund
Scudder Variable Life Investment Fund
AARP Cash Investment Funds
AARP Growth Trust
AARP Income Trust
AARP Tax Free Income Trust
AARP Managed Investment Portfolios Trust
The Japan Fund, Inc.
Part C - Page 9
<PAGE>
(b)
(1) (2) (3)
Name and Principal Position and Offices with Positions and
Business Scudder Investor Services, Offices with
Address Inc. Registrant
Lynn S. Birdsong Senior Vice President President
345 Park Avenue
New York, NY 10154
E. Michael Brown Assistant Treasurer None
Two International Place
Boston, MA 02110
Mark S. Casady Director and Vice President None
Two International Place
Boston, MA 02110
Linda Coughlin Director and Senior Vice None
Two International Place President
Boston, MA 02110
Richard W. Desmond Vice President None
345 Park Avenue
New York, NY 10154
Paul J. Elmlinger Senior Vice President and None
345 Park Avenue Assistant Clerk
New York, NY 10154
Margaret D. Hadzima Assistant Treasurer None
Two International Place
Boston, MA 02110
Thomas W. Joseph Director, Vice President, Vice
Two International Place Treasurer and Assistant President
Boston, MA 02110 Clerk
David S. Lee Director, President and None
Two International Place Assistant
Boston, MA 02110 Treasurer
Thomas F. McDonough Clerk Assistant
Two International Place Secretary
Boston, MA 02110
Thomas H. O'Brien Assistant Treasurer None
345 Park Avenue
New York, NY 10154
Edward J. O'Connell Assistant Treasurer Vice
345 Park Avenue President
New York, NY 10154
Part C - Page 10
<PAGE>
Name and Principal Position and Offices with Positions and
Business Scudder Investor Services, Offices with
Address Inc. Registrant
Daniel Pierce Director, Vice President None
Two International Place and Assistant Treasurer
Boston, MA 02110
Kathryn L. Quirk Director, Senior Vice Vice
345 Park Avenue President and Assistant President and
New York, NY 10154 Clerk Secretary
Robert A. Rudell Vice President None
Two International Place
Boston, MA 02110
Edmund J. Thimme Vice President None
345 Park Avenue
New York, NY 10154
Benjamin Thorndike Vice President None
Two International Place
Boston, MA 02110
Sydney S. Tucker Vice President None
Two International Place
Boston, MA 02110
David B. Watts Assistant Treasurer None
Two International Place
Boston, MA 02110
Linda J. Wondrack Vice President None
Two International Place
Boston, MA 02110
The Underwriter has employees who are denominated officers of an
operational area. Such persons do not have corporation-wide
responsibilities and are not considered officers for the purpose of this
Item 29.
(c)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
(1) (2) (3) (4) (5)
Net Underwriting Compensation on
Name of Principal Discounts and Redemptions Brokerage Other
Underwriter Commissions and Repurchases Commissions Compensation
Scudder Investor None None None None
Services, Inc.
</TABLE>
Item 30. Location of Accounts and Records.
Certain accounts, books and other documents required to be maintained
by Section 31(a) of the 1940 Act and the Rules promulgated thereunder
are maintained by the Registrant at its offices, 345 Park Avenue, New
York, NY 10154 with the exception of the accounts, books and other
documents relating to the duties of the registrant's custodian, which
are maintained by the registrant's custodian, Brown Brothers Harriman
& Co., 40 Water Street, Boston, Massachusetts 02109. Records relating
Part C - Page 11
<PAGE>
to the duties of the Registrant's transfer agent are maintained by
Scudder Service Corporation, Two International Place, Boston,
Massachusetts 02110- 4103.
Item 31. Management Services.
Inapplicable.
Item 32. Undertakings.
Inapplicable.
Part C - Page 12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, and the State of New York,
on the 10th day of October, 1997.
THE JAPAN FUND, INC.
By/s/Lynn Birdsong
---------------------------
Lynn Birdsong
President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to its Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
SIGNATURE TITLE DATE
/s/Henry Rosovsky
- ---------------------------
Henry Rosovsky* Chairman of the Board and October 10, 1997
Director
/s/Lynn Birdsong
- ---------------------------
Lynn Birdsong President (Principal October 10, 1997
Executive Officer)
/s/Gina Provenzano
- ---------------------------
Gina Provenzano* Treasurer (Principal October 10, 1997
Financial and Accounting
Officer) and Vice
President
/s/William L. Givens
- ---------------------------
William L. Givens* Director October 10, 1997
/s/William H. Gleysteen, Jr
- ---------------------------
William H. Gleysteen, Jr. * Director October 10, 1997
/s/John F. Loughran
- ---------------------------
John F. Loughran* Director October 10, 1997
/s/Yoshihiko Miyauchi
- ---------------------------
Yoshihiko Miyauchi* Director October 10, 1997
<PAGE>
/s/William V. Rapp
- ---------------------------
William V. Rapp* Director October 10, 1997
/s/O. Robert Theurkauf
- ---------------------------
O. Robert Theurkauf* Director October 10, 1997
/s/Shoji Umemura
- ---------------------------
Shoji Umemura* Director October 10, 1997
/s/Hiroshi Yamanaka
- ---------------------------
Hiroshi Yamanaka* Director October 10, 1997
</TABLE>
*By:/s/Kathryn L. Quirk
- ---------------------------
Kathryn L. Quirk,
Attorney-in-fact pursuant to
powers of attorney contained
in the signature pages of Post-
Effective Amendment No. 9
to the Registration Statement.
2
<PAGE>
File No. 33-13863
File No. 811-1090
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
TO
FORM N-1A
POST-EFFECTIVE AMENDMENT NO. 11
TO REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AND
AMENDMENT NO. 22
TO REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
THE JAPAN FUND, INC.
<PAGE>
THE JAPAN FUND
EXHIBIT INDEX
Exhibit 1(a)
Exhibit 1(b)
Exhibit 2(a)
Exhibit 2(b)
Exhibit 5(a)
Exhibit 5(b)
Exhibit 5(c)
Exhibit 5(d)
Exhibit 5(e)
Exhibit 5(f)
Exhibit 6
Exhibit 7
Exhibit 8(a)
Exhibit 8(b)
Exhibit 9(a)(1)
Exhibit 9(b)(1)
Exhibit 14(a)
Exhibit 14(b)
Exhibit 14(c)
Exhibit 14(d)
Exhibit 14(e)
Exhibit 16
Exhibit 1(a)
[SEAL]
STATE OF MARYLAND
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
301 West Preston Street
Baltimore 21201
THIS IS TO CERTIFY THAT the within instrument is a true copy of the
ARTICLES OF INCORPORATION
OF
THE JAPAN FUND, INC.
as approved and received for record by the State Department of
Assessments and Taxation of Maryland, August 10, 1961
at 11:30 o'clock A.M.
As WITNESS my hand and official Seal of the said Department at Baltimore
this 24th day of April, 1975.
/s/ Richard H. Keller
---------------------------
RICHARD H. KELLER
SUPERVISOR-CHARTER DIVISION
<PAGE>
ARTICLES OF INCORPORATION
of
THE JAPAN FUND, INC.
--------------------
This is to Certify:
FIRST: We, the subscribers, PETER O. A. SOLBERT, JOHN M. BLEWER and JOSEPH
F. JOHNSTON, JR., the post offices address of all of whom is 15 Broad Street,
New York 5, N.Y., all being at least twenty-one years of age, do, under and by
virtue of the General Laws of the State of Maryland authorizing the formation of
corporations, associate ourselves with the intention of forming a corporation.
SECOND: The name of the corporation (hereinafter called the Corporation) is
THE JAPAN FUND, INC.
THIRD: 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 as follows:
(1) To hold, invest and reinvest its funds, and to purchase or
otherwise acquire, hold for investment or otherwise, sell, assign,
negotiate, transfer, exchange or otherwise dispose of or turn to account
or realize upon, securities (which term "securities" shall for the
purposes of these Articles, without limitation of the generality thereof,
be deemed to include any stocks, shares, bonds, debentures, notes,
mortgages or other obligations, and any certificates, receipts, warrants
or other instruments [ILLEGIBLE] rights to receive, purchase or
subscribe for the same, or evidencing or representing any other rights or
interests therein, or in [ILLEGIBLE] property or [ILLEGIBLE] created or
issued by any persons, firms, associations, corporations, syndicates,
combinations, organizations, entities, governments or subdivisions thereof
or other public authorities; and to exercise, as owner or holder of any
securities, all rights, powers and privileges in [ILLEGIBLE] thereof; and
to do any and all acts and things for the preservation, protection,
improvement and enhancement in value of
<PAGE>
2
any and all such securities; provided, however, that the
Corporation shall not
(a) purchase any securities on margin;
(b) participate on a joint or joint and several basis in any
trading account in any securities;
(c) contract to sell any security except to the extent that
the same shall be owned by the Corporation;
(d) mortgage or pledge any of its property, real or personal;
(e) purchase the securities of any investment company or
investment trust (as such terms may reasonably be understood by the
Corporation], other than the Corporation, except by purchase in the
open market where no commission or profit to a sponsor or dealer
results from such purchase other than the customary broker's
commission or except when such purchase though not made in the open
market is part of a plan of merger or consolidation;
(f) purchase or retain in the portfolio of the Corporation the
securities of any person, firm, association, corporation, syndicate,
combination or organization if, to the knowledge of the Corporation,
any officer or director of the Corporation, any person or
organization which [ILLEGIBLE] investment advisor of the Corporation
(which term "investment advisor" shall for the purposes of these
Articles have the meaning of such term as defined in the United
States Investment Company Act of 1940), or any officer, director,
partner or trustee of, or person owning of record more than 10% of
the stock of, any such investment advisor, owns beneficially more
than 1/2 of 1% of the outstanding securities of any class of such
[ILLEGIBLE] and the persons or organizations so owning more than 1/2
of 1% of such securities together own beneficially more than 5% of
such securities. The Corporation shall be deemed to have complied
with the provisions of this subdivision if within ten days after the
end of each calendar quarter each officer and director of the
Corporation, each [ILLEGIBLE] Corporation, and each officer,
director, partner [ILLEGIBLE] or person owning of record
more than 10% of the stock of, any such investment advisor, is
furnished with a complete list of the securities held by the
Corporation as
<PAGE>
3
of the last Friday of such quarter and is requested to advise the
Corporation promptly, in the event that he or it owns beneficially
more than 1/2 of 1% of the outstanding securities of any class of
any issuer whose securities appeal on such list, as to the number or
principal amount of securities so owned by him and if the
Corporation thereafter disposes of all securities of any issuer
which, on the basis of information so received, the Corporation is
prohibited from retaining by the provisions of this subdivision;
such disposal to take place as soon as may be practicable in view of
market conditions and the possibility of loss which might result
from immediate disposal, but in any event not more than thirty days
after the existence of such ownership in excess of 5% has been so
ascertained by the Corporation;
(g) underwrite the sale of, or participate in any underwriting
or selling group in connection with the public distribution of, any
securities, provided, however, that this provision shall not be
construed to prevent or limit in any manner the right of the
Corporation to purchase securities for its investment portfolio,
whether or not such purchase might be deemed to make the Corporation
an underwriter or a participant in any such underwriting or selling
group;
(h) purchase any commodities or commodity contracts;
(i) purchase any real estate, other than real estate deemed by
the Board of Directors to be necessary and convenient for the
operation of the affairs of the Corporation; provided, however,
that the Corporation may purchase, acquire and invest in securities
of real estate companies or other companies owning or investing in
real estate;
(j) purchase the securities of any one issuer if, upon such
purchases, the Corporation would own more than 10% of any class of
the outstanding securities of such issuer; provided that for the
purpose of this restriction, all kinds of securities of an issuer
representing debt shall be deemed to constitute a single class, and
all kinds of stock of an issuer preferred over common stock as to
dividends or in liquidation shall be deemed to constitute a single
class;
(k) purchase any securities of any one issuer (except
Government securities as defined in the Investment Company Act of
<PAGE>
4
1940) if upon any such purchase more than 5% of the total assets of
the Corporation (as determined in good faith by the Corporation)
would consist of the securities of such issuer;
(l) make any investment which involves promotion or business
management by the Corporation or which would subject the Corporation
to unlimited liability or for the purpose of exercising control or
management; or
(m) invest in the securities of issuers which have been in
operation for less than 3 years (including the operations of
predecessor companies) if such investment at the time thereof would
cause more than 5% of the total assets of the Corporation (as
determined in good faith by the Corporation) to be invested in
securities of all such issuers.
(2) To issue and sell shares of its own capital stock and securities
convertible into such capital stock in such amounts and on such terms and
conditions, or such purposes and for such amount or kind of consideration
(including without limitation thereto, securities) now or hereafter
permitted by the laws of Maryland, by the United States Investment Company
Act of 1940, and by these Articles of Incorporation, as its Board of
Directors may, and is hereby authorized to, determine; provided, however,
that the Corporation shall not sell any shares of its capital stock (i) to
any officer or director of the Corporation, (ii) to any person or
organization furnishing advisory or supervisory services to the
Corporation, or (iii) to any officer, director or partner of, or person
owning of record 10% or more of the stock of, any person or organization
furnishing advisory or supervisory services to the Corporation, unless (a)
the sale is made to any such person or organization acting as underwriter
in connection with the sale of capital stock issued by the Corporation, or
(h) the sale is made at a price not less than the price then available to
the public and the Corporation is advised that the purchase is being made
for investment and that the purchaser will advise the Corporation of any
sale of shares of the capital stock of the corporation made by the
purchaser less than two months after the date of any purchase by the
purchaser of shares of the capital stock of the Corporation.
(3) To borrow money but only to the extent that such borrowings are
undertaken as a temporary measure for extraordinary or emer-
<PAGE>
5
gency purposes, and then only in an aggregate amount not in excess of 10%
of the total gross assets of the Corporation taken at cost.
(4) To purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue or cancel (all without the vote or consent of the
stockholders of the Corporation) shares of its capital stock, in any
manner and to the extent now or hereafter permitted by the laws of
Maryland, by the United States Investment Company Act of 1940, and by
these Articles of Incorporation.
(5) Subject to any applicable provisions of law, to buy, hold, sell,
and otherwise deal in and with foreign exchange.
(6) To conduct its business in all its branches at one or more
offices in Maryland and elsewhere in any part of the world, without
restriction or limit as to extent.
(7) To carry out all or any of the foregoing objects and purposes as
principal or agent, and alone or with associates or, to the extent now or
hereafter permitted by the laws of Maryland, as a member of, or as the
owner or holder of any stock of, or shares or interest in, any firm,
association, corporation, trust or syndicate; and in connection therewith
to make or enter such deeds or contracts with any persons, firms,
associations, corporations, syndicates, governments or subdivisions
thereof, and to do such acts and things and to exercise such powers as a
natural person could lawfully make, enter into, do or exercise.
(8) To do any and all such further acts and things and to exercise
any and all such further powers as may be necessary, incidental, relative,
conducive, appropriate or desirable for the accomplishment, carrying out
or attainment of all or any of the foregoing purposes or objects.
The foregoing objects and purposes shall, except as otherwise expressly
provided, 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 these Articles of
Incorporation, and shall each be regarded as independent, and construed as
powers as well as objects and purposes, and the enumeration of specific
purposes, objects and powers shall not be construed to limit or restrict in any
manner the meaning of general terms or the general powers of the Corporation now
or hereafter conferred by the laws of the State of Maryland
<PAGE>
6
nor shall the expression of one thing be deemed to exclude another, though it be
of like nature, not expressed; provided, however, that the Corporation shall not
have the power to carry on within the State of Maryland any business whatsoever
the carrying on of which would preclude it from being classified as an ordinary
business corporation under the laws of said State; nor shall it carry on any
business, or exercise any powers, in any other state, territory, district or
country except to the extent that the same may lawfully be carried on or
exercised under the laws thereof.
FOURTH: The post office address of the place at which the principal office
of the Corporation in the State of Maryland will be located is 1508 First
National Bank Building, Baltimore 2. The Corporation's resident agent in charge
of said principal office is United States Corporation Company, whose post office
address in 1508 First National Bank Building, Baltimore 2, Maryland. Said
resident agent is domiciled in the State of Maryland and actually resides
therein.
FIFTH:
(1) The total number of shares which the Corporation has authority
to issue is five million (5,000,000) shares of Common Stock of the par
value of $1 each, all of one class, having an aggregate par value of
$5,000,000.
(2) At all meetings of stockholders each stockholder of the
Corporation shall be entitled to one vote for each share of Common Stock
standing in his name on the books of the Corporation on the date, fixed in
accordance with the By-Laws, for determination of stockholders entitled to
vote at such meeting. If the By-Laws so provide, meetings of
stockholders, whether annual or special, may be held outside the State of
Maryland. The presence in person or by proxy of the holders of a majority
of the shares of capital stock of the Corporation outstanding and entitled
to vote thereat shall constitute a quorum at any meeting of the
stockholders. If at any meeting of the stockholders there shall be less
than a quorum present, stockholders holding a majority of the shares
represented at such meeting may, without further notice, adjourn the same
from time to time until a quorum shall attend, but no business shall be
transacted at any such adjourned meeting except such as might have been
lawfully transacted had the meeting not been adjourned.
<PAGE>
7
(3) Notwithstanding any provision of law of the State of Maryland
requiring a greater proportion than a majority of the votes of all classes
or of any class of capital stock of the Corporation entitled to be cast,
to take or authorize any action, such action may be taken or authorized
upon the concurrence of a majority of the aggregate votes entitled to be
cast thereon, and any such action so taken or authorized shall be valid
and effective.
(4) No holder of any class of capital stock of the Corporation
shall, as such holder, have any right to purchase or subscribe for any
shares of the capital stock of the Corporation of any class which it may
issue or sell (whether out of the number of shares authorized by these
Articles of Incorporation, or by any amendment hereto, or out of any
shares of the capital stock of the Corporation acquired by it after the
issue thereof, or otherwise), or any securities convertible into such
shares of capital stock, other than such right, if any, as the Board of
Directors, in its discretion, may determine.
(5) All persons who shall acquire capital stock in the Corporation
shall acquire the same subject to the provisions of these Articles of
Incorporation.
(6) Any fractional share shall carry proportionally all the rights
of a whole share, including the right to vote and to receive dividends.
SIXTH: The number of directors of the Corporation shall be three, and the
names of those who shall act as such until the first annual meeting or until
their successors are duly chosen and qualified are as follows:
HAROLD L. BACHE
PETER O. A. SOLBERT
NAOMICHI TOYAMA
However, the By-Laws of the Corporation may fix the number of directors at a
number greater than that fixed in these Articles of Incorporation, and may
authorize the Board of Directors, by the vote of a majority of the entire Board
of Directors, to increase or decrease the number of directors
<PAGE>
8
fixed by these Articles of Incorporation or by the By-Laws within a limit
specified in the By-Laws (provided that in no case shall the number of Directors
be less than three) and to fill the vacancies created by any such increase in
the number of directors. Unless otherwise provided by the By-Laws of the
Corporation, the directors of the Corporation need not be stockholders therein.
SEVENTH: The following provisions are hereby adopted for
the purpose of defining, limiting and regulating the powers of
the Corporation and of the directors and stockholders:
(1) The By-Laws of the Corporation may divide the directors of the
Corporation into classes and prescribe the tenure of office of the several
classes, but no class shall be elected for a period shorter than that from
the time of the election following the division into classes until the
next annual meeting and thereafter for a period shorter than the interval
between annual meetings or for a longer period than five years, and the
term of office of at least one class shall expire each year.
Notwithstanding the foregoing, no such division into classes shall be made
prior to the first annual meeting of stockholders of the Corporation.
(2) The Board of Directors shall have power, if authorized by the
By-Laws, to designate by resolution or resolutions adopted by the Board of
Directors one or more committees, each committee to consist of two or more
members of the Board, which, to the extent provided in said resolutions or
in the By-Laws of the Corporation and permitted by the laws of Maryland,
shall have and may exercise any or all of the powers of the Board of
Directors in the management of the business and affairs of the
Corporation, and may have power to authorize the seal of the
Corporation to be affixed to all papers which may require it, provided
that nothing herein shall be deemed to prohibit the designation of
additional committees for and appropriate purposes.
(3) The Board of Directors shall subject to the laws of
Maryland, have power to determine from time to time whether and to what
extent and what times and places and under what conditions and regulations
and accounts and books of the Corporation, or any of them, shall be open
to the inspection of the stockholders; and no stockholder shall
<PAGE>
9
have any right to inspect any account or book or document of the
Corporation, except as conferred by the laws of Maryland, unless and until
authorized so to do by resolution of the Board of Directors or of the
stockholders.
(4) Any director, or any officer elected or appointed by the Board
of Directors or by any committee of said Board or by the stockholders or
otherwise, may be removed at any time, with or without cause, in such
lawful manner as may be provided in the By-Laws of the Corporation.
(5) If the By-Laws so provide, the Board of Directors of the
Corporation shall have power to hold their meetings, to have an office or
offices and, subject to the provisions of the laws of Maryland, to keep
the books of the Corporation outside of said State at such places as may
from time to time be designated by them.
(6) In addition to the powers and authority hereinbefore or by
statue 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 these Articles of Incorporation, and of the
By-Laws of the Corporation.
(7) Whenever the Corporation shall be entitled to vote as the owner
of any security, such security may be voted (i) by the President or a
Vice-President, or (ii) by such person or persons as may be thereunto
authorized in any proxy or power of attorney signed by the President or a
Vice-President, or (iii) by any person or persons thereunto authorized by
the Board of Directors.
(8)(a) The Corporation shall not purchase or sell any securities
(other than the capital stock of the Corporation) from or to any of the
following acting as principals, and shall not make any loan to (i) any
officer or director of the Corporation, (ii) any partnership of which any
officer or director of the Corporation is a member, (iii) any corporation
or association of which any officer or director of the Corporation is an
officer, director or trustee, (iv) any person or organization furnishing
advisory or supervisory services to the Corporation, (v) any officer,
director, partner or trustee of, or person owning of record 10%
<PAGE>
10
or more of the stock of, any person or organization furnishing such
advisory or supervisory services, (vi) any partnership of which any
officer, director, partner or trustee of, or person owning of record 10%
or more of the stock of, any person or organization furnishing such
advisory or supervisory services, is a member, or (vii) any corporation or
association of which any officer, director, partner or trustee of, or
person owning of record 10% or more of the stock of, any person or
organization furnishing such advisory or supervisory services, is an
officer, director or trustee; provided, however, that nothing contained in
(iii) or (vii) shall prevent the purchase of additional securities from
any corporation or association referred to in such clauses upon the
exercise of rights issued to the Corporation as a part of a general
offering to the holders of securities of such corporation or association.
No person, partnership, association or corporation with which the
Corporation may have a supervisory or advisory contract shall be paid any
brokerage commission (other than with respect to securities issued by the
Corporation) in the purchase or sale of securities for the account of the
Corporation.
(b) Subject only to the provisions of subparagraph (a) of this
paragraph 8 and the provisions of the United State Investment Company Act
of 1940, any director, officer or employee individually, or any
partnership of which any director, officer or employee may be a member, or
any corporation or association of which any director, officer or employee
may be a member, or any corporation or association of which any director,
officer or employee may be an officer, director, trustee, employee or
stockholder, may be a party to, or may be pecuniarily or otherwise
interested in, any contract or transaction of the Corporation, and in the
absence of fraud no contract or other transaction shall be thereby
affected or invalidated; provided that in case a director, or a
partnership, corporation or association of which a director is a member,
officer, director, trustee, employee or stockholder, is so interested,
such fact shall be disclosed or shall have been known to the Board of
Directors or a majority thereof; and any director of the Corporation who
is so interested or who is also a director, officer, trustee, employee or
stockholder of such other corporation or association or a member of such
partnership which is so interested, may be counted in determining the
existence of a quorum at any meeting of the Board of Directors of the
Corporation which shall authorize any such contract or transaction, and
may vote
<PAGE>
11
thereat to authorize any such contract or transaction, with like force and
effect as if he were not such director, officer, trustee, employee or
stockholder of such other corporation or association or not so interested
or not a member of a partnership so interested.
(c) Specifically, but without limitation of the foregoing, the
Corporation may enter into an advisory or supervisory contract and other
contracts with, and may otherwise do business with, the firm of The Nikko
Securities Co., Ltd. notwithstanding that the Board of Directors of the
Corporation may be composed in part of directors, officers or employees of
said corporation and officers of the Corporation may have been or may be or
become directors, officers or employees of said corporation, and
notwithstanding that said corporation (or its affiliated corporations) may
act as investment advisor to United States or foreign investment companies
investing in securities similar to or identical with those owned by the
Corporation and may at or about the same time recommend the purchase or
sale of the same securities to the Corporation and such other investment
companies, provided, however, that in all such situations advice given by
said corporation to the Corporation shall be fair and reasonable by
comparison with advice given by said corporation (or its affiliated
corporations) to such other investment companies, and in the absence of
fraud the Corporation and said corporation may deal freely with each other,
and neither such advisory or supervisory contract nor any other contract or
transaction between the Corporation and said corporation shall be
invalidated or in any manner affected thereby, nor shall any director or
officer of the corporation be liable to the Corporation or to any
stockholder or creditor thereof provided or to any other person for any
loss incurred by it or him under or by reason of any such contract or
transaction; that nothing herein shall protect any director or officer of
the Corporation against any liability to the Corporation or to its security
holders to which he 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; and provided always that such
contract or transaction shall have been on terms that were not unfair at
the time at which it was entered into.
<PAGE>
12
EIGHTH: Each director and officer (and his heirs, executors and
administrators) shall be indemnified by the Corporation against reasonable
costs and expenses incurred by him in connection with any action, suit or
proceeding to which he is made a party by reason of his being or having
been a director or officer of the Corporation, except in relation to any
action, suit or proceeding in which he has been adjudged liable because of
willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office. In the absence of an
adjudication which expressly absolves the director or officer of liability
to the Corporation or its stockholders for willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his office, or in the event of a settlement, each director and
officer (and his heirs, executors and administrators) shall be indemnified
by the Corporation against payment made, including reasonable costs and
expenses, provided that such indemnity shall be conditioned upon receipt
by the Corporation of a written opinion of independent counsel selected by
the Board of Directors, or the adoption by a majority of the entire Board
(in which majority there shall not be included any director who shall have
or shall at any time have had any financial interest adverse to the
Corporation in such action, suit or proceeding or the subject matter or
outcome thereof) of a resolution, to the effect that the director or
officer has no liability by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his office. The indemnity provided herein shall, in the event
of the settlement of any such action, suit or proceeding, not exceed the
costs and expenses (including attorneys' fees) which would reasonably have
been incurred if such action, suit or proceeding had been litigated to a
final conclusion. Such a determination by independent counsel or by the
Board of Directors and the payment of amounts by the Corporation on the
basis thereof shall not prevent a stockholder from challenging such
indemnification by appropriate legal proceeding on the grounds that the
director or officer was liable because of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his office. The foregoing rights and indemnification shall not
be exclusive of any other right to which the officers and directors may be
entitled according to law.
NINTH: From time to time any of the provisions of these Articles of
Incorporation may be amended, altered or repealed (including any amend-
<PAGE>
13
ment which changes the terms of any of the outstanding stock by
classification, reclassification or otherwise) upon the vote of the
holders of a majority of the shares of capital stock of the Corporation at
the time outstanding and entitled to vote, and other provisions which
might under the statutes of the State of Maryland at the time in force be
lawfully contained in articles of incorporation may be added or inserted
upon the vote of the holders of a majority of the shares of capital stock
of the Corporation at the time outstanding and entitled to vote, and all
rights at any time conferred upon the stockholders of the Corporation by
these Articles of Incorporation are granted subject to the provisions of
this Article NINTH.
IN WITNESS WHEREOF, we have signed these ARTICLES OF INCORPORATION
on this 8th day of August, 1961.
/s/ Peter O.A. Solbert (L.S.)
----------------------------------
Peter O.A. Solbert
/s/ John M. Blewer (L.S.)
----------------------------------
John M. Blewer
/s/ Joseph F. Johnston, Jr. (L.S)
----------------------------------
Joseph F. Johnston, Jr.
<PAGE>
14
STATE OF NEW YORK }
} ss.:
COUNTY OF NEW YORK }
This is to certify that on this 9th day of August, 1961, before me, the
subscriber, a Notary Public of the State of New York, personally appeared PETER
O. A. SOLBERT, JOHN M. BLEWER and JOSEPH F. JOHNSTON, JR., and severally
acknowledged the foregoing Articles of Incorporation to be their act.
Witness my hand and Notarial Seal the day and year last above written.
(SEAL) /s/ Rose P. Eckert
--------------------
Notary Public
[Notary stamp of Rose P. Eckert]
[NOTARIAL SEAL]
<PAGE>
ARTICLES OF INCORPORATION
OF
THE JAPAN FUND, INC.
approved and received for record by the State Department of Assessments and
Taxation of Maryland August 10, 1961, at 11:30 A.M. as in conformity with law
and ordered recorded.
A 11485
-----------------------
Recorded in [ILLEGIBLE] folio 201, one of the Charter Records of the State
Department of Assessments and Taxation of Maryland.
------------------------
[ILLEGIBLE] tax paid $390.00 Recording fee paid $26.00.
-------------------------
To the clerk of the Superior Court of Baltimore City
IT IS HEREBY CERTIFIED [ILLEGIBLE] within instrument, together with all
attachments has been received, approved and recorded by the State Department of
Assessments and Taxation of Maryland.
AS WITNESS my hand and seal of the said Department at
Baltimore
<PAGE>
STATE OF NEW YORK }
} ss.:
COUNTY OF NEW YORK }
BE IT REMEMBERED that on this 23rd day of March, 1962, personally came
before me ROBERT L. GARNER, who acknowledged that he is President of The Japan
Fund, Inc., that he executed the foregoing Article of Amendment and that the
statements contained therein are true.
(SEAL) /s/ Rose P. Eckert
--------------------
Notary Public
[Notary stamp of Rose P. Eckert]
[NOTARIAL SEAL]
CERTIFICATE
I, HARRY G. A. SEGGERMAN, hereby certify that I am the Secretary of the
Japan Fund, Inc.; that the seal of such corporation was affixed by me to the
foregoing Article of Amendment and is hereby attested by me to be the true seal
of such corporation; that I was the secretary of the meeting of the Board of
Directors of such corporation held on March 9, 1962; that at said meeting the
amendment set forth in the foregoing Article of Amendment was approved by a
majority of the entire Board of Directors; and that there were at the time of
such adoption no shares of stock entitled to vote the [ILLEGIBLE]
/s/ Harry G. A. Seggerman
--------------------------
Harry G. A. Seggerman
<PAGE>
STATE OF NEW YORK }
} ss.:
COUNTY OF NEW YORK }
BE IT REMEMBERED that on this 23rd day of March, 1962, personally came
before me HARRY G. A. SEGGERMAN, who acknowledged that he is Secretary of The
Japan Fund, Inc., that he executed the foregoing Article of Amendment and that
the statements contained therein are true.
(SEAL) /s/ Rose P. Eckert
------------------
Notary Public
[Notary stamp of Rose P. Eckert]
[NOTARIAL SEAL]
Exhibit 1(b)
THE JAPAN FUND, INC.
ARTICLES OF AMENDMENT AND RESTATEMENT
THE JAPAN FUND, INC., a Maryland corporation (which is hereinafter
called the "Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: The Corporation desires to amend and restate the charter of
the Corporation as currently in effect.
SECOND: The charter of the Corporation is hereby amended and
restated as follows:
* * *
FIRST: We, the subscribers, PETER O.A. SOLBERT, JOHN M. BLEWER and
JOSEPH F. JOHNSTON, JR., the post office address of all of whom is 15 Broad
Street, New York, New York 10005, all being at least twenty-one years of age,
do, under and by virtue of the General Laws of the State of Maryland authorizing
the formation of corporations, associate ourselves with the intention of forming
a corporation.
SECOND: The name of the corporation (hereinafter called the
Corporation) is THE JAPAN FUND, INC.
THIRD: The purpose or purposes for which the Corporation is formed
and the business and objects to be carried on and promoted by it are:
(1) To act as an investment company under the federal Investment
Company Act of 1940 and to exercise and enjoy all the powers, rights and
privileges granted to or conferred upon corporations by the Maryland
General Corporation Law.
(2) To engage in any one or more businesses or transactions, or to
acquire all or any portion of any entity engaged in any one or more
businesses or transactions which the Board of Directors may from time to
time authorize or approve, whether or not related to the business
described elsewhere in this Article or to any other business at the time
or theretofore engaged in by the Corporation.
Except as expressly provided in Article VII of this charter, 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 this charter and each shall be regarded as
independent; provided, however, that the Corporation shall not have the power to
carry on within the State of Maryland any business whatsoever the carrying on of
which would preclude it from being classified as an ordinary business
corporation under the laws of said State; nor shall it
<PAGE>
carry on any business, or exercise any powers, in any other state, territory,
district or country except to the extent that the same may lawfully be carried
on or exercised under the laws thereof.
FOURTH: The post office address of the place at which the principal
office of the Corporation in the State of Maryland will be located is 32 South
Street, Baltimore, Maryland 21202. The Corporation's resident agent in charge of
said principal office is The Corporation Trust Incorporated, whose post office
address is 32 South Street, Baltimore, Maryland 21202. Said resident agent is a
Maryland corporation.
FIFTH:
(1) The total number of shares which the Corporation has authority
to issue is 600 million (600,000,000) shares of Common Stock of the par
value of $.33-1/3 each, all of one class, having an aggregate par value of
$199,999,999.80.
(2) The Board of Directors may classify and reclassify any unissued
shares of Common Stock into one or more additional or other classes or
series as may be established from time to time by setting or changing in
any one or more respects the designations, preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
rights upon liquidation, dissolution or winding up of the affairs of the
Corporation, qualifications or terms or conditions of redemption of such
shares of stock; provided, that the Board of Directors shall not classify
or reclassify any of such shares into any class or series of stock which
is prior to any class or series of stock then outstanding with respect to
rights upon the liquidation, dissolution, or winding up of the affairs of
or upon any distribution of the general assets of the Corporation.
(3) On each matter submitted to a vote of the stockholders, each
holder of a share shall be entitled to one vote for each share standing in
his name on the books of the Corporation on the date, fixed in accordance
with the By-Laws, for determination of stockholders entitled to vote at
such meeting, irrespective of the class or series thereof, and all shares
of all classes or series shall vote as a single class or series ("Single
Class Voting"); provided, however, that (a) as to any matter with respect
to which a separate vote of any class or series is required by the
Investment Company Act of 1940 or by the Maryland General Corporation Law,
such requirement as to a separate vote by that class or series shall apply
in lieu of Single Class Voting as described above; (b) in the event that
the separate vote requirements referred to in (a) above apply with respect
to one or more classes or series, then, subject to (c) below, the shares
of all other classes or series shall
2
<PAGE>
vote as a single class or series; and (c) as to any matter which does not
affect the interest of a particular class or series, only the holders of
shares of the one or more affected classes shall be entitled to vote. If
the By-Laws so provide, meetings of stockholders, whether annual or
special, may be held outside the State of Maryland. The presence in person
or by proxy of the holders of a majority of the shares of capital stock of
the Corporation outstanding and entitled to vote thereat shall constitute
a quorum at any meeting of the stockholders. If at any meeting of the
stockholders there shall be less than a quorum present, stockholders
holding a majority of the shares represented at such meeting may, without
further notice, adjourn the same from time to time until a quorum shall
attend, but no business shall be transacted at any such adjourned meeting
except such as might have been lawfully transacted had the meeting not
been adjourned.
(4) Notwithstanding any provisions of the law of the State of
Maryland requiring a greater proportion than a majority of the votes of
all classes or of any class of capital stock of the Corporation entitled
to be cast to take or authorize any action, such action may be taken or
authorized upon the concurrence holders of a majority of the total number
of shares of the Corporation, or of a series of the Corporation, as
applicable, outstanding and entitled to vote thereon, and any such action
so taken or authorized shall be valid and effective, except to the extent
otherwise required by the Investment Company Act of 1940 and rules
thereunder.
The vote of two-thirds of the outstanding shares of Common Stock of
the Corporation shall be necessary to authorize any of the following
actions: (i) a merger into or consolidation with an open-end investment
company, (ii) the dissolution of the Corporation, (iii) the transfer of
all or substantially all of the assets of the Corporation, (iv) any
amendment to this charter which makes the Common Stock a redeemable
security (as such term is defined in the Investment Company Act of 1940)
or reduces the two-thirds vote required to authorize the actions listed in
this paragraph or (v) a merger into or consolidation with a closed-end
investment company whose charter does not require the vote of at least
two-thirds of each class of stock entitled to be cast to approve the
actions listed in this paragraph.
(5) No holder of any class of capital stock of the Corporation
shall, as such holder, have any right to purchase or subscribe for any
shares of the capital stock of the Corporation of any class or series
which it may issue or sell (whether out of the number of shares authorized
by this charter, or by any amendment hereto, or out of any shares of the
capital stock of the
3
<PAGE>
Corporation acquired by it after the issue thereof, or otherwise), or any
securities convertible into such share of capital stock, other than such
right, if any, as the Board of Directors, in its discretion, may
determine.
(6) All persons who shall acquire capital stock in the Corporation
shall acquire the same subject to the provisions of this charter.
(7) Any fractional share shall carry proportionally all the rights
of a whole share, including the right to vote and to receive dividends.
(8) The consideration per share to be received by the Corporation
upon the issuance or sale of any shares of its capital stock shall be the
net asset value per share determined in accordance with the requirements
of the Investment Company Act of 1940 and the applicable rules and
regulations of the Securities and Exchange Commission (or any succeeding
governmental authority) and in conformity with generally accepted
accounting principles.
(9) To the extent the Corporation has funds or property legally
available therefor, each stockholder of the Corporation shall have the
right at such times as may be permitted by the Corporation to require the
Corporation to redeem all or any part of his shares at a redemption price
equal to the net asset value per share of the capital stock next
determined after the shares are properly tendered for redemption (less
such redemption fee as may be determined from time to time by the Board of
Directors); such determination of the net asset value per share shall be
made in accordance with the requirements of the Investment Company Act of
1940 and the applicable rules and regulations of the Securities and
Exchange Commission (or any succeeding governmental authority) and in
conformity with generally accepted accounting principles.
Notwithstanding the foregoing, the Corporation may but need not
postpone payment or deposit of the redemption price and may suspend the
right of the holders of its capital stock to require the Corporation to
redeem shares of such capital stock for such periods and to the extend
permitted by, or in accordance with, the Investment Company Act of 1940
and the rules, regulations and orders issued thereunder.
Without limiting the generality of the foregoing, the Board of
Directors may authorize the Corporation, at its option and to the extent
permitted by and in accordance with the conditions of applicable law, to
redeem stock owned by any stockholder under circumstances deemed
appropriate by the Board of Directors in its sole
4
<PAGE>
discretion from time to time, such circumstances including but not limited
to (1) failure to provide the Corporation with a tax identification number
and (2) failure to maintain ownership of a specified minimum number or
value of shares of any class or series of stock of the Corporation, such
redemption to be effected at such a price, at such time and subject to
such conditions as may be required or permitted by applicable law.
(10) Transfers of shares of the capital stock of the Corporation
will be recorded on the stock transfer records of the Corporation only at
such times as stockholders shall have the right to require the Corporation
to redeem shares pursuant to paragraph (9) of this ARTICLE FIFTH and at
such other times as may be permitted by the Corporation.
(11) The relative preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption of each class or series of stock of the
Corporation shall be as follows, unless otherwise provided in Articles
Supplementary hereto:
All consideration received by the Corporation for the issue or sale
of stock of a particular class or series, together with all assets in
which such consideration is invested or reinvested, all income, earnings,
profits and proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same
may be, shall irrevocably belong to that class or series for all purposes,
and shall be so recorded on the books of account of the Corporation. Any
assets, income, earnings, profits or proceeds thereof, funds or payments
which are not readily attributable to a particular class or series shall
be allocated to and among any one or more series or classes in such manner
and on such basis as the Board of Directors, in its sole discretion, shall
deem fair and equitable, and items so allocated to a particular series or
class shall belong to that series or class. Each such allocation shall be
conclusive and binding upon the stockholders of all classes and series for
all purposes.
The assets belonging to each class or series shall be charged with
the liabilities of the Corporation in respect of that class or series and
with all expenses, costs, charges and reserves attributable to that class
or series and with all expenses, costs, charges and reserves attributable
to that class or series and shall be so recorded on the books of account
of the Corporation. Any general liabilities, expenses, costs, charges or
reserves of the Corporation which are not readily identifiable as
6
<PAGE>
belonging to any particular class or series shall be allocated and charged
to and among any one or more of the classes or series in such manner and
on such basis as the Board of Directors in its sole discretion deems fair
and equitable, and any items so allocated to a particular class or series
shall be charged to, and shall be a liability belonging to, that class or
series. Each such allocation shall be conclusive and binding upon the
stockholders of all classes and series for all purposes.
The Board of Directors shall have full discretion, to the extent not
inconsistent with the Maryland General Corporation Law and the Investment
Company Act of 1940, to determine which items shall be treated as income
and which items shall be treated as capital. Each such determination shall
be conclusive and binding. "Income belonging to" a class or series
includes all income, earnings and profits derived from assets belonging to
that class or series, less any expenses, costs, charges or reserves
belonging to that class or series, for the relevant time period.
Dividends and distributions on shares of a particular class or
series may be declared and paid with such frequency, in such form and in
such amount as the Board of Directors may from time to time determine.
Dividends may be declared daily or otherwise pursuant to a standing
resolution or resolutions adopted only once or with such frequency as the
Board of Directors may determine, after providing for actual and accrued
liabilities belonging to that class or series.
All dividends on shares of a particular class or series shall be
paid only out of the income belonging to that class or series and capital
gains distributions on shares of the class or series shall be only out of
the capital gains belonging to the class or series. All dividends and
distributions on shares of a particular class or series shall be
distributed pro rata to the shareholders of that class or series held by
such shareholders at the date and time of record established for the
payment of such dividends or distributions, except that in connection with
any dividend or distribution program or procedure the Board of Directors
may determine that no dividend or distribution shall be payable on shares
as to which the shareholder's purchase order and/or payment have not been
received by the time or times established by the Board of Directors under
such program or procedure.
(12) Unless otherwise prohibited by law, so long as the Corporation
is registered as an open-end investment company under the Investment
Company Act of 1940, the Board of Directors shall have the power and
authority, without the approval of the holders of any outstanding
6
<PAGE>
shares, to increase or decrease the number of shares of capital stock or
the number of shares of capital stock of any class or series that the
Corporation has authority to issue.
SIXTH: The number of directors of the Corporation shall be three.
However, the By-Laws of the Corporation may fix the number of directors at a
number greater than that fixed in this charter, any may authorize the Board of
Directors, by the vote of a majority of the entire Board of Directors, to
increase or decrease the number of directors fixed by this charter or by the
By-Laws within a limit specified in the By-Laws (provided that in no case shall
be the number of Directors be less than three) and to fill the vacancies created
by any such increase in the number of directors. Unless otherwise provided by
the By-Laws of the Corporation, the directors of the Corporation need not be
stockholders therein.
SEVENTH: The following provisions are hereby adopted for the purpose
of defining, limiting and regulating the powers of the Corporation and of the
directors and stockholders:
(1) The Board of Directors of the Corporation is hereby empowered to
authorize the issuance from time to time of shares of stock of any class,
whether now or hereafter authorized, or securities convertible into shares
of its stock into any class or series, whether now or hereafter
authorized, for such consideration (which shall consist only of cash or
securities) as may be deemed advisable by the Board of Directors and
without any action by the stockholders.
(2) The By-Laws of the Corporation may divide the directors of the
corporation into classes and prescribe the tenure of office of the several
classes, but no class shall be elected for a period shorter than that from
the time of the election following the division into classes until the
next annual meeting and thereafter for a period shorter than the interval
between annual meetings or for a longer period than five years, and the
term of office at least one class shall expire each year. Notwithstanding
the foregoing, no such division into classes shall be made prior to the
first annual meeting of stockholders of the Corporation.
(3) The Board of Directors shall have power, if authorized by the
By-Laws, to designate by resolution or resolutions adopted by the Board of
Directors one or more committees, each committee to consist of two or more
members of the Board, which, to the extent provided in said resolutions or
in the By-Laws of the Corporation and permitted by the laws of Maryland,
shall have and may exercise any or all of the powers of the Board of
Directors in the management of the business and affairs of the
Corporation, and may have power to authorize the
7
<PAGE>
seal of the Corporation to be affixed to all papers which may require it,
provided that nothing herein shall be deemed to prohibit the designation
of additional committees for limited and appropriate purposes.
(4) The Board of Directors shall, subject to the laws of Maryland,
have power to determine from time to time whether and to what extent and
what times and places and under what conditions and regulations the
accounts and books of the Corporation, or any of them, shall be open to
the inspection of the stockholders; and no stockholder shall have any
right to inspect any account or book or document of the Corporation,
except as conferred by the laws of Maryland, unless and until authorized
so to do by resolution of the Board of Directors or of the stockholders.
(5) Any director, or any officer elected or appointed by the Board
of Directors or by any committee of said Board or by the stockholders or
otherwise, may be removed at any time, with or without cause, in such
lawful manner as may be provided in the By-Laws of the Corporation.
(6) If the By-Laws so provide, the Board of Directors of the
Corporation shall have power to hold their meetings, to have an office or
offices and, subject to the provisions of the laws of Maryland, to keep
the books of the Corporation outside of said State at such places as may
from time to time be designated by them.
(7) In addition to the powers and authority hereinbefore 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 this charter, and of the By-Laws of the
Corporation.
(8) Whenever the Corporation shall be entitled to vote as the owner
of any security, such security may be voted (i) by the President or a
Vice-President, or (ii) by such person or persons as may be thereunto
authorized in any proxy or power of attorney signed by the President or a
Vice-President, or (iii) by any person or persons thereunto authorized by
the Board of Directors.
EIGHTH: (1) Each director and officer (and his heirs, executors and
administrators) shall be indemnified by the Corporation against reasonable
costs and expenses incurred by him in connection with any action, suit or
proceeding to which he is made a party by reason of his being or having
been a director or officer of the Corporation, except in relation to any
action, suit or proceeding in which he has been adjudged liable because
8
<PAGE>
of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office. In the absence of an
adjudication which expressly absolves the director or officer of liability
to the Corporation or its stockholders for willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his office, or in the event of a settlement, each director and
officer (and his heirs, executors and administrators) shall be indemnified
by the Corporation against payment made, including reasonable costs and
expenses, provided that such indemnity shall be conditioned upon receipt
by the Corporation of a written opinion of independent counsel selected by
the Board of Directors, or the adoption by a majority of the entire Board
(in which majority there shall not be included any director who shall have
or shall at any time have had any financial interest adverse to the
Corporation in such action, suit or proceeding or the subject matter or
outcome thereof) of a resolution, to the effect that the director or
officer has no liability by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his office. Such a determination by independent counsel or by
the Board of Directors and the payment of amounts by the Corporation on
the basis thereof shall not prevent a stockholder from challenging such
indemnification by appropriate legal proceeding on the grounds that the
director or officer was liable because of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his office. The foregoing rights and indemnification shall not
be exclusive of any other right to which the officers and directors may be
entitled according to law.
(2) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or interpreted, no director or officer of this
Corporation shall be personally liable to the Corporation or its
stockholders for money damages. No amendment of the charter of the
Corporation or repeal of any of its provisions shall limit or eliminate
the benefits provided to directors and officers under this provision with
respect to any act or omission which occurred prior to such amendment or
repeal. This Paragraph (2) shall not protect any director officer of the
Corporation against any liability to the Corporation or to its security
holders to which he would be otherwise subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his office.
NINTH: From time to time any of the provisions of this charter may
be amended, altered or repealed (including any amendment which changes the terms
of any of the outstanding stock by classification, reclassification or
otherwise) upon the vote of
9
<PAGE>
the holders of a majority of the shares of capital stock of the Corporation at
the time outstanding and entitled to vote, and other provisions which might
under the statutes of the State of Maryland at the time in force be lawfully
contained in articles of incorporation may be added or inserted upon the vote of
the holders of a majority of the shares of capital stock of the Corporation at
the time outstanding and entitled to vote, and all rights at any time conferred
upon the stockholders of the Corporation by this charter are granted subject to
the provisions of this Article NINTH.
* * *
THIRD: The foregoing Articles of Amendment and Restatement do not
increase the authorized stock of the corporation.
FOURTH: The foregoing amendment and restatement of the charter of
the Corporation was advised by the Board of Directors and approved by the
stockholders.
FIFTH: The following are the current members of the Board of
Directors of the Corporation:
Allan Comrie William V. Rapp
William L. Givens Henry Rosovsky
John F. Loughran Robert G. Stone, Jr.
Minoru Makihara 0. Robert Theurkauf
Jonathan Mason Shoji Umemura
James W. Morley Hiroshi Yamanaka
IN WITNESS WHEREOF, The Japan Fund, Inc. has caused these presents
to be signed in its name and on its behalf by its President and witnessed by its
Secretary as of the 7th day of January, 1992.
THE JAPAN FUND, INC.
By /s/ O. Robert Theurkauf
-------------------------
O. Robert Theurkauf
President
(Seal)
WITNESS:
/s/ [Illegible]
- --------------------------
Name:
Title:
10
<PAGE>
THE UNDERSIGNED, President of The Japan Fund, Inc., who executed on
behalf of the Corporation the foregoing Articles of Amendment and Restatement of
which this certificate is made a part, hereby acknowledges in the name and on
behalf of said Corporation the foregoing Articles of Amendment and Restatement
to be the corporate act of said Corporation and hereby certifies that to the
best of his knowledge, information, and belief the matters and facts set forth
therein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
/s/ 0. Robert Theurkauf
------------------------
0. Robert Theurkauf
President
11
Exhibit 2(a)
THE JAPAN FUND, INC.
---------------------
BY-LAWS
AS ADOPTED JANUARY 25, 1985
AND AMENDED MARCH 6, 1987
---------------------
<PAGE>
BY-LAWS
of
THE JAPAN FUND, INC.
(a Maryland Corporation)
---------------------
ARTICLE 1.
Meetings of Stockholders.
SECTION 1. Annual Meeting. An annual meeting of stockholders for the
election of directors and the transaction of such other business as may properly
come before the meeting shall be held at the principal office of the Corporation
in the State of New York, or at such other place within the United States as may
be stated in the notice of the meeting, on the fourth Thursday next following
the first Thursday in April of each year (or, if that day be a legal holiday,
then on the next succeeding business day) or on such other day between April 21
and May 20, inclusive, of each year which is not a legal holiday, as shall be
determined by the Board of Directors, but if for any reason such meeting shall
not be held on such date, a special meeting may be held in lieu thereof, and any
elections held or other business transacted at such special meeting shall be
equally as effective as if done at the annual meeting. The annual meeting of
stockholders shall be held at 11:00 o'clock in the forenoon of the day
determined as provided above, or at such other time of day as shall be
determined by the Board of Directors.
SECTION 2. Special Meetings. Special meetings of stockholders
may be held for any purpose or purposes at any place within the United States
when called by the Chairman of the Board or the President or the Secretary or
by the Board of Directors, and shall be called by the Secretary upon receipt
of the request in writing signed by the holders of shares entitled to not
less than 25% of all the votes entitled to be cast at such meeting, provided
that (a) such request shall state the purpose or purposes of such meetings
and the matters proposed to be acted on; and (b) the stockholders requesting
such meeting shall have paid to the Corporation the reasonably estimated cost
of preparing and mailing the notice thereof, which the Secretary shall
determine and specify to such stockholders. No
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special meeting need be called upon the request of the holders of shares
entitled to cast less than a majority of all votes entitled to be cast at such
meeting to consider any matter which is substantially the same as a matter voted
upon at any special meeting of the stockholders held during the preceding 12
months.
SECTION 3. Notice of Stockholders' Meeting. Written or printed
notice of the time and place, and in the case of special meetings, of the
purpose or purposes, of every meeting of the stockholders shall be given not
less than ten nor more than ninety days before the date of the meeting either by
personal delivery or by mailing the same with postage prepaid to every
stockholder entitled to vote at such meeting at his address as it appears on the
records of the Corporation.
SECTION 4. Quorum. The presence in person or by proxy of the holders
of record of a majority of the shares of capital stock of the Corporation issued
and outstanding and entitled to vote thereat shall constitute a quorum at any
meeting of the stockholders. If at any meeting of the stockholders there shall
be less than a quorum present, stockholders holding a majority of the shares
represented at such meeting may, without further notice, adjourn the same from
time to time until a quorum shall attend, but no business shall be transacted at
any such adjourned meeting except such as might have been lawfully transacted
had the meeting not been adjourned. This Section 4 may be altered, amended or
repealed only upon the affirmative vote of the holders of a majority of all the
shares of the capital stock of the Corporation at the time outstanding and
entitled to vote.
SECTION 5. Voting. At all meetings of stockholders, each stockholder
of record entitled to vote thereat shall be entitled to one vote for each share
of stock standing in his name on the books of the Corporation on the date fixed
as hereinafter provided for the determination of stockholders entitled to vote
at such meeting, and action shall be taken and all questions decided by the
votes of the holders of a majority of the shares represented at the meeting in
person or by proxy and entitled to vote thereat except as otherwise provided by
the Articles of Incorporation or by these By-Laws or by specific statutory
provision superseding the restrictions and limitations contained in the Articles
of Incorporation or in these By-Laws.
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SECTION 6. Closing of Transfer Books: Record Dates. The Board of
Directors may fix the time, not exceeding twenty days preceding the date of any
meeting of stock holders, of any dividend payment date or any date for the
allotment of rights, during which the books of the Corporation shall be closed
against transfers of stock. If such books are closed for the purpose of
determining stockholders entitled to notice of or to vote at a meeting of stock
holders, such books shall be closed for at least ten days immediately preceding
such meeting. In lieu of providing for the closing of the books against
transfers of stock as aforesaid, the Board of Directors may fix, in advance, a
date, not exceeding sixty days and not less than ten days preceding the date of
and not exceeding sixty days preceding any dividend payment date or any date for
the allotment of rights, as a record date for the determination of the
stockholders entitled to notice of and to vote at such meeting, or entitled to
receive such dividends or rights, as the case may be, and only stockholders of
record on such date shall be entitled to notice of an to vote at such meeting or
to receive such dividends or rights as the case may be.
ARTICLE II.
Directors.
SECTION 1. Powers. Except as otherwise provided by law, by the
Articles of Incorporation or by these By-Laws, all the business and affairs of
the Corporation shall be managed and all the powers of the Corporation shall be
exercised by its Board of Directors. All acts done by any meeting of the Board
of Directors or by any person acting as a director, so long as his successor
shall not have been duly elected or appointed, shall, notwithstanding that it be
afterwards discovered that there was some defect in the election of the
directors or such person acting as a director or that they or any of them were
disqualified to be directors or a director, be as valid as if the directors or
such person acting as a director, as the case may be, had been duly elected and
were or was qualified to be the directors or a director of the Corporation.
SECTION 2. Number - Election - Term. The number of directors shall
be thirteen, but a majority of the entire Board of Directors may increase such
number at any time or from time to time to not more than twenty-one, and may
elect directors to fill the vacancies created by any such increase in the number
of directors; provided, that no such vacancy may be so filled after the first
annual meeting of stock-
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holders of the Corporation if immediately after filling such vacancy less than
two-thirds of the directors then holding office would have been elected by the
stockholders at an annual or special meeting. The Board of Directors, by the
vote of a majority of the entire Board, may likewise decrease the number of
directors to a number not less than three. At the first annual meeting of
stockholders and at each annual meeting thereafter, the stockholders shall elect
the Board of Directors. Each director shall hold office until the next annual
meeting and until his successor shall be elected and shall qualify, subject to
prior resignation or removal as hereinafter provided.
SECTION 3. Vacancies. In case of any vacancy in the Board of
Directors through death, resignation, or other cause, other than an increase in
the number of directors, a majority of the remaining directors, although less
than a quorum, may elect a successor to hold office until the next annual
meeting of the stockholders of the Corporation and until his successor is duly
elected and qualifies; provided that no such vacancy may be so filled after the
first annual meeting of stockholders of the Corporation if immediately after
filling such vacancy less than two-thirds of the directors then holding office
would have been elected by the stockholders at an annual or special meeting
thereof.
SECTION 4. Election of Entire New Board. If at any time after the
first annual meeting of stockholders of the Corporation a majority of the
directors in office shall consist of directors elected by the Board of
Directors, a meeting of the stockholders 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. This Section 4 may be altered, amended or repealed
only upon the affirmative vote of the holders of a majority of all the shares of
the capital stock of the Corporation at the time outstanding and entitled to
vote.
SECTION 5. Removal. At any meeting of stockholders duly called
and at which a quorum is present, the stockholders may, by the affirmative
votes of the holders of a majority of the votes entitled to be cast thereon,
remove any director or
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directors from office, with or without cause, and may elect a successor or
successors to fill any resulting vacancies for the unexpired terms of the
removed directors.
SECTION 6. Annul Meeting. The annual meeting of the newly-elected
Board of Directors for the election of officers and the transaction of any other
business that may come before the meeting may be held without notice immediately
following the annual meeting of stockholders (or special meeting held in lieu
thereof) and at the same place, or at such other time and place within the
United States as the Board of Directors may determine.
SECTION 7. Other Meetings. Special meetings of the Board of
Directors may be held at any time or place within the United States and for any
purpose when called by the Chairman of the Board or the President or any Vice
President or the Secretary, or by not less than one-third of the entire Board,
or by any four directors if the entire Board consists of more than twelve
directors. However, with the concurrence of not less than two-thirds of the
entire Board, any such special meeting may be held at a place outside the United
States. The Board of Directors may also from time to time fix a place and time
for the holding of regular meetings of the Board at any place within the United
States, and such meetings may be held on such notice, if any, as the directors
may from time to time determine.
SECTION 8. Notice of Directors' Meeting. Notice of the time and
place (and of the purposes of the meeting when expressly required by law, the
Articles of Incorporation or these By-Laws) of every special meeting of the
Board of Directors shall be given by mail, telegraph, telephone or in person, to
each director at his address as it appears on the records of the Corporation not
less than twenty-four hours before the meeting; provided that, if any meeting of
the Board of Directors shall be called to be held outside the United States, the
notice thereof shall be given not less than three weeks before the meeting.
SECTION 9. Waiver of Notice - When Notice not Necessary. Whenever
any notice of the time, place or purposes of any meeting of directors or any
committee thereof is required to be given under any provisions of law, of the
Articles of Incorporation or of the By-Laws, a waiver thereof 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,
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or actual attendance at the meeting in person, shall be deemed equivalent to the
giving of such notice to such person or persons.
SECTION 10. Quorum - Voting. At all meetings of the Board of
Directors the presence of one-third of the whole number of directors as fixed
from time to time pursuant to the By-Laws, but in any case not less than two
directors, shall constitute a quorum for the transaction of all business, but if
a quorum be lacking at any meeting, a majority of those present may adjourn the
meeting to such time and place within the United States as they may determine,
and such meeting may be held as so adjourned without further notice if a quorum
is present. Subject to the provisions of the By-Laws as to notice, any business
that may come before any meeting of the Board of Directors at which a quorum
shall be present may be transacted thereat, and unless otherwise provided by
law, by the Articles of Incorporation or by the By-Laws, all elections shall be
had and all questions shall be decided by the votes of a majority of the
directors present.
SECTION 11. Meetings by Conference Telephone. Members of the Board
of Directors or any committee designated thereby may participate in a meeting of
such Board or committee by means of a conference telephone or similar
communications equipment enabling all persons participating in the meeting to
hear each other at the same time and participation by such means shall
constitute presence in person at such meeting.
SECTION 12. Action without a Meeting. Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if a written consent to such
action is signed by all the 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 13. Compensation of Directors. Directors shall be entitled
to receive such compensation from the Corporation for their services as may from
time to time be determined by the Board of Directors.
ARTICLE III.
Committees.
SECTION 1. Executive Committee. The Board of Directors may, in each
year, by the affirmative vote of a
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majority of the entire Board, elect from the directors an Executive Committee to
consist of such number of directors (not less than three) as the Board may from
time to time determine. The chairman of the Committee shall be elected by the
Board of Directors. The Board of Directors by such affirmative vote shall have
power at any time to change the members of such Committee and may fill vacancies
in the Committee by election from the directors. When the Board of Directors is
not in session, the Executive Committee shall have and may exercise any or all
of the powers of the Board of Directors in the management of the business and
affairs of the Corporation (including the power to authorize the seal of the
Corporation to be affixed to all papers which may require it) except as provided
by law and except the power to increase or decrease the size of, or fill
vacancies on, the Board, to remove or appoint executive officers or to dissolve
or change the permanent membership of the Executive Committee, or to make or
amend the By-Laws of the Corporation. The Executive Committee may fix its own
rules of procedure, and may meet when and as provided by such rules or by
resolution of the Board of Directors, but in every case the presence of a
majority shall be necessary to constitute a quorum. In the absence of any member
of the Executive Committee, the members thereof present at any meeting, whether
or not they constitute a quorum, may appoint a member of the Board of Directors
to act in the place of such absent member.
SECTION 2. Other Committees. The Board of Directors, by the
affirmative vote of a majority of the entire Board, may appoint other committees
which shall in each case consist of such number of members (not less than two)
who need not be members of the Board of Directors and shall have and may
exercise such powers as the Board may determine in the resolution appointing
them. A majority of all members of any such committee may determine its action
and fix the time and place of its meetings, unless the Board of Directors shall
otherwise provide. The Board of Directors, by the affirmative vote of a majority
of the entire Board, shall have power at any time to change the members and
powers of any such committee, to fill vacancies, and to discharge any such
committee.
ARTICLE IV.
Officers.
SECTION 1. Executive Officers. The executive officers of the
Corporation shall be chosen by the Board of Directors as soon as may be
practicable after incorporation and thereafter annually after the annual
meeting of the
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stockholders. These shall be a Chairman of the Board, a Vice-Chairman of the
Board, a President (each of whom shall be selected from among the Directors) , a
Secretary and a Treasurer. The Board of Directors or the Executive Committee may
also in its discretion appoint other officers, including Vice Presidents,
Assistant Secretaries, Assistant Treasurers, and agents and employees, who shall
have such authority and perform such duties as the Board or the Executive
Committee may determine. The Board of Directors may fill any vacancy which may
occur in any office. Any two offices, except those of President and Vice
President, may be held by the same person, but no officer shall execute,
acknowledge or verify any instrument on behalf of the Corporation in more than
one capacity, if such instrument is required by law or these By-Laws to be
executed, acknowledged or verified by two or more officers on behalf of the
Corporation.
SECTION 2. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the stockholders and of the Board of Directors.
Subject to the control of the Board of Directors, he shall have general charge
of the business of the Corporation and the power to formulate all plans and
policies in connection therewith. He shall keep the Board of Directors fully
informed and shall freely consult with the Board concerning the business of the
Corporation. He shall have supervision of such other matters and shall have such
other powers and perform such other duties as may, from time to time, be
specified by the Board of Directors.
SECTION 3. Vice Chairman of the Board. In the absence of the
Chairman of the Board and the President, the Vice-Chairman of the Board shall
preside at all meetings of stockholders and of the Board of Directors. He shall
have supervision of such other matters and shall have such other powers and
perform such other duties as may from time to time be specified by the Board of
Directors.
SECTION 4. President. In the absence of the Chairman of the Board,
the President shall preside at all meetings of the stockholders and of the Board
of Directors. Subject to the control of the Board of Directors and to the powers
of the Chairman of the Board, the President shall be the general executive and
administrative officer of the Corporation. He shall keep the Board of Directors
and the Chairman of the Board fully informed and shall freely consult with them
concerning the business of the Corporation in his charge. He shall have such
other powers and perform
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such other duties as may, from time to time, be specified by the Board of
Directors and shall have such other duties as may from time to time be assigned
to him by the Chairman of the Board.
SECTION 5. Term of Office. The term of office of all officers shall
be one year and until their respective successors are chosen and qualified,
subject, however, to the provision for removal contained in the Articles of
Incorporation. Any officer may be removed from office at any time with or
without cause by the vote of a majority of the entire Board of Directors.
SECTION 6. Powers and Duties of Officers other than the Chairman of
the Board, the Vice-Chairman of the Board and the President. The officers of the
Corporation, other than the Chairman of the Board, the Vice-Chairman of the
Board and the President, whose powers and duties are set forth in Sections 2, 3
and 4 hereof, shall have the powers and duties as generally pertain to their
respective offices, as well as such powers and duties as may from time to time
be conferred by the Board of Directors or the Executive Committee.
SECTION 7. Compensation. The officers of the Corporation shall
receive from the Corporation only such compensation as the Board of Directors
may from time to time determine.
SECTION 8. Surety Bonds. The Board of Directors may require
that any officer, agent or employee of the Corporation be bonded for the
faithful performance of his duty .
ARTICLE V.
Capital Stock.
SECTION 1. Certificate of Shares. The interest of each stockholder
of the Corporation shall be evidenced by certificates for shares of stock in
such form as the Board of Directors may from time to time prescribe. No
certificate shall be valid unless it is signed by the Chairman of the Board, the
President or a Vice President and by the Secretary or an Assistant Secretary or
the Treasurer or an Assistant Treasurer of the Corporation and sealed with its
seal, or bears the facsimile signatures of such officers and a facsimile of such
seal.
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SECTION 2. Transfer of Shares. Shares of the Corporation shall be
transferable on the books of the Corporation by the holder thereof in person or
by his duly authorized attorney or legal representative, upon surrender and
cancellation of a certificate or certificates for the same number of shares of
the same class, duly endorsed or accompanied by proper instruments of assignment
and transfer, with such proof of the authenticity of the signature as the
Corporation or its agents may reasonably require.
SECTION 3. Stock Ledgers. The stock ledgers of the Corporation,
containing the names and addresses of the stockholders and the number of shares
held by them respectively, shall be kept at the principal offices of the
Corporation or, if the Corporation employs a transfer agent, at the offices of
the Transfer Agent of the Corporation.
SECTION 4. Lost, Stolen or Destroyed Certificates. The Board of
Directors or the Executive Committee may determine the conditions upon which a
new certificate of stock of the Corporation of any class may be issued in place
of a certificate which is alleged to have been lost, stolen or destroyed; and
may, in their discretion, require the owner of such certificate or his legal
representative to give bond, with sufficient surety to the Corporation and the
Transfer Agent, if any, to indemnify it and such Transfer Agent against any and
all loss or claims which may arise by reason of the issue of a new certificate
in the place of the one so lost, stolen or destroyed.
ARTICLE VI.
Corporate Seal and Fiscal Year.
SECTION 1. Seal. The seal of the Corporation shall be in such form
as the Board of Directors shall approve, but shall contain the name of the
Corporation and the State and year of its incorporation.
SECTION 2. Fiscal Year. The fiscal year of the Corporation
shall be the period of twelve months ending on the last day of December in
each year.
ARTICLE VII.
Miscellaneous.
SECTION 1. (a) Advisory Contract. Any advisory contract in effect
after the first annual meeting of stockholders
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of the Corporation, to which the Corporation is or shall become a party,
whereby, subject to the control of the Board of Directors of the Corporation,
the investment portfolio of the Corporation shall be managed or supervised by
the other party to such contract, shall become effective and binding only upon
the affirmative vote of a majority of the outstanding voting securities of the
Corporation (as defined in the Investment Company Act of 1940). Any advisory
contract to which the Corporation shall be a party whereby, subject to the
control of the Board of Directors of the Corporation, the investment portfolio
of the Corporation shall be managed or supervised by the other party to such
contract, shall provide, among other things, that such contract cannot be
transferred, assigned, sold or in any manner hypothecated or pledged by the
other party thereto.
(b) Certain Expenses. In no event shall the maximum charges per
annum paid by the Corporation, inclusive of management or advisory fee but
exclusive of interest, taxes, or brokerage fees, exceed one per cent (1%) of the
average annual value of the net assets of the Corporation computed at least
quarterly.
SECTION 2. Reports to Stockholders. The books of account of the
Corporation shall be examined by an independent firm of public accountants at
the close of each annual and semi-annual fiscal period of the Corporation and at
such other times, if any, as may be directed by the Board of Directors of the
Corporation. A report to the stockholders based upon each such examination shall
be mailed to each stockholder of the Corporation, of record on such date with
respect to each report as may be determined by the Board of Directors, at his
address as the same appears on the books of the Corporation. Each such report
shall show the assets and liabilities of the Corporation as of the close of the
annual or semi-annual period covered by the report and the securities in which
the funds of the Corporation were then invested; such report shall show the
Corporation's income and expenses for the period from the end of the
Corporation's preceding fiscal year to the close of the annual or semi-annual
period covered by the report and any amount paid during such period to any
security dealer, legal counsel, transfer agent, dividend disbursing agent,
registrar or custodian having a partner, officer or director who was also an
officer or director of the Corporation at any time during such period, and shall
set forth such other matters as the Board of Directors or such independent firm
of public accountants shall determine.
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SECTION 3. Approval of Firm of Independent Public Accountants. At every
annual meeting of the stockholders of the Corporation there shall be submitted
for ratification or rejection the name of the firm of independent public
accountants which has been selected for the current fiscal year in which such
annual meeting is held by a majority of those members of the Board of Directors
who are not "interested persons" investment advisors of, or affiliated persons
of an investment advisor of, or officers or employees of, the Corporation, as
such terms are defined in the Investment Company Act of 1940.
SECTION 4. Custodianship. All securities owned by the Corporation and all
cash, including, without limiting the generality of the foregoing, the proceeds
from sales of securities owned by the Corporation and from the issuance of
shares of the capital stock of the Corporation, payments of principal upon
securities owned by the Corporation and distributions in respect of securities
owned by the Corporation which at the time of payments are represented by the
distributing corporation to be capital distributions, shall be held by a
custodian which shall be a trust company or a national bank of good standing,
having a capital, surplus and undivided profits aggregating not less than ten
million dollars ($10,000,000). The terms of custody of such securities and cash
shall include provisions to the effect that the custodian shall deliver
securities owned by the Corporation only (a) upon sales of such securities for
the account of the Corporation and receipt by the custodian of payment therefor,
(b) when such securities are called, redeemed or retired or otherwise become
payable, (c) for examination by any broker selling any such securities in
accordance with "street delivery" custom, (d) in exchange for or upon conversion
into other securities alone or other securities and cash whether pursuant to any
plan of merger, consolidation, reorganization, recapitalization or readjustment,
or otherwise, (e) upon conversion of such securities pursuant to their terms
into other securities, (f) upon exercise of subscription, purchase or other
similar rights represented by such securities, (g) for the purpose of exchanging
interim receipts or temporary securities for definitive securities, or (h) for
other proper corporate purposes. Such terms of custody shall also include
provisions to the effect that the custodian shall hold the securities and funds
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of the Corporation in a separate account or accounts and shall have sole power
to release and deliver any such securities and draw upon any such account, that
the custodian shall deliver or pay out of any such account any of the securities
or funds of the Corporation only on receipt by such custodian of written
instructions from two or more persons authorized by the Board of Directors to
give such instructions on behalf of the Corporation, except as to (b) and (g)
above, and that the custodian shall deliver cash of the Corporation required by
this Section 4 to be deposited with the custodian only upon the purchase of
securities for the portfolio of the Corporation and the delivery of such
securities to the custodian, for the purchase of shares of the capital stock of
the Corporation, for the payment of interest, dividends, taxes, advisory or
supervisory fees or operating expenses, for payments in connection with the
conversion, exchange or surrender of securities owned by the Corporation, for
payments in connection with the exercise of warrants or rights to subscribe to
securities owned by the Corporation, for conversion from United States dollars
into a foreign currency or from a foreign currency into United States dollars,
or for other proper corporate purposes. Upon the resignation or inability to
serve of any such custodian the Corporation shall (a) use its best efforts to
obtain a successor custodian, (b) require the cash and securities of the
Corporation held by the custodian to be delivered directly to the successor
custodian, and (c) in the event that no successor custodian can be found, submit
to the stockholders of the Corporation, before permitting delivery of such cash
and securities to anyone other than a successor custodian, the question whether
the Corporation shall be dissolved or shall function without a custodian;
provided, however, that nothing herein contained shall prevent the termination
of any agreement between the Corporation and any such custodian by the
affirmative vote of the holders of a majority of all the shares of the capital
stock of the Corporation at the time outstanding and entitled to vote. Upon its
resignation or inability to serve, the custodian may deliver any assets of the
Corporation held by it to a qualified bank or trust company in The City of New
York selected by it, such assets to be held subject to the terms of custody
which governed such retiring custodian, pending action by the Corporation as set
forth in this Section 4.
SECTION 5. Information to Accompany Dividends. At the time of the payment
by the Corporation of any dividend to its stockholders, each stockholder to whom
such dividend is paid
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shall be notified of the account or accounts from which it is paid and of the
amount thereof paid from each such account.
SECTION 6. Investment Restriction. In any case where an officer or
director of the Corporation or of any investment advisor of the Corporation, or
a member of an advisory committee or portfolio committee of the Corporation, is
also an officer or director of another corporation and the purchase or sale of
the securities issued by such other corporation is under consideration, the
officer, director or committee member concerned will abstain from participating
in any decision made on behalf of the Corporation to purchase or sell any
securities issued by such other corporation .
SECTION 7. Amendment of This Article. After the initial issue of shares of
capital stock of the Corporation, this Article VII may be altered, amended or
repealed only upon the affirmative vote of the holders of a majority of all the
shares of the capital stock of the Corporation at the time outstanding and
entitled to vote. The Corporation shall notify the stockholders in its next
subsequent regular report to the stockholders of any such alteration, amendment
or repeal.
ARTICLE VIII
Amendment of By-Laws
Except as provided in Section 4 of Article I hereof, Section 4 of
Article II hereof, Section 7 of Article VII hereof and in this Article VIII, the
By-Laws of the Corporation may be altered, amended, added to or repealed by the
stockholders or by majority vote of the entire Board of Directors; but any such
alteration, amendment, addition or repeal of the By-Laws by action of the Board
of Directors may be altered or repealed by the stockholders. After the initial
issue of any shares of capital stock of the Corporation, this Article VIII may
be altered, amended or repealed only upon the affirmative vote of the holders of
the majority of all shares of the capital stock of the Corporation at the time
outstanding and entitled to vote.
<PAGE>
BOARD OF DIRECTORS MEETING
MARCH 6, 1987
AMENDMENT TO BY-LAWS OF THE JAPAN FUND, INC.
RESOLVED, that Section 6 of the By-Laws is hereby revised to change the
period during which the record date for any meeting of stockholders may be fixed
from "not exceeding sixty days and not less than ten days" preceding the date of
such meeting to "not exceeding ninety days and not less than ten days" preceding
the date of such meeting to conform to revisions in the Maryland law.
<PAGE>
REVISION OF BY-LAWS - AS ADOPTED - 7125/85
RESOLVED, that the second sentence of Section 1 of ARTICLE IV of the
By-Laws is hereby revised, in order to eliminate the requirement that the
President be a board member, so as to read as follows:
"There shall be a Chairman of the Board, a Vice Chairman of the
Board (each of whom shall be selected from among the Directors), a
President, a Secretary and a Treasurer."
Exhibit 2(b)
THE JAPAN FUND, INC.
Amendment to the By-Laws
On January 28, 1993, the Board of Directors of The Japan Fund, Inc.
adopted the following resolution amending the By-Laws of each Fund:
RESOLVED, that pursuant to Article II, Section 1 of the Fund's
By-Laws, the Board of Directors may from time to time
designate and appoint one or more qualified persons to the
position of "honorary director". Article II of the Fund's
By-Laws are hereby amended to read as follows:
Section 1A. Powers. An honorary director shall be
invited to attend all meetings of the Board of Directors but
shall not be present at any portion of a meeting from which
the honorary director shall have been excluded by vote of the
directors. An honorary director shall not be a "Director" or
"officer" within the meaning of the Corporation's Certificate
of Incorporation or of these By-Laws, shall not be deemed to
be a member of an "advisory board" within the meaning of the
Investment Company Act of 1940, as amended from time to time,
shall not hold himself out as any of the foregoing, and shall
not be liable to any person for any act of the Corporation.
Notice of special meetings may be given to an honorary
director but the failure to give such notice shall not affect
the validity of any meeting or action taken thereat. An
honorary director shall not have the powers of a Director, may
not vote at meetings of the Board of Directors and shall not
take part in the operation or governance of the Corporation.
An honorary director shall receive such compensation as
determined by the Board of Directors and may, in the
discretion of the Board of Directors, be reimbursed for
expenses incurred in attending meetings of the Board of
Directors or otherwise.
Section 2A. Number - Election - Term. An honorary director
shall serve for such term as shall be specified in the
resolution of the Board of Directors appointing him or her
until his or her earlier resignation or removal.
Section 5A. Removal. An honorary director may be removed from
such a position with or without cause by the vote of a
majority of the Board of Directors given at any regular
meeting or special meeting.
Exhibit 5(a)
THE JAPAN FUND, INC.
345 Park Avenue
New York, New York 10154
May 24, 1991
Asia Management Corporation
345 Park Avenue
New York, NY 10154
INVESTMENT MANAGEMENT AGREEMENT
Dear Sirs:
The Japan Fund, Inc. (the "Fund") has been established as a
Maryland Corporation to engage in the business of an investment company.
The Fund has selected you (the "Advisor") to act as investment manager of
the Fund and to provide certain other services, as more fully set forth below,
and you have indicated that you are willing to act as such investment manager
and to perform such services under the terms and conditions hereinafter set
forth. Accordingly, the Fund agrees with you as follows:
1. Delivery of Documents. The Fund engages in the business of investing
and reinvesting the assets of the Fund in the manner and in accordance with the
investment objectives, policies and restrictions specified in the currently
effective Prospectus (the "Prospectus") and Statement of Additional Information
(the "SAI") included in the Fund's Registration Statement on Form N-1A, as
amended from time to time, (the "Registration Statement") filed by the Fund
under the Investment Company Act of 1940, as amended, (the "1940 Act") and the
Securities Act of 1933, as amended. Copies of the documents referred to in the
preceding sentence have been furnished to you by the Fund. The Fund has also
furnished you with copies properly certified or authenticated of each of the
following additional documents related to the Fund:
(a) Articles of Incorporation of the Fund dated June 8, 1989, as
amended to date (the "Articles").
(b) By-Laws of the Fund as in effect on the date hereof (the
"By-Laws").
(c) Resolutions of the Directors of the Fund and the shareholders of
the Fund selecting you as investment manager and approving the form of
this Agreement.
<PAGE>
The Fund will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements, if any,
to the foregoing, including the Prospectus, the SAI and the Registration
Statement.
2. Portfolio Management Services. As manager of the assets of the Fund,
you shall provide continuing investment management of the assets of the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended, (the "Code") relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Fund's Board of
Directors. In connection therewith, you shall use reasonable efforts to manage
the Fund so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. In managing the Fund
in accordance with the requirements set forth in this section 2, you shall be
entitled to receive and act upon advice of counsel to the Fund or counsel to
you. You shall also make available to the Fund promptly upon request all of the
Fund's investment records and ledgers as are necessary to assist the Fund to
comply with the requirements of the 1940 Act and other applicable laws. To the
extent required by law, you shall furnish to regulatory authorities having the
requisite authority any information or reports in connection with the services
provided pursuant to this Agreement which may be requested in order to ascertain
whether the operations of the Fund are being conducted in a manner consistent
with applicable laws and regulations.
You shall determine the securities, instruments, investments, currencies,
repurchase agreements, futures, options and other contracts relating to
investments to be purchased, sold or entered into by the Fund and place orders
with broker-dealers, foreign currency dealers, futures commission merchants or
others pursuant to your determinations and all in accordance with Fund policies
as expressed in the Registration Statement and with guidelines and directions
from the Board of Directors. Subject to such policies and guidelines, you shall
determine what portion of the Fund's portfolio shall be invested in securities
and other assets and what portion, if any, should be held uninvested.
You shall furnish to the Fund's Board of Directors periodic reports on the
investment performance of the Fund and on the performance of your obligations
pursuant to this Agreement, and you shall supply such additional reports and
information as the Fund's officers or Board of Directors shall reasonably
request.
In rendering the services required under this section you may receive the
assistance of The Nikko International Capital Management Co., Ltd. ("NICAM"),
which is to furnish regular investment research and advisory services with
respect to the Fund pursuant to an agreement with the Advisor dated as of the
date hereof (as the same may be amended from time to time), and may contract
with or consult with such banks, other securities firms or other parties in
Japan or elsewhere, including Scudder, Stevens & Clark, Inc. (an Affiliated
company of the Advisor, as defined in the Investment Company Act of 1940, as
amended) as it may deem appropriate to obtain information and advice, including
investment recommendations, advice regarding economic factors and trends, advice
as to currency exchange matters, and clerical and accounting services
2
<PAGE>
and other assistance, but any fees, compensation or expenses to be paid to any
such parties shall be paid by you, and no obligation shall be incurred on the
Fund's behalf in any such respect.
3. Administrative Services. In addition to the portfolio management
services specified above in section 2, you shall furnish at your expense for the
use of the Fund such office space and facilities as the Fund may require for its
reasonable needs, and you (or one or more of your affiliates designated by you)
shall render to the Fund administrative services necessary for operating as an
investment company and not provided by persons not parties to this Agreement
including, but not limited to, preparing reports to and meeting materials for
the Fund's Board of Directors and reports and notices to Fund shareholders;
supervising, negotiating contractual arrangements with, to the extent
appropriate, and monitoring the performance of, custodians, depositories,
transfer and pricing agents, accountants, attorneys, printers, underwriters,
brokers and dealers, insurers and other persons in any capacity deemed to be
necessary or desirable to Fund operations; preparing and making filings with the
Securities and Exchange Commission (the "SEC") and other regulatory and
self-regulatory organizations, including, but not limited to, preliminary and
definitive proxy materials, post-effective amendments to the Registration
Statement, semi-annual reports on Form N-SAR and notices pursuant to Rule 24f-2
under the 1940 Act; overseeing the tabulation of proxies by the Fund's transfer
agent; assisting in the preparation and filing of the Fund's federal, state and
local tax returns; preparing and filing the Fund's federal excise tax return
pursuant to Section 4982 of the Code; providing assistance with investor and
public relations matters; monitoring the valuation of portfolio securities, the
calculation of net asset value and the calculation and payment of distributions
to Fund shareholders; monitoring the registration of the Fund's shares of
capital stock, $.33 1/3 par value per share (the "Shares") under applicable
federal and state securities laws; maintaining or causing to be maintained for
the Fund all books, records and reports and any other information required under
the 1940 Act, to the extent that such books, records and reports and other
information are not maintained by the Fund's custodian or other agents of the
Fund; assisting in establishing the accounting policies of the Fund; assisting
in the resolution of accounting issues that may arise with respect to the Fund's
operations and consulting with the Fund's independent accountants, legal counsel
and the Fund's other agents as necessary in connection therewith; establishing
and monitoring the Fund's operating expense budgets; reviewing the Fund's bills;
processing the payment of bills that have been approved by a person authorized
by the Fund; assisting the Fund in determining the amount of dividends and
distributions available to be paid by the Fund to its shareholders, preparing
and arranging for the printing of dividend notices to shareholders, and
providing the transfer and dividend paying agent and the custodian with such
information as is required for such parties to effect the payment of dividends
and distributions; and otherwise assisting the Fund as it may reasonably request
in the conduct of its business, subject to the direction and control of the
Fund's Board of Directors. Nothing in this Agreement shall be deemed to shift to
you or to diminish the obligations of any agent of the Fund or any other person
not a party to this Agreement which is obligated to provide services to the
Fund.
4. Allocation of Charges and Expenses. Except as otherwise
specifically provided in this section 4, you shall pay the compensation
and expenses of all Directors, officers and employees of the Fund
(including the Fund's share of payroll taxes) who are affiliated persons
of you, or are
3
<PAGE>
affiliated persons of Scudder, Stevens & Clark, Inc., and you shall make
available, without expense to the Fund, the services of such of your, or
Scudder, Stevens & Clark, Inc.'s, directors, officers and employees as may duly
be elected officers of the Fund, subject to their individual consent to serve
and to any limitations imposed by law. You shall provide at your expense the
portfolio management services described in section 2 hereof and the
administrative services described in section 3 hereof.
You shall not be required to pay any expenses of the Fund other than those
specifically allocated to you in this section 4. In particular, but without
limiting the generality of the foregoing, you shall not be responsible, except
to the extent of the reasonable compensation of such of the Fund's Directors and
officers as are directors, officers or employees of you whose services may be
involved, for the following expenses of the Fund, to the extent they are not
entailed in your provision of the services described in section 2 and section 3
hereof: organization expenses of the Fund (including out-of-pocket expenses, but
not including your overhead or employee costs); fees payable to you and to any
other Fund advisors or consultants; legal expenses; auditing and accounting
expenses; maintenance of books and records which are required to be maintained
by the Fund's custodian or other agents of the Fund; telephone, telex,
facsimile, postage and other communications expenses; taxes and governmental
fees; fees, dues and expenses incurred by the Fund in connection with membership
in investment company trade organizations; fees and expenses of the Fund's
custodians, subcustodians, transfer agents, dividend disbursing agents and
registrars; payment for portfolio pricing or valuation services to pricing
agents, accountants, bankers and other specialists, if any; expenses of
preparing share certificates and, except as provided below in this section 4,
other expenses in connection with the issuance, offering, distribution, sale,
redemption or repurchase of securities issued by the Fund; expenses relating to
investor and public relations; expenses and fees of registering or qualifying
Shares of the Fund for sale; interest charges, bond premiums and other insurance
expense; freight, insurance and other charges in connection with the shipment of
the Fund's portfolio securities; the compensation and all expenses (specifically
including travel expenses relating to Fund business) of Directors, officers and
employees of the Fund who are not affiliated persons of you; brokerage
commissions or other costs of acquiring or disposing of any portfolio securities
of the Fund; expenses of printing and distributing reports, notices and
dividends to shareholders; expenses of printing and mailing Prospectuses and
SAIs of the Fund and supplements thereto; costs of stationery; any litigation
expenses; indemnification of Directors and officers of the Fund; costs of
shareholders' and other meetings; and travel expenses (or an appropriate portion
thereof) of Directors and officers of the Fund who are directors, officers or
employees of you to the extent that such expenses relate to attendance at
meetings of the Board of Directors of the Fund or any committees thereof or
advisors thereto held outside of Boston, Massachusetts or New York, New York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Fund if and to the extent
that (i) such expenses are required to be borne by a principal underwriter which
acts as the distributor of the Fund's Shares pursuant to an underwriting
agreement which provides that the underwriter shall assume some or all of such
expenses, or (ii) the Fund shall have adopted a plan in conformity with the 1940
Act providing that the Fund (or some other party) shall assumed some or all of
such expenses. You shall be
4
<PAGE>
required to pay such of the foregoing sales expenses as are not required to be
paid by the principal underwriter pursuant to the underwriting agreement or are
not permitted to be paid by the Fund (or some other party) pursuant to such a
plan.
5. Management Fee. For all services to be rendered, payments to be made and
costs to be assumed by you as provided in sections 2, 3 and 4 hereof, the Fund
shall pay you a monthly fee, payable in dollars, equal on an annual basis to .85
of 1% of the value of the average daily net assets of the Fund up to and
including $200 million; plus .80 of 1% of the value of the average daily net
assets of the Fund over $200 million and up to and including $300 million; plus
.75 of 1% of the value of the average daily net assets of the Fund over $300
million and up to and including $700 million; plus .70 of 1% of the average
daily net assets over $700 million.
The "average daily net assets" of the Fund shall mean the average of the
values placed on the Fund's net assets as of 4:00 p.m. (New York time) on each
day on which the net asset value of the Fund is determined consistent with the
provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully determines
the value of its net assets as of some other time on each business day, as of
such time. The value of the net assets of the Fund shall always be determined
pursuant to the applicable provisions of the Articles and the Registration
Statement. If the determination of net asset value does not take place for any
particular day, then for the purposes of this section 5, the value of the net
assets of the Fund as last determined shall be deemed to be the value of its net
assets as of 4:00 p.m. (New York time), or as of such other time as the value of
the net assets of the Fund's portfolio may be lawfully determined on that day.
If the Fund determines the value of the net assets of its portfolio more than
once on any day, then the last such determination thereof on that day shall be
deemed to be the sole determination thereof on that day for the purposes of this
section 5.
You agree that your gross compensation for any fiscal year shall not be
greater than an amount which, when added to the other expenses of the Fund,
shall cause the aggregate expenses of the Fund to equal the maximum expenses
under the lowest applicable expense limitation established pursuant to the
statutes or regulations of any jurisdiction in which the Shares of the Fund may
be qualified for offer and sale. Except to the extent that such amount has been
reflected in reduced payments to you, you shall refund to the Fund the amount of
any payment received in excess of the limitation pursuant to this section 5 as
promptly as practicable after the end of such fiscal year, provided that you
shall not be required to pay the Fund an amount greater than the fee paid to you
in respect of such year pursuant to this Agreement. As used in this section 5,
"expenses" shall mean those expenses included in the applicable expense
limitation having the broadest specifications thereof, and "expense limitation"
means a limit on the maximum annual expenses which may be incurred by an
investment company determined (i) by multiplying a fixed percentage by the
average, or by multiplying more than one such percentage by different specified
amounts of the average, of the values of an investment company's net assets for
a fiscal year or (ii) by multiplying a fixed percentage by an investment
company's net investment income for a fiscal year. The words "lowest applicable
expense limitation" shall be construed to result in the largest reduction of
your compensation for any fiscal year of the Fund; provided, however, that
5
<PAGE>
nothing in this Agreement shall limit your fees if not required by an applicable
statute or regulation referred to above in this section 5.
You may waive all or a portion of your fees provided for hereunder and
such waiver shall be treated as a reduction in purchase price of your services.
You shall be contractually bound hereunder by the terms of any publicly
announced waiver of your fee, or any limitation of the Fund's expenses, as if
such waiver or limitation were fully set forth herein.
6. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other investments
for the account of the Fund, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for the Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.
Your services to the Fund pursuant to this Agreement are not to be deemed
to be exclusive and it is understood that you may render investment advice,
management and services to others. In acting under this Agreement, you shall be
an independent contractor and not an agent of the Fund.
7. Limitation of Liability of Manager. As an inducement to your
undertaking to render services pursuant to this Agreement, the Fund agrees that
you shall not be liable under this Agreement for any error of judgment or
mistake of law or for any loss suffered by the Fund in connection with the
matters to which this Agreement relates, provided that nothing in this Agreement
shall be deemed to protect or purport to protect you against any liability to
the Fund or its shareholders to which you would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of your
duties, or by reason of your reckless disregard of your obligations and duties
hereunder. Any person, even though also employed by you, who may be or become an
employee of and paid by the Fund shall be deemed, when acting within the scope
of his or her employment by the Fund, to be acting in such employment solely for
the Fund and not as your employee or agent.
8. Duration and Termination of This Agreement. This Agreement shall remain
in force until February 28, 1993, and continue in force from year to year
thereafter, but only so long as such continuance is specifically approved at
least annually (a) by the vote of a majority of the Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval
and (b) by the Directors of the Fund, or by the vote of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the outstanding
voting securities of the Fund
6
<PAGE>
or by the Fund's Board of Directors on 60 days' written notice to you, or by you
on 60 days' written notice to the Fund. This Agreement shall terminate
automatically in the event of its assignment.
9 Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.
10. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall not apply to the management of assets allocated to
any series of the Fund's Shares hereafter established by the Fund's Board of
Directors.
In interpreting the provisions of this Agreement, the definitions
contained in Section 2(a) of the 1940 Act (particularly the definitions of
"affiliated person," "assignment" and "majority of the outstanding voting
securities"), as from time to time amended, shall be applied, subject, however,
to such exemptions as may be granted by the SEC by any rule, regulation or
order.
This Agreement shall be construed in accordance with the laws of the State
of Maryland, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, or in a manner which would cause the Fund to
fail to comply with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or management
agreements entered into between you and the Fund.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Fund, whereupon this letter shall become a binding contract
effective as of the date of this Agreement.
Yours very truly, THE JAPAN FUND, INC.
By /s/ [Illegible]
----------------------
Chairman
The foregoing Agreement is hereby accepted as of the date hereof.
ASIA MANAGEMENT CORPORATION
By /s/ [Illegible]
----------------------
President
7
Exhibit 5(b)
INVESTMENT ADVISORY AND
MANAGEMENT AGREEMENT
Agreement dated and effective as of July 1, 1986 between THE JAPAN
FUND, INC., a Maryland corporation (hereinafter referred to as the "Fund"), and
ASIA MANAGEMENT CORPORATION, a Delaware corporation (hereinafter referred to as
the "Advisor").
WITNESSETH: That in consideration of the mutual covenants herein
contained, it is agreed by the parties as follows:
1. The Advisor hereby undertakes and agrees, upon the terms and
conditions hereinafter set forth, (i) to make investment decisions for the Fund,
to prepare and make available to the Fund all necessary research and statistical
data in connection therewith, and to supervise the acquisition and disposition
of securities by the Fund, including the selection of the brokers or dealers to
carry out the transactions, all in accordance with the Fund's investment
objectives and policies and in accordance with guidelines and directions from
the Fund's Board of Directors; (ii) to assist the Fund as it may reasonably
request in the conduct of the Fund's business, subject to the direction and
control of the Fund's Board of Directors; (iii) to furnish at the Advisor's
expense for the use of the Fund such office space and facilities as the Fund may
require for its reasonable needs in the City of New York, and to furnish at the
Advisor's expense all bookkeeping and clerical services in the United States
that may be reasonably required by the Fund and that are not furnished to it
pursuant to its contract with its custodian; and (iv) to pay or cause to be paid
the reasonable salaries, fees and expenses of the Fund's officers and employees
(including the Fund's share of payroll taxes) and any fees and expenses of such
of the Fund's directors as are directors, officers or employees of the Advisor
or directors, officers or employees of Scudder, Stevens & Clark Ltd. The Advisor
shall bear all expenses arising out of its duties hereunder but shall not be
responsible for any of the Fund's expenses other than as herein provided.
Specifically, the Advisor will not be responsible, except to the extent of the
reasonable compensation of the Fund's employees whose services may be involved
and to the extent of the Fund's office equipment and facilities involved, for
the following expenses of the Fund: legal expenses and auditing and accounting
<PAGE>
expenses of independent auditors; taxes (other than payroll taxes) and
governmental fees; listing fees and any membership dues; fees and expenses of
the Fund's custodians, transfer agents and registrars; expenses of preparing
share certificates and other expenses in connection with the issuance, offering,
distribution, sale or underwriting of securities issued by the Fund; expenses of
registering or qualifying securities of the Fund for sale; freight, insurance
and other charges in connection with the shipment of the Fund's portfolio
securities; brokerage commissions or other costs of acquiring or disposing of
any portfolio securities of the Fund; expenses of preparing and distributing
reports, notices and dividends to stockholders; costs of stationery; or costs of
stockholders' and other meetings.
2. In rendering the services required under paragraph 1, the Advisor
may receive the assistance of The Nikko Research Center, Ltd., which is to
regularly furnish investment advisory services with respect to the Fund pursuant
to an agreement with the Advisor dated as of the date hereof, and may contract
with or consult with such banks, other securities firms or other parties in
Japan or elsewhere, including Scudder, Stevens & Clark Ltd. (an Affiliated
company of the Advisor, as defined in the Investment Company Act of 1940) as it
may deem appropriate to obtain information and advice, including investment
recommendations, advice regarding economic factors and trends, advice as to
currency exchange matters, and clerical and accounting services and other
assistance, but any fees, compensation or expenses to be paid to any such
parties shall be paid by the Advisor, and no obligation shall be incurred on the
Fund's behalf in any such respect.
3. The Fund agrees to pay in United States dollars to the Advisor,
as full compensation for the services to be rendered and expenses to be borne by
the Advisor hereunder, a monthly fee equal to 3/48 of 1% of the value of the net
assets of the Fund up to and including $150,000,000; plus 1/20 of 1% of the
value of the net assets of the Fund over $150,000,000 and up to and including
$200,000,000; plus 11/240 of 1% of the value of the net assets of the Fund over
$200,000,000. For purposes of computing the monthly fee, the value of the net
assets of the Fund shall be determined as of the close of business on the last
business day of each month; provided, however, that the fee for the period from
the end of the last month ending prior to termination of this Agreement for
whatever reason, to the date of termination shall be based on the value of the
net assets of the Fund determined as of the close of business on the date of
termination and
-2-
<PAGE>
the fee for such period and for the period from the date hereof to the end of
the month in which this Agreement becomes effective shall be prorated according
to the proportion which such period bears to a full monthly period. Each payment
of a monthly fee to the Advisor shall be made within the fifteen days next
following the day as of which such payment is so computed.
In determining the value of the net assets of the Fund pursuant to
the preceding paragraph, Citibank, N.A., as Custodian to the Fund, or its
successor custodian (the "Custodian"), shall determine the market value of all
securities owned by the Fund, using the last bid price available from any
acceptable source of information or, if such price is not available, using the
best information available to the Custodian or a determination by the Fund's
Board of Directors. Any assets or liabilities of the Fund initially expressed in
terms of Japanese yen shall, for purposes of determining the compensation to the
Advisor, be translated into United States dollars at the selling rate of
Japanese yen against United States dollars as quoted by the New York City office
of the Custodian at 11:00 a.m. on the day of valuation of the Fund's net assets,
or, if no such rate is quoted at such time, at such other appropriate rate as
may be determined by the Fund and the Custodian.
4. The Advisor agrees that there will be full compliance with any
and all provisions of the Investment Company Act of 1940, as amended, applicable
to the Advisor and its directors, officers or employees or to interested persons
of the Advisor.
5. The Advisor agrees that it will not make a short sale of any
capital stock of the Fund, or purchase any share of the capital stock of the
Fund otherwise than for investment.
6. The services of the Advisor to the Fund are not to be deemed to
be exclusive, the Advisor being free to render similar services to others.
7. Nothing herein shall be construed as constituting the Advisor
an agent of the Fund.
8. The Advisor may rely on information reasonably believed by it to
be accurate and reliable. Except as may otherwise be provided by the Investment
Company Act of 1940, as amended, neither the Advisor nor its officers,
directors, employees or agents shall be subject to any liability for any
-3-
<PAGE>
act or omission in the course of, connected with or arising out of any services
to be rendered hereunder, except by reason of wilful misfeasance, bad faith or
gross negligence in the performance of the Advisor's duties or by reason of
reckless disregard of the Advisor's obligations and duties under this Agreement.
9. This Agreement shall remain in effect until the next annual
meeting of stockholders of the Fund, and shall continue in effect thereafter,
but only so long as such continuance is specifically approved at least annually
by the affirmative vote of (i) a majority of the members of the Fund's Board of
Directors who are not interested persons of the Fund or of the Advisor or of any
entity regularly furnishing investment advisory services with respect to the
Fund pursuant to an agreement with the Advisor, cast in person at a meeting
called for the purpose of voting on such approval, and (ii) a majority of the
Fund's Board of Directors or the holders of a majority of the outstanding voting
securities of the Fund. This Agreement may nevertheless be terminated at any
time, without penalty, by the Fund's Board of Directors or by vote of holders of
a majority of the outstanding voting securities of the Fund, upon sixty (60)
days written notice delivered or sent by registered mail, postage prepaid, to
the Advisor, at its office in New York, or by the Advisor upon six (6) months
such written notice to the Fund, and shall automatically be terminated in the
event of its assignment. Any such notice shall be deemed given when received by
the addressee.
10. This Agreement may not be transferred, assigned, sold or in any
manner hypothecated or pledged by either party hereto. It may be amended by
mutual agreement, but only after authorization of such amendment by the
affirmative vote of (i) the holders of a majority of the outstanding voting
securities of the Fund, and (ii) a majority of the members of the Fund's Board
of Directors who are not interested persons of the Fund or of the Advisor or of
any entity regularly furnishing investment advisory services with respect to the
Fund pursuant to an agreement with the Advisor, cast in person at a meeting
called for the purpose of voting on such approval.
11. This Agreement shall be construed in accordance with the laws of
the State of New York, provided, however, that nothing herein shall be construed
as being inconsistent with the Investment Company Act of 1940, as amended. As
used herein, the terms "interested person", "assignment", and "vote of a
majority of the outstanding voting securities"
-4-
<PAGE>
shall have the meanings set forth in the Investment Company Act of 1940, as
amended.
IN WITNESS WHEREOF, the parties have executed this agreement by
their officers thereunto duly authorized as of the day and year first written
above.
THE JAPAN FUND, INC.
By /s/ Jonathan Mason
---------------------------
Chairman of the Board
ASIA MANAGEMENT CORPORATION
By /s/ [Illegible]
---------------------------
President
-5-
Exhibit 5(c)
ASIA MANAGEMENT CORPORATION
345 Park Avenue
New York, NY 10154-0004
May 24, 1991
THE NIKKO INTERNATIONAL CAPITAL
MANAGEMENT CO., LTD.
7-3, 2-chome, Marunouchi,
Chiyoda-ku
Tokyo, Japan
Dear Sirs:
We have entered into an Investment Management Agreement (the
"Management Agreement") dated as of May 24, 1991 with The Japan Fund, Inc., a
Maryland corporation (the "Fund"), pursuant to which we act as investment
advisor to and manager of the Fund. A copy of the Management Agreement has been
previously furnished to you. In furtherance of such duties to the Fund, and with
the approval of the Fund, we wish to avail ourselves of your investment advisory
services. Accordingly, with the acceptance of the Fund, we hereby agree with you
as follows for the duration of this Agreement:
1. You agree to furnish to us such information, investment
recommendations, advice and assistance, as we shall from time to time reasonably
request. In that connection, you agree to continue to maintain a separate staff
within your organization to furnish such services exclusively to us. In
addition, for the benefit of the Fund, you agree to pay the fees and expenses of
any directors of the Fund who are directors, officers or employees of you or of
the Nikko Securities Co., Ltd.
2. We agree to pay in United States dollars to you, as compensation for
the services to be rendered by you hereunder, a monthly fee, payable in dollars,
equal on an annual basis to .23 of 1% of the value of the average daily net
assets of the Fund up to and including $200 million; plus .21 of 1% of the value
of the average daily net assets over $200 million and up to an including $300
million; plus .19 of 1% of the value of the average daily net assets over $300
million and up to an including $700 million; plus .17 of 1% of the value of the
average daily net assets over $700 million. For purposes of computing the
monthly fee, the "average daily net assets" of the Fund for any calendar month
means the average of the daily net asset values of the Fund's portfolio for such
calendar month determined by the Fund's custodian pursuant to the procedures
established by the Board of Directors of the Fund and in accordance with the
requirements of the Investment Company Act of 1940, as amended, and the
applicable rules and regulations of the Securities and Exchange Commission. Each
payment of a monthly fee shall be made by us to you no later than the fifteenth
day of the following calendar month.
1
<PAGE>
3. You agree that there will be full compliance with any and all
provisions of the Investment Company Act of 1940, as amended, applicable to you
and your directors, officers or employees, or to interested persons with respect
to you.
4. You agree that you will not make a short sale of any capital stock
of the Fund, or purchase any share of the capital stock of the Fund otherwise
than for investment.
5. Your services to us are not to be deemed exclusive and you are free
to render similar services to others, except as othewise provided in section 1
hereof.
6. Nothing herein shall be construed as constituting you as agent of us
or of the Fund.
7. We and the Fund agree that you may rely on information reasonably
believed by you to be accurate and reliable. We and the Fund further agree that,
except as may otherwise be provided by the Investment Company Act of 1940, as
amended, neither you nor your officers, directors, employees or agents shall be
subject to any liability for any act or omission in the course of, connected
with or arising out of any services to be rendered hereunder except by reason of
willful misfeasance, bad faith or gross negligence in the performance of your
duties or by reason of reckless disregard of your obligations and duties under
this Agreement.
8. This Agreement shall remain in effect until February 28, 1993, and
shall continue in effect thereafter, but only so long as such continuance is
specifically approved at least annually by the affirmative vote of (i) a
majority of the members of the Fund's Board of Directors who are not interested
persons of the Fund, you or us, cast in person at a meeting called for the
purpose of voting on such approval, and (ii) a majority of the Fund's Board of
Directors or the holders of a majority of the outstanding voting securities of
the Fund. This Agreement may nevertheless be terminated at any time, without
penalty, by us or by the Fund's Board of Directors or by vote of holders of a
majority of the outstanding voting securities of the Fund, upon sixty (60) days
written notice delivered or sent by registered mail, postage prepaid, to you, at
your address given above or at any other address of which you shall have
notified us in writing, or by you upon six (6) months such written notice to us
and to the Fund, and shall automatically be terminated in the event of its
assignment or of the assignment of the Management Agreement. Any such notice
shall be deemed given when received by the addressee.
9. This Agreement may not be transferred, assigned, sold or in any
manner hypothecated or pledged by either party hereto. It may be amended by
mutual agreement, but only after authorization of such amendment by the
affirmative vote of (i) the holders of a majority of the outstanding voting
securities of the Fund, and (ii) a majority of the members of the Fund's Board
of Directors who are not interested persons of the Fund, you or us, cast in
person at a meeting called for the purpose of voting on such approval.
10. This Agreement shall be construed in accordance with the laws of
the State of New York, provided, however, that nothing herein shall be construed
as being inconsistent with the Investment Company Act of 1940, as amended. As
used herein the terms "interested person", "assignment", and "vote of a majority
of the outstanding voting securities" shall have the meanings set forth in the
Investment Company Act of 1940, as amended.
2
<PAGE>
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart hereof and return the same to us.
Very truly yours,
ASIA MANAGEMENT CORPORATION
By /s/ [Illegible]
-------------------
Title:
The foregoing agreement is hereby accepted as of the date first above written.
THE NIKKO INTERNATIONAL CAPITAL
MANAGEMENT CO., LTD.
By /s/ [Illegible]
---------------------
Title: President
Accepted:
THE JAPAN FUND, INC.
By /s/ Jonathan Mason
----------------------
Title: Chairman
3
Exhibit 5(d)
INVESTMENT ADVISORY AND
MANAGEMENT AGREEMENT
Agreement, dated and effective as of April 27, 1984 between THE JAPAN
FUND, INC., a Maryland corporation (hereinafter referred to as the "Fund"), and
ASIA MANAGEMENT CORPORATION, a Delaware corporation (hereinafter referred to as
the "Advisor").
WITNESSETH: That in consideration of the mutual covenants herein
contained, it is agreed by the parties as follows:
1. The Advisor hereby undertakes and agrees, upon the terms and conditions
hereinafter set forth, (i) to make investment decisions for the Fund, to prepare
and make available to the Fund all necessary research and statistical data in
connection therewith, and to supervise the acquisition and disposition of
securities by the Fund, including the selection of the brokers or dealers to
carry out the transactions, all in accordance with the Fund's investment
objectives and policies and in accordance with guidelines and directions from
the Fund's Board of Directors; (ii) to assist the Fund as it may reasonably
request in the conduct of the Fund's business, subject to the direction and
control of the Fund's Board of Directors; (iii) to furnish at the Advisor's
expense for the use of the Fund such office space and facilities as the Fund may
require for its reasonable needs in the City of New York, and to furnish at the
Advisor's expense all bookkeeping and clerical services in the United States
that may be reasonably required by the Fund and that are not furnished to it
pursuant to its contract with its custodian; and (iv) to pay or cause to be paid
the reasonable salaries, fees and expenses of the Fund's officers and employees
(including the Fund's share of payroll taxes) and any fees and expenses of such
of the Fund's directors as are directors, officers or employees of the Advisor
or officers, partners or employees of Scudder, Stevens & Clark. The Advisor
shall bear all expenses arising out of its duties hereunder but shall not be
responsible for any of the Fund's expenses other than as herein provided.
Specifically, the Advisor will not be responsible, except to the extent of the
reasonable compensation of the Fund's employees whose services may be involved
and to the extent of the Fund's office equipment and facilities involved, for
the following expenses of the Fund: legal expenses and auditing and accounting
expenses of independent auditors; taxes (other than payroll taxes) and
governmental fees; listing fees and any membership dues; fees and expenses of
the Fund's custodians, transfer agents and registrars; expenses of preparing
share certificates and other expenses in connection with the issuance, offering,
distribution, sale or underwriting of securities issued by the Fund; expenses of
registering or qualifying securities of the Fund for sale; freight, insurance
and other charges in connection with the shipment of the Fund's portfolio
securities; brokerage commissions or other costs of acquiring or disposing of
any portfolio securities of the Fund; expenses of preparing and distributing
reports, notices and dividends to stockholders; costs of stationery; or costs of
stockholders' and other meetings.
<PAGE>
2. In rendering the services required under paragraph 1, the Advisor may
receive the assistance of The Nikko Research Center, Ltd., which is to regularly
furnish investment advisory services with respect to the Fund pursuant to an
agreement with the Advisor dated as of the date hereof, and may contract with or
consult with such banks, other securities firms or other parties in Japan or
elsewhere, including Scudder, Stevens & Clark (of which the Advisor is a
subsidiary) as it may deem appropriate to obtain information and advice,
including investment recommendations, advice regarding economic factors and
trends, advice as to currency exchange matters, and clerical and accounting
services and other assistance, but any fees, compensation or expenses to be paid
to any such parties shall be paid by the Advisor, and no obligation shall be
incurred on the Fund's behalf in any such respect.
3. The Fund agrees to pay in United States dollars to the Advisor, as full
compensation for the services to be rendered and expenses to be borne by the
Advisor hereunder, a monthly fee equal to 1/24 of 1% of the value of the net
assets of the Fund up to and including $150,000,000; plus 3/80 of 1% of the
value of the net assets of the Fund over $150,000,000 and up to and including
$200,000,000; plus 1/30 of 1% of the value of the net assets of the Fund over
$200,000,000. For purposes of computing the monthly fee, the value of the net
assets of the Fund shall be determined as of the close of business on the last
business day of each month; provided, however, that the fee for the period from
the end of the last month ending prior to termination of this Agreement for
whatever reason, to the date of termination shall be based on the value of the
net assets of the Fund determined as of the close of business on the date of
termination and the fee for such period and for the period from the date hereof
to the end of the month in which this Agreement becomes effective shall be
prorated according to the proportion which such period bears to a full monthly
period. Notwithstanding the foregoing, if the total expenses of the Fund
(including the fee to the Advisor, but excluding taxes and interest) in any
fiscal year of the Fund exceed 1% of the value of the average net assets of the
Fund during that year, based upon computations of the value of the net assets of
the Fund made at least monthly, the fee to be paid to the Advisor pursuant to
this Agreement during such year shall be reduced to the extent that such
expenses exceed 1%. The term "total expenses," as used in this paragraph, does
not include any costs in connection with the issuance, offering, distribution,
sale or underwriting of securities issued by the Fund; expenses of registering
or qualifying securities of the Fund for sale; freight, insurance and other
charges in connection with the shipment of its portfolio securities; brokerage
commissions or other costs of acquiring or disposing of any portfolio securities
of the Fund; or any costs incurred or arising other than in the ordinary and
necessary course of the Fund's business. Each payment of a monthly fee to the
Advisor shall be made within the fifteen days next following the day as of which
such payment is so computed.
In determining the value of the net assets of the Fund pursuant to the
preceding paragraph, Citibank, N.A., as Custodian to the Fund, or its successor
custodian (the "Custodian"), shall determine the market value of all securities
owned by the Fund, using the last bid price available from any acceptable source
of information or, if such price is not available, using the best information
available to the Custodian or a determination by the Fund's Board of Directors.
Any assets or liabilities of the Fund initially expressed in terms of Japanese
yen shall, for purposes of determining the compensation to the Advisor,
2
<PAGE>
be translated into United States dollars at the selling rate of Japanese yen
against United States dollars as quoted by the New York City office of the
Custodian at 11:00 a.m. on the day of valuation of the Fund's net assets, or, if
no such rate is quoted at such time, at such other appropriate rate as may be
determined by the Fund and the Custodian.
4 The Advisor agrees that there will be full compliance with any and all
provisions of the Investment Company Act of 1940, as amended, applicable to the
Advisor and its directors, officers or employees or to interested persons of the
Advisor.
5. The Advisor agrees that it will not make a short sale of any capital
stock of the Fund, or purchase any share of the capital stock of the Fund
otherwise than for investment.
6. The services of the Advisor to the Fund are not to be deemed to be
exclusive, the Advisor being free to render similar services to others.
7. Nothing herein shall be construed as constituting the Advisor an agent
of the Fund.
8. The Advisor may rely on information reasonably believed by it to be
accurate and reliable. Except as may otherwise be provided by the Investment
Company Act of 1940, as amended, neither the Advisor nor its officers,
directors, employees or agents shall be subject to any liability for any act or
omission in the course of, connected with or arising out of any services to be
rendered hereunder, except by reason of willful misfeasance, bad faith or gross
negligence in the performance of the Advisor's duties or by reason of reckless
disregard of the Advisor's obligations and duties under this Agreement.
9. This Agreement shall remain in effect until the next annual meeting of
stockholders of the Fund, and shall continue in effect thereafter, but only so
long as such continuance is specifically approved at least annually by the
affirmative vote of (i) a majority of the members of the Fund's Board of
Directors who are not interested persons of the Fund or of the Advisor or of any
entity regularly furnishing investment advisory services with respect to the
Fund pursuant to an agreement with the Advisor, cast in person at a meeting
called for the purpose of voting on such approval, and (ii) a majority of the
Fund's Board of Directors or the holders of a majority of the outstanding voting
securities of the Fund. This Agreement may nevertheless be terminated at any
time, without penalty, by the Fund's Board of Directors or by vote of holders of
a majority of the outstanding voting securities of the Fund, upon sixty (60)
days' written notice delivered or sent by registered mail, postage prepaid, to
the Advisor, at its office in New York, or by the Advisor upon six (6) months'
such written notice to the Fund, and shall automatically be terminated in the
event of its assignment. Any such notice shall be deemed given when received by
the addressee.
10. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by either party hereto. It may be amended by mutual
agreement, but only after authorization of such amendment by the affirmative
vote of (i) the holders of a majority of the outstanding voting securities of
the Fund, and (ii) a majority of the members of the Fund's Board of Directors
who are
3
<PAGE>
not interested persons of the Fund or of the Advisor or of any entity regularly
furnishing investment advisory services with respect to the Fund pursuant to an
agreement with the Advisor, cast in person at a meeting called for the purpose
of voting on such approval.
11. This Agreement shall be construed in accordance with the laws of the
State of New York, provided, however, that nothing herein shall be construed as
being inconsistent with the Investment Company Act of 1940, as amended. As used
herein, the terms "interested person", "assignment", and "vote of a majority of
the outstanding voting securities" shall have the meanings set forth in the
Investment Company Act of 1940, as amended.
IN WITNESS WHEREOF, the parties have executed this Agreement by their
officers thereunto duly authorized as of the day and year first written above.
THE JAPAN FUND, INC.
By /s/ [Illegible]
---------------------------
Chairman of the Board
ASIA MANAGEMENT CORPORATION
By /s/ [Illegible]
---------------------------
President
4
<PAGE>
ASIA MANAGEMENT CORPORATION
1 Rockefeller Plaza
New York, N.Y. 10020
April 27, 1984
THE NIKKO RESEARCH CENTER, LTD.
1-1, 3-chome, Marunouchi,
Chivoda-ku
Tokyo, Japan
Dear Sirs:
We have entered into an Investment Advisory and Management Agreement (the
"Management Agreement") dated as of April 27, 1984 with The Japan Fund, Inc., a
Maryland corporation (the 'Fund"), pursuant to which we act as investment
advisor to and manager of the Fund. A copy of the Management Agreement has been
previously furnished to you. In furtherance of such duties to the Fund, and with
the approval of the Fund, we wish to avail ourselves of your investment advisory
services. Accordingly, with the acceptance of the Fund, we hereby agree with you
as follows for the duration of this Agreement:
1. You agree to furnish to us such information, investment
recommendations, advice and assistance, as we shall from time to time reasonably
request. In that connection, you agree to continue to maintain a separate staff
within your organization to furnish such services exclusively to us. In
addition, for the benefit of the Fund, you agree to pay the fees and expenses of
any directors of the Fund who are directors, officers or employees of you or of
The Nikko Securities Co., Ltd.
2. We agree to pay in United States dollars to you, as compensation for
the services to be rendered by you hereunder, a monthly fee equal to 1/96 of 1%
of the value of the net assets of the Fund up to and including $150,000,000;
plus 3/320 of 1% of the value of the net assets of the Fund over $150,000,000
and up to and including $200,000,000; plus 1/120 of 1% of the value of the net
assets of the Fund over $200,000,000. For purposes of computing the monthly fee,
the value of the net assets of the Fund shall be determined as of the close of
business on the last business day of each month, provided, however, that the fee
for the period from the end of the last month ending prior to termination of
this Agreement for whatever reason, to the date of termination shall be based on
the value of the net assets of the Fund determined as of the close of business
on the date of termination and the fee for such period and for the period from
the effective date hereof to the end of the month in which this Agreement
becomes effective shall be prorated according to the proportion which such
period bears to a full monthly period. Each payment of a monthly fee shall be
made by us to you within the fifteen days next following the as of which such
payment is so computed.
<PAGE>
In determining the value of the net assets of the Fund pursuant to the
preceding paragraph, Citibank, N.A. as Custodian to the Fund, or its successor
custodian (the "Custodian"), shall determine the market value of all securities
owned by the Fund, using the last bid price available from any acceptable source
of information or, if such price is not available, using the best information
available to the Custodian or a determination by the Fund's Board of Directors
Any assets or liabilities of the Fund initially expressed in terms of Japanese
yen shall, for purposes of determining your fee, be translated into United
States dollars at the selling rate of Japanese yen against United States dollars
quoted by the New York City office of the Custodian at 11:00 a.m. on the day of
valuation of the Fund's net assets or, if no such rate is quoted at such time,
at such other appropriate rate as may be determined by the Fund and the
Custodian.
3. You agree that there will be full compliance with any and all
provisions of the Investment Company Act of 1940, as amended, applicable to you
and your directors, officers or employees, or to interested persons with respect
to you.
4. You agree that you will not make a short sale of any capital stock of
the Fund, or purchase any share of the capital stock of the Fund otherwise than
for investment.
5. Your services to us are not to be deemed exclusive and you are free to
render similar services to others, except as otherwise provided in section I
hereof.
6. Nothing herein shall be construed as constituting you an agent of us or
of the Fund.
7. We and the Fund agree that you may rely on information reasonably
believed by you to be accurate and reliable We and the Fund further agree that,
except as may otherwise be provided by the Investment Company Act of 1940, as
amended, neither you nor your officers, directors, employees or agents shall be
subject to any liability for any act or omission in the course of, connected
with or arising out of any services to be rendered hereunder except by reason of
willful misfeasance, bad faith or gross negligence in the performance of your
duties or by reason of reckless disregard of your obligations and duties under
this Agreement.
8 This Agreement shall become effective as of April 27, 1984 and shall
remain in effect until the next annual meeting of shareholders of the Fund and
shall continue in effect thereafter, but only so long as such continuance is
specifically approved at least annually by the affirmative vote of (i) a
majority of the members of the Fund's Board of Directors who are not interested
persons of the Fund, you or us, cast in person at a meeting called for the
purpose of voting on such approval, and (ii) a majority of the Fund's Board of
Directors 6r the holders of a majority of the outstanding voting securities of
the Fund. This Agreement may nevertheless be terminated at any time, without
penalty, by us or by the Fund's Board of Directors or by vote of holders of a
majority of the outstanding voting securities of the Fund, upon sixty (60) days'
written notice delivered or sent by registered mail, postage prepaid, to you, at
your address given above or at any other address of which you shall have
notified us in writing, or by you upon six (6) months' such written notice to us
and to the Fund, and shall automatically be
2
<PAGE>
terminated in the event of its assignment or of the assignment of the Management
Agreement. Any such notice shall be deemed given when received by the addressee.
9. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by either party hereto. It may be amended by mutual
agreement, but only after authorization of such amendment by the affirmative
vote of (i) the holders of a majority of the outstanding voting securities of
the Fund; and (ii) a majority of the members of the Fund's Board of Directors
who are not interested persons of the Fund, you or us, cast in person at a
meeting called for the purpose of voting on such approval.
10. This Agreement shall be construed in accordance with the laws of the
State of New York, provided, however, that nothing herein shall be construed as
being inconsistent with the Investment Company Act of 1940, as amended. As used
herein the terms "interested person", "assignment", and "vote of a majority of
the outstanding voting securities" shall have the meanings set forth in the
Investment Company Act of 1940, as amended.
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart hereof and return the same to us.
Very truly yours,
ASIA MANAGEMENT CORPORATION
By /s/ [Illegible]
-----------------------------
Chairman of the Board
The foregoing agreement is hereby accepted as of the date first above written.
THE NIKKO RESEARCH CENTER, LTD.
By /s/ [Illegible]
- ----------------------
President
Accepted:
THE JAPAN FUND, INC.
By /s/ [Illegible]
- ----------------------
President
3
THE JAPAN FUND, INC.
345 Park Avenue
New York, New York 10154
January 1, 1994
Scudder, Stevens & Clark, Inc.
345 Park Avenue
New York, NY 10154
Investment Management Agreement
Dear Sirs:
The Japan Fund, Inc. (the "Fund") has been established as a Maryland
Corporation to engage in the business of an investment company.
The Fund has selected you (the "Advisor") to act as investment manager of
the Fund and to provide certain other services, as more fully set forth below,
and you have indicated that you are willing to act as such investment manager
and to perform such services under the terms and conditions hereinafter set
forth. Accordingly, the Fund agrees with you as follows:
1. Delivery of Documents. The Fund engages in the business of investing and
reinvesting the assets of the Fund in the manner and in accordance with the
investment objectives, policies and restrictions specified in the currently
effective Prospectus (the "Prospectus") and Statement of Additional Information
(the "SAI") included in the Fund's Registration Statement on Form N-1A, as
amended from time to time (the "Registration Statement"), filed by the Fund
under the Investment Company Act of 1940, as amended (the "1940 Act"), and the
Securities Act of 1933, as amended. Copies of the documents referred to in the
preceding sentence have been furnished to you by the Fund. The Fund has also
furnished you with copies properly certified or authenticated of each of the
following additional documents related to the Fund:
(a) Articles of Amendment and Restatement of the Fund dated January 7,
1992, as amended to date (the "Articles").
(b) By-Laws of the Fund as in effect on the date hereof (the "By-Laws").
(c) Resolutions of the Directors of the Fund and the shareholders of
the Fund selecting you as investment manager and approving the form of
this Agreement.
The Fund will furnish you from time to time with copies, properly certified
or authenticated, of all amendments of or supplements, if any, to the foregoing,
including the Prospectus, the SAI and the Registration Statement.
2. Portfolio Management Services. As manager of the assets of the Fund, you
shall provide continuing investment management of the assets of the Fund in
accordance with the investment objectives, policies and restrictions set forth
in the Prospectus and SAI; the applicable provisions of the 1940 Act and the
Internal Revenue Code of 1986, as amended (the "Code"), relating to regulated
investment companies and all rules and regulations thereunder; and all other
applicable federal and state laws and regulations of which you have knowledge;
subject always to policies and instructions adopted by the Fund's Board of
Directors. In connection therewith, you shall use reasonable efforts to manage
the Fund so that it will qualify as a regulated investment company under
Subchapter M of the Code and regulations issued thereunder. The Fund shall have
the benefit of the investment analysis and research, the review of current
economic conditions and trends and the consideration of long-range investment
policy generally available to your investment advisory clients. In managing the
Fund in accordance with the requirements set forth in this section 2, you shall
be entitled to receive and act upon advice of counsel to the Fund or counsel to
you. You shall also make available to the Fund promptly upon request all of the
Fund's investment records and ledgers as are necessary to assist the Fund to
comply with the requirements of the 1940 Act and other applicable laws. To the
extent required by law, you shall furnish to regulatory authorities having the
requisite authority any information or reports in connection with the services
provided pursuant to this Agreement which may be requested in order to ascertain
whether the operations of the Fund are being conducted in a manner consistent
with applicable laws and regulations.
You shall determine the securities, instruments, investments, currencies,
repurchase agreements, futures, options and other contracts relating to
investments to be purchased, sold or entered into by the Fund and place orders
with broker-dealers, foreign currency dealers, futures commission merchants or
others pursuant to your determinations and all in accordance with Fund policies
as expressed in the Registration Statement and with guidelines and directions
1
<PAGE>
from the Board of Directors. Subject to such policies and guidelines, you shall
determine what portion of the Fund's portfolio shall be invested in securities
and other assets and what portion, if any, should be held uninvested.
You shall furnish to the Fund's Board of Directors periodic reports on the
investment performance of the Fund and on the performance of your obligations
pursuant to this Agreement, and you shall supply such additional reports and
information as the Fund's officers or Board of Directors shall reasonably
request.
In rendering the services required under this section you may receive the
assistance of The Nikko International Capital Management Co., Ltd. ("NICAM"),
which is to furnish investment research services with respect to the Fund
pursuant to an agreement with the Advisor dated as of the date hereof (as the
same may be amended from time to time), and may contract with or consult with
such banks, other securities firms or other parties in Japan or elsewhere as it
may deem appropriate to obtain information and advice, including investment
recommendations, advice regarding economic factors and trends, advice as to
currency exchange matters, and clerical and accounting services and other
assistance, but any fees, compensation or expenses to be paid to any such
parties shall be paid by you, and no obligation shall be incurred on the Fund's
behalf in any such respect.
3. Administrative Services. In addition to the portfolio management
services specified above in section 2, you shall furnish at your expense for the
use of the Fund such office space and facilities as the Fund may require for its
reasonable needs, and you (or one or more of your affiliates designated by you)
shall render to the Fund administrative services necessary for operating as an
investment company and not provided by persons not parties to this Agreement
including, but not limited to, preparing reports to and meeting materials for
the Fund's Board of Directors and reports and notices to Fund shareholders;
supervising, negotiating contractual arrangements with, to the extent
appropriate, and monitoring the performance of, custodians, depositories,
transfer and pricing agents, accountants, attorneys, printers, underwriters,
brokers and dealers, insurers and other persons in any capacity deemed to be
necessary or desirable to Fund operations; preparing and making filings with the
Securities and Exchange Commission (the "SEC") and other regulatory and
self-regulatory organizations, including, but not limited to, preliminary and
definitive proxy materials, post-effective amendments to the Registration
Statement, semi-annual reports on Form N-SAR and notices pursuant to Rule 24f-2
under the 1940 Act; overseeing the tabulation of proxies by the Fund's transfer
agent; assisting in the preparation and filing of the Fund's federal, state and
local tax returns; preparing and filing the Fund's federal excise tax return
pursuant to Section 4982 of the Code; providing assistance with investor and
public relations matters; monitoring the valuation of portfolio securities, the
calculation of net asset value and the calculation and payment of distributions
to Fund shareholders; monitoring the registration of the Fund's shares of
capital stock, $.33 1/3 par value per share (the "Shares") under applicable
federal and state securities laws; maintaining or causing to be maintained for
the Fund all books, records and reports and any other information required under
the 1940 Act, to the extent that such books, records and reports and other
information are not maintained by the Fund's custodian or other agents of the
Fund; assisting in establishing the accounting policies of the Fund; assisting
in the resolution of accounting issues that may arise with respect to the Fund's
operations and consulting with the Fund's independent accountants, legal counsel
and the Fund's other agents as necessary in connection therewith; establishing
and monitoring the Fund's operating expense budgets; reviewing the Fund's bills;
processing the payment of bills that have been approved by a person authorized
by the Fund; assisting the Fund in determining the amount of dividends and
distributions available to be paid by the Fund to its shareholders, preparing
and arranging for the printing of dividend notices to shareholders, and
providing the transfer and dividend paying agent and the custodian with such
information as is required for such parties to effect the payment of dividends
and distributions; and otherwise assisting the Fund as it may reasonably request
in the conduct of its business, subject to the direction and control of the
Fund's Board of Directors. Nothing in this Agreement shall be deemed to shift to
you or to diminish the obligations of any agent of the Fund or any other person
not a party to this Agreement which is obligated to provide services to the
Fund.
4. Allocation of Charges and Expenses. Except as otherwise specifically
provided in this section 4, you shall pay the compensation and expenses of all
Directors, officers and employees of the Fund (including the Fund's share of
payroll taxes) who are affiliated persons of you and you shall make available,
without expense to the Fund, the services of such of your directors, officers
and employees as may duly be elected officers of the Fund, subject to their
individual consent to serve and to any limitations imposed by law. You shall
provide at your expense the portfolio management services described in section 2
hereof and the administrative services described in section 3 hereof.
You shall not be required to pay any expenses of the Fund other than those
specifically allocated to you in this section 4. In particular, but without
limiting the generality of the foregoing, you shall not be responsible, except
to the extent of the reasonable compensation of such of the Fund's Directors and
2
<PAGE>
officers as are directors, officers or employees of you whose services may be
involved, for the following expenses of the Fund, to the extent they are not
entailed in your provision of the services described in section 2 and section 3
hereof: organization expenses of the Fund (including out-of-pocket expenses, but
not including your overhead or employee costs); fees payable to you and to any
other Fund advisors or consultants; legal expenses; auditing and accounting
expenses; maintenance of books and records which are required to be maintained
by the Fund's custodian or other agents of the Fund; telephone, telex,
facsimile, postage and other communications expenses; taxes and governmental
fees; fees, dues and expenses incurred by the Fund in connection with membership
in investment company trade organizations; fees and expenses of the Fund's
custodians, subcustodians, transfer agents, dividend disbursing agents and
registrars; payment for portfolio pricing or valuation services to pricing
agents, accountants, bankers and other specialists, if any; expenses of
preparing share certificates and, except as provided below in this section 4,
other expenses in connection with the issuance, offering, distribution, sale,
redemption or repurchase of securities issued by the Fund; expenses relating to
investor and public relations; expenses and fees of registering or qualifying
Shares of the Fund for sale; interest charges, bond premiums and other insurance
expense; freight, insurance and other charges in connection with the shipment of
the Fund's portfolio securities; the compensation and all expenses (specifically
including travel expenses relating to Fund business) of Directors, officers and
employees of the Fund who are not affiliated persons of you; brokerage
commissions or other costs of acquiring or disposing of any portfolio securities
of the Fund; expenses of printing and distributing reports, notices and
dividends to shareholders; expenses of printing and mailing Prospectuses and
SAIs of the Fund and supplements thereto; costs of stationery; any litigation
expenses; indemnification of Directors and officers of the Fund; costs of
shareholders' and other meetings; and travel expenses (or an appropriate portion
thereof) of Directors and officers of the Fund who are directors, officers or
employees of you to the extent that such expenses relate to attendance at
meetings of the Board of Directors of the Fund or any committees thereof or
advisors thereto held outside of Boston, Massachusetts or New York, New York.
You shall not be required to pay expenses of any activity which is
primarily intended to result in sales of Shares of the Fund if and to the extent
that (i) such expenses are required to be borne by a principal underwriter which
acts as the distributor of the Fund's Shares pursuant to an underwriting
agreement which provides that the underwriter shall assume some or all of such
expenses, or (ii) the Fund shall have adopted a plan in conformity with the 1940
Act providing that the Fund (or some other party) shall assumed some or all of
such expenses. You shall be required to pay such of the foregoing sales expenses
as are not required to be paid by the principal underwriter pursuant to the
underwriting agreement or are not permitted to be paid by the Fund (or some
other party) pursuant to such a plan.
5. Management Fee. For all services to be rendered, payments to be made and
costs to be assumed by you as provided in sections 2, 3 and 4 hereof, the Fund
shall pay you a monthly fee, payable in dollars, equal on an annual basis to .85
of 1% of the value of the average daily net assets of the Fund up to and
including $100 million; plus .75 of 1% of the value of the average daily net
assets of the Fund over $100 million and up to and including $300 million; plus
.70 of 1% of the value of the average daily net assets of the Fund over $300
million and up to and including $600 million; plus .65 of 1% of the average
daily net assets over $600 million.
The "average daily net assets" of the Fund shall mean the average of the
values placed on the Fund's net assets as of 4:00 p.m. (New York time) on each
day on which the net asset value of the Fund is determined consistent with the
provisions of Rule 22c-1 under the 1940 Act or, if the Fund lawfully determines
the value of its net assets as of some other time on each business day, as of
such time. The value of the net assets of the Fund shall always be determined
pursuant to the applicable provisions of the Articles and the Registration
Statement. If the determination of net asset value does not take place for any
particular day, then for the purposes of this section 5, the value of the net
assets of the Fund as last determined shall be deemed to be the value of its net
assets as of 4:00 p.m. (New York time), or as of such other time as the value of
the net assets of the Fund's portfolio may be lawfully determined on that day.
If the Fund determines the value of the net assets of its portfolio more than
once on any day, then the last such determination thereof on that day shall be
deemed to be the sole determination thereof on that day for the purposes of this
section 5.
You agree that your gross compensation for any fiscal year shall not be
greater than an amount which, when added to the other expenses of the Fund,
shall cause the aggregate expenses of the Fund to equal the maximum expenses
under the lowest applicable expense limitation established pursuant to the
statutes or regulations of any jurisdiction in which the Shares of the Fund may
be qualified for offer and sale. Except to the extent that such amount has been
reflected in reduced payments to you, you shall refund to the Fund the amount of
any payment received in excess of the limitation pursuant to this section 5 as
promptly as practicable after the end of such fiscal year, provided that you
shall not be required to pay the Fund an amount greater than the fee paid to you
in respect of such year pursuant to this Agreement. As used in this section 5,
3
<PAGE>
"expenses" shall mean those expenses included in the applicable expense
limitation having the broadest specifications thereof, and "expense limitation"
means a limit on the maximum annual expenses which may be incurred by an
investment company determined (i) by multiplying a fixed percentage by the
average, or by multiplying more than one such percentage by different specified
amounts of the average, of the values of an investment company's net assets for
a fiscal year or (ii) by multiplying a fixed percentage by an investment
company's net investment income for a fiscal year. The words "lowest applicable
expense limitation" shall be construed to result in the largest reduction of
your compensation for any fiscal year of the Fund; provided, however, that
nothing in this Agreement shall limit your fees if not required by an applicable
statute or regulation referred to above in this section 5.
You may waive all or a portion of your fees provided for hereunder and such
waiver shall be treated as a reduction in purchase price of your services. You
shall be contractually bound hereunder by the terms of any publicly announced
waiver of your fee, or any limitation of the Fund's expenses, as if such waiver
or limitation were fully set forth herein.
6. Avoidance of Inconsistent Position; Services Not Exclusive. In
connection with purchases or sales of portfolio securities and other investments
for the account of the Fund, neither you nor any of your directors, officers or
employees shall act as a principal or agent or receive any commission. You or
your agent shall arrange for the placing of all orders for the purchase and sale
of portfolio securities and other investments for the Fund's account with
brokers or dealers selected by you in accordance with Fund policies as expressed
in the Registration Statement. If any occasion should arise in which you give
any advice to clients of yours concerning the Shares of the Fund, you shall act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.
Your services to the Fund pursuant to this Agreement are not to be deemed
to be exclusive and it is understood that you may render investment advice,
management and services to others. In acting under this Agreement, you shall be
an independent contractor and not an agent of the Fund.
7. Limitation of Liability of Manager. As an inducement to your undertaking
to render services pursuant to this Agreement, the Fund agrees that you shall
not be liable under this Agreement for any error of judgment or mistake of law
or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, provided that nothing in this Agreement shall be deemed
to protect or purport to protect you against any liability to the Fund or its
shareholders to which you would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of your duties, or
by reason of your reckless disregard of your obligations and duties hereunder.
Any person, even though also employed by you, who may be or become an employee
of and paid by the Fund shall be deemed, when acting within the scope of his or
her employment by the Fund, to be acting in such employment solely for the Fund
and not as your employee or agent.
8. Duration and Termination of This Agreement. This Agreement shall remain
in force until February 28, 1995, and continue in force from year to year
thereafter, but only so long as such continuance is specifically approved at
least annually (a) by the vote of a majority of the Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval
and (b) by the Directors of the Fund, or by the vote of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that
continuance of this Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder.
This Agreement may be terminated with respect to the Fund at any time,
without the payment of any penalty, by the vote of a majority of the outstanding
voting securities of the Fund or by the Fund's Board of Directors on 60 days'
written notice to you, or by you on 60 days' written notice to the Fund. This
Agreement shall terminate automatically in the event of its assignment.
9. Amendment of This Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought and no amendment of this Agreement shall be
effective until approved in a manner consistent with the 1940 Act and rules and
regulations thereunder.
10. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
This Agreement shall not apply to the management of assets allocated to any
series of the Fund's Shares hereafter established by the Fund's Board of
Directors.
4
<PAGE>
In interpreting the provisions of this Agreement, the definitions contained
in Section 2(a) of the 1940 Act (particularly the definitions of "affiliated
person," "assignment" and "majority of the outstanding voting securities"), as
from time to time amended, shall be applied, subject, however, to such
exemptions as may be granted by the SEC by any rule, regulation or order.
This Agreement shall be construed in accordance with the laws of the State
of Maryland, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, or in a manner which would cause the Fund to
fail to comply with the requirements of Subchapter M of the Code.
This Agreement shall supersede all prior investment advisory or management
agreements entered into between you and the Fund.
If you are in agreement with the foregoing, please execute the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Fund, whereupon this letter shall become a binding contract
effective as of the date of this Agreement. Yours very truly,
THE JAPAN FUND, INC.
By /s/Douglas M. Loudon
-------------------------
President
The foregoing Agreement is hereby accepted as of the date hereof.
SCUDDER, STEVENS & CLARK, INC.
By /s/David S. Lee
-------------------------
Managing Director
5
Exhbit 5(f)
SCUDDER, STEVENS & CLARK, INC.
345 Park Avenue
New York, NY 10154-0004
January 1, 1994
NIKKO INTERNATIONAL CAPITAL
MANAGEMENT CO., LTD.
17-9, Nihanbashi-Hakozakicho
Chuo-ku, Tokyo 103
Japan
RESEARCH AGREEMENT
Dear Sirs:
We have entered into an Investment Management Agreement (the "Management
Agreement") dated as of January 1, 1994 with The Japan Fund, Inc., a Maryland
corporation (the "Fund"), pursuant to which we act as investment advisor to and
manager of the Fund. A copy of the Management Agreement has been previously
furnished to you. In furtherance of such duties to the Fund, and with the
approval of the Fund, we wish to avail ourselves of your investment research
services. Accordingly, with the acceptance of the Fund, we hereby agree with you
as follows for the duration of this Agreement:
1. You agree to furnish to us such information, investment recommendations,
advice and assistance, as we shall from time to time reasonably request. In
addition, for the benefit of the Fund, you agree to pay the fees and expenses of
any directors of the Fund who are directors, officers or employees of you or of
The Nikko Securities Co., Ltd.
2. We agree to pay in United States dollars to you, as compensation for the
services to be rendered by you hereunder, a monthly fee, payable in dollars, as
follows:
(a) For the period ended December 31, 1994 the fee shall be an amount
equal on an annual basis to .15 of 1% of the value of the average daily
net assets of the Fund up to and including $700 million; plus .14 of 1%
of the value of the average daily net assets over $700 million.
(b) For the period January 1, 1995 through December 31, 1995 the fee
shall be an amount equal on an annual basis to .10 of 1% of the value
of the average daily net assets of the Fund.
For purposes of computing the monthly fee, the "average daily net
assets" of the Fund for any calendar month means the average of the
daily net asset values of the Fund's portfolio for such calendar month
determined by the Fund's custodian pursuant to the procedures
established by the Board of Directors of the Fund and in accordance
with the requirements of the Investment Company Act of 1940, as
amended, and the applicable rules and regulations of the Securities and
Exchange Commission. Each payment of a monthly fee shall be made to us
to you no later than the fifteenth day of the following calendar month.
3. You agree that there will be full compliance with any and all provisions
of the Investment Company Act of 1940, as amended, applicable to you and your
directors, officers or employees, or to interested persons with respect to you.
4. You agree that you will not make a short sale of any capital stock of
the Fund, or purchase any share of the capital stock of the Fund otherwise than
for investment.
5. Your services to us are not to be deemed exclusive and you are free to
render similar services to others.
6. Nothing herein shall be construed as constituting you as agent of us or
of the Fund.
7. We and the Fund agree that you may rely on information reasonably
believed by you to be accurate and reliable. We and the Fund further agree that,
except as may otherwise be provided by the Investment Company Act of 1940, as
amended, neither you nor your officers, directors, employees or agents shall be
subject to any liability for any act or omission in the course of, connected
with or arising out of any services to be rendered hereunder except by reason of
willful misfeasance, bad faith or gross negligence in the performance of your
duties or by reason of reckless disregard of your obligations and duties under
this Agreement.
<PAGE>
8. This Agreement shall remain in effect until December 31, 1995.
9. This Agreement may nevertheless be terminated at any time, without
penalty, by us or by the Fund's Board of Directors or by vote of holders of a
majority of the outstanding voting securities of the Fund, upon sixty (60) days'
written notice delivered or sent by registered mail, postage prepaid, to you, at
your address given above or at any other address of which you shall have
notified us in writing, or by you upon six (6) months' such written notice to us
and to the Fund, and shall automatically be terminated in the event of its
assignment or of the assignment of the Management Agreement. Any such notice
shall be deemed given when received by the addressee.
10. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by either party hereto. It may be amended by mutual
agreement, but only after authorization of such amendment by the affirmative
vote of (i) the holders of a majority of the outstanding voting securities of
the Fund, and (ii) a majority of the members of the Fund's Board of Directors
who are not interested persons of the Fund, you or us, cast in person at a
meeting called for the purpose of voting on such approval.
11. This Agreement shall be construed in accordance with the laws of the
State of New York, provided, however, that nothing herein shall be construed as
being inconsistent with the Investment Company Act of 1940, as amended. As used
herein the terms "interested person," "assignment," and "vote of a majority of
the outstanding voting securities" shall have the meanings set forth in the
Investment Company Act of 1940, as amended.
12. This Agreement shall supersede all prior investment advisory,
sub-advisory, research or management agreements entered into between you and us
or any of our affiliates.
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart hereof and return the same to us.
Yours very truly,
SCUDDER, STEVENS & CLARK, INC.
By /s/David S. Lee
---------------------------
Managing Director
The foregoing Agreement is hereby accepted as of the date first above written.
NIKKO INTERNATIONAL CAPITAL
MANAGEMENT CO., LTD.
By /s/unintelligible
---------------------------
President
Accepted:
THE JAPAN FUND, INC.
By /s/Douglas M. Loudon
---------------------------
President
2
Exhibit 6
THE JAPAN FUND, INC.
345 Park Avenue
New York, New York 10154
August 14, 1987
Scudder Fund Distributors, Inc.
175 Federal Street
Boston, Massachusetts 02110
Underwriting Agreement
Dear Sirs:
The Japan Fund, Inc. (hereinafter called the "Fund") is a corporation
organized under the laws of Maryland and is engaged in the business of an
investment company. The authorized capital of the Fund consists of shares of
capital stock, par value $0.33 1/3 per share ("Shares"). The Fund has selected
you to act as principal underwriter (as such term is defined in Section 2(a)(29)
of the Investment Company Act of 1940, as amended (the "1940 Act")) of the
Shares and you are willing to act as such principal underwriter and to perform
the duties and functions of underwriter in the manner and on the terms and
conditions hereinafter set forth. Accordingly, the Fund hereby agrees with you
as follows:
1. Delivery of Documents. The Fund has furnished you with copies
properly certified or authenticated of each of the following:
(a) Articles of Incorporation of the Fund, dated August 10, 1961.
(b) By-Laws of the Fund as in effect on the date hereof.
(c) Resolutions of the Board of Directors of the Fund selecting
you as principal underwriter and approving this form of
Agreement.
The Fund will furnish you from time to time with copies, properly certified
or authenticated, of all amendments of or supplements to the foregoing, if any.
The Fund will furnish you promptly with properly certified or authenticated
copies of any registration statement filed by it with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, (the "1933
Act") or the
<PAGE>
1940 Act, together with any financial statements and exhibits included therein,
and all amendments or supplements thereto hereafter filed.
2. Registration and Sale of Additional Shares. The Fund will from time to
time use its best efforts to register under the 1933 Act such number of Shares
not already so registered as you may reasonably be expected to sell on behalf of
the Fund. You and the Fund will cooperate in taking such action as may be
necessary from time to time to qualify Shares so registered for sale by you or
the Fund in any states mutually agreeable to you and the Fund, and to maintain
such qualification. This Agreement relates to the issue and sale of Shares that
are duly authorized and registered and available for sale by the Fund, including
redeemed or repurchased Shares if and to the extent that they may be legally
sold and if, but only if, the Fund sees fit to sell them.
3. Sale of Shares. Subject to the provisions of paragraphs 5 and 7 hereof
and to such minimum purchase requirements as may from time to time be currently
indicated in the Fund's prospectus or statement of additional information, you
are authorized to sell as agent on behalf of the Fund Shares authorized for
issue and registered under the 1933 Act. You may also purchase as principal
Shares for resale to the public. Such sales will be made by you on behalf of the
Fund by accepting unconditional orders to purchase Shares placed with you by
investors and such purchases will be made by you only after acceptance by you of
such orders. The sales price to the public of Shares shall be the public
offering price as defined in paragraph 6 hereof.
4. Solicitation of Orders. You will use your best efforts (but only in
states in which you may lawfully do so) to obtain from investors unconditional
orders for Shares authorized for issue by the Fund and registered under the 1933
Act, provided that you may in your discretion refuse to accept orders for Shares
from any particular applicant.
5. Sale of Shares by the Fund. Unless you are otherwise notified by the
Fund, any right granted to you to accept orders for Shares or to make sales on
behalf of the Fund or to purchase Shares for resale will not apply to (i) Shares
issued in connection with the merger or consolidation of any other investment
company with the Fund or its acquisition, by purchase or otherwise, of all or
substantially all of the assets of any investment company or substantially all
the outstanding shares of any such company, and (ii) such right shall not apply
to Shares that may be offered by the Fund to shareholders of the Fund by virtue
of their being such shareholders.
-2-
<PAGE>
6. Public Offering Price. All Shares sold to investors by you will be sold
at the public offering price. The public offering price for all accepted
subscriptions will be the net asset value per Share, as determined next after
the order is accepted by you and in the manner provided in the Fund's
registration statement as from time to time in effect under the 1933 Act and the
1940 Act.
7. Suspension of Sales. If and whenever the determination of net asset
value is suspended and until such suspension is terminated, no further orders
for Shares shall be accepted by you except unconditional orders placed with you
before you had knowledge of the suspension. In addition, the Fund reserves the
right to suspend sales and your authority to accept orders for Shares on behalf
of the Fund if, in the judgment of a majority of the Board of Directors or a
majority of the Executive Committee of such Board, if such body exists, it is in
the best interests of the Fund to do so, such suspension to continue for such
period as may be determined by such majority; and in that event, no Shares will
be sold by you on behalf of the Fund while such suspension remains in effect
except for Shares necessary to cover unconditional orders accepted by you before
you had knowledge of the suspension.
8. Portfolio Securities. Portfolio securities of the Fund may be bought or
sold by or through you and you may participate directly or indirectly in
brokerage commissions or "spread" in respect of transactions in portfolio
securities of the Fund; provided, however, that all sums of money received by
you as a result of such purchases and sales or as a result of such participation
must, after reimbursement of your actual expenses in connection with such
activity, be paid over by you to or for the benefit of the Fund.
9. Expenses. (a) The Fund will pay (or will enter into arrangements
providing that others than you will pay) all fees and expenses:
(1) in connection with the preparation, setting in type and
filing of any registration statement (including a
prospectus and statement of additional information) under
the 1933 Act or the 1940 Act, or both, and any amendments
or supplements thereto that may be made from time to
time;
(2) in connection with the registration and qualification of
Shares for sale in the various jurisdictions in which the
Fund shall determine it advisable to qualify such Shares
for sale (including registering the Fund as a broker or
dealer or any officer of the Fund or other person as
agent or salesman of the Fund in any such jurisdictions);
-3-
<PAGE>
(3) of preparing, setting in type, printing and mailing any
notice, proxy statement, report, prospectus or other
communication to shareholders of the Fund in their
capacity as such;
(4) of preparing, setting in type, printing and mailing
prospectuses annually, and any supplements thereto, to
existing shareholders;
(5) in connection with the issue and transfer of Shares
resulting from the acceptance by you of orders to
purchase Shares placed with you by investors, including
the expenses of printing and mailing confirmations of
such purchase orders and the expenses of printing and
mailing a prospectus included with the confirmation of
such orders;
(6) of any issue taxes or any initial transfer taxes;
(7) of WATS (or equivalent) telephone lines other than the
portion allocated to you in this paragraph 9;
(8) of wiring funds in payment of Share purchases or in
satisfaction of redemption or repurchase requests,
unless such expenses are paid for by the investor or
shareholder who initiates the transaction;
(9) of the cost of printing and postage of business reply
envelopes sent to Fund shareholders;
(10) of one or more CRT terminals connected with the computer
facilities of the transfer agent other than the portion
allocated to you in this paragraph 9;
(11) permitted to be paid or assumed by the Fund pursuant to a
plan ("12b-l Plan"), if any, adopted by the Fund in
conformity with the requirements of Rule 12b-l under the
1940 Act ("Rule 12b-l") or any successor rule,
notwithstanding any other provision to the contrary
herein;
(12) of the expense of setting in type, printing and postage
of the periodic newsletter to shareholders other than the
portion allocated to you in this paragraph 9; and
(13) of the salaries and overhead of persons employed by you
as shareholder representatives other than the portion
allocated to you in this paragraph 9.
(b) You shall pay or arrange for the payment of all fees and
expenses:
-4-
<PAGE>
(1) of printing and distributing any prospectuses or reports
prepared for your use in connection with the offering of
Shares to the public;
(2) of preparing, setting in type, printing and mailing any
other literature used by you in connection with the
offering of Shares to the public;
(3) of advertising in connection with the offering of Shares
to the public;
(4) incurred in connection with your registration as a
broker or dealer or the registration or qualification of
your officers, directors, agents or representatives
under Federal and state laws;
(5) of that portion of WATS (or equivalent) telephone lines,
allocated to you on the basis of use by investors (but
not shareholders) who request information or
prospectuses;
(6) of that portion of the expense of setting in type,
printing and postage of the periodic newsletter to
shareholders attributable to promotional material
included in such newsletter at your request concerning
investment companies other than the Fund or concerning
the Fund to the extent you are required to assume the
expense thereof pursuant to paragraph 9(b)(8), except
such material which is limited to information, such as
listings of other investment companies and their
investment objectives, given in connection with the
exchange privilege as from time to time described in the
Fund's prospectus;
(7) of that portion of the salaries and overhead of persons
employed by you as shareholder representatives
attributable to the time spent by such persons in
responding to requests from investors, but not
shareholders, for information about the Fund; and
(8) of any activity which is primarily intended to result in
the sale of Shares, unless a 12b-l Plan shall be in
effect which provides that the Fund shall bear some or
all of such expenses, in which case the Fund shall bear
such expenses in accordance with such Plan; and
(9) of that portion of one or more CRT terminals connected
with the computer facilities of the transfer agent
attributable to your use of such terminal(s) to gain
access to such of the transfer agent's records as also
serve as your records.
-5-
<PAGE>
Expenses which are to be allocated between you and the Fund shall be
allocated pursuant to reasonable procedures or formulae mutually agreed upon
from time to time, which procedures or formulae shall to the extent practicable
reflect studies of relevant empirical data.
10. Conformity with Law. You agree that in selling Shares you will duly
conform in all respects with the laws of the United States and any state in
which Shares may be offered for sale by you pursuant to this Agreement and to
the rules and regulations of the National Association of Securities Dealers,
Inc., of which you are a member.
11. Independent Contractor. You shall be an independent contractor and
neither you nor any of your officers or employees is or shall be an employee of
the Fund in the performance of your duties hereunder. You shall be responsible
for your own conduct and the employment, control and conduct of your agents and
employees and for injury to such agents or employees or to others through your
agents or employees. You assume full responsibility for your agents and
employees under applicable statutes and agree to pay all employee taxes
thereunder.
12. Indemnification. You agree to indemnify and hold harmless the Fund and
each of its Directors and officers and each person, if any, who controls the
Fund within the meaning of Section 15 of the 1933 Act, against any and all
losses, claims, damages, liabilities or litigation (including legal and other
expenses) to which the Fund or such Directors, officers, or controlling person
may become subject under such Act, under any other statute, at common law or
otherwise, arising out of the acquisition of any Shares by any person which (i)
may be based upon any wrongful act by you or any of your employees or
representatives, or (ii) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in a registration statement
(including a prospectus or statement of additional information) covering Shares
or any amendment thereof or supplement thereto or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statement therein not misleading if such statement or
omission was made in reliance upon information furnished to the Fund by you, or
(iii) may be incurred or arise by reason of your acting as the Fund's agent
instead of purchasing and reselling Shares as principal in distributing the
Shares to the public, provided, however, that in no case (i) is your indemnity
in favor of a Director or officer or any other person deemed to protect such
Director or officer or other person against any liability to which any such
person would otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of his duties or by reason of his
reckless disregard of obligations and duties under this Agreement or (ii) are
you to be liable under your indemnity
-6-
<PAGE>
agreement contained in this paragraph with respect to any claim made against the
Fund or any person indemnified unless the Fund or such person, as the case may
be, shall have notified you in writing within a reasonable time after the
summons or other first legal process giving information of the nature of the
claims shall have been served upon the Fund or upon such person (or after the
Fund or such person shall have received notice of such service on any designated
agent), but failure to notify you of any such claim shall not relieve you from
any liability which you may have to the Fund or any person against whom such
action is brought otherwise than on account of your indemnity agreement
contained in this paragraph. You shall be entitled to participate, at your own
expense, in the defense, or, if you so elect, to assume the defense of any suit
brought to enforce any such liability, but if you elect to assume the defense,
such defense shall be conducted by counsel chosen by you and satisfactory to the
Fund, to its officers and Directors, or to any controlling person or persons,
defendant or defendants in the suit. In the event that you elect to assume the
defense of any such suit and retain such counsel, the Fund, such officers and
Directors or controlling person or persons, defendant or defendants in the suit
shall bear the fees and expenses of any additional counsel retained by them,
but, in case you do not elect to assume the defense of any such suit, you will
reimburse the Fund, such officers and Directors or controlling person or
persons, defendant or defendants in such suit for the reasonable fees and
expenses of any counsel retained by them. You agree promptly to notify the Fund
of the commencement of any litigation or proceedings against it in connection
with the issue and sale of any of Shares.
The Fund agrees to indemnify and hold harmless you and each of your
directors and officers and each person, if any, who controls you within the
meaning of Section 15 of the 1933 Act, against any and all losses, claims,
damages, liabilities or litigation (including legal and other expenses) to which
you or such directors, officers or controlling person may become subject under
such Act, under any other statute, at common law or otherwise, arising out of
the acquisition of any Shares by any person which (i) may be based upon any
wrongful act by the Fund or any of its employees or representatives, or (ii) may
be based upon any untrue statement or alleged untrue statement of a material
fact contained in a registration statement (including a prospectus or statement
of additional information) covering Shares or any amendment thereof or
supplement thereto or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in reliance upon
information furnished to you by the Fund; provided, however, that in no case (i)
is the Fund's indemnity in favor of a director or officer or any other person
deemed to protect such director or officer or other person
-7-
<PAGE>
against any liability to which any such person would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of his duties or by reason of his reckless disregard of obligations and duties
under this Agreement or (ii) is the Fund to be liable under its indemnity
agreement contained in this paragraph with respect to any claims made against
you or any such director, officer or controlling person unless you or such
director, officer or controlling person, as the case may be, shall have notified
the Fund in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon you or upon such director, officer or controlling person (or after
you or such director, officer or controlling person shall have received notice
of such service on any designated agent), but failure to notify the Fund of any
such claim shall not relieve it from any liability which it may have to the
person against whom such action is brought otherwise than on account of its
indemnity agreement contained in this paragraph. The Fund will be entitled to
participate at its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce any such liability, but if the Fund
elects to assume the defense, such defense shall be conducted by counsel chosen
by it and satisfactory to you, your directors, officers or controlling persons
or persons, defendant or defendants in the suit. In the event that the Fund
elects to assume the defense of any such suit and retain such counsel, you, your
directors, officers or controlling person or persons, defendant or defendants in
the suit, shall bear the fees and expenses of any additional counsel retained by
them, but, in case the Fund does not elect to assume the defense of any such
suit, it will reimburse you or such directors, officers or controlling person or
persons, defendant or defendants in the suit, for the reasonable fees and
expenses of any counsel retained by them. The Fund agrees promptly to notify you
of the commencement of any litigation or proceedings against it or any of its
officers or Director in connection with the issuance or sale of any Shares.
13. Authorized Representations. The Fund is not authorized to give any
information or to make any representations on behalf of you other than the
information and representations contained in a registration statement (including
a prospectus or statement of additional information) covering Shares, as such
registration statement and prospectus may be amended or supplemented from time
to time.
You are not authorized to give any information or to make any
representations on behalf of the Fund or in connection with the sale of Shares
other than the information and representations contained in a registration
statement (including a prospectus or statement of additional information)
covering
-8-
<PAGE>
Shares, as such registration statement may be amended or supplemented from time
to time. No person other than you is authorized to act as principal underwriter
(as such term is defined in the 1940 Act) for the Fund.
14. Duration and Termination of this Agreement. This Agreement shall
become effective upon the date first written above and will remain in effect
until ____________, 198__ and from year to year thereafter, but only so long as
such continuance is specifically approved at least annually by the vote of a
majority of the Directors who are not interested persons of you or of the Fund,
cast in person at a meeting called for the purpose of voting on such approval,
and by vote of the Board of Directors or of a majority of the outstanding voting
securities of the Fund. This Agreement may, on 60 days written notice, be
terminated at any time without the payment of any penalty, by the Board of
Directors of the Fund, by a vote of a majority of the outstanding voting
securities of the Fund, or by you. This Agreement will automatically terminate
in the event of its assignment. In interpreting the provisions of this paragraph
14, the definitions contained in Section 2(a) of the 1940 Act (particularly the
definitions of "interested person", "assignment" and "majority of the
outstanding voting securities"), as modified by any applicable order of the
Securities and Exchange Commission, shall be applied.
15. Amendment of this Agreement. No provisions of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. If the Fund should at any time deem it
necessary or advisable in the best interests of the Fund that any amendment of
this Agreement be made in order to comply with the recommendations or
requirements of the Securities and Exchange Commission or other governmental
authority or to obtain any advantage under state or federal tax laws and should
notify you of the form of such amendment, and the reasons therefor, and if you
should decline to assent to such amendment, the Fund may terminate this
Agreement forthwith. If you should at any time request that a change be made in
the Fund's Articles of Incorporation or By-laws or in its methods of doing
business, in order to comply with any requirements of federal law or regulations
of the Securities and Exchange Commission or of a national securities
association of which you are or may be a member relating to the sale of shares
of the Fund, and the Fund should not make such necessary change within a
reasonable time, you may terminate this Agreement forthwith.
16. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect
-9-
<PAGE>
their construction or effect. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Fund, whereupon this letter shall become a binding contract.
Very truly yours,
THE JAPAN FUND, INC.
BY: /s/ [Illegible]
---------------
The foregoing Agreement is hereby accepted as of the date thereof.
SCUDDER FUND DISTRIBUTORS, INC.
BY: /s/ [Illegible]
---------------
-10-
Exhibit 7
THE JAPAN FUND, INC.
DIRECTORS' RETIREMENT PLAN
Independent members ("Independent Members") of the board of
directors of The Japan Fund, Inc. (the "Fund") are entitled to receive benefits
under this retirement plan (the "Plan").
An Independent Member is a director or trustee who is not a present
or former officer, director or control person of an investment manager or
principal underwriter of the Fund or an affiliated company of an investment
manager or principal underwriter of the Fund.
The Fund is responsible for the payment of the benefits as well as
all expenses of administration of the Plan, including without limitation all
accounting and legal fees. The obligations of the Fund to pay benefits and
expenses will not be secured or funded in any manner and such obligations will
not have any preference over the lawful claims of the Fund's creditors or
shareholders.
The Plan shall be administered by a committee of Independent Members
which shall be the Independent Members who are responsible for selecting and
nominating candidates to fill vacancies for Independent Members, as set forth in
the resolution establishing the Fund's Nominating Committee, and who are not
"interested persons" of the Fund, as that term is defined in the Investment
Company Act of 1940, or "interested persons" of any investment adviser or
distributor of the Fund.
Members of the board of directors of the Fund [(other than members
serving on the date of adoption of this plan/members who turn 72 after [date])]
shall retire from the board no later than their 72nd birthday. Independent
Members who retire earlier shall nonetheless be entitled to receive benefits
under this Plan, provided they have served as Independent Members for at least
five years.
An Independent Member, upon retirement after at least five years of
service as an Independent Member, shall receive a monthly retirement payment for
a period of 120 months. In the event of an Independent Member's death prior to
the passage of the 120 month period, payments shall continue to be made to the
beneficiary that the Independent Member shall have designated to the Secretary
of the Fund, or if no such beneficiary shall have been designated or
<PAGE>
shall be living, to the Independent Member's estate. Payment to the Independent
Members's estate may, at the election of the estate's representative, be made in
a lump sum in the amount of all monthly payments that were remaining to be paid
to the Independent Member at the time of his death.
The amount of the monthly retirement payment shall be fixed at the
date of retirement. For Independent Members with five years of service on the
board of directors, the annual retirement benefit will be 50% of the basic
annual retainer (excluding any fees relating to attending meetings) on the
retirement date. For Independent Members with more than five years service, the
annual benefit will increase by an amount equal to .10% of the basic annual
retainer for each year of service or portion thereof in excess of five years, up
to a maximum annual benefit of 100% of the basic annual retainer. Payments shall
be made during the first week of each month in the amount of one-twelfth of the
annual benefit. No payment may be anticipated, pledged, assigned either in law
or equity, alienated, attached, garnished, levied or subject to any other legal
or equitable process.
The Plan does not create a right for any director to be renominated
nor is there any duty on the part of the members of any committee or the board
to renominate a person for election as a director.
The contingent obligations of the Fund under the Plan shall be
accounted for in accordance with generally accepted accounting principles so the
retirement benefits shall be recognized (and thus affect shareholders) during
the service in office and not during retirement, with the amount of the monthly
accrual being adjusted as appropriate for the time value of money. Upon the
retirement of an Independent Member, the Fund, at its option, may purchase an
annuity contract to meet its obligation to the Independent Member.
The Fund at any time may terminate the Plan or, from time to time,
may modify or change the Plan; provided, however, that the right of an
Independent Member to receive payments under the Plan shall vest upon his or her
retirement date and no termination, modification or change shall affect his or
her rights to receive the payments to which he or she was entitled under the
Plan as it existed upon the date of retirement.
The Plan shall not be a qualified plan under Section 401 of the
Internal Revenue Code and need not be submitted for approval of shareholders.
2
<PAGE>
The Plan and any modification, change or termination of a Plan shall
be approved by a majority of the directors who are not "interested persons" of
the Fund or "interested persons" of any investment adviser or distributor of the
Fund and by a majority of the board as a whole.
3
Exhibit 8(a)
CUSTODIAN AGREEMENT
AGREEMENT made this 17th day of July, 1987, between THE JAPAN FUND, INC.
(the "Fund") and Brown Brothers Harriman & Co. (the "Custodian").
WITNESSETH: That in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. The Fund hereby employs and appoints the Custodian as a custodian for
the term and subject to the provisions of this Agreement. The Fund agrees to
deliver to the Custodian all securities and cash owned 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 it for such new or treasury shares of capital stock of
the Fund as may be issued or sold from time to time.
The Custodian shall not be under any duty or obligation to require the
Fund to deliver to it any securities or funds owned by the Fund and shall have
no responsibility or liability for or on account of securities or funds not so
delivered. The Fund will deposit with the Custodian copies of the Certificate of
Incorporation and By-Laws (or comparable documents) of the Fund and all
amendments thereto, and copies of such votes and other proceedings of the Fund
as may be necessary for or convenient to the Custodian in the performance of its
duties.
1
<PAGE>
It is understood that as used in this Agreement, the term "securities"
shall include futures contracts and options.
2. Except for securities and funds held by subcustodians appointed
pursuant to the provisions of Section 3 hereof, the Custodian shall have and
perform the following powers and duties:
A. Safekeeping - To keep safely the securities of the Fund that have been
delivered to the Custodian and from time to time to receive delivery of
securities for safekeeping.
B. Manner of Holding Securities - To hold securities of the Fund (1) by
physical possession of the share certificates or other instruments representing
such securities in registered or bearer form or of the broker's receipts or
confirmations for futures contracts, options and similar securities, or (2) in
book-entry form by a Securities System (as said term is defined in Section 2V).
C. Registered Name; Nominee - To hold registered securities of the Fund
(1) in the name or any nominee name of the Custodian or the Fund, or in the name
or any nominee name of any agent appointed pursuant to Section 6E, or (2) in
street certificate form, so-called, and in any case with or without any
indication of fiduciary capacity.
D. Purchases - Upon receipt of proper instructions, and insofar as funds
are available for the purpose, to pay for and receive securities purchased for
the account of the Fund, payment being made only upon receipt of the securities
(1) by the
-2-
<PAGE>
Custodian, or (2) by a clearing corporation of a national securities exchange of
which the Custodian is a member, or (3) by a Securities System. However, (i) in
the case of repurchase agreements entered into by the Fund, the Custodian (as
well as a Subcustodian or an Agent, as defined in Section 2G) may release funds
to a Securities System prior to the receipt of advice from the Securities System
that the securities underlying such repurchase agreement have been transferred
by book entry into the Account (as defined in Section 2V) of the Custodian (or
such Subcustodian or Agent) maintained with such Securities System, and (ii) in
the case of futures contracts, options and similar securities or time deposits,
call account deposits, currency deposits, and other deposits pursuant to
Sections 2M, 2N and 20, the Custodian may make payment therefor without
receiving an instrument evidencing said contract, option, security or deposit.
Exchanges - Upon receipt of proper instructions, to exchange securities
held by it for the account of the Fund for other securities in connection with
any reorganization, recapitalization, split-up of shares, change of par value,
conversion or other event, and to deposit any such securities in accordance with
the terms of any reorganization or protective plan. Without such instructions,
the Custodian may surrender securities in temporary form for definitive
securities, may surrender securities for transfer into a name or nominee name as
permitted in Section 2C, and may surrender securities for a
-3-
<PAGE>
different number of certificates or instruments representing the same number of
shares or same principal amount of indebtedness, provided the securities to be
issued are to be delivered to the Custodian.
F. Sales of Securities - Upon receipt of proper instructions, to make
delivery of securities which have been sold for the account of the Fund, but
only against payment therefor (1) in cash, by a certified check, bank cashier's
check, bank credit, or bank wire transfer, or (2) by credit to the account of
the Custodian with a clearing corporation of a national securities exchange of
which the Custodian is a member or (3) by credit to the account of the Custodian
or an Agent of the Custodian with a Securities System.
G. Depositary Receipts - Upon receipt of proper instructions, to instruct
a subcustodian appointed pursuant to Section 3 hereof (a "Subcustodian") or an
agent of the Custodian appointed pursuant to Section 6E hereof (an "Agent") to
surrender securities to the depositary used by an issuer of American Depositary
Receipts or International Depositary Receipts (hereinafter collectively referred
to as "ADRs") for such securities against a written receipt therefor adequately
describing such securities and written evidence satisfactory to the Subcustodian
or Agent that the depositary has acknowledged receipt of instructions to issue
with respect to such securities ADRs in the name of the Custodian, or a nominee
of the Custodian,
-4-
<PAGE>
for delivery to the Custodian in Boston, Massachusetts, or at such other place
as the Custodian may from time to time designate.
Upon receipt of proper instructions, to surrender ADRs to the issuer
thereof against a written receipt therefor adequately describing the ADRs
surrendered and written evidence satisfactory to the Custodian that the issuer
of the ADRs has acknowledged receipt of instructions to cause its depositary to
deliver the securities underlying such ADRs to a Subcustodian or an Agent.
H. Exercise of Rights; Tender Offers - Upon receipt of proper
instructions, to deliver to the issuer or trustee thereof, or to the agent of
either, warrants, puts, calls, futures contracts, options, rights or similar
securities for the purpose of being exercised or sold, provided that the new
securities and cash, if any, acquired by such action are to be delivered to the
Custodian, and, upon receipt of proper instructions, to deposit securities upon
invitations for tenders of securitries, provided that the consideration is to be
paid or delivered or the tendered securities are to be returned to the
Custodian.
I. Stock Dividends, Rights, Etc. - To receive and collect all stock
dividends, rights and other items of like nature; and to deal with the same
pursuant to proper instructions relative thereto.
J. Options - Upon receipt of proper instructions, to receive and retain
confirmations or other documents evidencing the purchase or writing of an option
on a security or securities index
5
<PAGE>
by the Fund; to deposit and maintain in a segregated account, either physically
or by book-entry in a Securities System, securities subject to a covered call
option written by the Fund; and to release and/or transfer such securities or
other assets only in accordance with a notice or other communication evidencing
the expiration, termination or exercise of such covered option furnished by The
Options Clearing Corpopration, the securities or options exchange on which such
covered option is traded or such other organization as may be responsible for
handling such options transactions.
K. Futures Contracts - Upon receipt of proper instructions, to receive and
retain confirmations evidencing the purchase or sale of a futures contract or an
option on a futures contract by the Fund; to deposit and maintain in a
segregated account, for the benefit of any futures commission merchant, assets
designated by the Fund as initial, maintenance or variation "margin" deposits
intended to secure the Fund's performance of its obligations under any futures
contracts purchased or sold or any options on futures contracts written by the
Fund, in accordance with the provisions of any agreement or agreements among any
of the fund, the Custodian and such futures commission merchant, designed to
comply with the rules of thue Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or organizations, regarding such
margin deposits; and to release and/or transfer assets in such margin accounts
only in accordance with any such agreements or rules.
-6-
<PAGE>
L. Borrowings - Upon receipt of proper instructions, to deliver securities
of the Fund to lenders or their agents as collateral for borrowings effected by
the Fund, but only against receipt of the amounts borrowed, provided that if
such collateral is held in book-entry form by a Securities System (as defined in
Section 2V), such collateral may be transferred by book-entry to such lender or
its agent against receipt by the Custodian of any undertaking by such lender to
pay such borrowed money to or upon the Custodian's order on the next business
day following such transfer of collateral.
M. Demand Deposit Bank Accounts - To open and operate an account or
accounts in the name of the Fund on the Custodian's books subject only to draft
or order by the Custodian. All funds received by the Custodian from or for the
account of the Fund shall be deposited in said account(s). The responsibilities
of the Custodian to the Fund for deposits accepted on the Custodian's books
shall be that of a U. S. bank for a similar deposit.
If and when authorized by proper instructions, the Custodian may open and
operate an additional account(s) in such other banks or trust companies as may
be designated by the Fund in such instructions (any such bank or trust company
so designated by the Fund being referred to hereafter as a "Banking
Institution") provided that such account(s) shall be in the name of the
Custodian for account of the Fund and subject only to the Custodian's draft or
order. Such accounts may be opened with
-7-
<PAGE>
Banking Institutions in the United States and in other countries and may be
denominated in either U. S. Dollars or other currencies as the Fund may
determine. All such deposits shall be deemed to be portfolio securities of the
Fund and accordingly the responsibility of the Custodian therefor shall be the
same as and no greater than the Custodian's responsibility in respect of other
portfolio securities of the Fund.
N. Interest Bearing Call or Time Deposits - To place interest bearing
fixed term and call deposits with such banks and in such amounts as the Fund may
authorize pursuant to proper instructions. Such deposits may be placed with the
Custodian or with Subcustodians or other Banking Institutions as the Fund may
determine. Deposits may be denominated in U. S. Dollars or other currencies and
need not be evidenced by the issuance or delivery of a certificate to the
Custodian, provided that the Custodian shall include in its records with respect
to the assets of the Fund, appropriate notation as to the amount and currency of
each such deposit, the accepting Banking Institution, and other appropriate
details. Such deposits, other than those placed with the Custodian, shall be
deemed portfolio securities of the Fund and the responsibilities of the
Custodian therefor shall be the same as those for demand deposit bank accounts
placed with other banks, as described in the second paragraph of Section 2M of
this Agreement. The responsibility of the Custodian for such deposits accepted
on the Custodian's books shall be that of a U. S. bank for a similar deposit.
-8-
<PAGE>
O. Foreign Exchange Transactions - Pursuant to proper instructions, to
enter into foreign exchange contracts to purchase and sell foreign currencies
for spot and future delivery on behalf and for the account of the Fund, and in
connection therewith to receive and retain receipts, confirmations or other
documents evidencing such contracts and to deposit and maintain cash or
designated securities in a segregated account and to release and/or transfer
assets held in such account only in accordance with such proper instructions.
Such transactions may be undertaken by the Custodian with such Banking
Institutions, including the Custodian and Subcustodian(s) as principals, as
approved and authorized by the Fund. Foreign exchange contracts, other than
those executed with the Custodian, shall be deemed to be portfolio securities of
the Fund and the responsibilities of the Custodian therefor shall be the same as
those for demand deposit bank accounts placed with other banks as described in
the second paragraph of Section 2M of this Agreement.
P. Stock Loans - Upon receipt of proper instructions, to deliver
securities of the Fund, in connection with loans of securities by the Fund, to
the borrower thereof but only against receipt of such collateral as the Fund
shall instruct; except that in connection with any loans for which collateral is
to be credited to the Custodian's Account in a book-entry system referred to in
Section 2V(ii) hereof, the Custodian may deliver securities prior to the credit
of such collateral, provided that
-9-
<PAGE>
the Custodian shall promptly notify the Fund if such collateral is not credited.
Q. Collections - To collect, receive and deposit in the account or
accounts referred to in Section 2M all income and other payments with respect to
the securities held hereunder, and to 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 or in
connection with transfer of securities, and pursuant to proper instructions to
take other actions, which involve an investment decision, with respect to
collection or receipt of funds or transfer of securities.
R. Dividends, Distributions and Redemption - Upon receipt of proper
instructions from the Fund, or upon receipt of instructions from the Fund's
shareholder servicing agent or agent with comparable duties (the "Shareholder
Servicing Agent") (given by such person or persons and in such manner on behalf
of the Shareholder Servicing Agent as the Fund shall have authorized), the
Custodian shall release funds or securities to the Shareholder Servicing Agent
or otherwise apply funds or securities, insofar as available, for the payment of
dividends or other distributions to Fund shareholders. Upon receipt of proper
instructions from the Fund, or upon receipt of instructions from the Shareholder
Servicing Agent (given by such person or persons and in such manner on behalf of
the Shareholder Servicing Agent as the Fund
- 10 -
<PAGE>
shall have authorized), the Custodian shall release funds or securities,
insofar as available, to the Shareholder Servicing Agent or as such Agent shall
otherwise instruct for payment to the Fund shareholders who have delivered to
such Agent a request for repurchase or redemption of their shares of capital
stock of the Fund.
S. Proxies, Notices, Etc. - Promptly to deliver or mail to the Fund all
forms of proxies and all notices of meetings and any other notices or
announcements affecting or relating to securities owned by the Fund that are
received by the Custodian, and upon receipt of proper instructions, to execute
and deliver or cause its nominee to execute and deliver such proxies or other
authorizations as may be required. Neither the Custodian nor its nominee shall
vote upon any of such securities or execute any proxy to vote thereon or give
any consent or take any other action with respect thereto (except as otherwise
herein provided) unless ordered to do so by proper instructions.
T. Bills - Upon receipt of proper instructions, to pay or cause to be
paid, insofar as funds are available for the purpose, bills, statements, or
other obligations of the Fund.
U. Nondiscretionary Details - Without the necessity of express
authorization from the Fund (1) to attend to all nondiscretionary details in
connection with the sale, exchange, substitution, purchase, transfer or other
dealings with securities, funds or other property of the Fund held by the
- 11 -
<PAGE>
Custodian except as otherwise directed from time to time by the Board of
Directors of the Fund, and (2) to make payments to itself or others for minor
expenses of handling securities or other similar items relating to the
Custodian's duties under this Agreement, provided that all such payments shall
be accounted for to the Fund.
V. Deposit of Fund Assets in Securities Systems - The Custodian may
deposit and/or maintain securities owned by the Fund in (i) The Depository Trust
Company, (ii) any book-entry system as provided in Subpart O of Treasury
Circular No. 300, 31 CFR 306, Subpart B of 31 CRF Part 350, or the book-entry
regulations of federal agencies substantially in the form of Subpart O, or (iii)
any other domestic 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 and whose use the Fund has previously approved in
writing (each of the foregoing being referred to in this Agreement as a
"Securities System"). Utilization of a Securities System shall be 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 deposit and/or maintain Fund securities, either
directly or through one or more Agents appointed by the custodian
(provided that any such Agent shall be
- 12 -
<PAGE>
qualified to act as a custodian of the Fund pursuant to the
Investment Company Act of 1940 and the rules and regulations
thereunder), in a Securities System provided that such securities
are represented in an account ("Account") of the Custodian or such
Agent in the Securities System which shall not include any assets of
the Custodian or Agent 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
- 13 -
<PAGE>
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 or an
Agent as referred to above, and be provided to the Fund at its
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 on the next business
day;
(4) The Custodian shall provide the Fund with any report obtained by the
Custodian or any Agent as referred to above on the Securities
System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the Securities
System; and the custodian and such Agents shall send to the Fund
such reports on their own systems of
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<PAGE>
internal accounting control as the Fund may reasonably requesst from
time to time.
(5) At the written request of the fund, the Custodian will terminate the
use of any such Securities System on behalf of the Fund as promptly
as practicable.
W. Other Transfers - To deliver securities, funds and other property of
the Fund to a Subcustodian or another custodian of the Fund; and, upon receipt
of proper instructions, to make such other disposition of securities, funds or
other property of the Fund in a manner other than or for purposes other than as
enumerated elsewhere in this Agreement, provided that the instructions relating
to such disposition shall include a statement of the purpose for which the
delivery is to be made, the amount of securities to be delivered and the name of
the person or persons to whom delivery is to be made.
X. Investment Limitations - In performing its duties generally, and more
particularly in connection with the purchase, sale and exchange of securities
made by or for the Fund, the Custodian may assume unless and until notified in
writing to the contrary that proper instructions received by it are not in
conflict with or in any way contrary to any provisions of the Fund's Certificate
of Incorporation or By-Laws (or comparable documents) or votes or proceedings of
the shareholders or Directors of the Fund. The Custodian shall in no event be
liable
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<PAGE>
to the fund and shall be indemnified by the Fund for any violation of any
investment limiations to which the Fund is subject or other limitations with
respect to the Fund's powers to make expenditures, encumber securities, borrow
or take similar actions affecting its portfolio.
Y. Proper Instructions - Proper instructions shall mean a tested telex
from the Fund or a written request,, direction, instruction or certification
signed or initialled on behalf of the Fund by one or more person or persons as
the Board of Directors of the Fund shall have from time to time authorized,
provided, however, that no such instructions directing the delivery of
securities or the payment of funds to an authorized signatory of the Fund shall
be signed by such person. Those persons authorized to give proper instructions
may be identified by the Board of Directors by name, title or position and will
include at least one officer empowered by the Board to name other individuals
who are authorized to give proper instructions on behalf of the Fund. Telephonic
or other oral instructions given by any one of the above persons 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. Oral instructions will be confirmed by tested telex or in
writing in the manner set forth above but the lack of such confirmation shall in
no way affect any action taken by the Custodian in reliance upon such oral
instructions. Proper
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<PAGE>
instructions may relate to specific transactions or to types or classes of
transactions, and may be in the form of standing instructions.
Proper instructions may include communications effected directly between
electro-mechanical or electronic devices or systems, in addition to tested
telex,, provided that the Fund and the Custodian agree in writing to the use of
such device or system.
3. Securities, funds and other property of the Fund may be held by
subcustodians appointed pursuant to the provisions of this Section 3 (a
"Subcustodian"). The Custodian may, at any time and from time to time, appoint
any bank or trust company (meeting the requirements of a custodian or a foreign
custodian under the Investment Company Act of 1940 and the rules and regulations
thereunder) to act as a Subcustodian for the Fund, provided that the Fund shall
have approved in writing (1) any such bank or trust company and the subcustodian
agreement to be entered into between such bank or trust company and the
Custodian, and (2) the Subcustodian's offices or branches at which the
Subcustodian is authorized to hold securities, cash and other property of the
Fund. Upon such approval by the Fund, the Custodian is authorized on behalf of
the Fund to notify each Subcustodian of its appointment as such. The Custodian
may, at any time in its discretion, remove any bank or trust company that has
been appointed as a Subcustodian.
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<PAGE>
Those Subcustodians, their offices or branches which the Fund has approved
to date are set forth on Appendix A hereto. Such Appendix shall be amended from
time to time as Subcustodians, branches or offices are changed, added or
deleted. The Fund shall be responsible for informing the custodian sufficiently
in advance of a proposed investment which is to be held at a location not listed
on Appendix A, in order that there shall be sufficient time for the Fund to give
the approval required by the preceding paragraph and for the Custodian to put
the appropriate arrangements in place with such Subcustodian pursuant to such
subcustodian agreement.
If the Fund shall have invested in a security to be held in a location
before the foregoing procedures have been completed, such security shall be held
by such agent as the Custodian may appoint unless and until the Fund shall
instruct the Custodian to move the security into the possessiosn of the
Custodian or a Subcustodian. In any event, the Custodian shall be liable to the
Fund for the actions of such agent if and only to the extent the Custodian shall
have recovered from such agent for any damages caused the Fund by such agent.
With respect to the securities and funds held by a Subcustodian, either
directly or indirectly, including demand and interest bearing deposits,
currencies or other deposits and foreign exchange contracts as referred to in
Sections 2M, 2N or 2O, the Custodian shall be liable to the fund if and only to
the
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<PAGE>
extent that such Subcustodian is liable to the custodian and the custodian
recovers under the applicable subcustodian agreement. The Custodian shall
nevertheless be liable to the Fund for its own negligence in transmitting any
instructions received by it from the Fund and for its own negligence in
connection with the delivery of any securities or funds held by it to any such
Subcustodian.
In the event that any Subcustodian appointed pursuant to the provisions of
this Section 3 fails to perform any of its obligations under the terms and
conditions of the applicable subcustodian agreement, the Custodian shall use its
best efforts to cause such Subcustodian to perform such obligations. In the
event that the Custodian is unable to cause such Subcustodian to perform fully
its obligations thereunder, the Custodian shall forthwith upon the Fund's
request terminate such Subcustodian and, if necessary or desirable, appoint
another subcustodian in accordance with the provisions of this Section 3. At the
election of the fund, it shall have the right to enforce, to the extent
permitted by the subcustodian agreement and applicable law, the Custodian's
rights against any such Subcustodian for loss or damage caused the fund by such
Subcustodian.
At the written request of the Fund, the Custodian will terminate any
Subcustodian appointed pursuant to the provisions of this Section 3 in
accordance with the termination provisions under the applicable subcustodian
agreement. The Custodian will not
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<PAGE>
amend any subcustodian agreement or agree to change or permit any changes
thereunder except upon the prior written approval of the Fund.
In the event the custodian intends to make any payment to a Subcustodian
under the indemnification provisions of any subcustodian agreement, the
Custodian shall give the Fund written notice of such intention no less than
thirty (30) days prior to the date such payment is to be made. The Fund shall be
obligated promptly to reimburse the custodian the amount of such payment, unless
the Fund shall, within thirty (30) days of receipt of the Custodian's notice,
object in writing to such payment to the Subcustodian or to reimbursement of the
Custodian (i) because the fund disputes the right of the Subcustodian to be so
indemnified or (ii) because the Fund believes that the Custodian was or might
have been responsible by reason of the Custodian's negligence or misconduct for
the event or occurance giving rise to the Subcustodian's demand for
indemnification. In the event the Fund, at the direction of its Board of
Directors or any Executive Committee thereof, shall give written notice of such
objection and the reasons therefor, the Custodian may nevertheless make such
payment to the Subcustodian, but without prejudice to the Fund's right to refuse
to reimburse the custodian if the Fund's objection under clause (i) or (ii)
above shall be upheld in an appropriate judicial or other proceeding; or in the
alternative, the Custodian may refuse to pay the indemnification demanded by the
Subcustodian
- 20 -
<PAGE>
and the Custodian shall in such event defend against any judicial or other
proceeding brought against the Custodian by the Subcustodian to obtain such
indemnification. Such defense shall be conducted by counsel reasonably
satisfactory to both the Fund and the Custodian. The Fund shall be entitled to
participate in any such proceeding with separate counsel of its own choice if it
believes its position might otherwise be compromised and, if the Fund or the
Custodian believes there may be a conflict in the respective positions of the
Fund and the Custodian, then each may retain separate counsel of its own choice.
The Fund shall bear the costs and expenses of defending against the
Subcustodian's claim, and the fund shall indemnify the Custodian and hold it
harmless from all claims, liabilities, judgments, costs and expenses (including
counsel fees) and settlements of such claim (provided that such settlement shall
have been effected with the Fund's written consent) incurred or assesssed
against the Custodian. Notwithstanding the foregoing, if it shall be determined
in an appropriate proceeding, including in a proceeding as aforesaid brought by
the Subcustodian, that, although the Subcustodian was entitled to
indemnification the Custodian was not entitled to reimbursement by the Fund
because the custodian was responsible by reason of its negligence or misconduct
for the occurance or event giving rise to the Subcustodian's right to
indemnification, then in such event the Fund shall not be obligated to indemnify
the Custodian as aforesaid and the
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<PAGE>
Custodian shall reimburse the Fund for any amounts paid by the Fund to Custodian
in respect of the costs and expenses of defending against the subcustodian's
claim.
4. The Custodian may assist generally in the preparation of reports to
Fund shareholders, regulatory authorities and others, audits of accounts, and
other ministerial matters of like nature.
5. The Fund hereby also appoints the custodian as its financial agent.
With respect to the appointment as financial agent, the Custodian shall have and
perform the following powers and duties:
A. Records - To create, maintain and retain such records relating to its
activities and obligations under this Agreement as are required under the
Investment Company Act of 1940 and the rules and regulations thereunder
(including Section 31 thereof and Rules 31a-l and 31a-2 thereunder) and under
applicable Federal and State tax laws and administrative regulations. All such
records will be the property of the Fund and in the event of termination of this
Agreement shall be delivered to the successor custodian.
B. Accounts - To keep books of account and render statements, including
interim monthly and complete quarterly financial statements, or copies thereof,
from time to time as reasonably requested by proper instructions.
C. Access to Records - Subject to security requirements of the Custodian
applicable to its own employees having access to similar records within the
Custodian and such regulations as may
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<PAGE>
be reasonably imposed by the Custodian, the books and records maintained by the
Custodian pursuant to Sections 5A and 5B shall be open to inspection and audit
at reasonable times by officers of, attorneys for, and auditors employed by, the
Fund.
D. Calculation of Net Asset Value - To compute and determine the net asset
value per share of capital stock of the Fund as of the close of business on the
New York Stock Exchange on each day on which such Exchange is open, unless
otherwise directed by proper instructions. Such computation and determination
shall be made in accordance with (1) the provisions of the Certificate of
Incorporation and By-Laws of the Fund, as they may from time to time be amended
and delivered to the custodian, (2) the votes of the Board of Directors of the
Fund at the time in force and applicable, as they may from time to time be
delivered to the Custodian, and (3) proper instructions from such officers of
the Fund or other persons as are from time to time authorized by the Board of
Directors of the fund to give instructions with respect to computation and
determination of the net asset value. On each day that the Custodian shall
compute the net asset value per share of the Fund, the Custodian shall provide
the Fund with written reports which permit the Fund to verify that portfolio
transactions have been recorded in accordance with the Fund's instructions.
In computing the net asset value, the Custodian may rely upon any
information furnished by proper instructions, including
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<PAGE>
without limitation any information (1) as to accrual of liabilities of the Fund
and as to liabilities of the Fund not appearing on the books of account kept by
the custodian, (2) as to the existence, status and proper treatment of reserves,
if any, authorized by the fund, (3) as to the sources of quotations to be used
in computing the net asset value, including those listed in Appendix B, (4) as
to the fair value to be assigned to any securities or other property for which
price quotations are not readily avilable, and (5) as to the sources of
information with respect to "corporate actions" affecting portfolio securities
of the fund, including those listed in Appendix B. (Information as to "corporate
actions" shall include information as to dividends, distributions, stock splits,
stock dividends, rights offerings, conversions, exchanges, recapitalizations,
mergers, redemptions, calls, maturity dates and similar transactions, including
the ex- and record dates and the amounts or other terms thereof.)
In like manner, the Custodian shall compute and determine the net asset
value as of such other times as the Board of Directors of the Fund from time to
time may reasonably request.
Notwithstanding any other provisions of this Agreement, including Section
6C, the following provisions shall apply with respect to the Custodian's
foregoing responsibilities in this Section 5D: The Custodian shall be held to
the exercise of reasonable care in computing and determining net asset value as
provided in this Section 5D, but shall not be held accountable or
- 24 -
<PAGE>
liable for any losses, damages or expenses the Fund or any shareholder or former
shareholder of the Fund may suffer or incur arising from or based upon errors or
delays in the determination of such net asset value unless such error or delay
was due to the Custodian's negligence, gross negligence or reckless or willful
misconduct in determination of such net asset value. (The parties hereto
acknowledge, however, that the Custodian's causing an error or delay in the
determination of net asset value may, but does not in and of itself, constitute
negligence, gross negligence or reckless or willful misconduct.) In no event
shall the Custodian be liable or responsible to the Fund, any present or former
shareholder of the fund or any other party for any error or delay which
continued or was undetected after the date of an audit performed by the
certified public accountants employed by the Fund if, in the exercise of
reasonable care in accordance with generally accepted accounting standards, such
accountants should have become aware of such error or delay in the course of
performing such audit. The Custodian's liability for any such negligence, gross
negligence or reckless or willful misconduct which results in an error in
determination of such net asset value shall be limited to the direct,
out-of-pocket loss the Fund, shareholder or former shareholder shall actually
incur, measured by the difference between the actual and the erroneously
computed net asset value, and any expenses the fund shall incur in connection
with correcting the records of the Fund affected by
- 25 -
<PAGE>
such error (including charges made by the Fund's registrar and transfer agent
for making such corrections) or communicating with shareholders or former
shareholders of the Fund affected by such error.
Without limiting the foregoing, the Custodian shall not be held
accountable or liable to the Fund, any shareholder or former shareholder thereof
or any other person for any delays or losses, damages or expenses any of them
may suffer or incur resulting from (1) the Custodian's failure to receive timely
and suitable notification concerning quotations or corporate actions relating to
or affecting portfolio securities of the fund or (2) any errors in the
computation of the net asset value based upon or arising out of quotations or
information as to corporate actions if received by the Custodian either (i) from
a source which the Custodian was authorized pursuant to the second paragraph of
this Section 5D to rely upon, or (ii) from a source which in the Custodian's
reasonable judgment was as reliable a source for such quotations or information
as the sources authorized pursuant to that paragraph. Nevertheless, the
Custodian will use its best judgment in determining whether to verify through
other sources any information it has received as to quotations or corporate
actions if the Custodian has reason to believe that any such information might
be incorrect.
In the event of any error or delay in the determination of such net asset
value for which the Custodian may be liable, the
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<PAGE>
Fund and the Custodian will consult and make good faith efforts to reach
agreement on what actions should be taken in order to mitigate any loss suffered
by the Fund or its present or former shareholders, in order that the custodian's
exposure to liability shall be reduced to the extent possible after taking into
account all relevant factors and alternatives. Such actions might include the
Fund or the custodian taking reasonable steps to collect from any shareholder or
former shareholder who has received any overpayment upon redemption of shares
such overpaid amount or to collect from any shareholder who has underpaid upon a
purchase of shares the amount of such underpayment or to reduce the number of
shares issued to such shareholder. It is understood that in attempting to reach
agreement on the actions to be taken or the amount of the loss which should
appropriately be borne by the Custodian, the Fund and the Custodian will
consider such relevant factors as the amount of the loss involved, the Fund's
desire to avoid loss of shareholder good will, the fact that other persons or
entitles could have been reasonably expected to have detected the error sooner
than the time it was actually discovered, the appropriateness of limiting or
eliminating the benefit which shareholders or former shareholders might have
obtained by reason of the error, and the possibility that other parties
providing services to the fund might be induced to absorb a portion of the loss
incurred.
E. Disbursements - Upon receipt of proper instructions, to
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<PAGE>
pay or cause to be paid, insofar as funds are avilable for the purpose, bills,
statements and other obligations of the Fund (including but not limited to
interest charges, taxes, advisory fees, compensation to Fund officers and
employees, and other operating expenses of the Fund).
6. A. The Custodian shall not be liable for any action taken or omitted in
reliance upon proper instructions reasonably believed by it to be genuine or
upon any other written notice, request, direction, instruction, certificate or
other instrument believed by it to be genuine and signed by the proper party or
parties.
The Secretary or Assistant Secretary of the Fund shall certify to the
custodian the names, signatures and scope of authority of all persons authorized
to give proper instructions or any other such notice, request, direction,
instructions, certificate or instrument on behalf of the Fund, the names and
signatures of the officers of the Fund, the name and address of the Shareholder
Servicing Agent, and any resolutions, votes, instructions or directions of the
Fund's Board of Directors or shareholders. Such certificate may be accepted and
relied upon by the Custodian as conclusive evidence of the facts set forth
therein and may be considered in full force and effect until receipt of a
similar certificate to the contrary.
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the
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<PAGE>
title, validity or genuineness of any property or evidence of title thereto
received by it or delivered by it pursuant to this Agreement.
The Custodian shall be entitled, at the expense of the Fund, to receive
and act upon advice of counsel (who may be counsel for the Fund) on all matters,
and the Custodian shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
B. With respect to the portfolio securities, cash and other property of
the fund held by a Securities System, the Custodian shall be liable to the Fund
for any loss or damage to the fund resulting from use of the Securities System
if caused by any negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees or from any failure of the
Custodian or any such agent to enforce effectively such rights as it may have
against the Securities System. At the election of the fund, it shall be entitled
to be subrogated to the rights of the Custodian with respect to any claim
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. The Custodian shall be
subject to the same responsibility with respect to all securities of the Fund,
and all cash, stock dividends, rights and items of like nature to which the Fund
is entitlted, held or received by such Securities System, as if the same where
held or received by the Custodian at its own office.
- 29 -
<PAGE>
C. Except as may otherwise be set forth in this Agreement with respect to
particulare matters, the Custodian shall be held only to the exercise of
reasonable care and diligence in carrying out the provisions of this Agreement,
provided that the Custodian shall not thereby be required to take any action
which is in contravention of any applicable law. The Fund agrees to indemnify
and hold harmless the Custodian and its nominees from all claims and liabilities
(including counsel fees) incurred or assessed against it or its nominees in
connection with the performance of this Agreement, except such as may arise from
its or its nominee's breach of the relevant standard of conduct set forth in
this Agreement. Without limiting the foregoing indemnification obligation of the
Fund, the Fund agrees to indemnify the Custodian and its nominees against any
liability the Custodian or such nominee may incur by reason of taxes assessed to
the Custodian or such nominee or other costs, liability or expense incurred by
the Custodian or such nominee resulting directly or indirectly from the fact
that portfolio securities or other property of the fund are registered in the
name of the Custodian or such nominee.
It is also understood that the Custodian shall not be liable for any loss
involving any securities, currencies, deposits or other property of the Fund,
whether maintained by it, a Subcustodian, an agent of the Custodian or a
Subcustodian, a Securities System or a Banking Institution, or a loss arising
from a foreign currency transaction or contract, resulting from a
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<PAGE>
Sovereign Risk. A "Sovereign Risk" shall mean nationalization, expropriation,
devaluation, revaluation, confiscation, seizure, cancellation, destruction or
similar action by any governmental authority, de facto or de jure; or enactment,
promulgation, imposition or enforcement by any such governmental authority of
currency restrictions, exchange controls, taxes, levies or other charges
affecting the Fund's property; or acts of war, terrorism, insurrection or
revolution; or any other similar act or event beyond the Custodian's control.
D. The Custodian shall be entitled to receive reimbursement from the Fund
on demand, in the manner provided in Section 7, for its cash disbursements,
expenses and charges (including the fees and expenses of any Subcustodian or any
Agent) in connection with this Agreement, but excluding salaries and usual
overhead expenses.
E. The Custodian may at any time or times in its discretion appoint (and
may at any time remove) any other bank or trust company as its agent (an
"Agent") to carry out such of the provisions of this Agreement as the Custodian
may from time to time direct, provided, however, that the appointment of such
Agent (other than an Agent appointed pursuant to the third paragraph of Section
3) shall not relieve the Custodian of any of its responsibilities under this
Agreement.
F. Upon request, the Fund shall deliver to the Custodian such proxies,
power of attorney or other instruments as may be
- 31 -
<PAGE>
reasonable and necessary or desirable in connection with the performance by the
Custodian or any Subcustodian of their respective obligations under this
Agreement or any applicable subcustodian agreement.
7. The Fund shall pay the Custodian a custody fee based on such fee
schedule as may from time to time be agreed upon in writing by the custodian and
the Fund. Such fee, together with all amounts for which the Custodian is to be
reimbursed in accordance with Section 6D, shall be billed to the Fund in such a
manner as to permit payment either by a direct cash payment to the Custodian or
by placing Fund portfolio transactions with the Custodian resulting in an
agreed-upon amount of commissions being paid to the Custodian within an
agreed-upon period of time.
8. This Agreement shall continue in full force and effect until terminated
by either party by an instrument in writing delivered or mailed, postage
prepaid, to the other party, such termination to take effect not sooner than
sixty (60) days after the date of such delivery or mailing. In the event of
termination the Custodian shall be entitled to receive prior to delivery of the
securities, funds and other property held by it all accrued fees and
unreimbursed expenses the payment of which is contemplated by Sections 6D and 7,
upon receipt by the Fund of a statement setting forth such fees and expenses.
In the event of the appointment of a successor custodian, it is agreed
that the funds and securities owned by the Fund and
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<PAGE>
held by the Custodian or any Subcustodian shall be delivered to the successor
custodian, and the Custodian agrees to cooperate with the fund in execution of
documents and performance of other actions necessary or desirable in order to
substitute the successor custodian for the Custodian under this Agreement.
9. This Agreement constitutes the entire understanding and agreement of
the parties hereto with respect to the subject matter hereof. No provision of
this Agreement may be amended or terminated except by a statement in writing
signed by the party against which enforcement of the amendment or termination is
sought.
In connection with the operation or this Agreement, the Custodian and the
Fund may agree in writing from time to time on such provisions interpretative of
or in addition to the provisions of this Agreement as may in their joint opinion
be consistent with the generaltenor of this Agreement. No interpretative or
additional provisions made as provided in the preceding sentence shall be deemed
to be an amendment of this Agreement.
10. This instrument is executed and delivered in The Commonwealth of
Massachusetts and shall be governed by and construed according to the laws of
said Commonwealth.
11. Notices and other writings delivered or mailed postage prepaid to the
fund addressed to the Fund at 345 Park Avenue, New York, New York 10022, or to
such other address as the Fund may have designated to the Custodian in writing,
or to the Custodian
- 33 -
<PAGE>
at 40 Water Street, Boston, Massachusetts 02109, Attention: Manager, Securities
Department, or to such other address as the Custodian may have designated to the
Fund in writing, shall be deemed to have been properly delivered or given
hereunder to the respective addressee.
12. This Agreement shall be binding on and shall inure to the benefit of
the Fund and the Custodian and their respective successors and assigns, provided
that neither party hereto may assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of the other party.
l3. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original. This Agreement shall become effective when
one or more counterparts have been signed and delivered by each of the parties.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executedin its name and behalf on the day and year first above written.
THE JAPAN FUND, INC. BROWN BROTHERS HARRIMAN & CO.
By /s/ [Illegible] per pro /s/ [Illegible]
-------------------------- --------------------------
- 34 -
<PAGE>
THE JAPAN FUND, INC.
APPENDIX A
COUNTRY SUBCUSTODIAN DEPOSITORY
- ------- ------------ ----------
JAPAN CITIBANK, N. A., TOKYO NONE
TRANSNATIONAL OPERATED BY MORGAN GUARANTY TRUST COMPANY EUROCLEAR
OF NEW YORK, BRUSSELS
APPROVED: /s/ [Illegible] 8-18-87
-------------------------------------------------------------
DATE
<PAGE>
APPENDIX B
THE JAPAN FUND, INC.
THE FOLLOWING AUTHORIZED SOURCES ARE TO BE USED FOR PRICING AND FOREIGN EXCHANGE
QUOTATIONS, CORPORATE ACTIONS, DIVIDENDS AND RIGHTS OFFERINGS:
AUTHORIZED SOURCES
QUOTRON
REUTERS
INTERACTIVE DATA CORPORATION
VALORINFORM (GENEVA)
SUBSCRIPTION BANKS
FUND MANAGERS
EXTEL (LONDON)
REPUTABLE FOREIGN BROKERS
APPROVED: /s/ [Illegible]
-------------------------------------------
DATE
<PAGE>
The Japan Fund, Inc.
Certificate as to Resolution
of
Board of Directors
The undersigned certifies that she is the Secretary of The Japan Fund, Inc. (the
"Fund"), a Maryland corporation, and that, as such, she is authorized to execute
this Certificate on behalf of the Fund, and further certifies that the following
is a complete and correct copy of a resolution duly adopted by the duly elected
Board of Directors of the Fund at a meeting duly called, convened and held on
July 23, 1987, at which a quorum was present and acting throughout, and that
such resolution has not been amended and is in full force and effect.
RESOLVED, that any of the following designated persons in their
capacities as officers of the Fund or officers of Scudder Stevens &
Clark Ltd., the Fund's investment manager as appropriate, may give
instructions to Brown Brothers Harriman & Co. in accordance with
Paragraph 2(Y) of the Custodian Agreement:
Ann Falling
Michael D. Griffin
Marilyn J. Hayes
George S. Johnston
David S. Lee
Thomas F. McDonough
Pamela A. McGrath
Edward J. O'Connell
Juris Padegs
Daniel Pierce
Robert E. Pruyne
Gina Provenzano
O. Robert Theurkauf
Laura E. Luckyn-Malone
Jonathan Mason
Virginia A. Callahan
William F. Holzer
IN WITNESS WHEREOF, I hereunto set my hand and seal of said Fund this 13th day
of August, 1987.
/s/ Virginia A. Callahan
-----------------------------
(Corporate Seal)
<PAGE>
THE JAPAN FUND, INC.
345 PARK AVENUE
NEW YORK, N.Y. 10154
TELEX: 222116 TELEPHONE (212) 326-65OO
July 17, 1987
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Attn: Kenneth A. Csaplar,
Assistant Manager
RE: THE JAPAN FUND. INC.
This letter will acknowledge, on behalf of The Japan Fund, Inc. ("Fund"),
that the Fund will hold Brown Brothers Harriman & Co. harmless with respect to
any loss suffered by the Fund insofar as such loss is the result of your
reasonable reliance in the performance of your duties as the Fund's custodian or
record keeper, upon records and books of account that were maintained for the
Fund prior to the employment of Brown Brothers Harriman & Co. as custodian and
record keeper.
The undersigned, as President of the Fund, is fully authorized as
President to make this representation on behalf of the Fund.
Sincerely,
/s/ O. Robert Theurkauf
--------------------------
O. Robert Theurkauf
ORT/lti
<PAGE>
THE JAPAN FUND, INC.
APPENDIX A
COUNTRY SUBCUSTODIAN DEPOSITORY
- ------- ------------ ----------
JAPAN CITIBANK, N. A., TOKYO NONE
TRANSNATIONAL OPERATED BY MORGAN GUARANTY TRUST COMPANY EUROCLEAR
OF NEW YORK, BRUSSELS
APPROVED: /s/ [Illegible] August 10, 1987
-------------------------------------------------------------
DATE
Exhibit 8(b)
MASTER SUBCUSTODIAN AGREEMENT
AGREEMENT dated as of July 16, 1981, between Brown Brothers Harriman
& Co., a limited partnership organized under the laws of the State of New York
(the "Custodian"), and Citibank, N.A., New York (the "Subcustodian").
WITNESSETH:
WHEREAS, the Custodian has entered into certain custodian agreements
and may in the future enter into additional custodian agreements whereby cash
and securities will be held outside the United States;
WHEREAS, the Custodian desires to utilize sub-custodians for the
purpose of holding cash and securities outside the United States, and
WHEREAS, the Subcustodian is willing to enter into an agreement
whereby it may, from time to time, be appointed as subcustodian for the
Custodian's customers (each such customer shall hereinafter be referred to as a
"Customer");
NOW, THEREFORE, the Custodian and Subcustodian hereby agree as
follows:
I. Upon the terms and conditions set forth in this Agreement and
subject in each case to acceptance by
<PAGE>
the Subcustodian, the Subcustodian may, at any time and from time to time, be
appointed as subcustodian for a Customer by delivery to the Subcustodian of a
letter substantially in the form of Exhibit A hereto.
II. The Custodian may from time to time deposit securities or cash
with the Subcustodian. The Subcustodian shall not be responsible for any
property of the Customer not delivered to the Subcustodian.
III. The Subcustodian shall hold and dispose of the securities
hereafter held by or deposited with the Subcustodian as follows:
A. The Subcustodian shall hold in a separate account, and physically
segregated at all times from those of any other persons, firms or
corporations, pursuant to the provisions hereof, all securities received
by it for the account of the Custodian as custodian for the Customer. All
such securities are to be held or disposed of by the Subcustodian for, and
subject at all times to the instructions of, the Custodian pursuant to the
terms of this Agreement.
B. Upon receipt of instructions from the Custodian, the Subcustodian
shall release or deliver securities owned by the Customer only for
-2-
<PAGE>
the following purposes:
(1) upon sale of securities for the account of the Customer
against receipt of payment therefor by cash, certified or cashier's
check, or bank credit;
(2) to the issuer thereof or its agent when securities are
called, redeemed, retired or otherwise become payable, provided that
the cash is to be delivered to the Subcustodian;
(3) for exchange for a different number of bonds or
certificates representing the same aggregate face amount or number
of units, 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
Subcustodian;
(4) in the case of warrants, rights or similar securities, the
surrender thereof in
-3-
<PAGE>
the exercise of such warrants, rights or similar securities;
provided that the surrender of interim receipts or temporary
securities for definitive securities may be made at any time;
provided that, in any such case, the securities are to be delivered
to the Subcustodian;
(5) in the case of tender offers or similar offers to purchase
received in writing, the delivery of securities to the designated
depository or other receiving agent. The Subcustodian shall have
full responsibility for transmitting to the Custodian any such
offers received by it. Thereafter, the Custodian, if it desires to
respond to such offer, shall have full responsibility for providing
the Subcustodian with all necessary instructions in timely enough
fashion for the Subcustodian to act thereon prior to any expiration
time for such offer;
(6) upon receipt from the Custodian of instructions directing
disposition of securities in a manner other than or for purposes
other than the manners and purposes enumerated in the foregoing five
items; provided, however,
4
<PAGE>
that disposition pursuant to this item (6) shall be made by the
Subcustodian only upon receipt of instructions from the Custodian
specifying the amount of such securities to be delivered, the
purpose for which the delivery is to be made, and the name of the
person or persons to whom such delivery is to be made.
IV. The Subcustodian shall hold and dispose of cash hereafter held
by or deposited with the Subcustodian as follows:
A. The Subcustodian shall open and maintain with the Citibank, N.A.
a separate account or accounts in the name of the Custodian as custodian
for the Customer, subject only to draft or order by the Subcustodian
acting pursuant to the terms of this Agreement. The Subcustodian shall
hold in such account or accounts, subject to the provisions hereof, all
cash received by it for the account of the Custodian as Custodian for the
Customer.
B. Upon receipt of instructions from the Custodian, the Subcustodian
shall make payments
5
<PAGE>
of cash for the account of the Customer from such cash only for the
following purposes:
(1) upon the purchase of securities for the account of the
Customer but only against the delivery of such securities to the
Subcustodian;
(2) in connection with the subscription, conversion, exchange,
tender or surrender of securities owned by the Customer as set forth
in Paragraph IIIB hereof; and
(3) for deposit with the Custodian or with such other banking
institutions as may from time to time be approved by the Customer.
V. All instructions shall be in writing executed by the Custodian,
and the Subcustodian shall not be required to act on instructions otherwise
communicated; provided, however, that the Subcustodian may in its discretion act
on the basis of instructions received via telecommunications facilities if the
Subcustodian reasonably believes such instructions to have been dispatched by
the Custodian. The Subcustodian may require that instructions received via
telecommunications facilities be authenticated. The Subcustodian shall be
protected in acting upon any instructions, notice, request, con-
-6-
<PAGE>
sent, certificate or other instrument or paper reasonably believed by it to be
genuine and to have been properly executed. The Subcustodian may receive and
accept a certificate signed by a partner of the Custodian as conclusive evidence
of the authority of any person to act on behalf of the Custodian, and such
certificate may be considered as in full force and effect until receipt by the
Subcustodian of written notice to the contrary.
VI. Unless and until the Subcustodian receives instructions from the
Custodian to the contrary, the Subcustodian shall:
A. Present for payment all coupons and other income items held by it
for the account of the custodian as custodian for the Customer which call
for payment upon presentation and hold the cash received by it upon such
payment for the account of the Custodian as custodian for the Customer;
B. Collect interest and cash dividends received, with notice to the
Custodian, for the account of the Custodian as custodian for the Customer;
C. Hold for the account of the Custodian as custodian for the
Customer hereunder all stock dividends, rights and similar securities
issued with
-7-
<PAGE>
respect to any securities held by it hereunder.
VII. The Subcustodian shall execute on behalf of the Custodian, in
the Customer's name, any declarations, affidavits, or certificates of ownership
which may be necessary or useful from time to time for the Subcustodian to
perform any or several of its obligations arising under the provisions of this
Agreement.
VIII. If the Subcustodian shall receive any notices or reports in
respect of securities held by it hereunder, it shall promptly upon receipt
thereof transmit to the Custodian by airmail, telecommunications facilities, or
comparable means any such notices or reports.
IX. The Subcustodian may, from time to time, appoint other offices
of Citibank, N.A. (located outside the United States) and such other persons as
are approved in advance by the Custodian and the Customer ("Additional
Subcustodians") for purposes of acquiring, holding or disposing of securities.
The Subcustodian shall be fully liable to the Custodian for the acts or
omissions of such Additional Subcustodians to the same extent as if the acts or
omissions of the Additional Subcustodians were the acts or omissions of the
Subcustodian. Upon receipt
-8-
<PAGE>
of instructions from the Custodian, the Subcustodian shall terminate any
Additional Subcustodians appointed pursuant to the provisions of this paragraph
in the manner provided in the applicable agreement.
The Subcustodian shall transmit to Additional Subcustodians any
instructions received from the Custodian concerning the acquisition, custody or
disposition of securities by Additional Subcustodians and shall transmit to the
Custodian any notices or reports received from Additional Subcustodians in
respect of securities held by such Additional Subcustodians.
X. The Subcustodian may, from time to time, appoint (and may at any
time remove) any bank or trust company as its agent for purposes of acquiring or
disposing of securities or carrying out such provisions of this Agreement as the
Subcustodian may, from time to time, direct; provided that the Subcustodian
shall be fully liable to the Custodian for the acts or omissions of such agents
to the same extent as if the acts or omissions of the agents were the acts or
omissions of the Subcustodian.
-9-
<PAGE>
XI. On each day on which there is a cash or securities transaction
over the account of the Custodian as custodian for the Customer, the
Subcustodian shall dispatch to the Custodian (and to the Customer if requested)
separate cash and securities advices. The Subcustodian shall furnish the
Custodian at the end of every month with a statement of the cash and securities
held by the Subcustodian and any Additional Subcustodians and a summary of all
transactions effected over the account. Such statements and summaries shall be
sent by air mail, telecommunications facilities or comparable means to the
Custodian within 15 days after the end of each month. Upon request of the
Custodian, additional statements will be furnished at the expense of the
Custodian.
XII. As compensation for the services rendered pursuant to this
Agreement, the Custodian shall pay the Subcustodian a fee computed in accordance
with the schedule attached hereto as Exhibit B, as such schedule may be amended
from time to time by written agreement between the Custodian and the
Subcustodian. The Custodian shall reimburse the Subcustodian for any reasonable
out-of-pocket expenses incurred by the Subcustodian in connection with its
obligations hereunder (including the fees and reasonable
-10-
<PAGE>
out-of-pocket expenses of Additional Subcustodians and Agents).
XIII. Upon request, the Custodian shall deliver, or shall request
the Customer to deliver, to the Subcustodian, such proxies, powers-of-attorney
or other instruments as may be necessary or desirable in connection with the
performance by the Subcustodian of its obligations under this Agreement.
XIV. So long as and to the extent that it is in the exercise of
reasonable care, the Subcustodian 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 Agreement. The Subcustodian shall not be
liable for any action taken or omitted in good faith upon any notice, request,
certificate or other instrument reasonably believed by it to be genuine and to
be signed by the proper party or parties. The Subcustodian shall be obligated to
exercise reasonable care and diligence in carrying out the provisions of this
Agreement; provided that the Subcustodian shall not thereby be required to take
any action which is in contravention of any applicable law. Notwithstanding the
foregoing, the Subcustodian shall not be liable
-11-
<PAGE>
for (a) any violation by the Customer of any limitation applicable to its powers
to make expenditures, to invest in or pledge securities or to borrow which does
not involve action by the Subcustodian, and (b) any violation by the Customer of
any limitation applicable to its power to make investments, to invest in or
pledge securities or to borrow which involves action by the Subcustodian,
provided that such action was authorized in accordance with Paragraphs III, IV
or V hereof. The Subcustodian shall be entitled to and may act upon advice of
counsel (who may be counsel for the Customer) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.
XV. This Agreement may be terminated at any time by the Custodian or
the Subcustodian by giving written notice to the other party at least thirty
(30) days prior to the date on which such termination is to become effective.
Such termination shall, inter alia, constitute a revocation of the
Subcustodian's authority to act on behalf of all Customers (including all
authority granted to the Subcustodian under any power-of-attorney executed in
connection with this Agreement). In the event of termination, the Subcustodian
will deliver any securities held
-12-
<PAGE>
by it or any additiona1 Subcustodians to the Custodian or to such successor
subcustodian as the Custodian shall instruct in a manner to be mutually agreed
upon by the parties hereto or in the failure of such agreement in a reasonable
manner. Further in the event of termination, the Subcustodian shall be entitled
to receive prior to the delivery of the securities held by it or any Additional
Subcustodians all accrued fees and unreimbursed expenses the payment of which is
contemplated by Paragraph XII hereof upon receipt by the Custodian of a final
statement setting forth such fees and expenses.
XVI. Except as the parties shall from time to time otherwise agree,
all instructions, notices, reports and other communications contemplated by this
Agreement shall be dispatched as follows:
If to the Custodian Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
Attention: Manager-Securities Dept.
Telex No.: 940709
If to the Subcustodian: Citibank, N.A.
Global Custody Department
Citicorp Center, 24th Floor
153 East 53rd Street
New York, New York 10043
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<PAGE>
XVII. This Agreement constitutes the entire understanding and
agreement of the parties hereto, and neither this Agreement nor any provisions
hereof may be changed, waived, discharged or terminated except by a statement in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
XVIII. This Agreement shall be binding upon and shall inure to the
benefit of the Custodian and the Subcustodian and their successors and assignees
provided that neither the Custodian nor the Subcustodian may assign this
Agreement or any of the rights or obligations hereunder without the prior
written consent of the other party.
XIX. This Agreement shall be construed in accordance with and
governed by the laws of the State of New York. The parties hereto agree that
notwithstanding any provisions or provisions of this Agreement of apparent
contrary effect, the Subcustodian shall have no obligation to take any action
which is contrary to any or several provisions of the laws, orders or
regulations of the country in which the Subcustodian is serving. The
Subcustodian shall not be liable for any expense or damage to the Custodian or
the Customer that may result from violation of any or several of the foregoing
laws, orders
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<PAGE>
and regulations, except as such expense or damage is caused by the wilful
misconduct or negligence of the Subcustodian.
XX. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which shall constitute one and
the same instrument. This Agreement shall become effective when one or more
counterparts have been signed and delivered by each of the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
BROWN BROTHERS HARRIMAN & CO.
(the "Custodian")
per pro /s/ [Illegible]
--------------------------
CITIBANK, N.A., NEW YORK
(the "Subcustodian")
By /s/ P.A. Humbert
-------------------------------
P.A. HUMBERT
Vice President
-15-
EXHIBIT 9(a)(1)
TRANSFER AGENCY AND SERVICE AGREEMENT
between
THE JAPAN FUND, INC.
and
SCUDDER SERVICE CORPORATION
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of MAY 1, 1990, by and between THE JAPAN FUND, INC., a
Maryland Corporation, having its principal office and place of business at 345
Park Avenue, New York, New York 10154 (the "Company") and SCUDDER SERVICE
CORPORATION, a Massachusetts Corporation, having its principal office and place
of business at 160 Federal Street, Boston, Massachusetts 02110 (the "Agent").
WHEREAS, the Company desires to appoint the Agent as a transfer agent,
dividend disbursing agent and agent in connection with certain other activities
and the Agent desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
Article 1. Terms of Appointment; Duties of the Agent.
1.01. Subject to the terms and conditions set forth in this Agreement, the
Company hereby employs and appoints the Agent to act as, and the Agent agrees to
act as, transfer agent for the Company's authorized and issued shares of common
stock $0.33 1/3 par value ("Shares"), dividend disbursing agent and agent in
connection with any accumulation, open-account or similar plans provided to the
shareholders of the Company ("Shareholders") and set out in a currently
effective prospectus ("Prospectus") or currently effective statement of
additional information ("Statement of Additional Information") of the Company,
including without limitation any periodic investment plan or periodic withdrawal
program. If the company offers two or more series of Shares as of the date
hereof, the term "Company shall be deemed to apply to each series of Shares,
unless the context otherwise requires.
1.02. The Agent agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Company and the Agent, the Agent shall:
(i) Receive for acceptance orders for the purchase of Shares and
promptly deliver payment and appropriate documentation thereof
to the duly authorized custodian of the Company (the
"Custodian").
(ii) Pursuant to orders for the purchase of Shares, record the
purchase of the appropriate number of Shares in the
Shareholder's account and, if requested by the Shareholder,
and if the Board of Directors of the Company have authorized
the issuance of stock certificates, issue a certificate for
the appropriate number of Shares;
<PAGE>
(iii) Pursuant to instructions provided by Shareholders, reinvest
income dividends and capital gain distributions;
(iv) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof
to the Custodian;
(v) Provide an appropriate response to Shareholders with respect
to all correspondence and rejected trades;
(vi) At the appropriate time as and when it receives monies paid to
it by the Custodian with respect to any redemption, pay over
or cause to be paid over in the appropriate manner such monies
as instructed by the redeeming Shareholders;
(vii) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(viii)Prepare and transmit payments for dividends and distributions
declared by the Company;
(ix) Report abandoned property to the various states as authorized
by the Company in accordance with policies and principles
agreed upon by the Company and Agent;
(x) Maintain records of account for and advise the Company and its
Shareholders as to the foregoing;
(xi) Record the issuance of Shares of the Company and maintain an
accurate control book with respect to Shares pursuant to SEC
Rule 17Ad-10(e) under the Securities Exchange Act of 1934. The
Agent shall also provide the Company on a regular basis with
the total number of Shares which are issued and outstanding
and shall have no obligation, when recording the issuance of
Shares, to monitor the issuance of such Shares or to take
cognizance of any laws relating to the issue or sale of such
Shares, which functions shall be the sole responsibility of
the Company;
(xii) Respond to all telephone inquiries from shareholders or their
authorized representatives regarding the status of Shareholder
accounts;
(xiii)Respond to correspondence from Shareholders or their
authorized representatives regarding the status of Shareholder
accounts or information related to Shareholder accounts; and
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<PAGE>
(xiv) Perform all Shareholder account maintenance updates.
(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Agent shall: (i) perform the
customary services of a transfer agent, dividend disbursing agent and, as
relevant, agent in connection with accumulation, open-account or similar plans
(including without limitation any periodic investment plan or periodic
withdrawal program). The detailed definition, frequency, limitations and
associated costs (if any) set out in the attached fee schedule, include but are
not limited to: maintaining all shareholder accounts, preparing Shareholder
meeting lists, mailing proxy statements and proxies, receiving and tabulating
proxies, mailing shareholder reports and prospectuses to current Shareholders,
and withholding all applicable taxes (including but not limited to all
withholding taxes imposed under the U.S. Internal Revenue Code and Treasury
regulations promulgated thereunder, and applicable state and local laws to the
extent consistent with good industry practice), preparing and filing U.S.
Treasury Department Forms 1099, Form 941 when applicable and other appropriate
forms required with respect to dividends, distributions and taxes withheld on
Shareholder accounts by federal authorities for all registered Shareholders,
preparing and mailing confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares and other confirmable
transactions in Shareholder accounts, preparing and mailing activity statements
for Shareholders, and providing Shareholder account information, (ii) provide
daily and monthly a written report and access to information which will enable
the Company to monitor the total number of Shares sold and the aggregate public
offering price thereof in each State by the Company, added by sales in each
State of the registered Shareholder or dealer branch office, as defined by the
Company, and (iii) if directed by the Company, (A) each confirmation of the
purchase which establishes a new account will be accompanied by a Prospectus and
any amendment or supplement thereto, and (B) a Prospectus, and any amendment or
supplement thereto, will be mailed to each Shareholder at the time a
confirmation of the first purchase by such Shareholder, subsequent to the
effective date of a Prospectus or any amendment or supplement thereto, is mailed
to such Shareholders.
(c) In addition, the Company shall (i) identify to the Agent in
writing those transactions and assets to be treated as exempt from blue sky
reporting to the Company for each state and (ii) approve those transactions to
be included for each state on the blue sky system prior to activation and
thereafter monitor the daily activity for each state. The responsibility of the
Agent for the Company's blue sky State registration status is solely limited to
the initial establishment of transactions subject to blue sky compliance by the
Company and the reporting of such transactions as provided above.
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<PAGE>
(d) The Agent shall utilize a system to identify all share
transactions which involve purchase and redemption orders that are processed at
a time other than the time of the computation of net asset value per share next
computed after receipt of such orders, and shall compute the net effect upon the
Company of such transactions so identified on a daily and cumulative basis.
(e) The Agent shall supply to the Company from time to time, as
mutually agreed upon, reports summarizing the transactions identified pursuant
to paragraph (d) above, and the daily and cumulative net effects of such
transactions, and shall advise the Company at the end of each month of the net
cumulative effect at such time. The Agent shall promptly advise the Company if
at any time the cumulative net effect exceeds a dollar amount equivalent to 1/2
of 1 cent per outstanding Share.
1.03. The Agent's offices, personnel and computer and other equipment
shall be adequate to perform the services contemplated by this Agreement for the
Company and for other investment companies advised by Scudder, Stevens & Clark,
Inc. and its affiliates. The Agent shall notify the Company in the event that it
proposes to provide such services for any investment companies or other entities
other than those managed by Scudder, Stevens & Clark, Inc. and its affiliates.
Article 2. Fees and Expenses
2.01. For the performance by the Agent pursuant to this Agreement, the
Company agrees to pay the Agent an annual maintenance fee for each Shareholder
account as set out in a fee schedule agreed to by both parties in writing. Such
fees and out-of-pocket expenses and advances identified under Section 2.02 below
may be changed from time to time subject to mutual written agreement between the
Company and the Agent, as approved by a majority of the Directors who are not
"interested persons" (as defined in the Investment Company Act of 1940) of the
Company.
2.02. In addition to the fee paid under Section 2.01 above, the Company
agrees to reimburse the Agent for out-of-pocket expenses or advances incurred by
the Agent for the items set out in the fee schedule agreed to by both parties in
writing. In addition, any other expenses incurred by the Agent at the request or
with the consent of the Company will be reimbursed by the Company.
2.03. The Company agrees to pay all fees and reimbursable expenses
promptly, the terms, method and procedures for which are detailed on the fee
schedule agreed to by both parties in writing. Postage for mailing of dividends,
proxy statements, Company reports and other mailings to all Shareholders
accounts shall be advanced to
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<PAGE>
the Agent by the Company at least two (2) days prior to the mailing date of such
materials.
2.04. The Company may engage accounting firms or other consultants to
evaluate the fees paid by the Company and quality of services rendered by the
Servicing Company hereunder, and such firms or other consultants shall be
provided access by the Servicing Company to such information as may be
reasonably required in connection with such engagement. The Servicing Company
will give due consideration and regard to the recommendations to the Company in
connection with such engagement, but shall not be bound thereby.
Article 3. Representations and Warranties of the Agent.
The Agent represents and warrants to the Company that:
3.01. It is a corporation duly organized and existing and in good standing
under the laws of The Commonwealth of Massachusetts.
3.02. It has the legal power and authority to carry on its business in The
Commonwealth of Massachusetts.
3.03. It is empowered under applicable laws and by its charter and by-laws
to enter into and perform this Agreement.
3.04. All requisite proceedings have been taken to authorize it to enter
into and perform this Agreement.
3.05. It is duly registered as a transfer agent under Section 17A of the
Securities Exchange Act of 1934, as amended.
3.06. It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
Article 4. Representations and Warranties of the Company.
The Company represents and warrants to the Agent that:
4.01. It is a corporation duly organized and existing and in good standing
under the laws of Maryland.
4.02. It is empowered under applicable laws and by its Charter and By-Laws
to enter into and perform this Agreement.
4.03. All proceedings required by said Charter and By-Laws have been taken
to authorize it to enter into and perform this Agreement.
4.04. It is an investment company registered under the Investment Company
Act of 1940, as amended.
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<PAGE>
4.05. A registration statement under the Securities Act of 1933 is
currently effective (or will be effective prior to commencement by the Agent of
performance of services hereunder) and will remain effective, and appropriate
state securities law filings have been made and/or will continue to be made,
with respect to all Shares of the Company being offered for sale.
Article 5. Indemnification
5.01. To the extent that the Agent acts in good faith and without
negligence or willful misconduct, the Agent shall not be responsible for, and
the Company shall indemnify and hold the Agent harmless from and against, any
and all losses, damages, costs, charges, counsel fees, payments, expenses and
liabilities arising out of or attributable to:
(a) All actions of the Agent or its agents or subcontractors
required to be taken and correctly executed pursuant to this Agreement.
(b) The Company's lack of good faith, negligence or willful
misconduct or which arise out of the breach of any representation or warranty of
the Company hereunder.
(c) The reasonable reliance on or use by the Agent or its agents or
subcontractors of information, records and documents or services which are
received or relied upon by the Agent or its agents or subcontractors and
furnished to it or performed by or on behalf of the Company.
(d) The reasonable reliance on, or the carrying out by the Agent or
its agents or subcontractors of, any written instructions or requests of the
Company.
(e) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations, or the securities laws or
regulations of any state that such Shares be registered in such state, or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state, unless such violation is the result of the Agent's negligent or willful
failure to comply with the provisions of Section 1.02(b) of this Agreement.
5.02. The Agent shall indemnify and hold the Company harmless from and
against any and all, losses, damages, costs, charges, counsel fees, payments,
expenses and liabilities arising out of or attributable to the Agent's refusal
or failure to comply with the terms of this Agreement (whether as a result of
the acts or omissions of the Agent or of its agents or subcontractors) or
arising out of the lack of good faith, negligence or willful misconduct of the
Agent, or its agents or subcontractors, or arising out of the breach of any
representation or warranty of the Agent hereunder.
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<PAGE>
5.03. At any time the Agent may apply to any officer of the Company for
instructions, and may consult with outside legal counsel with respect to any
matter arising in connection with the services to be performed by the Agent
under this Agreement, and the Agent and its agents or subcontractors shall not
be liable and shall be indemnified by the Company for any action reasonably
taken or omitted by it in reliance upon such instructions or upon the opinion of
such counsel. The Agent, its agents and subcontractors shall be protected and
indemnified in acting upon any paper or document furnished by or on behalf of
the Company, reasonably believed to be genuine and to have been signed by the
proper person or persons, or upon any instruction, information, data, records or
documents provided to the Agent or its agents or subcontractors by
machine-readable input, telex, CRT data entry or other similar means authorized
by the Company, and shall not be held to have notice of any change of authority
of any person, until receipt by the Agent of written notice thereof from the
Company. The Agent, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Company,
and the proper countersignature of any former transfer agent or registrar, or of
a co-transfer agent or co-registrar.
5.04. In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable to the other for
any damages resulting from such failure to perform or otherwise from such
causes.
5.05. Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement, but each shall
be liable for general damages resulting from breach of this Agreement. For the
purposes of this Agreement, the term "general damages" shall include but shall
not be limited to:
(a) All costs of correcting errors made by the Agent or its agents
or subcontractors in Company shareholder accounts, including
the expense of computer time, computer programming and
personnel;
(b) Amounts which the Company is liable to pay to a person (or his
representative) who has purchased or redeemed, or caused to be
repurchased, Shares at a price which is higher, in the case of
a purchase, or lower, in the case of a redemption or
repurchase, than correct net asset value per Share, but only
to the extent that the price at which such Shares were
purchased, redeemed or repurchased was incorrect as a result
of either (i) one or more errors caused by the Agent or its
agents or subcontractors in processing shareholder accounts of
the Company or (ii) the posting by the Agent of the purchase,
redemption or repurchase of Shares subsequent to the time such
purchase, redemption or repurchase
-7-
<PAGE>
should have been posted pursuant to laws and regulations
applicable to open-end investment companies, if the delay is
caused by the Agent, its agents or subcontractors;
(c) The value of dividends and distributions which were not
credited on Shares because of the failure of the Agent or its
agents or subcontractors to timely post the purchase of such
Shares;
(d) The value of dividends and distributions which were
incorrectly credited on Shares because of the failure of the
Agent or its agents or subcontractors to timely post the
redemption or repurchase of such Shares;
(e) The value of dividends and distributions, some portion of
which was incorrectly credited, or was not credited, on Shares
because of the application by the Agent or its agents or
subcontractor of an incorrect dividend or distribution factor
or otherwise;
(f) Penalties and interest which the Company is required to pay
because of the failure of the Agent or its agents or
subcontractors to comply with the information reporting and
withholding (including backup withholding) requirements of the
Internal Revenue Code of 1986, as amended, and applicable
Treasury regulations thereunder, applicable to Company
Shareholder accounts; and
(g) Interest in accordance with the laws of The Commonwealth of
Massachusetts on any damages from the date of the breach of
this Agreement.
5.06. In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim or loss for which either
party may be required to indemnify the other, the party seeking indemnification
shall promptly notify the other party of such assertion or loss, and shall keep
the other party advised with respect to all developments concerning such claim.
The party who may be required to indemnify shall have the option to participate
at its expense with the party seeking indemnification in the defense of such
claim. The party seeking indemnification shall in no case confess any claim or
make any compromise in any case in which the other party may be required to
indemnify it except with the other party's prior written consent.
5.07. Losses incurred by the Company arising from the Agent effecting a
share transaction at a trade (pricing) date prior to the processing date shall
be governed by a separate agreement between the Agent and the Company.
The obligations of the parties hereto under this Article 5 shall survive
the termination of this Agreement.
-8-
<PAGE>
Article 6. Covenants of the Company and the Agent.
6.01. The Company shall promptly furnish to the Agent the following:
(a) A certified copy of the resolution of the Board of Directors of
the Company authorizing the appointment of the Agent and the execution and
delivery of this Agreement.
(b) A copy of the Charter and By-Laws of the Company and all
amendments thereto.
6.02. The Agent hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Company for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account, of such certificates,
forms and devices.
6.03. The Agent shall at all times maintain insurance coverage which is
reasonable and customary in light of its duties hereunder and its other
obligations and activities.
6.04. The Agent shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
(the "Act") and the Rules thereunder, the Agent agrees that all such records
prepared or maintained by the Agent relating to the services to be performed by
the Agent hereunder and those records that the Company and the Agent agree from
time to time to be the records of the Company are the property of the Company
and will be preserved, maintained and made available in accordance with such
Section and Rules, and will be surrendered promptly to the Company on and in
accordance with its request. Records surrendered hereunder shall be in machine
readable form, except to the extent that the Agent has maintained such a record
only in paper form.
6.05. The Agent and the Company agree that all books, records, information
and data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential and shall not be voluntarily disclosed to any other person,
except as may be required by law.
6.06. In case of any requests or demands for the inspection of the
Shareholders records of the Company, the Agent will endeavor to notify the
Company and to secure instructions from an authorized officer of the Company as
to such inspection. The Agent reserves the right, however, to exhibit the
Shareholders records to any person whenever it is reasonably advised by its
counsel that it may be held liable for the failure to exhibit the Shareholders
records to such person.
-9-
<PAGE>
6.07. The Agent agrees to maintain or provide for redundant facilities or
a compatible configuration and to maintain or provide for backup of the
Company's master and input files and to store such files in a secure
off-premises location so that in the event of a power failure or other
interruption of whatever cause at the location of such files the Company's
records are maintained intact and transactions can be processed at another
location.
6.08. The Agent acknowledges that the Company, as a registered investment
company under the Act, is subject to the provisions of the Act and the rules and
regulations thereunder, and that the offer and sale of the Company's Shares are
subject to the provisions of federal and state laws and regulations applicable
to the offer and sale of securities. The Company acknowledges that the Agent is
not responsible for the Company's compliance with such laws and regulations. If
the Company advises the Agent that a procedure of the Agent related to the
discharge of its obligations hereunder has or may have the effect of causing the
Company to violate any of such laws or regulations, the Agent shall use its best
efforts to develop a mutually agreeable alternative procedure which does not
have such effect.
Article 7. Termination of Agreement.
7.01. This Agreement may be terminated by either party upon one hundred
twenty (120) days written notice to the other.
7.02. Should the Company exercise its right to terminate, all reasonable
out-of-pocket expenses of the Agent associated with the movement of records and
materials required by this Agreement will be borne by the Company. Additionally,
the Agent reserves the right to charge for any other reasonable expenses
associated with such termination.
Article 8. Additional Series.
8.01. In the event that the Company establishes one or more series of
shares with respect to which it desires to have the Agent render services as
transfer agent under the terms hereof, it shall so notify the Agent in writing,
and unless the Agent objects in writing to providing such service, the term
"Company" hereunder, unless the context otherwise requires, shall be deemed to
include each such series of Shares. All recordkeeping and reporting shall be
done separately for each series. Unless the Company and the Agent agree to an
amended fee schedule, the fee schedule attached hereto shall apply to each
series separately.
Article 9. Assignment
9.01. Except as provided in Section 9.03 below, neither this Agreement nor
any rights or obligations hereunder may be assigned by either party without the
written consent of the other party.
-10-
<PAGE>
9.02. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
9.03. The Agent may, with notice to and consent on the part of the
Company, which consent shall not be unreasonably withheld, subcontract for the
performance of certain services under this Agreement to qualified service
providers, which shall be registered as transfer agents under Section 17A of the
Securities Exchange Act of 1934 if such registration is required; provided,
however, that the Agent shall be as fully responsible to the Company for the
acts and omissions of any subcontractor as it is for its own acts and omissions.
Article 10. Amendment.
10.01. This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Directors of each party.
Article 11. Massachusetts Law to Apply.
11.01. This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
Article 12. Form N-SAR.
12.01. The Agent shall maintain such records as shall enable the Company
to fulfill the requirements of Form N-SAR or any successor report which must be
filed with the Securities and Exchange Commission.
Article 13. Merger of Agreement.
13.01. This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject hereof
whether oral or written.
Article 14. Counterparts.
14.01. This Agreement may be executed by the parties hereto in any number
of counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
ATTEST: THE JAPAN FUND, INC.
/s/ Virginia A. Callahan By /s/ [Illegible]
- -------------------------- --------------------------
Title: President
ATTEST: SCUDDER SERVICE CORPORATION
/s/ [Illegible] BY: /s/ [Illegible]
- -------------------------- -------------------------
Title: President
-12-
Exhibit 9(b)(1)
SHAREHOLDER SERVICE AGREEMENT
between
THE JAPAN FUND, INC.
and
SCUDDER SERVICE CORPORATION
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 Terms of Appointment; Duties of
Service ................................................... 1
ARTICLE 2 Fees and Expenses ......................................... 4
ARTICLE 3 Representations and Warranties of Service ................. 4
ARTICLE 4 Representations and Warranties of the Fund ................ 5
ARTICLE 5 Indemnification ........................................... 6
ARTICLE 6 Covenants of the Fund and Service ......................... 10
ARTICLE 7 Termination of Agreement .................................. 11
ARTICLE 8 Assignment ................................................ 12
ARTICLE 9 Amendment ................................................. 12
ARTICLE 10 Massachusetts Law to Apply ................................ 12
ARTICLE 11 Entire Agreement .......................................... 13
ARTICLE 12 Form N-SAR ................................................ 13
ARTICLE 13 Further Actions ........................................... 13
ARTICLE 14 Interpretive Provisions ................................... 13
-i-
<PAGE>
SHAREHOLDER SERVICE AGREEMENT
THIS AGREEMENT made as of this 14th day of AUGUST, 1987 by and between
SCUDDER SERVICE CORPORATION, a Massachusetts Corporation ("Service") and THE
JAPAN FUND, INC., a Maryland corporation (the "Fund").
WITNESSETH:
WHEREAS, Service is engaged in the business of providing certain
recordkeeping, shareholder servicing and other services; and
WHEREAS, the Fund is engaged in business as an open-end investment company
registered under the Investment Company Act of 1940, as amended; and
WHEREAS, Service is willing to provide to the Fund certain shareholder
servicing and other services on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
Article 1. Terms of Appointment; Duties of Service
1.01 Subject to the terms and conditions set forth in this Agreement, the
Fund hereby employs and appoints Service to act as, and Service agrees to act
as, shareholder servicing agent with respect to the authorized and issued shares
of common
<PAGE>
stock of the Fund ("Shares") which are held in accounts (individually an
"Account" or collectively the "Accounts") for shareholders of the Fund (the
"Shareholders").
1.02 Service agrees that it will perform the following services in
accordance with procedures established from time to time by agreement between
the Fund and Service. Subject to such procedures, Service shall:
(i) respond to all telephone inquiries from Shareholders or
their authorized representatives regarding the status of Shareholder Accounts;
(ii) receive and record all telephone orders in appropriate form for
redemption or repurchase (including a redemption or repurchase and the
investment of the proceeds thereof in the shares of another investment company
advised by the Fund's investment adviser, which transaction is sometimes
referred to as an "exchange") of Shares from Shareholders or their authorized
representatives, and transmit such orders to the Fund's transfer agent on the
business day received;
(iii) respond to correspondence from Shareholders or their
authorized representatives regarding the status of Accounts or information
related to Accounts; provided, however, that Service shall not be responsible
for processing written orders to purchase, redeem or repurchase Shares, whether
or not in "good order" as defined in the Fund's registration statement as from
time to time in effect under the Securities Act of 1933, for the purchase or
redemption of Shares;
-2-
<PAGE>
(iv) perform Account maintenance updates, including minor
corrections and adjustments to Account information when requested by a
Shareholder or his authorized representative; provided, however, that the term
"Account maintenance updates" shall not include: (a) changing the number of
shares in an account, (b) changing the taxpayer identification number of the
Shareholder, except for obvious typographical or data entry errors, (c) changing
the Shareholder's name, or any portion of it, or address, except for obvious
typographical or data entry errors, (d) changing the bank account to which
redemption proceeds are to be wired in the case of telephone redemption, or (e)
changing any other information in the Account which cannot be changed in the
absence of a signature guarantee pursuant to the policies of the Fund as from
time to time in effect; and
(v) cooperate with the Fund's transfer agent for the purpose of
establishing and implementing procedures to ensure that the Fund's transfer
agency and shareholder relations functions are efficiently carried out.
Nothwithstanding anything to the contrary in this Agreement, Service shall not
be responsible for the performance of any duties which are required to be
performed by State Street Bank and Trust Company (the "Bank") pursuant to a
Transfer Agency and Service Agreement dated as of _______, 1987 between the Fund
and the Bank.
-3-
<PAGE>
Article 2 Fees and Expenses
2.01 For performance by Service of services pursuant to this Agreement,
the Fund agrees to pay Service an annual maintenance fee for each Account as set
out in the fee schedule attached hereto as Exhibit A. Such fee schedule and
out-of-pocket expenses and advances identified under Section 2.02 below may be
changed from time to time by mutual agreement between the Fund and Service, as
approved by a majority of the disinterested Trustees of the Fund.
2.02 In addition to the fee paid under Section 2.01 above, the Fund agrees
to reimburse Service for out-of-pocket expenses or advances incurred by Service
for the items set out in the fee schedule attached hereto as Exhibit A. In
addition, any other expenses incurred by Service, at the request or with the
consent of the Fund, will be reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses promptly.
Postage and the cost of materials for mailing shall be advanced to Service by
the Fund at least two (2) days prior to the mailing date of such materials or
paid within two (2) days of the receipt by the Fund of a bill therefor.
Article 3 Representations and Warranties of Service
Service represents and warrants to the Fund that:
3.01 It is a corporation duly organized and existing and in good
standing under the laws of The Commonwealth of
-4-
<PAGE>
Massachusetts.
3.02 It has the legal power and authority to carry on its business in The
Commonwealth of Massachusetts.
3.03 It is empowered under applicable laws and by its charter and by-laws
to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement.
3.05 It is duly registered as transfer agent under Section 17A of the
Securities Exchange Act of 1934, as amended.
3.06 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
Article 4 Representations and Warranties of the Fund
The Fund represents and warrants to Service that:
4.01 It is a corporation duly organized and existing under the laws of
Maryland.
4.02 It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement.
4.03 All proceedings required by said Articles of Incorporation and
By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.04 It is an investment company registered under the Investment Company
Act of 1940, as amended (the "Act").
4.05 A majority of the Directors of the Fund who are not interested
persons have made findings to the effect that:
-5-
<PAGE>
(a) the services to be performed pursuant to the Agreement are
services required for the operation of the Fund;
(b) Service can provide services the nature and quality of which are
at least equal to those provided by others offering the same or similar
services; and
(c) the fees charged by Service for such services are fair and
reasonable in the light of the usual and customary charges made by others for
services of the same nature and quality.
4.06 A registration statement under the Securities Act of 1933, as
amended, has been filed and has become effective, and appropriate state
securities law filings have been made with respect to all Shares of the Fund
being offered for sale. The Fund shall notify Service if such registration
statement or any state securities registration or qualification has been
terminated or a stop order has been entered with respect to the Shares.
Article 5 Indemnification
5.01 Service shall not be responsible for, and the Fund shall indemnify
and hold Service harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to:
(a) All actions of Service or its agents required to be taken
pursuant to this Agreement, provided that such actions are taken in good faith
and without negligence or willful misconduct.
-6-
<PAGE>
(b) The Fund's refusal or failure to comply with the terms of this
Agreement, or which arise out of the Fund's lack of good faith, negligence or
willful misconduct or which arise out of the breach of any representation or
warranty of the Fund hereunder.
(c) The reliance on or use by Service or its agents of information,
records and documents which (i) are received by Service or its agents and
furnished to it by or on behalf of the Fund, and (ii) have been prepared and/or
maintained by the Fund or any other person or firm (except Service) on behalf of
the Fund.
(d) The reliance on or the carrying out by Service or its agents of
any written instructions or requests of the Fund or any person acting on behalf
of the Fund.
(e) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations, or the securities laws or
regulations of any state that such Shares be registered in such state, or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state.
5.02 Service shall indemnify and hold the Fund harmless from and against
any and all losses, damages, costs, charges, counsel fees, payments, expenses
and liabilities arising out of or attributable to Service's refusal or failure
to comply with the terms of this Agreement (whether as a result of the acts or
-7-
<PAGE>
omissions of Service or of its agents or subcontractors) or which arises out of
Service's or its agent's or subcontractor's lack of good faith, negligence or
willful misconduct or which arises out of the breach of any representation or
warranty of Service hereunder.
5.03 At any time Service may apply to any officer of the Fund for
instructions, and may consult with legal counsel (which may also be legal
counsel for the Fund) with respect to any matter arising in connection with the
services to be performed by Service under this Agreement, and Service shall not
be liable and shall be indemnified by the Fund for any action taken or omitted
by it in reliance upon such instructions or upon the opinion of such counsel.
Service and its agents shall be protected and indemnified in acting upon any
paper or document furnished by or on behalf of the Fund, reasonably believed to
be genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data or records or documents provided Service or its
agents by telephone, in person, machine readable input, telex, CRT data entry or
other similar means authorized by the Fund, and shall not be held to have notice
of any change of authority of any person, until receipt of written notice
thereof from the Fund.
5.04 Service may at any time or times in its discretion appoint (and may
at any time remove) another individual, corporation, partnership, trust or
company as its agent to carry out such of the provisions of this Agreement as
Service shall from time to time direct.
-8-
<PAGE>
5.05 In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable to the other for
any damages resulting from such failure to perform or otherwise from such
causes.
5.06 In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
Article 6 Covenants of the Fund and Service
6.01 Service hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of records and for
the preparation or use, and for keeping account of, such records.
-9-
<PAGE>
6.02 Service shall at all times maintain insurance coverage which is
reasonable and customary in light of its duties hereunder and its other
obligations and activities and shall notify the Fund of any changes in its
insurance coverage.
6.03 Service shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Act and the Rules thereunder, Service agrees that
all such records, and those records that the Fund and Service agree from time to
time to be the records of the Fund, will be preserved, maintained at the expense
of the Fund and made available in accordance with such Section and Rules and
this Agreement, and will be surrendered promptly to the Fund at its request.
Records surrendered hereunder shall be in machine readable form, except to the
extent that Service has maintained such a record only in paper form.
6.04 Service and the Fund agree that all books, records, information and
data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
6.05 In case of any requests or demands for the inspection of the
records relating to Accounts with the Fund, Service will endeavor to notify
the Fund and to secure instructions from an authorized officer of the Fund as
to such inspection. Service
-10-
<PAGE>
reserves the right, however, to exhibit such records to any person whenever it
is advised by counsel to the Fund that it may be held liable for the failure to
exhibit such records to such person.
6.06 Service acknowledges that the Fund, as a registered investment
company under the Act, is subject to the provisions of the Act and the rules and
regulations thereunder, and that the offer and sale of the Fund's Shares are
subject to the provisions of federal and state laws and regulations applicable
to the offer and sale of securities. The Fund acknowledges that Service is not
responsible for the Fund's compliance with such laws, rules and regulations. If
the Fund advises Service that a procedure of Service related to the discharge of
its obligations hereunder has or may have the effect of causing the Fund to
violate any of such laws, rules or regulations, Service shall use its best
efforts to develop a mutually agreeable alternative procedure which does not
have such effect.
Article 7. Termination of Agreement
7.01 This Agreement may be terminated by the Fund on the last day of the
month next commencing after thirty (30) days written notice to Service. This
agreement may be terminated by Service upon one hundred twenty (120) days
written notice to the Fund.
7.02 Upon termination of this Agreement, the Fund shall pay to Service
such fees and expenses as may be due as of the date of such termination.
-11-
<PAGE>
7.03 Should the Fund exercise its right to terminate this Agreement, all
out-of-pocket expenses associated with the movement of records and material will
be borne by the Fund. Additionally, Service reserves the right to charge for any
other reasonable expenses associated with such termination.
Article 8. Assignment
8.01 Neither this Agreement nor any rights or obligations hereunder may be
assigned by either party without the written consent of the other party.
8.02 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
Article 9. Amendment
9.01 This Agreement may be amended or modified by a written agreement
executed by both parties.
Article 10. Massachusetts Law to Apply
10.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
Article 11. Entire Agreement
11.01 This Agreement constitutes the entire agreement between the
parties hereto.
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<PAGE>
Article 12. Form N-SAR
12.01 Service shall maintain such records as shall enable the Fund to
fulfill the requirements of Form N-SAR.
Article 13. Further Actions
13.01 Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
Article 14. Interpretive Provisions
14.01 In connection with the operation of this Agreement, Service and the
Fund may agree from time to time on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. Any such interpretive or
additional provisions are to be signed by the parties and annexed hereto, but no
such provision shall contravene any applicable federal or state law or
regulation and no such interpretive or additional provision shall be deemed to
be an amendment of this Agreement.
-13-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
SCUDDER SERVICE CORPORATION
By: /s/ David S. Lee
-------------------------------
Title: President & Director
THE JAPAN FUND, INC.
By: /s/ [Illegible]
-------------------------------
Title: President
-14-
THE
SCUDDER
FLEXI-PLAN
---------------------
Plan Document
A profit sharing plan and
money purchase pension
plan
SCUDDER
SERVING INVESTORS SINCE 1919
<PAGE>
SCUDDER PROTOTYPE PLAN
TABLE OF CONTENTS
Page
----
SECTION 1 Introduction .................................................. 2
SECTION 2 Definitions ................................................... 2
SECTION 3 Eligibility ................................................... 3
SECTION 4 Contributions ................................................. 3
SECTION 5 Code Section 415 Limitations on Allocations ................... 4
SECTION 6 Time and Manner of Making Contributions ....................... 6
SECTION 7 Vesting ....................................................... 6
SECTION 8 Distribution Upon Death ....................................... 6
SECTION 9 Other Distributions ........................................... 6
SECTION 10 Loans ......................................................... 7
SECTION 11 Trust Provisions .............................................. 7
SECTION 12 Administration ................................................ 9
SECTION 13 Fees and Expenses ............................................. 9
SECTION 14 Benefit Recipient Incompetent or Difficult to
Ascertain or Locate .......................................... 9
SECTION 15 Designation of Beneficiary .................................... 9
SECTION 16 Spendthrift Provision ......................................... 10
SECTION 17 Necessity of Qualification .................................... 10
SECTION 18 Amendment or Termination ...................................... 10
SECTION 19 Transfers ..................................................... 10
SECTION 20 Owner-Employee Provisions ..................................... 10
SECTION 21 Top-Heavy Provisions .......................................... 10
SECTION 22 Waiver of Minimum Funding Standard ............................ 11
SECTION 23 Miscellaneous ................................................. 12
1
<PAGE>
SCUDDER PROTOTYPE PLAN
SECTION 1.
INTRODUCTION
The Employer has established this Plan (the "Plan"), consisting of the
Adoption Agreement and the following provisions (the "Prototype Plan") for the
exclusive benefit of its Employees and their Beneficiaries.
SECTION 2.
DEFINITIONS
Where the following words and phrases appear in this Plan, they shall have
the respective meanings set forth below, unless their context clearly indicates
a contrary meaning. The singular herein shall include the plural, and vice
versa, and the masculine gender shall include the feminine gender, and vice
versa, where the context requires.
2.1 "Account" shall mean the Trust assets held by the Trustee for the
benefit of a Participant, which shall be the sum of the Participant's Employer
Contribution Account, Nondeductible Voluntary Contribution Account, Deductible
Voluntary Contribution Account and Rollover Account.
2.2 "Act" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
2.3 "Administrator" shall mean the person or persons specified in Section
12.1.
2.4 "Adoption Agreement" shall mean the agreement by which the Employer has
most recently adopted or amended the Plan.
2.5 "Beneficiary" shall mean any person or legal representative entitled to
receive benefits on or after the death of a Participant.
2.6 "Code" shall mean the Internal Revenue Code of 1954, as amended.
Reference to a section of the Code shall include any comparable section or
sections of future legislation that amends, supplements or supersedes such
section.
2.7 "Compensation" shall mean the amount paid during the Plan Year by the
Employer to the Employee for services rendered while a Participant, as
reportable to the Federal Government for the purpose of withholding Federal
income taxes, but not including amounts attributable to any category specified
in the Adoption Agreement. If so specified in the Adoption Agreement,
Compensation shall also mean amounts paid to the Employee for services rendered
for the entire Plan Year in which an Employee became a Participant whether or
not such an Employee was a Participant for the entire Plan Year. In the case of
a Self-Employed Individual, the above determination of Compensation shall be
made on the basis of the Self-Employed Individual's Earned Income.
Notwithstanding the previous sentence, for the purposes of the limitations
imposed by Section 4.1(a)(i)(B) below, Compensation of a Self-Employed
Individual shall be determined on the basis of the Self-Employed Individual's
Earned Income determined in accordance with the rules provided by Code Section
404(a)(8)(D).
2.8 "Current or Accumulated Earnings and Profits" of an Employer other than
a sole-proprietorship or partnership shall mean the Employer's current or
accumulated earnings and profits, as determined on the basis of the Employer's
books of account in accordance with generally accepted accounting practices,
without any deductions for Employer Contributions under the Plan (or any other
qualified plan) for the current Year or for income taxes for the current Year,
and without regard to the Employer's election to be taxed as a small business
corporation, if it has so elected. If the Employer is a sole-proprietorship or
partnership, "Current or Accumulated Earnings and Profits" shall mean the net
income of such Employer before deduction for income taxes and contributions made
hereunder.
2.9 "Deductible Voluntary Contribution Account" shall mean the separate
account maintained pursuant to Section 6.3(c) hereof for the Deductible
Voluntary Contributions made by the Participant and the income, expenses, gains
and losses attributable thereto.
2.10 "Deductible Voluntary Contributions" shall mean the contributions made
by Participants in accordance with Section 4.2 hereof, which respective
contributing Participants designate as "Deductible Voluntary Contributions" at
the time of contribution, and which comply with the requirements of Code Section
219.
2.11 "Designated Investment Company" shall mean a regulated investment
company for which Scudder, Stevens & Clark, its successor or any of its
affiliates, acts as investment adviser and which is designated by Scudder Fund
Distributors, Inc. or its successors, as eligible for investment under the Plan.
2.12 "Designation of Beneficiary" or "Designation" shall mean the document
executed by a Participant under Section 15.
2.13 "Disability" shall mean the inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment that can be expected to last for a continuous period of 12 months or
more, as certified by a licensed physician selected by the Participant and
approved by the Employer.
2.14 "Distributee" shall mean the Beneficiary or other person entitled to
receive the undistributed portion of the Participant's Account under Section 8
because of death or under Section 14 because of incompetency or inability to
ascertain or locate such individual.
2.15 "Distributor" shall mean Scudder Fund Distributors, Inc. or its
successor.
2.16 "Earned Income" shall mean the net earnings from self-employment in
the trade or business with respect to which the Plan is established, for which
personal services of the Owner-Employee or Self-Employed Individual are a
material income-producing factor. Net earnings will be determined without regard
to items not included in gross income and the deductions allocable to such
items. Net earnings are reduced by contributions by the Employer to a qualified
plan, including this Plan, to the extent deductible under Code Section 404.
2.17 "Effective Date" shall mean the date specified by the Employer in the
Adoption Agreement.
2.18 "Employee" shall mean an individual who performs services in the
business of the Employer in any capacity except for, (a) if specified in the
Adoption Agreement, non-resident aliens who receive no earned income from United
States sources (as described in Code Section 410(b)(3)(C)), (b) if specified in
the Adoption Agreement, individuals who are covered by a collective bargaining
contract between the Employer and a recognized bargaining agent, if contract
negotiations considered retirement benefits in good faith and unless such
contract specifically provides for participation in the Plan, and (c) such other
individuals as are excluded under the Adoption Agreement.
2.19 "Employer" shall mean the organization or other entity named as such
in the Adoption Agreement and any successor organization or entity which adopts
the Plan. Any two or more organizations or entities which are "related
businesses" within the meaning of Section 3.6 hereof may adopt and maintain the
plan as a single Plan.
2.20 "Employer Contribution Account" shall mean the separate account
maintained pursuant to Section 6.3(a) hereof for the Employer Contributions
allocated to a Participant and the income, expenses, gains and losses
attributable thereto.
2.21 "Employer Contributions" shall mean the contributions made by the
Employer in accordance with Section 4.1 hereof.
2.22 "Hour of Service" shall mean:
(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;
(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 (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.
Where the Employer maintains the plan of a predecessor employer, service
for such predecessor employer shall be treated as Service of the Employer. Where
the Employer does not maintain the plan of a predecessor employer, employment by
a predecessor employer, upon the written election of the Employer made in a
uniform and non-discriminatory manner, shall be treated as Service for the
Employer.
2.23 "Integration Level" for a Plan Year shall mean the lesser of the
Social Security Wage Base or the dollar amount specified in the Adoption
Agreement.
2.24 "Integration Rate" for a Plan Year shall mean the lesser of the OASDI
Rate or the rate specified in the Adoption Agreement.
2.25 "Loan Trustee" shall mean the Trustee or, if the Employer has
specified otherwise in the Adoption Agreement, the individual or individuals so
appointed to act as trustee solely for the purpose of administering the
provisions of Section 10 and holding the Trust assets to the extent that they
are invested in loans pursuant to such Section.
2.26 "Nondeductible Voluntary Contribution Account" shall mean the separate
account maintained pursuant to the Section 6.3(b) hereof for Nondeductible
Voluntary Contributions made by the Participant and the income, expenses, gains
and losses attributable thereto.
2.27 "Nondeductible Voluntary Contributions" shall mean all Contributions
by Participants which are not Deductible Voluntary Contributions, Rollover
Contributions, or contributions of accumulated deductible employee contributions
made pursuant to Section 4.2(b)(vi) hereof.
2.28 "Normal Retirement Date" or "Normal Retirement Age" shall mean the
earlier of (a) the date selected by the Employer in the Adoption Agreement or,
(b) if the Employer enforces a mandatory retirement age, the first day of the
month in which the Participant reaches such age.
2.29 "OASDI Rate" for a Plan Year shall mean the tax rate applicable, on
the first day of the Plan Year, to employer contributions for old age,
survivors, and disability insurance under the Social Security Act.
2.30 "One-Year Break in Service" shall mean a 12-consecutive-month period
in which an Employee does not complete more than 500 Hours of Service unless the
number of Hours of Service specified in the Adoption Agreement for purposes of
determining a Year of Service is less than 501, in which case a
12-consecutive-month period in which an Employee has fewer than that number of
Hours of Service shall be a One-Year Break in Service. The computation period
over which One-Year Breaks in Service shall be measured shall be the same
computation period over which Years of Service are measured as selected in the
Adoption Agreement.
2.31 "Owner-Employee" shall mean an Employee who is a sole proprietor
adopting this Plan as the Employer, or who is a partner owning more than 10% of
either the capital or profits interest of a partnership adopting this Plan as
the Employer.
2.32 "Participant" shall mean an Employee who is eligible to participate in
the Plan under Section 3 and who has not, since becoming a Participant, died,
retired, otherwise terminated employment with the Employer or transferred from
an eligible class to a class of Employees ineligible to participate in the Plan.
2.33 "Plan" shall mean the Prototype Plan and Adoption Agreement.
2.34 "Plan Year" shall mean the fiscal year of the Employer or a different
12-consecutive-month period as specified in the Adoption Agreement.
2.35 "Prototype Plan" shall mean these Sections 1-23.
2.36 "Rollover Account" shall mean the separate account maintained pursuant
to Section 6.3(d) hereof for any Rollover Contributions (as described in Section
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4.3 hereof) made by the Participant and the income, expenses, gains and losses
attributable thereto.
2.37 "Rollover Contributions" shall mean contributions made to the Trust by
Participants in accordance with Section 4.3 hereof.
2.38 "Self-Employed Individual" shall mean an Employee who has Earned
Income for the Plan Year from the trade or business for which the Plan is
established, or an individual who would have had Earned Income but for the fact
that the trade or business had no Current or Accumulated Earnings and Profits
for the Plan Year.
2.39 "Service" shall mean employment by the Employer and, if the Employer
is maintaining the plan of a predecessor employer, or if the Employer is not
maintaining the plan of a predecessor employer but has so elected in the manner
described in Section 2.22 above, employment by such predecessor employer.
2.40 "Social Security Wage Base" for a Plan Year means the maximum amount
of annual earnings which may be considered wages under Code Section 3121(a)(1)
as in effect on the first day of such Plan Year.
2.41 "Sponsor" shall mean any of the organizations (a) which have requested
a favorable opinion letter from the National Office of the Internal Revenue
Service for this Plan or (b) to which a favorable opinion letter for this Plan
has been issued by the National Office of the Internal Revenue Service.
2.42 "Trust" shall mean the trust established under Section 11 of this Plan
for investment of Trust assets.
2.43 "Trust Fund" shall mean the contribution to the Trust and any assets
into which such contributions shall be invested or reinvested in accordance with
Sections 11.1 and 11.3 of this Plan.
2.44 "Trustee" shall mean the person or persons, including any successor or
successors thereto, named in the Adoption Agreement to act as trustee of the
Trust and hold the Trust assets in accordance with Section 11 hereof.
2.45 "Valuation Date" shall mean the last day of each Plan Year.
2.46 "Vesting Years" shall be measured on the 12-consecutive-month period
specified in the Adoption Agreement. A Participant will have a Vesting Year
during such computation period only if the Participant completes the number of
Hours of Service selected in the Adoption Agreement for purposes of computing a
Year of Service or, if so specified in the Adoption Agreement, the Participant
will have a Vesting Year for each Plan Year for which the Participant shares in
the allocation of Employer Contributions for the Plan Year. However, when
determining Vesting Years, unless the Employer has otherwise specified in the
Adoption Agreement, there shall be excluded: (a) if this Plan is a continuation
of an earlier plan which would have disregarded such service, Service before the
first Plan Year to which the Act is applicable; (b) Service after a One-Year
Break in Service (but this exclusion shall apply only for the purpose of
computing the vested percentage of Employer Contributions made before such
break); (c) Service before a One-Year Break in Service, if the Participant had
no vested interest at the time of such break and the number of consecutive
One-Year Breaks in Service equals or exceeds the number of Vesting Year before
such break without counting Vesting Years excluded by an earlier application of
this provision; (d) Service before the first Plan Year in which the Participant
attained age 22; (e) Service before the Employer maintained this Plan or a
predecessor plan; and (f) Service before January 1, 1971, unless the Participant
has completed at least 3 Vesting Years after December 31, 1970.
2.47 "Year" shall mean the fiscal year of the Employer.
2.48 "Year of Service" shall mean a 12-consecutive-month period, beginning
on an Employee's initial date of employment or an anniversary thereof during
which the Employee completes the number of Hours of Service specified in the
Adoption Agreement. The initial date of employment is the first day on which the
Employee performs an Hour of Service.
SECTION 3.
ELIGIBILITY
3.1 Entry. Each Employee of the Employer, who on the Effective Date of this
Plan meets the conditions specified in the Adoption Agreement, shall become
eligible to participate in the Plan commencing with the Effective Date. Each
other Employee of the Employer, including future Employees, shall become
eligible to participate in the Plan when the eligibility requirements specified
in the Adoption Agreement are met.
3.2 Interrupted Service. All Years of Service with the Employer are counted
towards eligibility except the following:
(a) If the Employer has specified in the Adoption Agreement that more than
one Year of Service is required before becoming a Participant, and if the
individual has a One-Year Break in Service before satisfying the Plan's
eligibility requirements, Service before such break will not be taken into
account.
(b) In the case of a Participant who does not have any nonforfeitable right
to the Employer Contribution Account, Years of Service before a One-Year Break
in Service will not be taken into account in computing Years of Service for
purposes of eligibility if the number of consecutive One-Year Breaks in Service
equals or exceeds the aggregate number of such Years of Service before such
break. Such aggregate number of Years of Service before such break will not
include any Years of Service disregarded under this Section by reason of a prior
break in service.
3.3 Reentry. If a former Participant either (a) had a nonforfeitable right
to all or a portion of his or her Employer Contribution Account at the time of
termination from Service or (b) did not have any nonforfeitable right to his or
her Employer Contribution Account but does not have Service prior to the break
in Service disregarded by operation of Section 3.2(b) hereof, such former
Participant shall become a Participant immediately upon return to the employ of
the Employer as a member of an eligible class of Employees.
3.4 Transfer to Eligible Class. In the event an Employee who is not a
member of an eligible class of Employees becomes a member of an 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 a member of an eligible class throughout the
period of employ with the Employer.
3.5 Determination by Administrator. Eligibility shall be determined by the
Administrator and the Administrator shall notify each Employee upon his or her
admission as a Participant in the Plan.
3.6 Related Businesses. If the Employer is a member of (a) a controlled
group of corporations (as defined under Code Section 414(b)), (b) group of
trades or businesses (whether or not incorporated) which are under common
control (as defined under Code Section 414(c)), or (c) an affiliated service
group (as defined under Code Section 414(m)), all service of an Employee for any
member of such a group shall be treated as if it were Service for the Employer
for purposes of the eligibility requirements of the Adoption Agreement and this
Section 3.
In addition, all service for any individual who is considered a leased
employee of the Employer under Code Section 414(n) shall be treated as if it
were Service for the Employer for purposes of the eligibility requirements of
the Adoption Agreement and this Section 3. However, qualified plan contributions
or benefits provided by the leasing organization which are attributable to
Services performed for the Employer shall be treated as provided by the
Employer. The provisions of this paragraph shall not apply to any leased
employee if such employee is covered by a money purchase pension plan maintained
by the leasing organization providing: (a) a non-integrated employer
contribution rate of at least 7-1/2% of compensation, (b) immediate
participation, and (c) full and immediate vesting. For purposes of this section
3.6, the term "leased employee" means any person who pursuant to an agreement
between the recipient and any other person ("leasing organization") has
performed services for the Employer (or for the Employer and related persons
determined in accordance with Code Section 414(n)(6)) on a substantially
full-time basis for a period of at least 1 year and such services are of a type
historically performed by employees in the business field of the Employer.
SECTION 4.
CONTRIBUTIONS
4.1 Employer Contributions and Allocation.
(a) Profit Sharing Plan. If the Employer has adopted this Plan as a profit
sharing plan, the following provisions shall apply:
(i) Contribution. Beginning in the Plan Year in which the Plan is adopted,
and for each Plan Year thereafter, the Employer will contribute the amount
determined by it, in its discretion, for the Plan Year in question; provided,
however, that such Employer Contributions may not exceed the lesser of (A) the
Employer's Current or Accumulated Earnings and Profits for the Plan Year or (B)
15% (or such larger percentage as may be permitted by the Code as a current
deduction to the Employer with respect to any Plan Year) of the total
Compensation (disregarding any exclusion from Compensation specified by the
Employer in the Adoption Agreement) paid to, or accrued by the Employer for,
Participants for that Plan Year plus any unused credit carryovers from previous
Plan Years. For this purpose, a "credit carryover" is the amount by which
Employer Contributions for a previous Plan Year was less than 15% of the total
Compensation (disregarding any exclusion from Compensation specified by the
Employer in the Adoption Agreement) paid or accrued by the Employer to
Participants for such Plan Year, but such unused credit carryover shall in no
event permit the Employer Contributions for a Plan Year to exceed 25% (or such
larger percentage as may be permitted by the Code as a deduction to the
Employer) of the total Compensation (disregarding any exclusion from
Compensation specified by the Employer in the Adoption Agreement) paid or
accrued by the Employer to Participants for the Plan Year in question.
(ii) Allocation Under Non-Integrated, Profit Sharing Plan. If the Employer
has adopted this Plan as a profit sharing plan under which allocations shall be
made on a non-integrated basis, Employer Contributions, plus any forfeitures
under Section 7.3, for a Plan Year shall be allocated according to the
provisions of this subsection (ii) as of the Valuation Date for such Plan Year.
Unless the Employer has specified otherwise in the Adoption Agreement, such
amount shall be allocated among the Employer Contribution Accounts of all
Participants and former Participants who were employed by the Employer during
the Plan Year. If the Employer has specified in the Adoption Agreement that a
minimum number of Hours of Service are necessary to share in the allocation of
Employer Contributions and forfeitures for a Plan Year in which the Plan is not
Top Heavy, Participants and former Participants, as the case may be, who fail to
complete the required number of Hours of Service during such a Plan Year shall
not share in the allocation. If the Employer has so specified in the Adoption
Agreement, Employer Contributions and forfeitures shall be allocated only among
otherwise entitled Participants who are employed by the Employer on such
Valuation Date. Employer Contributions and forfeitures shall be allocated to
Participants entitled to share in the allocation of Employer Contributions and
forfeitures for that Plan Year in proportion to their Compensation for such Plan
Year.
(iii) Allocation Under Integrated, Profit Sharing Plan. If the Employer has
adopted this Plan as a profit sharing plan under which allocations shall be made
on an integrated basis, Employer Contributions, plus any forfeitures under
Section 7.3, for a Plan Year shall be allocated according to the provisions of
this subsection (iii) as of the Valuation Date for such Plan Year. Unless the
Employer has specified otherwise in the Adoption Agreement, such amount shall be
allocated among all Participants and former Participants who were employed by
the Employer during the Plan Year. If the Employer has specified in the Adoption
Agreement that a minimum number of Hours of Service are necessary to share in
the allocation of Employer Contributions and forfeitures for a Plan Year in
which the Plan is not Top Heavy, Participants and former Participants, as the
case may be, who fail to complete the required number of Hours of Service during
such a Plan Year shall not share in the allocation. If the Employer has so
specified in the Adoption Agreement, Employer Contributions and forfeitures
shall be allocated only among otherwise entitled Participants who are employed
by the Employer on such Valuation Date. Employer Contributions and forfeitures
shall be allocated to Participants
3
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entitled to share in the allocation of Employer Contributions and forfeitures
for that Plan Year as follows:
(A) First, Employer Contributions and forfeitures will be allocated to
the Employer Contribution Account of each Participant entitled to share in
the allocation of such amounts in the ratio that each such Participant's
Compensation for the Plan Year in excess of the Integration Level bears to
the Compensation in excess of the Integration Level for all such
Participants, provided that the amount so credited to any such
Participant's Employer Contribution Account for the Plan Year shall not
exceed the product of the Integration Rate times the Participant's
Compensation in excess of the Integration Level.
(B) Next, any remaining Employer Contributions or forfeitures will be
allocated to the Employer Contribution Accounts of all Participants
entitled to share in the allocation of the Employer Contributions for the
Plan Year in the ratio that each such Participant's Compensation for the
Plan Year bears to all such Participants' Compensation for that Plan Year.
(b) Money Purchase Pension Plan. If the Employer has adopted this Plan as a
money purchase pension plan, the Employer will, beginning for the Plan Year in
which the Plan is adopted, and for each Plan year thereafter, contribute, for
allocation to the Employer Contribution Account of each Participant entitled to
share in the allocation of Employer Contributions, the amount specified in the
Adoption Agreement reduced by any forfeitures arising during the preceding Plan
Year pursuant to Section 7.3 hereafter.
(i) Employer has specified otherwise in the Adoption Agreement, the
amount of the Employer Contribution shall be calculated on the basis of the
Compensation of all Participants and former Participants who were employed
by the Employer during the Plan Year. If the Employer has specified in the
Adoption Agreement that a minimum number of Hours of Service are necessary
to receive an Employer Contribution in a Plan Year in which the Plan is not
Top Heavy, Participants and former Participants, as the case may be, who
fail to complete the required number of Hours of Service during such a Plan
Year shall not be considered when calculating the amount of the Employer
Contribution. If the Employer has so specified in the Adoption Agreement,
only Participants who are employed by the Employer on such Valuation Date
and who are otherwise entitled to receive an allocation shall be considered
when calculating the amount of the Employer Contribution. Employer
Contributions shall be allocated to the Employer Contribution Accounts of
only those Participants who were included in the calculation of the amount
of the Employer Contribution.
(ii) To the extent that the Employer Contribution for a Plan Year is
reduced by forfeitures, such forfeitures shall be added to such Employer
Contribution and allocated as a part thereof.
(iii) Any excess forfeitures not allocated pursuant to this Section
4.1(b) shall be carried over to future Plan Years.
4.2 Participant Contributions. If, in the Adoption Agreement, the Employer
has specified that Participants may make either Deductible Voluntary
Contributions or Nondeductible Voluntary Contributions, or both, a Participant
may make such permitted contributions to his or her Account; provided, however,
that a Participant's right to make such contribution(s) shall be subject to the
conditions and limitations specified below.
(a) The following conditions and limitations shall apply if the Employer
has specified that Participants may make Nondeductible Voluntary Contributions:
(i) The aggregate amount of a Participant's Nondeductible Voluntary
Contributions, plus any nondeductible voluntary contributions he or she
makes under any other qualified retirement plan maintained by the Employer,
shall not exceed 10% of his or her Compensation (disregarding any
exclusions from Compensation specified by the Employer in the Adoption
Agreement) for the period in which he or she has been a Participant in the
Plan.
(ii) The aggregate amount of a Participant's Nondeductible Voluntary
Contributions shall not cause the Annual Addition (as defined in Section
5.5(a) hereof) to his or her Account to exceed the limitations set forth in
Section 5.
(iii) A Participant's Nondeductible Voluntary Contributions shall be
allocated to his or her Nondeductible Voluntary Contribution Account under
Section 6.3 hereof.
(iv) A Participant's right to his or her Nondeductible Voluntary
Contribution Account shall be nonforfeitable and the Participant may
withdraw all or a portion of his or her Nondeductible Voluntary
Contribution Account upon 30 days written notice to the Administrator.
(b) The following conditions and limitations shall apply if the Employer
has specified that Participants may make Deductible Voluntary Contributions:
(i) The aggregate amount of a Participant's Deductible Voluntary
Contributions in any calendar year may not exceed the lesser of (1) $2,000
or (2) the Participant's compensation for calendar year for which the
contribution is made. Compensation for this purpose means all wages,
salaries, earned income and other amounts received or derived from personal
services actually rendered and includible in gross income, but does not
include amounts derived from or received as earnings or profits from
property or amounts received as a pension or annuity or as deferred
compensation. This limitation applies to all the Participants' Deductible
Voluntary Contributions made for the calendar year to all qualified
retirement plans maintained by the Employer.
(ii) A Participant may not make Deductible Voluntary Contributions for
the calendar year in which he or she attains age 70-1/2 or any calendar
year thereafter.
(iii) A Deductible Voluntary Contribution will be considered
contributed for the calendar year in which it is actually made. However, if
a Participant makes a Deductible Voluntary Contribution on or before April
15, he or she may notify the Administrator at the time the Deductible
Voluntary Contribution is made that it is made for the preceding calendar
year. A Deductible Voluntary Contribution may only be made for a calendar
year in which the Employee was a Participant, and in no event may a
Deductible Voluntary Contribution be made by an Employer after he or she
has ceased to be a Participant.
(iv) A Participant's Deductible Voluntary Contributions shall be
allocated to his or her Deductible Voluntary Contribution Account under
Section 6.3 hereof.
(v) A Participant's right to his or her Deductible Voluntary
Contribution Account shall be nonforfeitable and the Participant may
withdraw all or a portion of his or her Deductible Voluntary Contribution
Account upon written application to the Administrator. However, if at the
time the Participant receives the withdrawal, he or she has not attained
age 59-1/2 and is not disabled, the Participant will be subject to a
federal income tax penalty unless he or she rolls over the amount withdrawn
to a qualified retirement plan or individual retirement plan within 60 days
of the date he or she receives it.
(vi) The Administrator may, in its discretion, accept accumulated
deductible employee contributions (as defined in Code Section 72(o)(5))
that were distributed from a qualified retirement plan and rolled over
pursuant to Code Sections 402(a)(5), 402(a)(7), 403(a)(4), or 408(d)(3).
The rolled over amount will be added to the Participant's Deductible
Voluntary Contribution Account, but will not be taken into account in
applying the restrictions specified in Section 4.2(b)(i) and (ii) above. In
no case may the Administrator authorize the Plan to accept rollovers of
accumulated deductible employee contributions from a qualified plan under
which the Participant was covered as a Self-Employed Individual.
4.3 Rollover Contributions. The Administrator may, in its discretion,
direct the Trustee to accept a Rollover Contribution upon the express request of
the Participant wishing to make such Rollover Contribution, the same to be held,
administered and distributed by the Trustee in accordance with the terms of this
Plan, provided that the Trustee consents if the contribution includes property
other than cash. A Rollover Contribution shall only be a contribution, comprised
of money and/or property, which is a "rollover amount" within the meaning of
Code Section 402(a)(5) or a "rollover contribution" within the meaning of Code
Section 408(d)(3)(A)(ii) (as modified by Code Section 408(d)(3)(C)with respect
to which both of the following conditions are met:
(a) The transfer of such amount is being made within 60 days of its receipt
by the Participant and
(b) No part of such amount is attributable to contributions made on behalf
of the Participant while he or she was a Key Employee (as defined in Section
21.2(a) and applied to such other employer) in a Top-Heavy Plan (as defined in
Section 21.2(b) and applied to such other plan).
All Rollover Contributions made under this Section 4.3 must be accepted by
the Trustee within the 60-day period referred to in paragraph (a) above. A
Participant's Rollover Contribution shall at no time be included in the
computation of the maximum allocation to a Participant's Account as set forth in
Section 5 hereof. Each Rollover Contribution made by a Participant shall be
allocated to his or her Rollover Account pursuant to Section 6.3(d) hereof. Such
Rollover Account shall be invested by the Trustee as part of the Trust Fund,
pursuant to Section 11 hereafter, except as it may be held in kind as permitted
above. A Participant may withdraw all or a portion of his or her Rollover
Account upon 30 days' written notice to the Administrator.
4.4 Transfers from other Qualified Plans. The Administrator may, in its
discretion, direct the Trustee to accept the transfer of any assets held for a
Participant's benefit under a qualified retirement plan of a former employer of
such Participant. Such a transfer shall be made directly between the trustee or
custodian of the former employer's plan and the Trustee in the form of cash or
its equivalent, and shall be accompanied by written instruction showing
separately the portion of the transfer attributable to contributions by the
former employer and by the Participant respectively. To the extent that the
amount transferred is attributable to contributions by the former employer, it
shall be maintained in a Participant's Rollover Account. To the extent that the
amount transferred is attributable to contributions by the Participant, it shall
be maintained in the Participant's Nondeductible Voluntary Contribution Account
or Deductible Voluntary Contribution Account as is appropriate.
SECTION 5.
CODE SECTION 415 LIMITATIONS ON ALLOCATIONS
5.1 Employers Maintaining No Other Plan.
(a) If a Participant does not participate in, and has never participated in
another qualified plan maintained by the Employer, the amount of the Annual
Addition which may be credited to the Participant's Account for any Limitation
Year shall not exceed the lesser of the Maximum Permissible Amount or any other
limitation contained in the Plan.
(b) If the Employer Contribution that would otherwise be allocated to a
Participant's Account would cause the Annual Addition for the Limitation Year to
exceed the Maximum Permissible Amount, the amount allocated will be reduced so
that any Excess Amount shall be eliminated and, consequently, the Annual
Addition for the Limitation Year will equal the Maximum Permissible Amount.
(c) Any Excess Amount shall be eliminated pursuant to the following
procedure:
(i) The portion of the Excess Amount consisting of Nondeductible
Voluntary Contributions which are a part of the Annual Addition (as defined
in Section 5.5(a)) shall be returned to the Participant as soon as
administratively feasible;
(ii) If after the application of subparagraph (i) an Excess Amount
still exists and the Participant is covered by the Plan at the end of the
Limitation Year, the Excess Amount in the Participant's Account will be
used to reduce Employer Contributions (including any allocation of
forfeitures) for such Participant in the next Limitation Year, and each
succeeding Limitation Year if necessary;
(iii) If after the application of subparagraph (i) an Excess Amount
still exists and the Participant is not covered by the Plan at the end of
the Limitation Year, the Excess Amount will be held unallocated in a
suspense account. The
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suspense account will be applied to reduce proportionately future
Employer Contributions (including any allocation of forfeitures) for all
remaining Participants in the next Limitation Year, and each succeeding
Limitation Year, if necessary. If a suspense account is in existence at any
time during the Limitation Year pursuant to this subparagraph, it will not
participate in the allocation of the Trust's investment gains and losses.
In the event of termination of the Plan, the suspense account shall revert
to the Employer to the extent it may not then be allocated to any
Participant's Account.
(d) Notwithstanding any other provision in subsections (a) through
(c), the Employer shall not contribute any amount that would cause an
allocation to the suspense account as of the date the contribution is
allocated.
5.2 Employers Maintaining Other Master or Prototype Defined Contribution
Plans.
(a) This Section applies if, in addition to this Plan, a Participant is
covered under another qualified Master or Prototype defined contribution plan
maintained by the Employer during any Limitation Year. The Annual Addition which
may be allocated to any Participant's Account for any such Limitation Year shall
not exceed the Maximum Permissible Amount, reduced by the sum of any portion of
the Annual Addition credited to the Participant's account under such other plans
for the same Limitation Year.
(b) If the Annual Addition with respect to a Participant under other
defined contribution plans maintained by the Employer of what would be portions
of the Annual Addition (if the allocations were made under the Plan) 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 Addition for the Limitation Year to exceed this
limitation, the amount contributed or allocated will be reduced so that the
Annual Addition under all such plans for the Limitation Year will equal the
Maximum Permissible Amount.
(c) If the Annual Addition with respect to the Participant under such other
defined contribution plans 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.
(d) If an Excess Amount was allocated to a Participant under this Plan on a
date which coincides with the date an allocation was made under another plan,
the Excess Amount attributed to this Plan will be the product of,
(i) the total Excess Amount allocated as of such date, multiplied by
(ii) the quotient obtained by dividing
(A) the portion of the Annual Addition allocated to the
Participant for the Limitation Year as of such date by
(B) the total would-be and actual Annual Addition allocations to
the Participant for the Limitation Year as of such date under this and
all the other qualified Master or Prototype defined contribution plans
maintained by the Employer.
(e) Any Excess Amount attributed to the Plan will be disposed in the manner
described in Section 5.1.
5.3 Employers Maintaining Other Defined Contribution Plans. If a
Participant is covered under another qualified defined contribution plan which
is not a Master or Prototype plan, the Annual Addition credited to the
Participant's Account under this Plan for any Limitation Year will be in
accordance with the provisions of Section 5.2 as though the plan were a Master
or Prototype Plan, unless the Employer provides other limitations pursuant to
the Adoption Agreement.
5.4 Employers Maintaining Defined Benefit Plans. 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. The Annual Addition which may be credited to the Participant's
Account under this Plan for any Limitation Year will be limited in accordance
with the provisions of Section 5.2, unless the Employer provides other
limitations pursuant to the Adoption Agreement.
5.5 Definitions. For the purposes of this Section 5, the following terms
shall be defined as follows:
(a) Annual Addition. With respect to any Participant, the "Annual Addition"
shall be the sum of the following amounts credited to a Participant's Account
for the Limitation Year:
(i) Employer Contributions;
(ii) forfeitures; and
(iii) the lesser of
(A) one-half (1/2) the allocated Nondeductible Voluntary
Contributions or
(B) the amount of allocated Nondeductible Voluntary Contributions
in excess of 6% of the Participant's Compensation for the Limitation
Year.
Any Excess Amount applied under subparagraphs (ii) or (iii) of subsection (c) of
Section 5.1 or subsection (e) of Section 5.2 in a Limitation Year to reduce
Employer Contributions will be considered part of the Annual Addition for such
Limitation Year.
(b) Compensation. For the purposes of this Section 5, a Participant's
"Compensation" shall include any earned income, wages, salaries, and fees for
professional services and other amounts received for personal services actually
rendered in the course of employment with the Employer maintaining the Plan
(including, but not limited to commissions paid salesmen, compensation for
services on the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses), and excluding the following:
(i) Employer contributions to a plan of deferred compensation which
are not includible in the Participant'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
Participant, or any distributions from a plan of deferred compensation;
(ii) Amounts realized from the exercise of a nonqualified stock
option, or when restricted property held by the Participant either becomes
freely transferable or is no longer subject to a substantial risk of
forfeiture;
(iii) Amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option; and
(iv) other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under a salary reduction
agreement) towards the purchase of an annuity described in Code Section
403(b) (whether or not the amounts are actually excludable from the gross
income of the Participant).
For purposes of applying the limitations of this Section 5, Compensation
for a Limitation Year is the Compensation actually paid or includible in gross
income during such year.
Notwithstanding the preceding sentence, Compensation for a Participant who
is permanently and totally disabled (as defined in Code Section 37(e)(3)) is the
Compensation such Participant would have received for the Limitation Year if the
Participant was 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 an
officer, an owner, or highly compensated, and contributions made on behalf of
such a Participant are nonforfeitable when made.
(c) Defined Benefit Fraction. The "Defined Benefit Fraction" shall be 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%
of the dollar limitation in effect for the Limitation Year under Code Section
415(b)(1)(A) or 140% of the Participant's Highest Average Compensation.
Notwithstanding the above, if the Participant was a participant in one or
more defined benefit plans maintained by the Employer which were in existence on
July 1, 1982, the denominator of this fraction will not be less than 125% of the
sum of the annual benefits under such plans which the Participant had accrued as
of the later of the end of the last Limitation Year beginning before January 1,
1983. The preceding sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements of Code Section 415
as in effect at the end of the 1982 Limitation Year. For purposes of this
paragraph, a Master or Prototype plan with an opinion letter issued before
January 1, 1983, which was adopted by the Employer on or before June 30, 1983,
is treated as a plan in existence on July 1, 1982.
(d) Defined Contribution Fraction. The "Defined Contribution Fraction"
shall be 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 denominator of
which is the sum of the Maximum Aggregate Amounts for the current and all prior
Limitation Years of service with the Employer (regardless of whether a defined
contribution plan was maintained by the Employer). The Maximum Aggregate Amount
in any Limitation Year is the lesser of 125% of the dollar limitation in effect
under Code Section 415(C)(1)(A) or 35% of the Participant's Compensation for
such year.
If the Participant was a participant in one or more defined contribution
plans maintained by the Employer which were in existence on July 1, 1982, the
numerator of this fraction will be adjusted if the sum of this Defined
Contribution 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
(i) the excess of the sum of the fractions over 1.0, multiplied by
(ii) the denominator of this Defined Contribution 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 later
of the end of the last Limitation Year beginning before January 1, 1983 or
September 30, 1983. This adjustment also will be made if at the end of the
last Limitation Year beginning before January 1, 1984, the sum of the
fractions exceeds 1.0 because of accruals or additions that were made
before the limitations of this Section 5 became effective to any plans of
the Employer in existence on July 1, 1982. For purposes of this paragraph,
a Master or Prototype plan with an opinion letter issued before January 1,
1983, which is adopted by the Employer on or before September 30, 1983, is
treated as a plan in existence on July 1, 1982.
(e) Employer. "Employer" means the Employer that adopts this Plan and all
members of (i) a controlled group of corporations (as defined in Code Section
414(b) as modified by Code Section 415(h)), (ii) commonly controlled trades or
businesses (whether or not incorporated) (as defined in Code Section 414(c) as
modified by Code Section 415(h)), or (iii) affiliated service groups (as defined
in Code Section 414(m)) of which the Employer is a part.
(f) Excess Amount. The "Excess Amount" is the excess of what would
otherwise be a Participant's Annual Addition for the Limitation Year over the
Maximum Permissible Amount. If at the end of a Limitation Year when the Maximum
Permissible Amount is determined on the basis of the Participant's actual
Compensation for the year, an Excess Amount results, the Excess Amount will be
deemed to consist of the portion of the Annual Addition last allocated.
(g) Highest Average Compensation. A Participant's "Highest Average
Compensation" is his or her average Compensation for the 3 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.
(h) Limitation Year. A Limitation Year is the Plan Year or any other
12-consecutive-month period specified by the Employer in the Adoption Agreement.
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.
(i) Master or Prototype Plan. A "Master or Prototype" plan is a plan the
form of which is the subject of a favorable opinion letter from the Internal
Revenue Service.
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(j) Maximum Permissible Amount. For a Limitation Year, the "Maximum
Permissible Amount" with respect to any Participant shall be the lesser of
(i) $30,000 (or beginning January 1, 1986, such larger amount
determined by the Commissioner of Internal Revenue for the Limitation Year)
or
(ii) 25% of the Participant's Compensation for the Limitation Year.
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 quotient determined by first
multiplying $30,000 by the number of months in the short Limitation Year
and then dividing the product by 12. 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 each Limitation Year, the
Maximum Permissible Amount for the Limitation Year will be determined on
the basis of Participants' actual Compensation for the Limitation Year.
(k) Projected Annual Benefit. The "Projected Annual Benefit" is the annual
retirement benefit (adjusted to an actuarilly equivalent straight life annuity
if such benefit is expressed in a form other than a straight life annuity or
qualified joint and survivor annuity) to which the Participant would be entitled
under the terms of the plan assuming:
(i) the Participant will continue employment until normal retirement
date under the plan (or current age, if later), and
(ii) the Participant's compensation for the current Limitation Year
and all other relevant factors used to determine benefits under the plan
will remain constant for all future Limitation Years.
SECTION 6.
TIME AND MANNER OF MAKING CONTRIBUTIONS
6.1 Manner. Unless otherwise agreed to by the Trustee, contributions to
said Trustee shall be made only in cash. All contributions may be made in one or
more installments.
6.2 Time. Employer Contributions and Participant Contributions with respect
to a Plan Year shall be made before the time limit, including extensions
thereof, for filing the Employer's federal income tax returns for the Year with
or within which the particular Plan Year ends (or such later time as permitted
by regulations authorized by the Secretary of the Treasury or delegate).
Rollover Contributions may be made at any time acceptable to the Administrator
in accordance with Section 4.3 hereof. All contributions shall be paid to the
Administrator for transfer to the Trustee, as soon as possible, or, if
acceptable to the Administrator and the Trustee, such contributions may be paid
directly to the Trustee. The Administrator shall transfer such contributions to
the Trustee as soon as possible. The Administrator may establish a payroll
deduction system or other procedure to assist the making of Participant
Contributions to the Trust, and the Administrator may from time to time adopt
rules or policies governing the manner in which such contributions may be made
so that the Plan may be conveniently administered.
6.3 Separate Accounts. For each Participant, a separate account shall be
maintained for each of the following types of contributions and the income,
expenses, gains and losses attributable thereto:
(a) Employer Contributions;
(b) Nondeductible Voluntary Contributions, if selected in the Adoption
Agreement;
(c) Deductible Voluntary Contributions, if selected in the Adoption
Agreement; and
(d) Rollover Contributions, if the Administrator accepts such contributions
pursuant to Section 4.3 hereof.
Notwithstanding the above, if a Participant's rights to Employer Contributions
are immediately and fully nonforfeitable, Employer Contributions allocated on
behalf of such Participant and his or her Nondeductible Voluntary Contributions
may be maintained in a single account.
SECTION 7.
VESTING
7.1 When Vested. A Participant's interest in his or her Nondeductible
Voluntary Contribution Account, Deductible Voluntary Contribution Account and
Rollover Account shall always be fully vested and nonforfeitable. A
Participant's interest in his or her Employer Contribution Account shall be
vested and nonforfeitable at Normal Retirement Date, death, Disability, upon
termination (including a complete discontinuance of Employer Contributions) or
partial termination of the Plan and otherwise only to the extent specified in
the Adoption Agreement.
7.2 Amendment of Vesting Schedule. If the Adoption Agreement has been
executed as an amendment to an existing plan, Participants with 5 or more
Vesting Years before the expiration of the election period described in the next
sentence shall have the right to elect the vesting schedule in effect on the day
before the election period. The election period shall commence on the date the
amendment is adopted and end on the latest of (a) 60 days after the amendment is
adopted, (b) 60 days after the Effective Date, or (c) 60 days after the
Participant is issued written notice of the amendment by the Administrator.
Failure to so elect shall be treated as a rejection and such election or
rejection shall be final.
7.3 Forfeitures. If a Participant's employment with the Employer is
terminated before his or her Employer Contribution Account is fully vested in
accordance with Section 7.1 hereof, the portion of the Employer Contribution
Account which is not vested shall be held in suspense until the Participant
becomes reemployed, dies, becomes disabled or completes a One-Year Break in
Service, whichever occurs first. If the Participant is reemployed, dies or
becomes disabled before a One-Year Break in Service, the amount held in suspense
shall be restored to the Employer Contribution Account. If the Participant is
reemployed by the Employer before a One-Year Break in Service and thereafter has
a One-Year Break in Service before the Employer Contribution Account has become
fully vested, the portion of the Employer Contribution Account which is then
vested shall be determined by adding to the then value of the Employer
Contribution Account, the amount, if any, previously distributed, applying the
vesting percentage then applicable, and then subtracting the amount previously
distributed. If a One-Year Break in Service occurs before reemployment with the
Employer, death or Disability, the portion of the Participant's Employer
Contribution Account held in suspense shall be forfeited and (a) if this Plan is
adopted as a profit sharing plan, allocated as of the next Valuation Date in the
same manner, and to the same Participants' Employer Contribution Accounts as the
Employer Contribution for that Plan Year is allocated pursuant to Section 4.1
hereof, or (b) if this Plan is adopted as a money purchase pension plan, applied
to reduce the Employer Contributions for the next Plan Year.
SECTION 8.
DISTRIBUTION UPON DEATH
8.1 Distribution to Beneficiary. If a Participant's employment terminates
because of death, the Trustee shall, upon the direction of the Administrator,
distribute the Participant's Account or the undistributed remainder thereof, as
the case may be, in accordance with the provisions of Section 8.2, to the
Beneficiary or Beneficiaries validly named in the most recent Designation of
Beneficiary form filed by the Participant with the Trustee before death in
compliance with Section 15. The Administrator's direction shall include
notification of the Participant's death, the identity of the Beneficiary or
Beneficiaries so named, and the appropriate manner of distribution.
8.2 Manner of Distribution. A distribution made under this Section 8 shall
be made in such manner as the Participant shall in his or her most recent
Designation of Beneficiary have validly elected. In the absence of such an
election, such distribution shall be made in such manner as the Participant's
Beneficiary (or Beneficiaries) may elect, or in the absence of such an election,
in such manner as the Administrator shall determine. If a Participant dies
before benefits commence and the surviving spouse is not the Beneficiary, the
Participant's entire Account balance must be distributed to the Participant's
Beneficiary within 5 years. However, if distributions have commenced to the
Participant before the Participant's death, distributions to the Participant's
surviving spouse, Beneficiary or estate may continue over the period selected by
the Participant.
SECTION 9.
OTHER DISTRIBUTIONS
9.1 Normal Distributions. The Account of any Participant, to the extent it
is vested pursuant to Section 7.1 hereof, will normally be distributed in
monthly installments which must commence at or within 60 days after the end of
the Plan Year in which occurs his or her Normal Retirement Date or in which his
or her Employment ceases, whichever is later, to continue over a period of 120
months; provided, however, that in the case of a Participant who is a Key
Employee (as defined in Section 21.2 hereafter), monthly installments to such a
Participant must commence no later than the last day of the Participant's
taxable year in which such Participant attains age 70-1/2, but only if this Plan
is Top-Heavy (as defined in Section 21.2 hereafter). The monthly amount shall
normally be the vested balance of the Participant's Account divided by the
remaining number of months in such 120 months, all rounded to the nearest cent.
However, the amount of each monthly installment may be recomputed and adjusted
from time to time no more frequently than monthly as the Trustee may reasonably
determine.
9.2 Optional Distribution. All Participants may request the Administrator
to approve, in its sole discretion, any of the following variations from the
normal pattern of distribution:
(a) Distribution made or commencing before the Participant's Normal
Retirement Date.
(b) Distributions made or commencing after the normal time of distribution
described in Section 9.1; provided, however, that any such deferred distribution
must commence no later than the last day of the Participant's taxable year in
which the Participant attains age 70-1/2.
(c) Distribution of the Participant's entire Account at one time.
(d) Installment payments of a fixed amount, such payments to be made until
exhaustion of the Participant's Account.
(e) Distribution in kind.
(f) Any reasonable combination of the foregoing or any reasonable time or
manner of distribution within the above stated limitations.
Notwithstanding the above, if this Plan is adopted as an integrated, profit
sharing plan, such distribution may not commence before termination of Service.
Furthermore, the minimum distribution to be made each calendar year shall be the
amount equal to the quotient obtained by dividing the Participant's Account
balance at the beginning of the year by the greater of the life expectancy of
the Participant or the joint life and last survivor expectancy of the
Participant and spouse. For purposes of this minimum distribution rule, life
expectancy and joint life and last survivor expectancy shall be determined as of
the date the Participant attained age 70, reduced by one for each calendar year
commencing after the Participant's attainment of age 70-1/2, reduced by one for
each calendar year commencing after the Participant's attainment of age 70-1/2.
In the case of a Participant who becomes a Key Employee (as defined in Section
21.2 hereafter) after age 70-1/2 but before termination of Employment, and if
this Plan is Top-Heavy (as defined in Section 21.2 hereafter), such Participant
must begin to receive distribution of his or her Account by the end of the
calendar year in which Participant becomes such a Key Employee.
9.3 Special One-Time Distribution Election. Notwithstanding any Plan
provision to the contrary, distribution on behalf of any Employee, including a
Key Employee (as defined in Section 21.2(a) below) in a Plan Year in which this
Plan is Top-Heavy, may be made in accordance with the following requirements
(regardless of when such distribution commences):
(a) The distribution is one which would not have disqualified the Plan
under Code Section 401(a)(9) as it was in effect prior to its amendment by the
Tax Equity
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and Fiscal Responsibility Act of 1982.
(b) The distribution is in accordance with a method of distribution
designated by the Participant whose interest in the Plan is being distributed
or, if the Participant has died, by a beneficiary of such Participant.
(c) Such designation was in writing, was signed by the Participant or the
beneficiary, and was made before January 1, 1984.
(d) The Participant had accrued a benefit under the Plan as of December 31,
1983.
(e) The method of distribution designated by the Participant 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 Participant's death, the Beneficiaries of the Participant are listed in
order of priority.
A distribution upon death will not be covered by this Section 9.3 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 Participant.
For any distribution which commences before January 1, 1984, but continues
after December 31, 1983, the Participant, 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
requirement in subsection (a) above.
If a designation is revoked, any subsequent distribution must satisfy the
requirements of Code Section 401(a)(9) as amended by the Tax Equity and Fiscal
Responsibility Act of 1982. 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).
SECTION 10.
LOANS
10.1 Availability of Loans. If, in the Adoption Agreement, the Employer has
specified that loans to Participants are permitted, the Loan Trustee shall, upon
the direction of the Administrator, make one or more loans, including any
renewal thereof, to a Participant (other than a Participant who is an
Owner-Employee). Any such loan shall be subject to such terms and conditions as
the Administrator shall determine pursuant to a uniform policy adopted by the
Administrator for this purpose, which policy shall be at least as restrictive as
required by this Section 10.
10.2 Equivalent Basis. No such loan may be made to a disqualified person
within the meaning of Code Section 4975(3), unless such loans are available to
all Participants on a reasonably equivalent basis and are not made available to
officers, shareholders or highly paid Participants in an amount which, when
stated as a percentage of such Participant's Account, if greater than is
available to other Participants.
10.3 Limitation on Amount. The amount of any such loan, when added to the
outstanding balance of all other loans from the Plan (and any other qualified
retirement plans of the Employer's) to the Participant, shall not exceed the
following:
Participant's Vested Maximum Amount
Account Balance of Loan
- ------------------- -------------------------
$0-$10,000 100% of vested Account balance
$10,000-$20,000 $10,000
$20,000-$100,000 50% of vested Account balance
over $100,000 $50,000
The value of the Participant's Account balance shall be as determined by the
Administrator; provided, however, that such determination in no event take into
account the portion of the Participant's Account attributable to the
Participant's Deductible Voluntary Contribution Account.
10.4 Maximum Term. The term of any such loan shall not exceed 5 years;
provided, however, that such limitation shall not apply to any loan used to
acquire, construct, reconstruct, or substantially rehabilitate any dwelling unit
which within a reasonable time is to be used (determined at the time the loan is
made) as a principal residence of the Participant or a member of the
Participant's family (within the meaning of Code Section 267(c)(4)).
10.5 Promissory Note. Any such loan shall be evidenced by a promissory note
executed by the Participant and payable to the Loan Trustee, on the earliest of
(i) a fixed maturity date meeting the requirements of Section 10.4 above, but in
no event later than the Participant's Normal Retirement Date, (ii) the
Participant's death, or (iii) when distribution hereunder is to be made to the
Participant (other than a withdrawal which will not reduce the value of his or
her Account to the extent that the aggregate amount owing could not be made as a
new loan within the limitation set forth in Section 10.3 above). Such promissory
note shall be secured by an assignment of the Participant's Account to the Loan
Trustee. Such promissory note shall evidence such terms as are required by this
Section 10.
10.6 Interest. Any such loan shall be subject to a reasonable rate of
interest.
10.7 Repayment. If a note is not paid when the Participant's benefits
hereunder are to be distributed, then any unpaid portion of such loan and unpaid
interest thereon shall be deducted by the Loan Trustee from the Participant's
Account before benefits are paid from or purchased out of the Account. Such
deduction shall, to the extent thereof, cancel the indebtedness of the
Participant. If a note is not paid when it otherwise becomes payable under
Section 10.5, or if at any time the Administrator determines that the aggregate
amounts owing by a Participant upon such notes exceed the vested value of the
Participant's Account, the Participant shall be promptly notified in writing
that unless such loan or excess is repaid within 30 days, action will be taken
to collect the same plus any cost of collections.
10.8 Accounting. Loans shall be made only from the Account of the
Participant (exclusive of that portion of the Account attributable to the
Participant's Deductible Voluntary Contribution Account) requesting the loan,
and shall be treated as an investment of such Account. All interest payments
made with respect to such loan shall be credited to the Participant's Account.
10.9 Precedence. This Section 10 overrides Section 16 below.
SECTION 11.
TRUST PROVISIONS
11.1 Manner of Investment. All contributions to the Account of a
Participant shall be held in trust by the Trustee designated in the Adoption
Agreement. Except to the extent that a Participant's Account is invested in a
loan pursuant to Section 10 hereof, the Account of a Participant may only be
invested and reinvested in shares of Designated Investment Companies, unless the
Distributor permits less than 100% of the Trust assets to be so invested. If the
Administrator or the Participant, as the case may be, has elected to have a
portion of an Account invested in other than shares of Designated Investment
Companies and the Distributor has authorized the investment of less than 100% of
Trust assets in such shares, the Trustee shall invest such amount in such
investments as it is empowered to invest in under Section 11.3 hereof. The
Designated Investment Companies available for investment may be limited by the
Employer. Investment in the shares of more than one Designated Investment
Company is not permitted unless the value of the Participant's Account and the
value of the investment in each additional Designated Investment Company exceed
amounts from time to time determined by the Distributor.
11.2 Investment Decision.
(a) The decision as to the investment of an Account shall be made by the
person designated in the Adoption Agreement, and the Trustee shall have no
responsibility for determining how an Account is to be invested or to see that
investment directions communicated to it comply with the terms of the Plan. If
the decision is made by the Participant, the Participant shall convey investment
instructions to the Trustee. Further, if the decision is to be made by the
Participant, the right to make such a decision shall remain with the Participant
upon retirement and shall pass to the Distributee upon death.
(b) The person designated to make the decision as to the investment of an
Account may direct that the investment medium of an Account be changed, provided
that no such change may be made from or to an investment other than a Designated
Investment Company except to the extent permitted under Section 11.1 above and
by the terms of that other investment vehicle. If the Distributor determines in
its own judgment that there has been trading of shares of Designated Investment
Companies in the Accounts of the Participants, any Designated Investment Company
may refuse to sell its shares to such Accounts. When an investment is being made
or changed, the person designated to do so shall specify the type of Account to
which the change refers.
(c) If any decision as to investments is to be made by the Administrator,
it shall be made on a uniform basis with respect to all Participants.
(d) The Administrator and the Trustee may adopt procedures permitting
Participants to convey their investment instructions directly to the Trustee or
to the transfer agent for the Designated Investment Company or Companies or for
any other investment permitted by the Distributor.
(e) Whenever a Participant is the person designated to make the decision as
to the investment of an Account, the Administrator shall ascertain that the
Participant has received a copy of the current prospectus relating to the shares
of any Designated Investment Company in which such Account is to be invested
plus, where required by any state or federal law, the current prospectus
relating to any other investment in which the Account is to be invested. With
respect to contributions designated for investment by a Participant, by
remitting such a contribution to the Trustee, the Administrator shall be deemed
to warrant to the Trustee that the Participant has received all such
prospectuses. By remitting any other contribution to the Trustee, the
Administrator shall be deemed to warrant to the Trustee that the Administrator
has received a current prospectus of any Designated Investment Company in which
the contribution is to be invested, plus, where required by any state or federal
law, the current prospectus relating to any other investment in which
contributions are to be invested.
11.3 Investment Powers. To the extent that a portion of the Trust assets
are invested other than in shares of Designated Investment Companies pursuant to
Section 11.1 above, the Trustee is hereby granted full power and authority to
invest and reinvest the Trust assets in any property of any kind or nature
whatsoever (speculative or otherwise) or in any rights or interests therein, or
in any evidences or indicia thereof and whether real, personal or mixed, or
whether tangible or intangible (including for illustration but not to be limited
to the following, or anything of a similar kind, character or class: common or
preferred stocks, evidences or ownership in so-called Massachusetts business
trusts, fees, beneficial interests, leaseholds, bonds, mortgages, leases, notes
or obligations, oil and gas payments, oil and gas contracts and other
securities, instruments or commodities) without regard to any rule of law or
statute of the state of the Trustee designating investments eligible for trust
funds, and without respect to any custom or practice either as to types of
investments or diversification of investments, and to hold cash uninvested at
any time and from time to time in such amounts and to such extent as the Trustee
in its own uncontrolled discretion and judgment deems advisable; provided,
however, that the Trustee is to act with the care, skill and diligence, under
the circumstances then prevailing, which would characterize the actions of a
prudent man who is acting as such a Trustee and who is familiar with the duties
of such a Trustee; further provided that the Trustee shall diversify the
investments of the Trust Fund so as to minimize the risk of large losses unless,
under the circumstances, such diversification would not be prudent; further
provided that the Trustee is not empowered to enter into any investment which
would be prohibited under the Act or otherwise by the provisions of this Plan.
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Notwithstanding the above, the following restrictions on he investment of a
Participant's Accounts shall apply:
(a) No part of a Participant's Deductible Voluntary Contribution Account
may be used to purchase life insurance.
(b) No more than one-half of the aggregate Employer Contributions allocated
to a Participant's Employer Contributions Account may be used to pay premiums
attributable to the purchase of ordinary life insurance contracts (life
insurance contracts with both nondecreasing death benefits and nonincreasing
premiums).
(c) No more than one-quarter of aggregate Employer Contributions allocated
to a Participant's Employer Contribution Account may be used to pay premiums on
term life insurance contracts, universal life insurance contracts, and all other
life insurance contracts which are not ordinary life insurance contracts.
(d) One-half of the amount used to pay premiums on ordinary life insurance
contracts plus the amount used to pay premiums on all other life insurance
contracts may not exceed an amount equal to one-quarter of the aggregate
Employer Contributions allocated to a Participant's Employer Contribution
Account.
11.4 Appointment of Investment Manager. To the extent that a portion of the
Trust assets is invested other than in shares of Designated Investment Companies
pursuant to Sections 11.1 and 11.3 above, the Employer may designate Scudder,
Stevens & Clark, or its successor or any affiliate, to act as investment manager
(within the meaning of the Act), and may at any time revoke such designation. If
an investment manager is so designated, the Trustee shall follow all investment
directions given by the investment manager with respect to the retention,
investment and reinvestment of the Plan assets to the extent they are under the
control of such investment manager. If permitted by the Trustee, the investment
manager may issue orders for the purchase and sale of securities, including
orders through any affiliate of such investment manager. Such an investment
manager is specifically allowed to direct or make investments in shares of any
Designated Investment Company. The Trustee shall not be liable for following any
direction given by, or any actions of, an investment manager so appointed.
11.5 Trustee: Number, Qualifications and Majority Action.
(a) The number of Trustees shall be one, two or three. Any natural person
and any corporation having power under applicable law to act as a trustee of a
pension or profitsharing plan may be a Trustee. No person shall be disqualified
from being a Trustee by being employed by the Employer, by being the
Administrator, by being a trustee under any other qualified retirement plan of
the Employer or by being a Participant in this Plan or such other qualified
plan.
(b) A Trustee holding office as sole Trustee hereunder shall have all the
powers and duties herein given the Trustees. When the number of Trustees
hereunder is three, any two of them may act, but the third Trustee shall be
promptly informed of the action. When there are two or three Trustees hereunder,
they may, by written instrument communicated to the Employer and the
Administrator, allocate among themselves the powers and duties herein given to
the Trustee hereunder. If such an allocation is made, to the extent permitted by
applicable law, no Trustee shall be liable either individually or as a trustee
for loss to the Plan from the acts or omissions of another Trustee with respect
to duties allocated to such other Trustee.
11.6 Change of Trustee.
(a) Any Trustee may resign as Trustee upon notice in writing to the
Employer, and the Employer may remove any Trustee upon notice in writing to each
Trustee. The removal of a Trustee shall be effective immediately, except that a
corporation serving as a Trustee shall be entitled to 60 days' notice which it
may waive, and the resignation of a Trustee shall be effective immediately,
provided that, if the Trustee is the sole Trustee, neither a removal nor a
resignation of the Trustee shall be effective until a successor Trustee has been
appointed and has accepted the appointment. If within 60 days of the delivery of
the written resignation or removal of a sole Trustee another Trustee shall not
have been appointed and have accepted, the resigning or removed Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee or may terminate the Plan pursuant to Section 18 of the Prototype Plan.
The Trustee shall not be liable for the acts and omissions of any successor
trustee.
(b) At any time when the number of Trustees is one or two the Employer may
but need not appoint one or two additional Trustees, provided that the number of
Trustees shall not be more than three. Such an appointment and the acceptance
thereof shall be in writing, and shall take effect upon the delivery of written
notice thereof to all the Trustees and the Administrator and such acceptance by
the appointed Trustee, provided that if a corporation is a Trustee then in the
absence of its consent, such an appointment of an additional or successor
Trustee shall not become effective until 60 days after its receipt of notice.
(c) Although any Employer adoption the Plan may choose any Trustee who is
willing to accept the Trust, the Distributor or its successors may make or may
have made tentative standard arrangements with any bank or trust company with
the expectation it will be used as the Trustee by a substantial group of
Employers. It is also contemplated that more favorable results can be obtained
with a substantial volume of business, and that it may become advisable to
remove such bank or trust company as Trustee and substitute another Trustee.
Therefore, anything in the prior two subsections of this Section 11.6
notwithstanding, each Employer adopting this Plan hereby agrees that the
Distributor may, upon a date specified in a notice of at least 30 days to the
affected Employer and in absence of written objection by the Employer received
by the Distributor before such date, (i) remove any such Trustee and in that
case, or if such a Trustee has resigned as to a group of Employers, (ii) appoint
such a successor Trustee, provided such action is taken with respect to all
Employers similarly circumstanced of which the Distributor has knowledge, and
provided such notice is given in writing mailed postage prepaid to the Employer
at the latest address furnished to the Distributor directly or supplied to it by
such Trustee which is to be succeeded. If within 60 days after such Trustee's
resignation or removal, the Employer has not appointed a successor which has
accepted such appointment (unless the appointment of a successor Trustee is
waiting for action by the Distributor pursuant to the next preceding sentence
according to notice which has been given), the Trustee may petition an
appropriate court for the appointment of its successor. The Trustee shall not be
liable for the acts and omissions of such successor.
(d) Successor Trustees qualifying under this Section 11.5 shall have all
rights and powers and all the duties and obligations of original Trustees.
11.7 Valuation. Annually, on the Valuation Date, or more frequently in the
discretion of the Trustee, the assets of the Trust shall be revalued at fair
market value and the accounts of the Trust shall be proportionately adjusted to
reflect income, gains, losses or expenses, if the system of accounting does not
directly accomplish all such adjustments. The Trust Fund shall be administered
separately from, and shall not include any assets being administered under, any
other plan of an Employer. Interim valuations, if any, shall be applied
uniformly and in a non-discriminatory manner for all Employees.
11.8 Registration. Any assets in the Trust Fund may be registered in the
name of the Trustee or any nominee designated by the Trustee.
11.9 Certifications and Instructions.
(a) Any pertinent vote or resolution of the Board of Directors of the
Employer (if it is a corporation) shall be certified to the Trustee over the
signature of the Secretary or an Assistant Secretary of the Employer and under
its corporate seal. The Employer shall promptly furnish to the Trustee
appropriate certification evidencing the appointment and termination of the
individual or individuals serving as Administrator under Section 12.1 of the
Plan.
(b) The Administrator shall furnish to the Trustee appropriate
certification of the individual or individuals authorized to give notice on
behalf of the Administrator and providing specimens of their signatures. All
requests, directions, requisitions for money and instructions by the
Administrator to the Trustee shall be in writing and signed. There may be
standing requests, directions, requisitions or instructions to the extent
acceptable to the Trustee.
11.10 Accounts and Approval.
(a) The Trustee shall keep accurate and detailed accounts of all
investments, receipts and disbursements and other transactions hereunder, and
all books and record relating thereto shall be open at all reasonable times to
inspection and audit by any person or persons designated by the Administrator or
by the Employer.
(b) Within 90 days following the close of each Plan Year the Trustee may,
and upon the request of the Employer or the Administrator shall, file with the
Administrator and the Employer a written report setting forth all securities or
other investments (including insurance contracts) purchased and sold, all
receipts, disbursements and other transactions effected by it during the period
since the date covered by the next prior report, and showing the securities and
other property held at the end of such period, and such other information about
the Trust Fund as the Administrator shall request. Unless the Employer or
Administrator, within 90 days from the date of mailing of such report, objects
to the contents of such report, the report shall be deemed approved. Any such
objection shall set forth the specific grounds on which they are based.
11.11 Taxes. The Trustee may assume that any taxes assessed on or in
respect of the Trust Fund are lawfully assessed unless the Administrator shall
in writing advise the Trustee that in the opinion of counsel for the Employer
such taxes are not lawfully assessed. In the event that the Administrator shall
so advise the Trustee, the Trustee, if so requested by the Administrator and
suitable provision for their indemnity having been made, shall contest the
validity of such taxes in any manner deemed appropriate by the Administrator or
counsel for the Employer. The word "taxes" in this Section 11 shall be deemed to
include any interest or penalties that may be levied or imposed in respect to
any taxes assessed. Any taxes, including transfer taxes incurred in connection
with the investment or reinvestment of the assets of the Trust Fund that may be
levied or assessed in respect to such assets shall, if allocable to the Accounts
of specific Participants, be charged to such Accounts, and if not so allocable,
they shall be equitably apportioned among all such Participants' Accounts.
11.12 Employment of Counsel. The Trustee may employ legal counsel (who may
be counsel for the Employer) and shall be fully protected in acting or
refraining from acting, upon such counsel's advice in respect to any legal
questions.
11.13 Compensation of Trustee. An individual Trustee who is an Employee of
the Employer shall not be compensated for services as Trustee. A corporation, or
an individual who is not an Employee of the Employer, serving as a Trustee shall
be entitled to reasonable compensation for services; such compensation shall be
paid in accordance with Section 13.
11.14 Limitation of Trustee's Liability.
(a) The Trustee shall have no duty to take any action other than as herein
specified, unless the Administrator shall furnish it with instructions in proper
form and such instructions shall have been specifically agreed to by it, or to
defend or engage in any suit unless it shall have first agreed in writing to do
so and shall have been fully indemnified to its satisfaction.
(b) The Trustee may conclusively rely upon and shall be protected in acting
in good faith upon any written representation or order from the Administrator or
any other notice, request, consent, certificate or other instrument or paper
believed by the Trustee to be genuine and properly executed, or any instrument
or paper if the Trustee believes the signature thereon to be genuine.
(c) The Trustee shall not be liable for interest on any reasonable cash
balances maintained in the Trust.
(d) The Trustee shall not be obligated to, but may, in its discretion,
receive a contribution from a Participation unless forwarded by the
Administrator.
11.15 Successor Trustee. Any corporation into which a corporation acting as
a Trustee hereunder may be merged or with which it may be consolidated, or any
corporation resulting from any merger, reorganization or consideration to which
such Trustee may be a party, shall be the successor of the Trustee hereunder,
without the necessity of any appointment or other action, provided the Trustee
does not resign and is not removed.
11.16 Enforcement of Provisions. To the extent permitted by applicable law,
the Employer and the Administrator shall have the exclusive right to enforce any
and all provisions of this Agreement on behalf of all Employees or former
Employees of the Employer or their Beneficiaries or other persons having or
claiming to have
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an interest in the Trust Fund or under the Plan. In any action or proceeding
affecting the Trust Fund or any property constituting a part or all thereof, or
the administration thereof or for instructions to the Trustee, the Employer, the
Administrator and the Trustee shall be the only necessary parties and shall be
solely entitled to any notice of process in connection therewith; any judgment
that may be entered in such action or proceeding shall be binding and conclusive
on all persons having or claiming to have any interest in the Trust Fund or
under the Plan.
11.17 Voting. The Trustee shall deliver, or cause to be executed and
delivered, to the Administrator all notices, prospectuses, financial statements,
proxies and proxy soliciting materials received by the Trustee relating to
securities held by the Trust. The Administrator shall deliver these to the
appropriate Participant or Beneficiary of a deceased Participant, but only if
the Employer has specified in the Adoption Agreement that investment decisions
shall be made by Participants pursuant to Section 11.2 hereof. The Trustee shall
not vote any securities held by the Trust except in accordance with the written
instructions of the person or persons entitled to make investment decisions
pursuant to Section 11.2.
11.18 Applicability to Loan Trustee. Where appropriate, the foregoing
provisions of this Section 11 shall apply to the Loan Trustee on the same basis
as if the Loan Trustee were the Trustee.
SECTION 12.
ADMINISTRATION
12.1 Appointment of Administrator. From time to time, the Employer may, by
identifying such person(s) in writing to both the Trustee and the Participants,
appoint one or more persons as Administrator (hereinafter referred to in the
singular). Such Administrator shall have all power and authority necessary to
carry out the terms of the Plan. A person appointed as Administrator may also
serve in any other fiduciary capacity, including that of Trustee, with respect
to the Plan. The Administrator may resign upon 15 days advance written notice to
the Employer, and the Employer may at any time revoke the appointment of the
Administrator with or without cause. The Employer shall exercise the power and
fulfill the duties of the Administrator if at any time, an Administrator has not
been properly appointed in accordance with this Section 12.1 or the position is
otherwise vacant.
12.2 Named Fiduciaries. The "Named Fiduciaries" within the meaning of the
Act shall be the Administrator and the Trustee.
12.3 Allocation of Responsibilities. Responsibilities under the Plan shall
be allocated among the Trustee, the Administrator and the Employer as follows:
(a) Trustee: The Trustee shall have exclusive responsibility to hold,
manage and invest, pursuant to instructions communicated to it in accordance
with Section 11.2 above, the funds received by it subject to the powers granted
to it under Section 11 hereof. To the extent that loans are made to Participants
in accordance with Section 10 hereof, these responsibilities shall fall to the
Loan Trustee.
(b) The Administrator: The Administrator shall have the responsibility and
authority to control the operation and administration of the Plan in accordance
with its terms including, without limiting the generality of the foregoing, (i)
any investment decisions assigned to it under the Adoption Agreement or
transmission to the Trustee of any Participant investment decision under Section
11.2; (ii) interpretation of the Plan, conclusive determination of all questions
of eligibility, status, benefits and rights under the Plan and certification of
the Trustee of all benefit payments under the Plan; (iii) hiring of persons to
provide necessary services to the Plan not provided by Employees; (iv)
preparation and filing of all statements, returns and reports required to be
filed by the Plan with any agency of Government; (v) compliance with all
disclosure requirements of all state or federal law; (vi) maintenance and
retention of all Plan records as required by law, except those required to be
maintained by the Trustee; and (vii) all functions otherwise assigned to it
under the terms of the Plan.
(c) Employer: The Employer shall be responsible for the design of the Plan,
as adopted or amended, the designation of the Administrator and Trustee (and, if
appropriate, the Loan Trustee) as provided in the Plan, the delivery to the
Administrator and the Trustee of Employee information necessary for operation of
the Plan, the timely making of the Employer Contributions pursuant to Section
4.1 hereof, and the exercise of all functions provided in or necessary to the
Plan except those assigned in the Plan to other persons.
(d) This Section 12.3 is intended to allocate individual responsibility for
the prudent execution of the functions assigned to each of the Trustees, the
Loan Trustee, the Administrator and the Employer and none of such
responsibilities or any other responsibility shall be shared among them unless
specifically provided in the Plan. Whenever one such person is required by the
Plan to follow the directions of another, the two shall not be deemed to share
responsibility, but the person who gives the direction shall be responsible for
giving it and the responsibility of the person receiving the direction shall be
to follow it insofar as it is on its face proper under applicable law.
12.4 More Than One Administrator. If more than one individual is appointed
as Administrator under Section 12.1, such individuals shall either exercise the
duties of the Administrator in concert, acting by a majority vote or allocate
such duties among themselves by written agreement delivered to the Employer and
the Trustee. In such a case, the Trustee may rely upon the instruction of any
one of the individuals appointed as Administrator regardless of the allocation
of duties among them.
12.5 No Compensation. The Administrator shall not be entitled to receive
any compensation from the funds held under the Plan for its services in that
capacity unless so determined by the Employer or required by law.
12.6 Record of Acts. The Administrator shall keep a record of all its
proceedings, acts and decisions, and all such records and all instruments
pertaining to Plan administration shall be subject to inspection by the Employer
at any time. The Employer shall supply, and the Administrator may rely on the
accuracy of, all Employee data and other information needed to administer the
Plan.
12.7 Bond. The Administrator shall be required to give bond for the
faithful performance of its duties to the extent, if any, required by the Act,
the expense to be borne by the Employer.
12.8 Agent for Service of Legal Process. The Administrator shall be agent
for service of legal process on the Plan.
12.9 Rules. The Administrator may adopt or amend and shall publish to the
Employees such rules and forms for the administration of the Plan, and may
employ or retain such attorneys, accountants, physicians, investment advisors,
consultants and other persons to assist in the administration of the Plan as it
deems necessary or advisable.
12.10 Delegation. To the extent permitted by applicable law, the
Administrator may delegate all or part of its responsibilities hereunder and at
any time revoke such delegation, by written statement communicated to the
delegate and the Employer. The Trustee may, but need not, act on the
instructions of such a delegate. The Administrator shall annually review the
performance of all such delegates.
12.11 Claims Procedure. It is anticipated that the Administrator will
administer the Plan to provide Plan benefits without waiting for them to be
claimed, but the following procedure is established to provide additional
protection to govern unless and until a different procedure is established by
the Administrator and published to the Participants and Beneficiaries.
(a) Manner of Making Claim. A claim for benefits by a Participant or
Beneficiary to be effective under this procedure must be made to the
Administrator and must be in writing unless the Administrator formally or by
course of conduct waives such requirements.
(b) Notice of Reason for Denial. If an effective claim is wholly or
partially denied, the Administrator shall furnish such Participant or
Beneficiary with written notice of the denial within 60 days after the original
claim was filed. This notice of denial shall set forth in a manner calculated to
be understood by the claimant (i) the reason or reasons for denial, (ii)
specific reference to pertinent plan provisions on which the denial is based,
(iii) a description of any additional information needed to perfect the claim
and an explanation of why such information is necessary, and (iv) an explanation
of the Plan's claim procedure.
(c) The Participant or Beneficiary shall have 60 days from receipt of the
denial notice in which to make written application for review by the
Administrator. The Participant or Beneficiary may request that the review be in
the nature of a hearing. The Participant or Beneficiary shall have the rights
(i) to have representation, (ii) to review pertinent documents, and (iii) to
submit comments in writing.
(d) The Administrator shall issue a decision on such review within 60 days
after receipt of an application for review, except that such period may be
extended for a period of time not to exceed an additional 60 days if the
Administrator determines that special circumstances (such as the need to hold a
hearing) requires such extension. The decision on review shall be in writing and
shall include specific reasons for the decision, written in a manner calculated
to be understood by the claimant, and specific references to the pertinent Plan
provisions on which the decision is based.
SECTION 13.
FEES AND EXPENSES
All reasonable fees and expenses of the Administrator or Trustee incurred
in the performance of their duties hereunder or under the Trust shall be paid by
the Employer; and to the extent not so paid by the Employer, said fees and
expenses shall be deemed to be an expense of the Trust and the Trustee is
authorized to charge the same to the Accounts of the Participants, and unless
allocable to the Accounts of specific Participants, they shall be charged
against the respective accounts of all or a reasonable group of Participants in
such reasonable manner as the Trustee shall determine.
SECTION 14.
BENEFIT RECIPIENT INCOMPETENT OR DIFFICULT TO
ASCERTAIN OR LOCATE
14.1 Incompetency. If any portion of the Trust Fund becomes distributable
to a minor or to a Participant or Beneficiary who, as determined in the sole
discretion of the Administrator, is physically or mentally incapable of handling
his or her financial affairs, the Administrator may direct the Trustee to make
such distributions either to the legal representative or custodian of, or any of
the relatives and friends of, the incompetent or to apply such distribution
directly for the incompetent's support and maintenance. Payments which are made
in good faith shall completely discharge the Employer, Administrator and Trustee
from liability therefore.
14.2 Difficulty to Ascertain or Locate. If it is impossible or difficult to
ascertain the person who is entitled to receive any benefit under the Plan, the
Administrator in its discretion may direct that such benefit be (i) paid to
another person in order to carry out the Plan's purposes; or (ii) retained in
the Trust; or (iii) paid to a court pending judicial determination of the right
thereto.
SECTION 15.
DESIGNATION OF BENEFICIARY
Each Participant may submit to the Trustee a properly executed Designation
of Beneficiary form. In order to be effective, such Designation must have been
properly executed and submitted to the Trustee before the death of the
Participant. The last effective Designation accepted by the Trustee shall be
controlling, and whether or not fully dispositive of the Participant's Account,
thereupon shall revoke all Designations previously submitted by the Participant.
Each such executed Designation is hereby specifically incorporated herein by
reference and shall be construed and enforced in accordance with the laws of the
state in which the Employer has its principal place of business. To the extent
that any portion of an Account of
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a deceased Participant is not governed by an effective Designation which names
at least one living Beneficiary designated by the Participant, that portion of
the Account shall be distributed to the deceased Participant's surviving spouse,
or if that is not possible, to the estate of the deceased Participant.
SECTION 16.
SPENDTHRIFT PROVISION
No interest of any Participant or Beneficiary shall be assigned,
anticipated or alienated in any manner nor shall it be subject to attachment,
bankruptcy proceedings or to any other legal process or to the interference or
control of creditors or others, except to the extent that Participants may
secure loans from the Trust with their Accounts pursuant to Section 10 hereof.
SECTION 17.
NECESSITY OF QUALIFICATION
This Plan is established with the intent that it shall qualify under Code
Section 401(a) as that Section exists at the time the Plan is established. If
the Plan as adopted by the Employer fails to attain such qualification, the Plan
will no longer participate in this Prototype Plan and will be considered an
individually designed plan. If that the Plan as adopted by the Employer fails to
attain or retain such qualification, the Employer shall promptly either amend
the Plan under Code Section 401(b) so that it does qualify, or direct the
Trustee to terminate the Plan and distribute all the assets of the Trust
equitably among the contributors thereto in proportion to their contributions,
and the Plan shall be considered to be rescinded and of no force and effect.
SECTION 18.
AMENDMENT OR TERMINATION
18.1 Amendment or Termination. The Employer may at any time, and from time
to time amend this Prototype Plan and the Adoption Agreement (including a change
in any election it has made in the Adoption Agreement), or suspend or terminate
this Plan by giving written notice to the Trustee, but the Trust may not thereby
be diverted from the exclusive benefit of the Participants, their Beneficiaries,
survivors or estates, or the administrative expenses of the Plan, nor revert to
the Employer, nor may an allocation or contribution theretofore made be changed
thereby, nor may any amendment directly or indirectly deprive a Participant of
such Participant's nonforfeitable rights to benefits accrued to the date of the
amendment, nor may any amendment otherwise operate retroactively beyond the
first day of the Plan Year in which such amendment is made except as the same
may be deemed necessary in order to make the Plan qualify under Code Section
401(a). An amendment shall be deemed necessary for this purpose if counsel for
the Employer certifies and advises that in its opinion the written ruling of the
Commissioner of Internal Revenue that the Plan meets such requirements can be
obtained within a reasonable time only with such retroactive amendment. Any
amendment by the Employer which is other than the amendment of the Employer's
prior designation of an option or provision set forth or referred to in the
Adoption Agreement will constitute a substitution by the Employer of an
individually designed plan for this Prototype Plan and the general amendment
procedure of the Internal Revenue Service governing individually designed plans
will be applicable. Nothing contained herein shall constitute an agreement or
representation by the Distributor that it will continue to maintain its
sponsorship of the Plan indefinately.
18.2 Delegation. The Employer hereby delegates to the Sponsor the authority
to amend so much of the Adoption Agreement and this Prototype Plan as is in
prototype form and, to the extent to which the Employer could effect such
amendment, the Employer shall be deemed to have consented to any amendment so
made. The Sponsor, in turn, delegates to the Distributor such authority to amend
so much of the Adoption Agreement and this Prototype Plan as is in prototype
form and, to the extent to which the Sponsor could effect such amendment, it
shall be deemed to have consented to any amendment so made. When an election
within the prototype form has been made by the Employer, it shall be deemed to
continue after amendment of the prototype form unless and until the Employer
expressly further amends the election, notwithstanding that the provision for
the election in the amended prototype form is in a different form or place;
provided, however, that if the amended form inadvertently fails to provide means
to duplicate exactly the earlier election, such earlier election shall continue
until such further amendment. The immediately preceding sentence is subject to
the qualification that each Employer hereby delegates to the Distributor, in the
event of such an amendment of the prototype form, authority to determine
conclusively that such a continuation of an earlier election by the Employer is
not advisable and to make the election for the Employer in the amended prototype
form which in the judgment of the Distributor most nearly corresponds with the
election made by the Employer before the amendment of the prototype form,
provided the following procedure is followed: the election for the Employer may
be made with respect to any specified Employers as to whom it may be applicable
singly, or such election may be made with respect to all Employers as to whom it
may be applicable as a group; and the election shall be made as of an effective
date which has been specified in a notice mailed or delivered, at the last
address(es) of the Employer(s) on the records of the Distributor, to the
Employer(s) at least 20 days before the end of the remedial amendment period.
Such notice may be mailed to Employers to whom it cannot be applicable by reason
of a previous election made by the Employer or otherwise, but it shall be
effective only as to those Employers who have received the notice and have not
themselves made a new election with respect to that item since the amendment of
the prototype form and previous to the effective date of such election by the
Distributor. The foregoing delegations of authority to make elections, or to
make amendments, shall not impose any duty on the Distributor to make them nor
shall it affect the interpretation of the Plan if they are not used.
18.3 Distribution of Accounts Upon Termination. Upon termination of the
Plan or complete discontinuance of Employer Contributions under it, the
Administrator shall determine whether to pay the interests of Participants,
former Participants and Beneficiaries immediately, to retain such interest in
the Trust and pay them in the future according to Section 9, or to use what
other methods the Administrator deems advisable in order to furnish whatever
benefits the Trust will provide, subject to the limitations of Section 9.2
limiting the length of the period over which an Account can be paid.
SECTION 19.
TRANSFERS
Nothing contained herein shall prevent the merger or consolidation of the
Plan with, or transfer of assets or liabilities of the Plan to, another plan
meeting the requirements of Code Section 401(a) or the transfer to the Plan of
assets or liabilities of another such plan so qualified under the Code. Any such
merger, consolidation or transfer shall be accompanied by the transfer of such
existing records and information as may be necessary to properly allocate such
assets among Participants, including any tax or other information necessary for
the Participants or persons administering the plan which is receiving the
assets. The terms of such merger, consolidation or transfer must be such that if
this Plan is then terminated, each Participant would receive a benefit
immediately after the merger, consolidation or transfer equal to or greater than
the benefit he or she would have received if the Plan had terminated immediately
before the merger, consolidation or transfer.
SECTION 20.
OWNER-EMPLOYEE PROVISIONS
20.1 Purpose of Section. This Section is intended to insure that the Plan
complies with Code Section 401(d). Any ambiguity herein will be construed to
that end, and this Section 20 will override any other provision of the Plan with
which it may be inconsistent.
20.2 Control. For purposes of this Section 20, "Control" means the
ownership directly or indirectly of more than 50% of either the capital interest
or the profits interest in a partnership or on unincorporated trade or business.
20.3 Limitations. No benefits shall be provided to an Owner-Employee under
this Plan unless:
(a) if an Owner-Employer or group of Owner-Employees Controls the trade or
business covered by this Plan and also Control as an Owner-Employee or
Owner-Employees one or more other trades or businesses, this Plan and the plans
established for such other trades or businesses, when taken together, form a
single plan which satisfies the requirements of Section 401(a) and (d) of the
Code with respect to the employees of all the controlled trades or businesses;
and
(b) if an Owner-Employee or group of Owner-Employees controls another trade
or business but does not control the trade or business covered by this Plan, the
employees of such other trades or businesses are included in a plan which
satisfies the requirements of Sections 401(a) and (d) of the Code and which
provides contributions and benefits for such employees which are not less
favorable than those provided for Owner-Employees under this Plan.
SECTION 21.
TOP-HEAVY PROVISIONS
21.1 Purposes of Section. This Section is intended to insure that the Plan
complies with Code Section 4.16. If the Plan is or becomes Top-Heavy in any Plan
Year beginning after December 31, 1983, the provisions of this Section will
supersede any conflicting provision in the Plan.
21.2 Definitions. The terms used in this Section shall have the following
meanings:
(a) 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 having an annual compensation greater than 1.5 multiplied by the
amount in effect under Code Section 415(C)(1)(A) for the Plan Year, an owner (or
considered an owner under Code Section 318) of 1 of the 10 largest interests in
the Employer if such individual's compensation exceeds 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. The determination period is the Plan Year containing the Determination
Date and the 4 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.
(b) Top-Heavy Plan. For any Plan Year beginning after December 31, 1983,
this Plan is Top-Heavy if any of the following conditions exists:
(i) If the Top-Heavy Ratio for this Plan exceeds 60% and this Plan is
not part of any Required Aggregation Group or Permissive Aggregation Group
of plans.
(ii) If this Plan is a part of a Required Aggregation Group and part
of a Permissive Aggregation Group and the Top-Heavy Ratio for the Required
Aggregation Group of plans exceeds 60%.
(iii) If this 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%.
(c) Top-Heavy Ratio.
(i) If the Employer maintains one or more defined contribution plans
(including any Simplified Employee Pension Plan within the meaning of Code
Section 408(k)) and the Employer has never maintained any defined benefit
plan which has covered or could cover a Participant in this Plan, the
Top-Heavy Ratio is a fraction, the numerator of which is the sum of the
account balances of all Key Employees under all of the plans as of the
Determination
10
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Date (including any part of any account balance distributed in the
five-year period ending on the Determination Date), and 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) of all Participants as of the Determination Date. Both the numerator
and denominator of the Top-Heavy Ratio are adjusted to reflect any
contribution which is due but unpaid as of the Determination Date.
(ii) If the Employer maintains one or more defined contribution plans
(including any Simplified Employee Pension Plan within the meaning of Code
Section 408(k)) and the Employer maintains or has maintained one or more
defined benefit plans which have covered or could cover a Participant in
this Plan, the Top-Heavy Ratio is a fraction, the numerator of which is the
sum of account balances under the defined contribution plans for all Key
Employees and the present value of accrued benefits under the defined
benefit plans for all Key Employees, and the denominator of which is the
sum of the account balances under the defined contribution plans for all
participants and the present value of accrued benefits under the defined
benefit plans for all participants. Both the numerator and denominator of
the Top-Heavy Ratio are adjusted for any distribution of an account balance
or an accrued benefit made in the five-year period ending on the
Determination Date and any contribution due but unpaid as of the
Determination Date.
(iii) For purposes of (i) and (ii) above, the value of account
balances and the present value of accrued benefits will be determined as of
the most recent Valuation Date and falls within or ends with the
twelve-month period ending on the Determination Date. The account balances
and accrued benefits of a Participant who is not a Key Employee but who was
a Key Employee in a prior Plan Year 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. Deductible Voluntary
Contributions and any deductible employee contributions under any other
qualified plan maintained by the Employer 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.
(d) Permissive Aggregation Group. 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.
(e) Required Aggregate Group. (i) Each qualified plan of the Employer in
which at least one Key Employee participates, and (ii) any other qualified plan
of the Employer which enables a plan described in (I) to meet the requirements
of Code Sections 401(a)(4) and 410.
(f) 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.
(g) Valuation Date. See Section 2.45.
(h) Present Value. Present value shall be based only on the interest rate
employed as of the date in question by the Pension Plan Benefit Guaranty
Corporation to value immediate annuities and the mortality rate specified in
Table LN at Treas. Reg. [s]20.2031-10, unless otherwise specified in the most
recently adopted or amended defined benefit plan maintained by the Employer.
21.3 Minimum Allocation.
(a) In any Plan Year in which this Plan is Top-Heavy, except as otherwise
provided in (d), (e) and (f) below, the Employer Contributions and forfeitures
allocated on behalf of any Participant who is not a Key Employee shall not be
less than the lesser of 3% of such Participant's Compensation or, in the case
where the Employer has no defined benefit plan which designates this Plan to
satisfy Code Section 401, the largest percentage of Employer Contributions and
forfeitures stated as a percentage of the first $200,000 of a Key Employee's
Compensation, allocated on behalf of any Key Employee for that Plan Year. The
minimum allocation is determined without regard to any Social Security
contribution by the Employer.
(b) For purposes of computing the minimum allocation, "Compensation" will
have the same meaning as in Section 2.7, disregarding any exclusion from
Compensation specified by the Employer in the Adoption Agreement.
(c) During any Plan Year for which a minimum allocation is required under
subsections (a) or (f) to a plan under which allocations shall be made on an
integrated basis, Employer Contributions and forfeitures will be allocated to
each Participant's Employer Contribution Account in the ratio that each
Participant's Compensation for the Plan Year bears to all Participants'
Compensation for the Plan Year but not in excess of 3% of such Compensation. The
provisions of this Section 21.3(C) shall take precedence over any conflicting
provisions of Section 4.1. To the extent any amount of Employer Contributions
and forfeitures remains unallocated after the application of this Subsection
(C), such amount shall be allocated in accordance with the provisions of Section
4.1 hereof.
(d) The provision in subsection (a) above shall not apply to any
Participant who was not employed by the Employer on the last day of the Plan
Year.
(e) The provision in subsection (a) above shall not apply to any
Participant to the extent the Participant is covered under any other plan (other
than a plan which incorporates this Prototype Plan) or plans of the Employer,
and the Employer has provided in the Adoption Agreement that the minimum
allocation or benefit requirement applicable to Top-Heavy Plans will be met in
such other plan or plans.
(f) The provision in subsection (a) above shall not apply in the case of a
Participant who is an Employee of an Employer who has adopted both a profit
sharing plan and a money purchase pension plan which incorporates this Prototype
Plan. In such case, the aggregate total of the Employer Contributions and
forfeitures under both plans allocated to the Employer Contribution Account of a
Participant who is not a Key Employee shall not be less than 3% of such
Participant's Compensation. Unless the Employer has specified otherwise in the
Adoption Agreement and such specification is sufficient to satisfy the minimum
allocation requirement referred to in the preceding sentence, subsection (c)
above shall apply to the allocation of Employer Contributions and forfeitures
under the money purchase pension plan and, only to the extent that such
allocation is insufficient to satisfy the minimum allocation requirement
referred to in the preceding sentence, the profit sharing plan.
21.4 Non-forfeitability of Minimum Allocation. The minimum allocation
required (to the extent required to be nonforfeitable under Code Section 416(b))
may not be forfeited under Code Section 411(a)(3)(B) or 411(A)(3)(D).
2.15 Limitation on Compensation. For any Plan Year in which the Plan is
Top-Heavy, only the first $200,000 (or such larger amount as may be prescribed
by the Secretary of the Treasury or his or her delegate) of a Participant's
Compensation for the Plan Year shall be taken into account for purposes of
allocation Employer Contributions under the Plan.
21.6 Minimum Vesting Schedule. Unless the Employer has specified a more
rapid vesting schedule in the Adoption Agreement, for any Plan Year in which
this Plan is Top-Heavy, the following minimum vesting schedule shall apply:
Nonforfeitable Percentage
Vesting Years of Employer Contribution Account
- ------------------------------- -----------------------------------
1 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
The minimum vesting schedule applies to all benefits within the meaning of Code
Section 411(a)(7) attributable to Employer Contributions and forfeitures,
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 Section 21.6 does not apply to the Employer
Contribution Account balances of any former Participant who does not have an
Hour of Service after the Plan has initially become Top-Heavy and such former
Participant's vested Employer Contribution Account balance will be determined
without regard to this Section.
21.7 Effect on Code Section 415 Limitations. Notwithstanding anything to
the contrary in Section 5 above, the following provisions apply if the Plan is
Top-Heavy.
(a) In any Plan Year in which the Top-Heavy ratio exceeds 90% (and the Plan
therefore becomes super Top-Heavy) the denominators of the Defined Benefit
Fraction (as defined in Section 5.5(C) above) and the Defined Contribution
Fraction (as defined in Section 5.5(d) above) shall be computed using 100% of
the dollar limitation stated therein instead of 125%.
(b) In any Plan Year in which the Top-Heavy Ratio exceeds 60%, but is less
than 90%, the denominators of the Defined Benefit Fraction (as defined in
Section 5.5(c) above) and the Defined Contribution Fraction (as defined in
Section 5.5(d) above) shall be computed using 100% of the dollar limitation
described therein instead of 125%, unless the Employer has specified in the
Adoption Agreement that the minimum allocation provisions of Section 21.3 above
shall be computed using 4% of a Participant's Compensation instead of 3%, in
which case the dollar limitations of the Defined Benefit Fraction (as defined in
Section 5.5(c) above) and the Defined Contribution Fraction (as defined in
Section 5.5(d) above) shall continue to be computed using 125% of the dollar
limitations.
21.8 Termination of Top-Heavy Status. If the Plan ceases to be Top-Heavy
for any Plan Year and if the Employer has not specified otherwise in the
Adoption Agreement, the minimum vesting schedule described in Section 21.6 shall
continue to apply. If the Employer has specified in the Adoption Agreement that,
upon conversion of the Plan to non-Top-Heavy status, Participants' vested
benefits are to be determined according to a schedule other than the minimum
vesting schedule described in Section 21.6, such change in vesting schedules
shall be treated as an amendment, and the election referred to in Section 7.2
hereof shall apply.
SECTION 22.
WAIVER OF MINIMUM FUNDING STANDARD
If an Employer who has adopted this Prototype Plan as a money purchase
pension plan is unable to satisfy the minimum funding standard (as described in
Code Section 412) for a given Plan Year, it may apply to the Internal Revenue
Service for a waiver of such minimum funding standard. If the waiver is granted,
the following provisions apply:
(a) An adjusted Account balance shall be maintained for each Participant
whose actual Account balance is less than or equal to his or her adjusted
Account balance.
(i) For the Plan Year for which the first waiver is granted, the
adjusted Account balance as of the Valuation Date for each affected
Participant equals:
(A) the Participant's actual Account balance, plus
(B) the amount that such Participant would have received if the
amount waived had been contributed.
(ii) For each Plan Year following the Plan Year for which a waiver is
granted, the adjusted Account balance for each Participant affected by such
waiver (calculated as of the Valuation Date for that Plan Year) equals:
(A) the adjusted Account balance as of the Valuation Date in the
prior Plan Year, plus
(B) the amount equal to the actual investment return credited or
charged to the Participant's actual Account balance, plus
(C) the amount equal to 5% of the excess of the amount in (A)
over the Participant's actual Account balance calculated as of the
same date, plus
(D) the amount equal to such Participant's allocated share of the
11
<PAGE>
required Employer Contribution (whether or not waived) for the Plan
Year (determined without regard to adjusted waiver payments and
discretionary Employer Contributions), minus
(E) the amount of the Participant's adjusted Account balance
forfeited during the Plan Year under the Plan's provisions.
(b) For a given Year, the Employer is required to contribute a certain
amount in order to satisfy the minimum funding standard for such Plan Year. For
each Plan Year which follows a Plan Year for which a waiver of the minimum
funding standard was granted the amount equals:
(i) the amount due as determined under Section 4.1(b) above (without
regard to this Section), plus
(ii) the adjusted waiver amount.
(c) The adjusted waiver amount for given Plan Year equals:
(i) the sum of the amounts necessary to amortize each waived funding
deficiency over a period of 15 Plan Years (measured from the Valuation Date
of the Plan Year for which the corresponding waiver was granted) at 5%
interest, compounded annually, minus
(ii) the sum of the amounts necessary to amortize the total of each
Plan Year's forfeitures (which have arisen since the first waiver was
granted) over a period of 15 Plan Years (measured from the Valuation Date
of the Plan Year in which the corresponding forfeitures arose) at 5%
interest, compounded annually.
(d) An amount equal to the adjusted waiver amount must be contributed only
until each Participant's actual Account balance equals the Participant's
adjusted Account balance.
(e) Any Plan provision which provides that Employer Contributions shall be
reduced immediately by forfeitures is revoked until each Participant's actual
Account balance equals that Participant's adjusted Account balance.
(f) Discretionary Employer Contributions, which are in addition to the
amounts contributed to satisfy the minimum funding standard, can be made in any
given Plan Year. However, the total Employer Contribution for the Plan Year
cannot exceed the then remaining underfunded amount (the sum of Participants'
adjusted Account balances minus total Plan assets).
(g) The adjusted waiver payments, discretionary Employer contributions and
the forfeitures of actual Account balances for the current Plan Year shall be
allocated as of that Plan Year's Valuation Date to the actual Account balances
of the affected Participants.
(h) Each time a waiver is granted, an original waiver account ("OWA") will
be determined for each affected Participant. The OWA equals the Participant's
portion of the amount which was waived.
(i) Commencing with the Valuation Date of the Plan Year for which a waiver
is granted, a remaining original waiver amount ("ROWA") must be calculated for
each affected Participant. As of such Valuation Date the OWA equals the ROWA. On
the Valuation Date of a succeeding Plan Year the ROWA equals the prior Plan
Year's ROWA multiplied by 1.05, minus the forfeiture of amounts in the prior
Plan Year's ROWA incurred in the current Plan Year. For each waiver that is
granted one OWA and a corresponding ROWA will be established for each affected
Participant.
(j) The sum of the adjusted waiver payments, discretionary Employer
Contributions and forfeitures of actual Account balances for a given Plan Year
are allocated to those Participants who have ROWAs by multiplying the sum of
these three amounts by the fraction:
(i) the numerator of which equals the sum of OWAs for a particular
Participant, and
(ii) the denominator of which equals the sum of the OWAs for all
Participants.
To determine the portion of this allocation which is to be assigned to a given
ROWA, multiply the allocation by the corresponding OWA, then divide by the sum
of the OWAs for the particular Participant.
(k) If the calculation of a ROWA results in a value which is less than
zero, then
(i) the ROWA is set equal to zero,
(ii) the corresponding OWA is set equal to zero, and
(iii) the excess payments will be reallocated to the remaining ROWAs.
(l) A distribution is determined by multiplying a Participant's vested
percentage by his or her adjusted Account balance. However, distributions from
the Plan may not exceed a Participant's actual Account balance. If so limited,
plan Participants shall receive subsequent distributions derived from future
adjusted waiver payments.
SECTION 23.
MISCELLANEOUS
23.1 Misrepresentation. Notwithstanding any other provisions herein, if an
Employee misrepresents his or her age or any other fact, any benefit payable
hereunder shall be the smaller of: (i) the amount that would be payable if no
facts had been misrepresented, or (ii) the amount that would be payable if the
facts were as misrepresented.
23.2 Legal or Equitable Action. If any legal or equitable action with
respect to the Plan is brought by or maintained against any person, and the
results of such action are adverse to that person, attorney's fees and all other
costs to the Employer, the Administrator or the Trust of defending or bringing
such action shall be charged against the interest, if any, of such person under
the Plan.
23.3 No Enlargement of Plan Rights. It is a condition of the Plan, and each
Participant by participating herein expressly agrees, that he or she shall look
solely to the assets of the Trust for the payment of any benefit under the Plan.
23.4 No Enlargement of Employment Rights. Nothing appearing in or done
pursuant to the Plan shall be construed (a) to give any person a legal or
equitable right or interest in the assets of the Trust or distribution
therefrom, nor against the Employer, except as expressly provided herein or (b)
to create or modify any contract of employment between the Employer and any
Employee or obligate the Employer to continue the services of any Employee.
23.5 Written Orders. In taking or omitting to take any action under this
Plan, the Trustee may conclusively rely upon and shall be protected in acting
upon any written orders from or determinations by the Employer or the
Administrator as appropriate, or upon any other notices, requests, consents,
certificates or other instruments or papers believed by it to be genuine and to
have been properly executed, and so long as it acts in good faith, in taking or
omitting to take any other action.
23.6 No Release from Liability. Nothing in the Plan shall relieve any
person from liability for any responsibility under Part 4 of Title I of the Act.
Subject thereto, neither the Trustee, the Loan Trustee, or the Administrator nor
any other person shall have any liability under the Plan, except as a result of
negligence or willful misconduct, and in any event the Employer shall fully
indemnify and save harmless all persons from any liability except that resulting
from their negligence or willful misconduct.
23.7 Discretionary Actions. Any discretionary action, including the
granting of a loan pursuant to Section 10 hereof, to be taken by the Employer or
the Administrator under this Plan shall be non-discriminatory in nature and all
Employees similarly situated shall be treated in a uniform manner.
23.8 Headings. Headings herein are primarily for convenience of reference,
and if they conflict with the text, the text shall control.
23.9 Applicable Law. This Plan shall, to the extent state law is
applicable, be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the state in which (a) if the Trustee
is a corporation, the Trustee has its principal place of business; (b) if the
Trustee is an individual, the Trustee resides; or (c) if the Trustee is
individuals, where a majority of the individuals serving as Trustees reside. The
Employer's execution of the Adoption Agreement may be acknowledged where
required by applicable law.
23.10 No Reversion. Notwithstanding any other contrary provision of the
Plan, but subject nevertheless to Sections 5 and 16, no part of the assets in
the Trust shall revert to the Employer, and no part of such assets, other than
that amount required to pay taxes or administrative expenses, shall be used for
any purpose other than exclusive benefit of Employees or their Beneficiaries.
23.11 Notices. The Employer will provide the notice to other interested
parties contemplated under Code Section 7476 before requesting a determination
by the Secretary of the Treasury or his or her delegate with respect to the
qualification of the Plan.
23.12 Conflict. In the event of any conflict between the provisions of this
Plan and the terms of any contract or agreement issued thereunder or with
respect thereto, the provisions of the Plan shall control.
12
<PAGE>
SCUDDER
- -------
This booklet is not to be used in connection
with the offering of any of the Scudder funds
unless preceded or accompanied by the
appropriate current prospectuses. Scudder
Fund Distributors, Inc. is the underwriter
of the Scudder no-load mutual funds.
11-10-104 (C) Scudder Fund Distributors, Inc.
Scudder
IRA
============================
Plan and
Disclosure Statement
- ----------------------------
SCUDDER
SERVING INVESTORS SINCE 1919
<PAGE>
Introduction
When Congress approved IRAs as a tax incentive to save for retirement, it
required that all IRA investments be held by an IRA Custodian or Trustee. The
job of the Custodian or Trustee is to hold and safeguard your IRA assets until
you withdraw them.
The Custodian of the Scudder IRA is State Street Bank and Trust Company.
As Custodian, State Street Bank and Trust Company is the registered owner of
your investments in Scudder fund shares and holds them for your benefit.
This booklet and the accompanying adoption agreement comprise the agreement
between you and State Street Bank and Trust Company. It gives a detailed
explanation of the procedures governing the Scudder IRA. These procedures are
set by Congress and the Internal Revenue Service and are common to all IRAs.
Accompanying this document is "Scudder IRA: A guide to saving taxes while
building retirement income", which explains the Scudder IRA in plain English.
It is intended for your use as an easy reference guide for your Scudder IRA
investment.
If you have any questions, please call 1-800-225-2470.
2
<PAGE>
Form 5305-A OMB No. 1545-0365
(Rev. November 1983) -----------------
Department of the Treasury DO NOT FILE
Internal Revenue Service with Internal
Revenue Service
READ BUT DO NOT COMPLETE
Individual Retirement Custodial Account
Scudder IRA Form 12084 for use with the Scudder Funds
(Under Section 408(a) of the Internal Revenue Code)
- --------------------------------------------------------------------------------
See Adoption Agreement, Article IX,
Paragraph 1 hereof (hereafter referred
to as A/A)
State of ____________________________________________________ SS
County of ____________________________________________________
[_] Amendment
- --------------------------------------------------------------------------------
Depositor's name See A/A
------------------------------------------------------------
Depositor's date of birth See A/A
-----------------------------------------------------
Depositor's social security number See A/A
-------------------------------------------
Depositor's address See A/A
----------------------------------------------------------
Custodian's name State Street Bank & Trust Company
--------------------------------------------------------------
Custodian's address or principal place of business
Boston, Massachusetts
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Depositor whose name appears above is establishing an individual
retirement account (under section 408(a) of the Internal Revenue Code) to
provide for his or her retirement and for the support of his or her
beneficiaries after death.
The Custodian named above had given the Depositor the disclosure statement
required under the Income Tax Regulations under section 408(i) of the Code.
The Depositor has deposited with the Custodian See A/A dollars
($ See A/A ) in cash.
The Depositor and the Custodian make the following agreement:
Article I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8),
405(d)(3), 408(d)(3), or 409(b)(3)(C) of the Code or an employer contribution to
a simplified employee pension plan as described in section 408(k).
Article II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
- --------------------------------------------------------------------------------
For Paperwork Reduction Act Notice, see back of this form.
3
<PAGE>
Article III
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5) of the Code).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m) of the Code).
Article IV
1. The Depositor's entire interest in the custodial account must be, or
begin to be, distributed before the end of the tax year in which the Depositor
reaches age 70 1/2. By the end of that tax year, the Depositor may elect, in a
manner acceptable to the Custodian, to have the balance in the custodial 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 Depositor.
The payments must begin by the end of that tax year.
(c) An annuity contract that provides equal monthly, quarterly, or annual
payments over the joint and last survivor lives of the Depositor and
his or her spouse. The payments must begin by the end of the tax
year.
(d) Equal or substantially equal monthly, quarterly, or annual payments
over a specified period that may not be longer than the Depositor's
life expectancy.
(e) Equal or substantially equal monthly, quarterly, or annual payments
over a specified period that may not be longer than the joint life and
last survivor expectancy of the Depositor and his or her spouse.
Even if distributions have begun to be made under option (d) or (e), the
Depositor may receive a distribution of the balance in the custodial account at
any time by giving written notice to the Custodian. If the Depositor does not
choose any of the methods of distribution described above by the end of the tax
year in which he or she reaches age 70 1/2, distribution to the Depositor will
be made before the end of that tax year by a single-sum payment. If the
Depositor elects as a means of distribution (b) or (c) above, the annuity
contract must satisfy the requirements of section 408(b)(1), (3), (4), and (5)
of the Code. If the Depositor elects as a means of distribution (d) or (e)
above, figure the payments made in tax years beginning in the tax year the
Depositor reaches age 70 1/2 as follows:
(i) For the minimum payment, divide the Depositor's entire interest in the
custodial account at the beginning of each year by the life expectancy
of the Depositor (or the joint life and last survivor expectancy of
the Depositor and his or her spouse, or the period specified under (d)
or (e), whichever applies). Determine the life expectancy in either
case on the date the Depositor reaches 70 1/2 minus the number of
whole years passed since the Depositor became 70 1/2.
(ii) For the minimum monthly payment, divide the result in (i) above by 12.
(iii) For the minimum quarterly payment, divide the result in (i) above by
4.
2. If the Depositor dies before his or her entire interest in the account
is distributed to him or her, or if distribution is being made as provided in
(e) above to his or her surviving spouse, and the surviving spouse dies before
the entire interest is distributed, the entire remaining undistributed interest
will, within 5 years after
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the Depositor's death or the death of the surviving spouse, be distributed to
the beneficiary or beneficiaries of the Depositor or the Depositor's surviving
spouse.
Article V
Unless the Depositor dies, is disabled (as defined in section 72(m) of the
Code), or reaches age 59 1/2 before any amount is distributed from the account,
the Custodian must receive from the Depositor a statement explaining how he or
she intends to dispose of the amount distributed.
Article VI
1. The Depositor agrees to provide the Custodian with information
necessary for the Custodian to prepare any reports required under section 408(i)
of the Code and the related regulations.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor as prescribed by the Internal Revenue Service.
Article VII
Notwithstanding any other articles which may be added to or incorporated,
the provisions of Articles I through III and this sentence will be controlling.
Any additional articles that are not consistent with section 408(a) of the Code
and related regulations will be invalid.
Article VIII
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.
- --------------------------------------------------------------------------------
Note: The following space (Article IX) may be used for any other provisions
you wish to add. If you do not wish to add any other provisions, draw
a line through this space. If you add provisions, they must comply
with applicable requirements of State law and the Internal Revenue
Code.
- --------------------------------------------------------------------------------
Article IX
1. These provisions of Article IX are set forth in the Adoption Agreement
which is incorporated herein by reference and which Depositor acknowledges
having received and read.
2.-13. The remaining provisions of Article IX are set forth in Appendix
"A" to this Adoption Agreement, which is incorporated herein by reference, and
which Depositor acknowledges having received and read. Paragraph 7 thereof
amplifies Article IV and Paragraph 9 thereof amplifies Article VIII.
- --------------------------------------------------------------------------------
Depositor's Signature See A/A
-------------------------------------------------------
Custodian's Signature See A/A
-------------------------------------------------------
Date See A/A
-----------------------------------------
Witness See A/A
----------------------------------------------------------------------
(Use only if signature of Depositor or Custodian is required to be witnessed.)
- --------------------------------------------------------------------------------
Instructions
(Section references are to the Internal Revenue Code unless otherwise noted.)
Paperwork Reduction Act Notice
The Paperwork Reduction Act of 1980 says that we must tell you why we are
collecting this information, how it is to be used, and whether you have to
provide it. The information is
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used to determine if you are entitled to a deduction for contributions to this
custodial account. Your completing this information is only required if you
want to adopt this model custodial account.
Purpose of Form
This model custodial account may be used by an individual who wishes to
adopt an individual retirement account under section 408(a). When fully
executed by the Depositor and the Custodian not later than the time prescribed
by law for filling the federal income tax return for the Depositor's tax year, a
Depositor will have an individual retirement account (IRA) custodial account
which meets the requirements of Section 408(a). This custodial account must be
created in the United States for the exclusive benefit of the Depositor or
his/her beneficiaries.
Definitions
Custodian. -- The Custodian must be a bank or a savings and loan
association, as defined in section 408(n), or other person who has the approval
of the Internal Revenue Service to act as Custodian.
Depositor. -- The Depositor is the person who establishes the account.
IRA for Non-Working Spouse
Contributions to an IRA custodial account for a non-working spouse must be
made to a separate IRA custodial account established by the non-working spouse.
This form may be used to establish the IRA custodial account for the non-
working spouse.
An employee's social security number will serve as the identification
number of his or her individual retirement account. An employer identification
number is not required for each individual retirement account, nor for a common
fund created for individual retirement accounts.
For more information get a copy of the required disclosure statement from
your Custodian or get Publication 590, Individual Retirement Arrangements,
IRA's.
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 Depositor reaches age 70 1/2 to make sure the
requirements of section 408(a)(6) have been met. For example, if a Depositor
elects distributions over a period permitted in (d) or (e) of Article IV, the
period may not extend beyond the life expectancy of the Depositor at age 70 1/2
(under option (d)) or the joint life and last survivor expectancy of the
Depositor (at age 70 1/2) and the Depositor's spouse (under option e)). For
this purpose, life expectancies must be determined by using the expected return
multiples in section 1.72-9 of the Income Tax Regulations (26 CFR Part 1). The
balance in the account as of the beginning of each tax year beginning on or
after the Depositor reaches age 70 1/2 will be used in computing the payments
described in (d) and (e) of Article IV. Article IV does not preclude a mode of
distribution different from those described in (a) through (e) of Article IV
prior to the close of the tax year of the Depositor in which he/she attains age
70 1/2.
Article IX. -- This article and any that follow it may incorporate
additional provisions that are agreed upon by the Depositor and Custodian to
complete the agreement. These may include, for
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example: definitions, investment powers, voting rights, exculpatory provisions,
amendment and termination, removal of custodian, custodian's fees, state law
requirements, beginning date of distributions, accepting only cash, treatment of
excess contributions, prohibited transactions with the depositor, etc. Use
additional pages if necessary, and add them to this form.
Note: This form may be reproduced and reduced in size for adoption to
passbook or card purposes.
U.S. Government Printing Office: 1984--421-108/258.
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Appendix "A" Incorporated Into
Article IX of Agreement on
Scudder IRA Form 12-84
Between Custodian and Depositor
----------------------
1. Please refer to Scudder IRA Adoption Agreement.
2. Depositor's Selection of Investments
Depositor directs Custodian to invest all custodial funds in
investment funds issued by the "Mutual Fund(s)," or in the other investments
which have been designated by Scudder Fund Distributors, Inc. (or its
successors) as eligible for investment hereunder, which have been selected by
Depositor until Depositor hereafter gives Custodian contrary instructions
pursuant to Article IX, paragraph ("para.") 6 below, which governs investment of
the custodial account in "Mutual Fund" shares or other investments.
3. Contributions
(a) Period Contributions. Periodic contributions which Depositor
intends to be tax-deductible under Internal Revenue Code Section 219 shall be in
cash and are to be invested under this Agreement. Depositor contemplates future
periodic contributions within the tax-deductible limits and in accordance with
the rules for tax-deductibility specified in the Internal Revenue Code.
Depositor assumes full and sole responsibility for making sure that the sum of
periodic contributions during a single taxable year of Depositor does not exceed
those limits or violate those rules. Depositor should not contribute to the
custodial account after it ceases to be exempt by reason of either section
408(e) or 415(g) of the Internal Revenue Code.
(b) Rollover Contributions From an Individual Retirement Account or
Individual Retirement Annuity Funded Exclusively With Deductible Contributions.
A rollover contribution by Depositor from an individual retirement account or
individual retirement annuity funded exclusively with deductible contributions
shall be a deposit in cash to be invested under this agreement, with respect to
which contribution, Depositor warrants that
(1) it meets the requirements for a rollover contribution from such an
individual retirement account or individual retirement annuity as are contained
in Code Section 408(d) and that
(2) no portion of such rollover contribution is attributable to a distribution
from an employees' trust, an employee annuity, an annuity contract or a U.S.
retirement bond as described in Internal Revenue Code Sections 402(a)(5),
403(a)(4), 403(b)(8), 405(d)(3), or 409(b)(3)(C).
(c) Rollover Contributions Attributable to Distributions From
Employer Plans. A rollover contribution by Depositor other than a contribution
described in paragraph (b) above shall be a deposit in cash to be invested under
this Agreement with respect to which contribution Depositor warrants that (1)
the amount rolled over is attributable to a distribution from an employees'
trust, an employee annuity, an annuity contract, a qualified bond purchase plan,
or a U.S. retirement bond, which meets the requirements of Code sections
402(a)(5), 403(a)(4), 403(b)(8), 405(d)(3), or 409(b)(3)(C); and (2) Depositor
will make no additional contributions to the custodial account in which such
contribution is deposited, except as otherwise permitted by Scudder Fund
Distributors, Inc.
If permitted by Scudder Fund Distributors, Inc., rollover
contributions may be received under this Agreement with respect to qualified
voluntary employee contributions as defined in Internal Revenue Code Section
219(e)(2) and such contributions shall thereafter be held and administered
hereunder by the Custodian in accordance with all applicable law with respect to
accumulated deductible employee contributions as defined in Internal Revenue
Code Section 72(o)(5)(B).
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<PAGE>
(d) Transfer from an Individual Retirement Account or Individual
Retirement Annuity. Depositor may make an opening contribution hereunder by
directing the transfer of a cash amount from a custodian or trustee of an
individual retirement account or individual retirement annuity to the Custodian
be made for investment under this Agreement.
(1) From IRA Funded with Deductible Contributions. Where no portion
of such transferred amount is attributable to a distribution from an
employees' trust, an employee annuity, an annuity contract or a U.S.
retirement bond as described in Internal Revenue Code Sections
402(a)(5), 403(a)(4), 403(b)(8), 405(d)(3), or 409(b)(3)(C), Depositor
warrants that Depositor did not inherit the account or annuity, or if
Depositor did inherit the account or annuity, that Depositor is the
surviving spouse of the individual for whose benefit the account was
originally maintained or the annuity was originally purchased.
(2) From IRA Funded with Distributions Attributable to an Employer
Plan. With respect to any other transferred amount, Depositor:
(A) agrees that no additional contributions will be made to the
custodial account in which such contribution is deposited, except
as otherwise permitted by Scudder Fund Distributors, Inc.;
(B) that the entire amount of such transferred amount is
attributable to a distribution from an employees' trust, an
employee annuity, an annuity contract, a qualified bond purchase
plan, or a U.S. retirement bond, as described in Internal Revenue
Code Sections 402(a)(5), 403(a)(4), 403(b)(8), 405(d)(3), or
409(b)(3)(C), or other applicable law:
(3) that if the transferred amount had been a rollover contribution,
it would have complied with the requirements of subparagraph (b) or
(c) above.
4. Tax and Other Legal Matters
DEPOSITOR ACKNOWLEDGES HAVING READ THE SECTIONS ENTITLED
"INSTRUCTIONS" AT BOTTOM ON PAGE 5 OF I.R.S. FORM 5305-A (of which this is a
part), which describe some of the tax and other matters important to Depositor,
and "ADDITIONAL INSTRUCTIONS" preceding Appendix "A".
5. Custodian's Fees
(a) Custodian shall be entitled to receive such reasonable fees with
respect to the establishment and administration of this custodial account as are
established by it from time to time.
(b) Upon thirty (30) days prior written notice, Custodian may change
its fee schedule.
Custodian's fees, any income, gift, estate and inheritance taxes or
other taxes of any kind whatsoever, including transfer taxes incurred in
connection with the investment or reinvestment of the assets of the custodial
account, that may be levied or assessed in respect to such assets, and all other
administrative expenses incurred by Custodian in the performance of its duties
including fees for legal services rendered to Custodian, may be charged to the
custodial account, with the right to liquidate Mutual Fund shares or other
investments for this purpose, or (at Custodian's option) to the Depositor.
6. Custodial Account
(a) This Agreement shall take effect only when accepted and signed by
Custodian. As directed, Custodian shall then open and maintain a separate
custodial account for Depositor and invest the initial contribution hereunder in
shares of the Mutual Fund(s) or other investments selected by Depositor in
Article IX Para. 1. "Mutual Fund" means a regulated investment company which is
defined in Internal Revenue Code Section 851(a) and which has been designated by
Scudder Fund Distributors, Inc. (or its successors) as appropriate for
investment hereunder.
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<PAGE>
(b) Every subsequent contribution shall be invested in accordance
with instructions authorized by Depositor indicating Depositor's choice of the
Mutual Funds or other investments designated by Scudder Fund Distributors, Inc.
(or its successors) as appropriate for investment hereunder. Depositor agrees
that the listing shall not be construed as an endorsement by Custodian of the
Mutual Funds or other investments in which contributions may be invested, final
choice of which is in the sole discretion of Depositor. The Custodian does not
undertake to render any investment advice whatsoever to Depositor; its sole
duties are those prescribed in Article IX, para. 8(c).
(c) The Custodian shall invest subsequent contributions as directed.
However, if any such instructions authorized by Depositor are not received as
required, or if received, are in the opinion of Custodian unclear, or if the
accompanying contribution would cause the Depositor to exceed the maximum
limitation on tax deductibility, Custodian may hold or return all or a portion
of the contribution uninvested without liability for loss of income or
appreciation or for other loss, and without liability for interest, pending
receipt of written instructions or clarification.
(d) All dividends and capital gains distributions received on shares
of a Mutual Fund held in the custodial account shall (unless received in
additional such shares) be reinvested in shares of that Mutual Fund, if
available, which shall be credited to the account. If any distribution on such
shares may be received at the election of the shareholder in additional such
shares or in cash or other property, Custodian shall elect to receive it in
additional such shares. All accumulations on account of other investments shall
be reinvested in Depositor's custodial account.
(e) All Mutual Fund shares or other investments acquired by Custodian
hereunder shall be registered in the name of Custodian (with or without
identifying Depositor) or of its nominee. Custodian shall deliver, or cause to
be executed and delivered, to Depositor all notices, prospectuses, financial
statements, proxies, and proxy soliciting materials relating to such Mutual Fund
shares or other investments held in the custodial account. Custodian shall not
vote any such Mutual Fund shares or other investments except in accordance with
any written instructions received from Depositor.
7. Distributions.
(This paragraph 7 supplements Article IV on Scudder IRA Form 12-84 of
the Agreement and must be read in conjunction with it.)
(a) Distribution of the custodial account assets in accordance with
Article VI shall be made in a manner set forth in subparagraph (c)(1) or (2),
whichever applies, except as Article IV otherwise requires and at such time as
Depositor (or Depositor's Beneficiary if Depositor is deceased) shall elect by
written order to Custodian, provided that distribution (except for distribution
on account of Depositor's disability or death, return of an "excess
contribution" referred to in subparagraph (d) or a "rollover" from this
account), must be no earlier than age 59 1/2 if Depositor wants to avoid an
"early distribution additional tax" under Code section 408(f) or other
applicable law. For that purpose, Depositor will be considered disabled if
Depositor can prove, as provided in Code section 72(m)(7), that Depositor is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or be of long-continued and indefinite duration. Depositor (or
Depositor's Beneficiary if Depositor is deceased) will order distribution in the
manner and at the time permitted or required by Article IV and this paragraph.
Custodian assumes no responsibility for the tax treatment of any distribution
from the custodial account; such responsibility accrues solely to the person
ordering the distribution.
(b) Custodian assumes (and shall have) no responsibility to make any
distribution on order of Depositor (or Depositor's Beneficiary if Depositor is
deceased) unless and until such order specifies the occasion for
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<PAGE>
such distribution, the elected manner of distribution, and any declaration
required by Article V. Also, before making any such distribution or before
honoring any assignment of the custodial account, Custodian shall be furnished
with any and all application, certificates, tax waivers, signature guarantees,
and other documents (including proof of any legal representative's authority)
deemed necessary or advisable by Custodian, but Custodian shall not be
responsible for complying with an order which appears on its face to be genuine,
or for refusing to comply if not satisfied it is genuine, and assumes no duty of
further inquiry.
(c) Upon receipt of a proper written order as required above,
Custodian shall distribute the assets of the custodial account in cash or kind
as follows:
(1) Distribution to Depositor. If the distribution order calls for
the custodial account to be paid to Depositor under Article IV, then
distribution shall be made in one or more of the following ways as
specified in the order.
(A) In a lump sum.
(B) In installments pursuant to a cash withdrawal plan, provided
that such a plan suitable for prearranging the distributions
described in this subparagraph (B) is available for Custodian's
use under the rules governing the investments held in the
custodial account. A suitable cash withdrawal plan will provide
for periodic liquidation of some of investments held in the
custodial account to yield the cash necessary to pay each
installment. Prior to January 1, 1985, a suitable cash
withdrawal plan will provide for payment of installments over a
period not longer than the life expectancy of Depositor and
Depositor's spouse. Subsequent to December 31, 1984, a suitable
cash withdrawal plan will provide for payment of installments
ratably over a period of not longer than the life expectancy of
the Depositor or the joint life and last survivor expectancy of
the Depositor and the Depositor's Beneficiary (as defined in
subparagraph (c)(2) of this Para. 7). The life expectancies
referred to in this Agreement shall be determined by using
applicable Internal Revenue Service tables. The amount
distributed each year shall be at least equal to the quotient
obtained by dividing the entire custodial account remaining at
the beginning of that year by the adjusted life expectancy of
Depositor and Depositor's spouse, or the joint life and last
survivor expectancy of Depositor's Beneficiary (whichever is
applicable). Prior to January 1, 1985, the life or joint life
expect and last survivor expectancy used to calculate the minimum
amount to be distributed in a given year shall be equal to the
relevant expectancy as it was determined as of when Depositor
attained age 70 1/2 reduced by the number of whole years elapsed,
if any, since Depositor attained age 70 1/2. Subsequent to
December 31, 1984, the adjusted life or joint life and last
survivor expectancy used to calculate the minimum amount to be
distributed in a given year shall be, at the Depositor's
election, either determined by referring to the applicable
Internal Revenue Service table and determining the relevant
expectancy as of the particular year in question or by using a
previously determined expectancy and reducing such expectancy by
the number of whole years elapsed since it was determined.
Notwithstanding any implication to the contrary in this
subsection (B), no distribution need be made in any year, or a
lesser amount may be distributed during such year, if the
aggregate amounts distributed through the end of such year are at
least equal to the aggregate of the minimum amounts required by
this sub-
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paragraph (B) to have been so distributed. Moreover, during
Depositor's lifetime the entire custodial account remaining for
distribution at any time under this subparagraph (B) may,
pursuant to a proper supplementary written order as specified
above, be distributed to Depositor.
(c) By the purchase and distribution of a single-premium
contract meeting the requirements of Code section 408(b)(1), (3),
(40 and, prior to January 1, 1985, (5) applicable to an
"individual retirement annuity".
(2) Distribution upon Death of Depositor or Depositor's Spouse. Prior
to January 1, 1985, if Custodian receives a proper written order for
distribution on account of the Depositor's death, or the spouse's
death, if distributions were being made to the spouse over the joint
life and last survivor expectancy, Custodian shall distribute the
then- remaining custodial account to Depositor's (of, if applicable,
the spouse's) Beneficiary within five (5) years of Depositor's (or, if
applicable, the spouse's) death either in a lump sum or installments;
provided, however, that if distributions have already begun before
Depositor's death for a specified term, the Custodian may instead
continue to make the distribution in the same manner and without
regard to the foregoing five-year limitation; provided further, that
if Depositor's Beneficiary is Depositor's spouse and if Depositor's
Beneficiary elects to treat the account as if Depositor's Beneficiary
were the Depositor, then the Custodian may distribute the account as
directed by the Depositor's Beneficiary as if such person were the
Depositor and in accordance with Articles IV and IX. Subsequent to
December 31, 1984, if Custodian receives a proper written order for
distribution on account of the Depositor's death or, the spouse's
death, if distributions were being made to the Depositor's surviving
spouse, then the Custodian shall distribute the then-remaining
custodial account to the Depositor's (or, if applicable, the spouse's)
Beneficiary over the life of the Depositor's (or, if applicable, the
spouse's) Beneficiary or within a period not greater than the greater
of five (5) years after the Depositor's (or, if applicable, the
spouse's) death or the life expectancy of Depositor's (or, if
applicable, the spouse's) Beneficiary; provided, however, that if
distributions have already begun before Depositor's death for a
specified term, Custodian shall continue to distribute the custodial
account over a period at least as rapid as that specified term. The
term "Depositor's Beneficiary" means the person or persons designated
as such by the "designating person" (as defined below) on a form
acceptable to Custodian for use in connection with this Agreement,
signed by the designating person, and filed with the Custodian in
accordance with this subparagraph (2). The form may name persons or
estates to take upon the contingency of survival. However, the term
"Depositor's Beneficiary" means the designating person's estate to the
extent no such designation on such a form effectively disposes of the
custodial account as of when such distribution is to commence.
Moreover, a form shall not become effective for that purpose until it
is filed with the Custodian during the lifetime of the designating
person. The form last accepted by Custodian before such distribution
is to commence, upon becoming effective during the designating
person's lifetime, shall be controlling, and, whether or not fully
dispositive of the custodial account, thereupon shall revoke all such
forms previously filed by that person. The term "designating person"
means Depositor; after Depositor's death, it also means the person or
persons (other than Depositor's estate) who begin to receive a portion
of the custodial account pursuant to such a designation by Depositor,
and designations by such a person shall relate solely to the balance
of that
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portion remaining in the custodial account as of when distribution
pursuant to a designation by that person is to commence. The
Custodian shall accept all such forms only in the Commonwealth of
Massachusetts, and they shall be considered part of this Agreement for
purposes of Article IX, para. 13(c).
(3) Any annuity which Custodian is to purchase and distribute under
this Agreement may be fixed or variable, but Custodian shall not be
required to distribute in that manner unless the premium for that
annuity is at least $1,000.
(4) Depositor's Beneficiary shall not have the right or power to
anticipate any part of the custodial account or to sell, assign,
transfer, pledge or hypothecate any part thereof. The custodial
account shall not be liable for the debts of Depositor's Beneficiary
or subject to any seizure, attachment, execution or other legal
process in respect thereto.
(d) If during a taxable year under Article 1 a total amount is
contributed which exceeds the amount deductible for that year, either because
such amount exceeds the tax-deductible limits specified in the Internal Revenue
Code, or because of attainment of age 70 1/2 in that year, or for some other
reason, then upon receiving written notice specifying the year in question, the
amount of the excess, the reason it is an excess, and the amount of net income
in the custodial account attributable to such excess -- Custodian shall
distribute cash to Depositor in an amount equal to the sum of such excess and
earnings. If the excess contribution did not arise because of attainment of age
70 1/2. then (in Custodian's discretion unless otherwise instructed by
Depositor) in lieu of being distributed, said sum shall be treated by Depositor
as a contribution in the then current or a succeeding taxable year, in
accordance with applicable law.
8. Additional Provisions Regarding the Custodian
(a) When and after distributions of the custodial account to
Depositor's Beneficiary commence, all rights and obligations assigned to
Depositor by provisions of this Agreement shall inure to, and be enjoyed and
exercised by, Depositor's Beneficiary instead of Depositor. Until such
distributions commence to such a person, the Custodian shall not be responsible
for treating such person's predecessor to such rights and obligations as still
possessing the same.
(b) Custodian shall keep adequate records of transactions it is
required to perform hereunder. Not later than sixty (60) days after the close
of each calendar year or after the Custodian's resignation or removal pursuant
to Article IX, para. 10(a), Custodian shall render to Depositor a written report
or reports reflecting the transactions effected by it during such period and the
assets of the custodial account at the close of the period. Sixty (60) days
after rendering such report(s), Custodian shall be forever released and
discharged from all liability and accountability to anyone with respect to its
acts and transactions shown in or reflected by such report(s), except with
respect to those as to which the recipient of such report(s) shall have filed
written objections with the Custodian within the latter such sixty-day period.
(c) Custodian shall be an agent for Depositor to receive and invest
contributions as authorized by Depositor, hold and distribute such investments,
and keep adequate records and report thereon, all in accordance with this
Agreement. The parties do not intend to confer any fiduciary duties on
Custodian, and none shall be implied. Custodian may perform any of its
administrative duties through other persons designated by Custodian from time to
time, except that Mutual Fund shares or other investments must be registered as
stated in para. 6(e) of this Article IX; and Custodian intends initially to
delegate all such duties to Boston Financial Data Services, Inc., which is
partially owned by Custodian's parent company; but no such delegation or future
change therein shall be considered as an amendment to this Agreement. Custodian
shall not be liable (and assumes no responsibility) for the collection of
contributions, the
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deductibility of any contribution or its propriety under this Agreement, or the
purpose or propriety of any distribution ordered in accordance with Article IX,
para. 7, or made in accordance with Article IX, para. 12, which matters are the
sole responsibility of Depositor and Depositor's Beneficiary.
(d) Depositor shall always fully indemnify Custodian and save it
harmless from any and all liability whatsoever which may arise either (1) in
connection with this Agreement and matters which it contemplates, except that
which arises due to Custodian's negligence or willful misconduct, or (2) with
respect to making or failing to make any distribution, other than for failure to
make distribution in accordance with an order therefor which is in full
compliance with both Article IV and para. 7(a) and (b) of Article IX. Custodian
shall not be obligated or expected to commence or defend any legal action or
proceeding in connection with this Agreement or such matters unless agreed upon
by Custodian and Depositor, and unless fully indemnified for so doing to
Custodian's satisfaction.
(e) Custodian may conclusively rely upon and shall be protected in
acting upon any written order from or authorized by Depositor or Depositor's
Beneficiary or any other notice, request, consent, certificate or other
instrument, paper, or other communication believed by it to be genuine and to
have been issued in proper form and with proper authority, and, so long as it
acts in good faith, in taking or omitting to take any other action in reliance
thereon.
9. Amendment
(This paragraph 9 supplements Article VIII on Scudder IRA Form 12-84
of the Agreement and must be read in conjunction with it.)
(a) Depositor retains the right to amend this Agreement in any
respect at any time, effective on a stated date which shall be at least sixty
(60) days after giving written notice of the amendment (including its exact
terms) to Custodian by registered or certified mail unless Custodian waives such
notice as to that amendment. If Custodian does not wish to continue serving in
that capacity under this Agreement as so amended, it may resign in accordance
with Article IX, para. 10. Depositor also delegates, to the distributor
(principal underwriter) of a plurality of the Mutual Funds described in Article
IX, para. 6(b), Depositor's right so to amend including retroactively, as
necessary or appropriate in the opinion of counsel satisfactory to the
distributor, in order to conform with pertinent provisions of the Code and other
laws or successor provisions of law or to obtain a governmental ruling that such
requirements are met, to adopt a prototype or master plan (when one becomes
available) for investment in shares of such Mutual Funds or other investments,
or as otherwise may be advisable in the opinion of such counsel, provided the
distributor amends in the same manner all agreements comparable to this one,
having the same Custodian, permitting investment in shares of such Mutual Funds
or other investments, and under which such power has been delegated to it. Such
an amendment by the distributor shall be communicated in writing to Depositor
and Custodian, and Depositor shall be deemed to have consented thereto unless,
within thirty (30) days after such communication to Depositor is mailed,
Depositor either (1) gives Custodian a proper written order for a lump-sum
distribution of the custodial account, or (2) removes Custodian and
simultaneously appoints a Successor Custodian under Article IX, para. 10.
(b) This paragraph 9 shall not be construed to restrict Custodian's
freedom to agree with distributors of Mutual Fund shares, or others, upon the
terms by which shares of additional Mutual Funds or other investments may be
chosen for investment as contemplated in Article IX, para. 6(b), or Custodian's
freedom to change fee schedules in the manner proved by Article IX, para. 5(b),
and no such agreement or change shall be deemed to be an amendment of this
Agreement.
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10. Resignation or Removal of Custodian.
(a) Custodian may resign at any time upon at least thirty (30) days
prior notice in writing to Depositor, and may be removed by Depositor at any
time upon at least thirty (30) days prior notice in writing to Custodian. Upon
such resignation or removal, Depositor shall appoint a Successor Custodian to
serve under this Agreement. Upon receipt by Custodian of written acceptance of
such appointment by the Successor Custodian, Custodian shall transfer to such
Successor the assets of the custodial account and all necessary records (or
copies thereof) pertaining thereto, provided that (if so requested by Custodian)
any Successor Custodian agrees not to dispose of any such records without
Custodian's consent. Custodian is authorized, however, to reserve such a
portion of such assets as it may deem advisable for payment of all its fees,
compensation, costs, and expenses, or for payment of any other liabilities
constituting a charge on or against the assets of the custodial account or on or
against Custodian, with any balance of such reserve remaining after the payment
of all such items to be paid over to the Successor Custodian.
(b) If within thirty (30) days after Custodian's resignation or
removal or such longer time as Custodian may agree to, Depositor has not
appointed a Successor Custodian which has accepted such appointment, Custodian
shall terminate the custodial account pursuant to Article IX, para. 11, unless
within that time the distributor referred to in Article IX, para. 9(a), appoints
such Successor and gives written notice thereof to Depositor and Custodian.
(c) Custodian shall not be liable for the acts or omissions of such
Successor.
(d) The Custodian, and every Successor Custodian appointed to serve
under this Agreement, must be a bank as defined in Code section 408(n) or such
other person who qualifies to serve in the manner prescribed by Code section
408(a)(2) and satisfies the Depositor, distributor, or Custodian, upon request,
as to such qualification.
(e) After Custodian has transferred the custodial account assets
(including any reserve balance as contemplated above) to the Successor
Custodian, Custodian shall be relieved of all further liability with respect to
this Agreement, the custodial account, and the assets thereof.
11. Termination of Account
(a) Custodian shall terminate the custodial account if, within the
time specified in Article IX, para. 10(b), after Custodian's resignation or
removal, neither Depositor nor the distributor has appointed a Successor
Custodian which has accepted such appointment. Termination of the custodial
account shall be effected by distributing all assets thereof in a lump sum in
cash or in kind to Depositor subject to Custodian's right to reserve funds as
provided in Article IX, para. 10(a).
(b) Upon termination of the custodial account, this Agreement shall
terminate and have no further force and effect, and Custodian shall be relieved
from all further liability with respect to this Agreement, the custodial
account, and all assets thereof so distributed.
12. Liquidation of Account
(a) Notwithstanding anything contained in this Agreement to the
contrary, Scudder Fund Distributors, Inc. shall have the right to direct
Custodian, by written order to Custodian, to liquidate the custodial account if
the value of the account at the time of such written order is less than a
minimum value established on a non-discriminatory basis from time to time by
Scudder Fund Distributors, Inc., and upon receipt of such written order (which
Scudder Fund Distributors, Inc. shall have no duty to make and which, if made,
may be made with respect to any specified accounts as to which it may be made
applicable singly or to all accounts as to which it may be made applicable as a
group), Custodian shall forthwith proceed to liquidate the custodial account by
distributing all assets thereof in a lump sum in cash or in kind to Depositor,
subject to Custodian's right to reserve such a portion of such assets as it may
deem advis-
15
<PAGE>
able for payment of all its fees, compensation, costs, and expenses, or for
payment of any other liabilities constituting a charge on or against the assets
of the custodial account or on or against Custodian, with any balance of such
reserve remaining after the payment of all such items to be paid over to
Depositor.
(b) Neither Scudder Fund Distributors, Inc. nor Custodian shall be
liable for, or in any way responsible with respect to, any penalty or any other
loss incurred by any person with respect to a distribution made hereunder and
upon liquidation of the custodial account as aforesaid, this Agreement shall
terminate and have no further force and effect, and Custodian and Scudder Fund
Distributors, Inc. shall be relieved from all further liability with respect to
this Agreement, the custodial account, and all assets thereof so distributed.
13. Miscellaneous
(a) References herein to the "Internal Revenue Code" or "Code" and
sections thereof shall mean the same as amended from time to time hereafter,
including successors to such sections.
(b) Except where otherwise specifically required in this Agreement,
any notice from Custodian to any person provided for in this Agreement shall be
effective if sent by first-class mail to such person at that person's last
address on Custodian's records.
(c) This agreement is accepted by Custodian in, and shall be
construed and administered in accordance with the laws of the Commonwealth of
Massachusetts. This Agreement is intended to qualify under section 408 of the
Code as an Individual Retirement Account and for the Retirement Savings
deduction under section 219 of the Code, and if any provision hereof is subject
to more than one interpretation or any term used herein is subject to more than
one construction, such ambiguity shall be resolved in favor of that
interpretation or construction which is consistent with that intent. However,
neither the Custodian, nor any Mutual Fund (or company associated therewith)
shall be responsible for whether or not such intentions are achieved through use
of this Agreement, and Depositor is referred to Depositor's attorney for any
such assurances.
CUSTODIAN
DISCLOSURE STATEMENT
The following information is being provided to you by the State Street Bank
and Trust Company, the Custodian of the Scudder Individual Retirement Accounts,
in accordance with the requirements of the Internal Revenue Service. Please
read it together with the Individual Retirement Plan and the prospectus for the
shares of each Mutual Fund selected by you for the investment of your
contributions to that Plan, copies of which you should have already received
from the distributor of those shares. The provisions of the Plan and prospectus
must prevail over this statement in any instance where the statement is
incomplete or appears to conflict.
The Employee Retirement Income Security Act of 1974 has provided an
entirely new program that may enable you to plan for your retirement by creating
a "retirement plan" with federally tax-deductible dollars. This federal income
tax deduction is available even if you do not otherwise itemize your deductions.
In addition, any earnings on the assets held in your individual retirement
account will not be subject to federal income tax until you actually begin to
receive a distribution from your account. The state income tax treatment of
your account may differ, and details should be available from your state taxing
authority or your own tax adviser.
As with most other laws that provide special tax treatment, there are
certain restrictions and limitations involved with respect to your individual
retirement account:
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<PAGE>
1. Only a limited amount of savings can qualify for the preferential tax
treatment -- 100% of your compensation or earnings from self-
employment up to an annual maximum of $2,000. Under certain
conditions, an individual and his or her non-employed spouse may each
open an IRA. Annual deductions for contributions are allowable if a
joint income tax return is filed and the deductions are limited to the
lesser of 100% of the employed spouse's compensation or $2,250, and
the amount contributed to either individual retirement account may not
exceed $2,000.
In the case of an individual retirement account which meets the
requirements of a so-called Simplified Employee Pension Plan, an
employer may contribute a deductible amount equal to 15% of the
employee's compensation up to an annual maximum of $30,000, the amount
of such contribution is includible in the employee's income as wages
(for federal income tax purposes) but is deductible by him or her.
The employee is also allowed an annual deduction for his or her own
individual retirement account contributions limited to the lesser of
100% of the employee's compensation or $2,000.
There is a 6% penalty tax on any so-called "excess contribution" if
you make one, that is, on the portion of a contribution made to your
IRA in excess of the amount which can be currently deducted. Some
examples of when this can occur are when you make a contribution to
your IRA in excess of the allowable deduction limitations, or your
contribute during or after the calendar year in which you reach 70
1/2, or in the case of a spousal IRA, if the non-employed spouse
receives any compensation during the calendar year. The 6% penalty
tax on any "excess contribution" also attaches for each following year
until the excess is withdrawn or used up. If an excess contribution
plus earnings on it is withdrawn before the time for filing the
individual's tax return for the year of the contribution (including
extensions), there will be no 6% penalty tax. The amount withdrawn
will not be considered a premature distribution nor taxed as ordinary
income, except the earnings withdrawn will be included in the income
of the taxpayer. In addition, in certain cases an excess contribution
may be withdrawn after the time for filing the individual's tax return
without resulting in taxable income to the individual. Also, excess
contributions for one year may be carried forward and deducted in the
next year.
2. Contributions must be made to a Trust or Custodial Account in which
the Trustee/Custodian is either a bank or such other person who has
been approved by the Secretary of the Treasury. No part of your
contribution may be invested in life insurance or be commingled with
other property except in a common trust fund or common investment
fund.
3. No deduction is allowed for (a) contribution other than in cash; (b)
contributions (other than those by an employee to a Simplified
Employee Pension Plan) made during your calendar year in which you
attain age 70 1/2 or thereafter; or (c) for any amount you contribute
which was a distribution from another retirement plan ("rollover"
contribution). However, the limitations in paragraph 1 do not apply
to such rollovers.
4. Individuals receiving compensation may establish their own individual
retirement accounts even if they are already covered under tax-
qualified plans (including Keogh plans for self-employed individuals),
government plans, or certain annuities.
5. Your interest in the account must be nonforfeitable at all times.
6. An individual is allowed to transfer, as a so-called "rollover"
contribution, such individual's investment in one type of individual
retirement plan to another without any tax liability. Also,
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<PAGE>
under certain conditions, an individual may so roll over (tax-free) a
distribution received from a qualified plan or a tax-sheltered
annuity. However, strict limitations apply to such rollovers, and you
should seek competent tax advice in order to comply with all the rules
governing rollovers.
7. Since the purpose of the IRA savings plan is to accumulate funds for
retirement, your receipt or use of any portion of this account (for
example, as collateral for a loan) before you attain age 59 1/2 would
be considered as an early distribution unless the distribution is a
result of death or disability. The amount of early distribution would
be includable in your gross income and would also subject you to a
penalty tax equal to 10% of the distribution unless you transfer it to
another IRA under circumstances whereby it qualifies as a rollover.
8. If you or your beneficiary were to engage in any prohibited
transaction (such as any sale, exchange or leasing of any property
between you and the account, or any interference with the independent
status of the account) then the account would lose its exemption from
tax and be treated as having been distributed to you. The value of
the entire account would be includable in your gross income, and if
your then under age 59 1/2 you would also be subject to the 10%
penalty tax on early distributions.
9. If you attain age 70 1/2 before the end of 1984, your entire interest
in your account must be distributed to you, or begin to be distributed
to you, before the close of the year in which you attain age 70 1/2.
The distribution may be made at once in a lump sum, or it may be made
in installments. However, installment payments cannot be scheduled to
be made over a period which extends beyond your life expectancy, or
the combined life expectancy of you and your spouse. If the amount
distributed during a calendar year is less than the minimum amount
required to be distributed, the recipient would be subject to a
penalty tax equal to 50% of the difference between the amount required
to be distributed and the amount actually distributed. If you die
before the entire interest is distributed to you, similar rules
require prompt, level payments to your beneficiary.
10. If you do not attain age 70 1/2 until January 1, 1985 or later, your
entire interest in your account must be distributed, or begin to be
distributed, to you no later than the first April 1st of the year
following the later of the year in which you attain age 70 1/2 or
retire. Distribution may be made at once in a lump sum, or it may be
made in installments. However, installment payments cannot be
schedule to be made over a period which extends beyond your life
expectancy (as determined annually), or the joint life and last
survivor expectancy of you and the beneficiary your designate (as
redetermined annually, if that beneficiary is your spouse). If the
amount distributed during a calendar year is less than the minimum
amount required to be distributed, the recipient would be subject to a
penalty tax equal to 50% of the difference between the amount required
to be distributed and the amount actually distributed. If you die
before the entire interest is distributed to you, but after you have
begun to receive distributions, your entire account must be
distributed to your beneficiary over a period no longer than the last
determined life expectancy or life and last survivor expectancy over
which your account was being distributed prior to your death. If you
die before the entire interest has begun to be distributed to you and
your spouse is your beneficiary, distributions to your spouse must
either (a) be completed within 5 years of your death or (b) commence
before the later of one year after your death or the
18
<PAGE>
date on which you would have attained age 70 1/2, and continue over
his or her life or a period not exceeding his or her life expectancy.
If you die before the entire interest has begun to be distributed to
you and your spouse is not your beneficiary, distributions to your
beneficiary must either (a) be completed within five years of your
death of (b) commence within one year after your death and continue
over your beneficiary's life or a period not exceeding his or her life
expectancy.
11. Amounts distributed to you are includable in your gross income when
you receive them and are taxable as ordinary income without any
special lump-sum distribution privileges. However, normal four-year
income averaging may be available.
12. If you die before the end of 1984, the first $100,00 worth of
distributions paid to your beneficiary (other than your estate) are
not subject to federal estate and gift tax when they are paid in a
series of substantially equal period statements over the life of the
beneficiary or over a period of at least 36 months after your death.
After December 31, 1984, this special federal estate and gift tax
exclusion will no longer be available.
13. You must file Treasury Form 5329 with the Internal Revenue Service for
each calendar year during which there is an excess contribution,
premature distribution, or during which there is an insufficient
distribution as referred to in paragraphs 9 and 10 above.
14. The Individual Retirement Account Plan has been approved as to form by
the Internal Revenue Service. This approval is a determination only
as to the form of the account and does not represent a determination
of the merits of such account.
15. Information about the shares of each mutual fund available for
investment by your individual retirement account must be furnished to
you in the form of a prospectus governed by rules of the Securities
and Exchange Commission. Please refer to the prospectus for detailed
information concerning your mutual fund. Growth in the value of your
account cannot be guaranteed or projected. However, the income and
operating expenses of a mutual fund will affect the value of its
shares, and hence the value of your account, as does any increase or
decrease in the value of the assets of the mutual fund. The fund's
prospectus contains information regarding current income and expenses
of your mutual fund.
Fees and other expenses of maintaining your account may be charged to
you or your account. The Custodian's fee schedule is referred to in
Article IX of the Plan document and is distributed to you with it.
If you have not received this Disclosure Statement at least seven calendar
days before the establishment of your Individual Retirement Account, you have
the right to revoke your Individual Retirement Account during the seven calendar
day period following the establishment of it. In order to so revoke your
Individual Retirement Account, you must do so in writing and you must mail or
deliver your revocation to Scudder Fund Distributors, Inc., c/o State Street
Bank and Trust Company, P.O. Box 1912, Boston, Massachusetts 02105. If your
revocation is mailed, the date of the postmark (or the date of certification or
registration if sent by certified or registered mail) will be considered your
revocation date. If you so revoke your individual retirement account during the
seven-day period, the entire amount of your account, without any adjustments
(for items such as administrative expenses, fees, or fluctuation in market
value) will be returned to you.
You may obtain further information from any district office of the Internal
Revenue Service.
(C)1984 Scudder Fund Distributors, Inc.
All rights reserved
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SCUDDER
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12/34-3-15
SCUDDER
403(b)
PLANS
Plan Agreement
SCUDDER
SERVING INVESTORS SINCE 1919
<PAGE>
Scudder 403(b) Agreement
This Scudder 403(b) Agreement ("the Agreement") is entered into by and
among (i) each employer who executes a Scudder 403(b) Application ("the
Employer") and thereby certifies that the Employer is duly qualified as an
organization described in section 403(b)(1)(A) of the Internal Revenue Code of
1954, as amended ("the Code"), (ii) the Custodian which executes a Scudder
403(b) Application and thereby certifies that it is duly qualified as a bank
described in section 401(d)(1) of the Code, and (iii) each employee who executes
a Scudder 403(b) Application ("the Employee") and thereby certifies that the
Employee is an employee of the Employer, and this Agreement shall be effective
as of the date acknowledgment of the receipt by the Custodian of such Scudder
403(b) Application is mailed by the Custodian to the Employee.
ARTICLE 1. DEFINITIONS
A. Code means the Internal Revenue Code of 1954, as amended.
B. Contribution means the amount to be transmitted by the Employer to
the Custodian for addition to the Employee's Custodial Investment Account.
C. Custodial Investment Account or Account means the account or
accounts established and maintained by the Custodian for an Employee pursuant to
this Agreement and, when the contect so implies, may mean the assets, if any, at
the time held therein by the Custodian.
D. Scudder 403(b) Agreement or Agreement means this document,
incorporating by reference the Scudder 403(b) Application and Designation of
Beneficiary.
E. Custodian shall mean the bank, or any successor thereto, set forth
in the Scudder 403(b) Application.
F. Designation of Beneficiary or Designation means the document
executed by the Employee pursuant to Article II, Part C.
G. Employee means each person employed by the Employer who has properly
executed an Application.
H. Employer means the organization, state, political subdivision of a
state, or agency or instrumentality of such state or political subdivision named
in this Agreement.
I. Regulated Investment Company or Company means a domestic corporation
which is a regulated investment company within the meaning of Section 851(a) of
the Code and which issues only redeemable stock for which Scudder, Stevens and
Clark (or its successor) is acting as the investment adviser and which has been
designated by Scudder Fund Distributors, Inc. (or its successor) as appropriate
for investment hereunder.
J. Scudder 403(b) Application or Application means the document
executed by the Employer, the Employee and the Custodian pursuant to Article II,
Part A.
K. Normal Retirement Age means age 59 1/2.
ARTICLE II. ESTABLISHMENT OF CUSTODIAL INVESTMENT ACCOUNTS
A. Request for participation. Each Employee who properly executes an
Application thereby becomes a party to this Agreement with the right to enforce
its terms against any other party. Such executed Application is hereby
specifically incorporated herein by reference. An Application is properly
executed when signed by the Employer, the Employee and the Custodian. The
Custodian may rely on the validity of the signatures thereon, on the existence
of the employment relation thereby affirmed, and on the irrevocable subscription
to the provisions of this Agreement therein contained.
B. Opening of Account. Upon acceptance of an Application by the
Custodian, the Custodian shall open a separate Custodial Investment Account
("the Account") for the benefit of the Employee. The Account shall be maintained
pursuant to the terms of this Agreement, including the documents incorporated
herein by reference.
C. Employee's Designation of Beneficiary. Each Employee may submit to
the Custodian a properly executed Employee's Designation of Beneficiary form or
other written instrument acceptable to the Custodian for use in connection with
this Agreement (which are referred to hereinafter interchangeably as a
"Designation") which shall not become effective until it is filed with the
Custodian at the Custodian's home office during the lifetime of the Employee.
The last effective Designation accepted by the Custodian shall be controlling,
and whether or not fully dispositive of the Account, thereupon shall revoke all
other such Designations previously filed by the Employee. Each such executed
Designation is hereby specifically incorporated herein by reference and shall be
construed, enforced and administered according to the laws of the state in which
the home office of the Custodian is located.
ARTICLE III. CONTRIBUTIONS
A. Adjustment of compensation, transmittal of Contributions, and
exclusion allowance. Each agreement between the Employer and the Employee as to
the adjustment of the Employee's compensation, whether made pursuant to an
Application or pursuant to a separate written agreement between the Employer and
the Employee, shall be effective only as to amounts earned by the Employee after
such an agreement becomes effective. Each such agreement between the Employer
and the Employee as to the adjustment of the Employee's compensation, whether
made pursuant to an Application or pursuant to a separate written agreement
between the Employer and the Employee, shall be irrevocable as to both the
Employer and the Employee except that either of them may terminate such
agreement as of the end of any payroll period so that it will not apply to
compensation subsequently earned. Subject to the immediately preceding sentence,
the Employee may, in the manner provided for in subpart (a) of Part B of Article
VIII, change such agreement between the Employer and the Employee as to the
adjustment of the Employee's compensation, but such change may be made no more
than once in each taxable year of the Employee. All Contributions shall be
transmitted to the Custodian. The Employee shall be responsible for computing
the maximum amount that may be contributed on his behalf for each tax year in
accordance with the Employee's "exclusion allowance" as that term is defined in
section 403(b)(2) of the Code. The Employee shall determine the applicable
limitation(s) on contributions under section 415(c) of the Code, and the
Employee shall have the right to avail himself of and make any of the elections
provided under said section 415. Such computations and determinations shall be
made at least annually, and the Employee shall communicate the results to the
Employer no later than thirty (30) days before the last day on which the
Employee can execute a new Application or other written agreement with the
Employer for the taxable year without violating the pertinent rules and
regulations promulgated by the Treasury Department. Neither the Custodian,
Scudder Fund Distributors, Inc., any Regulated Investment Company, nor the
Employer shall have any obligation to verify the correctness of the Employee's
computation of the Employee's exclusion allowance or limitations on
contributions under section 415 of the Code or any responsibility with respect
to any election available to the Employee under said section 415 or any matters
relating to any tax consequences with respect to the Employee's contributions,
including the identification and correction of an "excess contribution" as that
term is defined in section 4973 of the Code, all of which foregoing matters
shall be solely the responsibility of the Employee.
B. Transfers and rollovers.
(a) Transfers from and to other Accounts. The Employer or the Employee
may cause the transfer of assets acceptable to the Custodian and
available from an existing custodial account qualified under section
403(b)(7) of the Code and/or from an existing annuity contract
qualified under section 403(b) of the Code to his Custodial Investment
Account. Once transferred into the Employee's Custodial Investment
Account, such assets shall be treated as a Contribution for purposes of
this Agreement and shall be invested, distributed and otherwise dealt
with as such. The Employer or Employee may cause the transfer of assets
agreed to by the Custodian from the Employee's Custodial Investment
Account to a custodial account established under section 403(b)(7) of
the Code and/or to an annuity qualified under section 403(b) of the
Code.
(b) Rollover contributions. The Custodian may accept contributions in
the form of assets acceptable to the Custodian received from an annuity
contract or a custodial account described in section 403(b) of the
Code, an individual retirement account described in section 408(a) of
the Code, an individual retirement annuity described in section 408(b)
of the Code, or a retirement bond described in section 409(a) of the
Code, provided that such contribution qualifies in all respects as a
rollover contribution in accordance with the requirements of section
403(b)(8), section 408(d)(3) or section 409(b)(3)(C) of the Code
(including the requirement that no part of the amount received from an
individual retirement account, individual retirement annuity or
retirement bond be attributable to any source other than a rollover
contribution from any annuity contract or custodial account described
in section 403(b) of the Code) or other applicable provisions of the
Code in effect from time to time. Such rollover contribution shall be
held by the Custodian in a separate Account for the benefit of the
Employee which consists only of such rollover contributions and the
earnings thereon. Once transferred into the Employee's Custodial
Account, such assets shall be treated as a Contribution for purposes of
this Agreement and shall be invested, distributed and otherwise dealt
with as such. The right is reserved to transfer the assets of the
Custodial Investment Account to another form of annuity contract or
custodial account described in section 403(b) of the Code or to an
individual retirement account, individual retirement annuity, or
retirement bond plan established pursuant to section 408 or 409 of the
Code.
If permitted by Scudder Fund Distributors, Inc., in accordance with
applicable law, rollover contributions with respect to qualified voluntary
employee contributions as defined in section 219(e)(2) of the Code may be
received under this Agreement with respect to taxable years
2
<PAGE>
beginning after December 31, 1981, and such contributions shall thereafter
be held and administered hereunder by the Custodian in accordance with all
applicable law with respect to accumulated deductible employee
contributions as defined in section 72(o)(5)(B) of the Code.
(c) Limitation of liabilities. Neither the Custodian nor Scudder Fund
Distributors, Inc. shall have any responsibility with respect to any
matters relating to the tax consequences with respect to any transfer or
rollover made under this Part B of Article III.
ARTICLE IV. INVESTMENT
A. Purchase. The Custodian shall receive and, as soon as practical,
shall invest all contributions in accordance with the Employee's investment
instructions which are then in effect for the Employee.
B. Registration and safekeeping. Any stock of a Regulated Investment
Company held under this Agreement shall be held by the Custodian. Such stock may
be registered in the name of the Custodian or its nominee, but the Custodian
need not require issuance of certificates for such stock.
C. Eligibility. The Custodian shall invest only in stock of a Regulated
Investment Company. Nothing in this Agreement shall prevent the Employer from
purchasing an annuity policy which qualifies under section 403(b) of the Code,
but such a policy, if selected by the Employee, shall be issued directly to such
Employee.
A Custodial Investment Account shall be limited to investment in stock
of one Regulated Investment Company, except that the Employee may choose that
the investment be divided between the stock of more than one Regulated
Investment Company if the value of the stock of each Company in which an
investment is being made is, upon completion of the investment, equal to a
minimum value established from time to time by a designation by Scudder Fund
Distributors, Inc. (including a designation that there shall be no such minimum
investment limitation).
If a Company in whose stock investments have been made is no longer
designated by Scudder Fund Distributors, Inc as appropriate for investment
hereunder, Scudder Fund Distributors, Inc. shall advise the Employee for whose
Account the investments were made and shall provide said Employee with a current
list of Companies available for investment. If, within 30 days of providing of
such current list, the Employee does not submit new investment instructions, the
Employee's investment in the deleted Company shall be changed to an investment
for the Employee's Account in stock of Scudder Cash Investment Trust or in stock
of another Regulated Investment Company or Companies designated by Scudder Fund
Distributors, Inc. and no additional investments shall be made in said deleted
Company.
D. Reports and voting of securities. The Custodian shall deliver to the
Employee all notices, reports, prospectuses, financial statements, proxies and
proxy-soliciting materials received by it as to investments made for the
Employee's Account. The Custodian shall vote all shares only in accordance with
the instructions of the Employee as expressed in the executed proxy. If the
Employee desires to attend a meeting at which securities held in this account
may be voted, the Custodian shall furnish a proxy at the Employee's request.
E. Dividends. All capital gain distributions and dividends received on
the stock of a Regulated Investment Company shall be reinvested in the stock of
that Regulated Investment Company. The Custodian shall elect to receive any such
distribution in the stock of the distributing Company whenever possible.
F. Change of investments. An Employee or his designated beneficiary or
beneficiaries who has (have) survived the Employee and to whom distributions are
being made (by unanimous agreement if there is more than one beneficiary) may
direct in writing (or by any other manner of direction designated by Scudder
Fund Distributors, Inc.) that the investment medium of the Accout be changed to
stock of another Regulated Investment Company or Companies. However, if Scudder
Fund Distributors, Inc. determines in its own judgment that there has been
trading within the Account, any Regulated Investment Company may refuse to sell
its shares to such Account. If the Employee's Account is invested in stock of
more than one Regulated Investment Company, a separate account shall be kept
with respect to the stock of each such Company, and he or they may designate the
portion of any new contribution, withdrawal, or change of investment which is to
be allocated to each such separate account.
ARTICLE V. CUSTODIAN
A. Duties. The Custodian shall:
(1) Receive contributions transmitted by the Employer;
(2) Provide safekeeping for the securities and other assets in the
Custodial Investment Account;
(3) Collect income;
(4) Execute orders for purchase, sale or exchange of securities and
make settlement in accordance with general practice;
(5) Maintain records of all transactions in the Account;
(6) Transmit to each Employee, not less frequently than annually,
appropriate statements of the amount of the Custodian's compensation,
if any, charged to the account.
(7) File with the Internal Revenue Service and/or any other government
agency such returns, reports, forms, and other information as may be
required of it as Custodian;
(8) Perform all other duties and services consistent with the purposes
and intentions of this Agreement. The Custodian may perform any of its
administrative duties through other persons designated by the Custodian
from time to time, except that all assets in the Account shall be held
by the Custodian; and if State Street Bank and Trust Company is the
Custodian, it intends initially to delegate all such duties to Boston
Financial Data Services, Inc., which is partially owned by the
Custodian's parent company; but no such delegation or future change
therein shall be considered as an amendment of this Agreement.
B. Cash requirements. If cash funds are required to pay taxes, fees, or
other expenses pursuant to Article VI or to make payments to the Employee or his
beneficiaries (other than withdrawals under Article VII, Part C), the Employee
shall instruct the Custodian in writing which Regulated Investment Company
shares shall be redeemed or sold if there is more than one account, unless the
item for which cash is required is clearly allocable to an investment in a
specific Regulated Investment Company. In the absence of such written
instructions, the Custodian shall exercise its own discretion. However, the
Custodian's fee, if any, for each account within a Custodial Investment Account
shall be charged to such account.
C. Limitation of liabilities and duties.
(1) The Custodian shall be fully protected in acting or omitting to
take any action in reliance upon any order or other direction believed
by the Custodian to be genuine and properly given.
(2) To the extent permitted by law, upon the expiration of a 30-day
period after providing to the Employee the statements required under
Article V, Part A(6), the Custodian shall be released and discharged
from all liability to the Employee or any third party as to the matters
contained in such statement unless the Employee files written
objections with the Custodian within such 30-day period.
(3) In no event shall the Custodian be under a fiduciary duty to the
Employee in regard to the selection of investments or be liable for any
loss so incurred.
(4) The Custodian shall have no responsibility to see to the initial or
continued qualification of the Custodial Investment Account under
section 403(b)(7) of the Code.
(5) The Custodian shall not be obligated to determine the amount of any
contribution due or collect such contribution from the Employer.
(6) The Custodian shall not be held responsible for determining the
amount, character, or timing of any distribution to the Employee except
as provided in Article IX.
(7) The Custodian shall have no responsibility with respect to the
computation of the Employee's "exclusion allowance" as defined in
Section 403(b)(2) of the Code, any applicable limitation(s) on
contributions under Section 415(c) of the Code, any election available
to the Employee under said section 415, or any matters relating to any
tax consequences with respect to the Employee's contributions,
including the identification and correction of an "excess contribution"
as that term is defined in section 4973 of the Code, all of which
foregoing matters shall be solely the responsibility of the Employee.
(8) The Custodian shall not be required to carry out any instructions
not given in accordance with this Agreement and the various documents
incorporated herein by reference. If such instructions are not received
as required or if received, are in the opinion of the Custodian
unclear, the Custodian shall not be liable for loss of income or
appreciation or depreciation and shall not be liable for interest,
pending receipt of written instructions or other clarification.
Furthermore, the Custodian assumes (and shall have) no responsibility
to make any distribution (or process a withdrawal) by order of the
Employer, the Employee or a Beneficiary unless and until the requisite
instructions specify the occasion for such action and the Custodian is
furnished with any and all applications, certificates, tax waivers,
signature guarantees and other documents (including proof of any legal
representative's authority) deemed necessary or advisable to the
Custodian. The Custodian shall not be responsible for complying with
any instructions or acting in accordance with any other documents which
appear on their face to be genuine, or for refusing to comply or so act
if not satisfied to that effect, and assumes no further duty of
inquiry. The Custodian shall have no liability to the Employee (or the
Employee's beneficiary) for any tax penalty or other damages resulting
from any inadvertent failure by the Custodian to make a distribution
under this Agreement.
(9) The Custodian shall not be liable (and assumes no responsibility)
for the collection of contributions or the deductibility of
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any contribution, or its propriety under this Agreement, or the purpose
or propriety of any distribution made pursuant to this Agreement, which
matters are the responsibility of the Employer and the Employee.
(10) The Custodian shall not be liable for interest on temporary cash
balances, if any, maintained in the Account.
(11) To the extent permitted by law, the Employee shall always fully
idemnify the Custodian and save it harmless from any and all liability
whatsoever which may arise either (i) in connection with this Agreement
and matters which it contemplates, except that which arises due to the
Custodian's negligence or willful misconduct, or (ii) with respect to
making or failing to make any distribution, other than for failure to
make distribution in accordance with an order therefor which is in full
compliance with Article IX or Article VII, Part C or this Part C of
Article V. Except as required by law, the Custodian shall not be
obligated or expected to commence or defend any legal action or
proceeding in connection with this Agreement or such matters unless
agreed upon by the Custodian and the Employee, and unless fully
indemnified for so doing to the Custodian's satisfaction.
(12) The Employer assumes neither any responsibility nor any liability
for any acts or omissions of the Custodian hereunder.
D. Compensation. In consideration for its services hereunder, the
Custodian shall be entitled to receive the fees specified in its then current
fee schedule for the services specified on the schedule. The Custodian may
substitute a revised fee schedule from time to time upon thirty (30) days'
written notice to the Employer or Employee. A Custodian shall be entitled to
such reasonable additional fees as it may from time to time determine for
additional services required of it, if such additional services are not clearly
identified on the fee schedule.
E. Resignation and removal. The Custodian may resign by giving at least
30 days' written notice to the Employer. The Employer or Scudder Fund
Distributors, Inc. may remove the Custodian hereunder by giving at least 30
days' written notice to the Custodian. In each case, the Employer or Scudder
Fund Distributors, Inc. shall designate a successor custodian qualified under
section 403(b)(7) of the Code, which successor custodian shall accept such
appointment by a writing to be submitted to the Employer and the Custodian.
If, within 30 days after the giving of notice of resignation or
removal, neither the Employer nor Scudder Fund Distributors, Inc. designates a
successor custodian which accepts the appointment, this Agreement shall
terminate, and all assets in the Account shall be distributed in kind to the
Employee, or in the event of his death, to his designated beneficiary or
beneficiaries subject to the Custodian's right to reserve funds as provided in
this Part E of Article V.
On the effective date of its resignation or removal, the Custodian
shall transfer to the designated successor the assets and records (or copies
thereof) of the Custodial Investment Accounts provided, however, that the
Custodian may retain whatever assets it deems necessary for payment of its fees,
costs and expenses, compensation, and any other liabilities which constitute a
charge on or against the assets of the Account or on or against the Custodian.
ARTICLE VI. FEES, TAXES, AND OTHER EXPENSES
A. Fees, taxes, and other expenses. Any income taxes of any kind
whatsoever that may be levied or assessed upon or in respect of a Custodial
Investment Account created hereunder (including any transfer taxes incurred in
connection with the investment and reinvestment of the assets), and all other
expenses, fees, and administrative costs incurred by the Custodian in the
performance of its duties, including fees for legal services rendered to the
Custodian, and the compensation to the Custodian as determined under Article V,
Part D of this Agreement shall constitute a charge upon the assets of the
Custodial Investment Account and be paid from the assets held in such Account,
or (at the Custodian's option) be paid by the Employee.
ARTICLE VII. PROTECTION OF EMPLOYEE BENEFITS
A. Non-forfeitable. At no time shall it be possible for any part of the
assets held by the Custodian in the Employee's Account to be used for or
diverted to purposes other than for the exclusive benefit of the Employee. The
Employee's rights to or derived from the Employer's contributions to the
Custodian for addition to the Employee's Account shall be non-forfeitable at all
times after such payments are made to the Custodian.
B. Non-alienable. Any right or benefit which shall be payable under the
terms of this Agreement shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any
attempt at such shall be void, and any such right or benefit shall not in any
way be subject to the debts, contracts, liabilities, engagements or torts of the
person who is entitled to such right or benefit, nor shall Such right or benefit
be subject to attachment or legal process for or against such person, except as
provided in Part C of this Article VII.
C. Employee withdrawals.
(a) At any time or times prior to the completion of distributions
pursuant to Article IX, an Employee who has attained age 59 1/2 may
withdraw amounts of cash from his Account, including the entire balance
thereof, if the Employee submits to the Custodian written proof
satisfactory to the Custodian of the attainment of such age and, also,
written instructions to the Custodian as to the amounts to be so
withdrawn. If the Employee makes any withdrawal at any time pursuant to
the provisions of this subpart (a) of this Part C of Article VII, no
additional contributions may be made to the Employee's Account for a
period of one (1) year after such withdrawal and the employee may not
participate in any other custodial account for regulated investment
company stock involving the Employer under section 403(b) of the Code
for a period of one (1) year after such withdrawal.
(b) In addition to the foregoing, at any time or times prior to the
completion of distributions pursuant to Article IX, an Employee may
withdraw amounts of cash from his Account, including the entire balance
thereof, if the Employee encounters financial hardship, as determined
under rules of uniform application and in accordance with applicable
law, governmental regulations or rulings, by a person designated by the
Employer in accordance with applicable legal authority, and if the
Employee submits to the Custodian written proof satisfactory to the
Custodian of such determination of hardship and, also, written
instructions to the Custodian as to the amounts to be so withdrawn.
(c) Any withdrawal made pursuant to the provisions of either subparts
(a) or (b) of this Part C may not be in kind but may only be in the
cash proceeds received by the Custodian from redemptions or sales of
shares of the Regulated Investment Companies held in the Employee's
Account. If there is more than one account, the Employee shall instruct
the Custodian in writing as to which Regulated Investment Company
shares shall be redeemed or sold before any distribution is made under
this Part C of Article VII.
ARTICLE VIII. AMENDMENT.
A. By Employer. This Agreement and/or the various documents
incorporated herein may be modified or amended by the Employer by delivering to
the Employee and to the Custodian a written copy of such modification or
amendment signed by the Employer.
B. By Employee. The Employee may amend this Agreement by making any of
the following changes:
(a) No more than one in each taxable year of the Employee, and subject
to other applicable provisions of Part A of Article III, the Employee
may change the agreement between the Employer and the Employee as to
the adjustment of the Employee's compensation either by submitting to
the Employer and the Custodian, in accordance with Article II, Part A,
a revised Application or in lieu thereof, by the execution of a
separate written agreement between the Employer and the Employee;
(b) The Employee may change investments pursuant to Article IV, Part F;
or
(c) The Employee may change his designated beneficiary or beneficiaries
by submitting to the Custodian at any time a revised Designation of
Beneficiary pursuant to Article II, Part C.
C. By Scudder Fund Distributors, Inc. The Employer hereby delegates
authority to Scudder Fund Distributors, Inc. to modify or amend this Agreement
and/or the various documents incorporated herein, including authority to adopt a
prototype or master plan (if one becomes available) for investment in shares of
Regulated Investment Companies, and the Employer shall be deemed to have
consented to any such modification or amendment. Scudder Fund Distributors, Inc.
shall provide copies of such modification or amendment to the Employer or the
Employee, and the Custodian. However, Scudder Fund Distributors, Inc. has no
affirmative obligation to amend any of the foregoing documents pursuant to this
portion of the Agreement.
D. Limitations. Notwithstanding the powers granted in Parts A, B, and C
above, no amendment shall be made which would:
(a) Cause or permit any part of the assets in the Account to be
diverted to purposes other than for the exclusive benefit of the
Employee and/or his beneficiaries, or cause or permit any portion of
such assets to revert to or become the property of the Employer.
(b) Place any greater burden on a Custodian without its written
consent, or
(c) Retroactively deprive any Employee of any benefit to which he was
entitled under this Agreement by reason of contributions made by the
Employer, unless such modification or amendment is necessary to conform
the Agreement to, or satisfy the conditions of any law, governmental
regulation or ruling, and to permit the Agreement and Account to meet
the requirements of Section 403(b) of the Code, or any similar statute
enacted in lieu thereof, and any such retroactive modification or
amendment must be pursuant to an opinion of counsel that it is
necessary or advisable to conform the Agreement to the requirements for
qualification under Section 403(b) of the Code and Regulations
prescribed thereunder.
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ARTICLE IX. DISTRIBUTION
A. Time of distribution.
(a) Subject to the remaining provisions of this Article IX and to the
provisions of Part C of Article VII, distribution of assets held in the
Employee's Investment Account shall be made or shall commence at the
earliest time of the occurrence of one of the following events:
(1) The disability of the Employee within the meaning of Section
72(m)(7) of the Code. An Employee shall be considered to be so
disbabled if he 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 and an individual shall not
be considered to be disabled, and, therefore, the Custodian shall
not be required to make distribution on account of the Employee's
disability, unless and until the Custodian has received a
physician's certificate to that effect;
(2) The Employee's actual retirement or attainment of the Normal
Retirement Age, whichever is later; or
(3) The Employee's death.
(b) In addition to the foregoing, distribution shall be made or shall
commence upon the Employee's separation from the service of the
Employer, prior to the occurrence of any of the events listed in
subpart (a) of this Part A or Article IX, if the Employee, either at
any time prior to or upon the Employee's separation from the service of
the Employer, files with the Custodian a written, irrevocable election
to have distribution commence upon such separation from service.
(c) The Custodian shall not be responsible for making any distributions
until such time as it has been notified in writing by either the
Employer or the Employee of the occurrence of one of the events set
forth in subparts (a)(1),(a)(2), or (b) of this Part A, or by the
designated beneficiary or beneficiaries (or by the Employee's Executor
or other personal representative if no such beneficiary survives the
Employee) of the occurrence of the event set forth in subpart (a)(3) of
this Part A.
B. Mode of distribution to Employee. Distributions to the Employee of
amounts held by the Custodian in his Custodial Investment Account shall normally
be made in the form of annual, quarterly or monthly installments in cash or in
kind or in the form of a lump sum, provided that:
(a) Installment payments in cash or in kind shall be made in
approximately equal amounts or approximately equal fractions of the
Employee's Custodial Investment Account;
(b) If payments to the Employee are made in the form of installments,
there shall be credited to such Employee's Custodial Investment Account
all earnings thereon during the period of such installments; and
(c) Except in the case where the distribution is made in the form of an
annuity for a period measured by the life of the Employee and his
spouse (regardless of whether the Employee's beneficiary is someone
other than his spouse), the present value of the payments to be made to
the Employee must be more than 50 percent of the present value of total
payments to be made to the Employee and his beneficiaries.
Stock of a Regulated Investment Company shall not be distributed in
kind unless at the time distribution is made or, if it is to be made in
installments, at the time it commences, the value of such stock held in the
Custodial Investment Account is five hundred ($500) dollars or more.
Distribution may also be made by distributing an annuity contract which
qualifies under section 403(b)(1)(A) of the Code.
C. Election. The Employee may elect or alter his election of the method
of distribution to the Employee by filing with the Custodian a written election
of a method of distribution which is consistent with the provisions of Part B of
this Article IX at any time prior to seven (7) days before the time of
distribution determined under Part A of this Article IX. Such election may be
changed at any time prior to the beginning of said seven (7)-day period.
In the event that an Employee fails to properly elect a method of
distribution of his Account, unless the Custodian in its absolute discretion
chooses another method of distribution consistent with the provisions of Part B
of this Article IX, installment payments pursuant to said Part B will be made in
cash or in kind to the Employee on a monthly basis over a 10-year-period, if a
systematic withdrawal plan is available for the Regulated Investment Company
stock held in the Account and if the assets in such Account are determined to be
sufficient by Scudder Fund Distributors, Inc. If such a plan is unavailable or
if such assets are deemed to be insufficient by Scudder Fund Distributors, Inc.,
the shares of the Regulated Investment Company stock held in the Account will be
distributed in cash or in kind promptly to the Employee, unless the Custodian in
its absolute discretion chooses another method of distribution consistent with
the provisions of said Part B of this Article IX.
D. Method of distribution to beneficiaries. In the event of the death
of the Employee either before or after the occurrence of any of the times for
distribution listed in Part A of this Article IX, any amounts held by the
Custodian in the Employee's Account shall be distributed to the beneficiary or
beneficiaries named in the Employee's Designation by the method acceptable to
the Custodian and stipulated in such form, but only after such beneficiary or
beneficiaries have notified the Custodian in writing of the Employee's death and
provided the Custodian with adequate verification of such death, as provided in
subpart (8) of Part C of Article V. Until such distributions commence to such
beneficiary or beneficiaries, the Custodian shall not be responsible for
treating such person's predecessor to such rights and obligations as still
possessing the same.
In the event that the Employee fails to properly stipulate a method of
distribution of his Account to such beneficiary or beneficiaries, unless the
Custodian in its absolute discretion chooses another mode of distribution,
installment payments will be made in cash or in kind to such beneficiary or
beneficiaries on a monthly basis over a 10-year period from the date of the
Employee's death, if a systematic withdrawal plan is available for the Regulated
Investment Company stock held in the Account and if the assets in such Account
are determined to be sufficient by Scudder Fund Distributors, Inc. If such a
plan is unavailable or if such assets are deemed to be insufficient by Scudder
Fund Distributors, Inc., the shares of the Regulated Investment Company stock
held in the Account will be distributed in cash or in kind promptly to such
beneficiary or beneficiaries, unless the Custodian in its absolute discretion
chooses another method of distribution.
If the Employee so elects in the Designation of Beneficiary form in
effect at the time of his death, his designated beneficiary or beneficiaries who
has (have) survived him and to whom distributions are to be made, may direct the
Custodian in writing (by unanimous agreement if there is more than one
beneficiary) to change the method of distribution to such beneficiary or
beneficiaries (that is, the method either selected in the Employee's Designation
or provided for in this Part D of Article IX, as the case may be), but only
within sixty (60) days after the day on which such beneficiary or beneficiaries
first became entitled to any distribution from the Account and only if such
change is acceptable to the Custodian.
If a distribution is payable to a person known by the Custodian to be a
minor or a person under a legal disability, the Custodian may in its absolute
discretion make the whole or any part of the distribution to (i) a parent of
such person, (ii) the guardian, committee or other legal representative,
wherever appointed, of such person, including a custodian for such person under
a Uniform Gifts to Minors Act or similar act, (iii) any person having the
control and custody of such person, or (iv) to such person directly, the receipt
of the distributee to whom any such payment or distribution is so being made a
sufficient discharge therefor.
Insofar as the disposition of the Account of a deceased Employee is not
governed by a valid Designation which names at least one beneficiary who
survives the Employee, the Account shall be distributed to the estate of the
deceased Employee. Any portion of an Account of a deceased Employee remaining
undisposed of after the death of an Employee's designated beneficiary who has
survived the Employee, shall be distributed to the estate of such deceased
beneficiary.
ARTICLE X. TERMINATION.
A. Voluntary termination. With respect to amounts not yet earned by an
Employee, this Agreement may be terminated by either such Employee or the
Employer by giving written notice to the other.
Copies of such notice shall be sent forthwith to the Custodian. Unless
otherwise mutually agreed upon by the Employer and the Employee, any such
termination shall take effect as of the last day of the month next following the
month in which such written notice shall have been given, the Employee's
compensation level shall be increased by the amount by which it otherwise would
be reduced pursuant to the Application, or other written agreement between the
Employer and the Employee as to the adjustment of the Employee's compensation,
and the obligations under this Agreement of the Employer with respect to future
pay periods shall cease.
B. Termination on distribution. This Agreement shall terminate as to an
Employee when all the assets held in the Custodial Investment Account
established for him hereunder have been distributed.
C. Termination on disqualification. This Agreement shall terminate as
to an Employee, if after notification by the Internal Revenue Service that the
Employee's Account does not qualify under section 403(b)(7) of the Code, Scudder
Fund Distributors, Inc. fails or is unable to make the amendments necessary to
so qualify the Account. On such termination of this Agreement, all assets in an
Account shall be distributed in kind by the Custodian to the Employee or, in the
event of his death, to his designated beneficiaries, subject to the Custodian's
right to reserve funds as provided in Article V, Part E, except that where the
value of such assets is less than five hundred ($500) dollars, the distribution
shall be in cash.
ARTICLE XI. MISCELLANEOUS
A. Adjustment regarding other employee benefits. Unless provided
otherwise in a separate written agreement between the Employer and the Employee,
all employee benefits furnished (either wholly or in part) by the Employer for
the benefit of the Employee(other than those provided for under this Agreement)
which are based on the amount of compensation payable to an employee, and which
would ordinarily be subject to reduction in the event of any salary adjustment
other than that provided for
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under this Agreement, shall continue to be based on the Employee's compensation
level without regard to any adjustment in compensation provided for under this
Agreement, if such employee benefits arrangements themselves are consistent with
this Part A of Article XI.
B. Qualified Voluntary Employee Contributions. If permitted by Scudder
Fund Distributors, Inc., qualified voluntary employee contributions as defined
in section 219(e)(2) of the Code may be received under this Agreement with
respect to taxable years beginning after December 31, 1981, and such
contributions shall thereafter be held and administered hereunder by the
Custodian in accordance with all applicable law with respect to accumulated
deductible employee contributions as defined in section 72(o)(5)(B) of the Code.
C. Applicable law. This Agreement and all documents incorporated herein
by reference shall be construed and administered in accordance with the laws of
the state in which the home office of the Custodian is located.
D. Terminology. Any masculine terminology in this Agreement shall
include the feminine.
E. Headings. Headings herein are primarily for convenience of
reference, and if they conflict with the text, the text shall control.
F. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall be an original,
but such counterparts shall together constitute one and the same instrument.
G. Change of address. The Employer shall notify the Custodian in
writing of any change of address within 30 days of such change.
H. Notice. Any notice from the Custodian to the Employee pursuant to
this Agreement shall be effective if sent by first class mail to the business
address of the Employer until the Employer specifies a different address
acceptable to the Custodian. Any notice to the Custodian pursuant to this
Agreement shall be by first class mail addressed to its home office.
I. Successors. This Agreement shall be binding upon and shall inure to
the benefit of the successors in interest of the parties hereto.
J. Not employment contract. This Agreement shall not be deemed to
constitute a contract of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Employer to discharge the Employee or
of the Employee to terminate his employment.
K. Construction. No provision of this Agreement, including the
documents incorporated herein by reference, shall be construed to conflict with
any provision of a Treasury Department or Internal Revenue Service regulation,
ruling, release or other order which affects the terms of this Agreement or its
qualification under section 403(b)(7) of the Code. It is intended that this
Agreement, including the documents incorporated herein by reference, qualify as
a custodial account under said section 403(b)(7) and this Agreement, including
said documents, shall be construed and limited and the powers and discretions
conferred hereunder and by applicable laws shall be exercised in a manner
consistent with that purpose. Subject to the foregoing provisions of this Part K
of Article XI, in the event of any conflict between this Agreement and the
documents incorporated herein by reference, the provisions of this Agreement
shall prevail.
L. Tax treatment. The tax treatment of any contributions to the Account
and of any earnings of the Account depends, among other things, upon the nature
of the Employer, and the amount and nature of contributions made in any year to
the Account (and to other plans, accounts or contracts with the benefit of
special tax treatment) for the benefit of the Employee. The Custodian and
Scudder Fund Distributors, Inc. assume no responsibility with respect to such
matters, nor shall any term or provision of this Agreement be construed so as to
place any such responsibility upon any one of them. Furthermore, the Employer
and the Employee shall file and shall have sole responsibility for filing with
the Internal Revenue Service and/or any other government agency such returns,
reports, forms, and other information as may be required of them.
M. Separability. If any provision of this Agreement shall be held
invalid or illegal for any reason, such determination shall not affect any
remaining provisions of this Agreement, but this Agreement shall be construed
and enforced as if such invalid or illegal provision had never been included in
this Agreement.
N. If the Employer does not sign the Application and is not required to
do so under the Code and the regulations thereunder, the Employee, to the extent
allowed by law, assumes all obligations and responsibilities of the Employer
under the Application and this Agreement.
O. Separate Employer Plan. If the Employer has established a written
separate 403(b) plan, intending to provide for the investment in Regulated
Investment Companies, the terms of such plan will supersede any provisions of
this Agreement which conflict with such terms. This provision shall not be
effective until the Employer has provided Scudder Fund Distributors, Inc. with a
copy of such written plan and the Custodian has agreed in writing to be bound by
terms thereof.
6
<PAGE>
Telephone
numbers and
addresses
- --------------------------------------------------------------------------------
National Toll Free
Telephone Numbers
and Addresses
------------------------------------------------------------
For general information,
CALL (toll-free) 1-800-225-2470
(within Massachusetts, call collect 617-426-8300)
or
WRITE to: Scudder Fund Distributors, Inc.
175 Federal Street
Boston, MA 02110
Shareholder representatives from Scudder Fund Distributors,
Inc., underwriter for the Scudder funds, will answer your
calls and letters.
------------------------------------------------------------
------------------------------------------------------------
For prospectuses, call 1-800-453-3305.
For questions about an existing account and to arrange
transactions,
CALL (toll-free) 1-800-225-5163
(in Boston, call 328-5000)
WRITE to: The Scudder Funds
c/o Boston Financial Data Services
P.O. Box 1912
Boston, MA 02105
Account representatives from the transfer agent for the
Scudder funds will answer your calls and letters.
------------------------------------------------------------
- --------------------------------------------------------------------------------
Local Telephone
Numbers and Addresses
of Scudder Fund
Distributors, Inc.
Boca Raton
150 East Palmetto Park Road
Boca Raton, Florida 33432
305-395-0040
Los Angeles
333 South Hope Street
Los Angeles, California 90071
213-628-1144
Boston
175 Federal Street
Boston, Massachusetts 02110
617-426-8300
New York
345 Park Avenue
New York, New York 10154
212-350-8370
Chicago
Suite 2200, 111 East Wacker Drive
Chicago, Illinois 60601
312-861-2700
Philadelphia
Three Mellon Bank Center
Philadelphia, Pennsylvania 19102
215-864-7200
Cincinnati
540 Carew Tower
Cincinnati, Ohio 45202
513-621-4200
Portland, Oregon
1211 S.W. Fifth Avenue
Portland, Oregon 97204
503-224-3999
Cleveland
Suite 700, 1801 East Ninth Street
Cleveland, Ohio 44114
216-241-7744
San Francisco
Suite 4100, 101 California Street
San Francisco, California 94111
415-981-8191
Houston
1530 Bank of the Southwest Building
Houston, Texas 77002
713-659-3838
7
<PAGE>
SCUDDER [LOGO]
- --------------
This booklet is not to be used in
connection with the offering of any of
the Scudder funds unless preceded or
accompanied by the appropriate current
prospectus. The prospectus will be sent
to you by the fund's underwriter,
Scudder Fund Distributor's, Inc.
14-6-84 (C) Scudder Fund Distributors, Inc.
THE
SCUDDER
FUNDS
Plan agreement, The Scudder
sample plan Employer-Select
documents 403(b) plan
SCUDDER
SCUDDER, STEVENS & CLARK INVESTMENT COUNSEL
<PAGE>
Contents
- --------------------------------------------------------------------------------
How employers establish
a Scudder Employer-
Select 403(b) program 3
- ------------------------------------
Explanation of employer
selections 4
- ------------------------------------
Worksheet for employer
to select plan options 7
- ------------------------------------
Sample employer
adoption agreement 10
- ------------------------------------
Sample employee
application 12
- ------------------------------------
Sample designation of
beneficiary form 13
- ------------------------------------
Sample salary reduction
agreement 14
- ------------------------------------
Plan agreement 15
- ------------------------------------
Telephone numbers and
addresses 23
- ------------------------------------
- ------------------------------------
The term "Scudder 403(b) Plan"
refers to the Scudder 403(b) Plan
and includes functions performed by:
o Scudder Fund Distributors,
Inc. which offers Scudder
403(b) Plans and acts as
principal underwriter for
each Scudder fund,
o State Street Bank and
Trust Company, as
custodian and transfer
agent of the Scudder funds
and as custodian of the
Scudder 403(b) Plans, and
o Boston Financial Data
Services, Inc. (an
affiliate of State Street
Bank), the service agent
responsible for
maintaining shareholder
account records for the
Scudder funds.
Scudder, Stevens & Clark acts
as investment adviser to the Scudder
funds.
- ------------------------------------
Introduction
- --------------------------------------------------------------------------------
The Scudder Funds booklet "Tax Deferred Annuity Plans (TDAs and TSAs) under
Section 403(b)(7)" describes the Scudder 403(b) program. This program consists
of eight Scudder no-load mutual funds, a processing and record keeping system
that segregates contributions by contribution type and by individual employee,
and either the Scudder Employee-Select or the Scudder Employer-Select 403(b)
plan.
The Employer-Select plan described in this booklet is a flexible plan that
allows employers to select among many options to tailor a plan in accordance
with their objectives and the needs of their employees. It is designed to
accept direct employer contributions as well as various types of employee
contributions and permits the employer to impose certain controls over the
investment and withdrawal of contributions.
This booklet explains how employers establish a Scudder Employer-Select
program. In addition to the plan itself, the booklet includes a worksheet
showing how employers select various plan options.
The booklet also contains samples of an employer adoption agreement, an
employee application form, a designation of beneficiary form, and an employee
salary reduction agreement.
2
<PAGE>
How employers establish
a Scudder Employer-
Select 403(b) program
- --------------------------------------------------------------------------------
Plan adoption The Scudder Employer-Select 403(b) plan
permits employers to select among various
options that determine many of the important
terms of their plan. The employer makes
these elections on a worksheet provided by a
Scudder Group Retirement Specialist, as
illustrated on pages 7-9. Scudder then
prepares an individually-designed adoption
agreement that reflects all selections made
and eliminates any reference to options not
selected. The plan becomes effective after
the employer and State Street Bank and Trust
Company, acting as custodian, sign the
adoption agreement.
- --------------------------------------------------------------------------------
Employee applications Based on the employer's selections,
Scudder prepares a package of individually
designed employee applications and
information. The employee applications
specify which Scudder fund or funds the
employees are permitted to select for
contributions and the allocation of
contributions among funds. Depending on how
the employer completes the worksheet,
employees may also be able to make other
selections such as normal retirement age. A
designation of beneficiary form can be
printed on the reverse side of the
application. Salary reduction agreements, if
desired by the employer, can also be
provided.
The Scudder information package also
includes prospectuses and information about
the investment characteristics of the funds
designated by the employer. This information
acquaints employees with the nature of mutual
funds and helps them select the fund or funds
most suited to their investment objectives.
Scudder can also provide copies of the plan
agreement and the completed adoption
agreement for distribution to participants if
the employer wishes.
- --------------------------------------------------------------------------------
Establishing the plan on the To establish a 403(b) plan on the
Scudder processing system Scudder processing system, the employer needs
only to provide certain background
information about the plan and payroll
processing details. Thereafter the employer
remits funds and information about how the
amount submitted should be allocated among
participants and how it is broken down by
contribution type, if more than one type of
contribution is involved. The booklet "The
Scudder Processing System" provides more
information.
- --------------------------------------------------------------------------------
Reporting and disclosure A 403(b) plan sponsored by an employer
is subject to the reporting and disclosure
requirements of ERISA. Scudder will provide
information to help comply with the reporting
requirements. In addition, Scudder will
prepare a sample summary plan description
tailored to the selections made by the
employer and suitable for distribution to
employees.
3
<PAGE>
Explanation of
employer selections
- --------------------------------------------------------------------------------
How to use the worksheet The plan agreement beginning on page 15
contains the provisions of the Scudder
Employer-Select 403(b) plan. Employers are
urged to review it to develop a full
understanding of the plan and of the various
selections available to them.
Employers first indicate the selections
which they wish to make on a worksheet
provided for the employer's convenience by a
Scudder Group Retirement Specialist. Later,
Scudder prepares an individually-designed
employer adoption agreement reflecting only
the selections made by the employer and
eliminating references to unselected options.
A copy of the worksheet begins on page 7.
The selections made by the employer include
the determination of which contribution types
in addition to direct employer contributions
the employer wishes to permit. Employer
selections also establish certain fundamental
procedures such as those involving changes of
investment, withdrawal of contributions by
employees, and distribution of benefits to
employees.
- --------------------------------------------------------------------------------
Normal retirement age The employer can determine whether
employees may select normal retirement age.
Section II This section gives employers the option
of selecting the normal retirement age for
all their employees. Alternatively,
employers may give individual employees the
right to select their own. The normal
retirement age is the age at which employees
usually begin to receive distributions from
their plans. It cannot be less than age
59 1/2.
- --------------------------------------------------------------------------------
Determination of Employers can elect to permit various
employer and employee types of contributions in a Scudder Employer-
contribution types Select 403(b) plan in addition to direct
employer contributions. (Direct employer
contributions are automatically permitted but
are not required). Optional contribution
types include employer contributions pursuant
to employee salary reduction agreements,
mandatory contributions, employer matching
thrift contributions, thrift contributions,
employee non-deductible voluntary
contributions, and employee deductible
voluntary contributions (often called
"QVECs"). Rollover and transfer
contributions are also permitted.
The Scudder processing system segregates
all contribution types in order to maintain
the identity of each and to permit different
investment selections, investment procedures,
and distribution and withdrawal provisions to
apply to some contribution types than apply
to others.
Section III This section determines whether
employees may make contributions to the plan
by means of a salary reduction agreement. If
the employer permits either mandatory
contributions or matching thrift
contributions, the employer must permit
salary reduction contributions.
4
<PAGE>
- --------------------------------------------------------------------------------
Section IV Employers have the option under this
section of requiring employees to make
"mandatory contributions", (defined as
employee contributions of up to 6% of
compensation) to be eligible to receive
employer contributions. The employer may
make contributions on behalf of those
employees who contribute the mandatory
contributions, although there is no
requirement for the employer to make such
contributions.
Section V This section permits employers to offer
matching thrift contributions in order to
encourage employees to make salary reduction
contributions. Employers must match any
employee contributions made under the terms
of the matching agreement. The amount of the
employer's matching contribution may vary
from employee to employee but must then be
based on a formula established and
implemented by the employer that applies to
all employees. Employees with 20 years of
service, for example, could be offered a
higher matching contribution than employees
with five years of service.
Section VI The Scudder Employer-Select 403(b) plan
allows employees to make non-deductible
voluntary contributions to their plan if
permitted by the employer. Although not
deductible, employee contributions accumulate
tax-free until withdrawn. Non-deductible
voluntary contributions (but not earnings
from these contributions) may be withdrawn
from the plan.
The plan also permits employees to make
deductible voluntary contributions ("QVECs")
to the plan which are normally in lieu of IRA
contributions. These contributions are fully
tax-deductible but subject to certain
limitations concerning maximum contribution
amounts and withdrawals.
- --------------------------------------------------------------------------------
Investment selection The Scudder Employer-Select plan permits
employers to limit the Scudder funds eligible
for new contributions and to limit the funds
available to employees who wish to change the
investment of already-contributed amounts.
The plan also permits the employer to set
different fund-selection limitations for
different contribution types.
Section VII This selection permits employers to
limit the number of Scudder funds available
for contributions. Some employers, for
example, might wish to limit the selection to
one money market fund, an income fund, and a
common stock fund investing in large
established companies.
- --------------------------------------------------------------------------------
Investment changes Under the plan, new contributions are
invested identically. If, for example, a
monthly plan contribution consists of a
direct employer contribution and a salary
reduction contribution, the contributions
would be invested in two contribution
accounts and the investment allocation within
each contribution account would be in the
same proportions. Changes in the allocation
among funds of new contributions in the
future apply to all contribution types until
instructions are issued to the contrary.
5
<PAGE>
Explanation of
employer selections, cont.
- --------------------------------------------------------------------------------
However, the plan permits investment
changes involving already-contributed amounts
to be made in different proportions among
contribution types if allowed by the
employer. The employer, for example, could
permit employees to arrange investment
changes in their salary reduction accounts
without restriction. These investment
changes could result in money being invested
in funds other than those permitted for new
contributions. Employers could also permit
employees to make investment changes in their
salary reduction accounts by telephone at any
time while requiring that investment changes
in their direct employer contribution
accounts be arranged in writing no more
frequently than quarterly.
Section VIII This section permits employers to
require investment changes to be made through
the plan administrator, and enables employers
to limit the frequency with which employees
make investment changes.
Under this section, if employees are
given the right to make investment changes
directly with the custodian, the employer
cannot limit the frequency of investment
changes.
- --------------------------------------------------------------------------------
Withdrawals and Employers may select various provisions
distributions affecting the timing and manner of
distributions.
Section IX This section permits employers to decide
whether employees who have not reached normal
retirement age will be allowed to make
withdrawals from the plan upon attainment of
age 59 1/2.
Section X This section permits employers to decide
whether employees will be able to receive
distributions from the plan for reasons of
financial hardship before distribution would
normally begin.
Section XI This section permits employers to decide
whether employees are automatically entitled
to distributions upon separation from
service, or whether distributions would be
subject to guidelines imposed by the
employer.
Section XII The employer may select whether the
employer or the employee is to determine the
method of distribution of benefits to
employees.
6
<PAGE>
Worksheet for Scudder 403(b) Plan,
Employer Adoption Agreement, and
Summary Plan Description
- --------------------------------------------------------------------------------
The undersigned Employer will be establishing a custodial account, under
Internal Revenue Code Section 403(b)(7), and will be adopting a Scudder 403(b)
Plan pursuant to the provisions of the Scudder 403(b) Agreement and the
provisions selected below by the Employer in this worksheet. This worksheet is
provided only for the convenience of the Employer and is not a part of any Plan
or any Scudder 403(b) Agreement, nor is any portion of this worksheet
incorporated by reference into any Scudder 403(b) Agreement.
This plan will be for the benefit of each employee of the employer who signs a
Scudder 403(b) Plan Employee Application which is accepted by the Custodian.
However, if the Employer specifies in a writing pertaining to eligibility that
only employees of a certain class or classes are eligible to participate in this
403(b) plan, then this plan will be for the benefit of only such employees who
sign a Scudder 403(b) Plan Employee Application which is accepted by the
Custodian.
I. NAME OF PLAN
The Name of the 403(b) Plan to be adopted shall be the
___________________________________ 403(b) Plan.
(insert name of Employer)
II. NORMAL RETIREMENT AGE
An Employee's Normal Retirement Age (which may not be less than
age 59 1/2) shall be:
Select One [] (1) age 65 unless another age is indicated by the Employer
and Complete here: _________________________________
if Applicable (may not be less than age 59 1/2)
and if
Desired [] (2) age 65 unless another age is indicated by the Employee
in the Scudder 403(b) Plan Employee Application.
III. EMPLOYER CONTRIBUTIONS BY SALARY REDUCTION AGREEMENT
[NOTE: If either Mandatory Contributions by Salary Reduction Agreement
under Section IV(2) or Employer Matching Thrift Contributions under Section
V(2) are selected, Section III(1) must be selected to permit Employer
Contributions by means of a Salary Reduction Agreement.]
Select One [] (1) Employer Contributions made in accordance with a Salary
Reduction Agreement, made between the Employer and
Employee, described in Article III, Part B of the Scudder
403(b) Agreement.
[] (2) Employer contributions by means of a Salary Reduction
Agreement made between the Employer and the Employee are
not permitted.
IV. MANDATORY CONTRIBUTIONS BY SALARY REDUCTION AGREEMENT
[NOTE: Section IV(2) should NOT be completed to require Mandatory
Contributions if Employer Matching Thrift Contributions have been selection
under Section V(2), or if Employer Contributions by means of a Salary
Reduction Agreement are not permitted under Section III(2).]
Select One and [] (1) Mandatory Contributions are not required.
Complete if
Necessary [] (2) In order to participate in any Employer Contributions
which the Employer may wish to (but need not) make, with
respect to a taxable year of the Employee, directly to
the Employee's Employer Contribution Account, the
Employee must agree with the Employer for Mandatory
Contributions to be made, in accordance with a Salary
Reduction Agreement between the Employer and the
Employee, to the Employee's Mandatory Contribution
Account, with the total of such Mandatory Contributions
for such taxable year of the Employee to be an amount
equal to __________% (insert not over 6%) of the
Employee's Compensation with respect to such taxable year
of the Employee.
7
<PAGE>
V. MATCHING THRIFT CONTRIBUTIONS
[NOTE: Section V(2) should NOT be completed to permit Employer Matching
Thrift Contributions if Mandatory Contributions have been selected under
Section IV(2), or if Employer Contributions by means of a Salary Reduction
Agreement are not permitted under Section III(2).]
Select Either [] (1) Matching Thrift Contributions are not permitted.
(1) or (2);
and, if (2) [] (2) For each taxable year of the Employee with respect to
is Selected, which the Employee has agreed with the Employer for Thrift
Complete it Contributions to be made, in accordance with a Salary
and, if Reduction Agreement between the Employer and the Employee,
Desired, to the Employee's Thrift Contribution Account in a total
Select (3) amount not exceeding __________% (insert not over 6%) of
the Employee's Compensation for such taxable year of the
Employee, the Employer will make Employee Matching Thrift
Contributions directly to the Employer Matching Thrift
Contribution Account in a total amount equal to _____% of
the total amount of the Employee's Thrift Contributions
for such taxable year of the Employee.
[] (3) The preceding sentence of this Section V to the
contrary notwithstanding, the total amount of the
Employer Matching Thrift Contributions for the Employee
for such taxable year of the Employee shall not exceed an
amount designated in writing by the Employer and
communicated to the Employee based on a written formula
established by the Employer and applied in a uniform and
nondiscriminatory manner with respect to all Employees, a
copy of which formula is to be attached to the Scudder
403(b) Plan Employer Adoption Agreement before it is
signed by the Employer and the Custodian.
VI. EMPLOYEE CONTRIBUTIONS
A. Employee Non-deductible Voluntary Contributions:
Select One [] (1) Employee Non-deductible Voluntary Contributions, subject
to the provisions of Article III, Part A(e) of the
Scudder 403(b) Agreement, are permitted.
[] (2) Employee Non-deductible Voluntary Contributions are not
permitted.
B. Employee Deductible Voluntary Contributions:
Select One [] (1) Employee Deductible Voluntary Contributions, subject to
the provisions of Article III, Part A(f) of the Scudder
403(b) Agreement, are permitted.
[] (2) Employee Deductible Voluntary Contributions are not
permitted.
VII. PERMITTED INVESTMENTS
Select as Scudder Fund
Many as [] Government Money Fund
are Desired [] Cash Investment Trust
[] Income Fund
[] Target Fund (multi Portfolios)
[] Capital Growth Fund
[] Common Stock Fund
[] Development Fund
[] International Fund
[] Such other Scudder Fund or Funds, if
any, as may be designated from time to
time by Scudder Fund Distributors,
Inc. (or its successor) as appropriate
for investment hereunder
8
<PAGE>
VIII. PROCEDURES FOR CHANGE OF INVESTMENTS BY EMPLOYEE OR BENEFICIARY
[NOTE: Section VIII(3), concerning telephone exchange instructions, may be
selected ONLY if Section VIII(2) has been selected to permit Account
investment changes by directions given directly to the Custodian.]
Select Either [] (1) An Employee or the Employee's designated beneficiary or
(1) or (2); beneficiaries may change the investment medium of an
and, if (2) Account by directions given to the Plan Administrator in
is Selected such fashion and at such times as provided in Article IV,
and, if Part F of the Scudder 403(b) Agreement.
Desired,
Select (3) [] (2) An Employee or the Employee's designated beneficiary or
beneficiaries may change the investment medium of an
Account by directions given to the Custodian in such
fashion and at such times as provided in Article IV, Part
F of the Scudder 403(b) Agreement.
[] (3) The preceding sentence of this Section VIII to the
contrary notwithstanding, an Employee or the Employee's
designated beneficiary or beneficiaries is permitted to
change the investment medium of an Account, by
exchanging, by telephone, telegram or TWX instructions
given directly to the Custodian, shares in one Scudder
fund for shares of another Scudder fund for which
telephone exchange is available, unless the Employee
elects otherwise in Item 3C of the Scudder 403(b) Plan
Employee Application.
IX. WITHDRAWALS BY AN EMPLOYEE WHO HAS ATTAINED AGE 59 1/2
Withdrawals from an Account by an Employee who has attained age
59 1/2, subject to the provisions of Article VII, Part C(a) of
the Scudder 403(b) Agreement:
Select One [] (1) are permitted, except that such withdrawals are permitted
and Complete only if the Employee has attained another age if another
if Applicable age is indicated here: _________________________________
and if Desired (may not be less than age 59 1/2)
[] (2) are not permitted.
X. WITHDRAWALS BY AN EMPLOYEE IN CASE OF FINANCIAL HARDSHIP
Withdrawals from an Account by an Employee who encountered
financial hardship, subject to the provisions of Article VII,
Part C(b) of the Scudder 403(b) Agreement:
Select One [] (1) are permitted.
[] (2) are not permitted.
XI. DISTRIBUTION TO AN EMPLOYEE UPON SEPARATION FROM SERVICE
Distribution from an Account to an Employee, subject to the
provisions of Article IX, Part A(b) of the Scudder 403(b)
Agreement:
Select One [] (1) shall be made or shall commence upon the Employee's
separation from the service of the Employer if so
determined by the Employer in a uniform and
nondiscriminatory manner with respect to all Employees.
[] (2) shall be made or shall commence upon the Employee's
separation from the service of the Employer, if the
Employee so elects.
XII. DETERMINATION OF METHOD OF DISTRIBUTION OF BENEFITS TO AN EMPLOYEE
The method of distribution of benefits to an Employee from an
Account, subject to the provisions of Article IX, Part C of the
Scudder 403(b) Agreement:
Select One [] (1) shall be determined by the Employer.
[] (2) shall be determined by the Employee.
- ------------------------------------- -------------------------------------
Signature of Employer Printed name of Employer
- ------------------------------------- -------------------------------------
Date Date
9
<PAGE>
Sample employer
adoption agreement
- --------------------------------------------------------------------------------
The adoption agreement appearing below reflects one possible combination of
worksheet selections which an employer might choose.
- --------------------------------------------------------------------------------
Employer Adoption Agreement
The undersigned Employer by completing this Employer Adoption Agreement and the
undersigned Custodian hereby establish a custodial account, under section
403(b)(7) of the Internal Revenue Code of 1954, as amended (the "Code"), as
follows. (For definition of terms, see Article 1 of the Scudder 403(b)
Agreement.)
I. NAME OF PLAN
The Name of the 403(b) Plan hereby adopted shall be The Sample Organization
403(b) Plan.
II. NORMAL RETIREMENT AGE
An Employee's Normal Retirement Age shall be 65.
III. EMPLOYER CONTRIBUTIONS BY SALARY REDUCTION AGREEMENT
Employer Contributions may be made in accordance with a Salary Reduction
Agreement, made between the Employer and Employee, described in Article
III, Part B of the Scudder 403(b) Agreement.
IV. MANDATORY CONTRIBUTIONS BY SALARY REDUCTION AGREEMENT
Mandatory Contributions are not required.
V. MATCHING THRIFT CONTRIBUTIONS
For each taxable year of the Employee with respect to which the Employee
has agreed with the Employer for Thrift Contributions to be made, in
accordance with a Salary Reduction Agreement between the Employer and the
Employee, to the Employee's Thrift Contribution Account in a total amount
not exceeding 6% of the Employee's Compensation for such taxable year of
the Employee, the Employer will make Employer Matching Thrift Contributions
directly to the Employee's Employer Matching Thrift Contribution Account in
a total amount to equal 50% of the total amount of the Employee's Thrift
Contributions for such taxable year of the Employee.
VI. EMPLOYEE CONTRIBUTIONS
A. Employee Non-deductible Voluntary Contributions:
Employee Non-deductible Voluntary Contributions, subject to the
provisions of Article III, Part A(e) of the Scudder 403(b) Agreement,
are permitted.
B. Employee Deductible Voluntary Contributions:
Employee Deductible Voluntary Contributions, subject to the provisions
of Article III, Part A(f) of the Scudder 403(b) Agreement, are
permitted.
VII. PERMITTED INVESTMENTS
Initial and subsequent contributions to an account, subject to the
provisions of Article IV of the Scudder 403(b) Agreement, are permitted in
stock of the following Regulated Investment Companies:
Scudder Fund
Government Money Fund
Income Fund
Capital Growth Fund
Common Stock Fund
VIII. PROCEDURES FOR CHANGE OF INVESTMENTS BY EMPLOYEE OR BENEFICIARY
An Employee or the Employee's designated beneficiary or beneficiaries may
change the investment medium of an Account by directions given to the Plan
Administrator in such fashion and at such times as provided in Article IV,
Part F of the Scudder 403(b) Agreement.
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
IX. WITHDRAWALS BY AN EMPLOYEE WHO HAS ATTAINED AGE 59 1/2
Withdrawals from an Account by an Employee who has attained age 50 1/2,
subject to the provisions of Article VII, Part C(a) of the Scudder 403(b)
Agreement are not permitted.
X. WITHDRAWALS BY AN EMPLOYEE IN CASE OF FINANCIAL HARDSHIP
Withdrawals from an Account by an Employee who has encountered financial
hardship, subject to the provisions of Article VII, Part C(b) of the
Scudder 403(b) Agreement are permitted.
XI. DISTRIBUTION TO AN EMPLOYEE UPON SEPARATION FROM SERVICE
Distribution from an Account to an Employee, subject to the provisions of
Article IX, Part A(b) of the Scudder 403(b) Agreement shall be made or
shall commence upon the Employee's separation from the service of the
Employer if so determined by the Employer in a uniform and
nondiscriminatory manner with respect to all Employees.
XII. DETERMINATION OF METHOD OF DISTRIBUTION OF BENEFITS
The method of distribution of benefits to an Employee from an Account,
subject to the provisions of Article IX, Part C of the Scudder 403(b)
Agreement shall be determined by the Employer.
XIII. ADOPTION OF AGREEMENT BY EMPLOYER AND CUSTODIAN
By this Employer Adoption Agreement, the Employer, duly qualified as an
organization described in section 403(b)(1)(A) of the Code, hereby agrees
with the Custodian, duly qualified as a bank described in Section 401(d)(1)
of the Code, to open a separate Custodial Investment Account (the
"Account"), for the benefit of each Employee of the Employer who signs a
Scudder 403(b) Plan Employee Application which is accepted by the
Custodian, pursuant to the Scudder 403(b) Agreement (the "Agreement")
hereby adopted by the Employer and the Custodian, and the Employer and the
Custodian further agree to the provisions contained in this Employer
Adoption Agreement.
STATE STREET BANK AND TRUST COMPANY
- ------------------------------------- By -------------------------------------
Signature of Employer Custodian
Sample Organization
- ------------------------------------- By -------------------------------------
Employer Date
Anytown, USA IMPORTANT: The Scudder 403(b) Agreement,
- ------------------------------------- including this Employer Adoption
Address of Employer Agreement, becomes effective upon the
date this Employer Adoption Agreement is
signed by the Employer and the
Custodian.
- --------------------------------------------------------------------------------
11
<PAGE>
Sample
Employee Application
- --------------------------------------------------------------------------------
The employee application appearing below reflects the selections set forth
in the sample adoption agreement on pages 10-11.
- --------------------------------------------------------------------------------
Employee Application
Return this form to:
Employee Benefits Dept.
1. NAME AND ADDRESS OF EMPLOYEE
Name ______________________________________________________________________
Address ___________________________________________________________________
City ___________________ State _______ Zip _______ Date of Birth __________
Social Security Number __________ Employee Identification Number __________
2. NAME AND ADDRESS OF EMPLOYER
Name ______________________________________________________________________
Address ___________________________________________________________________
City ____________________________ State _______________ Zip _______________
Employer Group Number ______________ Tax Identification Number ____________
3. INVESTMENT INSTRUCTIONS BY EMPLOYEE
A.Initial contribution to come B.Fund selection for initial
from (check one): contribution listed in
[] Employer check for Item 3A and for subsequent
$____________________ contributions (make your
or Fund selection below,
[] transfer or rollover choosing only among the
check from existing Funds which are permitted
plan for investment under
for $________________ Section VII of the Scudder
403(b) Plan Employer
Adoption Agreement)
Amount
$ %
Scudder Fund ---------- ---------
[] Government Money Fund __________ or _________
[] Income Fund __________ or _________
[] Capital Growth Fund __________ or _________
[] Common Stock Fund __________ or _________
Total 100%
---------- ---------
(amount
from 3A)
4. DESIGNATION OF BENEFICIARY BY EMPLOYEE (see form on reverse side of this
page)
[] If this box is checked, I have completed the Designation of
Beneficiary form on the reverse side.
5. ADOPTION OF AGREEMENT BY EMPLOYEE
By this Employee Application, I hereby agree to the establishment of a
separate Custodial Investment Account (the "Account") for my benefit,
pursuant to the Scudder 403(b) Agreement (the "Agreement") adopted by my
Employer and by State Street Bank and Trust Company as Custodian and hereby
adopted by me, and I hereby agree to the terms and conditions of that
Agreement and the completed Employer Adoption Agreement therefor, and to
the provisions contained above in this Employee Application. I also
acknowledge receipt of the prospectus for each Fund selected by me.
---------------------------------- ----------------------------------
Date Signature of Employee
IMPORTANT: Once acknowledgment of the receipt of this Employee Application
has been mailed by the Custodian to the Employee, this Employee Application
shall be deemed accepted by the Custodian, and, therefore, effective, as of
the date this Employee Application was signed by the Employee.
- --------------------------------------------------------------------------------
12
<PAGE>
Sample designation
of beneficiary form
- --------------------------------------------------------------------------------
The designation of beneficiary form appearing below reflects the worksheet
selections made by a sample employer. Normally this form would be printed on
the reverse side of the employee application form.
- --------------------------------------------------------------------------------
Designation of Beneficiary Form
IMPORTANT INFORMATION
Before executing this Designation form you may wish to consult an attorney
or tax advisor to determine whether use of the form, or another written
instrument acceptable to the Custodian, will accomplish your goals. Please also
review the applicable provisions of the Agreement. This form may be used as a
Designation form. It is effective if filed with the Custodian, State Street
Bank and Trust Company, during your lifetime.
This Designation form is for your use, if desired, in naming the
Beneficiary or Beneficiaries who are to receive the amounts in your Account at
your death; also, if desired, in electing the method of distribution of such
amounts; and, also, if desired, in permitting your designated Beneficiary or
Beneficiaries to change the method of distribution to such Beneficiary or
Beneficiaries. The Agreement (in Article IX, Part D) contains provisions which
govern as to death benefits if no surviving Beneficiary is designated by you, or
if no method of distribution is elected by you, in a valid Designation form.
You should, if desired, complete, date and sign this Designation form and
forward it to State Street Bank and Trust Company, P.O. Box 1912, Boston, MA
02105. We suggest you retain a copy for your records and review it
periodically. Additional copies can be obtained from any office of Scudder Fund
Distributors, Inc.
- --------------------------------------------------------------------------------
Designation of Beneficiary and Election of Method of Distribution
(under Article II, Part C, and Article IX, Part D, of Agreement).
Print Name of Employee: ________________________________________________________
Print Name of Employer: ________________________________________________________
Upon my death, the following person or persons shall receive the undistributed
amount in my Account under Article IX, Part D, of the Agreement. If a
Beneficiary or Beneficiaries fail to survive me, their interests shall lapse and
the surviving Beneficiaries shall take such interest proportionately. If more
than one named Beneficiary shall survive me, such Beneficiaries shall receive
equal portions unless otherwise indicated by me below. All previous Designation
forms of any kind of mine are hereby revoked. I reserve the right to change
this Designation form by executing a new Designation form or other written
instrument acceptable to the Custodian and filing it with the Custodian during
my lifetime.
Beneficiary: __________________________ Social Security Number _________________
(%)
Beneficiary: __________________________ Social Security Number _________________
(%)
Address of each Beneficiary specifically named above:
________________________________________________________________________________
The undistributed amount in my Account under Article IX, Part D of the Agreement
shall be paid to the appropriate Beneficiary or Beneficiaries in one of the
following methods (if desired, check and, where applicable, complete one -- the
selected method of distribution must be acceptable to the Custodian):
[] 1. _____ monthly installments consisting of the dollar value of
the Account divided by the remaining number of monthly
installments.
[] 2. _____ annual installments consisting of the dollar value of
the Account divided by the remaining number of annual
installments.
[] 3. A single lump sum.
Any undistributed balance in the Account which becomes payable to an estate of a
deceased Beneficiary shall be paid, as soon as practical, in a lump sum to such
estate, unless a valid direction as to a method of distribution to such estate
is made in accordance with Article IX, Part D, and Article II, Part C, of the
Agreement.
Option Right Of Beneficiary To Change Method Of Distribution
[] Check if this option is desired.
I agree that my designated Beneficiary or Beneficiaries surviving me may direct
the Custodian in writing (by unanimous agreement if there is more than one
Beneficiary) to change the method of distribution to such Beneficiary or
Beneficiaries (that is, the method either selected in my Designation or provided
for in Article IX, Part D, of the Agreement, as the case may be), but only
within sixty (60) days after the day on which such Beneficiary or Beneficiaries
first became entitled to any distribution from the Account and only if such
change is acceptable to the Custodian.
Date: _______________________ Signature of Employee: _______________________
- --------------------------------------------------------------------------------
13
<PAGE>
Sample salary
reduction agreement
- --------------------------------------------------------------------------------
This sample salary reduction agreement may be used with the Scudder
Employer-Select 403(b) plan. It contains language suitable for each eligible
contribution type. An Employer may reproduce the agreement using the portions
relevant to the options selected on the worksheet or may substitute its own
salary reduction agreement which is consistent with the plan.
- --------------------------------------------------------------------------------
Salary Reduction Agreement Return this form to:
Employee Benefits Dept.
Check one:
() This is an original Salary Reduction Agreement
() This is a subsequent Salary Reduction Agreement.
By this Salary Reduction Agreement, made between
_____________________________ and ___________________________, the Employer
(insert name of Employer) (insert name of Employee)
and the Employee hereby make the following agreement as to the adjustment of the
Employee's Compensation.
1. As of the ______________________________________ payroll period ending
(weekly, monthly, semi-monthly, etc.)
on _________________________________________________ the Employee's Compensation
(date)
(the first day of this period must be after the effective date of this Salary
Reduction Agreement)
shall be reduced by the Employer for each such payroll period by the amount(s)
or by the percentage(s) selected below in subparagraphs (a) or (b) and (c), or
by the amount or by the percentage selected below in subparagraph (d), as the
case may be (if more than one selection is made, all selections must be made in
the same manner, that is, either by selecting an amount or by selecting a
percentage; if neither Mandatory nor Thrift Contributions are selected below in
subparagraph (a) or subparagraph (b), then only subparagraph (d) may be
completed):
(a) Mandatory Contributions (Complete only if (1) Mandatory Contributions
are provided for under Section IV of the Scudder 403(b) Plan Employer
Adoption Agreement ["the Adoption Agreement"], (2) Mandatory
Contributions are desired by the Employee, and (3) Thrift
Contributions are not selected below in subparagraph (b).)
The Employee's Compensation shall be reduced by the Employer for each
such payroll period by $____________ or by ____________%, and the
amount of each such reduction shall be treated, under the Scudder
403(b) Agreement adopted by the Employer, the Custodian, and the
Employee (the "Scudder 403(b) Agreement"), as a Mandatory Contribution
made to the Employee's Mandatory Contribution Account.
(b) Thrift Contributions (Complete only if (1) Thrift Contributions are
permitted under Section V of the Adoption Agreement, (2) Thrift
Contributions are desired by the Employee, and (3) Mandatory
Contributions are not selection above in subparagraph (a).)
The Employee's Compensation shall be reduced by the Employer for each
such payroll period by $____________ or by ____________%, and the
amount of each such reduction shall be treated under the Scudder
403(b) Agreement as a Thrift Contribution made to the Employee's
Thrift Contribution Account.
(c) Contributions in Addition to Mandatory or Thrift Contributions
(Complete only if (1) either Mandatory Contributions or Thrift
Contributions are selected above, in either subparagraph (a) or
subparagraph (b), and (2) additional Contributions are desired by the
Employee.)
In addition to the reduction of Compensation provided for above under
either subparagraph (a) or subparagraph (b), the Employee's
Compensation shall be reduced by the Employer for each such payroll
period by $____________ or by ____________%, and the amount of each
such reduction shall be treated under the Scudder 403(b) Agreement as
a Contribution made to the Employee's Employer Contribution Account.
(d) Other Contributions (Complete only if (1) neither Mandatory
Contributions nor Thrift Contributions are selected above in either
subparagraph (a) or subparagraph (b) and (2) Contributions by means of
a Salary Reduction Agreement are desired by the Employee.)
The Employee's Compensation shall be reduced by the Employer for each
such payroll period by $____________ or by ____________%, and the
amount of each such reduction shall be treated under the Scudder
403(b) Agreement as a Contribution made by means of a Salary Reduction
Agreement to the Employee's Employer Contribution Account.
2. The amount(s) of such reduction(s) shall be transmitted by the
Employer to State Street Bank and Trust Company as Custodian under the Scudder
403(b) Agreement to be held in a separate Custodial Investment Account for the
benefit of the Employee pursuant to the terms and conditions of the Scudder
403(b) Agreement.
3. This Salary Reduction Agreement shall be irrevocable as to both the
Employer and the Employee except that either of them may terminate this Salary
Reduction Agreement as of the end of any pay period so that it will not apply to
Compensation subsequently earned. Subject to the preceding sentence, the
Employee may change tis agreement as to the adjustment of the Employee's
Compensation by the execution of a subsequent written Salary Reduction Agreement
between the Employer and the Employee, but such change may be made no more than
once in each taxable year of the Employee.
4. If Section V of the Employer Adoption Agreement provides for a written
formula to be used with respect to Employer Matching Thrift Contributions, the
Employee acknowledges having received and read a copy of that formula.
5. The Employee is responsible for determining that the total amount of
the salary reduction or reductions in Paragraph I above does not exceed the
Employee's "exclusion allowance" as defined in section 403(b)(2) of the Internal
Revenue Code of 1954, as amended (the "Code"), and for determining the
applicable limitation(s) on Contributions under section 415 of the Code, all as
provided in Article III, Part C of the Scudder 403(b) Agreement.
___________________________________ ___________________________________
Signature of Employer Signature of Employee
___________________________________ IMPORTANT: This Salary Reduction
Date Agreement becomes effective upon the
date it is signed by the Employer and
the Employee. Such signature date must
be a date which is on or after the date
upon which the Employee signs the
Scudder 403(b) Plan Employee
Application.
- --------------------------------------------------------------------------------
14
<PAGE>
Scudder 403(b) Agreement
- --------------------------------------------------------------------------------
INTRODUCTION
This Scudder 403(b) Agreement (the "Agreement") is entered into by and
among (i) each employer who executes a Scudder 403(b) Plan Employer Adoption
Agreement (the "Employer") and thereby certifies that the Employer is duly
qualified as an organization described in section 403(b)(1)(A) of the Internal
Revenue Code of 1954, as amended (the "Code"), (ii) the Custodian which executes
a Scudder 403(b) Plan Employer Adoption Agreement and thereby certifies that it
is duly qualified as a bank described in section 401(d)(1) of the Code (the
"Custodian"), and (iii) each employee who is eligible to participate in this
Agreement and who executes a Scudder 403(b) Plan Employee Application which is
accepted by the Custodian (the "Employee") and thereby certifies that the
Employee is an employee of the Employer. Any person employed by the Employer is
eligible to participate in this Agreement unless the Employer specifies in a
writing pertaining to eligibility, a copy of which writing is attached to the
Scudder 403(b) Plan Employer Adoption Agreement prior to execution thereof by
the Employer and the Custodian, that only Employees of a certain class or
classes are eligible to participate in this Agreement, in which event only such
Employees shall be eligible to participate in this Agreement. This Agreement,
including the Scudder 403(b) Plan Employer Adoption Agreement, becomes effective
upon the date such Employer Adoption Agreement is properly executed by the
Employer and the Custodian. Once acknowledgment of the receipt of the Scudder
403(b) Plan Employee Application has been mailed by the Custodian to the
Employee, such Employee Application shall be deemed accepted by the Custodian,
and, therefore, effective, as of the date such Employee Application was executed
by the Employee.
ARTICLE I. DEFINITIONS
A. Act means the Employee Retirement Income Security Act of 1974, as
amended.
B. Administrator or Plan Administrator means the person or persons
appointed under Article X, Part A.
C. Agreement or Scudder 403(b) Agreements means this document,
incorporating by reference the Scudder 403(b) Plan Employer Adoption Agreement,
the Scudder 403(b) Plan Employee Application, the Designation of Beneficiary,
the Salary Reduction Agreement, if Section V of the Employer Adoption Agreement
provides for a written formula to be used with respect to Employer Matching
Thrift Contributions any such written formula which is attached to the Employer
Adoption Agreement as required by said Section V thereof, and, if a writing
pertaining to eligibility is attached to the Employer Adoption Agreement under
the provisions of Section XIII thereof, any such writing pertaining to
eligibility.
D. Code means the Internal Revenue Code of 1954, as amended. Reference
to a section of the Code shall include any comparable section or sections of
future legislation amending, supplementing, or superseding such section.
E. Compensation means, unless provided otherwise in a separate written
agreement between the Employer and the Employee, the total amount for services
received by the Employee from the Employer for the taxable year or portion
thereof involved which is includible in the gross income of the Employee,
including, without limitation, basic salary or wages, bonuses, commissions, and
overtime payments, without regard to any adjustment in compensation provided for
under the Agreement.
F. Contribution means the amount to be transmitted to the Custodian for
addition to the Employee's Custodial Investment Account.
G. Custodial Investment Account or Account means the cash and securities
held by the Custodian for the benefit of an Employee pursuant to this Agreement,
which shall be the sum of the Employee's Employer Contribution Account, Employer
Matching Thrift Contribution Account, Thrift Contribution Account, Mandatory
Contribution Account, Employee Non-deductible Voluntary Contribution Account,
Employee Deductible Voluntary Contribution Account, and Rollover Contribution
Account.
H. Custodian means the bank or any successor thereto, set forth in the
Scudder 403(b) Employer Adoption Agreement.
I. Designation of Beneficiary or Designation means the document executed
by the Employee pursuant to Article II, Part C.
J. Employee means each person employed by the Employer who is eligible to
participate in this Agreement and who has properly executed an Employee
Application.
K. Employee Application or Scudder 403(b) Plan Employee Application means
the document executed by the Employee pursuant to Article II, Part A.
L. Employee Non-deductible Voluntary Contributions means the
Contributions made to the Custodial Investment Account by the Employee in
accordance with Article III, Part A(e). These after-tax Contributions are
intended not to be "qualified voluntary employee contributions" within the
meaning of Code Section 219(e)(2).
M. Employee Non-deductible Voluntary Contribution Account means the
separate account maintained pursuant to Article II, Part B for Employee Non-
deductible Voluntary Contributions made by the Employee and the income,
expenses, gains, and losses attributable thereto.
N. Employee Deductible Voluntary Contributions means the Contributions
made to the Custodial Investment Account by the Employee in accordance with
Article III, Part A(f). Such Contributions are intended to be "qualified
voluntary employee contributions" within the meaning of Code Section 219(e)(2).
O. Employee Deductible Voluntary Contribution Account means the separate
Account maintained pursuant to Article II. Part B for Employee Deductible
Voluntary Contributions made by the Employee and the income, expenses, gains,
and losses attributable thereto.
P. Employer means the organization, state, political subdivision of a
state, or agency or instrumentality of such state or political subdivision named
in the Employer Adoption Agreement.
Q. Employer Adoption Agreement or Scudder 403(b) Plan Employer Adoption
Agreement means the agreement executed by the Employer and the Custodian
providing for the establishment of the Custodial Investment Account in
accordance with the terms and conditions of this Agreement.
R. Employer Contributions means the Contributions made to the Custodial
Investment Account in accordance with Article III, Part A(a).
S. Employer Contribution Account means the separate Account maintained
pursuant to Article II, Part B for Employer Contributions made and the income,
expenses, gains, and losses attributable thereto.
T. Employer Matching Thrift Contributions means the Contributions made to
the Custodial Investment Account by the Employer in accordance with Article III,
Part A(b).
U. Employer Matching Thrift Contribution Account means the separate
Account maintained pursuant to Article II, Part B for Employer Matching Thrift
Contributions made by the Employer and the income, expenses, gains, and losses
attributable thereto.
V. Mandatory Contributions means the Contributions made to the Custodial
Investment Account by the Employer in accordance with Article III, Part A(d).
W. Mandatory Contribution Account means the separate Account maintained
pursuant to Article II, Part B for Mandatory Contributions made and the income,
expenses, gains, and losses attributable thereto.
X. Normal Retirement Age means age 65 unless another age is properly
indicated by the Employer in Section II of the Employer Adoption Agreement, or,
if the Employee is permitted by the Employer by Section II of the Employer
Adoption Agreement to indicate another age, unless another age is properly
indicated by the Employee in the Employee Application. In any event, Normal
Retirement Age cannot be less than 59 1/2.
Y. Plan means the Agreement, the Employer Adoption Agreement, the
Employee Application, the Designation of Beneficiary, the Salary Reduction
Agreement, if Section V of the Employer Adoption Agreement provides for a
written formula to be used with respect to Employer Match Thrift Contributions,
any such written formula which is attached to the Employer Adoption Agreement as
required by said Section V thereof, and, if a writing pertaining to eligibility
is attached to the Employer Adoption Agreement under the provisions of Section
XIII thereof, any such writing pertaining to eligibility.
Z. Regulated Investment Company or Company means a domestic corporation
which is a regulated investment company within the meaning of Section 851(a) of
the Code and which issues only redeemable stock for which Scudder, Stevens &
Clark (or its successor) is acting as the investment adviser and which has been
designated by Scudder Fund Distributors, Inc. (or its successor) as appropriate
for investment hereunder.
AA. Rollover Contributions means the Contributions made to the Custodial
Investment Account by the Employee in accordance with Article III, Part D(b).
BB. Rollover Contribution Account means the separate Account maintained
pursuant to Article II, Part B for Rollover Contributions made by the Employee
and the income, expenses, gains, and losses attributable thereto.
CC. Salary Reduction Agreement or Scudder 403(b) Plan Salary Reduction
Agreement means the document executed by the Employer and the Employee and
referred to in Article III, Part B.
DD. Thrift Contributions means the Contributions made to the Custodial
Investment Account in accordance with Article III, Part A(c).
15
<PAGE>
- --------------------------------------------------------------------------------
EE. Thrift Contribution Account means the separate Account maintained
pursuant to Article II, Part B for Thrift Contributions made and the income,
expenses, gains, and losses attributable thereto.
ARTICLE II. ESTABLISHMENT OF CUSTODIAL INVESTMENT ACCOUNTS
A. Request for participation. Each Employee who is eligible to
participate in this Agreement and properly executes an Employee Application
which is accepted by the Custodian thereby becomes a party to this Agreement
with the right to enforce its terms against any other party. Such executed
Employee Application is hereby specifically incorporated herein by reference.
An Employee Application is properly executed when completed and signed by the
Employee. The Custodian may rely on the validity of the signature thereon, on
the existence of the employment relation thereby affirmed, and on the
irrevocable subscription to the provisions of this Agreement therein contained.
B. Opening and administration of Account. The Custodian shall open a
separate Custodial Investment Account (the "Account") for the benefit of each
Employee whose Employee Application has been accepted by the Custodian. The
Account shall be maintained pursuant to the terms of this Agreement, including
the documents incorporated herein by reference. For each Employee, the
Custodian shall maintain a separate Account for each of the following types of
Contributions and the income, expenses, gains, and losses attributable thereto:
(a) Employer Contributions, involving, without limitation, the
following: (1) those types of Employer Contributions made in accordance with a
separate Salary Reduction Agreement made between the Employer and the Employee,
including, without limitation, Contributions exceeding the amount of Mandatory
Contributions made, or exceeding the amount of Thrift Contributions made, and
which are neither Employee Non-deductible Voluntary Contributions nor Employee
Deductible Voluntary Contributions; and (2) those types of Employer
Contributions made by the Employer directly to the Employee's Account,
including, without limitation, Employer Contributions made for Employees who
have made Mandatory Contributions, Employer Contributions made in addition to
Employer Matching Thrift Contributions, and Employer Contributions made in
addition to any made in accordance with a Salary Reduction Agreement. The
various types of Employer Contributions may be accounted for in separate sub-
accounts by the Custodian;
(b) Employer Matching Thrift Contributions, if such Contributions are
required by Section V of the Employer Adoption Agreement;
(c) Thrift Contributions, if such Contributions are permitted by
Section V of the Employer Adoption Agreement;
(d) Mandatory Contributions, if such Contributions are provided for
by Section IV of the Employer Adoption Agreement;
(e) Employee Non-deductible Voluntary Contributions, if such
Contributions are permitted by Section VI-A of the Employer Adoption Agreement;
(f) Employee Deductible Voluntary Contributions, if such
Contributions are permitted by Section VI-B of the Employer Adoption Agreement;
and
(g) Rollover Contributions, if the Custodian accepts such
Contributions pursuant to Article III, Part D(b).
Each Contribution shall be accompanied or preceded by clear
instructions specifying the Account to which it is to be credited. If such
clear instructions are not received by the Custodian, the Custodian may hold
such Contributions in a separate suspense account until it receives the proper
clear instructions. Such suspense account may be invested or left uninvested by
the Custodian as it deems fit.
C. Employee's Designation of Beneficiary. Each Employee may submit to
the Custodian a properly executed Employee's Designation of Beneficiary form or
other written instrument acceptable to the Custodian for use in connection with
this Agreement (which is referred to hereinafter interchangeably as a
"Designation") which shall not become effective until it is filed with the
Custodian during the lifetime of the Employee. The last effective Designation
accepted by the Custodian shall be controlling, and whether or not fully
dispositive of the Account, thereupon shall revoke all other such Designations
previously filed by the Employee. Each such executed Designation is hereby
specifically incorporated herein by reference and shall be construed, enforced
and administered according to the laws of the state in which the home office of
the Custodian is located.
ARTICLE III. CONTRIBUTIONS
A. Types of Contributions
(a) Employer Contributions. The Employer may make Employer
Contributions in cash to be held by the Custodian in a separate Employer
Contribution Account for the benefit of the Employee.
Such Employer Contributions may be made by the Employer to the
Employer Contribution Account in accordance with a separate Salary Reduction
Agreement made between the Employer and the Employee, if Employer Contributions
by means of a Salary Reduction Agreement are permitted by Section III of the
Employer Adoption Agreement. Such Employer Contributions made by means of a
Salary Reduction Agreement may include, without limitation, contributions which
exceed the amount of Mandatory Contributions made (if Mandatory Contributions
are provided for by Section IV of the Employer Adoption Agreement), or which
exceed the amount of the Thrift Contributions made (if Thrift Contributions are
permitted by Section V of the Employer Adoption Agreement) and which are neither
Employee Non-deductible Voluntary Contributions nor Employee Deductible
Voluntary Contributions.
Such Employer Contributions may also be made by the Employer directly
to the Employer Contribution Account and they may include, without limitation,
the following: Employer Contributions made for Employees who have made Mandatory
Contributions (if Mandatory Contributions are provided for by Section IV of the
Employer Adoption Agreement); Employer Contributions made in addition to
Employer Matching Thrift Contributions (if Employer Matching Thrift
Contributions are permitted by Section V of the Employer Adoption Agreement);
and Employer Contributions made in addition to any Contributions made in
accordance with a Salary Reduction Agreement made between the Employer and the
Employee.
(b) Employer Matching Thrift Contributions. If Employer Matching
Thrift Contributions are required by Section V of the Employer Adoption
Agreement, the Employer shall make to the Employee's Account the Employer
Matching Thrift Contributions required by that Section, including, without
limitation, if Section V of the Employer Adoption Agreement provides for a
written formula to be used with respect to Employer matching Thrift
Contributions, such Matching Thrift Contributions made in accordance with such
written formula. All Employer Matching Thrift Contributions shall be maintained
in the Employee's Employer Matching Thrift Contribution Account pursuant to
Article II, Part B.
(c) Thrift Contributions. If Thrift Contributions are permitted by
Section V of the Employer Adoption Agreement, they may be made to the Employee's
Account. All Thrift Contributions shall be maintained in the Employee's Thrift
Contribution Account pursuant to Article II, Part B.
(d) Mandatory Contributions. If Mandatory Contributions are provided
for by Section IV of the Employer Adoption Agreement, they may be made to the
Employee's Account. All Mandatory Contributions shall be maintained in the
Employee's Mandatory Contribution Account pursuant to Article II, Part B.
(e) Employee Non-deductible Voluntary Contributions. If Employee Non-
deductible Voluntary Contributions are permitted by Section VI-A of the Employer
Adoption Agreement, an Employee may make Employee Non-deductible Voluntary
Contributions to the Employee's Account; provided, however, that the aggregate
amount of such Employee Non-deductible Voluntary Contributions, plus any Non-
deductible Voluntary Contributions made by the Employee under any other plan
maintained by the Employer and intended to meet the requirements of Code section
401, shall not exceed ten percent (10%) of the Employee's total Compensation for
the period in which the Employee has been a party to this Agreement and,
therefore, a covered participant in this Plan. An Employee's Employee Non-
deductible Voluntary Contributions shall be maintained in the Employee's
Employee Non-deductible Voluntary Contribution Account pursuant to Article II,
Part B. An Employee may withdraw all or a portion of the Employee's Employee
Non-deductible Voluntary Contribution Account (but not including any earnings
thereon) upon at least thirty (30) days' written notice to the Custodian.
(f) Employee Deductible Voluntary Contributions. If Employee
Deductible Voluntary Contributions are permitted by Section VI-B of the Employer
Adoption Agreement, an Employee may make Employee Deductible Voluntary
Contributions to the Employee's Account; provided, however that with respect to
each taxable year of the Employee, the aggregate amount of such Employee
Deductible Voluntary Contributions, plus any other "qualified retirement
contributions" as that term is defined in Code section 219(e)(1) made by the
Employee, shall not exceed the lesser of $2,000 or 100% of the Employee's total
Compensation includible in the Employee's gross income for such taxable year (or
such higher limitation as permitted under Code section 219). An Employee's
Employee Deductible Voluntary Contributions shall be maintained in the
Employee's Employee Deductible Voluntary Contribution Account pursuant to
Article II, Part B. An Employee may withdraw all or a portion of his Employee
Deductible Voluntary Contribution Account (including the earnings thereon) upon
at least thirty (30) days' written notice to the Custodian. All such Employee
Deductible Voluntary Contributions received by the Custodian under this
Agreement shall be held and administered by it in accordance with all applicable
law with respect to "qualified voluntary employee contributions" as that
16
<PAGE>
- --------------------------------------------------------------------------------
term is defined in Code Section 219(e)(2) including, without limitation, any law
with respect to the redesignation thereof as non-deductible contributions in
connection with any withdrawal thereof by the Employee from the Employee's
Employee Deductible Voluntary Contribution Account.
B. Salary Reduction Agreements. If Employer Contributions by means of a
Salary Reduction Agreement are permitted by Section III of the Employer Adoption
Agreement, Employer Contributions may be made in accordance with a separate
written Salary Reduction Agreement made between the Employer and the Employee
providing for an adjustment of the Employee's Compensation and for transmittal
of the resultant Employer Contribution to the Custodian, which such Salary
Reduction Agreement shall become effective upon the date it is signed by the
Employer and the Employee. Such Salary Reduction Agreement may provide for an
adjustment of the Employee's Compensation with respect to either Mandatory
Contributions (if Mandatory Contributions are provided for by Section IV of the
Employer Adoption Agreement) or Thrift Contributions (if Thrift Contributions
are permitted by Section V of the Employer Adoption Agreement) and/or other
Contributions which the Employee may wish to have made by means of the Salary
Reduction Agreement.
Each such Salary Reduction Agreement between the Employer and the Employee
as to the adjustment of the Employee's Compensation shall be effective only as
to amounts earned by the Employee after such Salary Reduction Agreement becomes
effective. Each such Salary Reduction Agreement between the Employer and the
Employee as to the adjustment of the Employee's Compensation shall be
irrevocable as to both the Employer and the Employee except that either of them
may terminate such Salary Reduction Agreement as of the end of any payroll
period so that it will not apply to Compensation subsequently earned. Subject
to the immediately preceding sentence, the Employee may, in the manner provided
for in subpart (a) of Part B of Article VIII, change such Salary Reduction
Agreement between the Employer and the Employee as to the adjustment of the
Employee's Compensation, but such change may be made no more than once in each
taxable year of the Employee.
C. Transmittal of Contributions and Employee's responsibility regarding
Contributions. All Contributions shall be transmitted to the Custodian. The
Employee shall be responsible for the computation and the proper making of
Employee Contributions provided for under the terms of the Plan including, if
desired, Mandatory Contributions, Thrift Contributions, Employee Non-deductible
Contributions, and Employee Deductible Voluntary Contributions. The Employee
shall be responsible for computing the maximum amount that may be contributed on
the Employee's behalf for each tax year in accordance with the Employee's
"exclusion allowance" as that term is defined in section 403(b)(2) of the Code.
The Employee shall determine the applicable limitation(s) on Contributions under
section 415 of the Code, and the Employee shall have the right to make any of
the elections provided under said section 415. Such computations and
determinations shall be made at least annually, and the Employee shall
communicate the results to the Employer no later than thirty (30) days before
the last day on which the Employee can execute a new Salary Reduction Agreement
with the Employer for the taxable year without violating the pertinent rules and
regulations promulgated by the Treasury Department. Neither the Custodian,
Scudder Fund Distributors, Inc., any Regulated Investment Company, nor the
Employer shall have any obligation to verify the correctness of the Employee's
computations with respect to Contributions or the correctness of the Employee's
computation of the Employee's exclusion allowance or limitations on
Contributions under section 415 of the Code or any responsibility with respect
to any election available to the Employee under said section 415 or any matters
relating to any tax consequences with respect to any Contributions made to the
Custodial Account for the benefit of the Employee, including, without
limitation, the identification and correction of an "excess contribution" as
that term is defined in section 4973 of the Code, all of which foregoing matters
shall be solely the responsibility of the Employee.
D. Transfers and rollovers.
(a) Transfers from and to other Accounts. The Employer or the
Employee may cause the transfer of assets acceptable to the Custodian and
available from an existing custodial account qualified under section 403(b)(7)
of the Code and/or from an existing annuity contract qualified under section
403(b) of the Code to the Employee's Custodial Investment Account. Once
transferred into the Employee's Custodial Investment Account, such assets shall
be treated as a Contribution for purposes of this Agreement and shall be
invested, distributed and otherwise dealt with as such. The Employer or the
Employee may cause the transfer of assets agreed to by the Custodian from the
Employee's Custodial Investment Account to a custodial account established under
section 403(b)(7) of the Code and/or to an annuity qualified under section
403(b) of the Code.
(b) Rollover Contributions. The Custodian may in its discretion
accept contributions in the form of assets acceptable to the Custodian received
from an annuity contract or a custodial account described in section 401(b) of
the Code, an individual retirement account described in section 408(a) of the
Code, and individual retirement annuity described in section 408(b) of the Code,
or a retirement bond described in section 409(a) of the Code, provided that such
Contribution qualifies in all respects as a Rollover Contribution in accordance
with the requirements of section 403(b)(8), section 408(d)(3) or section
409(b)(3)(C) of the Code (including the requirement that no part of the amount
received from an individual retirement account, individual retirement annuity or
retirement bond be attributable to any source other than a rollover contribution
from any annuity contract or custodial account described in section 403(b) of
the Code) or other applicable provisions of the Code in effect from time to
time. Such rollover contribution shall be held by the Custodian in a separate
Rollover Account for the benefit of the Employee which consists only of such
rollover contributions and the earnings thereon. Once transferred into the
Employee's Custodial Account, such assets shall be treated as a Contribution for
purposes of this Agreement and shall be invested, distributed and otherwise
dealt with as such. The right is reserved to transfer the assets of the
Custodial Investment Account to another form of annuity contract or custodial
account described in section 403(b) of the Code or to an individual retirement
account, individual retirement annuity, or retirement bond plan established
pursuant to section 408 or 409 of the Code.
If permitted by Scudder Fund Distributors, Inc. in accordance with
applicable law, rollover contributions with respect to "qualified voluntary
employee contributions" as that term is defined in section 219(e)(2) of the Code
may be received under this Agreement with respect to taxable years beginning
after December 31, 1981, and such contributions shall thereafter be held and
administered hereunder by the Custodian in accordance with all applicable law
with respect to "accumulated deductible employee contributions" as that term is
defined in section 72(o)(5)(B) of the Code.
(c) Limitation of liabilities. Neither the Custodian nor Scudder
Fund Distributors, Inc. shall have any responsibility with respect to any
matters relating to the tax consequences with respect to any transfer or
rollover made under this part D of Article III.
ARTICLE IV. INVESTMENT
A. Purchase. The Custodian shall receive and, as soon as practical,
shall invest all Contributions in accordance with the investment instructions
which are then in effect for the Employee.
B. Registration and safekeeping. Any stock of a Regulated Investment
Company held under this Agreement shall be held by the Custodian. Such stock
may be registered in the name of the Custodian or its nominee, but the Custodian
need not require issuance of certificates for such stock.
C. Eligibility. The Custodian shall invest only in stock of a Regulated
Investment Company.
A Custodial Investment Account shall be limited to investment in stock of
one Regulated Investment Company, except that the investment may be divided
between the stock of more than one Regulated Investment Company if the value of
the stock of each Company in which an investment is being made is, upon
completion of the investment, equal to a minimum value established from time to
time by a designation by Scudder Fund Distributors, Inc. (including a
designation that there shall be no such minimum investment limitation).
If a Company in whose stock investments have been made is no longer
designated by Scudder Fund Distributors, Inc. as appropriate for investment
hereunder, Scudder Fund Distributors, Inc. shall advise the Employee for whose
Account the investments were made and shall give a current list of Companies
available for investment to the Employee or, if the Employer pursuant to Article
IV, Part G wishes to make the investment determination, to the Employer. If,
within 30 days of providing of such current list, the Employee, or the Employer
as the case may be, does not submit new investment instructions, the Employee's
investment in the deleted Company shall be changed to an investment for the
Employee's Account in stock of Scudder Cash Investment Trust or in stock of
another Regulated Investment Company or Companies designated by Scudder Fund
Distributors, Inc. and no additional investments shall be made in said deleted
Company.
D. Reports and voting of securities. The Custodian shall deliver to the
Employee or to the Employee's designated beneficiary all notices, reports,
prospectuses, financial statements, proxies and proxy-soliciting materials
received by it as to investments made for the Employee's Account. The Custodian
shall vote all shares only in accordance with the written instructions of the
Employee or the Employee's designated beneficiary. If the Employee desires to
attend a meeting at which securities held in his Account may be voted, the
Custodian shall furnish a proxy at the Employee's request.
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E. Dividends. All capital gain distributions and dividends received on
the stock of a Regulated Investment Company shall be reinvested in the stock of
that Regulated Investment Company. The Custodian shall elect to receive any
such distribution in the stock of the distributing Company whenever possible.
F. Change of investments. An Employee or his designated beneficiary or
beneficiaries who has (have) survived the Employee and to whom distributions are
being made (by unanimous agreement if there is more than one beneficiary) may
direct that the investment medium of the Account or any portion thereof be
changed to stock of another Regulated Investment Company or Companies which have
been selected by the Employer as permitted investments under Section VII of the
Employer Adoption Agreement. If the Employer determines in Section VIII of the
Employer Adoption Agreement that such changes in the investment medium of the
Account are to be made by such directions given to the Plan Administrator, such
directions shall be given in writing by the Employee or by the Employee's said
designated beneficiary or beneficiaries to the Administrator who shall instruct
the Custodian in writing as to any such directed changes, and any such
investment changes may be made at such times as are determined from time to time
by the Employer in a uniform and nondiscriminatory manner with respect to all
Employees. If the Employer determines in Section VIII of the Employer Adoption
Agreement that such changes in the investment medium of the Account are to be
made by such directions to be given directly to the Custodian, such directions
shall be given by the Employee or by the Employee's said designated beneficiary
or beneficiaries directly to the Custodian, either in writing or by any other
manner of direction designated from time to time by the Employer in a uniform
and nondiscriminatory manner with respect to all Employees, and such investment
changes may be made at any time or times. However, if Scudder Fund
Distributors, Inc. determines in its own judgment that there has been trading
within the Account, any Regulated Investment Company may refuse to sell its
shares to such Account. If the Employee's Account invested in stock of more
than one Regulated Investment Company, a separate account shall be kept with
respect to the stock of each such Company, and he or they may designate the
portion of any new Contribution, withdrawal, or change of investment which is to
be allocated to each such separate account. The provisions of this Part F of
Article IV are subject to the provisions of Part G of this Article IV.
G. Employer determinations as to investments. Anything in this Agreement
to the contrary notwithstanding, the Employer may, if permitted by Scudder Fund
Distributors, Inc., decide from time to time to make any or all determinations
with respect to the investment of an Employee's Account or any portion thereof
in stock of a Regulated Investment Company or Companies, including without
limitation determinations as to initial investments, subsequent investments, and
changes in the investment medium of an Account or portion thereof, as to the
frequency and manner of direction of any changes in the investment medium of an
Account or portion thereof, and as to whether the Employer or the Employee shall
make any determinations with respect to the investment of an Employee's Account
or any portion thereof. Any such determination by the Employer shall be
communicated by the Employer to the Employee, shall be made in a uniform and
nondiscriminatory manner with respect to all Employees, and shall be subject to
the further requirement that if Scudder Fund Distributors, Inc. determines in
its own judgment that there has been trading within an Account, any Regulated
Investment Company may refuse to sell its shares to such Account.
ARTICLE V. CUSTODIAN.
A. Duties. The Custodian shall:
(1) Receive Contributions transmitted by the Employer or the
Employee;
(2) Provide safekeeping for the securities and other assets in the
Custodial Investment Account;
(3) Collect income;
(4) Execute orders for purchase, sale or exchange of securities and
make settlement in accordance with general practice;
(5) Maintain records of all transactions in the Account;
(6) Transmit to each Employee, not less frequently than annually,
appropriate statements of the amount of the Custodian's compensation, if any,
charged to the Account;
(7) File with the Internal Revenue Service and/or any other
government agency such returns, reports, forms, and other information as may be
required of it as Custodian;
(8) Perform all other duties and services consistent with the
purposes and intentions of this Agreement. The Custodian may perform any of its
administrative duties through persons designated by the Custodian from time to
time, except that all assets in the Account shall be held by the Custodian; and
if State Street Bank and Trust Company is the Custodian, it intends initially to
delegate all such duties to Boston Financial Data Services, Inc., which is
partially owned by the Custodian's parent company; but no such delegation or
future change therein shall be considered as an amendment of this Agreement.
B. Cash requirements. If cash funds are required to pay taxes, fees, or
other expenses pursuant to Article VI or to make payments to the Employee or his
beneficiaries (other than withdrawals under Article VII, Part C), the Employee
shall instruct the Custodian in writing which Regulated Investment Company
shares shall be redeemed or sold if there is more than one account, unless the
item for which cash is required is clearly allocable to an investment in a
specific Regulated Investment Company. In the absence of such written
instructions, the Custodian shall exercise its own discretion. However, the
Custodian's fee, if any, for each Account within a Custodial Investment Account
shall be charged to such Account.
C. Limitation of liabilities and duties.
(1) The Custodian shall be fully protected in acting or omitting to
take any action in reliance upon any order or other direction believed by the
Custodian to be genuine and properly given.
(2) To the extent permitted by law, upon the expiration of a 30-day
period after providing to the Employee the statements required under Article V,
Part A(6), the Custodian shall be released and discharged from all liability to
the Employee or any third party as to the matters contained in such statement
unless the Employee files written objections with the Custodian within such 30-
day period.
(3) In no event shall the Custodian be under a fiduciary duty to the
Employee in regard to the selection of investments or be liable for any loss so
incurred.
(4) The Custodian shall have no responsibility to see to the initial
or continued qualification of the Custodial Investment Account under section
403(b)(7) of the Code.
(5) The Custodian shall not be obligated to determine the amount or
type of any contribution due or to collect any Contribution from the Employer.
(6) The Custodian shall not be held responsible for determining the
amount, character, or timing of any distribution to the Employee except as
provided in Article IX.
(7) The Custodian shall have no responsibility with respect to the
computation of the Employee's "exclusion allowance" as defined in section
403(b)(2) of the Code, any applicable limitation(s) on Contributions under
section 415 of the Code, any election available to the Employee under said
section 415, or any matters including the identification and correction of an
"excess contribution" as that term is defined in section 4973 of the Code, all
of which foregoing matters shall be solely the responsibility of the Employee.
(8) The Custodian shall not be required to carry out any instructions
not given in accordance with this Agreement and the various documents
incorporated herein by reference. If such instructions are not received as
required or if received, are in the opinion of the Custodian unclear, the
Custodian shall not be liable for loss of income or appreciation or depreciation
and shall not be liable for interest, pending receipt of written instructions or
other clarification. Furthermore, the Custodian assumes (and shall have) no
responsibility to make any distribution (or process a withdrawal) by order of
the Employer, the Employee or a Beneficiary unless and until the requisite
instructions specify the occasion for such action and the Custodian is furnished
with any and all applications, certificates, tax waivers, signature guarantees
and other documents (including proof of any legal representative's authority)
deemed necessary or advisable to the Custodian. The Custodian shall not be
responsible for complying with any instructions or acting in accordance with any
other documents which appear on their face to be genuine, or for refusing to
comply or so act if not satisfied to that effect, and assumes no further duty of
inquiry. The Custodian shall have no liability to the Employee (or the
Employee's beneficiary) for any tax penalty or other damages resulting from any
inadvertent failure by the Custodian to make a distribution under the Agreement.
(9) The Custodian shall not be liable (and assumes no responsibility)
for the collection of Contributions or the making or the deductibility of any
Contribution, or its purpose or propriety under this Agreement, or the purpose
or propriety of any distribution made pursuant to this Agreement, which matters
are the responsibility of the Employer and the Employee.
(10) The Custodian shall not be liable for interest on temporary cash
balances, if any, maintained in the Account.
(11) To the extent permitted by law, the Employee shall always fully
indemnify the Custodian and save it harmless from any and all liability
whatsoever which may arise either (i) in connection with this Agreement and
matters which it contemplates, except that which arises due to the Custodian's
negligence or willful misconduct, or (ii) with respect to making or failing to
make any distribution, other
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than for failure to make distribution in accordance with an order therefor which
is in full compliance with Article IX or Article VII, Part C or this Part C of
Article V. Except as required by law, the Custodian shall not be obligated or
expected to commence or defend any legal action or proceeding in connection with
this Agreement or such matters unless agreed upon by the Custodian and the
Employee, and unless fully indemnified for so doing to the Custodian's
satisfaction.
(12) The Employer assumes neither any responsibility nor any liability
for any acts or omissions of the Custodian hereunder.
D. Compensation. In consideration for its services hereunder, the
Custodian may be entitled to receive the fees specified in its then current fee
schedule for the services specified on the schedule. The Custodian may
substitute a revised fee schedule from time to time upon thirty (30) days'
written notice to the Employer or Employee. A Custodian may be entitled to such
reasonable additional fees as it may from time to time determine for additional
services required of it, if such additional services are not clearly defined on
the fee schedule.
E. Resignation and removal. The Custodian may resign by giving at least
30 days' written notice to the Employer. The Employer or Scudder Fund
Distributors, Inc. may remove the Custodian hereunder by giving at least 30
days' written notice to the Custodian. In each case, the Employer or Scudder
Fund Distributors, Inc. shall designate a successor custodian qualified under
section 403(b)(7) of the Code, which successor custodian shall accept such
appointment by a writing to be submitted to the Employer and the Custodian.
If, within 30 days after the giving of notice of resignation or removal,
neither the Employer nor Scudder Fund Distributors, Inc. designates a successor
custodian which accepts the appointment, this Agreement shall terminate, and all
assets in the Account shall be distributed in kind to the Employee, or in the
event of his death, to his designated beneficiary or beneficiaries subject to
the Custodian's right to reserve funds as provided in this Part E of Article V.
On the effective date of its resignation or removal, the Custodian shall
transfer to the designated successor the assets and records (or copies thereof)
of the Custodial Investment Accounts provided, however, that the Custodian may
retain whatever assets it deems necessary for payment of its fees, costs and
expenses, compensation, and any other liabilities which constitute a charge on
or against the assets of the Accounts or on or against the Custodian.
ARTICLE VI. FEES, TAXES, AND OTHER EXPENSES
A. Fees, taxes, and other expenses. Any income taxes or other taxes of
any kind whatsoever that may be levied or assessed upon or in respect of a
Custodial Investment Account created hereunder (including any transfer taxes
incurred in connection with the investment and reinvestment of the assets), and
all expenses, fees and administrative costs incurred by the Custodian in the
performance of its duties, including fees for legal services rendered to the
Custodian, and the compensation to the Custodian as determined under Article V,
Part D of this Agreement shall constitute a charge upon the assets of the
Custodial Investment Account and be paid from the assets held in such Account,
or (at the Custodian's option) be paid by the Employee.
ARTICLE VII. PROTECTION OF EMPLOYEE BENEFITS AND WITHDRAWALS BY EMPLOYEES
A. Non-forfeitable. At no time shall it be possible for any part of the
assets held by the Custodian in the Employee's Account be used for or diverted
to purposes other than for the exclusive benefit of the Employee. The
Employee's rights to or derived from all Contributions to the Custodian for
addition to the Employee's Account shall be non-forfeitable at all times after
such payments are made to the Custodian.
B. Non-alienable. Any right or benefit which shall be payable under the
terms of this Agreement shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any
attempt at such shall be void, and any such right or benefit shall not in any
way be subject to the debts, contracts, liabilities, engagements or torts of the
person who is entitled to such right or benefit, nor shall such right or benefit
be subject to attachment or legal process for or against such person, except as
provided in Part C of this Article VII and in subparts (e) and (f) of Part A of
Article III.
C. Employee withdrawals.
(a) If withdrawals from an Account by an Employee, pursuant to this
subpart (a) of this Part C of Article VII, are permitted by Section IX of the
Employer Adoption Agreement, then at any time or times prior to the completion
of distributions pursuant to Article IX, an Employee who has attained age 59
1/2, or who has attained the age indicated by the Employer in Section IX of the
Employer Adoption Agreement if an age other than 59 1/2 is so indicated by the
Employer, may withdraw amounts of cash from his Account, including the entire
balance thereof, if the Employee submits to the Custodian written proof
satisfactory to the Custodian of the attainment of such age and, also, written
instructions to the Custodian as to the amounts to be so withdrawn. If the
Employee makes any withdrawal at any time pursuant to the provisions of this
subpart (a) of this Part C of Article VII, no additional contributions may be
made to the Employee's Account for a period of one (1) year after such
withdrawal and the Employee may not participate in any other custodial account
for regulated investment company stock involving the Employer under section
403(b) of the Code for a period of one (1) year after such withdrawal.
(b) In addition to the foregoing, if withdrawals from an Account by
an Employee who has encountered financial hardship, pursuant to this subpart (b)
of this Part C of Article VII, are permitted by Section X of the Employer
Adoption Agreement, at any time or times prior to the completion of
distributions pursuant to Article IX, an Employee may withdraw amounts of cash
from the Employee's Account, including the entire balance thereof, if the
Employee encounters financial hardship, as determined in a uniform and
nondiscriminatory manner with respect to all Employees and in accordance with
applicable law, governmental regulations or rulings, by a person designated by
the Employer in accordance with applicable legal authority, and if the Employee
submits to the Custodian written proof satisfactory to the Custodian of such
determination of hardship and, also, written instructions to the Custodian as
the amounts to be so withdrawn.
(c) Any withdrawal made pursuant to the provisions of either subparts
(a) or (b) of this Part C may not be in kind but may only be in the cash
proceeds received by the Custodian from redemptions or sales of shares of the
Regulated Investment Companies held in the Employee's Account. If there is more
than one account, the Employee shall instruct the Custodian in writing as to
which Regulated Investment Company shares shall be redeemed or sold before any
distribution is made under either subparts (a) or (b) of this Part C of Article
VII.
ARTICLE VIII. AMENDMENT OR MODIFICATION
A. By Employer. This Agreement and/or the various documents incorporated
herein may be modified or amended by the Employer by delivering to the Employee
and to the Custodian a written copy of such modification or amendment signed by
the Employer.
B. By Employee. The Employee may modify this Agreement by making any of
the following changes:
(a) If Employer Contributions by means of a Salary Reduction
Agreement are permitted by Section III of the Employer Adoption Agreement, and
subject to other applicable provisions of Part B of Article III, then no more
than once in each taxable year of the Employee, the Employee may change the
Salary Reduction Agreement between the Employer and the Employee as to the
adjustment of the Employee's Compensation by the execution of a subsequent
written Salary Reduction Agreement between the Employer and the Employee;
(b) The Employee may change investments pursuant to Article IV, Part
F; or
(c) The Employee may change the Employee's designated beneficiary or
beneficiaries by submitting to the Custodian at any time a revised Designation
of Beneficiary pursuant to Article II, Part C.
C. By Scudder Fund Distributors, Inc. The Employer hereby delegates
authority to Scudder Fund Distributors, Inc. to modify or amend this Agreement
and/or various documents incorporated herein, including authority to adopt a
prototype or master plan (if one becomes available) for investment in shares of
Regulated Investment Companies, and the Employer shall be deemed to have
consented to any such modification or amendment. Scudder Fund Distributors,
Inc. shall provide copies of such modification or amendment to the Employer or
the Employee, and the Custodian. However, Scudder Fund Distributors, Inc. has
no affirmative obligation to amend any of the foregoing documents pursuant to
this portion of the Agreement.
D. Limitations. Notwithstanding the powers granted in Parts A, B, and C
above, no amendment shall be made which would:
(a) Cause or permit any part of the assets in the Account to be
diverted to purposes other than for the exclusive benefit of the Employee and/or
the Employee's beneficiaries, or cause to permit any portion of such assets to
revert to or become the property of the Employer,
(b) Place any greater burden on a Custodian without its written
consent, or
(c) Retroactively deprive any Employee of any benefit to which the
Employee was entitled under the Agreement by reason of Contributions made by the
Employer or the Employee, unless such modification or amendment is necessary to
conform the Agreement to, or satisfy the conditions of any law, governmental
regulation or ruling, and to permit the Agreement and Account to meet the
requirements
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of Section 403(b) of the Code, or any similar statute enacted in lieu thereof,
and any such retroactive modification or amendment must be pursuant to an
opinion of counsel that it is necessary or advisable to conform the Agreement to
the requirements for qualification under Section 403(b) of the Code and
Regulations prescribed thereunder.
ARTICLE IX. DISTRIBUTIONS
A. Time of distribution.
(a) Subject to the remaining provisions of this Article IX, and to
the provisions of Part C of Article VII and to the provisions of subparts (e)
and (f) of Part A of Article III, distribution of assets held in the Employee's
Investment account shall be made or shall commence at the earliest time of the
occurrence of one of the following events:
(1) The disability of the Employee within the meaning of Section
72(m)(7) of the Code. An Employee shall be considered to be so disabled if the
Employee 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 and an
individual shall not be considered to be disabled, and, therefore, the Custodian
shall not be required to make distribution on account of the Employee's
disability, unless and until the Custodian has received a physician's
certificate to that effect;
(2) The Employee's actual retirement or attainment of the Normal
Retirement Age, whichever is later; or
(3) The Employee's death.
(b) In addition to the foregoing, distribution shall be made or shall
commence upon the Employee's separation from the service of the Employer, prior
to the occurrence of any of the events listed in subpart (a) of this Part A of
Article IX, subject to whichever one of the following two provisions of this
subpart (b) of this Part A of Article IX is applicable:
(1) If Section XI of the Employer Adoption Agreement provides
for a determination by the Employer with respect to such distribution upon the
Employee's separation from the service of the Employer, such distribution upon
the Employee's separation from the service of the Employer shall be made or
shall commence if so determined by the Employer in a uniform and
nondiscriminatory manner with respect to all Employees; or
(2) If Section XI of the Employer Adoption Agreement provides
for an election by the Employee with respect to such distribution upon the
Employee's separation from the service of the Employer, such distribution upon
the Employee's separation from the service of the Employer shall be made or
shall commence only if the Employee, either at any time prior to or upon the
Employee's separation from the service of the Employer, files with the Custodian
a written irrevocable election to have distribution commence upon such
separation from service.
(c) The Custodian shall not be responsible for making any
distributions until such time as it has been notified in writing by either the
Employer or the Employee of the occurrence of one of the events set forth in
subparts (a)(1), (a)(2), or (b) of this Part A, or by the designated beneficiary
or beneficiaries (or by the Employee's Executor or other personal representative
if no such beneficiary survives the Employee) of the occurrence of the event set
forth in subpart (a)(3) of this Part A.
B. Method of distribution to Employee. Distributions to the Employee of
amounts held by the Custodian in the Employee's Custodial Investment Account
shall normally be made in the form of annual, quarterly or monthly installments
in cash or in kind or in the form of a lump sum, provided that:
(a) Installment payments in cash or in kind shall be made in
approximately equal amounts or approximately equal fractions of the Employee's
Custodial Investment Account;
(b) If payments to the Employee are made in the form of installments,
there shall be credited to such Employee's Custodial Investment Account all
earnings thereon during the period of such installments; and
(c) Except in the case where the distribution is made for a period
measured by the life of the Employee and the Employee's spouse (regardless of
whether the Employee's beneficiary is someone other than the Employee's spouse),
the present value of the payments to be made to the Employee must be more than
50 percent of the present value of total payments to be made to the Employee and
the Employee's beneficiaries.
Stock of a Regulated Investment Company shall not be distributed in kind
unless at the time distribution is made or, if it is to be made in installments,
at the time it commences, the value of such stock held in the Custodial
Investment Account is five hundred ($500) dollars or more.
C. Election. The method of distribution of the Employee's Account to the
Employee shall be determined as follows:
(a) In the event that Section XII of the Employer Adoption Agreement
provides that the method of distribution of the Employee's Account to the
Employee shall be determined by the Employer, the Employer may, in such event,
at any time prior to thirty (30) days after the time of distribution determined
under Part A of this Article IX, file with the Custodian a written election of a
method of distribution to the Employee which is consistent with the provisions
of Part B of this Article IX, which election may be changed at any time prior to
the end of said thirty (30)-day period; or
(b) In the event that Section XII of the Employer Adoption Agreement
provides that the method of distribution of the Employee's Account to the
Employee shall be determined by the Employee, the Employee may, in such event,
elect or alter the Employee's election of the method of distribution to the
Employee by filing with the Custodian a written election of a method of
distribution to the Employee which is consistent with the provisions of Part B
of this Article IX at any time prior to seven (7) days before the time of
distribution determined under Part A of this Article IX, which election may be
changed at any time prior to the beginning of said seven (7)-day period.
In the event that the Employer or the Employee, as the case may be, fails
to properly elect a method of distribution of the Employee's Account, unless the
Custodian in its absolute discretion chooses another method of distribution
consistent with the provisions of Part B of this Article IX, installment
payments pursuant to said Part B will be made in cash or in kind to the Employee
on a monthly basis over a 10-year period, if a systematic withdrawal plan is
available for the Regulated Investment Company stock held in the Account and if
the assets in such Account are determined to be sufficient by Scudder Fund
Distributors, Inc. If such a plan is unavailable or if such assets are deemed
to be insufficient by Scudder Fund Distributors, Inc., the shares of the
Regulated Investment Company stock held in the Account will be distributed in
cash or in kind promptly to the Employee, unless the Custodian in its absolute
discretion chooses another method of distribution consistent with the provisions
of said Part B of this Article IX.
D. Method of distribution to beneficiaries. In the event of the death of
the Employee either before or after the occurrence of any of the times for
distribution listed in Part A of this Article IX, any amounts held by the
Custodian in the Employee's Account shall be distributed to the beneficiary or
beneficiaries named in the Employee's Designation by the method acceptable to
the Custodian and stipulated in such form, but only after such beneficiary or
beneficiaries have notified the Custodian in writing of the Employee's death and
provided the Custodian with adequate verification of such Death, as provided in
subpart (8) of Part C of Article V. Until such distributions commence to such
beneficiary or beneficiaries, the Custodian shall not be responsible for
treating such person's predecessor to such rights and obligations as still
possessing the same.
In the event that the Employee fails to properly elect a method of
distribution of the Employee's Account to such beneficiary or beneficiaries,
unless the Custodian in its absolute discretion chooses another method of
distribution, installment payments will be made in cash or in kind to such
beneficiary or beneficiaries on a monthly basis over a 10-year period from the
date of the Employee's death, if a systematic withdrawal plan is available for
the Regulated Investment Company stock held in the Account and if the assets in
such Account are determined to be sufficient by Scudder Fund Distributors, Inc.
If such a plan is unavailable or if such assets are deemed to be insufficient by
Scudder Fund Distributors, Inc., the shares of the Regulated Investment Company
stock held in the Account will be distributed in cash or in kind promptly to
such beneficiary or beneficiaries, unless the Custodian in its absolute
discretion chooses another method of distribution.
In the event the Employee so elects in the Designation of Beneficiary form
in effect at the time of his death, his designated beneficiary or beneficiaries
who has (have) survived him an to whom distributions are to be made, may direct
the Custodian in writing (by unanimous agreement if there is more than one
beneficiary) to change the method of distribution to such beneficiary or
beneficiaries (that is, the method either selected in the Employee's Designation
or provided for in this Part D of Article IX, as the case may be), but only
within sixty (60) days after the day on which such beneficiary or beneficiaries
first became entitled to any distribution from the Account and only if such
change is acceptable to the Custodian.
If a distribution is payable to a person known by the Custodian to be a
minor or a person under a legal disability, the Custodian may in its absolute
discretion made the whole or any part of the distribution to (i) a parent of
such person, (ii) the guardian, committee or other legal representative,
wherever appointed, of such person, including a custodian for such person under
a Uniform Gifts to Minors Act or similar act, (iii) any person having the
control and custody of such person, or (iv) to such person directly, the receipt
of the distributee to whom any such payment or distribution is so made being a
sufficient discharge therefor.
20
<PAGE>
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Insofar as the disposition of the Account of a deceased Employee is not
governed by a valid Designation which names at least one beneficiary who
survives the Employee, the Account shall be distributed to the estate of the
deceased Employee. Any portion of an Account of a deceased Employee remaining
undisposed of after the death of an Employee's designated beneficiary who has
survived the Employee, shall be distributed to the estate of such deceased
beneficiary.
ARTICLE X. ADMINISTRATION
A. Appointment of Administrator. The Employer may from time to time in
writing appoint one or more individuals as Administrator (hereinafter referred
to in the singular) who shall have all power and authority necessary to carry
out the terms of the Plan. The Administrator may resign upon fifteen (15) days
advance written notice to the Employer, and the Employer may at any time revoke
the appointment of the Administrator with or without cause. The Employer shall
exercise the power and fulfill the duties of the Administrator if at any time
the position is vacant.
B. Named Fiduciary. The "Named Fiduciary" within the meaning of the Act
shall be the Administrator.
C. Allocations of responsibilities. Responsibilities under the Plan
shall be allocated among the Custodian, the Administrator, and the Employer as
follows:
(a) Custodian: The Custodian shall have exclusive responsibility to
hold, manage, and invest, pursuant to instructions communicated to it under
parts A and F of Article IV by the Administrator or by the Employee as the case
may be, the funds received by it subject to the terms of the Agreement under
which it serves, and the Custodian shall also have all functions otherwise
assigned to it under the terms of the Plan.
(b) Administrator: The Administrator shall have the responsibility
and authority to control the operation and administration of the Plan in
accordance with its terms including, without limiting the generality of the
foregoing: (1) the transmission to the Custodian of any Employee or beneficiary
investment decision under Part F of Article IV; (2) interpretation of the Plan
and conclusive determination of all questions of eligibility and status under
the Plan; (3) hiring of persons to provide necessary services to the Plan not
provided by Employees; (4) preparation and filing of all statements, returns and
reports required to be filed by the Plan with any agency of Government; (5)
compliance with all disclosure requirements of all state or federal law; (6)
maintenance and retention of all Plan records as required by law, except those
required to be maintained by the Custodian; and (7) all functions otherwise
assigned to it under the terms of the Plan.
(c) Employer: The Employer shall be responsible for the design of the
Plan, as adopted or amended, the selection of the Custodian and the designation
of the Administrator as provided in the Plan, the delivery to the Administrator
and the Custodian of Employee information necessary for operation of the Plan,
the computation and the proper making of Employer Contributions and Employer
Matching Thrift Contributions, if any, provided for under the terms of the Plan
(including without limitation, if Section V of the Employer Adoption Agreement
provides for a written formula to be used with respect to Employer Matching
Thrift Contributions, the establishment and application of such written formula
in accordance with applicable law), the selection in a writing pertaining to
eligibility under Section XIII of the Employer Adoption Agreement of Employees
eligible to participate in this Agreement if such selection is made by the
Employer, any determinations as to investments made by the Employer under the
provisions of Part G of Article IV, and the exercise of all functions provided
in or necessary to the Plan except those assigned in the Plan to others.
(d) This part C of Article X is intended to allocate individual
responsibility for the prudent execution of the functions assigned to each of
the Custodian, the Administrator, and the Employer and none of such
responsibilities or any other responsibility shall be shared among them unless
specifically provided in the Plan. Whenever one such person is required by the
Plan to follow the directions of another, the two shall not be deemed to share
responsibility, but the person who gives the direction shall be responsible for
giving it and the responsibility of the person receiving the direction shall be
to follow it insofar is it is on its face proper under applicable law.
D. More than one Administrator. If more than one individual is appointed
as Administrator under Part A of this Article X, such individuals shall either
exercise the duties of the Administrator in concert, acting by a majority vote
or allocate such duties among themselves by written agreement delivered to the
Employer and the Custodian. In such case, the Custodian may rely upon the
instruction of any one of the individuals appointed as Administrator regardless
of the allocation of duties among them.
E. No compensation. The Administrator shall not be entitled to receive
any compensation from the funds held under the Plan for its services in that
capacity unless so determined by the Employer or required by law.
F. Record of acts. The Administrator shall keep a record of all
proceedings, acts and all such records and instruments pertaining to the Plan
administration and shall be subject to inspection by the Employer at any time.
The Employer shall supply, and the Administrator may rely on the accuracy of,
all Employee data and other information needed to administer the Plan.
G. Bond. The Administrator shall be required to give bond for the
faithful performance of his duties to the extent, if any, required by the Act,
the expense to be borne by the Employer.
H. Agent for service of process. The Administrator shall be agent for
service of legal process on the Plan.
I. Rules. The Administrator may adopt or amend and shall publish to the
Employees such rules and forms for the administration of the Plan, and may
employ or retain such attorneys, accountants, physicians, investment advisors,
consultants and other persons to assist in the administration of the Plan as it
deems necessary or advisable.
J. Delegation. To the extent permitted by applicable law, the
Administrator may delegate all or part of his responsibilities hereunder and at
any time revoke such delegation, by written statement communicated to the
delegate and the Employer. The Custodian may, but need not, act on the
instructions of such a delegate. The Administrator shall annually review the
performance of such delegate.
K. Claims procedure. It is anticipated that the Administrator will
administer the Plan to provide Plan benefits without waiting for them to be
claimed, but the following procedure is established to provide additional
protection to govern unless and until a different procedure is established by
the Administrator and published to the Employees and Employees' beneficiaries.
(a) Manner of making claim. A Claim for benefits by an Employee or
beneficiary to be effective under this procedure must be made to the
Administrator and must be in writing unless the Administrator formally or by
course of conduct waives such requirements.
(b) Notice of reason for denial. If an effective claim is wholly or
partially denied, the Administrator shall furnish such Employee or beneficiary
with written notice of the denial within sixty (60) days after the original
claim was filed. This notice of denial shall set forth in a manner calculated
to be understood by the claimant (1) the reason or reasons for denial, (2)
specific reference to pertinent plan provisions on which the denial is based,
(3) a description of any additional information needed to perfect the claim and
an explanation of why such information is necessary, and (4) an explanation of
the Plan's claim procedure.
(c) Application for review. The Employee or beneficiary shall have
sixty (60) days from receipt of the denial notice in which to make written
application for review by the Administrator. The Employee or beneficiary may
request that the review be in the nature of a hearing. The Employee or
beneficiary shall have the rights (1) to have representation, (2) to review
pertinent documents, and (3) to submit comments in writing.
(d) Decision on review. The Administrator shall issue a decision on
such review within sixty (60) days after receipt of an application for review,
except that such period may be extended for a period of time not to exceed an
additional sixty (60) days if the Administrator determines that special
circumstances (such as the need to hold a hearing) requires such extension. The
decision on review shall be in writing and shall include specific reasons for
the decision, written in a manner calculated to be understood by the claimant,
and specific references to the pertinent Plan provisions on which the decision
is based.
L. Fees and expenses of Administrator. All reasonable expenses, fees,
and administrative costs incurred by the Administrator in the performance of its
duties hereunder, including fees for legal services rendered to the
Administrator, shall be paid by the Employer; and to the extent not so paid by
the Employer, said fees and expenses shall be deemed to be an expense of the
Custodial Investment Account and the Custodian is authorized to charge the same
to the Accounts of the Employees, and unless allocable to the Accounts of
specific Employees, they shall be charged against the respective Accounts of all
or a reasonable group of Employees in such reasonable manner as the Custodian
shall determine.
ARTICLE XI. TERMINATION
A. Voluntary termination. With respect to amounts not yet earned by an
Employee, this Agreement may be terminated by either such Employee or the
Employer by giving written notice to the other. Copies of such notice shall be
sent forthwith tot he Custodian. Unless otherwise mutually agreed upon by the
Employer and the Employee, any such termination shall take effect as of the last
day of the
21
<PAGE>
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month next following the month in which such written notice shall have been
given, the Employee's compensation level shall be increased by the amount by
which it otherwise would be reduced pursuant to any applicable Salary Reduction
Agreement, and the obligations under this Agreement of the Employer with respect
to future pay periods shall cease.
B. Termination on distribution. This Agreement shall terminate as to an
Employee when the assets held in the Custodial Investment Account established
for the Employee hereunder have been distributed.
C. Termination on disqualification. This Agreement shall terminate as to
an Employee if, after notification by the Internal Revenue Service that the
Employee's Account does not qualify under section 403(b)(7) of the Code, Scudder
Fund Distributors, Inc. fails to or is unable to make the amendments necessary
to so qualify the Account. On such termination of this Agreement, all assets in
an Account shall be distributed in kind by the Custodian to the Employee or, in
the event of his death, to his designated beneficiaries, subject to the
Custodian's right to reserve funds as provided in Article V, Part E, except that
where the value of such assets is less than five hundred ($500) dollars, the
distribution shall be in cash.
ARTICLE XII. MISCELLANEOUS
A. Adjustment regarding other employee benefits. Unless provided
otherwise in a separate written agreement between the Employer and the Employee,
all employee benefits furnished (either wholly or in part) by the Employer for
the benefit of the Employee (other than those provided for under this Agreement)
which are based on the amount payable to an employee, and which would ordinarily
be subject to reduction in the event of any salary adjustment other than that
provided for under this Agreement, shall continue to be based on the Employee's
compensation level without regard to any adjustment in Compensation provided for
under this Agreement, if such employee benefits arrangements themselves are
consistent with this Part A of Article XII.
B. No release from liability. Nothing in this Plan shall relieve any
person from liability for any responsibility under Part 4 of Title I of the Act.
Subject thereto neither the Custodian, the Administrator nor any other person
shall have any liability under the Plan, except as a result of his negligence or
willful misconduct, and in any event the Employer shall fully indemnify and save
harmless all person from any such liability except that resulting from their
negligence or willful misconduct.
C. Applicable law. This Agreement and all documents incorporated herein
by reference shall be construed and administered in accordance with the laws of
the state in which the home office of the Custodian is located.
D. Terminology. Any masculine terminology in this Agreement shall
include the feminine.
E. Headings. Headings herein are primarily for convenience of reference,
and if they conflict with the text, the text shall control.
F. Counterparts. This Agreement may be executed in any number of
counterparts, each of which, when executed and delivered, shall be an original,
but such counterparts shall together constitute one and the same instrument.
G. Change of address. The Employer shall notify the Custodian in writing
of any change of address within 30 days of such change.
H. Notice. Notice from the Custodian to the Employee pursuant to this
Agreement shall be effective if sent by first class mail to the business address
of the Employer until the Employer specifies a different address acceptable to
the Custodian. Any notice to the Custodian pursuant to this Agreement shall be
by first class mail addressed to its home office.
I. Successors. This Agreement shall be binding upon and shall inure to
the benefit of the successors in interest of the parties hereto.
J. Not employment contract. This Agreement shall not be deemed to
constitute a contract of employment between the parties hereto, nor shall any
provision hereof restrict the right of the Employer to discharge the Employee or
of the Employee to terminate his employment.
K. Discretionary actions. Any discretionary action to be taken by the
Employer or the Administrator under this Plan shall be nondiscriminatory in
nature and all Employees similarly situated shall be treated in a uniform
manner.
L. Department of Labor requirements. If the Custodial Investment Account
and this Agreement constitutes a plan subject to Title I of the Act, then the
Employer, Administrator, Employee, and Custodian shall comply with the
applicable requirements of Title I and shall furnish to each other such
information as may be required in that respect.
M. Construction. No provision of this Agreement, including the documents
incorporated herein by reference, shall be construed to conflict with any
provision of a Labor Department, Treasury Department or Internal Revenue Service
regulation, ruling, release or other order which affects the terms of this
Agreement or its qualification under section 403(b)(7) of the Code. It is
intended that this Agreement, including the documents incorporated herein by
reference, qualify as a custodial account under said section 403(b)(7) and this
Agreement, including said documents, shall be construed and limited and the
powers and discretions conferred hereunder and by applicable laws shall be
exercised in a manner consistent with that purpose. Subject to the foregoing
provisions of this Part M of Article XII, the following constructional
principles shall govern: (1) in the event of any conflict between the Employer
Adoption Agreement and the Employee Application, the provisions of the Employer
Adoption Agreement shall prevail; and (2) in the event of any conflict between
this Agreement and the documents incorporated herein by reference, the
provisions of this Agreement shall prevail.
N. Tax treatment. The tax treatment of any contributions to the Account
and of any earnings of the Account depends, among other things, upon the nature
of the Employer, and the amount and nature of contributions made in any year to
the Account (and to other plans, accounts or contracts with the benefit of
special tax treatment) for the benefit of the Employee. The Custodian and
Scudder Fund Distributors, Inc. assume no responsibility with respect to such
matters, nor shall any term or provision of this Agreement be construed so as to
place any such responsibility upon any one of them. Furthermore, the Employer,
the Employee, and the Administrator shall file and shall have sole
responsibility for filing with the Internal Revenue Service and/or any other
governmental agency such returns, reports, forms, and other information as may
be required of them.
O. Separability. If any provision of this Agreement shall beheld invalid
or illegal for any reason, such determination shall not affect any remaining
provisions of this Agreement, but this Agreement shall be construed and enforced
as if such invalid or illegal provision had never been included in this
Agreement.
22
<PAGE>
Telephone
numbers and
addresses
- --------------------------------------------------------------------------------
National toll free
telephone numbers
and addresses
For information about the Scudder Employer-Select 403(b) program,
CALL (toll-free) 1-800-225-2471
(within Massachusetts, call collect 617-482-3990)
or
WRITE to: Scudder Funds Group Retirement Plans
175 Federal Street
Boston, MA 02110
A Group Retirement Specialist from Scudder Fund Distributors, Inc.,
underwriter for the Scudder funds, will answer your calls and letters.
- --------------------------------------------------------------------------------
Local addresses Boca Raton
of Scudder Fund 150 East Palmetto Park Road
Distributors, Inc. Boca Raton, Florida 33432
305-395-0040
Boston
175 Federal Street
Boston, Massachusetts 02110
617-426-8300
Chicago
Suite 2200, 111 East Wacker Drive
Chicago, Illinois 60601
312-861-2700
Cincinnati
540 Carew Tower
Cincinnati, Ohio 45202
513-621-2733
Cleveland
Suite 700, 1801 East Ninth Street
Cleveland, Ohio 44114
216-241-7744
Dallas
Suite 2124, Plaza of the Americas
700 North Pearl
Dallas, Texas 75201
214-742-1465
Houston
1530 Bank of the Southwest Building
Houston, Texas 77002
713-659-3838
Los Angeles
333 South Hope Street
Los Angeles, California 90071
213-628-1144
New York
345 Park Avenue
New York, New York 10154
212-350-8200
Philadelphia
Three Girard Plaza
Philadelphia, Pennsylvania 19102
215-864-7200
Portland, Oregon
Benjamin Franklin Plaza
1 S.W. Columbia St.
Portland, Oregon 97258
503-224-3999
San Francisco
Suite 4100, 101 California Street
San Francisco, California 94111
415-981-8191
23
<PAGE>
Scudder
- ---------------------------------------------
This booklet is not to be used in connection
with the offering of any of the Scudder funds
unless preceded or accompanied by the
appropriate current prospectuses. Scudder
Fund Distributors, Inc. is the underwriter
of the Scudder no-load mutual funds.
BES-23 (C)Scudder Fund Distributors, Inc.
THE
SCUDDER
FUNDS
Employer Adoption Agreement, Cash or Deferred
Prototype Plan, and Profit Sharing Plan
Trust Agreement under Section 401(k)
SCUDDER
SCUDDER, STEVENS & CLARK INVESTMENT COUNSEL
<PAGE>
Contents
- --------------------------------------------------------------------------------
Advantages of a 401(k) plan 3
- ----------------------------------------------
Features of the Scudder
prototype 401(k) plan 4
- ----------------------------------------------
How to establish a Scudder
401(k)plan 6
- ----------------------------------------------
Instructions for completing
the Adoption Agreement 7
- ----------------------------------------------
Adoption Agreement 9
- ----------------------------------------------
Prototype Plan 13
- ----------------------------------------------
Trust Agreement 21
- ----------------------------------------------
Introduction
- --------------------------------------------------------------------------------
The Scudder Funds booklet "Cash or Deferred Arrangements under Section 401(k)"
describes Scudder's 401(k) program. This program consists of eight Scudder
no-load mutual funds, a specially-designed administrative system, and a flexible
prototype plan that can be tailored to fit the needs of corporations not
requiring an individually designed plan.
The Scudder prototype 401(k) plan has not received a determination with
respect to its qualified status from the National Office of the IRS. The IRS
will not consider prototype 401(k) plans at the present time. Scudder believes
its prototype qualifies under Section 401(k) and the proposed IRS regulations
and will apply for a determination letter as soon as the IRS National Office
will accept it. Scudder will revise the prototype plan as necessary to meet IRS
requirements.
This booklet contains the Scudder prototype 401(k) plan, the Adoption
Agreement to be completed by the employer, and the Trust Agreement which sets
forth the responsibilities of the trustee of the plan.
2
<PAGE>
Advantages of a 401(k) profit sharing plan
- --------------------------------------------------------------------------------
Advantages over traditional
profit sharing plans
Section 401(k) profit sharing plans offer many advantages over traditional
profit sharing plans, as described in more detail in our general information
booklet. Four of the most important advantages for employers and participants
are listed below.
- --------------------------------------------------------------------------------
Tax savings for participants
and employers
Contributions to a 401(k) plan are made before taxes, so participants pay
no federal income taxes on contributions. Earnings accumulate tax-free until
withdrawal. Lump-sum distributions from a 401(k) plan are eligible for 10-year
averaging, which substantially reduces the taxes paid upon distribution. If
contributions are made through salary reduction, employers also save Social
Security taxes, unemployment insurance, and workmen's compensation payments.
- --------------------------------------------------------------------------------
High ceiling on contributions
401(k) contributions are subject to the same limitations imposed on any
profit sharing plan. There is no $2,000 annual maximum, as with Individual
Retirement Account contributions.
Participants in a 401(k) plan may also make a tax-deductible contribution
of up to $2,000 per year to an Individual Retirement Account.
- --------------------------------------------------------------------------------
Employee contributions to
thrift plans with pre-tax
dollars
Employers may make matching contributions to a 401(k) plan. This feature
allows employers to use a 401(k) plan in place of a traditional thrift plan, so
that employees contribute pre-tax dollars to the plan.
- --------------------------------------------------------------------------------
No penalty for distributions
Distributions from a 401(k) plan can be made without penalty upon
retirement, separation from service, death, disability, or attainment of age
59 1/2. In addition, distributions may be made in cases of hardship, subject to
restrictions required by law.
3
<PAGE>
The Scudder prototype 401(k) plan -
summary of features
- --------------------------------------------------------------------------------
The Scudder family of no-load
mutual funds
The Scudder prototype 401(k) plan is used with eight Scudder no-load
(commission-free) mutual funds. These funds offer a wide range of investment
choice, and include money market, growth, income, and international funds.
Transfers among the funds may easily be made, so, if the employer permits,
participants can tailor their 401(k) portfolios to meet changes in investment
requirements and the economic environment.
- --------------------------------------------------------------------------------
Flexible administrative
system
Scudder offers a flexible administrative system for use with the prototype
plan. Some companies may choose to use the Scudder processing system, which was
specially designed to facilitate the administrative work involved in operating a
401(k) plan. It maintains separate files for each participant and segregates
contributions by type, allowing each type of contribution to be invested
separately. Other companies may require more detailed benefit plan
administrative services which may be arranged through Scudder. These services
include consolidated statements to participants, information for government
reports and discrimination testing.
- --------------------------------------------------------------------------------
Eligibility
The employer may choose to have all employees eligible to participate in
the plan, or participation may be limited by age, years of service, or class of
service (e.g., salaried or piece-rate employees).
- --------------------------------------------------------------------------------
Contribution options
Salary reduction
An employer may make contributions to the plan on behalf of an
employee instead of paying salary, based on a salary reduction agreement
between the employer and the employee.
Cash deferred
profit sharing
An employer may make a profit sharing contribution to the plan and
permit an employee to elect to receive some or all of that contribution in
cash. The employer may use this option to meet the IRS "fail-safe" test.
Social Security
integration
The plan may be integrated with Social Security.
Non-deductible voluntary
contributions
If the employer chooses, the employee may make non-deductible
voluntary contributions of up to 10% of total compensation. These
contributions may be withdrawn by the employee for any reason upon 30 days'
notice.
4
<PAGE>
- --------------------------------------------------------------------------------
Deductible voluntary
contributions (QVECs)
Employees may also make deductible voluntary contributions (QVECs) to
the plan of up to $2,000. These contributions may also be withdrawn upon 30
days' notice, subject to the same penalties for premature distribution as
apply to IRAs.
Matching contributions
Employers may choose to make matching contributions in proportion to
any or all of these contributions (except QVECs).
Rollover contributions
Under certain circumstances, distributions from other qualified plans
may be rolled over into this plan.
Vesting
All contributions including Employer Matching Contributions, are 100%
vested immediately.
- --------------------------------------------------------------------------------
Investment decisions
Employers may choose to give the plan administrator control over how
contributions and subsequent earnings on these contributions are to be invested,
or they may allow participants to make their own investment decisions.
- --------------------------------------------------------------------------------
Loans and hardship distributions
If selected as an option by the employer, loans may be made to participants
from the plan.
The employer may also choose to make distributions to participants in cases
of hardship. These distributions are made without penalty upon determination of
hardship by the administrator of the plan.
- --------------------------------------------------------------------------------
Appointment of trustee
The employer may designate one or more individuals, a bank, or trust
company as trustee. The Trust Agreement (p.21) is the document under which the
trustee accepts appointment, and it details the responsibilities of the trustee.
- --------------------------------------------------------------------------------
No separate charges
Employers pay no charges for using the Scudder processing system.
Participants are not charged any fees for opening or maintaining 401(k)
plan investments in the Scudder funds. These and other fund expenses are paid
out of the gross investment income of each fund, as detailed in each fund
prospectus.
5
<PAGE>
How to establish a Scudder 401(k) plan
- --------------------------------------------------------------------------------
Scudder Group Representative
A Scudder Group Representative, a retirement plan specialist familiar with
the issues involved in adopting a plan under Section 401(k), will help you
complete the Adoption Agreement (p.9) and determine the appropriate
administrative and information processing procedures. These representatives are
located in most of the twelve Scudder offices throughout the country.
- --------------------------------------------------------------------------------
Adopting the plan
The first step in adopting the plan is to complete the Adoption Agreement
(instructions are found on pages 7-8), sign it, and send it to Scudder Fund
Distributors, Inc. Scudder will execute the Adoption Agreement to acknowledge
its acceptance and return it to you.
Scudder will also provide various forms which may be required once the plan
is in effect, including Designation of Beneficiary, a Summary Plan Description,
and sample agreements whereby participants may elect to defer portions of their
salaries or profit sharing bonuses.
- --------------------------------------------------------------------------------
IRS determination letter
The Scudder prototype 401(k) plan has not yet received a determination with
respect to its qualified status from the National Office of the IRS. If you wish
to apply for a determination with respect to your plan before the Scudder
prototype 401(k) plan becomes qualified, you should submit your plan to the
appropriate Key District Director of the IRS as if it were an
individually-designed plan rather than a prototype plan. Your Scudder Group
Representative will provide you with the necessary forms and instructions.
- --------------------------------------------------------------------------------
Advice of attorney
It is important that an employer adopting this plan first consult with its
attorney for advice in connection with the adoption and operation of the plan
and in selecting the options available.
- --------------------------------------------------------------------------------
Establishing administrative processing procedures
A 401(k) plan requires that separate accounts be maintained for each
participant. The Scudder processing system, which maintains participant
subaccounts, is available for this purpose. Other administrative options include
an employer's in-house processing system and a benefit plan administrative
service, which may be arranged through Scudder.
The appropriate administrative and processing procedures for your plan
depend on a number of factors, such as the number of participants, the number of
different types of contributions your plan permits, and your company's
processing capabilities. Your Scudder Group Representative will discuss the
options with you and help you determine which is best suited to your needs.
6
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Instructions for completing the Adoption Agreement
- --------------------------------------------------------------------------------
Before completing the Adoption Agreement, please carefully read it and the
following comments about the various options you may select.
I. Eligibility
This option determines who will be covered by the plan. You may select a
waiting period of up to 3 years and a minimum age requirement up to 25 years.
You may also elect to exclude certain classes of employees, such as hourly paid
employees, so long as such exclusion does not discriminate in favor of officers,
shareholders or highly compensated employees.
II. Normal retirement date
Indicate the normal retirement date under the plan by completing this
section.
III. Definition of compensation
This option limits the definition of "compensation" under the plan. Under
part A, you determine whether compensation includes amounts paid during the
entire year in which the employee first becomes eligible to participate in the
plan, or only amounts paid after the employee becomes eligible to participate.
Under part B, you may exclude certain amounts paid, such as commissions, from
the definition of compensation so long as such exclusion does not result in
discrimination in favor of officers, shareholders or highly-paid employees.
IV. Employer salary deferral and profit sharing deferral contributions
This option determines the type of employer contribution that will be made
to the plan. You may select either "Employer Salary Deferral Contributions" or
"Employer Profit Sharing Deferral Contributions," or both.
Employer Salary Deferral Contributions. If you select this option,
participants will be able to elect to reduce their compensation and have a
portion of it contributed to the plan. You must specify under Part 1 the maximum
percentage by which participants may reduce their compensation by selecting and
completing option (a) or (b):
Option (a) permits a participant to elect a percentage reduction of
his entire compensation.
Option (b) only permits a participant to elect a percentage reduction
of that portion of his compensation in excess of the social security
taxable wage base.
In completing Part 1, keep in mind the limitations under Code Section 415
(as described in Section 5 of the plan) which generally limit contributions on
behalf of any participant to 25% of compensation, as well as the limitations
under Code Section 404(a)(3) which limit an employer's deduction for employer
contributions to 15% of the aggregate compensation paid or accrued during its
taxable year to all participants as shown on the W-2 forms. Compensation for
these purposes is calculated after salary reductions under the plan. For this
reason, although you may elect a percentage limitation greater than 15% (because
it is unlikely that all participants will elect the maximum reduction),
employers may want to select a limit less than 15% to be safe. Furthermore, if
an employer maintains another qualified plan, consideration must be given to the
effect of that plan on the contribution and allocation limitations of Code
Section 415 and the deductibility limitations of code Section 404.
Employer Profit Sharing Deferral Contributions. If you select this option,
a profit sharing contribution will be made to the plan except to the extent that
you permit participants to elect to receive a portion of their profit sharing
allocation in cash. You must specify under Part 2 how profit sharing allocations
will be determined each year:
Option (a) specifies that the profit sharing allocation will be a
fixed percentage of compensation.
Option (b) specifies that the profit sharing allocation will be a
percentage of compensation determined each year by your Board of Directors.
Furthermore, you must specify under Part 2 the extent to which participants
may elect to receive cash instead of having their profit sharing
contributions deferred and contributed to the plan:
Option (c) does not permit participants to receive any cash.
Option (d) permits participants to receive in cash only that portion
of their profit sharing allocation which exceeds the percentage of
compensation you specify (thus requiring participants to defer part of
their profit sharing allocations).
Option (e) permits participants to receive in cash up to the
percentage of their profit sharing allocations that you specify.
The comments above about the limitations under Code Section 404 and 415 as
discussed above for Employer Salary Deferral contributions also apply to
Employer Profit Sharing Contributions.
Anti-Discrimination Rules. In completing Part IV, you should also keep in
mind that the anti-discrimination requirements of Code Section 401(k) may limit
the percentage of compensation highly-paid participants may elect to defer
through Employer Salary Deferral Contributions or Employer Profit Sharing
Deferral Contributions. These anti-discrimination rules are described in Section
6 of the prototype plan and you should review them carefully before completing
Section IV of the Adoption Agreement. The following are examples of some of the
ways to meet these anti-discrimination requirements:
Fail-Safe. You can meet the so-called "fail-safe" rule of the proposed
regulations by completing Part 2 so that the profit sharing allocation is a
fixed percentage of compensation which the participant cannot receive in
cash. If you then complete Part 1 so that the maximum salary reduction a
participant can elect will be a percentage of compensation not greater,
when compared to the percentage of compensation represented by the profit
sharing allocation under Part 2, than permitted under the special
anti-discrimination requirements of Code Section 401(k), the fail-safe rule
will be satisfied. For example, you could complete Part 2 so that the
Employer Profit Sharing Deferral Contributions will be 5% and Part 1 so
that the maximum salary reduction can be no more than 3% of compensation.
Social Security Integration. Some employers will be able to meet the
general anti-discrimination rules of Code Section 401(k) by selecting
option (b) of Part 1 so that the maximum salary reduction a participant can
elect will be limited to not more than 7% in excess of the taxable wage
base.
Other Alternatives. You may want to limit the percentage of
compensation which participants may defer through Employer Salary Deferral
contributions to a modest amount, such as 5%. So long as the actual
deferral percentage for the lower 2/3 is 2% or more, your plan will meet
the anti-discrimination rule under code Section 401(k). Alternatively, you
may decide to hold Employer Salary Deferral contributions or Employer
Profit Sharing Deferral contributions for the highest paid one-third (top
1/3) of your employees in suspense outside the plan before contributing
them to the plan to first verify that the anti-discrimination rules not be
violated. The IRS does not permit a refund of such contributions after they
have been contributed to the plan in order to meet the anti-discrimination
rules. Or you may decide to permit only the lower paid two-thirds (lower
2/3) of your employees to have Employer Salary Deferral contributions made
for them through payroll deduction during the year and limit the Employer
Salary Deferral contributions for the top 1/3 to a one-time only
contribution at the end of the year after the maximum permissible
contributions have been determined. Another alternative might be to permit
the top 1/3 to withdraw a portion of their Participant Non-Deductible
Voluntary Contributions and then use those amounts to have Employer Salary
Deferral Contributions made on their behalf once the maximum contributions
for the top 1/3 have been determined at the end of the year on the basis of
the percentage actually contributed for the lower 2/3 of your employees.
The flexibility of the Scudder prototype plan and processing system permits
these as well as other possible solutions to the anti-discrimination rules.
7
<PAGE>
V. Employer thrift contributions
This option permits you to make Employer Thrift Contributions that will
match the percentage you select of either Employer Salary Deferral
contributions, Employer Profit Sharing Deferral contributions or Participant
Non-Deductible Voluntary contributions, or any combination of these types of
contributions. For example, you might elect to make an Employer Thrift
contribution equal to 50% of each participant's Employer Salary Deferral
Contribution and Employer Profit Sharing Deferral Contribution.
VI. Participant non-deductible and deductible voluntary contributions
Under this option, you may permit participants to make either Participant
Non-Deductible Voluntary contributions or Participant Deductible Voluntary
contributions. If you select Participant Non-Deductible Voluntary contributions,
participants will be permitted to make voluntary contributions each year in an
amount not greater than 10% of their total compensation. These contributions
will be nondeductible. If you select Participant Deductible Voluntary
Contributions, participants will be permitted to make voluntary contributions
each year up to $2,000. These contributions will be deductible but are subject
to the special rules under the Code relating to "qualified voluntary employee
contributions" (QVECs) which are generally similar to the rules applicable to
individual retirement accounts (IRAs).
VII. Determination of investment
Indicate in this section whether investment decisions will be made by the
Administrator (whom you appoint) or by participants themselves.
VIII. Tax-option corporations (Subchapter S)
This option pertains to Subchapter S corporations. Indicate in part A
whether or not the employer is a Subchapter S corporation. If so, also complete
part B to indicate how the limitations of Code Section 1379(b) on Subchapter S
corporations are to apply.
IX. Loans to participants
By this Option you may permit participants to borrow out of their accounts,
subject to the limitations of Section 12 of the prototype plan.
X. Hardship distributions
By this option you may permit participants to receive early distribution of
their account in case of hardship, subject to the limitations of Section 9 of
the prototype plan (which describes special rules attributable to such
distributions under Code Section 401(k)).
XI. Effective date of plan
Insert the effective date of the plan in this section.
XII. Plan year
Indicate in this section either that the plan year is the same as the
fiscal year of the employer or insert another date if you prefer.
XIII. Amendment
Indicate in this section whether this is a new plan or an amendment of an
existing plan.
XIV. Appointment of trustee
Insert the name or names of the Trustee(s) in this Section. One or more
individuals, a bank, or a trust company may be designated.
XV. Statement of Employer
Please read this section of the Adoption Agreement carefully.
XVI. Limitation on allocations
If this plan is the only retirement plan which you maintain, do not
complete this section of the Adoption Agreement; it applies only in certain
cases where employees participate in more than one plan maintained by the same
employer. Complete this section only it you maintain another plan which is a
qualified defined contribution plan other than a model, master or prototype
plan; and you may prefer not to complete it, which is permitted, in which case
the provisions of Section 5.2 of the prototype plan will automatically apply to
this plan.
THE ADOPTION AGREEMENT SHOULD BE SIGNED BY THE EMPLOYER AND THE TRUSTEE(S).
Under the Employer's signature, insert the Federal Employer Identification
Number, the Plan Serial Number (001 if you maintain no other plan), the
employer's fiscal year and the employer's telephone number.
8
<PAGE>
SCUDDER CASH OR DEFERRED PROFIT-SHARING PLAN
ADOPTION AGREEMENT
The undersigned (the "Employer") hereby establishes, or amends the
______________________ [insert name of Employer] CASH OR DEFERRED PROFIT-SHARING
PLAN, by completing this Adoption Agreement adopting or amending the
profit-sharing plan and trust agreement in the form of the Prototype Plan and
the Trust Agreement attached. (For definition of terms, see Section 2 of the
Prototype Plan.)
I. ELIGIBILITY
A. To become a Participant an Employee:
Select One
(_) (1) Need not complete any waiting period.
(_) (2) Must complete [insert no more than 3] Years of Service.
B. To become a Participant an Employee:
Select One
(_) (1) Need not attain any minimum age.
(_) (2) Must be at least ________[insert 25 or less] years of age.
C. Employees in all classes are entitled to be Participants except:
[NOTE: If Employees are excluded from the Plan under one or more of
the classifications below (not including the last two
classifications), the exclusion must NOT result in discrimination in
favor of officers, shareholders or highly-paid Employees.]
One or More May be Selected
(_) (1) Salaried Employees
(_) (2) Hourly-paid Employees
(_) (3) Piece-rate Employees
(_) (4) Employees paid by commission
(_) (5) Employees covered by another retirement plan to which the Employer
is required to contribute
(_) (6) Employees in the following classification [must be
nondiscriminatory] ______________________________________________
_________________________________________________________________
(_) (7) Non-resident aliens who receive no earned income from United
States sources (as permitted under Code Section 410(b)(3)(c).)
(_) (8) Employees covered by a collective bargaining contract between the
Employer and a recognized bargaining agent, if contract
negotiations considered retirement benefits in good faith, unless
such contract specifically provides for participation in the
Plan.
This must be Completed
D. A Year of Service shall mean a 12-month period beginning on an
Employee's initial date of Employment or an anniversary thereof during
which the Employee has __ [insert 1,000 or less] Hours of Service.
E. The Participants eligible for Profit Sharing Allocations under Section
IV below or Employer Thrift Contributions under Section V below for
any Plan Year shall be:
Select One
(_) (1) All Participants
(_) (2) All Participants except those who have not completed the
number of Hours of Service required under D above during
such Plan Year.
II. NORMAL RETIREMENT DATE
A Participant's Normal Retirement Date shall be:
Select and Complete One
(_) (1) The first day of the month preceding his ___th [insert not
less than 55 nor more than 65] birthday.
(2) The first day of the month preceding his ___th [insert not
less than 55 nor more than 65] birthday or the ___th
[insert 10 or less] anniversary of the date he became a
Participant, whichever is later.
III. COMPENSATION
A. "Compensation" shall include amounts paid as described in B
below:
Select One
(_) (1) For the entire Plan Year in which the Employee became a
Participant whether or not he was a Participant for the
entire Plan Year.
(_) (2) For the portion of the Plan Year after the Employee became a
Participant.
B. "Compensation" shall mean the amount paid by the Employer to the
Employee for his services as reportable to the Federal Government
for the purposes of withholding Federal income taxes, or which
would be reportable if it were not deferred by the Employee's
election hereunder to have it contributed to the Plan as an
Employer Salary Deferral Contribution described in Section IV
below, but excluding any portion of the Profit Sharing Allocation
described in Section IV below which the Participant has elected
to receive in cash and also excluding the following:
Select One or More Desired
(_) (1) Bonuses
(_) (2) Commissions
(_) (3) Overtime Payments
(_) (4) Other(specify) ________________________________
[NOTE: If one or more of the above are chosen the exclusion must
NOT result in discrimination in favor of officers, shareholders
or highly-paid Employees.]
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<PAGE>
IV. EMPLOYER CONTRIBUTIONS
For each Year the Employer will make the following contribution to the
Trust established pursuant to the Plan on behalf of each Participant:
Select and Complete
if Desired
(_) (1) Subject to Section 4.1 of the Prototype Plan, an Employer
Salary Deferral Contribution equal to the portion of the
Compensation otherwise payable by the Employer for the Plan
Year that the Participant has elected to be deferred and
contributed to the Trust. Such election shall specify the
amount of the Compensation to be deferred, which amount
shall be:
Select and Complete
One if Salary Deferral
Contribution has been
Selected
(_)(a) not less than ___% nor more than __% of the
Participant's Compensation.
(_)(b) not more than ____ % [insert 7% or less] of that
portion of the Participant's Compensation which
exceeds the Taxable Wage Base.
Select and
Complete if
Desired
(_) (2) Subject to Section 4.2 of the Prototype Plan, an Employer
Profit Sharing Deferral Contribution equal to that portion
of the Profit Sharing Allocation for the Plan Year which the
Participant has not elected to receive in cash, if permitted
below, instead of having it deferred and contributed to the
Trust. The Profit Sharing Allocation for this purpose shall
be an amount equal to:
Select and Complete
One if Profit Sharing
Deferral Contribution
has been Selected
(_) (a) __ % of the Participant's Compensation, or
(_) (b) the percentage of the Participant's Compensation as
is determined by a vote of the Board of Directors
of the Employer for each Year (which percentage
shall be the same for each Participant), but in no
event more than _____%.
Select and Complete
One if Profit Sharing
Deferral Contribution
has been Selected
A Participant:
(_) (c) may not elect to receive any portion of his Profit
Sharing Allocation in cash instead of having it
deferred and contributed to the Trust.
(_) (d) may elect to receive that portion of his Profit
Sharing Allocation which exceeds ________ % of his
Compensation in cash instead of having it deferred
and contributed to the Trust.
(_) (e) may elect to receive not more than __% of his
Profit Sharing Allocation in cash instead of having
it deferred and contributed to the Trust.
[NOTE: Code Section 404(a)(3) generally limits the
Employer's deduction for Employer Contributions to 15% of
the aggregate compensation otherwise paid or accrued during
its taxable year to all Participants as shown on the W-2
forms. Employers should not complete Section IV in such a
way that this limitation will likely be exceeded.]
V. EMPLOYER THRIFT CONTRIBUTION
Select and
Complete if
Desired
(_) In addition to the Employer Salary Deferral or Profit Sharing Deferral
Contributions in Section IV above, the Employer shall make an Employer
Thrift Contribution pursuant to Section 4.5 of the Prototype Plan on
behalf of each Participant equal to __% of the aggregate:
Select One or more if
Thrift Contribution
has been Selected
(_) (1) Employer Salary Deferral Contribution
(_) (2) Employer Profit Sharing Deferral Contribution
(_) (3) Participant Non-Deductible Voluntary Contribution allocated to
such Participant's Account for the Plan Year, but only to the extent
that the aggregate amount of the Contributions designated in (1), (2)
or (3) above which are allocated to the Participant's Account for such
Plan Year does not exceed __% [insert 6% or less] of the Participant's
Compensation.
[NOTE: Code Section 404(a)(3) generally limits the Employer's
deduction for Employer Contributions to 15% of the aggregate
compensation otherwise paid or accrued during its taxable year to all
Participants as shown on the W-2 forms. Employers should not complete
Section V in such a way that this limitation will likely be exceeded.]
VI. PARTICIPANT CONTRIBUTIONS
A. Participant Non-Deductible Voluntary Contributions:
Select One
(_)(1) Participant Non-Deductible Voluntary contributions pursuant to
Section 4.3 of the Prototype Plan are permitted.
(_)(2) Participant Non-Deductible Voluntary contributions are not
permitted.
B. Participant Deductible Voluntary Contributions:
Select One
(_) (1) Participant Deductible Voluntary Contributions pursuant to Section
4.4 of the Prototype Plan are permitted.
(_) (2) Participant Deductible Voluntary Contributions are not permitted.
[NOTE: Participant Non-Deductible Contributions made hereunder
shall not be allowed to the extent they would otherwise exceed
the limitations of Section 5 of the Prototype Plan.]
10
<PAGE>
VII. INVESTMENT
Pursuant to Section 11 of the Prototype Plan, all contributions
under this Plan and any earnings thereon shall be invested as
determined by:
Select One
(_) (1) the Administrator.
(_) (2) the Participant.
VIII. TAX-OPTION CORPORATIONS (Subchapter S)
A. The Employer:
Select One
(_) (1) is an electing small business corporation under Code Section 1371.
(_) (2) is not an electing small business corporation under Code Section
1371.
Complete ONLY if the Employer is an Electing Small Business Corporation
B. With respect to any Year in which the Employer is an electing small
business corporation, the Employer Contributions for each
shareholder-employee (as defined in Code Section 1379(d)) otherwise
payable under the Plan for such Year shall be limited as follows:
Select One
(_) (1) No limitation on the amount to be allocated to a
shareholder-employee.
(_) (2) No allocations to any shareholder-employee.
(_) (3) The statutory limit permitted under Code Section 1379(b) which may
be deducted by the Employer without inclusion in the gross income
of the shareholder-employee.
IX. LOANS
Loans to a Participant pursuant to Section 12 of the Prototype Plan:
Select One
(_) (1) are permitted.
(_) (2) are not permitted.
X. EARLY DISTRIBUTION IN CASES OF HARDSHIP
Early distributions to Participants in cases of hardship pursuant to
Section 9 of the Prototype Plan:
Select One
(_) (1) are permitted.
(_) (2) are not permitted.
XI. EFFECTIVE DATE
Complete
The Effective Date of this Plan or amendment shall be ___.
XII. PLAN YEAR
The Plan year shall:
Select One and, if Applicable, Complete
(_) (1) be the same as the fiscal year of the Employer.
(_) (2) end on the last day of the month of _________.
XIII. AMENDMENT
Execution of this Adoption Agreement:
Select One
(_) (1) is an amendment to an existing plan.
(_) (2) is not an amendment to an existing plan.
XIV. APPOINTMENT OF TRUSTEES
The Employer hereby designates the following person or persons as
Trustee(s) under the Trust:
Complete:_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
XV. STATEMENT OF EMPLOYER
The Employer (i) covenants and agrees that whenever a Participant makes a
contribution the Employer shall ascertain that the Participant has received a
copy of the current prospectus relating to the shares of any Designated
Investment Company in which such contribution is to be invested plus, where
required by any state or federal law, the current prospectus relating to any
other investment in which contributions are to be invested, and (ii) by
remitting such a contribution to the Trustee the Employer shall be deemed to
represent that the Participant has received such a prospectus, and (iii) by
remitting any other contribution to the Trustee the Employer shall be deemed
to represent that the Employer has received a current prospectus of any
Designated Investment Company in which it is to be invested, plus, where
required by any state or federal law, the current prospectus relating to any
other investment in which contributions are to be invested.
11
<PAGE>
XVI. LIMITATION ON ALLOCATIONS
[NOTE: Complete this Section only if the Employer maintains either (i)
another plan which is a qualified defined contribution plan other than a Model,
Master or Prototype plan, or (ii) a qualified defined benefit Plan. If the
Employer maintains such a plan, failure to complete this Section may adversely
affect the qualification of the plans the Employer maintains. If the Employer
does not complete this Section, the provisions of Section 5.2 of the Prototype
Plan will automatically apply to this Plan.]
The amount of Annual Additions allocated to any Participant's Account under
this Plan shall be limited as follows: [Use a Rider to provide appropriate
provisions to comply with the Code.]
IN WITNESS WHEREOF, the Employer has hereunto executed this Adoption
Agreement as of the __ day of ______, 19__.
____________________________________
Name of Employer
By____________________________________
Authorized Signature
Address ____________________________________
____________________________________
Employer Identification ____________________________
Plan Serial Number ____________________________
Employer Fiscal Year ____________________________
Employer Telephone Number ____________________________
TRUSTEE ACCEPTANCE
The undersigned accept(s) appointment as Trustee(s) under the Trust
Agreement.
____________________________________
____________________________________
____________________________________
DESIGNATED INVESTMENT COMPANY ACKNOWLEDGEMENT
Scudder Fund Distributors, Inc. acknowledges receipt of a copy of the
executed Adoption Agreement and agrees to accept, on behalf of the Designated
Investment Company or Companies, contributions under the Plan for investment in
accordance with Section VII of the Adoption Agreement.
____________________________________
Scudder Fund Distributors, Inc.
Return this form to:
Scudder Fund Distributors, Inc.
Group Representatives
175 Federal Street
Boston, Massachusetts 02110
12
<PAGE>
SCUDDER CASH OR DEFERRED PROFIT-SHARING PLAN
SECTION 1. INTRODUCTION
The Employer has established this Plan (the "Plan"), consisting of the
Adoption Agreement, the following provisions (the "Prototype Plan") and the
Trust Agreement for the exclusive benefit of its Employees and their
Beneficiaries.
SECTION 2. DEFINITIONS
Where the following words and phrases appear in the Plan, they shall have
the respective meanings set forth below, unless their context clearly indicates
a contrary meaning. The singular herein shall include the plural, and vice
versa, and the masculine gender shall include the feminine gender, and vice
versa, where the context requires.
2.1 "Account" shall mean the cash and securities held by the Trustee for
the benefit of a Participant, which shall be the sum of his Employer Salary
Deferral Account, Employer Profit Sharing Deferral Account, Employer Thrift
Account, Participant Non-Deductible Voluntary Account, Participant Deductible
Voluntary Account, and Rollover Account.
2.2 "Act" shall mean the Employer Retirement Income Security Act of 1974,
as amended.
2.3 "Administrator" shall mean the person or persons appointed under
Section 13.1.
2.4 "Adoption Agreement" shall mean the agreement by which the Employer has
most recently adopted or amended the Plan.
2.5 "Beneficiary" shall mean any person or legal representative entitled to
receive benefits on or after the death of a Participant.
2.6 "Code" shall mean the Internal Revenue Code of 1954, as amended.
Reference to a section of the Code shall include any comparable section or
sections of future legislation that amends, supplements or supersedes such
section.
2.7 "Compensation" shall mean the amount paid by the Employer to the
Employee for his services as reportable to the Federal Government for the
purpose of withholding Federal income taxes, or which would be reportable if it
were not deferred by the Employee's election to have it contributed to the Plan
as an Employer Salary Deferral Contribution, but excluding any portion of the
Profit Sharing Allocation which a Participant elects to receive in cash and (i)
amounts attributable to services rendered by an Employee when he was not a
Participant, except to the extent specified in Section III-A of the Adoption
Agreement, (ii) the amounts attributable to any category specified by the
Employer to be excluded in Section III-B of the Adoption Agreement, and (iii),
in the case of an Employer who has one or more shareholder-employees within the
meaning of Section 1379(b) of the Code as Participants, amounts paid to any
Employee in excess of $200,000.
2.8 "Current or Accumulated Earnings and Profits" of the Employer, shall
mean the Employer's current or accumulated earnings and profits, as determined
on the basis of the Employer's books of account in accordance with generally
accepted accounting practices, without any deductions for Employer Contributions
under the Plan for the current Year or for Federal income taxes for the current
Year and without regard to the Employer's election to be taxed as a small
business corporation, if it has so elected.
2.9 "Designated Investment Company" shall mean a regulated investment
company for which Scudder, Stevens & Clark, or its successor or any of its
affiliates, acts as investment adviser and which is designated by Scudder Fund
Distributors, Inc., or its successors, as eligible for investment under the
Plan.
2.10 "Designation of Beneficiary" or "Designation" shall mean the document
executed by a Participant under Section 16.
2.11 "Distributee" shall mean the Beneficiary or other person entitled to
receive the undistributed portion of the Participant's Account because of death
under Section 8 or because of his incompetency or the inability to ascertain or
locate him under Section 15.
2.12 "Distributor" shall mean Scudder Fund Distributors, Inc. or its
successor.
2.13 "Effective Date" shall mean the date selected by the Employer in
Section XI of the Adoption Agreement.
2.14 "Employee" shall mean an individual who performs services in the
business of the Employer in any capacity except as a self-employed individual.
2.15 "Employer" shall mean the organization named as such in the Adoption
Agreement and any successor organization which adopts the Plan. Any two or more
members of a controlled group of corporations as defined in Code Section 414(b)
may adopt and maintain the plan as a single Plan.
2.16 "Employer Contributions" shall mean the sum of the Employer Profit
Sharing Deferral Contributions, Employer Salary Deferral Contributions and
Employer Thrift Contributions.
2.17 "Employer Profit Sharing Deferral Account", shall mean the separate
account maintained pursuant to Section 7.3 hereof for the Employer Profit
Sharing Deferral Contributions (as described in Section IV of the Adoption
Agreement) allocated to a Participant and the income, expenses, gains and losses
attributable thereto.
2.18 "Employer Profit Sharing Deferral Contributions" shall mean
contributions made to the Trust by the Employer in accordance with Section 4.2
as that part of the Profit Sharing Allocations which Participants have not
elected to receive in cash.
2.19 "Employer Salary Deferral Account" shall mean the separate account
maintained pursuant to Section 7.3 hereof for the Employer Salary Deferral
Contributions allocated to a Participant and the income, expenses, gains and
losses attributable thereto.
2.20 "Employer Salary Deferral Contributions" shall mean contributions made
to the Trust by the Employer in accordance with Section 4.1 hereof as a result
of the election by Participants to defer part of their Compensation.
2.21 "Employer Thrift Account" shall mean the separate account maintained
pursuant to Section 7.3 hereof for the Employer Thrift Contributions allocated
to a Participant and the income, expenses, gains and losses attributable
thereto.
2.22 "Employer Thrift Contributions" shall mean contributions made to the
Trust by the Employer in accordance with Section 4.5 hereof as matching
contributions.
2.23 "Hour of Service" shall mean:
(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
(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) Where the Employer maintains the plan of a predecessor employer,
service for such predecessor employer shall be treated as service of
the Employer. Where the Employer does not maintain the plan of a
predecessor employer, employment by a predecessor employer, upon the
written election of the Employer made in a uniform and
non-discriminatory manner, shall be treated as service for the
Employer.
2.24 "Normal Retirement Date" or "Normal Retirement Age" shall mean the
date selected by the Employer in Section II of the Adoption Agreement.
2.25 "Participant" shall mean an Employee who is eligible to participate in
the Plan under Section 3 and who has not, since becoming a Participant, died,
become disabled, retired or otherwise terminated employment with the Employer.
2.26 "Participant Contributions" shall mean the sum of the Participant
Non-Deductible Voluntary Contributions and the Participant Deductible Voluntary
Contributions.
2.27 "Participant Deductible Voluntary Account" shall mean the separate
account maintained pursuant to Section 7.3 hereof for the Participant Deductible
Voluntary Contributions (as described in Section VI-B of the Adoption Agreement)
made by the Participant and the income, expenses, gains and losses attributable
thereto.
2.28 "Participant Deductible Voluntary Contributions" shall mean
contributions made to the Trust by Participants in accordance with Section 4.4
hereof. Such contributions are intended to be "qualified voluntary employee
contributions" within the meaning of Code Section 219(e)(2).
2.29 "Participant Non-Deductible Voluntary Account" shall mean the separate
account maintained pursuant to Section 7.3 hereof for the Participant
Non-Deductible Voluntary Contributions (as described in Section VI-A of the
Adoption Agreement) made by the Participant and the income, expenses, gains and
losses attributable thereto.
2.30 "Participant Non-Deductible Voluntary Contributions" shall mean
contributions made to the Trust by Participants in accordance with Section 4.3
hereof. Such contributions are intended not to be "qualified
13
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voluntary employee contributions" within the meaning of Code Section 219(e)(2).
2.31 "Plan" shall mean the Prototype Plan, the Adoption Agreement and the
Trust Agreement.
2.32 "Plan Year" shall mean the fiscal year of the Employer or a different
period as specified in Section XIV of the Adoption Agreement.
2.33 "Profit Sharing Allocation" shall mean the contribution payable by the
Employer to the Trust on behalf of a Participant out of the Employer's Current
or Accumulated Earnings in accordance with Section 4.2 hereof subject to the
Participant's right to elect, if permitted by Section IV of the Adoption
Agreement, to receive all or a portion of such contribution in cash in lieu of
having it deferred and contributed to the Trust on his behalf.
2.34 "Prototype Plan" shall mean these Sections 1-21.
2.35 "Rollover Account" shall mean the separate account maintained pursuant
to Section 7.3 hereof for any Rollover Contributions (as described in Section
4.6 hereof) made by the Participant and the income, expenses, gains and losses
attributable thereto.
2.36 "Rollover Contributions" shall mean contributions made to the Trust by
Participants in accordance with Section 4.6 hereof out of "qualifying rollover
distributions" within the meaning of Code Section 402(a)(5)(D)(i).
2.37 "Service" generally shall mean Employment by the Employer or, if the
Employer is maintaining the plan of a predecessor employer or has so elected,
employment by such predecessor employer. (See "Hour of Service").
2.38 "Taxable Wage Base" shall mean, for any Plan Year, the maximum amount
of earnings which may be considered wages for the calendar year ending within or
coincident with such Plan Year for purposes of determining F.I.C.A. tax
liability under Code Section 3121(a)(1).
2.39 "Trust" shall mean the trust established under the Trust Agreement
entered into pursuant to this Plan for investment as provided in Section VII of
the Adoption Agreement.
2.40 "Trust Agreement" shall mean the agreement under which the Trustee
accepts appointment to establish a Trust for the investment of contributions
under the Plan.
2.41 "Trustee" shall mean the person or persons, including any successor or
successors thereto, designated pursuant to Section XIV of the Adoption Agreement
to act as trustee of the Trust.
2.42 "Valuation Date" shall mean the last day of each Plan Year.
2.43 "Year" shall mean the fiscal year of the Employer.
2.44 "Year of Service" shall mean a twelve (12) month period, beginning on
an Employee's initial date of Employment or an anniversary thereof in which the
Employee had the number of Hours of Service specified in Section 1-D of the
Adoption Agreement. The date of initial employment is the first day on which the
Employee performs an Hour of Service.
SECTION 3. ELIGIBILITY
3.1 Entry. Each Employee of the Employer who on the Effective Date of this
Plan meets the conditions specified in Section I of the Adoption Agreement shall
become eligible to participate in the Plan commencing with that Effective Date,
Each other Employee of the Employer, including future Employees, shall become
eligible to participate in the Plan on the first business day of the month next
following the month in which he meets such conditions.
3.2 Reentry. A former Participant shall become a Participant immediately
upon his return to the employ of the Employer or his return to an eligible class
of employees, whichever is applicable.
3.3 Transfer to Eligible Class. In the event an Employee who is not a
member of an eligible class of Employees becomes a member of an 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 been in the eligible class.
3.4 Determination by Administrator. Eligibility shall be determined by the
Administrator and the Administrator shall notify each Employee upon his
admission as a Participant in the Plan.
3.5 Related Businesses. If the Employer is a member of (a) a controlled
group of corporations (as defined under Code Section 414(h)), (b) a group of
trades or businesses (whether or not incorporated) which are under common
control (as defined under Code Section 414(c)), or (c) an affiliated service
group (as defined under Code Section 414(m)), all service of an Employee for any
member of such a group shall be treated as if it were service for the Employer
for purposes of the eligibility requirements of Section I of the Adoption
Agreement and this Section 3.
SECTION 4. CONTRIBUTIONS
4.1 Employer Salary Deferral Contributions. If selected by the Employer in
Section IV of the Adoption Agreement, the Employer will make an Employer Salary
Deferral Contribution to the Trust on behalf of each Participant who has elected
to defer a portion of the Compensation otherwise payable to him for the Plan
Year and have it contributed to the Trust. Such an election may only be made
pursuant to a written salary reduction agreement between the Participant and the
Employer. The agreement shall be in such form and subject to such rules as the
Administrator may prescribe, and the agreement shall specify the amount of
Compensation that the Participant desires to defer (but in no event may such
deferral exceed the percentage of Compensation specified in Section IV (1) of
the Adoption Agreement). A salary reduction agreement may be amended or
terminated prospectively during the Plan Year at such times and in such manner
as permitted by the rules of the Administrator. The Employer Salary Deferral
Contribution made for a Participant shall be in an amount equal to the amount
specified in the Participant's salary reduction agreement; provided, however,
that the Employer Salary Deferral Contribution otherwise to be made for a
Participant shall be reduced to the extent necessary, if any, to comply with the
limitations of Section 4.7, 5 and 6 hereof (and Section VIII of the Adoption
Agreement if applicable). Any amount which cannot be contributed to the Trust
because of those limitations shall be paid to the Participant in cash no later
than the last day that such amount could otherwise have been contributed to the
Trust for the Plan Year in respect to which it has been deferred, and such
payment shall be subject to federal income and other tax withholding by the
Employer. An Employer Salary Deferral Contribution made for a Participant shall
be allocated to his Employer Salary Deferral Account pursuant to Section 7.3
hereof.
4.2 Employer Profit Sharing Deferral Contributions. If selected by the
Employer in Section IV of the Adoption Agreement, the Employer will make an
Employer Profit Sharing Deferral Contribution to the Trust in an amount equal to
the Profit Sharing Allocation specified in Section IV (2) of the Adoption
Agreement as expressed as a percentage of the Participant's Compensation;
provided, however, that if and to the extent permitted by Section IV (2) of the
Adoption Agreement, each Participant may elect to receives portion of the Profit
Sharing Allocation in cash in lieu of having it deferred and contributed to the
Trust as an Employer Profit Sharing Deferral Contribution. Such an election may
only be made pursuant to a written agreement between the Participant and the
Employer. The agreement shall be in such form and subject to such rules as the
Administrator may prescribe, and the election shall specify the amount of the
Profit Sharing Allocation that the Participant desires to receive in cash. The
amount which a Participant has elected to receive in cash pursuant to such an
election shall be paid to the Participant by the Employer no later than the last
day on which the Employer Profit Sharing Deferral Contributions for the Plan
Year in question must be paid to the Trust under Section 7.2 hereof,
Notwithstanding the above, the Employer Profit Sharing Deferral Contribution
otherwise to be made for a Participant shall be reduced to the extent necessary,
if any, to comply with the limitations of Sections 4.7, 5 and 6 hereof (and
Section VIII of the Adoption Agreement, if applicable). Any amount which cannot
be contributed to the Trust because of those limitations shall be paid to the
Participant in cash no later than the last day that such amount could otherwise
have been contributed to the Trust for the Plan Year in the respect to which it
has been deferred, and such payment shall be subject to federal income and other
tax withholding by the Employer. An Employer Profit Sharing Deferral
Contribution made for a participant shall be allocated to his Employer Profit
Sharing Deferral Account pursuant to Section 7.3 hereof.
4.3 Participant Non-Deductible Voluntary Contributions. If selected by the
Employer in Section VI A of the Adoption Agreement, a Participant may make
Participant Non-Deductible Voluntary Contributions to his Account in any Plan
Year; provided, however, that the aggregate amount of such Participant
Non-Deductible Voluntary Contributions, plus any Participant Non-Deductible
Voluntary Contributions made by him under any other plan maintained by the
Employer and intended to meet the requirements of Code Section 401, shall not
exceed ten percent (10%) of his total compensation (disregarding any exclusions
from Compensation specified by the Employer in Section III-B of the Adoption
Agreement) for the period in which he has been a Participant in the Plan;
provided, further, that in no event shall a Participant be permitted to makes
Participant Non-Deductible Voluntary Contribution in an amount which would cause
the annual addition to his Account to exceed the limitations set forth in
Section 5 hereof. A Participant's Participant Non-Deductible Voluntary
Contributions shall be allocated to his Participant Non-Deductible Voluntary
Account pursuant to Section 7.3 hereof. A Participant may withdraw all or 5
portion of his Participant Non-Deductible Voluntary Account upon 30 days'
written notice to the Administrator.
4.4 Participant Deductible Voluntary Contributions. If selected by the
Employer in Section VI-B of the Adoption Agreement, a Participant may make
Participant Deductible Voluntary Contributions to his Account in any Year;
provided, however, that the aggregate amount of such Participant Deductible
Voluntary Contributions, plus any other "qualified retirement contributions" (as
that term is defined in Code Section 219(e)(1)) made by the Participant, shall
not, in any taxable year of the Participant, exceed the lesser of $2,000 or 100%
of the Participant's total compensation includible in his gross income for his
taxable year (or such higher limitation as is permitted under Code Section 219).
A Participant's Participant Deductible Voluntary Contributions shall at no time
be included in the computation of the maximum allocation to a Participant's
Account as set forth
14
<PAGE>
in Section 5 and 6 hereof. A Participant's Participant Deductible Voluntary
Contributions shall be allocated to his Participant Deductible Voluntary Account
pursuant to Section 7.3 hereof. A Participant may withdraw all or a portion of
his Participant Deductible Voluntary Account upon 30 days' written notice to the
Administrator, who may also permit, to the extent allowed by applicable law, the
Participant to redesignate his Participant Deductible Voluntary Account as his
Participant Non-Deductible Voluntary Account prior to the withdrawal thereof.
4.5 Employer Thrift Contributions. If selected by the Employer in Section V
of the Adoption Agreement, the Employer will make an Employer Thrift
Contribution to the Trust for each Participant for each Plan Year that one or
more of contribution categories selected by the Employer in Section V of the
Adoption Agreement for matching (i.e., Employer Profit Sharing Deferral
Contributions, Employer Salary Deferral Contributions or Participant
Non-Deductible Voluntary Contributions) is allocated to the Participant's
Account. The Employer Thrift Contribution made for a Participant shall be in an
amount equal to the percentage specified in Section V of the Adoption Agreement
of the aggregate of the contributions categories selected by the Employer in
Section V of the Adoption Agreement (i.e., Employer Profit Sharing Deferral
Contributions, Employer Salary Deferral Contributions or Participant
Non-Deductible Voluntary Contributions) allocated to the Participant's Account
for the Year, but only to the extent that such aggregate amount does not exceed
the percentage of the Participant's Compensation specified in Section V of the
Adoption Agreement (not in excess of 6%); provided, however, that the Thrift
Contribution otherwise to be made for a Participant shall be reduced to the
extent necessary to comply with the limitations of Sections 4.7, 5 and 6 hereof
(and Section VIII of the Adoption Agreement, if applicable). Any amount which
cannot be contributed to the Trust because of these limitations will be retained
by the Employer, and the Employer shall have no obligation to contribute such
amount . An Employer Thrift Contribution made for a Participant shall be
allocated to his Employer Thrift Account pursuant to Section 7.3 hereof.
4.6 Rollover Contributions. The Administrator may, in his discretion,
direct the Trustee to accept a Rollover Contribution upon the express request of
the Participant wishing to make such Rollover Contribution, the same to be held,
administered and distributed by the Trustee in accordance with the terms of this
Plan provided the Trustee consents if the contribution includes property other
than cash. A Rollover Contribution shall only be a contribution, comprised of
money and/or property, which is all or a portion of a lump sum with respect to
which such Participant certifies in writing that all of the following conditions
are met:
(a) Such lump sum is such Participant's entire interest (or such lesser
amount as permitted by applicable law) in all qualified plans of the
same type of a prior employer of such Participant (within the meaning
of Code Section 402(e)(4)(C) as modified by Code Section
402(A)(6)(E)), including qualified annuity plans under Code Section
403(a), reduced by the amount, if any, considered as contributed by
him to such other plan or plans (as determined under Code Section
402(e)(4)(D)(i)) and augmented, if such be the case, by any earnings
on the aforesaid net amount accrued during any period when such net
amount was held in an intervening individual retirement account or
annuity (as defined in Code Sections 408(a) and (b));
(b) Such lump sum was received by such Participant as a lump sum
distribution from such other qualified plan or plans within the
meaning of Code Section 402(e)(4)(A) or as a payment within one
taxable year of the Participant on account of a termination of such
plan(s) or, in the case of a profit-sharing or stock bonus plan, a
complete discontinuance of contributions under such plan(s) (within
the meaning of Code Section 402(a)(6));
(c) The transfer of all or a portion of such lump sum is being made within
60 days of its receipt by him from the plan or plans referred to in
paragraph (a) above or, if the net amount referred to in paragraph (a)
above had previously been deposited in an intervening individual
retirement account or annuity (as defined in Code Sections 408 (a) and
(b)) within 60 days of its prior receipt from such plan or plans, the
transfer of such lump sum is being made within 60 days of its receipt
by him from such intervening individual retirement account or annuity;
and
(d) No part of such lump sum represents an amount derived from a plan in
which such Participant was a self-employed employee (within the
meaning of Code Section 401(c)(1)) at any time contributions were made
on his behalf under that plan.
All Rollover Contributions made under this Section 4.6 must be accepted by
the Trustee within the 60 day period referred to in paragraph (c) above. If the
sum accepted as a Rollover Contribution contains property other than cash, the
Trustee shall promptly sell it, and reinvest the proceeds as set forth in the
paragraph immediately below. However, the Trustee may nevertheless, in his
discretion, retain part or all of such property in kind at the Participant's
express request, provided the Participant reimburses the Trustee for any
additional expenses arising out of such retention. A Participant's Rollover
Contribution shall at no time be included in the computation of the maximum
allocation to a Participant's Account as set forth in Sections 5 and 6 hereof.
Each Rollover Contribution made by a Participant shall be allocated to his
Rollover Account pursuant to Section 7.3 hereof. Such Rollover Account shall be
invested by the Trustee as part of the Trust Fund, pursuant to the provisions of
the Trust Agreement, and shall share in the gains and losses of such fund,
except as it may be held in kind as permitted above. A Participant may withdraw
all or a portion of his Rollover Account upon 30 days' written notice to the
Administrator.
4.7 Limited by Profits. Notwithstanding anything to the contrary herein,
the total Employer Contributions for a Year shall not exceed the Current or
Accumulated Earnings and Profits of the Employer for the Year, whichever is
greater.
SECTION 5. CODE SECTION 415 LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS
5.1 Employers Maintaining No Other Plan.
(a) If an Employer does not maintain any other qualified plan, the amount
of Annual Addition which may be allocated under this Plan on a
Participant's behalf for a Limitation Year shall not exceed the
Maximum Permissible Amount.
(b) Prior to the determination of the Participant's actual compensation
for a Limitation Year, the Maximum Permissible Amount may be
determined on the basis of the Participant's estimated annual
compensation for such Limitation Year. Such estimated annual
compensation shall be determined on a reasonable basis and shall be
uniformly determined for all Participants similarly situated.
(c) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for such Limitation
Year shall be determined on the basis of the Participant's actual
compensation for such Limitation Year.
(d) If, pursuant to Section 5.1(c) and notwithstanding the provisions of
Section 4 hereof which require Employer Contributions on behalf of a
Participant to be reduced so as out to exceed the limitations of this
Section 5, there is an Excess Amount with respect to a Participant for
a Limitation Year, such Excess Amount shall be disposed of as follows:
(i) First, any Participant Contributions, to the extent that the
return would reduce the Excess Amount, shall be returned to the
Participant.
(ii) Second, such Excess Amount, to the extent attributable to
Employer Thrift Contributions, must out be distributed to the
Participant, but shall be applied to reduce Employer Thrift
Contributions for the Limitation Year. To the extent such Excess
Amount is attributable to Employer Profit Sharing Deferral
Contributions or Employer Salary Deferral Contributions, it shall
be distributed to the Participant in accordance with Sections 4.1
and 4.2.
5.2 Employers Maintaining Other Model, Master or Prototype Defined
Contribution Plans.
(a) If, in addition to this Plan, the Employer maintains any other
qualified defined contribution plan (all of which are qualified Model,
Master or Prototype Plans), the amount of Annual Additions which may be
allocated under this Plan on a Participant's behalf for a Limitation Year,
shall out exceed the Maximum Permissible Amount, reduced by the sum of any
Annual Additions allocated to the Participant's account for the same
Limitation Year under such other defined contribution plan.
(b) Prior to the determination of the Participant's actual compensation for
the Limitation Year, the amounts referred to in Section 5.2(a) above may be
determined on the basis of the Participant's estimated annual compensation
for such Limitation Year. Such estimated annual compensation shall be
determined on a reasonable basis and shall be uniformly determined for all
Participants similarly situated.
(c) As soon as is administratively feasible after the end of the Limitation
Year, the amounts referred to in Section 5.2(a) shall be determined on the
basis of the Participant's actual compensation for such Limitation Year.
(d) If a Participant's Annual Additions under this Plan and all such other
plans result in an Excess Amount, such Excess Amount shall be deemed to
consist of the Amounts last allocated.
(e) If an Excess Amount was allocated to a Participant on an allocation
date of this Plan which coincides with an allocation date of another plan,
the Excess Amount attributed to this Plan will be the product of:
(i) the total Excess Amount allocated as of such date (including any
amount which would have been allocated but for the limitations of Code
Section 415), times
(ii) the ratio of (A) the amount allocated to the Participant as of such
date under this Plan, divided by (B) the total amount allocated as of
such date under all qualified defined contribution plans (determined
without regard to the limitations of Code Section 415).
(f) Any Excess Amounts attributed to this Plan shall be disposed of as
provided in Section 5.1(d).
15
<PAGE>
5.3 Employers Maintaining Other Defined Contribution Plans, If the Employer
also maintains another plan which is a qualified defined contribution plan other
than a Model, Master or Prototype Plan, Annual Additions allocated under this
Plan on behalf of any Participant shall be limited in accordance with the
provisions of Section 5.2 as though the other plan were a Model, Master or
Prototype Plan, unless the Employer provides other limitations in the Adoption
Agreement.
5.4 Definitions. For purposes of this Section 5, the following terms shall
be defined as follows:
(a) "Annual Additions" - The sum of the following amounts allocated on
behalf of a Participant for a Limitation Year:
(i) all employer contributions,
(ii) all forfeitures, and
(iii) the lesser of (A) one-half of all employee contributions, and (B) the
amount of all employee contributions in excess of six percent (6%) of
such Participant's actual compensation.
For the purposes of this Section 5, amounts reapplied to reduce employer
contributions shall also be included as Annual Additions.
(b)"Employer" - The employer that adopts this Plan. In the case of a group
of employers which constitutes a (i) controlled group of corporations (as
defined in Code Section 414(b) as modified by Code Section 415(h)), (ii)
trades or businesses (whether or not incorporated) which are under common
control (as defined in Code Section 414(c) as modified by Code Section
415(h)), or (iii) an affiliated service group (as defined in Code Section
414 (ml), all such employers shall be considered a single employer for
purposes of applying the limitations of this Section 5.
(c)"Excess Amount" - The excess of the Participant's Annual Additions for
the Limitation Year over the Maximum Permissible Amount, less loading and
other administrative charges allocable to such excess.
(d)"Limitation Year" - A calendar year (Or any other 12 consecutive month
period adopted for all plans of the Employer pursuant to a written
resolution adopted by the Employer).
(e)"Master or Prototype Plan" - A plan the form of which is the subject of
a favorable opinion letter from the Internal Revenue Service issued
pursuant to Rev. Proc. 80-29 or successor procedure.
(f) "Maximum Permissible Amount" - For a Limitation Year, with respect to
any Participant shall be the lesser of:
(1)(A) if the Plan was in existence on July 1, 1982, $25,000 for
Limitation Years beginning before January 1, 1983 and $30,000 for
Limitation Years beginning after December 31, 1982, or (B) if the Plan was
not in existence on July 1, 1982, $30,000; provided, however, that the
amounts described in (A) and (B) shall be increased to such larger amounts
as may be prescribed by regulation authorized by the Secretary of the
Treasury or his delegate; or
(2) 25% of the Participant's compensation for the Limitation Year.
(g)"Model Plan" - A plan the form of which has been published by the
Internal Revenue Service.
SECTION 6. CODE SECTION 401(1;) LIMITATIONS ON CONTRIBUTIONS AND ALLOCATIONS
6.1 Limitation. In addition to any other limitations set forth in this
Plan, Code Section 401(k) requires that the Employer Contributions and the
allocation thereof must not result in discrimination in favor of the
shareholders, officers or highly compensated employees of the Employer. To meet
this requirement, one or more of the following tests must be met each Plan Year:
(a) If the Employer has not elected to make Employer Thrift Contributions
under Section V of the Adoption Agreement, the Employer Profit Sharing
Deferral Contributions and Employer Salary Deferral Contributions and the
allocation thereof must either:
(i) satisfy the General Cash or Deferred Discrimination Rule (as defined
below); or
(ii) satisfy the Special Cash or Deferred Discrimination Rule (as defined
below).
(b) If the Employer has elected to make Employer Thrift Contributions under
Section V of the Adoption Agreement, either:
(i) the combined Employer Thrift, Profit Sharing Deferral and Salary
Deferral Contributions must satisfy the General Cash or Deferred
Discrimination Rule; or
(ii) the Employer Thrift Contributions must satisfy the General Cash or
Deferred Discrimination Rule and the Employer Profit Sharing Deferral
and Salary Deferral Contributions must meet the Special Cash or
Deferred Discrimination Rule; or
(iii) the Employer Thrift Contributions must satisfy the General Cash or
Deferred Discrimination Rule and the combined Employer Thrift, Profit
Sharing Deferral and Salary Deferral Contributions must meet the
Special Cash or Deferred Discrimination Rule,
6.2 General Cash or Deferred Discrimination Rule Defined. To satisfy the
General Cash or Deferred Discrimination Rule, the Plan must satisfy either the
percentage test or the classification test described in Code Section 410(b)(1),
and the Employer Contributions (or relevant portion thereof) must also satisfy
the requirements of Code Section 401(a)(4). In testing whether the requirements
of Code Section 410(b)(1) are satisfied, the Employees who benefit from the Plan
may be either (a) the Employees eligible to participate in the Plan, or (b) the
Employees who participate in the Plan. In testing for discrimination under Code
Section 401(a)(4), the eligible or covered Employees will be considered
depending on the group used to satisfy Code Section 410(b)(1).
6.3 Special Cash or Deferred Discrimination Rule Defined. To satisfy the
Special Cash or Deferred Discrimination Rule, the Plan must satisfy either the
percentage test or the classification test described in Code Section 410(b)(1).
For this purpose, all eligible Employees are considered to benefit from the
Plan. In addition, the Employer Contributions (or relevant portion thereof) must
satisfy one of the following tests:
(a) the actual deferral percentage for the highly compensated Employees
eligible to participate in the Plan (the top 1/3) must not be more than the
actual deferral percentage of all other eligible Employees (lower 2/3)
multiplied by 1.5; or
(b) the excess of the actual deferral percentage for the top 1/3 over the
lower 2/3 is not more than 3 percentage points, and the actual deferral
percentage for the top 1/3 is not more than the actual deferral percentage
of the lower 2/3 multiplied by 2.5.
For purposes of the above, the term "highly compensated Employee" means any
eligible Employee who receives, with respect to the Compensation taken into
account for the Plan Year, more Compensation than two-thirds of all other
eligible Employees. Both 1/3 and 2/3 of all the eligible Employees shall be
rounded to the nearest integer. The "actual deferral percentage" for the top 3
and the lower 2/3 for a Plan Year is the average of the ratios, calculated
separately for each Employee in such group, of the amount of Employer
Contributions (or relevant portion thereof) paid under the Plan for such Plan
Year on behalf of each such Employee for such Plan Year, to the Employee's
Compensation for such Plan Year (prior to any deferral hereunder).
6.4 Responsibilities of Ad7nblistrator. The Administrator shall have the
responsibility of monitoring the Plan's compliance with the limitations of this
Section 6 and shall have the power to take any and all steps it deems necessary
or appropriate to ensure compliance, including, without limitation, restricting
the amount of salary or Profit Sharing Bonus which the highly compensated
Employees may elect to defer, or delaying or holding Employer Contributions in
suspense until it can be determined that no amount in excess of these
limitations will be contributed to the Trust. Any actions taken by the
Administrator under this Section 6.4 shall be pursuant to non-discriminatory
procedures consistently applied.
SECTION 7. TIME AND MANNER OF MAKING CONTRIBUTIONS
7.1 Manner. unless otherwise agreed to by the Trustee, contributions to
said Trustee shall be made only in cash. All contributions may be made in one or
more installments.
7.2 Time. Employer Profit Sharing Deferral or Salary Deferral Contributions
with respect to a Plan Year shall be made no later than 30 days after the end of
that Plan Year (or such later time as is permitted by regulations authorized by
the Secretary of the Treasury or delegate). Employer Thrift Contributions and
Participant Non-Deductible Contributions shall be made before the time limit,
including extensions thereof, for filing the Employer's federal income tax
returns for the Year with or within which the particular Plan Year ends (or such
later time as is permitted by regulations authorized by the Secretary of the
Treasury or delegate). Participant Deductible Voluntary Contributions shall be
made no later than April 15 following the Participant's taxable year for which
such contributions are made. All contributions shall be paid to the
Administrator for transfer to the Trustee. The Administrator shall transfer such
contributions to the Trustee as soon as possible, except to the extent permitted
by Section 6.4 hereof. The Administrator may establish a payroll deduction
system or other procedure to assist the making of Participant Contributions and
Employer Salary Deferral Contributions to the Trust, and the Administrator may
from time to time adopt rules or policies governing the manner in which such
contributions may be made so that the Plan may be conveniently administered.
7.3 Separate Accounts. For each Participant, a separate account shall be
maintained for each of the following types of contributions and the income,
expenses, gains and losses attributable thereto:
(a)Participant Non-Deductible Voluntary Contributions, if selected under
Section VI-A of the Adoption Agreement;
(b) Participant Deductible Voluntary Contributions, if selected under
Section VI-B of the Adoption Agreement;
(c) Employer Profit Sharing Deferral Contributions, if selected under
Section IV of the Adoption Agreement;
(d) Employer Salary Deferral Contributions, if selected under Section IV of
the Adoption Agreement;
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(e) Employer Thrift Contributions, if selected under Section V of the
Adoption Agreement; and
(f) Rollover Contributions, if the Administrator accepts such contributions
pursuant to Section 4.6 hereof.
7.4 Vesting. A Participant's interest in his Account shall always be fully
vested and nonforfeitable.
SECTION 8. DISTRIBUTION UPON DEATH
8.1 Distribution to Beneficiary. If a Participant's employment terminates
because of his death, the Trustee shall, upon the direction of the
Administrator, distribute the Participant's Account or the undistributed
remainder thereof, as the case may be, in accordance with the provisions of
Section 8.2, to the Beneficiary or Beneficiaries validly named in the most
recent Designation of Beneficiary form filed by the Participant with the
Administrator before his death in compliance with Section 16. The
Administrator's direction shall include notification of the Participant's death,
the identity of the Beneficiary or Beneficiaries so named, and the appropriate
manner of distribution.
8.2 Manner of Distribution. A distribution made under this Section 8 shall
be made in such manner as the Participant shall in his most recent Designation
have validly elected. In the absence of such an election, such distribution
shall be made in such manner as the Participant's Beneficiary (or Beneficiaries)
may elect, subject to the approval of the Administrator, or in the absence of
such an election, in such manner as the Administrator shall determine.
SECTION 9. DISTRIBUTION UPON HARDSHIP
If selected by the Employer in Section x of the Adoption Agreement, the
Trustee shall, upon the direction of the Administrator, distribute all or a
portion of a Participant's Employee Salary Deferral Account, Employer Profit
Sharing Deferral Account and Employer Thrift Account prior to the time such
Accounts are otherwise distributable in accordance with Sections 8 and 10
hereof, subject to the following:
9.1 Hardship Defined. Any such distribution shall be made only if, and the
amount of such distribution shall be limited to the extent that, the Participant
demonstrates that he is suffering from "hardship," as that term is defined in
proposed or final regulations (whichever are applicable) promulgated pursuant to
Code Section 401(k), or such other standard as may from time to time be
established or authorized by the Secretary of the Treasury or his delegate for
the purpose of determining the circumstances under and the extent to which
elective contributions to a cash or deferred profit-sharing plan may be
withdrawn on account of hardship without adverse effect upon such a plan's
continued qualification. Any determination of the existence of hardship and the
amount to be distributed on account thereof shall be made by the Administrator
(Or such other person as may be required to make such decisions under the
applicable regulations described above) in accordance with the foregoing rule as
applied in a uniform and non-discriminatory manner.
9.2 Manner of Distribution. A distribution under this Section 9 shall be
made in a lump sum payment to the Participant.
SECTION 10. OTHER DISTRIBUTIONS
10.1 Normal Distribution. The Account of any Participant will normally be
distributed in monthly installments which must commence at or within sixty (60)
days after the end of the Plan Year in which occurs his Normal Retirement Date
(as selected by the Employer in Section II of the Adoption Agreement) or in
which his Employment ceases, whichever is later, to continue over a period of
one hundred and twenty (120) months, The monthly amount shall normally be the
balance of the Participant's Account divided by the remaining number of months
in such one hundred and twenty (120) months, all rounded to the nearest cent,
However, the amount of each monthly installment may be recomputed and adjusted
from time to time no more frequently than monthly as the Trustee may reasonably
determine.
10.2 Optional Distribution. All Participants may request the Administrator
to approve, in its sole discretion, any of the following variations from the
normal pattern of distribution provided that the distribution (i) shall not
commence before the earlier of the Participant's retirement, death, disability,
separation from service, or attainment of age 59 1/2, (ii) extend beyond the
lifetime of the Participant or the joint lifetime of the Participant and his
spouse, as actuarially estimated either at the time of approval or periodically
in a consistent manner, and (iii) the present value of the distributions to be
made to the Participant is more than one-half (1/2) the value of his Account, as
determined at the time this distribution commences:
(a) Distribution made or commencing before his Normal Retirement Date,
(b) Distributions made or commencing after the normal time of distribution
described in Section 10.1.
(c) Distribution of his entire Account at one time,
(d) Installment payments of a fixed amount, such payments to be made until
exhaustion of the Participant's Account,
(e) Distribution in Kind,
(f) Any reasonable combination of the foregoing or any reasonable time or
manner of distribution within the above-stated limitations, including
purchase and distribution of bonds described in Code Section 405(d).
SECTION 11. INVESTMENT OF CONTRIBUTIONS
11.1 Manner of Investment. All contributions to the Account of a
Participant shall be held by the Trustee designated by the Employer in Section
XIV of the Adoption Agreement. The Account of a Participant may only be invested
and reinvested in shares of Designated Investment Companies (in such proportions
as tile Trustee is instructed in accordance with Section VII of the Adoption
Agreement) or such other investments as are permitted by the Distributor, except
to the extent that a Participant's Account is invested in a loan pursuant to
Section 112 hereof. Investment in the shares of more than one Designated
Investment Company is not permitted unless tile value of the Participant's
Account and the value of the investment in the second Designated Investment
Company exceed amounts from time to time determined by the Distributor.
11.2 Investment Decision.
(a) The decision as to the investment of an Account shall be made by the
person designated in Section VII of the Adoption Agreement. If the decision
is made by the Participant, the Participant shall convey investment
instructions to the Administrator and the Administrator shall promptly
transmit those instructions to the Trustee. Further, if the decision is to
be made by the Participant, the right to make such a decision shall remain
with the Participant upon his retirement and shall pass to the Distributee
upon such Participant's death.
(b) The person designated to make the decision as to the investment of an
Account may direct that the investment medium of an Account be changed,
provided that no such change may be made from or to an investment other
than a Designated Investment Company except to the extent permitted by the
terms of that other investment vehicle. If the Distributor determines in
its own judgment that there has been trading of Designated Investment
Companies in the Accounts of the Participants, any Designated Investment
Company may refuse to sell its shares to such Accounts. When an investment
is being made or changed the person designated to do so shall specify the
type of Account to which the change refers.
(c) If any decision as to investments is to be made by the Administrator,
it shall be made on a uniform basis with respect to all Participants.
(d) The Administrator and the Trustee may adopt procedures permitting
Participants to convey their investment instructions directly to the
transfer agent for the Designated Investment Company or Companies or for
any other investment permitted by the Distributor.
SECTION 12. LOANS
If selected by the Employer in Section IX of the Adoption Agreement, the
Trustee shall, upon the direction of the Employer, make one or more loans,
including any renewal thereof, to a Participant. Any such loan shall be subject
to such terms and conditions as the Employer shall determine pursuant to a
uniform policy adopted by the Employer for this purpose, which policy shall be
at least as restrictive as the following:
12.1 Equivalent Basis. No such loan may be made to a disqualified person
within the meaning of Code Section 4975(e), unless such loans are available to
all Participants on a reasonably equivalent basis and are not made available to
officers, shareholders or highly paid Participants in an amount which, when
stated as a percentage of such Participant's Account, is greater than is
available to other Participants.
12.2 Limitation on Amount. The amount of any such loan, when added to the
outstanding balance of all other loans from the Plan (and any other plan of the
Employer) to the Participant, shall not exceed the following:
Participant's Maximum Amount
Account Balance of Loan
$0 - $10,000 100% of Account balance
$110,000 - $20,000 $10,000
$20,000 - $100,000 50% of Account balance
over $100,000 $50,000
The value of the Participant's Account balance shall be as determined by the
Employer; provided, however, that such determination shall in no event take into
account the portion of the Participant's Account attributable to Participant
Deductible Voluntary Contributions.
12.3 Maximum Term, The term of any such loan shall not exceed 5 years;
provided, however, that such limitation shall not apply to any loan used to
acquire, construct, reconstruct, or substantially rehabilitate any dwelling unit
which within a reasonable time is to be used (determined at the time the loan is
made) as a principal residence of the Participant or a member of the family
(within the meaning of Code Section 267(c)(4)) of the Participant.
12.4 Promissory Note, Any such loan shall be evidenced by a promissory note
executed by the Participant and payable to the Trustee, on the earliest of (i) a
fixed maturity date meeting the requirements of Section 12.3 above, but in no
event later than the Participant's Normal Retirement Date,
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(ii) the Participant's death, or (iii) when distribution hereunder is to be made
to the Participant (other than a withdrawal which will not reduce the Value of
his Account to the extent that the aggregate amount owing could not be made as a
new loan within the limitation set forth in Section 12.2 above). Such promissory
note shall be secured by an assignment of the Participant's Account to the
Trustee. Such promissory note shall evidence such terms as are required by this
Section 12.
12.5 Interest. Any such loan shall be subject to a reasonable rate of
interest.
12.6 Repayment. If a note is not paid when the Participant's benefits
hereunder are to be distributed, then any unpaid portion of such loan and unpaid
interest thereon shall be deducted by the Trustee from the Participant's Account
before benefits are paid from or purchased out of the Account. Such deduction
shall, to the extent thereof, cancel the indebtedness of the Participant. If a
note is not paid when it otherwise becomes payable under Section 12.4, or if at
any time the Employer determines that the aggregate amounts owing by a
Participant upon such notes exceed the vested value of the Participant's
Account, the Participant shall be promptly notified in writing that unless such
loan or excess is repaid within 30 days, action will be taken to collect the
same plus any cost of collections.
12.7 Accounting. Loans shall be made only from the Account of the
Participant (exclusive of that portion of the Account attributable to
Participant Deductible Voluntary Contributions) requesting the loan, and shall
be treated as an investment of his Account. All interest payments made with
respect to such loan shall be credited to the Participant's Account.
12.8 Precedence. This Section 12 overrides Section 17 below.
SECTION 13. ADMINISTRATION
13.1 Appointment of Administrator. The Employer may from time to time in
writing appoint one of more persons as Administrator (hereinafter referred to in
the singular) who shall have all power and authority necessary to carry out the
terms of the Plan. A person appointed as Administrator may also serve in any
other fiduciary capacity, including that of Trustee, with respect to the Plan.
The Administrator may resign upon fifteen (15) days advance written notice to
the Employer, and the Employer may at any time revoke the appointment of the
Administrator with or without cause. The Employer shall exercise the power and
fulfill the duties of the Administrator if at any time the position is vacant.
13.2 Named Fiduciaries. The "Named Fiduciaries" within the meaning of the
Act shall be the Administrator and the Trustee.
13.3 Allocation of Responsibilities. Responsibilities upon the Plan shall
be allocated among the Trustee, the Administrator and the Employer as follows:
(a) Trustee: The Trustee shall have exclusive responsibility to hold,
manage and invest, pursuant to instructions communicated to it by the
Administrator under Section VII of the Adoption Agreement and Section 11.2
above, the foods received by it subject to the Trust Agreement under which
it serves.
(b) The Administrator: The Administrator shall have the responsibility sod
authority to control the operation and administration of the Plan in
accordance with its terms including, without limiting the generality of the
foregoing, (1) any investment decisions assigned to it under Section VII of
the Adoption Agreement or transmission to the Trustee of any Participant
investment decision under Section 11.2(2) interpretation of the Plan,
conclusive determination of all questions of eligibility, status, benefits
and rights under the Plan and certification to the Trustee of all benefit
payments under the Plan; (3) hiring of persons to provide necessary
services to the Plan not provided by Employees; (4) preparation and filing
of all statements, returns and reports required to be filed by the Plan
with any agency of Government; (5) compliance with all disclosure
requirements of all state or federal law; (6) maintenance and retention of
all Plan records as required by law, except those required to be maintained
by the Trustee; and (7) all functions otherwise assigned to it under the
terms of the Plan.
(c) Employer: The Employer shall be responsible for the design of the Plan,
as adopted or amended, the designation of the Administrator and Trustee as
provided in the Plan, the delivery to the Administrator and the Trustee of
Employee information necessary for operation of the Plan, the timely making
of the Employer Contributions specified in Sections IV or V of the Adoption
Agreement, and the exercise of all functions provided in or necessary to
the Plan except those assigned in the Plan to other persons. (d) This
Section 13.3 is intended to allocate individual responsibility for the
prudent execution of the functions assigned to each of the Trustee, the
Administrator and the Employer and none of such responsibilities or any
other responsibilty shall be shared among them unless specifically provided
in the Plan, Whenever one such person is required by the Plan to follow the
directions of another, the two shall not be deemed to share responsibility,
but the person who gives the direction shall be responsible for giving it
and the responsibility of the person receiving the direction shall be to
follow it insofar as it is on its face proper under applicable law.
13.4 More Than One Administrator, If more than one individual is appointed
as Administrator under Section 13.1, such individuals shall either exercise the
duties of the Administrator in concert, acting by a majority vote or allocate
such duties among themselves by written agreement delivered to the Employer and
the Trustee. In such a case, the Trustee may rely upon the instruction of any
one of the individuals appointed as Administrator regardless of the allocation
of duties among them.
13.5 No Compensation. The Administrator shall not be entitled to receive
any compensation from the funds held under the Plan for its services in that
capacity unless so determined by the Employer or required by law.
13.6 Record of Acts. The Administrator shall keep a record of all his
proceedings, acts and decisions, and all such records and all instruments
pertaining to Plan administration shall be subject to inspection by the Employer
at any time. The Employer shall supply, and the Administrator may rely on the
accuracy of, all Employee data and other information needed to administer the
Plan.
13.7 Bond. The Administrator shall be required to give bond for the
faithful performance of his duties to the extent, if any, required by the Act,
the expense to be borne by the Employer.
13.8 Agent for Service of Legal Process. The Administrator shall be agent
for service of legal process on the Plan.
13.9 Rules. The Administrator may adopt or amend and shall publish to the
Employees such rules and forms for the administration of the Plan, and may
employ or retain such attorneys, accountants, physicians, investment advisors,
consultants and other persons to assist in the administration of the Plan as it
deems necessary or advisable.
13.10 Delegation. To the extent permitted by applicable law, the
Administrator may delegate all or part of his responsibilities hereunder and at
any time revoke such delegation, by written statement communicated to the
delegate and the Employer. The Trustee may, but need not, act on the
instructions of such a delegate. The Administrator shall annually review the
performance of all such delegates.
13.11 Claims Procedure. It is anticipated that the Administrator will
administer the Plan to provide Plan benefits without waiting for them to be
claimed, but the following procedure is established to provide additional
protection to govern unless and until a different procedure is established by
the Administrator and published to the Participants and Beneficiaries.
(a) Manner of Making Claims. A claim for benefits by a Participant or
Beneficiary to be effective under this procedure must be made to the
Administrator and must be in writing unless the Administrator formally or
by course of conduct waives such requirements.
(b) Notice of Reason for Denial. If an effective claim is wholly or
partially denied, the Administrator shall furnish such Participant or
Beneficiary with written notice of the denial within sixty (60) days after
the original claim was filed. This notice of denial shall set forth in a
manner calculated to be understood by the claimant (1) the reason or
reasons for denial, (2) specific reference to pertinent plan provisions on
which the denial is based, (3) a description of any additional information
needed to perfect the claim and an explanation of why such information is
necessary, and (4) an explanation of the Plan's claim procedure.
(c) The Participant or Beneficiary shall have sixty (60) days from receipt
of the denial notice in which to make written application for review by the
Administrator, The Participant or Beneficiary may request that the review
be in the nature of a hearing. The Participant or Beneficiary shall have
the rights (1) to have representation, (2) to review pertinent documents,
and (3) to submit comments in writing. (d) The Administrator shall issues
decision on such review within sixty (60) days after receipt of an
application for review, except that such period may be extended for a
period of time not to exceed an additional sixty (60) days if the
Administrator determines that special circumstances (such as the need to
hold a hearing) requires such extension. The decision on review shall be in
writing and shall include specific reasons for the decision, written in a
manner calculated to be understood by the claimant, and specific references
to the pertinent Plan provisions on which the decision is based.
SECTION 14 FEES AND EXPENSES
All reasonable fees and expenses of the Administrator or Trustee incurred
in the performance of their duties hereunder or under the Trust shall be paid by
the Employer; and to the extent not so paid by the Employer, said fees and
expenses shall be deemed to be an expense of the Trust and the Trustee is
authorized to charge the same to the Accounts of the Participants, and unless
allocable to the Accounts of specific Participants, they shall be charged
against the respective accounts of all or a reasonable group of Participants in
such reasonable manner as the Trustee shall determine,
SECTION 15. BENEFIT RECIPIENT INCOMPETENT
OR DIFFICULT TO ASCERTAIN OR LOCATE
15.1 Incompetency. If, in the sole judgment of the Administrator a
Participant or Beneficiary is physically or mentally incapable of handling his
financial affairs, payment otherwise due him may be made for his benefit in the
sole discretion of the Administrator either to his legal
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representative or to any of his relatives or friends or maybe applied directly
for his support and maintenance, Payment so made in good faith shall completely
discharge the Employer, the Administrator and the Trustee from liability
therefor.
15.2 Difficulty to Ascertain or Locate, If it is impossible or difficult to
ascertain the person who is entitled to receive any benefit under the Plan, the
Administrator in its discretion may direct that such benefit be (i) paid to
another person in order to carry Out the Plan's purposes; or (ii) retained in
the Trust; or (iii) paid to a court pending judicial determination of the right
thereto.
SECTION 16. DESIGNATION OF BENEFICIARY
Each Participant may submit to the Administrator a properly-executed
Designation of Beneficiary form. In order to be effective, such Designation must
have been properly executed and submitted to the Administrator at the home
office thereof before the death of the Participant. The last effective
Designation accepted by the Administrator shall be controlling, and whether or
not fully dispositive of his Account, thereupon shall revoke all Designations
previously submitted by the Participant. Each such executed Designation is
hereby specifically incorporated herein by reference and shall be construed and
enforced in accordance with the laws of the state in which the Employer has its
principal place of business. To the extent that any portion of an Account of a
deceased Participant is not governed by a Designation which names at least one
living Beneficiary designated by the Participant, that portion of the Account
shall be distributed to the estate of the deceased Participant.
SECTION 17. SPENDTHRIFT PROVISION
No interest of any Participant or Beneficiary shall be assigned,
anticipated or alienated in any manner nor shall it be subject to attachment,
bankruptcy proceedings or to any other legal process or to the interference or
control of creditors or others, except to the extent that Participants may
secure loans from the Trust with their Accounts pursuant to Section 12 hereof.
SECTION 18. NECESSITY OF QUALIFICATION
This Plan is established with the intent that it shall qualify under Code
Section 401 (a) as that Section exists at the time the Plan is established. If
the Employer fails to obtain or retain such a determination that the Plan so
qualifies, the Plan shall cease to have any of the benefits of Revenue Procedure
80-29 or successor procedure which apply to the Plan as a prototype plan. The
Administrator shall promptly notify the Trustee in writing of any determination
made with respect to the qualified status of the Plan. Notwithstanding any other
provision contained in this Plan, if the Internal Revenue Service determines
that the Plan initially fails to so qualify, then the Employer shall promptly
either amend the Plan under Code Section 401(b) 50 that it does qualify, or
direct the Trustee to terminate the Plan and distribute all the assets of the
Trust equitably among the contributors thereto in proportion to their
contributions, and the Plan shall be considered to be rescinded and of no force
and effect.
SECTION 19. AMENDMENT OR TERMINATION
19.1 Amendment or Termination. The Employer may at any time, and from time
to time amend this Prototype Plan, the Adoption Agreement and the Trust
Agreement (including a change in any election it has made in the Adoption
Agreement), or suspend or terminate this Plan by giving written notice to the
Distributor and to the Trustee, but the Trust may not thereby be diverted from
the exclusive benefit of the Participants, their Beneficiaries, survivors or
estates, or the administrative expenses of the Plan, nor revert to the Employer,
nor may an allocation or contribution theretofore made be changed thereby or an
amendment otherwise operate retroactively except as the same may be deemed
necessary in order to make the Plan qualify under Code Section 401(a). An
amendment shall be deemed necessary for this purpose if counsel for the Employer
certifies that in its opinion the written ruling of the Commissioner of Internal
Revenue that the Plan meets such requirements can be obtained within a
reasonable time only with such retroactive amendment. Any amendment by the
Employer which is other than the amendment of the Employer's prior designation
of an option or provision set forth or referred to in the Adoption Agreement
will constitute a substitution by the Employer of an individually designed plan
for this prototype plan and the general amendment procedure of the Internal
Revenue Service governing individually designed plans will be applicable.
Nothing contained herein shall constitute an agreement or representation by the
Distributor that it will continue to maintain its sponsorship of the Plan
indefinitely.
19.2 Delegation. The Employer hereby delegates to the Distributor the
authority to amend so much of the Adoption Agreement, this Prototype Plan, and
the Trust Agreement, as is in prototype form and, to the extent to which the'
Employer could effect such amendment, the Employer shall be deemed to have
consented to any amendment so made, When an election within the prototype form
has been made by the Employer, it shall be deemed to continue after amendment of
the prototype form unless and until the Employer expressly further amends the
election, notwithstanding that the provision for the election in the amended
prototype form is in a different form or place; provided, however, that if the
amended form inadvertently fails to provide means to duplicate exactly the
earlier election, such earlier election shall continue until such further
amendment. The immediately preceding sentence is subject to the qualification
that each Employer hereby delegates to the Distributor, in the event of such an
amendment of the prototype form, authority to determine conclusively that such a
continuation of an earlier election by the employer is not advisable and to make
the election for the Employer in the amended prototype form which in the
judgment of the Distributor most nearly corresponds with the election made by
the employer before an amendment of the prototype form, provided the following
procedure is followed: the election for the Employer may be made with respect to
any specified Employers as to whom it may be made applicable singly, or such
election may be made with respect to all Employers as to whom it may be made
applicable as a group; and the election shall be made as of an effective date
which has been specified in a notice mailed or delivered, at the last
address(es) of the Employer(s) on the records of the Distributor, to the
Employer(s) at least twenty (20) days before the effective date of the election.
Such notice may be mailed to Employers to whom it cannot be applicable by reason
of a previous election made by the Employer or otherwise, but it shall be
effective only as to those Employers who have received the notice and have not
themselves made a new election with respect to that item since the amendment of
the prototype form and previous to the effective date of such election by the
Distributor. The foregoing delegations of authority to make elections, or to
make amendments, shall not impose any duty on the Distributor to make them nor
shall it affect the interpretation of the Plan if they are not used.
19.3 Distribution of Accounts Upon Termination. Upon termination of the
Plan or complete discontinuance of contributions under it, the Administrator
shall determine whether to pay the interests of Participants, former
Participants and Beneficiaries immediately, to retain such interest in the Trust
and pay them in the future according to Section 10, or to use what other methods
the Administrator deems advisable in order to furnish whatever benefits the
Trust will provide, subject to the limitations of Section 10.2 limiting the
length of the period over which an Account can be paid.
SECTION 20. TRANSFERS
Nothing contained herein or in the Trust shall prevent the merger or
consolidation of the Plan with, or transfer of assets or liabilities of the Plan
to, another plan meeting the requirements of Code Section 401(a) or the transfer
to the Plan of assets or liabilities of another such plan so qualified under the
Code. Any such merger, consolidation or transfer shall be accompanied by the
transfer of such existing records and information as may be necessary to
properly allocate such assets among Participants, including any tax or other
information necessary for the Participants or persons administering the plan
which is receiving the assets. The terms of such merger, consolidation or
transfer must be such that if this Plan then terminated, each Participant would
receive a benefit immediately after the merger, consolidation or transfer equal
to or greater than the benefit be would have received if the Plan had terminated
immediately before the merger, consolidation or transfer.
SECTION 21. MISCELLANEOUS
21.1 Misrepresentation. Notwithstanding any other provision herein, if an
Employee misrepresents his age or any other fact, any benefit payable to him
hereunder shall be the smaller of: (i) the amount that would be payable if no
facts had been misrepresented, or (ii) the amount that would be payable if the
facts were as misrepresented.
21.2 Legal or Equitable Action. If any legal or equitable action with
respect to the Plan is brought by or maintained against any person, and the
results of such action are adverse to that person, attorney's fees and all other
costs to the Employer, the Administrator or the Trust of defending or bringing
such action shall be charged against the interest, if any, of such person under
the Plan.
21.3 No Enlargement of Plan Rights. It is a condition of the Plan and Trust
Agreement, and each Participant by participating herein expressly agrees, that
he shall look solely to the assets of the Trust for the payment of any benefit
under the Plan.
21.4 No Enlargement of Employment Rights. Nothing appearing in or done
pursuant to the Plan shall be construed to (a) give any person a legal or
equitable right or interest in the assets of the Trust or distribution
therefrom, nor against the Employer, except as expressly provided herein; (b)
create or modify any contract of employment between the Employer and any
Employee or obligate the Employer to continue the services of any Employee; or
(c) allow service as a sole proprietor or partner, or compensation therefor, to
be taken into account for any purpose of the Plan.
21.5 Written Orders. In taking or omitting to take any action under this
Plan or under the Trust, the Trustee may conclusively rely upon and shall be
protected in acting upon any written orders from or determinations by the
Employer or the Administrator as appropriate, or upon any other notices,
requests, consents, certificates or other instruments or papers believed by it
to be genuine and to have been properly executed and, so long as it acts in good
faith, in taking or omitting to take any other action.
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21.6 No Release from Liability. Nothing in the Plan shall relieve any
person from liability for any responsibility under Part 4 of Title I of the Act,
Subject thereto neither the Trustee, the Administrator nor any other person
shall have any liability under the Plan, except as a result of his negligence or
wilful misconduct, and in any event the Employer shall fully indemnify and save
harmless all persons from any such liability except that resulting from their
negligence or wilful misconduct.
21.7 Discretionary Actions. Any discretionary action, including the
granting of a loan pursuant to Section 12 hereof, to be taken by the Employer or
the Administrator under this Plan shall be non-discriminatory in nature and all
Employees similarly situated shall be treated in a uniform manner.
21.8 Headings. Headings herein are primarily for convenience of reference,
and if they conflict with the text, the text shall control.
21.9 Applicable Law. This Plan shall, to the extent state law is
applicable, be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the laws of the state in which the Employer has
its principal place of business.
21.10 No Reversion. Notwithstanding any other contrary provision of the
Plan, but subject nevertheless to Sections 5, 6 and 18, no part of the assets in
the Trust shall revert to the Employer, and no part of such assets, other than
that amount required to pay taxes or administrative expenses, shall be used for
any purpose other than exclusive benefit of Employees or their Beneficiaries.
21.11 Notices. The Employer will provide the notice to other interested
parties contemplated under Code Section 7476 before requesting a determination
by the Secretary of the Treasury or his delegate with respect to the
qualification of the Plan.
21.12 Conflict. In the event of any conflict between the provisions of this
Plan and the terms of any contract or agreement issued thereunder or with
respect thereto, the provisions of the Plan shall control.
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TRUST AGREEMENT
ESTABLISHED PURSUANT TO THE
SCUDDER CASH OR DEFERRED PROFIT SHARING PLAN
The Employer has established the Scudder Cash or Deferred Profit Sharing
Plan for the benefit of the Participants therein, As part of the Plan the
Employer has designated the person or persons specified in the Adoption
Agreement as Trustee(s) to maintain and administer a Trust upon the following
terms and conditions for the investment of contributions under the Plan, The
definitions in Section 2 of the Prototype Plan apply herein,
1. TRUST FUND
The Trustee shall open and maintain a Trust account for the Plan, with such
subdivisions as the Employer may specify pursuant to the Plan; provided,
however, that the maintaining of such subdivisions shall not require the
physical separation of assets.
Whenever a Participant makes a contribution the Administrator shall
ascertain that the Participant has received a copy of the current prospectus
relating to the shares of any Designated Investment Company in which such
contribution is to be invested plus, where required by any state or federal law,
the current prospectus relating to any other investment in which contributions
are to be invested, By remitting such a contribution to the Trustee the
Administrator shall be deemed to warrant to the Trustee that the Participant has
received such a prospectus, and by remitting any other contribution to the
Trustee the Administrator shall be deemed to warrant to the Trustee that the
Administrator has received a current prospectus of any Designated Investment
Company in which it is to be invested, plus, where required by any state or
federal law, the current prospectus relating to any other investment in which
contributions are to be invested.
All contributions to the Trust, and any assets into which such
contributions shall be invested or reinvested shall be hereinafter referred to
in this Trust Agreement as the "Trust Fund."
2. ADMINISTRATOR
The Plan shall be administered by the Administrator as provided for in
Section 13 of the Prototype Plan, and the Trustee shall have no duties with
respect to the administration of the Plan, (However an individual who is a
Trustee may also be Administrator.)
3. TRUSTEE: NUMBER, QUALIFICATIONS AND MAJORITY ACTION
The number of Trustees shall be one, two or three. Any natural person and
any corporation having power to act as a trustee in the premises may be a
Trustee. No person shall be disqualified from being a Trustee by being employed
by the Employer, by being Administrator, by being a trustee under any other plan
of the Employer or by being a Participant in this plan or such other plan.
A Trustee holding office as sole Trustee hereunder shall have all the
powers and duties herein given the Trustees. When the number of Trustees
hereunder is three, any two of them may act, but the third Trustee shall be
promptly informed of the action. When there are two or more Trustees hereunder,
they may, by written instrument communicated to the Employer and the
Administrator allocate among themselves the powers and duties herein given to
the Trustee. If such an allocation is made, to the extent permitted by
applicable law, no Trustee shall be liable either individually or as a trustee
for loss to the Plan from the acts or omissions of another Trustee with respect
to duties allocated to such other Trustee.
4. CHANGE OF TRUSTEE
Any Trustee may resign as Trustee upon notice in writing to the Employer
and the Administrator, and the Employer may remove Trustee upon notice in
writing to the Administrator, and to all the Trustees. The removal of a Trustee
shall be effective immediately, except that a corporation serving as a Trustee
shall be entitled to sixty (60) days' notice which it may waive, and the
resignation of a Trustee shall be effective immediately, provided that neither a
removal nor a resignation of a Trustee shall be effective if the Trustee is the
sole Trustee until a successor Trustee has been appointed and has accepted the
appointment. If within sixty (60) days of the delivery of the written
resignation or removal of a sole Trustee another Trustee shall not have been
appointed and have accepted, the resigning or removed Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee or
may terminate the Plan pursuant to Section 19 of the Prototype Plan. The Trustee
shall not be liable for the acts and omissions of such successor.
At any time when the number of Trustees is one or two the Employer may but
not need appoint one or two additional Trustees, provided that the number of
Trustees shall not be more than three. Such an appointment and the acceptance
thereof shall be in writing, and shall take effect upon the delivery of written
notice thereof to all the Trustees and the Administrator and such acceptance by
the appointed Trustee, provided that if a corporation is a Trustee then in the
absence of its consent such an appointment of an additional or successor Trustee
shall not have become effective until sixty (60) days after its receipt of
notice.
Although any Employer adopting the Plan may choose any Trustee who is
willing to accept the Trust, the Distributor or its successor, may make or may
have made tentative standard arrangements with any bank or trust company with
the expectation it will be used as the Trustee by a substantial group of
Employers. It is also contemplated that more favorable results can be obtained
with a substantial volume of business, and that it may become advisable to
remove such bank or trust company as Trustee and substitute another Trustee.
Therefore, anything else in the prior two paragraphs of this Section 4
notwithstanding, each Employer adopting this Plan hereby agrees that the
Distributor may, upon a date specified in a notice to the affected Employer of
at least thirty (30) days and in the absence of written objection by the
Employer received by the Distributor before such date, (i) remove any such
Trustee and in that case, or if such a Trustee has resigned to a group of
Employers, (ii) appoint such a successor Trustee, provided such action is taken
with respect to all Employers similarly circumstanced of which the Distributor
has knowledge, and provided such notice is given in writing mailed postage
prepaid to the Employer at the latest address which has been furnished the
Distributor directly or supplied to it by such Trustee which is to be succeeded.
If within sixty (60) days after such Trustee's resignation or removal the
Employer has not appointed a successor which has accepted such appointment,
unless the appointment of a successor Trustee is waiting for action by the
Distributor pursuant to the next-preceding sentence according to notice which
has been given, the Trustee may petition an appropriate court for the
appointment of its successor. The Trustee shall not be liable for the acts and
omissions of such successor.
Successor Trustees qualifying under this Section 4 shall have all rights
and powers and all duties and obligations of original Trustees.
5. INVESTMENT OF TRUST FUND
The Trust Fund shall be fully invested and reinvested pursuant to Section
VII of the Adoption Agreement. The Trustee shall have full power and authority
to invest in any property specified in instructions communicated to it by the
Administrator, and the Trustee may invest in property selected by it pursuant to
authority delegated to it and accepted by it, all without regard to the law of
any state regarding proper investment. The Trustee shall have no responsibility
for determining how the Trust Fund is to be invested or to see that investment
instructions communicated to it comply with the terms of the Plan. Annually, on
the Valuation Date or more frequently in the discretion of the Trustee, the
assets of the Trust shall be revalued at fair market value and the accounts of
the Trust shall be proportionately adjusted to reflect income, gains, losses or
expenses, if the system of accounting does not directly accomplish all such
adjustments. The Trust Fund shall be administered separately from, and shall not
include any assets being administered under, any other plan of an employer.
Interim valuations, if any, shall be applied uniformly and in a
non-discriminatory manner for all Employees.
Any assets in the Trust Fund may be registered in the name of the Trustee
or any nominee designated by the Trustee.
6. DISTRIBUTION FROM THE TRUST FUND
The Trustee shall make or cause to be made such distribution from the Trust
Fund as the Administrator may in writing direct upon certification by the
Administrator that the same is for the exclusive benefit of Employees or former
Employees of the Employer or their Beneficiaries, or for the payment of expenses
of administering the Plan.
7. CERTIFICATIONS AND INSTRUCTIONS
Any pertinent vote or resolution of the Board of Directors of the Employer
shall be certified to the Trustee over the signature of the Secretary or an
Assistant Secretary of the Employer and under its corporate seal. The Employer
shall promptly furnish the Trustee from time to time certificates of an officer
of the Employer evidencing the appointment and termination of office of the
individual or individuals appointed as Administrator under Section 13 of the
Prototype Plan.
The Administrator shall furnish the Trustee certificates signed by the
individual or individuals appointed as Administrator, naming the person or
persons authorized to give notice on behalf of the Administrator and providing
specimens of their signatures; and all requests, directions, requisitions for
moneys and instructions by the Administrator to the Trustee shall be writing,
signed by such person or persons as may be designated from time to time by the
Administrator; they may be standing requests, directions, requisitions or
instructions; and may be made to be contingent upon determination made by the
Trustee.
21
<PAGE>
8. ACCOUNTS AND APPROVAL
The Trustee shall keep accurate and detailed accounts of all investments,
receipts and disbursements and other transactions hereunder, and all books and
records relating thereto shall be open at all reasonable times to inspection and
audit by any person or persons designated by the Administrator or by the
Employer.
Within ninety (90) days following the close of each of the Plan Years
selected by the Employer in Section XII of the Adoption Agreement the Trustee
may, and upon the request of the Employer or the Administrator shall, file with
the Administrator and the Employer a written report setting forth all securities
or other investments (including insurance contracts) purchased and sold, all
receipts, disbursements and other transactions effected by them during the
period since the date covered by the next prior report, and showing the
securities and other property held at the end of such period, and such other
information about the Trust Fund as the Administrator shall request. Within
ninety (90) days from the date of mailing or delivery of such report the
Employer shall certify in writing to the Trustee that it has carefully reviewed
the contents of the report and has found therein no matter to which it objects
or takes exception other than those which it therewith sets forth accompanied by
the specific ground or grounds for such objections or exceptions.
9. TAXES
The Trustee may assume that any taxes assessed on or in respect of the
Trust Fund are lawfully assessed unless the Administrator shall in writing
advise the Trustee that in the opinion of counsel for the Employer such taxes
are not lawfully assessed. In the event that the Administrator shall so advise
the Trustee, the Trustee, if so requested by the Administrator and suitable
provision for their indemnity having been made, shall contest the validity of
such taxes in any manner deemed appropriate by the Administrator or counsel for
the Employer. The word "taxes" in this Section 9 shall be deemed to include any
interest or penalties that may be levied or imposed in respect to any taxes
assessed.
10. EMPLOYMENT OF COUNSEL
The Trustee may employ legal counsel (who may be counsel for the Employer)
and shall be fully protected in acting or refraining from acting, upon such
counsel's advice in respect to any legal questions.
11. REIMBURSEMENT AND COMPENSATION OF TRUSTEE
The Trustee shall be entitled to be reimbursed for his reasonable expenses.
An individual Trustee who is an Employee of the Employer shall not be
compensated for his services as Trustee, save as his compensation as an Employee
of the Employer may be such compensation. A corporation, or an individual who is
not an Employee of the Employer, which serves as a Trustee shall be entitled to
reasonable compensation for its or his services. Any taxes of any kind
whatsoever, including transfer taxes incurred in connection with the investment
or reinvestment of the assets of the Trust Fund that may be levied or assessed
in respect to such assets shall, if allocable to the Accounts of specific
Participants, be charged to such Accounts, and if not so allocable, they shall
be equitably apportioned among all such Participants' Accounts. All other
administrative expenses incurred by the Trustee in the performance of his duties
including fees for legal services rendered to them shall be paid by the Employer
within a reasonable time specified by the Trustee or at the Trustee's option may
be equitably apportioned among such Accounts.
12. LIMITATION OF TRUSTEE'S LIABILITY; INDEMNIFICATION
Nothing in this Trust Agreement or the Plan of which it is a part shall
relieve any person from liability for any responsibility under Part 4 of Title I
of the Act. Subject thereto, the Trustee shall have no liability under the Plan,
except as may arise from its negligence or wilful misconduct, and in any event,
the Employer shall fully indemnify the Trustee and save it harmless from any
such liability except that resulting from its negligence or wilful misconduct.
In the application of the foregoing, except as otherwise required by law:
12.1 The Trustee shall have no duty to take any action other than as herein
specified, unless the Administrator shall furnish it with instructions in proper
form and such instructions shall have been specifically agreed to by it, or to
defend or engage in any suit unless it shall have first agreed in writing to do
so and shall have been fully indemnified to its satisfaction.
12.2 The Trustee may conclusively rely upon and shall be protected in
acting in good faith upon any written representation or order from the
Administrator or any other notice, request, consent, certificate or other
instrument or paper believed by it to be genuine and properly executed, or any
instrument or paper if it believes the signature thereon to be genuine.
12.3 The Trustee shall not be liable for interest on any reasonable cash
balances maintained in the Trust.
12.4 The Trustee shall not be obligated to, but may, in its discretion,
receive a contribution from a Participant unless forwarded by the Administrator.
13. AMENDMENT
No part of the corpus or income of the Trust Fund shall be used for or
diverted to purposes other than the exclusive benefit of Participants or their
Beneficiaries or the administrative expenses of the Plan, or revert to the
Employer except as specifically permitted by the terms of the Plan. The right of
the Employer to amend or terminate the Trust Agreement and the delegation of
that right are set forth in Section 19 of the Prototype Plan, subject to the
foregoing and other limitations in the Plan.
The Employer will cause a copy of any amendment of the Adoption Agreement
to be delivered to the Trustee for the Trustee's information.
14. TERMINATION
Upon certification by the Board of Directors of the Employer that the
Employer has terminated the Plan as therein provided and that the Trust Fund or
part thereof is accordingly to be distributed in accordance with the termination
provisions thereof, the Trustee shall pay such amounts from the Trust Fund as
the Administrator may direct, either directly to the persons entitled to receive
such amounts or to the Administrator for distribution, provided the
Administrator further certifies that all such amounts are payable under the Plan
to Participants or their Beneficiaries or for administrative expenses of the
Plan or for other payments in accordance with the provisions thereof.
15. SUCCESSOR TRUSTEES
Any corporation into which a corporation acting as a Trustee hereunder may
be merged or with which it may be consolidated, or any corporation resulting
from any merger, reorganization or consolidation to which such Trustee may be a
party, shall be the successor of the Trustee hereunder, without the necessity of
any appointment or other action, provided it does not resign and is not removed.
16. ENFORCEMENT OF PROVISIONS
To the extent permitted by applicable law, the Employer and the
Administrator shall have the exclusive right to enforce any and all provisions
of this Agreement on behalf of all Employees or former Employees of the Employer
or their Beneficiaries or other persons having or claiming to have an interest
in the Trust Fund or under the Plan. In any action or proceeding affecting the
Trust Fund or any property constituting a part or all thereof, or the
administration thereof or for instructions to the Trustee, the Employer, the
Administrator and the Trustee shall be the only necessary parties; and shall be
solely entitled to any notice of process in connection therewith; and any
judgment that may be entered in such action or proceeding shall be binding and
conclusive on all persons having or claiming to have any interest in the Trust
Fund or under the Plan.
17. VOTING
The Trustee shall deliver, or cause to be executed and delivered, to the
Administrator all notices, prospectuses, financial statements, proxies and proxy
soliciting materials received by the Trustee relating to securities held by the
Trust, and the Administrator shall deliver these to the appropriate Participant
or the Beneficiary of a deceased Participant. The Trustee shall not vote any
securities held by the Trust except in accordance with the written instructions
of the Participant or the Beneficiary of the Participant, if the Participant is
deceased.
18. GOVERNING LAW
This instrument shall, to the extent state law is applicable, be governed
by and interpreted under the laws of the state in which the Employer has its
principal place of business.
19. ACCEPTANCE
The Trustee accepts the trust hereunder.
20. TRANSFER TO EMPLOYER
Anything contained elsewhere in this Agreement to the contrary
notwithstanding, the Employer reserves the right by action of its Board of
directors to direct the Trustee to transfer the Trust Fund to the Employer
subject to claims against it for administrative expenses if the Plan is properly
terminated in accordance with the terms and conditions of the original Plan upon
the Employer's receipt of a determination letter from the Director of Internal
Revenue determining that the Plan initially fails to qualify under Section 401
(a) of the Internal Revenue Code. The Employer shall direct the Trustee to
transfer to Employees such portion of the Trust Fund as the Plan requires to be
transferred to them on account of their contributions, but the Trustee shall not
be required to see to the application of the Trust Fund for this purpose. If
such termination ceases to be possible this section shall be of no further force
or effect.
22
<PAGE>
Telephone
numbers and
addresses
- --------------------------------------------------------------------------------
National toll free
telephone numbers
and addresses
----------------------------------------------------------------------
For information about the Scudder 401(k) program,
CALL (toll-free) 1-800-225-2471
(within Massachusetts, call collect 617-482-3990)
or
WRITE to: Scudder Funds Croup Retirement Plans
175 Federal Street
Boston, MA 02110
A Group Retirement Specialist from Scudder Fund Distributors, Inc.,
underwriter for the Scudder funds, will answer your calls and letters.
----------------------------------------------------------------------
- --------------------------------------------------------------------------------
Local addresses
of Scudder Fund
Distributors, Inc.
Boca Raton
150 East Palmetto Park Road
Boca Raton, Florida 33432
305-395-0040
Boston
175 Federal Street
Boston, Massachusetts 02440
617-482-3990
Chicago
Suite 2200, 111 East Wacker Drive
Chicago, Illinois 60604
312-861-2700
Cincinnati
540 Carew Tower
Cincinnati, Ohio 45202
513-621-2733
Cleveland
Suite 700, 1801 East Ninth Street
Cleveland, Ohio 44114
216-241-7744
Dallas
Suite 2124, Plaza of the Americas
700 North Pearl
Dallas, Texas 75201
214-742-1465
1530 Bank of the Southwest Building
Houston, Texas 77002
713-659-3838
Los Angeles
333 South Hope Street
Los Angeles, California 90071
243-6284444
New York
345 Park Avenue
New York, New York 10154
212-350-8200
Philadelphia
Three Girard Plaza
Philadelphia, Pennsylvania 19402
215-864-7200
Portland, Oregon
Benjamin Franklin Plaza
1 S.W. Columbia St.
Portland, Oregon 97258
503-224-3999
San Francisco
Suite 4100, 104 California Street
San Francisco, California 94144
415-981-8191
23
<PAGE>
Scudder
- ---------------------------------------------
This booklet is not to be used in connection
with the offering of any of the Scudder funds
unless preceded or accompanied by the
appropriate current prospectuses. Scudder
Fund Distributors, Inc. is the underwriter
of the Scudder no-load mutual funds.
K-S-33 (C) Scudder Fund Distributors, Inc.
JAPAN FUND: DECEMBER SERIES
ADJUSTED
TOTAL TOTAL TOTAL 10 YRS 5 YRS 1 YR
DATE PRICE SERIES NAV RETURN $1000 $1000
1277 11.55 4.71761 54.49
1278 16.24 5.41669 87.97 61.4 $1,000
1279 11.33 6.23989 70.70 -19.6 $804
1280 12.85 7.30379 93.85 32.8 $1,067
1281 13.76 8.19267 112.73 20.1 $1,282
1282 12.00 9.57092 114.85 1.9 $1,306
1283 13.90 10.66131 148.19 29.0 $1,685 $1,000
1284 12.60 11.55207 145.56 -1.8 $1,655 $982
1285 15.53 13.01726 202.16 38.9 $2,298 $1,364
1286 20.28 17.69830 358.92 77.5 $4,080 $2,422
1287 16.97 28.13131 477.39 33.0 $5,427 $3,221 $1,000
1288 16.24 35.09974 570.02 19.4 $6,480 $3,846 $1,194
ANNUALIZED
10 YRS 20.547
5 YRS 30.919
<PAGE>
EXHIBIT 16
JAPAN FUND TOTAL REINVESTMENT SERIES
MARKET PRICE HAS TO BE USED FOR INCEPTION NUMBER PER WATERHOUSE
<TABLE>
<CAPTION>
DIVIDEND CAP GAIN DIVIDEND CAP GAIN DIVIDEND CAP GAIN TOTAL TOTAL DECEMBER TOTAL
YEAR TYPE RECDATE PAYDATE AMOUNT AMOUNT REINV PRICE REINV PRICE # SHARE # SHARE # SHARE SERIES NAV ADJ NAV
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4.167 4.1667
1962 1.00000 3.850 3.8500
1963 I 2/15 2/15 0.16 11.0000 0.0145 0.0145 1.01455
I 7/10 8/1 0.17 9.2500 0.0104 0.0104 1.03319
RTS 7/15 0.44 9.375 0.0469 0.0469 1.00168 3.340 3.6128
1964 I 2/3 2/17 0.18 8.5630 0.0210 0.0210 1.10442
I 7/20 8/1 0.20 8.8130 0.0227 0.0227 1.12940 3.347 3.7004
1965 I 2/3 2/17 0.21 8.2500 0.0255 0.0255 1.15023
I 8/17 8/30 0.21 8.0000 0.0263 0.0263 1.10064 4.720 5.6104
1966 I 2/8 2/17 0.22 10.7500 0.0205 0.0205 1.21296
I 8/3 8/13 0.21 11.1250 0.0189 0.0189 1.23584 5.050 6.2411
1967 I/CG 2/1 2/15 0.17 0.51 11.2500 11.25 0.0151 0.0453 0.0604 1.31056
I 8/10 8/16 0.17 13.5000 0.0126 0.0126 1.32704 4.847 6.4323
1968 I/CG 2/13 3/15 0.22 1.84 11.5630 11.75 0.0190 0.1566 0.1756 1.56013
I 8/8 8/16 0.16 10.7500 0.0085 0.0085 1.57344 6.803 10.7041
1969 I/CG 2/10 3/13 0.24 1.15 22.5000 20.63 0.0107 0.0557 0.0664 1.67793
I 8/6 8/14 0.10 31.7500 0.0031 0.0031 1.60332 14.130 23.7030
1970 I/CG 2/13 3/16 0.12 4.16 40.3625 34.94 0.0030 0.1191 0.1221 1.00060
I 8/4 8/14 0.06 10.1250 0.0059 0.0059 1.09979 7.990 15.1793
1971 I/CG 2/12 3/15 0.07 1.54 9.9375 71.14 0.0070 0.2157 0.2227 2.32293
I 8/5 8/18 0.05 9.8750 0.0051 0.0051 2.33470 10.070 23.5104
1972 I/CG 2/14 3/16 0.03 0.50 11.8125 11.18 0.0025 0.0447 0.0472 2.44504
I 8/3 8/16 0.05 15.3125 0.0033 0.0033 2.45302 16.560 40.6221
1973 I/CG 2/16 3/9 0.02 1.66 14.3750 14.375 0.0014 0.1155 0.1169 2.73971
I 8/2 8/16 0.04 13.6250 0.0044 0.0044 2.75177 11.680 32.1407
1974 I/CG 2/15 3/20 0.10 1.44 8.0000 7.9375 0.0225 0.1814 0.2039 3.31291
I 8/15 8/30 0.05 5.4375 0.0092 0.0092 3.34337 9.190 30.7256
1975 I/CG 2/16 3/21 0.05 0.80 9.3750 9.25 0.0053 0.0865 0.0918 3.65036
RTS 5/15 0.500 11.125 0.0449 0.0449 3.81442
I 8/14 8/29 0.08 8.5000 0.0094 0.0094 3.85432 11.270 43.3931
1976 I/CG 2/10 3/17 0.06 0.77 9.0000 8.9375 0.0067 0.0862 0.0928 4.20771
I 8/5 8/23 0.08 9.0625 0.0088 0.0088 4.24485 13.100 55.6076
1977 I/CG 2/16 3/29 0.06 0.84 8.5000 8.6875 0.0071 0.0967 0.1037 4.68525
I 8/11 8/29 0.06 8.6875 0.0088 0.0088 4.71761 11.550 54.4804
1978 I/CG 2/15 3/26 0.08 1.04 8.7500 8.375 0.0091 0.1242 0.1333 5.34657
I 9/17 9/22 0.15 11.4370 0.0131 0.0131 5.41669 16.240 87.9671
1979 I/CG 2/14 3/26 0.03 1.38 10.1880 10.188 0.0029 0.1355 0.1384 6.16635
I 9/4 9/21 0.12 10.0630 0.0119 0.0119 6.23989 11.330 70.6979
1980 I/CG 2/13 3/25 0.03 1.17 7.6880 7.688 0.0039 0.1522 0.1561 7.21386
I 9/2 9/19 0.12 9.6250 0.0125 0.0125 7.30379 12.850 93.8538
1981 I/CG 2/18 3/30 0.03 0.92 8.8750 8.875 0.0034 0.1037 0.1070 8.08541
I 9/9 9/28 0.12 9.0630 0.0132 0.0132 8.19267 13.760 112.7311
1982 I/CG 2/16 3/26 0.04 1.21 8.0630 8.063 0.0050 0.1501 0.1550 9.46277
I 9/9 9/28 0.10 8.7500 0.0114 0.0114 9.57092 12.000 114.8510
1983 I/CG 2/15 3/19 0.01 1.00 9.9380 9.938 0.0010 0.1006 0.1016 10.54361
I 9/6 9/20 0.12 10.7500 0.0112 0.0112 10.66131 13.900 148.1921
1984 I/CG 2/14 3/20 0.05 1.05 13.9380 13.938 0.0036 0.0753 0.0789 11.50271
I 9/5 9/27 0.05 11.6500 0.0043 0.0043 11.55207 12.600 145.5561
1985 I/CG 2/13 3/27 0.03 1.36 11.3100 11.31 0.0027 0.1202 0.1229 12.97182
I 9/4 0.04 11.4200 0.0035 0.0035 13.01726 15.530 202.1581
1986 I/CG 2/5 3/28 0.02 1.67 12.9380 12.938 0.0015 0.1291 0.1306 14.71761
3.00 14.813 0.0000 0.2025 0.2025 17.69830 20.28 358.9214
1987 I/CG 3/27 0.06 1.74 17.438 17.438 0.0340 0.0998 0.1032 19.52516 19.91 388.7460
I/CG 12/31 12/31 0.1353 7.3446 16.97 16.97 0.0000 0.4328 0.4408 20.13131 16.97 477.3883
1988 CG 2/88 0.4622 17.24 0.0268 0.0268 20.88550 19.23 555.4682
I/CG 12/21 0.02 3.42 15.99 15.99 0.0013 0.2139 0.2151 35.09977 16.24 570.0202
<CAPTION>
PROSPECTUS: CAPITAL
CAP GAIN CAP GAIN NAVQTR/Y CAPITAL TOTNAV LIMITED LIMITED LIMITED DISTRIBUTIONS DIVIDENDS
YEAR SERIES ADJ NAV % CHG CHANGES % CHG TOT NAV CAP NAV NAV YRLY REINVESTED REINVESTED
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.0000 4.1667 $10,000.00 $10,000.00 $10,000.00
1962 1.0000 3.8550 0.9240 0.9240 0.9240 $9,240.00 $9,240.00 $9,240.00 $0.00 $0.00
1963
1.0000
1.0469 3.4968 0.8675 0.9002 0.9304 $8,670.76 $8,392.22 $8,016.00 $376.22 $278.55
1964 1.0469
1.0469 3.5041 1.0021 1.0021 1.0464 $9,072.91 $8,409.81 $8,032.00 $377.01 $663.11
1965 1.0469
1.0469 4.9415 1.4102 1.4102 1.4841 $13,464.89 $11,859.66 $11,328.00 $531.66 $1,605.22
1966 1.0469
1.0469 5.2870 1.0699 1.0699 1.1124 $14,978.62 $12,688.83 $12,120.00 $548.83 $2,289.70
1967 1.0944
1.0944 5.3045 0.9598 1.0033 1.0306 $15,437.47 $12,730.87 $11,632.00 $1,098.07 $2,706.60
1968 1.2650
1.2650 8.6110 1.4035 1.6233 1.6641 $25,689.84 $20,666.51 $16,327.20 $4,339.31 $5,023.33
1969 1.3363
1.3363 18.8824 2.0770 2.1920 2.2219 $57,001.23 $45,317.66 $33,912.00 $11,405.44 $11,763.57
1970 1.4954
1.4954 11.9485 0.5655 0.6320 0.6382 $36,430.44 $28,676.49 $19,176.00 $9,500.49 $7,753.95
1971 1.0100
1.0100 18.3071 1.2603 1.5322 1.5488 $54,424.95 $43,936.97 $24,168.00 $19,768.97 $12,487.97
1972 1.0993
1.0993 31.4522 1.6445 1.7100 1.7278 $97,492.98 $75,485.24 $39,744.00 $35,741.24 $22,007.74
1973 2.1186
2.1186 24.7454 0.7053 0.7868 0.7912 $77,137.69 $59,388.95 $28,032.00 $31,356.95 $17,748.73
1974 2.5030
2.5030 23.0023 0.7868 0.9296 0.9560 $73,741.37 $55,205.41 $22,056.00 $33,149.41 $18,535.96
1975 2.7194
2.8417
2.0417 32.0255 1.2263 1.3923 1.4123 $104,143.23 $76,861.23 $27,048.00 $49,013.23 $27,282.20
1976 3.0865
3.0865 40.4329 1.1624 1.2625 1.2815 $133,450.13 $97,038.95 $31,440.00 $65,598.95 $36,419.19
1977 3.3849
3.3849 39.0958 0.8817 0.9669 0.9799 $130,772.18 $93,829.82 $27,720.00 $66,109.82 $38,942.36
1978 3.8052
3.8052 41.7973 1.4061 1.5807 1.6144 $211,121.09 $148,313.42 $38,976.00 $109,337.42 $62,807.67
1979 4.3207
4.3207 48.9534 0.6977 0.7922 0.8037 $169,675.03 $117,488.05 $27,192.00 $90,296.05 $52,186.98
1980 4.9702
4.9702 63.9702 1.1342 1.3068 1.3275 $225,249.03 $153,520.57 $30,840.00 $122,688.57 $71,720.44
1981 5.4943
5.4943 75.6013 1.0708 1.1818 1.2011 $270,554.67 $181,443.15 $33,024.00 $148,419.15 $89,111.52
1982 6.3188
6.3188 75.0256 0.8721 1.0030 1.0188 $275,642.39 $181,981.40 $28,800.00 $153,181.40 $93,661.00
1983 6.9546
6.9546 96.6692 1.1583 1.2749 1.2903 $355,661.16 $232,006.14 $33,360.00 $198,646.14 $123,655.02
1984 7.4785
7.4785 94.2296 0.9065 0.9748 0.9822 $349,334.71 $226,150.96 $30,240.00 $195,910.96 $123,183.75
1985 8.3778
8.3778 130.1074 1.2325 1.3807 1.3889 $485,179.32 $312,257.85 $37,272.00 $274,985.85 $172,921.47
1986 9.4592
11.3749 230.6834 1.3059 1.7730 1.7754 $861,411.42 $553,640.07 $48,672.00 $504,968.07 $307,771.35
1987 12.5099 249.0728 0.9818 1.0797 1.0031 $932,990.42 $597,774.62 $47,784.00 $549,990.62 $335,215.00
17.9242 304.1740 0.8368 1.3186 1.3301 $1,145,731.91 $730,017.61 $40,728.00 $689,289.61 $415,714.30
1988 18.4048 353.9236 1.1332 1.1636 1.6360 $1,333,123.65 $849,416.63 $46,152.00 $803,264.63 $483,707.00
22.3412 362.0210 0.8445 1.0251 1.0262 $1,368,048.56 $870,772.24 $38,976.00 $831,796.24 $497,276.32
</TABLE>
