<PAGE> 1
As filed with the Securities and Exchange Commission on May 26, 1995
Registration Nos. 2-79510 and 811-3574
--------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
POST-EFFECTIVE AMENDMENT NO. 16 /X/
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 17 /X/
-------------------------
MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.
(California Money Fund and California Intermediate Municipal Fund Portfolios)
(Exact Name of Registrant As Specified In Charter)
Bellevue Park Corporate Center
400 Bellevue Parkway, Suite 100
Wilmington, Delaware 19809
(Address of Principal Executive Offices)
Registrant's Telephone Number: (302) 792-2555
EDWARD J. ROACH
Bellevue Park Corporate Center
400 Bellevue Parkway, Suite 100
Wilmington, Delaware 19809
(Name and Address of Agent for Service)
Copies to:
MORGAN R. JONES
Drinker Biddle & Reath
1345 Chestnut Street, Suite 1100
Philadelphia, Pennsylvania 19107
It is proposed that this filing will become effective (check
appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/x/ on May 31, 1995 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(i)
/ / on (date) pursuant to paragraph (a)(i)
/ / 75 days after filing pursuant to paragraph (a)(ii)
/ / on (date) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
-------------------------------
<PAGE> 2
CALCULATION OF REGISTRATION FEE UNDER
THE SECURITIES ACT OF 1933(1)
<TABLE>
<CAPTION>
Proposed Proposed Proposed
Maximum Maximum Maximum
Title of Securities Amount Being Offering Offering Amount of
Being Registered Registered(2) Per Unit(2) Price(3) Registration
Fee
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Common Stock,
$.001 Par Value 732,842,272 $1.00
- -----------------------------------------------------------------------------------------------------------
Class B Common Stock,
$.001 Par Value 134,870 $10.36
- -----------------------------------------------------------------------------------------------------------
Total Class A and
Class B Common Stock 732,977,142 $290,000 $100
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Registrant has also registered an indefinite number of shares of its
Class A and Class B Common Stock under the Securities Act of 1933
pursuant to Rule 24f-2 under the Investment Company Act of 1940 (the
"1940 Act"). Registrant's Rule 24f-2 Notice for the fiscal year ended
January 31, 1995 was filed on March 27, 1995.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 24e-2 under the 1940 Act and Rule 457(c) under the
Securities Act of 1933, based on an offering price of 10.36 with
respect to its Class B Common Stock on May 23, 1995.
(3) The maximum aggregate offering price for Registrant's Class A and
Class B Common Stock is calculated pursuant to Rule 24e-2 under the
1940 Act. During the fiscal year ended January 31, 1995, Registrant
redeemed a total of 1,517,300,379 shares of its Class A Common Stock
and 488,982 shares of its Class B Common Stock. Of these redeemed
shares, 784,747,565 Class A shares and 353,855 Class B shares were
used for reductions pursuant to paragraph (c) of Rule 24f-2 in
Registrant's Rule 24f-2 Notice dated March 27, 1995 for the year ended
January 31, 1995, and none of the redeemed shares were used for
reductions pursuant to Rule 24e-2 in any previous post-effective
amendments. As a result, 732,552,814 redeemed shares of Class A
Common Stock and 134,818 shares of Class B Common Stock are being used
to reduce, pursuant to paragraph (a) of Rule 24e-2, the number of
shares for which the registration fee is payable with respect to this
Post-Effective Amendment.
<PAGE> 3
CALIFORNIA MONEY FUND
An Investment Portfolio Offered by
Municipal Fund for California Investors, Inc.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Form N-1A Item Prospectus Caption
-------------- ------------------
<S> <C> <C>
1. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . Background and Expense Information
3. Condensed Financial Information . . . . . . . . . . . . . . . . Financial Highlights
4. General Description of
Registrant . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Highlights; Investment
Objective and Policies
5. Management of the Fund . . . . . . . . . . . . . . . . . . . . . Management of the Fund
6. Capital Stock and Other
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page; Financial Highlights;
Dividends; Taxes; Description of
Shares and Miscellaneous; Yield
7. Purchase of Securities Being
Offered . . . . . . . . . . . . . . . . . . . . . . . . . . . Management of the Fund; Purchase
of Shares; Redemption of Shares
8. Redemption or Repurchase . . . . . . . . . . . . . . . . . . . . Redemption of Shares
9. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
</TABLE>
<PAGE> 4
California Money Fund
An Investment Portfolio Offered by
Municipal Fund for California Investors, Inc.
<TABLE>
<S> <C>
Bellevue Park Corporate Center For purchase and redemption orders call:
400 Bellevue Parkway 800-441-7450 (in Delaware: 302-791-5350).
Suite 100 For current yield information call:
Wilmington, Delaware 19809 800-821-6006.
(Code: California Money-52; California Money
Dollar-57; California Money Plus-58).
For other information call: 800-821-7432.
</TABLE>
Municipal Fund for California Investors, Inc. (the "Company") is a no-load,
open-end investment company currently offering shares in two separate investment
portfolios: California Money Fund and California Intermediate Municipal Fund.
The shares offered by this Prospectus represent interests in the California
Money Fund portfolio (the "Fund"). The Fund is a non-diversified investment
company that is designed primarily to provide California institutional investors
and their customers with as high a level of current interest income that is
exempt from Federal income tax and, to the extent possible, from California
state personal income tax as is consistent with the preservation of capital and
relative stability of principal. Portfolio securities held by the Fund will
generally have remaining maturities of 13 months or less and will be determined
by the investment adviser to have minimal credit risk. The Fund has a
distribution and service plan applicable to one series of its shares and a
service plan applicable to another series of its shares under which certain
service organizations are entitled to receive a fee at the rate of .25% per
annum for their provision of distribution and/or support services to the
beneficial owners of such shares.
PFPC Inc. ("PFPC") and Provident Distributors, Inc. ("PDI") serve as the
Fund's administrators. PNC Institutional Management Corporation ("PIMC") and PNC
Bank, National Association ("PNC Bank") serve as the Fund's adviser and
sub-adviser, respectively. PDI also serves as the Fund's distributor. Shares may
not be purchased by individuals directly but, as indicated above, institutional
investors, such as banks and broker-dealers, may purchase shares for accounts
maintained by individuals.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED, OR
ENDORSED BY, PNC BANK, NATIONAL ASSOCIATION OR ANY OTHER BANK AND SHARES OF THE
FUND ARE NOT FEDERALLY INSURED BY, GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE
SUPPORTED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENTS IN SHARES OF
THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL
AMOUNT INVESTED. THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
This Prospectus briefly sets forth certain information about the Fund that
investors should know before investing. Investors are advised to read this
Prospectus and retain it for future reference. Additional information about the
Fund, contained in a Statement of Additional Information currently dated May 31,
1995, has been filed with the Securities and Exchange Commission, and is
available to investors without charge by calling the Fund at 800-821-7432. The
Statement of Additional Information, as amended from time to time, is
incorporated by reference in its entirety into this Prospectus.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
May 31, 1995
<PAGE> 5
BACKGROUND AND EXPENSE INFORMATION
The Company was organized as a Maryland corporation on September 20, 1982
and currently offers shares in two separate investment portfolios: the Fund and
California Intermediate Municipal Fund ("California Intermediate"). The Fund
currently offers three separate series of shares--California Money ("Money"),
California Money Dollar ("Dollar") and California Money Plus ("Plus"). The
public offering of Money shares commenced on February 28, 1983 and the public
offering of Dollar and Plus shares commenced on September 30, 1985. Shares of
each series represent equal pro rata interests in a single portfolio of high
quality, short-term, tax-exempt obligations maintained by the Fund (see
"Investment Objective and Policies"), except that Dollar and Plus shares bear
service fees payable by the Fund (at the rate of .25% per annum) to
institutional investors ("Service Organizations") for distribution and/or
support services they provide to the beneficial owners of such shares. (See
"Management of the Fund--Service Organizations.") Because of the service fees
borne by the Dollar and Plus shares, the net yield on such shares can be
expected, at any given time, to be approximately .25% lower than the net yield
on Money shares.
EXPENSE SUMMARY
<TABLE>
<CAPTION>
MONEY DOLLAR PLUS
SHARES SHARES SHARES
---------- ---------- ----------
(ESTIMATED)
<S> <C> <C> <C> <C> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees After Fee Waivers................................ .06% .06% .06%
12b-1 Fees....................................................... -- -- .25%
Other Expenses................................................... .14% .39% .14%
Administration Fees After Fee Waivers.......................... .06% .06% .06%
Non-12b-1 Fees................................................. -- .25% --
Other.......................................................... .08% .08% .08%
===== ===== =====
Total Fund Operating Expenses After Fee Waivers.................. .20% .45% .45%
</TABLE>
- ---------------
EXAMPLE
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming (1) an hypothetical 5% annual
return and (2) redemption at the end of each time period
with respect to the following shares:
Money Shares.......................................... $ 2 $ 6 $ 11 $ 26
Dollar Shares......................................... $ 5 $ 14 $ 25 $ 57
Plus Shares (estimated)............................... $ 5 $ 14 $ 25 $ 57
</TABLE>
The foregoing Expense Summary and Example are intended to assist investors
in understanding the various costs and expenses that an investor in the Fund
will bear directly or indirectly. In addition, institutional investors may
charge their customers fees for providing services in connection with
investments in the Fund's Dollar and Plus shares. (For more complete
descriptions of the various costs and expenses, see "Management of the Fund" in
the Prospectus and Statement of Additional Information and the Financial
Statements and related notes contained in the Statement of Additional
Information.) The investment adviser and administrators have agreed to waive the
advisory and administration fees otherwise payable to them and to reimburse the
Fund for its operating expenses to the extent necessary to ensure that the
annual operating expense ratio of the Fund (excluding fees paid to Service
Organizations pursuant to Servicing Agreements) does not exceed .20% of the
Fund's average daily net assets for the year ended January 31, 1996. Absent fee
waivers and expense reimbursements for the year ended January 31, 1995, "Total
Fund Operating Expenses" for the Fund's Money, Dollar and Plus shares would have
been .48%, .73%, and .73% (estimated), respectively, of the Fund's average daily
net assets. During the year ended January 31, 1995, no Plus shares had been
sold. The foregoing table has not been audited by the Fund's independent
accountants.
THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RETURN OR OPERATING EXPENSES. ACTUAL INVESTMENT RETURN AND
OPERATING EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
2
<PAGE> 6
FINANCIAL HIGHLIGHTS
The tables of "Financial Highlights" below are derived from the Fund's
financial statements contained in the Statement of Additional Information, and
set forth certain information concerning the historic investment results for
Money, Dollar and Plus shares. The financial highlights for the fiscal years
ended January 31, 1995, 1994, 1993, 1992 and 1991 have been audited by Coopers &
Lybrand L.L.P., the Fund's independent accountants whose report thereon appears
in the Statement of Additional Information along with the financial statements.
This information should be read in conjunction with the financial statements and
notes included in the Statement of Additional Information. More information
about the performance of the Fund is also contained in the Annual Report to
Shareholders, which may be obtained without charge by calling 800-821-7432.
FINANCIAL HIGHLIGHTS
(For a Fund share outstanding throughout each period)
<TABLE>
<CAPTION>
MONEY SHARES
------------------------------------------------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED YEAR ENDED YEAR ENDED
01/31/95 01/31/94 01/31/93 01/31/92 01/31/91 01/31/90
-------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year.............. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- -------- -------- ---------- ----------
Income from Investment Operations:
Net Investment Income........................ 0.0281 0.0223 0.0251 0.0375 0.0509 0.0578
-------- -------- -------- -------- ---------- ----------
Less Distributions:
Dividends to Shareholders From Net
Investment Income............................ (0.0281) (0.0223) (0.0251) (0.0375) (0.0509) (0.0578)
-------- -------- -------- -------- ---------- ----------
Net Asset Value, End of Year.................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
========== ========== ========== ========== =========== ===========
Total Return.................................... 2.84% 2.25% 2.54% 3.82% 5.21% 5.93%
Ratios/Supplemental Data:
Net Assets, End of Year $(000)................. 385,824 356,501 359,193 490,141 629,001 1,046,590
Ratio of Expenses to Average Net Assets(2)..... .20% .20% .30% .30% .29% .30%
Ratio of Net Investment Income to Average
Net Assets................................... 2.79% 2.23% 2.52% 3.75% 5.10% 5.78%
</TABLE>
<TABLE>
<CAPTION>
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
01/31/89 01/31/88 01/31/87 01/31/86(1)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Year.............. $1.00 $1.00 $1.00 $1.00
-------- -------- -------- --------
Income from Investment Operations:
Net Investment Income........................ 0.0500 0.0440 0.0415 0.0484
-------- -------- -------- --------
Less Distributions:
Dividends to Shareholders From Net
Investment Income............................ (0.0500) (0.0440) (0.0415) (0.0484)
-------- -------- -------- --------
Net Asset Value, End of Year.................... $1.00 $1.00 $1.00 $1.00
========== ========== ========== ==========
Total Return.................................... 5.12% 4.51% 4.23% 4.94%
Ratios/Supplemental Data:
Net Assets, End of Year $(000)................. 1,105,956 828,103 492,447 341,832
Ratio of Expenses to Average Net Assets(2)....... .30% .30% .34% .37%
Ratio of Net Investment Income to Average
Net Assets................................... 5.01% 4.47% 4.12% 4.89%
</TABLE>
- ---------------
(1) Transactions in Plus shares which commenced on November 22, 1985, had no
impact on the financial highlights described above for the year ended
January 31, 1986. The number of Plus shares outstanding at
January 31, 1986 was 182,897.
(2) Annualized operating expense ratios before waivers of Investment Adviser and
Administrator fees for Money shares for the years ended January 31, 1995,
1994, 1993, 1992, 1991, 1990, 1989, 1988, 1987 and 1986 were .48%, .49%,
.48%, .48%, .46%, .47%, .47%, .48%, .50% and .57%, respectively.
3
<PAGE> 7
FINANCIAL HIGHLIGHTS
(For a Fund share outstanding throughout each period)
<TABLE>
<CAPTION>
DOLLAR SHARES
------------------------------------------------
YEAR YEAR YEAR YEAR 01/09/91(1)
ENDED ENDED ENDED ENDED TO
01/31/95 01/31/94 01/31/93 01/31/92 01/31/91
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period....................... $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- -------- -------- --------
Income From Investment Operations:
Net Investment Income.................................. 0.0256 0.0198 0.0226 0.0350 0.0024
-------- -------- -------- -------- --------
Less Distributions:
Dividends to Shareholders from Net Investment Income..... (0.0256) (0.0198) (0.0226) (0.0350) (0.0024)
-------- -------- -------- -------- --------
Net Asset Value, End of Period............................. $1.00 $1.00 $1.00 $1.00 $1.00
========= ========= ========= ========= =========
Total Return............................................... 2.59% 2.00% 2.29% 3.57% 3.87%2
Ratios/Supplemental Data:
Net Assets, End of Period $(000)......................... 11,026 19,098 11,750 6,599 1,126
Ratio of Expenses to Average Net Assets(3)............... 0.45% .45% .55% .55% .54%2
Ratio of Net Investment Income to Average Net Assets..... 2.54% 1.98% 2.27% 3.50% 3.85%2
</TABLE>
- ---------------
(1) Commencement of operations.
(2) Annualized.
(3) Annualized operating expense ratios before waivers of Investment Adviser and
Administrator fees for Dollar shares for the years ended January 31, 1995,
1994, 1993 and 1992 were .73%, .74%, .73% and .73%, respectively, and for
the period ended January 31, 1991 was .71%.
<TABLE>
<CAPTION>
PLUS SHARES
----------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
01/31/95 01/31/94(1) 01/31/93(1) 01/31/92 01/31/91 01/31/90 01/31/89 01/31/88 01/31/87
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year...... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income from Investment
Operations:
Net Investment
Income............. -- -- 0.0191 0.0350 0.0484 0.0553 0.0475 0.0415 0.0390
-------- -------- -------- -------- -------- -------- -------- -------- --------
Less Distributions:
Dividends to
Shareholders from Net
Investment Income.... -- ( -- ) (0.0191) (0.0350) (0.0484) (0.0553) (0.0475) (0.0415) (0.0390)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value, End of
Year................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
========= ========= ========= ========= ========= ========= ========= ========= =========
Total Return............. -- -- 1.93% 3.57% 4.96% 5.68% 4.87% 4.26% 3.98%
Ratios/Supplemental Data:
Net Assets, End of Year
$(000)............... -- -- -- 27,656 19,872 26,769 15,961 8,181 0.1
Ratio of Expenses to
Average Net
Assets2.............. -- -- .55% .55% .54% .55% .55% .55% .59%
Ratio of Net Investment
Income to Average Net
Assets............... -- -- 2.27% 3.50% 4.85% 5.53% 4.76% 4.22% 3.87%
</TABLE>
- ---------------
(1) Only 100 Plus shares were outstanding during the period from
December 1, 1992 to January 31, 1995.
(2) Annualized operating expense ratios before waiver of Investment Adviser and
Administrator fees for Plus shares for the years ended January 31, 1993,
1992, 1991, 1990, 1989, 1988 and 1987 were .64%, .73%, .71%, .72%, .72%,
.73% and .75%, respectively.
4
<PAGE> 8
INVESTMENT OBJECTIVE AND POLICIES
IN GENERAL
The Fund is a no-load, open-end, non-diversified investment company which
has an investment objective to provide investors with as high a level of current
interest income that is exempt from Federal income tax and, to the extent
possible, from California state personal income tax as is consistent with the
preservation of capital and relative stability of principal. There can be, of
course, no assurance that the Fund will achieve its investment objective. The
Fund has a distribution plan applicable to one series of its shares and a
service plan applicable to another series of its shares. See "Service
Organizations."
Substantially all of the Fund's assets are invested in debt obligations
issued by or on behalf of the State of California and other states, territories
and possessions of the United States, the District of Columbia and their
respective authorities, agencies, instrumentalities and political sub-divisions
and tax-exempt derivatives such as tender option bonds, participations,
beneficial interests in trusts and partnership interests ("Municipal
Obligations"). Dividends paid by the Fund that are derived from interest on
bonds that is exempt from taxation under the Constitution or statutes of
California ("California Municipal Obligations") are exempt from regular Federal
income tax and California state personal income tax. California Municipal
Obligations include municipal securities issued by the State of California and
its political sub-divisions, as well as certain other governmental issuers such
as the Commonwealth of Puerto Rico. Dividends derived from interest on municipal
obligations other than California Municipal Obligations are exempt from regular
Federal income tax but may be subject to California state personal income tax.
(See, however, "Taxes" below concerning treatment of exempt-interest dividends
paid by the Fund for purposes of the Federal alternative minimum tax applicable
to particular classes of investors.) The Fund expects that, except during
temporary defensive periods or when acceptable securities are unavailable for
investment by the Fund, the Fund's assets will be invested primarily in
California Municipal Obligations. At least 50% of the Fund's assets must be
invested in obligations which, when held by an individual, the interest
therefrom is exempt from California personal income taxation (i.e., California
Municipal Obligations and certain U.S. Government obligations) at the close of
each quarter of its taxable year so as to permit the Fund to pay dividends that
are exempt from California state personal income tax. Dividends, regardless of
their source, may be subject to local taxes.
The Fund will not knowingly purchase securities the interest on which is
subject to regular Federal income tax; however, the Fund may hold uninvested
cash reserves pending investment during temporary defensive periods or, if in
the opinion of the Fund's investment adviser, suitable tax-exempt obligations
are unavailable. Uninvested cash reserves will not earn income.
The Fund invests in Municipal Obligations that are determined by the Fund's
investment adviser to present minimal credit risks pursuant to guidelines
approved by the Company's Board of Directors pursuant to Rule 2a-7 under the
Investment Company Act of 1940, as amended (the "1940 Act"). Pursuant to these
guidelines, the Fund is authorized to purchase instruments that (i) are rated at
the time of purchase in one of the top two rating categories by two unaffiliated
nationally recognized statistical rating organizations ("NRSROs"), (ii)
instruments rated in one of the top two rating categories by one such NRSRO (if
only one such organization rates the instrument), (iii) instruments issued by
issuers with short-term debt having such ratings, and (iv) unrated instruments
determined by the investment adviser, pursuant to procedures approved by the
Board of Directors, to be of comparable quality. The Appendix to the Statement
of Additional Information includes a description of applicable NRSRO ratings.
5
<PAGE> 9
The Fund intends to use its best efforts to maintain its net asset value at
$1.00 per share, and computes its net asset value using the amortized cost
method. In connection with its use of this valuation method, the Fund limits the
dollar-weighted average maturity of its portfolio to not more than 90 days and
the remaining maturity of each portfolio security to not more than 13 months
(with certain exceptions).
The Fund's investment objective and the policies described herein may be
changed by its Board of Directors without the affirmative vote of the holders of
a majority of the Fund's outstanding shares, except that the Fund may not change
the following investment limitations without such a vote of shareholders.
THE FUND MAY NOT:
1. Invest less than 80% of its assets in securities the interest on
which is exempt from Federal income taxes, except during defensive periods.
2. Purchase the securities of any issuer if as a result more than 5%
of the value of the Fund's assets would be invested in the securities of
such issuer, except that (a) up to 50% of the value of the Fund's assets
may be invested without regard to this 5% limitation; provided that no more
than 25% of the value of the Fund's assets are invested in the securities
of any one issuer and (b) this 5% limitation does not apply to securities
issued or guaranteed by the U.S. Government, or its agencies or
instrumentalities. For purposes of this limitation, a security is
considered to be issued by the governmental entity (or entities) whose
assets and revenues back the security, or, with respect to a private
activity bond that is backed only by the assets and revenues of a non-
governmental user, by such non-governmental user. In certain circumstances,
the guarantor of a guaranteed security may also be considered to be an
issuer in connection with such guarantee.
3. Borrow money except from banks for temporary purposes and then in
amounts not in excess of 10% of the value of the Fund's assets at the time
of such borrowing; or mortgage, pledge or hypothecate any assets except in
connection with any such borrowing and in amounts not in excess of the
lesser of the dollar amounts borrowed or 10% of the value of the Fund's
assets at the time of such borrowing. (This borrowing provision is not
intended for investment leverage, but solely to facilitate management of
the Fund's portfolio by enabling the Fund to meet redemption requests when
the liquidation of portfolio securities is deemed to be disadvantageous or
inconvenient, and hence the Fund may not purchase any portfolio securities
while its borrowings are outstanding.)
4. Invest more than 10% of the value of the Fund's total assets in
illiquid securities (including illiquid variable rate demand notes) which
may be illiquid due to legal or contractual restrictions on resale or the
absence of readily available market quotations.
5. Purchase any securities which would cause more than 25% of the
value of the Fund's total assets at the time of purchase to be invested in
the securities of issuers conducting their principal business activities in
the same industry; provided that this limitation shall not apply to
Municipal Obligations or governmental guarantees of Municipal Obligations;
and provided, further, that for the purpose of this limitation only,
industrial development bonds that are considered to be issued by
non-governmental users (see the second investment limitation above) shall
not be deemed to be Municipal Obligations.
6
<PAGE> 10
Opinions relating to the validity of Municipal Obligations and to the
exemption of interest thereon from Federal income tax (and, with respect to
California Municipal Obligations, to the exemption of interest thereon from
California state personal income tax) are rendered by bond counsel to the
respective issuers at the time of issuance, and opinions relating to the
validity of and the tax-exempt status of payments received by the Fund from
tax-exempt derivatives are rendered by counsel to the respective sponsors of
such derivatives. Neither the Fund nor its investment adviser will review the
proceedings relating to the issuance of Municipal Obligations, the creation of
any tax-exempt derivatives, or the bases for such opinions.
TYPES OF MUNICIPAL OBLIGATIONS
The two principal classifications of Municipal Obligations which may be
held by the Fund are "general obligation" securities and "revenue" securities.
General obligation securities are secured by the issuer's pledge of its full
faith, credit and taxing power for the payment of principal and interest.
Revenue securities are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise tax or other specific revenue source such as the user of the
facility being financed. Revenue securities may include private activity bonds.
Such bonds may be issued by or on behalf of public authorities to finance
various privately operated facilities, and are not payable from the unrestricted
revenues of the issuer. As a result, the credit quality of private activity
bonds is frequently related directly to the credit standing of private
corporations or other entities.
The Fund's portfolio may also include "moral obligation" securities, which
are normally issued by special purpose public authorities. If the issuer of
moral obligation securities is unable to meet its debt service obligations from
current revenues, it may draw on a reserve fund, the restoration of which is a
moral commitment but not a legal obligation of the state or municipality which
created the issuer.
OTHER INVESTMENT PRACTICES
Municipal Obligations purchased by the Fund may include variable and
floating rate instruments, which provide for adjustments in the interest rate on
certain reset dates or whenever a specified interest rate index changes,
respectively. Variable and floating rate instruments are subject to the credit
quality standards described above. In some cases the Fund may require that the
obligation to pay the principal of the instrument be backed by a letter or line
of credit or guarantee. Such instruments may carry stated maturities in excess
of 397 days provided that the maturity-shortening provisions stated in Rule 2a-7
are satisfied. Although a particular variable or floating rate demand instrument
may not be actively traded in a secondary market, in some cases, the Fund may be
entitled to principal on demand and may be able to resell such instruments in
the dealer market.
The Fund may also purchase Municipal Obligations on a "when-issued" basis.
When-issued securities are securities purchased for delivery beyond the normal
settlement date at a stated price and yield. The Fund will generally not pay for
such securities or start earning interest on them until they are received.
Securities purchased on a when-issued basis are recorded as an asset and are
subject to changes in value based upon changes in the general level of interest
rates. The Fund expects that commitments to purchase when-issued securities will
not exceed 25% of the value of its total assets absent unusual market
conditions, and that a commitment by the Fund to purchase when-issued securities
will not exceed 45 days. The Fund does not intend to purchase when-issued
securities for speculative purposes but only in furtherance of its investment
objective.
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In addition, the Fund may acquire "stand-by commitments" with respect to
Municipal Obligations held in its portfolio. Under a stand-by commitment, a
dealer agrees to purchase at the Fund's option specified Municipal Obligations
at a price equal to their amortized cost value plus accrued interest. The Fund
will acquire stand-by commitments solely to facilitate portfolio liquidity and
does not intend to exercise its rights thereunder for trading purposes.
RISK FACTORS
The Fund intends to follow the diversification standards set forth in the
1940 Act except to the extent, in the investment adviser's judgment, that
non-diversification is appropriate in order to maximize the percentage of the
Fund's assets that are California Municipal Obligations. The investment return
on a non-diversified portfolio typically is dependent upon the performance of a
smaller number of issuers relative to the number of issuers held in a
diversified portfolio. In the event of changes in the financial condition or in
the market's assessment of certain issuers, the Fund's maintenance of large
positions in the obligations of a small number of issuers may affect the value
of the Fund's portfolio to a greater extent than that of a diversified
portfolio.
Although the Fund does not presently intend to do so on a regular basis, it
may invest more than 25% of its assets in Municipal Obligations the interest on
which is paid solely from revenues on similar projects if such investment is
deemed necessary or appropriate by the Fund's investment adviser. To the extent
that the Fund's assets are concentrated in Municipal Obligations payable from
revenues on similar projects, the Fund will be subject to the particular risks
presented by such projects to a greater extent than it would be if the Fund's
assets were not so concentrated.
The Fund's ability to achieve its investment objective is dependent upon
various factors, including the ability of the issuers of California Municipal
Obligations to timely meet their continuing payment obligations with respect to
the municipal obligations. Currently, the State of California and many other
issuers of California Municipal Obligations are experiencing financial and
budgetary problems which could affect their ability to timely meet their
financial obligations. Any resulting reductions in the credit worthiness of
issuers of California Municipal Obligations could adversely affect the market
values and marketability of California Municipal Obligations, and, consequently,
the net asset value of the Fund's portfolio.
On July 15, 1994 and July 15, 1994, respectively, Standard and Poor's
Ratings Group and Moody's Investors Service, Inc., citing the State of
California's deteriorating financial position, lowered their ratings of the
State's general obligation bonds from A+ and Aa, respectively, to A and A1,
respectively.
Certain California constitutional amendments, legislative measures,
executive orders, administrative regulations and voter initiatives could result
in certain adverse consequences affecting California Municipal Obligations.
Significant financial and other considerations relating to the Fund's
investments in California Municipal Obligations are summarized in the Statement
of Additional Information.
PURCHASE OF SHARES
The Fund's shares are sold to institutional investors at the net asset
value per share next determined after receipt of a purchase order by PFPC, the
Fund's transfer agent.
Purchase orders for shares will be accepted by the Fund only on a day on
which both the New York Stock Exchange and the Federal Reserve Bank of
Philadelphia are open for business (a "Business Day"), and must be transmitted
to PFPC by telephone at 800-441-7450 (in Delaware call
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<PAGE> 12
302-791-5350) or through the Fund's computer access program. Orders received by
PFPC by Noon, Eastern time (9:00 A.M., Pacific time) will be executed the same
day if PNC Bank, the Fund's custodian, has received payment by 4:00 P.M.,
Eastern time (1:00 P.M., Pacific time) that day. Orders received at other times,
and orders for which payment has not been received by 4:00 P.M., Eastern time
(1:00 P.M., Pacific time), will not be accepted and notice thereof will be given
to the institution placing the order. Payment for orders which are not received
or accepted will be returned after prompt inquiry by PNC Bank to the sending
institution.
Payment for shares may be made only in Federal funds or other funds
immediately available to PNC Bank. The minimum initial investment is $5,000;
however, broker-dealers and other institutional investors may set a higher
minimum for their customers. There is no minimum subsequent investment. The Fund
may in its discretion reject any purchase order for shares.
Conflict of interest restrictions may apply to an institution's receipt of
compensation paid by the Fund in connection with the investment of fiduciary
funds in Dollar or Plus shares. Institutions, including banks regulated by the
Comptroller of the Currency and investment advisers and other money managers
subject to the jurisdiction of the Securities and Exchange Commission, the
Department of Labor or state securities commissions, should consult legal
counsel before investing in Dollar or Plus shares. (See also "Management of the
Fund--Banking Laws.")
REDEMPTION OF SHARES
REDEMPTION PROCEDURES
Redemption orders must be transmitted to PFPC by telephone in the manner
described under "Purchase of Shares." Shares are redeemed at the net asset value
per share next determined after receipt of the redemption order by PFPC. While
the Fund intends to use its best efforts to maintain the net asset value per
share of each of its series at $1.00, the proceeds paid upon redemption may be
more or less than the amount invested depending upon a share's net asset value
at the time of redemption.
Payment for redeemed shares for which a redemption order is received by
PFPC prior to Noon, Eastern time (9:00 A.M., Pacific time) on a Business Day is
normally made in Federal funds wired to the redeeming shareholder on the same
business day. Payment for redeemed shares for which a redemption order is
received by PFPC after Noon, Eastern time (9:00 A.M., Pacific time) on such a
business day or on a day that PNC Bank is closed is normally made in Federal
funds wired to the redeeming shareholder on the next business day that PNC Bank
is open. The Fund reserves the right to wire redemption proceeds within 7 days
after receiving the redemption order if, in the judgment of the Fund's
administrator, an earlier payment could adversely affect the Fund.
The Fund may suspend the right of redemption or postpone the date of
payment upon redemption (as well as suspend or postpone the recordation of the
transfer of its shares) for such periods as are permitted under the 1940 Act.
The Fund reserves the right to redeem the shares of the Fund owned by a
shareholder at their net asset value if the value of such shares is less than
$500. Any such shareholder will be notified in writing that its shares have a
value of less than $500 and will be allowed 60 days to make an additional
investment before the redemption is processed by the Fund. The Fund may also
redeem shares involuntarily (and restrict the transfer of its shares) under
certain special circumstances described in the Statement of Additional
Information under "Additional Purchase and Redemption Information."
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<PAGE> 13
OTHER MATTERS
The Fund's net asset value per share for purposes of pricing purchase and
redemption orders is determined by PIMC as of Noon and 4:00 P.M., Eastern time
(9:00 A.M. and 1:00 P.M., Pacific time) on each Business Day (excluding those
holidays on which either the New York Stock Exchange or the Federal Reserve Bank
of Philadelphia is closed). Currently, the holidays which the New York Stock
Exchange or the Federal Reserve Bank of Philadelphia observes are New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and
Christmas Day. The net asset value per share of each of the Fund's series is the
same and is calculated by adding the value of all of the Fund's portfolio
securities and other assets, subtracting liabilities and dividing the results by
the number of the Fund's outstanding shares (irrespective of series). The net
asset value for purposes of pricing purchase and redemption orders for Fund
shares is determined independently of the net asset value per share of the
Company's other investment portfolio. Portfolio securities are valued on the
basis of amortized cost. Under this method, the Fund values a portfolio security
at cost on the date of purchase and thereafter assumes a constant amortization
of any discount or premium until maturity of the security. As a result, the
value of the security for purposes of determining net asset value normally does
not change in response to fluctuating interest rates. While the amortized cost
method seems to provide certainty in portfolio valuation, it may result in
periods during which values, as determined by amortized cost, are higher or
lower than the amount the Fund would receive if it sold the securities.
Shares of each of the Fund's series are sold and redeemed without charge by
the Fund, although Service Organizations (see below) and other institutional
investors purchasing or holding Fund shares for their customers' accounts may
charge customers for cash management and other services provided in connection
with their accounts including, for example, account maintenance fees,
compensating balance requirements or fees based upon account transactions,
assets or income. Such charges will reduce the yield of the Fund to such
customers. A customer should therefore read this Prospectus in light of the
terms governing its account with a Service Organization (or other institution)
before purchasing Fund shares. An institution purchasing or redeeming Fund
shares on behalf of its customers is responsible for transmitting orders to the
Fund in accordance with its agreements with its customers.
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS
The business and affairs of the Fund are managed under the direction of the
Company's Board of Directors. The directors of the Company are as follows:
G. Willing Pepper, Chairman of the Board and President of the Company,
is a former President of Scott Paper Company.
Rodney D. Johnson is President of Fairmount Capital Advisors, Inc.
William R. Howell is a former Vice Chairman, Union Bank, Los Angeles.
Rudolph A. Peterson is Honorary Director, President and Chief
Executive Officer (Ret.) of BankAmerica Corporation.
Anthony M. Santomero is the Richard K. Mellon Professor of Finance at
The Wharton School, University of Pennsylvania.
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<PAGE> 14
INVESTMENT ADVISER AND SUB-ADVISER
PIMC, a wholly-owned subsidiary of PNC Asset Management Group, Inc., which
is in turn a wholly-owned subsidiary of PNC Bank, serves as the Fund's
investment adviser. PIMC was organized in 1977 by PNC Bank to perform advisory
services for investment companies, and has its principal offices at Bellevue
Park Corporate Center, 400 Bellevue Parkway, Wilmington, Delaware 19809. PNC
Asset Management Group, Inc.'s principal business address is 1835 Market Street,
Philadelphia, Pennsylvania 19102. PNC Bank serves as the Fund's sub-adviser. PNC
Bank and its predecessors have been in the business of managing the investments
of fiduciary and other accounts in the Philadelphia area since 1847. PNC Bank is
an indirect, wholly-owned subsidiary of PNC Bank Corp., and its principal
business address is located at Broad and Chestnut Streets, Philadelphia,
Pennsylvania 19102. PNC Bank Corp. is a multi-bank holding company. PIMC and PNC
Bank also serve as adviser and sub-adviser, respectively, to the Company's
California Intermediate portfolio.
PNC Bank Corp., headquartered in Pittsburgh, Pennsylvania, is the eleventh
largest bank holding company in the United States. Categorized as a super
regional bank holding company, PNC Bank Corp. operates over 500 branch offices
in six U.S. states.
PNC Bank's Investment Management and Trust Division, headquartered in
Philadelphia, Pennsylvania, traces its money management services to individuals
and institutions to the year 1847, and is the second largest bank manager of
investments for individuals in the U.S. with $28 billion in discretionary trust
assets under management.
PNC Financial Services Group is PNC Bank Corp.'s mutual fund complex,
headquartered in Wilmington, Delaware. This group includes PIMC, PFPC, and PNC
Bank. In 1973, Provident National Bank (predecessor to PNC Bank) commenced
advising the first institutional money market mutual fund -- a U.S.
dollar-denominated constant net asset value fund -- offered in the United
States.
The PNC Financial Services Group is one of the largest U.S. bank managers
of mutual funds with assets currently under management in excess of $30 billion.
This group, through PFPC Inc. and PFPC International Ltd., is also a leading
mutual fund service provider having contractual relationships with approximately
400 mutual funds with 3.5 million shareholders and in excess of $106 billion in
assets. This group, through its PNC Institutional Investment Service, produces
investment research to some 250 financial institutions located in the United
States and abroad. PNC Bank provides custodial services for approximately $217
billion in assets, including $106 billion in mutual fund assets.
In its advisory agreement with the Fund, PIMC has agreed to manage the
Fund's portfolio and to be responsible for, make decisions with respect to and
place orders for all purchases and sales of the Fund's portfolio securities.
PIMC also computes the Fund's net asset value and maintains the Fund's financial
accounts and records. For the services provided and expenses assumed pursuant to
the advisory agreement, PIMC is entitled to receive a fee from the Fund,
computed daily and payable monthly, at the annual rate of .20% of the Fund's
average daily net assets. For the fiscal year ended January 31, 1995, the Fund
paid advisory fees to PIMC (after fee waivers) of .06% of the Fund's average
daily net assets. PIMC and the administrators have agreed to reduce the advisory
and administration fees otherwise payable to them and to reimburse the Fund for
its operating expenses to the extent necessary to ensure that its annual
operating expense ratio (excluding fees paid to Service Organizations pursuant
to Servicing Agreements) does not exceed .20% of the Fund's average daily net
assets.
As sub-adviser, PNC Bank has agreed to: (i) provide investment research and
credit analysis concerning the Fund's investments; (ii) make recommendations
with respect to the Fund's continuous
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<PAGE> 15
investment program; (iii) supply PIMC with computer facilities and operating
personnel; and (iv) provide PIMC with such statistical services as PIMC may from
time to time reasonably request. As compensation therefor, PIMC has agreed to
pay PNC Bank an amount equal to 75% of the advisory fee paid by the Fund to
PIMC, as adjusted quarterly to ensure that PIMC has income before taxes from all
sources of at least $22,500 during each quarter.
ADMINISTRATORS
PFPC, whose principal business address is 400 Bellevue Parkway, Wilmington,
Delaware 19809 and PDI, whose principal business address is 259 Radnor-Chester
Road, Suite 120, Radnor, Pennsylvania 19087, serve as co-administrators. PFPC is
an indirect wholly-owned subsidiary of PNC Bank Corp. A majority of the
outstanding stock of PDI is owned by its officers.
As administrators, PFPC and PDI have agreed to: assist in maintaining
office facilities for the Fund; furnish the Fund with statistical and research
data and clerical and certain other services required by the Fund; perform
administrative services in connection with the Fund's computer access program
maintained to facilitate shareholder access to the Fund; monitor the
arrangements pertaining to the Fund's agreements with Service Organizations;
prepare semi-annual reports to the Securities and Exchange Commission, Federal
and state tax returns and filings with state securities commissions; arrange for
and bear the cost of processing share purchase and redemption orders; and
generally assist in the Fund's operations.
For their administrative services, the administrators are entitled jointly
to receive a fee, computed daily and payable monthly, determined in the same
manner as PIMC's advisory fee described above. (For information regarding the
administrators' obligations to waive administrative fees otherwise payable to
them and to reimburse the Fund for operating expenses, see "Investment Adviser
and Sub-Adviser" above.) For the fiscal year ended January 31, 1995, the Fund
paid PFPC and PDI administrative fees (after fee waivers) aggregating .06% of
its average daily net assets. The Fund also reimburses each administrator for
reasonable out-of-pocket expenses incurred in connection with the Fund's
computer access program.
DISTRIBUTOR
PDI serves as distributor of the Fund's shares. Its principal offices are
located at 259 Radnor-Chester Road, Suite 120, Radnor, Pennsylvania 19087. Fund
shares are sold on a continuous basis by the Distributor as agent. The
Distributor pays the cost of printing and distributing prospectuses to persons
who are not shareholders of the Fund (excluding preparation and printing
expenses necessary for the continued registration of the Fund's shares) and of
printing and distributing all sales literature. No compensation is payable by
the Fund to the distributor for its distribution services.
CUSTODIAN AND TRANSFER AGENT
PNC Bank serves as the custodian of the Fund's assets, and PFPC, an
indirect, wholly-owned subsidiary of PNC Bank Corp., serves as the Fund's
transfer and dividend disbursing agent. The Fund compensates PNC Bank and PFPC
for their services, and reimburses PFPC for its out-of-pocket expenses incurred
in connection with its transfer agency and dividend disbursing services.
Communications to PFPC, including any election to reinvest dividends in
additional shares of the Fund, should be directed to PFPC, P.O. Box 8950,
Wilmington, Delaware 19899.
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<PAGE> 16
SERVICE ORGANIZATIONS
As stated above, Service Organizations may purchase Dollar or Plus shares
offered by the Fund. Dollar shares are sold to institutions other than
broker/dealers, and Plus shares are sold to broker/ dealers, which, in each
case, enter into servicing agreements with the Fund requiring them to provide
support services to their customers who are the beneficial owners of such shares
in consideration for .25% (on an annualized basis) of the average daily net
asset value of the Dollar or Plus shares held by the Service Organizations for
the benefit of their customers. Such services, which are described more fully in
the Statement of Additional Information under "Management of the Fund--Service
Organizations," include aggregating and processing purchase and redemption
requests from customers and placing net purchase and redemption orders with
PFPC; processing dividend payments from the Fund on behalf of customers;
providing information periodically to customers showing their positions in
Dollar or Plus shares; and providing sub-accounting not provided by the transfer
agent with respect to shares beneficially owned by customers or the information
necessary for sub-accounting. In addition, broker/dealers purchasing Plus shares
may be requested to provide from time to time assistance (such as the forwarding
of sales literature and advertising to their customers) in connection with the
distribution of Plus shares. Under the terms of the agreements, Service
Organizations are required to provide to their customers a schedule of any fees
that they may charge to their customers relating to the investment of their
customers' assets in Dollar or Plus shares. Money shares offered by the Fund may
be purchased by any type of institutional investor (including banks and
broker/dealers) which does not wish to enter into such servicing agreements with
the Fund in connection with its investments.
EXPENSES
Except as noted above, the Fund's service contractors bear all expenses in
connection with the performance of their services. Similarly, the Fund bears the
expenses incurred in its operations. The ratios of the Fund's expenses to its
average daily net assets for the fiscal year ended January 31, 1995 for the
Fund's Money, Dollar and Plus shares were .20%, .45% and .45%, respectively
(such ratios would have been .48%, .73% and .73% (estimated) for the Fund's
Money, Dollar and Plus shares, respectively, without the waiver of advisory and
administration fees described above).
BANKING LAWS
Banking laws and regulations currently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from sponsoring, organizing, controlling or
distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from issuing, underwriting, selling or distributing securities, but such banking
laws and regulations do not prohibit such a holding company or affiliate or
banks generally from acting as investment adviser, transfer agent or custodian
to such an investment company, or from purchasing shares of such a company as
agent for and upon the order of such a customer. PNC Bank, PIMC, PFPC, as well
as certain Service Organizations (i.e., banks), are subject to such banking laws
and regulations, but believe they may perform the services for the Fund
contemplated by their respective agreements, this Prospectus and Statement of
Additional Information without violating applicable banking laws or regulations.
Should future legislative, judicial or administrative action prohibit or
restrict the activities of bank Service Organizations in connection with the
provision of support services to their customers, the Fund might be required to
alter or discontinue its arrangements with Service Organizations generally
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<PAGE> 17
and change its method of operations. It is not anticipated, however, that any
change in the Fund's method of operations would affect its net asset value per
share or result in a financial loss to any customer.
DIVIDENDS
The Fund's net income is declared daily as a dividend to the holders of
record of each of the Fund's series of shares at the close of business on the
day of declaration. Dividends for each series are equal to the net income
available for each series and are determined in the same manner. Net income
available for dividends on the Dollar shares is after deduction of all the
expense of fees paid to Service Organizations for their services with respect to
Dollar shares, and for the Plus shares is after deduction of all the expense of
fees paid to Service Organizations with respect to Plus shares. (See "Management
of the Fund--Service Organizations.") Shares of each series begin accruing
dividends on the day the purchase order for the shares is executed and continue
to accrue dividends through, and including, the day before the redemption order
for the shares is executed. Dividends are paid monthly by check, or by wire
transfer if requested in writing by the shareholder, within 5 business days
after the end of the month or within 5 business days of the redemption of all of
a shareholder's shares of a series. The Fund does not expect to realize net
long-term capital gains.
Institutional shareholders may elect to have their dividends reinvested in
additional full and fractional shares of the same series with respect to which
dividends are declared valued at their net asset value on the payment date.
Reinvested dividends receive the same tax treatment as dividends paid in cash.
Such election, or any revocation thereof, must be made in writing to PFPC, and
will become effective with respect to dividends paid after its receipt by PFPC.
TAXES
The Fund and California Intermediate (each, a "Portfolio") are treated as
separate corporations for Federal tax purposes. It is intended that each
Portfolio will separately qualify as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended (the "Code"). Such qualification
generally relieves each Portfolio of liability for Federal income and California
franchise and income taxes to the extent each Portfolio's earnings are
distributed in accordance with the Code.
The Fund's policy is to pay its shareholders with respect to each taxable
year dividends equal to at least the sum of 90% of its exempt-interest income
(net of certain deductions) and 90% of its investment company taxable income for
such year. Dividends derived from exempt-interest income (known as
"exempt-interest dividends") may be treated by the Fund's shareholders as items
of interest excludable from their gross income under Section 103(a) of the Code,
unless under the circumstances applicable to the particular shareholder
exclusion would be disallowed. (See Statement of Additional Information under
"Additional Information Concerning Taxes.")
If the Fund should hold certain private activity bonds issued after August
7, 1986, shareholders must include, as an item of tax preference, the portion of
dividends paid by the Fund that is attributable to interest on such bonds in
their Federal alternative minimum taxable income for purposes of determining
liability (if any) for the 26-28% alternative minimum tax applicable to
individuals and the 20% alternative minimum tax and the environmental tax
applicable to corporations. Corporate shareholders also must take all
exempt-interest dividends into account in determining certain adjustments for
alternative minimum and environmental tax purposes. The environmental tax
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<PAGE> 18
applicable to corporations is imposed at the rate of .12% on the excess of the
corporation's modified Federal alternative minimum taxable income over
$2,000,000. Shareholders receiving Social Security benefits or Railroad
Retirement Act benefits should note that all exempt-interest dividends will be
taken into account in determining the taxability of such benefits.
Dividends that are paid by the Fund to non-corporate shareholders and are
derived from interest on California Municipal Obligations or certain U.S.
Government obligations are also exempt from California state personal income
tax. However, dividends paid to corporate shareholders subject to California
state franchise tax or California state corporate income tax will be taxed as
ordinary income to such shareholders, notwithstanding that all or a portion of
such dividends is exempt from California state personal income tax. Moreover, to
the extent that the Fund's dividends are derived from interest on debt
obligations other than California Municipal Obligations or certain U.S.
Government obligations such dividends will be subject to California state
personal income tax, even though such dividends may be exempt for Federal income
tax purposes.
Exempt-interest dividends derived from U.S. Government obligations
generally will be exempt from state and local tax as well. However, except as
noted with respect to California state personal income tax, in some situations
distributions of net investment income may be taxable to investors under state
or local law as dividend income even though all or a portion of such
distributions may be derived from interest on tax-exempt obligations which, if
realized directly, would be exempt from such income taxes. To the extent, if
any, that dividends paid to shareholders are derived from taxable interest or
from long-term or short-term capital gains, such dividends will not be exempt
from Federal income tax or California state personal income tax.
Shareholders will be advised at least annually as to the Federal and
California state personal income tax consequences of distributions made each
year.
The foregoing is only a brief summary of some of the important tax
considerations generally affecting the Fund and its shareholders. No attempt is
made to present a detailed explanation of the Federal, state or local income tax
treatment of the Fund or its shareholders, and this discussion is not intended
as a substitute for careful tax planning. Accordingly, potential investors in
the Fund should consult their tax advisers with specific reference to their own
tax situations.
DESCRIPTION OF SHARES AND MISCELLANEOUS
The Company's Charter authorizes the Board of Directors to issue up to
three billion full and fractional shares of capital stock, $.001 par value per
share, and to classify or reclassify any unissued shares of the Fund into one or
more classes or series by setting or changing in any one or more respects their
respective preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption. Pursuant to such authority, the Board of Directors has classified
2.3 billion of its shares as California Money shares (Class A Common Stock), 300
million of its shares as California Money Dollar shares (Class A Common
Stock-Special Series 1), 300 million of its shares as California Money Plus
shares (Class A Common Stock-Special Series 2), 80 million of its shares as
California Intermuni shares (Class B Common Stock), 10 million of its shares as
California Intermuni Dollar shares (Class B Common Stock-Special Series 1) and
10 million of its shares as California Intermuni Plus shares (Class B Common
Stock-Special Series 2). As of May 17, 1995, Bank of America National Trust &
Savings Association held, on behalf of its underlying accounts, approximately
31.5% of the Company's shares that were outstanding on that date. The 1940 Act
states that the beneficial owner of more than 25% of the voting securities of a
company is presumed to control the
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<PAGE> 19
company. Under this definition, Bank of America National Trust & Savings
Association may be deemed to be a controlling person of the Company.
THIS PROSPECTUS RELATES PRIMARILY TO THE FUND AND DESCRIBES ONLY THE
INVESTMENT OBJECTIVE AND POLICIES, OPERATIONS, CONTRACTS AND OTHER MATTERS
RELATING TO THE FUND. INVESTORS WISHING TO OBTAIN SIMILAR INFORMATION REGARDING
CALIFORNIA INTERMEDIATE MAY OBTAIN A SEPARATE PROSPECTUS DESCRIBING THAT
PORTFOLIO BY CALLING THE DISTRIBUTOR AT 800-998-7633.
Each Money, Dollar and Plus share represents an equal proportionate
interest in the assets of the Fund. Shareholders of each series are entitled to
participate equally in any dividend or distribution declared by the Company's
Board of Directors (except as provided under "Dividends") and in the net
distributable assets of the Fund on liquidation. Fund shares have no pre-emptive
rights and only such conversion and exchange rights as the Board may grant in
its discretion. When issued for payment as described in this Prospectus, the
Fund's shares will be fully paid and non-assessable. Further, shareholders of
each series are entitled to one vote for each full share held and proportionate
fractional votes for fractional shares held, and will vote in the aggregate and
not by series, except where otherwise required by law and except that only
Dollar shares will be entitled to vote on matters submitted to a vote of
shareholders pertaining to the Fund's arrangements with Service Organizations
with respect to Dollar shares, and Plus shares will enjoy similar voting rights
on matters pertaining to the Fund's arrangements with Service Organizations with
respect to Plus shares. (See "Management of the Fund--Service Organizations.")
Shares of the Company have non-cumulative voting rights and, accordingly, the
holders of more than 50% of the Company's outstanding shares (irrespective of
class or series) may elect all of the directors.
For information concerning the redemption of Fund shares and possible
restrictions on their transferability, see "Redemption of Shares."
YIELD
From time to time the Fund may advertise the "yields," "effective yields"
and "tax-equivalent yields" of its Money, Dollar and Plus shares. Yield figures
are based on historical earnings and are not intended to indicate future
performance. The "yield" for each series of Fund shares refers to the income
generated by an investment in the shares of such series over a seven-day period
(which period will be stated in the advertisement). This income is then
"annualized." That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in a series
of Fund shares is assumed to be reinvested in shares of that series. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment. The "tax-equivalent yield"
shows the level of taxable yield necessary to produce an after-tax yield
equivalent to the Fund's tax-free yield. It is calculated by increasing the
Fund's yield (calculated as above) by the amount necessary to reflect the
payment of Federal and California income taxes at a stated tax rate. The
"tax-equivalent yield" will always be higher than the "yield."
For the seven-day period ended January 31, 1995 the yields on Money and
Dollar shares were 3.39% and 3.14%, respectively, the compounded effective
yields on Money and Dollar shares were 3.45% and 3.19%, respectively, and the
tax-equivalent yields on Money and Dollar shares were 5.52% and 5.11%,
respectively. These tax-equivalent yields assume a Federal income tax rate of
31.0% and a
16
<PAGE> 20
California income tax rate of 11.0%. Because actual income tax rates may vary
considerably from those assumptions, each investor should consider their own tax
rate in evaluating yields. During this seven-day period, the Fund's Adviser and
Administrators voluntarily waived 69.90% of the advisory and administration fees
payable by the Fund; without such waivers each of the above-quoted yields would
have been 4.12% lower. The yield of any investment is generally a function of
portfolio quality and maturity, type of investment and operating expenses. The
yield on Money, as well as Dollar and Plus, shares will fluctuate and is not
necessarily representative of future results. Any fees charged by broker-
dealers, banks or others directly to their customers in connection with
investments in the Fund are not reflected in the yields on the Fund's shares,
and such fees, if charged, will reduce the actual return received by customers
on their investments. Investors may call 800-821-6006 to obtain the current
yields on each series of the Fund's shares.
17
<PAGE> 21
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 22
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 23
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND
OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND
OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
-----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Background and Expense
Information.................. 2
Financial Highlights........... 3
Investment Objective and
Policies..................... 5
Purchase of Shares............. 8
Redemption of Shares........... 9
Management of the Fund......... 10
Dividends...................... 14
Taxes.......................... 14
Description of Shares and
Miscellaneous................ 15
Yield.......................... 16
</TABLE>
PIF-P-011
CALIFORNIA
MONEY FUND
AN INVESTMENT PORTFOLIO
OFFERED BY
MUNICIPAL FUND FOR
CALIFORNIA INVESTORS, INC.
[PIF LOGO]
Prospectus
May 31, 1995
- --------------------------------------------------------------------------------
<PAGE> 24
CALIFORNIA MONEY FUND
(Dollar Shares)
An Investment Portfolio Offered by
Municipal Fund for California Investors, Inc.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Form N-1A Item Prospectus Caption
- -------------- ------------------
<S> <C> <C>
1. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . Background and Expense Information
3. Condensed Financial Information . . . . . . . . . . . . . . . . Financial Highlights
4. General Description of
Registrant . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Highlights; Investment
Objective and Policies
5. Management of the Fund . . . . . . . . . . . . . . . . . . . . . Management of the Fund
6. Capital Stock and Other
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page; Financial Highlights;
Dividends; Taxes; Description of
Shares and Miscellaneous; Yield
7. Purchase of Securities Being
Offered . . . . . . . . . . . . . . . . . . . . . . . . . . . Management of the Fund; Purchase
of Shares; Redemption of Shares
8. Redemption or Repurchase . . . . . . . . . . . . . . . . . . . . Redemption of Shares
9. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
</TABLE>
<PAGE> 25
- --------------------------------------------------------------------------------
Prospectus
California Money Fund
(Dollar Shares)
An Investment Portfolio Offered By
Municipal Fund for California Investors, Inc.
Bellevue Park Corporate Center
400 Bellevue Parkway, Suite 100
Wilmington, Delaware 19809
For purchase and redemption orders call Morgan Guaranty Trust Company of New
York at (800) 521-5411.
- --------------------------------------------------------------------------------
Municipal Fund for California Investors, Inc. (the "Company") is a no-load,
open-end investment company currently offering shares in two separate investment
portfolios: California Money Fund and California Intermediate Municipal Fund.
This Prospectus offers one series of shares ("Dollar Shares") in the California
Money Fund portfolio (the "Fund"). The Fund is a non-diversified investment
company that is designed primarily to provide California institutional investors
and their customers with as high a level of current interest income that is
exempt from Federal income tax and, to the extent possible, from California
state personal income tax as is consistent with the preservation of capital and
relative stability of principal. Portfolio securities held by the Fund will
generally have remaining maturities of 13 months or less and will be determined
by the investment adviser to have minimal credit risk.
PFPC Inc. ("PFPC") and Provident Distributors, Inc. ("PDI") serve as the Fund's
administrators. PDI also serves as the Fund's distributor. PNC Institutional
Management Corporation ("PIMC") and PNC Bank, National Association ("PNC Bank")
serve as the Fund's adviser and sub-adviser, respectively. Morgan Guaranty Trust
Company of New York will act as Service Organization on behalf of its customers
and customers of its affiliates with respect to all Shares offered by this
Prospectus. The customers, which may include individuals, trusts, partnerships
and corporations, must maintain accounts (such as demand deposit, custody, trust
or escrow accounts) with the Service Organization.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED, OR
ENDORSED BY, ANY BANK INCLUDING MORGAN GUARANTY TRUST COMPANY OF NEW YORK, PNC
BANK, NATIONAL ASSOCIATION AND SHARES OF THE FUND ARE NOT FEDERALLY INSURED BY,
GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL
AGENCY. INVESTMENTS IN SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING
THE POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED. THERE CAN BE NO ASSURANCE THAT
THE FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
This Prospectus briefly sets forth certain information about the Fund that
investors should know before investing. Investors are advised to read this
Prospectus and retain it for future reference. Additional information about the
Fund, contained in a Statement of Additional Information currently dated May
31, 1995, has been filed with the Securities and Exchange Commission and is
available to investors without charge by calling 800-821-7432. The Statement of
Additional Information, as amended from time to time, is incorporated by
reference in its entirety into this Prospectus.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
May 31, 1995
<PAGE> 26
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
2 Background and Expense Information
3 Financial Highlights
5 Investment Objective and Policies
8 Purchase of Shares
9 Redemption of Shares
<CAPTION>
PAGE
<S> <C>
10 Management of the Fund
12 Dividends
13 Taxes
14 Description of Shares and
Miscellaneous
15 Yield
</TABLE>
- --------------------------------------------------------------------------------
BACKGROUND AND EXPENSE INFORMATION
The Company was organized as a Maryland corporation on
September 20, 1982 and currently offers shares in two separate
investment portfolios: the Fund and California Intermediate Municipal
Fund ("California Intermediate"). The Fund currently offers three
separate series of shares -- California Money ("Money"), California
Money Dollar ("Dollar") and California Money Plus ("Plus"). The public
offering of Money shares commenced on February 28, 1983 and the public
offering of Dollar and Plus shares commenced on September 30, 1985.
Shares of each series represent equal pro rata interests in a
single portfolio of high quality, short-term, tax-exempt obligations
maintained by the Fund (see "Investment Objective and Policies"),
except that Dollar and Plus shares bear the additional expense of
service fees payable by the Fund (at the rate of .25% per annum) to
Service Organizations for support and/or distribution services they
provide to the beneficial owners of such shares. (See "Management of
the Fund -- Service Organizations.")
EXPENSE SUMMARY
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<S> <C> <C>
Management Fees After Fee Waivers............................... .06%
Other Expenses.................................................. .39%
Administration Fees After Fee Waivers...................... .06%
Non-12b-1 Fees............................................. .25%
Other...................................................... .08%
===
Total Fund Operating Expenses After Fee Waivers................. .45%
</TABLE>
EXAMPLE
An investor would pay the following expenses on a $1,000 investment, assuming
(1) a hypothetical 5% annual return and (2) redemption at the end of each time
period with respect to the Dollar Shares:
<TABLE>
<S> <C>
1 Yr................................. $ 5
3 Yrs................................ $14
5 Yrs................................ $25
10 Yrs................................ $57
</TABLE>
2
<PAGE> 27
- --------------------------------------------------------------------------------
The foregoing Expense Summary and Example are intended to assist
investors in understanding the various costs and expenses that an
investor in the Fund will bear directly or indirectly. In addition,
institutional investors may charge their customers fees for providing
services in connection with investments in the Fund's Dollar and Plus
shares. (For more complete descriptions of the various costs and
expenses, see "Management of the Fund" in the Prospectus and Statement
of Additional Information and the financial statements and related notes
contained in the Statement of Additional Information.) The investment
adviser and administrators have agreed to waive the advisory and
administration fees otherwise payable to them and to reimburse the Fund
for its operating expenses to the extent necessary to ensure that the
annual operating expense ratio of the Fund (excluding fees paid to
Service Organizations pursuant to Servicing Agreements) does not exceed
.20% of the Fund's average daily net assets for the year ended January
31, 1996. Absent fee waivers and expense reimbursements for the year
ended January 31, 1995, "Total Fund Operating Expenses" for the Fund's
Dollar shares were .73% of the Fund's average daily net assets. The
foregoing table has not been audited by the Fund's independent
accountants.
THE EXAMPLE SHOWN ON THE PRIOR PAGE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE INVESTMENT RETURN OR OPERATING
EXPENSES. ACTUAL INVESTMENT RETURN AND OPERATING EXPENSES MAY BE MORE OR
LESS THAN THOSE SHOWN.
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The table of "Financial Highlights" below is derived from the Fund's
financial statements contained in the Statement of Additional
Information and sets forth certain information concerning the historic
investment results for Money, Dollar and Plus shares. The Financial
Highlights for the fiscal years ended January 31, 1995, 1994, 1993, 1992
and 1991 have been audited by Coopers & Lybrand L.L.P., the Fund's
independent accountants whose report thereon appears in the Statement of
Additional Information along with the financial statements. This
information should be read in conjunction with the financial statements
and notes included in the Statement of Additional Information. More
information about the performance of the Fund is also contained in the
Annual Report to Shareholders, which may be obtained without charge by
calling 800-521-5411.
FINANCIAL HIGHLIGHTS
(For a Fund share outstanding throughout each period)
<TABLE>
<CAPTION>
MONEY SHARES
--------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
01/31/95 01/31/94 01/31/93 01/31/92 01/31/91 01/31/90 01/31/89 01/31/88 01/31/87 01/31/86(1)
-------- -------- -------- -------- -------- -------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Year...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- ---------- -------- -----------
Income From Investment
Operations:
Net Investment
Income............. 0.0281 0.0223 0.0251 0.0375 0.0509 0.0578 0.0500 0.0440 0.0415 0.0484
-------- -------- -------- -------- -------- -------- -------- ---------- -------- -----------
Less Distributions:
Dividends to
Shareholders From Net
Investment Income.... (0.0281) (0.0223) (0.0251) (0.0375) (0.0509) (0.0578) (0.0500) (0.0440) (0.0415) (0.0484)
-------- -------- -------- -------- -------- -------- -------- ---------- -------- -----------
Net Asset Value, End of
Year................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ======== ========== ======== ===========
Total Return............ 2.84% 2.25% 2.54% 3.82% 5.21% 5.93% 5.12% 4.51% 4.23% 4.94%
Ratios/Supplemental
Data:
Net Assets, End of Year
$(000)............... 385,824 356,501 359,193 490,141 629,001 1,046,590 1,105,956 828,103 492,447 341,832
Ratio of Expenses to
Average Net
Assets(2)............ .20% .20% .30% .30% .29% .30% .30% .30% .34% .37%
Ratio of Net Investment
Income to Average Net
Assets............... 2.79% 2.23% 2.52% 3.75% 5.10% 5.78% 5.01% 4.47% 4.12% 4.89%
</TABLE>
- ---------------
(1) Transactions in Plus Shares which commenced on November 22, 1985, had no
impact on the financial highlights described above for the year ended
January 31, 1986. The number of Plus shares outstanding at January 31,
1986 was 182,897.
(2) Annualized operating expense ratios before waivers of Investment Adviser and
Administrator fees for Money shares for the years ended January 31, 1995,
1994, 1993, 1992, 1991, 1990, 1989, 1988, 1987 and 1986 were .48%, .49%,
.48%, .48%, .46%, .47%, .47%, .48%, .50% and .57%, respectively.
3
<PAGE> 28
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DOLLAR SHARES
----------------------------------------------------
YEAR YEAR YEAR YEAR 01/09/91(1)
ENDED ENDED ENDED ENDED TO
01/31/95 01/31/94 01/31/93 01/31/92 01/31/91
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income From Investment Operations:
Net Investment Income........................................... 0.0256 0.0198 0.0226 0.0350 0.0024
-------- -------- -------- -------- --------
Less Distributions:
Dividends to Shareholders from Net Investment Income.............. (0.0256) (0.0198) (0.0226) (0.0350) (0.0024)
-------- -------- -------- -------- --------
Net Asset Value, End of Period...................................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total Return........................................................ 2.59% 2.00% 2.29% 3.57% 3.87%(2)
Ratios/Supplemental Data:
Net Assets, End of Period $(000).................................. 11,026 19,098 11,750 6,599 1,126
Ratio of Expenses to Average Net Assets(3)........................ .45% .45% .55% .55% .54%(2)
Ratio of Net Investment Income to Average Net Assets.............. 2.54% 1.98% 2.27% 3.50% 3.85%(2)
</TABLE>
- ---------------
(1) Commencement of operations.
(2) Annualized.
(3) Annualized operating expense ratios before waivers of Investment Adviser and
Administrator fees for Dollar shares for the years ended January 31, 1995,
1994, 1993 and 1992 were .73%, .74%, .73% and .73%, respectively, and for
the period ended January 31, 1991 was .71%.
<TABLE>
<CAPTION>
PLUS SHARES
-------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
01/31/95 01/31/942 01/31/93(2)01/31/92 01/31/91 01/31/90 01/31/89 01/31/88 01/31/87
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Year........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income from Investment
Operations:
Net Investment Income........ -- -- 0.0191 0.0350 0.0484 0.0553 0.0475 0.0415 0.0390
-------- -------- -------- -------- -------- -------- -------- -------- --------
Less Distributions:
Dividends to Shareholders from
Net Investment Income........ -- ( --) (0.0191) (0.0350) (0.0484) (0.0553) (0.0475) (0.0415) (0.0390)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value, End of Year..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= ========= ========= ========= ========= =========
Total Return..................... -- -- 1.93% 3.57% 4.96% 5.68% 4.87% 4.26% 3.98%
Ratios/Supplemental Data:
Net Assets, End of Year
$(000)....................... -- -- -- 27,656 19,872 26,769 15,961 8,181 0.1
Ratio of Expenses to Average
Net Assets(1)................ -- -- .55% .55% .54% .55% .55% .55% .59%
Ratio of Net Investment Income
to Average Net Assets........ -- -- 2.27% 3.50% 4.85% 5.53% 4.76% 4.22% 3.87%
</TABLE>
- ---------------
(1) Annualized operating expense ratios before waivers of Investment Adviser and
Administrator fees for Plus shares for the years ended January 31, 1993,
1992, 1991, 1990, 1989, 1988 and 1987 were .64%, .73%, .71%, .72%, .72%,
.73% and .75%, respectively.
(2) Only 100 Plus shares were outstanding during the period from December 1,
1992 to January 31, 1995.
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE AND POLICIES
IN GENERAL
The Fund is a no-load, open-end non-diversified investment company
which has an investment objective to provide investors with as
high a level of current interest income that is exempt from Federal
income tax and, to the extent possible, from California state personal
income tax as is consistent with the preservation of capital and
relative stability of principal. There can be, of course, no assurance
that the Fund will achieve its investment objective. The Fund has a
service plan applicable to the Dollar Shares. See "Service
Organizations."
Substantially all of the Fund's assets are invested in debt
obligations issued by or on behalf of the State of California and other
states, territories and possessions of the United States, the District
of Columbia and their respective authorities, agen-
4
<PAGE> 29
- --------------------------------------------------------------------------------
cies, instrumentalities and political subdivisions and tax-exempt
derivatives such as tender option bonds, participations, beneficial
interests in trusts and partnership interests ("Municipal
Obligations"). Dividends paid by the Fund that are derived from
interest on bonds that is exempt from taxation under the Constitution
or statutes of California ("California Municipal Obligations") are
exempt from regular Federal income tax and California state personal
income tax. California Municipal Obligations include municipal
securities issued by the State of California and its political
subdivisions, as well as certain other governmental issuers such as
the Commonwealth of Puerto Rico. Dividends derived from interest on
municipal obligations other than California Municipal Obligations are
exempt from regular Federal income tax but may be subject to
California state personal income tax. (See, however, "Taxes" below
concerning treatment of exempt-interest dividends paid by the Fund for
purposes of the Federal alternative minimum tax applicable to
particular classes of investors.) The Fund expects that, except during
temporary defensive periods or when acceptable securities are
unavailable for investment by the Fund, the Fund's assets will be
invested primarily in California Municipal Obligations. At least 50%
of the Fund's assets must be invested in obligations which, when held
by an individual, the interest therefrom is exempt from California
personal income taxation (i.e., California Municipal Obligations and
certain U.S. Government obligations) at the close of each quarter of
its taxable year so as to permit the Fund to pay dividends that are
exempt from California state personal income tax. Dividends,
regardless of their source, may be subject to local taxes.
The Fund will not knowingly purchase securities the interest on which
is subject to regular Federal income tax; however, the Fund may hold
uninvested cash reserves pending investment during temporary defensive
periods or, if in the opinion of the Fund's investment adviser,
suitable tax-exempt obligations are unavailable. Uninvested cash
reserves will not earn income.
The Fund invests in Municipal Obligations that are determined by the
Fund's investment adviser to present minimal credit risks pursuant to
guidelines approved by the Company's Board of Directors pursuant to
Rule 2a-7 under the Investment Company Act of 1940, as amended (the
"1940 Act"). Pursuant to these guidelines, the Fund is authorized to
purchase instruments that (i) are rated at the time of purchase in one
of the top two rating categories by two unaffiliated nationally
recognized statistical rating organizations ("NRSROs"), (ii)
instruments rated in one of the top two rating categories by one such
NRSRO (if only one such organization rates the instrument), (iii)
instruments issued by issuers with short-term debt having such
ratings, and (iv) unrated instruments determined by the adviser,
pursuant to procedures approved by the Board of Directors, to be of
comparable quality. The Appendix to the Statement of Additional
Information includes a description of applicable NRSRO ratings.
The Fund intends to use its best efforts to maintain its net asset
value at $1.00 per share, and computes its net asset value using the
amortized cost method. In connection with its use of this valuation
method, the Fund limits the dollar-weighted average maturity of its
portfolio to not more than 90 days and the remaining maturity of each
portfolio security to not more than 13 months (with certain exceptions).
The Fund's investment objective and the policies described herein may
be changed by its Board of Directors without the affirmative vote of
the holders of a majority of the Fund's outstanding shares, except
that the Fund may not change the following investment limitations
without such a vote of shareholders. The Fund may not:
1. Invest less than 80% of its assets in securities the interest on
which is exempt from Federal income taxes, except during defensive
periods.
2. Purchase the securities of any issuer if as a result more than 5%
of the value of the Fund's assets would be invested in the
securities of such issuer, except that (a) up to 50% of the value
of the Fund's assets may be invested without regard to this 5%
limitation; provided that no more than 25% of the value of the
Fund's assets are invested in the securities of any one issuer and
(b) this 5% limitation does not apply to securities issued or
guaranteed
5
<PAGE> 30
- --------------------------------------------------------------------------------
by the U.S. Government, or its agencies or instrumentalities. For
purposes of this limitation, a security is considered to be issued
by the governmental entity (or entities) whose assets and revenues
back the security, or, with respect to a private activity bond that
is backed only by the assets and revenues of a non-governmental
user, by such non-governmental user. In certain circumstances, the
guarantor of a guaranteed security may also be considered to be an
issuer in connection with such guarantee.
3. Borrow money except from banks for temporary purposes and then in
amounts not in excess of 10% of the value of the Fund's assets at
the time of such borrowing; or mortgage, pledge or hypothecate any
assets except in connection with any such borrowing and in amounts
not in excess of the lesser of the dollar amounts borrowed or 10%
of the value of the Fund's assets at the time of such borrowing.
(This borrowing provision is not intended for investment leverage,
but solely to facilitate management of the Fund's portfolio by
enabling the Fund to meet redemption requests when the liquidation
of portfolio securities is deemed to be disadvantageous or
inconvenient, and hence the Fund may not purchase any portfolio
securities while its borrowings are outstanding.)
4. Invest more than 10% of the value of the Fund's total assets in
illiquid securities (including illiquid variable rate demand notes)
which may be illiquid due to legal or contractual restrictions on
resale or the absence of readily available market quotations.
5. Purchase any securities which would cause more than 25% of the
value of the Fund's total assets at the time of purchase to be
invested in the securities of issuers conducting their principal
business activities in the same industry; provided that this
limitation shall not apply to Municipal Obligations or governmental
guarantees of Municipal Obligations; and provided, further, that
for the purpose of this limitation only, industrial development
bonds that are considered to be issued by non-governmental users
(see the second investment limitation above) shall not be deemed to
be Municipal Obligations.
Opinions relating to the validity of Municipal Obligations and to the
exemption of interest thereon from Federal income tax (and, with
respect to California Municipal Obligations, to the exemption of
interest thereon from California state personal income tax) are
rendered by bond counsel to the respective issuers at the time of
issuance, and opinions relating to the validity of and the tax-exempt
status of payments received by the Fund from tax exempt derivatives
are rendered by counsel to the respective sponsors of such
derivatives. Neither the Fund nor its investment adviser will review
the proceedings relating to the issuance of Municipal Obligations, the
creation of any tax-exempt derivatives or the bases for such opinions.
TYPES OF MUNICIPAL OBLIGATIONS
The two principal classifications of Municipal Obligations which may
be held by the Fund are "general obligation" securities and "revenue"
securities. General obligation securities are secured by the issuer's
pledge of its full faith, credit and taxing power for the payment of
principal and interest. Revenue securities are payable only from the
revenues derived from a particular facility or class of facilities or,
in some cases, from the proceeds of a special excise tax or other
specific revenue source such as the user of the facility being
financed. Revenue securities may include private activity bonds. Such
bonds may be issued by or on behalf of public authorities to finance
various privately operated facilities, and are not payable from the
unrestricted revenues of the issuer. As a result, the credit quality
of private activity bonds is frequently related directly to the credit
standing of private corporations or other entities.
The Fund's portfolio may also include "moral obligation" securities,
which are normally issued by special purpose public authorities. If
the issuer of moral obligation securities is unable to meet its debt
service obligations from current revenues, it may draw on a reserve
fund, the restoration of which is a moral commitment but not a legal
obligation of the state or municipality which created the issuer.
6
<PAGE> 31
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OTHER INVESTMENT PRACTICES
Municipal Obligations purchased by the Fund may include variable and
floating rate demand instruments, which provide for adjustments in
the interest rate on certain reset dates or whenever a specified
interest rate index changes, respectively. Variable and floating rate
instruments are subject to the credit quality standards described
above. In some cases the Fund may require that the obligation to pay
the principal of the instrument be backed by a letter or line of
credit or guarantee. Such instruments may carry stated maturities in
excess of 397 days provided that the maturity-shortening provisions
stated in Rule 2a-7 are satisfied. Although a particular variable or
floating rate demand instrument may not be actively traded in a
secondary market, in some cases, the Fund may be entitled to principal
on demand and may be able to resell such instruments in the dealer
market.
The Fund may also purchase Municipal Obligations on a "when-issued"
basis. When-issued securities are securities purchased for delivery
beyond the normal settlement date at a stated price and yield. The
Fund will generally not pay for such securities or start earning
interest on them until they are received. Securities purchased on a
when-issued basis are recorded as an asset and are subject to changes
in value based upon changes in the general level of interest rates.
The Fund expects that commitments to purchase when-issued securities
will not exceed 25% of the value of its total assets absent unusual
market conditions, and that a commitment by the Fund to purchase
when-issued securities will not exceed 45 days. The Fund does not
intend to purchase when-issued securities for speculative purposes
but only in furtherance of its investment objective.
In addition, the Fund may acquire "stand-by commitments" with respect
to Municipal Obligations held in its portfolio. Under a stand-by
commitment, a dealer agrees to purchase at the Fund's option specified
Municipal Obligations at a price equal to their amortized cost value
plus accrued interest. The Fund will acquire stand-by commitments
solely to facilitate portfolio liquidity and does not intend to
exercise its rights thereunder for trading purposes.
RISK FACTORS
The Fund intends to follow the diversification standards set forth in
the 1940 Act except to the extent, in the investment adviser's
judgment, that non-diversification is appropriate in order to maximize
the percentage of the Fund's assets that are California Municipal
Obligations. The investment return on a non-diversified portfolio
typically is dependent upon the performance of a smaller number of
issuers relative to the number of issuers held in a diversified
portfolio. In the event of changes in the financial condition or in
the market's assessment of certain issuers, the Fund's maintenance
of large positions in the obligations of a small number of issuers may
affect the value of the Fund's portfolio to a greater extent than that
of a diversified portfolio.
Although the Fund does not presently intend to do so on a regular
basis, it may invest more than 25% of its assets in Municipal
Obligations the interest on which is paid solely from revenues on
similar projects if such investment is deemed necessary or appropriate
by the Fund's investment adviser.
To the extent that the Fund's assets are concentrated in Municipal
Obligations payable from revenues on similar projects, the Fund will
be subject to the particular risks presented by such projects to a
greater extent than it would be if the Fund's assets were not so
concentrated.
The Fund's ability to achieve its investment objective is dependent
upon various factors, including the ability of the issuers of
California Municipal Obligations to timely meet their continuing
payment obligations with respect to the municipal obligations.
Currently, the State of California and many other issuers of
California Municipal Obligations are experiencing financial and
budgetary problems which could affect their ability to timely meet
their financial obligations. Any resulting reductions in the
creditworthiness of issuers of California Municipal Obligations could
adversely affect the market values and marketability of California
Municipal Obligations, and consequently, the net asset value of the
Fund's portfolio.
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On July 15, 1994 and July 15, 1994, respectively, Standard and Poor's
Ratings Group and Moody's Investors Service, Inc. citing the State of
California's deteriorating financial position, lowered their ratings
of the State's general obligation bonds from A+ and Aa, respectively,
to A and A1, respectively.
Certain California constitutional amendments, legislative measures,
executive orders, administrative regulations and voter initiatives
could result in certain adverse consequences affecting California
Municipal Obligations. Significant financial and other considerations
relating to the Fund's investments in California Municipal Obligations
are summarized in the Statement of Additional Information.
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PURCHASE OF SHARES
Dollar Shares are sold to Service Organizations acting on behalf of
their customers. Morgan Guaranty Trust Company of New York ("Morgan")
will act as Service Organization for its customers and customers of
its affiliates with respect to all shares offered by this Prospectus.
Purchase orders are transmitted by Morgan directly to PFPC, the Fund's
transfer agent. All such transactions are effected through a
customer's account through procedures established in connection with
the requirements of the account. Shares are sold at the net asset
value per share next determined after receipt of a purchase order by
PFPC.
Purchase orders for shares will be accepted by the Fund only on a day
on which both the New York Stock Exchange and the Federal Reserve
Bank of Philadelphia are open for business (a "Business Day"), and
must be transmitted by Morgan to PFPC by telephone. Orders received
by PFPC by Noon, Eastern time (9:00 A.M., Pacific time) will be
executed the same day if PNC Bank, the Fund's Custodian, has received
payment by 4:00 P.M., Eastern time (1:00 P.M., Pacific time) that day.
Orders received at other times, and orders for which payment has not
been received by 4:00 P.M., Eastern time (1:00 P.M., Pacific time),
will not be accepted and notice thereof will be given to the
institution placing the order. Payment for orders which are not
received or accepted will be returned after prompt inquiry by PNC
Bank to the sending institution.
Payment for shares may be made only in Federal Funds or other funds
immediately available to PNC Bank. The minimum initial investment is
$5,000 and there is no minimum subsequent investment; however, Service
Organizations such as Morgan may set a higher minimum initial
investment and minimum subsequent investment for their customers. The
Fund may in its discretion reject any purchase order for shares.
Conflict of interest restrictions may apply to an institution's
receipt of compensation paid by the Fund in connection with the
investment of fiduciary funds in Dollar Shares. Institutions,
including banks regulated by the Comptroller of the Currency and
investment advisers and other money managers subject to the
jurisdiction of the Securities and Exchange Commission, the Department
of Labor or state securities commissions, should consult legal counsel
before investing in Dollar Shares. (See also "Management of the
Fund-Banking Laws.")
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REDEMPTION OF SHARES
REDEMPTION PROCEDURES
Redemption orders must be transmitted by Morgan to PFPC by telephone
in the manner described under "Purchase of Shares." Shares are
redeemed at the net asset value per share next determined after
receipt of the redemption order by PFPC. While the Fund intends to
use its best
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efforts to maintain the net asset value per share of each of its
series at $1.00, the proceeds paid upon redemption may be more or less
than the amount invested depending upon a share's net asset value at
the time of redemption.
Payment for redeemed shares for which a redemption order is received
by PFPC prior to Noon, Eastern time (9:00 A.M., Pacific time) on a
Business Day is normally made in Federal Funds wired to the redeeming
shareholder on the same Business Day. Payment for redeemed shares for
which a redemption order is received by PFPC after Noon, Eastern time
(9:00 A.M., Pacific time) on such a Business Day is normally made in
Federal Funds wired to the redeeming shareholder on the next business
day that PNC Bank is open. The Fund reserves the right to wire
redemption proceeds within 7 days after receiving the redemption order
if, in the judgment of the Fund's administrator, an earlier payment
could adversely affect the Fund.
The Fund may suspend the right of redemption or postpone the date of
payment upon redemption (as well as suspend or postpone the
recordation of the transfer of its shares) for such periods as are
permitted under the 1940 Act. The Fund reserves the right to redeem
the shares of the Fund owned by a shareholder at their net asset value
if the value of such shares is less than $500. Any such shareholder
will be notified in writing that its shares have a value of less than
$500 and will be allowed 60 days to make an additional investment before
the redemption is processed by the Fund. Service Organizations such as
Morgan may require that customers maintain share accounts with minimum
balances in excess of $500. The Fund may also redeem shares
involuntarily (and restrict the transfer of its shares) under certain
special circumstances described in the Statement of Additional
Information under "Additional Purchase and Redemption Information."
OTHER MATTERS
The Fund's net asset value per share for purposes of pricing purchase
and redemption orders is determined by PIMC as of Noon and 4:00 P.M.,
Eastern time (9:00 A.M. and 1:00 P.M., Pacific time) on each Business
Day. Currently, the holidays which the New York Stock Exchange or the
Federal Reserve Bank of Philadelphia observe are New Year's Day,
Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Columbus Day, Veterans' Day,
Thanksgiving Day and Christmas Day. The net asset value per share of
each of the Fund's series is the same and is calculated by adding the
value of all of the Fund's portfolio securities and other assets,
subtracting liabilities and dividing the results by the number of the
Fund's outstanding shares (irrespective of series). The net asset
value for purposes of pricing purchase and redemption orders for Fund
shares is determined independently of the net asset value per share of
the Company's other investment portfolio. Portfolio securities are
valued on the basis of amortized cost. Under this method, the Fund
values a portfolio security at cost on the date of purchase and
thereafter assumes a constant amortization of any discount or premium
until maturity of the security. As a result, the value of the security
for purposes of determining net asset value normally does not change
in response to fluctuating interest rates. While the amortized cost
method seems to provide certainty in portfolio valuation, it may
result in periods during which values, as determined by amortized
cost, are higher or lower than the amount the Fund would receive if it
sold the securities.
Shares of the Fund are sold and redeemed without charge by the Fund,
although Service Organizations (see below) purchasing or holding Fund
shares for their customers' accounts may charge customers for cash
management and other services provided in connection with their
accounts including, for example, account maintenance fees,
compensating balance requirements or fees based upon account
transactions, assets or income. Such charges will reduce the yield of
the Fund to such customers. A customer should therefore read this
Prospectus in light of the terms governing its account with a Service
Organization before purchasing Fund shares. An institution purchasing
or redeeming Fund shares on behalf of its customers is responsible for
transmitting orders to the Fund in accordance with its agreements with
its customers.
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MANAGEMENT OF THE FUND
BOARD OF DIRECTORS
The business and affairs of the Fund are managed under the direction of
the Company's Board of Directors. The directors of the Company are as
follows:
G. Willing Pepper, Chairman of the Board and President of the Company,
is a former President of Scott Paper Company.
Rodney D. Johnson is President of Fairmount Capital Advisors, Inc.
William R. Howell is a former Vice Chairman, Union Bank, Los Angeles.
Rudolph A. Peterson is Honorary Director, President and Chief Executive
Officer (Ret.) of BankAmerica Corporation.
Anthony M. Santomero is the Richard K. Mellon Professor of Finance at
The Wharton School, University of Pennsylvania.
INVESTMENT ADVISER AND SUB-ADVISER
PIMC, a wholly-owned subsidiary of PNC Asset Management Group, Inc.,
which is in turn a wholly-owned subsidiary of PNC Bank, serves as the
Fund's investment adviser. PIMC was organized in 1977 by PNC Bank to
perform advisory services for investment companies, and has its
principal offices at Bellevue Park Corporate Center, 400 Bellevue
Parkway, Wilmington, Delaware 19809. PNC Asset Management Group, Inc.'s
principal business address is 1835 Market Street, Philadelphia,
Pennsylvania 19102. PNC Bank serves as the Fund's sub-adviser. PNC Bank
and its predecessors have been in the business of managing the
investments of fiduciary and other accounts in the Philadelphia area
since 1847. PNC Bank is an indirect, wholly-owned subsidiary of
PNC Bank Corp., and its principal business address is located at Broad
and Chestnut Streets, Philadelphia, Pennsylvania 19102. PNC Bank Corp.
is a multi-bank holding company. PIMC and PNC Bank also serve as
adviser and sub-adviser, respectively, to the Company's California
Intermediate portfolio.
In its advisory agreement with the Fund, PIMC has agreed to manage the
Fund's portfolio and to be responsible for, make decisions with respect
to and place orders for all purchases and sales of the Fund's portfolio
securities. PIMC also computes the Fund's net asset value and maintains
the Fund's financial accounts and records. For the services provided
and expenses assumed pursuant to the advisory agreement, PIMC is
entitled to receive a fee from the Fund, computed daily and payable
monthly, at the annual rate of .20% of the Fund's average daily net
assets. PIMC and the administrators have agreed to reduce the advisory
and administration fees otherwise payable to them and to reimburse the
Fund for its operating expenses to the extent necessary to ensure that
its annual operating expense ratio (excluding fees paid to Service
Organizations pursuant to Servicing Agreements) does not exceed .20% of
the Fund's average daily net assets. For the fiscal year ended
January 31, 1995, the Fund paid advisory fees to PIMC (after fee
waivers) of .06% of the Fund's average daily net assets.
As sub-adviser, PNC Bank has agreed to: (i) provide investment research
and credit analysis concerning the Fund's investments; (ii) make
recommendations with respect to the Fund's continuous investment
program; (iii) supply PIMC with computer facilities and operating
personnel; and (iv) provide PIMC with such statistical services as
PIMC may from time to time reasonably request. As compensation
therefore, PIMC has agreed to pay PNC Bank an amount equal to 75% of
the advisory fee paid by the Fund to PIMC, as adjusted quarterly to
ensure that PIMC has income before taxes from all sources of at least
$22,500 during each quarter.
ADMINISTRATORS
PFPC, whose principal business address is 400 Bellevue Parkway,
Wilmington, Delaware 19809 and PDI, whose principal business address
is 259 Radnor-Chester Road, Suite 120, Radnor, Pennsylvania 19087,
serve as co-administrators. PFPC is an indirect wholly-owned subsidiary
of PNC Bank Corp. A majority of the outstanding stock of PDI is owned
by its officers.
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As administrators, PFPC and PDI have agreed to: assist in maintaining
office facilities for the Fund; furnish the Fund with statistical and
research data and clerical and certain other services required by the
Fund; perform administrative services in connection with the Fund's
computer access program maintained to facilitate shareholder access to
the Fund; monitor the arrangements pertaining to the Fund's agreements
with Service Organizations; prepare semi-annual reports to the
Securities and Exchange Commission, Federal and state tax returns and
filings with state securities commissions; arrange for and bear the
cost of processing share purchase and redemption orders; and generally
assist in the Fund's operations.
For their administrative services, the administrators are entitled
jointly to receive a fee, computed daily and payable monthly,
determined in the same manner as PIMC's advisory fee described above.
(For information regarding the administrators' obligations to waive
administrative fees otherwise payable to them and to reimburse the Fund
for operating expenses, see "Investment Adviser and Sub-Adviser"
above.) For the fiscal year ended January 31, 1995, the Fund paid PFPC
and PDI administrative fees (after fee waivers) aggregating .06% of its
average daily net assets. The Fund also reimburses each administrator
for reasonable out-of-pocket expenses incurred in connection with the
Fund's computer access program.
DISTRIBUTOR
PDI serves as distributor of the Fund's shares. Its principal offices
are located at 259 Radnor-Chester Road, Suite 120, Radnor, Pennsylvania
19087. Fund shares are sold on a continuous basis by the Distributor
as agent. The Distributor pays the cost of printing and distributing
prospectuses to persons who are not shareholders of the Fund (excluding
preparation and printing expenses necessary for the continued
registration of the Fund's shares) and of printing and distributing all
sales literature. No compensation is payable by the Fund to the
distributor for its distribution services.
CUSTODIAN AND TRANSFER AGENT
PNC Bank serves as the custodian of the Fund's assets, and PFPC serves
as the Fund's transfer and dividend disbursing agent. The Fund
compensates PNC Bank and PFPC for their services, and reimburses PFPC
for its out-of-pocket expenses incurred in connection with its transfer
agency and dividend disbursing services. Communications to PFPC,
including any election to reinvest dividends in additional shares of
the Fund, should be directed to PFPC Inc., P.O. Box 8950,
Wilmington, Delaware 19899.
SERVICE ORGANIZATIONS
As stated above, Service Organizations may purchase Dollar Shares
offered by the Fund. Morgan Guaranty Trust Company of New York,
9 West 57th St., New York, New York 10019, will act as the Service
Organization for the Dollar Shares offered by this Prospectus.
Dollar Shares are sold to institutions other than broker/dealers which
enter into servicing agreements with the Fund requiring them to
provide support services to their customers who are the beneficial
owners of such shares in consideration for .25% (on an annualized
basis) of the average daily net asset value of the Dollar Shares held
by the Service Organizations for the benefit of their customers. Such
services, which are described more fully in the Statement of Additional
Information under "Management of the Fund--Service Organizations,"
include aggregating and processing purchase and redemption requests
from customers and placing net purchase and redemption orders with
PFPC; processing dividend payments from the Fund on behalf of
customers; providing information periodically to customers showing their
positions in Dollar Shares; and providing sub-accounting not provided
by the transfer agent with respect to shares beneficially owned by
customers or the information necessary for sub-accounting. Under the
terms of the agreements, Service Organizations are required to provide
to their customers a schedule of any fees that they may charge to their
customers relating to the investment of their customers' assets in
Dollar Shares. (However, customers of Morgan and its affiliates will
not be subject to such charges.)
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EXPENSES
Except as noted above, the Fund's service contractors bear all expenses
in connection with the performance of their services. Similarly, the
Fund bears the expenses incurred in its operations. The ratio of the
Fund's expenses to its average daily net assets for the fiscal year
ended January 31, 1995 was .45% (such ratio would have been .73%
without the waiver of advisory and administration fees described above).
BANKING LAWS
Banking laws and regulations currently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any
bank or non-bank affiliate thereof from sponsoring, organizing,
controlling or distributing the shares of a registered, open-end
investment company continuously engaged in the issuance of its shares,
and prohibit banks generally from issuing, underwriting, selling or
distributing securities, but such banking laws and regulations do not
prohibit such a holding company or affiliate or banks generally from
acting as investment adviser, transfer agent or custodian to such an
investment company, or from purchasing shares of such a company as
agent for and upon the order of such a customer. PNC Bank, PIMC, PFPC,
as well as certain Service Organizations (i.e., banks), are subject to
such banking laws and regulations, but believe they may perform the
services for the Fund contemplated by their respective agreements, this
Prospectus and Statement of Additional Information without violating
applicable banking laws or regulations.
Should future legislative, judicial or administrative action prohibit or
restrict the activities of bank Service Organizations in connection
with the provision of support services to their customers, the Fund
might be required to alter or discontinue its arrangements with
Service Organizations generally and change its method of operations.
It is not anticipated, however, that any change in the Fund's method of
operations would affect its net asset value per share or result in a
financial loss to any customer.
- --------------------------------------------------------------------------------
DIVIDENDS
The Fund's net income is declared daily as a dividend to the holders of
record of each of the Fund's series of shares at the close of business
on the day of declaration. Dividends for each series are equal to the
net income available for each series and are determined in the same
manner. Net income available for dividends on the Dollar Shares is
after deduction of all the expense of fees paid to Service
Organizations for their services with respect to Dollar Shares, and for
the Plus shares is after deduction of all the expense of fees paid to
Service Organizations with respect to Plus shares. (See "Management of
the Fund-- Service Organizations.") Shares of each series begin
accruing dividends on the day the purchase order for the shares is
executed and continue to accrue dividends through, and including, the
day before the redemption order for the shares is executed.
Dividends are paid monthly by check, or by wire transfer if requested
in writing by the shareholder, within 5 business days after the end of
the month or within 5 business days of the redemption of all of a
shareholder's shares of a series. The Fund does not expect to realize
net long-term capital gains.
Institutional shareholders may elect to have their dividends reinvested
in additional full and fractional shares of the same series with
respect to which dividends are declared valued at their net asset value
on the payment date. Reinvested dividends receive the same tax
treatment as dividends paid in cash. Such election, or any revocation
thereof, must be made in writing to PFPC, and will become effective
with respect to dividends paid after its receipt by PFPC.
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TAXES
The Fund and California Intermediate (each a "Portfolio") are treated as
separate corporations for Federal tax purposes. It is intended that each
Portfolio will separately qualify as a "regulated investment company"
under the Internal Revenue Code of 1986, as amended (the "Code"). Such
qualification generally relieves each Portfolio of liability for
Federal income and California franchise and income taxes to the extent
each Portfolio's earnings are distributed in accordance with the Code.
The Fund's policy is to pay its shareholders with respect to each
taxable year dividends equal to at least the sum of 90% of its exempt
interest income (net of certain deductions) and 90% of its investment
company taxable income for such year. Dividends derived from
exempt-interest income (known as "exempt-interest dividends") may be
treated by the Fund's shareholders as items of interest excludable from
their gross income under Section 103(a) of the Code, unless under the
circumstances applicable to the particular shareholder exclusion would
be disallowed. (See the Statement of Additional Information under
"Additional Information Concerning Taxes").
If the Fund should hold certain private activity bonds issued after
August 7, 1986, shareholders must include, as an item of tax
preference, the portion of dividends paid by the Fund that is
attributable to interest on such bonds in their Federal alternative
minimum taxable income for purposes of determining liability (if any)
for the 26-28% alternative minimum tax applicable to individuals and
the 20% alternative minimum tax and the environmental tax applicable to
corporations. Corporate shareholders must also take all exempt-interest
dividends into account in determining certain adjustments for
alternative minimum and environmental tax purposes. The environmental
tax applicable to corporations is imposed at the rate of .12% on the
excess of the corporation's modified Federal alternative minimum
taxable income over $2,000,000. Shareholders receiving Social Security
benefits or Railroad Retirement Act benefits should note that all
exempt-interest dividends will be taken into account in determining the
taxability of such benefits.
Dividends that are paid by the Fund to non-corporate shareholders and
are derived from interest on California Municipal Obligations (as
defined above) or certain U.S. Government obligations are also exempt
from California state personal income tax. However, dividends paid to
corporate shareholders subject to California state franchise tax or
California state corporate income tax will be taxed as ordinary income
to such shareholders, notwithstanding that all or a portion of such
dividends is exempt from California state personal income tax.
Moreover, to the extent that the Fund's dividends are derived from
interest on debt obligations other than California Municipal
Obligations or certain U.S. Government obligations, such dividends will
be subject to California state personal income tax, even though such
dividends may be exempt for Federal income tax purposes.
Exempt-interest dividends derived from U.S. Government obligations
generally will be exempt from state and local tax as well. However,
except as noted with respect to California state personal income tax,
in some situations distributions of net investment income may be
taxable to investors under state or local law as dividend income even
though all or a portion of such distributions may be derived from
interest on tax-exempt obligations which, if realized directly, would
be exempt from such income taxes. To the extent, if any, that dividends
paid to shareholders are derived from taxable interest or from
long-term or short-term capital gains, such dividends will not be exempt
from Federal income tax or California state personal income tax.
Shareholders will be advised at least annually as to the Federal and
California state personal income tax consequences of distributions
made each year.
The foregoing is only a brief summary of some of the important tax
considerations generally affecting the Fund and its shareholders. No
attempt is made to present a detailed explanation of the Federal, state
or local income tax treatment of the Fund or its shareholders, and
this discussion is
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not intended as a substitute for careful tax planning. Accordingly,
potential investors in the Fund should consult their tax advisers with
specific reference to their own tax situations.
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DESCRIPTION OF SHARES AND MISCELLANEOUS
The Company's Charter authorizes the Board of Directors to issue up to
three billion full and fractional shares of capital stock, $.001 par
value per share, and to classify or reclassify any unissued shares of
the Fund into one or more classes or series by setting or changing in
any one or more respects their respective preferences, conversion or
other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions or redemption. Pursuant to
such authority, the Board of Directors has classified 2.3 billion of
its shares as California Money shares (Class A Common Stock), 300
million of its shares as California Money Dollar shares (Class A Common
Stock--Special Series 1), 300 million of its shares as California Money
Plus shares (Class A Common Stock--Special Series 2), 80 million of
its shares as California Intermuni shares (Class B Common Stock), 10
million of its shares as California Intermuni Dollar shares (Class B
Common Stock--Special Series 1) and 10 million of its shares as
California Intermuni Plus shares (Class B Common Stock--Special
Series 2). As of May 17, 1995, Bank of America National Trust & Savings
Association held, on behalf of its underlying accounts, approximately
31.5% of the Company's shares that were outstanding on that date. The
1940 Act states that the beneficial owner of more than 25% of the
voting securities of a company is presumed to control the company.
Under this definition, Bank of America National Trust & Savings
Association may be deemed to be a controlling person of the Company.
THIS PROSPECTUS RELATES PRIMARILY TO THE DOLLAR SHARES OF THE FUND AND
DESCRIBES ONLY THE INVESTMENT OBJECTIVE AND POLICIES, OPERATIONS,
CONTRACTS AND OTHER MATTERS RELATING TO THE FUND. INVESTORS WISHING TO
OBTAIN SIMILAR INFORMATION REGARDING THE FUND'S OTHER SERIES OF SHARES
OR CALIFORNIA INTERMEDIATE MAY OBTAIN SEPARATE PROSPECTUSES BY CALLING
THE DISTRIBUTOR AT 800-998-7633.
Each Money, Dollar and Plus share represents an equal proportionate
interest in the assets of the Fund. Shareholders of each series are
entitled to participate equally in any dividend or distribution
declared by the Company's Board of Directors (except as provided under
"Dividends") and in the net distributable assets of the Fund on
liquidation. Fund shares have no pre-emptive rights and only such
conversion and exchange rights as the Board may grant in its
discretion. When issued for payment as described in this Prospectus,
the Fund's shares will be fully paid and non-assessable. Further,
shareholders of each series are entitled to one vote for each full
share held and proportionate fractional vote for fractional shares
held, and will vote in the aggregate and not by series, except where
otherwise required by law and except that only Dollar Shares will be
entitled to vote on matters submitted to a vote of shareholders
pertaining to the Fund's arrangements with Service Organizations with
respect to Dollar Shares, and Plus shares will enjoy similar voting
rights on matters pertaining to the Fund's arrangements with Service
Organizations with respect to Plus shares. (See "Management of the
Fund--Service Organizations.") Shares of the Company have
non-cumulative voting rights and, accordingly, the holders of more
than 50% of the Company's outstanding shares (irrespective of class or
series) may elect all of the directors.
For information concerning the redemption of Fund shares and possible
restrictions on their transferability, see "Redemption of Shares."
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YIELD
From time to time the Fund may advertise the "yields," "effective
yields" and "tax-equivalent yields" of its Money, Dollar and Plus
shares. Yield figures are based on historical earnings and are not
intended to indicate future performance. The "yield" for each series
of Fund shares refers to the income generated by an investment in the
shares of such series over a seven-day period (which period will be
stated in the advertisement). This income is then "annualized." That
is, the amount of income generated by the investment during that week
is assumed to be generated each week over a 52-week period and is shown
as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in
a series of Fund shares is assumed to be reinvested in shares of that
series. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment. The
"tax-equivalent yield" shows the level of taxable yield necessary to
produce an after-tax yield equivalent to the Fund's tax-free yield. It
is calculated by increasing the Fund's yield (calculated as above) by
the amount necessary to reflect the payment of Federal and California
income taxes at a stated tax rate. The "tax-equivalent yield" will
always be higher than the "yield."
For the seven-day period ended January 31, 1995 the yield on Dollar
shares was 3.14%, the compounded effective yield on Dollar shares was
3.19%, and the tax-equivalent yield on Dollar shares was 5.11%. These
tax-equivalent yields assume a Federal income tax rate of 31.0% and a
California income tax rate of 11.0%. Because actual income tax rates
may vary considerably from those assumptions, each investor should
consider their own tax rate in evaluating yields. During this seven-day
period, the Fund's Adviser and Administrator voluntarily waived 69.90%
of the advisory and administration fees payable by the Fund; without
such waivers each of the above-quoted yields would have been 4.12%
lower. The yield of any investment is generally a function of
portfolio quality and maturity, type of investment and operating
expenses. The yield on all shares will fluctuate and is not necessarily
representative of future results. Any fees charged by broker-dealers,
banks or others directly to their customers in connection with
investments in the Fund are not reflected in the yields on the Fund's
shares, and such fees, if charged, will reduce the actual return
received by customers on their investments. Investors may call
800-821-6006 to obtain the current yields on each series of the
Fund's shares.
15
<PAGE> 40
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR THE FUND'S
STATEMENT OF ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE,
IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE FUND OR ITS DISTRIBUTOR. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR BY THE
DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
<PAGE> 41
CALIFORNIA INTERMEDIATE MUNICIPAL FUND
An Investment Portfolio Offered by
Municipal Fund for California Investors, Inc.
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Form N-1A Item Prospectus Caption
- -------------- ------------------
<S> <C> <C>
1. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . . . Background and Expense Information
3. Condensed Financial Information . . . . . . . . . . . . . . . . Financial Highlights
4. General Description of
Registrant . . . . . . . . . . . . . . . . . . . . . . . . . . Financial Highlights; Investment
Objective and Policies
5. Management of the Fund . . . . . . . . . . . . . . . . . . . . . Management of the Fund
6. Capital Stock and Other
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page; Financial Highlights;
Dividends; Taxes; Description of
Shares and Miscellaneous; Yield
7. Purchase of Securities Being
Offered . . . . . . . . . . . . . . . . . . . . . . . . . . . Management of the Fund; Purchase
of Shares; Redemption of Shares
8. Redemption or Repurchase . . . . . . . . . . . . . . . . . . . . Redemption of Shares
9. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
</TABLE>
<PAGE> 42
California Intermediate
Municipal Fund
An Investment Portfolio Offered by
Municipal Fund for California Investors, Inc.
<TABLE>
<S> <C>
Bellevue Park Corporate Center For purchase and redemption orders call:
400 Bellevue Parkway 800-441-7450 (in Delaware: 302-791-5350). For
Suite 100 current yield information call: 800-821-6006
Wilmington, DE 19809 (California Intermuni shares code: 64;
California Intermuni Dollar shares code: 65;
California Intermuni Plus shares code: 66).
For other information call: 800-821-7432.
</TABLE>
Municipal Fund for California Investors, Inc. (the "Company") is a no-load,
open-end investment company currently offering shares in two separate investment
portfolios: California Money Fund and California Intermediate Municipal Fund.
The shares offered by this Prospectus represent interests in the California
Intermediate Municipal Fund portfolio (the "Fund"). The Fund is a
non-diversified investment company that is designed primarily to provide
California institutional investors and their customers with a high level of
current interest income which is exempt from Federal income tax and, to the
extent possible, from California state personal income tax. The Fund has a
distribution and service plan applicable to one series of its shares and a
service plan applicable to another series of its shares under which certain
service organizations are entitled to receive a fee at the rate of .25% per
annum for their provision of distribution and/or support services to the
beneficial owners of such shares.
The Fund invests substantially all of its assets in tax-exempt obligations
having remaining maturities of ten years or less. The Fund does not invest in
obligations subject to regular Federal income tax and may hold uninvested cash
reserves pending investment, during temporary defensive periods or when suitable
tax-exempt obligations are unavailable. The Fund's net asset value per share
will fluctuate as the value of its portfolio changes in response to changing
market rates of interest and other factors.
PNC Institutional Management Corporation ("PIMC"), PNC Bank, National
Association ("PNC Bank"), PFPC Inc. ("PFPC") and Provident Distributors, Inc.
("PDI") serve as the Fund's adviser, sub-adviser and administrators,
respectively. PDI also serves as the Fund's distributor. Shares may not be
purchased by individuals directly but, as indicated above, institutional
investors, such as banks and broker-dealers, may purchase shares for accounts
maintained by individuals.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, PNC BANK, NATIONAL ASSOCIATION OR ANY OTHER BANK AND SHARES ARE NOT
FEDERALLY INSURED BY, GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY
THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENTAL AGENCY. INVESTMENTS IN SHARES OF THE
FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
This Prospectus briefly sets forth certain information about the Fund that
investors should know before investing. Investors are advised to read this
Prospectus and retain it for future reference. Additional information about the
Fund, contained in a Statement of Additional Information currently dated May 31,
1995, has been filed with the Securities and Exchange Commission and is
available to investors without charge by calling the Fund at 800-821-7432. The
Statement of Additional Information, as amended from time to time, is
incorporated by reference in its entirety into this Prospectus.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
May 31, 1995
<PAGE> 43
BACKGROUND AND EXPENSE INFORMATION
The Company was organized as a Maryland corporation on September 20, 1982,
and currently offers shares in two separate investment portfolios: California
Money Fund ("California Money") and the Fund. The Fund currently offers three
separate series of shares--California Intermuni ("Intermuni"), California
Intermuni Dollar ("Dollar") and California Intermuni Plus ("Plus"). The public
offering of Intermuni, Dollar and Plus shares commenced on September 12, 1988.
Shares of each series represent equal, pro rata interests in a single portfolio
of intermediate-term, tax-exempt obligations maintained by the Fund (see
"Investment Objective and Policies"), except that Dollar and Plus shares bear
certain fees payable by the Fund (at the rate of .25% per annum) to
institutional investors ("Service Organizations") for distribution and/or
support services they provide to the beneficial owners of such shares. (See
"Management of the Fund--Service Organizations.") Because of the service fees
borne by the Dollar and Plus shares, the net yield on such shares can be
expected, at any given time, to be approximately .25% lower than the net yield
on Intermuni shares.
EXPENSE SUMMARY
<TABLE>
<CAPTION>
INTERMUNI DOLLAR PLUS
ANNUAL FUND OPERATING EXPENSES SHARES SHARES SHARES
- ------------------------------------------------------ -------- ------ ------
(as a percentage of average net assets) (ESTIMATED) (ESTIMATED)
<S> <C> <C> <C> <C> <C> <C>
Management Fees After Fee Waivers..................... .03% .03% .03%
12b-1 Fees............................................ -- -- .25%
Other Expenses........................................ .17% .42% .17%
Administration Fees After Fee Waivers.............. .03% .03% .03%
Non-12b-1 Fees..................................... -- .25% --
Other.............................................. .14% .14% .14%
----- ----- ----- ----- ----- -----
Total Fund Operating Expenses
After Fee Waivers.................................. .20% .45% .45%
==== ==== ====
</TABLE>
- ---------------
EXAMPLE
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming (1) a hypothetical 5% annual return
and (2) redemption at the end of each time period with
respect to the following shares:
Intermuni Shares..................................... $2 $ 6 $11 $ 26
Dollar Shares (estimated)............................ $5 $14 $25 $ 57
Plus Shares (estimated).............................. $5 $14 $25 $ 57
</TABLE>
The foregoing Expense Summary and Example are intended to assist investors
in understanding the various costs and expenses that an investor in the Fund
will bear directly or indirectly. In addition, institutional investors may
charge their customers fees for providing services in connection with
investments in the Fund's Dollar and Plus shares. (For more complete
descriptions of the various costs and expenses, see "Management of the Fund" in
the Prospectus and Statement of Additional Information and the financial
statements and related notes contained in the Statement of Additional
Information.) The investment adviser and administrators have agreed to waive the
advisory and administration fees otherwise payable to them and to reimburse the
Fund for its operating expenses to the extent necessary to ensure that the
annual operating expense ratio of the Fund (excluding fees paid to Service
Organizations pursuant to Servicing Agreements) does not exceed .20% of the
Fund's average daily net assets for the year ended January 31, 1996. Absent fee
waivers and expense reimbursements for the year ended January 31, 1995, "Total
Fund Operating Expenses" for the Fund's Intermuni, Dollar and Plus shares would
have been .53%, .78% (estimated), and .78% (estimated), respectively, of the
Fund's average daily net assets. During the year ended January 31, 1995, no
Dollar shares or Plus shares had been sold. The foregoing table has not been
audited by the Fund's independent accountants.
THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RETURN OR OPERATING EXPENSES. ACTUAL INVESTMENT RETURN AND
OPERATING EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
2
<PAGE> 44
FINANCIAL HIGHLIGHTS
The table of "Financial Highlights" below is derived from the Fund's
financial statements contained in the Statement of Additional Information and
sets forth certain information concerning the investment results for Intermuni
shares. The financial highlights for the fiscal years ended January 31, 1995,
1994, 1993, 1992 and 1991 have been audited by Coopers & Lybrand L.L.P., the
Fund's independent accountants, whose report thereon appears in the Statement of
Additional Information along with the financial statements. This information
should be read in conjunction with the financial statements and notes included
in the Statement of Additional Information. No Dollar or Plus shares were sold
during the periods presented. More information about the performance of the Fund
is also contained in the Annual Report to Shareholders which may be obtained
without charge by calling 800-821-7432.
FINANCIAL HIGHLIGHTS
(For a Fund share outstanding throughout each period)
<TABLE>
<CAPTION>
INTERMUNI SHARES
-----------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR 09/12/881
ENDED ENDED ENDED ENDED ENDED ENDED TO
01/31/95 01/31/94 01/31/93 01/31/92 01/31/91 01/31/90 01/31/89
-------- -------- -------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period.................. $ 10.85 $ 10.72 $ 10.61 $ 10.34 $ 10.05 $ 10.04 $ 10.00
Income From Investment
Operations:
Net Investment Income.... 0.5165 0.5480 0.5655 0.6070 0.6199 0.6414 0.2393
Net Realized and
Unrealized Gain/Loss
on Investments........ (0.7959) 0.4110 0.2219 0.3296 0.2915 0.0100 0.0400
-------- -------- -------- -------- -------- -------- ----------
Total From Investment
Operations............ (0.2794) 0.9590 0.7874 0.9366 0.9114 0.6514 0.2793
-------- -------- -------- -------- -------- -------- ----------
Less Distributions:
Dividends From Net
Investment Income........ (0.5165) (0.5480) (0.5655) (0.6070) (0.6199) (0.6414) (0.2393)
Distributions From Net
Capital Gains............ (0.0341) (0.2810) (0.1119) (0.0596) (0.0015) ( --) ( --)
-------- -------- -------- -------- -------- -------- ----------
Total Distributions........ (0.5506) (0.8290) (0.6774) (0.6666) (0.6214) (0.6414) (0.2393)
-------- -------- -------- -------- -------- -------- ----------
Net Asset Value, End of
Period..................... $ 10.02 $ 10.85 $ 10.72 $ 10.61 $ 10.34 $ 10.05 $ 10.04
======== ======== ======== ======== ======== ======== ==========
Total Return................. (2.51)% 9.26% 7.68% 9.34% 9.40% 6.70% 7.41%3
Ratios/Supplemental Data
Net Assets, End of Period
$(000)................... 17,432 20,061 17,318 19,516 14,131 10,687 8,191
Ratio of Expenses to
Average Net Assets2...... 0.20% .20% .30% .30% .30% .21% .23%3
Ratio of Net Investment
Income to Average Net
Assets................... 5.06% 5.06% 5.31% 5.80% 6.14% 6.42% 6.19%3
Portfolio Turnover Rate.... 3% 23% 52% 63% 39% 43% 118%3
</TABLE>
- ---------------
1 Commencement of operations.
2 Annualized operating expense ratios before waivers of Investment Adviser and
Administrator fees for the years ended January 31, 1995, 1994, 1993, 1992,
1991 and 1990 and for the period ended January 31, 1989 were .53%, .51%, .48%,
.53%, .57%, .61% and .63%, respectively.
3 Annualized.
3
<PAGE> 45
INVESTMENT OBJECTIVE AND POLICIES
IN GENERAL
The Fund is a no-load, open-end, non-diversified investment company which
has an investment objective to provide investors with a high level of current
interest income which is exempt from Federal income tax and, to the extent
possible, from California state personal income tax. There can be, of course, no
assurance that the Fund will achieve its investment objective. The Fund has a
distribution plan applicable to one series of its shares and a service plan
applicable to another series of its shares. See "Service Organizations."
Substantially all of the Fund's assets will be invested in debt obligations
with remaining maturities of ten years or less issued by or on behalf of the
State of California and other states, territories and possessions of the United
States, the District of Columbia and their respective authorities, agencies,
instrumentalities and political sub-divisions and tax-exempt derivatives such as
tender option bonds, participations, beneficial interests in trusts and
partnership interests ("Municipal Obligations"). Dividends paid by the Fund that
are derived from interest on obligations which is exempt from taxation under the
Constitution or statutes of California ("California Municipal Obligations") are
exempt from regular Federal income tax and California state personal income tax.
California Municipal Obligations include municipal securities issued by the
State of California and its political sub-divisions, as well as certain other
governmental issuers such as the Commonwealth of Puerto Rico. Dividends derived
from interest on Municipal Obligations other than California Municipal
Obligations are exempt from regular Federal income tax but may be subject to
California state personal income tax. (See, however, "Taxes" below concerning
treatment of exempt-interest dividends paid by the Fund for purposes of the
Federal alternative minimum tax applicable to particular classes of investors.)
The Fund expects that, except during temporary defensive periods or when
acceptable securities are unavailable for investment by the Fund, the average
weighted maturity of the Fund will be between three and ten years and 65% of the
Fund's assets will be invested in California Municipal Obligations. At least 50%
of the Fund's assets must be invested in obligations which, when held by an
individual, the interest therefrom is exempt from California personal income
taxation (i.e., California Municipal Obligations and certain U.S. Government
obligations) at the close of each quarter of its taxable year so as to permit
the Fund to pay dividends that are exempt from California state personal income
tax. Dividends, regardless of their source, may be subject to local taxes.
The Fund will not knowingly purchase securities the interest on which is
subject to regular Federal income tax; however, the Fund may hold uninvested
cash reserves pending investment during temporary defensive periods or, if in
the opinion of the Fund's investment adviser, suitable tax-exempt obligations
are unavailable. Uninvested cash reserves will not earn income.
The Fund invests in Municipal Obligations that at the time of purchase are
rated "A" or higher by Standard & Poor's Ratings Group ("S&P"), "A" or higher by
Moody's Investors Service, Inc. ("Moody's") or "A" or higher by Fitch Investors
Service, Inc. ("Fitch") in the case of bonds, rated "SP-1" by S&P, "MIG-1" by
Moody's or "F-1+" or "F-1" by Fitch in the case of notes, rated "A-1" by S&P,
"Prime-1" by Moody's or "F-1+" or "F-1" by Fitch in the case of tax-exempt
commercial paper, or rated "VMIG-1" by Moody's in the case of variable rate
demand obligations. The Fund may also purchase "high quality" California
Municipal Obligations rated "A-2" by S&P, or "Prime-2", "MIG-2" or "VMIG-2" by
Moody's or "F-2" by Fitch when acceptable California Municipal Obligations with
higher ratings are unavailable for investment by the Fund. The Fund may purchase
Municipal Obligations that are unrated at the time of purchase provided they are
determined by the investment
4
<PAGE> 46
adviser to be of comparable quality. See the Appendix to the Statement of
Additional Information for a description of applicable Municipal Obligations
ratings.
The Fund's investment objective and the policies described herein may be
changed by its Board of Directors without the affirmative vote of the holders of
a majority of the Fund's outstanding shares, except that the Fund may not change
the following investment limitations without such a vote of shareholders.
THE FUND MAY NOT:
1. Invest less than 80% of its total assets in securities the interest
on which is exempt from Federal income taxes, except during temporary
defensive periods or when acceptable securities are unavailable for
investment by the Fund.
2. Purchase the securities of any issuer if as a result more than 5%
of the value of the Fund's assets would be invested in the securities of
such issuer, except that (a) up to 50% of the value of the Fund's assets
may be invested without regard to this 5% limitation, provided that no more
than 25% of the value of the Fund's assets are invested in the securities
of any one issuer and (b) this 5% limitation does not apply to securities
issued or guaranteed by the U.S. Government, or its agencies or
instrumentalities. For purposes of this limitation, a security is
considered to be issued by the governmental entity (or entities) whose
assets and revenues back the security, or, with respect to a private
activity bond that is backed only by the assets and revenues of a non-
governmental user, by such non-governmental user. In certain circumstances,
the guarantor of a guaranteed security may also be considered to be an
issuer in connection with such guarantee.
3. Borrow money except from banks for temporary purposes and then in
amounts not in excess of 10% of the value of the Fund's assets at the time
of such borrowing; or mortgage, pledge or hypothecate any assets except in
connection with any such borrowing and in amounts not in excess of the
lesser of the dollar amounts borrowed or 10% of the value of the Fund's
assets at the time of such borrowing. (This borrowing provision is not
intended for investment leverage, but solely to facilitate management of
the Fund's portfolio by enabling the Fund to meet redemption requests when
the liquidation of portfolio securities is deemed to be disadvantageous or
inconvenient, and hence the Fund may not purchase any portfolio securities
while its borrowings are outstanding.)
4. Invest more than 10% of the value of the Fund's total assets in
securities (including variable rate demand notes) which are illiquid due to
legal or contractual restrictions on resale or the absence of readily
available market quotations.
5. Purchase any securities which would cause 25% or more of the value
of the Fund's total assets at the time of purchase to be invested in the
securities of issuers conducting their principal business activities in the
same industry; provided that this limitation shall not apply to Municipal
Obligations or governmental guarantees of Municipal Obligations; and
provided, further, that for the purpose of this limitation only, private
activity bonds that are considered to be issued by non-governmental users
(see the second investment limitation above) shall not be deemed to be
Municipal Obligations.
Opinions relating to the validity of Municipal Obligations and to the
exemption of interest thereon from Federal income tax (and, with respect to
California Municipal Obligations, to the exemption of interest thereon from
California state personal income tax) are rendered by bond counsel to the
5
<PAGE> 47
respective issuers at the time of issuance, and opinions relating to the
validity of and the tax-exempt status of payments received by the Fund from
tax-exempt derivatives are rendered by counsel to the respective sponsors of
such derivatives. Neither the Fund nor its investment adviser will review the
proceedings relating to the issuance of Municipal Obligations, the creation of
any tax-exempt derivatives, or the bases for such opinions.
TYPES OF MUNICIPAL OBLIGATIONS
The two principal classifications of Municipal Obligations which may be
held by the Fund are "general obligation" securities and "revenue" securities.
General obligation securities are secured by the issuer's pledge of its full
faith, credit and taxing power for the payment of principal and interest.
Revenue securities are payable only from the revenues derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise tax or other specific revenue source such as the user of the
facility being financed. Revenue securities may include private activity bonds.
Such bonds may be issued by or on behalf of public authorities to finance
various privately operated facilities, and are not payable from the unrestricted
revenues of the issue. As a result, the credit quality of private activity bonds
is frequently related directly to the credit standing of private corporations or
other entities.
The Fund's portfolio may also include "moral obligation" securities, which
are normally issued by special purpose public authorities. If the issuer of
moral obligation securities is unable to meet its debt service obligations from
current revenues, it may draw on a reserve fund, the restoration of which is a
moral commitment but not a legal obligation of the state or municipality which
created the issuer.
OTHER INVESTMENT PRACTICES
Municipal Obligations purchased by the Fund may include variable and
floating rate instruments, which provide for adjustments in the interest rate on
certain reset dates or whenever a specified interest rate index changes,
respectively. Variable and floating rate instruments are subject to the credit
quality standards described above. In some cases the Fund may require that the
obligation to pay the principal of the instrument be backed by a letter or line
of credit or guarantee. Although a particular variable or floating rate demand
instrument may not be actively traded in a secondary market, in some cases, the
Fund may be entitled to principal on demand and may be able to resell such
instrument in the dealer market.
The Fund may also purchase Municipal Obligations on a "when-issued" basis.
When-issued securities are securities purchased for delivery beyond the normal
settlement date at a stated price and yield. The Fund will generally not pay for
such securities or start earning interest on them until they are received.
Securities purchased on a when-issued basis are recorded as an asset and are
subject to changes in value based upon changes in the general level of interest
rates. The Fund expects that commitments to purchase when-issued securities will
not exceed 25% of the value of its total assets absent unusual market
conditions, and that a commitment by the Fund to purchase when-issued securities
will not exceed 45 days. The Fund does not intend to purchase when-issued
securities for speculative purposes but only in furtherance of its investment
objective.
In addition, the Fund may acquire "stand-by commitments" with respect to
Municipal Obligations held in its portfolio. Under a stand-by commitment, a
dealer agrees to purchase at the Fund's option specified Municipal Obligations
at a stated price. The Fund will acquire stand-by commitments solely to
facilitate portfolio liquidity, and does not intend to exercise its rights
thereunder for trading purposes.
6
<PAGE> 48
RISK FACTORS
The Fund intends to follow the diversification standards set forth in the
Investment Company Act of 1940, as amended (the "1940 Act") except to the
extent, in the investment adviser's judgment, that non-diversification is
appropriate in order to maximize the percentage of the Fund's assets that are
California Municipal Obligations. The investment return on a non-diversified
portfolio typically is dependent upon the performance of a smaller number of
issuers relative to the number of issuers held in a diversified portfolio. In
the event of changes in the financial condition or in the market's assessment of
certain issuers, the Fund's maintenance of large positions in the obligations of
a small number of issuers may affect the value of the Fund's portfolio to a
greater extent than that of a diversified portfolio.
Although the Fund does not presently intend to do so on a regular basis, it
may invest more than 25% of its assets in Municipal Obligations the interest on
which is paid solely from revenues on similar projects if such investment is
deemed necessary or appropriate by the Fund's investment adviser. To the extent
that the Fund's assets are concentrated in Municipal Obligations payable from
revenues on similar projects, the Fund will be subject to the particular risks
presented by such projects to a greater extent than it would be if the Fund's
assets were not so concentrated.
The Fund's ability to achieve its investment objective is dependent upon
various factors, including the ability of the issuers of California Municipal
Obligations to timely meet their continuing payment obligations with respect to
the municipal obligations. Currently, the State of California and many other
issuers of California Municipal Obligations are experiencing financial and
budgetary problems which could affect their ability to timely meet their
financial obligations. Any resulting reductions in the credit worthiness of
issuers of California Municipal Obligations could adversely affect the market
values and marketability of California Municipal Obligations, and, consequently,
the net asset value of the Fund's portfolio.
On July 15, 1994 and July 15, 1994, respectively, Standard and Poor's
Ratings Group and Moody's Investors Service, Inc., citing the State of
California's deteriorating financial position, lowered their ratings of the
State's general obligation bonds from A+ and Aa, respectively, to A and A1,
respectively.
Certain California constitutional amendments, legislative measures,
executive orders, administrative regulations and voter initiatives could result
in certain adverse consequences affecting California Municipal Obligations.
Significant financial and other considerations relating to the Fund's
investments in California Municipal Obligations are summarized in the Statement
of Additional Information.
PURCHASE AND REDEMPTION OF SHARES
PURCHASE PROCEDURES
Fund shares are sold to institutional investors at the net asset value per
share next determined after receipt of a purchase order by PFPC, the Fund's
transfer agent.
Purchase orders for shares are accepted by the Fund until 4:00 P.M.,
Eastern time, only on days on which both the New York Stock Exchange and the
Federal Reserve Bank of Philadelphia, are open for business (a "Business Day"),
and must be transmitted to PFPC by telephone at 800-441-7450 (in Delaware call
302-791-5350) or through the Fund's computer access program. Purchase orders
received before 4:00 P.M., Eastern time, will be executed the following Business
Day if payment has been received by 4:00 P.M., Eastern time, on the day the
order is executed. Orders for which payment
7
<PAGE> 49
has not been received by 4:00 P.M., Eastern time, on the next Business Day
following receipt of the order, will not be accepted and notice thereof will be
given to the institution placing the order. (Payment for orders which are not
received or accepted will be returned after prompt inquiry to the sending
institution.) The Fund may in its discretion reject any order for shares.
Conflict of interest restrictions may apply to an institution's receipt of
compensation paid by the Fund in connection with the investment of fiduciary
funds in Dollar or Plus shares. Institutions, including banks regulated by the
Comptroller of the Currency and investment advisers and other money managers
subject to the jurisdiction of the Securities and Exchange Commission, the
Department of Labor or state securities commissions, should consult their legal
advisers before investing fiduciary funds in Dollar or Plus shares. See also
"Management of the Fund--Banking Laws."
Payment for Fund shares may be made only in Federal funds or other funds
immediately available to PNC Bank. The minimum initial investment by an
institution is $5,000; however, broker-dealers and other institutional investors
may set a higher minimum for their customers. There is no minimum subsequent
investment.
REDEMPTION PROCEDURES
Redemption orders must be transmitted to PFPC by telephone in the manner
described under "Purchase Procedures." Redemption orders will be priced at the
net asset value per share determined as of 4:00 P.M., Eastern time, on the day
the order is received and will be executed on the following Business Day. The
proceeds paid to a shareholder upon redemption may be more or less than the
amount invested depending upon a share's net asset value at the time of
redemption.
Payment for redeemed shares is normally made in Federal funds wired to the
redeeming shareholder on the next Business Day (the execution date) following
receipt of the order. The Fund reserves the right to wire redemption proceeds
within 7 days after receiving the redemption order if, in the judgment of the
Fund's investment adviser, an earlier payment could adversely affect the Fund.
The Fund reserves the right to redeem shares in any account at their net
asset value if the value of the account is less than $1,000 upon sixty days'
written notice to the shareholder, unless the shareholder increases the value of
its account to $1,000 or more during such sixty-day period. In addition, the
Fund may redeem shares involuntarily or suspend the right of redemption under
certain special circumstances described in the Statement of Additional
Information under "Additional Purchase and Redemption Information."
OTHER MATTERS
The Fund's net asset value per share for purposes of pricing purchase and
redemption orders is determined by PIMC, as of 4:00 P.M., Eastern time, on each
Business Day (excluding those holidays on which either the New York Stock
Exchange or the Federal Reserve Bank of Philadelphia is closed). Currently, the
holidays which the New York Stock Exchange or the Federal Reserve Bank of
Philadelphia observe are New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day. The net asset
value per share of the Fund's shares is calculated by adding the value of all
securities and other assets of the Fund, subtracting liabilities and dividing
the result by the number of the Fund's outstanding shares (irrespective of
series). The net asset value per share for purposes of pricing purchase and
redemption orders for Fund shares is determined independently of the net asset
value per share of the Company's other investment portfolio.
8
<PAGE> 50
The net asset value of the Fund's shares will fluctuate as the value of its
portfolio changes in response to changing market rates of interest and other
factors. The value of the Fund's portfolio securities can be expected to vary
inversely with changes in prevailing interest rates. Municipal Obligations with
longer maturities tend to produce higher yields and are generally subject to
potentially greater capital appreciation and depreciation than securities with
shorter maturities and lower yields. Thus, investing in Municipal Obligations
with longer maturities will cause greater fluctuations in the Fund's net asset
value than investing in securities with shorter maturities.
Portfolio securities for which market quotations are readily available
(other than debt securities with remaining maturities of 60 days or less) are
valued at the mean of the most recent quoted bid and asked prices provided by
investment dealers. Other securities and assets for which market quotations are
not readily available are valued at their fair value in the best judgment of
PIMC under procedures established by, and under the supervision of, the
Company's Board of Directors. Market or fair value may be determined by a matrix
pricing system which is used to determine the value of Municipal Obligations
based on factors such as yield, prices, maturities, call features and ratings on
comparable securities.
Debt securities with remaining maturities of 60 days or less are valued on
an amortized cost basis (unless the Board determines that such basis does not
represent fair value at the time). Under this method, such securities are valued
initially at cost on the date of purchase or, in the case of securities
purchased with more than 60 days to maturity, are valued at their market or fair
value each day until the 61st day prior to maturity. Thereafter, absent unusual
circumstances, the Fund assumes a constant proportionate amortization of any
discount or premium until maturity of the security.
Shares of the Fund are sold and redeemed without charge by the Fund,
although Service Organizations (see below) and other institutional investors
purchasing or holding Fund shares for their customers' accounts may charge
customers for cash management and other services provided in connection with
their accounts including, for example, account maintenance fees, compensating
balance requirements or fees based upon account transactions, assets or income.
Such charges, in effect, will reduce the yield of the Fund to such customers. A
customer should therefore read this Prospectus in light of the terms governing
its account with a Service Organization (or other institution) before purchasing
Fund shares. An institution purchasing or redeeming shares on behalf of its
customers is responsible for transmitting orders to the Fund in accordance with
its customer agreements.
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS
The business and affairs of the Fund are managed under the direction of the
Company's Board of Directors. The directors of the Company are as follows:
G. Willing Pepper, Chairman of the Board and President of the Company,
is a former President of Scott Paper Company.
Rodney D. Johnson is President of Fairmount Capital Advisors, Inc.
William R. Howell is a former Vice Chairman, Union Bank, Los Angeles.
Rudolph A. Peterson is Honorary Director, President and Chief
Executive Officer (Ret.) of BankAmerica Corporation.
Anthony M. Santomero is the Richard K. Mellon Professor of Finance at
The Wharton School, University of Pennsylvania.
9
<PAGE> 51
INVESTMENT ADVISER AND SUB-ADVISER
PIMC, a wholly-owned subsidiary of PNC Asset Management Group, Inc. which
is in turn a wholly-owned subsidiary of PNC Bank, serves as the Fund's
investment adviser. PIMC was organized in 1977 by PNC Bank to perform advisory
services for investment companies, and has its principal offices at Bellevue
Park Corporate Center, 400 Bellevue Parkway, Wilmington, Delaware 19809. PNC
Asset Management Group, Inc.'s principal business address is 1835 Market Street,
Philadelphia, Pennsylvania 19102. PNC Bank serves as the Fund's sub-adviser. PNC
Bank and its predecessors have been in the business of managing the investment
of fiduciary and other accounts in the Philadelphia area since 1847. PNC Bank is
an indirect, wholly-owned subsidiary of PNC Bank Corp., and its principal
business address is located at Broad and Chestnut Streets, Philadelphia,
Pennsylvania 19102. PNC Bank Corp. is a multi-bank holding company. PIMC and PNC
Bank also serve as adviser and sub-adviser, respectively, to the Company's
California Money portfolio.
The California Intermediate Municipal Fund's portfolio manager, W. Don
Simmons, is the person primarily responsible for the day-to-day management of
the Fund's investments. Mr. Simmons has been with PIMC since 1984 and has been
the Fund's manager since 1991.
PNC Bank Corp., headquartered in Pittsburgh, Pennsylvania, is the eleventh
largest bank holding company in the United States. Categorized as a super
regional bank holding company, PNC Bank Corp. operates over 500 branch offices
in six U.S. states.
PNC Bank's Investment Management and Trust Division, headquartered in
Philadelphia, Pennsylvania, traces its money management services to individuals
and institutions to the year 1847, and is the second largest bank manager of
investments for individuals in the U.S. with $28 billion in discretionary trust
assets under management.
PNC Financial Services Group is PNC Bank Corp.'s mutual fund complex,
headquartered in Wilmington, Delaware. This group includes PIMC, PFPC, and PNC
Bank. In 1973, Provident National Bank (predecessor to PNC Bank) commenced
advising the first institutional money market mutual fund -- a U.S.
dollar-denominated constant net asset value fund -- offered in the United
States.
The PNC Financial Services Group is one of the largest U.S. bank managers
of mutual funds with assets currently under management in excess of $30 billion.
This group, through PFPC Inc. and PFPC International Ltd., is also a leading
mutual fund service provider having contractual relationships with approximately
400 mutual funds with 3.5 million shareholders and in excess of $75 billion in
assets. This group, through its PNC Institutional Investment Service, provides
investment research to some 250 financial institutions located in the United
States and abroad. PNC Bank provides custodial services for approximately $217
billion in assets, including $106 billion in mutual fund assets.
In its advisory agreement with the Fund, PIMC has agreed to manage the
Fund's portfolio and to be responsible for, make decisions with respect to and
place orders for all purchases and sales of the Fund's portfolio securities.
PIMC also computes the Fund's net asset value and maintains the Fund's financial
accounts and records. For the services provided and expenses assumed pursuant to
the advisory agreement, PIMC is entitled to receive a fee from the Fund,
computed daily and payable monthly, at the annual rate of .20% of the Fund's
average daily net assets. For the fiscal year ended January 31, 1995, the Fund
paid advisory fees to PIMC (after fee waivers) of .03% of the Fund's average
daily net assets. PIMC and the administrators have agreed to reduce the advisory
and administration fees otherwise payable to them and to reimburse the Fund for
its operating expenses to the extent necessary to ensure that its annual
operating expense ratio (excluding fees paid to Service
10
<PAGE> 52
Organizations pursuant to Servicing Agreements) does not exceed .20% of the
Fund's average daily net assets.
As sub-adviser, PNC Bank has agreed to: (i) provide investment research and
credit analysis concerning the Fund's investments; (ii) make recommendations
with respect to the Fund's continuous investment program; (iii) supply PIMC with
computer facilities and operating personnel; and (iv) provide PIMC with such
statistical services as PIMC may from time to time reasonably request. As
compensation therefor, PIMC has agreed to pay PNC Bank an amount equal to 75% of
the advisory fee paid by the Fund to PIMC (subject to adjustment in certain
circumstances). The sub-advisory fees paid by PIMC to PNC Bank have no effect on
the advisory fees payable by the Fund to PIMC.
ADMINISTRATORS
PFPC whose principal business address is 400 Bellevue Parkway, Wilmington,
Delaware 19809 and PDI, whose principal business address is 259 Radnor-Chester
Road, Suite 120, Radnor, Pennsylvania 19087, serve as administrators. PFPC is an
indirect wholly-owned subsidiary of PNC Bank Corp. A majority of the outstanding
stock of PDI is owned by its officers.
As administrators, PFPC and PDI have agreed to assist in maintaining office
facilities for the Fund; furnish the Fund with statistical and research data and
clerical and certain other services required by the Fund; perform administrative
services in connection with the Fund's computer access program maintained to
facilitate shareholder access to the Fund; monitor the arrangements pertaining
to the Fund's agreements with Service Organizations; prepare semi-annual reports
to the Securities and Exchange Commission, Federal and state tax returns and
filings with state securities commissions; arrange for and bear the cost of
processing share purchase and redemption orders; and generally assist in the
Fund's operations.
For their administrative services, the administrators are entitled jointly
to receive a fee, computed daily and payable monthly, determined in the same
manner as PIMC's advisory fee described above. (For information regarding the
administrators' obligations to waive administrative fees otherwise payable to
them and to reimburse the Fund for operating expenses, see "Investment Adviser
and Sub-Adviser" above.) For the fiscal year ended January 31, 1995, the Fund
paid PFPC and PDI administrative fees (after fee waivers) aggregating .03% of
its average daily net assets. The Fund also reimburses each administrator for
reasonable out-of-pocket expenses incurred in connection with the Fund's
computer access program.
DISTRIBUTOR
PDI serves as distributor of the Fund's shares. Its principal offices are
located at 259 Radnor-Chester Road, Suite 120, Radnor Pennsylvania 19087. Fund
shares are sold on a continuous basis by the Distributor as agent. The
Distributor pays the cost of printing and distributing prospectuses to persons
who are not shareholders of the Fund (excluding preparation and printing
expenses necessary for the continued registration of the Fund's shares) and of
printing and distributing all sales literature. No compensation is payable by
the Fund to the distributor for its distribution services.
CUSTODIAN AND TRANSFER AGENT
PNC Bank serves as the custodian of the Fund's assets, and PFPC, an
indirect, wholly-owned subsidiary of PNC Bank Corp., serves as the Fund's
transfer and dividend disbursing agent. The Fund compensates PNC Bank and PFPC
for their services, and reimburses PFPC for its out-of-pocket
11
<PAGE> 53
expenses incurred in connection with its transfer agency and dividend disbursing
services. Communications to PFPC, including any election to reinvest dividends
in additional shares of the Fund, should be directed to PFPC, P.O. Box 8950,
Wilmington, Delaware 19899.
SERVICE ORGANIZATIONS
As stated above, Service Organizations may purchase Dollar or Plus shares
offered by the Fund. Dollar shares are sold to institutions other than
broker/dealers, and Plus shares are sold to broker/ dealers, which, in each
case, enter into servicing agreements with the Fund requiring them to provide
support services to their customers who are the beneficial owners of such shares
in consideration for .25% (on an annualized basis) of the average daily net
asset value of the Dollar or Plus shares held by the Service Organizations for
the benefit of their customers. Such services, which are described more fully in
the Statement of Additional Information under "Management of the Fund--Service
Organizations," include aggregating and processing purchase and redemption
requests from customers and placing net purchase and redemption orders with
PFPC; processing dividend payments from the Fund on behalf of customers;
providing information periodically to customers showing their positions in
Dollar or Plus shares; and providing sub-accounting not provided by the transfer
agent with respect to shares beneficially owned by customers or the information
necessary for sub-accounting. In addition, broker/dealers purchasing Plus shares
may be requested to provide from time to time assistance (such as the forwarding
of sales literature and advertising to their customers) in connection with the
distribution of Plus shares. Under the terms of the agreements, Service
Organizations are required to provide to their customers a schedule of any fees
that they may charge to their customers relating to the investment of their
customers' assets in Dollar or Plus shares. Intermuni shares offered by the Fund
may be purchased by any type of institutional investor (including banks and
broker/dealers) which does not wish to enter into such servicing agreements with
the Fund in connection with its investments.
EXPENSES
Except as noted above, the Fund's service contractors bear all expenses in
connection with the performance of their services. Similarly, the Fund bears the
expenses incurred in its operations. The ratio of the Fund's expenses to its
average daily net assets for the period ended January 31, 1995 for the Fund's
Intermuni, Dollar and Plus shares were .20%, .45% and .45%, respectively (such
ratios would have been .53%, .78% (estimated) and .78% (estimated) for the
Fund's Intermuni, Dollar and Plus shares, respectively, without the waiver of
advisory and administration fees described above).
BANKING LAWS
Banking laws and regulations currently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from sponsoring, organizing, controlling or
distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from issuing, underwriting, selling or distributing securities, but such banking
laws and regulations do not prohibit such a holding company or affiliate or
banks generally from acting as investment adviser, transfer agent or custodian
to such an investment company, or from purchasing shares of such a company as
agent for and upon the order of such a customer. PNC Bank, PIMC, PFPC, as well
as certain Service Organizations (i.e., banks), are subject to such banking laws
and regulations, but believe they may
12
<PAGE> 54
perform the services for the Fund contemplated by their respective agreements,
this Prospectus and Statement of Additional Information without violating
applicable banking laws or regulations.
Should future legislative, judicial or administrative action prohibit or
restrict the activities of bank Service Organizations in connection with the
provision of support services to their customers, the Fund may be required to
alter or discontinue its arrangements with Service Organizations generally and
change its method of operations. It is not anticipated, however, that any change
in the Fund's method of operations would affect its net asset value per share or
result in a financial loss to any customer.
PERFORMANCE CALCULATIONS
From time to time, performance information such as total return and yield
data for the Fund may be quoted in advertisements or in communications to
shareholders. The Fund's total return may be calculated on an average annual
total return basis, and may also be calculated on an aggregate total return
basis, for various periods. Average annual total return reflects the average
annual percentage change in value of an investment in the Fund over the
measuring period. Aggregate total return reflects the total percentage change in
value over the measuring period. Both methods of calculating total return assume
that dividends and capital gain distributions made by the Fund during the period
are reinvested in Fund shares.
The yield of the Fund is computed based on its net income during a 30-day
(or one month) period (the particular period will be identified in connection
with a given yield quotation). More specifically, the Fund's yield is computed
by dividing its net income per share during a 30-day (or one month) period by
the net asset value per share on the last day of the period and annualizing the
result on a semi-annual basis. The Fund's "tax-equivalent yield" may also be
quoted from time to time and shows the level of taxable yield necessary to
produce an after-tax yield equivalent to the Fund's tax-free yield. It is
calculated by increasing the Fund's yield (calculated as above) by the amount
necessary to reflect the payment of Federal and California income taxes at a
stated tax rate. The "tax-equivalent yield" will always be higher than the
yield. The yield for Intermuni shares for the month of January 1995 was 4.96%
and the tax-equivalent yield was 8.08%. This tax-equivalent yield assumes a
Federal income tax rate of 31.0% and a California income tax rate of 11.0%.
Because actual income tax rates may vary considerably from these assumptions,
each investor should consider their own tax rate in evaluating yields.
Performance quotations of the Fund represent the Fund's past performance,
and should not be considered as representative of future results. The investment
return and principal value of an investment in the Fund will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Any fees charged by banks or other institutional investors
directly to their customer accounts in connection with investments in shares of
the Fund will not be included in the Fund's calculations of yield and total
return.
DIVIDENDS
Shareholders of the Fund are entitled to dividends and distributions
arising only from the net income and capital gains, if any, earned on
investments held by the Fund. The Fund's net income is declared daily as a
dividend to shareholders of record at the close of business on the day of
declaration. Shares begin accruing dividends on the day the purchase order for
the shares is executed and continue to accrue dividends through, and including,
the day before the redemption order for the shares is
13
<PAGE> 55
executed. Dividends are paid monthly by check, or by wire transfer if requested
in writing by the shareholder, within 5 business days after the end of the month
or within 5 business days after a redemption of all of a shareholder's shares of
a particular series. Dividends declared in December of any year payable to
shareholders of record on a specified date in such month will be deemed to have
been received by the shareholders and paid by the Fund on the record date,
provided such dividends are paid before February 1 of the following year.
Dividends for each series are equal to the net income available for such
series and are determined in the same manner. Net income available for dividends
on the Dollar shares is after deduction of all the expenses of fees paid to
Service Organizations for their services with respect to Dollar shares and for
the Plus shares is after deduction of all the expenses of fees paid to Service
Organizations with respect to Plus shares. As a result, at any given time, the
net yield on Dollar shares and Plus shares will be approximately .25% lower than
the net yield on other shares of the Fund that are not subject to agreements
with Service Organizations. Yield quotations are computed for Dollar shares and
Plus shares separately from those for shares not subject to agreements with
Service Organizations.
Changes in the Fund's net asset value will affect its yield for any period,
and such changes should be considered together with the Fund's yield in
ascertaining the Fund's total return to shareholders for the period. See the
Statement of Additional Information--"Dividends--Additional Information on
Performance Calculations" for a description of the method used by the Fund to
calculate its yield.
The Fund expects to distribute at least once each year any net realized
short and long-term capital gains.
TAXES
The Fund and California Money (each, a "Portfolio") are treated as separate
corporations for Federal tax purposes. It is intended that each Portfolio will
separately qualify as a "regulated investment company" under the Internal
Revenue Code of 1986, as amended (the "Code"). Such qualification generally
relieves each Portfolio of liability for Federal income and California franchise
and income taxes to the extent each Portfolio's earnings are distributed in
accordance with the Code.
The Fund's policy is to pay its shareholders with respect to each taxable
year dividends equal to at least the sum of 90% of its exempt-interest income
(net of certain deductions) and 90% of its investment company taxable income for
such year. Dividends derived from exempt-interest income (known as
"exempt-interest dividends") may be treated by the Fund's shareholders as items
of interest excludable from their gross income under Section 103(a) of the Code,
unless under the circumstances applicable to the particular shareholder
exclusion would be disallowed. (See Statement of Additional
Information--"Additional Information Concerning Taxes.")
If the Fund should hold certain private activity bonds issued after August
7, 1986, shareholders must include, as an item of tax preference, the portion of
dividends paid by the Fund that is attributable to interest on such bonds in
their Federal alternative minimum taxable income for purposes of determining
liability (if any) for the 26-28% alternative minimum tax applicable to
individuals and the 20% alternative minimum tax and the environmental tax
applicable to corporations. Corporate shareholders also must take all
exempt-interest dividends into account in determining certain adjustments for
alternative minimum and environmental tax purposes. The environmental tax
applicable to corporations is imposed at the rate of .12% on the excess of the
corporation's modified Federal alternative minimum taxable income over
$2,000,000. Shareholders receiving Social Security
14
<PAGE> 56
benefits or Railroad Retirement Act benefits should note that all
exempt-interest dividends will be taken into account in determining the
taxability of such benefits.
Dividends that are paid by the Fund to non-corporate shareholders and are
derived from interest on California Municipal Obligations (as defined above) or
certain U.S. Government obligations are exempt from California state personal
income tax. For this purpose, Federal Obligations are obligations the interest
on which is excludable from gross income for state income tax purposes under the
Constitution or laws of the United States. However, dividends paid to corporate
shareholders subject to California state franchise tax or California state
corporate income tax will be taxed as ordinary income to such shareholders,
notwithstanding that all or a portion of such dividends is exempt from
California state personal income tax. Moreover, to the extent that the Fund's
dividends are derived from interest on debt obligations other than California
Municipal Obligations or certain U.S. Government obligations, such dividends
will be subject to California state personal income tax, even though such
dividends may be exempt for Federal income tax purposes.
Exempt-interest dividends derived from U.S. Government obligations
generally will be exempt from state and local taxes as well. However, except as
noted with respect to California state personal income tax, in some situations
distributions of net investment income may be taxable to investors under state
or local law as dividend income even though all or a portion of such
distributions may be derived from interest on tax-exempt obligations which, if
realized directly, would be exempt from such income taxes. To the extent, if
any, that dividends paid to shareholders are derived from taxable interest or
from long-term or short-term capital gains, such dividends will not be exempt
from Federal income tax or California state personal income tax.
Shareholders will be advised at least annually as to the Federal and
California state personal income tax consequences of distributions made each
year.
The foregoing is only a brief summary of some of the important tax
considerations generally affecting the Fund and its shareholders. No attempt is
made to present a detailed explanation of the Federal, state or local income tax
treatment of the Fund or its shareholders, and this discussion is not intended
as a substitute for careful tax planning. Accordingly, potential investors in
the Fund should consult their tax advisers with specific reference to their own
tax situations.
DESCRIPTION OF SHARES AND MISCELLANEOUS
The Company's Charter authorizes the Board of Directors to issue up to
three billion full and fractional shares of capital stock, $.001 par value per
share, and to classify or reclassify any unissued shares of the Fund into one or
more classes or series by setting or changing in any one or more respects their
respective preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption. Pursuant to such authority, the Board of Directors has classified
2.3 billion of its shares as California Money shares (Class A Common Stock), 300
million of its shares as California Money Dollar shares (Class A Common
Stock--Special Series 1), 300 million of its shares as California Money Plus
shares (Class A Common Stock--Special Series 2), 80 million of its shares as
California Intermuni shares (Class B Common Stock), 10 million of its shares as
California Intermuni Dollar shares (Class B Common Stock--Special Series 1) and
10 million of its shares as California Intermuni Plus shares (Class B Common
Stock--Special Series 2). At May 17, 1995, Santa Barbara Bank & Trust held, on
behalf of its underlying accounts, approximately 42.6% of the Company's shares
that were outstanding on that date. The 1940 Act states that the beneficial
owner of more than 25% of the voting
15
<PAGE> 57
securities of a company is presumed to control the company. Under this
definition, Santa Barbara Bank & Trust may be deemed to be a controlling person
of the Company.
THIS PROSPECTUS RELATES PRIMARILY TO THE FUND AND DESCRIBES ONLY THE
INVESTMENT OBJECTIVE AND POLICIES, OPERATIONS, CONTRACTS AND OTHER MATTERS
RELATING TO THE FUND. INVESTORS WISHING TO OBTAIN SIMILAR INFORMATION REGARDING
CALIFORNIA MONEY MAY OBTAIN A SEPARATE PROSPECTUS DESCRIBING THAT PORTFOLIO BY
CONTACTING THE DISTRIBUTOR AT 800-998-7633.
Each Intermuni, Dollar and Plus share represents an equal proportionate
interest in the assets of the Fund. Shareholders of each series are entitled to
participate equally in any dividend or distribution declared by the Company's
Board of Directors (except as provided under "Dividends") and in the net
distributable assets of the Fund on liquidation. Fund shares have no pre-emptive
rights and only such conversion and exchange rights as the Board may grant in
its discretion. When issued for payment as described in this Prospectus, the
Fund's shares will be fully paid and non-assessable. Further, shareholders of
each series are entitled to one vote for each full share held and proportionate
fractional votes for fractional shares held, and will vote in the aggregate and
not by series, except where otherwise required by law and except that only
Dollar shares will be entitled to vote on matters submitted to a vote of
shareholders pertaining to the Fund's arrangements with Service Organizations
with respect to Dollar shares, and Plus shares will enjoy similar voting rights
on matters pertaining to the Fund's arrangements with Service Organizations with
respect to Plus shares. (See "Management of the Fund--Service Organizations.")
Shares of the Company have non-cumulative voting rights and, accordingly, the
holders of more than 50% of the Company's outstanding shares (irrespective of
class or series) may elect all of the directors.
For information concerning the redemption of Fund shares and possible
restrictions on their transferability, see "Purchase and Redemption of Shares."
16
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<PAGE> 59
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<PAGE> 60
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<PAGE> 61
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED
TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS NOT
CONTAINED IN THIS PROSPECTUS, CALIFORNIA
OR IN THE FUND'S STATEMENT OF INTERMEDIATE
ADDITIONAL INFORMATION MUNICIPAL
INCORPORATED HEREIN BY FUND
REFERENCE, IN CONNECTION WITH
THE OFFERING MADE BY THIS
PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY AN INVESTMENT PORTFOLIO
OR ITS DISTRIBUTOR. THIS OFFERED BY
PROSPECTUS DOES NOT MUNICIPAL FUND FOR
CONSTITUTE AN OFFERING BY CALIFORNIA INVESTORS, INC.
THE FUND OR BY THE DISTRIBUTOR
IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
---------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
Background and Expense
Information.................. 2
Financial Highlights........... 3
Investment Objective and
Policies..................... 4
Purchase and Redemption of [PROVIDENT
Shares....................... 7 INSTITUTIONAL
Management of the Fund......... 9 FUNDS
Dividends...................... 13 LOGO]
Taxes.......................... 14
Description of Shares and
Miscellaneous................ 15
</TABLE>
Prospectus
PIF-P-018
May 31, 1995
- --------------------------------------------------------------------------------
<PAGE> 62
CALIFORNIA MONEY FUND
and
CALIFORNIA INTERMEDIATE MUNICIPAL FUND
Investment Portfolios Offered By
Municipal Fund for California Investors, Inc.
Statement of Additional Information
May 31, 1995
<TABLE>
<CAPTION>
Table of Contents
-----------------
<S> <C>
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . . . . . . . . . 2
MUNICIPAL OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . 8
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION . . . . . . . . . . . 30
MANAGEMENT OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . 35
ADDITIONAL INFORMATION CONCERNING TAXES . . . . . . . . . . . . . . . 43
DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
COUNSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . 55
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
REPORT OF INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . FS-1
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
</TABLE>
This Statement of Additional Information is meant to be read
in conjunction with the Prospectuses for California Money Fund and California
Intermediate Municipal Fund dated May 31, 1995, and is incorporated by
reference in its entirety into those Prospectuses. Because this Statement of
Additional Information is not itself a prospectus, no investment in shares of
California Money Fund or California Intermediate Municipal Fund should be made
solely upon the information contained herein. Copies of the Prospectuses for
California Money Fund and California Intermediate Municipal Fund may be
obtained by calling 800-821-7432. Capitalized terms used but not defined
herein have the same meanings as in the Prospectuses.
<PAGE> 63
THE COMPANY
Municipal Fund for California Investors, Inc. (the "Company")
is a no-load, non-diversified, open-end investment company presently offering
two separate investment portfolios -- California Money Fund ("California Money")
and California Intermediate Municipal Fund ("California Intermediate")
(individually, a "Fund," collectively, the "Funds"). California Money is a
money market fund. Substantially all of California Money's assets are invested
in obligations which have remaining maturities of 13 months or less at the time
of purchase. California Intermediate is an intermediate-term bond fund.
Substantially all of California Intermediate's assets are invested in
tax-exempt obligations having remaining maturities of ten years or less at the
time of purchase. The Funds will not knowingly purchase securities the
interest on which is subject to regular Federal income tax; however, the Funds
may hold uninvested cash reserves pending investment during temporary defensive
periods of, if in the opinion of the Funds' investment adviser, suitable
tax-exempt obligations are unavailable. Although both Funds have the same
investment adviser and comparable investment objectives, their yields normally
will differ due to their differing cash flows and differences in the specific
portfolio securities held.
INVESTMENT OBJECTIVE AND POLICIES
As stated in California Money's Prospectuses, the investment
objective of California Money is to provide investors with as high a level of
current interest income that is exempt from Federal income tax and, to the
extent possible, from California state personal income tax as is consistent
with the preservation of capital and relative stability of principal. The
investment objective of California Intermediate is to provide investors with a
high level of current interest income that is exempt from Federal income tax
and, to the extent possible, from California state personal income tax. The
following policies supplement the description of California Money's and
California Intermediate's investment objectives and policies in their
respective Prospectuses.
Additional Information on Investment Practices.
Variable and Floating Rate Demand Instruments. Variable and
floating rate demand instruments held by California Money may have maturities
of more than 13 months, provided: (i) California Money is entitled to the
payment of principal at any time or during specified intervals not exceeding 13
months, subject to notice of no more than 30 days, and (ii) the rate of
interest on such instruments is adjusted (based upon a pre-selected market
sensitive index such as the prime rate of a major commercial bank) at periodic
intervals not exceeding 13 months.
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In determining California Money's average weighted portfolio maturity and
whether a variable or floating rate demand instrument has a remaining maturity
of 13 months or less, the maturity of each instrument will be computed in
accordance with guidelines established by the Securities and Exchange
Commission (the "SEC").
Variable or floating rate demand instruments held by
California Intermediate may have maturities of more than ten years, provided:
(i) California Intermediate is entitled to the payment of principal, at any
time or during specified intervals within a prescribed period after California
Intermediate's demand for payment, and (ii) the rate of interest on such
instruments is adjusted at periodic intervals according to the terms of the
instrument. In determining California Intermediate's average weighted
portfolio maturity and whether a variable or floating rate demand instrument
has a remaining maturity of 10 years or less, each instrument will be deemed by
California Intermediate to have a maturity equal to the longer of the period
remaining until its next interest rate adjustment or the period remaining until
the principal amount can be recovered through demand.
In determining whether an unrated variable rate demand
instrument is of comparable quality at the time of purchase to instruments with
minimal credit risk, the Funds' investment adviser will consider the earning
power, cash flow and other liquidity ratios of the issuer of the instrument and
will continuously monitor its financial condition. In addition, the Funds
sometimes require that the issuer's obligation to pay the principal of the
instrument be backed by an unconditional bank letter or line of credit,
guarantee or commitment to lend.
Variable and floating rate notes that do not provide for
payment within seven days may be deemed illiquid and subject to the 10%
limitation on such investments.
California Money and California Intermediate may hold
tax-exempt derivatives which may be in the form of tender option bonds,
participations, beneficial interests in a trust, partnership interests or other
forms. A number of different structures have been used. For example,
interests in long-term fixed-rate Municipal Obligations, held by a bank as
trustee or custodian, are coupled with tender option, demand and other features
when the tax-exempt derivatives are created. Together, these features entitle
the holder of the interest to tender (or put), the underlying Municipal
Obligation to a third party at periodic intervals and to receive the principal
amount thereof. In some cases, Municipal Obligations are represented by
custodial receipts evidencing rights to receive specific future interest
payments, principal payments, or both, on the underlying municipal securities
held by the custodian. Under such arrangements, the holder of the custodial
receipt has the option
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to tender the underlying municipal securities at its face value to the sponsor
(usually a bank or broker dealer or other financial institution), which is paid
periodic fees equal to the difference between the bond's fixed coupon rate and
the rate that would cause the bond, coupled with the tender option, to trade at
par on the date of a rate adjustment. California Money and California
Intermediate may hold tax-exempt derivatives, such as participation interests
and custodial receipts, for Municipal Obligations which give the holder the
right to receive payment of principal subject to the conditions described
above. The Internal Revenue Service has not ruled on whether the interest
received on tax-exempt derivatives in the form of participation interests or
custodial receipts is tax-exempt, and accordingly, purchases of any such
interests or receipts are based on the opinion of counsel to the sponsors of
such derivative securities. Neither a Fund nor its investment adviser will
review the proceedings related to the creation of any tax-exempt derivatives or
the bases for such options.
When-Issued Securities. As stated in the Funds' Prospectuses,
the Funds may purchase Municipal Obligations on a "when-issued" basis (i.e.,
for delivery beyond the normal settlement date at a stated price and yield).
When the Funds agree to purchase when-issued securities, their custodian will
set aside cash or liquid portfolio securities equal to the amount of the
commitment in a separate account. Normally, the custodian will set aside
portfolio securities to satisfy a purchase commitment, and in such a case the
Funds may be required subsequently to place additional assets in the separate
account in order to ensure that the value of the account remains equal to the
amount of each Fund's commitment. It may be expected that the Funds' net
assets will fluctuate to a greater degree when they set aside portfolio
securities to cover such purchase commitments than when they set aside cash.
Because the Funds will set aside cash or liquid assets to satisfy their
purchase commitments in the manner described, the Funds' liquidity and ability
to manage their portfolios might be affected in the event their commitments to
purchase when-issued securities ever exceeded 25% of the value of their assets.
When the Funds engage in when-issued transactions, they rely
on the seller to consummate the trade. Failure of the seller to do so may
result in the Funds incurring a loss or missing an opportunity to obtain a
price considered to be advantageous.
Stand-By Commitments. The Funds may acquire "stand-by
commitments" with respect to Municipal Obligations held in their portfolios.
Under a stand-by commitment, a dealer agrees to purchase at a Fund's option
specified Municipal Obligations at their amortized cost value to such Fund plus
accrued interest, if any. (Stand-by commitments acquired by the Funds may also
be
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referred to as "put" options.) Stand-by commitments may be sold, transferred
or assigned by the Funds only with the underlying instruments.
The Funds expect that stand-by commitments will generally be
available without the payment of any direct or indirect consideration.
However, if necessary or advisable, the Funds may pay for a stand-by commitment
either separately in cash or by paying a higher price for portfolio securities
which are acquired subject to the commitment (thus reducing the yield to
maturity otherwise available for the same securities). The total amount paid
in either manner for outstanding stand-by commitments held by a Fund is not
expected to exceed 1/2 of 1% of the value of the Fund's total assets calculated
immediately after each stand-by commitment is acquired.
The Funds intend to enter into stand-by commitments only with
dealers, banks and broker-dealers which, in the investment adviser's opinion,
present minimal credit risks. In evaluating the creditworthiness of the issuer
of a stand-by commitment, the investment adviser will review periodically the
issuer's assets, liabilities, contingent claims and other relevant financial
information.
The Funds would acquire stand-by commitments solely to
facilitate portfolio liquidity and do not intend to exercise their rights
thereunder for trading purposes. Stand-by commitments acquired by the Funds
would be valued at zero in determining net asset value. Where a Fund paid any
consideration directly or indirectly for a stand-by commitment, its cost would
be reflected as unrealized depreciation for the period during which the
commitment was held by that Fund.
Portfolio Transactions.
Subject to the general control of the Company's Board of
Directors, PNC Institutional Management Corporation ("PIMC"), the Funds'
investment adviser, is responsible for, makes decisions with respect to and
places orders for all purchases and sales of portfolio securities for the
Funds. Purchases and sales of portfolio securities are usually principal
transactions without brokerage commissions. The cost of securities purchased
from the underwriters includes an underwriting commission or concession, and
the prices at which securities are purchased from and sold to dealers include a
dealer's mark-up or mark-down. In transactions with dealers, PIMC seeks to
obtain the best net price and the most favorable execution of orders. To the
extent that the execution and price offered by more than one dealer are
comparable, PIMC may, in its discretion, effect transactions in portfolio
securities with dealers who provide the Company with
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research advice or other services such as information relating to the price of
portfolio securities.
Investment decisions for the Funds are made independently from
those for other investment company portfolios advised by PIMC. Such other
investment company portfolios may invest in the same securities as the Funds.
When purchases or sales of the same security are made at substantially the same
time on behalf of such other investment company portfolios, transactions are
averaged as to price, and available investments allocated as to amount, in a
manner which PIMC believes to be equitable to each investment company
portfolio, including the Funds. In some instances, this investment procedure
may adversely affect the price paid or received by the Funds or the size of the
position obtained for the Funds. To the extent permitted by law, PIMC may
aggregate the securities to be sold or purchased for the Funds with those to be
sold or purchased for such other investment companies in order to obtain best
execution.
Portfolio securities will not be purchased from or sold to
PIMC, PNC Bank, National Association ("PNC Bank"), PFPC Inc. ("PFPC"),
Provident Distributors, Inc. ("PDI"), or any affiliated person of any of them
(as such term is defined in the Investment Company Act of 1940, as amended (the
"1940 Act")), except to the extent permitted by the SEC. In addition, the
Funds will not purchase Municipal Obligations during the existence of any
underwriting or selling group relating thereto of which PNC Bank is a member,
except to the extent permitted by the SEC. Under certain circumstances, the
Funds may be at a disadvantage because of these limitations in comparison with
other investment company portfolios which have a similar investment objective
but are not subject to such limitations. Furthermore, with respect to such
transactions, securities and deposits, the Funds will not give preference to
Service Organizations with whom the Funds enter into agreements concerning the
provision of support services to customers who beneficially own shares of
California Money Dollar or California Intermuni Dollar ("Dollar shares") or
California Money Plus or California Intermuni Plus ("Plus shares"). See the
Prospectuses, "Management of the Fund--Service Organizations."
The Funds may participate, if and when practicable, in bidding
for the purchase of Municipal Obligations directly from an issuer in order to
take advantage of the lower purchase price available to members of a bidding
group. The Funds will engage in this practice, however, only when PIMC, in its
sole discretion, believes such practice to be otherwise in the Funds'
interests.
The Funds do not intend to seek profits through short-term
trading. The Funds' annual portfolio turnover rate is not expected to have a
material effect on their net income.
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California Money's portfolio turnover is expected to be zero for regulatory
reporting purposes and California Intermuni's portfolio turnover is not
expected to exceed 100%. The portfolio turnover rate for California Intermuni
is disclosed in its Prospectus under "Financial Highlights."
Other Investment Limitations.
The Prospectuses for the Funds set forth certain investment
limitations that may not be changed with respect to California Money or
California Intermediate without the affirmative vote of the holders of a
majority of that Fund's outstanding shares (as defined below under "Additional
Information - Miscellaneous"). Similarly, the following additional investment
limitations may not be changed without such a vote of shareholders.
The Funds may not:
1. Make loans except that the Funds may purchase or hold
debt obligations in accordance with their investment objective, policies and
limitations.
2. Underwrite any issue of securities except to the
extent that the purchase of Municipal Obligations directly from the issuer
thereof in accordance with the Funds' investment objective, policies and
limitations may be deemed to be underwriting.
3. Purchase or sell real estate except that the Funds
may invest in Municipal Obligations secured by real estate or interests
therein.
4. Purchase securities on margin, make short sales of
securities or maintain a short position.
5. Write or sell puts, calls, straddles, spreads or
combinations thereof.
6. Purchase or sell commodities or commodity contracts,
or invest in oil, gas or mineral exploration or development programs.
7. Purchase securities of other investment companies
except in connection with a merger, consolidation, acquisition or
reorganization.
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MUNICIPAL OBLIGATIONS
In General.
Municipal Obligations include debt obligations issued by
governmental entities to obtain funds for various public purposes, including
the construction of a wide range of public facilities, the refunding of
outstanding obligations, the payment of general operating expenses and the
extension of loans to public institutions and facilities. Private activity
bonds that are issued by or on behalf of public authorities to finance various
privately-operated facilities are included within the term Municipal
Obligations if the interest paid to shareholders is (subject to the Federal
alternative minimum tax) exempt from regular Federal income tax.
California Money may hold tax-exempt derivatives which may be
in the form of tender option bonds, participations, beneficial interests in a
trust, partnership interests or other forms. A number of different structures
have been used. For example, interests in a long-term fixed-rate Municipal
Obligation, held by a bank as trustee or custodian, are coupled with tender
option, demand and other features when the tax-exempt derivatives are created.
Together, these features entitle the holder of the interest to tender (or put)
the underlying Municipal Obligation to a third party at periodic intervals and
to receive the principal amount thereof. In some cases, Municipal Obligations
are represented by custodial receipts evidencing rights to receive specific
future interest payments, principal payments, or both, on the underlying
municipal securities held by the custodian. Under such arrangements, the
holder of the custodial receipt has the option to tender the underlying
municipal securities at its face value to the sponsor (usually a bank or broker
dealer or other financial institution), which is paid periodic fees equal to
the difference between the bond's fixed coupon rate and the rate that would
cause the bond, coupled with the tender option, to trade at par on the date of
a rate adjustment. The Fund may hold tax-exempt derivatives, such as
participation interests and custodial receipts, for Municipal Obligations which
give the holder the right to receive payment of principal subject to the
conditions described above. The Internal Revenue Service has not ruled on
whether the interest received on tax-exempt derivatives in the form of
participation interests or custodial receipts is tax-exempt, and accordingly,
purchases of any such interests or receipts are based on the opinion of counsel
to the sponsors of such derivative securities. Neither the Fund nor its
investment adviser will independently review the underlying proceedings related
to the creation of any tax-exempt derivatives or the bases for such opinions.
Before purchasing a tax-exempt derivative for the Fund, PIMC is
required by the Fund's procedures to conclude that the
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tax-exempt security and the supporting short-term obligation involve minimal
credit risks and are Eligible Securities under the Fund's Rule 2a-7 procedures.
In evaluating the creditworthiness of the entity obligated to purchase the
tax-exempt security, PIMC will review periodically the entity's relevant
financial information. Currently, the Directors have authorized the purchase
of tax- exempt derivatives by the Fund so long as after any purchase not more
than 15% of the Fund's assets are invested in such securities.
As described in the Prospectuses for the Funds, the two
principal classifications of Municipal Obligations consist of "general
obligation" and "revenue" issues, and the Funds' portfolios may include "moral
obligation" issues, which are normally issued by special purpose authorities.
There are, of course, variations in the quality of Municipal Obligations, both
within a particular classification and between classifications, and the yields
on Municipal Obligations depend upon a variety of factors, including general
money market conditions, the financial condition of the issuer, general
conditions of the municipal bond market, the size of a particular offering, the
maturity of the obligation and the rating of the issue. The ratings of Moody's
Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings Group ("S&P"),
Fitch Investors Service, Inc. ("Fitch") and Duff & Phelps ("Duff") represent
their opinions as to the quality of Municipal Obligations. It should be
emphasized, however, that ratings are general and are not absolute standards of
quality, and Municipal Obligations with the same maturity, interest rate and
rating may have different yields while Municipal Obligations of the same
maturity and interest rate with different ratings may have the same yield.
Subsequent to their purchase by the Funds, issues of Municipal Obligations may
cease to be rated or their ratings may be reduced below the minimum rating
required for purchase by the Funds. The Funds' investment adviser will
consider such an event in determining whether the Funds should continue to hold
the obligation.
An issuer's obligations under its Municipal Obligations are
subject to the provisions of bankruptcy, insolvency and other laws affecting
the rights and remedies of creditors, such as the Federal Bankruptcy Code, and
laws, if any, which may be enacted by Federal or state legislatures extending
the time for payment of principal or interest, or both, or imposing other
constraints upon enforcement of such obligations or upon the ability of
municipalities to levy taxes. The power or ability of an issuer to meet its
obligations for the payment of interest on and principal of its Municipal
Obligations may be materially adversely affected by litigation or other
conditions.
Among other types of Municipal Obligations, the Funds may
purchase short-term General Obligation Notes, Tax Anticipation Notes, Bond
Anticipation Notes, Revenue Anticipation
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Notes, Tax-Exempt Commercial Paper, Construction Loan Notes and other forms of
short-term loans. Such instruments are issued with a short-term maturity in
anticipation of the receipt of tax funds, the proceeds of bond placements or
other revenues. In addition, the Funds may invest in other types of tax-exempt
instruments, including general obligation and private activity bonds, provided
they have remaining maturities of 13 months or less, in the case of California
Money, or ten years or less, in the case of California Intermediate, at the
time of purchase.
Special Considerations Relating to California Municipal Obligations.
Economic Factors. The Governor's 1993-1994 Budget, introduced
on January 8, 1993, proposed general fund expenditures of $37.3 billion, with
projected revenues of $39.9 billion. To balance the budget in the face of
declining revenues, the Governor proposed a series of revenue shifts from local
government, reliance on increased federal aid, and reductions in state
spending.
The Department of Finance of the State of California's May
Revision of General Fund Revenues and Expenditures (the "May Revision"),
released on May 20, 1993, projected the State would have an accumulated deficit
of about $2.75 billion by June 30, 1993, essentially unchanged from the prior
year. The Governor proposed to eliminate this deficit over an 18-month period.
Unlike previous years, the Governor's Budget and May Revision did not calculate
a "gap" to be closed, but rather set forth revenue and expenditure forecasts
and proposals designed to produce a balanced budget.
The 1993-1994 budget act (the "1993-94 Budget Act") was signed
by the Governor on June 30, 1993, along with implementing legislation. The
Governor vetoed about $71 million in spending.
The 1993-94 Budget Act is predicated on general fund revenues
and transfers estimated at $40.6 billion, $400 million below 1992-93 (and the
second consecutive year of actual decline). The principal reasons for
declining revenue were the continued weak economy and the expiration (or
repeal) of three fiscal steps taken in 1991 -- a half cent temporary sales tax,
a deferral of operating loss carryforwards, and repeal by initiative of a sales
tax on candy and snack foods.
The 1993-94 Budget Act also assumes special fund revenues of
$11.9 billion, an increase of 2.9 percent over 1992- 93.
The 1993-94 Budget Act includes general fund expenditures of
$38.5 billion (a 6.3 percent reduction from projected 1992-93 expenditures of
$41.1 billion), in order to
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keep a balanced budget within the available revenues. The 1993-94 Budget Act
also includes special fund expenditures of $12.1 billion, a 4.2 percent
increase. The 1993-94 Budget Act reflects the following major adjustments:
1. Changes in local government financing to shift about
$2.6 billion in property taxes from cities, counties, special
districts and redevelopment agencies to school and community college
districts, thereby reducing general fund support by an equal amount.
About $2.5 billion is permanent, reflecting termination of the
State's "bailout" of local governments following the property tax cuts
of Proposition 13 in 1978 (See "Constitutional, Legislative and Other
Factors" below).
The property tax revenue losses for cities and counties are
offset in part by additional sales tax revenues and mandate relief.
2. The 1993-94 Budget Act keeps K-12 Proposition 98
funding on a cash basis at the same per-pupil level as 1992-93 by
providing schools a $609 million loan payable from future years'
Proposition 98 funds.
3. The 1993-94 Budget Act assumed receipt of about $692
million of aid to the State from the federal government to offset
health and welfare costs associated with foreign immigrants living in
the State, which would reduce a like amount of General Fund
expenditures. About $411 million of this amount was one-time funding.
Congress ultimately appropriated only $450 million.
4. Reductions of $600 million in health and welfare
programs and $400 million in support for higher education (partly
offset by fee increases at all three units of higher education) and
various miscellaneous cuts (totalling approximately $150 million) in
State government services in many agencies, up to 15 percent.
5. A 2-year suspension of the renters' tax credit ($390
million expenditure reduction in 1993-94).
6. Miscellaneous one-time items, including deferral of
payment to the Public Employees Retirement Fund ($339 million) and a
change in accounting for debt service from accrual to cash basis,
saving $107 million.
The 1993-94 Budget Act contains no general fund tax/revenue
increases other than a two-year suspension of the renters' tax credit. The
1993-94 Budget Act suspended the 4 percent automatic reduction trigger, as was
done in 1992-1993, so cuts could be focused.
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Administration reports during the course of the 1993-94 Fiscal
Year indicated that while economic recovery appeared to have started in the
second half of the fiscal year, recessionary conditions continued longer than
had been anticipated when the 1993-94 Budget Act was adopted. Overall,
revenues for the 1993-94 Fiscal Year were about $800 million lower than
original projections, and expenditures were about $780 million higher,
primarily because of higher health and welfare caseloads, lower property taxes
which require greater State support for K-14 education to make up the
shortfall, and lower than anticipated federal government payments for
immigration-related costs. The reports in May and June, 1994, indicated that
revenues in the second half of the 1993-94 Fiscal Year have been very close to
the projections made in the Governor's Budget of January 10, 1994, which is
consistent with a slow turnaround in the economy.
The Department of Finance's July 1994 Bulletin, including the
final June receipts, reported that June revenues were $114 million (2.5
percent) above projection, with final end-of-year results at $377 million
(about 1 percent) above the May Revision projections. Part of this result was
due to end-of-year adjustments and reconciliations. Personal income tax and
sales tax continued to track projections very well. The largest factor in the
higher than anticipated revenues was from bank and corporation taxes, which
were $140 million (18.4 percent) above projection in June. While the higher
June receipts are reflected in the actual 1993-94 Fiscal Year cash flow
results, and help the starting cash balance for the 1994-95 Fiscal Year, the
Department of Finance has not adjusted any of its revenue projections for the
1994-95 or 1995-96 Fiscal Years.
During the 1993-94 Fiscal Year, the State implemented the
deficit retirement plan, which was part of the 1993-94 Budget Act, by issuing
$1.2 billion of revenue anticipation warrants in February 1994 maturing
December 21, 1994. This borrowing reduced the cash deficit at the end of the
1993-94 Fiscal Year. Nevertheless, because of the $1.5 billion variance from
the original 1993-94 Budget Act assumptions, the General Fund ended the fiscal
year at June 30, 1994 carrying forward an accumulated deficit of approximately
$2 billion.
Because of the revenue shortfall and the State's reduced
internal borrowable cash resources, in addition to the $1.2 billion of revenue
anticipation warrants issued as part of the deficit retirement plan, the State
issued an additional $2.0 billion of revenue anticipation warrants, maturing
July 26, 1994, which were needed to fund the State's obligations and expenses
through the end of the 1993-94 Fiscal Year.
On January 17, 1994, a major earthquake measuring an estimated
6.8 on the Richter Scale struck Los Angeles. Significant property damage to
private and public facilities
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occurred in a four-county area including northern Los Angeles County, Ventura
County, and parts of Orange and San Bernardino Counties, which were declared as
State and federal disaster areas by January 18. Current estimates of total
property damage (private and public) are in the range of $20 billion, but these
estimates are still subject to change.
Despite such damage, on the whole, the vast majority of
structures in the areas, including large manufacturing and commercial buildings
and all modern high-rise offices, survived the earthquake with minimal or no
damage, validating the cumulative effect of strict building codes and thorough
preparation for such an emergency by the State and local agencies.
Damage to state-owned facilities included transportation
corridors and facilities such as Interstate Highways 5 and 10 and State
Highways 14, 118 and 210. Major highways have now been reopened. The campus
of California State University at Northridge (very near the epicenter) suffered
an estimated $350 million damage, resulting in temporary closure of the campus.
It has reopened using borrowed facilities elsewhere in the area and many
temporary structures. There was also some damage to the University of
California at Los Angeles, and to an office building in Van Nuys (now open
after a temporary closure). Overall, except for the temporary road and bridge
closures, and CSU - Northridge, the earthquake did not and is not expected to
significantly affect State government operations.
The State in conjunction with the federal government is
committed to providing assistance to local governments, individuals and
businesses suffering damage as a result of the earthquake, as well as to
provide for the repair and replacement of State-owned facilities. The federal
government provided substantial earthquake assistance.
The President immediately allocated some available disaster
funds, and Congress has approved additional funds for a total of at least $9.5
billion of federal funds for earthquake relief, including assistance to
homeowners and small businesses, and costs for repair of damaged public
facilities. The Governor originally proposed that the State will have to pay
about $1.9 billion for earthquake relief costs, including a 10 percent match to
some of the federal funds, and costs for some programs not covered by the
federal aid. The Governor proposed to cover $1.05 billion of these costs from
a general obligation bond issue which was on the June, 1994 ballot, but it was
not approved by the voters. The Governor subsequently announced that the
State's share for transportation projects would come from existing Department
of Transportation funds (thereby delaying other, non-earthquake related
projects), that the State's share for certain other costs (including local
school building repairs) would come
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from reallocating existing bond funds, and that a proposed program for
homeowner and small business aid supplemental to federal aid would have to be
abandoned. Some other costs will be borrowed from the federal government in a
manner similar to that used by the State of Florida after Hurricane Andrew;
pursuant to Senate Bill 2383, repayment will have to be addressed in 1995-96 or
beyond. The 1995-96 Governor's Budget includes $60 million as the first
repayment of an estimated $121.4 million in loans prior to June 30, 1995.
The 1994-95 Fiscal Year will represent the fourth consecutive
year the Governor and Legislature will be faced with a very difficult budget
environment to produce a balanced budget. Many program cuts and budgetary
adjustments have already been made in the last three years. The Governor's
Budget proposal, as updated in May and June, 1994, recognized that the
accumulated deficit could not be repaid in one year and proposed a two-year
solution. The budget proposal sets forth revenue and expenditure forecasts and
revenue and expenditure proposals which result in operating surpluses for the
budget for both 1994-95 and 1995-96, and lead to the elimination of the
accumulated budget deficit, estimated at about $1.8 billion at June 30, 1994,
by June 30, 1996.
The 1994-95 Budget Act, signed by the Governor on July 8,
1994, projects revenues and transfers of $41.9 billion, $2.1 billion higher
than revenues in 1993-94. This reflects the Administration's forecast of an
improving economy. Also included in this figure is a projected receipt of
about $360 million from the Federal Government to reimburse the State's cost of
incarcerating undocumented immigrants. The State will not know how much the
Federal Government will actually provide until the Federal FY 1995 Budget is
completed. Completion of the Federal Budget is expected by October 1994. The
Legislature took no action on a proposal in the January 1994-95 Governor's
Budget to undertake an expansion of the transfer of certain programs to
counties, which would also have transferred to counties 0.5% of the State's
current sales tax.
The 1994-95 Budget Act projects Special Fund revenues of $12.1
billion, a decrease of 2.4% from 1993-94 estimated revenues.
The 1994-95 Budget Act projects General Fund expenditures of
$40.9 billion, an increase of $1.6 billion over 1993- 94. The 1994-95 Budget
Act also projects Special Fund expenditures of $12.3 billion, a 4.7% decrease
from 1993-94 estimated expenditures. The principal features of the 1994-95
Budget Act were the following:.
1. Receipt of additional federal aid in 1994-95 of about
$400 million for costs of refugee assistance and
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medical care for undocumented immigrants, thereby offsetting a similar
General Fund cost. The State will not know how much of these funds it
will receive until the Federal FY 1995 Budget is passed.
2. Reductions of approximately $1.1 billion in health
and welfare costs. A 2.3% reduction in Aid to Family with Dependent
Children payments (equal to about $56 million for the entire fiscal
year) has been suspended by court order.
3. A General Fund increase of approximately $38 million
in support for the University of California and $65 million for
California State University. It is anticipated that student fees for
both the University of California and the California State University
will increase up to 10%.
4. Proposition 98 funding for K-14 schools is increased
by $526 million from 1993-94 levels, representing an increase for
enrollment growth and inflation. Consistent with previous budget
agreements, Proposition 98 funding provides approximately $4,217 per
student for K-12 schools, equal to the level in the past three years.
5. Legislation enacted with the Budget clarifies laws
passed in 1992 and 1993 which require counties and other local
agencies to transfer funds to local school districts, thereby reducing
State aid. Some counties had implemented a method of making such
transfers which provided less money for schools if there were
redevelopment agency projects. The new legislation bans this method
of transfer. If all counties had implemented this method, General
Fund aid to K-12 schools would have been $300 million higher in each
of the 1994-95 and 1995-96 Fiscal Years.
6. The 1994-95 Budget Act provides funding for
anticipated growth in the State's prison inmate population, including
provisions for implementing recent legislation (the so-called "Three
Strikes" law) which requires mandatory life prison terms for certain
third-time felony offenders.
7. Additional miscellaneous cuts ($500 million) and fund
transfers ($255 million) totalling in the aggregate approximately $755
million.
The 1994-95 Budget Act contains no tax increases. Under
legislation enacted for the 1993-94 Budget, the renters' tax credit was
suspended for two years (1993 and 1994). A ballot proposition to permanently
restore the renters' tax credit after this year failed at the June, 1994
election. The Legislature enacted a further one-year suspension of the
renters' tax credit, for 1995, saving about $390 million in the 1995-96 Fiscal
Year.
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The 1994-95 Budget assumes that the State will use a cash flow
borrowing program in 1994-95 which combines one-year notes and two-year
warrants, which have now been issued. Issuance of warrants allows the State to
defer repayment of approximately $1.0 billion of its accumulated budget deficit
into the 1995-96 Fiscal Year.
The State's cash flow management plan for the 1994-95 fiscal
year included the issuance of $4.0 billion of revenue anticipation warrants on
July 26, 1994, to mature on April 25, 1996, as part of a two-year plan to
retire the accumulated State budget deficit.
Because preparation of cash flow estimates for the 1995-96
Fiscal Year necessarily entails greater risks of variance from assumptions, and
because the Governor's two-year budget plan assumes receipt of a large amount
of federal aid in the 1995-96 Fiscal Year for immigration-related costs which
is uncertain, the Legislature enacted a backup budget adjustment mechanism to
mitigate possible deviations from projected revenues, expenditures or internal
borrowable resources which might reduce available cash resources during the
two-year plan, so as to assure repayment of the warrants.
Pursuant to Section 12467 of the California Government Code,
enacted by Chapter 135, Statutes of 1994 (the "Budget Adjustment Law"), the
State Controller was required to make a report by November 15, 1994 on whether
the projected cash resources for the General Fund as of June 30, 1995 will
decrease more than $430 million from the amount projected by the State in its
official statement in July, 1994 for the sale of $4,000,000,000 of Revenue
Anticipation Warrants. On November 15, 1994, the State Controller issued the
report on the State's cash position required by the Budget Adjustment Law. The
report indicated that the cash position of the General Fund on June 30, 1995
would be $581 million better than was estimated in the July, 1994 cash flow
projections and therefore, no budget adjustment procedures will be invoked for
the 1994-95 Fiscal Year. As explained earlier, the Law would only be
implemented if the State Controller estimated that borrowable resources on June
30, 1995 would be at least $430 million lower than projected.
The State Controller's report identified a number of factors
which have led to the improved cash position of the State. Estimated revenues
and transfers for the 1994-95 Fiscal Year other than federal reimbursement for
immigration costs were up about $650 million. The largest portion of this was
in higher bank and corporation tax receipts, but all major tax sources were
above original projections. However, most of the federal immigration aid
revenues projected in connection with the 1994-95 Budget Act and in the July,
1994 cash flows will not be received,
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as indicated above, leaving a net increase in revenues of $322 million.
On the expenditure side, the State Controller reported that
estimated reduced caseload growth in health and welfare programs, reduced
school enrollment growth, and an accounting adjustment reducing a transfer from
the General Fund to the Special Fund for Economic Uncertainties resulted in
overall General Fund expenditure reductions (again before adjusting for federal
aid) of $672 million. However, the July, 1994 cash flows projected that
General Fund health and welfare and education expenditures would be offset by
the anticipated receipt of $407 million in federal aid for illegal immigrant
costs. The State Controller now estimates that none of these funds will be
received, so the net reduction in General Fund expenditures is $265 million.
Finally, the State Controller indicated that a review of
balances in special funds available for internal borrowing resulted in an
estimated reduction of such borrowable resources of $6 million. The
combination of these factors results in the estimated improvement of the
General Fund's cash position of $581 million. The State Controller's revised
cash flow projections for 1994-95 have allocated this improvement to two line
items: an increase from $0 to $427 million in the estimated ending cash
balance of the General Fund on June 30, 1995, and an increase in unused
borrowable resources of $154 million.
The State Controller's report indicated that there was no
anticipated cash impact in the 1994-95 Fiscal Year for recent initiatives on
"three strikes" criminal penalties and illegal immigration which were approved
by voters on November 8, 1994. At a hearing before a committee of the
Legislature on November 15, 1994, both the Legislative Analyst and the
Department of Finance concurred in the reasonableness of the State Controller's
report. (The Legislative Analyst had issued a preliminary analysis on November
1, 1994 which reached a conclusion very close to that of the State Controller.)
The State Controller's report makes no projections about whether the Law may
have to be implemented in 1995-96. However, both the State Controller and the
Legislative Analyst in the November 15 hearing noted that the July, 1994 cash
flows for the 1995-96 Fiscal Year place continued reliance on large amounts of
federal assistance for immigration costs, which did not materialize this year,
indicating significant budget pressures for next year. The Department of
Finance indicated that the budgetary issues identified in the hearing would be
addressed in the Governor's Budget proposal for the 1995-96 Fiscal Year, which
will be released in early January, 1995.
The 1995-96 Governor's Budget, discussed below, contains a
reforecast of revenues and expenditures for the 1994-
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95 Fiscal Year. The Department of Finance Bulletins for February and March
1995 report that combined General Fund revenues for February, 1995 were about
$356 million below forecast, but combined revenues for January and February
were only about $82 million (or 0.3 percent) below the 1995-96 Governor's
Budget forecast. The largest component of the decrease is attributable to
personal income tax receipts, which were about $131 million (or 1.1 percent)
below the two months' forecast. This decrease in personal income tax receipts
appears to be largely attributable to fourth quarter 1994 activity, probably in
the anticipation of tax reform, with some taxpayers shifting income into 1995
to the extent possible. The withholding component comprised $77 million of
this shortfall, but the Department of Finance does not yet view this as
significant. Additionally, sales and use tax receipts were very close to
forecast for the two-month period, while bank and corporation tax receipts were
about $42 million (or 1.5 percent) below the two months' forecast.
Miscellaneous revenues were about $117 million (or 6.2 percent) above forecast
for the two months, but the Department of Finance is not yet able to determine
whether this gain is real, or is instead attributable to cash flow factors.
Initial analysis of the federal Fiscal Year 1995 budget by the
Department of Finance indicates that about $98 million was appropriated for
California to offset costs of incarceration of undocumented and refugee
immigrants, less than the $356 million which was assumed in the State's 1994-95
Budget Act. Because of timing considerations in applying for these federal
funds, the Department estimates that about $33 million of these funds will be
received during the State's 1994-95 Fiscal Year, with the balance received in
the following fiscal year. It does not appear that the federal budget contains
any of the additional $400 million in funding for refugee assistance and health
costs which were also assumed in the 1994-95 Budget Act, but the Department
expects the State to continue its efforts to obtain some or all of these
federal funds.
On January 10, 1995, the Governor presented his 1995-96 Fiscal
Year Budget Proposal (the "Proposed Budget"). The Proposed Budget estimates
General Fund revenues and transfers of $42.5 billion (an increase of 0.2
percent over 1994-95). This nominal increase from the 1994-95 Fiscal Year
reflects the Governor's realignment proposal and the first year of his tax cut
proposal (see principal features of the Proposed Budget below for further
discussions). Without these two proposals, General Fund revenues would be
projected at approximately $43.8 billion, or an increase of 3.3 percent over
1994-95. Expenditures are estimated at $41.7 billion (essentially unchanged
from 1994-95). Special Fund revenues are estimated at $13.5 billion (10.7
percent higher than 1994-95) and Special Fund expenditures are estimated at
$13.8 billion (12.2 percent higher than 1994-95). The Proposed Budget projects
that the General Fund will end the fiscal year at
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June 30, 1996 with a budget surplus in the Special Fund for Economic
Uncertainties of about $92 million, or less than 1 percent of General Fund
expenditures, and will have repaid all of the accumulated budget deficits.
The following are the principal features of the Proposed
Budget:
1. The principal feature of the Proposed Budget is a
proposed 15 percent cut in personal income and corporate tax rates,
which would be phased in at 5 percent per year starting in 1996.
Existing personal income tax rates, which are scheduled to drop from
11 percent top rate to 9.3 percent in 1996, would be continued during
the time the overall tax cut takes effect. This proposal would reduce
General Fund revenues by $225 million in 1995-96, but the revenue
reduction would reach $3.6 billion by 1998-99.
2. The Governor has proposed an expansion of the
realignment program between the State and counties, so that counties
will take on greater responsibility for welfare and social services,
while the State will take on increased funding of trial court costs.
The proposal includes transfer of about $1 billion of State revenues,
from sales taxes and trial court funding moneys, to counties. The net
effect of the shifts, however, is estimated to save the General Fund
about $240 million.
3. The Governor proposes further cuts in health and
welfare costs totaling about $1.4 billion. Some of these cuts would
require federal legislative approval.
4. Proposition 98 funding for schools and community
colleges will increase by about $1.2 billion, reflecting strong
General Fund revenue growth. Per-pupil expenditures are projected to
increase by $61 to $4,292. For the first time in several years, a
cost-of-living increase (2.2 percent) is added to the enrollment
growth factor. The Governor proposes to set aside about $514 million
of the Proposition 98 funding increase to repay prior years' loans
from the General Fund to schools. As the legality of these loans is
currently being challenged in a lawsuit, the Governor proposes to set
the amount aside in escrow until the litigation is resolved.
5. The Proposed Budget includes increases in funding for
the University of California ($63 million General Fund) and the
California State University system ($3 million General Fund). The
Governor has proposed a four-year funding "company" for the higher
education units which includes both annual increases in State funding
and increases in student fees.
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6. The Proposed Budget assumes receipt of $830 million
in new federal aid for costs of undocumented and refugee immigrants,
above commitments already made by the federal government. This amount
is much less than an estimated $2.8 billion which had been included in
the Governor's pro-forma two-year plan from last summer.
The Proposed Budget contains a cash flow projection (based on
all the assumptions described above) which shows about $1 billion of unused
borrowable resources at June 30, 1996, providing this amount of "cushion"
before the budget "trigger" would have to be invoked.
However, a report issued by the Legislative Analyst in
February, 1995 notes that the Proposed Budget is subject to a number of major
risks, including receipt of the expected federal immigration aid and other
federal actions to allow health and welfare costs, and the outcome of several
lawsuits concerning previous budget actions which the State has lost at the
trial court level, and which are under appeal. This Analyst's Report also
estimates that, despite more favorable revenues, the two-year budget estimates
made in July, 1994 are about $2 billion out of balance, principally because
federal immigration aid appears likely to be much lower than previously
estimated. This shortfall is much smaller than the State has faced in recent
years, and has been addressed in the Governor's Budget.
The Director of Finance is required to include updated
cash-flow statements for the 1994-95 and 1995-96 Fiscal Years in the May
revision to the 1995-96 Fiscal Year budget proposal. By June 1, 1995, the
State Controller must concur with these updated statements or provide a revised
estimate of the cash condition of the General Fund for the 1994-95 and the
1995-96 Fiscal Years. For the 1995-96 Fiscal Year, Chapter 135 prohibits any
external borrowing as of June 30, 1996, thereby requiring the State to rely
solely on internal borrowable resources, expenditure reductions or revenue
increases to eliminate any projected cash flow shortfall.
Commencing on October 15, 1995, the State Controller will, in
conjunction with the Legislative Analyst's Office, review the estimated cash
condition of the General Fund for the 1995-96 Fiscal Year. The "1996 cash
shortfall" shall be the amount necessary to bring the balance of unused
borrowable resources on June 30, 1996 to zero. On or before December 1, 1995,
legislation must be enacted providing for sufficient General Fund expenditure
reductions, revenue increases, or both, to offset any such 1996 cash shortfall
identified by the State Controller. If such legislation is not enacted, within
five days thereafter the Director of Finance must reduce all General Fund
appropriations for the 1995-96 Fiscal Year, except the Required Appropriations,
by the percentage equal to the ratio of said 1996
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cash shortfall to total remaining General Fund appropriations for the 1995-96
Fiscal Year, excluding the Required Appropriations.
On December 6, 1994, Orange County, California and its
Investment Pool (the "Pool") filed for bankruptcy under Chapter 9 of the United
States Bankruptcy Code. Approximately 187 California public entities,
substantially all of which are public agencies within the County, are investors
in the Pool. Many of the agencies have various bonds, notes or other forms of
indebtedness outstanding, in some instances the proceeds of which have been
invested in the Pool. Such agencies also have additional funds invested in the
Pool. Since the filing, investor access to monies in the Pool has been
pursuant to Court order only and severely limited. Various investment advisors
have been employed by the County to restructure the Pool. Such restructuring
has resulted in the sale of substantially all of the Pool's portfolio resulting
in losses estimated to be approximately $1.7 billion or approximately 22% of
amounts deposited by the Pool investors, including the County. It is
anticipated that such losses may result in delays or failures of the County as
well as investors in the Pool to make scheduled debt service payments.
Further, the County expects substantial budget deficits to occur in Fiscal Year
1995 with possibly similar effects upon operations of investors in the Pool.
The County has failed to make certain deposits to a fund for repayment of
$169,000,000 aggregate principal amount of its short term indebtedness
resulting in a technical default under its note resolution. There has been no
default in payment to noteholders. Principal and interest on such notes is due
on June 30, 1995. Additionally, the County has defaulted in its obligation to
accept tenders of its $110,200,000 aggregate principal amount of its Taxable
Pension Obligation Bonds, Series B used to finance County pension obligations.
Interest at a rate set pursuant to the bond documents has been timely paid on
such Pension Bonds. Principal and interest payments on other indebtedness of
the County and the investors will come due at various times and amounts
throughout 1995 and thereafter. Both S&P and Moody's have suspended or
downgraded ratings on various debt securities of the County and certain of the
investors in the Pool. Such suspensions or downgradings could affect both
price and liquidity of such securities. The Fund is unable to predict when
funds may be released from the Pool to investors, the amount of such funds, if
any, whether additional technical and payment defaults by the County and/or
investors in the pool may occur and the financial impact upon the value of
securities of the County and the investors in the Pool. Further, continuing
audits of various funds by outside consultants and the State Auditor have
initially identified transfers to and among various funds as unauthorized
and/or inappropriate. Such undertakings could result in materially greater or
lesser losses among the County and the investors. The County has recently
filed a motion seeking Bankruptcy Court
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approval of a proposed comprehensive settlement agreement ("CSA") between the
County and Pool investors. On May 2, 1995, the Bankruptcy Court approved the
CSA which, among other things, (i) established a formula for distribution of
all available cash and securities from the Pool to the Pool investors,
including the County, (ii) established formulas for distribution among certain
settling Pool investors of several tranches of new County obligations to be
payable from, and in some instances secured by, certain designated sources of
potential recoveries on Pool related claims, and (iii) designate certain
outstanding short term note obligations of the County, including the Series B
Pension Obligation Bonds, to be senior to or on a parity with certain of the
new County obligations.
Constitutional, Legislative and Other Factors.
Certain California constitutional amendments, legislative
measures, executive orders, administrative regulations and voter initiatives
could result in the adverse effects described below. The following information
constitutes only a brief summary, does not purport to be a complete
description, and is based on information drawn from official statements and
prospectuses relating to securities offerings of the State of California and
various local agencies in California, available as of the date of this
Statement of Additional Information. While the Funds have not independently
verified such information, they have no reason to believe that such information
is not correct in all material respects.
Certain California Municipal Obligations in the Funds'
Portfolio may be obligations of issuers which rely in whole or in part on
California State revenues for payment of these obligations. Property tax
revenues and a portion of the State's general fund surplus are distributed to
counties, cities and their various taxing entities and the State assumes
certain obligations theretofore paid out of local funds. Whether and to what
extent a portion of the State's general fund will be distributed in the future
to counties, cities and their various entities, is unclear.
In 1988, California enacted legislation providing for a
water's-edge combined reporting method if an election fee was paid and other
conditions met. On October 6, 1993, California Governor Pete Wilson signed
Senate Bill 671 (Alquist) which modifies the unitary tax law by deleting the
requirements that a taxpayer electing to determine its income on a water's-edge
basis pay a fee and file a domestic disclosure spreadsheet and instead
requiring an annual information return. Significantly, the Franchise Tax Board
can no longer disregard a taxpayer's election. The Franchise Tax Board is
reported to have estimated state revenue losses from the Legislation as growing
from $27 million in 1993-94 to $616 million in 1999-2000, but others,
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including Assembly Speaker Willie Brown, disagree with that estimate and assert
that more revenue will be generated for California, rather than less, because
of an anticipated increase in economic activity and additional revenue
generated by the incentives in the Legislation.
Certain California Municipal Obligations held by the Funds may
be obligations of issuers who rely in whole or in part on ad valorem real
property taxes as a source of revenue. On June 6, 1978, California voters
approved an amendment to the California Constitution known as Proposition 13,
which added Article XIIIA to the California Constitution. The effect of
Article XIIIA is to limit ad valorem taxes on real property and to restrict the
ability of taxing entities to increase real property tax revenues. On November
7, 1978, California voters approved Proposition 8, and on June 3, 1986,
California voters approved Proposition 46, both of which amended Article XIIIA.
Section 1 of Article XIIIA limits the maximum ad valorem tax
on real property to 1% of full cash value (as defined in Section 2), to be
collected by the counties and apportioned according to law; provided that the
1% limitation does not apply to ad valorem taxes or special assessments to pay
the interest and redemption charges on (i) any indebtedness approved by the
voters prior to July 1, 1978, or (ii) any bonded indebtedness for the
acquisition or improvement of real property approved on or after July 1, 1978,
by two-thirds of the votes cast by the voters voting on the proposition.
Section 2 of Article XIIIA defines "full cash value" to mean "the County
Assessor's valuation of real property as shown on the 1975/76 tax bill under
'full cash value' or, thereafter, the appraised value of real property when
purchased, newly constructed, or a change in ownership has occurred after the
1975 assessment." The full cash value may be adjusted annually to reflect
inflation at a rate not to exceed 2% per year, or reduction in the consumer
price index or comparable local data, or reduced in the event of declining
property value caused by damage, destruction or other factors. The California
State Board of Equalization has adopted regulations, binding on county
assessors, interpreting the meaning of "change in ownership" and "new
construction" for purposes of determining full cash value of property under
Article XIIIA.
Legislation enacted by the California Legislature to implement
Article XIIIA (Statutes of 1978, Chapter 292, as amended) provides that
notwithstanding any other law, local agencies may not levy any ad valorem
property tax except to pay debt service on indebtedness approved by the voters
prior to July 1, 1978, and that each county will levy the maximum tax permitted
by Article XIIIA of $4.00 per $100 assessed valuation (based on the former
practice of using 25%, instead of 100%, of full cash value as the assessed
value for tax purposes). The legislation further provided that, for the
1978/79 fiscal year
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only, the tax levied by each county was to be apportioned among all taxing
agencies within the county in proportion to their average share of taxes levied
in certain previous years. The apportionment of property taxes for fiscal
years after 1978/79 has been revised pursuant to Statutes of 1979, Chapter 282
which provides relief funds from State moneys beginning in fiscal year 1979/80
and is designed to provide a permanent system for sharing State taxes and
budget funds with local agencies. Under Chapter 282, cities and counties
receive more of the remaining property tax revenues collected under Proposition
13 instead of direct State aid. School districts receive a correspondingly
reduced amount of property taxes, but receive compensation directly from the
State and are given additional relief. Chapter 282 does not affect the
derivation of the base levy ($4.00 per $100 assessed valuation) and the bonded
debt tax rate.
On November 6, 1979, an initiative known as "Proposition 4" or
the "Gann Initiative" was approved by the California voters, which added
Article XIIIB to the California Constitution. Under Article XIIIB, State and
local governmental entities have an annual "appropriations limit" and are not
allowed to spend certain moneys called "appropriations subject to limitation"
in an amount higher than the "appropriations limit." Article XIIIB does not
affect the appropriation of moneys which are excluded from the definition of
"appropriations subject to limitation," including debt service on indebtedness
existing or authorized as of January 1, 1979, or bonded indebtedness
subsequently approved by the voters. In general terms, the "appropriations
limit" is required to be based on certain 1978/79 expenditures, and is to be
adjusted annually to reflect changes in consumer prices, population and certain
services provided by these entities. Article XIIIB also provides that if these
entities' revenues in any year exceed the amounts permitted to be spent, the
excess is to be returned by revising tax rates or fee schedules over the
subsequent two years.
At the November 8, 1988 general election, California voters
approved an initiative known as Proposition 98. This initiative amends Article
XIIIB to require that (i) the California Legislature establish a prudent state
reserve fund in an amount as it shall deem reasonable and necessary and (ii)
revenues in excess of amounts permitted to be spent and which would otherwise
be returned pursuant to Article XIIIB by revision of tax rates or fee
schedules, be transferred and allocated (up to a maximum of 4%) to the State
School Fund and be expended solely for purposes of instructional improvement
and accountability. No such transfer or allocation of funds will be required
if certain designated state officials determine that annual student
expenditures and class size meet certain criteria as set forth in Proposition
98. Any funds allocated to the State School Fund shall cause the appropriation
limits established in
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Article XIIIB to be annually increased for any such allocation made in the
prior year.
Proposition 98 also amends Article XVI to require that the
State of California provide a minimum level of funding for public schools and
community colleges. Commencing with the 1988-89 fiscal year, state monies to
support school districts and community college districts shall equal or exceed
the lesser of (i) an amount equalling the percentage of state general revenue
bonds for school and community college districts in fiscal year 1986-87, or
(ii) an amount equal to the prior year's state general fund proceeds of taxes
appropriated under Article XIIIB plus allocated proceeds of local taxes, after
adjustment under Article XIIIB. The initiative permits the enactment of
legislation, by a two-thirds vote, to suspend the minimum funding requirement
for one year.
On June 30, 1989, the California Legislature enacted Senate
Constitutional Amendment 1, a proposed modification of the California
Constitution to alter the spending limit and the education funding provisions
of Proposition 98. Senate Constitutional Amendment 1, on the June 5, 1990
ballot as Proposition 111, was approved by the voters and took effect on July
1, 1990. Among a number of important provisions, Proposition 111 recalculates
spending limits for the State and for local governments, allows greater annual
increases in the limits, allows the averaging of two years' tax revenues before
requiring action regarding excess tax revenues, reduces the amount of the
funding guarantee in recession years for school districts and community college
districts (but with a floor of 40.9 percent of State general fund tax
revenues), removes the provision of Proposition 98 which included excess moneys
transferred to school districts and community college districts in the base
calculation for the next year, limits the amount of State tax revenue over the
limit which would be transferred to school districts and community college
districts, and exempts increased gasoline taxes and truck weight fees from the
State appropriations limit. Additionally, Proposition 111 exempts from the
State appropriations limit funding for capital outlays.
Article XIIIB, like Article XIIIA, may require further
interpretation by both the Legislature and the courts to determine its
applicability to specific situations involving the State and local taxing
authorities. Depending upon the interpretation, Article XIIIB may limit
significantly a governmental entity's ability to budget sufficient funds to
meet debt service on bonds and other obligations.
On November 4, 1986, California voters approved an initiative
statute known as Proposition 62. This initiative (i) requires that any tax for
general governmental purposes imposed by local governments be approved by
resolution or ordinance
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adopted by a two-thirds vote of the governmental entity's legislative body and
by a majority vote of the electorate of the governmental entity, (ii) requires
that any special tax (defined as taxes levied for other than general
governmental purposes) imposed by a local governmental entity be approved by a
two-thirds vote of the voters within that jurisdiction, (iii) restricts the use
of revenues from a special tax to the purposes or for the service for which the
special tax was imposed, (iv) prohibits the imposition of ad valorem taxes on
real property by local governmental entities except as permitted by Article
XIIIA, (v) prohibits the imposition of transaction taxes and sales taxes on the
sale of real property by local governments, (vi) requires that any tax imposed
by a local government on or after August 1, 1985 be ratified by a majority vote
of the electorate within two years of the adoption of the initiative or be
terminated by November 15, 1988, (vii) requires that, in the event a local
government fails to comply with the provisions of this measure, a reduction in
the amount of property tax revenue allocated to such local government occurs in
an amount equal to the revenues received by such entity attributable to the tax
levied in violation of the initiative, and (viii) permits these provisions to
be amended exclusively by the voters of the State of California.
In September 1988, the California Court of Appeal in City of
Westminster v. County of Orange, 204 Cal. App. 3d 623, 215 Cal. Rptr. 511 (Cal.
Ct. App. 1988), held that Proposition 62 is unconstitutional to the extent that
it requires a general tax by a general law city, enacted on or after August 1,
1985 and prior to the effective date of Proposition 62, to be subject to
approval by a majority of voters. The Court held that the California
Constitution prohibits the imposition of a requirement that local tax measures
be submitted to the electorate by either referendum or initiative. It is not
possible to predict the impact of this decision on charter cities, on special
taxes or on new taxes imposed after the effective date of Proposition 62.
On November 8, 1988, California voters approved Proposition
87. Proposition 87 amended Article XVI, Section 16, of the California
Constitution by authorizing the California Legislature to prohibit
redevelopment agencies from receiving any of the property tax revenue raised by
increased property tax rates levied to repay bonded indebtedness of local
governments which is approved by voters on or after January 1, 1989. It is not
possible to predict whether the California Legislature will enact such a
prohibition nor is it possible to predict the impact of Proposition 87 on
redevelopment agencies and their ability to make payments on outstanding debt
obligations.
Certain California Municipal Obligations held by the Funds may
be obligations which are payable solely from the revenues of health care
institutions. Certain provisions under
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California law may adversely affect these revenues and, consequently, payment
on those Municipal Obligations.
The Federally sponsored Medicaid program for health care
services to eligible welfare beneficiaries in California is known as the
Medi-Cal program. Historically, the Medi-Cal program has provided for a
cost-based system of reimbursement for inpatient care furnished to Medi-Cal
beneficiaries by any hospital wanting to participate in the Medi-Cal program,
provided such hospital met applicable requirements for participation.
California law now provides that the State of California shall selectively
contract with hospitals to provide acute inpatient services to Medi-Cal
patients. Medi-Cal contracts currently apply only to acute inpatient services.
Generally, such selective contracting is made on a flat per diem payment basis
for all services to Medi-Cal beneficiaries, and generally such payment has not
increased in relation to inflation, costs or other factors. Other reductions or
limitations may be imposed on payment for services rendered to Medi-Cal
beneficiaries in the future.
Under this approach, in most geographical areas of California,
only those hospitals which enter into a Medi-Cal contract with the State of
California will be paid for non-emergency acute inpatient services rendered to
Medi-Cal beneficiaries. The State may also terminate these contracts without
notice under certain circumstances and is obligated to make contractual
payments only to the extent the California legislature appropriates adequate
funding therefor.
California enacted legislation in 1982 that authorizes private
health plans and insurers to contract directly with hospitals for services to
beneficiaries on negotiated terms. Some insurers have introduced plans known
as "preferred provider organizations" ("PPOs"), which offer financial
incentives for subscribers who use only the hospitals which contract with the
plan. Under an exclusive provider plan, which includes most health maintenance
organizations ("HMOs"), private payors limit coverage to those services
provided by selected hospitals. Discounts offered to HMOs and PPOs may result
in payment to the contracting hospital of less than actual cost and the volume
of patients directed to a hospital under an HMO or PPO contract may vary
significantly from projections. Often, HMO or PPO contracts are enforceable
for a stated term, regardless of provider losses or of bankruptcy of the
respective HMO or PPO. It is expected that failure to execute and maintain
such PPO and HMO contracts would reduce a hospital's patient base or gross
revenues. Conversely, participation may maintain or increase the patient base,
but may result in reduced payment and lower net income to the contracting
hospitals.
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<PAGE> 89
These California Municipal Obligations may also be insured by
the State of California pursuant to an insurance program implemented by the
Office of Statewide Health Planning and Development for health facility
construction loans. If a default occurs on insured California Municipal
Obligations, the State Treasurer will issue debentures payable out of a reserve
fund established under the insurance program or will pay principal and interest
on an unaccelerated basis from unappropriated State funds. At the request of
the Office of Statewide Health Planning and Development, Arthur D. Little,
Inc., prepared a study in December 1983, to evaluate the adequacy of the
reserve fund established under the insurance program and based on certain
formulations and assumptions found the reserve fund substantially underfunded.
In September of 1986, Arthur D. Little, Inc. prepared an update of the study
and concluded that an additional 10% reserve be established for "multi-level"
facilities. For the balance of the reserve fund, the update recommended
maintaining the current reserve calculation method. In March of 1990, Arthur
D. Little, Inc. prepared a further review of the study and recommended that
separate reserves continue to be established for "multi-level" facilities at a
reserve level consistent with those that would be required by an insurance
company.
Certain California Municipal Obligations held by the Funds may
be obligations which are secured in whole or in part by a mortgage or deed of
trust on real property. California has five principal statutory provisions
which limit the remedies of a creditor secured by a mortgage or deed of trust.
Two limit the creditor's right to obtain a deficiency judgment, one limitation
being based on the method of foreclosure and the other on the type of debt
secured. Under the former, a deficiency judgment is barred when the
foreclosure is accomplished by means of nonjudicial trustee's sale. Under the
latter, a deficiency judgment is barred when the foreclosed mortgage or deed of
trust secures certain purchase money obligations. Another California statute,
commonly known as the "one form of action" rule, requires creditors secured by
real property to exhaust their real property security by foreclosure before
bringing a personal action against the debtor. The fourth statutory provision
limits any deficiency judgment obtained by a creditor secured by real property
following a judicial sale of such property to the excess of the outstanding
debt over the fair value of the property at the time of the sale, thus
preventing the creditor from obtaining a large deficiency judgment against the
debtor as the result of low bids at a judicial sale. The fifth statutory
provision gives the debtor the right to redeem the real property from any
judicial foreclosure sale as to which a deficiency judgment may be ordered
against the debtor.
Upon the default of a mortgage or deed of trust with respect
to California real property, the creditor's nonjudicial
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<PAGE> 90
foreclosure rights under the power of sale contained in the mortgage or deed of
trust are subject to the constraints imposed by California law upon transfers
of title to real property by private power of sale. During the three-month
period beginning with the filing of a formal notice of default, the debtor is
entitled to reinstate the mortgage by making any overdue payments. Under
standard loan servicing procedures, the filing of the formal notice of default
does not occur unless at least three full monthly payments have become due and
remain unpaid. The power of sale is exercised by posting and publishing a
notice of sale for at least 20 days after expiration of the three-month
reinstatement period. Therefore, the effective minimum period for foreclosing
on a mortgage could be in excess of seven months after the initial default.
Such time delays in collections could disrupt the flow of revenues available to
an issuer for the payment of debt service on the outstanding obligations if
such defaults occur with respect to a substantial number of mortgages or deeds
of trust securing an issuer's obligations.
In addition, a court could find that there is sufficient
involvement of the issuer in the nonjudicial sale of property securing a
mortgage for such private sale to constitute "state action," and could hold
that the private-right-of-sale proceedings violate the due process requirements
of the Federal or State Constitutions, consequently preventing an issuer from
using the nonjudicial foreclosure remedy described above.
Certain California Municipal Obligations in the Funds'
portfolios may be obligations which finance the acquisition of single family
home mortgages for low and moderate income mortgagors. These obligations may
be payable solely from revenues derived from the home mortgages, and are
subject to California's statutory limitations described above applicable to
obligations secured by real property. Under California antideficiency
legislation, there is no personal recourse against a mortgagor of a single
family residence purchased with the loan secured by the mortgage, regardless of
whether the creditor chooses judicial or nonjudicial foreclosure.
Under California law, mortgage loans secured by single-family,
owner-occupied dwellings may be prepaid at any time. Prepayment charges on
such mortgage loans may be imposed only with respect to voluntary prepayments
made during the first five years during the term of the mortgage loan, and
cannot in any event exceed six months' advance interest on the amount prepaid
in excess of 20% of the original principal amount of the mortgage loan. This
limitation could affect the flow of revenues available to an issuer for debt
service on the outstanding debt obligations which financed such home mortgages.
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<PAGE> 91
Other Considerations.
From time to time, proposals have been introduced before
Congress for the purpose of restricting or eliminating the Federal income tax
exemption for interest on Municipal Obligations. For example, under the Tax
Reform Act of 1986, enacted in October 1986, interest on certain private
activity bonds must be included in an investor's alternative minimum taxable
income, and corporate investors must include all tax-exempt interest in the
calculation of adjusted current earnings for purposes of determining the
corporation's alternative minimum tax liability. (See the Funds' Prospectuses,
"Taxes.") The Company cannot predict what legislation or regulations, if any,
may be proposed in Congress or promulgated by the Department of Treasury as
regards the Federal income tax exemption of interest on such obligations or the
impact of such legislative and regulatory activity on such exemption.
Additionally, with respect to Municipal Obligations issued by the State of
California and political subdivisions thereof, the Company cannot predict what
legislation, if any, may be proposed in the California Legislature as regards
the California state personal income tax status of interest on such
obligations, or which proposals, if any, might be enacted. Such proposals,
while pending or if enacted, might materially adversely affect the availability
of California Municipal Obligations, in particular, and Municipal Obligations
generally, for investment by the Funds and the liquidity and value of each
Fund's portfolio. In such an event, the Company would re-evaluate the
investment objectives and policies of the Funds and consider changes in their
structures or possible dissolution.
Moreover, if the Company's Board of Directors, after
consultation with the Funds' investment adviser, should for any reason
determine that it is impracticable to invest at least 50% of California Money's
or California Intermediate's assets in California Municipal Obligations at the
close of each quarter of the Company's taxable year (and thereby to qualify
such Funds to pay dividends that are exempt from California state personal
income tax), the Board would consider changing the Funds' investment objectives
and policies (and recommending to shareholders a change in the Funds' names),
or possibly dissolving the Funds.
The payment of principal and interest on most securities
purchased by the Funds will depend upon the ability of the issuers to meet
their obligations. The value of the Funds' portfolio securities can be
expected to vary inversely with changes in prevailing interest rates.
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<PAGE> 92
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
In General.
Information on how to purchase and redeem shares of California
Money and California Intermediate, and how such shares are priced, is included
in their Prospectuses. The issuance of shares is recorded on the books of the
Funds, and share certificates are not issued unless expressly requested in
writing. Certificates are not issued for fractional shares.
The regulations of the Comptroller of the Currency provide
that funds held in a fiduciary capacity by a national bank approved by the
Comptroller to exercise fiduciary powers must be invested in accordance with
the instrument establishing the fiduciary relationship and local law. The
Company believes that the purchase of California Money or California
Intermediate shares by such national banks acting on behalf of their fiduciary
accounts is not contrary to applicable regulations if consistent with the
particular account and proper under the law governing the administration of the
account. With respect to Dollar and Plus shares, conflict of interest
restrictions may apply to an institution's receipt of compensation paid by the
Funds in connection with the investment of fiduciary funds in Dollar and Plus
shares. Institutions, including banks regulated by the Comptroller of the
Currency and investment advisers and other money managers subject to the
jurisdiction of the SEC, the Department of Labor or state securities
commissions, are urged to consult their legal advisers before investing
fiduciary funds in Dollar and Plus shares.
Prior to effecting a redemption of shares represented by
certificates, PFPC must have received such certificates at its principal
office. All such certificates must be endorsed by the redeeming shareholder or
accompanied by a signed stock power, in each instance with the signature
guaranteed by a bank or other eligible guarantor institution unless other
arrangements satisfactory to the Funds have previously been made. The Funds
may require any additional information reasonably necessary to evidence that a
redemption has been duly authorized.
Under the 1940 Act, the Funds may suspend the right of
redemption or postpone the date of payment upon redemption for any period
during which the New York Stock Exchange is closed, other than customary
weekend and holiday closings, or during which trading on said Exchange is
restricted, or during which (as determined by the SEC by rule or regulation) an
emergency exists as a result of which disposal or valuation of portfolio
securities is not reasonably practicable, or for such other periods as the SEC
may permit. (The Funds may also suspend or postpone the recordation of the
transfer of their shares upon the occurrence of any of the foregoing
conditions.)
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<PAGE> 93
In addition, if, in the opinion of the Board of Directors of
the Company, ownership of shares has or may become concentrated to an extent
which would cause the Funds to be deemed a personal holding company, the
Company may compel the redemption of, reject any order for or refuse to give
effect on the books of the Funds to the transfer of the Funds' shares in an
effort to prevent that consequence. The Funds may also redeem shares
involuntarily if such redemption otherwise appears appropriate in light of the
Funds' responsibilities under the 1940 Act. If the Company's Board of
Directors determines that conditions exist which make payment of redemption
proceeds wholly in cash unwise or undesirable, the Funds may make payment
wholly or partly in securities or other property. In certain instances, the
Funds may redeem shares pro rata from each shareholder of record without
payment of monetary consideration. See "Portfolio Valuation -- California
Money" below.
Any institution purchasing shares on behalf of separate
accounts will be required to hold the shares in a single nominee name (a
"Master Account"). Institutions investing in more than one of the Company's
portfolios or series of shares must maintain a separate Master Account for each
portfolio and series of shares. Institutions may arrange with PFPC for certain
sub- accounting services (such as purchase, redemption and dividend
recordkeeping) paid for by the Company, if PFPC is provided with the
information necessary for sub-accounting. Sub-accounts may be established by
name or number.
Net Asset Value.
As stated in the Prospectuses for California Money and
California Intermediate, the net asset value per share for California Money and
California Intermediate is calculated by adding the value of all of a Fund's
portfolio securities and other assets belonging to that Fund, subtracting the
liabilities charged to that Fund including dividends that have been declared
but not paid, and dividing the result by the number of the Fund shares
outstanding (irrespective of series). The value of the assets of California
Money is calculated using the amortized cost method pursuant to procedures
adopted by the Board of Directors under Rule 2a-7. "Assets belonging to" a
Fund consist of the consideration received upon the issuance of that Fund's
shares together with all income, earnings, profits and proceeds derived from
the investment thereof, including any proceeds from the sale of such
investments, any funds or payments derived from any re-investment of such
proceeds, and the portion of any general assets of the Company not belonging to
either California Money or California Intermediate. Assets belonging to a Fund
are charged with the direct liabilities of that Fund and with a share of the
general liabilities of the Company allocated in proportion to the relative net
assets of the Fund and the Company's other portfolio. The determinations by
the Board of Directors as to
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<PAGE> 94
the direct and allocable liabilities, and allocable portion of general assets,
with respect to each Fund are conclusive.
Portfolio Valuation.
California Money. California Money's portfolio securities are
valued on the basis of amortized cost. In connection with its use of amortized
cost valuation, California Money limits the dollar-weighted average maturity of
its portfolio to not more than 90 days and does not purchase any instrument
with a remaining maturity of more than 13 months (with certain exceptions).
The Company's Board of Directors has also established procedures that are
intended to stabilize the net asset value per share of each of California
Money's series of shares for purposes of sales and redemptions at $1.00. Such
procedures include the determination, at such intervals as the Board deems
appropriate, of the extent, if any, to which California Money's net asset value
per share calculated by using available market quotations deviates from $1.00
per share. In the event such deviation exceeds 1/2 of 1%, the Board will
promptly consider what action, if any, should be initiated. If the Board
believes that the amount of any deviation from California Money's $1.00
amortized cost price per share may result in material dilution or other unfair
results to investors or existing shareholders, it will take such steps as it
considers appropriate to eliminate or reduce to the extent reasonably
practicable any such dilution or unfair results. These steps may include
selling portfolio instruments prior to maturity; shortening California Money's
average portfolio maturity; withholding or reducing dividends; redeeming shares
in kind; reducing the number of California Money's outstanding shares without
monetary consideration; or utilizing a net asset value per share determined by
using available market quotations.
California Intermediate. California Intermediate's portfolio
securities for which market quotations are readily available (other than debt
securities with remaining maturities of 60 days or less) are valued at the mean
of the most recent quoted bid and asked prices provided by investment dealers.
Debt securities with remaining maturities of 60 days or less are valued on an
amortized cost basis (unless the Board of Directors determines that such basis
does not represent fair value at the time). Other securities and assets for
which market quotations are not readily available are valued at their fair
value in the best judgment of PIMC under procedures established by, and under
supervision of, the Company's Board of Directors. PIMC may use a pricing
service to value portfolio securities where the prices provided are believed to
reflect the fair market value of such securities. In valuing California
Intermediate's securities, the pricing service would normally take into
consideration such factors as yield, risk, quality, maturity, type of issue,
trading characteristics, special circumstances and other factors it deems
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<PAGE> 95
relevant in determining valuations for normal institutionalized trading units
of debt securities and would not rely exclusively on quoted prices. The
methods used by the pricing service and the valuation so established will be
reviewed by PIMC under the general supervision of the Company's Board of
Directors. Several pricing services are available, one or more of which may be
used by PIMC at its own expense from time to time.
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<PAGE> 96
MANAGEMENT OF THE COMPANY
Board of Directors.
The Company's directors and executive officers, their
addresses, principal occupations during the past 5 years and other affiliations
are as follows:
<TABLE>
<CAPTION>
Principal Occupations
during last 5 years
Name and Address Position and Other Affiliations(4)
- ---------------- -------- -------------------------
<S> <C> <C>
G. Willing Pepper(1)(2) Chairman of Retired; Chairman of the Board,
128 Springton Lake Rd. the Board The Institute of Cancer Re-
Media, PA 19063 and President search until 1979; Director,
Age 87 Philadelphia National Bank until
1978; President, Scott Paper Company,
1971 to 1973; Chairman of the Board,
Specialty Composites Corp. until
May, 1984.
Rodney D. Johnson(2) Director President, Fairmount Capital
Fairmount Capital Advisors, Inc. (financial
Advisors, Inc. advising), since 1987; Chair,
1435 Walnut Street Board of Advocates, Fox Chase
Drexel Building Cancer Center, since 1993;
Philadelphia, PA 19102 Treasurer, North Philadelphia
Age 53 Health System (formerly Girard
Medical Center), 1988 to 1993.
William R. Howell(3) Director Retired; Vice Chairman,
73-350 Calliandra Street Union Bank, Los Angeles,
Palm Desert, CA 92260 until September, 1982; Director,
Age 73 Current Income Shares, Inc.
Rudolph A. Peterson(2)(3) Director Honorary Director, President
BankAmerica Corporation and Chief Executive Officer
555 California Street (Retired), BankAmerica
Suite 500 Corporation and Bank of America,
San Francisco, CA 94104 NT & SA.
Age 90
</TABLE>
- ----------------
(1) This director may be deemed to be an "interested person" of the
Company as defined in the 1940 Act.
(2) Executive Committee Member.
(3) Audit Committee Member.
(4) Additional affiliations with investment companies advised by PIMC or
PNC Bank are set forth below.
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<PAGE> 97
<TABLE>
<CAPTION>
Principal Occupations
during last 5 years
Name and Address Position and Other Affiliations(4)
- ---------------- -------- -------------------------
<S> <C> <C>
Anthony M. Santomero(3) Director Richard K. Mellon
310 Keithwood Road Professor of Finance, since
Wynnewood, PA 19096 April 1984 and Dean's Advisory
Age 48 Council Member since July 1984, The Wharton School,
University of Pennsylvania; Associate Editor,
Journal of Banking and Finance, since June 1978;
Associate Editor, Journal of Economics and
Business, since October 1979; Associate Editor,
Journal of Money, Credit and Banking, since January
1980; Research Associate, New York University
Center for Japan-US Business and Economic Studies,
since July 1989; Editorial Advisory Board, Open
Economics Review, since November 1990; Director,
The Zweig Fund and The Zweig Total Return Fund.
Edward J. Roach Vice Certified Public Accountant;
Bellevue Park Corporate President Vice Chairman of the Board, Fox
Center and Treas- Chase Cancer Center; President
400 Bellevue Parkway urer or Vice President and Treasurer
Suite 100 of various investment companies
Wilmington, DE 19809 advised by PNC Institutional
Age 70 Management Corporation.
Morgan R. Jones Secretary Partner of the law firm of
PNB Building Drinker Biddle & Reath.
1345 Chestnut Street
Philadelphia, PA 19107-3496
Age 55
</TABLE>
- ----------------
(3) Audit Committee Member.
(4) Additional affiliations with investment companies advised by PIMC or
PNC Bank are set forth below.
---------------
During intervals between meetings of the Board, the Executive
Committee may exercise the authority of the Board of Directors in the
management of the business of the Company to the extent permitted by law.
Messrs. Pepper, Johnson and Santomero serve as trustees of
Municipal Fund for Temporary Investment ("MuniFund"), Portfolios for
Diversified Investment ("Diversified"), Trust for Federal Securities
("FedFund") and The PNC(R) Fund ("PNC") and as
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<PAGE> 98
directors of Temporary Investment Fund, Inc. ("TempFund") and Provident
Institutional Funds, Inc. ("PIF"). In addition, Mr. Pepper serves as a
director of Independence Square Income Securities, Inc. ("ISIS") and Managing
General Partner of Chestnut Street Exchange Fund ("Chestnut"); and Mr. Johnson
is a director of Municipal Fund for New York Investors, Inc. ("New York
Money"). Each of the investment companies named above receives various
advisory or other services from PIMC or PNC Bank.
Mr. Pepper is Chairman of the Board and President and Mr.
Roach is Vice President and Treasurer of TempFund, Diversified, MuniFund,
FedFund and PIF. In addition, Mr. Roach is Treasurer of Chestnut, President
and Treasurer of The RBB Fund, Inc. ("RBB") and New York Money and Vice
President and Treasurer of ISIS and PNC; Mr. Pepper is Chairman of the Board
and President of PNC; Mr. Jones is Secretary of Chestnut, MuniFund, New York
Money, PNC and RBB. Mr. Johnson is a director of International Dollar Reserve
Fund. Of the above-mentioned funds, PDI provides distribution services and
PFPC and PDI provide administration services to TempFund, PIF, FedFund,
Diversified, MuniFund, New York Money and PNC.
Each director who is not affiliated with PNC Bank, PIMC, PFPC
or PDI receives $5,000 annually from the Company for his services as a director
plus $250 for each Board meeting attended, $250 for each Committee meeting
attended and is reimbursed for reasonable out-of-pocket expenses incurred in
attending meetings. The Chairman of the Board is entitled to receive an
additional $5,000 per annum for services in such capacity.
For the fiscal year ended January 31, 1995, the Company paid
or accrued for the account of its directors and officers a total of $48,140
(exclusive of expense reimbursements) for services in all capacities. In
addition, the Company contributed $1,002 for its last fiscal year to its
retirement plan for employees (who included Mr. Roach). No employee of PDI,
PIMC, PFPC or PNC Bank receives any compensation from the Company for acting as
an officer or director of the Company. The directors and officers of the
Company own less than 1% of the Company's shares.
By virtue of the responsibilities assumed by PDI, PIMC, PNC
Bank and PFPC under their respective agreements with the Company, the Company
itself requires only one part-time employee in addition to its officers.
Drinker Biddle & Reath, of which Mr. Jones is a partner, receives legal fees as
counsel to the Company.
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<PAGE> 99
The table below sets forth information about the fees received
by the Company's directors in the most recently completed fiscal year.
<TABLE>
<CAPTION>
Pension or Total
Retirement Estimated Compensation
Benefits Annual from Company
Aggregate Accrued as Benefits and Fund
Name of Person Compensation Part of Fund Upon Complex(1) Paid
Position from Company Expenses Retirement to Directors
- -------------- ------------ ------------ ---------- -------------
<S> <C> <C> <C> <C>
William R. Howell $6,250 0.00 N/A (1)(2) $6,250
Director
Rodney D. Johnson $6,000 0.00 N/A (7)(2) $54,375
Director
G. Willing Pepper, $11,000 0.00 N/A (8)(2) $97,875
Director, Chairman
and President
Rudolph A. Peterson $6,250 0.00 N/A (1)(2) $6,250
Director
Anthony M. Santomero, $6,000 0.00 N/A (6)(2) $49,625
Director
$35,500 0.00 $208,125
</TABLE>
- -----------------------
(1) A "fund complex" means two or more investment companies that hold
themselves out to investors as related companies for purposes of
investment and investor services, or have a common investment adviser
or have an investment adviser that is an affiliated person of the
investment adviser of any of the other investment companies.
(2) Total number of such other investment companies director serves on
within the fund complex.
Adviser and Administrators.
The advisory and administrative services provided and the
expenses assumed by PIMC and the administrators, as well as the fees payable to
each of them, are described in the Pros-
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<PAGE> 100
pectuses. For California Money Fund's fiscal year ended January 31, 1995 and
1994, PIMC received fees for advisory services (net of waivers) in the amounts
of $250,983 and $209,402. For the same period, PFPC and PDI received fees for
administration services (net of waivers) of $250,983 and $209,402 in the
aggregate. For California Money Fund's fiscal year ended January 31, 1993,
PIMC and The Boston Company Advisors, Inc. ("Boston Advisors"), the Company's
former Administrator, each received fees for advisory and administration
services (net of waivers), in the amount of $474,812 and $623,533,
respectively. For California Money Fund's fiscal year ended January 31, 1995
and 1994, PIMC waived advisory fees of $582,744 and $555,359 and PFPC and PDI
waived administration fees of $582,744 and $555,359 in the aggregate. For
California Money Fund's fiscal year ended January 31, 1993, PIMC and Boston
Advisors each waived fees of $429,879 and $494,145, respectively, with respect
to that Fund, although the expense reimbursement limitations described in the
following paragraph were not exceeded. For California Intermediate Municipal
Fund's fiscal years ended January 31, 1995 and 1994, PIMC received fees for
advisory services (net of waivers) in the amounts of $6,382 and $8,238. For
the same period, PFPC and PDI received fees for administration services (net of
waivers) of $6,382 and $8,238 in the aggregate. For California Intermediate
Municipal Fund, for the fiscal year ended January 31, 1993, PIMC and Boston
Advisors each received fees for advisory and administration services,
respectively (each net of waivers), of $23,243 and $13,645, respectively. For
California Intermediate Municipal Fund's fiscal years ended January 31, 1995
and 1994, PIMC waived advisory fees of $30,987 and $26,591 and PFPC and PDI
waived administration fees of $30,987 and $26,591 in the aggregate. For
California Intermediate Municipal Fund's fiscal years ended January 31, 1993,
PIMC and Boston Advisors each waived fees of $20,751 and $19,099, respectively,
although the expense reimbursement limitations described in the following
paragraph were not exceeded.
PIMC and the administrators have agreed that if, in any fiscal
year, the expenses borne by each Fund exceed the applicable expense limitations
imposed by the securities regulations of any state in which shares of a Fund
are registered or qualified for sale to the public, they will each reimburse
that Fund for one-half of any excess to the extent required by such
regulations. To the Funds' knowledge, as of the date of this Statement of
Additional Information, the most restrictive expense limitation applicable to
the Funds provides that annual expenses (as defined by statute) may not exceed
2.5% of the first $30 million of a portfolio's average annual net assets, 2% of
the next $70 million of the average annual net assets and 1.5% of the remaining
average annual net assets.
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<PAGE> 101
Banking Laws.
Certain banking laws and regulations with respect to
investment companies are discussed in the Funds' Prospectuses. PIMC, PFPC and
PNC Bank believe that PIMC may perform the advisory services for the Funds
contemplated by the Company's Advisory Agreement, the Funds' Prospectuses and
this Statement of Additional Information, that PFPC may perform the transfer
agency services for the Funds contemplated by the Company's Transfer Agency
Agreement, the Funds' Prospectuses and this Statement of Additional
Information, and that PNC Bank may perform the custodial services for the Funds
contemplated by the Company's Custodian Agreement, the Funds' Prospectuses and
this Statement of Additional Information, and the sub-advisory services for the
Funds contemplated by the Company's Sub-Advisory Agreement, the Funds'
Prospectuses and this Statement of Additional Information, without violation of
the Glass-Steagall Act or applicable banking laws or regulations. It should be
noted, however, that changes in legal requirements relating to the permissible
activities of banks and their affiliates, as well as further interpretations of
present and future requirements, could prevent PIMC, PNC Bank and PFPC from
continuing to perform such services for the Funds. If PIMC, PFPC or PNC Bank
were prohibited from continuing to perform such services, it is expected that
the Board of Directors would recommend that the Company enter into new
agreements with other qualified firms. Any new advisory agreement would be
subject to shareholder approval.
In addition, state securities laws on this issue may differ
from the interpretations of federal law expressed herein and banks and
financial institutions may be required to register as dealers pursuant to state
law.
Custodian and Transfer Agent.
As custodian of the Funds' assets, PNC Bank (i) maintains a
separate account or accounts in the name of the Funds, (ii) holds and disburses
portfolio securities on account of the Funds, (iii) makes receipts and
disbursements of money on behalf of the Funds, (iv) collects and receives all
income and other payments and distributions on account of the Funds' portfolio
securities, (v) responds to correspondence from security brokers and others
relating to its duties and (vi) makes periodic reports to the Company's Board
of Directors concerning the Funds' operations. PNC Bank is authorized to
select one or more banks or trust companies to serve as sub-custodian on behalf
of the Funds, provided that PNC Bank remains responsible for the performance of
all its duties under its Custodian Agreement with the Funds and holds the Funds
harmless from the acts and omissions of any sub-custodian. Each Fund pays PNC
Bank a fee
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<PAGE> 102
for its custodial services equal to $.25 per annum for each $1,000 of that
Fund's average gross assets.
As the Funds' transfer and dividend disbursing agent, PFPC (i)
issues and redeems shares of the Funds, (ii) addresses and mails all
communications by the Funds to its shareholders, including reports to
shareholders, dividend and distribution notices and proxy material for its
meetings of shareholders, (iii) responds to correspondence by shareholders and
others relating to its duties, (iv) maintains shareholder accounts and
sub-accounts, (v) provides installation and other services in connection with
the Funds' computer access program maintained to facilitate shareholder access
to the Funds, and (vi) makes periodic reports to the Board of Directors
concerning the Funds' operations. PFPC may, on 30 days' notice to the Company,
assign its duties thereunder to any other affiliate of PNC Bank Corp. For its
transfer agency, dividend disbursing and sub-accounting services, each Fund
pays PFPC $12.00 per account and sub-account per annum plus $1.00 for each
purchase or redemption transaction by an account (other than a purchase
transaction made in connection with the automatic reinvestment of dividends).
PFPC sends each shareholder of record a monthly statement
showing the total number of shares owned as of the last business day of the
month (as well as the dividends paid during the current month and year), and
provides each shareholder of record with a daily transaction report for each
day on which a transaction occurs in the shareholder's Master Account with each
of the Funds. Further, an institution establishing sub-accounts with PFPC is
provided with a daily transaction report for each day on which a transaction
occurs in a sub-account and, as of the last calendar day of each month, a
report which sets forth the share balance for the sub-account at the beginning
and end of the month and income paid or reinvested during the month.
Service Organizations.
As stated in the Funds' Prospectuses, the Funds enter into
agreements with institutional investors ("Service Organizations") requiring
them to provide support services to their customers who beneficially own Dollar
or Plus shares. In consideration of such services, California Money pays
Service Organizations .25% (on an annualized basis) of the average daily net
asset value of the California Money Dollar or California Money Plus shares held
by the Service Organizations for the benefit of their customers. California
Intermediate pays such Service Organizations the same fee based on the average
daily net asset value of the California Intermuni Dollar or California
Intermuni Plus shares held by the Service Organizations for the benefit of
their customers. Such services include: (i) aggregating and processing
purchase and redemption requests from
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customers and placing net purchase and redemption orders with the transfer
agent; (ii) providing customers with a service that invests the assets of their
accounts in Dollar or Plus shares; (iii) processing dividend payments from the
Funds on behalf of customers; (iv) providing information periodically to
customers showing their positions in Dollar and Plus shares; (v) arranging for
bank wires; (vi) responding to customer inquiries relating to the services
performed by the Service Organizations; (vii) providing sub-accounting with
respect to Dollar and Plus shares beneficially owned by customers or the
information necessary for sub- accounting; (viii) forwarding shareholder
communications from the Company (such as proxies, shareholder reports, annual
and semi- annual financial statements and dividend, distribution and tax
notices) to customers, if required by law; and (ix) other similar services if
requested by the Company. In addition, broker/dealers purchasing Plus shares
may be requested to provide from time to time assistance (such as the
forwarding of sales literature and advertising to customers) in connection with
the distribution of Plus shares. For the fiscal year ended January 31, 1995,
California Money paid a total of $43,771 to Service Organizations with respect
to California Money Dollar shares, 3.7% of which was paid to an affiliate.
California Money made no payments to Service Organizations with respect to
California Money Plus shares for such period because no such shares had been
sold during the fiscal year ended January 31, 1995. California Intermuni made
no payments to Service Organizations for such period because no California
Intermuni Dollar or California Intermuni Plus shares had been sold during the
fiscal year ended January 31, 1995.
Each Fund's agreements with Service Organizations are governed
by Plans (called "Non-12b-1 Shareholder Services Plan" and "12b-1 Services
Plan" for the Dollar shares and Plus shares, respectively), which have been
adopted by the Board of Directors pursuant to applicable rules and regulations
of the SEC and an exemptive order granted by the SEC in connection with the
creation of the Dollar and Plus shares. Pursuant to each Plan, the Board of
Directors reviews, at least quarterly, a written report of the amounts expended
under the Fund's agreements with Service Organizations and the purposes for
which the expenditures were made. In addition, the Funds' arrangements with
Service Organizations must be approved annually by a majority of the Fund's
directors, including a majority of the directors who are not "interested
persons" of the Fund as defined in the 1940 Act and have no direct or indirect
financial interest in such arrangements (the "Disinterested Directors").
The Board of Directors has approved the Funds' arrangements
with Service Organizations based on information provided by the Funds' service
contractors that there is a reasonable likelihood that the arrangements will
benefit the Funds and their shareholders by affording the Funds greater
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flexibility in connection with the servicing of the accounts of the beneficial
owners of their shares in an efficient manner. Any material amendment to the
Funds' arrangements with Service Organizations must be approved by a majority
of the Board of Directors (including a majority of the Disinterested
Directors), and any amendment to increase materially the costs under the 12b-1
Services Plan adopted by the Board with respect to Plus shares must be approved
by the holders of a majority of the outstanding Plus shares. (It should be
noted that while the annual service fee with respect to Plus shares is
currently set at .25%, the plan adopted by the Board of Directors permits the
Board to increase this fee to .40% without shareholder approval.) So long as
the Funds' arrangements with Service Organizations are in effect, the selection
and nomination of the members of the Board of Directors who are not "interested
persons" (as defined in the 1940 Act) of the Company will be committed to the
discretion of such noninterested directors.
Expenses.
Except as noted in the Funds' Prospectuses, the Funds' service
contractors bear the expenses incurred in connection with the performance of
their services. Similarly, the Funds bear the expenses incurred in their
operations. Fund expenses include taxes, interest, fees and salaries of its
directors and officers, SEC fees, state securities qualification fees, costs of
preparing and printing prospectuses for regulatory purposes and for
distribution to shareholders, advisory and administration fees, charges of the
custodian, transfer agent and dividend disbursing agent, Service Organization
fees, costs of the Funds' computer access program, certain insurance premiums,
outside auditing and legal expenses, cost of independent pricing service, costs
of shareholder reports and shareholder meetings and any extraordinary expenses.
The Funds also pay for brokerage fees and commissions (if any) in connection
with the purchase of portfolio securities.
ADDITIONAL INFORMATION CONCERNING TAXES
The following summarizes certain additional Federal, state and
local tax considerations generally affecting the Funds and their shareholders
that are not described in the Funds' Prospectuses. No attempt is made to
present a detailed explanation of the tax treatment of the Funds or their
shareholders, and the discussion here and in the Funds' Prospectuses is not
intended as a substitute for careful tax planning. Investors should consult
their tax advisers with specific reference to their own tax situations.
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General.
Each Fund is treated as a separate corporate entity under the
Code, and has qualified, and intends to continue to qualify, as a regulated
investment company.
As described above and in the Funds' Prospectuses, the Funds
are designed to provide California institutional investors and their customers
with current tax-exempt interest income. The Funds are not intended to
constitute a balanced investment program and are not designed for investors
seeking capital appreciation or maximum tax-exempt income irrespective of
fluctuations in principal. Shares of the Funds would not be suitable for
tax-exempt institutions and may not be suitable for retirement plans qualified
under Section 401 of the Internal Revenue Code, H.R. 10 plans and individual
retirement accounts since such plans and accounts are generally tax-exempt and,
therefore, would not only not gain any additional benefit from the Funds'
dividends being tax-exempt, but such dividends would be ultimately taxable to
the beneficiaries when distributed to them. In addition, the Funds may not be
an appropriate investment for entities which are "substantial users" of
facilities financed by private activity bonds or "related persons" thereof.
"Substantial user" is defined under U.S. Treasury Regulations to include a
non-exempt person who regularly uses a part of such facilities in his trade or
business and (i) whose gross revenues derived with respect to the facilities
financed by the issuance of bonds are more than 5% of the total revenues
derived by all users of such facilities, or (ii) who occupies more than 5% of
the usable area of such facilities or (iii) for whom such facilities or a part
thereof were specifically constructed, reconstructed or acquired. "Related
persons" include certain related natural persons, affiliated corporations, a
partnership and its partners and an S Corporation and its shareholders.
The percentage of total dividends paid by each Fund with
respect to any taxable year which qualify as Federal exempt-interest dividends
will be the same for all shareholders receiving dividends for such year. In
order for a Fund to pay exempt-interest dividends for any taxable year, at the
close of each fiscal quarter at least 50% of the aggregate value of the Fund's
portfolio must consist of exempt-interest obligations. In addition, a Fund
must distribute with respect to each taxable year an amount that is at least
equal to the sum of 90% of the exempt-interest income net of certain deductions
and 90% of the investment company taxable income for the taxable year. Not
later than 60 days after the close of its taxable year, each Fund will notify
each shareholder of the portion of the dividends paid by that Fund to the
shareholder with respect to such taxable year which constitutes an
exempt-interest dividend. The aggregate amount of dividends so designated
cannot, however, exceed the
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excess of the amount of interest exempt from tax under Section 103 of the Code
received by that Fund during the taxable year over any amounts disallowed as
deductions under Sections 265 and 171(a)(2) of the Code.
A percentage of the interest on indebtedness incurred by a
shareholder to purchase or carry a Fund's shares, equal to the percentage of
total non-capital gain dividends distributed during the shareholder's taxable
year that are exempt-interest dividends, is not deductible for Federal income
tax purposes.
While the Funds do not expect to earn any investment company
taxable income, any taxable income earned by the Funds will be distributed to
shareholders. In general, a Fund's investment company taxable income will be
its taxable income, subject to certain adjustments and excluding the excess of
any net long-term capital gain for the taxable year over the net short-term
capital loss, if any, for such year. Such distributions would be taxable to
shareholders as ordinary income (whether made in cash or additional shares).
Similarly, while the Funds do not expect to realize long-term
capital gains, any net realized long-term capital gains will be distributed at
least annually. A Fund will generally have no tax liability with respect to
such gains, and the distributions (whether paid in cash or additional shares)
will be taxable to shareholders as long-term capital gain, regardless of how
long a shareholder has held shares of the Fund. Such distributions will be
designated as capital gain dividends in a written notice mailed by the Funds to
shareholders not later than 60 days after the close of the Funds' taxable year.
Taxable distributions generally are included in a
shareholder's gross income for the taxable year in which they are received.
Dividends declared in October, November or December of any year and made
payable to a Fund's shareholders of record on a specified date in such months
will be deemed to have been received by the shareholders and paid by the Funds
on December 31 of such year, if such dividends are actually paid during
January of the following year.
A 4% non-deductible excise tax is imposed on regulated
investment companies that fail to distribute currently an amount equal to
specified percentages of their ordinary taxable income and capital gain net
income (excess of capital gains over capital losses). Each Fund intends to
make sufficient distributions or deemed distributions of its ordinary taxable
income and any capital gain net income with respect to each calendar year to
avoid liability for this excise tax.
Although each Fund expects to qualify as a "regulated
investment company" and to be relieved of all or substantially
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all liability for Federal income taxes, a Fund may be subject to the tax laws
of certain states or localities, depending upon the extent of its activities in
states and localities in which its offices are maintained, in which its agents
or independent contractors are located or in which it is deemed to be
conducting business.
If for any taxable year a Fund does not qualify for the
special Federal income tax treatment afforded regulated investment companies,
all of its taxable income would be subject to Federal income tax at regular
corporate rates (without any deduction for distributions to its shareholders).
In such event, dividend distributions (including amounts derived from interest
on Municipal Obligations) would be taxable to shareholders to the extent of a
Fund's current or accumulated earnings and profits and would be eligible for
the dividends received deduction allowed to corporations under the Code.
To the extent that a Fund's dividends distributed to
shareholders are derived from interest income exempt from Federal income tax
and are properly designated as "exempt-interest dividends" by a Fund, they will
be excludable from a shareholder's gross income for Federal income tax
purposes. Under the Code, shareholders that receive exempt-interest dividends
may be required to treat as taxable income a portion of certain otherwise
nontaxable social security and railroad retirement benefit payments.
A shareholder of California Intermediate should be aware that
a redemption of such shares is a taxable event, and, accordingly, a capital
gain or loss may be recognized. If a shareholder of California Intermediate
receives an exempt-interest dividend with respect to any share and such share
has been held for six months or less, any loss on a redemption of such shares
will be disallowed to the extent of such exempt-interest dividend. Similarly,
if a shareholder receives a distribution taxable as long-term capital gain and
redeems shares before he has held them for more than six months, any loss on
the redemption (not otherwise disallowed as attributable to an exempt-interest
dividend) will be treated as long-term capital loss.
California.
Assuming each Fund qualifies as a "regulated investment
company," it will be relieved of California franchise and income taxes to the
extent it distributes its exempt-interest income, investment company taxable
income and any excess of net long-term capital gain over net short-term
capital loss. It is anticipated that each Fund will be relieved of all or
substantially all of
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California franchise and income taxes by making such distributions.
If, at the close of each quarter of its taxable year, at least
50% of the value of the total assets of a regulated investment company, or
series thereof, consists of obligations which when held by an individual, the
interest therefrom is exempt from California personal income taxation
("California Tax-Exempt Obligations") then the regulated investment company, or
series of that company, will be qualified to pay dividends exempt from
California state personal income tax to its non-corporate shareholders
(hereinafter referred to as "California exempt-interest dividends"). Series of
a regulated investment company is defined as a segregated portfolio of assets,
the beneficial interest in which is owned by the holders of an exclusive class
or series of stock of the company. California Tax-Exempt Obligations are
limited to California Municipal Obligations and certain U.S. Government
obligations the interest on which is exempt from state income taxation as
provided by federal law. Each of the Funds intends to qualify under the above
50% by value requirement so that it can pay California exempt-interest
dividends. If the Funds fail to so qualify, no part of their dividends will be
exempt from California state personal income tax.
Not later than 60 days after the close of its taxable year,
each Fund will notify each shareholder of the portion of the dividends paid by
that Fund to the shareholder with respect to such taxable year which is exempt
from California state personal income tax. The total amount of California
exempt-interest dividends paid by each Fund to its shareholders with respect to
any taxable year cannot exceed the excess of the amount of interest received by
the Fund during such year on California Tax-Exempt Obligations over any amounts
that, if the Fund were treated as an individual, would be considered expenses
related to tax exempt income and would thus not be deductible under Federal
income or California state personal income tax law. The percentage of total
dividends paid by the Fund with respect to any taxable year which qualifies as
California exempt-interest dividends will be the same for all shareholders
receiving dividends from the Fund with respect to such year.
In cases where shareholders are "substantial users" or
"related persons" with respect to California Municipal Obligations held by the
Funds, such shareholders should consult their tax advisers to determine whether
California exempt-interest dividends paid by the Funds with respect to such
obligations retain their California state personal income tax exclusion. In
this connection rules similar to those regarding the possible unavailability of
Federal exempt-interest dividend treatment to "substantial users" are
applicable for California
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state tax purposes. See "Additional Information Concerning Taxes - General"
above.
To the extent any dividends paid to shareholders are derived
from long-term and short-term capital gains, such dividends will not constitute
California exempt-interest dividends. Rules similar to those regarding the
treatment of such dividends for Federal income tax purposes are also applicable
for California state personal income tax purposes. See "Additional Information
Concerning Taxes - General." Moreover, interest on indebtedness incurred by a
shareholder to purchase or carry shares of the Funds is not deductible for
California state personal income tax purposes if the particular Fund
distributes California exempt-interest dividends to the shareholder during his
or her taxable year.
The foregoing is only a summary of some of the important
California state personal income tax considerations generally affecting the
Funds and their shareholders. No attempt is made to present a detailed
explanation of the California state personal income tax treatment of the Funds
or their shareholders, and this discussion is not intended as a substitute for
careful planning. Further, it should be noted that the portion of each Fund's
dividends constituting California exempt-interest dividends is excludable from
income for California state personal income tax purposes only. Any dividends
paid to shareholders of the Funds subject to California state franchise tax or
California state corporate income tax will be taxed as ordinary dividends to
such shareholders, notwithstanding that all or a portion of such dividends is
exempt from California state personal income tax. Accordingly, potential
investors in the Funds, including, in particular, corporate investors which may
be subject to either California franchise tax or California corporate income
tax, should consult their tax advisers with respect to the application of such
taxes to the receipt of the Funds' dividends and as to their own California
state tax situation, in general.
DIVIDENDS
General.
Net income for dividend purposes for each of the Funds
consists of (i) interest accrued and original issue discount earned on the
Fund's assets for the applicable dividend period, less (ii) amortization of
market premium on such assets, accrued expenses directly attributable to the
Fund and the general expenses (e.g. legal, accounting and director's fees) of
the Company prorated to the Fund on the basis of its relative net assets. Net
income for each Fund's three series of shares is determined in the same manner
except that Dollar and Plus shares bear the fees payable to Service
Organizations for the services
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to the beneficial owners of such shares. (See the Fund's Prospectus under
"Dividends.") Realized and unrealized gains and losses on portfolio securities
are reflected in net asset value.
Should a Fund incur or anticipate any unusual or unexpected
significant expense or loss which would affect disproportionately the income of
the Fund for a particular period, the Board of Directors would at that time
consider whether to adhere to the present dividend policy with respect to the
Fund or to revise it in order to mitigate to the extent possible the
disproportionate effect of such expense or loss on the income of the Fund.
Such expense or loss may result in the shareholder's receiving no dividends for
the period during which it held shares of the Fund and in it receiving upon
redemption a price per share lower than that which it paid.
Yield Information.
Yields are computed separately for each series of each Fund.
California Money. The "yields," "effective yields" and
"tax-equivalent yields" for each of California Money's three series of shares
as described and shown in the Prospectuses are calculated according to formulas
prescribed by the SEC. The standardized seven-day yield for each of California
Money's three series of shares is computed separately for each series by
determining the net change in the value of a hypothetical pre-existing account
in California Money having a balance of one share of the series involved at the
beginning of the period, dividing the net change by the value of the account at
the beginning of the period to obtain the base period return, and multiplying
the base period return by 365/7. The net change in the value of an account in
California Money includes the value of additional shares purchased with
dividends from the original share and dividends declared on the original share
and any such additional shares, net of all fees charged to all shareholder
accounts in proportion to the length of the base period and California Money's
average account size, but does not include gains and losses or unrealized
appreciation and depreciation. The "effective yield" of any series of shares
is calculated by compounding the unannualized base period return for the series
involved (calculated as above) by adding one to the base period return for the
series, raising that sum to a power equal to 365/7, and subtracting one from
the result. The "tax-equivalent" yield of any series of shares is computed by:
(a) dividing the portion of the yield for the series involved (calculated as
above) that is exempt from both Federal and California State income taxes by
one minus a stated combined Federal and California State income tax rate; (b)
dividing the portion of the yield for the series involved (calculated as above)
that is exempt from Federal income tax only by one minus a stated Federal
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income tax rate; and (c) adding the figures resulting from (a) and (b) above to
that portion, if any, of the yield for the series involved that is not exempt
from Federal income tax.
From time to time, in advertisements or in reports to
shareholders, the yield of California Money may be quoted and compared to those
of other mutual funds with similar investment objectives and to stock or other
relevant indices. For example, the yield of California Money may be compared
to the Donoghue's IBC/Money Fund Average, which is an average compiled by
Donoghue's MONEY FUND REPORT(R) of Holliston, MA 01746, a widely recognized
independent publication that monitors the performance of money market funds, or
to the data prepared by Lipper Analytical Services, Inc. ("Lipper"), a
widely-recognized independent service that monitors the performance of mutual
funds.
The Funds may also from time to time include in advertisements, sales
literature, communications to shareholders and other materials ("Materials"),
discussions or illustrations of the effects of compounding. "Compounding"
refers to the fact that, if dividends or other distributions on a Fund
investment are reinvested by being paid in additional Fund shares, any future
income or capital appreciation of a Fund would increase the value, not only of
the original Fund investment, but also of the additional Fund shares received
through reinvestment. As a result, the value of the Fund investment would
increase more quickly than if dividends or other distributions had been paid in
cash.
In addition, the Funds may also include in Materials discussions
and/or illustrations of the potential investment goals of a prospective
investor, investment management strategies, techniques, policies or investment
suitability of a Fund, economic conditions, the relationship between sectors of
the economy and the economy as a whole, various securities markets, the effects
of inflation and historical performance of various asset classes, including but
not limited to, stocks, bonds and Treasury securities. From time to time,
Materials may summarize the substance of information contained in shareholder
reports (including the investment composition of a Fund), as well as the views
of the advisers as to current market, economic, trade and interest rate trends,
legislative, regulatory and monetary developments, investment strategies and
related matters believed to be of relevance to a Fund. The Funds may also
include in Materials charts, graphs or drawings which compare the investment
objective, return potential, relative stability and/or growth possibilities of
the Funds and/or other mutual funds, or illustrate the potential risks and
rewards of investment in various investment vehicles, including but not limited
to, stocks, bonds, Treasury securities and shares of a Fund and/or other mutual
funds. Materials may include a discussion of
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certain attributes or benefits to be derived by an investment in a Fund and/or
other mutual funds (such as value investing, market timing, dollar cost
averaging, asset allocation, constant ratio transfer, automatic accounting
rebalancing, the advantages and disadvantages of investing in tax-deferred and
taxable investments), shareholder profiles and hypothetical investor scenarios,
timely information on financial management, tax and retirement planning and
investment alternatives to certificates of deposit and other financial
instruments. Such Materials may include symbols, headlines or other material
which highlight or summarize the information discussed in more detail therein.
California Money's yield will fluctuate and any quotation of
California Money's yield should not be considered as representative of the
future performance of California Money. Since yields fluctuate, yield data
cannot necessarily be used to compare an investment in California Money's
shares with bank deposits, savings accounts, and similar investment
alternatives which often provide an agreed or guaranteed fixed yield for a
stated period of time. Shareholders should remember that yield is generally a
function of kind and quality of the investments held in a portfolio, portfolio
maturity, operating expenses, and market conditions. Any fees charged by banks
or other financial institutions with respect to customer accounts investing in
shares of California Money will not be included in calculations of yield; such
fees, if charged, would reduce the actual yield from that quoted.
California Intermediate. From time to time, the yield of
California Intermediate may be quoted in advertisements, shareholder reports or
other communications to shareholders. The yield of California Intermediate
will be calculated by dividing the net investment income per share (as
described below) earned by California Intermediate during a 30-day (or one
month) period by the net asset value per share on the last day of the period
and annualizing the result on a semi-annual basis by adding one to the
quotient, raising the sum to the power of six, subtracting one from the result
and then doubling the difference. California Intermediate's net investment
income per share earned during the period will be based on the average daily
number of shares outstanding during the period entitled to receive dividends
and will include dividends and interest earned during the period minus expenses
accrued for the period, net of reimbursements. This calculation can be
expressed as follows:
a-b (6)
Yield = 2 [ (----- + 1) - 1]
cd
Where: a = dividends and interest earned during
the period.
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b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = net asset value per share on the last day of the period.
Except as noted below, for the purpose of determining net
investment income earned during the period (variable "a" in the formula),
interest earned on debt obligations held by California Intermediate will be
calculated by computing the yield to maturity of each obligation based on the
market value of the obligation (including actual accrued interest) at the close
of business on the last business day of each month, or, with respect to
obligations purchased during the month, the purchase price (plus actual accrued
interest) and dividing the result by 360 and multiplying the quotient by the
market value of the obligation (including actual accrued interest) in order to
determine the interest income on the obligation for each day of the subsequent
month that the obligation is held by California Intermediate. For purposes of
this calculation, it is assumed that each month contains 30 days. The maturity
of an obligation with a call provision will be the next call date on which the
obligation reasonably may be expected to be called or, if none, the maturity
date.
Interest earned on tax-exempt obligations that are issued
without original issue discount and have a current market discount will be
calculated by using the coupon rate of interest instead of the yield to
maturity. In the case of tax-exempt obligations that are issued with original
issue discount but which have discounts based on current market value that
exceed the then-remaining portion of the original issue discount (market
discount), the yield to maturity will be the imputed rate based on the original
issue discount calculation. On the other hand, in the case of tax-exempt
obligations that are issued with original issue discount but which have
discounts based on current market value that are less than the then-remaining
portion of the original issue discount (market premium), the yield to maturity
will be based on the market value.
Undeclared earned income will be subtracted from the net asset
value per share (variable "d" in the formula). Undeclared earned income is the
net investment income which, at the end of the base period, has not been
declared as a dividend, but is reasonably expected to be and is declared as a
dividend shortly thereafter.
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The "tax-equivalent" yield of any series of shares is computed
by: (a) dividing the portion of the yield for the series involved (calculated
as above) that is exempt from both Federal and California state income taxes by
one minus a stated combined Federal and California state income tax rate; (b)
dividing the portion of the yield for the series involved (calculated as above)
that is exempt from Federal income tax only by one minus a stated Federal
income tax rate; and (c) adding the figures resulting from (a) and (b) above to
that portion, if any, of the yield for the series involved that is not exempt
from Federal income tax.
Total Return Calculations -- California Intermediate.
California Intermediate will compute its average annual total
return by determining the average annual compounded rates of return during
specified periods that equate the initial amount invested to the ending
redeemable value of such investment. This will be done by dividing the ending
redeemable value of a hypothetical $1,000 initial payment by $1,000 and raising
the quotient to a power equal to one divided by the number of years (or
fractional portion thereof) covered by the computation and subtracting one from
the result. This calculation can be expressed as follows:
ERV (1/n)
T = [(-----) - 1]
P
Where: T = average annual total return.
ERV = ending redeemable value at the
end of the period covered by
the computation of a
hypothetical $1,000 payment
made at the beginning of the
period.
P = hypothetical initial payment of
$1,000.
n = period covered by the computation, expressed
in terms of years.
California Intermediate will compute its aggregate total
returns by determining the aggregate compounded rates of return during
specified periods that likewise equate the initial amount invested to the
ending redeemable value of such investment. The formula for calculating
aggregate total return is as follows:
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ERV
Aggregate Total Return = [(-----) - 1]
P
The calculations of average annual total return and aggregate
total return assume the reinvestment of all dividends and capital gain
distributions at California Intermediate's net asset value as described in the
Prospectus on the reinvestment dates during the period. The ending redeemable
value (variable "ERV" in each formula) is determined by assuming complete
redemption of the hypothetical investment and the deduction of all nonrecurring
charges at the end of the period covered by the computations.
Since performance will fluctuate, performance data for
California Intermediate cannot necessarily be used to compare an investment in
California Intermediate's shares with bank deposits, savings accounts and
similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Shareholders should remember that
performance is generally a function of the kind and quality of the instruments
held in a portfolio, portfolio maturity, operating expenses and market
conditions. The time periods used in advertising will be updated no less
frequently than through the last day of the most recent calendar quarter prior
to submission of the advertising for publication and will cover one, five and
ten year periods or a shorter period dating from the commencement of California
Intermediate's operations.
The total return and yield of the Fund may be compared to
those of other mutual funds with similar investment objectives and to bond and
other relevant indices or to rankings prepared by independent services or other
financial or industry publications that monitor the performance of mutual
funds. For example, the total return and yield of the Fund's shares may be
compared to data prepared by Lipper. Total return and yield data as reported
in national financial publications such as MONEY MAGAZINE, FORBES, BARRON'S,
THE WALL STREET JOURNAL and THE NEW YORK TIMES, or in publications of a local
or regional nature, may also be used in comparing the performance of the Fund.
Based on the foregoing calculations, the average annual total
return for California Intermuni shares for the one-year period ended January
31, 1995 was (2.51)%, for the five year period ended January 31, 1995 was
6.52% and for the period from commencement of operations (September 12, 1988)
to January 31, 1995 was 6.61%. No shares of California Intermuni Dollar or
Plus had been sold during the period ended January 31, 1995.
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COUNSEL
Drinker Biddle & Reath, 1100 Philadelphia National Bank
Building, 1345 Chestnut Street, Philadelphia, Pennsylvania 19107, of which Mr.
Jones, Secretary of the Company, is a partner, will pass upon certain legal
matters for the Company as its counsel. O'Melveny & Myers, 400 South Hope
Street, Los Angeles, California 90071, act as special California counsel for
the Company and have reviewed the portions of this Statement of Additional
Information and the Funds' Prospectuses concerning California taxes and the
description of the special considerations relating to California Municipal
Obligations.
INDEPENDENT ACCOUNTANTS
The financial statements of the Company which appear in this
Statement of Additional Information and the information included in the
Financial Highlights tables which appear in the Funds' Prospectuses have been
audited by Coopers & Lybrand L.L.P., independent accountants, whose report
thereon appears elsewhere herein, and have been included herein and in the
Funds' Prospectuses in reliance upon the report of said firm of independent
accountants given upon their authority as experts in accounting and auditing.
Coopers & Lybrand L.L.P. has offices at 2400 Eleven Penn Center, Philadelphia,
Pennsylvania 19103.
MISCELLANEOUS
The Company was organized as a Maryland corporation on
September 20, 1982 under the name of California Municipal Fund for Temporary
Investment, Inc. On February 10, 1983, the Company changed its name to
Municipal Fund for California Investors, Inc.
As used in this Statement of Additional Information and the
Funds' Prospectuses, a "majority of the outstanding shares" of the Company or
either Fund means, with respect to the approval of an investment advisory
agreement, a distribution plan or a change in a fundamental investment policy,
the lesser of (1) 67% of the Company's or the Fund's shares, irrespective of
series, represented at a meeting at which the holders of more than 50% of the
outstanding shares of the Company or the Fund are present in person or by
proxy, or (2) more than 50% of the Company's or a Fund's outstanding shares,
irrespective of series.
As stated in the Prospectuses for California Money, holders of
such Fund's Money, Dollar and Plus shares will vote in the aggregate and not by
series on all matters, except where otherwise required by law, except that only
Dollar shares will be entitled to vote on matters submitted to a vote of
shareholders
-55-
<PAGE> 117
pertaining to such Fund's arrangements with Service Organizations with respect
to Dollar shares and only Plus shares will be entitled to vote on matters
submitted to a vote of shareholders pertaining to such Fund's arrangements with
Service Organizations with respect to Plus shares. As stated in California
Intermediate's Prospectus, holders of that Fund's Intermuni, Dollar and Plus
shares will vote in the aggregate and not by series on all matters, except
where otherwise required by law and except that only Dollar shares will be
entitled to vote on matters submitted to a vote of shareholders pertaining to
such Fund's arrangements with Service Organizations with respect to Dollar
shares and only Plus shares will be entitled to vote on matters submitted to a
vote of shareholders pertaining to such Fund's arrangements with Service
Organizations with respect to Plus shares. (See the Fund's Prospectuses
"Management of the Fund - Service Organizations.") Further, shareholders of
both of the Company's portfolios will vote in the aggregate and not by
portfolio except as otherwise required by law or when the Board of Directors
determines that the matter to be voted upon affects only the interests of the
shareholders of a particular portfolio.
Rule 18f-2 under the 1940 Act provides that any matter
required to be submitted by the provisions of such Act or applicable state law,
or otherwise, to the holders of the outstanding securities of an investment
company such as the Company shall not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding shares of
each portfolio affected by the matter. Rule 18f-2 further provides that a
portfolio shall be deemed to be affected by a matter unless it is clear that
the interests of each portfolio in the matter are identical or that the matter
does not affect any interest of the portfolio. Under the Rule, the approval of
an investment advisory agreement or any change in a fundamental investment
policy would be effectively acted upon with respect to a portfolio only if
approved by the holders of a majority of the outstanding voting securities of
such portfolio. However, the Rule also provides that the ratification of the
selection of independent accountants, the approval of principal underwriting
contracts and the election of directors are not subject to the separate voting
requirements and may be effectively acted upon by shareholders of the
investment company voting without regard to portfolio.
As of May 17, 1995, the name, address and percentage of
ownership of each institutional investor that owned of record 5% or more of
the outstanding shares of California Money were as follows: Bank of America
National Trust & Savings Association as Fiduciary for Various Accounts, Trust
Operations, 701 South Western Avenue, Glendale, California 91201, 31.5%; Union
Bank, Jessica Hickman, Trust Fund Accounting, P.O. Box 109, San Diego,
California 92112,
-56-
<PAGE> 118
8.3%; U.S. Trust Company of New York, 114 West 47th Street, 5th Floor, New
York, New York 10036, 6.4%; SANBARCO, Santa Barbara Bank & Trust, P.O. Box
2340, Santa Barbara, California 93120, 5.7%, and Santa Monica Bank, P.O. Box
1320, Santa Monica, California 90406, 5.4%. As of May 17, 1995, the name,
address and percentage of ownership of each institutional investor that owned
of record 5% or more of the outstanding shares of California Intermediate were
as follows: SANBARCO, Santa Barbara Bank & Trust, P.O. Box 2340, Santa
Barbara, California 93102, 42.6%; University Bank & Trust Company, Principal
Account, Attn: Trust Department, P.O. Box 89, Palo Alto, California 94302,
13.3%; Exchange Bank, P.O. Box 208, Santa Rosa, California 95402, 6.4%; Laird
Norton Trust Company, Dral & Co., 801 2nd Avenue, Seattle, Washington 98104,
6.1%, and Union Safe Deposit Bank, P.O. Box 201076, Stockton, California
95201, 6.0%. Bank of America National Trust & Saving Association is a
subsidiary of BankAmerica Corporation and is a corporation organized and
existing under the laws of the United States as a national banking
association. The Company does not know whether the entities named above are
the beneficial owners of the shares held by them.
The Company does not presently intend to hold annual meetings
of shareholders except as required by the 1940 Act or other applicable law.
The law under certain circumstances provides shareholders with the right to
call for a meeting of shareholders to consider the removal of one or more
directors. To the extent required by law, the Company will assist in
shareholder communication in such matters.
Notwithstanding any provision of Maryland law requiring a
greater vote of the Company's shares in connection with any corporate action,
unless otherwise provided by law or by the Company's Charter, the Company may
take or authorize such action upon the favorable vote of the holders of more
than 50% of the Company's outstanding shares voting without regard to class or
series. (See, however, the Funds' Prospectuses under "Description of Shares"
regarding certain special voting rights of Dollar and Plus shares on matters
pertaining to the Funds' arrangements with Service Organizations.)
-57-
<PAGE> 119
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
of Municipal Fund for California Investors, Inc:
We have audited the accompanying statements of net assets of Municipal Fund
for California Investors, Inc. (comprised of California Money Fund and
California Intermediate Municipal Fund Portfolios) as of January 31, 1995, and
the related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the periods presented. These financial
statements and financial highlights are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
January 31, 1995 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the respective portfolios constituting Municipal Fund for California
Investors, Inc. as of January 31, 1995, the results of their operations for the
year then ended, the changes in their net assets for each of the two years in
the period then ended, and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
March 10, 1995
FS-1
<PAGE> 120
CALIFORNIA MONEY FUND
MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.
Statement of Net Assets
January 31, 1995
<TABLE>
<CAPTION>
INVESTMENTS IN MATURITY PAR
SECURITIES DATE (000) VALUE
- ---------------------------------- ------- -----------
<S> <C> <C>
CALIFORNIA -- 95.75%
ABAG Finance Authority
Certificates of Participation
(Lucile Salter Parker Childrens
Hospital at Sanford) DN (AMBAC
Insurance) (A-1+, VMIG-1)**
3.30%..................02/07/95
$18,050 $18,050,000
Bay Area Government Association
(Lease Revenue Pooled Projects)
Series 1987 DN (National
Westminster LOC) (VMIG-1)**
3.55%..................02/07/95
8,797 8,797,000
California Educational
Facilities Financing Authority
(Occidental College Project)
Series 1985B (Morgan Guaranty
LOC) (A-1+)
4.15%..................06/01/95
10,100 10,100,000
California Health Facilities
(Sutter Health) Series 1990B DN
(Morgan Guaranty LOC)
(A-1+, VMIG-1)**
3.80%..................02/01/95
1,100 1,100,000
California Health Facilities
Financing Authority (Adventist
Health System/West-Sutter
Health) Series 1991A DN
(Toronto Dominion LOC)
(A-1+, VMIG-1)**
3.55%..................02/07/95
6,000 6,000,000
California Health Facilities
Financing Authority (Adventist
Health System/West-Sutter
Health) Series 1991B DN
(Toronto Dominion LOC)
(A-1+, VMIG-1)**
3.50%..................02/07/95
2,500 2,500,000
California Health Facilities
Financing Authority (Catholic
Healthcare West) Series 1988B
DN (MBIA Insurance) (VMIG-1)**
3.35%..................02/07/95
1,000 1,000,000
California Health Facilities
Financing Authority (Enloe
Memorial Hospital) DN (Bank of
America LOC) (A-1)**
2.70%..................02/07/95
500 500,000
California Health Facilities
Financing Authority (Health
Dimensions, Inc.) Series A
(A-1, VMIG-1)
3.40%..................02/01/95
6,055 6,055,000
California Health Facilities
Financing Authority (O'Connor
Hospital) DN (A-1+, VMIG-1)**
3.40%..................02/07/95
7,317 7,316,533
<CAPTION>
INVESTMENTS IN MATURITY PAR
SECURITIES DATE (000) VALUE
- ---------------------------------- ------- -----------
<S> <C> <C>
California Health Facilities
Financing Authority (Pooled
Loan Program) Series 1987A DN
(Sanwa Bank LOC) (VMIG-1)**
3.70%..................02/07/95
$ 2,700 $ 2,700,000
California Health Facilities
Financing Authority (Scripps
Memorial Hospital) Series 1985B
DN (MBIA Insurance) (A-1+,
VMIG-1)**
3.70%..................02/07/95
6,500 6,500,000
California PCR (Pacific Gas &
Electric) Series 1988E TECP
(Long Term Credit Bank of
Japan LOC)
3.75%..................02/28/95
4,000 4,000,000
California Pollution Control
Finance Authority DN (Societe
Generale LOC) (A-1+, VMIG-1)**
3.45%..................02/15/95
3,100 3,100,000
California Pollution Control
Finance Authority PCRB (Shell
Oil Company Project) Series A
DN (A-1+, VMIG-1)**
3.70%..................02/01/95
600 600,000
California Pollution Control
Finance Authority PCRB TECP
(A-1, P-1) 4.05%.......03/14/95
3,000 3,000,000
California Pollution Control
Finance Authority (Pacific Gas
& Electric) TECP Series C
2.70%..................02/15/95
4,300 4,300,000
California Pollution Control
Finance Authority TECP (Banque
Nationale de Paris LOC) (A-1+)
3.10%..................02/16/95
5,000 5,000,000
3.15%..................02/16/95
6,000 6,000,000
City of Anaheim Certificates of
Participation Series 1993 DN
(Industrial Bank of Japan LOC)
(A-1+, VMIG-1)**
3.85%..................02/07/95
800 800,000
City of Loma Linda (Loma Linda
University Medical Center)
Series 1985C DN (A-1+)**
3.70%..................02/07/95
2,875 2,875,000
City of Loma Linda Hospital
Revenue Bonds DN (Industrial
Bank of Japan LOC) (A-1+)**
3.70%..................02/07/95 2,400 2,400,000
City of Stockton IDRB (La Quinta
Motor Inns) DN (NationsBank
LOC) (A-1)**
3.75%..................02/07/95
2,790 2,790,000
</TABLE>
FS-2
<PAGE> 121
CALIFORNIA MONEY FUND
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
INVESTMENTS IN MATURITY PAR
SECURITIES DATE (000) VALUE
- ---------------------------------- ------- -----------
<S> <C> <C>
Corona Multifamily Housing
Revenue Refunding Bonds
(Country Hills Apartment
Project) DN (Union Bank of
Switzerland LOC) (A-1)**
3.60%..................02/07/95
$ 7,045 $ 7,045,000
County of Sacramento (Courthouse
Project - Administration
Center) DN (Union Bank of
Switzerland LOC) (A-1+,
VMIG-1)**
3.45%..................02/07/95
12,000 12,000,000
Eastern Municipal Water District
Facilities Corporation
(Riverside County) Certificates
of Participation DN (FGIC
Insurance) (A-1+, VMIG-1)**
3.50%..................02/07/95
900 900,000
Fremont Multifamily Housing
Bonds (Mission Wells Project)
Series 1985E DN (Industrial
Bank of Japan LOC) (A-1+,
VMIG-1)**
3.65%..................02/07/95
5,100 5,100,000
Golden Empire Schools Financing
Authority (Kern High School
District Project) DN (A-1+)**
3.75%..................02/07/95
1,700 1,700,000
Golden Empire Schools Financing
Authority (Kern High School
District Project) Series 1989
DN (Barclays Bank LOC)
(VMIG-1)**
3.75%..................02/07/95
2,000 2,000,000
Los Angeles County Housing
Authority (Malibu Woods
Project) DN (Sumitomo Bank
LOC)**
3.65%..................02/07/95
2,129 2,129,000
Los Angeles County Housing
Authority Multifamily Housing
Revenue Bonds (Sand Canyon
Ranch Project) Series 1985F DN
(Citibank LOC) (A-1)**
2.95%..................02/07/95
4,000 4,000,000
Los Angeles County Metropolitan
Transportation Authority Second
Subordinate Sales Tax Revenue
Notes Series A DN (A-1+)**
3.50%..................02/07/95
12,000 12,000,000
Los Angeles County Multifamily
Mortgage Revenue Bonds
Series 1984B DN (Citibank LOC)
(A-1+, VMIG-1)**
4.16%..................02/07/95
4,100 4,100,000
Los Angeles County TRAN
Series 1994-95 (SP-1+, MIG-1+)
4.50%..................06/30/95
11,900 11,923,878
<CAPTION>
INVESTMENTS IN MATURITY PAR
SECURITIES DATE (000) VALUE
- ---------------------------------- ------- -----------
<S> <C> <C>
Los Angeles Unified School
District TRAN (SP-1+)
4.50%..................07/10/95
$12,000 $12,045,379
Moorpark Multifamily Revenue
Bonds (Le Club Apartments
Project) Series A DN (Citibank
LOC) (A-1)**
2.75%..................02/07/95
2,700 2,700,000
Oakland Certificates of
Participation (Capital
Improvement Project)
DN (Mitsubishi Bank LOC)
(A-1+, VMIG-1)**
4.10%..................02/07/95
26,200 26,200,000
Oakland Economic Development
Revenue Bonds (Leamington
Project) Series 1994A DN (First
Interstate LOC) (A-1)**
3.70%..................02/07/95
4,300 4,300,000
Orange County TRAN (Citibank
LOC) (SP-1+, MIG-1)***
4.50%..................07/19/95
7,900 7,924,290
Pasadena Certificates of
Participation (Rose Bowl
Improvements) DN (Industrial
Bank of Japan LOC)
(A-1, VMIG-1)**
3.80%..................02/07/95
5,400 5,400,000
Placer IDRB (Chesapeake
Industries, Inc.) DN (Barclays
Bank LOC) (VMIG-1)**
3.40%..................02/07/95
1,200 1,200,000
Redlands City Multifamily
Revenue Refunding Bonds DN
(Bank of America LOC)
(VMIG-1)**
3.55%..................02/07/95
3,600 3,600,000
Riverside County Certificates of
Participation (Riverside County
Public Facility) Series 1985C
DN (Sanwa Bank LOC)
(A-1+, VMIG-1)**
3.40%..................02/07/95
1,400 1,400,000
Riverside County TRAN
Series 1994-95 (SP-1+, MIG-1)
4.25%..................06/30/95
3,000 3,007,675
Riverside County Transportation
Commission Sales Tax Revenue
Bonds TECP (Industrial Bank of
Japan LOC) (A-1, P-1)
3.25%..................02/01/95
9,400 9,400,000
San Francisco City and County
Housing Authority Multifamily
Housing Revenue Bonds
(Winterland Project) Series
1985C DN (Citibank LOC)
(A-1, VMIG-1)**
3.35%..................02/07/95
1,200 1,200,000
</TABLE>
FS-3
<PAGE> 122
CALIFORNIA MONEY FUND
Statement of Net Assets (Continued)
<TABLE>
<CAPTION>
INVESTMENTS IN MATURITY PAR
SECURITIES DATE (000) VALUE
- ---------------------------------- ------- -----------
<S> <C> <C>
San Francisco City and County
Redevelopment Agency
Multifamily Housing Revenue
Bonds (Bayside Village Project)
Series A DN (Industrial Bank of
Japan LOC) (A-1+, VMIG-1)**
3.525%.................02/07/95
$ 4,600 $ 4,600,000
San Francisco City and County
Redevelopment Agency
Multifamily Housing Revenue
Bonds (Bayside Village Project)
Series B DN (Industrial Bank of
Japan LOC) (A-1+, VMIG-1)**
3.525%.................02/07/95
5,500 5,500,000
San Francisco City and County
Redevelopment Agency
Multifamily Housing Revenue
Bonds (South Harbor Project) DN
(VMIG-1)**
3.50%..................02/07/95
12,080 12,080,000
San Jose Multifamily Housing
Bonds DN (FGIC Insurance)
(VMIG-1)**
3.55%..................02/07/95
4,980 4,980,000
San Ramon Valley Unified School
District TRAN (MIG-1)
3.50%..................02/16/95
5,000 5,000,055
Santa Clara Multifamily Housing
Bonds (Fox Chase Project) DN
(FGIC Insurance)
(A-1+, VMIG-1)**
3.55%..................02/07/95
1,600 1,600,000
Santa Clara TRAN (SP-1+, MIG-1)
4.25%..................07/07/95 5,000 5,013,254
Santa Margarita/Dana Point
Authority (Orange County)
Series 1994B RB (MBIA
Insurance)
4.50%..................08/01/95
3,595 3,599,385
Southern California (Public
Power Authority Transportation
Project) Subordinate Refunding
Revenue Bonds Series 1991 DN
(FGIC Insurance) (A-1+,
VMIG-1)** 3.25%........02/07/95
11,600 11,600,000
<CAPTION>
INVESTMENTS IN MATURITY PAR
SECURITIES DATE (000) VALUE
- ---------------------------------- ------- -----------
<S> <C> <C>
State of California Department
of Water Resources Series 1
TECP (A-1+, VMIG-1)
3.55%..................02/14/95
$ 6,000 $ 6,000,000
3.60%..................03/02/95
4,727 4,727,000
State of California GO DN**
6.625%.................02/01/95
5,795 5,795,000
State of California RAN
Series 1994-95A (SP-1, MIG-1)
5.00%..................06/28/95
13,490 13,539,091
State of California RAN
Series 1994-95B DN
(A-1, VMIG-1)**
4.32%..................02/01/95
35,000 35,000,000
Triunfo Sanitation District
Revenue Bonds DN (Banque
National de Paris LOC) (A-1+)**
3.75%..................02/07/95
2,400 2,400,000
Ventura County Certificates of
Participation (Channel Islands
Beach Community Services
District) Series 1990 DN (Swiss
Bank LOC) (A-1+, VMIG-1)**
3.40%..................02/07/95
2,000 2,000,000
Washington Township Hospital
District (Alameda County) DN
(Industrial Bank of Japan LOC)
(VMIG-1)**
3.60%..................02/07/95
9,800 9,800,000
-----------
379,992,540
-----------
PUERTO RICO -- 3.81%
Puerto Rico Government
Development Bank Series 1985 DN
(Credit Suisse LOC)
(A-1+, VMIG-1)**
2.95%..................02/07/95
7,100 7,100,000
Puerto Rico Maritime Shipping
Authority TECP (Credit Suisse
LOC) (A-1, P-1)
2.90%..................02/15/95
3,000 3,000,000
3.50%..................02/27/95
5,000 5,000,000
-----------
15,100,000
-----------
</TABLE>
FS-4
<PAGE> 123
CALIFORNIA MONEY FUND
Statement of Net Assets (Concluded)
<TABLE>
<CAPTION>
VALUE
------------
<S> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
(Cost $395,092,540*)...............99.56% $395,092,540
OTHER ASSETS IN EXCESS OF
LIABILITIES..........................0.44 1,757,474
--- ------------
NET ASSETS (Equivalent to $1.00
per share based on
385,958,121 California Money,
100 California Plus,
and 11,028,469
California Dollar shares
outstanding.......................100.00% $396,850,014
------ ------------
------ ------------
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
($396,850,014 / 396,986,690)............. $1.00
-----
-----
</TABLE>
- -------------
* Aggregate cost for federal income tax purposes is
$395,092,540.
** Variable rate demand notes -- the interest rate shown
is as of January 31, 1995, and the maturity date shown
is the longer of (i) the next interest readjustment
date or (ii) the date on which the principal amount
owed can be recovered through demand.
*** With respect to this security, PNC Institutional
Management Corporation, the Investment Adviser,
through PNC Bank Corp., has obtained an $8,300,000
irrevocable letter of credit from Citibank, N.A.. This
letter of credit provides additional support for the
valuation of this security. The marked to market
valuation of this security has at no time adversely
affected the maintenance of a net asset value of
$1.00. The letter of credit expires on July 31, 1995.
The Moody's Investors Service, Inc. and Standard &
Poor's Ratings Group, Division of McGraw-Hill, Inc.
ratings are believed to be the most recent ratings
available at January 31, 1995. The ratings have not
been verified by the Independent Accountants and,
therefore, are not covered by the Report of the
Independent Accountants.
- --------------------------------------------------------
CALIFORNIA MONEY FUND
SUPPLEMENTARY INFORMATION
Maturity Schedule of Portfolio
January 31, 1995
<TABLE>
<CAPTION>
MATURITY
PERIOD PAR PERCENTAGE
------------ ------------ ----------
<S> <C> <C>
1-30 Days $324,939,533 82.3%
31-60 Days 3,000,000 0.8%
Over 60 Days 66,985,000 16.9%
Average Weighted Maturity of Portfolio -- 33 days
- --------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
FS-5
<PAGE> 124
CALIFORNIA INTERMEDIATE MUNICIPAL FUND
MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.
Statement of Net Assets
January 31, 1995
<TABLE>
<CAPTION>
INVESTMENTS IN MATURITY PAR
SECURITIES DATE (000) VALUE
- ---------------------------------- ------- -----------
<S> <C> <C>
CALIFORNIA -- 91.22%
Alameda County Transit Authority
(Sales Tax Revenue) RB (FGIC
Insurance) (Aaa)
5.50%..................11/01/01
$ 1,000 $ 991,250
Anaheim Electric Revenue
Refunding Bonds RB (Aa)
4.75%..................10/01/01
800 726,000
California Education Authority
(Pepperdine University) RB
(MBIA Insurance) (Aaa)
6.80%..................11/01/00
500 537,500
California Education Authority
(Stanford University) RB (Aaa)
5.50%..................11/01/00 800 813,000
California Health Facilities
Financing Authority
(Cedars-Sinai Hospital) Series
1990 RB (Aa)
6.50%..................11/01/00
600 624,750
California Health Facilities
Financing Authority DN
(Industrial Bank of Japan LOC)
(Aa3, VMIG-1)**
3.95%..................02/01/95
100 100,000
City of Sacramento Sanitation
District RB (Aa)
4.30%..................12/01/00
500 468,125
East Bay Municipal Utility
District RB (AMBAC Insurance)
(Aaa)
7.00%..................06/01/00
800 858,000
Elk Grove Unified School
District Pre-Refunded 12/01/98
@ 103 RB (FGIC Insurance) (Aaa)
9.00%..................12/01/07
700 805,875
Los Angeles County Public Works
RB (Aa1)
4.70%..................03/01/03
1,000 906,250
Los Angeles County
Transportation Commission Sales
Tax Revenue Series A
Pre-Refunded 07/01/98 @ 102 RB
(Aaa)
8.00%..................07/01/18
800 880,000
Los Angeles Department of Water
and Power (Electric Plant) RB
(Aa)
9.00%..................02/01/01
500 585,625
Los Angeles Department of Water
and Power (Electric Plant)
Series 1990 RB (Aa)
6.75%..................05/15/99
500 528,125
<CAPTION>
INVESTMENTS IN MATURITY PAR
SECURITIES DATE (000) VALUE
- ---------------------------------- ------- -----------
<S> <C> <C>
Los Angeles State Building
Authority General Services
Series A RB (Aa)
6.75%..................03/01/99
$ 500 $ 521,250
Metropolitan Water District of
Southern California RB (Aa)
6.25%..................07/01/01
1,000 1,037,500
San Elijo Joint Power Water
Authority PCRB (FGIC
Insurance) (Aaa)
4.90%..................03/01/01
500 475,000
San Francisco Bay Area Rapid
Transit District Sales Tax RB
(A1)
6.60%..................07/01/99
600 629,250
San Francisco GO (Aa)
5.70%..................06/15/01
500 503,750
San Francisco Various Purpose
Unlimited Tax GO Series A RB
(Aa)
6.20%..................12/15/99
700 728,000
Southern California Public Power
Authority (Joint Power Project)
RB (A)
6.75%..................07/01/00
600 632,250
Southern California Public Power
Authority (Transmission
Project) RB (Aa)
6.80%..................07/01/98
400 418,000
State of California GO (Aa)
4.10%..................09/01/01
1,000 878,750
University of California (Multi-
Purpose Projects) Series C RB
(AMBAC Insurance) (Aaa)
4.125%..................9/01/00
800 730,000
West Sacramento Redevelopment
Agency RB (MBIA Insurance)
(Aaa)
6.25%..................09/01/01
500 523,125
-----------
15,901,375
-----------
VIRGIN ISLANDS -- 6.30%
Virgin Islands Public Finance
Authority Pre-Refunded
10/01/00 @ 101 RB (Aaa)
7.25%..................10/01/07
1,000 1,098,750
-----------
</TABLE>
FS-6
<PAGE> 125
CALIFORNIA INTERMEDIATE MUNICIPAL FUND
Statement of Net Assets (Concluded)
<TABLE>
<CAPTION>
VALUE
-----------
<S> <C> <C>
TOTAL INVESTMENTS IN SECURITIES
(Cost $17,176,376*)................ 97.52%
$17,000,125
OTHER ASSETS IN EXCESS OF
LIABILITIES...........................2.48
432,094
--- -----------
NET ASSETS (Equivalent to $10.02
per share based on 1,739,014
California Intermuni shares
outstanding........................100.00%
$17,432,219
------ -----------
------ -----------
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
($17,432,219 / 1,739,014).........................$10.02
------
------
</TABLE>
- -------------
* Aggregate cost for federal income tax purposes is
$17,176,376. The aggregate gross unrealized
depreciation (excess of tax cost over market value) is
$(176,251) (comprised of $264,816 appreciation and
$441,067 depreciation.)
** Variable rate demand notes -- the interest rate shown
is as of January 31, 1995, and the maturity date shown
is the longer of (i) the next interest readjustment
date or (ii) the date on which the principal amount
owed can be recovered through demand.
The Moody's Investors Service, Inc. and Standard &
Poor's Ratings Group, Division of McGraw-Hill, Inc.
ratings are believed to be the most recent ratings
available at January 31, 1995. The ratings have not
been verified by the Independent Accountants and,
therefore, are not covered by the Report of the
Independent Accountants.
- --------------------------------------------------------
CALIFORNIA INTERMEDIATE
MUNICIPAL FUND
Supplementary Information
January 31, 1995
Average Weighted Maturity of Portfolio -- 5.59 Years
- ---------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT ABBREVIATIONS:
<S> <C>
DN Demand Notes (Variable Rate)
GO General Obligation
IDA Industrial Development Authority
IDRB Industrial Development Revenue Bond
LOC Letter of Credit
PCR Pollution Control Revenue
PCRB Pollution Control Revenue Bond
RAN Revenue Anticipation Notes
RB Revenue Bonds
TECP Tax-Exempt Commercial Paper
TRAN Tax and Revenue Anticipation Notes
</TABLE>
See accompanying notes to financial statements.
FS-7
<PAGE> 126
MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.
Statements of Operations
For the Year Ended January 31, 1995
<TABLE>
<CAPTION>
CALIFORNIA CALIFORNIA
MONEY INTERMEDIATE
FUND MUNICIPAL FUND
----------- --------------
<S> <C> <C>
Investment income:
Interest.................................................. $12,450,075 $ 981,929
----------- --------------
Expenses:
Investment advisory fee................................... 833,727 37,369
Administration fee........................................ 833,727 37,369
Service Organization fees:
Dollar shares.......................................... 43,771 --
Custodian fees............................................ 104,373 5,158
Legal fees................................................ 32,800 1,500
Transfer agent fees....................................... 47,500 2,725
Audit fees................................................ 42,750 2,070
Directors' and Officers' fees and expenses................ 46,250 1,890
Registration and filing fees.............................. 4,800 --
Printing.................................................. 19,350 4,950
Other..................................................... 34,060 6,313
----------- --------------
2,043,108 99,344
Fees waived by Investment Adviser and Administrators...... (1,165,487) (61,973)
----------- --------------
Total expenses......................................... 877,621 37,371
----------- --------------
Net investment income................................ 11,572,454 944,558
----------- --------------
Realized and unrealized gain (loss) on investments:
Net realized loss on investments sold..................... (39,944) (43,055)
Decrease in unrealized appreciation of investments........ -- (1,416,126)
Increase in amortized market discount..................... -- 3,617
----------- --------------
Net loss on investments.............................. (39,944) (1,455,564)
----------- --------------
Net increase (decrease) in net assets resulting from
operations................................................ $11,532,510 $ (511,006)
============ ============
</TABLE>
See accompanying notes to financial statements.
FS-8
<PAGE> 127
MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
CALIFORNIA INTERMEDIATE
CALIFORNIA MONEY FUND MUNICIPAL FUND
----------------------------- -------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JANUARY 31, JANUARY 31, JANUARY 31, JANUARY 31,
1995 1994 1995 1994
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Net investment income.......... $ 11,572,454 $ 8,495,814 $ 944,558 $ 881,270
Net realized and
unrealized gain (loss)
on investments............... (39,944) (3,743) (1,455,564) 655,629
------------ ------------ ----------- -----------
Net increase (decrease) in net
assets resulting from
operations................... 11,532,510 8,492,071 (511,006) 1,536,899
------------ ------------ ----------- -----------
Distributions to shareholders
from:
Net investment income:
Money shares.............. (11,142,146) (8,242,936) -- --
Plus shares............... -- -- -- --
Dollar shares............. (430,308) (252,878) -- --
Intermuni shares.......... -- -- (944,558) (881,270)
Net realized capital gains... -- -- (64,692) (446,415)
------------ ------------ ----------- -----------
Total distributions............ (11,572,454) (8,495,814) (1,009,250) (1,327,685)
------------ ------------ ----------- -----------
Increase (decrease) in net
assets from capital share
transactions................. 21,291,148 4,659,031 (1,108,779) 2,533,686
------------ ------------ ----------- -----------
Net increase (decrease) in net
assets....................... 21,251,204 4,655,288 (2,629,035) 2,742,900
Net assets:
Beginning of period.......... 375,598,810 370,943,522 20,061,254 17,318,354
------------ ------------ ----------- -----------
End of period................ $396,850,014 $375,598,810 $17,432,219 $20,061,254
============= ============= ============ ============
</TABLE>
See accompanying notes to financial statements.
FS-9
<PAGE> 128
CALIFORNIA MONEY FUND
MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
MONEY SHARES
-------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
01/31/95 01/31/94 01/31/93 01/31/92 01/31/91
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- ---------
Income From Investment Operations:
Net Investment Income....................................... 0.0281 0.0223 0.0251 0.0375 0.0509
-------- -------- -------- -------- ---------
Less Distributions:
Dividends to Shareholders From Net Investment Income........ (0.0281) (0.0223) (0.0251) (0.0375) (0.0509)
-------- -------- -------- -------- ---------
Net Asset Value, End of Period.................................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return.................................................... 2.84% 2.25% 2.54% 3.82% 5.21%
Ratios/Supplemental Data:
Net Assets, End of Period $(000).............................. 385,824 356,501 359,193 490,141 629,001
Ratio of Expenses to Average Net Assets(1).................... .20% .20% .30% .30% .29%
Ratio of Net Investment Income to Average Net Assets.......... 2.79% 2.23% 2.52% 3.75% 5.10%
</TABLE>
- ---------------
(1) Operating expense ratios before waivers of Investment Adviser and
Administrator fees for Money shares for the years ended January 31, 1995,
1994, 1993, 1992 and 1991 were .48%, .49%, .48%, .48%, and .46%, respectively.
See accompanying notes to financial statements.
FS-10
<PAGE> 129
CALIFORNIA MONEY FUND
MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
PLUS SHARES
--------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
01/31/95(4) 01/31/94(4) 01/31/93(4) 01/31/92 01/31/91
------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning
of Period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- -------- -------- --------
Income From
Investment
Operations:
Net Investment
Income........ -- -- 0.0191 0.0350 0.0484
------- ------- -------- -------- --------
Less
Distributions:
Dividends to
Shareholders
From Net
Investment
Income........ -- -- (0.0191) (0.0350) (0.0484)
------- ------- -------- -------- --------
Net Asset Value,
End of Period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======== ======== ========
Total Return........ -- -- 1.93% 3.57% 4.96%
Ratios/Supplemental
Data:
Net Assets, End of
Period $(000)... -- -- -- 27,656 19,872
Ratio of Expenses
to
Average Net
Assets(3)....... -- -- .55% .55% .54%
Ratio of Net
Investment
Income to
Average Net
Assets.......... -- -- 2.27% 3.50% 4.85%
</TABLE>
<TABLE>
<CAPTION>
DOLLAR SHARES
----------------------------------------------------------------------------
YEAR YEAR YEAR YEAR 01/09/91(1)
ENDED ENDED ENDED ENDED TO
01/31/95 01/31/94 01/31/93 01/31/92 01/31/91
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning
of Period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income From
Investment
Operations:
Net Investment
Income........ 0.0256 0.0198 0.0226 0.0350 0.0024
-------- -------- -------- -------- --------
Less
Distributions:
Dividends to
Shareholders
From Net
Investment
Income........ (0.0256) (0.0198) (0.0226) (0.0350) (0.0024)
-------- -------- -------- -------- --------
Net Asset Value,
End of Period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return........ 2.59% 2.00% 2.29% 3.57% 3.87%(2)
Ratios/Supplemental
Data:
Net Assets, End of
Period $(000)... 11,026 19,098 11,750 6,599 1,126
Ratio of Expenses
to
Average Net
Assets(3)....... .45% .45% .55% .55% .54%(2)
Ratio of Net
Investment
Income to
Average Net
Assets.......... 2.54% 1.98% 2.27% 3.50% 3.85%(2)
</TABLE>
- ---------------
(1) Commencement of operations.
(2) Annualized.
(3) Operating expense ratios before waivers of Investment Adviser and
Administrator fees for Plus shares for the years ended January 31, 1993,
1992 and 1991 were .64%, .73%, and .71%, respectively. Operating
expense ratios before waivers of Investment Adviser and Administrator fees
for Dollar shares for the years ended January 31, 1995, 1994, 1993 and 1992
were .73%, .74%, .73%, and .73%, respectively, and for the period ended
January 31, 1991 was .71%.
(4) Only 100 Plus shares were outstanding during the period from December 1,
1992 to January 31, 1995.
See accompanying notes to financial statements.
FS-11
<PAGE> 130
CALIFORNIA INTERMEDIATE MUNICIPAL FUND
MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INTERMUNI SHARES
-----------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
01/31/95 01/31/94 01/31/93 01/31/92 01/31/91
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.............. $ 10.85 $ 10.72 $ 10.61 $ 10.34 $ 10.05
------------- ------------- ------------- ------------- -------------
Income From Investment Operations:
Net Investment Income......................... 0.5165 0.5480 0.5655 0.6070 0.6199
Net Realized and Unrealized Gain (Loss) on
Investments................................. (0.7959) 0.4110 0.2219 0.3296 0.2915
------------- ------------- ------------- ------------- -------------
Total From Investment Operations............ (0.2794) 0.9590 0.7874 0.9366 0.9114
------------- ------------- ------------- ------------- -------------
Less Distributions:
Dividends From Net Investment Income.......... (0.5165) (0.5480) (0.5655) (0.6070) (0.6199)
Distributions From Net Capital Gains.......... (0.0341) (0.2810) (0.1119) (0.0596) (0.0015)
------------- ------------- ------------- ------------- -------------
Total Distributions......................... (0.5506) (0.8290) (0.6774) (0.6666) (0.6214)
------------- ------------- ------------- ------------- -------------
Net Asset Value, End of Period.................... $ 10.02 $ 10.85 $ 10.72 $ 10.61 $ 10.34
========= ========= ========= ========= =========
Total Return...................................... (2.51)% 9.26% 7.68% 9.34% 9.40%
Ratios/Supplemental Data:
Net Assets, End of Period $(000)................ 17,432 20,061 17,318 19,516 14,131
Ratio of Expenses to Average Net Assets(1)...... .20% .20% .30% .30% .30%
Ratio of Net Investment Income to Average
Net Assets.................................... 5.06% 5.06% 5.31% 5.80% 6.14%
Portfolio Turnover Rate........................... 3% 23% 52% 63% 39%
</TABLE>
- ---------------
(1) Operating expense ratios before waivers of Investment Adviser and
Administrator fees for the years ended January 31, 1995, 1994, 1993, 1992 and
1991 were .53%, .51%, .48%, .53% and .57%, respectively.
See accompanying notes to financial statements.
FS-12
<PAGE> 131
Notes to Financial Statements
1. General Information
Municipal Fund for California Investors, Inc. (the "Company") is a no-load,
non-diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended. The Company consists of two separate
portfolios: California Money Fund and California Intermediate Municipal Fund.
California Money Fund offers three series of shares: California Money ("Money"),
California Money Dollar ("Dollar"), and California Money Plus ("Plus").
California Intermediate Municipal Fund also offers three series of shares:
California Intermuni ("Intermuni"), California Intermuni Dollar ("Intermuni
Dollar"), and California Intermuni Plus ("Intermuni Plus"). Shares of each
series represent equal pro rata interests in a single investment portfolio and
are identical in all respects except that the Dollar and Plus shares of each
portfolio bear the service fees described below and are entitled to vote
separately on matters relating to these fees.
Dollar shares and Intermuni Dollar shares are sold pursuant to a non-12b-1
shareholder services plan to institutions other than broker/dealers, and Plus
shares and Intermuni Plus shares are sold pursuant to a 12b-1 services plan only
to broker/dealers which enter into agreements with each portfolio requiring them
to provide certain support services to their customers in consideration of the
portfolio's payment of .25% (on an annualized basis) of the average daily net
asset value of such shares held by the institutions on behalf of their
customers. Dividends paid to Plus and Dollar shareholders are reduced by such
fees. In addition, broker/dealers purchasing Plus shares and Intermuni Plus
shares may be requested to provide assistance in connection with the
distribution of such shares. Money and Intermuni shares are sold to
institutional investors who choose not to enter into such servicing agreements
with the portfolio. No Intermuni Dollar shares or Intermuni Plus shares have
been sold as of January 31, 1995.
Certain California municipal obligations in the Company's portfolios may be
obligations of issuers which rely in whole or in part on California State
revenues, real property taxes, revenues from health care institutions, or
obligations secured by mortgages on real property. Consequently, the possible
effect of economic conditions in California or of California law on these
obligations must be considered.
2. Significant Accounting Policies
Portfolio valuation--California Money Fund: Portfolio securities are valued
at amortized cost which approximates market value. Amortized cost valuation
involves valuing an instrument at its cost initially and, thereafter, assuming a
constant amortization to maturity of any discount or premium.
Portfolio valuation--California Intermediate Municipal Fund: Portfolio
securities for which market quotations are readily available (other than debt
securities with remaining maturities of 60 days or less) are valued at the mean
of the most recent quoted bid and asked prices provided by investment dealers.
Market or fair value may be determined by a matrix pricing system which is used
to determine the value of municipal obligations based on factors such as yield,
price, maturities, call features and ratings on comparable securities. Debt
securities with remaining maturities of 60 days or less are valued on an
amortized cost basis.
Securities transactions and investment income: Securities transactions are
recorded on the trade date. Realized gains and losses on investments sold are
recorded on the identified cost basis. Interest income is recorded on the
accrual basis.
Dividends and distributions to shareholders: It is the policy of each
portfolio to declare dividends from net investment income daily and to pay such
dividends within five business days of the end of each month. Net realized
capital gains, if any, are distributed at least annually.
FS-13
<PAGE> 132
Federal taxes: No provision is made for federal income or excise taxes
because the Company intends to have each portfolio continue to qualify as a
regulated investment company by complying with the applicable requirements of
the Internal Revenue Code and by distributing all of its earnings to its
shareholders.
3. Investment Advisory Fee, Administration Fee and Other Related Party
Transactions
The Company has entered into an Investment Advisory Agreement with PNC
Institutional Management Corporation (the "Investment Adviser"), a subsidiary of
PNC Bank, National Association ("PNC Bank"). PNC Bank serves as the Company's
sub-investment adviser pursuant to a Sub-Advisory Agreement between the
Investment Adviser and PNC Bank. Under the Investment Advisory Agreement, the
Investment Adviser is entitled to receive a fee from the Company, computed daily
and payable monthly, at an annual rate of .20% of the value of each portfolio's
average daily net assets.
Provident Distributors, Inc. ("PDI"), serves as the Company's Distributor.
No compensation is payable by the Company to PDI for its distribution services.
The Company has entered into an Administration Agreement with PFPC Inc.
("PFPC") and PDI (the "Administrators"), for certain administrative services.
Pursuant to their administrative agreement with the Company, PFPC and PDI
jointly are entitled to receive a fee at an annual rate of .20% of each
portfolio's daily net assets.
The Investment Adviser and the Administrators have agreed to reduce the
advisory and administration fees otherwise payable to them and to reimburse the
Portfolios for their operating expenses to the extent necessary to ensure that
their annual operating expense ratios (excluding fees paid to Service
Organizations pursuant to Servicing Agreements) do not exceed .20% of each
portfolio's average daily net assets.
For the year ended January 31, 1995, with respect to California Money Fund,
the Investment Adviser and the Administrators voluntarily waived fees, on an
equal basis, totaling $1,165,487.
For the year ended January 31, 1995, with respect to California
Intermediate Municipal Fund, the Investment Adviser and the Administrators
voluntarily waived fees, on an equal basis, totaling $61,973.
Expenses include legal fees paid to counsel to the Company, a partner of
which is secretary of the Company.
PNC Bank also serves as the Company's custodian and PFPC, a subsidiary of
PNC Bank, serves as transfer agent.
4. Fund Shares
Since California Money Fund has sold, issued as reinvestments of dividends
and redeemed shares only at a constant net asset value of $1.00 per share, the
number of shares represented by such sales, reinvestments and redemptions is the
same as the dollar amounts shown below for such transactions.
<TABLE>
<CAPTION>
CALIFORNIA MONEY FUND
----------------------------------
YEAR YEAR
ENDED ENDED
JANUARY 31, JANUARY 31,
1995 1994
--------------- ---------------
<S> <C> <C>
Sold
Money shares....... $ 1,362,734,998 $ 1,329,959,674
Plus shares........ -- --
Dollar shares...... 175,135,239 116,172,785
Issued as
reinvestments of
dividends
Money shares....... 412,873 450,944
Plus shares........ -- --
Dollar shares...... 308,417 155,154
Redeemed
Money shares....... (1,333,786,669) (1,333,097,037)
Plus shares........ -- --
Dollar shares...... (183,513,710) (108,982,489)
--------------- ---------------
Net increase......... $ 21,291,148 $ 4,659,031
=============== ===============
</TABLE>
FS-14
<PAGE> 133
<TABLE>
<CAPTION>
CALIFORNIA INTERMEDIATE MUNICIPAL FUND
-----------------------------------------------
YEAR ENDED YEAR ENDED
JANUARY 31, 1995 JANUARY 31, 1994
---------------------- ----------------------
SHARES VALUE SHARES VALUE
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Sold
Intermuni
shares........... 375,627 $ 3,840,132 600,624 $ 6,501,944
Issued as
reinvestments of
dividends
Intermuni
shares........... 2,718 27,667 23,062 247,846
Redeemed
Intermuni
shares........... (488,982) (4,976,578) (388,842) (4,216,104)
-------- ----------- -------- -----------
Net increase
(decrease)....... (110,637) $(1,108,779) 234,844 $ 2,533,686
========== ============= ========== =============
</TABLE>
The authorized capital of the Company consists of 2.3 billion Money shares,
300 million Dollar shares, and 300 million Plus shares, 80 million Intermuni
shares, 10 million Intermuni Dollar shares and 10 million Intermuni Plus shares,
each with a par value of $.001 per share.
5. Capital Loss Carryover
At January 31, 1995, California Money Fund had a capital loss carryover
amounting to $136,676 which expires in the years 2001 and 2002, and is available
to offset possible future capital gains.
At January 31, 1995 California Intermediate Municipal Fund had a capital
loss carryover amounting to $43,055 which expires in 2002, and is available to
offset possible future capital gains.
6. Purchases and Sales of Securities
For the year ended January 31, 1995, purchases and sales of investment
securities (excluding short-term investments) of California Intermediate
Municipal Fund were $505,865 and $1,081,648 respectively.
7. Net assets
At January 31, 1995, net assets consisted of the following:
<TABLE>
<CAPTION>
CALIFORNIA
INTERMEDIATE
CALIFORNIA MUNICIPAL
MONEY FUND FUND
------------ -----------
<S> <C> <C>
Paid-in capital............. $396,986,690 $17,642,942
Accumulated net realized
loss on investments....... (136,676) (43,055)
Amortized market discount... -- 8,583
Net unrealized appreciation
of investments............ -- (176,251)
------------ -----------
Total Net Assets............ $396,850,014 $17,432,219
============= ===========
</TABLE>
FS-15
<PAGE> 134
APPENDIX A
COMMERCIAL PAPER RATINGS
A Standard & Poor's commercial paper rating is a current
assessment of the likelihood of timely payment of debt considered short-term in
the relevant market. The following summarizes the rating categories used by
Standard and Poor's for commercial paper:
"A-1" - Issue's degree of safety regarding timely payment is
strong. Those issues determined to possess extremely strong safety
characteristics are denoted "A-1+."
"A-2" - Issue's capacity for timely payment is satisfactory.
However, the relative degree of safety is not as high as for issues designated
"A-1."
"A-3" - Issue has an adequate capacity for timely payment. It
is, however, somewhat more vulnerable to the adverse effects of changes and
circumstances than an obligation carrying a higher designation.
"B" - Issue has only a speculative capacity for timely payment.
"C" - Issue has a doubtful capacity for payment.
"D" - Issue is in payment default.
Moody's commercial paper ratings are opinions of the ability
of issuers to repay punctually promissory obligations not having an original
maturity in excess of 9 months. The following summarizes the rating categories
used by Moody's for commercial paper:
"Prime-1" - Issuer or related supporting institutions are
considered to have a superior capacity for repayment of short-term promissory
obligations. Prime-1 repayment capacity will normally be evidenced by the
following characteristics: leading market positions in well established
industries; high rates of return on funds employed; conservative capitalization
structures with moderate reliance on debt and ample asset protection; broad
margins in earning coverage of fixed financial charges and high internal cash
generation; and well established access to a range of financial markets and
assured sources of alternate liquidity.
A-1
<PAGE> 135
"Prime-2" - Issuer or related supporting institutions are
considered to have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the characteristics
cited above but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics,
while still appropriate, may be more affected by external conditions. Ample
alternative liquidity is maintained.
"Prime-3" - Issuer or related supporting institutions have an
acceptable capacity for repayment of short-term promissory obligations. The
effects of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and the requirement for relatively
high financial leverage. Adequate alternate liquidity is maintained.
"Not Prime" - Issuer does not fall within any of the Prime
rating categories.
The three rating categories of Duff & Phelps for investment
grade commercial paper and short-term debt are "D-1," "D-2" and "D-3." Duff &
Phelps employs three designations, "D-1+," "D-1" and "D-1-," within the highest
rating category. The following summarizes the rating categories used by Duff &
Phelps for commercial paper:
"D-1+" - Debt possesses highest certainty of timely payment.
Short-term liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations.
"D-1" - Debt possesses very high certainty of timely payment.
Liquidity factors are excellent and supported by good fundamental protection
factors. Risk factors are minor.
"D-1-" - Debt possesses high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors. Risk factors are very small.
"D-2" - Debt possesses good certainty of timely payment.
Liquidity factors and company fundamentals are sound. Although ongoing funding
needs may enlarge total financing requirements, access to capital markets is
good. Risk factors are small.
"D-3" - Debt possesses satisfactory liquidity, and other
protection factors qualify issue as investment grade. Risk
A-2
<PAGE> 136
factors are larger and subject to more variation. Nevertheless, timely payment
is expected.
"D-4" - Debt possesses speculative investment characteristics.
Liquidity is not sufficient to ensure against disruption in debt service.
Operating factors and market access may be subject to a high degree of
variation.
"D-5" - Issuer has failed to meet scheduled principal and/or
interest payments.
Fitch short-term ratings apply to debt obligations that are
payable on demand or have original maturities of up to three years. The
following summarizes the rating categories used by Fitch for short-term
obligations:
"F-1+" - Securities possess exceptionally strong credit
quality. Issues assigned this rating are regarded as having the strongest
degree of assurance for timely payment.
"F-1" - Securities possess very strong credit quality. Issues
assigned this rating reflect an assurance of timely payment only slightly less
in degree than issues rated "F-1+."
"F-2" - Securities possess good credit quality. Issues
assigned this rating have a satisfactory degree of assurance for timely
payment, but the margin of safety is not as great as the "F-1+" and "F-1"
categories.
"F-3" - Securities possess fair credit quality. Issues
assigned this rating have characteristics suggesting that the degree of
assurance for timely payment is adequate; however, near-term adverse changes
could cause these securities to be rated below investment grade.
"F-S" - Securities possess weak credit quality. Issues
assigned this rating have characteristics suggesting a minimal degree of
assurance for timely payment and are vulnerable to near-term adverse changes in
financial and economic conditions.
"D" - Securities are in actual or imminent payment default.
Fitch may also use the symbol "LOC" with its short-term
ratings to indicate that the rating is based upon a letter of credit issued by
a commercial bank.
Thomson BankWatch short-term ratings assess the likelihood of
an untimely or incomplete payment of principal or interest of unsubordinated
instruments having a maturity of one
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<PAGE> 137
year or less which is issued by United States commercial banks, thrifts and
non-bank banks; non-United States banks; and broker- dealers. The following
summarizes the ratings used by Thomson BankWatch:
"TBW-1" - This designation represents Thomson BankWatch's
highest rating category and indicates a very high degree of likelihood that
principal and interest will be paid on a timely basis.
"TBW-2" - This designation indicates that while the degree of
safety regarding timely payment of principal and interest is strong, the
relative degree of safety is not as high as for issues rated "TBW-1."
"TBW-3" - This designation represents the lowest investment
grade category and indicates that while the debt is more susceptible to adverse
developments (both internal and external) than obligations with higher ratings,
capacity to service principal and interest in a timely fashion is considered
adequate.
"TBW-4" - This designation indicates that the debt is regarded
as non-investment grade and therefore speculative.
IBCA assesses the investment quality of unsecured debt with an
original maturity of less than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
rating categories used by IBCA for short-term debt ratings:
"A1" - Obligations are supported by the highest capacity for
timely repayment. Where issues possess a particularly strong credit feature, a
rating of A1+ is assigned.
"A2" - Obligations are supported by a good capacity for timely
repayment.
"A3" - Obligations are supported by a satisfactory capacity
for timely repayment.
"B" - Obligations for which there is an uncertainty as to the
capacity to ensure timely repayment.
"C" - Obligations for which there is a high risk of default or
which are currently in default.
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<PAGE> 138
CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS
The following summarizes the ratings used by Standard & Poor's
for corporate and municipal debt:
"AAA" - This designation represents the highest rating
assigned by Standard & Poor's to a debt obligation and indicates an extremely
strong capacity to pay interest and repay principal.
"AA" - Debt is considered to have a very strong capacity to
pay interest and repay principal and differs from AAA issues only in small
degree.
"A" - Debt is considered to have a strong capacity to pay
interest and repay principal although such issues are somewhat more susceptible
to the adverse effects of changes in circumstances and economic conditions than
debt in higher-rated categories.
"BBB" - Debt is regarded as having an adequate capacity to pay
interest and repay principal. Whereas such issues normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher-rated categories.
"BB," "B," "CCC," "CC" and "C" - Debt is regarded, on balance,
as predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. "BB" indicates the
lowest degree of speculation and "C" the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
"BB" - Debt has less near-term vulnerability to default than
other speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments. The
"BB" rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB-" rating.
"B" - Debt has a greater vulnerability to default but
currently has the capacity to meet interest payments and principal repayments.
Adverse business, financial or economic conditions will likely impair capacity
or willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.
A-5
<PAGE> 139
"CCC" - Debt has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In
the event of adverse business, financial or economic conditions, it is not
likely to have the capacity to pay interest and repay principal. The "CCC"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "B" or "B-" rating.
"CC" - This rating is typically applied to debt subordinated
to senior debt that is assigned an actual or implied "CCC" rating.
"C" - This rating is typically applied to debt subordinated to
senior debt which is assigned an actual or implied "CCC-" debt rating. The "C"
rating may be used to cover a situation where a bankruptcy petition has been
filed, but debt service payments are continued.
"CI" - This rating is reserved for income bonds on which no
interest is being paid.
"D" - Debt is in payment default. This rating is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S & P believes such
payments will be made during such grace period. "D" rating is also used upon
the filing of a bankruptcy petition if debt service payments are jeopardized.
PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC"
may be modified by the addition of a plus or minus sign to show relative
standing within the major rating categories.
"r" - This rating is attached to highlight derivative, hybrid,
and certain other obligations that S & P believes may experience high
volatility or high variability in expected returns due to non-credit risks.
Examples of such obligations are: securities whose principal or interest return
is indexed to equities, commodities, or currencies; certain swaps and options;
and interest only and principal only mortgage securities.
The following summarizes the ratings used by Moody's for corporate and
municipal long-term debt:
"Aaa" - Bonds are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
A-6
<PAGE> 140
"Aa" - Bonds are judged to be of high quality by all
standards. Together with the "Aaa" group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in "Aaa" securities or fluctuation
of protective elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat larger than in
"Aaa" securities.
"A" - Bonds possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
"Baa" - Bonds considered medium-grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
"Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of
these ratings provide questionable protection of interest and principal ("Ba"
indicates some speculative elements; "B" indicates a general lack of
characteristics of desirable investment; "Caa" represents a poor standing; "Ca"
represents obligations which are speculative in a high degree; and "C"
represents the lowest rated class of bonds). "Caa," "Ca" and "C" bonds may be
in default.
Con. (---) - Bonds for which the security depends upon the
completion of some act or the fulfillment of some condition are rated
conditionally. These are bonds secured by (a) earnings of projects under
construction, (b) earnings of projects unseasoned in operation experience, (c)
rentals which begin when facilities are completed, or (d) payments to which
some other limiting condition attaches. Parenthetical rating denotes probable
credit stature upon completion of construction or elimination of basis of
condition.
Moody's applies numerical modifiers 1, 2 and 3 in each generic
classification from "Aa" to "B" in its bond rating system. The modifier 1
indicates that the issuer ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issuer ranks at the lower end of its generic rating
category.
A-7
<PAGE> 141
The following summarizes the long-term debt ratings used by
Duff & Phelps for corporate and municipal long-term debt:
"AAA" - Debt is considered to be of the highest credit
quality. The risk factors are negligible, being only slightly more than for
risk-free U.S. Treasury debt.
"AA" - Debt is considered of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
"A" - Debt possesses protection factors which are average but
adequate. However, risk factors are more variable and greater in periods of
economic stress.
"BBB" - Debt possesses below average protection factors but
such protection factors are still considered sufficient for prudent investment.
Considerable variability in risk is present during economic cycles.
"BB," "B," "CCC," "DD," and "DP" - Debt that possesses one of
these ratings is considered to be below investment grade. Although below
investment grade, debt rated "BB" is deemed likely to meet obligations when
due. Debt rated "B" possesses the risk that obligations will not be met when
due. Debt rated "CCC" is well below investment grade and has considerable
uncertainty as to timely payment of principal, interest or preferred dividends.
Debt rated "DD" is a defaulted debt obligation, and the rating "DP" represents
preferred stock with dividend arrearages.
To provide more detailed indications of credit quality, the
"AA," "A," "BBB," "BB" and "B" ratings may be modified by the addition of a
plus (+) or minus (-) sign to show relative standing within these major
categories.
The following summarizes the highest four ratings used by
Fitch for corporate and municipal bonds:
"AAA" - Bonds considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
"AA" - Bonds considered to be investment grade and of very
high credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated "AAA." Because
bonds rated in the "AAA" and "AA" categories are not significantly vulnerable
to foreseeable future developments, short-term debt of these issuers is
generally rated "F-1+."
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<PAGE> 142
"A" - Bonds considered to be investment grade and of high
credit quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
"BBB" - Bonds considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have an adverse impact on these
bonds, and therefore, impair timely payment. The likelihood that the ratings
of these bonds will fall below investment grade is higher than for bonds with
higher ratings.
"BB," "B," "CCC," "CC," "C," "DDD," "DD," and "D" - Bonds that
possess one of these ratings are considered by Fitch to be speculative
investments. The ratings "BB" to "C" represent Fitch's assessment of the
likelihood of timely payment of principal and interest in accordance with the
terms of obligation for bond issues not in default. For defaulted bonds, the
rating "DDD" to "D" is an assessment of the ultimate recovery value through
reorganization or liquidation.
To provide more detailed indications of credit quality, the
Fitch ratings from and including "AA" to "C" may be modified by the addition of
a plus (+) or minus (-) sign to show relative standing within these major
rating categories.
IBCA assesses the investment quality of unsecured debt with an
original maturity of more than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
rating categories used by IBCA for long-term debt ratings:
"AAA" - Obligations for which there is the lowest expectation
of investment risk. Capacity for timely repayment of principal and interest is
substantial such that adverse changes in business, economic or financial
conditions are unlikely to increase investment risk substantially.
"AA" - Obligations for which there is a very low expectation
of investment risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic or financial conditions may
increase investment risk albeit not very significantly.
"A" - Obligations for which there is a low expectation of
investment risk. Capacity for timely repayment of principal and interest is
strong, although adverse changes in business,
A-9
<PAGE> 143
economic or financial conditions may lead to increased investment risk.
"BBB" - Obligations for which there is currently a low
expectation of investment risk. Capacity for timely repayment of principal and
interest is adequate, although adverse changes in business, economic or
financial conditions are more likely to lead to increased investment risk than
for obligations in higher categories.
"BB," "B," "CCC," "CC," and "C" - Obligations are assigned one
of these ratings where it is considered that speculative characteristics are
present. "BB" represents the lowest degree of speculation and indicates a
possibility of investment risk developing. "C" represents the highest degree
of speculation and indicates that the obligations are currently in default.
IBCA may append a rating of plus (+) or minus (-) to a rating
to denote relative status within major rating categories.
Thomson BankWatch assesses the likelihood of an untimely
repayment of principal or interest over the term to maturity of long term debt
and preferred stock which are issued by United States commercial banks, thrifts
and non-bank banks; non- United States banks; and broker-dealers. The
following summarizes the rating categories used by Thomson BankWatch for
long-term debt ratings:
"AAA" - This designation represents the highest category
assigned by Thomson BankWatch to long-term debt and indicates that the ability
to repay principal and interest on a timely basis is very high.
"AA" - This designation indicates a superior ability to repay
principal and interest on a timely basis with limited incremental risk versus
issues rated in the highest category.
"A" - This designation indicates that the ability to repay
principal and interest is strong. Issues rated "A" could be more vulnerable to
adverse developments (both internal and external) than obligations with higher
ratings.
"BBB" - This designation represents Thomson BankWatch's lowest
investment grade category and indicates an acceptable capacity to repay
principal and interest. Issues rated "BBB" are, however, more vulnerable to
adverse developments (both internal and external) than obligations with higher
ratings.
"BB," "B," "CCC," and "CC," - These designations are assigned
by Thomson BankWatch to non-investment grade long-term
A-10
<PAGE> 144
debt. Such issues are regarded as having speculative characteristics regarding
the likelihood of timely payment of principal and interest. "BB" indicates the
lowest degree of speculation and "CC" the highest degree of speculation.
"D" - This designation indicates that the long-term debt is in
default.
PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC"
may include a plus or minus sign designation which indicates where within the
respective category the issue is placed.
MUNICIPAL NOTE RATINGS
A Standard and Poor's rating reflects the liquidity concerns
and market access risks unique to notes due in three years or less. The
following summarizes the ratings used by Standard & Poor's Ratings Group for
municipal notes:
"SP-1" - The issuers of these municipal notes exhibit very
strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics are given a plus (+)
designation.
"SP-2" - The issuers of these municipal notes exhibit
satisfactory capacity to pay principal and interest.
"SP-3" - The issuers of these municipal notes exhibit
speculative capacity to pay principal and interest.
Moody's ratings for state and municipal notes and other
short-term loans are designated Moody's Investment Grade ("MIG") and variable
rate demand obligations are designated Variable Moody's Investment Grade
("VMIG"). Such ratings recognize the differences between short-term credit
risk and long-term risk. The following summarizes the ratings by Moody's
Investors Service, Inc. for short-term notes:
"MIG-1"/"VMIG-1" - Loans bearing this designation are of the
best quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
"MIG-2"/"VMIG-2" - Loans bearing this designation are of high
quality, with margins of protection ample although not so large as in the
preceding group.
"MIG-3"/"VMIG-3" - Loans bearing this designation are of
favorable quality, with all security elements accounted for but lacking the
undeniable strength of the preceding grades.
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<PAGE> 145
Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.
"MIG-4"/"VMIG-4" - Loans bearing this designation are of
adequate quality, carrying specific risk but having protection commonly
regarded as required of an investment security and not distinctly or
predominantly speculative.
"SG" - Loans bearing this designation are of speculative
quality and lack margins of protection.
Fitch and Duff & Phelps use the short-term ratings described
under Commercial Paper Ratings for municipal notes.
A-12
<PAGE> 146
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
Financial Statements:
(1) Included in Part A of the Registration
Statement:
Financial Highlights for California Money
Fund (Money Shares) for the fiscal
years ended January 31, 1995, 1994,
1993, 1992, 1991, 1990, 1989, 1988,
1987 and 1986; for California Money
Fund (Dollar Shares) for the fiscal
years ended January 31, 1995, 1994,
1993, 1992 and for the period from
January 9, 1991 (commencement of
operations) through January 31,
1991; for California Money Fund
(Plus Shares) for the fiscal years
ended January 31, 1995, 1994, 1993,
1992, 1991, 1990, 1989, 1988 and
1987; and for California
Intermediate Municipal Fund
(Intermuni Shares) for the fiscal
years ended January 31, 1995, 1994,
1993, 1992, 1991 and 1990 and for
the period from September 12, 1988
(commencement of operations) through
January 31, 1989.
(2) Included in Part B of the Registration
Statement:
Statement of Net Assets for California Money
Fund and for California Intermediate
Municipal Fund - January 31, 1995.
Statements of Operations for California Money
Fund and for California Intermediate
Municipal Fund - January 31, 1995.
Statements of Changes in Net Assets for
California Money Fund and for
California Intermediate Municipal
Fund for the fiscal years ended
January 31, 1995 and 1994.
Financial Highlights for California Money
Fund (Money Shares) for the fiscal
years ended January 31, 1995, 1994,
1993, 1992 and 1991; for California
Money Fund (Dollar Shares) for the
fiscal years ended January 31, 1995,
1994, 1993, 1992 and for the period
from January 9, 1991
<PAGE> 147
(commencement of operations) through
January 31, 1991; for California
Money Fund (Plus Shares) for the
fiscal years ended January 31, 1995,
1994, 1993, 1992, 1991 and 1990;
and for California Intermediate
Municipal Fund (Intermuni Shares)
for the fiscal years ended January
31, 1995, 1994, 1993, 1992, 1991 and
1990.
Notes to Financial Statements-January 31,
1995.
Report of Independent Accountants-March 10,
1995.
(3) All required financial statements are
included in Parts A and B hereof. All other
financial statements and schedules are
inapplicable.
(b) Exhibits:
(1) (a) Articles of Incorporation dated
September 20, 1982 are incorporated
herein by reference to Exhibit 1(a)
of Post-Effective Amendment No. 7 to
Registrant's Registration Statement,
filed on March 31, 1988.
(b) Articles Supplementary to
Registrant's Articles of
Incorporation dated November 24,
1982 are incorporated herein by
reference to Exhibit 1(b) of
Post-Effective Amendment No. 7 to
Registrant's Registration Statement,
filed on March 31, 1988.
(c) Articles of Amendment to
Registrant's Articles of
Incorporation dated February 10,
1983 are incorporated herein by
reference to Exhibit 1(c) of
Post-Effective Amendment No. 7 to
Registrant's Registration Statement
filed on March 31, 1988.
(d) Articles Supplementary to
Registrant's Articles of
Incorporation dated August 31, 1985
are incorporated herein by reference
to Exhibit 1(d) of Post-Effective
Amendment No. 5 to Registrant's
Registration Statement, filed on May
30, 1986.
C-2
<PAGE> 148
(e) Articles Supplementary to
Registrant's Articles of
Incorporation dated July 26, 1988
are incorporated herein by reference
to Exhibit (1)(e) of Post-Effective
Amendment No. 10 to Registrant's
Registration Statement, filed on
March 31, 1989.
(f) Articles of Amendment to
Registrant's Articles of
Incorporation dated October 20, 1988
are incorporated herein by reference
to Exhibit (1)(f) of Post-Effective
Amendment No. 10 to Registrant's
Registration Statement, filed on
March 31, 1989.
(2) (a) By-laws as initially approved and
adopted by Registrant's Board of
Directors on September 21, 1982 are
incorporated herein by reference to
Exhibit 2(a) to Post-Effective
Amendment No. 7 to Registrant's
Registration Statement, filed on
March 31, 1988.
(b) Amendments to By-laws as approved
and adopted by Registrant's Board of
Directors on February 1, 1983 are
incorporated herein by reference to
Exhibit 2(b) to Post-Effective
Amendment No. 7 to Registrant's
Registration Statement, filed on
March 31, 1988.
(c) Amendment to By-laws as approved and
adopted by Registrant's Board of
Directors on May 8, 1984 is
incorporated herein by reference to
Exhibit (2)(c) of Post-Effective
Amendment No. 3 to Registrant's
Registration Statement, filed on May
30, 1985.
(d) Amendment to By-laws as approved and
adopted by Registrant's Board of
Directors on March 25, 1986 is
incorporated herein by reference to
Exhibit 2(d) of Post-Effective
Amendment No. 5 to Registrant's
Registration Statement, filed on May
30, 1986.
(e) Amendments to By-laws as approved
and adopted by Registrant's Board of
Directors on December 16, 1987 are
incorporated herein by reference to
Exhibit 2(e) to
C-3
<PAGE> 149
Post-Effective Amendment No. 7 to
Registrant's Registration Statement,
filed on March 31, 1988.
(f) Amendments to By-laws as approved
and adopted by Registrant's Board of
Directors on June 21, 1988 are
incorporated herein by reference to
Exhibit (2)(f) of Post-Effective
Amendment No. 10 to Registrant's
Registration Statement, filed on
March 31, 1989.
(3) None.
(4) (a) Specimen copy of share certificate
for Class A Common Stock is
incorporated herein by reference to
Exhibit (4) of Post-Effective
Amendment No. 1 to Registrant's
Registration Statement, filed on
September 1, 1983.
(b) Specimen copy of share certificate
for Class A Common Stock-Special
Series 1 is incorporated herein by
reference to Exhibit 4(b) of
Post-Effective Amendment No. 5 to
Registrant's Registration Statement,
filed on May 30, 1986.
(c) Specimen copy of share certificate
for Class A Common Stock-Special
Series 2 is incorporated herein by
reference to Exhibit 4(c) of
Post-Effective Amendment No. 5 to
Registrant's Registration Statement,
filed on May 30, 1986.
(d) Specimen copy of share certificate
for Class B Common Stock is
incorporated herein by reference to
Exhibit (4)(d) of Post-Effective
Amendment No. 10 to Registrant's
Registration Statement, filed on
March 31, 1989.
(e) Specimen copy of share certificate
for Class B Common Stock -- Special
Series 1 is incorporated herein by
reference to Exhibit (4)(e) of
Post-Effective Amendment No. 10 to
Registrant's Registration Statement,
filed on March 31, 1989.
(f) Specimen copy of share certificate
for Class B Common Stock -- Special
Series 2 is
C-4
<PAGE> 150
incorporated herein by reference to
Exhibit (4)(f) of Post-Effective
Amendment No. 10 to Registrant's
Registration Statement, filed on
March 31, 1989.
(5) (a) Amended and Restated Investment
Advisory Agreement dated July 28,
1988 between Registrant and
Provident Institutional Management
Corporation is incorporated herein
by reference to Exhibit (5)(a) of
Post-Effective Amendment No. 10 to
Registrant's Registration Statement,
filed on March 31, 1989.
(b) Amended and Restated Sub-Advisory
Agreement dated July 28, 1988
between Provident Institutional
Management Corporation and Provident
National Bank is incorporated herein
by reference to Exhibit (5)(b) of
Post-Effective Amendment No. 10 to
Registrant's Registration Statement,
filed on March 31, 1989.
(6) Distribution Agreement dated January 31, 1994
between Registrant and Provident
Distributors, Inc. is incorporated herein by
reference to Exhibit (6) of Post-Effective
Amendment No. 15 to Registrant's Registration
Statement filed on May 27, 1994.
(7) Fund Office Retirement Profit-Sharing Plan
and Trust Agreement as approved September 27,
1990 is incorporated herein by reference to
Exhibit (7) of Post-Effective Amendment No.
49 to the Registration Statement of Temporary
Investment Fund, Inc. (TempFund portfolio)
(No. 2-47015) filed on December 12, 1990.
(8) Amended and Restated Custodian Agreement
dated July 28, 1988 between Registrant and
Provident National Bank is incorporated
herein by reference to Exhibit (8) of
Post-Effective Amendment No. 10 to
Registrant's Registration Statement, filed on
March 31, 1989.
(9) (a) Administration Agreement dated
January 18, 1993 between Registrant
and Provident Distributors, Inc.
(formerly MFD Group, Inc.) and
Provident Financial Processing
C-5
<PAGE> 151
Corporation is incorporated herein by
reference to Exhibit (9)(a) of
Post-Effective Amendment No. 14 to
Registrant's Registration Statement
filed on May 28, 1993.
(b) Amended and Restated Transfer Agency
Agreement dated July 28, 1988
between Registrant and Provident
Financial Processing Corporation is
incorporated herein by reference to
Exhibit (9)(b) of Post-Effective
Amendment No. 10 to Registrant's
Registration Statement, filed on
March 31, 1989.
(10) Opinion of Counsel.
(11) (a) Consent of Coopers & Lybrand.
(b) Consent of Drinker Biddle & Reath.
(c) Consent of O'Melveny & Myers.
(12) None.
(13) None.
(14) None.
(15) (a) 12b-1 Services Plan is incorporated
herein by reference to Exhibit (15)
of Post-Effective Amendment No. 4 to
Registrant's Registration Statement,
filed on July 30, 1985.
(b) Amended and Restated 12b-1 Services
Plan is incorporated herein by
reference to Exhibit 15(b) of
Post-Effective Amendment No. 8 to
the Registrant's Registration
Statement, filed on June 1, 1988.
(c) Amended and Restated Non-12b-1 Plan
is incorporated herein by reference
to Exhibit (15)(c) of Post-Effective
Amendment No. 10 to Registrant's
Registration Statement, filed on
March 31, 1989.
(16) Schedule for Computation of Performance
Quotations is incorporated herein by
reference to Exhibit (16) of Post-Effective
C-6
<PAGE> 152
Amendment No. 14 to Registrant's Registration
Statement, filed on May 28, 1993.
(27) (a) Financial Data Schedule as of January 31,
1995 for the California Money Fund.
(b) Financial Data Schedule as of January 31,
1995 for the California Intermediate
Municipal Fund.
Item 25. Persons Controlled by or under Common Control with Registrant
Registrant is controlled by its Board of Directors.
Item 26. Number of Holders of Securities
The following information is as of May 17, 1995.
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
-------------- ------------------------
<S> <C>
Class A Common Stock 53
Class A Common Stock -
Special Series 1 3
Class A Common Stock -
Special Series 2 0
Class B Common Stock 12
</TABLE>
Item 27. Indemnification
Article VII, Section 3 of the Registrant's Articles of
Incorporation, incorporated herein by reference as Exhibit (1)(a), and Article
VI, Section 2 of Registrant's By-Laws, incorporated herein by reference as
Exhibit (2)(a), require the indemnification of Registrant's directors and
officers to the full extent permissible under the General Laws of the State of
Maryland and the Investment Company Act of 1940. Indemnification of
Registrant's principal underwriter, custodian and transfer agent against
certain losses is provided for, respectively, in Section 6.b. of the
Distribution Agreement, incorporated herein by reference as Exhibit (6),
Section 22 of the Custodian Agreement, incorporated herein by reference as
Exhibit (8), and Section 15 of the Transfer Agency Agreement, incorporated
herein by reference as Exhibit (9)(b). The Fund has obtained from a major
insurance carrier a directors and officers' liability policy covering certain
types of errors and omissions.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of Registrant pursuant to the
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<PAGE> 153
foregoing provisions, or otherwise, 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 Registrant of expenses incurred or paid by a director,
officer or controlling person of 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,
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 and Other Connections of Investment
Adviser
PIMC performs investment advisory and other services for
Registrant and certain other investment companies. PNC Bank and its
predecessors have been in the business of managing the investments of fiduciary
and other accounts in the Philadelphia area since 1847. In addition to its
trust business, PNC Bank provides commercial banking services.
The information required by this Item 28 with respect to each
director and officer of PIMC is incorporated by reference to Form ADV and
Schedules A and D filed with the SEC pursuant to the Securities Exchange Act of
1934. (File No. 801- 13304.) To the knowledge of Registrant, none of the
directors or officers of PNC Bank, except those set forth below, is, or has
been, at any time during Registrant's past two fiscal years, engaged in any
other business, profession, vocation or employment of a substantial nature,
except that certain directors and officers of PNC Bank also hold various
positions with, and engage in business for, PNC Bank Corp, which indirectly
owns all the outstanding stock of PNC Bank, or other subsidiaries of PNC Bank
Corp. Set forth below are the names and principal businesses of the directors
and certain of the senior executive officers of PNC Bank who are engaged in any
other business, profession, vocation or employment of a substantial nature.
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<PAGE> 154
PNC BANK, NATIONAL ASSOCIATION
DIRECTORS
<TABLE>
<CAPTION>
Position with Other Business Type of
PNC Bank Name Connections Business
-------- ---- ----------- --------
<S> <C> <C> <C>
Director B.R. Brown President and C.E.O. of Coal
Consol, Inc.
Consol Plaza
Pittsburgh, PA 15241
Director Constance E. Clayton Chief, Division of Community Health Care Medical
Medical College of Pennsylvania
3300 Henry Avenue, Office 4338
Philadelphia, PA 19129
Director Eberhard Faber, IV Chairman and C.E.O. Manufacturing
E.F.L., Inc.
450 Hedge Road
P.O. Box 49
Bear Creek, PA 18602
Director Dr. Stuart Heydt President and C.E.O. Medical
Geisinger Foundation
100 N. Academy Avenue
Danville, PA 17822
Director Edward P. Junker, III Chairman and C.E.O. Banking
PNC Bank, N.A.
Ninth and State Streets
Erie, PA 16553
Director Thomas A. McConomy President, C.E.O. and Manufacturing
Chairman, Calgon Carbon
Corporation
P.O. Box 717
Pittsburgh, PA 15230-0717
Director Robert C. Milsom Retired
PNC Bank, National Association
One PNC Plaza, Suite 2310
Pittsburgh, PA 15265
Director Thomas H. O'Brien Chairman Banking
PNC Bank, N.A.
One PNC Plaza, 30th Floor
Pittsburgh, PA 15265
Director Dr. J. Dennis O'Connor Chancellor, University Education
of Pittsburgh
107 Cathedral of Learning
Pittsburgh, PA 15260
Director Rocco A. Ortenzio Chairman and C.E.O. Medical
Continental Medical
Systems, Inc.
P.O. Box 715
Mechanicsburg, PA 17055
</TABLE>
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<PAGE> 155
<TABLE>
<CAPTION>
Position with Other Business Type of
PNC Bank Name Connections Business
-------- ---- ----------- --------
<S> <C> <C> <C>
Director Jane G. Pepper President Horticulture
Pennsylvania Horticultural
Society
325 Walnut Street
Philadelphia, PA 19106
Director Robert C. Robb, Jr. Partner, Lewis, Eckert, Financial and
Robb & Company Management
425 One Plymouth Meeting Consultants
Plymouth Meeting, PA 19462
Director James E. Rohr President and C.E.O. Bank Holding Company
PNC Bank, N.A.
One PNC Plaza, 30th Floor
Pittsburgh, PA 15265
Director Daniel M. Rooney President, Pittsburgh Steelers Football
Football Club of the National Football
League
300 Stadium Circle
Pittsburgh, PA 15212
Director Seth E. Schofield Chairman, President and C.E.O. Airline
USAir Group, Inc. and
USAir, Inc.
2345 Crystal Drive
Arlington, VA 22227
Director Robert M. Valentini President and C.E.O. Bell Communications
Atlantic-Pennsylvania, Inc.
One Parkway, 18th Floor
Philadelphia, PA 19102
</TABLE>
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<PAGE> 156
PNC BANK, NATIONAL ASSOCIATION
OFFICERS
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
John W. Atkinson Executive Vice President None
Richard C. Caldwell Executive Vice President Director, D.R. Corp.
Investment Officer, J.L. Caldwell Company
Council Member, Pennsylvania
Horticultural Society
Director, PFPC
Executive Vice President, Investment
Management and Trust, PNC Bank Corp.
J. Richard Carnall Executive Vice President Director, Franklin Institute (The)
Director, Hayden Bolts, Inc.
Director, Parkway Real Estate Company
Director, PNC Trust Company of New York
Director, Provident Capital Management,
Inc.
Chairman and Director, PFPC
Chairman and Director, PIMC
Frederick C. Frank, III Executive Vice President Director, PNC National Bank
Director, PNC National Bank of New Jersey
William J. Friel Executive Vice President Director, Cedarbrook Country Club
Advisory Board Member, Chicago Title &
Abstract
Director, National Adoption Agency
</TABLE>
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<PAGE> 157
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
G. Robert Hoffman Executive Vice President Director, J.W. Pepper & Sons, Inc.
Director, Land Holding Corp. of PA
Chairman, President and Director,
Provident Realty Management, Inc.
Chairman, President and Director,
Provident Realty, Inc.
</TABLE>
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<PAGE> 158
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Joe R. Irwin Executive Vice President Member of the Executive Committee and
Director
Blue Cross of Western Pennsylvania
Director
Civic Light Opera
(Non-Profit Enterprise)
Chairman of the Board
Dinamo
(Non-Profit Enterprise)
Treasurer and Director
Girls' Hope
(Non-Profit Organization)
Member of the Executive Committee and
Director
Greater Pittsburgh Chamber of Commerce
Member of the Governing Council
Pennsylvania Bankers Association
Chairman
Pennsylvania Economy League, Inc.
Chairman, Annual Sustaining Fund Campaign
Pittsburgh Opera
Executive Vice President and Chief
Investment Officer
PNC Bank Corp.
Chairman, Chief Executive Officer and
Director
PNC Funding Corp.
Chairman and Director
PNC International Bank
Chairman and Director
PNC International Bank (New York)
Chairman and Director
PNC International Investment Corporation
Director
PNC Mortgage Bank, N.A.
</TABLE>
C-13
<PAGE> 159
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Joe R. Irwin (Cont'd.) Director
PNC Mortgage Corp. of America
Director
Ruffed Grouse Society, The
(Non-Profit Enterprise)
Edward P. Junker, III Vice Chairman Vice Chairman, PNC Bank Corp.
and Director
Director, PNC Mortgage Bank, N.A.
Director, PNC Mortgage Corp. of America
Louis J. Myers President and CEO, PNC None
Bank, Northeast, PA
</TABLE>
C-14
<PAGE> 160
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Thomas H. O'Brien Chairman and Director Director, Allegheny Club (Non-Profit
Corporation)
Chairman and Director, Allegheny
Conference on Community Development (Non-
Profit Organization)
Director, Alpine Indemnity Limited
Director, Bell Atlantic Corporation
Trustee, Carnegie (The)
Director, Central Bancorporation, Inc.
(The)
Director, Children's Hospital (Non-Profit
Corporation)
Director, Governor Casey's Pennsylvania
Economic Development Partnership
Director, Hilb, Rogal and Hamilton Co.
Chairman - Board of Visitors, Katz
Graduate School of Business
Director, Laurel Valley Golf Club
Director, Pittsburgh Baseball, Inc.
Co-Chairman of the Board of Directors,
Pittsburgh Opera (The)
President, PNC Bancorp, Inc.
Chairman, CEO & Director, PNC Bank Corp.
Director, PNC Investment Corp.
Chairman and Director, PNC Trust Company
of Florida, N.A.
Director, United Way of S.W. PA (Non-
Profit Organization)
</TABLE>
C-15
<PAGE> 161
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Trustee, University of Pittsburgh
Charles C. Pearson, Jr. President and CEO, PNC Director and Chairman, Chamber of
Bank, Central, PA Business and Industry of Centre County
Partner, Charrob Investments
Trustee, Juniata College
Partner, LPNS c/o Cir Realty
Director, Second Mile
Director, Uni-Marts, Inc.
Partner, University Drive Associates
John V. Petrycki President and CEO, PNC Director, Allied Arts Fund, Inc. (of
Bank, Southcentral, PA Harrisburg)
Director, Capital Region Economic
Development Corporation
Director, Channels
Director, Keystone Sports Foundation
Director, West Short YMCA
</TABLE>
C-16
<PAGE> 162
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Edward V. Randall, Jr. President and CEO, PNC Board of Trustees, Carlow College
Bank, Pittsburgh
Board Member, Cities in Schools
Board of Trustees, Landmarks Financial
Corporation
Board of Trustees, Landmarks Real Estate
Corporation
Board Member, Pittsburgh Downtown
Partnership
Board Member, Pittsburgh History &
Landmarks Foundation
Director Emeritus, Pittsburgh Partnership
for Neighborhood Development
Member, Advisory Committee Transportation
& Technology Museum
Member, Board of Visitors University of
Pittsburgh School of Social Work (Non-
Profit Organization)
</TABLE>
C-17
<PAGE> 163
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
James E. Rohr President, CEO and Director, Allegheny Ludlum Corporation
Director
Director, Alpine Indemnity Limited
Committee Member, American Bankers
Association Commercial Lending Div. Exec.
Com.
Director, American Cancer Society
Director, Boy Scouts of America
Business Advisory Council, Graduate
School of Industrial Adm. Carnegie Mellon
University
Trustee, Penn's Southwest Association
President and Director, Pittsburgh
National Bank Foundation
Chairman and Director, PNB Holdings, Inc.
President and Director, PNC Bank Corp.
Director, PNC International Bank (New
York)
Chairman, President, CEO and Director,
PNC Mortgage Bank, N.A.
Director, PNC Mortgage Corp. of America
Director, River City Brass Bank (Non-
Profit Corporation)
Chairman - Advisory Board, Salvation Army
(Non-Profit Organization)
Director, Shady Side Health, Education
and Research Center
Director, St. Vincent College
</TABLE>
C-18
<PAGE> 164
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
A. William Schenck, III Vice Chairman Board of Directors, Allegheny General
Hospital (Non-Profit Organization)
Director, Consumer Bankers Association
Board of Directors, Forward Products,
Inc.
Board of Directors, Health & Welfare
Planning Association (Non-Profit
Organization)
Chairman, Leadership Pittsburgh Steering
Committee
Director, Massachusetts Company, (The)
Board of Directors, Metropolitan
Pittsburgh Public Broadcasting, Inc.
(Non-Profit Organization)
Joint Ownership with wife Mikell Schenck,
Mikell Schenck Associates
1989 PBA Convention Committee Member,
Pennsylvania Bankers Association Group 8
(Non-Profit Organization)
Chairman and Director, Pinaco, Inc.
Board of Trustees, Pittsburgh Ballet
Theater (Non-Profit Organization)
Regional Advisory Council Member,
Pittsburgh Cancer Institute (Non-Profit
Organization)
Board of Trustees, Pittsburgh Center for
the Arts (Non-Profit Organization)
Vice President and Director, Pittsburgh
National Bank Foundation
Chairman and Director, Pittsburgh
National Life Insurance Co.
</TABLE>
C-19
<PAGE> 165
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Director, Pittsburgh Theological Seminary
Committee Member, Pittsburgh Trust for
Cultural Resources (Non-Profit
Organization)
Executive Vice President - PNC Retail
Banking, PNC Bank Corp.
Director, PNC Mortgage Bank, N.A.
Director, PNC Mortgage Corp. of America
Board of Trustee, Three Rivers
Shakespeare Festival (Non-Profit
Organization)
Board of Directors, Urban League of
Pittsburgh, Inc. (Non-Profit
Organization)
Director, Visa U.S.A., Inc.
Director, Wiser Oil Company
Board of Trustee, YMCA of Pittsburgh
(Non-Profit Organization)
</TABLE>
C-20
<PAGE> 166
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Richard L. Smoot President and CEO of PNC Trustee, Agnes Irwin School
Bank, Philadelphia
Board of Council, Episcopal Community
Services
Director, Greater Philadelphia Chamber of
Commerce
Director, Greater Philadelphia First
Corporation (The)
Director, Greater Philadelphia Urban
Affairs Coalition (The)
Director, Pennsylvania Ballet
Director, Philadelphia Orchestra (The)
Chairman and Director, PNC Credit Corp.
Chairman, CEO and Director, PNC National
Bank
Chairman, President and Director, PNC
National Bank of New Jersey
Director, PNC Service Corp.
Director, PNC Trust Company of New York
Director, Police Athletic League of
Philadelphia
Director, PFPC
Director, PIMC
Director, Settlement Music School
Director, St. John's College
Director, United Negro College Fund
Director, Widener University
Director, World Affairs Council of
Philadelphia
</TABLE>
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<PAGE> 167
<TABLE>
<CAPTION>
POSITION
WITH
NAME PNC BANK OTHER BUSINESS CONNECTIONS
---- -------- --------------------------
<S> <C> <C>
Herbert G. Summerfield, Jr. Executive Vice President Director, CBM-Old York Associates, Inc.
Director, CBM-Walnut Hill, Inc.
Director, Pennsylvania Mountain, Inc.
Executive Vice President - PNC Real
Estate, PNC Bank Corp.
Chairman and Director, PNC Realty Holding
Corp.
Director, PNC Realty Holding Corp. of
Georgia
Director, PNC Realty Holding Corp. of
Florida
Director, PNC Realty Holding Corp. of
Kentucky
Director, PNC Realty Holding Corp. of
Mississippi
Director, PNC Realty Holding Corp. of New
Jersey
Director, PNC Realty Holding Corp. of
Ohio
Director, PNC Realty Holding Corp. of
Pennsylvania
Director, PNC Realty Holding Corp. of
Texas
Director, PNC Realty Mortgage Company
Director, Regional Industrial Development
Corp. of Southwestern, PA
Director, Special Asset Holdings of
Michigan, Inc.
Malcolm C. Wilson Executive Vice President Board of Trustees, People's Light &
Theatre Company
Senior Vice President and Director, PNC
National Bank of New Jersey
</TABLE>
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<PAGE> 168
Item 29. Principal Underwriter
(a) Provident Distributors, Inc. currently acts as
distributor for, in addition to the Company, Trust for Federal Securities,
Municipal Fund for Temporary Investment, Portfolios for Diversified Investment,
Temporary Investment Fund, Inc., Municipal Fund for New York Investors, Inc.,
Provident Institutional Funds, Inc. and The PNC(R) Fund.
(b) The information required by this Item 29 with respect
to each director, officer or partner of Provident Distributors, Inc. is
incorporated by reference to Schedule A of Form BD filed by Provident
Distributors, Inc. with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934 (SEC File No. 8-46564).
Item 30. Location of Accounts and Records
(1) PNC Bank, National Association, Broad and
Chestnut Streets, Philadelphia, Pennsylvania
19101 (records relating to its functions as
sub-investment adviser).
(2) PNC Bank, National Association, 200 Stevens
Drive, Suite 440-A, Lester, Pennsylvania
19113 (records relating to its functions as
custodian).
(3) Provident Distributors, Inc., 259
Radnor-Chester Road, Suite 120, Radnor,
Pennsylvania 19087 (records relating to its
functions as distributor).
(4) PNC Institutional Management Corporation, 400
Bellevue Parkway, 4th Floor, Wilmington,
Delaware 19809 (records relating to its
functions as investment adviser).
(5) PFPC Inc., P.O. Box 8950, Wilmington,
Delaware 19885-9628 and Provident
Distributors, Inc., 289 Radnor-Chester Road,
Suite 120, Radnor, Pennsylvania 19087
(records relating to their functions as
administrators).
(6) PFPC Inc., 400 Bellevue Parkway, Wilmington,
Delaware 19809 (records relating to its
functions as transfer agent and dividend
disbursing agent).
C-23
<PAGE> 169
(7) Drinker Biddle & Reath, 1100 Philadelphia
National Bank Building, Philadelphia,
Pennsylvania 19107 (Registrant's Articles of
Incorporation, By-Laws and Minute Books).
Item 31. Management Services
None.
Item 32. Undertakings
Registrant hereby undertakes to provide its Annual Report upon
request without change to any recipient of a Prospectus for
the California Money Fund and California Intermediate
Municipal Fund.
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<PAGE> 170
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that it meets all
the requirements for effectiveness of this Post-Effective Amendment No. 16 to
its Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Post-Effective Amendment No. 16 to its
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Wilmington, and State of Delaware, on May 26,
1995.
MUNICIPAL FUND FOR
CALIFORNIA INVESTORS, INC.
* G. Willing Pepper
-------------------------
Chairman of the Board and
President
(Signature and Title)
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment No. 16 to Registrant's Registration Statement has
been signed below by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* G. Willing Pepper Chairman of May 26, 1995
- -------------------------- the Board
G. Willing Pepper and President
* William R. Howell Director May 26, 1995
- --------------------------
William R. Howell
* Rudolph A. Peterson Director May 26, 1995
- --------------------------
Rudolph A. Peterson
* Anthony M. Santomero Director May 26, 1995
- --------------------------
Anthony M. Santomero
* Rodney D. Johnson Director May 26, 1995
- --------------------------
Rodney D. Johnson
/s/ Edward J. Roach Vice President May 26, 1995
- -------------------------- and Treasurer
Edward J. Roach (Principal
Financial and
Accounting Officer)
*By:/s/ Edward J. Roach
----------------------
Edward J. Roach
Attorney-in-Fact
</TABLE>
<PAGE> 171
Powers of Attorney are incorporated by reference to Post-Effective Amendments
No. 13, 14 and 15 to the Registrant's Registration Statement filed on May 28,
1992, May 28, 1993 and May 27, 1994, respectively.
<PAGE> 172
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE NO.
- ----------- ----------- --------
<S> <C>
(6) Distribution Agreement dated
January 31, 1994 between Registrant
and Provident Distributors, Inc.
(7)
Fund Office Retirement Profit-Sharing
Plan and Trust Agreement as approved
September 27, 1990.
(9) (a) Administration Agreement dated
January 18, 1993 between Registrant
and Provident Distributors, Inc.
(formerly MFD Group, Inc.) and
Provident Financial Processing
Corporation.
(10) Opinion of Counsel.
(11) (a) Consent of Coopers & Lybrand.
(b) Consent of Drinker Biddle & Reath.
(c) Consent of O'Melveny & Myers.
(27) (a) Financial Data Schedule as of
January 31, 1995 for the California
Money Fund.
(b) Financial Data Schedule as of
January 31, 1995 for the California
Intermediate Municipal Fund.
</TABLE>
<PAGE> 1
MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.
DISTRIBUTION AGREEMENT
Agreement dated as of January 31, 1994 between Municipal Fund
for California Investors, Inc., a Maryland corporation, (the "Company"), and
Provident Distributors, Inc., a Delaware corporation (the "Distributor").
WHEREAS, the Company is an open-end, diversified management
investment company and is so registered under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Company desires to retain the Distributor as its
distributor to provide for the sale and distribution of each class or subclass
of shares of each of the Company's investment portfolios (individually a
"Fund," collectively, the "Funds") as listed on Appendix A (as such Appendix
may, from time to time, be supplemented (or amended)), and the Distributor is
willing to render such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants set forth and intending to be legally bound, the parties hereto agree
as follows:
1. APPOINTMENT OF DISTRIBUTOR. The Company hereby
appoints the Distributor as distributor of each class or subclass of shares in
each of the Company's Funds on the terms and for the period set forth in this
Agreement. The Distributor hereby accepts such appointment and agrees to
render the services and duties set forth in Section 3 below. In the event that
the Company establishes additional classes or investment portfolios other than
the Funds listed on Appendix A with respect to which it desires to retain the
Distributor to act as distributor hereunder, the Company shall notify the
Distributor, whereupon such Appendix A shall be supplemented (or amended) and
such portfolio shall become a Fund hereunder and shall be subject to the
provisions of this Agreement to the same extent as the Funds (except to the
extent that said provisions may be modified in writing by the Company and
Distributor at the time).
2. DELIVERY OF DOCUMENTS. The Company has furnished the
Distributor with copies, properly certified or authenticated, of each of the
following documents and will deliver to it all future amendments and
supplements, if any:
a. The Company's Articles of Incorporation,
filed with the Secretary of State of Maryland on September 20, 1982, as amended
(the "Charter"),
<PAGE> 2
b. The Company's By-Laws, as amended and
supplemented ("By-Laws");
c. Resolutions of the Company's Board of
Directors authorizing the execution and delivery of this Agreement;
d. The Company's most recent amendment to its
Registration Statement under the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act on Form N-1A as filed with the Securities and Exchange
Commission (the "Commission") on May 28, 1993, relating to its Funds (the
Registration Statement, as presently in effect and as amended or supplemented
from time to time, is herein called the "Registration Statement");
e. The Company's most recent Prospectuses and
Statement of Additional Information and all amendments and supplements thereto
(such Prospectuses and Statement of Additional Information and supplements
thereto, as presently in effect and as from time to time amended and
supplemented, are herein called the "Prospectuses");
f. The Company's amended and restated 12b-1 Services
Plan and related amended and restated form of Broker/Dealer Servicing
Agreement.
3. SERVICES AND DUTIES. The Distributor enters into the
following covenants with respect to its services and duties:
a. The Distributor agrees to sell, as agent,
from time to time during the term of this Agreement, shares upon the terms and
at the current offering price as described in the Prospectuses. The
Distributor will act only in its own behalf as principal in making agreements
with selected dealers. No broker-dealer or other person which enters into a
selling or servicing agreement with the Distributor shall be authorized to act
as agent for the Company or its Funds in connection with the offering or sale
of shares to the public or otherwise. The Distributor shall use its best
efforts to sell shares of each class or subclass of each of the Funds but shall
not be obligated to sell any certain number of shares.
b. The Distributor shall prepare or review,
provide advice with respect to, and file with the federal and state agencies or
other organization as required by federal, state, or other applicable laws and
regulations, all sales literature (advertisements, brochures and shareholder
communications) for each of the Funds and any class or subclass thereof.
c. In performing all of its services and duties
as Distributor, the Distributor will act in conformity with the
-2-
<PAGE> 3
Charter, By-Laws, Prospectuses and resolutions and other instructions of the
Company's Board of Directors and will comply with the requirements of the 1933
Act, the Securities Exchange Act of 1934, the 1940 Act and all other applicable
federal or state law.
d. The Distributor will bear the cost of (i)
printing and distributing any Prospectus (including any supplement thereto) to
persons who are not shareholders, and (ii) preparing, printing and distributing
any literature, advertisement or material which is primarily intended to result
in the sale of shares; provided, however, that the Distributor shall not be
obligated to bear the expenses incurred by the Company in connection with the
preparation and printing of any amendment to any Registration Statement or
Prospectus necessary for the continued effective registration of the shares
under the 1933 Act and state securities laws and the distribution of any such
document to existing shareholders of the Company's Funds.
e. The Company shall have the right to suspend
the sale of shares at any time in response to conditions in the securities
markets or otherwise, and to suspend the redemption of shares of any Fund at
any time permitted by the 1940 Act or the rules and regulations of the
Commission ("Rules").
f. The Company reserves the right to reject any
order for shares but will not do so arbitrarily or without reasonable cause.
4. LIMITATIONS OF LIABILITY. The Distributor shall not
be liable for any error of judgment or mistake of law or for any loss suffered
by the Company in connection with the matters to which this Agreement relates,
except a loss resulting from willful misfeasance, bad faith or gross negligence
on its part in the performance of its duties or from reckless disregard by it
of its obligations and duties under this Agreement.
5. PROPRIETARY AND CONFIDENTIAL INFORMATION. The
Distributor agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Company all records and
other information relative to the Company and its Funds and prior, present or
potential shareholders, and not to use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Company,
which approval shall not be unreasonably withheld and may not be withheld where
the Distributor may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Company.
-3-
<PAGE> 4
6. INDEMNIFICATION.
a. The Company represents and warrants to the
Distributor that the Registration Statement contains, and that the Prospectuses
at all times will contain, all statements required by the 1933 Act and the
Rules of the Commission, will in all material respects conform to the
applicable requirements of the 1933 Act and the Rules and will not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that no
representation or warranty in this Section 6 shall apply to statements or
omissions made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Distributor or either of the
Company's co-administrators expressly for use in the Registration Statement or
Prospectuses.
b. The Company on behalf of each Fund agrees
that each Fund will indemnify, defend and hold harmless the Distributor, its
several officers, and directors, and any person who controls the Distributor
within the meaning of Section 15 of the 1933 Act, from and against any losses,
claims, damages or liabilities, joint or several, to which the Distributor, its
several officers, and directors, and any person who controls the Distributor
within the meaning of Section 15 of the 1933 Act, may become subject under the
1933 Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) arise out of, or are based upon
any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement, the Prospectuses or in any application or other
document executed by or on behalf of the Company with respect to such Fund or
are based upon information furnished by or on behalf of the Company with
respect to such Fund filed in any state in order to qualify the shares under
the securities or blue sky laws thereof ("Blue Sky application") or arise out
of, or are based upon, 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, and will reimburse the Distributor, its several
officers, and directors, and any person who controls the Distributor within the
meaning of Section 15 of the 1933 Act, for any legal or other expenses
reasonably incurred by the Distributor, its several officers, and directors,
and any person who controls the Distributor within the meaning of Section 15 of
the 1933 Act, in investigating, defending or preparing to defend any such
action, proceeding or claim; provided, however, that the Company shall not be
liable in any case to the extent that such loss, claim, damage or liability
arises out of, or is based upon, any untrue statement, alleged untrue
statement, or omission or alleged omission made in the Registration Statement,
the Prospectus or any Blue Sky
-4-
<PAGE> 5
application with respect to such Fund in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Distributor
or either of the Company's co-administrators specifically for inclusion therein
or arising out of the failure of the Distributor to deliver a current
Prospectus.
c. The Company on behalf of each Fund shall not
indemnify any person pursuant to this Section 6 unless the court or other body
before which the proceeding was brought has rendered a final decision on the
merits that such person was not liable by reason of his or her willful
misfeasance, bad faith or gross negligence in the performance of his or her
duties, or his or her reckless disregard of any obligations and duties, under
this Agreement ("disabling conduct") or, in the absence of such a decision, a
reasonable determination (based upon a review of the facts) that such person
was not liable by reason of disabling conduct has been made by the vote of a
majority of a quorum of the directors of the Company who are neither
"interested parties" (as defined in the 1940 Act) nor parties to the
proceeding, or by an independent legal counsel in a written opinion.
d. The Distributor will indemnify and hold
harmless the Company and each of its Funds and its several officers and
directors, and any person who controls the Company within the meaning of
Section 15 of the 1933 Act, from and against any losses, claims, damages or
liabilities, joint or several, to which any of them may become subject under
the 1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon, any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, the Prospectus or any Blue Sky
application, or arise out of, or are based upon, 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, which statement or
omission was made in reliance upon and in conformity with information furnished
in writing to the Company or any of its several officers and directors by or on
behalf of the Distributor or either of the Company's co-administrators
specifically for inclusion therein, and will reimburse the Company and its
several officers, directors and such controlling persons for any legal or other
expenses reasonably incurred by any of them in investigating, defending or
preparing to defend any such action, proceeding or claim.
e. The obligations of each Fund under this
Section 6 shall be the several (and not the joint or joint and several)
obligation of each Fund.
-5-
<PAGE> 6
7. DURATION AND TERMINATION. This Agreement shall
become effective upon its execution as of the date first written above and,
unless sooner terminated as provided herein, shall continue until May 31, 1995.
Thereafter, if not terminated, this Agreement shall continue automatically for
successive terms of one year, provided that such continuance is specifically
approved at least annually (a) by a vote of a majority of those members of the
Company's Board of Directors who are not parties to this Agreement or
"interested persons" of any such party, cast in person at a meeting called for
the purpose of voting on such approval, and (b) by the Company's Board of
Directors or by vote of a "majority of the outstanding voting securities" of
the Company; provided, however, that this Agreement may be terminated by the
Company at any time, without the payment of any penalty, by vote of a majority
of the entire Board of Directors or by a vote of a "majority of the outstanding
voting securities" of the Company on 60-days' written notice to the
Distributor, or by the Distributor at any time, without the payment of any
penalty, on 90-days' written notice to the Company. This Agreement will
automatically and immediately terminate in the event of its "assignment." (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
as such terms have in the 1940 Act.)
8. 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 which an enforcement of
the change, waiver, discharge or termination is sought.
9. NOTICES. Notices of any kind to be given to the
Company hereunder by the Distributor shall be in writing and shall be duly
given if mailed or delivered to the Company at Bellevue Park Corporate Center,
Suite 152, 103 Bellevue Parkway, Wilmington, Delaware 19809, Attention: Mr.
Edward J. Roach, Treasurer, with a copy to Philadelphia National Bank Building,
1345 Chestnut Street, Philadelphia Pennsylvania 19107-3496, Attention: Morgan
R. Jones, Secretary, or at such other address or to such individual as shall be
so specified by the Company to the Distributor. Notices of any kind to be
given to the Distributor hereunder by the Company shall be in writing and shall
be duly given if mailed or delivered to Provident Distributors, Inc., 259
Radnor- Chester Road, Suite 120, Radnor, Pennsylvania 19087, Attention: Monroe
J. Haegele or at such other address or to such other individual as shall be so
specified by the Distributor to the Company.
10. MISCELLANEOUS. The captions in this Agreement are
included for convenience of reference only and in no way define
-6-
<PAGE> 7
or delimit any of the provisions hereof or otherwise affect their construction
or effect. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
11. COUNTERPARTS. This Agreement may be executed in
counterparts, all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day and
year first above written.
MUNICIPAL FUND FOR CALIFORNIA
INVESTORS, INC.
By
-----------------------------
President
PROVIDENT DISTRIBUTORS, INC.
By
----------------------------
Title
-7-
<PAGE> 8
APPENDIX A
to the
DISTRIBUTION AGREEMENT
between
Municipal Fund for California Investors, Inc.
and
Provident Distributors, Inc.
- --------------------------------------------------------------------------------
California Money Fund (Class A Common Stock, Class A Common Stock Special
Series 1 and Class A Common Stock - Special Series 2)
California Intermediate Municipal Fund (Class B Common Stock, Class B Comon
Stock - Special Series 1 and Class B Common Stock - Special Series 2)
A-1
<PAGE> 1
EXHIBIT 7
DRINKER BIDDLE & REATH
REGIONAL PROTOTYPE
DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT
SPONSORED
BY
DRINKER BIDDLE & REATH
PHILADELPHIA, PENNSYLVANIA
[ FUND OFFICE RETIREMENT PROFIT-SHARING PLAN ]
NAME OF PLAN OF ADOPTING EMPLOYER
[ MUNICIPAL FUND FOR TEMPORARY INVESTMENT ]
NAME OF ADOPTING EMPLOYER
(REV. 06/94)
(C)DRINKER BIDDLE & REATH 1995
<PAGE> 2
TABLE OF CONTENTS
PART I - PLAN
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Article I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Accrual Computation Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accrued Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Adjustment Factor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Administrative Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Adoption Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.6 Affiliated Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.7 Appropriate Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.8 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.11 Computation Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.12 Controlled Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.13 Defined Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.14 Defined Contribution Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.15 Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.16 Determination Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.17 Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.18 Early Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.19 Earned Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.20 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.21 Elective Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.22 Elective Deferral Account(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.23 Elective Deferral Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.24 Eligibility Computation Period(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.25 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.26 Employee Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.27 Employee Pension Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.28 Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.29 Employer Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.30 Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.31 Employer Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.32 Employment Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.33 Entry Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.34 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.35 Excess Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.36 Family Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.37 Fiduciary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.38 Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>
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1.39 Hour of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.40 Hourly Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.41 Inactive Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.42 Insurance Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.43 Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.44 Investment Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.45 Key Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.46 Leased Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.47 Limitation Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.48 Limitation Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.49 Matching Account(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.50 Matching Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.51 Non-Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.52 Non-Resident Alien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.53 Normal Retirement Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.54 Normal Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.55 One-Year Break In Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.56 Owner-Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.57 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.58 Participant Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.59 Participant Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.60 Permissive Aggregation Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.61 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.62 Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.63 Plan Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.64 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.65 Prior Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.66 Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.67 QVEC Account(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.68 Qualified Domestic Relations Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.69 Qualified Matching Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.70 Qualified Nonelective Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.71 Qualified Voluntary Employee Contributions . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.72 Qualifying Employer Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.73 Reemployment Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.74 Required Aggregation Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.75 Rollover Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.76 Rollover Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.77 Salaried Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.78 Self-Employed Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.79 Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.80 Sponsoring Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.81 Spouse or Surviving Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.82 Taxable Wage Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.83 Taxable Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.84 Top-Heavy Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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1.85 Top-Heavy Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
1.86 Top-Heavy Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.87 Transfer Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.88 Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.89 Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.90 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.91 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.92 Union Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.93 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.94 Vested Accrued Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.95 Vesting Computation Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.96 Welfare Benefit Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.97 Year of Service for Benefit Accrual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.98 Year of Service for Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
1.99 Year of Service for Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Article II PARTICIPATION UNDER PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.1 Adoption of Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.2 Eligibility Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.3 Additional Rules Relating to Plan Participation. . . . . . . . . . . . . . . . . . . . . . . 23
2.4 Plans Covering Owner-Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Article III CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.1 Employer Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.2 Participant Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.3 Qualified Voluntary Employee Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.4 Elective Deferral Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.5 Matching Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.6 Contributions Held in Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.7 Return of Employer Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.8 Limitations on Allocations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.9 Rollover Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.10 Transfers of Accounts from and to Other
Qualified Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
3.11 Top-Heavy Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Article IV ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
4.1 Separate Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Article V ALLOCATION OF CONTRIBUTIONS, EARNINGS AND FORFEITURES . . . . . . . . . . . . . . . . . . . . 50
5.1 Allocations of Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.2 Advice to Trustee re Allocations of Contributions and Direct Transfers. . . . . . . . . . . . 51
5.3 Valuations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.4 Allocation of Increases and Decreases. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.5 Forfeitures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
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Article VI INVESTMENT OF ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.1 Investment of Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.2 Insurance Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.3 Voting and Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Article VII BENEFITS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.1 Benefit Determination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.2 Designation of Beneficiary and Election with Respect to
Death Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.3 Normal Retirement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.4 Early Retirement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.5 Participation after Normal Retirement Date. . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.6 Separation from Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.7 Disability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.8 Death. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.9 Commencement of Payments; Deferral of Payments; Minimum
Distribution Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.10 Withdrawals during Employment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
7.11 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
7.12 QVEC Withdrawals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.13 Incidental Benefit Rule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.14 Joint and Survivor Annuity Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.15 Waiver of 30-day Notice Requirements for Certain Distributions . . . . . . . . . . . . . . . 84
Article VIII NONALIENATION OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
8.1 Benefits Not Alienable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
8.2 Special Provision with Respect to Qualified Domestic Relations
Orders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Article IX THE ADMINISTRATIVE COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
9.1 Structure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
9.2 Administrative Committee Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
9.3 Responsibilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
9.4 Contracting for Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
9.5 Expenses of Administrative Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Article X CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
10.1 Claims for Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
10.2 Appeals Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Article XI THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.1 Acceptance of Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.2 Resignation of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.3 Removal of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.4 Appointment of Successor Trustee upon Occurrence of Certain Events . . . . . . . . . . . . . . 88
11.5 Successor Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
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11.6 Meetings and Actions of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.7 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.8 Trustee's Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.9 General Powers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.10 Payments to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.11 Investment of Trust Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.12 Accounts, Reports and Governmental Filings. . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.13 Information to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.14 Benefit Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.15 Trust Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.16 Participants Exclusively to Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.17 Employment of Counsel, Agents, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.18 Compromise of Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.19 Suits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.20 Execution of Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.21 No Discrimination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.22 Decision of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.23 Funding Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Article XII THE INSURER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
12.1 Insurer's Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
12.2 Information to Insurer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
12.3 Benefit Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
12.4 Annuities Must be Nontransferable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
12.5 Conflicts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
12.6 Distribution of Insurance Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
12.7 Conflict with Insurance Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
12.8 Dividends or Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Article XIII THE INVESTMENT MANAGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
13.1 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
13.2 Responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
13.3 Act in Interest of Participants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
13.4 Directions from Investment Manager. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Article XIV FIDUCIARY RESPONSIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
14.1 Fiduciary Duties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
14.2 Allocation of Responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
14.3 Exclusive Responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
14.4 Transfer or Maintenance of Indicia of Ownership of Plan
Assets Outside United States Prohibited. . . . . . . . . . . . . . . . . . . . . . . . . . . 94
14.5 Liability of Fiduciary for Breach of Co-Fiduciary. . . . . . . . . . . . . . . . . . . . . . 94
14.6 Prohibited Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
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Article XV PLAN AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
15.1 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
15.2 Limitations upon Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
15.3 Rights of Trustee upon Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
15.4 Significant Reduction in Rate of Future Benefit Accruals. . . . . . . . . . . . . . . . . . . 98
Article XVI PLAN TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
16.1 Right to Discontinue Contributions and/or to Terminate Plan and Trust. . . . . . . . . . . . 99
16.2 Termination of Plan on Happening of Certain Events. . . . . . . . . . . . . . . . . . . . . . 99
16.3 Continuance of Trust after Complete Discontinuance of
Contributions to Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
16.4 Distribution of Trust Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
16.5 Distributees whose Whereabouts are Unknown. . . . . . . . . . . . . . . . . . . . . . . . . . 100
Article XVII SUCCESSOR EMPLOYER AND MERGER OR CONSOLIDATION OF PLAN . . . . . . . . . . . . . . . . . . . 100
17.1 Successor to Employer under Plan and Trust. . . . . . . . . . . . . . . . . . . . . . . . . . 100
17.2 Merger or Consolidation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Article XVIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
18.1 No Right to Employment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
18.2 Gender and Number. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
18.3 Bonding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
18.4 Agent for Service of Legal Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
18.5 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
18.6 Unclaimed Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
18.7 Reports Furnished to Participants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
18.8 Reports Available to Participant and Beneficiaries. . . . . . . . . . . . . . . . . . . . . . 102
18.9 Reports upon Request. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
18.10 Controlled Group Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
18.11 Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
18.12 Insurance and Indemnification for Liability. . . . . . . . . . . . . . . . . . . . . . . . . 103
18.13 No Retention of Interest in Trust Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
18.14 Termination of Plan and Trust under Rule Against Perpetuities. . . . . . . . . . . . . . . . 103
18.15 Notice to Interested Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
18.16 Effective Date of Adoption of Plan and Trust Agreement. . . . . . . . . . . . . . . . . . . . 104
18.17 Restatement of Existing Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
18.18 Individual Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
18.19 Failure of Qualification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Article XIX ADOPTION OF PLAN BY AFFILIATED EMPLOYERS . . . . . . . . . . . . . . . . . . . . . . . . . . 104
19.1 Adoption of Plan and Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
19.2 Withdrawal from Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
19.3 Exclusive Purpose of Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
19.4 Application of Withdrawal Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
19.5 Single Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
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19.6 Adopting Employer Appointed Agent of Adopting Affiliated Employers . . . . . . . . . . . . . . 106
PART II - ADOPTION AGREEMENTS
PROFIT-SHARING (401(K)) PLAN (REGIONAL PROTOTYPE PLAN NUMBER 001)
ADOPTION AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
MONEY PURCHASE PLAN (REGIONAL PROTOTYPE PLAN NUMBER 002) ADOPTION
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
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PART I
DRINKER BIDDLE & REATH
REGIONAL PROTOTYPE
DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT
ARTICLE I
DEFINITIONS
The following words and phrases, as used in the Plan and
Adoption Agreement, shall have the following meanings unless the context
clearly indicates otherwise:
1.1 ACCRUAL COMPUTATION PERIOD. "ACCRUAL COMPUTATION PERIOD"
shall mean the Plan Year except as otherwise elected in the applicable Adoption
Agreement.
1.2 ACCRUED BENEFIT. "ACCRUED BENEFIT" shall mean the amounts
credited to a Participant's Employer, Elective Deferral, Matching, Participant,
Rollover, Transfer and QVEC Accounts and other accounts (e.g., Qualified
Matching Contribution and Qualified Nonelective Contribution accounts)
including the proceeds of Insurance Contracts, if any, on the life of the
Participant.
1.3 ADJUSTMENT FACTOR. "ADJUSTMENT FACTOR" shall mean the
cost-of-living adjustment factor prescribed by the Secretary of the Treasury
under section 415(d) of the Code for years beginning after December 31, 1987,
as applied to such items and in such manner as the Secretary shall provide.
1.4 ADMINISTRATIVE COMMITTEE. "ADMINISTRATIVE COMMITTEE" shall
mean the committee appointed by the Employer to administer the Plan. The
name(s) of the member(s) of the Administrative Committee and his (their)
address(es) shall be indicated in the Adoption Agreement.
1.5 ADOPTION AGREEMENT. "ADOPTION AGREEMENT" shall mean the
document executed by the Employer and the Trustee under which the Employer has
elected to establish or continue a qualified retirement plan and trust under
the terms of this Plan and Trust Agreement. If the Employer desires to
establish a profit-sharing or a profit-sharing 401(k) plan, the Employer shall
adopt the Profit-Sharing (401(k)) Plan Adoption Agreement. If the Employer
desires to establish a money purchase plan, the Employer shall adopt the Money
Purchase Plan Adoption Agreement.
1.6 AFFILIATED EMPLOYER. "AFFILIATED EMPLOYER" shall mean the
Employer and any corporation which is a member of a controlled group of
corporations (as defined in section 414(b) of the Code) which includes the
Employer; any trade or business (whether or not incorporated) which is under
common control (as defined in section 414(c) of the Code) with the Employer;
any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in section 414(m) of the Code) which
includes the Employer; and any other entity required to be aggregated with the
Employer pursuant to regulations under section 414(o) of the Code.
1.7 APPROPRIATE FORM. "APPROPRIATE FORM" shall mean the form
prescribed or provided by the Administrative Committee for the particular
purpose.
(C) DRINKER BIDDLE & REATH 1995
<PAGE> 10
1.8 BENEFICIARY. "BENEFICIARY" shall mean the Surviving Spouse of
a Participant, but if there is no Surviving Spouse, or, if the Surviving Spouse
previously consented in a manner conforming to a qualified election as provided
in Article VII, then such other person or persons or legal entity as may be
designated by the Participant to receive benefits payable under the Plan after
the Participant's death, or the personal or legal representative of a deceased
Participant. Prior to August 23, 1984, "Beneficiary" shall mean such person or
persons or legal entity as may be designated by the Participant to receive
benefits payable under the Plan after the Participant's death, or the personal
or legal representative of a deceased Participant.
1.9 CODE. "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
1.10 COMPENSATION. "COMPENSATION" shall mean Limitation
Compensation as that term is defined in Section 1.47. For any Self-Employed
Person covered under the Plan, Compensation shall mean Earned Income.
Compensation shall include only that compensation which is actually paid to the
Participant during the determination period. Except as provided elsewhere in
the Plan, the determination period is the Accrual Computation Period elected by
the Employer in the Adoption Agreement. If no election is made, the
determination period is the Plan Year.
Notwithstanding the above, if elected by the Employer in the Adoption
Agreement, Compensation shall include any amount which is contributed by the
Employer pursuant to a salary reduction agreement and which is not includible
in the gross income of the Employee under sections 125, 402(e)(3), 402(h)(1)(B)
or 403(b) of the Code.
(A) LIMITATION FOR PLAN YEARS BEGINNING BEFORE JANUARY 1,
1994. Effective for Plan Years beginning on or after January 1, 1989, and
before January 1, 1994, the annual compensation of each Participant taken
into account for determining all benefits provided under the Plan for any
plan year shall not exceed $200,000, as adjusted by the Adjustment Factor
except that the dollar increase in effect on January 1 of any calendar year
is effective for plan years beginning in such calendar year and the first
adjustment to the $200,000 limitation is effective on January 1, 1990. If
the period for determining compensation used in calculating an Employee's
allocation for a determination period is a short plan year (i.e., shorter
than 12 months) the annual compensation limit is an amount equal to the
otherwise applicable compensation limit multiplied by the fraction, the
numerator of which is the number of months in the short plan year, and the
denominator of which is 12.
If Compensation for any prior determination period is taken
into account in determining an Employee's allocations or benefits for the
current determination period, the compensation for such prior period is subject
to the applicable annual compensation limit in effect for that prior period.
For this purpose, for periods beginning before January 1, 1990, the applicable
annual compensation limit is $200,000.
(B) LIMITATION FOR PLAN YEARS BEGINNING ON OR AFTER
JANUARY 1, 1994. In addition to other applicable limitations set forth in
the Plan, and notwithstanding any other provisions of the Plan to the
contrary, for plan years beginning on or after January 1, 1994, the annual
compensation of each Participant taken into account for determining all
benefits provided under the Plan for any plan year shall not exceed
$150,000, as adjusted for increases in the cost-of-living in accordance with
section 401(a)(17)(B) of the Code. The cost-of-living adjustment in effect
for a calendar year applies to any determination period beginning in such
calendar year.
If a determination period consists of fewer than 12 months,
the annual compensation limit is an amount equal to the otherwise applicable
annual compensation limit multiplied by a fraction, the numerator of which is
the number of months in the short determination period, and the denominator of
which is 12.
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For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under section 401(a)(17) of the
Code shall mean the OBRA '93 annual compensation limit set forth in this
provision.
If compensation for any prior determination period is taken
into account in determining a Participant's allocations for the current Plan
Year, the compensation for such prior determination period is subject to
applicable annual compensation limit in effect for that prior determination
period. For this purpose, in determining allocations in plan years
beginning on or after January 1, 1989, the annual compensation limit in
effect for determination periods beginning before that date is $200,000. In
addition, in determining allocations in plan years beginning on or after
January 1, 1994, the annual compensation limit in effect for determination
periods beginning before that date is $150,000.
In determining the Compensation of a Participant for purposes of the
limitations of Section 1.10(A) and (B), the rules of section 414(q)(6) of the
Code shall apply, except in applying such rules, the term "family" shall
include only the spouse of the Participant and any lineal descendants of the
Participant who have not attained age 19 before the close of the year. If, as
a result of the application of such rules, the adjusted annual compensation
limitation is exceeded, then (except for purposes of determining the portion of
Compensation up to the integration level if this Plan provides for permitted
disparity), the limitation shall be prorated among the affected individuals in
proportion to each such individual's Compensation as determined under this
Section 1.10 prior to the application of this limitation.
1.11 COMPUTATION PERIOD. "COMPUTATION PERIOD" shall mean any 12
consecutive month period.
1.12 CONTROLLED GROUP. "CONTROLLED GROUP" shall mean a group of
employers, of which the Employer is a member and which group constitutes:
(A) A controlled group of corporations (as defined in
section 414(b) of the Code);
(B) Trades or businesses (whether or not incorporated)
which are under common control (as defined in section 414(c) of the Code);
(C) Trades or businesses (whether or not incorporated)
which constitute an affiliated service group (as defined in section 414(m)
of the Code); or
(D) Any other entity required to be aggregated with the
Employer pursuant to section 414(o) of the Code and the Treasury regulations
thereunder.
Solely for the purpose of applying Section 3.8, the phrase "more than
50 percent" shall be substituted for the phrase "at least 80 percent" each
place it appears in section 1563(a)(1) of the Code.
If the Employer adopting the Plan is a member of a Controlled Group,
the Employer shall so indicate in the Adoption Agreement.
1.13 DEFINED BENEFIT PLAN. "DEFINED BENEFIT PLAN" shall mean any
Employee Pension Benefit Plan which is not a Defined Contribution Plan.
1.14 DEFINED CONTRIBUTION PLAN. "DEFINED CONTRIBUTION PLAN" shall
mean any Employee Pension Benefit Plan which provides for an individual account
for each Participant and for benefits based solely upon
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<PAGE> 12
the amount contributed to the Participant's account and any income, expenses,
gains and losses, and any forfeitures of accounts of other Participants which
may be allocated to such Participant's account.
1.15 DETERMINATION DATE. "DETERMINATION DATE" shall mean, with
respect to any Employee Pension Benefit Plan, except as otherwise provided in
Treasury regulations, the last day of the preceding plan year or, in the case
of the first plan year of any plan, the last day of such plan year.
1.16 DETERMINATION PERIOD. "DETERMINATION PERIOD" shall mean the
Plan Year containing the Determination Date and the four preceding Plan Years.
1.17 DISABILITY. "DISABILITY" shall mean the inability 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 to be
of long continued or indefinite duration. The permanence and degree of such
impairment shall be supported by medical evidence satisfactory to the
Administrative Committee. If elected by the Employer in the Adoption
Agreement, nonforfeitable contributions shall be made to the Plan on behalf of
each disabled Participant who is a Non-Highly Compensated Employee.
1.18 EARLY RETIREMENT DATE. "EARLY RETIREMENT DATE" shall mean the
date, if any, specified in the Adoption Agreement.
1.19 EARNED INCOME. "EARNED INCOME" shall mean the net earnings of
a Self-Employed Person from self-employment in the trade or business with
respect to which the Plan is established, for which personal services of the
Self-Employed Person 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 shall be reduced by
contributions by the Employer to a qualified plan to the extent deductible
under section 404 of the Code.
Net earnings shall be determined with regard to the deduction allowed
to the taxpayer by section 164(f) of the Code for Taxable Years beginning after
December 31, 1989.
1.20 EFFECTIVE DATE. "EFFECTIVE DATE" shall mean the date on which
the Employer's Plan becomes effective, as indicated in the Adoption Agreement.
1.21 ELECTIVE DEFERRALS. "ELECTIVE DEFERRALS" shall mean
contributions made to the Plan during the Plan Year by the Employer, at the
election of the Participant, in lieu of cash compensation and shall include
contributions made pursuant to a salary reduction agreement or other deferral
mechanism. Moreover, with respect to any taxable year of a Participant, such
Participant's Elective Deferral is the sum of all employer contributions made
on behalf of such Participant pursuant to an election to defer under any
qualified cash or deferred arrangement as described in section 401(k) of the
Code, any simplified employee pension cash or deferred arrangement as described
in section 402(h)(l)(B) of the Code, any eligible deferred compensation plan
under section 457 of the Code, any plan as described under section 501(c)(18)
of the Code, and any employer contributions made on the behalf of a Participant
for the purchase of an annuity contract under section 403(b) of the Code
pursuant to a salary reduction agreement. Elective Deferrals shall not include
any deferrals properly distributed as excess annual additions.
1.22 ELECTIVE DEFERRAL ACCOUNT(S). "ELECTIVE DEFERRAL ACCOUNT(S)"
shall mean the account established by the Administrative Committee with the
Trustee for each Participant, which account shall be invested as provided in
Article VI on behalf of the Participant for whom such Elective Deferral Account
has
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<PAGE> 13
been established, and to which Elective Deferral Contributions on behalf of
such Participant, and the earnings and losses thereon, shall be allocated.
1.23 ELECTIVE DEFERRAL CONTRIBUTIONS. "ELECTIVE DEFERRAL
CONTRIBUTIONS" shall mean Employer contributions through salary reduction under
Section 3.4.
1.24 ELIGIBILITY COMPUTATION PERIOD(S). "ELIGIBILITY COMPUTATION
PERIOD(S)" shall mean the Computation Period(s) determined under (A) or (B)
below.
(A) NORMAL RULE. Unless the Adoption Agreement provides
otherwise, the Eligibility Computation Period(s) shall be the Computation
Period(s) commencing on an Employee's Employment Commencement Date and the
anniversaries of the Employee's Employment Commencement Date.
(B) ALTERNATE RULE. If the Adoption Agreement so
provides, the initial Eligibility Computation Period shall be the
Computation Period commencing on an Employee's Employment Commencement Date
and the succeeding Eligibility Computation Period(s) shall commence with the
first Plan Year which begins prior to the first anniversary of the
Employee's Employment Commencement Date regardless of whether the Employee
is entitled to be credited with the number of Hours of Service required by
the Adoption Agreement (not to exceed 1,000 Hours of Service) during the
initial Eligibility Computation Period. An Employee who is credited with
the number of Hours of Service required by the Adoption Agreement (not to
exceed 1,000 Hours of Service) in both the initial Eligibility Computation
Period and the first Plan Year which commences prior to the first
anniversary of the Employee's initial Eligibility Computation Period shall
be credited with two Years of Service for Eligibility for purposes of
participation in the Plan.
Years of Service for Eligibility and One-Year Breaks In Service for
eligibility shall be measured by the same Eligibility Computation Periods.
This provision is not applicable if the elapsed time method is selected in
Section A.2.2(B)(2) of the Adoption Agreement.
1.25 EMPLOYEE. "EMPLOYEE" shall mean any employee of the Employer
or of any other employer required to be aggregated with such Employer under
sections 414(b), (c), (m) or (o) of the Code and shall also include any Leased
Employee deemed to be an employee of any employer described in the preceding
clause as provided in sections 414(n) or (o) of the Code.
1.26 EMPLOYEE CONTRIBUTIONS. "EMPLOYEE CONTRIBUTIONS" shall mean
contributions to the Plan made by a Participant during the Plan Year.
1.27 EMPLOYEE PENSION BENEFIT PLAN. "EMPLOYEE PENSION BENEFIT
PLAN" shall mean any plan described in section 415(k)(1) of the Code.
1.28 EMPLOYER. "EMPLOYER" shall mean the adopting individual(s) or
business entity(ies). For purposes of applying the provisions of sections 401,
410, 411, 415 and 416 of the Code, all employees of a Controlled Group shall be
treated as employed by a single employer.
1.29 EMPLOYER ACCOUNT. "EMPLOYER ACCOUNT" shall mean the account
established by the Administrative Committee with the Trustee for each
Participant, which shall be invested as provided in Article VI on behalf of the
Participant for whom such Employer Account has been established, and to which
the Employer Contributions on behalf of such Participant and the earnings and
losses thereon shall be allocated.
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<PAGE> 14
1.30 EMPLOYER CONTRIBUTIONS. "EMPLOYER CONTRIBUTIONS" shall mean
Employer contributions under Section 3.1 of the Plan.
1.31 EMPLOYER SECURITY. "EMPLOYER SECURITY" shall mean an employer
security (as such term is defined in section 407(d)(1) of ERISA) issued by an
Employer or other Controlled Group member.
1.32 EMPLOYMENT COMMENCEMENT DATE. "EMPLOYMENT COMMENCEMENT DATE"
shall mean the date on which an Employee first performs an hour of service.
For purposes of this Section 1.32, hour of service shall mean each hour for
which an Employee is paid or is entitled to payment for the performance of
services for the Employer.
1.33 ENTRY DATE. "ENTRY DATE" shall mean the date designated in
the Adoption Agreement as the date on which an Employee shall become an active
Participant in the Plan.
1.34 ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time.
1.35 EXCESS COMPENSATION. "EXCESS COMPENSATION" shall mean
Compensation in excess of the lesser of:
(A) The Taxable Wage Base; or
(B) The dollar amount set forth in the Adoption Agreement.
1.36 FAMILY MEMBER. "FAMILY MEMBER" shall mean an individual
described in section 414(q)(6)(B) of the Code.
1.37 FIDUCIARY. "FIDUCIARY" shall mean any person who:
(A) Exercises any discretionary authority or
discretionary control respecting management of the Plan or exercises any
authority or control respecting management or disposition of its assets;
(B) Renders investment advice for a fee or other
compensation, direct or indirect, with respect to any moneys or other
property of the Plan or has authority or responsibility to do so; or
(C) Has any discretionary authority or discretionary
responsibility in administering the Plan.
1.38 HIGHLY COMPENSATED EMPLOYEE. "HIGHLY COMPENSATED EMPLOYEE"
shall mean highly compensated active Employees and highly compensated former
Employees.
(A) ACTIVE EMPLOYEES.
(1) A highly compensated active Employee includes
any Employee who performs services for the Employer during the
determination year and who, during the look-back year:
(a) Received Compensation from the
Employer in excess of $75,000 (as adjusted by the Adjustment
Factor);
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<PAGE> 15
(b) Received Compensation from the
Employer in excess of $50,000 (as adjusted by the Adjustment
Factor) and was a member of the top-paid group for such year;
or
(c) Was an officer of the Employer and
received Compensation during such year that is greater than 50
percent of the dollar limitation in effect under section
415(b)(l)(A) of the Code. If elected by the Employer in the
Adoption Agreement, Section 1.38(A)(1)(a) shall be modified by
substituting $50,000 for $75,000 and Section 1.38(A)(1)(b)
shall be disregarded. This simplified definition of Highly
Compensated Employee shall apply only to Employers that
maintain significant business activities (and employ
Employees) in at least two significantly separate geographic
areas.
(2) A highly compensated active Employee also
includes any Employee who would be described in Section 1.38(A)(1)(a),
(b) or (c), if the term "determination year" were substituted for the
term "look-back year" and the Employee was one of the 100 Employees
who received the most Compensation from the Employer during the
determination year.
(3) A highly compensated active Employee also
includes any Employee who is a five-percent owner at any time during
the look-back year or determination year.
If elected by the Employer in the Adoption Agreement, Section
1.38(A)(1)(a) and (b) shall be modified by substituting $50,000 for $75,000
in Section 1.38(A)(1)(a) and by disregarding Section 1.38(A)(1)(b). This
simplified definition of Highly Compensated Employee shall apply only to
employers that maintain significant business activities (and employ
employees) in at least two significantly separate geographic areas.
If no officer has satisfied the Compensation requirement of
Section 1.38(A)(1)(c) above during either a determination year or look-back
year, the highest paid officer for such year shall be treated as a highly
compensated Employee.
For purposes of this Section 1.38, the determination year
shall be the Plan Year and the look-back year shall be the 12-month period
immediately preceding the determination year. However, the Employer may
elect, in the applicable Adoption Agreement, to make the look-back year
calculation for a determination year on the basis of the calendar year
ending with or within the applicable determination year (or, in the case of
a determination year that is shorter than 12 months, the calendar year
ending with or within the 12-month period ending with the end of the
applicable determination year). In such case, the Employer must make the
determination year calculation for the determination year on the basis of
the period (if any) by which the applicable determination year extends
beyond such calendar year (i.e., the lag period). If the Employer elects to
make the calendar year calculation election with respect to one plan, entity
or arrangement, such election must apply to all plans, entities and
arrangements of the Employer and such election must be provided for in the
plan. This election and the calculation are subject to the requirements and
provisions of Treas. Reg. Section 1.414(q)-1T Q- and A-14, as modified by
Proposed Treas. Reg. Section 1.414(q)-1T.
(B) FORMER EMPLOYEES. A highly compensated former
Employee includes any Employee who separated from service (or was deemed to
have separated) prior to the determination year, performs no service for the
Employer during the determination year, and was a highly compensated active
Employee for either the separation year or any determination year ending on
or after the Employee's 55th birthday.
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<PAGE> 16
If an Employee is, during a determination year or look-back
year, a Family Member of either a five-percent owner who is an active or
former Employee or a highly compensated Employee who is one of the ten most
highly compensated Employees ranked on the basis of Compensation paid by the
Employer during such year, then the Family Member and the five-percent owner
or top-ten highly compensated Employee shall be aggregated. In such case,
the Family Member and five-percent owner or top-ten highly compensated
Employee shall be treated as a single Employee receiving Compensation and
Plan contributions or benefits equal to the sum of such Compensation and
contributions or benefits of the Family Member and five-percent owner or
top-ten highly compensated Employee.
The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of Employees in the
top-paid group, the top 100 Employees, the number of Employees treated as
officers and the Compensation that is considered, shall be made in
accordance with section 414(q) of the Code and the Treasury regulations
thereunder.
1.39 HOUR OF SERVICE. "HOUR OF SERVICE" shall mean an hour of
service determined as follows:
(A) An "Hour of Service" shall mean:
(1) Each hour for which an Employee is paid, or
entitled to payment, for the performance of duties for the Employer;
(2) 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; and
(3) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the Employer,
provided that the same Hours of Service shall not be credited under
Section 1.39(A)(1) or Section 1.39(A)(2) and under Section 1.39(A)(3).
(B) Effective for Plan Years beginning after December 31,
1984, solely for purposes of determining whether a One-Year Break In
Service, as defined in Section 1.55, for participation and vesting purposes
has occurred in a Computation Period, an Employee who is absent from work
for maternity or paternity reasons shall receive credit for the Hours of
Service which would otherwise have been credited to such Employee but for
such absence, or in any case in which such Hours of Service cannot be
determined, eight Hours of Service per day of such absence. For purposes of
this Section 1.39(B), an absence from work for maternity or paternity
reasons means an absence:
(1) By reason of the pregnancy of the Employee;
(2) By reason of the birth of a child of the
Employee;
(3) By reason of the placement of a child with
the Employee in connection with the adoption of such child by such
Employee; or
(4) For purposes of caring for such child for a
period beginning immediately following such birth or placement.
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<PAGE> 17
The Hours of Service credited under this Section 1.39(B) shall be credited
(i) in the Computation Period in which the absence begins if the crediting
is necessary to prevent a One-Year Break In Service in that Computation
Period, or (ii) in all other cases, in the following Computation Period.
(C) Notwithstanding Section 1.39(A)(2),
(1) No more than 501 Hours of Service shall be
credited under Section 1.39(A)(2) to an Employee on account of any
single continuous period during which the Employee performs no duties
(whether or not such period occurs in a single Computation Period);
(2) Hours of Service shall not be credited under
Section 1.39(A)(2) to an Employee for payments made or due under a
plan maintained solely for the purpose of complying with any
applicable workers' compensation, unemployment compensation or
disability insurance laws;
(3) Hours of Service shall not be credited under
Section 1.39(A)(2) to an Employee for any payment which solely
reimburses him for medical or medically related expenses he has
incurred; and
(4) Hours of Service shall not be credited under
Section 1.39(A)(2) to an Employee for any payments made or due to him
under this Plan or any other pension or profit-sharing plan maintained
by the Employer.
(D) In the case of a payment which is made, or due, on
account of a period during which an Employee performs no duties, and which
results in the crediting of Hours of Service under Section 1.39(A)(2), or in
the case of an award or agreement for back pay, to the extent that such
award or agreement is made with respect to a period described in Section
1.39(A)(2), the number of Hours of Service to be credited shall be
determined in accordance with 29 CFR Section 2530.200b-2(b).
(E) Hours of Service described in Section 1.39(A)(1)
shall be credited to the Employee for the Computation Period in which the
duties are performed. Hours of Service under Section 1.39(A)(2) shall be
calculated and credited to service Computation Periods in accordance with 29
CFR Section 2530.200b-2 which is incorporated herein by this reference.
Hours of Service under Section 1.39(A)(3) shall be credited to the Employee
for the Computation Period(s) to which the award or agreement pertains
rather than to the Computation Period in which the award, agreement or
payment is made.
(F) This Section 1.39 shall not be construed so as to
alter, amend, modify, invalidate, impair or supersede any law of the United
States or any rule or regulation issued under any such law. The nature and
extent of credit for Hours of Service recognized under this Section 1.39
shall be determined under such law.
(G) In the case of an Employee who is on leave of absence
for service on active duty in the Armed Forces of the United States, such
Employee shall receive upon return to the service of the Employer, in
addition to credit for Hours of Service to which such Employee is entitled
under this Section 1.39, such other credit as may be prescribed by Federal
laws relating to military service and veterans' reemployment rights.
(H) Hours of Service shall be credited for employment
with other members of an affiliated service group (under section 414(m) of
the Code) and of other members of a Controlled Group of which the
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<PAGE> 18
adopting Employer is a member. Hours of Service shall also be credited for
any individual required under section 414(n) of the Code to be considered an
Employee of any employer aggregated under sections 414(b), 414(c), or 414(m)
of the Code or section 414(o) of the Code and the Treasury regulations
thereunder.
(I) Except as otherwise provided in Section 1.39(B), the
number of Hours of Service to be credited to an Employee in a Computation
Period shall be determined in the following manner:
(1) In the case of an Employee for whom the
Employer maintains records of his hours worked and hours for which
payment is made or due, the number of Hours of Service to be credited
to such Employee in a Computation Period shall be determined from such
records.
(2) In the case of an Employee for whom the
Employer does not maintain records of his hours worked and hours for
which payment is made or due, the number of Hours of Service to be
credited to such Employee in a Computation Period shall be determined
on the basis of periods of employment which shall be the payroll
periods of the Employer applicable to such Employee. An Employee
shall be credited with a number of Hours of Service, determined in
accordance with the following table, for each of his payroll periods
in which he actually has at least one Hour of Service:
<TABLE>
<CAPTION>
PAYROLL PERIOD HOURS OF SERVICE CREDITED
-------------- -------------------------
<S> <C>
Daily 10
Weekly 45
Semi-monthly 95
Monthly 190
</TABLE>
1.40 HOURLY EMPLOYEE. "HOURLY EMPLOYEE" shall mean any Employee
who is compensated by the Employer on an hourly-rated basis.
1.41 INACTIVE PARTICIPANT. "INACTIVE PARTICIPANT" shall mean any
Employee or former Employee who has ceased to be a Participant and on whose
behalf an account is maintained under the Plan.
1.42 INSURANCE CONTRACTS. "INSURANCE CONTRACTS" shall mean fixed
or variable annuities, endowments and any other form or type of life insurance
contract or combination thereof issued by an Insurer. Each Insurance Contract
shall be held and owned by the Trustee in accordance with the terms of the
Plan.
1.43 INSURER. "INSURER" shall mean any life insurance company
which is licensed to do business in the State where the Employer's principal
office is located.
1.44 INVESTMENT MANAGER. "INVESTMENT MANAGER" shall mean the
investment manager, if any, appointed by the Employer to manage and invest all
or any portion of the assets of the Plan. Such Investment Manager shall:
(A) Have the power to manage, acquire or dispose of any
Plan assets committed to it;
(B) Be registered as an investment adviser under the
Investment Advisers Act of 1940; and
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<PAGE> 19
(C) Have acknowledged in writing that it is a Fiduciary
with respect to the Plan and that it is bonded as required by ERISA.
The name(s) and address(es) of any Investment Manager(s) shall
be indicated in the Adoption Agreement.
1.45 KEY EMPLOYEE. "KEY EMPLOYEE" shall mean any Employee or
former Employee of the Employer who, at any time during the Determination
Period, is:
(A) An officer of the Employer having an annual
compensation which exceeds 50 percent of the dollar limitation under section
415(b)(1)(A) of the Code;
(B) An owner (or considered an owner under section 318 of
the Code) of one of the ten largest interests in the Employer if such
individual's compensation from the Employer exceeds 100 percent of the
dollar limitation under section 415(c)(1)(A) of the Code;
(C) A five-percent owner of the Employer; or
(D) A one-percent owner of the Employer having annual
compensation from the Employer of more than $150,000.
For the purposes of this Section 1.45, Key Employees shall
also include their beneficiaries.
Compensation means compensation as defined in Section A.1.47
of the Adoption Agreement, but including amounts contributed by the Employer
pursuant to a salary reduction arrangement which are excludable from the
Employee's gross income under sections 125, 402(e)(3), 402(h)(1)(B) or
403(b) of the Code.
For purposes of Section 1.45(A), no more than 50 Employees
(or, if less, the greater of three or ten percent of the Employees) shall be
treated as officers.
For purposes of Section 1.45(B), if two Employees have the
same interest in the Employer, the Employee having the greater amount of
compensation from the Employer shall be treated as having the larger
interest.
The determination of who is a Key Employee shall be made in
accordance with section 416(i)(l) of the Code and the Treasury regulations
thereunder.
1.46 LEASED EMPLOYEE. "LEASED EMPLOYEE" shall mean any person
(other than an employee of the recipient) who pursuant to an agreement between
the recipient and any other person ("leasing organization") has performed
services for the recipient (or for the recipient and related persons determined
in accordance with section 414(n)(6) of the Code) on a substantially full-time
basis for a period of at least one year, provided such services are of a type
historically performed by employees in the business field of the recipient
employer. Contributions or benefits provided a Leased Employee by the leasing
organization which are attributable to services performed for the recipient
employer shall be treated as provided by the recipient employer.
A Leased Employee shall not be considered an employee of the recipient
if:
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<PAGE> 20
(A) Such employee is covered by a money purchase pension plan
providing: (1) a nonintegrated employer contribution rate of at least ten
percent of compensation, as defined in section 415(c)(3) of the Code, but
including amounts contributed pursuant to a salary reduction agreement which
are excludable from the employee's gross income under section 125, section
402(e)(3), section 402(h)(1)(B) or section 403(b) of the Code, (2) immediate
participation, and (3) full and immediate vesting; and
(B) Leased Employees do not constitute more than 20 percent
of the recipient's nonhighly compensated workforce.
1.47 LIMITATION COMPENSATION. "LIMITATION COMPENSATION" shall mean
one of the following, as elected by the Employer in the Adoption Agreement:
(A) INFORMATION REQUIRED TO BE REPORTED UNDER SECTIONS 6041,
6051, AND 6052 OF THE CODE (WAGES, TIPS AND OTHER COMPENSATION AS REPORTED
ON FORM W-2). Limitation Compensation shall mean wages within the meaning
of section 3401(a) of the Code and all other payments of compensation to an
Employee by the Employer (in the course of the Employer's trade or business)
for which the Employer is required to furnish the Employee a written
statement under sections 6041(d), 6051(a)(3), and 6052 of the Code.
Limitation Compensation must be determined without regard to any rules under
section 3401(a) of the Code that limit the remuneration included in wages
based on the nature or location of the employment or the services performed
(such as the exception for agricultural labor in section 3401(a)(2) of the
Code).
(B) SECTION 3401(A) WAGES. Limitation Compensation shall
mean wages as defined in section 3401(a) of the Code for the purposes of
income tax withholding at the source but determined without regard to any
rules that limit the remuneration included in wages based on the nature or
location of the employment or the services performed (such as the exception
for agricultural labor in section 3401(a)(2) of the Code).
(C) 415 SAFE-HARBOR COMPENSATION. Limitation Compensation
shall mean wages, salaries, fees for professional services and other
amounts received (without regard to whether or not an amount is paid in
cash) for personal services actually rendered in the course of employment
with the Employer maintaining the Plan (including, but not limited to,
commissions paid salesmen, compensation on the basis of a percentage of
profits, commissions on insurance premiums, tips, bonuses, fringe benefits
and reimbursements or other expense allowances under a nonaccountable plan
(as described in Treas. Reg. Section 1.62-2(c)) and excluding the
following:
(1) Employer contributions to a deferred
compensation plan which are not includible in the Employee's gross
income for the taxable year in which contributed or Employer
contributions made on behalf of the Employee to a simplified employee
pension plan to the extent such contributions are deductible by the
Employee or any distributions from a deferred compensation plan;
(2) Amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or property) held
by the Employee either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(3) Amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified stock option;
and
(4) Other amounts which receive special tax
benefits, or Employer contributions (whether or not under a salary
reduction agreement) toward the purchase of an annuity contract
described
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<PAGE> 21
in section 403(b) of the Code (whether or not the contributions are
actually excludable from the gross income of the Employee).
For any Self-Employed Person, individual compensation shall mean
Earned Income.
Notwithstanding the above, Limitation Compensation for a Participant
in a Defined Contribution Plan who is permanently and totally disabled (as
defined in section 22(e)(3) of the Code) is the Limitation Compensation such
Participant would have received for the Limitation Year if the Participant had
been paid at the rate of Limitation Compensation paid immediately before
becoming permanently and totally disabled; such imputed Limitation Compensation
for the disabled Participant may be taken into account only if the Participant
is not a Highly Compensated Employee and contributions made on behalf of such
Participant are nonforfeitable when made.
For purposes of this Section 1.47, Limitation Compensation shall only
include compensation actually paid or made available during the applicable
Limitation Year. Notwithstanding the preceding sentence, an Employer may
include in Limitation Compensation amounts earned but not paid in a Limitation
Year because of the timing of pay periods and pay days if these amounts are
paid during the first few weeks of the next Limitation Year, the amounts are
included on a uniform and consistent basis with respect to all similarly
situated Participants, and no compensation is included in more than one
limitation period.
1.48 LIMITATION YEAR. "LIMITATION YEAR" shall mean the calendar
year unless another Computation Period is designated pursuant to a written
resolution adopted by the Employer.
1.49 MATCHING ACCOUNT(S). "MATCHING ACCOUNT(S)" shall mean the
account established by the Administrative Committee with the Trustee for each
Participant, which account shall be invested as provided in Article VI on
behalf of the Participant for whom such Matching Account has been established
and to which Matching Contributions on behalf of such Participant and the
earnings and losses thereon shall be allocated.
1.50 MATCHING CONTRIBUTION. "MATCHING CONTRIBUTION" shall mean any
contribution to the Plan made by the Employer for the Plan Year and allocated
to a Participant's Matching Account by reason of the Participant's Participant
Contributions or other Employee Contributions and/or by reason of the
Participant's Elective Deferral Contributions.
1.51 NON-HIGHLY COMPENSATED EMPLOYEE. "NON-HIGHLY COMPENSATED
EMPLOYEE" shall mean an Employee of the Employer who is neither a Highly
Compensated Employee nor a Family Member.
1.52 NON-RESIDENT ALIEN. "NON-RESIDENT ALIEN" shall mean any
non-resident alien (within the meaning of section 7701(b)(1)(B) of the Code)
who receives no earned income (within the meaning of section 911(d)(2) of the
Code), which constitutes United States source income (within the meaning of
section 861(a)(3) of the Code).
1.53 NORMAL RETIREMENT AGE. "NORMAL RETIREMENT AGE" shall mean the
age (not less than age 62 nor more than age 65) and/or time specified in the
Adoption Agreement.
1.54 NORMAL RETIREMENT DATE. "NORMAL RETIREMENT DATE" shall mean
the Valuation Date coincident with, or immediately following, the date on which
a Participant attains his Normal Retirement Age.
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1.55 ONE-YEAR BREAK IN SERVICE. "ONE-YEAR BREAK IN SERVICE" shall
mean a one-year break in service computed under the regular method or the
elapsed time method, as defined below, based on the election made in the
Adoption Agreement.
(A) REGULAR METHOD. A One-Year Break In Service shall
mean a Computation Period during which the Employee has not completed more
than the number of Hours of Service (not to exceed 500 Hours of Service)
indicated in the Adoption Agreement.
(B) ELAPSED TIME METHOD. A One-Year Break In Service
shall mean a one-year period of severance in which an Employee does not have
one Hour of Service.
(1) GENERAL RULES. For purposes of determining
an Employee's initial or continued eligibility to participate in the
Plan or the nonforfeitable interest in the Participant's account
balance derived from Employer contributions (except for "Periods of
Service" (as defined in Section 1.97(B)(4)) which may be disregarded
on account of the "rule of parity" described in Section 2.3 and
Section A.7.6(B) of the Adoption Agreement), an Employee shall receive
credit for the aggregate of all time period(s) commencing with the
Employee's Employment or Reemployment Commencement Date and ending on
the date a break in service begins. An Employee shall also receive
credit for any "Period of Severance" (as defined in Section
1.97(B)(6)) of less than 12 consecutive months. Fractional periods of
a year shall be expressed in terms of days.
Each Employee shall share in Employer contributions
for the period beginning on the date the Employee commences
participation under the Plan and ending on the date on which such
Employee severs employment with the Employer or is no longer a member
of an eligible class of Employees.
If the Employer is a member of an affiliated service group
(under section 414(m) of the Code), a controlled group of corporations
(under section 414(b) of the Code), a group of trades or businesses
under common control (under section 414(c)of the Code), or any other
entity required to be aggregated with the Employer pursuant to section
414(o) of the Code, service shall be credited for any employment for
any period of time for any other member of such group. Service shall
also be credited for any individual required under section 414(n) of
the Code or section 414(o) of the Code to be considered an Employee of
any Employer aggregated under section 414(b), (c), or (m) of the Code.
For purposes of this Section 1.55(B), a One-Year
Break In Service occurs if:
(a) An Employee severs service and does
not return within 12 months from the date of severance (e.g.,
the date on which he quits, is discharged or retires); or
(b) An Employee is absent from service
(e.g., by reason of Disability (except as otherwise provided
in the Plan), vacation, or leave of absence) and severs
employment during such absence (e.g., he quits, is discharged
or retires) and does not return to service on or before the
first anniversary of the date on which the Employee was first
absent.
(2) EXCEPTION FOR MATERNITY OR PATERNITY LEAVE.
In the case of an individual who is absent from work for maternity or
paternity reasons, the 12-consecutive month period beginning on the
first anniversary of the first date of such absence shall not
constitute a One-Year Break In Service.
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For purposes of this Section 1.55(B)(2), an absence from work for
maternity or paternity reasons means an absence:
(a) By reason of the pregnancy of an
individual;
(b) By reason of the birth of a child of
the individual;
(c) By reason of the placement of a
child with the individual in connection with the adoption of
such child by such individual; or
(d) For purposes of caring for such
child for a period beginning immediately following such birth
or placement.
In the case of a leave of absence due to service in the Armed Forces
or the United States, the Employee must return to active employment with the
Employer within the period prescribed under the reemployment provisions of the
Title 38, Chapter 43 of the United States Code. Any leave of absence
authorized by the Employer shall be granted under uniform rules so that all
Participants under similar circumstances shall be treated alike.
1.56 OWNER-EMPLOYEE. "OWNER-EMPLOYEE" shall mean a Self-Employed
Person who is a sole proprietor, or who is a partner owning more than ten
percent of either the capital or profits interest of the partnership.
1.57 PARTICIPANT. "PARTICIPANT" shall mean any Employee who, on
the first applicable Entry Date, has met the requirements for participation in
the Plan as provided in Article II.
1.58 PARTICIPANT ACCOUNT. "PARTICIPANT ACCOUNT" shall mean the
account established by the Administrative Committee with the Trustee for each
Participant, which shall be invested as provided in Article VI on behalf of the
Participant for whom such Participant Account has been established, and to
which the Participant Contributions and the earnings or losses thereon shall be
allocated.
1.59 PARTICIPANT CONTRIBUTIONS. "PARTICIPANT CONTRIBUTIONS" shall
mean Participant contributions under Section 3.2.
1.60 PERMISSIVE AGGREGATION GROUP. "PERMISSIVE AGGREGATION GROUP"
shall mean 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 sections 401(a)(4) and 410
of the Code.
1.61 PLAN. "PLAN" shall mean the Employer's Defined Contribution
Plan and Trust Agreement as set forth in this document and in the applicable
Adoption Agreement, and as it may be amended from time to time. As adopted by
the Employer, the Plan shall be a profit-sharing plan, a profit-sharing 401(k)
plan or a money purchase plan, as indicated in the applicable Adoption
Agreement.
1.62 PLAN ADMINISTRATOR. "PLAN ADMINISTRATOR" shall mean the
Administrative Committee.
1.63 PLAN SPONSOR. "PLAN SPONSOR" shall mean the sponsor of the
Plan as designated in the Adoption Agreement.
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1.64 PLAN YEAR. "PLAN YEAR" shall mean the Computation Period
indicated in the Adoption Agreement. Plan Year shall also include any such
period completed before the Effective Date of the Plan.
1.65 PRIOR PLAN. "PRIOR PLAN" shall mean a prior qualified plan of
the Employer which is amended and restated into the Plan under the Adoption
Agreement applicable to such Employer.
1.66 PROFITS. "PROFITS" shall mean, in the case of a for-profit
Employer, the earnings and profits of the Employer for the Taxable Year but
before provision for income taxes (Federal, State and local) and before
deduction of Employer contributions hereunder or under any other pension or
profit-sharing plan of the Employer and/or accumulated earnings and profits as
computed by the Employer in accordance with generally accepted accounting
principles. Profits shall mean, in the case of a not-for-profit Employer, the
excess of such Employer's receipts over expenditures, whether such excess
results from the performance of such Employer's functions for which it is
recognized as exempt from Federal income tax, or from investments or other
business activity.
1.67 QVEC ACCOUNT(S). "QVEC ACCOUNT(S)" shall mean the account(s)
established by the Administrative Committee with the Trustee for each
Participant who has made Qualified Voluntary Employee Contributions to the
Plan, which QVEC Account(s) shall be invested as provided in Article VI on
behalf of the Participant for whom such QVEC Account(s) has (have) been
established, and to which the Participant's Qualified Voluntary Employee
Contributions have been and the earnings or losses thereon shall be, allocated.
1.68 QUALIFIED DOMESTIC RELATIONS ORDER. "QUALIFIED DOMESTIC
RELATIONS ORDER" shall mean a qualified domestic relations order as described
in section 414(p) of the Code.
1.69 QUALIFIED MATCHING CONTRIBUTION. "QUALIFIED MATCHING
CONTRIBUTION" shall mean a Matching Contribution which is subject to the
distribution and nonforfeitability requirements of section 401(k) of the Code
when made. Any Qualified Matching Contribution to the Plan shall be credited
to a separate Qualified Matching Contribution account maintained for the
Participant on whose behalf such Qualified Matching Contribution is made.
1.70 QUALIFIED NONELECTIVE CONTRIBUTION. "QUALIFIED NONELECTIVE
CONTRIBUTION" shall mean a contribution (other than Matching Contributions or
Qualified Matching Contributions) made by the Employer and allocated to
Participants' accounts that the Participant may not elect to receive in cash
until distributed from the Plan; that are 100 percent vested and nonforfeitable
when made; and that are distributable only in accordance with the distribution
provisions that are applicable to Elective Deferrals and Qualified Matching
Contributions; Qualified Nonelective Contributions to the Plan shall be
credited to a separate Qualified Nonelective Contribution account maintained
for the Participant on whose behalf such Qualified Nonelective Contribution is
made.
1.71 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS. "QUALIFIED
VOLUNTARY EMPLOYEE CONTRIBUTIONS" shall mean qualified voluntary employee
contributions within the meaning of section 219(e)(2) of the Code.
1.72 QUALIFYING EMPLOYER SECURITY. "QUALIFYING EMPLOYER SECURITY"
shall mean an Employer Security which is stock or a marketable obligation as
provided in sections 407(d)(5) and 407(e) of ERISA. The classes of Employer
Securities which are to be considered Qualifying Employer Securities may be
limited in the Adoption Agreement.
1.73 REEMPLOYMENT COMMENCEMENT DATE. "REEMPLOYMENT COMMENCEMENT
DATE" shall mean
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the first day, following a separation from service, on which an Employee
performs an hour of service. For purposes of this Section 1.73, an hour of
service shall mean each hour for which an Employee is paid or is entitled to
payment for the performance of services for the Employer.
1.74 REQUIRED AGGREGATION GROUP. "REQUIRED AGGREGATION GROUP"
shall mean:
(A) Each qualified plan of the Employer in which at least
one Key Employee participates or participated at any time during the
Determination Period (regardless of whether the Plan has terminated);and
(B) Any other qualified plan of the Employer which
enables a plan described in Section 1.74(A) to meet the requirements of
sections 401(a)(4) or 410 of the Code.
1.75 ROLLOVER ACCOUNT. "ROLLOVER ACCOUNT" shall mean the account
established by the Administrative Committee with the Trustee for each
Participant or other Employee who has made a Rollover Contribution to the Plan,
which Rollover Account shall be invested as provided in Article VI on behalf of
the Participant or other Employee for whom such Rollover Account has been
established and to which the Participant's or other Employee's Rollover
Contributions and the earnings and losses thereon shall be allocated.
1.76 ROLLOVER CONTRIBUTIONS. "ROLLOVER CONTRIBUTIONS" shall mean,
on or before December 31, 1992, "rollover amounts" which are contributed to the
Trustee on or before the 60th day immediately following the day the
contributing Participant or other Employee receives such "rollover amount".
The term "rollover amount" means:
(A) The entire amount (including money and any other
property) in an Individual Retirement Account or Individual Retirement
Annuity (as defined in section 408 of the Code) maintained for the benefit
of the Participant or other Employee making the Rollover Contribution, which
amount has been distributed from such individual retirement account or
individual retirement annuity; or
(B) Part or all of the amount received by such
Participant or other Employee from an employee's trust described in section
401(a) of the Code which is exempt from tax under section 501(a) of the
Code.
Such amount shall, however, only constitute a "rollover
amount" if the amount described in Section 1.76(A) or 1.76(B) is solely
attributable to a plan termination distribution, as that term is described in
section 402(a)(5) of the Code, or to a lump-sum distribution, as defined in
section 402(e)(4)(A) of the Code, or to an accumulated deductible employee
contribution distribution, as described in section 402(a)(5) of the Code, from
either a trust described in section 401(a) of the Code or from an annuity plan
described in section 403(a) of the Code, plus the earnings thereon. For
purposes of rolling-over property other than money under this Section 1.76, the
transfer of an amount equal to any portion of the proceeds from the sale of
property received in the distribution, including any excess in fair market
value of property on sale over the fair market value on distribution, shall
constitute a "rollover amount".
Effective January 1, 1993, "Rollover Contributions" shall mean
eligible rollover distributions within the meaning of section 402(c)(4) or
section 402(f)(2) of the Code, as in effect on and after January 1, 1993,
provided such eligible rollover distributions are transferred to the Plan
within 60 days of the date received by the Participant or other Employee.
Effective January 1, 1993, "Rollover Contributions" shall also mean such
eligible rollover distributions within the meaning of section 402(f)(2)(A) and
which are made in the form of a
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direct trustee-to-trustee transfer described in section 401(a)(31) of the Code
as in effect on and after January 1, 1993.
1.77 SALARIED EMPLOYEE. "SALARIED EMPLOYEE" shall mean any
Employee who is not an Hourly Employee.
1.78 SELF-EMPLOYED PERSON. "SELF-EMPLOYED PERSON" shall mean an
individual who has earned income for the Taxable Year from the trade or
business for which the Plan is established or an individual who would have had
earned income but for the fact the trade or business had no Profits for the
Taxable Year.
1.79 SERVICE. "SERVICE" shall mean service with the Employer or
any related employer who adopts this Plan. If the Employer adopting the Plan
is maintaining the Plan of a predecessor employer, then service for such
predecessor shall be treated as Service for the Employer. Service for a
predecessor employer shall otherwise be treated as Service for the Employer
only to the extent provided in Section 2.2 and in the Adoption Agreement.
In the event the Plan is an amendment and restatement of a Prior Plan
in accordance with Section 18.17, if the Prior Plan credited service for
eligibility, and/or vesting on the basis of the elapsed time method (as
described in Treas. Reg. Section 1.410(a)-7), unless and to the extent the
Employer continues to use the elapsed time method under this Plan, a
Participant shall receive Service credit as of the effective date of the
amendment, for a number of Years of Service for Eligibility and/or Years of
Service for Vesting (as applicable) equal to the number of 1-year periods of
service credited to the Participant under the Prior Plan as of the effective
date of the amendment. In addition, if the effective date of the amendment is
a date other than the first day of a Computation Period, a Participant shall
receive credit, in the Computation Period, which includes the effective date of
the amendment, for a number of Hours of Service determined under one of the
equivalencies set forth in Section 1.39(I) (unless the Employer maintains
records for the Participant on an hourly basis, in which case actual hours
shall be credited) for the fractional part of a period of service credited to
the Participant under the elapsed time method as of the effective date of the
amendment. The equivalency to be used for this purpose shall be selected by
the Employer in the Adoption Agreement.
1.80 SPONSORING ORGANIZATION. "SPONSORING ORGANIZATION" shall mean
DRINKER BIDDLE & REATH, a law firm which has its principal office at
Philadelphia National Bank Building, 1345 Chestnut Street, Philadelphia, PA
19107-3496.
1.81 SPOUSE or SURVIVING SPOUSE. "SPOUSE" or "SURVIVING SPOUSE"
shall mean the spouse or surviving spouse of a Participant, provided that a
former spouse shall be treated as the spouse or surviving spouse and a current
spouse shall not be treated as the spouse or surviving spouse to the extent
provided under a Qualified Domestic Relations Order.
1.82 TAXABLE WAGE BASE. "TAXABLE WAGE BASE" shall mean, with
respect to any Plan Year, the maximum amount of earnings which on the first day
of such Plan Year may be considered wages for such Plan Year under section
3121(a)(1) of the Code.
1.83 TAXABLE YEAR. "TAXABLE YEAR" shall mean the fiscal period
adopted by the Employer for filing its Federal income tax returns.
1.84 TOP-HEAVY PLAN. "TOP-HEAVY PLAN" shall mean this Plan if, for
any Plan Year beginning after December 31, 1983, any of the following
conditions exists:
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(A) If the Top-Heavy Ratio for this Plan exceeds 60
percent and this Plan is not part of any Required Aggregation Group or
Permissive Aggregation Group;
(B) If this Plan is a part of a Required Aggregation
Group but not part of a Permissive Aggregation Group and the Top-Heavy Ratio
for the Required Aggregation Group exceeds 60 percent.
(C) 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 Permissive Aggregation Group exceeds 60 percent.
1.85 TOP-HEAVY RATIO. "TOP-HEAVY RATIO" shall mean a fraction
determined as follows:
(A) If the Employer maintains one or more Defined
Contribution Plans (including any simplified employee pension plan) and the
Employer has not maintained any Defined Benefit Plan which, during the
Determination Period, has or has had accrued benefits, the Top-Heavy Ratio
for this Plan alone or for the Required or Permissive Aggregation Group, as
appropriate, is a fraction, the numerator of which is the sum of the account
balances of all Key Employees as of the Determination Date(s) (including any
part of any account balance distributed in the Determination Period), and
the denominator of which is the sum of all account balances (including any
part of any account balance distributed in the Determination Period), both
computed in accordance with section 416 of the Code and the Treasury
regulations thereunder. Both the numerator and denominator of the Top-
Heavy Ratio are increased to reflect any contribution not actually made as
of the Determination Date, but which is required to be taken into account on
that date under section 416 of the Code and the Treasury regulations
thereunder.
(B) If the Employer maintains one or more Defined
Contribution Plans (including any simplified employee pension plan) and the
Employer maintains or has maintained one or more Defined Benefit Plans which
during the Determination Period has or has had any accrued benefits, the
Top-Heavy Ratio for any Required or Permissive Aggregation Group as
appropriate is a fraction, the numerator of which is the sum of account
balances under the aggregated Defined Contribution Plan or Plans for all Key
Employees, determined in accordance with Section 1.85(A) above, and the
present value of accrued benefits under the aggregated Defined Benefit Plan
or Plans for all Key Employees as of the Determination Date(s), and the
denominator of which is the sum of the account balances under the aggregated
Defined Contribution Plan or Plans for all Participants, determined in
accordance with Section 1.85(A) above, and the present value of accrued
benefits under the Defined Benefit Plan or Plans for all Participants as of
the Determination Date(s), all determined in accordance with section 416 of
the Code and the Treasury regulations thereunder. The accrued benefits
under a Defined Benefit Plan in both the numerator and denominator of the
Top-Heavy Ratio are increased for any distribution of an accrued benefit
made in the Determination Period.
For purposes of Section 1.85(A) and Section 1.85(B) above, the
value of account balances and the present value of accrued benefits shall be
determined as of the most recent Top-Heavy Valuation Date that falls within or
ends with the 12-month period ending on the Determination Date, except as
provided in section 416 of the Code and the Treasury regulations thereunder for
the first and second plan years of a Defined Benefit Plan. The account
balances and accrued benefits of a Participant (1) who is not a Key Employee
but who was a Key Employee in a prior year, or (2) who has not been credited
with at least one hour of service with any Employer maintaining the plan at any
time during the Determination Period shall be disregarded. The calculation of
the Top-Heavy Ratio, and the extent to which distributions, rollovers, and
transfers are taken into account shall be made in accordance with section 416
of the Code and the Treasury regulations thereunder. Deductible employee
contributions shall not be taken into account for purposes of computing the
Top-Heavy
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Ratio. When aggregating plans, the value of account balances and accrued
benefits shall be calculated with reference to the Determination Dates that
fall within the same calendar year.
The accrued benefit of a Participant other than a Key Employee
shall be determined under the method, if any, that uniformly applies for
accrual purposes under all Defined Benefit Plans maintained by the Employer, or
if there is no such method, as if such benefit accrued not more rapidly than
the slowest accrual rate permitted under the fractional rule of section
411(b)(1)(C) of the Code.
Present value shall be determined in accordance with the
mortality and interest assumptions set forth in the Adoption Agreement.
1.86 TOP-HEAVY VALUATION DATE. "TOP-HEAVY VALUATION DATE" shall
mean the date selected by the Employer in the Adoption Agreement as of which
account balances or accrued benefits are valued for purposes of calculating the
Top-Heavy Ratio.
1.87 TRANSFER ACCOUNT. "TRANSFER ACCOUNT" shall mean the account
established by the Administrative Committee with the Trustee for each
Participant who has had transferred to the Plan assets from another qualified
plan pursuant to Section 3.10, which Transfer Account shall be invested as
provided in Article VI on behalf of the Participant for whom such Transfer
Account was established and the assets and the earnings and losses thereon have
been allocated.
1.88 TRUST. "TRUST" shall mean the legal entity established by
this Plan and Trust Agreement and by the Adoption Agreement by which the Plan
contributions shall be received, held, invested and disbursed to, or for the
benefit of, Participants or Beneficiaries of Participants, or both.
1.89 TRUST AGREEMENT. "TRUST AGREEMENT" shall mean the Trust
Agreement as set forth in this document and as it may be amended from time to
time.
1.90 TRUST FUND. "TRUST FUND" shall mean all funds received by the
Trustee and the property in which said funds shall be invested, together with
all income, profits and increments thereon less any withdrawals and losses
incurred thereon.
1.91 TRUSTEE. "TRUSTEE" shall mean the individual trustee(s)
(subject to the requirements of any applicable Federal Securities laws) or
corporate trustee(s) designated by the Employer in the Adoption Agreement.
1.92 UNION EMPLOYEE. "UNION EMPLOYEE" shall mean any Employee who
is included in a unit of employees covered by an agreement which the Secretary
of Labor finds to be a collective bargaining agreement between the Employer and
a bargaining representative of such person, if there is evidence that
retirement benefits were the subject of good faith bargaining between such
bargaining representative and the Employer.
1.93 VALUATION DATE. "VALUATION DATE" shall mean the last day of
each Plan Year and such other date or dates as may be provided for in the
applicable Adoption Agreement.
1.94 VESTED ACCRUED BENEFIT. "VESTED ACCRUED BENEFIT" shall mean
that portion of a Participant's Accrued Benefit which has become nonforfeitable
under the Plan.
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1.95 VESTING COMPUTATION PERIOD. "VESTING COMPUTATION PERIOD"
shall mean the Computation Period measured by the Plan Year. Years of Service
for Vesting and One-Year Breaks In Service for vesting shall be measured by the
Vesting Computation Period.
1.96 WELFARE BENEFIT FUND. "WELFARE BENEFIT FUND"shall mean a
welfare benefit fund as defined in section 419(e) of the Code.
1.97 YEAR OF SERVICE FOR BENEFIT ACCRUAL. "YEAR OF SERVICE FOR
BENEFIT ACCRUAL" shall mean any Year of Service for Benefit Accrual computed
under the regular method or the elapsed time method, as defined below, based on
the election made in the Adoption Agreement.
(A) REGULAR METHOD. A Year of Service for Benefit
Accrual shall mean any Accrual Computation Period during which a Participant
has completed not less than the number of Hours of Service (not to exceed
1,000 Hours of Service) with the Employer indicated in the Adoption
Agreement. If the Participant has completed a Year of Service for Benefit
Accrual but is not in the service of the Employer at the end of the Accrual
Computation Period, a Year of Service for Benefit Accrual shall be credited
except to the extent otherwise provided in Section 2.3(G), Section 3.11 and
in the Adoption Agreement.
(B) ELAPSED TIME METHOD. A Year of Service for Benefit
Accrual shall mean a "Period of Service," as defined below, (which shall be
the equivalent of a Year of Service for Benefit Accrual under the regular
method) with the Employer based on a Participant's actual period of
employment with the Employer, irrespective of the number of hours actually
worked during such period and during which the Participant completes 12
"Months of Service" as defined below. All periods of employment with the
Employer, including "Periods of Severance," as defined below, of less than
12 consecutive months shall be aggregated unless there is a "One-Year Period
of Severance". A "Period of Service" shall be credited for each completed
12 months of service (365 days) with the Employer, which need not be
consecutive. A partial Year of Service for Benefit Accrual shall be
credited for any "Period of Service" with the Employer of less than 12
months calculated to the nearest 1/12th based on a fraction, where the
numerator shall be the actual "Months of Service" and the denominator shall
be 12 "Months of Service". For purposes of determining "Periods of Service"
under the elapsed time method, the following terms shall apply:
(1) "DATE OF SEVERANCE (TERMINATION)" shall mean
the earlier of:
(a) The actual date a Participant quits,
is discharged, dies or retires; or
(b) The first anniversary of the date a
Participant is absent from work with the Employer (with or
without pay) for any other reason.
(2) "ELAPSED TIME" shall mean the total "Period
of Service" which has elapsed between a Participant's Employment
Commencement Date or Reemployment Commencement Date with the Employer
and "Date of Severance (Termination)" by the Employer, including
"Periods of Severance" where a "One-Year Period of Severance" does not
occur.
(3) "HOUR OF SERVICE" shall mean each hour for
which an Employee is paid or entitled to payment for the performance
of duties for the Employer.
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(4) "PERIOD OF SERVICE" shall mean each completed
12 "Months of Service" (whether or not consecutive) during the total
"Elapsed Time" while a Participant is employed by the Employer,
regardless of the number of hours worked.
(5) "MONTH OF SERVICE" shall mean 30 days of
"Elapsed Time".
(6) "PERIOD OF SEVERANCE" shall mean the time
between the actual "Date of Severance (Termination)" by the Employer,
as defined above, and the subsequent date, if any, on which the
Participant performs an "Hour of Service", as defined above, with the
Employer.
(7) "ONE-YEAR PERIOD OF SEVERANCE" shall mean a
12-month period following a Participant's "Date of Severance
(Termination)", as defined above, in which a Participant does not have
one "Hour of Service" with the Employer.
1.98 YEAR OF SERVICE FOR ELIGIBILITY. "YEAR OF SERVICE FOR
ELIGIBILITY" shall mean any Eligibility Computation Period in which a
Participant has completed not less than the number of Hours of Service (not to
exceed 1,000 Hours of Service) indicated in the Adoption Agreement. For
purposes of this Section 1.98, Service with a Predecessor Employer shall be
included to the extent provided in Sections 1.79 and 2.2 and in the applicable
Adoption Agreement. If less than one Year of Service for Eligibility is
required for participation in the Plan, the eligibility period shall be
computed without regard to the number of Hours of Service completed. This
provision is not applicable if the elapsed time method is selected in Section
A.2.2(B)(2) of the Adoption Agreement.
1.99 YEAR OF SERVICE FOR VESTING. "YEAR OF SERVICE FOR VESTING"
shall mean any Year of Service for Vesting computed under the regular method or
the elapsed time method, as defined below, based on the election made in the
Adoption Agreement.
(A) REGULAR METHOD. A Year of Service for Vesting shall
mean any Vesting Computation Period indicated in the Adoption Agreement
during which an Employee has completed not less than the number of Hours of
Service (not to exceed 1,000 Hours of Service) with the Employer indicated
in the Adoption Agreement.
(B) ELAPSED TIME METHOD. A Year of Service for Vesting
shall mean a "Period of Service", as defined in Section 1.97(B)(4), (which
shall be the equivalent of a Year of Service for Vesting under the regular
method) with the Employer based on an Employee's actual period of employment
with the Employer, irrespective of the number of hours actually worked
during such period and during which the Employee has completed 12 "Months of
Service" as defined in Section 1.97(B)(5) with the Employer. All periods of
employment with the Employer, including "Periods of Severance", as defined
in Section 1.97(B)(6), of less than 12 consecutive months shall be
aggregated unless there is a "One-Year Period of Severance", as defined in
Section 1.97(B)(7). A "Period of Service" shall be credited for each
completed 12 "Months of Service" (365 days) with the Employer, which need
not be consecutive. A partial Year of Service for Vesting shall be credited
for any "Period of Service" with the Employer of less than 12 months
calculated to the nearest 1/12th based on a fraction, where the numerator
shall be the actual "Months of Service" and the denominator shall be 12
"Months of Service". For purposes of this Section 1.99, Service with a
predecessor employer shall be included to the extent provided in Sections
1.79 and 2.2 and in the Adoption Agreement.
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ARTICLE II
PARTICIPATION UNDER PLAN
2.1 ADOPTION OF PLAN. An Employer shall adopt the Plan by
executing the Adoption Agreement.
2.2 ELIGIBILITY REQUIREMENTS. To be eligible for participation in
the Plan, an Employee must satisfy both of the following eligibility
requirements:
(A) The Employee must be a member of an eligible class of
Employees as specified by the Employer in the Adoption Agreement; and
(B) The Employee must have completed the period of
Service and attained the age specified by the Employer in the Adoption
Agreement.
Upon satisfaction of the requirements of Sections 2.2(A) and 2.2(B) as
specified in the Adoption Agreement, an Employee shall become a Participant in
the Plan on the Entry Date specified in the Adoption Agreement, unless the
Employee separated from service with the Employer before the Entry Date. An
Employee who has met all the requirements for eligibility, as set forth in this
Article II and in the Adoption Agreement, but who separates from service with
the Employer before the Entry Date and has not been rehired before the Entry
Date, shall become a Participant in the Plan on his Reemployment Commencement
Date. In the case of any such eligible Employee who is rehired before the
Entry Date, such eligible Employee shall become a Participant on such Entry
Date. Employees who have completed such requirements prior to the Effective
Date shall become Participants as of the Effective Date. Except as otherwise
provided in Section 1.79, service with a predecessor employer shall be included
as Service with the Employer for purposes of eligibility to participate under
the Plan only to the extent provided in the Adoption Agreement and to the
extent required by the Secretary of the Treasury or his delegate.
2.3 ADDITIONAL RULES RELATING TO PLAN PARTICIPATION. The
following additional rules relating to the Plan Participation apply:
(A) EMPLOYEES REQUIRED TO COMPLETE MORE THAN ONE YEAR OF
SERVICE FOR ELIGIBILITY. If an Employee who is required to complete more
than one Year of Service for Eligibility as an eligibility requirement has a
One-Year Break In Service before satisfying such requirement, Service prior
to such Break shall be disregarded.
(B) REHIRED FORMER PARTICIPANTS WITH NONFORFEITABLE
RIGHTS. A former Participant shall become a Participant immediately upon
his return to the employ of the Employer, if such former Participant had a
nonforfeitable right to all or a portion of his Employer Account at the time
of his termination.
(C) REHIRED FORMER PARTICIPANTS WITHOUT NONFORFEITABLE
RIGHTS. A former Participant who did not have a nonforfeitable right to any
portion of his Employer Account at the time of his termination shall be
considered, upon his reemployment, a new Employee for eligibility purposes,
if the number of consecutive One-Year Breaks In Service equals or exceeds
the greater of (1) five or (2) the aggregate number of Years of Service for
Eligibility before such Breaks. If such former Participant's Years of
Service for Eligibility before his termination may not be disregarded
pursuant to the preceding sentence, such former Participant shall
participate immediately upon his reemployment.
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(D) PARTICIPANTS WHO BECOME INELIGIBLE EMPLOYEES. In the
event a Participant becomes ineligible to participate because he is no
longer a member of an eligible class of Employees, but has not incurred a
One-Year Break In Service, such Employee shall participate immediately upon
his return to an eligible class of Employees. If such Participant incurs a
One-Year Break In Service, his eligibility to participate shall be
determined pursuant to Section 2.3(B) or 2.3(C).
(E) INELIGIBLE EMPLOYEES WHO BECOME ELIGIBLE. In the
event an Employee who is not a member of the eligible class of Employees
becomes a member of the eligible class, such Employee shall participate
immediately, if such Employee has satisfied the minimum age and service
requirements and would have previously become a Participant had he been in
the eligible class.
(F) DURATION OF PARTICIPATION. After an Employee becomes
a Participant in the Plan, the Employee's active participation shall
continue until the earlier of the Participant's death, retirement,
Disability, or termination of employment with the Employer. However, except
as otherwise provided in Section 3.11 and in the Adoption Agreement, no
Participant shall share in Employer Contributions in any Plan Year in which
such Participant does not complete a Year of Service for Benefit Accrual and
meet the other eligibility requirements of Sections 2.2 and 2.3.
(G) PARTICIPANTS WHO SEPARATE BEFORE END OF PLAN YEAR.
Subject to Section 3.11, a Participant whose employment is terminated before
the end of a Plan Year but after he has completed the number of Hours of
Service required for a Year of Service for Benefit Accrual shall share in
Employer contributions for such Plan Year only if the Adoption Agreement so
provides.
(H) LEASED EMPLOYEES.
(1) GENERAL. If the Employer has Leased
Employees, such Leased Employees shall participate in the Plan only
if, and to the extent, provided in the Adoption Agreement of such
Employer.
(2) SAFE-HARBOR. Notwithstanding any other
provisions of the Plan, for purposes of determining the number or
identity of Highly Compensated Employees or for purposes of the
pension requirements of section 414(n)(3) of the Code, the Employees
of the Employer shall include individuals defined as Employees in
Section 1.25. This provision was effective December 31, 1986.
2.4 PLANS COVERING OWNER-EMPLOYEES. If this Plan, as adopted by
the applicable Adoption Agreement, provides contributions or benefits for one
or more Owner-Employees who control both the business for which this Plan, as
adopted by the applicable Adoption Agreement, is established and one or more
other trades or businesses, this Plan and the plan established for other trades
or businesses must, when looked at as a single plan, satisfy sections 401(a)
and (d) of the Code for the employees of this and all other trades or
businesses.
If the Plan, as adopted by the applicable Adoption Agreement, provides
contributions or benefits for one or more Owner-Employees who control one or
more other trades or businesses, the employees of the other trades or
businesses must be included in a plan which satisfies sections 401(a) and (d)
of the Code and which provides contributions and benefits not less favorable
than provided for Owner-Employees under this Plan.
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If an individual is covered as an Owner-Employee under the plans of two or more
trades or businesses which are not controlled and the individual controls a
trade or business, then the contributions or benefits of the employees under
the plan of the trades or businesses which are controlled must be as favorable
as those provided for him under the most favorable plan of the trade or
business which is not controlled.
For purposes of this Section 2.4, an Owner-Employee, or two or more
Owner-Employees, will be considered to control a trade or business if the
Owner-Employee, or two or more Owner-Employees together:
(A) Own the entire interest in an unincorporated trade or
business; or
(B) In the case of a partnership, own more than 50
percent of either the capital interest or the profits interest in the
partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or more
Owner-Employees shall be treated as owning any interest in a partnership which
is owned, directly or indirectly, by a partnership which such Owner-Employee,
or such two or more Owner-Employees, are considered to control within the
meaning of the preceding sentence.
ARTICLE III
CONTRIBUTIONS
3.1 EMPLOYER CONTRIBUTIONS. Employer Contributions shall be
determined as follows:
(A) MONEY PURCHASE PLAN. If the Plan is a money purchase
plan, this Section 3.1(A) applies and the Employer Contribution shall be
determined in accordance with the applicable Money Purchase Plan Adoption
Agreement.
(B) PROFIT-SHARING OR PROFIT-SHARING 401(K) PLAN. If the
Plan is a profit-sharing plan or a profit-sharing 401(k) plan, the
Profit-Sharing (401(k)) Adoption Agreement applies and contributions shall
be made in accordance with such Adoption Agreement and this Section 3.1(B).
(1) AMOUNT. Except as otherwise provided in
Section 3.11(G), for each Plan Year during the continuance of the
Plan, the Employer shall contribute to the Trustee such amount as
shall be authorized by the Employer, in its sole discretion, provided
that the amount of the Employer Contribution for any Plan Year shall
not exceed the lesser of:
(a) The amount allowable as a deduction,
if the Employer is a for-profit organization, for computing
Federal income tax under the applicable provisions of the Code
for the Taxable Year which ends with or within such Plan Year
or, if the Employer is a not-for-profit organization, an
amount not in excess of reasonable compensation for services
rendered by the Participants for the Employer for the Taxable
Year which ends with or within such Plan Year; or
(b) The limitations set forth in Section
3.8 below.
(2) PROFITS NOT REQUIRED. Unless the Adoption
Agreement provides otherwise, effective for Plan Years beginning after
December 31, 1985, the Employer shall, notwithstanding any
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other provision of the Plan, make all contributions to the Plan
without regard to current or accumulated Profits for the Taxable Year
or Years ending with or within such Plan Year. Notwithstanding the
foregoing, the Plan shall continue to be designed to qualify as a
profit-sharing plan for purposes of sections 401(a), 402, 412 and 417
of the Code.
(3) QUALIFIED NONELECTIVE CONTRIBUTIONS AND
QUALIFIED MATCHING CONTRIBUTIONS.
(a) ELECTION. If the Plan provides for
Elective Deferral Contributions, the Employer may elect to
make Qualified Nonelective Contributions and/or Qualified
Matching Contributions under the Plan on behalf of Employees
as provided in the Adoption Agreement.
In addition, in lieu of distributing "Excess
Contributions" as provided in Section 3.4(B)(4), or "Excess
Aggregate Contributions" as provided in Section 3.2(G), and to
the extent elected by the Employer in the Adoption Agreement,
the Employer may make Qualified Nonelective Contributions
and/or Qualified Matching Contributions on behalf of
Non-Highly Compensated Employees that are sufficient to
satisfy either the "Actual Deferral Percentage" (ADP) (as
defined in Section 3.4(B)) test or the "Average Contribution
Percentage" (ACP) (as defined in Section 3.2(F)) test, or
both, pursuant to Treasury regulations under the Code.
(b) VESTING AND ACCOUNTS. The
Participant's Accrued Benefit derived from Qualified
Nonelective Contributions and Qualified Matching Contributions
and the earnings thereon shall be nonforfeitable at all times.
Separate accounts for Qualified Nonelective Contributions and
Qualified Matching Contributions shall be maintained for each
Participant on whose behalf such contributions are made. Each
account shall be credited with the applicable contributions
and earnings or losses thereon.
(C) TIME AND TYPE OF CONTRIBUTIONS. Employer
Contributions, for any Plan Year, shall be paid to the Trustee if the
Employer's Plan is a profit-sharing or profit-sharing 401(k) plan, no later
than the due date (including extensions of time) for filing the Employer's
Federal income tax return for the Taxable Year which ends with or within
such Plan Year or if the Employer's Plan is a money purchase plan no later
than the time required by the rules of section 412(m) of the Code but in no
event later than the due date (including extensions of time) for filing the
Employer's Federal income tax return for the Taxable Year which ends with or
within such Plan Year.
3.2 PARTICIPANT CONTRIBUTIONS. Participant Contributions shall be
determined as follows:
(A) AMOUNT. Unless this Plan is a profit-sharing 401(k)
plan, this Plan shall not accept Employee Contributions and Matching
Contributions for Plan Years beginning after the Plan Year in which this
Plan is adopted by the Employer. Employee Contributions for Plan Years
beginning after December 31, 1986, together with any Matching Contributions
as defined in section 401(m) of the Code, shall be limited so as to meet the
nondiscrimination test of section 401(m) of the Code. Participant
Contributions on or after such date are only permitted or required if the
Plan is a profit-sharing 401(k) plan. In such case, Participants are not
required to make Participant Contributions under the Plan, unless the
Adoption Agreement provides otherwise. If, however, the Plan is a
profit-sharing 401(k) plan and the Employer has elected in the Adoption
Agreement to permit Participant Contributions, a Participant may, subject to
the limitations of Section 3.2 and Section 3.8, make cash contributions
under the Plan in any Plan Year in any amount up to ten percent of the
aggregate Compensation (as defined in Section 1.10 before any modifications
thereto in the Adoption
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Agreement) received by such Participant for all periods of participation in
the Plan reduced by any Participant Contributions made by such Participant
under this Plan during such period. This limitation applies in the
aggregate to voluntary contributions by any Participant to two or more
qualified plans maintained by the same Employer. Mandatory Participant
Contributions are subject to the requirements of the Adoption Agreement.
(B) PARTICIPANT CONTRIBUTIONS AND EARNINGS THEREON
NONFORFEITABLE. The interest of each Participant in his Participant
Contributions and the earnings thereon shall be nonforfeitable at all times.
(C) MANNER OF MAKING CONTRIBUTIONS. Participant
Contributions shall be made in cash and paid to the Employer. Participant
Contributions may be made by regular payroll deductions from his
Compensation, if the Adoption Agreement so provides, or in any other way
approved by the Employer. For a Participant Contribution to be deemed to be
credited to a Participant's Participant Account for any particular
Limitation Year, such Participant Contribution must be made to the Plan not
later than 30 days following the end of such Limitation Year. Participant
Contributions shall be paid to the Trustee by the Employer as soon as is
administratively possible after receipt by the Employer.
(D) CHANGE OF PARTICIPANT CONTRIBUTION RATE. If the
Adoption Agreement provides for Participant Contributions by regular payroll
deductions from the Participant's Compensation, a Participant, by 30 days'
written notice to the Administrative Committee, may elect to change his
Participant Contribution rate (but not retroactively) within the limits
specified herein, to discontinue making Participant Contributions, or to
resume Participant Contributions.
(E) RESPONSIBILITY OF TRUSTEE. The Trustee shall be
accountable for Participant Contributions received by it, but shall have no
duty to require any Participant Contributions to be delivered to it nor to
determine that the Participant Contributions received are of the correct
amount or are correctly attributed by the Administrative Committee to the
Participants who made them.
(F) LIMITATIONS ON EMPLOYEE CONTRIBUTIONS AND MATCHING
CONTRIBUTIONS - AVERAGE CONTRIBUTION PERCENTAGE TEST REQUIREMENT.
(1) TEST. The "Average Contribution Percentage"
(ACP) for Participants who are Highly Compensated Employees for each
Plan Year and the ACP for Participants who are Non-Highly Compensated
Employees for the same Plan Year must satisfy one of the following two
tests:
(a) The ACP for Participants who are
Highly Compensated Employees for the Plan Year shall not
exceed the ACP for Participants who are Non-Highly Compensated
Employees for the same Plan Year multiplied by 1.25; or
(b) The ACP for Participants who are
Highly Compensated Employees for the Plan Year shall not
exceed the ACP for Participants who are Non-Highly Compensated
Employees for the same Plan Year multiplied by two, provided
that the ACP for Participants who are Highly Compensated
Employees does not exceed the ACP for Participants who are
Non-Highly Compensated Employees by more than two percentage
points.
(2) SPECIAL RULES. The following special rules
apply:
(a) MULTIPLE USE. If one or more Highly
Compensated Employees participate in both a cash or deferred
arrangement (CODA) and a plan subject to the ACP test
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<PAGE> 36
maintained by the Employer and the sum of the "Actual Deferral
Percentage" (ADP), as defined below in Section 3.4(B), and the
ACP of those Highly Compensated Employees subject to either or
both tests exceeds the "Aggregate Limit," then the
"Contribution Percentages" of those Highly Compensated
Employees who also participate in a CODA shall be reduced
(beginning with such Highly Compensated Employee whose
"Contribution Percentage" is the highest) so that the limit is
not exceeded. The amount by which each Highly Compensated
Employee's "Contribution Percentage Amount" is reduced shall
be treated as an "Excess Aggregate Contribution." The ADP and
ACP of the Highly Compensated Employees shall be determined
after any corrections required to meet the ADP and ACP tests.
Multiple use does not occur if both the ADP and ACP of the
Highly Compensated Employees do not exceed 1.25 multiplied by
the ADP and ACP of the Non-Highly Compensated Employees.
(b) MULTIPLE PLANS. For purposes of
this Section 3.2(F), the "Contribution Percentage" for any
Participant who is a Highly Compensated Employee and who is
eligible to have "Contribution Percentage Amounts" allocated
to his account under two or more plans described in section
401(a) of the Code, or CODAs that are maintained by the
Employer, shall be determined as if the total of such
"Contribution Percentage Amounts" were made under each plan.
If a Highly Compensated Employee participates in two or more
CODAs that have different plan years, all CODAs ending with or
within the same calendar year shall be treated as a single
arrangement. Notwithstanding the foregoing, certain plans
shall be treated as separate if mandatorily disaggregated
pursuant to Treasury regulations under section 401(m) of the
Code.
(c) AGGREGATION. In the event that this
Plan satisfies the requirements of sections 401(m), 401(a)(4)
or 410(b) of the Code only if aggregated with one or more
other plans, or if one or more other plans satisfy the
requirements of such sections of the Code only if aggregated
with this Plan, then this Section 3.2(F) shall be applied by
determining the ACP of Employees as if all such plans were a
single plan. For Plan Years beginning after December 31,
1989, plans may be aggregated in order to satisfy section
401(m) of the Code only if they have the same plan year.
(d) FAMILY AGGREGATION. For purposes of
determining the "Contribution Percentage" of a Participant who
is a five-percent owner or one of the ten most highly-paid
Highly Compensated Employees, the "Contribution Percentage
Amounts" and "Applicable Compensation" of such Participant
shall include the "Contribution Percentage Amounts" and
"Applicable Compensation" for the Plan Year of Family Members.
Family Members, with respect to Highly Compensated Employees,
shall be disregarded as separate Employees in determining the
ACP both for Participants who are Non-Highly Compensated
Employees and for Participants who are Highly Compensated
Employees.
(e) TIMING. For purposes of the ACP
test, "Employee Contributions" are considered to have been
made in the Plan Year in which contributed to the Trust.
Matching Contributions, Qualified Matching Contributions and
Qualified Nonelective Contributions shall be considered made
for a Plan Year if made no later than the end of the 12-month
period beginning on the day after the close of the Plan Year.
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<PAGE> 37
(f) RECORDS. The Employer shall
maintain records sufficient to demonstrate satisfaction of the
ACP test and the amount of Qualified Nonelective Contributions
or Qualified Matching Contributions, or both, used in such
test.
(g) OTHER REQUIREMENTS. The
determination and treatment of the "Contribution Percentage"
of any Participant shall satisfy such other requirements as
may be prescribed by the Secretary of the Treasury.
(3) DEFINITIONS. The following definitions apply:
(a) "AGGREGATE LIMIT" shall mean the sum
of (i) 125 percent of the greater of (AA) the ADP of the
Non-Highly Compensated Employees eligible under the CODA for
the Plan Year or (BB) the ACP of Non-Highly Compensated
Employees eligible under the Plan subject to section 401(m) of
the Code for the Plan Year beginning with or within the Plan
Year of the CODA, and (ii) two plus the lesser of (AA) or (BB)
above, but in no event shall this amount exceed 200 percent of
the lesser of (AA) or (BB) above. However, the "Aggregate
Limit," for Plan Years beginning before the later of January
1, 1992, or the date that is 60 days after publication of
final Treasury regulations under section 401(m) of the Code,
shall be the greater of (aa) the "Aggregate Limit," as
calculated under the preceding sentence, or (bb) the sum of
(AAA) 125 percent of the lesser of (AAAA) the ADP of the Non-
Highly Compensated Employees eligible under the CODA for the
Plan Year, or (BBBB) the ACP of the Non-Highly Compensated
Employees eligible under the Plan subject to section 401(m) of
the Code for the Plan Year beginning with or within the Plan
Year of the CODA, and (BBB) two plus the greater of (AAAA) or
(BBBB) above, but in no event shall this amount exceed 200
percent of the greater of (AAAA) or (BBBB) above.
(b) "AVERAGE CONTRIBUTION PERCENTAGE
(ACP)" shall mean the average of the "Contribution
Percentages" of the "Eligible Participants" in a group.
(c) "CONTRIBUTION PERCENTAGE" shall mean
the ratio (expressed as a percentage) of the Participant's
"Contribution Percentage Amounts" to the Participant's
"Applicable Compensation" for the Plan Year (whether or not
the Employee was a Participant for the entire Plan Year).
(d) "CONTRIBUTION PERCENTAGE AMOUNTS"
shall mean the sum of the "Employee Contributions", Matching
Contributions and Qualified Matching Contributions (to the
extent not taken into account for purposes of the ADP test)
made under the Plan on behalf of the Participant for the Plan
Year. Such Contribution Percentage Amounts shall not include
Matching Contributions that are forfeited either to correct
"Excess Aggregate Contributions" as defined below, or because
the contributions to which they relate are "Excess Elective
Deferrals" under Section 3.4, "Excess Contributions" under
Section 3.4, or "Excess Aggregate Contributions" under this
Section 3.2. If so elected in the Adoption Agreement, the
Employer may include Qualified Nonelective Contributions in
the "Contribution Percentage Amounts." The Employer also may
elect to use Elective Deferrals in the "Contribution
Percentage Amounts" so long as the ADP test is met before the
Elective Deferrals are used in the ACP test and continues to
be met following the exclusion of those Elective Deferrals
that are used to meet the ACP test.
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<PAGE> 38
(e) "ELIGIBLE PARTICIPANT" shall mean
any Employee who is eligible to make an "Employee
Contribution" or an Elective Deferral (if the Employer takes
such contributions into account in the calculation of the
"Contribution Percentage"), or to receive a Matching
Contribution (including forfeitures) or a Qualified Matching
Contribution. If an "Employee Contribution" is required as a
condition of participation in the Plan, any Employee who would
be a Participant in the Plan if such Employee made such an
"Employee Contribution" shall be treated as an "Eligible
Participant" on behalf of whom no "Employee Contributions" are
made.
(f) "EMPLOYEE CONTRIBUTION" shall mean
any contribution made to the Plan by or on behalf of a
Participant that is included in the Participant's gross income
in the Plan Year in which made and that is maintained under a
separate account to which earnings and losses are allocated.
(g) "APPLICABLE COMPENSATION" shall mean
compensation (i) within the meaning of section 414(s)(1) of
the Code for the Plan Year for which a determination under
this Section 3.2(F) is being made, plus (ii) any amount
contributed by the Employer for such Plan Year pursuant to a
salary reduction agreement and which is not includible in
gross income under section 125, 402(e)(3), 402(h)(1)(B) or
403(b) of the Code.
(G) DISTRIBUTION OF "EXCESS AGGREGATE CONTRIBUTIONS".
(1) IN GENERAL. Notwithstanding any other
provision of this Plan, "Excess Aggregate Contributions", plus any
income and minus any loss allocable thereto, shall be forfeited, if
forfeitable, or, if not forfeitable, distributed no later than the
last day of each Plan Year to Participants to whose accounts such
"Excess Aggregate Contributions" were allocated for the preceding Plan
Year. If such "Excess Aggregate Contributions" are distributed more
than two and one-half months after the last day of the Plan Year in
which such "Excess Aggregate Contributions" arose, a ten percent
excise tax will be imposed on the Employer maintaining the plan with
respect to such "Excess Aggregate Contributions". Such distributions
shall be made to Highly Compensated Employees on the basis of the
respective portions of the "Excess Aggregate Contributions"
attributable to each of such Employees. "Excess Aggregate
Contributions" of Participants who are subject to the Family Member
aggregation rules of section 414(q)(6) of the Code shall be allocated
among the Family Members in proportion to the "Employee Contributions"
and Matching Contributions (or amounts treated as Matching
Contributions) of each Family Member that is combined to determine the
combined ACP. "Excess Aggregate Contributions" shall be treated as
"Annual Additions" (within the meaning of Section 3.8(D)(1)) under the
Plan.
(2) DETERMINATION OF INCOME OR LOSS. "Excess
Aggregate Contributions" shall be adjusted for any income or loss.
The income or loss allocable to "Excess Aggregate Contributions" is
the income or loss allocable to the Participant's "Employee
Contribution" account, Matching Contribution account, Qualified
Matching Contribution account (if any, and if all amounts therein are
not used in the ADP test) and, if applicable, Qualified Nonelective
Contribution account and Elective Deferral account for the Plan Year
multiplied by a fraction, the numerator of which is such Participant's
"Excess Aggregate Contributions" for the Plan Year and the denominator
of which is the Participant's account balance(s) attributable to
"Contribution Percentage Amounts" without regard to any income or loss
occurring during such Plan Year. Income or loss allocable to the
period between the end of the Plan Year and the date of distribution
shall be disregarded in determining income or loss.
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<PAGE> 39
(3) FORFEITURES OF "EXCESS AGGREGATE
CONTRIBUTIONS". Forfeitures of "Excess Aggregate Contributions" may
either be reallocated to the accounts of Non-Highly Compensated
Employees or applied to reduce Employer contributions, as elected by
the Employer in the Adoption Agreement with respect to Matching
Contributions.
(4) ACCOUNTING FOR "EXCESS AGGREGATE
CONTRIBUTIONS". "Excess Aggregate Contributions" shall be forfeited,
if forfeitable or distributed on a pro-rata basis from the
Participant's "Employee Contribution" account, Matching Contribution
account and Qualified Matching Contribution account (and, if
applicable, the Participant's Qualified Nonelective Contribution
account or Elective Deferral account, or both).
(5) DEFINITIONS. The following definitions apply:
(a) "EXCESS AGGREGATE CONTRIBUTIONS"
shall mean, with respect to any Plan Year, the excess of:
(i) The aggregate "Contribution
Percentage Amounts" actually taken into account in
computing the ACP of Highly Compensated Employees for
such Plan Year, over
(ii) The maximum "Contribution
Percentage Amounts" permitted by the ACP test
(determined by reducing contributions made on behalf
of Highly Compensated Employees in order of their
"Contribution Percentages" beginning with the highest
of such percentages).
Such determination shall be made after first
determining "Excess Elective Deferrals" under Section 3.4 and
then determining "Excess Contributions" under Section 3.4.
(6) VESTING AND ACCOUNTS. The Participant's
Accrued Benefit derived from Employee Contributions shall be
nonforfeitable at all times. Separate accounts for Employee
Contributions shall be maintained for each Participant. Each account
shall be credited with the applicable contributions and earnings
thereon.
3.3 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS. The rules
relating to Qualified Voluntary Employee Contributions are as follows:
(A) NOT PERMITTED AFTER DECEMBER 31, 1986. No Qualified
Voluntary Employee Contributions shall be permitted after December 31, 1986.
Contributions made prior to that date shall be maintained in separate
accounts. Such accounts shall share in gains or losses of the Trust in the
manner described in Article V. No part of such accounts shall be used to
purchase life insurance. Withdrawals from such accounts are provided for in
Sections 7.10(B) and 7.12.
(B) QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTION AND
EARNINGS THEREON VESTED AT ALL TIMES. The interest of each Participant in
any Qualified Voluntary Employee Contributions made on his behalf before
January 1, 1987, and the earnings thereon shall be nonforfeitable at all
times.
(C) RESPONSIBILITY OF TRUSTEE. The Trustee shall be
accountable for Qualified Voluntary Employee Contributions received by it,
but shall have no duty to determine that the Qualified Voluntary
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Employee Contributions received are of the correct amount or are correctly
allocated by the Employer to the Participants who made them.
3.4 ELECTIVE DEFERRAL CONTRIBUTIONS. The rules relating to
Elective Deferral Contributions are as follows:
(A) AMOUNT. If the Adoption Agreement provides for
Elective Deferral Contributions, the Employer shall make an Elective
Deferral Contribution to the Plan on behalf of each Participant who has
elected to defer a portion of the Compensation otherwise payable for the
Plan Year and have it contributed to the Plan. Such an election may only be
made pursuant to a written salary reduction agreement between the Employer
and the Participant. The agreement shall be on the Appropriate Form
prescribed by the Administrative Committee, and the agreement shall specify
the percentage or amount of Compensation that the Participant desires to
defer (but in no event may Elective Deferral Contributions exceed for any
Plan Year, after taking into account any Employer Contributions for such
Plan Year under this Plan and under any other qualified profit-sharing or
qualified stock-bonus plan the amount allowable under Section 3.1(B)(1) for
the Taxable Year which ends with or within such Plan Year, or the
limitations set forth in Section 3.8 below). A Participant shall not be
permitted to enter into more than one salary reduction agreement in the
periods specified in the Adoption Agreement, and the agreement for any such
period must be entered into before the first day of such period. The
Elective 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 Elective Deferral Contribution
otherwise to be made for a Participant shall be reduced if and to the extent
necessary to comply with the limitations of Section 3.4(B). An Elective
Deferral Contribution made for a Participant shall be allocated to his
Elective Deferral Account pursuant to Section 5.1(D). In the event the
requirements of Section 3.4(B) would not otherwise be met, but only if the
Adoption Agreement so provides, the Employer may make, on behalf of
Non-Highly Compensated Employees, for any Plan Year, such Qualified
Nonelective Contributions as are necessary to meet the requirements of
Section 3.4(B). Such Employer Qualified Nonelective Contributions must be
made by the Employer no later than 30 days after the end of the Plan Year.
Such Employer Qualified Nonelective Contributions shall be separately
accounted for and no portion of such Employer Qualified Nonelective
Contributions attributable to Plan Years beginning after December 31, 1988,
may be withdrawn upon hardship of the Participant. Moreover, such Employer
Qualified Nonelective Contributions must satisfy all other requirements
relating to Qualified Nonelective Contributions as set forth in Section
1.70. The CODA provisions may not be integrated with social security.
(B) ELECTIVE DEFERRALS.
(1) MAXIMUM AMOUNT OF ELECTIVE DEFERRALS.
Effective as of January 1, 1987, no Employee shall be permitted to
have Elective Deferrals made under this Plan during the taxable year
of such Employee in excess of $7,000 multiplied by the Adjustment
Factor as provided by the Secretary of the Treasury and as in effect
at the beginning of such taxable year of the Employee. The foregoing
limit shall not apply to Elective Deferrals of amounts attributable to
service performed in 1986 and described in section 1105(c)(5) of the
Tax Reform Act of 1986.
(2) "ACTUAL DEFERRAL PERCENTAGE" TEST
REQUIREMENT. The "Actual Deferral Percentage" (ADP) for Participants
who are Highly Compensated Employees for each Plan Year and the ADP
for Participants who are Non-Highly Compensated Employees for the same
Plan Year must satisfy one of the following tests:
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(a) The ADP for Participants who are
Highly Compensated Employees for the Plan Year shall not
exceed the ADP for Participants who are Non-Highly Compensated
Employees for the same Plan Year multiplied by 1.25; or
(b) The ADP for Participants who are
Highly Compensated Employees for the Plan Year shall not
exceed the ADP for Participants who are Non-Highly Compensated
Employees for the same Plan Year multiplied by 2.0, provided
that the ADP for Participants who are Highly Compensated
Employees does not exceed the ADP for Participants who are
Non-Highly Compensated Employees by more than two percentage
points.
(3) SPECIAL RULES. The following special rules
apply:
(a) The ADP for any Participant who is a
Highly Compensated Employee for the Plan Year and who is
eligible to have Elective Deferrals (and Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, if
treated as Elective Deferrals for purposes of the ADP test)
allocated to his accounts under two or more cash or deferred
arrangements described in section 401(k) of the Code (CODAs),
that are maintained by the Employer, shall be determined as if
such Elective Deferrals (and, if applicable, such Qualified
Nonelective Contributions or Qualified Matching Contributions,
or both) were made under a single CODA. If a Highly
Compensated Employee participates in two or more CODAs that
have different Plan Years, all CODAs ending with or within the
same calendar year shall be treated as a single CODA.
Notwithstanding the foregoing, certain CODAs shall be treated
as separate CODAs if mandatorily disaggregated pursuant to
regulations under section 401(k) of the Code.
(b) In the event that this Plan
satisfies the requirements of section 401(k), 401(a)(4), or
410(b) of the Code only if aggregated with one or more other
plans, or if one or more other plans satisfy the requirements
of such sections of the Code only if aggregated with this
Plan, then this Section shall be applied by determining the
ADP of Employees as if all such plans were a single plan. For
Plan Years beginning after December 31, 1989, plans may be
aggregated in order to satisfy section 401(k) of the Code only
if they have the same Plan Year.
(c) For purposes of determining the ADP
of a Participant who is a five-percent owner or one of the ten
most highly-paid Highly Compensated Employees, the Elective
Deferrals (and Qualified Nonelective Contributions or
Qualified Matching Contributions, or both, if treated as
Elective Deferrals for purposes of the ADP test) and
"Applicable Compensation" of such a Participant shall include
the Elective Deferrals (and, if applicable, Qualified
Nonelective Contributions and Qualified Matching
Contributions, or both) and "Applicable Compensation" for the
Plan Year of Family Members of such Participant. Family
Members, with respect to such Highly Compensated Employees,
shall be disregarded as separate Employees in determining the
ADP both for Participants who are Non-Highly Compensated
Employees and for Participants who are Highly Compensated
Employees.
(d) For purposes of determining the ADP
test, Elective Deferrals, Qualified Nonelective Contributions
and Qualified Matching Contributions must be made before the
last day of the 12-month period immediately following the Plan
Year to which the contributions relate.
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(e) The Employer shall maintain records
sufficient to demonstrate satisfaction of the ADP test and the
amount of Qualified Nonelective Contributions or Qualified
Matching Contributions, or both, used in such test.
(f) The determination and treatment of
the ADP amounts of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
(4) DEFINITIONS. The following definitions apply:
(a) "ACTUAL DEFERRAL PERCENTAGE" shall
mean, for a specified group of Participants for a Plan Year,
the average of the ratios (calculated separately for each
Participant in such group) of (i) the amount of Employer
contributions actually paid over to the Trust on behalf of
such Participant for the Plan Year to (ii) the Participant's
"Applicable Compensation" for such Plan Year (whether or not
the Employee was a Participant for the entire Plan Year).
Employer contributions on behalf of any Participant shall
include any Elective Deferrals made pursuant to the
Participant's deferral election (including "Excess Elective
Deferrals" of Highly Compensated Employees), but excluding
"Excess Elective Deferrals of Non-Highly Compensated Employees
that arise solely from Elective Deferrals made under the plan
or plans of the Employer and excluding Elective Deferrals that
are taken into account in the "Contribution Percentage" test
(provided the ADP test is satisfied both with and without
exclusion of these Elective Deferrals) and, at the election of
the Employer, Qualified Nonelective Contributions and
Qualified Matching Contributions. For purposes of computing
"Actual Deferral Percentages", an Employee who would be a
Participant but for the failure to make Elective Deferrals
shall be treated as a Participant on whose behalf no Elective
Deferrals are made.
(b) "APPLICABLE COMPENSATION" shall have
the meaning set forth in Section 3.2(F)(3)(g).
(5) DISTRIBUTION OF "EXCESS ELECTIVE DEFERRALS".
(a) IN GENERAL. A Participant may
assign to this Plan any "Excess Elective Deferrals" made
during such Participant's taxable year by notifying the Plan
Administrator, in accordance with Section 3.4(B)(5)(c) of the
amount of the "Excess Elective Deferrals" to be assigned to
the Plan. A Participant is deemed to notify the Plan
Administrator of any "Excess Elective Deferrals" that arise by
taking into account only those Elective Deferrals made to this
Plan and any other plans of the Employer.
Notwithstanding any other provision of the
Plan, "Excess Elective Deferrals" plus any income and minus
any loss allocable thereto shall be distributed no later than
April 15 to any Participant to whose account "Excess Elective
Deferrals" were assigned for the preceding taxable year of
such Participant and who claims "Excess Elective Deferrals"
for such taxable year of the Participant.
(b) DEFINITION. For purposes of the
Plan, "EXCESS ELECTIVE DEFERRALS" shall mean those Elective
Deferrals that are includible in a Participant's gross income
under section 402(g) of the Code to the extent such
Participant's Elective Deferrals for a taxable year exceed the
dollar limitation under such Code section. "Excess Elective
Deferrals" shall be
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treated as "Annual Additions" (within the meaning of Section
3.8(D)(1)) under the Plan, unless such amounts are distributed
no later than the first April 15 following the close of the
Participant's taxable year.
(c) CLAIMS. The Participant's claim
shall be in writing; shall be submitted to the Plan
Administrator no later than March 1; shall specify the
Participant's "Excess Elective Deferral" for the preceding
taxable year of such Participant (which shall not exceed the
amount of the Participant's Elective Deferral under this Plan
for such taxable year); and shall be accompanied by the
Participant's written statement that if such amounts are not
distributed, such "Excess Elective Deferral", when added to
other Elective Deferrals exceeds the limit imposed on the
Participant by section 402(g) of the Code for the taxable year
of the Participant in which the Elective Deferral occurred.
(d) DETERMINATION OF INCOME OR LOSS.
"Excess Elective Deferrals" shall be adjusted for income or
loss. The income or loss allocable to "Excess Elective
Deferrals" is the income or loss allocable to the
Participant's Elective Deferrals for the year multiplied by a
fraction, the numerator of which is such Participant's "Excess
Elective Deferrals" for the year and the denominator of which
is the Participant's account balance attributable to Elective
Deferrals without regard to any income or loss occurring
during such taxable year. Income or loss allocable to the
period between the end of the taxable year of the Participant
and the date of the distribution shall be disregarded in
determining income or loss.
(6) DISTRIBUTION OF "EXCESS CONTRIBUTIONS".
(a) IN GENERAL. Notwithstanding any other
provision of the Plan, "Excess Contributions", plus any income
and minus any loss allocable thereto, shall be distributed no
later than the last day of each Plan Year beginning after
December 31, 1987, to Participants to whose accounts such
"Excess Contributions" were allocated for the preceding Plan
Year. If such "Excess Contributions" are distributed more
than two and one-half months after the last day of the Plan
Year in which such "Excess Contributions" arose, a ten percent
excise tax will be imposed on the Employer maintaining the
plan with respect to such "Excess Contributions". Such
distributions shall be made to Highly Compensated Employees on
the basis of the respective portions of the "Excess
Contributions" attributable to each of such Employees.
"Excess Contributions" of Participants who are subject to the
Family Member aggregation rules of section 414(q)(6) of the
Code shall be allocated among the Family Members in proportion
to the Elective Deferrals (and amounts treated as Elective
Deferrals) of each Family Member that is combined to determine
the combined ADP. "Excess Contributions" shall be treated as
"Annual Additions" (within the meaning of Section 3.8(D)(1))
under the Plan.
(b) DETERMINATION OF INCOME OR LOSS. "Excess
Contributions" shall be adjusted for any income or loss. The
income or loss allocable to "Excess Contributions" is the
income or loss allocable to the Participant's Elective
Deferral account (and, if applicable, the Qualified
Nonelective Contribution account or the Qualified Matching
Contributions account or both) for the Plan Year multiplied by
a fraction, the numerator of which is such Participant's
"Excess Contributions" for the Plan Year and the denominator
of which is the Participant's account balance attributable to
Elective Deferrals (and Qualified Nonelective Contributions or
Qualified Matching Contributions, or both, if any of such
contributions are included in the ADP test) without regard to
any income or loss occurring during such Plan Year. Income or
loss
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allocable to the period between the end of the Plan Year and
the date of the distribution shall be disregarded in
determining income or loss.
(c) ACCOUNTING FOR "EXCESS CONTRIBUTIONS".
"Excess Contributions" shall be distributed from the
Participant's Elective Deferral account and Qualified Matching
Contribution account (if applicable) in proportion to the
Participant's Elective Deferrals and Qualified Matching
Contributions (to the extent used in the ADP test) for the
Plan Year. "Excess Contributions" shall be distributed from
the Participant's Qualified Nonelective Contribution account
only to the extent that such "Excess Contributions" exceed the
balance in the Participant's Elective Deferral account and
Qualified Matching Contribution account.
(d) DEFINITION. "EXCESS CONTRIBUTION" shall
mean, with respect to any Plan Year, the excess of:
(i) The aggregate amount of
Employer contributions actually taken into account in
computing the ADP of Highly Compensated Employees for
such Plan Year, over
(ii) The maximum amount of such
contributions permitted by the ADP test (determined
by reducing contributions made on behalf of Highly
Compensated Employees in order of the ratios used in
determining the ADP of Highly Compensated Employees,
beginning with the highest of such ratios).
(e) REDUCTION FOR "EXCESS ELECTIVE
DEFERRALS" DISTRIBUTED. The "Excess Contributions" which
would otherwise be distributed to the Participant shall be
reduced, in accordance with regulations, by the amount of
"Excess Elective Deferrals" distributed to the Participant.
(C) VESTING AND ACCOUNTS. The interest of each
Participant in his Accrued Benefit derived from such Participant's Elective
Deferral Contributions and the earnings thereon shall be nonforfeitable at
all times. Separate accounts for Elective Deferral Contributions shall be
maintained for each Participant. Each account shall be credited with the
applicable contributions and earnings thereon.
(D) MANNER OF MAKING ELECTIVE DEFERRAL CONTRIBUTION. The
Employer shall contribute the Elective Deferral Contributions to the Plan
within the earlier of (1) 30 days following the pay period to which such
Elective Deferral Contributions relate, or (2) 30 days following the end of
the Plan Year for which such Elective Deferral Contributions are being made.
(E) RESPONSIBILITY OF TRUSTEE. The Trustee shall be
accountable for Elective Deferral Contributions received by it, but shall
have no duty to determine that the Elective Deferral Contributions received
are of the correct amount or are correctly allocated by the Administrative
Committee to the Participant on whose behalf such Elective Deferral
Contributions were made.
3.5 MATCHING CONTRIBUTIONS. The rules relating to Matching
Contributions are as follows:
(A) AMOUNT. If the Adoption Agreement provides for
Matching Contributions, the Employer shall make a Matching Contribution on
behalf of each Participant who has elected to make Elective Deferral
Contributions or Participant Contributions to the Plan in the amounts set
forth in the Adoption
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Agreement. The amount of the Matching Contribution shall be the amount
selected by the Employer in the Adoption Agreement to match such Elective
Deferral Contributions and/or Participant Contributions. A Matching
Contribution for a Participant shall be allocated to his Matching Account
pursuant to Section 5.1(E). The Employer may also make Qualified Matching
Contributions to the extent permitted by the applicable Adoption Agreement.
(B) TIME. Matching Contributions, for any Plan year,
shall be paid to the Trustee no later than the due date (including
extensions of time) for filing the Employer's Federal income tax return for
the Taxable Year which ends with or within such Plan Year.
(C) RESPONSIBILITY OF TRUSTEE. The Trustee shall be
accountable for Matching Contributions received by it, but shall have no
duty to determine that the Matching Contributions are of the correct amount
or are correctly allocated by the Administrative Committee to the
Participant on whose behalf such Matching Contributions were made.
(D) LIMITATIONS. All Matching Contributions are subject
to the requirements of Sections 3.2(F) and 3.2(G).
(E) VESTING AND ACCOUNTS. Matching Contributions shall
be vested in accordance with Section A.3.5(F) of the Adoption Agreement. In
any event, Matching Contributions shall be fully vested at Normal Retirement
Age, upon the complete or partial termination of the Plan, or upon the
complete discontinuance of Employer contributions. Qualified Matching
Contributions shall be vested when made.
Forfeitures of Matching Contributions, other than "Excess
Aggregate Contributions" (within the meaning of Section 3.2(G)) shall be
made in accordance with Sections 5.5 and 7.6(C) and Section A.7.6(C) of the
Adoption Agreement.
Separate accounts for Matching Contributions shall be
maintained for each Participant. Each account shall be credited with the
applicable contributions and earnings thereon.
Notwithstanding the foregoing, Matching Contributions
(including Qualified Matching Contributions) shall be forfeited if the
contributions to which they relate are "Excess Deferrals", "Excess
Contributions", or "Excess Aggregate Contributions". [SEE TREAS. REG. Section
1.401(A)(4)-11(G)(6) EXAMPLE 8]
3.6 CONTRIBUTIONS HELD IN TRUST. The Trustee covenants and agrees
that it holds, and will hold, all sums (including any Employer Contributions,
any Elective Deferral Contributions, any Matching Contributions, any
Participant Contributions, any Qualified Matching Contributions, any Qualified
Nonelective Contributions and, if applicable, prior Qualified Voluntary
Employee Contributions) which, from time to time, have been, or may be, paid to
it as Trustee hereunder, in trust, subject to the provisions of the Plan, for
the purposes and upon the terms, conditions and powers set forth in this Plan
and Trust Agreement.
3.7 RETURN OF EMPLOYER CONTRIBUTIONS. The rules relating to the
return of Employer Contributions are as follows:
(A) EXCLUSIVE BENEFIT RULE AND EXCEPTIONS THERETO. The
Trust Fund shall be held by the Trustee for the exclusive purpose of
providing benefits to Participants in the Plan and their Beneficiaries and
defraying reasonable expenses of administering the Plan. No part of the
Trust Fund shall at any time inure to the benefit of the Employer; provided,
however, that Employer Contributions and/or Elective Deferral
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Contributions and/or Matching Contributions to the Trust Fund shall be
refunded to the Employer, to the extent such refunds do not, in themselves,
deprive the Plan of its qualified status, under the following circumstances
and subject to the following limitations:
(1) MISTAKE OF FACT. In the case of Employer
Contributions and/or Elective Deferral Contributions and/or Matching
Contributions which are made, in whole or in part, by reason of a
mistake of fact (as for example, incorrect information as to the
eligibility or Compensation of a Participant, or a mathematical
error), so much of such Employer Contributions and/or Elective
Deferral Contributions and/or Matching Contributions as is
attributable to the mistake of fact shall be returned to the Employer
on demand, upon presentation to the Trustee of evidence of the mistake
of fact and calculations as to the impact of such mistake. Demand and
repayment must be effected within one year after the date of payment
of the Employer Contributions and/or Elective Deferral Contributions
and/or Matching Contributions to which the mistake applies.
(2) DISALLOWANCE OF DEDUCTION. In the event the
deduction of the contribution made by the Employer is disallowed under
section 404 of the Code, such contribution (to the extent disallowed)
shall be returned to the Employer within one year of the disallowance
of the deduction.
(3) INITIAL DISQUALIFICATION. If any Employer
and/or Elective Deferral Contributions and/or Matching Contributions
to the Plan are conditioned on initial qualification of the Plan under
section 401 of the Code and if the Plan receives an adverse
determination with respect to its initial qualification, any such
Employer Contributions and/or Elective Deferral Contributions and/or
Matching Contributions shall be returned to such Employer within one
year after such adverse determination but only if the application for
determination is made by the time prescribed by law for filing the
Employer's Federal income tax return for the Taxable Year in which
such Plan was adopted or such later date as the Secretary of the
Treasury shall provide.
(B) REFUND TO BE DEDUCTED AS INVESTMENT LOSS WITH CERTAIN
EXCEPTIONS. In the event that any refund is paid to the Employer hereunder,
such refund shall be made without interest and shall be deducted from the
Employer Accounts and/or Elective Deferral Accounts and/or Matching Accounts
of the Participants as an investment loss except to the extent that the
amount of the refund can be attributed to one or more specific Participants
(as in the case of certain mistakes of fact and disallowances of
Compensation resulting in reduction of deductible Employer Contributions) in
which case the amount of the refund attributable to each such Participant's
Employer Account and/or Elective Deferral Account and/or Matching Account
shall be deducted directly from such Employer Account and/or Elective
Deferral Account and/or Matching Account.
(C) LIMITATIONS ON REFUNDS. Notwithstanding any other
provisions of this Section 3.7, no refund shall be made to the Employer:
(1) To the extent such refund is specifically
chargeable to the Employer Account(s) and/or Elective Deferral
Account(s) and/or Matching Account(s) of any Participant(s) in excess
of 100 percent of the amount in such Account(s);
(2) If the amount otherwise subject to refund
hereunder has been distributed to Participants and/or their
Beneficiaries (in which case the Employer shall have a claim directly
against the distributees to the extent of the refund to which it is
entitled);
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(3) To the extent the amount is not in excess of
the amount which would have been contributed had no mistake of fact or
mistake in determining the deduction occurred (in which case the
amount subject to refund shall be limited to the excess of (a) the
amount of the Employer Contribution and/or Elective Deferral
Contribution and/or Matching Contribution over (b) the amount that the
Employer would have contributed, had there not occurred a mistake of
fact or a mistake in determining the amount of the deduction);
(4) Of earnings attributable to the excess
Employer Contribution and/or Elective Deferral Contribution and/or
Matching Contribution;
(5) To the extent there are losses attributable
to the amount subject to refund (in which case the losses shall reduce
the amount to be returned); and
(6) To the extent the amount subject to refund
would cause the balance of the Employer Account and/or Elective
Deferral Account and/or Matching Account of any Participant to be
reduced to less than the balance which would have been in such
Employer Account and/or Elective Deferral Account and/or Matching
Account had the amount subject to refund not been contributed (in
which case the amount to be refunded to the Employer shall be limited
so as to avoid such reduction).
(D) FURTHER LIMITATIONS ON REFUNDS. All refunds under
this Section 3.7 shall be limited in amount, circumstance and timing to the
provisions of section 403(c) of ERISA, and no such refund shall be made if,
solely on account of such refund, the Plan would cease to be a qualified
plan under section 401(a) of the Code or to meet the requirements of section
401(k) of the Code.
3.8 LIMITATIONS ON ALLOCATIONS. The limitations relating to
allocations under the Plan are as follows:
(A) LIMITATION APPLICABLE WHERE NO OTHER EMPLOYEE PENSION
BENEFIT PLAN OR WELFARE BENEFIT FUND OR INDIVIDUAL MEDICAL BENEFIT ACCOUNT
MAINTAINED.
(1) BASIC LIMITATION. If the Participant does
not participate in, and has never participated in, any other Employee
Pension Benefit Plan maintained by the "Employer" (as defined in
Section 3.8(D)(5)) or Welfare Benefit Fund maintained by the
"Employer" or individual medical benefit account (as defined in
section 415(l)(2) of the Code) maintained by the "Employer" and which
provides an "Annual Addition" (as defined in Section 3.8(D)(1)) by the
"Employer", the amount of the "Annual Additions" which may be
allocated under this Plan to such Participant's accounts during any
Limitation Year shall not exceed the lesser of the "Maximum
Permissible Amount" (as defined in Section 3.8(D)(8)) or any other
limitation contained in the Plan. If the Employer contribution that
would otherwise be contributed or allocated to the Participant's
account would cause the "Annual Additions" for the Limitation Year to
exceed the "Maximum Permissible Amount", the amount contributed or
allocated shall be reduced so that the "Annual Additions" for the
Limitation Year will equal the "Maximum Permissible Amount".
(2) ESTIMATION OF LIMITATION COMPENSATION. Prior to
determining the Participant's actual Limitation 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 Limitation Compensation for the Limitation Year,
uniformly determined for Participants similarly situated.
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<PAGE> 48
(3) DETERMINATION OF ACTUAL LIMITATION COMPENSATION.
As soon as is administratively feasible after the end of the
Limitation Year, the "Maximum Permissible Amount" for the Limitation
Year shall be determined on the basis of the Participant's actual
Limitation Compensation for the Limitation Year.
(4) DISPOSITION OF "EXCESS AMOUNTS". If,
pursuant to Section 3.8(A)(3), or as a result of the allocation of
forfeitures or under other limited facts and circumstances
satisfactory to the Commissioner of Internal Revenue there is an
"Excess Amount" (as defined in Section 3.8(D)(6)) with respect to a
Participant for a Limitation Year, such "Excess Amount" shall be
disposed of as follows:
(a) First, any Participant
Contributions, to the extent their return would reduce the
"Excess Amount", shall be paid to the Participant as soon as
is administratively feasible. The Administrative Committee
shall certify to the Trustee the amount of any such reduction
to be returned to any Participant and the name and address of
the Participant.
(b) Second, if, after the application of
Section 3.8(A)(4)(a), an "Excess Amount" still exists, and the
Participant is covered by the Plan at the end of a Limitation
Year, the "Excess Amount"in the Participant's account shall be
used to reduce Employer contributions (including any
allocation of forfeitures), for such Participant in the next
Limitation Year (and for each succeeding Limitation Year as
necessary).
(c) If, after the application of Section
3.8(A)(4)(a) an "Excess Amount" still exists, and the
Participant is not covered by the Plan at the end of a
Limitation Year, the "Excess Amount" shall be held unallocated
in a suspense account. The suspense account shall be applied
in the next Limitation Year (and succeeding Limitation Years,
as necessary) to reduce Employer contributions for all
remaining Participants.
(d) If a suspense account is in existence at
any time during a Limitation Year pursuant to this Section
3.8(A)(4), it shall not participate in the allocation of the
Trust's investment gains and losses. If a suspense account is
in existence at any time during a particular Limitation Year,
all amounts in the suspense account must be allocated and
reallocated to Participants' accounts before any "Employer"
contributions or any Employee contributions may be made to the
Plan for that Limitation Year. "Excess Amounts" may not be
distributed to Participants or former Participants. In the
event the Plan of an adopting "Employer" is terminated and any
portion of the "Excess Amount" cannot be allocated to
Participants under this Section 3.8(A)(4), such portion of
such "Excess Amount" shall revert to such adopting "Employer".
(B) MULTI-PLAN LIMITATIONS FOR ADDITIONAL REGIONAL
PROTOTYPE DEFINED CONTRIBUTION PLANS AND/OR WELFARE BENEFIT FUNDS AND/OR
INDIVIDUAL MEDICAL BENEFIT ACCOUNTS.
(1) LIMITATION. This Section 3.8(B) applies, if,
in addition to this Plan, the Participant is covered under another
qualified "Regional Prototype Plan" which is a Defined Contribution
Plan maintained by the "Employer" and/or a Welfare Benefit Fund
maintained by the "Employer" and/or an individual medical benefit
account (as defined in section 415(l)(2) of the Code) maintained by
the "Employer" which provides an "Annual Addition", during any
Limitation Year. The "Annual Additions" which may be credited under
this Plan to a Participant's account for any such Limitation Year
shall not exceed the lesser of:
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(a) The "Maximum Permissible Amount"
reduced by the sum of any "Annual Additions" credited to such
Participant's accounts under such other Defined Contribution
Plan or Plans and under such other Welfare Benefit Fund or
Funds and under such individual medical benefit account or
accounts for the same Limitation Year; or
(b) Any other limitation contained in
this Plan.
If the "Annual Additions" with respect to the
Participant under other Defined Contribution Plans and Welfare Benefit
Funds maintained by the Employer are less than the "Maximum
Permissible Amount" and the Employer contribution that would otherwise
be contributed or allocated to the Participant's account under this
Plan would cause the "Annual Additions" for the Limitation year to
exceed this limitation, the amount contributed or allocated shall be
reduced so that the "Annual Additions" under all such plans and funds
for the Limitation Year will equal the "Maximum Permissible Amount".
If the "Annual Additions" with respect to the Participant under such
other Defined Contribution Plans and Welfare Benefit Funds in the
aggregate are equal to or greater than the "Maximum Permissible
Amount", no amount shall be contributed or allocated to the
Participant's account under this Plan for the Limitation Year.
(2) ESTIMATION OF LIMITATION COMPENSATION. Prior
to determining the Participant's actual Limitation Compensation for
the Limitation Year, the Employer may determine the "Maximum
Permissible Amount" for a Participant in the manner described in
Section 3.8(A)(2).
(3) DETERMINATION OF ACTUAL LIMITATION
COMPENSATION. As soon as is administratively feasible after the end
of the Limitation Year, the "Maximum Permissible Amount" for the
Limitation Year shall be determined on the basis of the Participant's
actual Limitation Compensation for the Limitation Year.
(4) ORDER OF DETERMINING "EXCESS AMOUNTS". If
pursuant to Section 3.8(B)(3) or as a result of the allocation of
forfeitures, a Participant's "Annual Additions" under this Plan and
such other plans would result in an "Excess Amount" for a Limitation
Year, the "Excess Amount" shall be deemed to consist of the "Annual
Additions" last allocated, except that "Annual Additions" attributable
to a Welfare Benefit Fund or to an individual medical benefit account
shall be deemed to have been allocated first regardless of the actual
allocation date.
(5) SIMULTANEOUS ALLOCATION OF "EXCESS AMOUNTS".
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 shall be the product
of:
(a) The total "Excess Amount" allocated
as of such date; times
(b) The ratio of (i) the "Annual
Additions" allocated to the Participant for the Limitation
Year as of such date under this Plan, to (ii) the total
"Annual Additions" allocated to the Participant for the
Limitation Year as of such date under this and all the other
qualified "Regional Prototype Plans" maintained by the
"Employer" which are Defined Contribution Plans.
(6) DISPOSITION OF "EXCESS AMOUNTS". Any "Excess
Amounts" attributed to this Plan shall be disposed of in accordance
with Section 3.8(A)(4).
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(7) LIMITATION WHERE PARTICIPANT COVERED BY
NON-REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN. If the Participant
is covered under another qualified Defined Contribution Plan
maintained by the "Employer" which is not a "Regional Prototype Plan"
(as defined in Section 3.8(D)(10)), "Annual Additions" which may be
credited to the Participant's account under this Plan for any
Limitation Year shall be limited in accordance with Sections 3.8(B)(1)
through 3.8(B)(6) as though the other plan were a "Regional Prototype
Plan" unless the "Employer" provides other limitations in Section
A.3.8.(B) of the Adoption Agreement.
(C) MULTI-PLAN LIMITATIONS FOR ADDITIONAL PLAN WHICH IS A
DEFINED BENEFIT PLAN.
(1) LIMITATION. If, in addition to this Plan,
the "Employer" maintains or has maintained another plan which is a
Defined Benefit Plan covering any Participant in this Plan, the sum
of the Participant's "Defined Benefit Plan Fraction" and "Defined
Contribution Plan Fraction" shall not exceed 1.0 in any Limitation
Year. The "Annual Additions" which may be credited to the
Participant's accounts under this Plan for any Limitation Year shall
be limited as elected in Section A.3.8(C) of the Adoption Agreement.
(2) ELECTION OF PLAN LIMITATION. If Section
A.3.8(C)(1) of the Adoption Agreement is checked, the "Annual
Additions" which may be credited to a Participant's accounts shall be
reduced to the extent necessary so that they shall not exceed the
limitations in Sections 3.8(A) and 3.8(B) and, in addition, shall be
reduced to the extent necessary to prevent the decimal equivalent of
the sum of the "Defined Benefit Plan Fraction" (as defined in Section
3.8(D)(2)) and of the "Defined Contribution Plan Fraction" (as defined
in Section 3.8(D)(4)) for any Limitation Year beginning after December
31, 1982, with respect to such Participant, from exceeding 1.0.
(3) ORDER OF "ANNUAL ADDITIONS" REDUCTIONS. If,
as a result of Section 3.8(C)(2), the amount of the "Annual
Additions" which may be allocated to the accounts of any Participant
under this Plan is reduced for any Limitation Year, such reduction
shall be made as follows:
(a) The Participant Contribution portion
of such "Annual Additions" of such Participant for such
Limitation Year shall be reduced; and
(b) If the "Annual Additions" allocable
to such Participant Contributions are required to be reduced
to zero, then any Matching Contributions and Employer
Contributions (in that order) on behalf of such Participant
for such Limitation Year shall be reduced; and
(c) If the "Annual Additions" allocable
to Participant Contributions, Matching Contributions and
Employer Contributions are required to be reduced to zero,
then the Elective Deferral Contributions on behalf of such
Participant for such Limitation Year shall be reduced.
(4) TREATMENT OF "ANNUAL ADDITIONS" REDUCTIONS.
If as a result of Section 3.8(C)(2), the amount of the "Annual
Additions" which may be allocated under this Plan to any Participant's
accounts for any Limitation Year is reduced, such reduction shall be
treated as follows:
(a) The amount of such reduction
consisting of Participant Contributions shall be paid to the
Participant as soon as is administratively feasible; and
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(b) The amount of such reduction
consisting of Employer Contributions, Matching Contributions
and Elective Deferral Contributions shall be treated as an
"Excess Amount" and disposed of in accordance with Section
3.8(A)(4).
(D) DEFINITIONS. For purposes of this Article III, the
following terms shall be defined as follows:
(1) "ANNUAL ADDITIONS" shall mean, with respect
to any Participant, the amounts allocated to such Participant's
accounts during the Limitation Year that constitute:
(a) "Employer" contributions;
(b) Employee contributions;
(c) Forfeitures;
(d) Amounts allocated, after March 31,
1984, to an individual medical benefit account, as defined in
section 415(l)(2) of the Code, which is part of a pension or
annuity plan maintained by the "Employer";
(e) Amounts derived from contributions
paid or accrued after December 31, 1985, in taxable years
ending after such date, which are attributable to
post-retirement medical benefits, allocated to the separate
account of a key employee, as defined in section 419A(d)(3) of
the Code, under a Welfare Benefit Fund, maintained by the
"Employer"; and
(f) Any "Excess Amount" applied under
Sections 3.8(A) or 3.8(B) or 3.8(C) (if applicable), in the
Limitation Year to reduce "Employer" contributions for such
Limitation Year.
(2) "DEFINED BENEFIT PLAN FRACTION" shall mean a
fraction, the numerator of which is the sum of the Participant's
"Projected Annual Benefits" (as defined in Section 3.8(D)(9)) under
all the Defined Benefit Plans (whether or not terminated) maintained
by the "Employer", and the denominator of which is the lesser of 125
percent of the dollar limitation determined for the Limitation Year
under sections 415(b) and (d) of the Code or 140 percent of the
Participant's "Highest Average Compensation" (as defined in Section
3.8(D)(7)), including any adjustments under section 415(b) of the
Code.
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first Limitation Year beginning
after December 31, 1986, in one or more Defined Benefit Plans
maintained by the "Employer" which were in existence on May 6, 1986,
the denominator of this fraction shall not be less than 125 percent of
the sum of the annual benefits under such Plans which the Participant
had accrued as of the close of the last Limitation Year beginning
before January 1, 1987, disregarding any changes in the terms and
conditions of the Defined Benefit Plan after May 5, 1986. The
preceding sentence applies only if the Defined Benefit Plans
individually and in the aggregate satisfied the requirements of
section 415 of the Code for all Limitation Years beginning before
January 1, 1987.
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(3) "DEFINED CONTRIBUTION DOLLAR LIMITATION"
shall mean $30,000 or, if greater, one-fourth of the defined benefit
dollar limitation set forth in section 415(b)(1) of the Code as in
effect for the Limitation Year.
(4) "DEFINED CONTRIBUTION PLAN FRACTION" shall
mean a fraction, the numerator of which is the sum of the "Annual
Additions" to the Participant's account under all the Defined
Contribution Plans (whether or not terminated) maintained by the
"Employer" for the current and all prior Limitation Years (including
the "Annual Additions" attributable to the Participant's nondeductible
employee contributions to all Defined Benefit Plans, whether or not
terminated, maintained by the "Employer", and the "Annual Additions"
attributable to all Welfare Benefit Funds, and individual medical
benefit accounts (as defined in section 415(l)(2) of the Code)
maintained by the "Employer"), and the denominator of which is the sum
of the maximum aggregate amounts for the current and all prior
Limitation Years of service with the "Employer" (regardless of whether
a Defined Contribution Plan was maintained by the "Employer"). The
maximum aggregate amount in any Limitation Year is the lesser of 125
percent of the dollar limitation determined under sections 415(b) and
415(d) of the Code in effect under section 415(c)(1)(A) of the Code or
35 percent of the Participant's Limitation Compensation for such
Limitation Year.
If the Employee was a Participant as of the end of the first day of
the first Limitation Year beginning after December 31, 1986, in one or
more Defined Contribution Plans maintained by the "Employer" which
were in existence on May 6, 1986, the numerator of this fraction shall
be adjusted if the sum of this fraction and the "Defined Benefit Plan
Fraction" (as defined in Section 3.8(D)(2)) would otherwise exceed 1.0
under the terms of this Plan. Under the adjustment, an amount equal
to the product of (a) the excess of the sum of the fractions over 1.0
times (b) the denominator of this fraction, shall be permanently
subtracted from the numerator of this fraction. The adjustment is
calculated using the fractions as they would be computed as of the end
of the last Limitation Year beginning before January 1, 1987, and
disregarding any changes in the terms and conditions of the Plan made
after May 5, 1986, but using the section 415 limitation applicable to
the first Limitation Year beginning on or after January 1, 1987.
The "Annual Addition" for any Limitation Year
beginning before January 1, 1987, shall not be recomputed to treat all
Employee contributions as "Annual Additions".
(5) "EMPLOYER" shall mean the Employer that
adopts the Plan, and all members of a controlled group of corporations
(as defined in section 414(b) of the Code as modified by section
415(h) of the Code), all commonly controlled trades or businesses (as
defined in section 414(c) of the Code as modified by section 415(h) of
the Code) or affiliated service groups (as defined in section 414(m)
of the Code) of which the adopting Employer is a part, and any other
entity required to be aggregated with the Employer pursuant to
Treasury regulations under section 414(o) of the Code.
(6) "EXCESS AMOUNT" shall mean 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.
(7) "HIGHEST AVERAGE COMPENSATION" shall mean the
average compensation for the three consecutive Accrual Computation
Periods with the "Employer" that produces the highest average.
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(8) "MAXIMUM PERMISSIBLE AMOUNT" shall mean the
maximum "Annual Addition" that may be contributed or allocated to a
Participant's account under the Plan for any Limitation Year which
maximum is the lesser of:
(a) The "Defined Contribution Dollar
Limitation" (as defined in Section 3.8(D)(3)); or
(b) 25 percent of the Participant's
Limitation Compensation for the Limitation Year.
If a short Limitation Year is created because of an
amendment changing the Limitation Year to a different Computation
Period, the "Maximum Permissible Amount" shall not exceed the "Defined
Contribution Dollar Limitation" multiplied by the following fraction:
NUMBER OF MONTHS IN THE SHORT LIMITATION YEAR
---------------------------------------------
12
(9) "PROJECTED ANNUAL BENEFIT" shall mean the
annual retirement benefit (adjusted to an actuarially equivalent
straight life annuity if such benefit is expressed in a form other
than a straight life annuity or qualified joint and survivor annuity)
to which the Participant would be entitled under the terms of the plan
assuming:
(a) The Participant will continue
employment until normal retirement age under the plan (or
current age, if later), and
(b) The Participant's compensation for
the current Limitation Year and all other relevant factors
used to determine benefits under the plan will remain constant
for all future Limitation Years.
(10) "REGIONAL PROTOTYPE PLAN" shall mean a plan
the form of which is the subject of a favorable notification letter
from the Internal Revenue Service.
(E) SPECIAL RULE. The compensation limitation referred
to in Section 3.8(D)(8)(b) shall not apply to any contribution for medical
benefits (within the meaning of section 401(h) or section 419A(f)(2) of the
Code) which is otherwise treated as an "Annual Addition" under section
415(l)(1) or section 419A(d)(2) of the Code.
3.9 ROLLOVER CONTRIBUTIONS. The rules relating to Rollover
Contributions are as follows:
(A) GENERAL. If permitted by the Adoption Agreement, any
Participant may, with the approval of the Administrative Committee, make a
Rollover Contribution. The Trustee shall credit the amount of any Rollover
Contribution to the Participant's Rollover Account as of the date the
Rollover Contribution is made. A Rollover Contribution shall be fully
vested on the date of contribution. The limitations of Section 3.8 shall
not apply to Rollover Contributions. All Rollover Contributions shall be in
cash and/or other property acceptable to the Trustee. If permitted by the
Adoption Agreement, Employees other than Participants may be permitted to
make Rollover Contributions to the Plan.
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(B) TRUSTEE-TO-TRUSTEE TRANSFERS OF ROLLOVER CONTRIBUTIONS TO
PLAN. Effective January 1, 1993, if the Adoption Agreement provides for
Rollover Contributions and, if the Participant or other Employee eligible to
make a Rollover Contribution to the Plan (1) elects to have such Rollover
Contribution paid directly to the Plan, and (2) specifies the Plan as the
plan to which such Rollover Contribution is to be paid (in such form and at
such time as the Administrative Committee may prescribe), such Rollover
Contribution shall be made in the form of a direct trustee-to-trustee
transfer as described in section 401(a)(31) of the Code, as in effect on and
after January 1, 1993.
(C) ELIGIBLE ROLLOVER DISTRIBUTIONS FROM PLAN. This
Section 3.9(C) applies to distributions made on or after January 1, 1993.
(1) ELECTION OF DIRECT ROLLOVER. Notwithstanding
any provision of the Plan to the contrary that would otherwise limit a
"Distributee's" election under this Section 3.9(C), a "Distributee"
may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an "Eligible Rollover
Distribution" that is equal to at least $500 paid directly to an
"Eligible Retirement Plan" specified by the "Distributee" in a "Direct
Rollover".
(2) DEFINITIONS.
(a) "ELIGIBLE ROLLOVER DISTRIBUTION".
An "Eligible Rollover Distribution" is any distribution of all
or any portion of the balance to the credit of the
"Distributee", except that an "Eligible Rollover Distribution"
does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the
"Distributee" or the joint lives (or joint life expectancies)
of the "Distributee" and the "Distributee's" designated
beneficiary, or for a specified period of ten years or more;
any distribution to the extent such distribution is required
under section 401(a)(9) of the Code; the portion of any
distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities); and any
other distribution(s) that is reasonably expected to total
less than $200 during a year.
(b) "ELIGIBLE RETIREMENT PLAN". An
"Eligible Retirement Plan" is an individual retirement account
described in section 408(a) of the Code, an individual
retirement annuity described in section 408(b) of the Code, an
annuity plan described in section 403(a) of the Code, or a
qualified plan described in section 401(a) of the Code, that
accepts the "Distributee's" "Eligible Rollover Distribution".
However, in the case of an "Eligible Rollover Distribution" to
the surviving spouse, an "Eligible Retirement Plan" is an
individual retirement account or individual retirement
annuity.
(c) "DISTRIBUTEE". A "Distributee"
includes an employee or former employee. In addition, the
employee's or former employee's surviving spouse and the
employee's or former employee's spouse or former spouse who is
the alternate payee under a Qualified Domestic Relations
Order, as defined in section 414(p) of the Code, are
"Distributees" with regard to the interest of the spouse or
former spouse.
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(d) "DIRECT ROLLOVER". A "Direct
Rollover" is a payment by the Plan to the "Eligible Retirement
Plan" specified by the "Distributee".
3.10 TRANSFERS OF ACCOUNTS FROM AND TO OTHER QUALIFIED PLANS. The
rules relating to transfers of accounts are as follows:
(A) TRANSFER OF ACCOUNTS FROM OTHER QUALIFIED PLANS.
(1) GENERAL RULES. If permitted by the Adoption
Agreement, Participants may have the assets in their accounts in other
plans transferred to this Plan provided:
(a) The other plan is a plan which
formerly covered the Participant and is qualified under
section 401(a) of the Code but is not a Defined Benefit Plan
or a money purchase pension plan (including a target benefit
plan) or a plan which provided for distribution or should have
provided for distribution in the form of qualified joint and
survivor annuities or a direct or indirect transferee from any
such plan unless the Plan adopted hereunder by the Employer is
a money purchase plan;
(b) The Administrative Committee
approves such transfer;
(c) The Trustee accepts such transfer;
and
(d) The transferred assets consist
solely of cash and/or other property acceptable to the
Trustee.
The Trustee shall credit the fair market value of such transferred
assets to the Transfer Account of the Participant on whose behalf such
assets were transferred as of the date of the transfer. The interest
of a Participant in his Transfer Account shall be fully vested on the
date of the transfer. The limitations of Section 3.8 shall not apply
to such transfers. If permitted by the Adoption Agreement, Employees
other than Participants may be permitted to make direct transfers to
the Plan.
(2) LIMITATIONS APPLICABLE TO TRANSFERS FROM
PLANS COVERING CERTAIN KEY EMPLOYEES AND FIVE-PERCENT OWNERS. In the
event assets are transferred from a qualified plan covering Key
Employees in a Top-Heavy Plan, or five-percent owners (within the
meaning of section 416(i)(1) of the Code) of their former employer,
the following restrictions apply:
(a) Separate Transfer Accounts must be
maintained for the assets transferred by each of the former
Key Employees or five-percent owners;
(b) The former five-percent owners or
the former Key Employees (if they were five-percent owners of
their former employer) may, subject to the terms of the Plan,
receive benefits from such separate Transfer Accounts before
they attain age 59 1/2 or become disabled, but subject to any
penalties provided by the Code for such distributions; and
(c) The former five-percent owners or
the former Key Employees (if they were five-percent owners of
their former employer) must commence receiving benefits from
such separate Transfer Accounts not later than the April 1 of
the calendar year following the calendar year in which they
attain age 70 1/2.
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(B) TRANSFERS OF ACCOUNTS TO OTHER QUALIFIED PLANS. Upon
the request of a Participant who has terminated his services with the
Employer or whose coverage under this Plan has terminated, but only with the
approval of the Administrative Committee, the Trustee shall transfer all
amounts held in the Plan for the account of such Participant to another plan
or plans (including another qualified plan of the Employer) provided such
other plan or plans meet the requirements of section 401(a) of the Code and
such other plan or plans are maintained by the employer of such Participant
(or the Employer) and any required governmental notifications have been made
and further provided that any request is accompanied by an acceptance letter
from the trustee of the transferee plan or plans. Neither the Trustee nor
the Administrative Committee shall have any further liability under this
Plan with respect to amounts so transferred.
3.11 TOP-HEAVY PROVISIONS. If the Plan is or becomes top-heavy in
any Plan Year beginning after December 31, 1983, the provisions of this Section
3.11 shall supersede any conflicting provisions in the Plan or in the Adoption
Agreement. The following provisions shall be effective with respect to any
adopting Employer in any Plan Year in which the Plan, with respect to such
adopting Employer, is determined to be a Top-Heavy Plan.
(A) MINIMUM ALLOCATION.
(1) GENERAL. Except as otherwise provided in
Section 3.11(A)(4), the Employer contributions and forfeitures
allocated for any Plan Year in which the Plan is a Top-Heavy Plan on
behalf of any Participant who is not a Key Employee shall not be less
than the lesser of three percent of such Participant's "Compensation"
(as defined in Section 3.11(A)(3)) for such Plan Year or, in the case
where the Employer has no Defined Benefit Plan which designates this
Plan to satisfy section 401 of the Code, the largest percentage of
Employer contributions and forfeitures, as a percentage of the Key
Employee's "Compensation", as limited by section 401(a)(17) of the
Code, allocated on behalf of any Key Employee for that Plan Year. The
minimum allocation shall be determined without regard to any Social
Security contribution. This minimum allocation shall be made even
though, under other Plan provisions, the Participant would not
otherwise be entitled to receive an allocation, or would have received
a lesser allocation in the Plan Year because:
(a) The Participant failed to complete 1,000
Hours of Service (or any equivalent provided in the Plan);
(b) The Participant failed to make mandatory
employee contributions to the Plan; or
(c) The Participant's "Compensation" was less
than a stated amount.
(2) NONFORFEITABILITY OF MINIMUM ALLOCATION. The
minimum allocation required (to the extent required to be
nonforfeitable under section 416(b) of the Code) may not be forfeited
under section 411(a)(3)(B) or 411(a)(3)(D) of the Code.
(3) DEFINITION OF "COMPENSATION". For purposes
of computing the minimum allocation, "Compensation" shall mean
Limitation Compensation, as defined in Section A.1.47 of the Adoption
Agreement as limited by section 401(a)(17) of the Code.
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(4) EXCEPTIONS.
(a) LAST DAY OF PLAN YEAR RULE. The
provisions in Section 3.11(A)(1) shall not apply to any Participant who
was not employed by the Employer on the last day of the Plan Year.
(b) MINIMUM ALLOCATION OR BENEFIT
PROVIDED UNDER OTHER PLAN. The provisions in Section
3.11(A)(1) shall not apply to any Participant to the extent
the Participant is covered under any other Employee Pension
Benefit Plan(s) of the Employer and the Employer has provided
in Section A.3.11(A)(2) of the Adoption Agreement that the
minimum allocation or benefit requirements applicable to
Top-Heavy Plans shall be met in the other Employee Pension
Benefit Plan(s). [NOTE: THIS PROVISION MAY CAUSE THE PLAN TO
FAIL TO SATISFY THE UNIFORMITY REQUIREMENT OF TREAS. REG.
Section 1.401(A)(4)-2(B)(2)(II) FOR PLANS USING A
DESIGN-BASED SAFE HARBOR, EVEN THOUGH ALL OTHER REQUIREMENTS
OF THE SAFE HARBOR ARE MET.]
(5) ELECTIVE DEFERRALS AND MATCHING
CONTRIBUTIONS. Neither Elective Deferrals nor Matching Contributions
may be taken into account for the purpose of satisfying the minimum
top-heavy contribution requirement under Section 3.11(A)(1).
(B) VESTING. For any Plan Year in which this Plan is a
Top-Heavy Plan, one of the minimum vesting schedules as elected by the
Employer in the Adoption Agreement shall automatically apply to the Plan.
The minimum vesting schedule applies to all benefits within the meaning of
section 411(a)(7) of the Code except those attributable to Employee
contributions, including benefits accrued before the effective date of
section 416 of the Code and benefits accrued before the Plan became a
Top-Heavy Plan. Further, no decrease in a Participant's nonforfeitable
percentage may occur in the event the Plan's status as a Top-Heavy Plan
changes for any Plan Year. However, this Section 3.11(B) does not apply to
the account balances of any Employee who does not have an Hour of Service
after the Plan has initially become a Top-Heavy Plan and such Employee's
account balance attributable to Employer contributions and forfeitures shall
be determined without regard to this Section 3.11(B).
Notwithstanding the above, in the event the vesting schedule
selected under Section 7.6 provides for more rapid vesting than the vesting
schedule selected under this Section 3.11(B), the vesting schedule selected
under this Section 3.11(B) shall be superseded by the vesting schedule under
Section 7.6 but only to the extent more rapid vesting is provided in such
schedule.
The Participant shall at all times have a nonforfeitable right
to all of his Accrued Benefit under the Plan attributable to Elective
Deferral Contributions, Participant Contributions and Qualified Voluntary
Employee Contributions.
ARTICLE IV
ACCOUNTS
4.1 SEPARATE ACCOUNTS. The Administrative Committee shall
maintain or cause to be maintained, for each Participant, in accordance with
the provisions of this Section 4.1, a separate Employer Account and, if
Matching Contributions are permitted in accordance with Section 3.5, a separate
Matching Account, and if
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Elective Deferral Contributions are permitted in accordance with Section 3.4, a
separate Elective Deferral Account, and if Participant Contributions are
permitted in accordance with Section 3.2, a separate Participant Account, and,
if Rollover Contributions are made on behalf of a Participant, a separate
Rollover Account, and, if direct transfers are made to the Plan on behalf of a
Participant pursuant to Section 3.10, a separate Transfer Account, and, if
Qualified Voluntary Employee Contributions have been permitted in accordance
with Section 3.3, a separate QVEC Account, to which Employer, Matching,
Elective Deferral, Participant and Rollover Contributions and direct transfers
and Qualified Voluntary Employee Contributions, respectively, shall be
credited. The Administrative Committee shall also maintain or cause to be
maintained, for each such Participant, in accordance with the provisions of
this Section 4.1, a record of the value of the Participant's Employer,
Matching, Elective Deferral, Participant, Rollover, Transfer and QVEC Accounts,
which shall represent the interest of such Participant in the assets of the
accounts maintained by the Trustee for his benefit. Separate accounts shall
also be maintained, in accordance with Section 3.1(B)(3)(b) for any Qualified
Matching Contributions and/or Qualified Nonelective Contributions made to the
Plan on behalf of any Participant.
ARTICLE V
ALLOCATION OF CONTRIBUTIONS, EARNINGS AND FORFEITURES
5.1 ALLOCATIONS OF CONTRIBUTIONS. The rules relating to
allocations of contributions are as follows:
(A) EMPLOYER CONTRIBUTIONS. The Administrative Committee
shall allocate the Employer Contribution for each Plan Year for which an
Employer Contribution is made among the Employer Accounts of each
Participant entitled to receive an allocation, in accordance with the terms
of the Adoption Agreement. Each such allocation shall be effective as of
the last day of the Plan Year, except as otherwise specified in the Plan or
Adoption Agreement.
(B) PARTICIPANT CONTRIBUTIONS. The Trustee, upon
instructions from the Administrative Committee, shall, as of the date
received from the Employer, allocate any amounts contributed by a
Participant, in accordance with Section 3.2, to the Participant Account of
such Participant.
(C) QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS. No
Qualified Voluntary Employee Contributions are permitted after December 31,
1986.
(D) ELECTIVE DEFERRAL CONTRIBUTIONS. The Trustee, upon
instructions from the Administrative Committee, shall, as of the date
received from the Employer, allocate any Elective Deferral Contributions
made on behalf of any Participant in accordance with Section 3.4, to the
Elective Deferral Account of such Participant.
(E) MATCHING CONTRIBUTIONS. The Trustee, upon
instructions from the Administrative Committee, shall, as of the date
received from the Employer, allocate any Matching Contributions made on
behalf of any Participant, in accordance with Section 3.5 and the Adoption
Agreement, to the Matching Account of such Participant.
(F) ROLLOVER CONTRIBUTIONS. The Trustee, upon
instructions from the Administrative Committee, shall as of the date
received from the Employer or as of the date received in a
trustee-to-trustee transfer under Section 3.9(B), allocate any amounts
contributed by a Participant or transferred to the Trustee
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on his behalf under Section 3.9(B), in accordance with Section 3.9, to the
Rollover Account of such Participant.
(G) DIRECT TRANSFERS. The Trustee shall, as of the date
received from another qualified plan, pursuant to instructions of the
Administrative Committee, allocate any amounts transferred on behalf of a
Participant pursuant to Section 3.10, to the Transfer Account of such
Participant.
(H) QUALIFIED MATCHING AND QUALIFIED NONELECTIVE
CONTRIBUTIONS. The Trustee, upon instructions from the Administrative
Committee, shall, as of the date received from the Employer, allocate any
Qualified Matching and/or Qualified Nonelective Contribution made on behalf
of any Participant, to the separate account or accounts of such Participant
in accordance with Section 3.1(B)(3)(b).
5.2 ADVICE TO TRUSTEE RE ALLOCATIONS OF CONTRIBUTIONS AND DIRECT
TRANSFERS. The Administrative Committee shall, at the time contributions or
direct transfers are transmitted to the Trustee, deliver to the Trustee a
schedule showing the amounts allocated to the Employer, the Matching, the
Elective Deferral, the Participant, the Rollover, the Transfer and the QVEC
Accounts and the Qualified Matching Contribution account and the Qualified
Nonelective Contribution account of each Participant and, if Section 6.1(B) is
applicable to this Plan, indicating the manner in which the Participant has
directed that such contributions or direct transfers be invested.
5.3 VALUATIONS. The Trustee, as of each Valuation Date, shall
cause a valuation to be made of the assets of the Trust Fund and of each
Employer, Matching, Elective Deferral, Participant, Rollover, Transfer and QVEC
Account and of each Qualified Matching Contribution account and Qualified
Nonelective Contribution account in such Fund at their current fair market
value. In each such valuation, the Trustee shall credit all income and profits
realized since the preceding Valuation Date in accordance with Section 5.4 and
shall deduct all losses, costs, charges and expenses of administering the Trust
Fund since the preceding Valuation Date.
The Trustee shall furnish the Administrative Committee with a report
of each such valuation of the Trust Fund.
5.4 ALLOCATION OF INCREASES AND DECREASES. As of each Valuation
Date, in determining the valuation of each Employer, Matching, Elective
Deferral, Participant, Rollover, Transfer and QVEC Account and of each
Qualified Matching Contribution account and Qualified Nonelective Contribution
account under Section 5.3, upon receipt of the Trustee's report, the
Administrative Committee shall allocate the increase or decrease in the fair
market value of the assets of the Trust Fund, after reduction for any
forfeitures under Section 7.6, and any interim Employer, Matching, Elective
Deferral, Participant, Rollover and Qualified Voluntary Employee Contributions
and direct transfers and Qualified Matching and Qualified Nonelective
Contributions to the Employer, Matching, Elective Deferral, Participant,
Rollover and QVEC Accounts and Transfer Account and Qualified Matching
Contribution and Qualified Nonelective Contribution accounts of each
Participant in the proportion that the amount in the Employer, Matching,
Elective Deferral, Participant, Rollover and QVEC Accounts and Transfer Account
and Qualified Matching Contribution and Qualified Nonelective Contribution
accounts of each Participant bears respectively to the total amount in the
Employer, Matching, Elective Deferral, Participant, Rollover and QVEC Accounts
and Transfer Accounts and Qualified Matching Contribution and Qualified
Nonelective Contribution accounts of all Participants, all as determined on the
first day or last day (as specified in the Adoption Agreement) of the period in
which the Valuation Date occurs (except that the last day of the period shall
be used for the initial allocation for any Employer). At the discretion of the
Administrative Committee, in allocating increases and decreases, the
Administrative Committee may take into account on a uniform and
nondiscriminatory basis contributions and forfeitures allocated during the
period in which the Valuation Date occurs. For purposes of this Section 5.4,
in the event the Adoption Agreement provides for
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Participant directed investments pursuant to Section 6.1(B), each Account (and
each other account) subject to such Participant directed investments shall be
treated as a separate Trust Fund.
5.5 FORFEITURES. All amounts forfeited by separated Participants
of an adopting Employer in accordance with Section 7.6 shall be debited to the
Employer and/or Matching Accounts of the respective Participants employed by
such adopting Employer who are subject to such forfeitures. Subject to Section
3.8 and, except as otherwise provided in the Adoption Agreement, forfeitures
shall be aggregated with Employer, and/or Matching Contributions for the Plan
Year and shall be allocated to the Accounts of the remaining Participants
employed by such adopting Employer in the same manner as is provided for the
allocation of Employer, and/or Matching Contributions under Section 5.1. Such
allocation shall be effected as of the date specified in the Adoption
Agreement. Notwithstanding the foregoing, the forfeited amounts may first be
used to restore a rehired Participant's non-vested account that was forfeited,
as provided in Section 7.6(C).
ARTICLE VI
INVESTMENT OF ACCOUNTS
6.1 INVESTMENT OF ACCOUNTS. The Employer shall indicate in the
Adoption Agreement whether the Trustee, the Participant (or Beneficiary, if
applicable) and/or an Investment Manager shall have the power to direct
investment of Employer, Matching, Elective Deferral, Participant, Rollover,
Transfer and/or QVEC Accounts and/or of any other account (e.g., Qualified
Matching Contribution account and Qualified Nonelective Contribution account)
under the Plan. To the extent the Participant (or Beneficiary, if applicable)
does not have the power to direct the investment of his accounts under the
Plan, such Participant (or Beneficiary, if applicable) shall have a ratable
interest in all assets of the Trust.
(A) INVESTMENT BY TRUSTEE AND/OR INVESTMENT MANAGER. If
the Trustee or an Investment Manager is selected to direct investment of
Employer and/or Matching and/or Elective Deferral and/or Participant and/or
Rollover and/or Transfer and/or QVEC Accounts and/or Qualified Matching
Contribution account and/or Qualified Nonelective Contribution account
and/or other accounts, the Trustee, subject to the requirements set forth in
Article X, or, if an Investment Manager has been selected to direct
investments, the Trustee, subject to the directions of the Investment
Manager and subject to the requirements set forth in Articles X and XII,
shall have full discretion and authority to invest and reinvest the
principal and income of that portion of the Trust Fund committed to it for
investment in any form of property not prohibited by law (without
restriction to investments authorized by State law for fiduciaries).
Consistent with this authority, but not by way of limitation, the Trustee is
hereby specifically empowered with respect to that portion of the Trust Fund
committed to it:
(1) To invest any part or all of the assets in
any common stocks, bonds, insurance contracts, mortgages, notes or
other property of any kind, real or personal. All such investments
shall be diversified as provided by law, unless it is clearly prudent
not to do so;
(2) To invest any part or all of the assets in
any common, collective, pooled or group trust fund meeting the
requirements of Rev. Rul. 81-100, 1981-1 CB 326 and operated by a bank
or similar financial institution (even if such bank or other
institution serves as Trustee) supervised by the United States or any
State, provided such investments are available only to pension and
profit-sharing trusts which meet the requirements of section 401(a)
and related Code sections. So long as any portion
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of the Trust Fund is so invested, the instrument establishing such
common, collective, pooled or group trust fund shall constitute an
integral part of this Plan and Trust Agreement;
(3) To invest all or part of the assets in
deposits which bear a reasonable interest rate, including certificates
of deposit, in any bank, savings or similar financial institution
(even if such bank or other institution serves as Trustee) supervised
by the United States or any State;
(4) To hold cash uninvested for a reasonable
period of time and to deposit such sums in an account of any banking,
savings, or similar financial institution (even if such bank or other
institution serves as Trustee) supervised by the United States or any
State;
(5) To manage, purchase, grant options to
purchase, dispose of, abandon, improve, repair, insure, lease for any
future or present term or otherwise deal with all property, real or
personal, on such terms and conditions as the Trustee shall decide,
without liability on the purchasers to see to the application of the
purchase money or to the propriety of any such disposition;
(6) To borrow money or assume indebtedness, for
the purposes of the Plan, upon such terms as the Trustee deems
advisable. All or part of the assets may be pledged as security for
such loans or mortgages and no person lending to the Trustee need see
to the application of money lent or the propriety of borrowing.
Notwithstanding anything in this Section 6.1(A)(6) to the contrary, in
the event the Trustee borrows against the loan values of Insurance
Contracts purchased under the terms of the Plan, the amounts so
borrowed must be borrowed on a pro rata basis under each Insurance
Contract held by the Trustee;
(7) To extend mortgages or to invest in loans to
a Participant in accordance with, and as provided by, Section 7.11;
(8) To join in or oppose the reorganization,
recapitalization, consolidation, sale or merger of corporations or
properties, including those in which it is interested as Trustee, upon
such terms as deemed appropriate;
(9) To hold investments in nominee or bearer
form, provided the requirements of section 403(a) of ERISA are not
violated by so registering and so holding such investments;
(10) To give proxies;
(11) To provide benefits by annuity contracts
issued by an Insurer, if so instructed by the Administrative
Committee;
(12) To deduct from and charge against the Trust
Fund any taxes paid by it, which may be imposed upon the Trust Fund or
the income thereof, or which the Trustee is required to pay with
respect to the interest of any person therein;
(13) To receive and withdraw from the Trust Fund
reasonable compensation for the Trustee's services (unless the Trustee
is a full-time employee of the Employer in which case no additional
compensation shall be paid to the Trustee) and expenses hereunder,
including the compensation of an Investment Manager and legal fees,
and charge the Trust Fund, upon approval by the Administrative
Committee, for the compensation and expenses of any independent
accountant or actuary who may be
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employed from time to time by the Trustee, Employer or Administrative
Committee in connection with this Plan and Trust Agreement;
(14) To invest Trust assets allocable to Employer
contributions in Qualifying Employer Securities but only to the extent
the Plan and Adoption Agreement so provide and only if such Employer
contributions are not subject to Participant directed investment and,
if the Plan, as adopted by the Employer, is a money purchase plan,
only if immediately after the acquisition of such Qualifying Employer
Securities, the aggregate fair market value of such Qualifying
Employer Securities does not exceed ten percent of the fair market
value of Plan assets. In no event shall Trust assets be invested in
employer real property. In no event shall Employer contributions
subject to Participant directed investment or Participant, Matching,
Qualified Matching, Elective Deferral, Rollover or Qualified Voluntary
Employee Contributions or direct transfers be invested in Qualifying
Employer Securities unless such investment is in compliance with
applicable Federal and state securities laws and, if the Plan, as
adopted by the Employer, is a money purchase plan, is in compliance
with the ten percent limit described above;
(15) If the Trustee is a bank, to invest any part
or all of the assets in a common trust fund of said Trustee bank
provided such common trust fund is described in section 584 of the
Code; and
(16) If a bank, to accept employment and
thereafter act as agent for the Employer or Administrative Committee
to perform multiple or ancillary services for the Plan, its
Participants and Beneficiaries and to receive and withdraw from the
Trust Fund reasonable compensation therefor. Nothing done by the
Trustee as agent shall enlarge or increase in any manner the
responsibilities or liabilities of the Trustee hereunder which shall
be governed solely by the terms of the Plan and by applicable law.
(B) INVESTMENT BY PARTICIPANT OR BENEFICIARY. If the
Participant or Beneficiary (if applicable) is selected to direct investment
of his Employer and/or Matching and/or Elective Deferral and/or Participant
and/or Rollover and/or Transfer and/or QVEC Accounts and/or Qualified
Matching Contribution accounts and/or Qualified Nonelective Contribution
accounts and/or other accounts, the investment of all sums in the Employer
and/or Matching and/or Elective Deferral and/or Participant and/or Rollover
and/or Transfer and/or QVEC Accounts and/or Qualified Matching Contribution
accounts and/or Qualified Nonelective Contribution accounts and/or other
accounts of any Participant or Beneficiary (if applicable) shall be
directed, subject to any limitations on investments indicated in the
Adoption Agreement, by such Plan Participant or Beneficiary (if applicable),
as provided in Section 6.1(B)(1) below:
(1) Participant or Beneficiary investment
instructions shall be made in writing on the Appropriate Form or
otherwise as determined by the Administrative Committee. Such
instructions, whether in writing or as otherwise determined by the
Administrative Committee, shall be given to the Administrative
Committee or its agent who, in turn, shall notify the Trustee of the
instructions contained therein. The Trustee may, in his or its
discretion, require written confirmation of such instructions from the
Administrative Committee. In any case, the Participant or Beneficiary
shall be given the opportunity to obtain written confirmation from the
Administrative Committee or its agent of the Participant's or
Beneficiary's investment instructions.
(2) No Fiduciary, including, but not limited to,
the Administrative Committee and the Trustee, shall be liable for any
loss or by reason of any breach which results from the Participant's
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or Beneficiary's exercise of control as provided in this Section
6.1(B). It is the intent that any Plan subject to this Section 6.1(B)
shall constitute a plan described in section 404(c) of ERISA and 29
CFR Section 2550.404c-1.
(3) Any sums for which no adequate Participant or
Beneficiary investment instructions have been received by the Trustee,
in accordance with this Section 6.1(B), shall be deposited in an
interest bearing passbook account of any banking, savings, or similar
financial institution supervised by the United States or any State
until such Participant or Beneficiary investment instructions have
been received.
(4) Notwithstanding any other provision in the
Plan to the contrary, the Participant or Beneficiary may not direct
the investment of his Employer and/or Matching and/or Elective
Deferral and/or Participant and/or Rollover and/or Transfer and/or
QVEC Accounts and/or Qualified Matching Contribution and/or Qualified
Nonelective Contribution accounts and/or other accounts in:
(a) Qualifying Employer Securities
unless such investment is in compliance with applicable
Federal and state securities laws and, if the Plan, as adopted
by the Employer, is a money purchase plan, is in compliance
with the ten percent limit described above;
(b) "Collectibles"; "collectibles" include
any work of art, rug, antique, gem, stamp, coin, alcoholic
beverage, or any other item of tangible personal property
specified by the Secretary of the Treasury pursuant to section
408(m) of the Code;
(c) Any investment which would result in
a prohibited transaction described in section 406 of ERISA or
section 4975 of the Code; or
(d) Any investment which would generate
income that would be taxable to the Plan.
6.2 INSURANCE CONTRACTS. The rules relating to Insurance
Contracts are as follows:
(A) INVESTMENT IN INSURANCE CONTRACTS. The Trustee or
the Investment Manager, if appropriate, if the Trustee or an Investment
Manager has been selected to direct investment of Employer and/or Matching
Accounts and/or Participant Accounts and/or Elective Deferral Accounts
and/or Rollover Accounts and/or Qualified Matching Contribution accounts
and/or Qualified Nonelective Contribution accounts under the Adoption
Agreement, may direct that Employer and/or Participant and/or Elective
Deferral and/or Rollover and/or Matching Contributions and/or Qualified
Matching Contributions and/or Qualified Nonelective Contributions made on
behalf of Participants be used to pay premiums on Insurance Contracts. If
the Participant or Beneficiary has been selected to direct investment of his
Employer and/or Matching Accounts and/or Participant Accounts and/or
Elective Deferral Accounts and/or Rollover Accounts and/or Qualified
Matching Contribution accounts and/or Qualified Nonelective Contribution
accounts under the Adoption Agreement, the Participant or Beneficiary (if
applicable) may direct, on the Appropriate Form furnished by, and returned
to, the Administrative Committee, that Employer and/or Matching and/or
Participant and/or Elective Deferral and/or Rollover Contributions and/or
Qualified Matching Contributions and/or Qualified Nonelective Contributions
made on his behalf be used to pay premiums on Insurance Contracts. Any
death benefit payable under any non-transferable annuity or endowment
policies thereunder shall not exceed 100 times the anticipated monthly
annuity to be provided thereby. Moreover, the portion of any Employer,
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Elective Deferral and/or Matching and/or Qualified Matching and/or Qualified
Nonelective Contributions, if used to purchase:
(1) Ordinary life insurance, shall not exceed
one-half of such Employer, Elective Deferral, Matching, Qualified
Matching and Qualified Nonelective Contributions;
(2) Term or universal life insurance, shall not
exceed one-quarter of such Employer, Elective Deferral, Matching,
Qualified Matching and Qualified Nonelective Contributions; or
(3) Both ordinary life and term or universal life
insurance, shall not exceed, after adding the term insurance premium
to one-half of the ordinary life insurance premium, one-quarter of
such Employer, Elective Deferral, Matching, Qualified Matching and
Qualified Nonelective Contributions.
The Trustee shall purchase only such Insurance Contracts from
an Insurer as shall conform with the requirements of the Plan. In the event
of any conflict between the provisions of the Plan and the terms of any
Insurance Contract issued thereunder, the Plan provisions shall control.
All Insurance Contracts other than annuity policies shall
provide settlement options for conversion into annuity policies, either
directly or through conversion into cash and thereupon purchase of annuity
policies, in accordance with the terms of the Plan. When benefits become
payable, the Trustee shall direct the Insurer to convert such policies to
cash or distribute them, in accordance with the provisions of the Plan, to a
Participant. All Employer, Participant, Elective Deferral, Rollover,
Matching, Qualified Matching and Qualified Nonelective Contributions applied
to purchase Insurance Contracts shall be credited to the Participant's
Employer, Participant, Elective Deferral, Rollover, Matching, Qualified
Matching Contribution and Qualified Nonelective Contribution accounts and
shall be held by the Trustee until distributed in accordance with the terms
of the Plan. No direct transfers may be used to purchase any type of life
insurance.
(B) INSURANCE CONTRACTS TO BE HELD AND OWNED BY TRUSTEE.
The Trustee shall apply for, hold and own each Insurance Contract purchased
pursuant to the Plan. The Trustee shall exercise any right contained in the
Insurance Contract. The Insurance Contracts shall provide that the proceeds
shall be payable to the Trustee. The Trustee, however, shall be required to
pay over all proceeds of the Insurance Contract(s) to the Participant's
designated Beneficiary in accordance with the distribution provisions of the
Plan. A Participant's Spouse shall be the designated Beneficiary of the
proceeds in all circumstances unless a qualified election has been made in
accordance with Section 7.2(B). Under no circumstances shall the Trust
retain any part of the proceeds. If, upon the Disability, retirement or
termination of employment of the Participant, or upon the termination of the
Plan, if earlier, the Insurance Contract is not converted into cash, it
shall, subject to the terms of the Plan, be delivered to the Participant
covered thereunder.
6.3 VOTING AND OTHER ACTIONS. The rules pertaining to voting of
securities and other related rules are as follows:
(A) TRUSTEE AND/OR INVESTMENT MANAGER DIRECTED
INVESTMENTS. If the Trustee and/or an Investment Manager is selected to
direct investment of Employer and/or Matching and/or Elective Deferral
and/or Participant and/or Rollover and/or Transfer and/or QVEC Accounts
and/or Qualified Matching Contribution and/or Qualified Nonelective
Contribution accounts and/or other accounts under the Adoption Agreement,
the Trustee shall have, with respect to the accounts committed to it for
investment, all of the rights of an individual owner, including the power to
vote stock held in such accounts, to give proxies, to participate
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in any voting trusts, mergers, consolidations or liquidations and to receive
or sell stock subscriptions or conversion rights. Moreover, the Trustee may
hold any securities in its or its nominee's name, or in another form as is
deemed appropriate. This may be done with or without disclosing the trust
relationship.
(B) PARTICIPANT OR BENEFICIARY DIRECTED INVESTMENTS. If
the Participant or Beneficiary is selected to direct investment of his
Employer and/or Matching and/or Elective Deferral and/or Participant and/or
Rollover and/or Transfer and/or QVEC Accounts and/or Qualified Matching
Contribution and/or Qualified Nonelective Contribution accounts and/or other
accounts under the Adoption Agreement, the Participant or Beneficiary shall
be accorded all rights and powers described in Section 6.3(A) above with
respect to such accounts.
ARTICLE VII
BENEFITS AND DISTRIBUTIONS
7.1 BENEFIT DETERMINATION. The rules pertaining to benefit
determinations and certain other related matters are as follows:
(A) AMOUNT OF BENEFITS. The amount of any benefits
payable under this Article VII shall be determined as of the Valuation Date
coincident with, or if the Valuation Date does not coincide with the benefit
commencement date, the Valuation Date immediately preceding the benefit
commencement date. Except as otherwise provided in Section 7.9, all amounts
then credited to such Participant's Employer, Matching, Elective Deferral,
Participant, Rollover and/or QVEC Accounts and/or Transfer Account and/or
Qualified Matching Contribution and/or Qualified Nonelective Contribution
accounts and/or other account, including any Employer, Matching, Elective
Deferral, Participant, Rollover, QVEC, Qualified Matching Contribution and
Qualified Nonelective Contribution and other Employer contribution and
direct transfer not yet paid by the Employer to the Trustee but due the
Participant, shall be paid to the Participant in accordance with the
provisions of this Article VII.
(B) MANNER OF DISTRIBUTION.
(1) PROFIT-SHARING OR PROFIT-SHARING 401(K) PLAN.
Except as otherwise provided in this Article VII, if the Plan, as
adopted by the Employer, is a profit-sharing or profit-sharing 401(k)
plan, benefits shall be paid in one lump sum to the Participant unless
the Participant elects, no later than 30 days prior to the Valuation
Date immediately preceding the benefit commencement date, to receive
his benefits in equal or substantially equal monthly, quarterly, semi-
annual or annual installment payments over a period certain specified
by the Participant in such election, but in no event may such period
(a) extend beyond the life expectancy of the Participant or the joint
life expectancies of the Participant and his Beneficiary, provided
such Beneficiary is an individual or (b) violate the requirements of
Section 7.13. If a Participant's Accrued Benefit is to be paid in
installments, the Administrative Committee, in its sole discretion,
may direct the Trustee to segregate such Accrued Benefit from other
Trust assets and place it in a separate account. Such separate
account shall, until final payment to the Participant is made, be
invested in one or more accounts in one or more Federally insured
banks or saving institutions or a similar interest bearing account
allowing periodic withdrawals without penalty, as determined by the
Trustee, with all interest earned on such investment(s) credited to
such separate account and all disbursements charged thereto. Interest
earned during any period shall be paid with the next scheduled
installment payment. The installment election shall not be available
to any Participant whose Accrued
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Benefit is not more than $3,500. In such case the Participant shall
only be entitled to receive a lump sum payment of his Accrued Benefit.
(2) MONEY PURCHASE PLAN. Except as otherwise
provided in this Article VII, if the Plan, as adopted by the Employer
is a money purchase plan, benefits shall be paid in accordance with
the provisions of Section 7.14.
(C) ELECTIONS. An election under Section 7.1(B)(1) shall
be made on the Appropriate Form which the Administrative Committee shall
furnish to the Participant before the Valuation Date immediately preceding
the benefit commencement date. Any such election may, subject to the
approval of the Administrative Committee, be revoked and a new election made
at any time prior to the benefit commencement date. Any election under
Section 7.1(B)(2) shall be made in accordance with Section 7.14.
7.2 DESIGNATION OF BENEFICIARY AND ELECTION WITH RESPECT TO DEATH
BENEFIT. This Section 7.2 shall apply if the Plan, as adopted by the Employer
is a profit-sharing or profit-sharing 401(k) Plan. This Section 7.2 shall
apply if the Plan, as adopted by the Employer, is a money purchase plan only to
the extent not otherwise provided in Section 7.14.
(A) DESIGNATION OF BENEFICIARY. Effective August 23,
1984, in the event a Participant has a Surviving Spouse at his death, such
Surviving Spouse shall be the Participant's Beneficiary, unless the
Participant's Spouse has previously consented during the election period
provided in Section 7.2(C), in a manner conforming to a qualified election,
as described in Section 7.2(B), to the payment of the Participant's Accrued
Benefit (reduced by any security interest held by the Plan by reason of any
loans outstanding to such Participant) to a Participant-designated
Beneficiary other than the Surviving Spouse, except as otherwise provided in
the next succeeding sentence. In the event the Participant has no Surviving
Spouse at his death (or in the case of the Participant's death prior to
August 23, 1984, even if the Participant had a Surviving Spouse), the
Beneficiary shall be the Beneficiary designated by the Participant or, in
the event no Beneficiary has been designated or survives the Participant,
the Beneficiary shall be determined in accordance with Section 7.8(B). Such
Beneficiary (other than a Surviving Spouse, effective August 23, 1984) must
be designated on the Appropriate Form furnished by the Administrative
Committee, executed by the Participant and returned to the Administrative
Committee. Any such designation of Beneficiary may include contingent or
successive Beneficiaries, and need not designate individuals. Except as
otherwise provided with respect to a Surviving Spouse, a Participant may, at
any time, change his designation of Beneficiary by completing a new
designation form, but a designation of Beneficiary shall remain in effect
until such new form is received by the Administrative Committee.
(B) QUALIFIED ELECTION. For the consent by a Spouse to
payment of a Participant's Accrued Benefit (reduced by any security interest
held by the Plan by reason of any loans outstanding to such Participant) to
a Beneficiary other than the Spouse upon the Participant's death to be
valid, such consent must be made in writing on the Appropriate Form filed
with the Administrative Committee during the election period provided in
Section 7.2(C) and must be witnessed by a member of the Administrative
Committee as Plan representative or a notary public. Notwithstanding this
consent requirement, if the Participant establishes to the satisfaction of
such Plan representative that such written consent may not be obtained
because there is no Spouse or the Spouse cannot be located, the Spouse will
be deemed to have consented to the payment of the Participant's Accrued
Benefit (reduced by any security interest held by the Plan by reason of any
loans outstanding to such Participant) to a Beneficiary other than the
Spouse. Any consent necessary under this provision shall be valid only with
respect to the Spouse who signs the consent, or in the event of a deemed
consent, with respect to the Spouse who is deemed to have so consented. Any
spousal consent must
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acknowledge the specific non-spouse Beneficiary or contingent Beneficiary,
including any class of Beneficiaries or contingent Beneficiaries and if a
Beneficiary, contingent Beneficiary, or class of Beneficiaries or contingent
Beneficiaries is changed, the Spouse must consent to such change in the
manner provided above. Additionally, a revocation of a prior consent may be
made by a Participant without the consent of the Spouse at any time before
the commencement of benefits. The number of revocations or consents shall
not be limited. This Section 7.2(B) is effective August 23, 1984.
(C) ELECTION PERIOD. The election period for purposes of
the consent of the Spouse provided for in Section 7.2(B) shall be the period
which begins on the first day of the Plan Year in which the Participant
commences to participate in the Plan and ends on the date of the
Participant's death. This Section 7.2(C) is effective August 23, 1984.
7.3 NORMAL RETIREMENT. A Participant shall be fully vested in his
Accrued Benefit when he reaches his Normal Retirement Age. A Participant may
retire when he reaches his Normal Retirement Date. If he then retires, payment
of his Accrued Benefit shall be made or shall commence, unless otherwise
elected pursuant to Section 7.9(B), within 60 days following the Valuation Date
coincident with, or if the Valuation Date does not coincide with the date he
retires, the Valuation Date next succeeding, the date he retires. Payment
shall be made in one lump sum if the value of such Participant's Accrued
Benefit does not exceed (and, at the time of any prior distribution did not
exceed) $3,500 and otherwise in any of the methods described in Section 7.1(B)
except as otherwise provided in Section 7.14.
7.4 EARLY RETIREMENT. A Participant shall be fully vested in his
Accrued Benefit on his Early Retirement Date, if the Adoption Agreement
provides for an Early Retirement Date. A Participant may retire on his Early
Retirement Date, if the Adoption Agreement provides for an Early Retirement
Date. If he then retires, payment of his Accrued Benefit shall be made or
shall commence, within 60 days following the Valuation Date coincident with, or
if the Valuation Date does not coincide with the date he retires, the Valuation
Date next succeeding, the date he retires, if the value of the Participant's
Vested Accrued Benefit does not exceed (and, at the time of any prior
distribution did not exceed) $3,500, but otherwise only if the Participant so
requests in writing and if Section 7.14 applies, the Participant's spouse
consents thereto in accordance with Section 7.14 on the Appropriate Form. If
payment of a Participant's Accrued Benefit does not commence under the
preceding sentence, payment of such Participant's Accrued Benefit shall
commence within sixty days following the date the Participant would have
attained his Normal Retirement Date had he remained in the employ of the
Employer, unless the Participant requests earlier distribution, in writing on
the Appropriate Form, and if Section 7.14 applies, the Participant's spouse
consents thereto in accordance with Section 7.14, or unless otherwise elected
pursuant to Section 7.9(B). Any requests for payment under this Section 7.4
shall be made within the 90-day period preceding the date payment is to
commence. Payment shall be made in one lump sum if the value of such
Participant's Vested Accrued Benefit does not exceed (and, at the time of any
prior distributions did not exceed) $3,500 and otherwise in any of the methods
described in Section 7.1(B) except as otherwise provided in Section 7.14.
7.5 PARTICIPATION AFTER NORMAL RETIREMENT DATE. If a Participant
does not retire when he reaches his Normal Retirement Date, but continues
thereafter in the service of the Employer, he shall continue to participate in
the Plan until he actually retires. The Accrued Benefit of a Participant who
retires on, or after, his Normal Retirement Date shall continue to be fully
vested and shall be made or shall commence, unless otherwise elected pursuant
to Section 7.9(B), within 60 days following the Valuation Date coincident with,
or if the Valuation Date does not coincide with the date he retires, the
Valuation Date next succeeding, the date he actually retires. Payment shall be
made in one lump sum if the value of such Participant's Vested Accrued Benefit
does not exceed (and at the time of any prior distribution did not exceed)
$3,500 and otherwise in any
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of the methods described in Section 7.1(B) except as otherwise provided in
Section 7.14. In no event, however, shall payment commence later than the date
specified in Section 7.9(C). In the event such date is earlier than the
Valuation Date specified in the third preceding sentence, the amount to be
distributed shall be determined as of the Valuation Date immediately preceding
the date of the required distribution.
7.6 SEPARATION FROM SERVICE. The rules pertaining to benefit
determinations and certain other related matters upon separation from service
for any reason other than death, Disability or retirement are as follows:
(A) PAYMENT OF VESTED ACCRUED BENEFIT. If a Participant
separates from service for any reason other than death, Disability or
retirement on his Early Retirement Date (if the Adoption Agreement provides
for an Early Retirement Date) before he reaches his Normal Retirement Date,
his Vested Accrued Benefit shall be paid to him at such time as the Adoption
Agreement provides. When distribution is made, payment shall be made in one
lump sum if the value of such Participant's Vested Accrued Benefit does not
exceed (and at the time of any prior distribution did not exceed)$3,500 and
otherwise in any of the methods described in Section 7.1(B) except as
otherwise provided in Section 7.14.
(B) DETERMINATION OF VESTED ACCRUED BENEFIT.
(1) ELECTIVE DEFERRAL, PARTICIPANT, ROLLOVER,
TRANSFER AND QVEC ACCOUNTS. The portion of such Participant's Accrued
Benefit consisting of his interest in his Elective Deferral,
Participant, Rollover, Transfer, Qualified Matching Contribution,
Qualified Nonelective Contribution and QVEC Accounts shall at all
times be fully vested.
(2) EMPLOYER AND MATCHING ACCOUNTS. The portion
of such Participant's Accrued Benefit consisting of his interest in
his Employer and Matching Accounts shall vest in accordance with the
vesting schedule selected by the Employer in the Adoption Agreement.
(C) FORFEITURES.
(1) TIME OF FORFEITURES.
(a) NORMAL RULE.
(i) Unless the Adoption Agreement
provides otherwise, any portion of the Participant's
Employer and/or Matching Account which is not vested
in accordance with Section 7.6(B)(2) at the time of
his separation from service with the Employer shall
be forfeited and reallocated to the Employer and/or
Matching Accounts of the remaining Participants in
accordance with Section 5.5 as of the last day of the
Plan Year coinciding with, or if the last day of the
Plan Year does not so coincide, the last day of the
Plan Year next following, the date the Participant
incurs five consecutive One-Year Breaks In Service.
(ii) If a distribution is made to
a Participant at a time when such Participant has a
nonforfeitable right to less than 100 percent of his
Employer and/or Matching Account and, at the time of
such distribution, the Participant has not incurred
five consecutive One-Year Breaks In Service, the
Trustee shall retain the nonvested portion of the
Participant's Employer and/or Matching Account in his
Employer and/or
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Matching Account. Such Employer and/or Matching
Account may be invested in a Federally insured
savings account or invested as otherwise provided by
the Plan, as determined by the Administrative
Committee. In such case, the Participant's vested
interest in the Employer and/or Matching Account at
any relevant time shall not be less than an amount
("X") determined by the formula: X = P(AB + (RxD)) -
(RxD), where "P" is the vested percentage at the
relevant time; "AB" is the account balance (i.e., the
amount in the Employer and/or Matching Account) at
the relevant time; "D" is the amount of the payment;
"R" is the ratio of the account balance at the
relevant time to the account balance after payment;
and the relevant time is the time at which, under the
Plan, the Participant's vested interest in the amount
in the Employer and/or Matching Account cannot
increase.
(iii) If the Participant returns
to the service of the Employer before incurring five
consecutive One-Year Breaks In Service, the
Participant shall continue to vest in the amount in
his Employer and/or Matching Account in accordance
with the provisions set forth above.
(iv) If the Participant incurs
five consecutive One-Year Breaks In Service, the
amount in the Participant's Employer and/or Matching
Account, as determined under Section
7.6(C)(1)(a)(ii), shall be forfeited under Section
7.6(C)(1)(a) and shall be reallocated to the Employer
and/or Matching Accounts of the remaining
Participants in accordance with Section 5.5. Such
reallocation shall be effected on the last day of the
Plan Year coincident with, or if the last day of the
Plan Year does not so coincide, the last day of the
Plan Year next following, the date the Participant
incurs five consecutive One-Year Breaks In Service.
(b) SPECIAL RULE.
(i) PROFIT-SHARING OR
PROFIT-SHARING 401(K) PLAN. This Section
7.6(C)(1)(b)(i) applies to the Plan if the Plan, as
adopted by the Employer, is a profit-sharing or
profit-sharing 401(k) plan. If the Adoption
Agreement so provides, if a Participant separates
from the service of the Employer, and the value of
the Participant's Vested Accrued Benefit derived from
Employer and Employee contributions does not exceed
(or at the time of any prior distribution did not
exceed) $3,500 and Section A.7.6(A)(2) of the
Adoption Agreement is checked, the Participant shall
receive a distribution of the value of his entire
Vested Accrued Benefit (and if his entire Vested
Accrued Benefit is $-0-, he shall be deemed to have
received, as a cash-out of his Vested Accrued Benefit
under the Plan, such $0) at the time provided in the
Adoption Agreement and the nonvested portion of his
Accrued Benefit shall be forfeited at the time of
such distribution; if the value of the Participant's
Vested Accrued Benefit derived from Employer
contributions exceeds (or at the time of any prior
distribution exceeded) $3,500 and if Section
A.7.6(A)(1)(b) of the Adoption Agreement is checked
and if the Participant separates from the service of
the Employer, and elects to receive no less than the
entire value of the Participant's Vested Accrued
Benefit derived from Employer contributions,
distribution shall be made at the time provided in
the Adoption Agreement and the nonvested portion
shall be treated as a forfeiture at the time of
distribution to the Participant of his Vested Accrued
Benefit; if the Participant elects to have
distributed less than his entire Vested Accrued
Benefit derived from Employer
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contributions, the part of the nonvested portion that
will be treated as a forfeiture is the total
nonvested portion multiplied by a fraction, the
numerator of which is the amount of the distribution
attributable to Employer contributions and the
denominator of which is the total value of his Vested
Accrued Benefit derived from Employer contributions.
To the extent the nonvested portion is not or cannot
be forfeited at the time of a Participant's
separation from service because of the rules set
forth in this Section 7.6(C)(1)(b)(i), the rules of
Section 7.6(C) (1)(a) shall apply. If a Participant
receives a distribution pursuant to this Section
7.6(C)(1)(b)(i) (except as otherwise provided in the
immediately preceding sentence) and resumes
employment covered under the Plan, the Participant's
Accrued Benefit derived from Employer contributions
shall be restored to the amount on the date of
distribution if the Participant repays to the Plan
the full amount of the distribution attributable to
Employer contributions on or before the earlier of
the fifth anniversary of the Participant's resumption
of covered employment or the date the Participant
incurs five consecutive One-Year Breaks In Service.
If an Employee is deemed to receive a distribution
pursuant to this Section, and the Employee resumes
employment covered under this Plan before the earlier
of the fifth anniversary of the Participant's
resumption of covered employment or the date the
Participant incurs five consecutive One-Year Breaks
In Service, upon the reemployment of such Employee,
the Employer-derived account balance of the Employee
shall be restored to the amount on the date of such
deemed distribution. Forfeitures under this Section
7.6(C)(1)(b)(i) shall be reallocated to the Employer
contribution accounts of the remaining Participants
in accordance with Section 5.5 or, if the Adoption
Agreement so provides, used to reduce Employer
contributions. Such reallocation (or, if applicable,
reduction in Employer contributions) shall be
effected no earlier that the first Valuation Date
coincident with or next following the date of the
forfeiture and no later than the last day of the Plan
Year, in which occurred the date of the forfeiture
under this Section 7.6(C)(1)(b) (i). A Participant's
Vested Accrued Benefit shall not, for purposes of the
cash out provisions, include accumulated deductible
employee contributions within the meaning of section
72(o)(5)(B) of the Code for Plan Years beginning
prior to January 1, 1989.
(ii) MONEY PURCHASE PLAN. This
Section 7.6(C)(1)(b)(ii) applies to the Plan if the
Plan, as adopted by the Employer, is a money purchase
plan. If the Adoption Agreement so provides, if a
Participant separates from the service of the
Employer, and the value of the Participant's Vested
Accrued Benefit derived from Employer and Employee
contributions does not exceed (or at the time of any
prior distribution did not exceed) $3,500 and Section
A.7.6(A)(2) of the Adoption Agreement is checked, the
Participant shall receive a distribution of the value
of the entire Vested Accrued Benefit (and if his
entire Vested Accrued Benefit is $-0-, he shall be
deemed to have received, as a cash-out of his Vested
Accrued Benefit under the Plan, such $0) at the time
provided in the Adoption Agreement and the nonvested
portion of his Accrued Benefit shall be forfeited at
the time of such distribution. If the value of a
Participant's Vested Accrued Benefit derived from
Employer and Employee contributions exceeds (or at
the time of any prior distribution exceeded) $3,500,
and the Vested Accrued Benefit is immediately
distributable, the Participant and the Participant's
Spouse (or where either the Participant or the Spouse
has died, the survivor) must consent to any
distribution of such Vested Accrued Benefit. The
consent of the Participant and the Participant's
Spouse shall be obtained in writing
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within the 90-day period ending on the annuity
starting date. The annuity starting date is the
first day of the first period for which an amount is
paid as an annuity or any other form. The Plan
Administrator shall notify the Participant and the
Participant's Spouse of the right to defer any
distribution until the Participant's Vested Accrued
Benefit is no longer immediately distributable. Such
notification shall include a general description of
the material features, and an explanation of the
relative values of, the optional forms of benefit
available under the Plan in a manner that would
satisfy the notice requirements of section 417(a)(3)
of the Code and shall be provided no less than 30
days and no more than 90 days prior to the annuity
starting date.
Notwithstanding the foregoing, only the
Participant need consent to the commencement of a
distribution in the form of a "Qualified Joint and
Survivor Annuity" (within the meaning of Section
7.14(D)(4)) while the account balance is immediately
distributable. (Furthermore, if payment in the form
of a "Qualified Joint and Survivor Annuity" is not
required with respect to the Participant pursuant to
Section 7.14, only the Participant need consent to
the distribution of an account balance that is
immediately distributable.) Neither the consent of
the Participant nor the Participant's Spouse shall be
required to the extent that a distribution is
required to satisfy section 401(a)(9) of the Code or
section 415 of the Code.
An Accrued Benefit is immediately
distributable if any part of the Accrued Benefit
could be distributed to the Participant (or surviving
Spouse) before the Participant attains or would have
attained if not deceased) the later of Normal
Retirement Age or age 62.
For purposes of determining the
applicability of the foregoing consent requirements
to distributions made before the first day of the
first Plan Year beginning after December 31, 1988,
the Participant's Vested Accrued Benefit shall not
include amounts attributable to accumulated
deductible employee contributions within the meaning
of section 72(o)(5)(B) of the Code. If the value of
the Participant's Vested Accrued Benefit derived from
Employer and Employee contributions exceeds (or at
the time of any prior distribution exceeded) $3,500
and if Section A.7.6(A)(1)(b) of the Adoption
Agreement is checked and if the Participant separates
from the service of the Employer and elects, with the
consent of his Spouse as provided above, to receive
no less than the entire value of the Participant's
Vested Accrued Benefit derived from Employer and
Employee contributions, distribution shall be made at
the time provided in the Adoption Agreement and the
nonvested portion shall be treated as a forfeiture at
the time of distribution to the Participant of his
Vested Accrued Benefit; if the Participant elects,
with the consent of his Spouse as provided above, to
have distributed less than his entire Vested Accrued
Benefit derived from Employer contributions, the part
of the nonvested portion that will be treated as a
forfeiture is the total nonvested portion multiplied
by a fraction, the numerator of which is the amount
of the distribution attributable to Employer
contributions and the denominator of which is the
total value of his Vested Accrued Benefit derived
from Employer contributions. To the extent the
nonvested portion is not or cannot be forfeited at
the time of a Participant's termination of service
because of the rules set forth in this Section
7.6(C)(1)(b)(ii), the rules of Section 7.6(C)(1)(a)
shall apply. If a Participant receives a
distribution pursuant to this Section 7.6(C)(1)
(b)(ii) (except as otherwise provided in the
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immediately preceding sentence) and resumes
employment covered under the Plan, the Participant's
Accrued Benefit derived from Employer contributions
shall be restored to the amount on the date of
distribution if the Participant repays to the Plan
the full amount of the distribution attributable to
Employer contributions on or before the earlier of
the fifth anniversary of the Participant's resumption
of covered employment or the date the Participant
incurs five consecutive One-Year Breaks In Service.
If an Employee is deemed to receive a distribution
pursuant to this Section, and the Employee resumes
employment covered under this Plan before the earlier
of the fifth anniversary of the Participant's
resumption of covered employment or the date the
Employee incurs five consecutive One-Year Breaks In
Service, upon the reemployment of such Employee, the
Employer-derived account balance of the Employee
shall be restored to the amount on the date of such
deemed distribution. Forfeitures under this Section
7.6(C)(1) (b)(ii) shall be reallocated to the
Employer contribution accounts of the remaining
Participants in accordance with Section 5.5 or, if
the Adoption Agreement so provides, used to reduce
Employer contributions. Such reallocation (or, if
applicable, reduction in Employer contributions)
shall be effected no earlier that the first Valuation
Date coincident with or next following the date of
the forfeiture and no later than the last day of the
Plan Year , in which occurred the date of the
forfeiture under this Section 7.6(C)(1)(b)(ii).
(D) TERMINATION OF PLAN. If, upon termination of this
Plan, the Plan does not offer an annuity option (purchased from a
commercial provider), and if the Employer or any entity within the same
controlled group as the Employer does not maintain another Defined
Contribution Plan (other than an employee stock ownership plan described in
section 4975(e)(7) of the Code), the Participant's Vested Accrued Benefit
shall, without the Participant's consent, be distributed to the Participant.
However, if any entity within the same controlled group as the Employer
maintains another Defined Contribution Plan (other than an employee stock
ownership plan as defined in section 4975(e)(7) of the Code) then the
Participant's Vested Accrued Benefit shall be transferred, without the
Participant's consent, to the other plan if the Participant does not consent
to an immediate distribution.
(E) NO DIVESTMENT FOR CAUSE. There shall be no divestment of
a Participant's Vested Accrued Benefit under the Plan for cause.
7.7 DISABILITY. If, before reaching his Normal Retirement Date, a
Participant in the service of the Employer becomes subject to Disability as
established by competent medical proof satisfactory to the Administrative
Committee, such Participant shall then retire, and his Accrued Benefit shall be
fully vested and shall be paid to him, within 60 days following the Valuation
Date coincident with, or if the Valuation Date does not coincide with the date
of determination of Disability, the Valuation Date next succeeding, the date of
determination of Disability, by the Administrative Committee of his Disability,
if the value of such Accrued Benefit does not exceed (and at the time of any
prior distribution did not exceed) $3,500, but otherwise only if the
Participant so requests, and if Section 7.14 is applicable, with the consent of
the Participant's Spouse as provided in Section 7.14 in writing on the
Appropriate Form. If payment of a Participant's Accrued Benefit does not
commence under the preceding sentence, payment of such Participant's Accrued
Benefit shall commence within sixty days following the date the Participant
would have attained his Normal Retirement Date had he remained in the employ of
the Employer, unless the Participant requests, in writing on the Appropriate
Form, earlier distribution or unless otherwise elected pursuant to Section
7.9(B). Any requests for payment under this Section 7.7 shall be made within
the 90-day period preceding the date payment is to commence. Payment shall be
made in one lump sum if the value of such Participant's Accrued Benefit does
not exceed (and
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at the time of any prior distribution did not exceed) $3,500 and otherwise in
any of the methods described in Section 7.1(B), except as otherwise provided in
Section 7.14.
7.8 DEATH. This Section shall only apply to the extent Section
7.14 does not provide otherwise.
(A) AMOUNT AND DISTRIBUTION OF BENEFIT. If a Participant
dies while in the service of the Employer, his Accrued Benefit (reduced by
any security interest held by the Plan by reason of any loans outstanding to
such Participant) shall be fully vested and distribution thereof to the
Beneficiary or Beneficiaries provided under Section 7.2(A) shall be made or
commence no later than 60 days following the Valuation Date coincident with,
or if the Valuation Date does not coincide with the date of Death, the
Valuation Date immediately following, the date of death. If a Participant
dies before complete distribution to him of the Vested Accrued Benefit to
which he is entitled under Sections 7.3, 7.4, 7.5, 7.6 or 7.7, the
distribution of the remainder of such Vested Accrued Benefit (reduced by any
security interest held by the Plan by reason of any loans outstanding to
such Participant) to the Beneficiary or Beneficiaries provided under Section
7.2(A) shall be made or commence no later than 60 days following the
Valuation Date coincident with, or if the Valuation Date does not coincide
with the date of death, the Valuation Date immediately following, the date
of death.
(B) RECIPIENT OF BENEFIT WHERE NO BENEFICIARY DESIGNATED.
In the case of a Participant who is married on the date of his death and who
has not designated a Beneficiary, such Vested Accrued Benefit (reduced by
any security interest held by the Plan by reason of any loans outstanding to
such Participant) shall be distributed to such Participant's Surviving
Spouse. If no Beneficiary is designated or survives the Participant and if
the Participant has no Surviving Spouse, then such Vested Accrued Benefit
(reduced by any security interest held by the Plan by reason of any loans
outstanding to such Participant) shall be distributed to the Participant's
estate.
(C) MANNER OF DISTRIBUTION. Subject to Section 7.9(C),
any distributions under this Section 7.8 shall be made in a lump sum or in
installments as elected by the Participant in accordance with the terms of
Sections 7.1 and 7.2. In the absence of such a Participant election,
distributions shall be made in a lump sum to the Participant's Beneficiary,
as provided in Section 7.2(A).
7.9 COMMENCEMENT OF PAYMENTS; DEFERRAL OF PAYMENTS; MINIMUM
DISTRIBUTION REQUIREMENTS. The rules relating to commencement of payments,
deferral of payments and minimum distribution requirements are as follows:
(A) DATE PAYMENT TO COMMENCE. Payment under this Plan shall
commence no later than 60 days after the close of the Plan Year in which
occurs the latest of the following:
(1) The Participant's attainment of Normal
Retirement Age;
(2) The tenth anniversary of the date the
Participant commenced participation in the Plan; or
(3) The Participant's separation from service
with the Employer.
Notwithstanding the immediately preceding paragraph, if the
amount of payment required to otherwise commence on a date determined under
this Section 7.9(A) or under any other Section of the Plan cannot be
ascertained by such date or if the Administrative Committee is unable to
locate the Participant or Beneficiary after making reasonable efforts to do
so, a payment retroactive to such date may be made no later
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than 60 days after the later of (a) the earliest date on which the amount of
such payment can be ascertained under the Plan or (b) the earliest date on
which the Participant or Beneficiary is located.
Notwithstanding the foregoing, the failure of a Participant
and, if spousal consent is required, his Spouse to consent to a distribution
while a benefit is immediately distributable, shall be deemed to be an
election to defer commencement of payment of any benefit sufficient to
satisfy this Section.
(B) DEFERRAL OF PAYMENTS. If the Adoption Agreement so
provides, a Participant may irrevocably elect, subject to Section 7.9(C),
the deferral of the payment of benefits under Sections 7.3, 7.4, 7.5, and
7.7, by filing with the Administrative Committee, the Appropriate Form
signed by such Participant, describing the benefit and the date on which
payment of such benefit shall commence. Such Appropriate Form shall be
filed with the Administrative Committee no later than 30 days prior to such
Participant's separation from service with the Employer under Sections 7.3,
7.4, 7.5 or 7.7. No such election may be made if the exercise of such
election will cause the violation of the requirements of Section 7.13 or
Section 7.14. Moreover, no such election may defer payment of benefits
beyond the date specified in Section 7.9(C).
(C) MINIMUM DISTRIBUTION REQUIREMENTS.
(1) GENERAL RULES.
(a) Subject to Section 7.14 relating to
joint and survivor annuity requirements, the requirements of
this Section 7.9(C) shall apply to any distribution of a
Participant's interest and shall take precedence over any
inconsistent provisions of this Plan. Unless otherwise
specified, the provisions of this Section 7.9(C) apply to
calendar years beginning after December 31, 1984.
(b) All distributions required under
this Section 7.9(C) shall be determined and made in accordance
with the proposed Treasury regulations under section 401(a)(9)
of the Code, including the minimum distribution incidental
benefit requirement of Prop. Treas. Reg. Section
1.401(a)(9)-2.
(2) REQUIRED BEGINNING DATE. The entire interest
of a Participant must be distributed or begin to be distributed no
later than the Participant's "Required Beginning Date".
(3) LIMITS ON DISTRIBUTION PERIODS. As of the
first "Distribution Calendar Year", distributions, if not made in a
single sum, may only be made over one of the following periods (or a
combination thereof):
(a) The life of the Participant,
(b) The life of the Participant and a
"Designated Beneficiary",
(c) A period certain not extending
beyond the "Life Expectancy" of the Participant, or
(d) A period certain not extending
beyond the "Joint and Last Survivor Expectancy" of the
Participant and a "Designated Beneficiary".
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(4) DETERMINATION OF AMOUNT TO BE DISTRIBUTED
EACH YEAR. If the Participant's interest is to be distributed in
other than a single sum, the following minimum distribution rules
shall apply on or after the "Required Beginning Date":
(a) INDIVIDUAL ACCOUNT.
(i) If a "Participant's Benefit" is
to be distributed over (AA) a period not extending
beyond the "Life Expectancy" of the Participant or
the "Joint Life and Last Survivor Expectancy" of the
Participant and the Participant's "Designated
Beneficiary" or (BB) a period not extending beyond
the "Life Expectancy" of the "Designated
Beneficiary", the amount required to be distributed
for each calendar year, beginning with distributions
for the first "Distribution Calendar Year", must at
least equal the quotient obtained by dividing the
"Participant's Benefit" by the "Applicable Life
Expectancy".
(ii) For calendar years beginning
before January 1, 1989, if the Participant's Spouse
is not the "Designated Beneficiary", the method of
distribution selected must assure that at least 50
percent of the present value of the amount available
for distribution is paid within the "Life Expectancy"
of the Participant.
(iii) For calendar years beginning
after December 31, 1988, the amount to be distributed
each year, beginning with distributions for the first
"Distribution Calendar Year" shall not be less than
the quotient obtained by dividing the "Participant's
Benefit" by the lesser of (AA) the "Applicable Life
Expectancy" or (BB) if the Participant's Spouse is
not the "Designated Beneficiary", the applicable
divisor determined from the table set forth in Q&A-4
of Prop. Treas. Reg. Section 1.401(a)(9)-2.
Distributions after the death of the Participant
shall be distributed using the "Applicable Life
Expectancy" in Section 7.9(C)(4)(a)(i) above as the
relevant divisor without regard to Prop. Treas. Reg.
Section 1.401(a)(9)-2.
(iv) The minimum distribution
required for the Participant's first "Distribution
Calendar Year" must be made on or before the
Participant's "Required Beginning Date". The minimum
distribution for other calendar years, including the
minimum distribution for the "Distribution Calendar
Year" in which the Employee's "Required Beginning
Date" occurs, must be made on or before December 31
of that "Distribution Calendar Year".
(b) OTHER FORMS.
(i) If the "Participant's Benefit"
is distributed in the form of an annuity purchased
from an Insurer, distributions thereunder shall be
made in accordance with the requirements of section
401(a)(9) of the Code and the proposed Treasury
regulations thereunder.
(5) DEATH DISTRIBUTION PROVISIONS.
(a) DISTRIBUTION BEGINNING BEFORE DEATH.
If the Participant dies after distribution of his interest has
begun, the remaining portion of such interest shall continue
to be
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distributed at least as rapidly as under the method of
distribution being used prior to the Participant's death.
(b) DISTRIBUTION BEGINNING AFTER DEATH.
If the Participant dies before distribution of his interest
begins, distribution of the Participant's entire interest
shall be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death
except to the extent that an election is made to receive
distributions in accordance with (i) or (ii) below:
(i) If any portion of the
Participant's interest is payable to a "Designated
Beneficiary", distributions may be made over the life
or over a period certain not greater than the "Life
Expectancy" of the "Designated Beneficiary"
commencing on or before December 31 of the calendar
year immediately following the calendar year in which
the Participant died;
(ii) If the "Designated
Beneficiary" is the Participant's Surviving Spouse,
the date distributions are required to begin in
accordance with (i) above shall not be earlier than
the later of (AA) December 31 of the calendar year
immediately following the calendar year in which the
Participant died and (BB) December 31 of the calendar
year in which the Participant would have attained age
70 1/2.
If the Participant has not made an election pursuant to this
Section 7.9(C)(5)(b) by the time of his death, the
Participant's "Designated Beneficiary" must elect the method
of distribution no later than the earlier of (AA) December 31
of the calendar year in which distributions would be required
to begin under this Section, or (BB) December 31 of the
calendar year which contains the fifth anniversary of the date
of death of the Participant. If the Participant has no
"Designated Beneficiary", or if the "Designated Beneficiary"
does not elect a method of distribution, distribution of the
Participant's entire interest must be completed by December 31
of the calendar year containing the fifth anniversary of the
Participant's death.
(c) DEATH OF SURVIVING SPOUSE PRIOR TO
BENEFIT COMMENCEMENT. For purposes of Section 7.9(C)(5)(b)
above, if the Surviving Spouse dies after the Participant, but
before payments to such Spouse begin, the provisions of
Section 7.9(C)(5)(b), with the exception of Section
7.9(C)(5)(b)(ii), shall be applied as if the Surviving Spouse
were the Participant.
(d) TREATMENT OF AMOUNTS PAID TO
CHILDREN. For purposes of this Section 7.9(C)(5), any amount
paid to a child of the Participant will be treated as if it
had been paid to the Surviving Spouse if the amount becomes
payable when the child reaches the age of majority.
(e) DEEMED BENEFIT COMMENCEMENT. For
the purposes of this Section 7.9(C)(5), distribution of a
Participant's interest is considered to begin on the
Participant's "Required Beginning Date" (or, if Section
7.9(C)(5)(c) above is applicable, the date distribution is
required to begin to the Surviving Spouse pursuant to Section
7.9(C)(5)(b) above). If distribution in the form of an
annuity irrevocably commences to the Participant before the
"Required Beginning Date", the date distribution is considered
to begin is the date distribution actually commences.
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(6) DEFINITIONS. For purposes of this Section
7.9(C), the following definitions apply:
(a) "APPLICABLE LIFE EXPECTANCY" shall
mean the "Life Expectancy" (or "Joint and Last Survivor
Expectancy") calculated using the attained age of the
Participant (or "Designated Beneficiary") as of the
Participant's (or "Designated Beneficiary's") birthday in the
applicable calendar year reduced by one for each calendar year
which has elapsed since the date "Life Expectancy" was first
calculated. If "Life Expectancy" is being recalculated, the
"Applicable Life Expectancy" shall be the "Life Expectancy" as
so recalculated. The applicable calendar year shall be the
first "Distribution Calendar Year", and if "Life Expectancy"
is being recalculated, such succeeding calendar year.
(b) "DESIGNATED BENEFICIARY" shall mean
the individual who is designated as the Beneficiary under the
Plan in accordance with section 401(a)(9) of the Code and the
Treasury regulations thereunder.
(c) "DISTRIBUTION CALENDAR YEAR" shall
mean a calendar year for which a minimum distribution is
required. For distributions beginning before the
Participant's death, the first "Distribution Calendar Year" is
the calendar year immediately preceding the calendar year
which contains the Participant's "Required Beginning Date".
For distributions beginning after the Participant's death, the
first "Distribution Calendar Year" is the calendar year in
which distributions are required to begin pursuant to Section
7.9(C)(5) above.
(d) "LIFE EXPECTANCY" shall mean the
life expectancy and "Joint and Last Survivor Expectancy" as
computed by use of the expected return multiples in Tables V
and VI of Treas. Reg. Section 1.72-9. Unless otherwise
elected by the Participant (or Spouse, in the case of
distributions described in Section 7.9(C)(5)(b)(ii) above) by
the time distributions are required to begin, "Life
Expectancies" shall be recalculated annually. Such election
shall be irrevocable as to the Participant (or Spouse) and
shall apply to all subsequent years. The "Life Expectancy" of
a nonspouse Beneficiary may not be recalculated.
(e) "PARTICIPANT'S BENEFIT" shall mean
the account balance as of the last Valuation Date in the
calendar year immediately preceding the "Distribution Calendar
Year" ("Valuation Calendar Year") increased by the amount of
any contributions or forfeitures allocated to the account
balance as of dates in the "Valuation Calendar Year" after the
Valuation Date and decreased by distributions made in the
"Valuation Calendar Year" after the Valuation Date. For
purposes of this Section 7.9(C)(6)(e), if any portion of the
minimum distribution for the first "Distribution Calendar
Year" is made in the second "Distribution Calendar Year" on or
before the "Required Beginning Date", the amount of the
minimum distribution made in the second "Distribution Calendar
Year" shall be treated as if it had been made in the
immediately preceding "Distribution Calendar Year".
(f) "REQUIRED BEGINNING DATE" shall
mean, with respect to any Participant, except as provided
below, the first day of April of the calendar year following
the calendar year in which the Participant attains age 70 1/2.
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Notwithstanding the foregoing the "Required
Beginning Date" of a Participant who attains age 70 1/2 before
January 1, 1988, shall be determined in accordance with (i) or
(ii) below:
(i) NON-FIVE-PERCENT OWNERS. The
"Required Beginning Date" of a Participant who is not
a five-percent owner is the first day of April of the
calendar year following the calendar year in which
the later of retirement or attainment of age 70 1/2
occurs.
(ii) FIVE-PERCENT OWNERS. The
"Required Beginning Date" of a Participant who is a
five-percent owner during any year beginning after
December 31, 1979, is the first day of April
following the later of:
(AA) The calendar year in which the
Participant attains age 70 1/2, or
(BB) The earlier of the calendar year
with or within which ends the Plan Year in
which the Participant becomes a five-percent
owner, or the calendar year in which the
Participant retires.
The "Required Beginning Date" of a Participant who is
not a five-percent owner who attains age 70 1/2
during 1988 and who has not retired as of January 1,
1989, is April 1, 1990.
A Participant is treated as a
five-percent owner for purposes of this Section if
such Participant is a five-percent owner as defined
in section 416(i) of the Code (determined in
accordance with section 416 but without regard to
whether the Plan is a Top-Heavy Plan) at any time
during the Plan Year ending with or within the
calendar year in which such owner attains age 66 1/2
or any subsequent Plan Year.
Once distributions have begun to a
five-percent owner under this Section, they must
continue to be distributed, even if the Participant
ceases to be a five-percent owner in a subsequent
year.
(7) TRANSITIONAL RULE.
(a) Notwithstanding the other
requirements of this Section 7.9(C) and subject to the
requirements of Section 7.14 relating to joint and survivor
annuity requirements, distribution on behalf of any Employee,
including a five-percent owner, may be made in accordance with
all of the following requirements (regardless of when such
distribution commences):
(i) The distribution by the Plan is
one which would not have disqualified such Plan under
section 401(a)(9) of the Code as in effect prior to
amendment by the Deficit Reduction Act of 1984.
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(ii) The distribution is in
accordance with a method of distribution designated
by the Employee whose interest in the Plan is being
distributed or, if the Employee is deceased, by a
Beneficiary of such Employee.
(iii) Such designation was in
writing, was signed by the Employee or the
Beneficiary, and was made before January 1, 1984.
(iv) The Employee had accrued a
benefit under the Plan as of December 31, 1983.
(v) The method of distribution
designated by the Employee or the Beneficiary
specifies the time at which distribution will
commence, the period over which distributions will be
made, and in the case of any distribution upon the
Employee's death, the Beneficiaries of the Employee
listed in order of priority.
(b) A distribution upon death will not
be covered by this transitional rule unless the information in
the designation contains the required information described
above with respect to the distributions to be made upon the
death of the Employee.
(c) For any distribution which commences
before January 1, 1984, but continues after December 31, 1983,
the Employee, or the Beneficiary, to whom such distribution is
being made, will be presumed to have designated the method of
distribution under which the distribution is being made if the
method of distribution was specified in writing and the
distribution satisfies the requirements in Sections
7.9(C)(7)(a)(i) and (v).
(d) If a designation is revoked, any
subsequent distribution must satisfy the requirements of
section 401(a)(9) of the Code and the proposed Treasury
regulations thereunder. If a designation is revoked
subsequent to the date distributions are required to begin,
the Trust must distribute, by the end of the calendar year
following the calendar year in which the revocation occurs,
the total amount not yet distributed which would have been
required to have been distributed to satisfy section 401(a)(9)
of the Code and the proposed Treasury regulations thereunder,
but for the election under section 242(b)(2) of the Tax Equity
and Fiscal Responsibility Act of 1982. For calendar years
beginning after December 31, 1988, such distributions must
meet the minimum distribution incidental benefit requirements
in Prop. Treas. Reg. Section 1.401(a)(9)-2. Any changes in
the designation will be considered to be a revocation of the
designation. However, the mere substitution or addition of
another Beneficiary (one not named in the designation) under
the designation will not be considered to be a revocation of
the designation, so long as such substitution or addition does
not alter the period over which distributions are to be made
under the designation, directly or indirectly (for example, by
altering the relevant measuring life). In the case in which
an amount is transferred or rolled over from one plan to
another plan, the rules in Q&A J-2 and Q&A J-3 of Prop. Treas.
Reg. Section 1.401(a)(9)-1 shall apply.
7.10 WITHDRAWALS DURING EMPLOYMENT. This Section 7.10, other than
Section 7.10(B), shall apply to the Plan only if the Plan, as adopted by the
Employer, is a profit-sharing or profit-sharing 401(k) plan. Moreover,
withdrawals by a Participant of his Vested Accrued Benefit while such
Participant is employed by the Employer shall be permitted only if the
applicable Adoption Agreement so provides and then only in accordance with the
following rules:
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(A) PARTICIPANT ACCOUNTS. A Participant may elect to
withdraw, as of any Valuation Date in the Plan Year, but not more frequently
than once each Plan Year, any portion or all of the amount then credited to
the Participant's Participant Account (other than the portion attributable
to required Participant Contributions and to Participant Contributions which
are matched by the Employer). Such withdrawal election shall be made at
least 30 days prior to the effective date of the withdrawal on the
Appropriate Form furnished by the Administrative Committee for such purpose.
(B) QVEC ACCOUNTS. Subject to the joint and survivor
annuity requirements of Section 7.14 (if applicable), a Participant may
elect, subject to Section 7.12, to withdraw, as of any Valuation Date in the
Plan Year, but not more frequently than once each Plan Year, any portion or
all of the amount then credited to the Participant's QVEC Account. Such
withdrawal election shall be made at least 30 days prior to the effective
date of the withdrawal on the Appropriate Form furnished by the
Administrative Committee for such purposes.
(C) ROLLOVER ACCOUNTS. A Participant may elect to
withdraw, as of any Valuation Date in the Plan Year, but not more frequently
than once each Plan Year, any portion or all of the amount then credited to
the Participant's Rollover Account. Such withdrawal election shall be made
at least 30 days prior to the effective date of the withdrawal on the
Appropriate Form furnished by the Administrative Committee for such purpose.
(D) OTHER ACCOUNTS.
(1) AFTER ATTAINMENT OF AGE 59 1/2. A
Participant who is age 59 1/2 or older may elect to withdraw, as of
any Valuation Date in the Plan Year, but not more frequently than once
each Plan Year, any portion or all of such Participant's Vested
Accrued Benefit. Such withdrawal election shall be made at least 30
days prior to the effective date of the withdrawal on the Appropriate
Form furnished by the Administrative Committee for such purpose.
(2) BEFORE ATTAINMENT OF AGE 59 1/2. Except as
provided in Section 7.10(D)(3), Section 7.10(D)(4) or Section
7.10(D)(5), no withdrawals of such Participant's Accrued Benefit shall
be permitted while such Participant is employed by the Employer if the
Participant has not attained age 59 1/2.
(3) HARDSHIP WITHDRAWALS. A Participant who
incurs a hardship may elect to withdraw, as of any Valuation Date in
the Plan Year, but not more frequently than once each Plan Year, any
portion or all of the amount then credited to the Participant's
Elective Deferral Account which is attributable to Elective Deferral
Contributions (and of income allocable thereto credited to such
Elective Deferral Account as of the end of the last Plan Year ending
before July 1, 1989), any portion or all of the vested amount then
credited to the Participant's Employer Account, any portion or all of
the vested amount then credited to the Participant's Matching Account
and any portion or all of the Participant's Participant, Rollover and
Transfer Accounts, but a Participant may not elect to withdraw by
reason of hardship, any amount attributable to Qualified Nonelective
Contributions or Qualified Matching Contributions. For purposes of
this Section 7.10(D)(3), the Administrative Committee shall determine
that a hardship has occurred only if the distribution both is made on
account of an immediate and heavy financial need of the Participant
and is necessary to satisfy such financial need in accordance with the
following standards:
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(i) IMMEDIATE AND HEAVY FINANCIAL NEED.
(AA) IN GENERAL. The determination of
whether a Participant has an immediate and heavy
financial need is to be made on the basis of all
relevant facts and circumstances. A determination of
an immediate and heavy financial need will generally
be made by the Administrative Committee if the
inability to satisfy the financial need would have a
severe adverse effect upon the health, livelihood or
well-being of a Participant or of a member of the
Participant's immediate family. A financial need
shall not fail to qualify as immediate and heavy
merely because such need was reasonably foreseeable
or voluntarily incurred by the Participant.
(BB) DEEMED IMMEDIATE AND HEAVY
FINANCIAL NEED. A distribution will be deemed to be
made on account of an immediate and heavy financial
need of the Participant if the distribution is on
account of:
(AAA) Expenses incurred or necessary
for medical care described in section 213(d)
of the Code of the Participant, the
Participant's Spouse, or any dependents of
the Participant (as defined in section 152 of
the Code);
(BBB) Purchase (excluding mortgage
payments) of a principal residence for the
Participant;
(CCC) Payment of tuition and related
educational fees for the next 12 months of
post-secondary education for the Participant,
his Spouse, children, or dependents; or
(DDD) The need to prevent the eviction
of the Participant from his principal
residence or foreclosure on the mortgage of
the Participant's principal residence.
(ii) DISTRIBUTION NECESSARY TO SATISFY
FINANCIAL NEED.
(AA) IN GENERAL. A distribution will
be considered as necessary to satisfy an immediate
and heavy financial need of a Participant only if:
(AAA) The Participant has obtained all
distributions, other than hardship
distributions, and all nontaxable loans under
all plans maintained by the Employer;
(BBB) All plans (within the meaning of
Treas. Reg. Section 1.401(k)-
1(d)(2)(iv)(B)(4)) maintained by the Employer
provide that the Participant's Elective
Deferrals (and Employee Contributions) will
be suspended for 12 months after the receipt
of the hardship distribution;
(CCC) The distribution is not in
excess of the amount of an immediate and
heavy financial need (including amounts
necessary to pay any
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federal, state or local income taxes or
penalties reasonably anticipated to result
from the distribution); and
(DDD) All plans maintained by the
Employer provide that the Participant may not
make Elective Deferrals for the Participant's
taxable year immediately following the
taxable year of the hardship distribution in
excess of the applicable limit under section
402(g) of the Code for such taxable year less
the amount of such Participant's Elective
Deferrals for the taxable year of the
hardship distribution.
Such withdrawal election shall be made at least 30 days prior to the
effective date of the withdrawal on the Appropriate Form furnished by
the Administrative Committee for such purpose.
(4) OTHER LIMITATIONS ON DISTRIBUTIONS.
(i) GENERAL RULES. Notwithstanding any
other provision in the Plan, no Elective Deferral, Qualified
Nonelective Contribution or Qualified Matching Contribution
and income allocated to each shall be distributable earlier
than upon one of the following events:
(AA) The Participant's retirement,
death, disability or separation from service;
(BB) The termination of the Plan
without the maintenance or establishment of another
Defined Contribution Plan (other than an employee
stock ownership plan as defined in section 4975(e) of
the Code or section 409 of the Code) or a simplified
employee pension plan as defined in section 408(k) of
the Code;
(CC) The date of the sale or other
disposition by a corporate Employer to an unrelated
corporation of substantially all of the assets
(within the meaning of section 409(d)(2) of the Code)
used by such Employer in a trade or business of such
Employer with respect to a Participant who continues
employment with the corporation acquiring such
assets. The sale of 85 percent of the assets used in
a trade or business will be deemed a sale of
"substantially all" the assets used in such trade or
business;
(DD) The date of the sale or other
disposition by a corporate Employer of such
Employer's interest in a subsidiary (within the
meaning of section 409(d)(3) of the Code) to an
unrelated entity. This Section 7.10(D)(4)(i)(DD)
applies only to a Participant who continues
employment with such subsidiary;
(EE) The Participant's attainment of
age 59 1/2; or
(FF) In the case of distributions of
Elective Deferrals (and of income allocable thereto
credited to a Participant's account as of December
31, 1988) but not of amounts treated as Elective
Deferrals (and of income allocable thereto), the
Participant's hardship.
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(ii) OTHER RULES.
(AA) ESTABLISHMENT OF PLANS. For
purposes of Section 7.10(D)(4)(i)(BB), the
establishment of a plan means the existence at the
time the plan (including this Plan) with the cash or
deferred arrangement is terminated or the
establishment within the period ending 12 months
after distribution of all assets from the arrangement
of any other Defined Contribution Plan (other than an
employee stock ownership plan as defined in section
4975(e)(7) of the Code) maintained by the Employer.
A plan maintained by an unrelated employer (i.e., an
employer other than the employer maintaining the
terminating plan and other than an employer related
at the time of plan termination to the employer
maintaining the terminating plan within the meaning
of section 414(b), (c), (m), and (o) of the Code)
will be treated as the establishment of a plan only
if, as of the date of termination, the Employer knows
or has reason to know that such unrelated employer
will become related to the Employer.
(BB) LIMITATIONS APPLY AFTER TRANSFER.
The limitations of Section 7.10(D)(4) continue to
apply to amounts attributable to Elective Deferrals,
Qualified Nonelective Contributions and Qualified
Matching Contributions and income allocated to each
even if such amounts are transferred to another
qualified plan of any employer.
(CC) OTHER BENEFITS NOT CONTINGENT
UPON ELECTIVE DEFERRALS. For Plan Years beginning
after December 31, 1988, no other Employer benefit
may be conditioned (other than Matching or Qualified
Matching Contributions) (directly or indirectly)
within the meaning of section 401(k) of the Code and
the Treasury regulations issued thereunder upon the
Employee's electing to make or not to make Elective
Deferrals under the arrangement.
(DD) LUMP SUM DISTRIBUTION REQUIRED.
An event shall not be treated as described in Section
7.10((D)(4)(i)(BB), (CC) or (DD) with respect to any
Participant unless, with respect to distributions
after March 31, 1988, the Participant receives a lump
sum distribution within the meaning of section
401(k)(10)(B)(ii) of the Code by reason of the event.
(EE) TRANSFEROR CORPORATION MUST
MAINTAIN PLAN. An event shall not be treated as
described in Section 7.10(D)(4)(i)(CC) or (DD) unless
the transferor corporation continues to maintain the
plan after the disposition.
(FF) SUSPENSION OF ELECTIVE DEFERRALS
AND EMPLOYEE CONTRIBUTIONS. A Participant's Elective
Deferrals and Employee Contributions shall be
suspended for a period of 12 months following the
receipt of a hardship distribution. Moreover, the
Participant shall not make Elective Deferrals for his
taxable year immediately following the taxable year
of the distribution in excess of the applicable limit
under section 402(g) of the Code for such taxable
year less the amount of such Participant's Elective
Deferrals for the taxable year of the distribution.
(GG) CONSENT REQUIREMENTS. All
distributions that may be made pursuant to one or
more of the foregoing distributable events in Section
7.10(D)(4)(i)
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are subject to the spousal and Participant consent
requirements (if applicable) contained in sections
401(a)(11) and 417 of the Code.
(5) OTHER IN-SERVICE WITHDRAWALS BEFORE AGE 59-1/2.
If the Adoption Agreement so provides, a Participant may withdraw
during employment, prior to attaining age 59 1/2, his Vested Accrued
Benefit attributable to Employer Contributions, Participant
Contributions and Matching Contributions but not to Qualified
Nonelective Contributions or Qualified Matching Contributions or the
income allocable thereto after such Participant completes five or more
Years of Service for Benefit Accrual.
(6) DETERMINATION OF VESTED INTEREST IN CASE OF
CERTAIN WITHDRAWALS. No forfeitures shall occur solely as a result of
an Employee's withdrawal of Employee Contributions. In the event a
Participant makes a withdrawal under the Plan and his interest in the
Plan is not fully vested, such Participant's vested interest in the
portion of his Accrued Benefit remaining in the Plan shall be
determined in accordance with the rules of Section 7.6(C)(1)(a)(ii).
(7) DISTRIBUTIONS UPON PLAN TERMINATION. Subject to
Section 7.10(D)(4), the balances of Participants' Accounts shall be
distributed to Participants or their Beneficiaries as soon as
administratively feasible after the termination of the Plan.
(8) DISTRIBUTIONS UPON SALE OF ASSETS. Subject to
Section 7.10(D)(4), the balances of Participants' Accounts shall be
distributed to Participants as soon as administratively feasible after
the disposition, to an entity that is not a related entity, of
substantially all of the assets (within the meaning of section
409(d)(2) of the Code) used by the Employer in the trade or business
in which the Participant is employed, but only if the Participant
continues employment with the corporation acquiring such assets.
(9) DISTRIBUTION UPON SALE OF SUBSIDIARY. Subject
to Section 7.10(D)(4), the balances of Participants' Accounts shall be
distributed as soon as administratively feasible after the
disposition, to an entity that is not a related entity, of an
incorporated Employer's interest in a subsidiary (within the meaning
of section 409(d)(3) of the Code) to Participants who continue
employment with such subsidiary.
7.11 LOANS. The rules relating to loans are as follows:
(A) LIMITATIONS. If the Adoption Agreement so provides,
upon the filing of an application with the Administrative Committee by a
Participant or Beneficiary but only if the Beneficiary is a "party in
interest" with respect to the Plan (within the meaning of section 3(14) of
ERISA) on the Appropriate Form, the Administrative Committee shall, within
90 days from the date of receipt of such application, direct the Trustee to
make a loan or loans to such Participant or Beneficiary, provided such loan
or loans:
(1) Are available to all such Participants and
Beneficiaries on a reasonably equivalent basis;
(2) Are not made available to Highly Compensated
Employees and their Beneficiaries, in an amount greater than the
amount made available to other Employees and their Beneficiaries;
(3) Bear a reasonable rate of interest within the
meaning of 29 CFR Section 2550.408b-1;
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(4) Are adequately secured within the meaning to
29 CFR Section 2550.408b-1;
(5) Do not exceed (when added to the outstanding
balance of all other loans to the Participant or Beneficiary) the
lesser of:
(a) $50,000 (reduced by the excess (if any)
of (i) the highest outstanding balance of loans from the Plan
during the one-year period ending on the day before the date
on which such loan was made, over (ii) the outstanding balance
of loans from the Plan on the date on which such loan was
made), or
(b) One-half of the present value of the
Participant's Vested Accrued Benefit under the Plan (but, if
the Adoption Agreement so provides, not less than the lesser
of (i) $10,000 or (ii) the Participant's Vested Accrued
Benefit);
(6) Are repayable, except as otherwise provided
in Section 7.11(D), by their terms within five years from the date of
the loans;
(7) Shall not be made to any Owner-Employee or
shareholder-employee (for purposes of this requirement, a
shareholder-employee means an employee or officer of an electing small
business (Subchapter S) corporation who owns (or is considered as
owning within the meaning of section 318(a)(1) of the Code) on any day
during the taxable year of that corporation more than five percent of
the outstanding stock of the corporation);
(8) Require amortization (of both principal and
interest) in level payments made not less frequently than quarterly
over the term of the loan;
(9) If Section 7.14 is applicable and if the
Participant's Vested Accrued Benefit is to be used as security for
part or all of the loan and only in such cases, shall not be made
unless the Participant obtains the consent of his Spouse, if any, to
the use of the Participant's Vested Accrued Benefit as security for
the loan; such spousal consent shall be obtained no earlier than the
beginning of the 90-day period that ends on the date on which the loan
is to be so secured; such consent must be in writing, must acknowledge
the effect of the loan, and must be witnessed by a Plan representative
or notary public; such consent shall thereafter be binding with
respect to the consenting Spouse or any subsequent Spouse with respect
to that loan; a new consent shall be required if the Vested Accrued
Benefit is used for renegotiation, extension, renewal, or other
revision of the loan; and
(10) Comply with any other limitations on loans
specified in the Adoption Agreement.
In the event of default, if the security for the loan
is the Participant's Vested Accrued Benefit, foreclosure on the note and
attachment of security shall not occur until a distributable event occurs in
the Plan.
For purposes of this Section 7.11, the rules of section 414(b), (c),
(m) and (o) of the Code shall apply and all plans of the Employer (determined
after the application of section 414(b), (c), (m) and (o) of the Code) shall be
treated as one plan.
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An assignment or pledge of any portion of the Participant's interest
in the Plan and a loan, pledge, or assignment with respect to any Insurance
Contract purchased by the Plan, shall be treated as a loan under this Section
7.11.
If a valid spousal consent is required and has been obtained in
accordance with Section 7.11(A)(9) then, notwithstanding any other provision of
this Plan, the portion of the Participant's Vested Accrued Benefit used as a
security interest held by the Plan by reason of a loan outstanding to the
Participant shall be taken into account for purposes of determining the amount
of the Accrued Benefit payable at the time of death or distribution, but only
if the reduction is used as repayment of the loan. If less than 100 percent of
the Participant's Vested Accrued Benefit (determined without regard to the
preceding sentence) is payable to the Surviving Spouse, then the Accrued
Benefit shall be adjusted by first reducing the Vested Accrued Benefit by the
amount of the security used as repayment of the loan, and then determining the
benefit payable to the Surviving Spouse.
The Administrative Committee, provided the above requirements are met,
shall grant such request within 90 days following such request. In such event
the Administrative Committee shall be responsible for complying with any legal
requirements affecting said loan, such as Federal Reserve regulations.
(B) INTEREST. All such loans shall bear a reasonable
rate of interest, which shall, in accordance with 29 CFR Section
2550.408b-1, provide the Plan with a return commensurate with the interest
rates charged by persons engaged in the business of lending money for loans
which would be made in similar circumstances. Such rate of interest shall
be determined in accordance with the provisions of the Adoption Agreement.
Every loan applicant shall receive a clear statement of the charges involved
in each loan transaction. This statement shall include the dollar amount
and the annual interest rate of the finance charge.
(C) REPAYMENT-COLLECTION. Any such loan or loans shall
be repaid by the Participant or Beneficiary within the period certain
requested by the Participant or Beneficiary but not to exceed, except in the
case of loans subject to Section 7.11(D), a period of five years from the
date the loan or loans are made and such loan or loans shall by their terms
require repayment within such period. The loan or loans shall be evidenced
by a promissory note, shall be secured by payroll deduction if the
Participant is in the active service of the Employer and by such collateral
as shall be specified in the Adoption Agreement. If the Participant's
Vested Accrued Benefit is specified in the Adoption Agreement as collateral
for a loan, no more than 50 percent of the present value of such Vested
Accrued Benefit may be so used. In the event the Participant or Beneficiary
does not repay the loan within the period certain, the Trustee shall,
subject to the spousal consent requirements of Section 7.11(A)(9) (if
applicable), deduct the total amount of such loan or loans or any portion
thereof, if the collateral for the loan is the Participant's Vested Accrued
Benefit, from that portion (if any) of the Vested Accrued Benefit which
serves as collateral for the loan but only when a distributable event occurs
under the Plan and, if collateral other than the Participant's Vested
Accrued Benefit secures such loan, from such other collateral at the time of
the default. In the event the amount of any such payment, distribution or
collateral is insufficient to repay the remaining balance on the loan or
loans including interest, the Participant or Beneficiary shall be liable
for, and continue to make, payments on any balance still due from such
Participant or Beneficiary. Subject to the terms of the Plan, the
Participant or Beneficiary shall repay the loan or loans by payroll
deduction or in installments in such manner as shall comply with Section
7.11(A).
(D) EXCEPTION FOR HOME LOANS. Section 7.11(A)(6) shall
not apply to any loan used to acquire any dwelling unit which within a
reasonable time is to be used (determined at the time the loan is made) as
the principal residence of the Participant.
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(E) LOANS - INDIVIDUAL INVESTMENTS. Except as provided
in this paragraph, loans shall be treated as general investments of the
Trust Fund. However, if the Adoption Agreement provides for Participant
directed investments pursuant to Section 6.1(B) or if the Adoption Agreement
provides that loans are to be treated as investments of the Participant's or
Beneficiary's accounts only, until a loan to a Participant or Beneficiary is
repaid, the outstanding balance of the loan shall be treated as an
investment by such Participant or Beneficiary for his accounts only and the
interest paid by such Participant or Beneficiary shall be credited to the
accounts, as applicable, of such Participant or Beneficiary. Such
Participant's or Beneficiary's accounts shall not share in any other
earnings of the Plan with respect to the amount of the loan. The amount of
each repayment shall be invested in accordance with the regular investment
provisions selected by the Employer in the Adoption Agreement applicable to
such Employer.
7.12 QVEC WITHDRAWALS. Except in the case of the Participant's
death or disability (as defined in section 72(m)(7) of the Code) or attainment
of age 59 1/2, before distributing an amount from a Participant's QVEC Account,
the Employer shall receive from such Participant a declaration of the
Participant's intention as to the disposition of the amount distributed. The
Participant shall execute such forms as the Employer may require with respect
to the Participant's liability for Federal income tax which may result from the
distribution of amounts from such Participant's QVEC Account.
7.13 INCIDENTAL BENEFIT RULE. This provision is contained in
Section 7.9(C)(1)(b).
7.14 JOINT AND SURVIVOR ANNUITY REQUIREMENTS. This Section 7.14
shall apply only if the Plan, as adopted by the Employer, is a money purchase
plan.
(A) APPLICATION. The provisions of this Section 7.14
shall apply to any Participant in the Plan if the Plan, as adopted by the
Employer, is a money purchase plan and the Participant is one who is
credited with at least one Hour of Service with the Employer on or after
August 23, 1984, and such other Participants as provided in Section 7.14(G).
(B) QUALIFIED JOINT AND SURVIVOR ANNUITY. Unless an
optional form of benefit under Section 7.14(H) is selected pursuant to a
"Qualified Election" within the 90-day period ending on the "Annuity
Starting Date", a married Participant's "Vested Account Balance" shall be
paid in the form of a "Qualified Joint and Survivor Annuity" and an
unmarried Participant's "Vested Account Balance" will be paid in the form of
a life annuity. The Participant may elect to have such annuity distributed
upon attainment of the "Earliest Retirement Age" under the Plan.
(C) QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. Unless an
optional form of benefit under Section 7.14(H) has been selected within the
"Election Period" pursuant to a "Qualified Election", if a Participant dies
before the "Annuity Starting Date" then the Participant's "Vested Account
Balance" shall be applied toward the purchase of an annuity for the life of
the Surviving Spouse. The Surviving Spouse may elect to have such annuity
distributed within a reasonable period after the Participant's death.
(D) DEFINITIONS.
(1) "ELECTION PERIOD" shall mean the period which
begins on the first day of the Plan Year in which the Participant
attains age 35 and ends on the date of the Participant's death. If a
Participant separates from service prior to the first day of the Plan
Year in which age 35 is attained, with respect to the account balance
as of the date of separation, the "Election Period" shall begin on the
date of separation.
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A Participant who will not yet attain age 35 as of
the end of any current Plan Year may make a special qualified election
("Pre-age 35 Waiver") to waive the qualified preretirement survivor
annuity for the period beginning on the date of such election and
ending on the first day of the Plan Year in which the Participant will
attain age 35. Such election shall not be valid unless the
Participant receives a written explanation of the qualified
preretirement survivor annuity in such terms as are comparable to the
explanation required under Section 7.14(E)(1). Qualified
preretirement survivor annuity coverage will be automatically
reinstated as of the first day of the Plan Year in which the
Participant attains age 35. Any new waiver on or after such date
shall be subject to the full requirements of this Section.
(2) "EARLIEST RETIREMENT AGE" shall mean the
earliest date on which, under the plan, the Participant could elect to
receive retirement benefits.
(3) "QUALIFIED ELECTION" shall mean a waiver of a
"Qualified Joint and Survivor Annuity" or a qualified preretirement
survivor annuity. Any waiver of a "Qualified Joint and Survivor
Annuity" or a qualified preretirement survivor annuity shall not be
effective unless: (a) the Participant's Spouse consents in writing to
the election; (b) the election designates a specific Beneficiary,
including any class of Beneficiaries or any contingent Beneficiaries,
which may not be changed without spousal consent (or the Spouse
expressly permits designations by the Participant without any further
spousal consent); (c) the Spouses's consent acknowledges the effect of
the election; and (d) the Spouse's consent is witnessed by a Plan
representative or notary public. Additionally, a Participant's waiver
of the "Qualified Joint and Survivor Annuity" shall not be effective
unless the election designates a form of benefit payment which may not
be changed without spousal consent (or the Spouse expressly permits
designations by the Participant without any further spousal consent).
If it is established to the satisfaction of a Plan representative that
there is no Spouse or that the Spouse cannot be located, a waiver will
be deemed a "Qualified Election".
Any consent by a Spouse obtained under this provision (or
establishment that the consent of a Spouse may not be obtained) shall
be effective only with respect to such Spouse. A consent that permits
designations by the Participant without any requirement of further
consent by such Spouse must acknowledge that the Spouse has the right
to limit consent to a specific Beneficiary, and a specific form of
benefit where applicable, and that the Spouse voluntarily elects to
relinquish either or both of such rights. A revocation of a prior
waiver may be made by a Participant without the consent of the Spouse
at any time before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under this
provision shall be valid unless the Participant has received notice as
provided in Section 7.14(E) below.
(4) "QUALIFIED JOINT AND SURVIVOR ANNUITY" shall
mean an immediate annuity for the life of the Participant with a
survivor annuity for the life of the Spouse which is not less than 50
percent and not more than 100 percent of the amount of the annuity
which is payable during the joint lives of the Participant and the
Spouse and which is the amount of benefit which can be purchased with
the Participant's "Vested Account Balance". The percentage of the
survivor annuity under the Plan shall be 50 percent.
(5) "ANNUITY STARTING DATE" shall mean the first
day of the first period for which an amount is paid as an annuity or
any other form.
(6) "VESTED ACCOUNT BALANCE" shall mean the
aggregate value of the Participant's vested account balances derived
from Employer and Employee contributions (including rollovers and
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direct transfers), whether vested before or upon death, including the
proceeds of insurance contracts, if any, on the Participant's life.
The provisions of this Section 7.14 shall apply to a Participant who
is vested in amounts attributable to Employer contributions, Employee
contributions (or both) at the time of death or distribution.
(E) NOTICE REQUIREMENTS.
(1) In the case of a "Qualified Joint and
Survivor Annuity", the Plan Administrator shall no less than 30 days
and no more than 90 days prior to the "Annuity Starting Date" provide
to each Participant a written explanation of: (a) the terms and
conditions of a "Qualified Joint and Survivor Annuity"; (b) the
Participant's right to make and the effect of an election to waive the
"Qualified Joint and Survivor Annuity" form of benefit; (c) the rights
of a Participant's Spouse; and (d) the right to make, and the effect
of, a revocation of a previous election to waive the "Qualified Joint
and Survivor Annuity".
(2) In the case of a qualified preretirement
survivor annuity as described in Section 7.14(C), the Plan
Administrator shall provide each Participant within the applicable
period for such Participant a written explanation of the qualified
preretirement survivor annuity in such terms and in such manner as
would be comparable to the explanation provided for meeting the
requirements of Section 7.14(E)(1) applicable to a "Qualified Joint
and Survivor Annuity".
The applicable period for a Participant is whichever of the following
periods ends last: (a) the period beginning with the first day of the
Plan Year in which the Participant attains age 32 and ending with the
close of the Plan Year preceding the Plan Year in which the
Participant attains age 35; (b) a reasonable period ending after the
individual becomes a Participant; (c) a reasonable period ending after
Section 7.14(C) ceases to apply to the Participant; (d) a reasonable
period ending after this Section 7.14 first applies to the
Participant. Notwithstanding the foregoing, notice must be provided
within a reasonable period ending after separation from service in the
case of a Participant who separates from service before attaining age
35.
For purposes of applying the preceding paragraph, a reasonable period
ending after the enumerated events described in (b), (c) and (d) is
the end of the two-year period beginning one year prior to the date
the applicable event occurs, and ending one year after that date. In
the case of a Participant who separates from service before the Plan
Year in which age 35 is attained, notice shall be provided within the
two-year period beginning one year prior to separation and ending one
year after separation. If such a Participant thereafter returns to
employment with the Employer, the applicable period for such
Participant shall be redetermined.
(3) Notwithstanding the other requirements of
this Section 7.14(E), the respective notices prescribed by this
Section need not be given to a Participant if (a) the plan "fully
subsidizes" the costs of a "Qualified Joint and Survivor Annuity" or
qualified preretirement survivor annuity, and (b) the plan does not
allow the Participant to waive the "Qualified Joint and Survivor
Annuity" or qualified preretirement survivor annuity and does not
allow a married Participant to designate a nonspouse Beneficiary. For
purposes of this Section 7.14(E)(3), a plan fully subsidizes the costs
of a benefit if no increase in cost, or decrease in benefits to the
Participant may result from the Participant's failure to elect another
benefit.
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(F) SAFE HARBOR RULES.
(1) This Section 7.14(F) shall apply to a
Participant in a profit-sharing plan, and to any distribution made on
or after the first day of the first Plan Year beginning after December
31, 1988, from or under a separate account attributable solely to
accumulated deductible employee contributions, as defined in section
72(o)(5)(B) of the Code, and maintained on behalf of a participant in
a money purchase pension plan (including a target benefit plan), if
the following conditions are satisfied:
(a) The Participant does not or cannot
elect payments in the form of a life annuity; and
(b) On the death of a Participant, the
Participant's "Vested Account Balance" will be paid to the
Participant's Surviving Spouse, but if there is no Surviving
Spouse, or if the Surviving Spouse has consented in a manner
conforming to a "Qualified Election", then to the
Participant's "Designated Beneficiary". The Surviving Spouse
may elect to have distribution of the "Vested Account Balance"
commence within the 90-day period following the date of the
Participant's death. The "Vested Account Balance" shall be
adjusted for gains or losses occurring after the Participant's
death in accordance with the provisions of the Plan governing
the adjustment of account balances for other types of
distributions. This Section 7.14(F) shall not be operative
with respect to a Participant in a profit-sharing plan if the
plan is a direct or indirect transferee of a Defined Benefit
Plan, money purchase plan, a target benefit plan, stock bonus,
or profit-sharing plan which is subject to the survivor
annuity requirements of section 401(a)(11) and section 417 of
the Code (other than, effective January 1, 1993,
trustee-to-trustee transfers described in Section 3.9(B)). If
this Section 7.14(F) is operative, then the provisions of this
Section 7.14, other than Section 7.14(G), shall be
inoperative.
(2) The Participant may waive the spousal death
benefit described in this Section 7.14(F) at any time provided that no
such waiver shall be effective unless it satisfies the conditions of
Section 7.14(D)(3) (other than the notification requirement referred
to therein) that would apply to the Participant's waiver of the
qualified preretirement survivor annuity.
(3) For purposes of this Section 7.14(F), "Vested
Account Balance" shall mean, in the case of a money purchase pension
plan or a target benefit plan, the Participant's separate account
balance attributable solely to accumulated deductible employee
contributions within the meaning of section 72(o)(5)(B) of the Code.
In the case of a profit-sharing plan, "Vested Account Balance" shall
have the same meaning as provided in Section 7.14(D)(6).
(G) TRANSITIONAL RULES.
(1) Any living Participant not receiving benefits
on August 23, 1984, who would otherwise not receive the benefits
prescribed by the previous provisions of this Section 7.14 must be
given the opportunity to elect to have the prior provisions of this
Section 7.14 apply if such Participant is credited with at least one
Hour of Service under this Plan or a predecessor plan in a Plan Year
beginning on or after January 1, 1976, and such Participant had at
least ten Years of Service for Vesting when he separated from service.
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(2) Any living Participant not receiving benefits
on August 23, 1984, who was credited with at least one Hour of Service
under this Plan or a predecessor plan on or after September 2, 1974,
and who is not otherwise credited with any service in a Plan Year
beginning on or after January 1, 1976, must be given the opportunity
to have his or her benefits paid in accordance with Section
7.14(G)(4).
(3) The respective opportunities to elect (as
described in Sections 7.14(G)(1) and (2) above) must be afforded to
the appropriate Participants during the period commencing on August
23, 1984, and ending on the date benefits would otherwise commence to
said Participants.
(4) Any Participant who has elected pursuant to
Section 7.14(G)(2) and any Participant who does not elect under
Section 7.14(G)(1) or who meets the requirements of Section 7.14(G)(1)
except that such Participant does not have at least ten Years of
Service for Vesting when he separates from service, shall have his
benefits distributed in accordance with all of the following
requirements if benefits would have been payable in the form of a life
annuity:
(a) AUTOMATIC JOINT AND SURVIVOR
ANNUITY. If benefits in the form of a life annuity become
payable to a married Participant who:
(1) Begins to receive payments
under the Plan on or after Normal Retirement Age; or
(2) Dies on or after Normal
Retirement Age while still working for the Employer;
or
(3) Begins to receive payments on
or after the "Qualified Early Retirement Age"; or
(4) Separates from service on or
after attaining Normal Retirement Age (or the
"Qualified Early Retirement Age") and after
satisfying the eligibility requirements for the
payment of benefits under the plan and thereafter
dies before beginning to receive such benefits;
then such benefits shall be received under this Plan in the
form of a "Qualified Joint and Survivor Annuity", unless the
Participant has elected otherwise during the election period.
The election period must begin at least six months before the
Participant attains "Qualified Early Retirement Age" and end
not more than 90 days before the commencement of benefits.
Any election hereunder shall be in writing and may be changed
by the Participant at any time.
(b) ELECTION OF EARLY SURVIVOR ANNUITY.
A Participant who is employed after attaining the "Qualified
Early Retirement Age" shall be given the opportunity to elect,
during the election period, to have a survivor annuity payable
on death. If the Participant elects the survivor annuity,
payments under such annuity must not be less than the payments
which would have been made to the Spouse under the "Qualified
Joint and Survivor Annuity" if the Participant had retired on
the day before his death. Any election under this provision
shall be in writing and may be changed by the Participant at
any time. The election period begins on the later of (1) the
90th day before the Participant attains the "Qualified Early
Retirement Age",
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or (2) the date on which participation begins, and ends on the
date the Participant terminates employment.
(c) DEFINITIONS. For purposes of this
Section 7.14(G)(4):
(1) "QUALIFIED EARLY RETIREMENT
AGE" is the latest of:
(i) The earliest date,
under the Plan, on which the Participant may
elect to receive retirement benefits,
(ii) The first day of the
120th month beginning before the Participant
reaches Normal Retirement Age, or
(iii) The date the
Participant begins participation.
(2) "QUALIFIED JOINT AND SURVIVOR
ANNUITY" is an annuity for the life of the
Participant with a survivor annuity for the life of
the Spouse as described in Section 7.14(D)(4).
(H) OPTIONAL FORMS OF BENEFIT. The only optional forms
of benefit under the Plan are the forms of benefit provided under Section
7.1(B).
7.15 WAIVER OF 30-DAY NOTICE REQUIREMENTS FOR CERTAIN
DISTRIBUTIONS. If a distribution is one to which sections 401(a)(11) and 417
of the Code do not apply, such distribution may commence less than 30 days
after the notice required under Treas. Reg. Section 1.411(a)-11(c) is given,
provided that:
(A) The Plan Administrator clearly informs the
Participant that the Participant has a right to a period of at least 30 days
after receiving the notice to consider the decision of whether or not to
elect a distribution (and, if applicable, a particular distribution option);
and
(B) The Participant, after receiving the notice,
affirmatively elects a distribution.
ARTICLE VIII
NONALIENATION OF BENEFITS
8.1 BENEFITS NOT ALIENABLE. The right of any Participant or
Beneficiary to any benefit payment under the Plan shall not be subject to
attachment, execution, garnishment, any voluntary or involuntary alienation or
assignment or to any other legal or equitable process. The preceding sentence
shall also apply to the creation, assignment, or recognition of a right to any
benefit payable with respect to a Participant pursuant to a domestic relations
order, unless such order is determined to be a Qualified Domestic Relations
Order or any domestic relations order entered before January 1, 1985.
8.2 SPECIAL PROVISION WITH RESPECT TO QUALIFIED DOMESTIC RELATIONS
ORDERS. If the Adoption Agreement so provides and if the Qualified Domestic
Relations Order so provides:
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(A) Plan assets allocated to an alternate payee shall be
placed in a separate account established for such alternate payee and such
alternate payee shall be entitled, with respect to such separate account, to
all the rights including but not limited to, the investment direction
rights, if any, of a Participant under the Plan; and
(B) Distribution of the vested amount in such separate
account shall be made to such alternate payee at such time as the Qualified
Domestic Relations Order provides, even if such date precedes the date on
which a Participant is entitled to payment under the Plan, but such
distribution shall only be made in one lump sum payment if made prior to the
date the Participant would otherwise be first entitled to receive payment.
ARTICLE IX
THE ADMINISTRATIVE COMMITTEE
9.1 STRUCTURE. The Employer shall appoint an Administrative
Committee consisting of one or more persons to administer the Plan. The member
or the members of the Administrative Committee, if in the full-time employ of
the Employer, shall serve without additional compensation and at the pleasure
of the Employer. The Employer may, in its sole discretion, discharge or remove
any member from the Administrative Committee at any time. Any member may
resign by delivering his written resignation to the Employer and such
resignation shall become effective at delivery or at any later date specified
therein. In the event of the death, discharge, resignation or removal of any
member of the Administrative Committee, the Employer may appoint a successor.
The Employer shall notify the Trustee of the appointment of the member or
members of the Administrative Committee and of any successor member or members
thereto.
9.2 ADMINISTRATIVE COMMITTEE ACTION. On all matters within the
jurisdiction of the Administrative Committee the decision of a majority of the
members of the Administrative Committee shall govern and control. The
Administrative Committee may take action either at a meeting or in writing
without a meeting, provided that in the latter instance all members of the
Administrative Committee shall have been advised of the action contemplated and
that the written instrument evidencing the action shall be signed by a majority
of the members. If there is more than one member, the Employer shall appoint a
chairman. If there is more than one member, the Administrative Committee may
appoint, either from among its members or otherwise, a secretary who shall keep
a record of all meetings and actions taken by the Administrative Committee.
Either the Chairman or any member of the Administrative Committee designated by
the Chairman shall execute any certificate, instrument or other written
direction on behalf of the Administrative Committee.
9.3 RESPONSIBILITIES. The Administrative Committee shall have
sole responsibility and discretion for administration of the Plan, and shall
supervise and control the operation of the Plan in accordance with its terms.
The Administrative Committee shall have the responsibility, the discretion, the
power and the authority to do all things necessary to accomplish that purpose,
including, but not limited to, the responsibility, discretion, power and
authority to do the following:
(A) To construe and interpret the terms and provisions of
the Plan including, but not limited to, disputed or doubtful terms;
(B) To adopt such rules and regulations under the Plan as
it may consider desirable for the administration of the Plan;
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(C) To determine all questions of eligibility for
participation under the Plan;
(D) To determine all questions concerning the amount,
time and manner of payment of benefits under the Plan;
(E) To prescribe procedures to be followed by Employees,
Participants, and Beneficiaries under the Plan;
(F) To prepare and distribute appropriate information
concerning the Plan;
(G) To issue directions to the Trustee concerning all
benefits which are to be paid from the Trust pursuant to the Plan;
(H) To bring suit in a court of competent jurisdiction,
or to take any other action necessary to ascertain the proper actions to be
taken in the event that a reasonable interpretation of applicable law
precludes the Administrative Committee from satisfying its requirements
under this Plan or the Trust;
(I) To establish a funding policy and method to carry out
the Plan objectives in light of the short- and long-run financial needs of
the Plan and to communicate such policy and method to the Trustee;
(J) To keep such records, make such reports (including,
but not limited to, reports to Participants and the Internal Revenue Service
concerning Qualified Voluntary Employee Contributions, as may be required by
Treasury regulations) and do such other acts as it deems appropriate in
order to comply with ERISA and government regulations thereunder; and
(K) To do such other acts as may be necessary and/or
desirable in order to administer the Plan.
To the maximum extent permitted by law, the Administrative Committee's
determinations on all such matters shall be final and binding upon the
Employer, Participants, other employees, Beneficiaries and all other
parties.
9.4 CONTRACTING FOR SERVICE. The Administrative Committee may
contract for legal, accounting, clerical and other services necessary to carry
out its responsibilities under the Plan.
9.5 EXPENSES OF ADMINISTRATIVE COMMITTEE. Unless paid by the
Employer, any expenses incurred in administering the Plan, including but not
limited to, expenses incurred by the Administrative Committee and Trustee's
fees, shall be deducted from the Accounts to which such expenses relate or
proportionately from all Accounts, if such expenses do not relate to any
specific Accounts.
ARTICLE X
CLAIMS PROCEDURE
10.1 CLAIMS FOR BENEFITS. All claims for benefits under the Plan
shall be made in writing and shall be signed by the applicant. Claims shall be
submitted to a representative designated by the Administrative Committee and
hereinafter referred to as the "Claims Coordinator".
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Each claim hereunder shall be acted on and approved or
disapproved by the Claims Coordinator within 60 days following the receipt by
the Claims Coordinator of the information necessary to process the claim.
In the event the Claims Coordinator denies a claim for
benefits, in whole or in part, the Claims Coordinator shall notify the
applicant in writing of the denial of the claim and notify such applicant of
his right to a review of the Claims Coordinator's decision by the
Administrative Committee. Such notice by the Claims Coordinator shall also set
forth, in a manner calculated to be understood by the applicant, the specific
reason for such denial, the specific Plan provisions on which the denial is
based, a description of any additional material or information necessary to
perfect the claim, with an explanation of why such material or information is
necessary, and an explanation of the Plan's claim review procedure as set forth
in this Article X.
If no action is taken by the Claims Coordinator on an
applicant's claim within 60 days after receipt by the Claim Coordinator, such
application shall be deemed to be denied for purposes of the following appeals
procedure.
10.2 APPEALS PROCEDURE. Any applicant whose claim for benefits is
denied in whole or in part (such applicant being hereinafter referred to as the
"Claimant") may appeal from such denial to the Administrative Committee for a
review of the decision by the entire Administrative Committee. Such appeal
must be made within six months after the Claimant has received written notice
of the denial as provided above in Section 10.1. An appeal must be submitted
in writing within such period and must:
(A) Request a review by the entire Administrative
Committee of the claim for benefits under the Plan;
(B) Set forth all of the grounds upon which the
Claimant's request for review is based and any facts in support thereof; and
(C) Set forth any issues or comments which the Claimant
deems pertinent to the appeal.
The Administrative Committee shall regularly review appeals by
Claimants. The Administrative Committee shall act upon each appeal within 60
days after receipt thereof unless special circumstances require an extension of
the time for processing the Claimant's request for review. If such an
extension of time for processing is required, written notice of the extension
shall be forwarded to the Claimant prior to the commencement of the extension.
In no event shall such extension exceed a period of 120 days after the request
for review is received by the Administrative Committee.
The Administrative Committee shall make a full and fair review
of each appeal and any written materials submitted by the Claimant and/or the
Employer in connection therewith. The Administrative Committee may require the
Claimant and/or the Employer to submit such additional facts, documents or
other evidence as the Administrative Committee in its discretion deems
necessary or advisable in making its review. The Claimant shall be given the
opportunity to review pertinent documents or materials upon submission of a
written request to the Administrative Committee, provided the Administrative
Committee finds the requested documents or materials are pertinent to the
appeal.
On the basis of its review, the Administrative Committee shall
make an independent determination of the Claimant's eligibility for benefits
under the Plan. The decision of the Administrative Committee on any claim for
benefits shall be final and conclusive upon all parties thereto.
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In the event the Administrative Committee denies an appeal, in
whole or in part, the Administrative Committee shall give written notice of the
decision to the Claimant, which notice shall set forth, in a manner calculated
to be understood by the Claimant, the specific reasons for such denial and
which shall make specific reference to the pertinent Plan provisions on which
the Administrative Committee's decision was based.
It is intended that the claims procedure of this Plan be
administered in accordance with the claims procedure regulations of the
Department of Labor set forth in 29 CFR Section 2560.503-1.
ARTICLE XI
THE TRUSTEE
11.1 ACCEPTANCE OF TRUST. The Trustee hereby accepts the Trust
herein expressed, and agrees to carry out the provisions hereof on its part to
be performed.
11.2 RESIGNATION OF TRUSTEE. Any Trustee may resign his duties
hereunder by delivering a written resignation to the Employer. Such
resignation shall take effect on the date provided therein, but not before the
sixtieth day after delivery thereof unless, prior to such sixtieth day, a
successor Trustee shall have been appointed and shall have accepted such
appointment, or unless the Employer shall otherwise consent to such earlier
resignation. If, within 60 days after notice of resignation shall have been
given under the provisions of this Section 11.2, a successor Trustee shall not
have been appointed by the Employer, the resigning Trustee or the Employer, as
appropriate, may apply to any court of competent jurisdiction for the
appointment of a successor Trustee.
11.3 REMOVAL OF TRUSTEE. Any Trustee may be removed by the
Employer at any time, upon notice to the Trustee. Such removal shall be
effected by delivering to the Trustee a notice from the Employer removing the
Trustee, and may include notification to the Trustee of the appointment of a
successor Trustee in the manner hereinafter set forth in Section 11.5. Such
notice of removal shall be effective on the date specified therein, but not
before the actual date of such notice.
11.4 APPOINTMENT OF SUCCESSOR TRUSTEE UPON OCCURRENCE OF CERTAIN
EVENTS. In the event of the death or resignation of a Trustee or the inability
of a Trustee to serve as such after the Employer or any successor thereto shall
have gone out of business or ceased to exist, or been dissolved, a successor
Trustee shall be appointed by election of a majority of the Participants under
the Plan who were Employees of the Employer at the time the Employer or
successor thereto went out of business or ceased to exist, or was dissolved, as
the case may be. Such successor Trustee shall have the same powers as are
granted to successor Trustees under Section 11.5.
11.5 SUCCESSOR TRUSTEE. In the event of the death, resignation or
removal of a Trustee or Trustees hereunder, one or more successor Trustees
shall be appointed by the Employer, and such successor Trustee, upon accepting
such appointment by an instrument in writing delivered to the Employer, shall
become vested with the same powers, duties, privileges and immunities as if it
had originally been named in this Plan as Trustee.
11.6 MEETINGS AND ACTIONS OF TRUSTEE. In the event there is more
than one Trustee, the Trustee shall hold meetings upon such notice (which may
be waived), at such place or places and at such times as it may from
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time to time determine and shall act by majority vote of all the Trustees. Any
one or more Trustees designated by a majority vote of all the Trustees may
execute any certificate, instrument or other written document on behalf of all
the Trustees.
11.7 COMPENSATION. No fee or compensation shall be paid to the
Trustee for its services as such if such Trustee is an Employee of, or is
otherwise compensated by, the Employer and, if not, such Trustee shall receive
such reasonable compensation as may be agreed to by the Employer and such
Trustee.
11.8 TRUSTEE'S LIABILITY. In the exercise of its powers and the
performance of its duties as Trustee under the Plan, the Trustee shall act
solely in the interest of the Participants and their Beneficiaries and in
accordance with the provisions of Article XIV. The Trustee, however, shall not
be liable for any mistake in judgment or other action taken in good faith, or
for loss unless resulting from a breach of any of the responsibilities,
obligations or duties imposed upon the Trustee by the Plan or by Title I of
ERISA.
11.9 GENERAL POWERS. Subject to the provisions and limitations
herein expressly set forth, the Trustee shall have the duty and authority to do
and perform any and all acts and things which, in its judgment, shall be
necessary and/or reasonable to carry out the purposes of the Plan and Trust.
No enumeration of specific powers herein made shall be construed as a
limitation upon the foregoing general powers.
11.10 PAYMENTS TO TRUSTEE. All Participant, Matching, Elective
Deferral, Employer, Rollover, Qualified Matching, Qualified Nonelective, and
Qualified Voluntary Employee Contributions and direct transfers shall be paid
to the Trustee as provided in Article III. The Trustee shall be responsible
only for such funds as shall be accepted and received by it from the Employer.
The Trustee shall not be responsible for the collection of any contributions to
the Plan, or for the acceptance of any contribution in property other than cash
except as otherwise provided under Sections 3.9 and 3.10.
11.11 INVESTMENT OF TRUST FUND. Except to the extent that any Trust
assets have been committed by the Employer to the management of an Investment
Manager and subject to the Participant's right to direct the investment of his
Employer and/or Matching and/or Elective Deferral and/or Participant and/or
Rollover and/or Transfer and/or QVEC Accounts and/or Qualified Matching
Contribution and/or Qualified Nonelective Contribution accounts and subject to
the requirements of Article XIV, the Trustee shall invest and reinvest the
principal and income of the Employer, Matching, Elective Deferral, Participant,
Rollover, Transfer, and QVEC Accounts and Qualified Matching Contribution and
Qualified Nonelective Contribution accounts as provided in Article VI. No part
of the Trust Fund shall be invested in Employer real property. Except to the
extent provided in the Adoption Agreement, no part of the Trust Fund shall be
invested in Employer Securities. Notwithstanding the preceding sentence, no
portion of Participant, Matching, Elective Deferral, Rollover, Qualified
Matching, Qualified Nonelective, or Qualified Voluntary Employee Contributions
or direct transfers shall be invested in Employer Securities (unless in
compliance with applicable Federal and state securities laws); moreover, no
portion of Employer Contributions shall be invested in Employer Securities if
such Employer Contributions are subject to the investment direction of the
Participants (unless in compliance with Federal and state securities laws). In
any event, investment in Employer Securities shall be limited to investment in
Qualifying Employer Securities. Notwithstanding the above, in no event may the
Plan, if it is a money purchase plan with respect to the adopting Employer,
invest in Qualifying Employer Securities in excess of the ten percent limit
described in Section 6.1(A)(14) above.
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11.12 ACCOUNTS, REPORTS AND GOVERNMENTAL FILINGS. Rules relating to
certain accounting and reporting requirements are as follows:
(A) ACCOUNTS AND REPORTS. The Trustee shall keep
accounts and detailed records of all receipts, investments, disbursements
and other transactions required to be performed hereunder. The Trustee
shall prepare a written report reflecting the receipts, disbursements and
other transactions effected by it during the Plan Year (or period ending
with its resignation or removal) and the fair market value of the assets in
each Participant's Employer, Matching, Elective Deferral, Participant,
Rollover, Transfer, and QVEC Accounts and Qualified Matching Contribution
and Qualified Nonelective Contribution accounts as of the Valuation Date in
accordance with Section 5.3. Such report shall be filed with the
Administrative Committee within 60 days following such Valuation Date (or
following the Trustee's resignation or removal pursuant to Section 11.2 or
11.3). The Trustee shall not be obligated to take any action on any
individual account except upon the written instructions forwarded by the
Administrative Committee and shall have no obligation to inquire into the
propriety of any such written instructions and shall be fully protected in
acting in accordance with such written instructions.
(B) GOVERNMENTAL FILINGS BY TRUSTEE. The Trustee shall
keep such records, make such reports and file such returns and other
information as may be required of the Trustee with respect to the Trust
under the Code, ERISA and the regulations issued or forms adopted
thereunder. The Trustee shall make such of its records as may pertain
solely to a particular Participant available to such Participant, upon
request, for examination by such Participant.
(C) GOVERNMENTAL FILINGS BY ADMINISTRATIVE COMMITTEE.
The Administrative Committee shall be solely responsible for the filing of
any reports or information required, with respect to the Plan, under the
Code, ERISA or any other Federal or State law and regulations issued or
forms adopted thereunder.
11.13 INFORMATION TO TRUSTEE. The Administrative Committee shall
furnish to the Trustee any information required by the Plan. The Trustee shall
be fully protected in relying upon such information.
11.14 BENEFIT PAYMENTS. The Trustee shall make or, in the case of
Insurance Contracts, cause to be made all benefit payments under the Plan upon
written instructions of the Administrative Committee. The Trustee shall not be
liable for following proper Administrative Committee directions which are in
accordance with the terms of the Plan.
11.15 TRUST ASSETS. The Trust Fund shall consist of all amounts
contributed by, or on behalf of, Participants under the Plan, and the earnings
and appreciation thereon, less depreciation and payments made by the Trustee
under the Plan.
11.16 PARTICIPANTS EXCLUSIVELY TO BENEFIT. Except as provided in
Section 3.7, Trust Fund assets shall be held by the Trustee for the exclusive
purpose of providing benefits to Participants under the Plan and their
Beneficiaries and defraying reasonable expenses of administering the Plan.
11.17 EMPLOYMENT OF COUNSEL, AGENTS, ETC. The Trustee, upon notice
to the Administrative Committee, may employ such counsel, accountants and
agents and such clerical and other help as it may deem necessary in carrying
out the Trust, and pay the fees, charges and cost of the same from the Trust
Fund as an expense of the Plan, unless the Employer shall pay the same.
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11.18 COMPROMISE OF CLAIMS. The Trustee, upon notice to the
Administrative Committee, may compromise, arbitrate, or settle any suit or
legal proceeding, claim, debt, damage or undertaking due or owing from, or to,
the Trust Fund.
11.19 SUITS. The Trustee is authorized, upon notice to the
Administrative Committee, to sue or to defend any suit or legal proceedings by
or against the Trust. In the case of any suit or proceeding regarding this
Plan and Trust Agreement, to which the Trustee may be a party, said Trustee
shall have a lien upon the Trust Fund for any and all costs, attorneys' fees
(whether such attorneys shall be regularly retained or specifically employed by
the said Trustee), and for other expenses which it may incur or become liable
for on account thereof, or on account of any other legal expense incurred in
the administration of this Trust, and it shall be entitled to reimburse itself
for any of said expenses out of the Trust Fund.
11.20 EXECUTION OF DOCUMENTS. The Trustee shall have the power to
make, execute, acknowledge and deliver any and all documents, agreements,
insurance policies, annuity contracts and, without limitation by the foregoing,
any and all other instruments that may be necessary or appropriate to carry out
the powers herein granted.
11.21 NO DISCRIMINATION. The Trustee shall not take any action
which would result in benefiting one Participant or group of Participants at
the expense of another, or in discrimination as between Participants similarly
situated, or by the application of different rules to substantially similar
sets of facts.
11.22 DECISION OF TRUSTEE. The decision of the Trustee in matters
within its jurisdiction shall be final, binding and conclusive upon the
Administrative Committee and upon each Employee, Participant, Beneficiary and
every other person or party interested or concerned.
11.23 FUNDING POLICY. From time to time the Administrative
Committee shall communicate to the Trustee in writing the current funding
policy and methods that have been established, pursuant to Section 9.3(I) by
the Administrative Committee to carry out the objectives of the Plan.
ARTICLE XII
THE INSURER
12.1 INSURER'S LIABILITY. The Insurer shall not be deemed to be a
party to this Plan, nor shall it be responsible for the validity of this Plan,
or for the completion and/or submission of any returns or reports required to
be filed by the Trustee, the Employer or the Administrative Committee under the
provisions of the Code or ERISA. The Insurer shall, however, furnish to the
Trustee, upon request of the Trustee, such information as it may require with
respect to the Insurance Contracts to enable the Trustee to complete the annual
or more frequent valuation of Plan assets required by Section 5.3 and to file
such reports as may be required by ERISA and the Code.
12.2 INFORMATION TO INSURER. The Trustee shall furnish to the
Insurer such information as may be required by the Insurer to maintain
Insurance Contracts hereunder. The Insurer shall be fully protected in relying
upon such information.
12.3 BENEFIT PAYMENTS. The Insurer shall make all benefit payments
by it under the Plan only upon written instructions of the Trustee. The
Insurer shall not be liable for following such written instructions.
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12.4 ANNUITIES MUST BE NONTRANSFERABLE. Any annuity contract
distributed herefrom must be nontransferable.
12.5 CONFLICTS. The terms of any annuity contract purchased and
distributed by the Plan to a Participant or Spouse shall comply with the
requirements of this Plan.
12.6 DISTRIBUTION OF INSURANCE CONTRACTS. Subject to Section 7.14,
relating to joint and survivor annuity requirements, the Insurance Contracts on
a Participant's life shall be converted to cash or an annuity or distributed to
the Participant upon commencement of benefits.
12.7 CONFLICT WITH INSURANCE CONTRACTS. The Trustee shall apply
for and shall be the owner of any Insurance Contract purchased under the terms
of this Plan. The Insurance Contract(s) must provide that proceeds will be
payable to the Trustee; however, the Trustee shall be required to pay over all
proceeds of the Insurance Contract(s) to the Participant's designated
Beneficiary in accordance with the distribution provisions of this Plan. The
Spouse of a married Participant and otherwise the Participant's Beneficiary
shall be the designated Beneficiary of the proceeds in all circumstances unless
the Plan, as adopted by the Employer, is a money purchase plan and a qualified
election has been made in accordance with Section 7.14 relating to joint and
survivor annuity requirements, if applicable. Under no circumstances shall the
Trust retain any part of the proceeds. In the event of any conflict between
the terms of this Plan and the terms of any Insurance Contract purchased
hereunder, the Plan provisions shall control.
12.8 DIVIDENDS OR CREDITS. Any dividends or credits earned on
Insurance Contracts shall be allocated to the Participant's account derived
from Employer contributions for whose benefit the Insurance Contract is held.
ARTICLE XIII
THE INVESTMENT MANAGER
13.1 APPOINTMENT. The Employer may appoint one or more Investment
Managers, which shall serve at the pleasure of the Employer, to manage, control
and invest any or all of the assets held by the Trustee in the Trust. Any
Investment Manager, so appointed, shall signify in writing to the Employer that
it accepts the appointment and acknowledges its status as a Fiduciary.
13.2 RESPONSIBILITY. Subject only to the funding procedures
established by the Administrative Committee, such Investment Manager shall have
full responsibility, power and authority to manage and invest the assets held
by the Trustee in the Trust committed to it.
13.3 ACT IN INTEREST OF PARTICIPANTS. In carrying out its
responsibilities, the Investment Manager shall act solely in the interest of
the Participants and their Beneficiaries and in accordance with the provisions
of Article XIV.
13.4 DIRECTIONS FROM INVESTMENT MANAGER. Whenever the Trustee must
or may act upon the direction or approval of the Investment Manager, the
Trustee may act upon a written communication or oral communication followed by
a written communication signed by the representative of the Investment Manager,
as previously agreed upon in writing by the Trustee and the Investment Manager.
Until otherwise notified in
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writing by the proper officers of the Investment Manager, the Trustee shall be
fully protected in relying upon the last such direction or directions received
by it from the Investment Manager.
ARTICLE XIV
FIDUCIARY RESPONSIBILITY
14.1 FIDUCIARY DUTIES. A Fiduciary, as defined in Section 1.37,
shall discharge its duties with respect to the Plan and Trust in the interest
of the Participants and their Beneficiaries:
(A) For the exclusive purpose of:
(1) Providing benefits to Participants and their
Beneficiaries; and
(2) Defraying reasonable expenses of
administering the Plan and Trust;
(B) With the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent man acting in like capacity
and familiar with such matters would use in the conduct of an enterprise of
a like character and with like aims;
(C) Except for any Trust assets committed to investment
by a Participant, by diversifying the investments of the Plan and Trust so
as to minimize the risk of large losses, unless under the circumstances it
is clearly prudent not to do so; and
(D) In accordance with the documents and instruments
governing the Plan and Trust insofar as they are consistent with the
provisions of ERISA.
14.2 ALLOCATION OF RESPONSIBILITY. Authority and responsibility
for management of the Plan and Trust shall be allocated among the following
persons:
(A) The Employer shall have sole responsibility for the
appointment and removal of the Administrative Committee described in Article
IX, of the Trustee described in Article XI and of any Investment Manager
described in Article XIII. To the extent that it is carrying out this
responsibility, the Employer shall be a "named Fiduciary" of the Plan;
(B) The Administrative Committee shall have sole
responsibility for the administration of the Plan, as set forth in Article
IX. To the extent that it is carrying out this responsibility, the
Administrative Committee shall be a "named Fiduciary" of the Plan;
(C) The Trustee shall have sole responsibility for the
management and control of the Trust assets, except to the extent such assets
have been committed to investment by a Participant or by any Investment
Manager. To the extent it is carrying out this responsibility, the Trustee
shall be a "named Fiduciary" of the Plan;
(D) Any Investment Manager appointed under Article XIII
to manage and invest Trust assets shall have sole responsibility for the
investment and management of Trust assets held by the Trustee in the Trust
which have been committed to such Investment Manager, subject only to the
funding procedures
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established by the Administrative Committee. To the extent it is carrying
out this responsibility, an Investment Manager shall be a Fiduciary of the
Plan; and
(E) The Participants shall have sole responsibility for
the investment of the assets in their Employer, Matching, Elective Deferral,
Participant, Rollover, Transfer and/or QVEC Accounts and/or Qualified
Matching Contribution and/or Qualified Nonelective Contribution accounts in
the event the Employer indicates in the Adoption Agreement applicable to
such Employer that the Participants have the power to direct investment of
Employer, Matching, Elective Deferral, Participant, Rollover, Transfer
and/or QVEC Accounts and/or Qualified Matching Contribution and/or Qualified
Nonelective Contribution accounts.
14.3 EXCLUSIVE RESPONSIBILITY. It is the purpose of this Plan and
Trust Agreement to allocate to each of the Fiduciaries identified in Section
14.2 exclusive responsibility for prudent execution of the functions assigned
to him (or to the entity of which he is a member) and no responsibility for
execution of functions assigned to others. Whenever one such Fiduciary is
required by the Plan and Trust Agreement to follow the directions of another
such Fiduciary, the two Fiduciaries shall not be deemed to have been assigned a
shared responsibility, but the Fiduciary giving the directions shall have sole
responsibility for the functions assigned to him, including issuing such
directions, and the Fiduciary receiving the directions shall have sole
responsibility for the functions assigned to him, including following such
directions insofar as they are, on their face, proper under this Plan and Trust
Agreement and under applicable law.
14.4 TRANSFER OR MAINTENANCE OF INDICIA OF OWNERSHIP OF PLAN ASSETS
OUTSIDE UNITED STATES PROHIBITED. Except as authorized by the Secretary of
Labor by regulation, no Fiduciary shall maintain the indicia of ownership of
any assets of the Plan or Trust outside the jurisdiction of the district courts
of the United States.
14.5 LIABILITY OF FIDUCIARY FOR BREACH OF CO-FIDUCIARY. A
Fiduciary with respect to the Plan or Trust shall not be liable for a breach of
Fiduciary responsibility of another Fiduciary with respect to the Plan or Trust
except under the following circumstances:
(A) He or it participates knowingly in, or knowingly
undertakes to conceal, an act or omission of such other Fiduciary, knowing
such act or omission is a breach;
(B) By his or its failure to properly discharge his or
its own Fiduciary responsibilities, he or it has enabled such other
Fiduciary to commit a breach; or
(C) He or it has knowledge of a breach by such other
Fiduciary, unless he or it makes reasonable efforts under the circumstances
to remedy the breach.
14.6 PROHIBITED TRANSACTIONS. The rules relating to prohibited
transactions are as follows:
(A) Unless otherwise exempted by the Secretary of Labor,
a Fiduciary with respect to the Plan or Trust shall not cause the Plan or
Trust to engage in a transaction if he or it knows, or should know, that
such transaction constitutes a direct or indirect:
(1) Sale or exchange, or leasing, of any property
between the Plan or Trust and a party in interest or a disqualified
person;
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(2) Lending of money or other extension of credit
between the Plan or Trust and a party in interest or a disqualified
person;
(3) Furnishing of goods, services, or facilities
between the Plan or Trust and a party in interest or a disqualified
person; or
(4) Transfer to, or use by or for the benefit of,
a party in interest or a disqualified person, of any assets of the
Plan or Trust.
(B) Unless otherwise exempted by the Secretary of Labor,
a Fiduciary with respect to the Plan or Trust shall not:
(1) Deal with the assets of the Plan or Trust in
his or its own interest or for his or its own account;
(2) In his or its individual or any other
capacity, act in any transaction involving the Plan or Trust on behalf
of a party (or represent a party) whose interests are adverse to the
interests of the Plan or Trust or the interests of the Participants or
their Beneficiaries; or
(3) Receive any consideration for his or its own
personal account from any party dealing with the Plan or Trust in
connection with a transaction involving the assets of the Plan or
Trust.
(C) Notwithstanding anything to the contrary set forth in
this Section 14.6, a Fiduciary shall be entitled to:
(1) Receive any benefit to which the Fiduciary
may be entitled as a Participant or Beneficiary in the Plan or Trust,
so long as the benefit is computed and paid on a basis which is
consistent with the terms of the Plan and Trust as applied to all
Participants and their Beneficiaries;
(2) Receive any reasonable compensation for
services rendered, except that no person so serving who already
receives full-time pay from the Employer and/or Controlled Group
member, from an employee organization whose employees are Participants
in the Plan, or from an association of employers whose employees are
Participants in the Plan, shall receive compensation from the Plan or
Trust, except for reimbursement of expenses properly and actually
incurred;
(3) Receive reimbursement of expenses properly
and actually incurred in the performance of his or its duties with the
Plan and Trust;
(4) Serve as a Fiduciary in addition to being an
officer, employee, agent, or other representative of a party in
interest or disqualified person;
(5) Make loans to a party in interest or a
disqualified person who is a Participant or Beneficiary of the Plan
under Section 7.11, provided such loans are made in accordance with
the specific provisions of Section 7.11; and
(6) To the extent the Plan and applicable
Adoption Agreement so provide, acquire or sell Qualifying Employer
Securities if:
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(a) Such acquisition or sale is for
adequate consideration (as such term is defined in section
3(18) of ERISA); and
(b) No commission is charged with
respect to such acquisition or sale.
(D) For purposes of this Article XIV, the words "party in
interest" or "disqualified person" mean:
(1) Any Fiduciary, counsel or employee of the
Plan or Trust;
(2) A person providing services to the Plan or
Trust;
(3) The Employer;
(4) An employee organization any of whose members
are covered by the Plan;
(5) An owner, direct or indirect, of 50 percent
or more of:
(a) The combined voting power of all
classes of stock entitled to vote or the total value of shares
of all classes of stock of a corporation,
(b) The capital interest or the profits
interest of a partnership, or
(c) The beneficial interest of a trust
or unincorporated enterprise,
which is an employer or employee organization described in Section
14.6(D)(3) or (4);
(6) A spouse, ancestor, lineal descendant, or
spouse of a lineal descendant of any individual described in Section
14.6(D)(1), (2), (3) or (5);
(7) A corporation, partnership, or trust or
estate of which (or in which) 50 percent or more of:
(a) The combined voting power of all
classes of stock entitled to vote or the total value of shares
of all classes of stock of such corporation,
(b) The capital interest or profits
interest of such partnership, or
(c) The beneficial interest of such
trust or estate,
is owned directly or indirectly, or held by, persons described in
Section 14.6(D)(1), (2), (3), (4) or (5);
(8) An employee, officer, director (or an
individual having powers or responsibilities similar to those of
officers or directors), or a ten percent or more shareholder, directly
or indirectly, of a person described in Section 14.6(D)(2), (3), (4),
(5) or (7), or of the Plan or Trust; or
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(9) A ten percent or more (directly or indirectly
in capital or profits) partner or joint venturer of a person described
in Section 14.6(D)(2), (3), (4), (5) or (7).
ARTICLE XV
PLAN AMENDMENT
15.1 AMENDMENT. The rules relating to the amendment of the Plan
and Trust Agreement are as follows:
(A) SPONSORING ORGANIZATION'S POWER TO AMEND. The
Sponsoring Organization may amend any part of the Plan at any time with
respect to all Adopting Employers. Such amendment shall be applicable to
all Employers that have adopted the Plan and each such Employer shall be
deemed to have adopted such amendment as of the date of the notification
letter from the Internal Revenue Service which relates to such amendment.
This provision shall be interpreted in accordance with section 6.01(1) of
Rev. Proc. 89-13. The Sponsoring Organization shall notify each Adopting
Employer of any such amendment.
(B) AMENDMENT BY ADOPTING EMPLOYER. The Employer may (1)
change the choice of options in the Adoption Agreement, (2) add overriding
language in the Adoption Agreement when such language is necessary to
satisfy section 415 or section 416 of the Code because of the required
aggregation of multiple plans, and (3) add certain model amendments
published by the Internal Revenue Service which specifically provide that
their adoption will not cause the Plan to be treated as individually
designed. An Employer that amends the Plan for any other reason, including
a waiver of the minimum funding requirement under section 412(d) of the
Code, will no longer participate in the DRINKER BIDDLE & REATH REGIONAL
PROTOTYPE DEFINED CONTRIBUTION PLAN and will be considered to have an
individually designed plan.
(C) REV. PROC. 92-41 - DEEMED AMENDMENT OF ADOPTING
EMPLOYERS' PLANS. The changes made by this amendment and restatement of the
Plan and Trust Agreement, pursuant to Rev. Proc. 92-41, shall be deemed
adopted by each Adopting Employer on the date the notification letter is
issued by the District Office of the Internal Revenue Service with respect
to this amendment and restatement without further action on the part of the
Adopting Employer. However, each such Adopting Employer must send a notice
not earlier that six days, if by mail (nine days if by posting or in person)
and not more than 20 days, if by mail (23 days if by posting or in person)
from the date of the Internal Revenue Service notification letter to all
interested parties in accordance with Part II of Rev. Proc. 92-6 informing
such interested parties that the Plan and Trust Agreement have been amended.
The Adopting Employer may also change its Adoption Agreement with respect to
the amendments described in section 5.05 of Rev. Proc. 92-41 without
resubmission of such Adopting Employer's Plan to the Internal Revenue
Service. Any other changes made by the Adopting Employer will require
resubmission of such Adopting Employer's Plan to the Internal Revenue
Service for a determination as to the continuing qualification under section
401(a) of the Code of the Adopting Employer's Plan as thus amended.
15.2 LIMITATIONS UPON AMENDMENT. Notwithstanding the above, no
amendment shall be made which shall cause or permit:
(A) Any part of the assets of the Trust under the Plan to
be diverted to purposes other than for the exclusive benefit of Participants
or their Beneficiaries;
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(B) Any part of such assets to revert to, or become the
property of, the Employer;
(C) Any Participant or his Beneficiary to be deprived of
any benefit to which he was entitled under the Plan by reason of
contributions made by the Employer or Participant prior to such amendment,
unless such amendment is necessary either to conform the Plan to, or satisfy
the conditions of, any law, governmental regulation or ruling, or to permit
the Plan to meet the requirements of the Code, or ERISA;
(D) The account balance of a Participant to be decreased
or, effective for Plan amendments made after July 30, 1984, an optional form
of distribution to be restricted or eliminated with respect to any benefits
accrued prior to such amendment; notwithstanding the preceding clause, a
Participant's account balance may be reduced to the extent permitted under
section 412(c)(8) of the Code; for purposes of this provision, a Plan
amendment which has the effect of decreasing a Participant's account balance
or eliminating an optional form of benefit, with respect to benefits
attributable to service before the amendment, shall be treated as reducing
an accrued benefit;
(E) Any responsibilities of the Trustee under this Plan
and Trust Agreement to be increased without its prior written consent;
(F) In the event the vesting schedule of the Plan is
amended in the case of an Employee who is a Participant on (1) the date the
amendment is adopted, or (2) the date the amendment is effective, if later,
the nonforfeitable percentage (determined as of the date specified in (1) or
(2)) of such Employee's right to his Accrued Benefit derived from Employer
contributions to be less than his percentage computed under the Plan without
regard to such amendment; or
(G) The computation of a Participant's nonforfeitable
right to his Accrued Benefit derived from Employer contributions to be
affected by the amendment of the Plan's vesting schedule or to be directly
or indirectly affected by any other Plan amendment or by a deemed amendment
resulting from an automatic change to or from a top-heavy vesting schedule
unless a Participant with three or more Years of Service for Vesting is
permitted to elect, within 60 days after the latest of (1) the date the
amendment is adopted, (2) the date the amendment becomes effective, or (3)
the date written notification of such amendment is issued to the Participant
by an Employer or by the Administrative Committee, to have his
nonforfeitable percentage computed under the Plan without regard to such
amendment, provided, however, that no election shall be given to any
Participant whose nonforfeitable percentage under the Plan as amended cannot
at any time be less than such percentage determined without regard to such
amendment. For Participants who do not have at least one Hour of Service in
any Plan Year beginning after December 31, 1988, the preceding sentence
shall be applied by substituting "five Years of Service for Vesting" for
"three Years of Service for Vesting" where such language appears.
15.3 RIGHTS OF TRUSTEE UPON AMENDMENT. No amendment may be made to
the Plan and Trust Agreement which affects the rights, duties or
responsibilities of the Trustee without its prior written consent. A certified
copy of any amendment shall be delivered to the Trustee by the Employer.
15.4 SIGNIFICANT REDUCTION IN RATE OF FUTURE BENEFIT ACCRUALS.
This Section 15.4 shall only apply if the Plan, as adopted by the Employer, is
a money purchase plan. In such event the Plan may not be amended so as to
provide for a significant reduction in the rate of future benefit accruals,
unless, after adoption of the Plan amendment and not less than 15 days before
the effective date of the Plan amendment, the Administrative Committee, as Plan
administrator, provides a written notice, setting forth the Plan amendment and
its effective date, to:
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(A) Each Participant in the Plan;
(B) Each Beneficiary who is an alternate payee (within
the meaning of section 206(d)(3)(K) of ERISA) under an applicable Qualified
Domestic Relations Order; and
(C) Each employee organization representing Participants
in the Plan, except that such notice shall instead be provided to a person
designated in writing to receive such notice on behalf of any person
referred to in Section 15.4(A), (B) or (C).
This Section 15.4 is to be administered in accordance with the provisions of
section 204(h) of ERISA. This provision also applies upon termination of the
Plan.
ARTICLE XVI
PLAN TERMINATION
16.1 RIGHT TO DISCONTINUE CONTRIBUTIONS AND/OR TO TERMINATE PLAN
AND TRUST. The Employer has established the Plan with the intention and
expectation that from year to year it will be able to make its contributions as
herein provided. However, the Employer realizes that circumstances not now
foreseen or circumstances beyond its control may make it either impossible or
inadvisable to continue to make its contributions as herein provided. In such
event, the Employer shall have the power, subject to Section 15.4 in the case
the Plan is a money purchase plan, to discontinue contributions to the Plan and
Trust or to terminate the Plan and/or Trust by an appropriate resolution or, in
the case of non-corporate Employers, by other action, which shall specify the
date of termination. A certified copy of such resolution or other action shall
be delivered to the Administrative Committee and the Trustee.
16.2 TERMINATION OF PLAN ON HAPPENING OF CERTAIN EVENTS. The Plan
herein shall automatically terminate upon the happening of any of the following
events:
(A) Discontinuance or liquidation of the Employer's
business; or
(B) The merger or consolidation of the Employer with any
other corporation or business organization, or the sale or transfer by the
Employer of substantially all of its assets to any corporation or business
organization, if the successor corporation or business organization shall
fail to adopt this Plan within 90 days from the effective date of such
consolidation, merger or sale or transfer of assets. If such successor
corporation or business organization shall adopt this Plan, within 90 days
from the effective date of such consolidation, merger or sale or transfer of
assets, such successor corporation or business organization shall be deemed
to succeed to the position of the Employer under this Plan.
16.3 CONTINUANCE OF TRUST AFTER COMPLETE DISCONTINUANCE OF
CONTRIBUTIONS TO PLAN. Upon complete discontinuance of contributions to the
Plan, the rights of affected Employees under the Plan and Trust shall become
fully vested and nonforfeitable, notwithstanding any other provisions of the
Plan, but in all other respects the Plan and Trust shall continue in effect,
and be administered in accordance with the provisions of the Plan and Trust
Agreement.
16.4 DISTRIBUTION OF TRUST ASSETS. Upon termination or partial
termination of the Plan, notwithstanding any other provisions of the Plan, the
rights under the Plan and Trust of the affected Employees
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or, in the case of a partial termination, of the affected Employees in the
terminated portion of the Plan, shall become vested and nonforfeitable. The
Trustee, at the direction of the Administrative Committee, shall make payment
of such amounts in accordance with Section 7.1, no later than the time
prescribed for the commencement of such payments provided in Section 7.9. Upon
final termination of the Trust, at such time as shall be determined by the
Employer after notification to the Administrative Committee, the Administrative
Committee shall direct the Trustee to liquidate the assets held in Employer,
Matching, Elective Deferral, Participant, Rollover, Transfer and QVEC Accounts
and Qualified Matching Contribution and Qualified Nonelective Contribution
accounts and, after payment of all expenses and proportional adjustment of each
Employer, Matching, Elective Deferral, Participant, Rollover, Transfer and QVEC
Account and Qualified Matching Contribution and Qualified Nonelective
Contribution account to reflect income or losses to the date of termination, to
distribute, subject to the requirements of Section 7.14, if applicable, the
balance of each Participant's Accrued Benefit to each Participant, retired
Participant, or, if appropriate, to the Participant's Beneficiary.
16.5 DISTRIBUTEES WHOSE WHEREABOUTS ARE UNKNOWN. In the case of
any distributee described herein at the time of distribution upon termination
of the Plan or Trust whose whereabouts are unknown, the Administrative
Committee shall notify such individual at the last known address by certified
mail with return receipt requested advising such individual of the right to
such a benefit. If the distributee cannot be located in this manner, the
Trustee shall establish a custodial account for such individual's benefit in a
Federally insured bank, savings and loan association or credit union in which
the individual's account balance shall be deposited. Upon the distribution of
all Plan assets, the Trustee shall be discharged from all obligations under the
Plan and Trust and no Participant or Beneficiary shall have any further rights
or claims thereunder.
ARTICLE XVII
SUCCESSOR EMPLOYER AND MERGER
OR CONSOLIDATION OF PLAN
17.1 SUCCESSOR TO EMPLOYER UNDER PLAN AND TRUST. Subject to the
limitations described in Section 17.2, this Plan and Trust may be adopted by
any successor corporation or other business organization upon the merger or
consolidation of the Employer with such corporation or other business
organization, or upon the sale by the Employer of substantially all its assets
to such corporation or business organization, if such successor corporation or
other business organization:
(A) Adopts this Plan and Trust effective upon the date of
such merger, consolidation or sale of assets, and
(B) Agrees to continue and maintain this Plan and Trust.
Upon the adoption of the Plan and Trust Agreement by the
successor, such successor shall have all the powers, duties and
responsibilities of the Employer under the Plan and Trust Agreement.
17.2 MERGER OR CONSOLIDATION. In the event of any merger or
consolidation of the Plan with, or transfer, in whole or in part, of the assets
and liabilities of the Trust to another trust held under any other plan of
deferred compensation maintained or to be established for the benefit of all or
some of the Participants of this Plan, the assets of the Trust applicable to
such Participants shall be transferred to the other trust only if:
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(A) Each Participant would (if either this Plan or the
other plan then terminated) receive a benefit immediately after the merger,
consolidation or transfer which is equal to, or greater than, the benefit he
would have been entitled to receive immediately before the merger,
consolidation or transfer (if this Plan had then terminated); and
(B) Resolutions of the Board of Directors or other
governing entity of the Employer under this Plan, and of any new or
successor employer of the affected Participants, shall authorize such
transfer of assets; and, in the case of the new or successor employer of the
affected Participants, its resolutions shall include an assumption of
liabilities with respect to such Participant's inclusion in the new
employer's plan; and
(C) Such other plan and trust are qualified under
sections 401(a) and 501(a) of the Code.
ARTICLE XVIII
MISCELLANEOUS
18.1 NO RIGHT TO EMPLOYMENT. Participation in the Plan shall not
be deemed to be consideration for, or an inducement to, or a condition of the
employment of any Employee. Nothing contained in this Plan shall be deemed to
give any Participant the right to be retained in the employment of the
Employer, nor shall any Participant, retired Participant, deceased Participant,
disabled Participant, or terminated Participant have any right to any payment,
except as such payment may be provided under the terms of the Plan and then
only to the extent that assets are available under the Plan.
18.2 GENDER AND NUMBER. Whenever any words are used herein in any
specific gender, they shall be construed as though they were also used in any
other applicable gender. The singular form, whenever used herein, shall mean
or include the plural form where applicable.
18.3 BONDING. Except as provided in section 412 of ERISA with
respect to certain banks and other financial institutions, every Fiduciary of
the Plan and every person who handles funds or other property of the Plan shall
be bonded as provided in such section 412. The amount of such bond shall be
fixed at the beginning of each Plan Year and shall not be less than ten percent
of the amount of funds handled. In no case shall the bond be less than $l,000
nor more than $500,000, except as otherwise prescribed by the Secretary of
Labor, after due notice and opportunity for hearing to all interested parties.
18.4 AGENT FOR SERVICE OF LEGAL PROCESS. The name and address of
the person designated for the service of legal process with respect to the Plan
shall be indicated in the Adoption Agreement.
18.5 HEADINGS. The headings are for reference only. In the event
of a conflict between a heading and the content of an Article or Section, the
content of the Article or Section shall control.
18.6 UNCLAIMED BENEFITS. Except as otherwise provided in Section
16.5, any benefits payable to a Participant or Beneficiary which are not
claimed for a period of five years from the date of entitlement as determined
by the Administrative Committee and following a diligent effort to locate such
Participant or Beneficiary and with the approval of the Administrative
Committee, shall be forfeited and applied in accordance with the terms of
Section 5.5; provided, however, that such forfeited benefits shall be
reinstated if a claim for such forfeited benefits is made by the Participant or
Beneficiary.
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18.7 REPORTS FURNISHED TO PARTICIPANTS. The Administrative
Committee shall furnish to each Participant, and to each Beneficiary receiving
benefits under the Plan, within the time limits specified in the Code and
ERISA, each of the following:
(A) A Summary Plan Description and periodic revisions;
(B) Notification of amendments to the Plan;
(C) A Summary Annual Report which summarizes the Annual
Report filed with the Department of Labor;
(D) An annual status report of his Plan Accounts;
(E) A notice regarding a qualifying rollover
distribution, as prescribed in section 402(f) of the Code; and
(F) Any other reports, documents or information required
by the Code, ERISA or the regulations thereunder.
18.8 REPORTS AVAILABLE TO PARTICIPANT AND BENEFICIARIES. The
Administrative Committee shall make copies of the following documents available
at the principal office of the Employer and at such other locations as may be
required by ERISA for examination by any Participant or Beneficiary:
(A) The Plan and Trust Agreement;
(B) The Summary Plan Description;
(C) The latest Annual Report; and
(D) Any other documents required by the Code, ERISA or
the regulations thereunder.
18.9 REPORTS UPON REQUEST. The Administrative Committee shall
furnish to any Participant or Beneficiary who so requests in writing, once
during any twelve-month period, a statement indicating, on the basis of the
latest available information:
(A) The total benefits accrued; and
(B) The nonforfeitable benefits, if any, which have
accrued, or the earliest date on which benefits will become nonforfeitable.
The Administrative Committee shall also furnish to any Participant or
Beneficiary who so requests in writing, at a reasonable charge as prescribed by
regulation of the Secretary of Labor, any document referred to in Section 18.8.
18.10 CONTROLLED GROUP EMPLOYEES. Except as otherwise provided in
Section 3.8(F), all employees of all corporations, trades or businesses which
are members of a Controlled Group shall be treated as employed by a single
employer.
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18.11 CONSTRUCTION. Construction and administration of this Plan
and Trust Agreement shall be governed by ERISA and other applicable Federal law
and, to the extent not governed by Federal law, by the law of the State in
which the Trustee, if a corporate Trustee, maintains its principal place of
business or, if there is no corporate Trustee, by the law of the State in which
the Employer maintains its principal place of business.
18.12 INSURANCE AND INDEMNIFICATION FOR LIABILITY. The rules
relating to the insurance and indemnification for liability are as follows:
(A) INSURANCE. The Employer may, in its discretion,
obtain, pay for, and keep current a policy or policies of insurance,
insuring members of the Administrative Committee, the Trustee (if an
employee) and other employees to whom any Fiduciary responsibility with
respect to administration of the Plan and/or investment of Plan assets has
been delegated against any and all liabilities, costs and expenses incurred
by such persons as a result of any act, or omission to act, in connection
with the performance of their duties, responsibilities and obligations under
the Plan and any applicable Federal or state law.
(B) INDEMNITY. If the Employer does not obtain, pay for,
and keep current the type of insurance policy or policies referred to in
Section 18.12(A) above, or if such insurance is provided but any of the
members of the Administrative Committee, the Trustee (if an employee) or
other employees referred to in Section 18.12(A) above incur any costs or
expenses which are not covered under such policies, then, in either event,
the Employer shall, to the extent permitted by law, indemnify and hold
harmless such parties against any and all costs, expenses and liabilities
incurred by such parties in performing their duties and responsibilities
under this Plan, provided such party or parties were acting in good faith
within what was reasonably believed to have been in the best interests of
the Plan and its Participants.
18.13 NO RETENTION OF INTEREST IN TRUST FUND. Neither the Employer
nor the Trustee guarantees the Trust Fund from losses or from decline in value.
Except as provided in Section 3.7, the Employer does not retain any beneficial
or reversionary interest in any contributions to the Trust Fund or in any of
the assets, profits, earnings or increment thereof, and all Employer
obligations in any respect, except the supplying of information to the Trustee,
as herein provided, shall cease upon the payment of contributions to the
Trustee. The Employer shall not be in any way responsible for the acts of the
Trustee.
18.14 TERMINATION OF PLAN AND TRUST UNDER RULE AGAINST PERPETUITIES.
Except as may be limited by the law of the State governing the administration
of the Trust Fund, in no event shall the Plan and Trust hereby created continue
beyond the last to survive of those persons born before the Effective Date of
this Plan and Trust who shall die while Participants or Former Participants
hereunder, and 21 years thereafter. This Plan and the Trust hereby created
shall be deemed to have been terminated on the day before the lapse of this
ultimate term determined under this Section 18.14.
Notwithstanding the above, this Section 18.14 shall be inapplicable if
ERISA requires otherwise or if, under the law of the State governing the
administration of the Trust Fund, the Rule against Perpetuities is not
applicable to said Trust Fund.
18.15 NOTICE TO INTERESTED PARTIES. Prior to submitting this Plan
to the Internal Revenue Service for a determination that it qualifies under
section 401 of the Code, the Employer shall provide written notice to all
interested parties, in accordance with section 7476 of the Code, and the
regulations thereunder, that such a submission will be made.
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18.16 EFFECTIVE DATE OF ADOPTION OF PLAN AND TRUST AGREEMENT. The
effective date of adoption of the Plan and Trust Agreement by an adopting
Employer shall be indicated in Section A.1.20 of the Adoption Agreement
applicable to such Employer.
18.17 RESTATEMENT OF EXISTING PLAN. If the adoption of the Plan and
Trust Agreement is as a restatement of an Employer's Prior Plan and trust
agreement, the Employer shall so indicate in the Adoption Agreement applicable
to such Employer. If the Prior Plan provided for participation and/or vesting
standards which were different from those provided in this Plan, as adopted by
the Employer, and the standards, as adopted by the Employer, in this Plan are
to be given prospective application only, the Employer shall so indicate in the
Adoption Agreement applicable to such Employer. If the Prior Plan contained
terms which the adopting Employer desires to make applicable to this Plan, the
provisions of the Prior Plan shall be inserted in the Adoption Agreement
applicable to such adopting Employer. Moreover, any necessary and/or desirable
transitional rules shall be inserted in the Adoption Agreement applicable to
such adopting Employer.
18.18 INDIVIDUAL PROVISIONS. Any provisions applicable to the
adopting Employer only and not otherwise provided for in the Plan and Adoption
Agreement shall be inserted in the Adoption Agreement applicable to such
adopting Employer.
18.19 FAILURE OF QUALIFICATION. If the Plan, as adopted by the
Employer, fails to attain or retain qualification, such Plan shall no longer
participate in the DRINKER BIDDLE & REATH REGIONAL PROTOTYPE DEFINED
CONTRIBUTION PLAN and shall be considered an individually designed plan.
18.20 WAIVER OF MINIMUM FUNDING STANDARDS. Any Employer adopting
this Plan as a money purchase plan that amends this Plan because of a waiver of
the minimum funding standards under section 412(d) of the Code shall be
considered to have an individually designed plan and such plan may no longer
participate in the DRINKER BIDDLE & REATH REGIONAL PROTOTYPE DEFINED
CONTRIBUTION PLAN.
ARTICLE XIX
ADOPTION OF PLAN BY AFFILIATED EMPLOYERS
19.1 ADOPTION OF PLAN AND TRUST. If the Adoption Agreement so
provides, the terms of this Plan, as adopted by the adopting Employer indicated
in the applicable Adoption Agreement, may be adopted by any Affiliated
Employer of the adopting Employer provided:
(A) The Board of Directors or other governing entity of
the adopting Employer consents to such adoption;
(B) The Board of Directors or other governing entity of
the adopting Affiliated Employer adopts this Plan by appropriate action;
(C) The adopting Affiliated Employer executes the
Adoption Agreement; and
(D) The adopting Affiliated Employer executes such other
documents as may be required to make such adopting Affiliated Employer a
party to the Plan and Trust as an Employer (except as provided below).
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An adopting Affiliated Employer that adopts the Plan and Trust
Agreement is thereafter an Employer with respect to its employees for purposes
of the Plan and Trust Agreement except that such adopting Affiliated Employer
delegates to the adopting Employer the power to amend, after the adopting
Affiliated Employer's initial adoption of the Adoption Agreement, the Adoption
Agreement with respect to such adopting Affiliated Employer and the power to
terminate the Plan and Trust Agreement as set forth in Section 19.6.
19.2 WITHDRAWAL FROM PLAN. Subject to the requirements of Article
XVII, any adopting Affiliated Employer may, at any time, withdraw from the Plan
upon giving the Board of Directors or other governing entity of the adopting
Employer, the Administrative Committee and the Trustee at least 30 days notice
in writing of its intention to withdraw. Upon the withdrawal of an adopting
Affiliated Employer pursuant to this Section 19.2, the Trustee shall segregate
a portion of the assets in the Trust as set forth below, the value of which
shall equal the total amount credited to the accounts of Participants employed
by the withdrawing adopting Affiliated Employer. Subject to the requirements
of Article XVII, the determination of which assets are to be so segregated
shall be made by the Trustee in its sole discretion as set forth below.
The Administrative Committee may, at any time, direct the Trustee to
segregate from the Trust such part thereof as the Administrative Committee
shall determine to be held for the benefit of the employees of an adopting
Affiliated Employer, and shall give a copy of such directions to the adopting
Employer and each adopting Affiliated Employer. Such directions shall specify
the assets of the Trust to be segregated. Unless the adopting Employer or any
adopting Affiliated Employer files with the Trustee a written protest within 30
days after delivery of such directions to the Trustee, such directions shall
conclusively establish that the assets specified therein represent the part of
the Trust held for the benefit of the Employees of the adopting Employer and of
each adopting Affiliated Employer.
After the expiration of such 30 day period, and after settlement of
any such protest, the Trustee shall follow the Administrative Committee's
directions, including any modification thereof adopted in settlement of any
protest. Any part of the Trust segregated pursuant to such directions shall
thereafter be held in a separate trust identical in terms to the Trust hereby
established or maintained, except that, with respect to such separate trust,
this Plan and Trust Agreement shall be construed as if such adopting Affiliated
Employer were the adopting Employer and all powers and authority conferred
upon the adopting Employer or its Board or other governing entity and the
Administrative Committee shall devolve upon such adopting Affiliated Employer
or its Board of Directors or other governing entity. At any time thereafter,
such adopting Affiliated Employer and the Trustee may (but they shall not be
required to) enter into a separate agreement stating the terms of such separate
plan and trust agreement which may be the DRINKER BIDDLE & REATH REGIONAL
PROTOTYPE DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT. If the DRINKER BIDDLE
& REATH REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT is not
so adopted, the plan and trust agreement with respect to the withdrawing
adopting Affiliated Employer shall be considered an individually designed plan.
19.3 EXCLUSIVE PURPOSE OF TRUST. Neither the segregation and
transfer of the Trust assets upon the withdrawal of an adopting Affiliated
Employer nor the execution of a new plan and trust agreement by such
withdrawing adopting Affiliated Employer shall operate to permit any part of
the Trust to be used for, or diverted to, purposes other than for the
exclusive benefit of the Participants or their Beneficiaries.
19.4 APPLICATION OF WITHDRAWAL PROVISIONS. The withdrawal
provisions contained in Section 19.2 and Section 19.3 shall be applicable only
if the withdrawing adopting Affiliated Employer continues to cover its
Participants and eligible Employees in another plan and trust qualified under
sections 401 and 501 of the Code. Otherwise, the termination provisions of the
Plan and Trust Agreement shall apply.
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19.5 SINGLE PLAN. Notwithstanding any other provision set forth
herein, the Plan, as adopted pursuant to this Article XIX by the adopting
Employer and each adopting Affiliated Employer, shall constitute a single plan,
as such term is defined in Treas. Reg. Section 1.414(1)-1(b)(1), as to the
adopting Employer and each adopting Affiliated Employer.
19.6 ADOPTING EMPLOYER APPOINTED AGENT OF ADOPTING AFFILIATED
EMPLOYERS. Each adopting Affiliated Employer appoints the Board of Directors or
other governing entity of the adopting Employer as its agent to exercise on
its behalf all of the power and authority conferred upon the adopting Employer
by this Plan and Trust Agreement, including, without limitation, the power to
amend this Plan and Trust Agreement as set forth in Article XV and the power to
terminate this Plan and/or the Trust Agreement as set forth in Article XVI.
The authority of the Board of Directors or other governing entity of the
adopting Employer to act as agent of any adopting Affiliated Employer shall
terminate only if the part of the Plan's assets held for the benefit of the
employees of such adopting Affiliated Employer shall be segregated in a
separate trust as provided in Section 19.2 and such adopting Affiliated
Employer thereupon withdraws from the Plan in accordance with Section 19.2.
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PART II
[ MUNICIPAL FUND FOR TEMPORARY INVESTMENT]
----------------------------------------
NAME OF ADOPTING EMPLOYER
DEFINED CONTRIBUTION PLAN
(PROFIT-SHARING OR PROFIT-SHARING 401(K))
REGIONAL PROTOTYPE PLAN NUMBER 001
ADOPTION AGREEMENT
DRINKER BIDDLE & REATH
REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT
[ FUND OFFICE RETIREMENT PROFIT-SHARING PLAN ]
--------------------------------------------
NAME OF PLAN
(REV. 06/94)
(C) DRINKER BIDDLE & REATH 1995
<PAGE> 116
<TABLE>
<S> <C>
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
DISTRICT DIRECTOR
31 HOPKINS PLAZA
BALTIMORE, MD 21201-0000
Employer Identification Number:
Date: JAN 04, 1993 23-1423089
File Folder Number:
DRINKER BIDDLE & REATH 521006125
PHILADELPHIA NATIONAL BANK BLDG Person to Contact:
C/O HOMER L ELLIOTT ESQUIRE G.N. Wallace
DRINKER BIDDLE & REATH Contact Telephone Number:
1345 CHESTNUT STREET PH NAT BK BLDG (410) 962-2973
PHILADELPHIA, PA 19107-3496 Plan Name:
REGIONAL PROTOTYPE
DEFINED CONTRIBUTION PLAN
Plan Number: 001
Letter Serial Number:
D8520005
</TABLE>
Dear Applicant:
The amendment to the form of the plan identified above is acceptable
under section 401(a) or 403(a) of the Internal Revenue Code. This letter
relates only to the amendment to the form of the plan. It is not a
determination of any other amendment or of the form of the plan as a whole, or
on the effect of other federal or local statutes.
You must furnish a copy of this letter and the enclosed publication to
each employer who adopts this plan. You must also send a copy of this letter,
a copy of the approved form of the plan, and any approved amendments and
related documents to each key District Director of the Internal Revenue Service
in whose jurisdiction there are adopting employers.
The acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). To adopt the form of the plan, the employer should apply for a
determination letter by filing an application with the key District Director of
the Internal Revenue Service on Form 5307, Application for Determination for
Adopters of Master or Prototype, Regional Prototype or Volume Submitter Plans.
For purposes of sections 15.02 and 15.03 of Rev. Proc. 89-13, 1989-1
C.B. 801, your application was received before March 31, 1991.
Please advise those adopting the plan to contact you if they have any
questions about the operation of the plan.
We have sent a copy of this letter to your representative as indicated
in your Power of Attorney.
If you have any questions on our processing of this case, please call
the above telephone number. If you write, please provide your telephone number
and the most convenient time for us to call in case we need more information.
Whether you call or write, please refer to the Letter Serial Number and File
Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record.
Sincerely yours,
/s/ H.J. Hightower
District Director
Enclosure(s)
Publication 1488 Letter 2026/DO/CG)
A-2
<PAGE> 117
Department of the Treasury Internal Revenue Service
PUBLICATION 1488
(Rev. February 1991)
FAVORABLE NOTIFICATION LETTER
INTRODUCTION
This publication is issued in conjunction with a favorable notification letter.
It explains the significance of your letter, points out some features that may
affect the qualified status of the plan, and provides information on the
reporting requirements for the plan.
An employee retirement plan qualified under Internal Revenue Code
section 401(a) or 403(a) (qualified plan) is entitled to favorable tax
treatment. For example, contributions made in accordance with the plan
document are generally currently deductible. Participants will not include
these contributions into income until the time they receive a distribution from
the plan, at which time special income averaging rates for lump sum
distributions may serve to reduce the tax liability. In some cases, taxation
may be further deferred by rollover to another qualified plan or individual
retirement arrangement. See Publication 575, Pension and Annuity Income
(Including Simplified General Rule), for further details. Finally, plan
earnings may accumulate free of tax.
Employee retirement plans that fail to satisfy the requirements under
section 401(a) or 403(a) are not entitled to this favorable tax treatment.
Therefore, many employers desire advance assurance that the terms of their
plans satisfy the qualification requirements. The Service provides such
advance assurance for regional prototype plans by issuing favorable
notification letters. However, in some cases, a determination letter is also
required for reliance.
SIGNIFICANCE OF A FAVORABLE NOTIFICATION LETTER
Notification letters are issued by the Service to sponsors of regional
prototype plans. Plan sponsors then make the plan available to employers who
may adopt the plans for the benefit of their employees.
The significance of a favorable notification letter differs for
standardized plans and nonstandardized plans. A standardized plan can be
identified by the number 2, 5, or 7 appearing in the second position of the
letter serial number (the number following the alpha character which appears in
the upper right portion of the letter). A nonstandardized plan may be
identified by the number 3, 6, or 8 appearing in the second position.
STANDARDIZED PLANS. A standardized plan is designed to be automatically
acceptable under any fact pattern, except as indicated below. Therefore, there
is no need to request a determination letter for such plans, provided the
employer does not amend the plan and chooses only those options in the adoption
agreement that were approved by the Service. Although a determination letter
is not requested, the employer must still inform interested parties of the
establishment or amendment of the plan. However, a determination letter is
required for advance assurance that the provisions of the plan satisfy the
qualification requirements if the employer maintains or has maintained another
qualified plan. The Employer is not considered to have maintained another plan
merely because the plan was previously not a standardized plan. Under certain
circumstances, employers who have adopted standardized defined benefit plans
may wish to request a determination letter that their plans prior benefit
structure satisfies the requirements of Internal Revenue Code section
401(a)(26).
Paired plans are standardized plans that are designed to work
together. A paired plan may be recognized by the phrase "other than a
specified paired plan" appearing in the fifth or sixth paragraph of the
notification letter. If the employer maintains and has maintained only paired
plans, a determination letter is not needed.
NONSTANDARDIZED PLANS. It is possible that the unique fact patterns applicable
to a specific employer may cause a nonstandardized plan to fail qualification.
Therefore, to obtain advance assurance that the plan is qualified, the plan
must be submitted for a determination letter. A determination letter is
similar to an insurance policy that will, in many cases, protect the employer
and plan beneficiaries from adverse tax consequences if the plan is later found
to be nonqualified in the absence of a change in law, provided the plan is
being operated in good faith in accordance with plan provisions. This advance
assurance is a service provided by the Internal Revenue Service, and is not
required for qualification. Form 5307, Application for Determination for
Adopters of Master or Prototype Regional Prototype or Volume Submitter Plans,
is used to request a determination letter, along with Form 5302, Employee
Census, Form 8717 (explained later), a copy of the adoption agreement, a copy
of the notification letter, a certification from the plan sponsor that the plan
has not been withdrawn and is still in effect, and a copy of any separate trust
or custodial account document.
USER FEE. There is a charge for requesting a determination letter, but the
charge is significantly reduced for regional prototype plans. Please complete
and attach Form 8717, User Fee for Employee Plan Determination Letter Request,
to Form 5307 when requesting a determination letter.
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LAW CHANGES AFFECTING THE PLAN. Plans must be amended to retain their
qualified status if any plan provision fails qualification requirements because
of changes in the law becoming effective subsequent to the issuance of the
notification letter. If the plan is not amended, the plan will become
nonqualified without specific notice from the Service. This will occur even if
the employer has received a favorable determination letter in addition to the
notification letter. The employer and plan participants may be subject to
adverse tax consequences if the plan is nonqualified.
The first character of the serial number assigned to the plan
indicates the latest law change for which the plan had been amended. For
example, the letter "D" indicates the plan was amended for the Tax Reform Act
of 1986, which generally became effective for plan years after the 1988 plan
year.
A notification letter will not be applicable after a change in
qualification requirements unless the plan sponsor requests a new notification
letter within 12 months after the change. The plan sponsor must provide those
employers for whom the employer is continuing to sponsor the plan with a copy
of the amendments and the new notification letter within 60 days of the receipt
of the new letter. If a change requires modification of the adoption
agreement, employers must execute the new agreement by the later of 6 months
after issuance of the new notification letter, or the end of the period
specified in Internal Revenue Code section 401(b).
If the application for a notification letter was submitted to the
Service within certain time frames, the plan generally need not be amended
again unless required to do so by legislation. The application was submitted
to the Service within these time frames, if the following paragraph appears in
the notification letter: "For purposes of sections 15.02 and 15.03 of Rev.
Proc. 89-13, 1989-1 C.B. 801, your application was received timely".
REQUIRED NOTIFICATIONS TO ADOPTING EMPLOYERS. The plan sponsor must provide
adopting employers with annual notifications indicating whether the sponsor
intends to continue to sponsor the plan, and whether amendments have been made
to the plan. The plan sponsor must also notify employers within 60 days if the
plan sponsor discontinues its sponsoring of the plan.
REQUIRED NOTIFICATIONS TO THE INTERNAL REVENUE SERVICE. On each anniversary of
the date of issuance of the notification letter, the plan sponsor must advise
the Service whether the sponsor has made any changes to the plan, and whether
the plan is still being made available for adoption by employers. The plan
sponsor must also provide a listing of adopting employers, and a statement that
the plan sponsor has provided employers with the notification described in the
above paragraph.
REPORTING REQUIREMENTS. Most plan administrators or employers who maintain an
employee benefit plan must file an annual return/report with the Internal
Revenue Service. The following forms should be used for this purpose:
FORM 5500EZ - generally for a "One-Participant Plan," which is a plan that
covers only: (1) an individual, or an individual or his or her spouse who
wholly owns a business, whether incorporated or not, or (2) partner(s) in a
partnership or the partner(s) and their spouse(s). If Form 5500EZ cannot be
used, the one-participant plan should use 5500-C or 5500-R, whichever applies.
NOTE: Keogh (H.R. 10) plans are required to file an annual return even if the
only participants are owner-employees. The term "owner-employee" includes a
partner who owns more than 10% interest in either the capital or the profits of
the partnership. This applies to both defined contribution and defined benefit
plans.
FILING EXCEPTION FOR PLANS THAT HAVE NO MORE THAN $100,000 IN ASSETS. An
annual return is not required to be filed for one participant plans having less
than $100,000 in assets that otherwise qualify for filing Form 5500EZ.
FORM 5500 - for a pension benefit plan with 100 or more participants at the
beginning of the plan year.
FORM 5500-C - for a pension benefit plan with more than one but fewer than 100
participants at the beginning of the plan year.
FORM 5500-R - for a pension benefit plan with more than one but fewer than 100
participants at the start of the plan year for which 5500-C is not filed.
NOTE: For 1989 and subsequent years Form 5500-R is part of the Form 5500C/R
package. Filing only the first two pages of the Form 5500C/R package
constitutes the filing of a Form 5500-R.
WHEN TO FILE. Forms 5500 and 5500EZ must be filed annually. Form 5500-C must
be filed for (i) the initial plan year, (ii) the year a final return/report
would be filed, and (iii) at three-year intervals. Form 5500-R must be filed
in the years when Form 5500-C is not filed (See Note above). However, 5500-C
will be accepted in place of 5500-R.
DISCLOSURE. The Internal Revenue Service will process the returns and provide
the Department of Labor and the Pension Benefit Guarantee Corporation with the
necessary information and copies of the returns on microfilm for disclosure
purposes.
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PART II
[MUNICIPAL FUND FOR TEMPORARY INVESTMENT]
DEFINED CONTRIBUTION PLAN
(PROFIT-SHARING OR PROFIT-SHARING 401(K))
REGIONAL PROTOTYPE PLAN NUMBER 001
ADOPTION AGREEMENT
DRINKER BIDDLE & REATH
REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT
NOTES TO ADOPTING EMPLOYERS AND TO ADOPTING AFFILIATED EMPLOYERS:
THIS ADOPTION AGREEMENT MAY ONLY BE USED WITH THE DRINKER BIDDLE & REATH
REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN.
FAILURE TO PROPERLY FILL OUT THIS ADOPTION AGREEMENT MAY RESULT IN THE
DISQUALIFICATION OF THE PLAN AS ADOPTED BY THE EMPLOYER.
A CASH OR DEFERRED ARRANGEMENT MAY NOT BE ADOPTED BY A TAX EXEMPT OR
GOVERNMENTAL ORGANIZATION WITH THE EXCEPTION OF CERTAIN PRE-EXISTING PLANS.
DRINKER BIDDLE & REATH, THE SPONSORING ORGANIZATION OF THIS PLAN, WILL INFORM
THE ADOPTING EMPLOYER AND/OR ADOPTING AFFILIATED EMPLOYER OF ANY AMENDMENTS
MADE TO THE PLAN OR OF THE DISCONTINUANCE OR ABANDONMENT OF THE PLAN.
DRINKER BIDDLE & REATH IS THE SPONSORING ORGANIZATION OF THIS PLAN. ITS
ADDRESS IS PHILADELPHIA NATIONAL BANK BUILDING, 1345 CHESTNUT STREET,
PHILADELPHIA, PA 19107-3496 AND ITS TELEPHONE NUMBER IS (215) 988-2855.
(FILL IN BLANKS AND INDICATE SELECTION WHERE REQUIRED)
The undersigned Employer hereby (check applicable box)
[ ] adopts
[ X ] adopts, as an amendment to a predecessor
plan and trust agreement of the Employer,
the DRINKER BIDDLE & REATH REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN AND
TRUST AGREEMENT, consisting of Part I, the Plan and Trust Agreement, and Part
II, this Adoption Agreement. The Plan and Trust Agreement, as so adopted,
shall be known as the [FUND OFFICE RETIREMENT PROFIT-SHARING PLAN AND TRUST
AGREEMENT] (the "Plan"), a DEFINED CONTRIBUTION PLAN (PROFIT-SHARING OR PROFIT-
SHARING 401(K)) AND TRUST AGREEMENT. The Employer and Trustee, by signing this
Adoption Agreement, mutually agree and consent to the terms of the Plan and
Trust, consisting of Part I, the Plan and Trust Agreement, and Part II, this
Adoption Agreement.
(C) DRINKER BIDDLE & REATH 1995
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NAME OF ADOPTING EMPLOYER: [MUNICIPAL FUND FOR TEMPORARY INVESTMENT]
ADDRESS OF ADOPTING EMPLOYER:[BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809 ]
ADOPTING EMPLOYER'S EMPLOYER IDENTIFICATION NUMBER: [ 6742 ]
ADOPTING EMPLOYER'S BUSINESS CODE NUMBER: [ 51-0241021 ]
TYPE OF ENTITY (check one): [ ] Corporation [ ] S Corporation
[ ] Sole Proprietor [ ] Partnership [ ] Church
[ ] Tax Exempt Organization [ ] Governmental Organization
[ ] Professional Corporation
[ X ] Other (Specify): [ BUSINESS TRUST ]
PLACE OF INCORPORATION OR OTHER ORGANIZATION (SPECIFY): [
PENNSYLVANIA ]
DATE OF INCORPORATION OR DATE BUSINESS BEGAN: [ 1979 ]
ADMINISTRATIVE COMMITTEE EMPLOYER IDENTIFICATION NUMBER: [23-2118138]
PLAN NAME: [ FUND OFFICE RETIREMENT PROFIT-SHARING PLAN ]
PLAN IDENTIFICATION NUMBER: [ 001 (333 FOR FORM 5500C/R) ]
TRUST NAME: [ FUND OFFICE RETIREMENT PROFIT-SHARING PLAN TRUST ]
TRUST EMPLOYER IDENTIFICATION NUMBER (IF ANY): [ 23-2487197 ]
REGIONAL PROTOTYPE (PROFIT-SHARING (401(K)) PLAN NOTIFICATION
LETTER NUMBER: D8520005 (PN:001 JANUARY 4, 1993)
FROZEN PLAN: If the Employer has discontinued all further contributions
to the Plan, check here [ ]. The Employer and the Trustee shall,
however, continue to maintain the Plan and Trust in accordance with the
requirements of the Internal Revenue Code and the Treasury regulations
thereunder.
TYPE PLAN: The Plan, as adopted under this Adoption Agreement, is a
(check one):
[ X ] (A) Profit-Sharing Plan.
[ ] (B) Profit-Sharing 401(k) Plan.
A.1.1 ACCRUAL COMPUTATION PERIOD. The Accrual Computation Period is the
(check one):
[ X ] (A) Plan Year
[ ] (B) (A consecutive 12-month period ending with or within the
Plan Year.) Enter the day and the month this period begins:
[ ](day) [ ](month). For Employees whose
date of hire is less than 12 months before the end of the
12-month period designated, Compensation will be determined
over the Plan Year.
A.1.4 ADMINISTRATIVE COMMITTEE. The name(s) and address(es) of the
member(s) of the Administrative Committee are:
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[(A) EDWARD H. ROACH
----------------------------------------------------------------------
BELLEVUE PARK CORPORATE CENTER
----------------------------------------------------------------------
400 BELLEVUE PARKWAY, SUITE 100
----------------------------------------------------------------------
WILMINGTON, DE 19809
----------------------------------------------------------------------
(B)
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
(C)
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
]
A.1.10 COMPENSATION. Compensation shall be determined over the Accrual
Computation Period elected in Section A.1.1.
(A) Compensation shall (check one):
[ X ] (1) Include [ ] (2) Not include
Employer contributions made pursuant to a salary reduction agreement which
are not includible in the gross income of the Employee under sections 125,
402(e)(3), 402(h)(1)(B) or 403(b) of the Code.
(B) Compensation shall exclude (specify): [
N/A .]
(Note that this exclusion applies only to the manner of determining
contributions to the Plan and for no other purpose; if not applicable,
insert letters N/A in blanks).
A.1.12 CONTROLLED GROUP.
(A) Is the adopting Employer a member of a Controlled Group
(check one)?
[ ] (1) Yes [ X ] (2) No
(B) If Section A.1.12(A)(1) is checked, is the adopting Employer
a member of an affiliated service group (check one)?
[ ] (1) Yes [ ] (2) No [ X ] (3) N/A
If Section A.1.12(A)(1) is checked, list the name and address of each
member in the following blanks (and if Section A.1.12(B)(1) is also
checked, indicate whether the member is an affiliated service group
member): [ N/A
]
(If Section A.1.12(A)(2) is checked, the letters N/A should be inserted in
these blanks)
A.1.17 CONTRIBUTIONS ON BEHALF OF DISABLED PARTICIPANTS. The Employer
(check one):
[ ] (A) Will [ X ] (B) Will not
make contributions on behalf of disabled Participants on the basis of the
compensation each such Participant would have received for the Limitation
Year if the Participant had been paid at the rate of compensation paid
immediately before becoming permanently and totally disabled.
Such imputed compensation for the disabled Participant may be taken into
account only if the Participant is not a Highly Compensated Employee, and
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contributions made on behalf of such Participant shall be nonforfeitable when
made.
A.1.18 EARLY RETIREMENT DATE.
(A) Shall the Plan provide for an Early Retirement Date (check
one)?
[ ] (1) Yes [ X ] (2) No
If Section A.1.18(A)(1) is checked, complete the following:
(B) Early Retirement Date shall mean the (check one):
[ ] (1) Last day of the Plan Year
[ ] (2) Last day of the month (must coincide with a Valuation
Date)
[ ] (3) [ ] (fill in date) (must coincide with a
Valuation Date)
in which the Participant attains age [ ] (not later than age 64) and
completes [ ] Years of Service for Benefit Accrual with the Employer.
A.1.19 EARNED INCOME. This Section shall apply only if the Plan, as
adopted by the adopting Employer, covers Self-Employed Persons.
A.1.20 EFFECTIVE DATE. If the adoption of this Plan and Trust Agreement
constitutes the adoption of a new plan and trust agreement, check (A) and fill
in blank. If the adoption of this Plan and Trust Agreement constitutes the
restatement of an existing plan and trust agreement (including a prior version
of this Plan and Trust Agreement), check (B) and fill in blanks.
[ ] (A) NEW PLAN. The Effective Date of the Plan and Trust
Agreement is [ ].
[ X ] (B) RESTATED PLAN. The original effective date of the
predecessor plan and trust agreement was [SEPTEMBER 18, 1981].
Except as otherwise specifically provided herein, the Effective
Date of the Plan and Trust Agreement, as restated herein, is
[DECEMBER 1, 1989].
A.1.24 ELIGIBILITY COMPUTATION PERIOD. If Section A.1.33(A)(4) is
checked or if the elapsed time method is checked under Section A.2.2(B)(2),
check here [ ] and do NOT complete the remainder of this Section A.1.24.
Otherwise, the Eligibility Computation Period shall be calculated as follows:
(A) COMPUTATION PERIOD. The Eligibility Computation Period
shall be calculated pursuant to (check (1) or (2)):
[ X ] (1) NORMAL RULE. The Eligibility Computation Period(s)
shall be determined under Section 1.24(A) of the Plan.
[ ] (2) ALTERNATE RULE. The Eligibility Computation Period(s)
shall be determined under Section 1.24(B) of the Plan.
(B) HOURS OF SERVICE REQUIRED. The number of Hours of Service
which must be completed in order to meet the Eligibility Computation Period
requirements of the Plan is [ 1 ] (fill in blank but not to exceed 1,000
Hours of Service).
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<PAGE> 123
A.1.27 EMPLOYEE PENSION BENEFIT PLAN. Does the Employer or any member
of its Controlled Group maintain or has the Employer or any member of its
Controlled Group maintained any other Employee Pension Benefit Plan (check
one)?
[ X ] (A) Yes [ ] (B) No
If Section A.1.27(A) is checked, list such Employee Pension Benefit Plan(s)
in the following lines: [CHESTNUT STREET EXCHANGE FUND RETIREMENT
PROFIT-SHARING PLAN; INDEPENDENCE SQUARE INCOME SECURITIES, INC. RETIREMENT
PROFIT-SHARING PLAN; TEMPORARY INVESTMENT FUND, INC. RETIREMENT
PROFIT-SHARING PLAN; AND TRUST FOR SHORT TERM FEDERAL SECURITIES RETIREMENT
PROFIT-SHARING PLAN. ALL OF THE FOREGOING PLANS WERE MERGED INTO THIS PLAN
EFFECTIVE DECEMBER 1, 1987. ]
(If Section A.1.27(B) is checked, the letters N/A should be inserted in these
blanks).
A.1.33 ENTRY DATE. Entry Date shall mean (check (A) or (B)):
[ X ] (A) REGULAR METHOD.
[ ] (1) The first day of the Plan Year (this option cannot be
used unless the maximum age and service requirements are
reduced by 1/2 year (i.e., age 20 1/2 or less must be
selected in Section A.2.2(B)(1)(a)(ii) and the service
requirement in Section A.2.2(B)(1)(a) (i) must be reduced
by 1/2 year), coincident with, or, if the first day of the
Plan Year does not so coincide, the first day of the Plan
Year next following, the date on which an Employee meets
the eligibility requirements of Article II of the Plan.
[ ] (2) The first day of the Plan Year or the date six months
after the first day of the Plan Year (whichever date is
earlier), coincident with, or if such dates do not so
coincide, the first day of the Plan Year or the date six
months after the first day of the Plan Year (whichever date
is earlier) next following, the date on which an Employee
meets the eligibility requirements of Article II of the
Plan.
[ ] (3) The first day of the month coincident with, or if the
first day of the month does not so coincide, the first day
of the month next following, the date on which an Employee
meets the eligibility requirements of Article II of the
Plan.
[ ] (4) The Employee's date of hire.
[ X ] (5) The date on which the eligibility requirements of
Article II of the Plan are met.
[ ] (6) The first day of the quarter (in the Plan Year)
coincident with, or if the first day of the quarter does
not so coincide, the first day of the quarter (in the Plan
Year) next following, the date on which an Employee meets
the eligibility requirements of Article II of the Plan.
[ ] (7) The first day of the Plan Year in which an Employee
meets the eligibility requirements of Article II of the
Plan.
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<PAGE> 124
[ ] (B) ELAPSED TIME METHOD. The Employee's first day of
employment or reemployment in accordance with the rules of
Section 1.55(B) of the Plan.
A.1.35 EXCESS COMPENSATION. Excess Compensation shall mean Compensation
in excess of (check applicable block):
[ ] (A) Taxable Wage Base.
[ ] (B) [$ ] (if (B) is checked, insert dollar amount not to
exceed the Taxable Wage Base).
[ X ] (C) N/A (The Plan is not integrated with Social Security).
A.1.38 HIGHLY COMPENSATED EMPLOYEE.
(A) CALENDAR YEAR ELECTION. Does the Employer desire to make the
calendar year election provided in Section 1.38 of the Plan for purposes of
determining the look-back year calculation (check one)?
[ ] (1) Yes [ X ] (2) No
IF THIS ELECTION IS MADE, SUCH ELECTION MUST APPLY TO ALL PLANS, ENTITIES AND
ARRANGEMENTS OF THE EMPLOYER.
(B) SIMPLIFIED DEFINITION. If the Employer maintains significant
business activities (and employs Employees) in at least two significantly
separate geographic areas, the Employer may elect the simplified definition
of Highly Compensated Employee in Section 1.38 of the Plan. Does the
Employer desire to make this election (check one):
[ ] (1) Yes [ X ] (2) No [ ] (3) N/A
A.1.44 INVESTMENT MANAGER. The name and address of the Investment
Manager are: [ N/A
]
(If no Investment Manager has been appointed by the Employer, the letters N/A
should be inserted in these blanks).
A.1.46 LEASED EMPLOYEES. Does the Employer have any Leased Employees
(check one)?
[ ] (A) Yes [ X ] (B) No
If Section A.1.46(A) is checked, complete Section A.2.3(H) below.
A.1.47 LIMITATION COMPENSATION. Limitation Compensation shall mean all
of each Participant's (check one):
[ X ] (A) Wages, Tips and Other Compensation as Reported on Form
W-2.
[ ] (B) Code Section 3401(a) Wages.
[ ] (C) Code Section 415 Safe-Harbor Compensation.
A.1.48 LIMITATION YEAR. The Limitation Year is the (check applicable
block):
[ ] (A) Calendar year.
[ X ] (B) Twelve-consecutive month period ending (insert month and
day) [ NOVEMBER 30 ].
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<PAGE> 125
A.1.53 NORMAL RETIREMENT AGE. Normal Retirement Age shall mean (check
one):
[ X ] (A) Age [ 65 ] (fill in blank but not earlier than age 62 and
not later than age 65).
[ ] (B) The later of age [ ] fill in blank but not earlier than
age 62 and not later than age 65) or the [ ] (fill in blank
but not to exceed 5th) anniversary of the first day of the
first Plan Year in which the Participant commenced
participation in the Plan.
A.1.55 ONE-YEAR BREAK IN SERVICE. A One-Year Break In Service shall be
determined by the following method (check one):
[ X ] (A) REGULAR METHOD. If this method is selected, a One-Year
Break In Service shall occur in any Computation Period in which
the Employee completes not more than [ 100] (fill in blank, but
not to exceed 500) Hours of Service.
[ ] (B) ELAPSED TIME METHOD.
A.1.56 OWNER-EMPLOYEES OR SHAREHOLDER-EMPLOYEES.
(A) Does the Plan cover any Owner-Employees, as defined in
Section 1.56 of the Plan (check one)?
[ ] (1) Yes [ ] (2) No
[ X ] (3) N/A (This Plan does not cover any Self-Employed
Persons)
If Section A.1.56(A)(1) is checked, see Section 2.4 of the Plan.
(B) Does the Plan cover any shareholder-employees, as defined in
Section 7.11(A)(7) of the Plan (check one)?
[ ] (1) Yes [ ] (2) No
[ X ] (3) N/A (The Employer is not an electing S corporation)
If Section A.1.56(B)(1) is checked, see Section 7.11(A)(7) of the Plan.
A.1.63 PLAN SPONSOR. The name(s) and address(es) of the Plan Sponsor(s)
are: [ MUNICIPAL FUND FOR TEMPORARY INVESTMENT
BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809 ]
A.1.64 PLAN YEAR. The Plan Year shall be the Computation Period ending
(insert month and day) [ NOVEMBER 30 ].
A.1.72 QUALIFYING EMPLOYER SECURITIES. If this Adoption Agreement
provides for investments in Qualifying Employer Securities, the Employer may
restrict the types of Employer Securities so qualifying by indicating the
restrictions in the following blanks: [ NO RESTRICTIONS
]
(If investment in Qualifying Employer Securities is not restricted to type,
insert in the blanks the words "No Restrictions"; if investment in Qualifying
Employer Securities is not permitted, insert the letters N/A in the blanks).
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<PAGE> 126
A.1.78 SELF-EMPLOYED PERSONS. Does the Plan cover Self-Employed Persons
(check one)?
[ ] (A) Yes [ X ] (B) No
A.1.79 SERVICE.
(A) If not otherwise required by the Plan, shall service with
predecessor employer(s) (to the extent specified in Section A.1.79 (B) and
(C)) be treated as Service with the Employer (check one)?
[ ] (1) Yes [ ] (2) No
[ X ] (3) N/A (No predecessor employer)
(B) If Section A.1.79(A)(1) is checked, service with the
predecessor employer(s) specified in Section A.1.79 (C) shall be treated as
Service with the Employer for purposes of (check applicable blank(s)):
[ ] (1) Eligibility for Participation
[ ] (2) Vesting
[ X ] (3) N/A
(C) If Section A.1.79(A)(1) is checked, indicate the name of the
predecessor employer(s) in the following blanks: [ N/A ]
(If Section A.1.79(A)(2) or (3) is checked, insert the letters N/A in the
blanks).
(D) If Section A.18.17(A) is checked, and the Prior Plan
credited service under the elapsed time method, indicate the equivalency
(if any) which is to be used to credit service in the Computation Period in
which the amendment is effective, if the effective date of the amendment is
other than the first day of the Computation Period (check one):
[ ] Daily [ ] Monthly
[ ] Weekly [ X ] N/A
[ ] Semi-Monthly
A.1.83 TAXABLE YEAR. The Employer's Taxable Year is the year ending
(insert month and day) [ NOVEMBER 30 ].
A.1.85 TOP-HEAVY RATIO. For purposes of establishing present value to
compute the Top-Heavy Ratios of Section 1.85 of the Plan, any benefit shall be
discounted only for mortality and interest based on the following:
(A) INTEREST RATE (check one):
[ X ] (1) APPLICABLE INTEREST RATE (For purposes of this Section
A.1.85, "Applicable Interest Rate" shall mean the interest
rate or rates which would be used, as of the date
distribution commences under a Defined Benefit Plan, by the
Pension Benefit Guaranty Corporation for purposes of
determining the present value of a participant's benefits
under such Defined Benefit Plan if such Defined Benefit
Plan had terminated on the date distribution commences with
insufficient assets to provide benefits guaranteed by the
Pension Benefit Guaranty Corporation on that date. For
purposes of this
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provision, the "date distribution commences" shall mean the
Top-Heavy Valuation Date).
[ ] (2) OTHER (specify) [ ]%
(B) MORTALITY TABLE: [ 1984 UNISEX MORTALITY TABLE]
A.1.86 TOP-HEAVY VALUATION DATE. The Top-Heavy Valuation Date, for
purposes of calculating the Top-Heavy Ratios shall be (fill in blank) [ THE
LAST DAY ] of each Plan Year.
A.1.91 TRUSTEE(S). The name(s) and address(es) of the Trustee(s) are:
[(A) ROBERT R. FORTUNE
----------------------------------------------------------------------
BELLEVUE PARK CORPORATE CENTER
----------------------------------------------------------------------
400 BELLEVUE PARKWAY, SUITE 100
----------------------------------------------------------------------
WILMINGTON, DE 19809
----------------------------------------------------------------------
(B) EDWARD J. ROACH
----------------------------------------------------------------------
BELLEVUE PARK CORPORATE CENTER
----------------------------------------------------------------------
400 BELLEVUE PARKWAY, SUITE 100
----------------------------------------------------------------------
WILMINGTON, DE 19809
----------------------------------------------------------------------
(C)
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
]
----------------------------------------------------------------------
A.1.93 VALUATION DATE. Valuation Date shall mean:
(A) For purposes of determining a Participant's Accrued Benefit
which is distributable in accordance with Article VII of the Plan (check
one):
[ ] (1) Last day of Plan Year.
[ X ] (2) Last day of Plan Year and [ THE LAST DAY OF EVERY
OTHER CALENDAR MONTH DURING THE PLAN YEAR
] (insert date(s)).
(B) For purposes of determining the fair market value of assets
in the Trust Fund and allocating the increase or decrease in the assets in
accordance with Sections 5.3 and 5.4 of the Plan (check one):
[ X ] (1) The date(s) specified in Section A.1.93(A).
[ ] (2) Last day of Plan Year and [
] (insert date(s)).
A.1.97 YEAR OF SERVICE FOR BENEFIT ACCRUAL.
(A) GENERAL. A Year of Service for Benefit Accrual shall be
determined by the following method (check one):
[ X ] (1) REGULAR METHOD. (This method must be selected if
Section A.1.55(A) is checked). In order for a Participant
to have a Year of Service for Benefit Accrual for any Plan
Year, the Participant must complete the number of Hours of
Service indicated (check either (a) and fill in blank or
(b)):
[ X ] (a) The number of Hours of Service which must be
completed with the Employer in order for a Participant
to have a Year of Service for Benefit Accrual is [ 200
] (fill in blank but not to exceed 1,000 Hours of
Service).
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<PAGE> 128
[ ] (b) The number of Hours of Service which must be
completed with the Employer in order for a Participant
to have a Year of Service for Benefit Accrual for a
Plan Year is 501 if the Participant is not an active
Employee on the last day of the Plan Year; if the
Participant is an active Employee on the last day of
the Plan Year, only one Hour of Service with the
Employer must be completed in order for the Participant
to have a Year of Service for Benefit Accrual for such
Plan Year.
NOTE: UNDER PROPOSED TREAS. REG. Sections 1.410(B) AND
1.401(A)(26), IT MAY BE NECESSARY TO PROVIDE THAT NO MORE THAN 501
HOURS OF SERVICE ARE REQUIRED FOR A YEAR OF SERVICE FOR BENEFIT
ACCRUAL FOR ANY PARTICIPANT WHO HAS TERMINATED EMPLOYMENT AND IS
NOT AN ACTIVE EMPLOYEE ON THE LAST DAY OF THE PLAN YEAR AND THAT NO
MORE THAN ONE HOUR OF SERVICE IS REQUIRED FOR A YEAR OF SERVICE FOR
BENEFIT ACCRUAL FOR ANY PARTICIPANT WHO IS AN ACTIVE EMPLOYEE ON
THE LAST DAY OF THE PLAN YEAR. (PROPOSED TREAS. REG. Section
Section 1.410(B)-3(C) AND 1.401(A)(26)-3(B)(8)).
[ ] (2) ELAPSED TIME METHOD. (This method must be selected if
Section A.1.55(B) is checked).
(B) ELECTIVE DEFERRAL CONTRIBUTIONS. If Elective Deferral
Contributions are provided for under Section A.3.4 of the Adoption
Agreement, the number of Hours of Service which a Participant must complete
in a Year of Service for Benefit Accrual is [ N/A] (fill in blank but not
to exceed 1,000 Hours of Service unless Section A.1.97(A)(2) is checked, in
which case insert letters "ET" and the elapsed time rules apply; if there
are no Elective Deferral Contributions, insert letters "N/A") in order for
the Participant to have Elective Deferral Contributions made on his behalf
under the Plan.
(C) MATCHING CONTRIBUTIONS. If Matching Contributions by the
Employer are provided for under Section A.3.5 of the Adoption Agreement,
the number of Hours of Service which a Participant must complete in a Year
of Service for Benefit Accrual is [ N/A ] (fill in blank (if there are
no Matching Contributions, insert letters "N/A") but not to exceed 1,000
Hours of Service unless Section A.1.97(A)(2) is checked, in which case
insert letters "ET" and the elapsed time rules apply) in order for the
Employer to match Participant Contributions or Elective Deferral
Contributions of such Participant under Section A.3.5 of the Adoption
Agreement.
Except as provided in Sections A.1.97(B) and A.1.97(C), a Year of Service
for Benefit Accrual shall be determined under Section A.1.97(A).
A.1.98 YEAR OF SERVICE FOR ELIGIBILITY. The number of Hours of Service
which must be completed in order for an Employee to have a Year of Service for
Eligibility is [ 1 ] (fill in blank, but not to exceed 1,000 Hours of
Service; insert letters N/A if Section A.1.33(A)(4) is checked or if the
elapsed time method is selected under Section A.2.2.(B)(2).
A.1.99 YEAR OF SERVICE FOR VESTING. A Year of Service for Vesting shall
be determined by the following method (check one):
[ X ] (A) REGULAR METHOD. (This method must be selected if Section
A.1.55(A) is checked). The number of Hours of Service which
must be completed in order for a Participant to have a Year of
Service for Vesting is [ 200 ] (fill in blank but not to
exceed 1,000 Hours of Service).
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[ ] (B) ELAPSED TIME METHOD. (This method must be selected if
Section A.1.55(B) is checked).
[ ] (C) N/A (Plan provides 100% immediate vesting).
A.2.2 ELIGIBILITY REQUIREMENTS.
(A) ELIGIBLE CLASSES OF EMPLOYEES:
(1) Except as provided in (2) below, the following Employees
are or shall be eligible to participate in the Plan (check
one):
[ X ] (a) All Employees
[ ] (b) Salaried Employees only (as defined in Section
1.77 of the Plan)
[ ] (c) Hourly Employees only (as defined in Section 1.40
of the Plan)
[ ] (d) All Employees except (specify class or classes of
Employees to be excluded): [
]
(2) The following Employees shall not be eligible to
participate in the Plan (check block(s) if such Employees are
to be excluded):
[ X ] (a) Union Employees (as defined in Section 1.92 of the
Plan)
[ X ] (b) Non-Resident Aliens (as defined in Section 1.52 of
the Plan)
(B) LENGTH OF SERVICE; MINIMUM AGE: Participation in the Plan
shall be determined under either the regular method or the elapsed time
method (check (1) or (2)):
[ X ] (1) REGULAR METHOD. If the regular method is selected,
check (a) or (b):
[ ] (a) SERVICE AND AGE REQUIREMENT. In order to
participate in the Plan, an Employee shall meet the
following requirements (complete blanks):
(i) SERVICE.
(AA) ELECTIVE DEFERRAL CONTRIBUTIONS. An Employee
shall have completed [ ] Year of Service for
Eligibility (not more than one Year of Service for
Eligibility) to be eligible to make Elective Deferral
Contributions.
(BB) MATCHING CONTRIBUTIONS. An Employee shall have
completed [ ] Year(s) of Service for Eligibility
(not more than two Years of Service for Eligibility)
to be eligible for Matching Contributions.
(CC) EMPLOYER CONTRIBUTIONS AND ALL OTHER PURPOSES.
An Employee shall have completed [ ] Year(s) of
Service
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for Eligibility (not more than two Years of Service
for Eligibility) for Employer Contributions and for
all other purposes of the Plan.
Note that in Section A.2.2(B)(1)(a)(i)(BB) and (CC) not
more than one Year of Service for Eligibility may be
selected, if the option under Section A.7.6(B)(1)(a) is
not elected nor more than two Years of Service for
Eligibility if the option under Section A.7.6(B)(1)(a) is
elected. For purposes of this Section A.2.2(B)(1)(a)(i),
Service includes service with a predecessor employer if
the Employer adopting the Plan is maintaining the plan of
a predecessor employer. Such Service also includes
predecessor service to the extent required by the
Secretary of the Treasury or his delegate.
Service for purposes of eligibility also includes service
with a predecessor employer if such service is not
otherwise required to be included under Sections 1.79 and
2.2 of the Plan to the extent provided in Section A.1.79.
(ii) AGE. An Employee shall have attained [ ]
years of age (not more than age 21).
[ X ] (b) NO SERVICE OR AGE REQUIREMENT. The Plan shall
cover Employees in eligible classes effective on the
first Entry Date coinciding with, or next following,
their date of hire.
[ ] (2) ELAPSED TIME METHOD. The Employee shall be eligible
to participate in the Plan on his first day of employment
or reemployment in accordance with the rules of Section
1.55(B) of the Plan.
A.2.3 ADDITIONAL RULES.
(A)-(F) RESERVED.
(G) ALLOCATIONS TO PARTICIPANTS. Except as otherwise provided
below, a Participant shall share in Employer contributions in any Plan Year
if the Participant completes a Year of Service for Benefit Accrual during
such Plan Year. Notwithstanding any other provision of the Plan or this
Adoption Agreement, any Participant making Elective Deferral or Participant
Contributions to the Plan for any Plan Year shall be entitled to such
Elective Deferral or Participant Contributions.
(1) EMPLOYER CONTRIBUTIONS. This provision shall only apply
if Section A.1.97(A)(1) is checked and then only to the
extent permitted by Section 3.11 of the Plan.
(a) SEPARATION FROM SERVICE FOR REASONS OTHER THAN
DISABILITY, DEATH OR RETIREMENT.
(i) Shall Participants who separate from the service
of the Employer (for reasons other than Disability,
death or retirement) before the end of the Plan Year
even if they have completed a Year of Service for
Benefit Accrual share in Employer
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contributions for such Plan Year (check one)?
[ X ] (AA) Yes [ ] (BB) No
[ ] (CC) N/A (Section A.1.97(A)(2) checked)
NOTE THAT SECTION A.2.3(G)(1)(A)(I)(AA) MUST BE CHECKED IF SECTION
A.1.97(A)(1)(B) IS CHECKED.
(ii) If Section A.2.3(G)(1)(a)(i)(AA) is checked,
shall such Participant share in Employer contributions
for such Plan Year if such Participant has not
completed a Year of Service for Benefit Accrual (check
one)?
[ X ] (AA) Yes [ ] (BB) No
[ ] (CC) N/A (Section A.2.3 (G)(1) (a)(i)(AA) not
checked)
(b) DISABILITY, DEATH OR RETIREMENT.
(i) Shall Participants who separate from the service
of the Employer because of Disability, death or
retirement before the end of the Plan Year even if they
have completed a Year of Service for Benefit Accrual
share in Employer contributions for such Plan Year
(check one)?
[ X ] (AA) Yes [ ] (BB) No
[ ] (CC) N/A (Section A.1.97(A)(2) checked)
NOTE THAT SECTION A.2.3(G)(1)(B)(I)(AA) MUST BE CHECKED IF SECTION
A.1.97(A)(1)(B) IS CHECKED.
(ii) If Section A.2.3(G)(1)(b)(i)(AA) is checked,
shall such Participant share in Employer contributions
for such Plan Year if such Participant has not
completed a Year of Service for Benefit Accrual (check
one)?
[ X ] (AA) Yes [ ] (BB) No
[ ] (CC) N/A (Section A.2.3(G)(1)(b) (i)(AA) not
checked)
(2) MATCHING CONTRIBUTIONS. This provision shall only apply
if Section A.1.97(A)(1) is checked.
(a) SEPARATION FROM SERVICE FOR REASONS OTHER THAN
DISABILITY, DEATH OR RETIREMENT.
(i) Shall Participants who separate from the service of
the Employer (for reasons other than Disability, death
or retirement) before the end of the (check one) [ ]
(aa) month [ ] (bb) quarter [ ] (cc) Plan Year for
which the Matching Contribution is being made even if
they have completed a Year of Service for
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Benefit Accrual share in Matching Contributions for
such period (check one)?
[ ] (AA) Yes [ ] (BB) No
[ X ] (CC) N/A (No Matching Contributions or Section
A.1.97(A)(2) checked)
NOTE THAT SECTION A.2.3(G)(2)(A)(I)(AA) MUST BE CHECKED IF SECTION
A.1.97 (A)(1)(B) IS CHECKED.
(ii) If Section A.2.3(G)(2)(a)(i) (AA) is checked,
shall such Participant share in Matching Contributions
for such (check one) [ ] (aa) month [ ] (bb)
quarter [ ] (cc) Plan Year if such Participant has
not completed a Year of Service for Benefit Accrual
(check one)?
[ ] (AA) Yes [ ] (BB) No
[ X ] (CC) N/A (Section A.2.3(G)(2)(a)(i) (AA) not
checked)
(b) DISABILITY, DEATH OR RETIREMENT.
(i) Shall Participants who separate from the service
of the Employer because of Disability, death or
retirement before the end of the (check one) [ ] (aa)
month [ ] (bb) quarter [ ] (cc) Plan Year for which
the Matching Contribution is being made even if they
have completed a Year of Service for Benefit Accrual
share in Matching Contributions for such period (check
one)?
[ ] (AA) Yes [ ] (BB) No
[ X ] (CC) N/A (no Matching Contributions or Section
A.1.97(A)(2) checked)
NOTE THAT SECTION A.2.3(G)(2)(B)(I)(AA) MUST BE CHECKED IF SECTION
A.1.97(A)(1)(B) IS CHECKED.
(ii) If Section A.2.3(G)(2)(b) (i)(AA) is checked,
shall such Participant share in Matching Contributions
for such (check one) [ ] (aa) month [ ] (bb)
quarter [ ] (cc) Plan Year if such Participant has
not completed a Year of Service for Benefit Accrual
(check one):
[ ] (AA) Yes [ ] (BB) No
[ X ] (CC) N/A (Section A.2.3(G)(2)(b)(i)(AA) not
checked.
(H) LEASED EMPLOYEES. Shall Leased Employees be eligible to
participate in the Plan (check applicable block)?
[ ] (1) Yes [ ] (2) No [ X ] (3) N/A
If Section A.2.3(H)(1) is checked, describe Leased Employees to be covered by
the Plan and conditions and other limitations on such coverage in the
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following lines: [ N/A ]
(If not applicable, insert letters N/A in these blanks)
A.2.4 PLANS COVERING OWNER-EMPLOYEES. Section 2.4 of the Plan does not
apply unless Section A.1.56(A) is checked.
A.3.1 EMPLOYER CONTRIBUTIONS.
(A) EMPLOYER CONTRIBUTIONS.
(1) GENERAL. Shall the Employer, in its sole discretion, be
permitted to make Employer Contributions to the Plan (check
one)?
[ X ] (a) Yes [ ] (b) No
If Section A.3.1(A)(1)(a) is checked, such Employer
Contributions shall be allocated under Section A.5.1(A).
(2) PROFIT REQUIREMENTS. Shall Profits be required for
Employer Contributions to the Plan (check one)?
[ ] (a) Yes [ X ] (b) No
(B) QUALIFIED NONELECTIVE CONTRIBUTIONS.
(1) ELECTION. May the Employer be permitted to make, in its
sole discretion, Qualified Nonelective Contributions to the
Plan (check one)?
[ ] (a) Yes [ ] (b) No
[ X ] (c) N/A (No Elective Deferral or Participant
Contributions)
(2) AMOUNT. If the Employer does make such contributions to
the Plan, then the amount of such contributions for each Plan
Year shall be (check one):
[ ] (a) [ ] percent (not to exceed 15 percent) of the
Compensation of all Participants eligible to share in
the allocation.
[ ] (b) [ ] percent of the Profits, but in no event more
than [$ ] for any Plan Year.
[ ] (c) An amount determined by the Employer.
[ X ] (d) N/A (Qualified Nonelective contributions not
permitted).
(3) PARTICIPANTS ELIGIBLE FOR ALLOCATION. Allocation of
Qualified Nonelective Contributions shall be made to the
accounts of (check one):
[ ] (a) All Participants
[ ] (b) Only Participants who are Non-Highly Compensated
Employees
[ ] (c) Only Participants who are Non-Highly Compensated
Employees and who are (specify group to which
allocations are to be made) [
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]
[ X ] (d) N/A (Qualified Nonelective Contributions not
permitted)
(4) MANNER OF ALLOCATION. Allocation of Qualified
Nonelective Contributions shall be made (check one):
[ ] (a) In the ratio which each affected Participant's
Compensation for the Plan Year bears to the total
Compensation of all affected Participants for such Plan
Year.
[ ] (b) In the ratio which each affected Participant's
Compensation not in excess of [$ ] for the Plan
Year bears to the total Compensation of all affected
Participants not in excess of [$ ] for such Plan
Year.
[ X ] (c) N/A (Qualified Nonelective Contributions not
permitted).
(C) QUALIFIED MATCHING CONTRIBUTIONS.
(1) ELECTION. May the Employer be permitted to make
Qualified Matching Contributions to the Plan?
[ ] (a) Yes [ ] (b) No
[ X ] (c) N/A (No Elective Deferrals or Participant
Contributions)
(2) ALLOCATION. The Employer shall, in its sole discretion,
make Qualified Matching Contributions to the Plan on behalf
of (check one):
[ ] (a) All Participants
[ ] (b) All Participants who are Non-Highly Compensated
Employees
[ ] (c) All Participants who are Non-Highly Compensated
Employees and who are (specify group to which
allocations are to be made)
[
]
[ X ] (d) N/A (No Qualified Matching Contributions)
If Section A.3.1(C)(2)(a), (b) or (c) is checked, the
allocation shall be made to applicable Participants who make
(check (i) and/or (ii) or (iii)):
[ ] (i) Elective Deferral Contributions
[ ] (ii) Participant Contributions
[ X ] (iii) N/A (No Qualified Matching Contributions)
(3) AMOUNT. The Employer shall contribute and allocate to
each Participant's Qualified Matching
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Contribution account an amount determined as follows (check
applicable block(s)):
[ ] (a) ELECTIVE DEFERRAL CONTRIBUTIONS. The Employer
shall contribute an amount equal to (check one):
[ ] (i) [ ] percent of the Participant's Elective
Deferral Contributions; or
[ ] (ii) that percent of the Participant's Elective
Deferral Contributions, as determined by the
Employer, in its sole discretion, for the Plan
Year.
[ ] (b) PARTICIPANT CONTRIBUTIONS. The Employer shall
contribute an amount equal to (check one):
[ ] (i) [ ] percent of the Participant's
Participant Contributions; or
[ ] (ii) that percent of the Participant's
Participant Contributions, as determined by the
Employer, in its sole discretion, for the Plan
Year.
[ X ] (c) N/A (No Qualified Matching Contributions).
The Employer shall not match amounts provided above in excess of [$ N/A],
or in excess of [N/A] percent of the Participant's Compensation (if
there are no limitations or if this provision is not otherwise
applicable, insert letters N/A in blank(s)).
A.3.2 PARTICIPANT CONTRIBUTIONS.
(A) PERMISSIBILITY. Participant Contributions shall (check (1),
(2) or (3)):
[ X ] (1) Not be permitted under the Plan (NOTE: THIS BLOCK
MUST BE CHECKED UNLESS THE PLAN HAS A CODA AS INDICATED BY
CHECKING SECTION A.3.4(A)(2)).
[ ] (2) Be permitted (but not required) in the amounts
provided by Section 3.2 of the Plan but subject to the
limitations of Section 3.8 of the Plan.
[ ] (3) Be required in order for an Employee to participate in
the Plan. Such Participant Contributions shall be made by
payroll deduction and shall equal no less than [ ]
percent but shall not exceed [ ] percent (not to exceed 6
percent) of the Participant's Compensation for the Plan
Year. The Employee shall enter into an agreement with the
Employer providing for Participant Contributions in any
amount from [ ] percent to [ ] percent (not to exceed 6
percent) of the Participant's Compensation for the Plan
Year. In addition, the Employee may, but is not required
to, make voluntary Participant Contributions in the amounts
provided
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for in Section 3.2 of the Plan subject to the limitations
of Section 3.8 of the Plan.
(B) PAYROLL DEDUCTION. Participant Contributions by payroll
deduction (check (1), (2) or (3)):
[ ] (1) Shall not be permitted.
[ ] (2) Shall be permitted.
[ X ] (3) Are N/A (No Participant Contributions).
A.3.4 ELECTIVE DEFERRAL CONTRIBUTIONS.
(A) ELECTION. Elective Deferral Contributions shall (check (1)
or (2)):
[ X ] (1) Not be permitted under the Plan.
[ ] (2) Be permitted in accordance with the provisions of
Section 3.4 of the Plan.
If Section A.3.4(A)(2) is checked, a salary reduction agreement must be
completed and filed by the Participant with the Administrative Committee
prior to the date the Elective Deferral Contributions are made.
(B) ELECTION CHANGES. If Section A.3.4(A)(2) is checked, the
Participant shall be permitted to enter into a new salary reduction agreement
(check one):
[ ] (1) Monthly [ ] (2) Quarterly
[ ] (3) Semi-Annually [ ] (4) Annually
[ ] (5) Other (Specify): [ ]
[ X ] (6) N/A
A salary reduction agreement shall remain in effect until revoked or changed.
(C) REVOCATION OF ELECTION. A Participant shall be permitted to
revoke his salary reduction agreement (check one):
[ ] (1) Only as permitted under Section A.3.4(B).
[ ] (2) Upon 15 days' written notice to the Administrative
Committee on the Appropriate Form.
[ X ] (3) N/A.
(D) INCLUSION OF QUALIFIED MATCHING AND QUALIFIED NONELECTIVE
CONTRIBUTIONS. Qualified Matching Contributions and Qualified Nonelective
Contributions may be taken into account as Elective Deferral Contributions
for purposes of calculating the "Actual Deferral Percentages." In
determining Elective Deferral Contributions for the purpose of the ADP test,
the Employer shall include, under the Plan or any other plan of the Employer
as provided by Treasury regulations under the Code, (check one):
[ ] (1) Qualified Matching Contributions.
[ ] (2) Qualified Nonelective Contributions.
[ X ] (3) N/A (Elective Deferral Contributions are not permitted
or Employer does not desire to make this election or no
Qualified Matching or Qualified Nonelective Contributions
are permitted).
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(E) QUALIFIED MATCHING CONTRIBUTIONS - AMOUNT. The amount of
Qualified Matching Contributions made under Sections 3.1 of the Plan and
A.3.1 of this Adoption Agreement and taken into account as Elective Deferral
Contributions for purposes of calculating the "Actual Deferral Percentages,"
subject to such other requirements as may be prescribed by the Secretary of
the Treasury, shall be (check one):
[ ] (1) All such Qualified Matching Contributions.
[ ] (2) Such Qualified Matching Contributions that are needed
to meet the "Actual Deferral Percentage" test stated in
Section 3.4(B)(2) of the Plan.
[ X ] (3) N/A (Elective Deferral Contributions not permitted
and/or Qualified Matching Contributions not permitted).
(F) QUALIFIED NONELECTIVE CONTRIBUTIONS - AMOUNT. The amount of
Qualified Nonelective Contributions made under Sections 3.1 of the Plan and
A.3.1 of this Adoption Agreement and taken into account as Elective Deferral
Contributions for purposes of calculating the "Actual Deferral Percentages,"
subject to such other requirements as may be prescribed by the Secretary of
the Treasury, shall be (check one):
[ ] (1) All such Qualified Nonelective Contributions.
[ ] (2) Such Qualified Nonelective Contributions that are
needed to meet the Actual Deferral Percentage test stated
in Section 3.4(B)(2) of the Plan.
[ X ] (3) N/A (Elective Deferral Contributions and/or Qualified
Nonelective Contributions not permitted).
A.3.5 MATCHING CONTRIBUTIONS.
(A) ELECTION. Matching Contributions by the Employer (check
(1), (2) or (3)):
[ ] (1) Shall not be permitted under the Plan.
[ ] (2) Shall be permitted in accordance with the provisions
of Section 3.5 of the Plan and Section A.3.5(B) of the
Adoption Agreement.
[ X ] (3) Are N/A (No Elective Deferral or Participant
Contributions).
If Section A.3.5(A)(2) is checked, the Employer may, in its sole
discretion, match, in accordance with Section A.3.5(B), the Elective
Deferral Contributions of a Participant made pursuant to Section A.3.4 or
Participant Contributions made pursuant to Section A.3.2.
(B) ALLOCATION OF MATCHING CONTRIBUTIONS.
(1) AMOUNT. If Section A.3.5(A)(2) is checked, Matching
Contributions for the Plan Year shall be allocated to the
Matching Account of each Participant, on whose behalf
Elective Deferral Contributions for the Plan Year are being
made, in an amount equal to (check one):
[ ] (a) [ ] (insert percentage) percent of the (check
applicable block): (i) [ ] Elective Deferral
Contribution; (ii)[ ]
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Participant Contribution made on behalf of each
Participant for such Plan Year; or
[ ] (b) that percent of the (check applicable block): (i)
[ ] Elective Deferral Contribution; (ii) [ ]
Participant Contribution made on behalf of each
Participant for such Plan Year as determined by the
Employer, in its sole discretion, for such Plan Year.
[ X ] (c) N/A (No Matching Contributions).
In no event shall such Matching Contribution exceed the
lesser of (aaa) (insert percentage) [ ] percent of such
Participant's Compensation for such Plan Year or (bbb)
(insert amount, if any, of dollar limitation)
[$ ].
(2) ALLOCATION DATE. Shall Matching Contributions be
allocated effective as of a date or dates other than the last
day of the Plan Year (check one)?
[ ] (a) Yes [ ] (b) No [ X ](c) N/A
(aaa) If Section A.3.5(B)(2)(a) is checked, list the
date(s) (month and day) in each Plan Year as of which
Matching Contributions shall be allocated:
[
].
(bbb) If Section A.3.5(B)(2)(a) is checked, a
Participant who is employed as of a date specified for
the allocation of Matching Contributions and on whose
behalf Elective Deferral Contributions or Participant
Contributions are being made shall receive an
allocation of Matching Contributions as of such date
regardless of the number of Hours of Service credited
to the Participant for purposes of a Year of Service
for Benefit Accrual as of such date, notwithstanding
anything in the Plan to the contrary.
(C) VESTING. Matching Contributions shall be vested in
accordance with the following schedule (check one):
[ ] (1) Nonforfeitable when made.
[ ] (2) The Plan's general vesting schedule, other than that
for Elective Deferral Contributions.
[ ] (3) [The sponsor may add elections for one or more of the
vesting schedules that comply with section 411(a)(2) of the
Code:
[
].
[ X ] (4) N/A (No Matching Contributions).
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(D) "AVERAGE CONTRIBUTION PERCENTAGE" COMPUTATIONS.
(1) In computing the "Average Contribution Percentage" with
respect to Participant Contributions and Matching
Contributions, the Employer shall take into account, under
this Plan or any other plan of the Employer, as provided by
Treasury regulations, and include as "Contribution Percentage
Amounts" (check applicable block or blocks):
[ ] (a) Elective Deferral Contributions.
[ ] (b) Qualified Nonelective Contributions.
[ X ] (c) N/A (There are no Participant or Matching
Contributions, or Employer does not desire to make this
election).
(2) The amount of Qualified Nonelective Contributions that
are made under Section 3.1 of the Plan and Section A.3.1 and
taken into account as "Contribution Percentage Amounts" for
purposes of calculating the "Average Contribution
Percentage," subject to such other requirements as may be
prescribed by the Secretary of the Treasury, shall be (check
one):
[ ] (a) All such Qualified Nonelective Contributions.
[ ] (b) Such Qualified Nonelective Contributions that are
needed to meet the "Average Contribution Percentage"
test stated in Section 3.2 of the Plan.
[ X ] (c) N/A (No Participant or Matching Contributions or
Employer does not desire to make this election).
(3) The amount of Elective Deferral Contributions made under
Section 3.4 of the Plan and Section A.3.4 and taken into
account as "Contribution Percentage Amounts" for purposes of
calculating the "Average Contribution Percentage", subject to
such other requirements as may be prescribed by the Secretary
of the Treasury, shall be:
[ ] (a) All such Elective Deferral Contributions.
[ ] (b) Such Elective Deferral Contributions that are
needed to meet the "Average Contribution Percentage"
test stated in Section 3.2 of the Plan.
[ X ] (c) N/A (There are no Elective Deferral Contributions
under the Plan or Employer did not make election under
Section A.3.5(D)(1)).
(4) To the extent forfeitable, forfeitures of "Excess
Aggregate Contributions" shall be:
[ ] (a) Applied to reduce Employer contributions.
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[ ] (b) Allocated, after all other forfeitures under the
Plan, to each Participant's Matching Account in the
ratio which each Participant's Compensation for the
Plan Year bears to the total Compensation of all
Participants for such Plan Year. Such forfeitures
shall not be allocated to the account of any Highly
Compensated Employee.
[ X ] (c) N/A (No Matching Contributions).
A.3.8 LIMITATIONS ON ALLOCATIONS.
(A) GENERAL RULES. If the Employer maintains or ever maintained
another qualified plan (other than a paired defined contribution regional
prototype plan) in which any Participant in this Plan is (or was) a
participant or could become a participant, the Employer must complete this
Section A.3.8. The Employer must also complete this Section A.3.8 if it
maintains a Welfare Benefit Fund or an individual medical benefit account, as
defined in section 415(l)(2) of the Code, under which amounts are treated as
"Annual Additions" with respect to any Participant in this Plan. Does the
Employer maintain or has the Employer maintained any such plan(s) (check
one):
[ ] (1) Yes [ X ] (2) No
If Section A.3.8(A)(1) is checked, complete Section A.3.8(B) and/or (C).
(B) MAINTENANCE OF OTHER DEFINED CONTRIBUTION PLAN. If the
Participant is covered under another qualified Defined Contribution Plan
maintained by the Employer, other than a regional prototype plan (check
applicable provisions as necessary):
[ ] (1) The provisions of Section 3.8(B) of the Plan shall
apply as if the other plan were a regional prototype
plan.
[ X ] (2) Provide the method under which the plans will limit
the total "Annual Additions" to the "Maximum Permissible
Amount", and will properly reduce any "Excess Amounts",
in a manner that precludes Employer discretion: [CERTAIN
OF THE PARTICIPATING EMPLOYERS HAVE MAINTAINED OTHER
QUALIFIED DEFINED CONTRIBUTION PLANS. ALL SUCH PLANS
WERE MERGED INTO THIS PLAN EFFECTIVE DECEMBER 1, 1987.
TO THE EXTENT REQUIRED, ALL ADJUSTMENTS SHALL BE MADE
UNDER THIS PLAN.].
[ ] (3) N/A (No other qualified Defined Contribution Plan
(other than a regional prototype plan), Defined Benefit
Plan, Welfare Benefit Fund or individual medical benefit
account maintained).
(C) MAINTENANCE OF A DEFINED BENEFIT PLAN. If a Participant is or
has ever been a participant in a Defined Benefit Plan maintained by the
Employer, check either (1) or (2) and complete as necessary:
[ ] (1) The limitations set forth in Section 3.8(C)(2) through
(4) of the Plan shall apply.
[ ] (2) Provide the method under which the Plan will satisfy
the 1.0 limitation of section 415(e) of the Code (such
language must preclude employer discretion; see Treas. Reg.
Section 1.415-1 for guidance) in the following blanks:
[
A-26
<PAGE> 141
].
IF ADDITIONAL SPACE IS REQUIRED THE EMPLOYER IS TO INSERT APPLICABLE
LIMITATIONS IN AN ATTACHMENT TO THIS ADOPTION AGREEMENT. SUCH
ATTACHMENT SHALL BE ADDED TO, AND MADE A PART OF, THIS ADOPTION
AGREEMENT.
A.3.9 ROLLOVERS.
(A) PARTICIPANT ROLLOVERS. May Participants be permitted to make
Rollover Contributions to the Plan (check one)?
[ X ] (1) Yes [ ] (2) No
(B) NON-PARTICIPANT ROLLOVERS. May Employees other than
Participants be permitted to make Rollover Contributions to the Plan (check
one)?
[ ] (1) Yes [ X ] (2) No
A.3.10 TRANSFERS.
(A) PARTICIPANT DIRECT TRANSFERS. May Participants be permitted
to have direct transfers made on their behalf to the Plan (check one)?
[ X ] (1) Yes [ ] (2) No
(B) NON-PARTICIPANT DIRECT TRANSFERS. May Employees other than
Participants be permitted to have direct transfers made on their behalf to
the Plan (check one)?
[ ] (1) Yes [ X ] (2) No
(C) TRANSFERS OF ACCOUNTS. Are assets being transferred to this
Plan from a qualified plan covering Key Employees in a Top-Heavy Plan or
five-percent owners (within the meaning of section 416(i)(1) of the Code)
(check one)?
[ ] (1) Yes [ X ] (2) No
If such assets are transferred, the restrictions of Section 3.10(B) of the
Plan apply.
A.3.11 TOP-HEAVY PROVISIONS.
(A) APPLICATION OF PROVISIONS AND ADJUSTMENTS.
(1) APPLICATION. Is the Plan a Top-Heavy Plan on the
Effective Date (check one):
[ ] (a) Yes [ X ] (b) No
[ ] (c) Uncertain (Note that if this box is checked and the
Plan is a Top-Heavy Plan, the Top-Heavy Plan provisions
as set forth herein shall apply)
(2) ADJUSTMENTS. If the Employer maintains more than one
plan in a Permissive or Required Aggregation Group, set forth
here any adjustments to be made for Employer contributions or
benefits attributable to Employer contributions under such
other plan(s) in determining the amount of contributions to
be made under the Top-Heavy
A-27
<PAGE> 142
provisions of this Plan (if not applicable, insert letters
N/A)): [ N/A
]
(B) VESTING. The nonforfeitable interest of each Employee in
his account balance attributable to Employer contributions shall be
determined on the basis of the following (check either (1) or (2) and fill in
blank(s):
[ ] (1) 100% vesting after [ ] (not to exceed 3) Years of
Service for Vesting;
[ X ] (2) [ 10 ]% (no minimum) vesting after 1 Year of Service
for Vesting;
[ 25 ]% (not less than 20) vesting after 2 Years of
Service for Vesting;
[ 50 ]% (not less than 40) vesting after 3 Years of
Service for Vesting;
[ 75 ]% (not less than 60) vesting after 4 Years of
Service for Vesting;
[ 100 ]% (not less than 80) vesting after 5 Years of
Service for Vesting;
100% vesting after 6 Years of Service for Vesting.
If the vesting schedule under the Plan shifts in or out of the above
schedule for any Plan Year because of the Plan's top-heavy status, such
shift is an amendment to the vesting schedule and the election in Section
15.2(G) of the Plan applies.
A.5.1 ALLOCATIONS. If Section A.3.1(A)(1)(a) is checked, complete the
following:
(A) ALLOCATION OF EMPLOYER CONTRIBUTIONS.
(1) METHOD. Shall Employer Contributions (if any) to the
Employer Accounts of Participants be integrated with Social
Security contributions, subject to the overall permitted
disparity limits set forth below (check (a) if integrated,
(b) if not integrated)?
[ ] (a) Yes
The annual Employer Contribution shall not exceed the
limitations set forth in Section A.5.1(A)(2). In any Plan
Year in which there are Employer Contributions, such Employer
Contributions shall, subject to the Top-Heavy Plan
provisions, be allocated to each Participant's Employer
Account as follows:
(i) ALLOCATION OF EMPLOYER CONTRIBUTIONS FOR PLAN
YEARS IN WHICH PLAN IS A TOP-HEAVY PLAN. If the Plan
is a Top-Heavy Plan for the Plan Year, the Employer
Contribution for such Plan Year shall be allocated to
each Participant's Employer Account as follows:
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<PAGE> 143
(aa) "BASE CONTRIBUTION PERCENTAGE". First, (check
either (aaa) or (bbb))(percent in either (aaa) or
(bbb) must not be less than the "Minimum Top-Heavy
Rate"):
[ ] (aaa) [ ] (insert percent), or
[ ] (bbb) that percent determined by the
Employer for the Plan Year
of the Participant's "Base Compensation" for such
Plan Year shall be allocated to the Employer Account
of such Participant;
(bb) "EXCESS CONTRIBUTION PERCENTAGE". Second,
(check either (aaa) or (bbb))(percent in either
(aaa) or (bbb) must not be less than the "Minimum
Top-Heavy Rate" and must not exceed the "Maximum
Excess Allowance"):
[ ] (aaa)[ ] (insert percent) percent, or
[ ] (bbb) that percent determined by the
Employer for the Plan Year
of the Participant's Excess Compensation for such
Plan Year shall be allocated to the Employer Account
of such Participant (for purposes of this allocation,
forfeitures allocated to a Participant in the Plan
Year shall be treated as Employer Contributions);
however, in the case of any Participant who has
exceeded the cumulative permitted disparity limit
described below, the Employer shall contribute for
such Participant an amount equal to the "Excess
Contribution Percentage" multiplied by the
Participant's total Compensation for the Plan Year;
and
(cc) "ADDITIONAL CONTRIBUTION PERCENTAGE". Lastly,
any excess over (aa) and (bb) shall be allocated to
each Participant's Employer Account in the same ratio
as his Compensation for such Plan Year bears to the
Compensation of all Participants for such Plan Year.
(ii) ALLOCATION OF EMPLOYER CONTRIBUTIONS FOR PLAN
YEARS IN WHICH PLAN IS NOT A TOP-HEAVY PLAN. The
Employer Contribution for the Plan Year, if the Plan is
not a Top-Heavy Plan for the Plan Year, shall be
allocated as follows:
(aa) "BASE CONTRIBUTION PERCENTAGE". First, (check
either (aaa) or (bbb)):
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<PAGE> 144
[ ] (aaa)[ ] (insert percent) percent, or
[ ] (bbb) that percent determined by the
Employer for the Plan Year
of the Participant's "Base Compensation" for such
Plan Year shall be allocated to the Employer Account
of such Participant;
(bb) "EXCESS CONTRIBUTION PERCENTAGE". Second,
(check either (aaa) or (bbb))(percent in either (aaa)
or (bbb) must not exceed the "Maximum Excess
Allowance"):
[ ] (aaa)[ ] (insert percent) percent, or
[ ] (bbb) that percent determined by the
Employer for the Plan Year
of the Participant's Excess Compensation for such
Plan Year shall be allocated to the Employer Account
of such Participant (for purposes of this allocation,
forfeitures allocated to a Participant in the Plan
Year shall be treated as Employer Contributions);
however, in the case of any Participant who has
exceeded the cumulative permitted disparity limit
described below, the Employer shall contribute for
such Participant an amount equal to the "Excess
Contribution Percentage" multiplied by the
Participant's total Compensation for the Plan Year;
and
(cc) "ADDITIONAL CONTRIBUTION PERCENTAGE". Lastly,
any excess over (aa) and (bb) shall be allocated to
each Participant's Employer Account in the same ratio
as his Compensation for such Plan Year bears to the
Compensation of all Participants for such Plan Year.
With respect to any Employee who is a Participant in the Plan for
only a portion of the Plan Year for which the Employer Contribution
is made, the allocation to such Employee of the Employer
Contribution (other than the Top-Heavy portion, if the Plan is a
Top-Heavy Plan), shall be (check one):
[ ] (AA) Based only upon the amount of "Base
Compensation", Excess Compensation and/or
Compensation earned by such Employee and all
other Employees during the portion of the Plan
Year in which they are or were Plan Participants.
[ ] (BB) Based upon the amount of "Base
Compensation", Excess Compensation and/or
Compensation earned by such Employee and all
other Employees during the entire Plan Year.
A-30
<PAGE> 145
NOTE THAT THIS PLAN MAY NOT PROVIDE FOR PERMITTED DISPARITY IF THE EMPLOYER
MAINTAINS ANY OTHER PLAN THAT PROVIDES FOR PERMITTED DISPARITY AND BENEFITS
ANY OF THE SAME PARTICIPANTS.
[ X ] (b) No
The annual Employer Contributions (if any) shall be determined by
the Employer for each Plan Year but shall not exceed the
limitations of Section A.5.1(A)(2). In any Plan Year in which
there are Employer Contributions, such Employer Contributions
shall, subject to the Top-Heavy Plan provisions, be allocated to
such Participant's Employer Account as follows:
(i) ALLOCATION OF EMPLOYER CONTRIBUTIONS FOR PLAN
YEARS IN WHICH PLAN IS A TOP-HEAVY PLAN. If the Plan
is a Top-Heavy Plan for the Plan Year, the Employer
Contribution for such Plan Year shall be first
allocated to each Participant's Employer Account in the
same ratio as his Compensation for such Plan Year bears
to the Compensation of all Participants for such Plan
Year, in an amount which is not less than the "Minimum
Top-Heavy Rate". The balance of the Employer
Contribution for such Plan Year shall be allocated to
each Participant's Employer Account as follows (check
one):
[ ] (aa) In the same ratio as his Compensation for
such Plan Year bears to the Compensation of all
Participants for such Plan Year.
[ X ] (bb) In the same ratio as his Compensation for
the portion of the Plan Year in which he was a
Participant bears to the Compensation of all
Participants for the portion of the Plan Year
in which they were Participants.
(ii) ALLOCATION OF EMPLOYER CONTRIBUTIONS FOR PLAN
YEARS IN WHICH PLAN IS NOT A TOP-HEAVY PLAN. The
Employer Contribution for the Plan Year, if the Plan is
not a Top-Heavy Plan for the Plan Year, shall be
allocated to each Participant's Employer Account as
follows (check one):
[ ] (aa) In the same ratio as his Compensation for
such Plan Year bears to the Compensation of all
Participants for such Plan Year.
[ X ] (bb) In the same ratio as his Compensation for
the portion of the Plan Year in which he was a
Participant bears to the Compensation of all
Participants for the portion of the Plan Year
in which they were Participants.
[ ] (c) N/A (Section A.3.1(A)(1)(b) checked)
A-31
<PAGE> 146
(2) LIMITATIONS ON EMPLOYER CONTRIBUTIONS. The following
limitations on Employer Contributions apply:
(a) DEDUCTION LIMITATIONS. The annual Employer,
Matching, and Elective Deferral Contributions and any
other Employer contribution shall, in the aggregate, not
exceed the greater of:
(i) the Employer's "Primary Limitation" (as defined
below) for the Taxable Year which ends with or within
the Plan Year for which the Employer, Matching, and/or
Elective Deferral Contribution and/or other Employer
contribution is being made: or
(ii) the Employer's "Secondary Limitation" (as defined
below) for the Taxable Year which ends with or within
the Plan Year for which the Employer, Matching, and/or
Elective Deferral Contribution and/or other Employer
contribution is being made.
(b) CODE SECTION 415 LIMITATION. The allocation of the
Employer contributions for the Plan Year shall be further
limited by Section 3.8 of the Plan (Limitations on
Allocations).
(c) OVERALL PERMITTED DISPARITY LIMITS.
(i) ANNUAL OVERALL PERMITTED DISPARITY LIMIT.
Notwithstanding the preceding paragraphs, for any Plan
Year this Plan "Benefits" any Participant who
"Benefits" under another qualified plan or simplified
employee pension, as defined in section 408(k) of the
Code, maintained by the Employer that provides for
permitted disparity (or imputes disparity), Employer
contributions and forfeitures shall be allocated to the
account of every Participant otherwise eligible to
receive an allocation in the ratio that such
Participant's total Compensation bears to the total
Compensation of all Participants.
(ii) CUMULATIVE PERMITTED DISPARITY LIMIT. Effective
for Plan Years beginning on or after January 1, 1995,
the cumulative permitted disparity limit for a
Participant is 35 total cumulative permitted disparity
years. Total cumulative permitted years means the
number of years credited to the Participant for
allocation or accrual purposes under this Plan, any
other qualified plan or simplified employee pension
plan (whether or not terminated) ever maintained by the
Employer. For purposes of determining the
Participant's cumulative permitted disparity limit, all
years ending in the same calendar year are treated as
the same year. If the Participant has not "Benefitted"
under a defined benefit or target benefit plan for
A-32
<PAGE> 147
any year beginning on or after January 1, 1994, the
Participant has no cumulative disparity limit.
(3) DEFINITIONS. For purposes of this Section A.5.1(A), the
following definitions apply:
(a) "BASE CONTRIBUTION PERCENTAGE" means, for any Plan
Year, the percentage of Compensation contributed under
the Plan with respect to that portion of each
Participant's Compensation up to the "Integration Level"
(i.e., with respect to such Participant's "Base
Compensation") specified in the Plan for such Plan Year.
(b) "BASE COMPENSATION" means, for any Plan Year,
Compensation up to the "Integration Level" for such Plan
Year.
(c) "BENEFIT" OR" BENEFITING" means, with respect to a
Participant, that such Participant is treated as
benefiting under the Plan for any Plan Year during which
the Participant received or is deemed to receive an
allocation in accordance with Treas. Reg. Section
1.410(b)-3(a).
(d) "EXCESS CONTRIBUTION PERCENTAGE" means, for any Plan
Year, the percentage of Compensation which is contributed
under the Plan with respect to that portion of each
Participant's Compensation in excess of the "Integration
Level" (i.e., with respect to such Participant's Excess
Compensation) specified in the Plan for such Plan Year.
(e) "INTEGRATION LEVEL" means the amount of Compensation
specified in the Plan at or below which the rate of
contributions (expressed as a percentage of such
Compensation) provided under the Plan is less than the
rate of contributions (expressed as a percentage of
Compensation) provided under the Plan with respect to
Compensation above such level. The "Integration Level"
for any Plan Year may in no event exceed the Taxable Wage
Base as in effect on the first day of such Plan Year.
(f) "MAXIMUM EXCESS ALLOWANCE" means, for any Plan Year
beginning before January 1, 1989, the "Base Contribution
Percentage" plus 5.7% and for any Plan Year beginning
after December 31, 1988, the percentage determined under
either (i) or (ii):
(i) If the "Integration Level" for such Plan Year is
equal to the Taxable Wage Base, in effect on the first
day of such Plan Year, or if the "Integration Level" is
a uniform dollar amount for all Participants which is
no greater than the greater of $10,000 or 1/5 of the
Taxable Wage Base in effect on the first day of such
Plan Year, then the "Maximum Excess
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<PAGE> 148
Allowance" for such Plan Year is the lesser of:
(aa) The "Base Contribution Percentage", or
(bb) The greater of (AA) 5.7% or (BB) the
percentage equal to the rate of tax under section
3111(a) of the Code (in effect on the first day of
the Plan Year) which is attributable to the old age
insurance portion of the Old Age, Survivors and
Disability Insurance provisions of the Social
Security Act.
(ii) If the "Integration Level" for such Plan Year is
greater than the greater of $10,000 or 1/5 of the
Taxable Wage Base in effect on the first day of such
Plan Year but less than the Taxable Wage Base in effect
on the first day of such Plan Year then the "Maximum
Excess Allowance" shall be determined as follows:
<TABLE>
<CAPTION>
IF THE "INTEGRATION LEVEL" THE "MAXIMUM EXCESS
----------------------------------
IS MORE THAN BUT NOT MORE THAN ALLOWANCE" IS
---------------------------------- ----------------------
<S> <C>
(1) X* 80% OF TAXABLE
WAGE BASE 4.3%
(2) 80% OF Y**
TAXABLE
WAGE BASE 5.4%
</TABLE>
* x=The greater of $10,000 or 1/5 of Taxable Wage Base
**y=Any amount more than 80% of Taxable Wage Base but
less than 100% of Taxable Wage Base.
(g) "MINIMUM TOP-HEAVY RATE" means a rate of at least
three percent (unless the total Employer contribution to
the Plan is less than three percent), or, in certain cases
where a Defined Benefit Plan is maintained, five percent
or seven and one-half percent (whichever is applicable)
of each Participant's Compensation for such Plan Year; if
the Plan is integrated with Social Security, the
"Base Contribution Percentage" plus the "Excess
Contribution Percentage" plus the "Additional Contribution
Percentage" (if any) must be no less than the "Minimum
Top-Heavy Rate" as set forth in the preceding clause.
(h) "PRIMARY LIMITATION" means 15 percent of the
Compensation otherwise paid or accrued by the Employer
during such Taxable Year to, or for, the Participants in
the Plan.
A-34
<PAGE> 149
(i) "SECONDARY LIMITATION" means the lesser of:
(i) 25 percent of the Participants' Compensation for
the Taxable Year which ends with or within the Plan
Year for which the Employer, Matching, and/or Elective
Deferral Contribution or other Employer contribution is
being made, or
(ii) Any excess of (aa) the aggregate of the "Primary
Limitations" for all Taxable Years beginning before
January 1, 1987, over (bb) the aggregate of the
deductions allowed or allowable (for Employer, Matching,
and Elective Deferral Contributions or other Employer
contributions paid or deemed paid to the Plan) under
section 404(a)(3)(A) of the Code for all Taxable Years
beginning before January 1, 1987, which excess is
available as a carryforward to the current Taxable Year
from such prior Taxable Year(s) under said section
404(a)(3)(A).
(B) OTHER ALLOCATIONS. Other contributions shall be allocated
in accordance with the Plan document.
A.5.4 ALLOCATION OF INCREASES AND DECREASES. Allocation of
increases or decreases in the fair market value of assets described in Section
5.4 of the Plan shall be made on the basis of the amounts in the Accounts under
the Plan (as adjusted under Section 5.4 of the Plan) as determined on (check
either (A) or (B)):
[ X ] (A) First day of the period in which the
Valuation Date occurs (except that the last day
of the period shall be used for the initial
allocation).
[ ] (B) Last day of the period in which the Valuation
Date occurs.
A.5.5 ALLOCATION OF FORFEITURES.
(A) Shall forfeitures be allocated in accordance
with Section 5.5 of the Plan (check one)?
[ X ] (1) Yes [ ] (2) No
[ ] (3) N/A (No forfeitures)
If Section A.5.5(A)(1) is checked, such allocation shall be effected as of
the last day of the (check one): [ ] (a) month [ ] (b) quarter [ X ]
(c) Plan Year in which the forfeiture occurs under Section 7.6(c) of the
Plan, in proportion to the Employer and/or Matching Contributions (as
applicable) allocated to the remaining Participants for the period for
which the allocation is effected.
(B) If Section A.5.5(A)(2) is checked,
forfeitures shall be allocated as follows (check applicable block):
[ ] (1) Matching Account forfeitures shall
be used to reduce Matching Contributions
for the Plan Year in which such
forfeitures occur but otherwise the
provisions of Section 5.5 of the Plan
shall apply.
A-35
<PAGE> 150
[ ] (2) All Matching and Employer Account
forfeitures shall be used to reduce
Matching and Employer Contributions for
the Plan Year in which such forfeitures
occur.
[ X ] (3) N/A (Forfeitures shall be allocated
under Section 5.5 of Plan or no
forfeitures).
A.6.1 INVESTMENT OF ACCOUNTS.
(A) INVESTMENT POWER. Investment of Trust
assets shall be directed as follows (check (1), (2) or (3)):
[ X ] (1) Subject to the terms of the Plan,
the Trustee shall, subject to any
limitations indicated below, have the
sole power and authority to direct
investment of Trust assets.
[ ] (2) Subject to the terms of the Plan,
the Investment Manager shall, subject to
any limitations indicated below, have the
sole power and authority to direct
investment of Trust assets held in (check
applicable block(s)):
[ ] Employer Accounts [ ] Matching
Accounts
[ ] Participant Accounts [ ] Elective
Deferral
Accounts
[ ] QVEC Accounts [ ] Rollover
Accounts
[ ] Transfer Accounts [ ] Other
Accounts
Subject to the terms of the Plan, the Trustee shall have
the sole power and authority to direct investment of Trust
assets not committed to the direction of the Investment
Manager.
[ ] (3) Subject to the terms of the Plan,
each Plan Participant or Beneficiary
shall, subject to any limitations
indicated below, have the sole power and
authority to direct investment of the
Trust assets held in (check applicable
block(s)):
[ ] Employer Accounts [ ] Matching
Accounts
[ ] Participant Accounts [ ] Elective
Deferral
Accounts
[ ] QVEC Accounts [ ] Rollover
Accounts
[ ] Transfer Accounts [ ] Other
Accounts
The investments which the Participant or Beneficiary may
select are any one or more of the following (specify
investment selections available):
[
]
Investment instructions shall be given by the Participant
or Beneficiary on the Appropriate Form to the
Administrative Committee not later than (fill in blank)
[ ] days before the Valuation Date preceding the
effective date of the investment direction. The
Administrative Committee shall deliver such instructions
to the Trustee. Such investment instructions shall be
effected by the Trustee not later than (fill in blank)
[ ] days following the Valuation Date coincident with or
next
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<PAGE> 151
following the date on which the investment instructions
are delivered to the Administrative Committee.
Subject to the terms of the Plan, the Trustee shall have
the sole power and authority to direct investment of Trust
assets not committed to the direction of the Participant
or Beneficiary.
(B) LIMITATIONS. List any limitations on types
of investments and transitional investment rules (if none, write "none"): [
NONE
]
(C) QUALIFYING EMPLOYER SECURITIES. May Plan
assets be invested in Qualifying Employer Securities (check one)?
[ X ] (1) Yes [ ] (2) No
In no event may Employer, Participant, Elective Deferral, Matching,
Rollover or Qualified Voluntary Employee Contributions or other Employer
contributions or direct transfers or Employer, Participant, Elective
Deferral, Matching, Rollover, Transfer or QVEC Accounts or other accounts
be invested in Qualifying Employer Securities unless such investment is in
compliance with applicable Federal and state securities laws (including any
necessary filings under such Federal and state securities laws) and the
requirements of the Plan.
If such investment is in compliance with such laws (including any required
filings) and Plan requirements, the prohibition on investment of Plan
assets in Qualifying Employer Securities does not apply and up to [ 100 ]
(insert percentage; if not applicable, insert letters N/A in blank) percent
of Plan assets may be so invested.
If any such required filings have not been made, only Employer
Contributions and Employer Accounts not subject to Participant or
Beneficiary directed investment may be invested in Qualifying Employer
Securities. In such case, indicate the percentage of Employer
Contributions and Employer Accounts which may be invested in Qualifying
Employer Securities in the following blank: [ 100 ] percent (insert
percentage; if not applicable, insert letters N/A in blank).
A.7.6 SEPARATION FROM SERVICE.
(A) DISTRIBUTION OF ACCRUED BENEFITS UPON
SEPARATION FROM SERVICE.
(1) NORMAL RULES. Upon separation of a
Participant from the service of his
Employer under Section 7.6(A) of the
Plan, distribution of such Participant's
Vested Accrued Benefit shall be made
(check only one block (i.e., (a), (b) or
(c)):
[ ] (a) Upon the request of the
Participant in writing on the
Appropriate Form, within 60 days
following the last day of the
Plan Year in which such
Participant incurs five
consecutive One-Year Breaks In
Service but if distribution is
not so requested by the
Participant, distribution shall
be made on the date the
Participant would have attained
his Normal Retirement Age had he
remained in the employ of the
Employer;
[ X ] (b) Upon the request of the
Participant in writing on the
Appropriate Form, at any time
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<PAGE> 152
following the first Valuation
Date coincident with or next
following the date such
Participant separates from the
service of the Employer;
however, if distribution is not
so requested by the Participant
earlier, distribution shall be
made no later than 60 days
following the date the
Participant would have attained
his Normal Retirement Age had he
remained in the employ of the
Employer; or
[ ] (c) Within 60 days following
the date the Participant would
have attained his Normal
Retirement Age had he remained
in the employ of the Employer.
Notwithstanding any other provision in the Plan or Adoption
Agreement, if the Plan provides for distribution on an Early
Retirement Date and if a separated Participant met the service but
not the age requirement for such Early Retirement Date on the date
of his separation from the service of his Employer, upon meeting
such age requirement after separation, such Participant, if he so
requests in writing on the Appropriate Form, shall commence
receiving his deferred Vested Accrued Benefit no later than the
date which would have been his Early Retirement Date had he
continued in the service of the Employer. If no such request is
made, distribution shall be made in accordance with Section
A.7.6(A)(1)(a), (b) or (c), as elected by the Employer in this
Adoption Agreement. All requests for payment under this Section
A.7.6(A) shall be made within the 90-day period preceding the date
payment is to commence.
(2) EXCEPTION. If a Participant
separates from the service of the
Employer and the value of the
Participant's Vested Accrued Benefit does
not exceed and at the time of any prior
distribution did not exceed $3,500, the
Participant shall automatically, whether
or not he requests distribution, receive,
in one lump sum, a distribution of his
entire Vested Accrued Benefit (and if the
Vested Accrued Benefit is $-0-, he shall
be deemed to have received such Vested
Accrued Benefit) within 60 days following
the first Valuation Date coincident with
or next following the date such
Participant separates from the service of
the Employer.
This provision shall only apply if this block is checked [ X ].
If the above block is not checked or if the value of the
Participant's Vested Accrued Benefit exceeds or at the time of a
prior distribution exceeded $3,500, the election made under
Section A.7.6(A)(1) shall apply to the distribution of the
Participant's Vested Accrued Benefit under the Plan.
(B) VESTING UPON SEPARATION FROM SERVICE.
(1) Except as otherwise provided in the
Plan and in Sections A.3.5 and A.3.11,
the interest of each Participant in his
Employer Account and Matching Account
shall vest as follows (check one and
complete applicable blanks):
[ ] (a) 100 percent vesting
immediately. (This alternative
must be chosen if a period of
more than one year has been
designated in Section
A.2.2(B)(1)(a)(i)).
A-38
<PAGE> 153
[ ] (b) [ ] percent for each
Year of Service for Vesting (not
less than 20 percent for each
Year of Service for Vesting, but
not more than 100 percent).
[ ] (c) Nothing for the first five
Years of Service for Vesting and
100 percent thereafter.
[ ] (d) Nothing for the first
[ ] Years of Service for
Vesting, then [ ] percent
for each Year of Service for
Vesting thereafter, but not more
than 100 percent. (Full vesting
must occur after five Years of
Service for Vesting).
[ ] (e) In accordance with the
following table:
<TABLE>
<CAPTION>
IF YEARS OF SERVICE
FOR VESTING THEN THE VESTED
EQUAL OR EXCEED - PERCENTAGE IS
<S> <C>
3..................................20
4..................................40
5..................................60
6..................................80
7 or more.........................100
</TABLE>
[ X ] (f) [Other. (This alternative,
if chosen, must provide a
percentage of vesting which is
not less than the percentage
that would be provided under
options (c) or (e) used
consistently) - Specify:
<TABLE>
<CAPTION>
[IF YEARS OF SERVICE
-------------------
FOR VESTING THEN THE VESTED
----------- -------------------
EQUAL OR EXCEED - PERCENTAGE IS
--------------- --- ---------------
<S> <C>
1..................................10
-------------------------------------
2..................................25
-------------------------------------
3..................................50
-------------------------------------
4..................................75
-------------------------------------
5 OR MORE.........................100
-------------------------------------
</TABLE>
(2) For purposes of Section A.7.6(B)(1)
above and for purposes of Section A.3.5
and Section 3.11(B) of the Plan, Years of
Service for Vesting attributable to the
following shall be disregarded (check
applicable blocks):
[ ] (a) Service prior to the
attainment of age 18, exclusive
of the year within which the
Employee attained age 18.
[ ] (b) Service during any period
for which the Employer did not
maintain this Plan or a
predecessor trust or plan.
[ ] (c) Service before January 1,
1971, unless the Employee has
had at least three years of
credited service after December
31, 1970, determined without
application of paragraphs (a),
(b), (d) and (e) hereof if
selected by the Employer.
A-39
<PAGE> 154
[ X ] (d) If an Employee is reemployed by the
Employer following a One-Year Break In
Service, service before such One-Year
Break In Service, if the Employee has not
completed a Year of Service for Vesting
after such One-Year Break In Service, for
the purpose of determining the vested
percentage in his Employer-derived Accrued
Benefit which accrues after such One-Year
Break In Service.
[ X ] (e) If an Employee is reemployed by the
Employer following five consecutive
One-Year Breaks In Service (check only (i)
or (ii) whichever is to apply):
[ ] (i) Service after such five
consecutive One-Year Breaks
In Service, for the purpose
of determining the vested
percentage in his
Employer-derived Accrued
Benefit which accrued before
such five consecutive
One-Year Breaks In Service
but both pre-Break and
post-Break service will count
for purposes of determining
the vested percentage in his
Employer-derived Accrued
Benefit which accrued after
such Break.
[ X ] (ii) Service after such five
consecutive One-Year Breaks
In Service, for the purpose
of determining the vested
percentage in his
Employer-derived Accrued
Benefit which accrued before
such five consecutive
One-Year Breaks In Service
and, if the Employee had no
vested interest in his
Employer-derived Accrued
Benefit prior to such
Break(s) and the number of
consecutive One-Year Breaks
In Service equals or exceeds
the aggregate Years of
Service for Vesting, service
before such five consecutive
One-Year Breaks In Service
for the purpose of
determining the vested
percentage in his
Employer-derived Accrued
Benefit which accrues after
such five consecutive
One-Year Breaks In Service.
To the extent required by the Plan, separate accounts
shall be maintained for the Participant's pre-Break and
post-Break Employer-derived account balances.
(3) Except as otherwise provided in Section 7.6(C)
of the Plan relating to benefits accruing before a
separation from service, if a Participant separates
from service and thereafter returns to employment
with the Employer without incurring five
consecutive One-Year Breaks In Service, he shall
continue to vest in his Accrued Benefit.
(4) In the event that an Employee who is not a
member of the eligible class of Employees becomes a
A-40
<PAGE> 155
member of the eligible class, such
Employee shall, subject to any applicable
limitation set forth in this Section
A.7.6, receive credit, for vesting
purposes, for Service with the Employer
while such Employee was not a member of
the eligible class.
(5) Service, for purposes of Section
A.7.6(B)(1), includes service with a
predecessor employer if the Employer
adopting the Plan is maintaining the Plan
as a plan of a predecessor employer.
Service, for purposes of Section A.7.6(B)(1), also includes
service with a predecessor employer whose plan is not being
continued by the Employer to the extent provided in Section
A.1.79.
(C) FORFEITURES. If the provisions of Section
7.6(C)(1)(b) of the Plan are to apply, check this block [ X ];
otherwise the provisions of Section 7.6(C)(1)(a) of the Plan shall apply.
A.7.9 COMMENCEMENT OF PAYMENTS; DEFERRAL OF PAYMENTS; MINIMUM
DISTRIBUTION REQUIREMENTS.
(A) DATE PAYMENTS TO COMMENCE. This provision
is contained in the Plan.
(B) DEFERRAL OF PAYMENTS. Shall a Participant,
to the extent permitted by the Plan, be permitted to defer payment of
benefits under Sections 7.3, 7.4, 7.5 and 7.7 of the Plan (check one)?
[ X ] (1) Yes [ ] (2) No
(C) MINIMUM DISTRIBUTION REQUIREMENTS. This
provision is contained in the Plan.
A.7.10 WITHDRAWALS DURING EMPLOYMENT.
(A) WITHDRAWALS FROM PARTICIPANT ACCOUNTS.
Shall withdrawals of Participant Accounts (other than the portion of such
Participant Accounts attributable to required Participant Contributions and
to Participant Contributions which are matched by the Employer) be
permitted (check one)?
[ ] (1) Yes [ ] (2) No [ X ] (3) N/A
(B) WITHDRAWALS FROM QVEC ACCOUNTS. Shall
withdrawals of QVEC Accounts be permitted (check one)?
[ ] (1) Yes [ ] (2) No [ X ] (3) N/A
(C) WITHDRAWALS FROM ROLLOVER ACCOUNTS. Shall
withdrawals of Rollover Accounts be permitted (check one)?
[ ] (1) Yes [ X ] (2) No [ ] (3) N/A
(D) HARDSHIP AND POST - 59 1/2 WITHDRAWALS FROM
ELECTIVE DEFERRAL ACCOUNTS. Shall withdrawals of Elective Deferral
Accounts be permitted (if such withdrawals are to be permitted, check
either (1) or (2) or both) [ ] (1) on account of hardship [ ] (2) after
reaching age 59-1/2 (check one)?
[ ] (a) Yes [ ] (b) No [ X ] (c) N/A
(E) HARDSHIP AND POST - 59 1/2 WITHDRAWALS FROM
EMPLOYER, PARTICIPANT, ROLLOVER AND TRANSFER ACCOUNTS. Shall withdrawals
of Employer, Participant, Rollover and Transfer Accounts be permitted (if
such withdrawals
A-41
<PAGE> 156
are to be permitted, check either (1) or (2) or both) [ ] (1) on account
of hardship [ ] (2) after reaching age 59-1/2 (check one)?
[ ] (a) Yes [ X ] (b) No
(F) HARDSHIP AND POST - 59 1/2 WITHDRAWALS FROM
MATCHING ACCOUNTS. Shall hardship and post - age 59 1/2 withdrawals of
Matching Accounts be permitted (if such withdrawals are to be permitted,
check either (1) or (2) or both) [ ] (1) on account of hardship [ ] (2)
after reaching age 59-1/2 (check one)?
[ ] (a) Yes [ ] (b) No [ X ] (c) N/A
(G) OTHER PRE-59-1/2 IN-SERVICE WITHDRAWALS.
Shall withdrawals of a Participant's Vested Accrued Benefit attributable to
Participant Contributions, Employer Contributions, and Matching
Contributions after such Participant completes five Years of Service for
Benefit Accrual but before he attains age 59 1/2 be permitted (check one)?
[ ] (1) Yes [ X ] (2) No
WITHDRAWALS SHALL ONLY BE MADE IN ACCORDANCE WITH THE PROVISIONS OF SECTION
7.10 OF THE PLAN.
A.7.11 LOANS.
(A) Shall loans to Participants and
Beneficiaries if such Beneficiaries are parties-in-interest (as defined in
the Plan) be permitted (check one)?
[ X ] (1) Yes [ ] (2) No
NOTE: NO LOANS MAY BE MADE TO OWNER-EMPLOYEES OR TO
SHAREHOLDER EMPLOYEES (AS DEFINED IN SECTION 7.11(A)(7) OF THE PLAN).
(B) The interest rate shall be determined as
follows: [ THE INTEREST RATE SHALL EQUAL ONE PERCENTAGE POINT ABOVE THE PRIME
INTEREST RATE AS PUBLISHED IN THE WALL STREET JOURNAL ON THE FIRST BUSINESS DAY
OF THE WEEK IN WHICH THE LOAN IS MADE.
]
(C) Shall the exception to the 50% of Vested
Accrued Benefit limitation on loans not in excess of $10,000 apply?
[ ] (1) Yes [ X ] (2) No
[ ] (3) N/A (No loans permitted)
If the exception is to apply, note that only 50% of the Vested Accrued
Benefit may be used as security for the loan. Additional security
must be provided by the Participant or Beneficiary. Specify the type
of additional collateral which will be used to secure the remainder of
the loan: [ N/A
]
(D) Specify the types of collateral to be used
to secure loans under the Plan: [ ONE HALF OF THE PRESENT VALUE OF THE
PARTICIPANT'S OR BENEFICIARY'S VESTED ACCRUED BENEFIT UNDER THE PLAN.
]
(E) If Section A.7.11(A)(1) is checked, indicate
any additional limitations to be placed on loans (if none, so state; if not
applicable, insert letters N/A):[ LOANS FROM THE PLAN WILL BE PERMITTED
ONLY IN THE EVENT OF A PERSONAL EMERGENCY OR FINANCIAL HARDSHIP IN
ACCORDANCE WITH THE GUIDELINES SET FORTH IN SECTION 7.10(C)(3) OF THE PLAN.
]
A-42
<PAGE> 157
(F) Shall loans to a Participant be treated as
an investment by such Participant for his Accounts only (check one)?
[ X ] (1) Yes [ ] (2) No
[ ] (3) N/A (No loans permitted)
A.7.14 JOINT AND SURVIVOR ANNUITY. The provisions of Section
7.14 of the Plan shall not apply to the Plan, as adopted under this Adoption
Agreement.
A.8.2 SPECIAL PROVISION WITH RESPECT TO QUALIFIED DOMESTIC
RELATIONS ORDERS. Shall the special provision of Section 8.2 of the Plan with
respect to Qualified Domestic Relations Orders apply to the Plan as adopted by
the Employer (check one)?
[ X ] (A) Yes [ ] (B) No
A.15.1 AMENDMENT. THE CHANGES MADE BY THIS AMENDMENT AND
RESTATEMENT SHALL BE DEEMED ADOPTED BY EACH ADOPTING EMPLOYER ON THE DATE THE
NOTIFICATION LETTER IS ISSUED BY THE DISTRICT OFFICE OF THE INTERNAL REVENUE
SERVICE WITHOUT FURTHER ACTION ON THE PART OF THE ADOPTING EMPLOYER EXCEPT THAT
SUCH ADOPTING EMPLOYER MUST SEND A NOTICE TO INTERESTED PARTIES INFORMING SUCH
INTERESTED PARTIES THAT THE PLAN HAS BEEN AMENDED. SUCH NOTICE MUST BE GIVEN
IN ACCORDANCE WITH THE RULES OF SECTION 15.1(C) OF THE PLAN. SEE SECTION
15.1(C) OF THE PLAN FOR FURTHER INFORMATION.
A.18.4 AGENT FOR SERVICE OF LEGAL PROCESS. The name(s) and
address(es) of the agent(s) for service of legal process under the Plan are:
[ ADMINISTRATIVE COMMITTEE, FUND OFFICE RETIREMENT PROFIT-SHARING PLAN
C/O MUNICIPAL FUND FOR TEMPORARY INVESTMENT
BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
A.18.17 RESTATEMENT.
(A) RESTATEMENT OF EXISTING PLAN. The Employer
may adopt the Plan as an amendment and restatement of any Prior Plan
(including a prior version of this Plan and Trust Agreement). Adoption
shall not require termination of the Prior Plan, except that amendment and
restatement of an existing Defined Benefit Plan into the Plan shall be
deemed to be a termination of such Prior Plan for the purposes of Title IV
of ERISA. Upon adoption of this Plan, the assets of the Prior Plan shall
be invested in accordance with the provisions of this Plan. Check if
applicable:
[ X ] This is an amendment and restatement of the [ FUND
OFFICE RETIREMENT PROFIT-SHARING ] PLAN, an existing
qualified [ PROFIT-SHARING ] plan, which was adopted effective
as of [ SEPTEMBER 18, 1981].
(B) LIMITATIONS APPLICABLE TO PLAN PROVISIONS.
Except as otherwise provided in Section 3.11 of the Plan, the participation
and/or vesting provisions of the Plan, as adopted by the Employer, shall
apply as follows (check applicable block or blocks; to the extent not
checked, the Plan shall apply in accordance with the terms set forth
herein):
[ ] (1) The participation provisions of this
Plan, as adopted by the Employer, shall
apply only to Employees hired on or after
the date the Plan is adopted by the
Employer. The participation provisions
of the Prior Plan shall otherwise apply.
[ ] (2) The vesting provisions of this Plan,
as adopted by the Employer, shall apply
only to Employees hired on or after the
date the Plan is adopted by the
A-43
<PAGE> 158
Employer. The vesting provisions of the
Prior Plan shall otherwise apply.
[ X ] (3) N/A.
(C) INCORPORATION OF APPLICABLE PRIOR PLAN
PROVISIONS AND TRANSITIONAL RULES. If the Employer checked A.18.17(A),
such Employer shall insert here any Prior Plan provisions and any
transitional rules which such Employer desires or is required to make
applicable to this Plan (if none, write the word "none"):
[ (1) MERGER OF PLANS. EFFECTIVE DECEMBER 1, 1987, THE CHESTNUT STREET
EXCHANGE FUND RETIREMENT PROFIT-SHARING PLAN, THE INDEPENDENCE SQUARE INCOME
SECURITIES, INC. RETIREMENT PROFIT-SHARING PLAN, THE TEMPORARY INVESTMENT FUND,
INC. RETIREMENT PROFIT-SHARING PLAN, AND THE TRUST FOR SHORT-TERM FEDERAL
SECURITIES RETIREMENT PROFIT-SHARING PLAN WERE MERGED INTO, AND THEIR ASSETS
TRANSFERRED INTO, THE PLAN.
(2) CHANGE IN ACCRUAL COMPUTATION PERIODS, LIMITATION YEARS, PLAN
YEARS AND VESTING COMPUTATION PERIODS. AS A RESULT OF THE MERGER AND TRANSFER
OF ASSETS, THE ACCRUAL COMPUTATION PERIODS, LIMITATION YEARS, PLAN YEARS AND
VESTING COMPUTATION PERIODS FOR THE CHESTNUT STREET EXCHANGE FUND, INDEPENDENCE
SQUARE INCOME SECURITIES, INC., TEMPORARY INVESTMENT FUND, INC., AND TRUST FOR
FEDERAL SECURITIES RETIREMENT PROFIT-SHARING PLANS HAVE BEEN CHANGED AS
FOLLOWS:
<TABLE>
<CAPTION>
PLAN OLD (UNDER OLD PLAN) NEW (UNDER THIS PLAN)
- --------------------------------------------------------------------------
<S> <C> <C>
CHESTNUT STREET EX-
- -------------------------------------------------------------------------
CHANGE FUND 1/1 TO 12/31 12/1 TO 11/30
- -------------------------------------------------------------------------
INDEPENDENCE SQUARE
- -------------------------------------------------------------------------
INCOME SECURITIES,
- -------------------------------------------------------------------------
INC. 1/1 TO 12/31 12/1 TO 11/30
- -------------------------------------------------------------------------
TEMPORARY INVESTMENT
- -------------------------------------------------------------------------
FUND, INC. 10/1 TO 9/30 12/1 TO 11/30
- -------------------------------------------------------------------------
TRUST FOR FEDERAL
- -------------------------------------------------------------------------
SECURITIES 11/1 TO 10/31 12/1 TO 11/30
- -------------------------------------------------------------------------
</TABLE>
THIS RESULTED IN THE FOLLOWING SHORT ACCRUAL COMPUTATION PERIODS,
LIMITATION YEARS, PLAN YEARS AND VESTING COMPUTATION PERIODS:
<TABLE>
<CAPTION>
PLAN SHORT PERIOD/YEAR
- -------------------------------------------------------------------------
<S> <C>
CHESTNUT STREET 1/1/87 TO 11/30/87
- -------------------------------------------------------------------------
INDEPENDENCE SQUARE INCOME SECURITIES, INC. 1/1/87 TO 11/30/87
- -------------------------------------------------------------------------
TEMPORARY INVESTMENT FUND, INC. 10/1/87 TO 11/30/87
- -------------------------------------------------------------------------
TRUST FOR FEDERAL SECURITIES 11/1/87 TO 11/30/87
- -------------------------------------------------------------------------
</TABLE>
(A) CHANGE IN VESTING COMPUTATION PERIODS. EACH PARTICIPANT IN THE
ABOVE LISTED PLANS RECEIVED VESTING CREDIT FOR TWO YEARS OF
SERVICE FOR VESTING PROVIDED SUCH PARTICIPANT COMPLETED 200 OR
MORE HOURS OF SERVICE IN BOTH THE OLD VESTING COMPUTATION PERIOD
AND THE NEW VESTING COMPUTATION PERIOD AS SET FORTH ABOVE.
(B) CHANGE IN ACCRUAL COMPUTATION PERIODS. ANY PARTICIPANT IN THE
ABOVE LISTED PLANS WHO COMPLETED 200 HOURS OF SERVICE MULTIPLIED
BY THE NUMBER OF MONTHS IN THE SHORT ACCRUAL COMPUTATION PERIOD
DIVIDED BY TWELVE RECEIVED HIS PROPORTIONATE SHARE OF EMPLOYER
CONTRIBUTIONS DURING THE SHORT ACCRUAL COMPUTATION PERIOD SET
FORTH ABOVE.
(C) CHANGE IN LIMITATION YEARS. FOR THE SHORT LIMITATION YEARS, THE
DOLLAR LIMITATIONS UNDER SECTION 415(C)(1)(A) OF THE CODE WERE
ADJUSTED AS PROVIDED UNDER TREAS. REG. Section 1.415-2(B)(4).
THE ABOVE CHANGES WERE MADE PURSUANT TO THE AUTOMATIC APPROVAL
PROVISIONS OF REV. PROC. 87-27, 1987-25 I.R.B. 41. ]
A-44
<PAGE> 159
A.18.18 INDIVIDUAL PROVISIONS. Any provisions applicable to the
adopting Employer only should be inserted here (if none, write the word
"none"):
[ (A) EMPLOYER AMENDMENT OF PLAN AND/OR TRUST. ANY EMPLOYER AMENDMENT OF
THE PLAN AND/OR TRUST PERMITTED BY SECTION 15.1 OF THE PLAN AND TRUST AGREEMENT
SHALL BE EFFECTED BY RESOLUTION OF THE EMPLOYER'S BOARD OF DIRECTORS ADOPTED AT
A DULY HELD MEETING OF SAID BOARD OR BY UNANIMOUS WRITTEN CONSENT OF SAID
BOARD, IF THE EMPLOYER IS INCORPORATED AND OTHERWISE BY APPROPRIATE WRITTEN
ACTION OF EMPLOYER'S OWNER OR OTHER GOVERNING ENTITY UNDER STATE LAW. A
CERTIFIED COPY OF SUCH RESOLUTIONS OR OTHER WRITTEN ACTION SHALL BE DELIVERED
TO THE ADMINISTRATIVE COMMITTEE AND THE TRUSTEE.
(B) TERMINATION OR PARTIAL TERMINATION OF PLAN AND/OR TRUST. TERMINATION
OR PARTIAL TERMINATION OF THE PLAN AND/OR TRUST UNDER ARTICLE XVI OF THE PLAN
AND TRUST AGREEMENT SHALL BE EFFECTED BY RESOLUTION OF THE EMPLOYER'S BOARD OF
DIRECTORS ADOPTED AT A DULY HELD MEETING OF SAID BOARD OR BY UNANIMOUS WRITTEN
CONSENT OF SAID BOARD, IF SUCH EMPLOYER IS INCORPORATED AND OTHERWISE BY
APPROPRIATE WRITTEN ACTION OF EMPLOYER'S OWNER OR OTHER GOVERNING ENTITY UNDER
STATE LAW. A CERTIFIED COPY OF SUCH RESOLUTIONS OR OTHER WRITTEN ACTION SHALL
BE DELIVERED TO THE ADMINISTRATIVE COMMITTEE AND THE TRUSTEE.
(C) ADOPTION OF PLAN BY OTHER EMPLOYERS.
(1) EFFECTIVE DATE. THIS SECTION A.18.18(C) SHALL BE EFFECTIVE AS OF
DECEMBER 1, 1989.
(2) ADOPTION OF PLAN AND TRUST. ANY OTHER EMPLOYER MAY ADOPT THE
TERMS OF THIS PLAN AS ADOPTED BY THE ADOPTING EMPLOYER, AND THEREBY BECOME
A "PARTICIPATING EMPLOYER," PROVIDED:
(A) THE BOARD OF DIRECTORS OR OTHER GOVERNING ENTITY OF THE
ADOPTING EMPLOYER CONSENTS TO SUCH ADOPTION;
(B) THE BOARD OF DIRECTORS OR OTHER GOVERNING ENTITY OF THE
ADOPTING PARTICIPATING EMPLOYER ADOPTS THIS PLAN BY APPROPRIATE
ACTION;
(C) THE ADOPTING PARTICIPATING EMPLOYER EXECUTES THE ADOPTION
AGREEMENT; AND
(D) THE ADOPTING PARTICIPATING EMPLOYER EXECUTES SUCH OTHER
DOCUMENTS AS MAY BE REQUIRED TO MAKE SUCH ADOPTING PARTICIPATING
EMPLOYER A PARTY TO THE PLAN AND TRUST AS A PARTICIPATING EMPLOYER
(EXCEPT AS PROVIDED BELOW).
A PARTICIPATING EMPLOYER WHICH ADOPTS THE PLAN AND TRUST AGREEMENT IS
THEREAFTER AN EMPLOYER WITH RESPECT TO ITS EMPLOYEES FOR PURPOSES OF THE
PLAN, THE TRUST AGREEMENT AND THIS ADOPTION AGREEMENT EXCEPT THAT SUCH
PARTICIPATING EMPLOYER DELEGATES TO THE ADOPTING EMPLOYER THE POWER TO
AMEND THE ADOPTION AGREEMENT ON ITS BEHALF AND ON BEHALF OF THE ADOPTING
EMPLOYER AND EACH OTHER PARTICIPATING EMPLOYER, PROVIDED SUCH AMENDMENT
DOES NOT MATERIALLY AFFECT THE SUBSTANCE OF THE PLAN WITH RESPECT TO THE
ADOPTING EMPLOYER OR ANY PARTICIPATING EMPLOYER OR MATERIALLY AFFECT THE
COSTS OF THE ADOPTING EMPLOYER OR ANY PARTICIPATING EMPLOYER. A
PARTICIPATING EMPLOYER RESERVES THE POWER TO WITHDRAW FROM THE PLAN, AS
PROVIDED IN SECTION A.18.18(C)(3), AND TO TERMINATE THE PLAN AND TRUST
AGREEMENT WITH RESPECT TO SUCH PARTICIPATING EMPLOYER, AS PROVIDED IN
SECTION A.18.18(5).
(3) WITHDRAWAL FROM PLAN. SUBJECT TO THE REQUIREMENTS OF ARTICLE
XVII, ANY PARTICIPATING EMPLOYER MAY, AT ANY TIME, WITHDRAW FROM THE PLAN
UPON GIVING THE BOARD OF DIRECTORS OR OTHER GOVERNING ENTITY OF THE
ADOPTING EMPLOYER, THE ADMINISTRATIVE COMMITTEE AND THE TRUSTEE AT LEAST 30
DAYS NOTICE IN WRITING OF ITS INTENTION TO WITHDRAW. UPON THE WITHDRAWAL
OF A PARTICIPATING EMPLOYER PURSUANT TO THIS SECTION A.18.18(C)(3), THE
TRUSTEE SHALL SEGREGATE A PORTION OF THE ASSETS IN THE TRUST AS SET FORTH
BELOW, THE VALUE OF WHICH SHALL EQUAL THE TOTAL AMOUNT CREDITED TO THE
ACCOUNTS OF PARTICIPANTS EMPLOYED BY THE WITHDRAWING PARTICIPATING
EMPLOYER. SUBJECT TO THE REQUIREMENTS OF ARTICLE XVII, THE DETERMINATION
OF WHICH ASSETS ARE TO BE
A-45
<PAGE> 160
SO SEGREGATED SHALL BE MADE BY THE TRUSTEE IN ITS SOLE DISCRETION AS SET
FORTH BELOW.
THE ADMINISTRATIVE COMMITTEE MAY, AT ANY TIME, DIRECT THE TRUSTEE TO
SEGREGATE FROM THE TRUST SUCH PART THEREOF AS THE ADMINISTRATIVE COMMITTEE
SHALL DETERMINE TO BE HELD FOR THE BENEFIT OF THE EMPLOYEES OF A
PARTICIPATING EMPLOYER, AND SHALL GIVE A COPY OF SUCH DIRECTIONS TO THE
ADOPTING EMPLOYER AND EACH PARTICIPATING EMPLOYER. SUCH DIRECTIONS SHALL
SPECIFY THE ASSETS OF THE TRUST TO BE SEGREGATED. UNLESS THE ADOPTING
EMPLOYER OR ANY PARTICIPATING EMPLOYER FILES WITH THE TRUSTEE A WRITTEN
PROTEST WITHIN 30 DAYS AFTER DELIVERY OF SUCH DIRECTIONS TO THE TRUSTEE,
SUCH DIRECTIONS SHALL CONCLUSIVELY ESTABLISH THAT THE ASSETS SPECIFIED
THEREIN REPRESENT THE PART OF THE TRUST HELD FOR THE BENEFIT OF THE
EMPLOYEES OF THE ADOPTING EMPLOYER AND OF EACH PARTICIPATING EMPLOYER.
AFTER THE EXPIRATION OF SUCH 30 DAY PERIOD, AND AFTER SETTLEMENT OF
ANY SUCH PROTEST, THE TRUSTEE SHALL FOLLOW THE ADMINISTRATIVE COMMITTEE'S
DIRECTIONS, INCLUDING ANY MODIFICATION THEREOF ADOPTED IN SETTLEMENT OF ANY
PROTEST. ANY PART OF THE TRUST SEGREGATED PURSUANT TO SUCH DIRECTIONS
SHALL THEREAFTER BE HELD IN A SEPARATE TRUST IDENTICAL IN TERMS TO THE
TRUST HEREBY ESTABLISHED OR MAINTAINED, EXCEPT THAT, WITH RESPECT TO SUCH
SEPARATE TRUST, THIS PLAN AND TRUST AGREEMENT SHALL BE CONSTRUED AS IF SUCH
PARTICIPATING EMPLOYER WERE THE ADOPTING EMPLOYER AND ALL POWERS AND
AUTHORITY CONFERRED UPON THE ADOPTING EMPLOYER OR ITS BOARD OR OTHER
GOVERNING ENTITY AND THE ADMINISTRATIVE COMMITTEE SHALL DEVOLVE UPON SUCH
PARTICIPATING EMPLOYER OR ITS BOARD OF DIRECTORS OR OTHER GOVERNING ENTITY.
AT ANY TIME THEREAFTER, SUCH PARTICIPATING EMPLOYER AND THE TRUSTEE MAY
(BUT THEY SHALL NOT BE REQUIRED TO) ENTER INTO A SEPARATE AGREEMENT STATING
THE TERMS OF SUCH SEPARATE PLAN AND TRUST AGREEMENT WHICH MAY BE THE
DRINKER BIDDLE & REATH REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN AND
TRUST AGREEMENT. IF THE DRINKER BIDDLE & REATH REGIONAL PROTOTYPE DEFINED
CONTRIBUTION PLAN AND TRUST AGREEMENT IS NOT SO ADOPTED, THE PLAN AND TRUST
AGREEMENT WITH RESPECT TO THE WITHDRAWING PARTICIPATING EMPLOYER SHALL BE
CONSIDERED AN INDIVIDUALLY DESIGNED PLAN.
(4) EXCLUSIVE PURPOSE OF TRUST. NEITHER THE SEGREGATION AND TRANSFER
OF THE TRUST ASSETS UPON THE WITHDRAWAL OF A PARTICIPATING EMPLOYER NOR THE
EXECUTION OF A NEW PLAN AND TRUST AGREEMENT BY SUCH WITHDRAWING
PARTICIPATING EMPLOYER SHALL OPERATE TO PERMIT ANY PART OF THE TRUST TO BE
USED FOR, OR DIVERTED TO, PURPOSES OTHER THAN FOR THE EXCLUSIVE BENEFIT OF
THE PARTICIPANTS OR THEIR BENEFICIARIES.
(5) APPLICATION OF WITHDRAWAL PROVISIONS. THE WITHDRAWAL PROVISIONS
CONTAINED IN SECTION A.18.18(C)(3) AND (4) SHALL BE APPLICABLE ONLY IF THE
WITHDRAWING PARTICIPATING EMPLOYER CONTINUES TO COVER ITS PARTICIPANTS AND
ELIGIBLE EMPLOYEES IN ANOTHER PLAN AND TRUST QUALIFIED UNDER SECTIONS 401
AND 501 OF THE CODE. OTHERWISE, THE TERMINATION PROVISIONS OF THE PLAN AND
TRUST AGREEMENT SHALL APPLY WITH RESPECT TO THE WITHDRAWING PARTICIPATING
EMPLOYER.
(6) SINGLE PLAN. NOTWITHSTANDING ANY OTHER PROVISION SET FORTH
HEREIN, THE PLAN, AS ADOPTED PURSUANT TO THIS SECTION A.18.18(C) BY THE
ADOPTING EMPLOYER AND EACH PARTICIPATING EMPLOYER, SHALL CONSTITUTE A
SINGLE PLAN, AS SUCH TERM IS DEFINED IN TREAS. REG. Section
1.414(1)-1(B)(1), AS TO THE ADOPTING EMPLOYER AND EACH PARTICIPATING
EMPLOYER.
(7) QUALIFYING EMPLOYER SECURITIES. FOR PURPOSES OF SECTIONS A.1.72
AND A.6.1(B), AND FOR ALL OTHER PURPOSES OF THE PLAN AND TRUST AGREEMENT,
THE STOCK OF ANY ADOPTING EMPLOYER AND ANY PARTICIPATING EMPLOYER SHALL BE
TREATED AS QUALIFYING EMPLOYER SECURITIES.
(8) ADOPTING EMPLOYER APPOINTED AGENT OF PARTICIPATING EMPLOYERS.
EACH PARTICIPATING EMPLOYER APPOINTS THE BOARD OF DIRECTORS OR OTHER
GOVERNING ENTITY OF THE ADOPTING EMPLOYER AS ITS AGENT TO EXERCISE ON ITS
BEHALF ALL OF THE ADMINISTRATIVE POWER AND AUTHORITY CONFERRED UPON THE
ADOPTING EMPLOYER BY THIS PLAN AND TRUST AGREEMENT, INCLUDING THE POWER TO
AMEND THE ADOPTION AGREEMENT ON ITS BEHALF AND ON BEHALF OF THE ADOPTING
EMPLOYER AND
A-46
<PAGE> 161
EACH OTHER PARTICIPATING EMPLOYER AS SET FORTH IN ARTICLE XV, PROVIDED SUCH
AMENDMENT DOES NOT MATERIALLY AFFECT THE SUBSTANCE OF THE PLAN WITH RESPECT
TO THE ADOPTING EMPLOYER OR ANY PARTICIPATING EMPLOYER OR MATERIALLY AFFECT
THE COST OF THE ADOPTING EMPLOYER OR ANY PARTICIPATING EMPLOYER. THE
AUTHORITY OF THE BOARD OF DIRECTORS OR OTHER GOVERNING ENTITY OF THE
ADOPTING EMPLOYER TO ACT AS AGENT OF ANY PARTICIPATING EMPLOYER, IN
ACCORDANCE WITH SECTIONS A.18.18(C)(2) AND A.18.18(C)(8), SHALL TERMINATE
ONLY IF THE PART OF THE PLAN'S ASSETS HELD FOR THE BENEFIT OF THE EMPLOYEES
OF SUCH PARTICIPATING EMPLOYER SHALL BE SEGREGATED IN A SEPARATE TRUST AS
PROVIDED IN SECTION A.18.18(C)(3) AND SUCH PARTICIPATING EMPLOYER THEREUPON
WITHDRAWS FROM THE PLAN IN ACCORDANCE WITH SECTION A.18.18(C)(3). ANY
MATERIAL AMENDMENT (I.E., ANY AMENDMENT MATERIALLY AFFECTING THE SUBSTANCE
OF THE PLAN WITH RESPECT TO THE ADOPTING EMPLOYER OR ANY PARTICIPATING
EMPLOYER OR MATERIALLY AFFECTING THE COSTS OF THE ADOPTING EMPLOYER OR ANY
PARTICIPATING EMPLOYER CAN ONLY BE ADOPTED BY THE ADOPTING EMPLOYER AND ALL
PARTICIPATING EMPLOYERS. EACH PARTICIPATING EMPLOYER EXCLUSIVELY RESERVES
THE POWER TO TERMINATE THIS PLAN AND/OR THE TRUST AGREEMENT AS SET FORTH IN
ARTICLE XVI WITH RESPECT TO SUCH PARTICIPATING EMPLOYER. THE COMPLETE
TERMINATION OF THE PLAN CAN ONLY BE EFFECTED BY ACTION OF THE ADOPTING
EMPLOYER AND ALL PARTICIPATING EMPLOYERS.
(9) NAME OF ADOPTING EMPLOYER. THE MUNICIPAL FUND FOR TEMPORARY
INVESTMENT IS THE ADOPTING EMPLOYER.
(10) PARTICIPATING EMPLOYERS. THE NAMES AND PERTINENT DATA FOR THE
PARTICIPATING EMPLOYERS ARE AS FOLLOWS:
(A) CHESTNUT STREET EXCHANGE FUND:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:51-0199471
TAXABLE YEAR: JANUARY 1 - DECEMBER 31
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: PARTNERSHIP
PLACE OF ORGANIZATION: CALIFORNIA
(B) INDEPENDENCE SQUARE INCOME SECURITIES, INC.:
ADDRESS: ONE ALDWYN CENTER
VILLANOVA, PA 19085
EMPLOYER IDENTIFICATION NUMBER:23-1861553
TAXABLE YEAR: JANUARY 1 - DECEMBER 31
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: CORPORATION
PLACE OF ORGANIZATION: MARYLAND
(C) TEMPORARY INVESTMENT FUND, INC.:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:52-0983343
A-47
<PAGE> 162
TAXABLE YEAR: OCTOBER 1 - SEPTEMBER 30
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: CORPORATION
PLACE OF ORGANIZATION: MARYLAND
(D) TRUST FOR FEDERAL SECURITIES:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:52-1036683
TAXABLE YEAR: NOVEMBER 1 - OCTOBER 31
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: BUSINESS TRUST
PLACE OF ORGANIZATION: PENNSYLVANIA
(E) MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:51-0266273
TAXABLE YEAR: FEBRUARY 1 - JANUARY 31
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: CORPORATION
PLACE OF ORGANIZATION: MARYLAND
(F) MUNICIPAL FUND FOR NEW YORK INVESTORS, INC.:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:51-0270312
TAXABLE YEAR: AUGUST 1 - JULY 31
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: CORPORATION
PLACE OF ORGANIZATION: MARYLAND
(G) PORTFOLIOS FOR DIVERSIFIED INVESTMENT:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:51-0300345
TAXABLE YEAR: JULY 1 - JUNE 30
A-48
<PAGE> 163
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: BUSINESS TRUST
PLACE OF ORGANIZATION: MASSACHUSETTS
(H) THE PNC(R) FUND:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:51-0318674
TAXABLE YEAR: OCTOBER 1 - SEPTEMBER 30
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: BUSINESS TRUST
PLACE OF ORGANIZATION: MASSACHUSETTS
(I) THE RBB FUND, INC.:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:51-0312196
TAXABLE YEAR: SEPTEMBER 1 - AUGUST 31
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: CORPORATION
PLACE OF ORGANIZATION: MARYLAND
(J) PROVIDENT INSTITUTIONAL FUNDS, INC. (EFFECTIVE FEBRUARY
16, 1995):
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:41-1769812
TAXABLE YEAR: JANUARY 1 - DECEMBER 31
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: CORPORATION
PLACE OF ORGANIZATION: MARYLAND ]
A.19.1 ADOPTION OF PLAN AND TRUST BY AFFILIATED EMPLOYERS. Shall
Article XIX of the Plan apply (check one)?
[ ] (A) Yes [ ] (B) No
[ X ] (C) N/A (No Affiliated Employers adopting Plan)
A-49
<PAGE> 164
If Section A.19.1(A) is checked, fill in the following blanks:
Name of Adopting Employer: [ ]
Name(s), Address(es), Type of Entity and Tax Identification
Number(s) of Adopting Affiliated Employer(s):[
]
The adopting Employer and each adopting Affiliated Employer must adopt the Plan
and execute the Adoption Agreement upon the initial adoption by an adopting
Affiliated Employer of the Plan. Thereafter the adopting Affiliated Employer,
pursuant to Article XIX of the Plan, authorizes the adopting Employer to take
all further action including, but not limited to, the amendment and/or
termination of the Plan, on behalf of the adopting Affiliated Employer under
the Plan (unless such adopting Affiliated Employer withdraws from the Plan
pursuant to Article XIX of the Plan) and such adopting Affiliated Employer need
not be a party to this Adoption Agreement with respect to any such subsequent
action relating to the Plan and Trust Agreement and/or Adoption Agreement.
THE ADOPTING EMPLOYER OR ADOPTING AFFILIATED EMPLOYER MAY NOT RELY ON THE
NOTIFICATION LETTER ISSUED BY THE NATIONAL OR DISTRICT DIRECTOR OF THE INTERNAL
REVENUE SERVICE AS EVIDENCE THAT THE PLAN IS QUALIFIED UNDER SECTION 401 OF THE
INTERNAL REVENUE CODE. IN ORDER TO OBTAIN RELIANCE WITH RESPECT TO PLAN
QUALIFICATION, THE ADOPTING EMPLOYER AND/OR ADOPTING AFFILIATED EMPLOYER MUST
APPLY TO THE APPROPRIATE KEY DISTRICT OFFICE FOR A DETERMINATION LETTER.
Executed at [WILMINGTON ], [ DELAWARE ], on this the [ 28th ]
day of [ March ], 19[95].
<TABLE>
<S> <C>
ADOPTING EMPLOYER:
ATTEST: MUNICIPAL FUND FOR TEMPORARY
INVESTMENT
---------------------------------
[SEAL] NAME OF ADOPTING EMPLOYER
/s/ MORGAN R. JONES By: /s/ G. WILLING PEPPER
- ----------------------------------- ------------------------------
Morgan R. Jones, Secretary G. Willing Pepper, President
PARTICIPATING EMPLOYERS:
ATTEST: CHESTNUT STREET EXCHANGE FUND
---------------------------------
Name of Participating Employer
[SEAL]
/s/ MORGAN R. JONES By: /s/ ROBERT R. FORTUNE
- ----------------------------------- ---------------------------------
Morgan R. Jones, Secretary Robert R. Fortune, President
ATTEST: INDEPENDENCE SQUARE INCOME
SECURITIES, INC.
---------------------------------
[SEAL] Name of Participating Employer
/s/ GARY M. GARDNER By: /s/ ROBERT R. FORTUNE
- ----------------------------------- ---------------------------------
Gary M. Gardner, Secretary Robert R. Fortune, President
ATTEST: TEMPORARY INVESTMENT FUND, INC.
---------------------------------
Name of Participating Employer
[SEAL]
/s/ W. BRUCE McCONNEL By: /s/ G. WILLING PEPPER
- ---------------------------------- ---------------------------------
W. Bruce McConnel, III, Secretary G. Willing Pepper, President
</TABLE>
A-50
<PAGE> 165
<TABLE>
<S> <C>
ATTEST: TRUST FOR FEDERAL SECURITIES
---------------------------------
Name of Participating Employer
[SEAL]
/s/ W. BRUCE McCONNEL By: /s/ G. WILLING PEPPER
- ---------------------------------- ---------------------------------
W. Bruce McConnel, III, Secretary G. Willing Pepper, President
ATTEST: MUNICIPAL FUND FOR CALIFORNIA
INVESTORS, INC.
---------------------------------
[SEAL] Name of Participating Employer
/s/ MORGAN R. JONES By: /s/ G. WILLING PEPPER
- ---------------------------------- ----------------------------------
Morgan R. Jones, Secretary G. Willing Pepper, President
ATTEST: MUNICIPAL FUND FOR NEW YORK
INVESTORS, INC.
---------------------------------
[SEAL] Name of Participating Employer
/s/ MORGAN R. JONES By: /s/ EDWARD J. ROACH
- ---------------------------------- ---------------------------------
Morgan R. Jones, Secretary Edward J. Roach, Vice President
ATTEST: PORTFOLIOS FOR DIVERSIFIED
INVESTMENT
---------------------------------
[SEAL] Name of Participating Employer
/s/ W. BRUCE McCONNEL By: /s/ G. WILLING PEPPER
- --------------------------------- ---------------------------------
W. Bruce McConnel, III, Secretary G. Willing Pepper, President
ATTEST: THE PNC(R) FUND
-----------------------------------
Name of Participating Employer
[SEAL]
/s/ MORGAN R. JONES By: /s/ G. WILLING PEPPER
- --------------------------------- ---------------------------------
Morgan R. Jones, Secretary G. Willing Pepper, President
ATTEST: THE RBB FUND, INC.
---------------------------------
Name of Participating Employer
[SEAL]
/s/ MORGAN R. JONES By: /s/ EDWARD J. ROACH
- --------------------------------- ---------------------------------
Morgan R. Jones, Secretary Edward J. Roach, President
ATTEST: PROVIDENT INSTITUTIONAL FUNDS, INC.
-----------------------------------
[SEAL] Name of Participating Employer
/s/ W. BRUCE McCONNEL By: /s/ G. WILLING PEPPER
- --------------------------------- ---------------------------------
W. Bruce McConnel, III, Secretary G. Willing Pepper, President
</TABLE>
The undersigned hereby agree(s) to serve as the Trustee(s) under the Plan and
Trust Agreement.
<TABLE>
<S> <C>
EDWARD J. ROACH ROBERT R. FORTUNE
- --------------------------------- ---------------------------------
Name of Trustee Name of Trustee
/s/ ANTHONY M. SANTOMERO /s/ ROBERT R. FORTUNE
- --------------------------------- -----------------------------
Witness Signature
/s/ LINDA G. HAGAN /s/ EDWARD J. ROACH
- --------------------------------- -----------------------------
Witness Signature
</TABLE>
A-51
<PAGE> 1
MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.
ADMINISTRATION AGREEMENT
AGREEMENT dated as of January 18, 1993 between MUNICIPAL FUND
FOR CALIFORNIA INVESTORS, INC., a Maryland corporation (the "Company"),
PROVIDENT FINANCIAL PROCESSING CORPORATION, a Delaware corporation, and MFD
Group, Inc. ("MFD"), a Delaware corporation (collectively, the
"Administrators").
WHEREAS, the Company is registered as an open-end, diversified
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Company desires to retain the Administrators to
provide, as co-administrators, certain administration services for each class
and subclass of the Company's investment portfolios (individually, a "Fund,"
collectively, the "Funds") as listed on Appendix A (as such Appendix may, from
time to time, be supplemented (or amended)) and the Administrators are willing
to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained and intending to be legally bound, it is agreed
between the parties hereto as follows:
1. APPOINTMENT OF ADMINISTRATORS. The Company hereby
appoints each of the Administrators jointly to provide administration services
to each class and subclass of shares in each of the Company's Funds on the
terms and for the period set forth in this Agreement. The Administrators
accept such appointment and agree to perform the services and duties set forth
in Section 3 below in return for the compensation provided in Section 5 below.
In the event that the Company establishes additional classes or investment
portfolios other than the Funds listed on Appendix A with respect to which it
desires to retain the Administrators to act as co-administrators hereunder, the
Company shall notify the Administrators, whereupon such Appendix A shall be
supplemented (or amended) and such portfolio shall become a Fund hereunder and
shall be subject to the provisions of this Agreement to the same extent as the
Funds (except to the extent that said provisions, including the compensation
payable on behalf of such new Fund, may be modified in writing by the Company
and Administrators at the time).
<PAGE> 2
2. DELIVERY OF DOCUMENTS. The Company has furnished
each of the Administrators with copies, properly certified or authenticated, of
each of the following documents and will deliver to it all future amendments
and supplements, if any:
a. The Company's Articles of Incorporation,
filed with the Secretary of State of Maryland on September 20, 1982, as amended
(the "Charter");
b. The Company's By-Laws, as amended and
supplemented ("By-Laws");
c. Resolutions of the Company's Board of
Directors authorizing the execution and delivery of this Agreement;
d. The Company's most recent amendment to its
Registration Statement under the Securities Act of 1933, as amended, and under
the 1940 Act on Form N-1A as filed with the Securities and Exchange Commission
(the "Commission") on May 28, 1992 relating to its Funds (the Registration
Statement, as presently in effect and as amended or supplemented from time to
time, is herein called the "Registration Statement");
e. The Company's most recent Prospectuses and
Statement of Additional Information and all amendments and supplements thereto
(such Prospectuses and Statement of Additional Information and supplements
thereto, as presently in effect and as from time to time amended and
supplemented, are herein called the "Prospectuses"); and
f. The Company's amended and restated Non-12b-1
Shareholder Services Plan, adopted June 21, 1988 and related amended and
restated Servicing Agreement amended and restated 12b-1 Services Plan adopted
May 28, 1985 and related amended and restated form of Broker/Dealer Servicing
Agreement.
3. SERVICES AND DUTIES. The Administrators enter into
the following covenants jointly and severally with respect to their services
and duties:
a. Subject to the supervision and control of the
Company's Board of Directors, the Administrators shall assist in supervising
all aspects of the Funds' operations, other than those investment advisory and
accounting functions which are to be performed by the Company's investment
adviser pursuant to the Advisory Agreement and those advisory and other
services to be performed by any sub-adviser or the custodian pursuant to the
Company's Sub-Advisory Agreement and Custodian Agreement, as amended from time
to time, services to be performed by the
-2-
<PAGE> 3
distributor pursuant to the Company's Distribution Agreement and the transfer
agent pursuant to the Company's Transfer Agency Agreement, as amended from time
to time. In this regard, the Administrators' responsibilities include:
(1) Providing personnel and supervising
a facility in Wilmington, Delaware (or in such other location as the
Company shall reasonably request) to receive purchase and redemption
orders via the Company's toll-free in-WATS telephone lines and
transmitting such requests to the Company's transfer agent as promptly
as practicable;
(2) Providing for the preparing,
supervising and mailing of confirmations for all purchase and
redemption orders to shareholders of record;
(3) Providing and supervising the
operation of an automated data processing system to process purchase
and redemption orders (the Administrators assume responsibility for
the accuracy of the data transmitted for processing or storage);
(4) Maintaining a procedure external to
the transfer agent's system to reconstruct lost purchase and
redemption data;
(5) Providing daily information and
distributing written communications concerning the Funds to their
shareholders of record; handling shareholder problems and calls;
distributing weekly dividend letters and monthly listings of each
money market Fund's portfolio securities to all its shareholders of
record; and, at a shareholder's request, dividend letters and monthly
listings of each non-money market Fund's portfolio securities;
(6) Supervising the services of
individuals ("shareholder representatives") provided by MFD whose
principal responsibility and function shall be to preserve and
strengthen the Company's relationships with its shareholders;
(7) Administering all activities
concerning the installation, maintenance, monitoring and inventory
control of micro-computer equipment that may be leased (on lease terms
authorized by the Company) by the Administrators and placed in the
offices of certain shareholders of the Company to facilitate
shareholder access to the Company and related shareholder services
(herein called the "Computer Access Program"). The Administrators
shall provide the directors of the Company with such reports,
statistics and other information as they may from time to time
reasonably request in order to evaluate the Computer Access Program
-3-
<PAGE> 4
administered by the Administrators pursuant to this Section 3(a)(7)
and the Administrators' determination as to the costs which are
reimbursable by each of the Funds under Section 4. If this Agreement
is not renewed or is terminated, or if the Computer Access Program is
discontinued, for any reason, the Company shall have the option to
assume lessee's rights and obligations under its leases for the
micro-computer equipment and under any related maintenance, insurance
or other agreements; and
(8) Monitoring the Company's
arrangements with respect to services provided by certain
institutional shareholders ("Service Organizations") under its
Shareholder Services Plan, including monitoring and reviewing the
services rendered by Service Organizations to their customers who
beneficially own shares, pursuant to agreements between the Company
and such Service Organizations ("Servicing Agreements"); reviewing the
qualifications of Service Organizations wishing to enter into
Servicing Agreements with the Company; assisting in the execution and
delivery of Servicing Agreements; reporting to the Company's Board of
Directors with respect to the amounts paid or payable by the Company
from time to time under the Servicing Agreements and the nature of the
services provided by Service Organizations; and maintaining
appropriate records in connection with such duties.
b. The Administrators shall prepare or review,
and provide advice with respect to, all sales literature (advertisements,
brochures and shareholder communications) for each of the Funds and any class
or subclass thereof.
c. The Administrators shall participate to the
extent requested by the Company and its counsel in the periodic updating of the
Company's Registration Statement; compile data and accumulate information for
and coordinate with the Company's Treasurer the preparation of reports to
shareholders of record and the Commission (e.g., Annual and Semi-Annual Reports
on Form N-SAR), it being understood that the preparation and filing of timely
Notices pursuant to Rule 24f-2 shall be performed by the Company's Treasurer
with the assistance and advice of the Company's counsel; and file with the
Commission and other federal and state agency, subject to the approval of the
Company's Treasurer, reports and documents including, without limitation,
Annual and Semi-Annual Reports on Form N-SAR and federal and state tax returns
and required tax filings other than those required to be filed by the Company's
custodian or transfer agent.
d. For so long as the Company maintains an
office in Wilmington, Delaware, the Administrators shall pay the Company on the
first day of each month during such period an
-4-
<PAGE> 5
amount not to exceed $1,500 (or such lesser amount as is appropriate in the
event that the combined annual expenses of the Company, Trust for Federal
Securities, Municipal Fund for New York Investors, Inc., Municipal Fund for
Temporary Investment, Portfolios for Diversified Investment, Temporary
Investment Fund, Inc. and The PNC(R) Fund (collectively, herein called the
"Companies") in maintaining their offices in Wilmington, Delaware total less
than $18,000 divided by the number of Companies which have maintained an office
in Wilmington, Delaware during the previous month).
e. The Administrators, after consultation with
the distributor and counsel for the Company, shall determine the jurisdictions
in which the Company's shares shall be registered or qualified for sale. The
Administrators shall be responsible for maintaining the registration or
qualification of shares for sale under the securities laws of any state and for
preparing compliance filings pursuant to state securities laws with the advice
of the Company's counsel. Payment of share registration fees and any fees for
qualifying or continuing the qualification of the Company or any Fund as a
dealer or broker shall be made by the Company or Fund involved.
f. Monitor, and assist in developing compliance
procedures for each of the classes of the Company's Funds, which will include
without limitation, procedures to monitor compliance with each Fund's
investment objective, policies and limitations, tax matters, and applicable
laws and regulations.
g. The Administrators shall assist in monitoring
of regulatory and legislative developments which may affect the Company; assist
in counseling the Company with respect to regulatory examinations or
investigations of the Company; and work with the Company's counsel in
connection with regulatory matters or litigation.
h. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Administrators agree that all records which they
maintain for the Company are the property of the Company and further agree to
surrender promptly to the Company any of such records upon the Company's
request. The Administrators further agree to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under said Act.
i. If the expenses borne by any Fund in any
fiscal year exceed the applicable expense limitations imposed by the securities
regulations of any state in which the Fund's shares are registered or qualified
for sale to the public, the Administrators jointly and severally agree to
reimburse such Fund for a portion of any such excess expense in an amount equal
to the portion that the administration fees otherwise payable by the
-5-
<PAGE> 6
Fund to the Administrators bear to the total amount of the investment advisory
and administration fees otherwise payable by the Fund. The expense
reimbursement obligation of the Administrators is limited to the amount of
their fees hereunder for such fiscal year, provided, however, that
notwithstanding the foregoing, the Administrators shall reimburse such Fund for
a portion of any such excess expenses in an amount equal to the proportion that
the fees otherwise payable to the Administrators bear to the total amount of
investment advisory and administration fees otherwise payable by the Fund
regardless of the amount of fees paid to the Administrators during such fiscal
year to the extent that the securities regulations of any state having
jurisdiction over the Fund so require. Such expense reimbursement, if any,
will be estimated, reconciled and paid on a monthly basis.
j. In performing all of their services and
duties as co-administrators, the Administrators will act in conformity with the
Charter, By-Laws, Prospectuses and resolutions and other instructions of the
Company's Board of Directors and will comply with the requirements of the 1940
Act and other applicable federal or state law.
4. EXPENSES ASSUMED AS ADMINISTRATORS. The
Administrators will bear all expenses incurred by them in performing their
services and duties as co-administrators, except as otherwise expressly
provided herein. Other expenses to be incurred in the operation of the Funds,
including taxes, interest, brokerage fees and commissions, if any, salaries and
fees of officers and directors who are not officers, directors, shareholders or
employees of the Administrators, or the Company's investment adviser or
distributor for the Funds, Commission fees and state Blue Sky qualification
fees, advisory and administration fees, charges of custodians, transfer and
dividend disbursing agents' fees, certain insurance premiums, outside auditing
and legal expenses, costs of maintaining corporate existence, typesetting and
printing of prospectuses for regulatory purposes and for distribution to
current shareholders of the Funds, costs of shareholders' reports and corporate
meetings and any extraordinary expenses, will be borne by the Company,
provided, however, that the Company will not bear, directly or indirectly, the
cost of any activity which is primarily intended to result in the sale of
shares of the Funds. Notwithstanding the above, the Company shall assume the
Administrators' rights and liabilities and obligations, as lessee, under the
leases for the micro-computer equipment referred to in Section 3(a)(7) from the
date of the termination (or any expiration without renewal) of this Agreement,
or the discontinuance of the Computer Access Program, until the conclusion of
the first year of each lease.
-6-
<PAGE> 7
5. COMPENSATION. For the services provided and the
expenses assumed as Administrators pursuant to Section 4 above, the Company
will:
a. (1) pay the Administrators jointly a fee at
an annual rate of .20 of 1% of the Company's average daily net assets. Net
asset value shall be computed at least once a day. The fee for the period from
the day of the month this Agreement is entered into until the end of that month
shall be pro-rated according to the proportion which such period bears to the
full monthly period. Upon any termination of this Agreement before the end of
any month, the fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
b. The Company will also reimburse the
Administrators monthly for their reasonable out-of-pocket expenses incurred in
leasing, installing, maintaining and monitoring the micro-computer equipment
and administering the Computer Access Program pursuant to the provisions of
Section 3(a)(7) above, provided that the Administrators will not be reimbursed
for any costs: (i) which exceed the current budget for the Computer Access
Program approved by the Company's Board of Directors; (ii) which directly or
indirectly finance any activity primarily intended to result in the sale of
shares; or (iii) which the Administrators have not reasonably determined are in
the best interests of the Company and its shareholders.
c. For the purpose of determining fees payable
to the Administrators, the value of each Fund's net assets shall be computed as
required by its Prospectuses, generally accepted accounting principles and
resolutions of the Company's Board of Directors. The fee attributable to each
Fund shall be the several (and not joint or joint and several) obligation of
each such Fund.
d. The Administrators will from time to time
employ or associate with themselves such person or persons as they may believe
to be fitted to assist them in the performance of this Agreement. Such person
or persons may be officers and employees who are employed by both the Company
and either of the Administrators. The compensation of such person or persons
shall be paid by the Administrators, and no obligation shall be incurred on
behalf of the Company in such respect.
6. PROPRIETARY AND CONFIDENTIAL INFORMATION. The
Administrators agree on behalf of themselves and their employees to treat
confidentially and as proprietary information of the Company all records and
other information relative to the Company and its Funds and prior, present or
potential shareholders, and
-7-
<PAGE> 8
not to use such records and information for any purpose other than performance
of their responsibilities and duties hereunder, except after prior notification
to and approval in writing by the Company, which approval shall not be
unreasonably withheld and may not be withheld where the Administrators may be
exposed to civil or criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted authorities, or when
so requested by the Company.
7. LIMITATIONS OF LIABILITY. Neither Administrator
shall be liable for any error of judgment or mistake of law or for any loss
suffered by the Company in connection with the matters to which this Agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement. Any
person, even though also an officer, director, employee or agent of either of
the Administrators, who may be or become an officer, employee or agent of the
Company, shall be deemed, when rendering services to the Company or acting on
any business of the Company (other than services or business in connection with
the Administrators' duties as co-administrator hereunder) to be rendering such
services to or acting solely for the Company and not as an officer, director,
employee or agent or one under the control or direction of the Administrators
even though paid by either of them. The Administrators agree that their
liability under this Agreement, as set forth herein, shall be joint and
several.
8. DURATION AND TERMINATION. This Agreement shall
become effective upon its execution as of the date first written above and,
unless sooner terminated as provided herein, shall continue until May 31, 1994.
Thereafter, if not terminated, this Agreement shall continue automatically for
successive terms of one year, provided that such continuance is specifically
approved at least annually (a) by a vote of a majority of those members of the
Company's Board of Directors who are not parties to this Agreement or
"interested persons" of any such party, cast in person at a meeting called for
the purpose of voting on such approval, and (b) by the Company's Board of
Directors or by vote of a "majority of the outstanding voting securities" of
the Company; provided, however, that this Agreement may be terminated by the
Company at any time, without the payment of any penalty, by vote of a majority
of the entire Board of Directors or a vote of a "majority of the outstanding
voting securities" of the Company, on 60-days' written notice to the
Administrators, or by the Administrators at any time, without the payment of
any penalty, on 90-days' written notice to the Company. This Agreement will
automatically and immediately terminate in the event of its assignment. (As
used in this Agreement, the terms
-8-
<PAGE> 9
"majority of the outstanding voting securities," "interested person" and
"assignment" shall have the same meaning as such terms have in the 1940 Act.)
9. AMENDMENT OF THIS AGREEMENT. No provision of this
Agreement may be changed, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, discharge or termination is sought.
10. NOTICES. Notices of any kind to be given to the
Company hereunder by the Administrators shall be in writing and shall be duly
given if mailed or delivered to the Company at Bellevue Park Corporate Center,
Suite 152, 103 Bellevue Parkway, Wilmington, Delaware 19809, Attention: Mr.
Edward J. Roach, Treasurer, with a copy to Philadelphia National Bank Building,
1345 Chestnut Street, Philadelphia Pennsylvania 19107-3496, Attention: Morgan
R. Jones, Secretary, or at such other address or to such individual as shall be
so specified by the Company to the Administrators. Notices of any kind to be
given to the Administrators hereunder by the Company shall be in writing and
shall be duly given if mailed or delivered to MFD Group, Inc., 259
Radnor-Chester Road, Suite 135, Radnor, Pennsylvania 19087, Attention: Monroe
J. Haegele and to Provident Financial Processing Corporation, Bellevue Park
Corporate Center, 103 Bellevue Parkway, Wilmington, Delaware 19087, Attention:
Vincent J. Ciavardini, or at such other address or to such other individual as
shall be so specified by an Administrator to the Company.
11. 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 their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors.
12. COUNTERPARTS. This Agreement may be executed in
counterparts, all of which together shall constitute one and the same
instrument.
-9-
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day and
year first above written.
MUNICIPAL FUND FOR CALIFORNIA
INVESTORS, INC.
By:
--------------------------------
PROVIDENT FINANCIAL PROCESSING
CORPORATION
By:
--------------------------------
MFD GROUP, INC.
By:
--------------------------------
-10-
<PAGE> 11
APPENDIX A
to the
ADMINISTRATION AGREEMENT
between
Municipal Fund for California Investors, Inc.
and
Provident Financial Processing Corporation and
MFD Group, Inc.
- --------------------------------------------------------------------------------
California Money Fund (Class A Common Stock, Class A Comon Stock - Special
Series 1 and Class A Common Stock - Special Series 2)
California Intermediate Municipal Fund (Class B Common Stock, Class B Common
Stock - Special Series 1 and Class B Common Stock - Special Series 2)
A-1
<PAGE> 1
EXHIBIT 10
[DRINKER BIDDLE & REATH LETTERHEAD]
May 26, 1995
Municipal Fund for California Investors, Inc.
Bellevue Park Corporate Center
400 Bellevue Parkway, Suite 100
Wilmington, Delaware 19809
Re: Post-Effective Amendment No. 16 to Registration
Statement on Form N-1A for Municipal Fund for
California Investors, Inc. (Registration Nos. 2-79510;
811-3574)
Gentlemen:
We have acted as counsel for Municipal Fund for California
Investors, Inc., a Maryland corporation (the "Company"), in connection with the
registration of 732,842,272 shares of Class A Common Stock and 134,870 shares
of Class B Common Stock ("Shares"), pursuant to Post-Effective Amendment No. 16
to the Company's Registration Statement under the Securities Act of 1933. The
registration of such Shares has been made in reliance upon Rule 24e-2 under the
Investment Company Act of 1940. The Company is an open-end investment company
authorized to issue a total of three billion shares of Common Stock, par value
$.001 per share, of which two billion, three hundred million shares were
classified as Class A Common Stock, three hundred million shares were
classified as Class A Common Stock-Special Series 1, three hundred million
shares were classified as Class A Common Stock-Special Series 2, eighty million
shares were classified as Class B Common Stock, ten million shares were
classified as Class B Common Stock-Special Series 1 and ten million shares were
classified as Class B Common Stock-Special Series 1 and then million shares
were classified as Class B Common Stock-Special Series 2 at all times during
the fiscal year ended January 31, 1995 and remain so classified as of the date
of this opinion. We have reviewed the Company's Charter, its By-Laws,
resolutions adopted by its Board of Directors and shareholders and such other
legal and factual matters as we have deemed appropriate and relied upon a
certificate of the Company's transfer agent as to certain matters including
whether at any time during the fiscal year ended January 31, 1995 the number of
issued and outstanding shares of any class or series of the Company's Common
Stock exceeded the number of such Shares that the Company was then authorized
to issue.
<PAGE> 2
DRINKER BIDDLE & REATH
Municipal Fund for California
Investors, Inc.
May 26, 1995
Page 2
On the basis of the foregoing, we are of the opinion that the
foregoing 732,842,272 shares of Class A Common Stock and 134,870 shares of
Class B Common Stock, when issued for payment as described in the Company's
Prospectuses, will be validly issued, fully paid and non-assessable by the
Company.
We hereby consent to the filing of this opinion with the
Securities and Exchange Commission as an exhibit to Post-Effective Amendment
No. 16 to the Company's Registration Statement.
Very truly yours,
DRINKER BIDDLE & REATH
<PAGE> 1
EXHIBIT 11(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the following with respect to Post-Effective Amendment No. 16 and
Amendment No. 17 pursuant to the Securities Act of 1933 and the Investment
Company Act of 1940, respectively, as amended, to the Registration Statement on
Form N-1A of Municipal Fund for California Investors, Inc. (File No. 2-79510):
1. The incorporation by reference of our report dated
March 10, 1995 into the Prospectuses relating to the
California Money Fund and the California Intermediate
Municipal Fund.
2. The inclusion of our report dated March 10, 1995
accompanying the California Money Fund and the
California Intermediate Municipal Fund in the
Statement of Additional Information.
3. The references to our Firm under the heading
"Financial Highlights" in the Prospectuses relating
to the California Money Fund and the California
Intermediate Municipal Fund.
4. The reference to our Firm under the heading
"Independent Accountants" in the Statement of
Additional Information.
/s/ Coopers & Lybrand L.L.P.
- ----------------------------
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103
May 22, 1995
<PAGE> 1
EXHIBIT (11)(b)
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the references
to our firm under the caption "Counsel" in the Statement of Additional
Information included in this Post-Effective Amendment No. 16 to the
Registration Statement (Nos. 2-79510; 811-3574) on Form N-1A of Municipal Fund
for California Investors, Inc. (California Money Fund and California
Intermediate Municipal Fund portfolios) under the Securities Act of 1933 and
the Investment Company Act of 1940, respectively. This consent does not
constitute a consent under Section 7 of the Securities Act of 1933, and in
consenting to the use of our name and the reference to our firm under such
caption we have not certified any part of the Registration Statement and do not
otherwise come within the categories of persons whose consent is required under
Section 7 or the rules and regulations of the Securities and Exchange
Commission thereunder.
/s/ DRINKER BIDDLE & REATH
--------------------------
DRINKER BIDDLE & REATH
Philadelphia, Pennsylvania
May 26, 1995
<PAGE> 1
EXHIBIT 11(c)
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the reference
to our firm under the caption "Counsel" in the Statement of Additional
Information included in this Post-Effective Amendment No. 16 to the
Registration Statement (No. 2-79510) on Form N-1A of Municipal Fund for
California Investors, Inc. (California Money Fund and California Intermediate
Municipal Fund portfolios) under the Securities Act of 1933 and the Investment
Company Act of 1940, respectively.
/s/O'Melveny & Myers
----------------------
O'MELVENY & MYERS
Los Angeles, California
May 17, 1995
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> CALIFORNIA MONEY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 395,092,540
<INVESTMENTS-AT-VALUE> 395,092,540
<RECEIVABLES> 3,003,840
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 398,096,380
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,246,366
<TOTAL-LIABILITIES> 1,246,366
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 396,986,690
<SHARES-COMMON-STOCK> 396,986,690
<SHARES-COMMON-PRIOR> 432,356,061
<ACCUMULATED-NII-CURRENT> 11,572,454
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (136,676)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 396,850,014
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 12,450,075
<OTHER-INCOME> 0
<EXPENSES-NET> 877,621
<NET-INVESTMENT-INCOME> 11,572,454
<REALIZED-GAINS-CURRENT> (39,944)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 11,532,510
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 11,572,454
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 749,572,154
<NUMBER-OF-SHARES-REDEEMED> 785,321,940
<SHARES-REINVESTED> 380,415
<NET-CHANGE-IN-ASSETS> (35,369,371)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 833,727
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,043,108
<AVERAGE-NET-ASSETS> 416,853,295
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .0537
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.0537)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> CALIFORNIA INTERMEDIATE MONEY FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-1995
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 17,176,376
<INVESTMENTS-AT-VALUE> 17,000,125
<RECEIVABLES> 529,157
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 17,529,282
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 97,063
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 17,642,942
<SHARES-COMMON-STOCK> 1,739,014
<SHARES-COMMON-PRIOR> 1,855,690
<ACCUMULATED-NII-CURRENT> 944,558
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (43,055)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (176,251)
<NET-ASSETS> 17,432,219
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 981,929
<OTHER-INCOME> 0
<EXPENSES-NET> 37,371
<NET-INVESTMENT-INCOME> 944,558
<REALIZED-GAINS-CURRENT> (43,055)
<APPREC-INCREASE-CURRENT> (1,416,126)
<NET-CHANGE-FROM-OPS> (511,006)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 944,558
<DISTRIBUTIONS-OF-GAINS> 64,692
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 120,336
<NUMBER-OF-SHARES-REDEEMED> 237,012
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (116,676)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 64,692
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 37,369
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 99,344
<AVERAGE-NET-ASSETS> 18,677,397
<PER-SHARE-NAV-BEGIN> 10.85
<PER-SHARE-NII> .5165
<PER-SHARE-GAIN-APPREC> (.7959)
<PER-SHARE-DIVIDEND> (.5165)
<PER-SHARE-DISTRIBUTIONS> (.0341)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.02
<EXPENSE-RATIO> .20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
