Registration No. 33-12911
As filed on August 27, 1996 Registration No. 811-5075
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 20
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
Amendment No. 22
(Check appropriate box or boxes)
THE AAL MUTUAL FUNDS
(Exact name of registrant is specified in charter)
222 West College Ave.
Appleton, Wisconsin 54919-0007
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (414) 734-5721
Robert G. Same
Secretary
The AAL Mutual Funds
222 West College Avenue
Appleton, WI 54919-0007
(Name and Address of Agent for Services)
Approximate date of proposed public offering: As soon as practicable
after the effective date of the registration statement.
It is proposed that this filing will become effective (check appropriate box)
o immediately upon filing pursuant to paragraph (b) of Rule 485
XX on August 30, 1996, pursuant to paragraph (b) of Rule 485
o 60 days after filing pursuant to paragraph (a)(1) of Rule 485
o on ____________, pursuant to paragraph (a)(ii) of Rule 485
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Registrant has previously registered an indefinite number of its shares of
beneficial interest pursuant to Rule 24f-2 under the Investment Company Act of
1940. Registrant filed a notice under Rule 24f-2 before June 30, 1995.
=======================================
Page 1 of pages.
Exhibit index is located at Page
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CROSS REFERENCE SHEET FOR
The AAL U.S. Government Zero Coupon Target Funds
Series 2001 and 2006
N-1A ITEM NO. LOCATION
PART A
Item 1 Cover Page Cover Page
Item 2 Synopsis General Information
Item 3 Financial Highlights Financial Highlights
Item 4 General Description of Registrant Cover Page; General
Information; Investment
Objectives and Policies
Item 5 Management of the Fund Board of Trustees
and Management of the
Trust
Item 5A Management's Discussion of
Funds' Performance Not Applicable, See
Annual Report
Item 6 Capital Stock and Other Securities Organization and Descrip-
tion of Shares
Item 7 Purchase of Securities Being Offered How to Buy Shares Divi-
dends, Distributions and
Taxes; Organization & De-
scription of Shares
Item 8 Redemption or Repurchase How to Sell (Redeem)
Shares
Item 9 Pending Legal Proceedings Not Applicable
PART B
Item 10 Cover Page Cover Page
Item 11 Table of Contents Table of Contents
Item 12 General Information and History Not Applicable
Item 13 Investment Objectives and Policies Investment Objectives &
Policies; Investment Tech-
niques; Investment Re-
strictions
Item 14 Management of the Fund Investment Advisory Ser-
vices; Distribution Plan
Item 15 Control Persons and Principal Investment Advisory Ser-
Holders of Securities vices
Item 16 Investment Advisory and Other Investment Advisory Ser-
Services vices; Distributor; Dis-
tribution Plan
Item 17 Brokerage Allocation Portfolio Transactions
Item 18 Capital Stock and Other Securities General
Item 19 Purchase, Redemption and Pricing Purchases & Redemptions;
of Securities Being Offered Pricing Considerations
Item 20 Tax Status Dividends, Distributions
and Taxes
Item 21 Underwriters Distributor
Item 22 Calculation of Performance Data Calculation of Yiled and
Total Return
Item 23 Financial Statements Financial Statements
PART C
Item 24 Information required to be included in Part C is set forth under
the appropriate Item, so numbered in Part C to this Registration
Statement.
<PAGE>
Prospectus August 30, 1996
THE AAL MUTUAL FUNDS
THE AAL U.S. GOVERNMENT ZERO COUPON TARGET FUNDS
Series 2001 and Series 2006
222 West College Ave.
Appleton, WI 54919-0007
800-553-6319 or 414-734-7633 TDD 800-684-3416
The AAL U.S. Government Zero Coupon Target Funds (the "Funds") are two of a
series of separate mutual fund portfolios within a single Trust, The AAL Mutual
Funds. The Funds are designed for investors seeking high future return from U.S.
Government securities with a reasonable assurance that they will receive a
targeted dollar amount, predictable at the time of investment, on a specific
maturity date.
PLEASE TAKE NOTICE
SALES OF THE AAL U.S. GOVERNMENT ZERO COUPON TARGET FUNDS, SERIES 2001 AND 2006
WERE CLOSED TO NEW SHAREHOLDERS AND TO ADDITIONAL PURCHASES OF SHARES BY
EXISTING SHAREHOLDERS EFFECTIVE MAY 31, 1993. PURCHASES OF SHARES BY
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, IF ANY, IN EXISTING SHAREHOLDER
ACCOUNTS WILL CONTINUE TO BE ALLOWED AND WILL BE AT NET ASSET VALUE. ALTHOUGH
THERE IS NO INTENT TO DO SO, SALES OF THE FUNDS COULD BE REOPENED IN THE FUTURE.
THE DISCUSSION ELSEWHERE HEREIN AS TO THE PURCHASE OF SHARES OF THE FUNDS IS
QUALIFIED BY THE FOREGOING LIMITATIONS.
Because the Funds invest primarily in zero coupon securities, the net asset
value per share may fluctuate substantially prior to the maturity date. Although
investors may redeem shares on any business day at net asset value, a
shareholder who redeems prior to maturity may experience a significantly
different investment return than was anticipated at the time of purchase.
Redemptions prior to maturity may result in capital gains or losses which may be
substantial. See "Price Variability." Because up to 20% of a portfolio may be
invested in interest paying U.S. Government securities, the total return for
investors in the Funds cannot be guaranteed even if all shares are held until
maturity and all dividends and distributions are reinvested.
The Funds invest primarily in U.S. Government zero coupon securities ("zero
coupon securities" or "zeros"). Each series matures on a specified target date.
Presently, two series of Funds are offered, Series 2001, maturing on November
15, 2001, and Series 2006, maturing on November 15, 2006.
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 ON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
AAL Capital Management Corporation acts as Investment Adviser to and Distributor
for the Funds. The Funds are sold at the Public Offering Price, which includes a
maximum sales charge of 4.75% (4.99% of the net amount invested). The maximum
sales charge is reduced for certain qualifying purchases. See "How to Buy
Shares--Reducing Your Sales Charge." As the Adviser, AAL Capital Management
Corporation receives management and advisory fees from the Funds. As the
Distributor, AAL Capital Management Corporation, receives a distribution fee on
assets of the Funds. See "Management of the Trust" and "Distribution Expenses."
This prospectus provides you with the basic information you should know before
investing in the Funds. Please read it and keep it for future reference. A
Statement of Additional Information dated August 30, 1996, containing additional
information about the Funds has been filed with the Securities and Exchange
Commission and (together with any supplements thereto) is incorporated by
reference in this prospectus in its entirety. You may obtain a copy of Annual
Report and/or Statement of Additional Information without charge by writing or
calling the Funds at the address or telephone numbers set forth above.
THE AAL U.S. GOVERNMENT ZERO COUPON TARGET FUNDS
INVESTMENT OBJECTIVE
High investment returns from U.S. Government securities over selected periods of
time
INVESTMENT CHARACTERISTICS
Two portfolios - maturing in 2001 and 2006
Professionally managed portfolios of U.S. Government securities, primarily
consisting of zero coupon securities
Relatively predictable return at maturity date if dividends and distributions
are reinvested
<PAGE>
TABLE OF CONTENTS
Page
Summary of Fund Expenses
Financial Highlights
General Information
Zero Coupon Securities
Investment Objective
Investment Policies
Other Investment Factors Regarding the Funds' Investments
Board of Trustees
Management of the Trust
Adviser and Distributor
General Portfolio Manager
How to Buy Shares
How to Redeem (Sell) Shares
Exchange Privilege
Telephone Transactions
Retirement Plans
Net Asset Value
Dividends, Distributions and Taxes
Distribution Expenses
Yield and Performance Information
Custodian, Transfer Agent and Independent Accountants
Organization and Description of Shares
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EXPENSE INFORMATION
The following information shows recurring and non-recurring Fund expenses.
Operating expenses are expressed as a percentage of average net assets.
Percentages shown for management fees and Rule 12b-1 distribution fees are the
maximum fees permitted under The AAL Mutual Funds Investment Advisory Agreement
and Rule 12b-1 Distribution Plan, respectively, while the percentages shown for
"Other Expenses" are based on the amounts incurred in the prior fiscal year, and
prior to voluntary reimbursements by the Adviser. This information also reflects
the Adviser's current voluntary undertaking to pay all expenses of the Funds in
excess of 1%.
Shareholder Transaction Target Fund Target Fund
Expenses Series 2001 Series 2006
Maximum Sales Charge Imposed 4.75% 4.75%
on Purchases as a Percentage of
Offering Price
Maximum Sales Charge Imposed None None
on Reinvested Dividends as a
Percentage of Offering Price
Deferred 12b-1 Sales Charges None None
Redemption Fee None None
Exchange Fee (per exchange)(1) None None
Annual Fund Operating Target Fund Target Fund
Expenses (giving effect to Series 2001 Series 2006
expense undertaking as a
percentage of average net assets)
Management Fee(2) 0.50% 0.50%
Rule 12b-1 Distribution Plan 0.10% 0.10%
Fee(2)
Other Expenses (after contractual 0.40% 0.40%
and voluntary reimbursement by
the Adviser)(3)
Total Fund Operating Expenses 1.00% 1.00%
(giving effect to voluntary
reimbursement by the Adviser)(3)
(1) A $10.00 fee will be charged for each wire redemption.
(2) Since June 1, 1993, the Adviser has voluntarily waived its management
fee. Since July 1, 1993, The Distributor has waived receipt of the Rule
12b-1 Distribution Plan fee. Although these waivers are voluntary, there
is no present intention to reinstate these fees in the future. Because
Rule 12b- 1 fees continue for the life of the investment, over time a
long-term investor may pay more than the economic equivalent of the
maximum front-end sales charge permitted by the National Association of
Securities Dealers (NASD).
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(3) The Adviser has a contractual obligation to reimburse the Funds for
expenses in excess of any applicable state maximum expense limitation.
In addition, the Adviser is currently paying all expenses of the Funds
in excess of 1%. "Other Expenses" and "Total Fund Operating Expenses"
reflect these contractual and voluntary expense reimbursements. Without
the voluntary expense undertaking by the Adviser, the total operating
expenses would have been 1.74% and 2.07% for Series 2001 and 2006,
respectively, for the year ended April 30, 1996.
Expense Example
Based on the expense information provided (assuming no exchanges and with the
waiver of expenses over 1% for the first year), the following hypothetical
example illustrates the expenses you would pay on a $1,000 investment in each of
the Funds for the periods indicated. The example assumes a five percent (5%)
compounded annual return and redemption at the end of each time period.
Time Period Target Fund Target Fund
Series 2001 Series 2006
1-year $57 $57
3-years $78 $78
5-years $101 $101
10-years $166 $166
The purpose of these tables is to assist the investor in understanding the
various costs and expenses that an investor in the Funds will bear directly or
indirectly. The estimated operating expenses and the expense examples shown
above should not be considered a representation of future expenses. Actual
expenses may be greater or less than shown.
Without the Adviser's voluntary undertaking, it is estimated that these expenses
would be approximately $64, $99, $136 and $240 respectively, for Series 2001 and
approximately $68, $110, $155 and $279 respectively, for Series 2006.
<PAGE>
Financial Highlights
The audited Financial Highlights Table covers The AAL U.S. Government Zero
Coupon Target Funds, Series 2001 and 2006, for the period from November 14, 1990
(commencement of operations) through April 30, 1991, and for the years ended
April 30, 1992, 1993, 1994, 1995 and 1996, respectively. You should read the
Table in conjunction with the Funds' financial statements and related notes, all
of which have been audited by Price Waterhouse LLP, independent accountants. The
Funds' financial statements and related notes, including Price Waterhouse LLP's
report thereon, are contained in the Funds'
April 30, 1996 Annual Report, copies of which are available from the
Distributor at no charge.
<TABLE>
<CAPTION>
Target 2001 Fund
<S> <C> <C> <C> <C> <C> <C>
Period Ended Year Ended Year Ended Year Ended Year Ended Year Ended
4/30/91 4/30/92 4/30/93 4/30/94 4/30/95 4/30/96
NAV Start of Period $ 10.00 $ 10.25 $ 10.61 $ 12.25 $ 10.54 $ 10.37
Net Investment Income(loss) 0.444 0.772 0.741 0.700 0.663 0.647
Net Realized and Unrealized
Gain(loss) on Invesments 0.250 0.360 1.679 (0.623) 0.000 0.335
Total from Investment
Operations 0.694 1.132 2.420 0.077 0.663 0.982
Dividends from Net Investment
Income (0.444) (0.772) (0.741) (0.700) (0.663) (0.761)
Distribution from Net Realized
Gain on Investments(d) 0.000 0.000 (0.039) (1.087) (0.170) (0.041)
Total Dividends and Distributions (0.444) (0.772) (0.780) (1.787) (0.833) (0.802)
Net Increase\ Decrease in Net
Asset Value 0.250 0.360 1.640 (1.710) (0.170) 0.180
NAV: End of Period $ 10.25 $ 10.61 $ 12.25 $ 10.54 $ 10.37 $ 10.55
Total Return for Period(e) 6.97% 10.76% 23.27% -0.34% 6.82% 9.23%
Net Assets at End of Period $ 668,211 $ 1,494,818 $ 2,760,499 $ 1,824,482 $ 1,754,517 $ 1,811,034
Ratio of Net Operating Expenses
to Average Net Assets(a)(b) 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Investment income
(loss)to Average Net
Assets(a)(c) 10.21% 7.19% 6.38% 5.74% 6.50% 5.84%
Portfolio Turnover 0.00% 2.93% 2.79% 1.65% 0.00% 0.00%
</TABLE>
(a) Calculated on an annualized basis.
(b) Computed after giving effect to Adviser's expense limitation undertaking. If
the Funds had paid all of their expenses, the ratios would have been 13.27%,
7.32%. 4.60%, 2.33%, 2.00% and 1.74% for Series 2001, and 17.44%, 10.36%, 6.19%,
6.19%, 2.49% and 2.07% for Series 2006.
(c) If the Funds had paid all of their expenses the ratio would have been
(2.06%), 0.87%, 2.78%, 4.41%, 5.51% and 5.10% for Series 2001, and (5.75%),
(1.68%), 1.60%, 3.72%, 5.46% and 4.76% for Series 2006
(d) 100% of distributions from net realized capital gains during the fiscal year
ended April 30, 1996, were long term.
(e) Total returns are based on net amount invested.
<TABLE>
<CAPTION>
Target 2006 Fund
<S> <C> <C> <C> <C> <C> <C>
Period Ended Year Ended Year Ended Year Ended Year Ended Year Ended
4/30/91 4/30/92 4/30/93 4/30/94 4/30/95 4/30/96
NAV Start of Period $ 10.00 $ 10.31 $ 10.42 $ 12.52 $ 10.96 $ 10.93
Net Investment Income(loss) 0.473 0.824 0.795 0.740 0.734 0.711
Net Realized and Unrealized
Gain(loss) on Invesments 0.310 0.116 2.114 (0.567) 0.184 0.648
Total from Investment
Operations 0.783 0.940 2.909 0.173 0.918 1.359
Dividends from Net Investment
Income (0.473) (0.824) (0.795) (0.740) (0.734) (0.865)
Distribution from Net Realized
Gain on Investments(d) 0.000 (0.006) (0.014) (0.993) (0.214) (0.094)
Total Dividends and Distributions (0.473) (0.830) (0.809) (1.733) (0.948) (0.959)
Net Increase\ Decrease in Net
Asset Value 0.310 0.110 2.100 (1.560) (0.030) 0.400
NAV: End of Period $ 10.31 $ 10.42 $ 12.52 $ 10.96 $ 10.93 $ 11.33
Total Return for Period(e) 7.86% 8.73% 28.44% 0.18% 9.05% 11.80%
Net Assets at End of Period $ 451,758 $ 1,066,226 $ 1,951,566 $ 1,364,890 $ 1,400,161 $ 1,479,703
Ratio of Net Operating Expenses
to Average Net Assets(a)(b) 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Investment income
(loss)to Average Net
Assets(a)(c) 10.70% 7.68% 6.79% 5.86% 6.95% 5.83%
Portfolio Turnover 2.78% 2.31% 5.44% 1.05% 0.00% 0.00%
</TABLE>
(a) Calculated on an annualized basis.
(b) Computed after giving effect to Adviser's expense limitation undertaking. If
the Funds had paid all of their expenses, the ratios would have been 13.27%,
7.32%. 4.60%, 2.33%, 2.00% and 1.74% for Series 2001, and 17.44%, 10.36%, 6.19%,
6.19%, 2.49% and 2.07% for Series 2006.
(c) If the Funds had paid all of their expenses the ratio would have been
(2.06%), 0.87%, 2.78%, 4.41%, 5.51% and 5.10% for Series 2001, and (5.75%),
(1.68%), 1.60%, 3.72%, 5.46% and 4.76% for Series 2006
(d) 100% of distributions from net realized capital gains during the fiscal year
ended April 30, 1996, were long term.
(e) Total returns are based on net amount invested.
<PAGE>
GENERAL INFORMATION
The AAL U.S. Government Zero Coupon Target Funds (the "Funds") are part of The
AAL Mutual Funds (the "Trust"), a group of mutual funds that offer investment
opportunities to eligible Lutherans (including their families and their
enterprises), and to AAL members and employees. In addition, AAL branches,
Lutheran congregations and trusts, employee benefit plans and organizations
sponsored by or affiliated with Lutheran congregations are eligible to purchase
shares of the Funds. Lutheran investors in The AAL Mutual Funds are eligible for
associate membership in Aid Association for Lutherans ("AAL"), which entitles
them to become a part of one of over 9,000 local AAL branches throughout the
U.S. Through these branches and AAL, members help each other, aid Lutheran
congregations and their institutions and reach out to their communities through
charitable, educational, social, benevolent, fraternal and patriotic programs.
The Trust is a Massachusetts Business Trust, which was organized on June 9,
1987, with different series of shares, each of which is referred to as a "Fund."
In addition to The AAL U.S. Government Zero Coupon Target Funds, seven other AAL
Mutual Funds exist and are described in separate prospectuses: The AAL Small Cap
Stock Fund; The AAL Mid Cap Stock Fund (f/k/a/ The AAL Smaller Company Stock
Fund); The AAL Capital Growth Fund ; The AAL Utilities Fund; The AAL Bond Fund ;
The AAL Municipal Bond Fund (a tax-exempt investment); and The AAL Money Market
Fund , which are contained in one prospectus; and The AAL International Fund,
which is contained in another prospectus. The AAL U.S. Government Zero Coupon
Target Funds described in this prospectus seek to provide a high investment
return over selected periods, consistent with investment in U. S. Government
securities, with minimum reinvestment risk. (See "Reinvestment Risk"). Presently
two series exist: Series 2001 and Series 2006. The investment objective of each
of the Funds is a fundamental policy which cannot be changed without the vote of
a majority of the outstanding shares of a Fund.
When you invest in shares of a Fund, the money you invest is combined with that
of many other investors. The Funds provide you with diversification by investing
your money primarily in a variety of U.S. Government securities, and furnish
professional management to select and monitor your investments. You have an
interest in each of the securities held by the Fund in which you invest.
Because the Funds invest in bonds, the yields and values of which fluctuate with
market conditions, the value of your shares in the Funds will rise and fall
according to prevailing interest rates and over time may be more or less than
your cost. AAL Capital Management Corporation, the "Adviser" is responsible for
evaluating and selecting the securities held by the Funds. Although there can be
no assurance that it will be the
<PAGE>
case, the Adviser will use its professional expertise to try to ensure that
the Funds' objectives will be met. See "Management of the Trust."
The following sections of the prospectus include a description of the investment
objectives and policies of the Funds, additional information regarding zero
coupon securities, certain investment techniques used by the Funds, management
of the Funds, distribution arrangements for the Funds, including fees,
information on how to purchase and redeem shares, yield and performance
information, the tax treatment of investments in the Funds, and other matters.
ZERO COUPON SECURITIES
What are Zero Coupon Securities?
Unlike Treasury securities with coupons attached which generate periodic
interest payments to the holders, zero coupon securities pay no cash income
until their maturity date. Zero coupon securities are purchased at a substantial
discount from their value at their maturity date. The discount is amortized over
the life of the zero. When a zero is held to maturity, the entire return comes
from the difference between the purchase price and the maturity value. Because
this difference is known at the time of purchase, investors holding zero coupon
securities until maturity know the amount of their investment return at the time
of their investment. See "Reinvestment Risk" for a further explanation of how
zero coupon securities differ from traditional interest-paying bonds.
Why Invest in Zero Coupon Securities?
Because the return on zero coupon securities held to maturity is predictable, an
investment in zeros enables you to plan to meet future financial goals. However,
because there are no periodic interest payments on a zero coupon security, their
market value will decline more dramatically when interest rates rise than a bond
which pays interest on a current basis and will rise more dramatically than
other bonds as interest rates fall.
In order to obtain the predicted return and reduce their exposure to the price
volatility caused by changing interest rates, investors should plan to hold
shares of the Funds until maturity and elect automatic reinvestment of dividends
and distributions. Since each Fund will be primarily invested in zero coupon
securities, investors who hold shares to maturity and reinvest dividends and
distributions will experience a return consisting primarily of the accretion of
discount on the underlying securities in the Fund. Because up to 20% of a Fund's
portfolio may be invested in interest paying U.S. Government securities, the
total return for investors in the Funds cannot be guaranteed, even if all shares
are held until maturity and all dividends and distributions are reinvested. As
with all funds distributing taxable income, tax-paying investors in the Funds
will be subject to income taxes on all dividends and distributions, whether they
<PAGE>
elect to take them in cash or have them reinvested.
Generally, investors may redeem their shares on any business day at the daily
net asset value. However, the net asset value of a Fund's shares increases and
decreases with changes in the market value of that Fund's investments, and that
market value tends to vary inversely with changes in prevailing interest rates.
Zero coupon securities usually trade at a deep discount from their face or par
value and are subject to greater market value fluctuations from changing
interest rates than debt obligations of comparable maturities which make current
distributions of interest. Therefore, an investor who redeems prior to maturity
may experience a significantly different return than was expected at the time of
purchase, as these shares will have substantially more price volatility than
shares of funds investing in traditional fixed income investments.
INVESTMENT OBJECTIVE
The objective of each of the Funds is to provide a high investment return over
selected periods of time, consistent with investment in U.S. Government
securities. Presently, two funds are offered, Series 2001 and Series 2006, each
of which matures on a specified target date in each of those years. On a Fund's
target date, its assets will be converted to cash and distributed to
shareholders or reinvested, without a sales charge, in another series of The AAL
Mutual Funds, which are described in a separate prospectus.
By pursuing this objective, the Funds seek to return to investors a reasonably
assured targeted dollar amount, predictable at the time of investment, on a
specific target date in the future. In order to realize this return, investors
should plan to hold a Fund's shares until maturity and reinvest all dividends
and distributions. However, as with any investment, there can be no assurance
that the Funds' investment objective will be met.
The Funds may be an appropriate investment for IRAs, 403(b)(7) custodial
accounts, pension and profit sharing plans, 401(k) plans and other retirement
plans where investors can match their retirement planning needs with a specific
Fund target date. The Funds also may be appropriate for investors planning for
future anticipated expenses, such as college education of children or
grandchildren or the purchase of a home. The Funds may also be appropriate for a
Uniform Gift to Minors account or any other investment account where
predictability of return over a specific time period is important.
INVESTMENT POLICIES
Investments
At least 80% of each Fund will be invested in U.S. Government zero coupon
securities. These include U.S. Treasury notes and bonds which have no coupons
and
<PAGE>
are not entitled to income, U.S. Treasury bills, individual interest coupons
which trade separately and evidences of receipt of such securities. At least 50%
of each Fund will be invested in zero coupon U.S. Government securities maturing
within two years of the Fund's target date, although it is expected that under
normal circumstances the percentage of a Fund's assets so invested will be
greater. Up to 20% may be invested in interest-paying U.S. Treasury notes and
bonds, and in repurchase agreements with respect to such securities. These
interest-paying securities provide income for expenses, redemption payments and
cash dividends of each Fund.
QUALITY
All Treasury obligations in each Fund are backed by the full faith and credit of
the U.S. Government. In addition, each Fund may enter into repurchase agreements
with member banks of the Federal Reserve System with respect to such securities.
REINVESTMENT RISK
A portion of the total realized return from traditional interest-paying bonds
comes from the reinvestment of periodic interest. Since the rate to be earned on
these reinvestments may be higher or lower than the rate quoted on the
interest-paying bonds at the time of the original purchase, the investment's
total return is uncertain even for investors holding the security until
maturity. This uncertainty is commonly referred to as reinvestment risk, and can
have a significant impact on total realized investment return. With zero coupon
securities, however, there are no cash distributions to reinvest, so investors
bear no reinvestment risk if they hold the zero coupon security to maturity.
Because each Fund will not be invested entirely in zero coupon securities
maturing on the target date and may invest up to 20% of its assets in
interest-paying U.S. Government securities and repurchase agreements with
respect to such securities, there will be some reinvestment risk. To reduce this
risk, each Fund will invest at least half the market value of its net assets in
zero coupon securities maturing within two years of the Fund's target date.
ANTICIPATED GROWTH RATE
Due to the nature of zero coupon securities, a targeted dollar amount per share
to be received at the target date can be estimated daily for each Fund. The
difference between this amount and the net asset value per share at the time of
investment is the projected return and is called anticipated growth. Anticipated
growth will consist primarily of the estimated accretion of discount on the zero
coupon securities in a Fund, and to a much lesser degree, of projected cash flow
in income-producing securities in excess of estimated expenses.
On each business day, each Fund will calculate its anticipated growth rate,
which is the annualized rate of growth investors may expect from the time they
purchase a
<PAGE>
Fund's share until that Fund's target date. The anticipated growth rate cannot
be guaranteed, as it involves certain assumptions about variable factors such as
reinvestment of dividends and distributions, the expense ratio and composition
of the Fund's portfolio. The rate will vary from day to day due to changes in
interest rates and other market factors affecting the value of a Fund's
investments. Furthermore, differences in the price changes of securities with
different maturities can affect investment return, as can the skill of the
Adviser in managing the Fund. Under certain circumstances, shareholder
redemptions could also affect anticipated growth rate.
Owning shares of a Fund holding zero coupon and other securities differs from a
direct investment in zero coupon securities in various ways, including the
factors affecting predictability of return described above and the varying
maturity dates of the securities held by a Fund. The Adviser believes, however,
that investors buying and holding a Fund's shares to maturity and reinvesting
all dividends and distributions should be able to realize an investment return
substantially equal to the anticipated growth rate calculated on the day the
Fund's shares were purchased.
Each Fund will be liquidated in its target maturity year. All shareholders will
be notified of their Fund's pending liquidation prior to the target date and
asked how they wish to receive their liquidation proceeds. If no instructions
are received, proceeds will be invested automatically in The AAL Money Market
Fund, in an account established on behalf of the shareholder.
OTHER INVESTMENT FACTORS REGARDING THE FUNDS
Price Variability
With respect to interest-paying securities, it can be expected that a decline in
prevailing levels of interest rates generally will increase the value of
securities held in the portfolio and an increase in rates generally will reduce
the value of these securities. Because they do not pay interest, zero coupon
securities tend to be subject to greater fluctuation of market value in response
to changes in interest rates than interest-paying securities of similar
maturities. Investors can expect more appreciation from a Fund during periods of
declining interest rates than from interest-paying securities of similar
maturity. Conversely, when interest rates rise, a Fund will normally decline
more in price than interest-paying securities of similar maturity. The degree of
price fluctuations are expected to vary directly with the length of time to a
Fund's maturity date.
Interest rates can change suddenly and unpredictably. The Funds may not be
appropriate for investors who do not plan to hold their shares until maturity.
Redemptions prior to maturity may result in capital gains or losses which may be
substantial.
<PAGE>
Portfolio Turnover
It is not anticipated that any of the Funds will have a portfolio turnover rate
in excess of 100%.
Repurchase Agreements and Borrowing
The Funds may from time to time enter into repurchase agreements. Repurchase
agreements involve the sale of securities to a Fund with the concurrent
agreement of the seller (a bank or securities dealer) to repurchase the
securities at the same price plus an amount equal to an agreed upon interest
rate within a specified time, usually less than one week, but on occasion for a
longer period. The Funds require continual maintenance of collateral (in cash or
U.S. Government securities) held by the Funds' custodian in an amount equal to,
or in excess of, the market value of the securities which are the subject of the
agreement. Additional information regarding Repurchase Agreements is contained
in the Statement of Additional Information.
Each Fund may borrow money, but only from banks, for temporary or emergency
purposes in amounts not exceeding 10% of a Fund's total assets. Borrowings at
any time outstanding will be repaid before any purchase of securities is made.
When-Issued Purchases
The Funds may purchase securities on a when-issued or delayed delivery basis.
Although the payment and interest terms of these securities are established at
the time the purchaser enters into the commitment, the securities may be
delivered and paid for a month or more after the date of purchase, when their
value may have changed. The Funds make such commitments only with the intention
of actually acquiring the securities, but may sell the securities before
settlement date if it is deemed advisable for investment reasons.
INVESTMENT RESTRICTIONS
The policies discussed above with respect to specific investments, (other than
the policy on borrowing) may be changed by the Board of Trustees without
shareholder approval. In addition, the Funds are subject to other investment
restrictions which, like the Funds' investment objectives, may not be changed
without the vote of a majority of their outstanding shares. Among other things,
these restrictions generally prohibit the Funds from concentrating investments
in a single industry or purchasing securities of an issuer if as a result more
than 5% of the Fund's total assets would be invested in that issuer, except that
up to 25% of its assets may be invested without regard to this limitation and
provided that this limitation does not apply to securities issued or guaranteed
by the U.S. Government, its agencies or instrumentalities. Because the Funds
expect to invest solely in U.S. Government securities, the 5% limitation
referred to above will not apply to these portfolios. A description of all of
the investment restrictions applicable to the Funds is included in the Statement
of Additional Information.
<PAGE>
Board Of Trustees
The Funds' Board of Trustees decides matters of general policy and reviews the
activities of The Funds' Adviser. The Funds' officers conduct and supervise the
daily business operations of The Fund.
The Trustees, their business addresses and principal occupations during the past
five years are:
<TABLE>
<CAPTION>
Name and Address Position with the Funds
and Principal Occupation
<S> <C>
John H. Pender** Trustee, and from 1987 through May 1996, President
222 West College Ave. of the Funds; Prior to 1996, Senior Vice President and
Appleton, WI 54919 Chief Investment Officer, Aid Association for
DOB 5/25/30 Lutherans (fraternal benefit society) and prior to 1992, Treasurer
F. Gregory Campbell Trustee; President of Carthage College, Kenosha, WI;
2001 Alford Park Drive Director, Kenosha Hospital and Medical Center;
Kenosha, WI 53140 Chairman, WI Assoc. of Independent Colleges and
DOB 12/16/39 Universities; Board Member, Kenosha Area
Development; and Board Member, Prairie High School
Richard L. Gady Trustee; and Vice President, Public Affairs and Chief
One Central Park Plaza Economist, ConAgra, Inc. (a food and agricultural
Omaha, NE 68102 corporation)
DOB 2/28/43
D. W. Russler Trustee; Former Senior Vice President, Finance and
P.O. Box 84 Administration, NCR Corporation 1984 - 1988;
Minocqua, WI 54548 Director, Capital Markets Assurance Corporation
DOB 10/28/28 (reinsurance); and Member, Advisory Board --
Saratoga Partners II and III (corporate buy-out limited
partnerships)
Lawrence M. Woods Trustee; Former Executive Vice President and
P.O. Box 1860 Director, Mobil Oil Corp. (international oil company)
Worland, WY 82401
DOB 4/14/32
Richard L. Gunderson** Trustee; Chairman of the Board of Directors and Chief
4321 North Ballard Road Executive Officer and from 1985 through 1995, Appleton,
WI 54919 President, Aid Association for Lutherans (fraternal DOB 6/14/33 benefit
society); Trustee, Lawrence University; and
Director, Banta Corp.
- -------------------------------------------------------------- --------------------------------------------------------------
* All of the Trustees are Directors for the AAL Variable Product Series Fund,
Inc.
** Denotes an "interested person" of the Funds as defined in the Investment
Company Act of 1940.
</TABLE>
<PAGE>
MANAGEMENT OF THE TRUST
Adviser And Distributor--General
Through March 31, 1991, AAL Advisors Inc. ("Advisors") and AAL Distributors Inc.
("Distributors"), Delaware corporations, acted as investment adviser and
distributor for The AAL Mutual Funds. Effective April 1, 1991, Advisors was
merged into Distributors and Distributors changed its name to AAL Capital
Management Corporation. The ownership, officers and directors of AAL Capital
Management Corporation are the same as Advisors and Distributors. References to
AAL Capital Management Corporation in this prospectus include, where applicable,
references to the two former corporations.
The Adviser
AAL Capital Management Corporation (the "Adviser") was organized in 1986 as a
Delaware corporation all of the shares of which are owned by AAL Holdings Inc.,
a wholly-owned subsidiary of Aid Association for Lutherans ("AAL"). AAL is a
non-profit, non-stock, membership organization licensed to do business as a
fraternal benefit society in all states. AAL has approximately 1.7 million
members and is the world's largest fraternal benefit society in terms of assets
and life insurance in force, ranking it in the top two percent of all life
insurers in the U.S. in terms of ordinary life insurance in force. Membership is
open to Lutherans and their families. AAL offers life, health, and disability
income insurance and fixed annuities to its members and all members are part of
one of over 9,100 local AAL branches throughout the U.S. AAL Capital Management
Corporation has served as Adviser to the Funds from the commencement of
operations. As of April 30, 1996, AAL Capital management managed about $2.9
billion for the Funds. The principal address of the Adviser is 222 West College
Avenue, Appleton, Wisconsin 54919-0007 and of AAL is 4321 North Ballard Road,
Appleton, Wisconsin 54919-0001.
Pursuant to an Investment Advisory Agreement with the Trust, the Adviser manages
the investment and reinvestment of the Funds' assets, provides the Funds with
personnel, facilities and administrative services, and supervises the Funds'
daily business affairs, all subject to the supervision of the Funds' Board of
Trustees. The Adviser formulates and implements a continuous investment program
for the Funds consistent with each Fund's investment objectives, policies and
restrictions.
The Adviser provides office space, executive and other personnel to the Funds.
In addition to the investment advisory fees, each Fund incurs the following
expenses: legal, auditing and accounting expenses; Trustees' fees and expenses;
insurance premiums; brokers' commissions; taxes and governmental fees; expenses
of issuing and redeeming shares; organizational expenses; expenses of
registering or qualifying shares for sale; postage and printing for reports and
notices to shareholders; fees and disbursements of the custodian and transfer
agent; certain expenses with respect to
<PAGE>
membership fees of industry associations; and any extraordinary expenses, such
as
litigation expenses.
The Adviser receives an investment advisory fee computed separately and paid
monthly for each Fund at the annual rate of 0.50 of 1% of the Fund's average
daily net assets. The Funds also pay a Distribution Fee of a maximum of 0.10 of
1% of average daily net assets annually. See "Distribution Expenses."
Portfolio Manager
Michael R. Hilt, CFA, has managed the day-to-day investments for the Funds since
November 1, 1995. From April 1994 through August 1995, Mr. Hilt served as
portfolio manager and quantitative analyst for Conseco Capital Management, Inc.
From August 1992 through April 1994, he served as a portfolio manager and
quantitative analyst for PPM America, Inc. From June 1988 to August 1992, he
served as a portfolio analyst and trader for Sears Investment Management
Company, Inc. Mr. Hilt also manages The AAL Bond and Money Market Funds.
Portfolio Transactions
The Adviser directs the placement of orders for the purchase and sale of the
Funds' portfolio securities. Since it is anticipated that most purchases made by
the Funds will be principal transactions at net prices, the Funds will incur
little or no brokerage costs. The Funds will deal directly with the selling or
purchasing principal or market maker without incurring charges for the services
of a broker on its behalf unless it is determined that a better price or
execution may be obtained by utilizing the services of a broker. Purchase of
portfolio securities from the dealers of zero coupon Treasury securities, in
particular, may include a commission which may be included in a spread between
the bid and asked price. The Funds will seek to obtain prompt execution of
orders at the most favorable net price. Securities may also be purchased
directly from the issuer.
PLEASE TAKE NOTICE
SALES OF THE AAL U.S. GOVERNMENT ZERO COUPON TARGET FUNDS, SERIES 2001 AND 2006
WERE CLOSED TO NEW SHAREHOLDERS AND TO ADDITIONAL PURCHASES OF SHARES BY
EXISTING SHAREHOLDERS EFFECTIVE MAY 31, 1993. PURCHASES OF SHARES BY
REINVESTMENT OF DIVIDENDS AND CAPITAL GAINS, IF ANY, IN EXISTING SHAREHOLDER
ACCOUNTS WILL CONTINUE TO BE ALLOWED AND WILL BE AT NET ASSETS VALUE. ALTHOUGH
THERE IS NO INTENT TO DO SO, SALES OF THE FUNDS COULD BE REOPENED IN THE FUTURE.
THE DISCUSSION ELSEWHERE HEREIN AS TO THE PURCHASE OF SHARES OF THE FUNDS IS
QUALIFIED BY THE FOREGOING LIMITATIONS.
How To Buy Shares
<PAGE>
Initial Purchases in New Accounts
Shares of the Funds are offered continuously for sale through AAL
Capital Management Corporation (the "Distributor") and your AAL Capital
Management Corporation Registered Representative. Initial purchases of shares of
the Funds may be made by mail (including private mail delivery services) or by
wire.
A separate account registration is required for each individual account, joint
account, fiduciary account, custodial accounts for minors and tax-deferred
accounts (for example, IRA, 403(b)(7) custodial accounts, and pension and profit
sharing plans). Additional documentation will be required for some of these
accounts. You should consult your legal adviser if you have questions regarding
the type of registration best suited for your needs. All accounts, but
especially fiduciary accounts, custodial accounts for minors, and tax-deferred
accounts, may impose legal requirements, and result in income, gift and estate
tax consequences which are the sole responsibility of shareholders and their
professional advisers. Neither the Funds nor AAL Capital Management Corporation
and its Registered Representatives provide legal or tax advice to shareholders.
Further information on the documents required to open your account can be
obtained from your Registered Representative or AAL Capital Management
Corporation through the Mutual Fund Service Center at 800-553-6319.
Initial Purchases by Mail
Initial purchases by mail may be made by sending a check, made payable to The
AAL Target Fund Series 2001 or The AAL Target Fund Series 2006, along with a
completed shareholder application and new account form to:
AAL Capital Management Corporation
222 West College Avenue
Appleton, WI 54919-0007
Attention: New Accounts
A separate application and new account form must be completed for each different
account registration in the Funds. A separate check should accompany each
application. Your check should be made payable to the name of the Fund invested
in, or if more than one Fund is being purchased using a single application, you
may send one check payable to "The AAL Mutual Funds" for the total amount
invested.
Initial Purchase By Wire
Initial purchases of shares of the Funds by wire transfer may be made by taking
the following three steps:
(1) Telephone the Distributor through the Mutual Fund Service Center at
800-553-6319 or 414-734-7633 and provide your account registration,
<PAGE>
address, social security or tax identification number, the amount
being wired, the name of the wiring bank and the name and telephone
number of the person to be contacted at your bank in connection with
the purchase; and
(2) Instruct your bank (which must be a member of, or have a corresponding
relationship with a member of the Federal Reserve System) to wire
federal funds as follows:
Firstar National Bank
ABA No. 0750-00022
For Credit to Firstar Trust Co.
Acct. No 112-950-027
For Further Credit to The AAL U.S. Government Zero Coupon
Target Fund (specify target year)
Account Registration (name(s) of shareholder); and
(3) Complete the application form and mail it immediately to:
AAL Capital Management Corporation
222 West College Ave.
Appleton, WI 54919-0007.
Additional Purchases in Existing Accounts
After you have opened an account with The AAL Mutual Funds, you may purchase
additional shares in your account by mail or wire.
Additional Purchase By Mail
Payment for additional purchases in existing Fund accounts should be sent
directly to the Funds' Transfer Agent at the following address:
The AAL Mutual Funds
c/o Firstar Trust Co.
615 E. Michigan Street
P.O. Box 2981
Milwaukee, WI 53201-2981
Please indicate your AAL Mutual Fund account number on the face of all
subsequent investment checks and make your check payable to the specific fund in
which you are investing. If you have more than one account,
<PAGE>
always verify that you are investing in the proper account. This will help to
ensure the proper handling of the transaction.
Additional Purchase by Wire
You may make additional wire purchases in an existing Fund account by following
Step (2) of the wire transfer instructions shown for "Initial Purchase by Wire"
above, and in addition, by providing your existing Fund account number.
Wire order funds must be received in the office of the Funds' Transfer Agent
prior to the close of the New York Stock Exchange ("NYSE") (normally 3:00 p.m.
Central Time), in order to purchase shares on that day. Funds received after the
close of the NYSE will purchase shares on the following day.
Purchase Price
Purchases of shares of the Funds are made at the public offering price, which is
net asset value plus a sales charge. See "Sales Charges." Purchases of all Funds
are based on the net asset value (NAV) next determined after receipt of payment
by the Funds' Transfer Agent. All shares begin earning income on the business
day following the date the shares are purchased.
Minimum Purchase Amounts
The following minimum amounts apply to purchases of shares of each Fund:
Minimum Purchase Amount
Per Account Per Transaction
Account Initial Purchase Additional Purchase
Regular Account $1,000 $50
IRA or other Retirement Plan $250 $50
Account
Automatic Investment Plan $0 $25
* Minimums may be waived for qualified group retirement plans and payroll
deduction plans with prior approval or when required by law.
Other Purchase Information
Shareholders begin earning income on the business day following the date that
payment for the purchase is received by the Funds' Transfer Agent. All purchases
must be made in U.S. dollars and checks must be drawn on U.S. banks. Cash and
travelers checks will not be accepted. If your check does not clear, your
purchase will be canceled and you will be liable for any losses or fees
incurred. When you purchase
<PAGE>
shares by check, the Funds will not honor redemption requests for the shares
purchased for 12 days or until your check has cleared, if later. A written
confirmation of purchase will be mailed to you, usually within two business days
following your purchase date.
Share certificates are only issued upon written request and then only for full,
not fractional shares. A new written request for a share certificate is required
for each subsequent purchase. There is no charge for the issuance of share
certificates. If share certificates have been requested or issued, certificates
must be delivered to the Transfer Agent in negotiable form prior to redemptions,
transfers or exchanges.
The Funds, the Distributor and the Funds' Transfer Agent do not consider the
U.S. Postal Service or other private delivery services to be their agents. The
deposit in the mail or with such delivery services, or receipt at a Post Office
Box, of purchase applications or redemption requests, do not constitute receipt
by the Funds, the Distributor or the Transfer Agent. The legal effect of posting
for other purposes, such as the April 15th IRA deadline, shall be determined by
the applicable laws then in effect.
The Funds reserve the right to suspend the offering of shares for a period of
time. They also reserve the right to reject any specific purchase of shares.
Sales Charges
The public offering price of the shares of the Funds is the net asset value per
share next computed after receipt of an order in proper form by the Funds'
transfer agent plus a sales charge received by the Distributor. The sales charge
is expressed as a percentage of the public offering price, and the net amount
invested, in the table below:
<TABLE>
<CAPTION>
Amount of Purchase Sales Charge as a % of Sales Charge as a % of
Public Offering Price Net Amount Invested
<S> <C> <C>
Less than $25,000 4.75% 4.99%
$25,000 or more, but less than 4.50% 4.71%
$100,000
$100,000 or more, but less than 3.50% 3.63%
$250,000
$250,000 or more, but less than 2.00% 2.04%
$500,000
$500,000 or more, but less than 0.50% 0.50%
$1,000,000
$1,000,000 or more* No-Load No-Load
* Registered Representatives may receive, from the distributor, compensation not exceeding
0.25 of 1% of amounts invested at this purchase level.
</TABLE>
<PAGE>
Trustees, directors, and employees of the Funds and the Adviser, as well as
persons licensed to receive commissions for sales of The AAL Mutual Funds, may
not pay a sales charge on their purchases or on the purchases made by family
members residing with them. We reserve the right to change or stop these
reductions at any time. We will notify you in advance of any changes.
Reduced Sales Charges
Investors may benefit from a reduction of the sales charges shown in the above
table through several purchase plans which are described below. To receive the
benefit of a reduced sales charge, a shareholder must inform the Funds' Transfer
Agent in writing at the time of the new purchase that the purchase qualifies for
a reduced sales charge and provide substantiating information. Reduced sales
charge provisions may be modified or terminated at any time on notice to
shareholders. You may obtain further information on reduced sales charges from
your Registered Representative or by calling the Mutual Fund Service Center at
800-553- 6319.
Reduced Sales Charges for AAL Branches, Lutheran Congregations, Lutheran
Charitable Remainder Unitrusts and Related Charitable Non-Profit Organizations.
AAL branches, Lutheran congregations, Lutheran charitable organizations,
charitable remainder unitrusts and other charitable organizations sponsored by
or affiliated with Lutheran congregations, which qualify for tax exemption under
Section 501(c)(3) or (13) of the Internal Revenue Code, will be charged one-half
of the standard sales charge for purchase of the Funds, except that no reduction
will be given in connection with 403(b)(7) custodial accounts, which are
individual custodial accounts. Qualifying charitable non-profit organizations
will generally include churches, schools, colleges, seminaries, cemetery funds,
and foundations organized for charitable purposes. Lutheran organizations
qualified to receive the reduced sales charge must include substantiating
information at the time of purchase. The reduced sales charges, expressed as a
percentage of the public offering price and the net amount invested, for this
exception to the standard sales charges are as follows:
Amount of Purchase Sales Charge as a % of Sales Charge as a % of
Public Offering Price Net Amount Invested
Less than $25,000 2.375% 2.430%
$25,000 or more, but less than 2.250% 2.302%
$100,000
<PAGE>
$100,000 or more, but less than 1.750% 1.781%
$250,000
$250,000 or more, but less than 1.000% 1.010%
$500,000
$500,000 or more, but less than 0.250% 0.250%
$1,000,000
$1,000,000 or more* No-Load No-Load
Right of Accumulation. An investor with multiple accounts and investors who are
related and living within the same household may "link" their accounts in the
Funds and in the other AAL Mutual Funds so they are eligible for a reduced sales
charge based on the current value of shares owned, computed at the public
offering price, plus the amount of the new investment. The AAL Money Market Fund
shares may be included if they were acquired in a simultaneous transaction (i.e.
exchange) in which shares of another AAL Mutual Fund on which a sales charge was
paid are redeemed and the proceeds of sale were used to purchase Money Market
Fund shares. SEPs, SARSEPs and 403(b)(7) custodial accounts (except individual
IRAs) are linked with all other accounts in the plan and therefore may not be
linked with individual accounts. Accounts of institutional trustees will not be
linked, except within individual trusts. Please refer to the table on page __
for the sales charges, expressed as a percentage of the public offering price
and the net amount invested, at the different breakpoint levels.
Letter of Intent. Investors who establish a total investment goal in shares of
any of The AAL Mutual Funds (except The AAL Money Market Fund) of $25,000 or
more to be made over a 13-month period may purchase shares during this period at
the reduced sales charge applicable to the goal amount. To meet the Letter of
Intent goal, the investment amount must be fully invested at some point in time
during the 13-month period. The effective date of a Letter of Intent may be
back-dated up to 90 days, in order that any investment made during this 90-day
period, valued at the purchaser's cost, can be applied to the fulfillment of the
Letter of Intent goal. Sales charges on prior purchases will not be recalculated
or refunded. All shares of the Funds with the same registration, and shares in
accounts which have been "linked" under the Right of Accumulation, which are
purchased during the 13-month period, and still owned, will be included at the
purchaser's cost in determining the applicable sales charge, provided, however,
that AAL Money Market Fund shares may be included only to the extent they were
acquired in a simultaneous transaction (i.e. exchange) in which shares of
another AAL Mutual Fund, on which a sales charge was paid, are redeemed and the
proceeds of sale were used to purchase the Money Market Fund shares. The Letter
of Intent option is not available on 403(b)(7) custodial accounts, SEP-IRAs or
SARSEP- IRAs. Please refer to the table on page __ for the sales charges,
expressed as a percentage of the public offering price and the net amount
invested, at the different breakpoint levels above $25,000.
<PAGE>
A Letter of Intent does not obligate the investor to buy any Fund shares.
However, if the goal amount is not purchased during the term of the Letter of
Intent, the sales charge will be recalculated and charged at the rate applicable
to the shares actually purchased, and the difference between the sales charge
paid and the sales charge due will be charged against the account. During the
term of the Letter of Intent, the Transfer Agent will escrow shares totaling 5%
of the investment goal indicated in the Letter of Intent to cover any additional
sales charge which may become due, and will redeem the number of shares
necessary to pay the additional sales charge after expiration of a Letter of
Intent if the goal amount is not met. A Letter of Intent will be considered in
default and the additional sales charges will be recovered if redemptions reduce
the account value below 5% of the investment goal during the 13-month period.
Automatic Investment Plans
The AAL Mutual Funds offer several Automatic Investment Plans available to make
periodic investing more convenient. These Plans do not need an initial
investment. It takes 12 days from the time you invest for the transfer agent to
validate any electronic transfer. This will cause some delay in your ability to
write checks on an AAL Money Market Fund Account or to redeem or transfer from
your account.
The Bank Draft Plan. Investors who wish to make regular additional investments
in an existing Fund Account may do so through the Funds' Bank Draft Plan. Under
this Plan the Funds will draft an investor's bank checking or savings account in
the amount specified -- which may not be less than $25 per account -- on
specified dates, up to two transactions per month (at least 10 days apart), and
have the proceeds invested in shares of the specified Fund at the applicable
offering price determined on the date of the draft. To use this Plan you must
authorize the Plan on your application form, or subsequently in writing, and
submit additional documents. Your instructions to establish a Bank Draft Plan or
to change the Bank on an existing Plan, must be received by the Funds' Transfer
Agent at least 13 business day prior to the transaction date. Your instructions
for stopping a Bank Draft Plan or changing the dollar amount on an existing Plan
must be received by the Funds' Transfer Agent at least 5 business days prior to
the transaction date. For further information contact AAL Capital Management
Corporation (Mutual Fund Service Center -- 800-553-6319) or your Registered
Representative. Instructions for changes, additions or termination of a Bank
Draft Plan must be in writing and signed by all bank account owners.
The Capital Builder Plan. The Capital Builder Plan also allows investors to make
regular automatic investments in an existing account in The AAL Small Cap Stock,
Mid Cap Stock (f/k/a The AAL Smaller Company Stock Fund), Capital Growth, Bond,
Municipal Bond or U.S. Government Zero Coupon Target Funds, Series 2001 and 2006
by redemption of shares from their AAL Money Market Fund. The
<PAGE>
Capital Builder Plan Allows investors to select the transaction date. If you do
not select the date, it will automatically be drawn from their account on the
15th of the month. All such investments will be subject to the applicable sales
charge . These transactions must meet the minimum purchase amounts described
above. To start, stop or change the plan, you must notify The Funds at least 24
hours prior to the transaction date.
Payroll Deduction Savings and Investment Plan. The Payroll Deduction Savings and
Investment Plan allows employees of AAL, employees of Lutheran-affiliated
institutions, and Lutheran employees whose employers agree to invest in The
Funds through direct deduction from their paychecks or commission checks.
Prestige Account
Investors who maintain a share balance totaling $50,000 or more will be provided
with additional benefits, including personal attention from Prestige Account
Representatives, an exclusive toll-free telephone number, personalized
investment analysis, complimentary financial information, a Prestige Account
organizer and more. Your AAL Capital Management Corporation Registered
Representative can provide more detailed information.
Changes to Your Account
After opening your AAL Mutual Fund account, you may wish to make changes to your
account. Certain types of changes, such as moving to a new address or getting a
new telephone number, do not have any other effect on an account. Any feature
such as telephone exchange or participation in an automatic investment plan
would continue uninterrupted. Other changes, such as exchanging from one Fund to
another or transferring shares from a regular account to an IRA or adding a
joint owner, will affect your account options because a new account is actually
created. Account options such as an automatic investment plan are discontinued
unless additional action is taken. These changes may require additional
instructions and specific forms. If you are not sure whether a change affects
your account, please contact your local Registered Representative or the Mutual
Fund Service Center at 800-553-6319. When making these types of changes, please
use The AAL Mutual Funds Change Form For Existing Accounts, which is available
from your local Registered Representative or from the Mutual Fund Service
Center.
<PAGE>
How To Redeem (Sell) Shares
Because the Funds invest primarily in zero coupon securities, the net asset
value per share may fluctuate substantially prior to the maturity date. Although
investors may redeem shares on any business day at net asset value, a
shareholder who redeems prior to maturity may experience a significantly
different investment return than was anticipated at the time of purchase.
Redemption By Mail
Shareholders of any of the Funds may have their shares redeemed at any time at
the net asset value per share next determined after a written request and all
additional documents, if required, are received in proper form by the Funds'
Transfer Agent.
Payment for shares presented for redemption will be based on a Fund's net asset
value next computed after a request is received in proper form by the Transfer
Agent. Shareholders earn income and receive dividends paid on funds through the
date of redemption. Payment proceeds will be mailed within seven days following
receipt of all required documents. However, payment may be postponed or the
right of redemption suspended in unusual circumstances. Shares purchased by
check will not be redeemed for 12 days or until your check has cleared, if
later.
You may redeem shares of any of the Funds by mail, by sending a written request
for redemption to:
The AAL Mutual Funds
c/o Firstar Trust Co.
615 East Michigan Street
P.O. Box 2981
Milwaukee, Wisconsin 53201-2981
The redemption request must include your shareholder account number, specify the
dollar or share amount you wish to redeem and be signed by you and any other
persons registered as shareholders on the account, exactly as the account is
registered. If you wish to redeem shares with a value in excess of $25,000, your
signature(s) must be guaranteed. The transfer agent will accept signature
guarantees from all institutions that are eligible to provide signature
guarantees under federal or state law, provided that the individual giving the
signature guarantee is authorized to do so. Institutions that usually are
eligible to provide signature guarantees include commercial banks, trust
companies, brokers, dealers, national securities exchanges, savings and loan
institutions and credit unions. Please note that a signature guarantee is not
the same as a notarized signature. If shares are held in the name of a
corporation, trust, estate, custodianship, guardianship, partnership or pension
and profit sharing plan, or if you have requested and received share
certificates, additional
<PAGE>
documentation may be necessary. If you wish to redeem an IRA or other retirement
plan you must indicate on the redemption request whether or not Federal income
tax should be withheld. Redemption requests that fail to indicate an election
not to have Federal tax withheld will be subject to withholding.
Telephone Redemptions
The privilege to redeem shares by telephone is automatically extended to all
accounts, unless the option is specifically declined. If you do not want the
telephone redemption option, please call the AAL Mutual Fund Service Center at
800-553-6319. By accepting this privilege, you assume some risks for
unauthorized transaction. See Important Information on Transacting Business by
Telephone at page__. AAL Capital Management Corporation has implemented
procedures designed to reasonably ensure that telephone instructions are
genuine. These procedures include recording telephone conversations, requesting
verification of certain personal information, restricting transmittal of
redemption proceeds to pre-authorized designations and supplying transaction
verification information.
Telephone Redemptions and Checks Mailed
The following conditions apply to telephone redemptions described above:
a. Telephone redemption checks will be issued to the same payee(s) as the
account registration and sent only to the address of record;
b. There has been no change of address in the preceding 60 days;
c. The request is for $25,000 or less;
d. Retirement plan accounts are not eligible;
e. Shares to be redeemed cannot be in certificate form; and
f. Only one telephone redemption is permitted within any 30 day period for
each authorized account.
Telephone Redemptions by Bank Wire
a. Existing shareholders must send The AAL Mutual Funds Application or
Change Form with the appropriate section completed prior to exercising
the privilege of wire redemption to:
Firstar Trust Company
615 E. Michigan Street,
P.O. Box 2981, Milwaukee, WI 53201-2981.
<PAGE>
b. Wire redemptions can be made for any amount.
c. A $10.00 fee is assessed for redemptions by wire.
d. Requests received in good order before the close of the NYSE (usually
3:00 p.m. Central Time) receive that day's price.
If an account has multiple owners, AAL Capital Management Corporation may rely
on the instructions of any one account owner. This privilege may not be
available on all retirement plan accounts.
Reinstatement Privilege
So long as sales of the Funds are closed, the following reinstatement privilege
does not apply.
A shareholder who redeems shares in a Fund on which a commission has been paid
may, within 60 days after the date of redemption, reinstate any portion or all
of a redemption in shares of a Fund (in the same Fund and with the same
registration) without sales charges at net asset value next determined after
receipt by the Transfer Agent of a written request for reinstatement together
with a check for the amount to be reinstated. This reinstatement privilege is
available only once with respect to any one shareholder account. Reinvested
funds must be provided by a single check. In order to receive the reinvestment
privilege, shareholders must clearly state in writing at the time of purchase
that they qualify for the privilege.
Any gain recognized on a redemption is taxable despite the reinstatement in a
Fund. Any loss realized as a result of a redemption may not be allowed as a
deduction for federal income tax purposes, but may be applied, depending on the
amount reinstated, to adjust the cost basis of the shares acquired on
reinstatement.
Involuntary Redemption
Because all account owners share the high cost of maintaining accounts with low
balances, the Funds reserve the right to involuntarily redeem a shareholder's
account, other than a retirement plan account, at any time the value of the
account falls below $250. Shareholders will be notified in writing of any
planned involuntary redemption and will be allowed 30 days to increase the
account balance above the stated minimum before the redemption is processed.
EXCHANGE PRIVILEGE
Exchange by Mail
<PAGE>
Shares of the Funds held for at least 12 days may be exchanged for shares of any
other AAL Mutual Fund with the same registration, without additional sales
charge, at the net asset value per share next computed after receipt of a
written exchange request in proper form by the Transfer Agent.
An exchange constitutes a redemption of the shares of one mutual fund and the
purchase of shares of another. Because the Funds invest primarily in zero coupon
securities, the net asset value per share may fluctuate substantially prior to
the maturity date. Therefore, a shareholder who exchanges shares of a Fund prior
to maturity may experience a significantly different investment return than was
anticipated at the time of purchase.
In addition to the two series of The AAL U.S. Government Zero Coupon Target
Funds, eight other AAL Mutual Funds currently are offered. They are: (1) The AAL
Small Cap Stock Fund;(2) The AAL Mid Cap Stock Fund (f/k/a The AAL Smaller
Company Stock Fund); (3) The AAL Capital Growth Fund; (4) The AAL Bond Fund ;
(5) The AAL Municipal Bond Fund; (6) The AAL Money Market Fund; (7) The AAL
Utilities Fund; and (8) The AAL International Fund . Shareholders interested in
exchanging into any of these Funds should contact the The Mutual Fund Service
Center at 800-553-6319, or their AAL Capital Management Corporation Registered
Representative for a current prospectus prior to making an exchange.
Shareholders of a Fund may only exchange into such other Funds as are legally
available for sale in any state. If shares are held in the name of a
corporation, trust, estate, custodianship, guardianship, partnership or pension
and profit sharing plan, or if you have requested and received share
certificates, additional documentation may be necessary.
Exchanges are sales for tax purposes and could result in a gain or loss,
depending on the original cost of shares exchanged.
An excessive number of exchanges may be disadvantageous to the Funds. Therefore,
the Funds reserve the right to terminate the exchange privilege of any
shareholder who makes more than twelve exchanges in a year. Further, the Funds
reserve the right to modify or terminate the exchange privilege at any time with
respect to any Fund, if the Funds' Trustees determine that continuing the
privilege may be detrimental to shareholders.
TELEPHONE TRANSACTIONS
You can sell or exchange shares by phone. By doing so, you assume some risks for
unauthorized transactions. AAL Capital Management Corporation has
<PAGE>
implemented procedures designed to reasonably assure that telephone instructions
are genuine. These procedures include recording telephone conversations,
requesting verification of various pieces of personal information, restricting
transmittal of redemption proceeds to pre-authorized designations, and supplying
transaction/taping identification numbers and/or symbols. Please note, however,
that The AAL Mutual Funds, AAL Capital Management Corporation, the Custodian,
the Transfer Agent or any of their employees will not be liable for losses
suffered by a shareholder that result from following telephone instructions
reasonably believed to be authentic after verification pursuant to these
procedures.
Exchange by Telephone
Telephone exchanges (transactions in which the registration does not change) are
subject to the requirements described above, and additional requirements as
follows.
Shareholders may exchange shares for which certificates have not been issued by
telephoning the Mutual Fund Service Center at 800-553-6319 or 414-734- 7633.
Telephone exchange requests received prior to the close of the NYSE (usually
3:00 p.m. Central Time) will be made at the net asset value per share next
determined that day.
Telephone exchanges will be permitted only if the shareholder elects the
telephone exchange option on his initial purchase application, or requests the
telephone exchange privilege in a subsequent written request, signed by all
registered owners, with all signatures guaranteed.
During periods of extreme volume caused by dramatic economic or stock market
changes, shareholders may have difficulty reaching the Mutual Fund Service
Center by phone, and a telephone exchange may be difficult to implement at those
times. The Funds reserve the right to temporarily discontinue the telephone
exchange privilege during such periods of extreme volume.
RETIREMENT PLANS
AAL members and their enterprises and Lutheran organizations may establish their
own individual or business retirement plans, with assets invested in The AAL
Mutual Funds, by choosing among a variety of plans which may be made available
and which are designed to meet most long-term retirement planning needs.
Available plans may include:
<PAGE>
o IRA (Individual Retirement Account)
o 403(b)(7) Custodial Account (for employees of public schools and
certain non-profit organizations)
o SEP-IRA (Simplified Employee Pension Plan)
o SARSEP-IRA (Salary Reduction Simplified Employee Pension Plan)
o Money Purchase Pension Plan
o Profit Sharing Plan
o 401(k) Plan
Retirement Plans involve commitments covering future years and require long-term
planning. Because all of the plans available through AAL Capital Management
Corporation invest their plan assets in one or more of the Funds, it is
important that the investment objectives of the Fund(s) in which a plan invests
are consistent with the retirement plan objectives. It is the investor's
responsibility to determine which plan and investment best meets the retirement
objectives desired, and to understand the tax consequences of establishing a
retirement plan. Each investor should consult with a professional tax adviser
prior to establishing a retirement plan.
Your AAL Capital Management Corporation Registered Representative will provide
you with descriptive materials, plan documents, adoption agreements and other
related forms describing the plans available and the requirements to establish a
plan. Firstar Trust Company acts as Custodian for all AAL Mutual Fund Retirement
Plans. Administrative services for retirement plans may be arranged through AAL
Capital Management Corporation or may be provided by the employer. Fees are
charged for custodial and plan administration services. Information regarding
those services and fees are available from your AAL Capital Management
Corporation Registered Representative.
NET ASSET VALUE
The net asset value per share of each Fund is determined once daily at the close
of trading on the NYSE (normally 3:00 p.m. Central Time). Net asset value will
not be determined on holidays observed by NYSE. The net asset value of shares is
computed by adding the sum of the value of the securities held by each Fund plus
any cash or other assets it holds, less all of that Fund's liabilities, and
dividing the result by the total number of outstanding shares of that Fund at
such time. Securities owned by the Funds for which market quotations are readily
available are valued at current market value; all other securities and assets
are valued at fair value as determined in good faith by or under the direction
of the Board of Trustees. The Funds may make use of a
<PAGE>
pricing service in the determination of their net asset value as approved by the
Board of Trustees.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund intends to distribute in December and, if necessary, at such other
times as the Fund may determine, its net investment income and any net realized
capital gains resulting from investment activity. Any dividend (including a
capital gains dividend) declared in October, November or December with a record
date in such a month and paid during the following January will be treated by
shareholders for federal income tax purposes as if received on December 31 of
the calendar year declared. Cumulative statements showing all activity in the
account for the prior year will be mailed annually to all shareholders.
All income and capital gains distributions are reinvested in full and fractional
shares of a Fund at net asset value, without sales charges, on a payment date
unless a shareholder has requested payment in cash on the shareholder
application or by separate written request.
A shareholder's projected return at maturity assumes the reinvestment of all
income and capital gains distributions. If a shareholder elects to receive these
distributions in cash, the return at maturity will be substantially less than
was anticipated at the time of purchase.
Each Fund intends to qualify as a "regulated investment company" under the
Internal Revenue Code (the "Code") and to take all other action required so that
no federal income tax will be payable by the Funds themselves. Each Fund will be
treated as a separate regulated investment company under the Code. Shareholders
are provided annually with full information on income and capital gains
distributions for tax purposes. Shareholders should consult their tax advisers
regarding the applicability of state and local taxes to dividends and
distributions.
Under federal income tax laws, a portion of the difference between the purchase
price of zero coupon securities and their face value is considered to be income
to a Fund each year, even though the Fund will not in each year receive cash
interest payments from these securities.
The Funds must distribute substantially all their net investment income each
year, including the imputed income from their zero coupon investments. Because
of its imputed income, each Fund may be required to pay out as an income
distribution each year an amount greater than the total amount of cash interest
a Fund actually received. Such distributions may come from cash assets or from
liquidating some portfolio securities. If securities are liquidated, a Fund may
realize a gain or loss from the sale. As with all funds distributing taxable
income, tax-paying investors in the Fund will be subject to income taxes on
income and capital gain distributions whether they elect to
<PAGE>
take them in cash or have them reinvested.
Other Tax Information
The Funds are required by federal law to withhold 31% of reportable payments
(which include dividends, capital gain distributions and redemption proceeds)
paid to certain shareholders who have not properly certified that the Social
Security or other taxpayer identification number provided by the shareholder is
correct and that he or she is not otherwise subject to backup withholding. The
Funds' shareholder application includes the required certification.
No attempt is made herein to provide information as to state and local tax
consequences of ownership of shares of the Funds. Investors should consult their
personal tax adviser to determine the consequences of state and local taxes.
DISTRIBUTION EXPENSES
Because the Funds are no longer being sold, the 12b-1 fees under the
Distribution Plan are being waived by the Distributor and they will not be
reinstated as long as the Funds make no new sales. The following description
applies to the plan when such fees were paid.
In addition to the sales charge deducted at the time of purchase, each of the
Funds is authorized under a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940 (the "Act") to use a portion of
its assets to finance certain activities relating to the distribution of its
shares to investors. The Plan permits payments to be made by each of the Funds
to the Distributor to reimburse it for expenditures incurred by it in connection
with the distribution of each of the Fund's shares to investors. These payments
include, but are not limited to, the payment of compensation to selling
representatives (excluding the initial sales charge), advertising, preparation
and distribution of sales literature and prospectuses to prospective investors,
implementing and operating the Plan, and performing other promotional or
advertising activities on behalf of each of the Funds. Plan payments may also be
made to reimburse the Distributor for its overhead expenses related to
distribution of the Funds' shares. No reimbursement may be made under the Plan
for expenses of past fiscal years or in contemplation of expenses for future
fiscal years. Distribution fees paid by one Fund may not be used to finance
distribution of shares of another Fund.
Under the Plan, the payments may not exceed an amount computed at an annual rate
of 0.10 of 1% of the average daily net assets of each Fund. The Plan is subject
to review and annual approval by the Board of Trustees.
YIELD AND PERFORMANCE INFORMATION
The Funds will calculate and advertise performance information from time to
<PAGE>
time, and for different historical periods of time, by quoting yields or total
returns designed to inform investors of the performance of the Funds. Such
information will always include uniform performance information in accordance
with standardized methods established by the Securities and Exchange Commission,
and may also include other total return calculations, if deemed appropriate to
permit investors to evaluate the investment performance of the Funds. Yields and
total returns are based on historical performance and are not intended to
indicate future performance. Investment return and the principal value of an
investment will fluctuate, and the value of the investment, if redeemed, may be
worth more or less than the original cost.
Standardized Yield and Total Return
The Funds may advertise a standardized current yield which is based on the
income generated by an investment in the particular Fund over a 30-day period,
which period will be stated in the advertisement. Income earned on debt
obligations is determined by applying a calculated yield-to-maturity percentage
to the obligations held during the period. This income, less expenses, is then
annualized. That is, the amount of income generated during the 30 day period is
assumed to be generated and reinvested monthly to provide a six-month return
which is then annualized. The return is then shown as a percentage of the
maximum offering price per share on the last day of the period.
The Funds may also advertise a standardized average annual total rate of return
for one, five and ten year periods, or so much thereof as a Fund has been in
existence. Average annual total rate of return is the change in redemption value
of shares purchased with an assumed initial investment of $1,000, after giving
effect to the maximum applicable sales charge, assuming the reinvestment of
dividends and capital gains distributions.
Other Total Returns
Because there are many ways to evaluate investment performance, the Funds may
advertise total returns, other than those described above, if such information
is deemed informative to investors for use in evaluating the Funds. The Funds
may advertise total returns calculated on the basis of net investment in the
Fund. Some of these calculations will give investment performance based on
dollars invested without giving effect to the maximum applicable sales charge,
which will result in performance figures which are higher than those calculated
by the standardized methods.
Additional information regarding yield and performance information is contained
in the Statement of Additional Information.
CUSTODIAN, TRANSFER AGENT AND INDEPENDENT ACCOUNTANTS
Firstar Trust Company, P.O. Box 2981, 615 E. Michigan Street, Milwaukee,
<PAGE>
Wisconsin 53201-2981, serves as Custodian and Transfer Agent for the Funds.
Price Waterhouse LLP, 100 East Wisconsin Avenue, Suite 1500, Milwaukee,
Wisconsin 53202, serves as the Funds' independent accountants.
ORGANIZATION AND DESCRIPTION OF SHARES
The Trust is a diversified open-end management investment company registered
under the Act. Each of the Funds is a separate series of a Massachusetts
Business Trust organized under a Declaration of Trust dated March 13, 1987,
which provides that each shareholder shall be deemed to have agreed to be bound
by the terms thereof. The Declaration of Trust may be amended by a vote of
either its shareholders or its Board of Trustees. The Trust may issue an
unlimited number of shares, in one or more series as the Board of Trustees may
authorize. Currently, the Board has authorized ten series which bear the name of
the Fund.
Each share of a Fund is entitled to participate pro rata in any dividends or
other distributions declared by the Board with respect to that Fund, and all
shares of a Fund have equal rights in the event of liquidation of that Fund.
Each share of each Fund is entitled to one vote on each matter presented to
shareholders of that Fund. As a business trust, the Trust is not required to
hold annual shareholder meetings. However, special meetings may be called for
purposes such as electing or removing Trustees, changing fundamental policies,
or approving an investment advisory contract. On matters affecting an individual
Fund (such as approval of advisory and sub-advisory contracts and changes in
fundamental policies of a Fund) a separate vote of the shares of that Fund is
required. Shares of a Fund are not entitled to vote on any matter not affecting
that Fund. All shares of each Fund vote together in the election of Trustees.
Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Declaration of Trust disclaims liability of the shareholders, the
Trustees, or officers of the Trust for acts or obligations of the Trust, which
are binding only on the assets and property of the Trust. Notice of such
disclaimer is given in each agreement, obligation, or contract entered into or
executed by the Trust or the Board. The Declaration of Trust provides for
indemnification out of the Trust's assets for all losses and expenses of any
shareholder held personally liable for the obligations of the Trust. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is remote because it is limited to circumstances where the Trust
itself is unable to meet its obligations.
Shareholder Inquiries
All inquiries from shareholders regarding the Funds should be directed to the
Funds at the address and telephone number shown on the back cover of the
prospectus.
<PAGE>
Board of Trustees
John H. Pender
Richard L. Gunderson
D. W. Russler
F. Gregory Campbell
Richard L. Gady
Lawrence M. Woods
Officers
H. Michael Spence
President
Robert G. Same
Secretary
Terrance P. Gallagher
Treasurer
Joseph F. Wreschnig
Assistant Secretary
Charles Gariboldi
Assistant Treasurer
Investment Adviser and Distributor
AAL Capital Management Corporation
222 West College Avenue
Appleton, WI 54919-0007
Custodian, Transfer Agent, and Disbursing Agent
Firstar Trust Company
615 East Michigan Street
P.O. Box 2981
Milwaukee, WI 53201-2981
Independent Accountants
Price Waterhouse LLP
100 East Wisconsin Avenue
Suite 1500
Milwaukee, WI 53202
Legal Counsel
Quarles & Brady
411 East Wisconsin Avenue
Milwaukee, WI 53202
<PAGE>
THE AAL MUTUAL FUNDS
THE AAL U.S. GOVERNMENT ZERO COUPON TARGET FUNDS
Series 2001 and Series 2006
222 West College Ave.
Appleton, WI 54919-0007
Telephone (414) 734-5721
STATEMENT OF ADDITIONAL INFORMATION
August 30, 1996
This Statement of Additional Information is not a prospectus, but provides
additional information which should be read in conjunction with the Prospectus
of The AAL U.S. Government Zero Coupon Target Funds Series 2001 and Series 2006
dated August 30, 1996, and any supplements thereto. The Funds' Prospectus may be
obtained at no charge by writing or telephoning your AAL Capital Management
Corporation Registered Representative or the Funds at the address and telephone
number above.
In this Statement of Additional Information, The AAL Mutual Funds may be
referred to as the "Trust," and The AAL U.S. Government Zero Coupon Target Funds
may be referred to collectively as the "Funds" or individually as a "Fund."
Terms not otherwise defined have the same meaning as in the Prospectus.
PLEASE TAKE NOTICE
Sales of The AAL U.S. Government Zero Coupon Target Funds, Series 2001 and 2006
were closed to new shareholders and to additional purchases of shares by
existing shareholders effective May 31, 1993, except for automatic investment
plan purchases which were allowed to continue through June 30, 1993. Purchases
of shares by reinvestment of dividends and capital gains, if any, in existing
shareholder accounts will continue to be allowed and will be at net assets
value. Although there is no intent to do so, sales of the Funds could be
reopened in the future. The discussion elsewhere herein as to the purchase of
shares of the Funds is qualified by the foregoing limitations.
<PAGE>
<TABLE>
<CAPTION>
Table of Contents Page Prospectus Page
<S> <C> <C>
Investment Objective.............................................3...............................9
and Policies
Investment Techniques ...........................................5...............................9
Investment Restrictions .........................................6...............................12
Purchases & Redemptions;
Pricing Considerations ........................................8...............................11, 15, 23
Investment Advisory Services . . . . . . . . . . . .. . . . 10. . . . . . . . . . .. . . . . 14
Distributor.....................................................13 . . . . . . . . . . .. . . . .29
Distribution Plan.............................................. 13...............................30
Portfolio Transactions......................................... 15...............................15
Dividends, Distributions
and Taxes ................................................... 16...............................29
Calculation of Yield
and Total Return............................................... 18...............................30
General........................................................ 21...............................7
Financial Statements........................................... 23...............................6
</TABLE>
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The following information supplements the discussion of the Funds' respective
investment objectives and policies described in the Prospectus. In pursuing
their respective objective, each Fund invests as described below and employs the
investment techniques described in the Prospectus and elsewhere in this
Statement of Additional Information. Each Fund's investment objective is a
fundamental policy, which may not be changed without the approval of a "majority
of the outstanding voting securities" of that Fund. A "majority of the
outstanding voting securities" means the approval of the lesser of: (i) 67% or
more of the voting securities at a meeting if the holders of more than 50% of
the outstanding voting securities of a Fund are present or represented by proxy;
or (ii) more than 50% of the outstanding voting securities of a Fund.
The objective of each of the Funds is to provide as high an investment return
over selected periods of time as is consistent with an investment in U.S.
government securities.
Zero Coupon Securities
At least 80% of a Fund's net assets will be invested in U.S. Government zero
coupon securities. Zero coupon securities are non-interest (non-cash) paying
debt obligations which are payable in full at maturity. These securities include
U.S. Treasury notes and bonds that do not have coupons and do not pay cash
income, U.S. Treasury bills, individual interest coupons that trade separately
and evidences of receipt of such securities. At least 50% of each Fund's net
assets will be invested in U.S. Government zero coupon securities maturing
within two years of the Fund's target date.
Up to 20% of each Fund's net assets may be invested in interest-paying U.S.
Treasury notes and bonds, and repurchase agreements with respect to such
securities. These interest-paying securities produce income which may be an
efficient way to provide for expenses and redemptions, among other things.
Zero coupon securities usually trade at a deep discount from their face or par
value and are subject to greater market value fluctuations from changing
interest rates than debt obligations of comparable maturities that make current
distributions of interest (cash). As a result, the net asset value of shares of
a Fund prior to its target date may fluctuate over a greater range than shares
of other mutual funds investing in U.S. Treasury securities, making current
distributions of interest and having similar maturities. The current net asset
value of a Fund generally will vary inversely with changes in current interest
rates and the degree of fluctuations will vary directly with the length of time
to the maturity date of the Fund.
Zero coupon securities include U.S. Treasury bills issued directly by the U.S.
<PAGE>
Treasury, and U.S. Treasury bonds or notes and their unmatured interest coupons
which have been separated by their holder, typically a custodian bank or
investment brokerage firm. A holder will separate the interest coupons from the
underlying principal (the "corpus") of the U.S. Treasury security. A number of
securities firms and banks have stripped the interest coupons and resold them in
custodial receipt programs with a number of different names, including "Treasury
Income Growth Receipts" ("TIGRS") and Certificate of Accrual on Treasuries
("CATS"). The underlying U.S. Treasury bonds and notes themselves are held in
book-entry form at the Federal Reserve Bank or, in the case of bearer
securities, (i.e., unregistered securities that are owned ostensibly by the
bearer or holder thereof), in trust on behalf of the owners thereof. The staff
of the Securities and Exchange Commission no longer considers "TIGRS" and "CATS"
government securities.
The Treasury has facilitated transfers of ownership of zero coupon securities by
accounting separately for the beneficial ownership of particular interest coupon
and corpus payments on Treasury securities through the Federal Reserve
book-entry record-keeping system. The Federal Reserve program as established by
the Treasury Department is known as "STRIPS" or "Separate Trading of Registered
Interest and Principal of Securities." Under the STRIPS program, a Fund will be
able to have its beneficial ownership of zero coupon securities recorded
directly in the book-entry record-keeping system in lieu of having to hold
certificates or other evidences of ownership of the underlying U.S. Treasury
securities.
When U.S. Treasury obligations have been stripped of their unmatured interest
coupons by the holder, the stripped coupons are sold separately. The principal
or corpus is sold at a deep discount because the buyer receives only the right
to receive a future fixed payment on the security and does not receive any
rights to periodic interest (cash) payments. Once stripped or separated, the
corpus and coupons may be sold separately. Typically, the coupons are sold
separately or grouped with other coupons with like maturity dates and sold in
bundled form. Purchasers of stripped obligations acquire, in effect, discount
obligations that are economically identical to the zero coupon securities that
the Treasury sells itself.
Trading Opportunities
Although there is no present intention to do so, the Funds, consistent with
their investment policies, may engage in short-term trading (selling securities
for brief periods of time, usually less than three months) if the Adviser
believes that such transactions, net of costs, would further the attainment of
their investment objectives. The needs of different classes of lenders and
borrowers and their changing preferences and circumstances have in the past
caused market dislocations unrelated to fundamental creditworthiness and trends
in interest rates which have presented market trading opportunities. Such market
dislocations might result from a broker needing to cover a substantial short
position in a security or an abnormal demand for a security created by an
unusually large purchase or sale by an institutional portfolio manager.
<PAGE>
There can be no assurance that such dislocations will occur in the future or
that a Fund will be able to take advantage of them. The Funds will limit their
voluntary short-term trading, if any, to the extent necessary to qualify as a
"regulated investment company" under the Internal Revenue Code.
INVESTMENT TECHNIQUES
Each of the Funds may use the following techniques described in the prospectus
and in the Statement of Additional Information in pursuit of its investment
objective.
Lending Portfolio Securities
Although there is no present intention to do so, the Funds may from time to time
lend securities from their portfolios to brokers, dealers and financial
institutions such as banks and trust companies. The Adviser will monitor the
creditworthiness of firms with which the Funds engage in securities lending
transactions. In doing so, a Fund would continue to receive the equivalent of
the interest or dividends paid by the issuer on the securities loaned, and would
also receive an additional return which may be in the form of a fixed fee or a
percentage of the collateral. A Fund would have the right to call the loan and
obtain the securities loaned at any time on notice of not more than five
business days.
The Adviser will monitor the creditworthiness of firms with which the Funds
engage in securities lending transactions. Collateral values are continuously
maintained at 100% and marked to market daily. However, in the event of
bankruptcy or other default of the borrower, a Fund could experience both delays
in liquidating the loan collateral or recovering the loaned securities,
including possible decline in value of the collateral or loaned securities,
possible lack of access to income during this period, and expenses of enforcing
its rights.
When-Issued and Delayed Delivery Securities
A Fund may purchase securities on a when-issued or delayed-delivery basis, as
described in the Prospectus. A Fund makes such commitments only with the
intention of actually acquiring the securities, but may sell the securities
before settlement date if the Adviser deems it advisable for investment reasons.
At the time a Fund enters into a binding obligation to purchase securities on a
when-issued basis, liquid assets of the Fund having a value at least as great as
the purchase price of the securities to be purchased are identified on the books
of the Fund and held by the Fund`s custodian throughout the period of the
obligation. The use of these investment strategies may increase net asset value
fluctuation.
Repurchase Agreements
<PAGE>
In the event of a bankruptcy or other default of a seller of a repurchase
agreement, there may be delays and expenses in liquidating the securities,
declines in their value, and losses of interest. The Adviser maintains
procedures for evaluating and monitoring the creditworthiness of firms with
which they enter into repurchase agreements. No Fund may invest more than 10% of
its total assets in repurchase agreements maturing in more than seven days or in
securities subject to legal or contractual restrictions on resale.
INVESTMENT RESTRICTIONS
Each of the AAL Mutual Funds operates under the following investment
restrictions. The AAL U.S. Government Zero Coupon Target Funds do not engage in
the options and futures transactions and real estate transactions referred to in
(2), (3), (8) and (9) below. A Fund may not:
(1) invest more than 5% of its total assets (taken at value at the time of each
investment) in the securities (including repurchase agreements) of any one
issuer (for this purpose, the issuer(s) of a debt security being deemed to be
only the entity or entities whose assets or revenues are subject to the
principal and interest obligations of the security), except that up to 25% of
its assets may be invested without regard to this limitation and provided that
such restrictions shall not apply to obligations issued or guaranteed by the
U.S. Government or a Federal agency or evidences of receipt of such securities;
(2) purchase securities on margin, except for use of short-term credit necessary
for clearance of purchases and sales of portfolio securities, but a Fund may
make margin deposits in connection with transactions in options, futures and
options on futures;
(3) make short sales of securities or maintain a short position, or write,
purchase, or sell puts, calls, straddles, spreads, or combinations thereof,
except for the described transactions in options, futures and options on
futures;
(4) make loans to other persons, except that the Fund reserves freedom of
action, consistent with its other investment policies and restrictions and as
described in the Prospectus and this Statement, to: (a) invest in debt
obligations, including those that are either publicly offered or of a type
customarily purchased by institutional investors, even though the purchase of
such debt obligations may be deemed the making of loans; (b) enter into
repurchase agreements; and (c) lend portfolio securities, provided that the Fund
may not loan securities if, as a result, the aggregate value of all securities
loaned would exceed 33% of its total assets (taken at market value at the time
of such loan);
(5) issue senior securities or borrow, except that the Fund may borrow in
amounts not in excess of 10% of its total assets, taken at current value, and
then only
<PAGE>
from banks as a temporary measure for extraordinary or emergency purposes (the
Funds will not borrow to increase income, but only to meet redemption requests
that otherwise might require untimely dispositions of portfolio securities;
interest paid on any such borrowings will reduce net income);
(6) mortgage, pledge, hypothecate or in any manner transfer, as security for
indebtedness, any securities owned or held by a Fund except as may be necessary
in connection with and subject to the limits in restriction (5);
(7) underwrite any issue of securities, except to the extent that the purchase
of securities directly from an issuer thereof in accord with a Fund's investment
objectives and policies may be deemed to be underwriting or to the extent that
in connection with the disposition of portfolio securities a Fund may be deemed
an underwriter under federal securities laws;
(8) purchase or sell real estate, or real estate limited partnership interests,
provided that a Fund may invest in securities secured by real estate or
interests therein or issued by companies that invest in real estate or interests
therein;
(9) purchase or sell commodities or commodity contracts except that a Fund may
purchase or sell futures and options thereon for hedging purposes;
(10) invest more than 25% of its total assets (taken at current value at the
time of each investment) in securities of non-governmental issuers whose
principal business activities are in the same industry;
(11) invest in oil, gas or mineral related programs or leases;
(12) invest in repurchase agreements maturing in more than seven days or in
other securities with legal or contractual restrictions on resale if, as a
result thereof, more than 10% of a Fund's total assets (taken at current value
at the time of such investment) would be invested in such securities;
(13) invest in any security if as a result a Fund would have more than 5% of its
total assets invested in securities of companies which, together with any
predecessors have been in continuous operation for less than three years;
(14) purchase securities of other investment companies, if the purchase would
cause more than 10% of the value of a Fund's total assets to be invested in
investment company securities provided that: (a) no investment will be made in
the securities of any one investment company if immediately after such
investment more than 3% of the outstanding voting securities of such company
would be owned by a Fund or more than 5% of the value of a Fund`s total assets
would be invested in such company; and (b) no restrictions shall apply to a
purchase of investment company securities in connection with a merger,
consolidation, acquisition or reorganization;
<PAGE>
(15) purchase more than 10% of the outstanding voting securities of an issuer or
invest for the purpose of exercising control or management.
Each of the above restrictions (1) through (15), as well as each Fund's
investment objective, is a fundamental policy. In addition, each Fund may not,
so long as it publicly offers its shares for sale in certain states: (a) buy or
sell a call option unless (i) the option is issued by the Options Clearing
Corporation, an exchange, NASDAQ or similar entity, and (ii) the security
underlying the option is listed on an exchange or similar entity or is a U.S.
Government or Federal agency obligation; (b) invest more than 5% of its net
assets (valued at the time of investment at the lower of cost or market) in
warrants. Included within that amount, but not to exceed 2% of the value of a
Fund's net assets, may be warrants that are not listed on the New York or
American Stock Exchange; (c) write a put option except as a closing transaction
or purchase a put option if the aggregate premiums paid for all such options
exceed 2% of its net assets (less the amount by which any such positions are in
the money), excluding puts purchased as closing transactions; and (d) purchase
or retain securities of any issuer if 5% of the securities of such issuer are
owned by those officers and directors of the Fund or by partners of its Adviser
who own individually more than 1/2 of 1% of its securities.
PURCHASES AND REDEMPTIONS; PRICING CONSIDERATIONS
Purchases and redemptions are discussed in the Prospectus under the headings
"How to Buy Shares," "How to Redeem (Sell) Shares," and "Net Asset Value," and
that information is incorporated herein by reference.
The Funds' net asset value is determined only on the days on which the New York
Stock Exchange is open for trading. That Exchange is regularly closed on
Saturdays and Sundays and on New Years' Day, the third Monday in February, Good
Friday, the last Monday in May, Independence Day, Labor Day, Thanksgiving, and
Christmas. If one of these holidays falls on a Saturday or Sunday, the Exchange
will be closed on the preceding Friday or the following Monday, respectively.
Net asset value is determined by dividing the total assets of the particular
Fund, less all its liabilities, by the total number of shares of that Fund
outstanding. The Funds' portfolio securities may be valued through the use of
pricing services approved by the Trustees, which utilize information with
respect to bond and note transactions, quotations from bond dealers, market
transactions in comparable securities and various relationships between
securities. Money market instruments with remaining maturities of 60 days or
less are valued by the amortized cost method, which the Trustees believe
approximates fair value. Because of the large number of zero coupon securities
available, many may not trade each day; therefore, bid and asked prices
frequently are not available. In valuing such securities, then, the pricing
services generally take into account institutional size, trading in similar
groups of securities and any developments related to specific securities. Other
securities and assets are valued in good faith at fair
<PAGE>
value using methods (including pricing services) determined by the Trustees and
applied on a consistent basis. The Trustees review the valuation of each Fund's
portfolio securities through receipt of regular reports from the Adviser.
Generally, trading in U.S. Government Securities and other fixed income
securities is substantially completed each day at various times prior to the
close of the New York Stock Exchange. The values of such securities used in
determining the net asset value of a Fund's shares are computed as of such
times. Occasionally, events affecting the value of such securities may occur
between such times and the close of the New York Stock Exchange, which events
will not be reflected in the computation of a Fund's net asset value. If events
materially affecting the value of the Trust's securities occur during such a
period, then these securities will be valued at their fair value as determined
in good faith by the Trustees.
The Funds intend to pay all redemptions in cash and are obligated to redeem
shares solely in cash up to the lesser of $250,000 or one percent of the net
assets of the Fund during any 90-day period for any one shareholder. However,
redemptions in excess of such limit may be paid wholly or partly by a
distribution in kind of securities. If redemptions were made in kind, the
redeeming shareholders might incur brokerage fees in selling the securities
received in the redemptions.
Each Fund reserves the right to suspend or postpone redemptions during any
period when: (a) trading on the New York Stock Exchange is restricted, as
determined by the Securities and Exchange Commission, or that Exchange is closed
for other than customary weekend and holiday closings; (b) the Securities and
Exchange Commission has by order permitted such suspension; or (c) an emergency,
as determined by the Securities and Exchange Commission, exists, making disposal
of portfolio securities or valuation of net assets of the Fund not reasonably
practicable.
Confirmation of Fund Transactions
Shareholders of The AAL U.S. Government Zero Coupon Target Funds will receive
immediate written confirmations of all account transactions and annual
statements summarizing all transactions for the prior period.
Shareholders may always obtain current account information by calling,
toll-free, AAL Capital Management Corporation's Investor Mutual Fund Service
Center at 800-553-6319.
INVESTMENT ADVISORY SERVICES
Please refer to the description of the Adviser and Advisory Agreement and fees
under "Management of the Trust" in the Prospectus, which is incorporated herein
by reference.
<PAGE>
The following Executive Officers of the Trust also serve as directors and/or
officers of the Adviser as shown below:
H. Michael Spence President; Director, President of AAL Capital
222 West College Avenue Management Corporation since 1994, Vice President
Appleton, WI 54919-0007 1991 to 1994, and Director from 1988 to 1991
Robert G. Same Secretary; Director, Senior Vice President and
222 West College Avenue Secretary of AAL Capital Management Corporation
Appleton, WI 54919-0007 since 1987
Terrance P. Gallagher Treasurer; Director, Chief Financial Officer of AAL
222 West College Avenue Capital Management Corporation since 1994, Senior
Appleton, WI 54919 Vice President since 1987 and Comptroller since
1992
The Adviser furnishes the Fund, at the Adviser's expense, with all office space
and facilities, equipment and clerical personnel necessary for carrying out its
duties under the Advisory Agreement. The Adviser also will pay all compensation
of Trustees, officers and employees of the Trust who are affiliated persons of
the Adviser. All costs and expenses not expressly assumed by the Adviser under
the Advisory Agreement are paid by the Fund, including, but not limited to: (i)
interest and taxes; (ii) brokerage commissions; (iii) insurance premiums; (iv)
compensation and expenses of its Trustees other than those affiliated with the
Adviser; (v) legal and audit expenses; (vi) fees and expenses of the Trust's
custodian and transfer agent; (vii) expenses incident to the issuance of the
Trust's shares, including stock certificates and issuance of shares on the
payment of, or reinvestment of, dividends; (viii) fees and expenses incident to
the registration under Federal or state securities laws of the Trust or its
shares; (ix) expenses of preparing, printing and mailing reports and notices and
proxy material to shareholders of the Trust; (x) all other expenses incidental
to holding meetings of the Trust's shareholders; (xi) dues or assessments of or
contributions to the Investment Company Institute or its successor, or other
industry organizations; (xii) such non-recurring expenses as may arise,
including litigation affecting the Trust and the legal obligations which the
Trust may have to indemnify its officers and Trustees with respect
<PAGE>
thereto; and (xiii) all expenses which the Trust agrees to bear in any
distribution agreement or in any plan adopted by the Trust pursuant to Rule
12b-1 under the Investment Company Act of 1940 (the "Act").
The Adviser has agreed to reimburse each of the Funds monthly to the extent that
total annual expenses (excluding taxes, interest and brokers' commissions and
other normal charges incident to the purchase and sale of portfolio securities,
but including fees paid to the Adviser) that exceed the applicable limits
prescribed by any state in which the shares of such Fund are being offered for
sale. The Funds believe that currently the most restrictive state limits are 2
1/2% of a Fund's average daily net assets up to $30 million, 2% of the next $70
million and 1 1/2% thereafter. In addition, the Adviser has voluntarily
undertaken to pay all expenses of the Funds in excess of 1% until further
notice.
The Funds have paid the following advisory fees to the Adviser since
commencement of operations:
<TABLE>
<CAPTION>
Period Ended The AAL U.S. Government The AAL U.S. Government
Zero Coupon Target Fund Zero Coupon Target Fund
Series 2001 Series 2006
<S> <C> <C>
April 30, 1991* $920 $692
April 30, 1992 $5,559 $ 3,815
April 30, 1993 $10,418 $7,430
April 30, 1994 $1,175 $833
April 30, 1995 $0 $0
April 30, 1996 $0 $0
</TABLE>
The Advisory Agreement provides that subject to Section 36 of the Act, the
Adviser shall not be liable to the Trust for any error of judgment or mistake of
law or for any loss arising out of any investment or for any act or omission in
the management of the Trust and the performance of its duties under the
Agreement except for willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of its obligations
and duties under the Agreements.
The Trust has agreed to use its best efforts to change its name if the Adviser
ceases to act as such with respect to the Fund and the continued use of the
Trust's present name would create confusion in the context of the Adviser or its
parent's business.
As to the Funds, the Advisory Agreement was approved by the Board of Trustees on
February 27, 1990 and were approved by shareholders on November 12,
<PAGE>
1991. The Agreement will continue from year to year only so long as such
continuance is specifically approved at least annually by the Board of Trustees,
including a majority of the Trustees who are not Interested Persons (as defined
in the Act.)
The Advisory Agreement is terminable upon assignment or at any time without
penalty by the Board of Trustees or by vote of the holders of a majority of the
outstanding voting securities of the Trust, with respect to any Fund by the vote
of a majority of the outstanding shares of such Fund, or by the Adviser on 60
days' written notice to the Trust.
Compensation of The Board of Trustees
The Fund makes no payments to any of its officers for services. However, any of
the Trustees who are not officers or employees of the adviser or its parent are
paid, by The AAL Mutual Funds, an annual fee of $10,000 and a fee of $1,000 per
meeting. These fees are assessed ratably to each series of The AAL Mutual Funds,
including The AAL International Fund. Trustees are reimbursed by The AAL Mutual
Funds for any expenses they may incur by reason of attending such meetings or in
connection with services they may perform for The AAL Mutual Funds. For the
fiscal year ended April 30, 1996, The AAL Mutual Funds paid an aggregate of
$73,614.06 in Trustees' fees and expenses.
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5) (6)Total
Name of Capacities in Aggregate Pension or Estimated Compensation
Person Which Remuneration Retirement Annual from Registrant
Remuneration Benefits Benefits and Fund
Received Accrued During Upon Complex paid to
Registrant's Retirement Trustees (1)
Last Fiscal Year
<C> <C> <C> <C> <C> <C>
John H. Pender Trustee - - - $1,500
DOB 5/25/30
Richard L. Trustee - - - -
Gunderson,
DOB 6/14/33
F. Gregory Trustee $16,000 - - $23,500
Campbell
DOB 12/16/39
Richard L. Gady Trustee $16,000 - - $23,500
DOB 2/28/43
D. W. Russler Trustee $16,000 - - $23,500
DOB 10/28/28
Lawrence M. Trustee $16,000 - - $23,500
Woods
DOB 4/14/32
(1) The Fund complex includes the AAL Variable Product Series Fund, Inc.
</TABLE>
<PAGE>
DISTRIBUTOR
AAL Capital Management Corporation is the exclusive underwriter for the Funds
under a written Distribution Agreement with the Funds. Until May 31, 1993, the
underwriter offered the shares of the Funds for sale on a continuous basis
through its field sales force. The aggregate underwriting commissions received
and the amount of commissions retained by the underwriter for the last three
years were as follows:
Time Period Aggregate Commissions Retained Commissions
For the fiscal year ended $2,076 $598
4/30/94
For the fiscal year ended $0 $0
4/30/95
For the fiscal year ended $0 $0
4/30/96
With respect to all commissions and other compensation, AAL Capital Management
Corporation, the sole distributor for the Funds, does not receive any
compensation in connection with redemptions and repurchases, brokerage
commissions or other compensation.
AAL Capital Management Corporation also acts as exclusive underwriter for the
eight additional series of The AAL Mutual Funds: The AAL Small Cap Stock Fund;
The AAL Mid Cap Stock Fund (f/k/a The AAL Smaller Company Stock Fund); The AAL
Capital Growth Fund; The AAL Utilities Fund; The AAL Bond Fund; The AAL
Municipal Bond Fund; The AAL Money Market Fund; and The AAL International Fund.
Prior to July 1, 1992 The AAL Bond Fund was known as The AAL Income Fund.
DISTRIBUTION PLAN
Because the Funds are no longer being sold, the 12b-1 fees under the
Distribution Plan are being waived by the Distributor and they will not be
reinstated as long as the Funds make no new sales. The following description
applies to the plan when such fees were paid.
The Trust's Distribution Plan (the "Plan" ) is written in contemplation of Rule
12b- 1 (the "Rule") under the Act.
The Plan authorizes the distributor to make certain payments to any qualified
recipient, as defined in the Plan, that has rendered assistance in the
distribution of a Fund's shares (such as sale or placement of a Fund's shares,
or administrative assistance, such as maintenance of sub-accounting or other
records). The Plan also authorizes the Distributor to purchase advertising for
shares of the Funds, to pay for sales literature and other promotional material,
and to make payments to its sales
<PAGE>
personnel. Any such payments to qualified recipients or expenses will be
reimbursed or paid by the Funds, up to a limit of 0.10 of 1% of the average net
assets in a given fiscal year. No reimbursement or payment may be made for
expenses of past fiscal years or in contemplation of expenses for future fiscal
years.
The Plan states that if and to the extent that any of the following payments by
the Funds are considered to be "primarily intended to result in the sale of
shares" issued by a Fund within the meaning of the Rule, such payments by a Fund
are authorized without limit under the Plan and shall not be included in the
limitations contained in the Plan. Such costs include: (a) the costs of the
preparation, printing, and mailing of all required reports and notices to
shareholders, irrespective of whether such reports or notices contain or are
accompanied by material intended to result in the sale of shares of a fund or
other funds or other investments; (b) the costs of preparing, printing and
mailing of all prospectuses to shareholders; (c) the costs of preparing,
printing and mailing of any proxy statements and proxies, irrespective of
whether any such proxy statement includes any item relating to, or directed
toward, the sale of the Funds' shares; (d) all legal and accounting fees
relating to the preparation of any such reports, prospectuses, proxies and proxy
statements; (e) all fees and expenses relating to the qualification of the Funds
and or their shares under the securities or "Blue Sky" laws of any jurisdiction;
(f) all fees under the Act and the Securities Act of 1933, including fees in
connection with any application for exemption relating to or directed toward the
sale of the Funds' shares; (g) all fees and assessments of the Investment
Company Institute or any successor organization or industry association
irrespective of whether some of its activities are designed to provide sales
assistance; (h) all costs of preparing and mailing confirmations of shares sold
or redeemed or share certificates and reports of share balances; and (i) all
costs of responding to telephone or mail inquiries of shareholders.
The Plan also states it has recognized that the costs of distribution of the
Trust's shares are expected to exceed the sum of permitted payments, permitted
expenses, and the portion of the sales charge retained by the Distributor, and
that the profits, if any, of the Adviser are dependent primarily on the advisory
fees paid by the Funds to the Adviser. If and to the extent that any investment
advisory fees paid by the Funds might, in view of any excess distribution costs
and the common ownership of the Adviser and Distributor, be considered as
indirectly financing any activity that is primarily intended to result in the
sale of shares issued by the Funds, the payment of such fees is authorized under
the Plan. The Plan states that in taking any action contemplated by Section 15
of the Act as to any investment advisory contract to which the Trust is a party,
the Board of Trustees, including its Trustees who are not "interested persons"
as defined in the Act, and who have no direct or indirect financial interest in
the operation of the Plan or any agreements related to the Plan ("Qualified
Trustees"), shall, in acting on the terms of any such contract, apply the
"fiduciary duty" standard contained in Sections 36(a) and (b) of the Act.
The Plan requires that while it is in effect the Distributor shall report in
writing at
<PAGE>
least quarterly to the Trustees, and the Trustees shall review, the following:
(a) the amounts of all payments, the identity of recipients of each such
payment, the basis on which each such recipient was chosen and the basis on
which the amount of the payment was made; (b) the amounts of expenses and the
purpose of each such expense; and (c) all costs of the other payments specified
in the Plan (making estimates of such costs where necessary or desirable) in
each case during the preceding calendar or fiscal quarter.
Currently, the Distributor is waiving the 12b-1 fees for the AAL U.S. Government
Zero Coupon Target Funds, Series 2001 and 2006. Therefore, the aggregate amount
paid by the Funds to the Distributor under the Plan for the fiscal year ended
April 30, 1996, and the manner in which this amount was spent is as follows:
Gross 12b-1 fees paid by the Funds $0
Expenditures
Compensation to Registered Representatives $0
Other $0
The Plan was approved by shareholders of the Funds on November 12, 1991. The
Plan continues in effect from year to year only so long as such continuance is
specifically approved at least annually by the Board of Trustees and the
Qualified Trustees (as defined in the Plan) cast in person at a meeting called
for the purpose of voting on such continuance. The Plan may be terminated at any
time without penalty by a vote of a majority of the Qualified Trustees or by the
vote of the holders of a majority of the outstanding voting securities of the
Trust, and with respect to any Fund, by the vote of a majority of the
outstanding shares of such Fund. The Plan may not be amended to increase
materially the amount of payments to be made without shareholder approval. While
the Plan is in effect, the selection and nomination of those Trustees who are
not interested persons of the Trust is committed to the discretion of such
disinterested Trustees. Nothing in the Plan will prevent the involvement of
others in such selection and nomination if the final decision on any such
selection and nomination is approved by a majority of such disinterested
Trustees.
PORTFOLIO TRANSACTIONS
The Adviser directs the placement or orders for the purchase and sale of the
Funds' portfolio securities.
The Funds' purchases and sales of portfolio securities are generally placed by
the Adviser with primary market makers for these securities on a net basis,
without any brokerage commission being paid by the Funds. Trading does, however,
involve transaction costs. Transactions with dealers serving as primary market
makers reflect the spread between the bid and asked prices. Purchases of
portfolio securities from the dealers of zero coupon securities, in particular,
may include a mark-up which may
<PAGE>
be included in a spread between the bid and asked price. Purchases of
underwritten issues may be made which will include an underwriting fee paid to
the underwriter.
In placing portfolio transactions, the Adviser seeks the best combination of
price and execution. In determining which dealers provide best execution, the
Adviser looks primarily to the price quoted and normally place orders with the
dealer through which the most favorable price can be obtained. It is expected
that securities will ordinarily be purchased in the primary markets, and that in
assessing the best net price and execution available to a Fund, the Adviser will
consider all factors it deems relevant, including the breadth of the market in
the security, the price of the security, the financial condition and execution
capability of the dealer and the reasonableness of the commission, if any (for
the specific transaction and on a continuing basis). Although it is expected
that sales of shares of the Funds will be made only by the Distributor, the
Adviser may in the future consider the willingness of particular dealers to sell
shares of the Funds as a factor in the selection of dealers for the Funds'
portfolio transactions, subject to the overall best price and execution
standard.
Assuming equal execution capabilities, other factors may be taken into account
in selecting brokers or dealers to execute particular transactions and in
evaluating the best net price and execution available. The Adviser may consider
"brokerage and research services" (as those terms are defined in Section 28(e)
of the Securities Exchange Act of 1934), statistical quotations, specifically
the quotations necessary to determine the Funds' net asset values, and other
information provided to the Funds, to the Adviser or its affiliates. The Adviser
may also cause a Fund to pay to a broker or dealer who provides such brokerage
or research services a commission for executing a portfolio transaction that is
in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction. The Adviser must determine, in good
faith, however, that such commission was reasonable in relation to the value of
the brokerage and research services provided, viewed in terms of that particular
transaction or in terms of all the accounts over which the Adviser exercises
investment discretion. It is possible that certain of the services received by
the Adviser attributable to a particular transaction will benefit one or more
other accounts for which investment discretion is exercised by the Adviser. The
Trust paid, $155,000, $1,108,673 and $1,697,844 in brokerage commissions in each
of the past 3 years.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each of the Funds has elected to be treated as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code").
A regulated investment company qualifying under Subchapter M of the Code is
required to distribute to its shareholders at least 90 percent of its investment
company taxable income (including net short-term capital gains) and is not
subject to federal income tax to the extent that it distributes annually its
investment company taxable income and net realized capital gains in the manner
required under the Code.
<PAGE>
Each Fund is subject to a 4% nondeductible excise tax on amounts required to be
distributed, but not actually distributed under a prescribed formula. The
formula requires each Fund to distribute to shareholders during a calendar year
an amount equal to at least 98% of a Fund's ordinary income for the calendar
year, at least 98% of the excess of its capital gains over capital losses
(adjusted for certain ordinary losses as prescribed in the Code) realized during
the one-year period ending October 31 during such year, and all ordinary income
and capital gains for prior years that were not previously distributed.
Investment company taxable income includes dividends, interest (including
original issue discount amortization) and net short-term capital gains in excess
of net long-term capital losses, less expenses. Net realized capital gains of a
Fund for a fiscal year are computed by taking into account any capital loss
carry forward of such Fund to the extent allowed by the Internal Revenue Code.
If any net realized long-term capital gains in excess of net realized short-term
capital losses are not distributed by a Fund for reinvestment, requiring federal
income taxes to be paid thereon by the Fund, the Fund intends to elect to treat
such capital gains as having been distributed to shareholders. As a result,
shareholders will report such capital gains as long-term capital gains, will be
able to claim their share of federal income taxes paid by the Fund on such gains
as a credit against their own federal income tax liability, and will be entitled
to increase the adjusted tax basis of their shares by the difference between
their pro rata share of such gains and their tax credit.
Distributions of investment company taxable income are taxable to shareholders
as ordinary income. Under the federal income tax law, a portion of the
difference between the purchase price and the face amount of zero coupon
securities ("original issue discount") will be treated as income to any Fund
holding securities with original issue discount each year, although no current
payments will be received by such Fund with respect to such income. This
original issue discount amortization will comprise a part of that investment
company taxable income of such Fund that must be distributed to shareholders in
order to maintain its qualification as a regulated investment company and to
avoid federal income tax at the Fund level. Taxable shareholders of such a Fund
will be subject to income tax on such original issue discount amortization,
whether or not they elect to receive their distributions in cash. In the event
that a Fund acquires a debt instrument at a market discount, it is possible that
a portion of any gain recognized on the disposition of such instrument may be
treated as ordinary income.
Since the Funds invest primarily in zero coupon securities upon which they will
not receive cash payments of interest, to the extent shareholders of the Funds
elect to take their distributions in cash, these Funds may have to generate the
required cash from interest earned on non-zero coupon securities from the
disposition of such securities, or possibly from the disposition of some of
their zero coupon securities.
Distributions of the excess of net long-term capital gain over net short-term
<PAGE>
capital loss are taxable to shareholders as long-term capital gain, regardless
of the length of time the shares of the relevant Fund have been held by such
shareholders. Such distributions are not eligible for the dividends-received
deduction. Any loss realized upon the redemption of shares held at the time of
redemption for six months or less will be treated as a long-term capital loss to
the extent of any amounts treated as distributions of long-term capital gain
during such six-month period.
Distributions of investment company taxable income and net realized capital
gains will be taxable whether received in shares or in cash.
The foregoing is only a summary of certain tax considerations generally
affecting the Funds and their shareholders. Investors are urged to consult their
tax advisors with specific reference to their own tax situations, including
state and local tax liability.
CALCULATION OF YIELD AND TOTAL RETURN
From time to time, the Funds may advertise yield and total return for various
periods of investment. Such information will always include uniform performance
calculations based on standardized methods established by the Securities and
Exchange Commission, and may also include other total return information. Yield
is based on historical earnings and total return is based on historical
calculated earnings; neither is intended to indicate future performance.
Performance information should be considered in light of the Funds' investment
objectives and policies, characteristics and quality of their portfolio
securities and the market conditions during the applicable period and should not
be considered as a representation of what may be achieved in the future.
Investors should consider these factors in addition to differences in the
methods used in calculating performance information, and the impact of taxes on
alternative investments when comparing a particular Fund's performance to the
performance data published for alternative investments.
Standardized Performance Information
Average Annual Total Return. For each of the Funds, standardized average annual
total return is computed by finding the average annual compounded rates of
return over the 1, 5 and 10 year periods (or the portion thereof during which
the Fund has been in existence) that would equate the initial amount invested to
the ending redeemable value according to the following formula:
T = (ERV/P)^(1/n) - 1
Where:
T = average annual total return;
n = number of years and portion of a year;
<PAGE>
ERV = ending redeemable value (of the hypothetical $1,000 payment) at
the end of the 1, 5 and 10 year periods, or fractional portion thereof,
after deduction of all non-recurring charges to be deducted, assuming
redemption at the end of the period;
P = $1,000 (the hypothetical initial payment before deduction of the
maximum sales load); and
^ = raised to the power of.
Average Annual Total Return Series 2001 Series 2006
for the Period Ended 4/30/96
1-Year (total return) 9.23% 11.80%
5-year 9.54% 11.06%
From Inception (11/90) 9.91% 11.5%
Current Yield. Current yield quotations for the Funds are based on a 30-day (or
one month) period, and are computed by dividing the net investment income per
share earned during the period by the maximum offering price per share on the
last day of the period, according to the following formula:
Yield = 2[((a - b)/(cd) + 1)^6 - 1]
a = dividends and interest earned during the period;
b = expenses accrued for the period (net of reimbursements);
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends; and
d = the maximum offering price per share on the last day of the period
^ = to the power of.
For purposes of this calculation, income earned on debt obligations is
determined by applying a calculated yield-to-maturity percentage to the
obligations held during the period. The yields for The Funds, Series 2001 and
2006, for the 30-day period ended April 30, 1996 were 5.25% and 5.80%,
respectively. When advertising yield, a Fund will not advertise a one-month or a
30-day period which ends more than 45 days before the date on which the
advertisement is published.
Other Performance Information
<PAGE>
The Funds may, from time to time, include in their advertisements quotations
computed for a time period, or by a method which differs from the computations
described in the foregoing section.
Average Annual Total Return. The Funds may advertise an average annual total
return calculation for any appropriate time period, based upon the value of a
net investment in the Fund, after deduction of the maximum sales charge
according to the following formula:
T = n(ERV/P)^(1/n) -1
where:
T = average annual total return;
n = number of years and portion of a year;
ERV = ending redeemable value
(of the hypothetical $1,000
investment) at the end of
any period after deduction
of all non-recurring
charges to be deducted
assuming redemption at the
end of the period;
P = $1,000 (the hypothetical initial net
investment after deduction of the
sales load).
^ = raised to the power of.
Average Annual Total Return Series 2001 Series 2006
ended April 30, 1996
1-year (total return) 4.02% 6.45%
5-year 8.48% 9.99%
From Inception (11/90) 8.98% 10.51%
Anticipated Growth Rate. The anticipated growth rate is a calculation of
predicted return. Anticipated growth will consist primarily of the estimated
amortization of discount on the zero coupon securities in a Fund and, to a much
lesser degree, of projected cash flow on income-producing securities in excess
of estimated expenses. The anticipated growth rate is the rate which, when
compounded on a semi-annual basis, equates the current market value of a Zero
Coupon Fund to the sum of the present values of the payments to be received from
securities held in the Fund. It is calculated net of expenses on a
bond-equivalent basis in order to facilitate comparison with returns obtainable
from U.S. Treasury notes, bonds and stripped (zero coupon) securities, if held
directly. The calculation is based on certain assumptions (See "Investment
Objectives and Policies"). A shareholder who redeems prior to maturity of
<PAGE>
a Fund may experience a significantly different investment return than was
anticipated at time of purchase.
Performance information for the Funds may be compared to various un-managed
indices, such as the Dow Jones Industrial Average, the S&P 500 or the Lehman
Brothers Aggregate Index, as well as indices of similar mutual funds. The Funds
may also include in their advertising rankings published by recognized
statistical services or publishers such as Lipper Analytical Services, Inc.,
Wiesenberger Investment Companies Services or rankings published by other
comparable national services which rank mutual funds.
GENERAL
The Trust's Declaration of Trust permits its Trustees to issue an unlimited
number of full and fractional shares of beneficial interest and to divide or
combine the shares into a greater or lesser number of shares without thereby
changing the proportionate beneficial interest in a Fund. Each share represents
an interest in a Fund proportionately equal to the interest of each other share.
If the Trust were to liquidate, all shareholders of a Fund would share pro rata
in its net assets available for distribution to shareholders. If they deem it
advisable and in the best interests of shareholders, the Board may create
additional classes of shares which may differ from each other only as to
dividends or, as is the case with the Funds, each of which has separate assets
and liabilities (in which case any such class would have a designation including
the word "Series"). Shares of each series are entitled to vote as a series only
to the extent required by the '40 Act or as permitted by the Trustees. Income
and operating expenses are allocated fairly among the series by the Trustees.
As of July 31, 1996, the officers and Trustees of the Trust owned less than 1%
of the shares of any Funds. As of July 31, 1996, the following account holders
held in excess of 5% of the Funds: B. Mc Phearson, P.O. Box 251, Charleston, IL
61920-0241, owned 8.48% of the outstanding shares of Series 2001; G. J.
McPhearson, as custodian under a Uniform Transfer to Minors Act, 361 Bunker
Hill, Belleville, IL 62221-5765, controlled 8.34% of the outstanding shares of
Series 2001; and J. May and N. May, 745 Pleasant View Road, Chanhassen, MN
55317, jointly owned 9.93% of the outstanding shares of Series 2006.
Except for the election of Trustees and ratification of the selection of
accountants, any matter required to be submitted to shareholder vote is not
deemed to have been effectively acted upon unless approved by the holders of a
"majority" (as defined in the Rule) of the voting securities of each Series
affected by the matter.
The Trust's custodian, Firstar Trust Company, formerly known as First Wisconsin
Trust Company, is responsible for holding the Funds' assets.
<PAGE>
Pursuant to an Administrative Services Agreement (the "Agreement"), AAL Capital
Management Corporation (the "Adviser") provides certain administrative,
accounting and pricing services to the Funds, including: calculating the daily
net asset value per share; maintaining original entry documents and books of
record and general ledgers; posting cash receipts and disbursements; reconciling
bank account balance monthly; recording purchases and sales; and preparing
monthly and annual summaries to assist in the preparation of financial
statements of, and regulatory reports for, the Funds. The Agreement was approved
by a majority of the Trustees of the Funds, including a majority of the Trustees
who are not interested persons of the Funds or of the Adviser and will be
submitted to shareholders of the Funds at the next Shareholders' Meeting. The
Adviser has agreed to provide these services at rates which would not exceed the
rates charged by unaffiliated vendors for similar services. The initial rate of
payment for these services is $25,000 per Fund per year, plus the cost of
outside pricing services but only to the extent the Adviser is not voluntarily
absorbing any expenses of that Fund. The present agreement provides that the
annual rates of payment are:
The AAL U. S. Government Zero Coupon Target Fund Series 2001 - $5,000
The AAL U. S. Government Zero Coupon Target Fund Series 2006 - $5,000
The Agreement will continue in effect from year to year, as long as it is
approved at least annually by the Funds' Board of Trustees or by a vote of the
outstanding voting securities of the Funds and in either case by a majority of
the Trustees who are not parties to the Agreement or interested persons of any
such party. The Agreement terminates automatically if assigned and may be
terminated without penalty by either party on 60-days' notice. The Agreement
provides that neither the Adviser nor its personnel shall be liable for any
error of judgment or mistake of law or for any loss arising out of any act or
omission in the execution and the discharge of its obligations under the
Agreement, except for willful misfeasance, bad faith or gross negligence in the
performance of their duties or by reason of reckless disregard of their
obligations and duties under the Agreement.
The Trust's independent accountants, Price Waterhouse LLP, examine the Funds'
annual financial statements, assist in the preparation of certain reports to the
Securities and Exchange Commission and prepare the Trust's state and Funds'
federal tax returns.
Financial Statements
The financial statements and notes to financial statements for the Funds
included in the Annual Report to Shareholders of the Trust, for the year ended
April 30, 1996, are hereby incorporated by reference.
<PAGE>
THE AAL MUTUAL FUNDS
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The audited financial statement of the Trust for The AAL U.S. Government Zero
Coupon Target Funds, Series 2001 and 2006, for the fiscal year ended April 30,
1996, which have been filed electronically, are included and/or incorporated by
reference into this Post-Effective Amendment to this Registration Statement.
Such report contains the information required in parts (a) and (b) of this item.
(b) Exhibits
Except as noted below, all required exhibits have been previously filed and are
incorporated by reference from the Registrant's Registration Statement on Form
N-1A (File No. 33-12911), as amended:
(8) Amendment No. 11 to the First Amended Custodian
Agreement;
(9)(a) Amendment No. 11 to the Transfer Agency and
Dividend Disbursing Agent Agreement;
(9)(c) Amendment No. 2 to Shareholder Maintenance
Agreement;
(10) Opinion and consent of Outside Counsel;
(11) Consent of Independent Accountants;
(14) Copies of Standardized Retirement Plans for
Money Purchase Pension Plan, Profit Sharing
Plan, Profit Sharing Plan with CODA, and IRS
Model Form for SARSEPs; and
(17) The Financial Data Schedule (included as
Exhibit 27).
Item 25. Persons Controlled by or under Common Control with
Registrant
AAL Capital Management Corporation (the "Adviser" and "Distributor" for The AAL
Mutual Funds ("Trust")) was organized in 1986 as a Delaware corporation, all of
the
<PAGE>
shares of which are owned by AAL Holdings Inc., a wholly-owned subsidiary of the
Aid Association for Lutherans ("AAL"). AAL is a non-profit, non-stock membership
organization, licensed to do business as a fraternal benefit society in all
states. Under an Investment Advisory Agreement and a Distribution Agreement with
the Trust, and subject to the supervision of the Funds' Board of Trustees, AAL
Capital Management Corporation provides the investment advisory, administrative,
shareholder, distribution and other services for the Funds.
Item 26. Number of Holders of Securities
On June 30, 1996, the following were the numbers of record holders of the series
of the Registrant covered by this filing:
The AAL U.S. Government Zero Coupon Target Funds, Series 2001 - 243
The AAL U.S. Government Zero Coupon Target Funds, Series 2006 - 249
Item 27. Indemnification
Under Section 12 of Article Seventh of the Registrant's Declaration of Trust,
the Trust may not indemnify any trustee, officer or employee for expenses (e.g.,
attorney's fees, judgments, fines and settlement amounts) incurred in any
threatened, pending or completed action, if there has been an adjudication of
liability against such person based on a finding of willful misfeasance, bad
faith, gross negligence or reckless disregard of such person's duties of office
("disability conduct").
The Trust shall indemnify its trustees, officers or employees for such expenses
whether or not there is an adjudication of liability, if, pursuant to Investment
Company Act Release 11330, a determination is made that such person was not
liable by reason of disabling conduct by: (i) final decision of the court before
which the proceeding was brought; or (ii) in the absence of such a decision, a
reasonable determination, based on factual review, that the person was not
liable for reasons of such conduct is made by (a) a majority vote of
disinterested, non-party Trustees, or (b) independent legal counsel in a written
opinion.
Advancements of expenses incurred in defending such actions may be made pursuant
to Release 11330, provided that the person undertakes to repay the advance
unless it is ultimately determined that such person is entitled to
indemnification and one or more of the following conditions is met: (1) the
person provides security for the undertaking; (2) the registrant is insured
against losses arising by reason of any lawful advances; or (3) a majority of
disinterested non-party Trustees or independent legal counsel in a written
opinion determines, based on review of readily available facts, that there is
reason to believe the person ultimately will be found entitled to
indemnification.
Insofar as indemnification for liabilities arising under the Securities Act of
1933
<PAGE>
may be permitted to trustees, officers and controlling persons of Registrant
pursuant to the foregoing provision, 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 that 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 trustee, officer or controlling person of Registrant in the successful
defense of any action, suit or proceeding) is asserted by such trustees, 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 The Investment Adviser
AAL Capital Management Corporation (the "Adviser") is the investment adviser of
the Registrant. For information as to the business, profession, vocation or
employment of a substantial nature of the Adviser, refer to Parts A and B of
this Registration Statement and to Form ADV filed under the Investment Advisers
Act of 1940 by the Adviser.
Item 29. Principal Underwriters
(a) None
(b)
<TABLE>
<CAPTION>
Name and Principal Business Address Positions and Positions and Offices with
Offices with Registrant
Underwriter
<C> <C> <C>
Ronald G. Anderson Chairman of the None
222 W. College Ave. Board of Directors
Appleton, WI 54919
H. Michael Spence President and President
222 W. College Ave. Director
Appleton, WI 54919
Robert G. Same Senior Vice Secretary and
222 W. College Ave. President, Vice President
Appleton, WI 54919 Secretary and
Director
Terrance P. Gallagher Senior Vice Treasurer
222 W. College Ave. President, CFO,
Appleton, WI 54919 Treasurer and
Director
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Business Address Positions and Positions and Offices with
Offices with Registrant
Underwriter
<C> <C> <C>
Robert Roth Senior Vice None
222 W. College Ave. President
Appleton, WI 54919
James H. Abitz Director None
222 W. College Ave.
Appleton, WI 54915
Woody Eno Director None
222 W. College Avenue
Appleton, WI 54914
Kevin Van Eron Director None
4321 N. Ballard Rd.
Appleton, WI 54919
Jerome Laubenstein Director None
4321 N. Ballard Rd.
Appleton, WI 54919
Steven Weber Director None
4321 N. Ballard Rd.
Appleton, WI 54919
Joseph H. Thomas Vice President None
222 West College Ave.
Appleton, WI 54919
Anthony De Angelis Vice President None
222 West College Ave.
Appleton, WI 54919
Kenneth E. Podell Assistant None
222 West College Ave. Secretary
Appleton, WI 54919
Paul Stadler Assistant Vice None
222 West College Ave. President
Appleton, WI 54919
Stanley H. Herman Vice President None
1427 Hidden Oaks Cir.
Corinth, TX 76205
Lori Richardson Vice President None
222 West College Ave.
Appleton, WI 54919
Murray Ruffell Vice President None
1193 Salt Marsh
Ponte Vedra Beach, FL 32082
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Business Address Positions and Positions and Offices with
Offices with Registrant
Underwriter
<C> <C> <C>
Charles Gariboldi Assistant Vice Assistant Treasurer
222 West College Ave. President
Appleton, WI 54919
Byron Vielehr Assistant Vice None
222 West College Ave. President
Appleton, WI 54919
Charles Friedman Assistant Vice None
222 West College Ave. President
Appleton, WI 54919
Joseph Wreschnig Assistant Vice Assistant Secretary
222 West College Ave. President and
Appleton, WI 54919 Assistant
Secretary
</TABLE>
Item 30. Location of Accounts and Records.
The accounts, books and other documents required to be maintained by Registrant
pursuant to Section 31(a) of The Investment Company Act of 1940 and the rules
promulgated thereunder are in the possession of the Registrant and Registrant's
Custodian as follows: all documents required to be maintained by Rule 31a-1(b)
will be maintained by Registrant, except that records required to be maintained
by paragraph (2)(iv) of Rule 31a-1(b) will be maintained by the Custodian.
Item 31. Management Services
Not applicable
Item 32. Undertakings
The Registrant further undertakes that, at the request of the shareholders
holding 10% or more of the outstanding shares of the Registrant, the Registrant
will hold a special meeting for the purpose of considering the removal of a
trustee from office, and the Registrant will cooperate with and assist
shareholders of record who notify the Registrant that they wish to communicate
with the other shareholders for the purpose of obtaining signatures to request
such a meeting, all pursuant to and in accordance with Section 16(c) of the
Investment Company Act, as amended.
Registrant undertakes to furnish a copy of the Registrant's latest annual report
to shareholders, upon request and without charge, to each person to whom a
prospectus is delivered.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that this filing meets the
requirements of Rule 485(b) and has duly caused this amendment to its
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Appleton and State of Wisconsin, on the 9th day
of August, 1996
THE AAL MUTUAL FUNDS
/s/ H. Michael Spence *
- -----------------------------
H. Michael Spence, President
Pursuant to the requirements of the Securities Act of 1933, this amendment to
the Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
Trustee August 9, 1996
John H. Pender
/s/ Richard L. Gady Trustee August 9, 1996
- ---------------------------------
Richard L. Gady
/s/ D. W. Russler Trustee August 9, 1996
- -----------------------------------
D. W. Russler
/s/ Lawrence M. Woods Trustee August 9, 1996
- ----------------------------
Lawrence M. Woods
/s/ F. Gregory Campbell Trustee August 9, 1996
- ------------------------------
F. Gregory Campbell
/s/ Richard L. Gunderson Trustee August 9, 1996
- -----------------------------
Richard L. Gunderson
/s/ Terrance P. Gallagher Principal August 9, 1996
- ------------------------------ Financial and
Terrance P. Gallagher Accounting
Officer
/s/ John H. Pender
- ---------------------------------
John H. Pender, Trustee
Pursuant to Powers of Attorney
<PAGE>
POWER OF ATTORNEY
NOW ALL MEN BY THESE PRESENTS that the person whose signature appears below
constitutes John H. Pender to act as lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for such person and in such
person's name, place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to the Registration Statement
on Form N-1A of The AAL Mutual Funds, and to the file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done to all intents and purposes as such person
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do
or cause to be done by virtue thereof.
/s/ Richard L. Gunderson
Richard L. Gunderson,
as Trustee, but not
individually
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the person whose signature appears below
constitutes Richard L. Gunderson, to act as lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for such person and
in such person's name, place and stead, in any and all capacities, to sign any
or all amendments (including post-effective amendments) to the Registration
Statement on Form N-1A of The AAL Mutual Funds, and to the file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done to all intents and purposes as such person
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do
or cause to be done by virtue thereof.
/s/ John H. Pender
John H. Pender
as Trustee, but not
individually
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the person whose signature appears below
constitutes John H. Pender to act as lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for such person and in such
person's name, place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to the Registration Statement
on Form N-1A of The AAL Mutual Funds, and to the file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done to all intents and purposes as such person
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do
or cause to be done by virtue thereof.
/s/ D.W. Russler
D.W. Russler,
as Trustee, but not
individually
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the person whose signature appears below
constitutes John H. Pender to act as lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for such person and in such
person's name, place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to the Registration Statement
on Form N-1A of The AAL Mutual Funds, and to the file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done to all intents and purposes as such person
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do
or cause to be done by virtue thereof.
/s/ F. Gregory Campbell
F. Gregory Campbell,
as Trustee, but not
individually
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the person whose signature appears below
constitutes John H. Pender to act as lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for such person and in such
person's name, place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to the Registration Statement
on Form N-1A of The AAL Mutual Funds, and to the file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done to all intents and purposes as such person
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do
or cause to be done by virtue thereof.
/s/ Richard L. Gady
Richard L. Gady,
as Trustee, but not
individually
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the person whose signature appears below
constitutes John H. Pender to act as lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for such person and in such
person's name, place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to the Registration Statement
on Form N-1A of The AAL Mutual Funds, and to the file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done to all intents and purposes as such person
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do
or cause to be done by virtue thereof.
/s/ Lawrence M. Woods
Lawrence M. Woods,
as Trustee, but not
individually
<PAGE>
EXHIBIT INDEX
24(b)(8) Amendement No. 10 to the First Amended Custodian Agreement;
24(b)(9)(a) Amendment No. 10 to the Transfer Agency and Dividend Disbursing
Agent Agreement;
24(b)(9)(c) Amendment No. 2 to Shareholder Maintenance Agreement;
24(b)(10) Opinion and consent of Outside Counsel;
24(b)(11) Consent of Independent Accountants;
24(b)(14) Copies of Standardized Retirement Plans for Money Purchase
Pension Plan, Profit Sharing Plan, Profit Sharing Plan with
CODA, and SARSEP; and
24(b)(17) The Financial Data Schedule (included as Exhibit 27).
<PAGE>
AMENDMENT NO. 10
to
THE FIRST AMENDED CUSTODIAN CONTRACT BETWEEN
THE AAL MUTUAL FUNDS AND
FIRSTAR TRUST COMPANY
Effective July 1, 1996, the First Amended Custodian Contract ("Contract"), dated
October 29, 1987, between The AAL Mutual Funds and Firstar Trust Company (f/k/a
First Wisconsin Trust Company) is amended as follows:
Schedule A (Custodial Agent Fee Schedule) effective as of April 1, 1994, is
amended to:
(1) Add The AAL Small Cap Stock Fund;
(2) Change the name of The AAL Smaller Company Stock Fund to The AAL Mid
Cap Stock Fund; and
(3) Amend the fee schedule for a period of 24 months (July 1, 1996 - June
30, 1998) and month-to-month thereafter until otherwise agreed to by
and between the parties hereto.
An amended Schedule A, effective as of July 1, 1996, is attached hereto.
All other provisions of the Contract as amended, and all Sub-Custodian
Agreements, shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 10 to
the Contract to be signed by their duly authorized officers.
ATTEST: FIRSTAR TRUST COMPANY
By /s/ Mary Klabunde By /s/ Joe Redwine
ATTEST: THE AAL MUTUAL FUNDS
By /s/ Robert G. Same By /s/ H. Michael Spence
Robert G. Same, Secretary H. Michael Spence, President
<PAGE>
SCHEDULE A
TO
THE OCTOBER 29, 1987, FIRST AMENDED CUSTODIAN
CONTRACT BETWEEN THE AAL MUTUAL FUNDS AND
FIRSTAR TRUST COMPANY, AS AMENDED
FIRSTAR TRUST COMPANY
MUTUAL FUND CUSTODIAL AGENT
Fee Schedule
Effective July 1, 1996
I. Annual fee based on aggregate market value of all AAL Mutual Funds
.00005 (.5 basis points) on all assets
II. Fees for transactions (purchase, sale, exchange, tender, redemption,
maturity, receipt, delivery)
$ 6.00 per book entry security (depository or Federal Reserve system)
$25.00 per definitive security (physical) $75.00 per Euroclear $ 8.00
per principal reduction on pass-through certificates $35.00 per
option/futures contract $12.00 per variation margin transaction $10.00
per Fed wire deposit or withdrawal
III. Other Fees
Variable Rate Notes: Used as a short-term investment, variable rate
notes offer safety and prevailing high interest rates. Firstar charge,
which is 1/4 of 1%, is deducted from the variable rate note income at
the time it is credited to a Fund's account.
Extraordinary expenses: Based on time and complexity involved.
Out-of-pocket expenses: Charged to the account.
Fees are billed monthly, based on prior month-end market values and
prior month's transactions.
AMENDMENT NO. 10
TO
THE TRANSFER AND DIVIDEND DISBURSING AGENT AGREEMENT
BETWEEN
THE AAL MUTUAL FUNDS
AND
FIRSTAR TRUST COMPANY
Effective July 1, 1996, the Transfer and Dividend Disbursing Agent Agreement
("Agreement"), dated June 15, 1987, between The AAL Mutual Funds and Firstar
Trust Company (f/k/a First Wisconsin Trust Company) is amended as follows:
Schedule A (Mutual Fund Shareholder Service Fee Schedule) effective as of April
1, 1994, is amended to:
(1) Add The AAL Small Cap Stock Fund;
(2) Change the name of The AAL Smaller Company Stock Fund to The AAL Mid
Cap Stock Fund; and
(3) Amend the fee schedule for a period of 24 months (July 1, 1996 - June
30, 1998) and month-to-month thereafter until otherwise agreed to by
and between the parties hereto.
An amended Schedule A, effective as of July 1, 1996, is attached hereto.
All other provisions of this Agreement, as amended, shall be in full force and
effect.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 10 to be
signed by their duly authorized officers.
ATTEST: FIRSTAR TRUST COMPANY
By /s/ Mary Klabunde By /s/ Joe Redwine
ATTEST: THE AAL MUTUAL FUNDS
By /s/ Robert G. Same By /s/ H. Michael Spence
Robert G. Same, Secretary H. Michael Spence, President
<PAGE>
SCHEDULE A
TO
THE AAL MUTUAL FUNDS TRANSFER AND DIVIDEND DISBURSING AGENT
AGREEMENT BETWEEN THE AAL MUTUAL FUNDS AND
FIRSTAR TRUST COMPANY, AS AMENDED
FIRSTAR TRUST COMPANY
MUTUAL FUND SHAREHOLDER SERVICES
Fee Schedule Effective July 1, 1996
I. Annual Maintenance Fees
A. The AAL Capital Growth; Bond; Municipal Bond; Mid Cap Stock (f/k/a
The AAL Smaller Company Stock Fund); Utilities, International and
Small Cap Stock (added July 1, 1996) Funds
$13.00 per account, first 50,000 open accounts $12.75 per account, next
100,000 open accounts $12.50 per account, balance of open accounts $
6.00 per closed account
B. The AAL Target Funds
$ 6.00 per open/closed account
C. The AAL Money Market Fund
$15.00 per open account
$ 6.00 per closed account
II. Money Market Fund Drafts
$ 1.50 each
III. ACH (Automatic Clearing House)
$125.00 per cycle $ 0.50 account set-up/change $ 0.35 per item (EFT to
account) $ 3.25 per correction/reversal/return
<PAGE>
IV. IRA/403(b) Maintenance
$12.50 per IRA or 403(b) account
$25.00 cap for multiple IRA or 403(b) accounts with same social
security number (Firstar will charge $12.50 per IRA or 403(b) account,
with a $25.00 cap for multiple IRA or 403(b) accounts with the same
social security number.
V. IRA/403(b) Miscellaneous
Systematic Withdrawals - no charge Direct Stock Rollovers - no charge
Transfers Out - no charge Total Liquidations - no charge Partial
Liquidations - no charge Transfers In - no charge
VI. Other
Outgoing Wires $10.00 per wire
$20.00 stop payment/return item fee
All fees not paid by shareholders are billed monthly.
Out-of-pocket expenses are billed monthly
<PAGE>
AMENDMENT NO. 2
TO
SHAREHOLDER MAINTENANCE AGREEMENT
The Shareholder Maintenance Agreement between The AAL Mutual Funds and AAL
Capital Management Corporation, effective April 1, 1995, is hereby amended,
effective July 1, 1996, as follows:
Schedule A, attached to the Shareholder Maintenance Agreement, is amended to add
The AAL Small Cap Stock Fund and to change the name of The AAL Smaller Company
Stock Fund to The AAL Mid Cap Stock Fund. Schedule A, effective as of July 1,
1996, is attached hereto.
IN WITNESS WHEREOF the parties hereto have caused this Amendment to be
signed by the respective officers effective as of July 1, 1996.
ATTEST: THE AAL MUTUAL FUNDS
By /s/ Robert G. Same By /s/ H. Michael Spence
Robert G. Same, Secretary H. Michael Spence, President
ATTEST: AAL CAPITAL MANAGEMENT CORPORATION
By /s/ Robert G. Same By /s/ H. Michael Spence
Robert G. Same, Secretary H. Michael Spence, President
<PAGE>
SHAREHOLDER MAINTENANCE AGREEMENT
SCHEDULE A
(effective July 1, 1996)
The AAL Capital Growth Fund
The AAL Bond Fund
The AAL Municipal Bond Fund
The AAL Money Market Fund
The AAL U.S. Government Zero Coupon Target Fund, Series 2001
The AAL U.S. Government Zero Coupon Target Fund, Series 2006
The AAL Mid Cap Stock Fund (f/k/a The AAL Smaller Company Stock Fund)
The AAL Utilities Fund
The AAL International Fund
The AAL Small Cap Stock Fund
Exhibit 24(b)(10)
OPINION AND CONSENT OF OUTSIDE COUNSEL
Quarles & Brady
Attorneys at Law
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202-4497
Securities and Exchange Commission
Division of Investment Management
Judiciary Plaza
450 5th Street, N.W.
Washington, D.C. 20549
Re: The AAL Mutual Funds (the "Funds")
1933 Act Reg. No. 33-12911
1940 Act File No. 811-5075
CIK #0000811869
Post-Effective Amendment No. 20 To Form N-1A
Filed in Accordance With Rule 485(b)
Ladies and Gentlemen:
This letter is submitted in connection with the filing, pursuant to Rule 485 (b)
under the Securities Act of 1933 (the "1933 Act"), of Post-Effective Amendment
No. 20 under the 1933 Act and Amendment no. 22 under the Investment Company Act
of 1940 (the "1940 Act") (the "Amendment") to the Funds' Registration Statement
on Form N-1A (the "Registration Statement"). The Amendment reflects changes made
to The AAL U.S. Government Zero Coupon Target Funds, Series 2001 and 2006 (the
"Target Funds"). As legal counsel to the Fund, we assisted in the preparation of
the Amendment and we certify that the Amendment does not contain any disclosure
that would render it ineligible to become effective automatically on August 30,
1996, pursuant to Rule 485(b) under the 1933 Act.
The Fund, an open-end management investment company, is organized as a
Massachussetts Business Trust with different series of shares, each of which is
referred to as a fund. The Target Funds are two such series.
The Fund is filing the Amendment to bring the financial statement and other
information included in the Registration Statement up to date and to make such
other non-material changes as the Fund deemed appropriate.
Very truly yours,
/s/ Fredrick G. Lautz
Fredrick G. Lautz
Exhibit 24(b)(11)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 20 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated May 24, 1996, relating to the financial
statements and financial highlights appearing in the April 30, 1996 Annual
Report to Shareholders of The AAL U.S. Government Zero Coupon Target Fund,
Series 2001 and The AAL U.S. Government Zero Coupon Target Fund, Series 2006
(two of the portfolios constituting The AAL Mutual Funds), which are also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the headings "Financial Highlights" and "Custodian,
Transfer Agent and Independent Accountants" in the Prospectus and under the
heading "General" in the Statement of Additional Information.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Milwaukee, Wisconsin
August 20, 1996
THE AAL MUTUAL FUNDS PROTOTYPE
DEFINED CONTRIBUTION PLAN AND TRUST
Copyright 1995 AAL Capital Management Corporation
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
TOP HEAVY PROVISIONS AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS 16
2.2 DETERMINATION OF TOP HEAVY STATUS 16
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER 19
2.4 DESIGNATION OF ADMINISTRATOR 20
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES 21
2.6 RESPONSIBILITIES OF THE ADMINISTRATOR 21
2.7 RECORDS AND REPORTS 21
2.8 APPOINTMENT OF ADVISERS 21
2.9 INFORMATION FROM EMPLOYER 21
2.10 PAYMENT OF FEES AND EXPENSES 22
2.11 MAJORITY ACTIONS 22
2.12 CLAIMS PROCEDURE 22
2.13 CLAIMS REVIEW PROCEDURE 22
2.14 ADMINISTRATOR INDEMNIFICATION 23
<PAGE>
ARTICLE III
ELIGIBILITY
3.1 COMMENCEMENT OF ACTIVE PARTICIPATION 24
3.2 DETERMINATION OF ACTIVE PARTICIPATION 24
3.3 DURATION OF ACTIVE PARTICIPATION 24
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 DETERMINATION OF EMPLOYER'S CONTRIBUTION 25
4.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION 26
4.3 ALLOCATION OF CONTRIBUTIONS, FORFEITURES AND EARNINGS 26
4.4 MAXIMUM ANNUAL ADDITIONS 31
4.5 TRANSFERS FROM QUALIFIED PLANS 38
4.6 VOLUNTARY CONTRIBUTIONS 40
4.7 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS 40
4.8 MANDATORY EMPLOYEE CONTRIBUTIONS 41
4.9 OVERALL PERMITTED DISPARITY LIMITS 41
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND 43
<PAGE>
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT 44
6.2 DETERMINATION OF BENEFITS UPON DEATH 44
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY 45
6.4 DETERMINATION OF BENEFITS UPON TERMINATION 45
6.5 DISTRIBUTION OF BENEFITS 47
6.6 DISTRIBUTION OF BENEFITS UPON DEATH 53
6.7 TIME OF DISTRIBUTION 59
6.8 DISTRIBUTION TO INCOMPETENTS 59
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN 59
6.10 IN-SERVICE DISTRIBUTIONS 60
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP 60
6.12 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS 61
6.13 SPECIAL RULE FOR NON-ANNUITY PLANS 61
6.14 DIRECT ROLLOVERS 62
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE 63
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE 63
7.3 OTHER POWERS OF THE TRUSTEE 63
7.4 PARTICIPANT DIRECTION OF INVESTMENTS 65
7.5 LOANS TO PARTICIPANTS 65
7.6 DUTIES OF THE TRUSTEE REGARDING PAYMENTS 68
7.7 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES 68
7.8 ANNUAL REPORT OF THE TRUSTEE 68
7.9 AUDIT 69
7.10 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE 69
7.11 TRANSFER OF INTEREST 70
7.12 TRUSTEE INDEMNIFICATION 70
7.13 ALLOCATION AND DELEGATION OF RESPONSIBILITIES 71
ARTICLE VIII
AMENDMENT, TERMINATION, AND MERGERS
8.1 AMENDMENT 72
8.2 TERMINATION 73
8.3 MERGER OR CONSOLIDATION 73
ARTICLE IX
MISCELLANEOUS
9.1 EMPLOYER ADOPTIONS 74
9.2 PARTICIPANT'S RIGHTS 74
9.3 ALIENATION 74
9.4 CONSTRUCTION OF PLAN 75
9.5 GENDER AND NUMBER 75
9.6 LEGAL ACTION 75
9.7 PROHIBITION AGAINST DIVERSION OF FUNDS 75
9.8 BONDING 76
9.9 EMPLOYER'S, ADMINISTRATOR'S AND TRUSTEE'S
PROTECTIVE CLAUSE 76
9.10 INSURANCE COMPANY PROTECTIVE CLAUSE 77
9.11 RECEIPT AND RELEASE FOR PAYMENTS 77
9.12 ACTION BY THE EMPLOYER 77
9.13 HEADINGS 77
9.14 APPROVAL BY INTERNAL REVENUE SERVICE 77
9.15 UNIFORMITY 77
9.16 OWNER EMPLOYEES 78
ARTICLE X
PARTICIPATING EMPLOYERS
10.1 ELECTION TO BECOME A PARTICIPATING EMPLOYER 79
10.2 SINGLE TRUST FUND 79
10.3 DESIGNATION OF AGENT 79
10.4 EMPLOYEE TRANSFERS 79
10.5 PARTICIPATING EMPLOYER CONTRIBUTIONS AND FORFEITURES 79
10.6 PLAN EXPENSES 79
10.7 AMENDMENT 79
10.8 DISCONTINUANCE OF PARTICIPATION 79
10.9 EMPLOYER'S AUTHORITY 80
ARTICLE XI
CASH OR DEFERRED PROVISIONS
11.1 DETERMINATION OF EMPLOYER'S CONTRIBUTION 81
11.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION 81
11.3 PARTICIPANT'S DEFERRAL ELECTION 82
11.4 ALLOCATION OF CONTRIBUTION AND FORFEITURES 85
11.5 ACTUAL DEFERRAL PERCENTAGE TESTS 88
11.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS 90
11.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS 93
11.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS 95
11.9 ADVANCE DISTRIBUTION FOR HARDSHIP 97
<PAGE>
ARTICLE I
DEFINITIONS
As used in this Plan, the following words and phrases shall have the meanings
set forth herein unless a different meaning is clearly required by the context:
1.1 "Account" or "Accounts" means the record established and maintained by
the Administrator for each Participant to reflect his allocable portion of the
Trust Fund derived from Employer and Employee contributions to the Plan.
1.2 "Accrued Benefit" means, with respect to each Participant, the value of
all Accounts maintained on his behalf.
1.3 "Act" means the Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.
1.4 "Active Participant" means an Eligible Employee described in Section
3.1.
1.5 "Actual Contribution Percentage" means the percentage determined under
Section 11.7(b). "Actual Contribution Ratio" means the ratio determined under
Section 11.7(b).
1.6 "Actual Deferral Percentage" means the percentage determined under
Section 11.5(b). "Actual Deferral Ratio" means the ratio determined under
Section 11.5(b).
1.7 "Administrator" means the person or persons designated by the Employer
pursuant to Section 2.4.
1.8 "Adoption Agreement" means the separate Agreement which is executed by
the Employer and accepted by the Trustee and which sets forth the elective
provisions of the Plan as specified by the Employer.
1.9 "Affiliat ed Employer" means any corporation which is a member of a
controlled group of corporations (as defined in Code Section 414(b)) which
includes the Employer; any trade or business (whether or not incorporated) which
is under common control (as defined in Code Section 414(c)) with the Employer;
any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Code Section 414(m)) which includes the
Employer; and any other entity required to be aggregated with the Employer
pursuant to Regulations under Code Section 414(o).
1.10 "Alternat e Payee" means any spouse, former spouse, child or other
dependent of a Participant who is recognized by a Domestic Relations Order as
having a right to receive all, or a portion of, the Participant's Accrued
Benefit.
1.11 "Anniversary Date" means the date specified in the Adoption Agreement.
<PAGE>
1.12 "Annuity Starting Date" means the first day of the first period for
which an amount is paid as an annuity or any other form.
1.13 "Beneficiary" means the person to whom a share of a deceased
Participant's Accrued Benefit is payable pursuant to the provisions of Sections
6.2 and 6.6.
1.14 "Code" means the Internal Revenue Code of 1986, as amended or replaced
from time to time.
1.15 "Compensation" means, with respect to any Employee, the 415
Compensation that is actually paid to him during the Plan Year or, in the case
of a Profit Sharing Plan or Money Purchase Plan, during the period specified in
the Adoption Agreement. If specified in the Adoption Agreement, Compensation
shall also include amounts which are not currently includible in the Employee's
gross income by reason of Code Section 125, 402(e)(3), 402(h)(1)(B), or 403(b).
For any Self-Employed Individual, Compensation shall mean his Earned Income.
Unless otherwise provided in the Adoption Agreement, Compensation shall include
only 415 Compensation paid while an Employee is an Active Participant.
The annual Compensation of each Participant taken into account under the Plan
for any Plan Year or such other period specified in the Adoption Agreement shall
not exceed $150,000, as adjusted for increases in the cost-of-living in
accordance with Code Section 401(a)(17)(B). The cost-of-living adjustment in
effect for a calendar year applies to any Plan Year or such other period
beginning in such calendar year. If a Plan Year or such other period consists of
fewer than twelve months the $150,000 limitation (as adjusted) is an amount
equal to the $150,000 limitation (as adjusted) multiplied by a fraction, the
numerator of which is the number of months in the short Plan Year or such other
period and the denominator of which is twelve.
In applying this limitation, a Highly Compensated Employee and any Family
Members of such Highly Compensated Employee shall be treated as a single Highly
Compensated Employee, except that, for this purpose, Family Members shall
include only the Highly Compensated Employee's spouse and any lineal descendants
who have not attained age nineteen before the close of the Plan Year. If the
Compensation of the Employees treated as a single Highly Compensated Employee
exceeds the $150,000 limitation, as adjusted, then such limitation shall be
prorated among the affected Employees in proportion to each such Employee's
Compensation as determined under this Section 1.15 prior to the application of
the immediately preceding paragraph. If, pursuant to the provisions of the
immediately preceding sentence, the amount allocated to an Employee is less than
the amount that would otherwise have been allocated to him if he and the other
affected Employees were not treated as a single Highly Compensated Employee,
then the $150,000 limitation shall be divided among the affected Employees in
such a way as to maximize the amount allocable to each affected Employee.
1.16 "Deferred Compensation" means, with respect to any Active Participant,
that portion of the Active Participant's Compensation which has been contributed
to the Plan in accordance with his deferral election pursuant to Section 11.3.
<PAGE>
1.17 "Determination Date" means, for any Plan Year, the last day of the
preceding Plan Year or, in the case of the first Plan Year, the last day of such
Plan Year. For purposes of Section 2.2, "Determination Date" also means any such
day for any other plan of the Employer or an Affiliated Employer which is taken
into account in determining whether this Plan is a Top Heavy Plan or Super Top
Heavy Plan.
1.18 "Determination Year" means the Plan Year with respect to which a
determination of Highly Compensated Employees is being made pursuant to Section
1.40.
1.19 "Discretionary Non-Elective Contribution" means the Employer's
contributions to the Plan that are made pursuant to Section 11.1(a)(3) and which
are not used to satisfy the Actual Deferral Percentage test or the Actual
Contribution Percentage test. "Discretionary Non-Elective Account" means the
Account to which Discretionary Non-Elective Contributions are allocated.
1.20 "Domestic Relations Order" means any judgement, decree or order
(including approval of a property settlement agreement) which relates to the
provision of child support, alimony payments, or marital property rights to an
Alternate Payee and which is made pursuant to a State domestic relations law
(including a community property law).
1.21 "Early Retirement" means a Participant's termination of employment
occurring on or after the date the Participant has satisfied the age and service
requirements specified in the Adoption Agreement and occurring before he has
attained Normal Retirement Age. A Participant shall become fully Vested in his
Accrued Benefit upon satisfying the requirements for Early Retirement.
Notwithstanding any selection in the Adoption Agreement to the contrary, a
Participant who terminates employment after satisfying the service requirement,
if any, for Early Retirement and who thereafter satisfies the age requirement
for Early Retirement shall be entitled to receive his Accrued Benefit at any
time after satisfying such age requirement.
1.22 "Earned Income" means, with respect to a Self-Employed Individual, the
net earnings from self-employment in the trade or business with respect to which
the Plan is established, for which the personal services of the Self-Employed
Individual are a material income-producing factor. Net earnings will be
determined without regard to items not included in gross income and the
deductions allocable to such items. Net earnings are reduced by contributions by
the Employer to a qualified plan to the extent deductible under Code Section
404. In addition, net earnings shall be determined with regard to the deduction
allowed to the taxpayer by Code Section 164(f).
1.23 "Elective Contribution" means the Employer's contributions to the Plan
that are made pursuant to an Active Participant's deferral election under
Section 11.3. "Elective Account" means the Account to which Elective
Contributions are allocated.
1.24 "Eligible Employee" means any Employee specified in the Adoption
Agreement who is eligible to become an Active Participant.
<PAGE>
1.25 "Employee " means any individual employed by the Employer maintaining
the Plan or any other Affiliated Employer required to be aggregated with the
Employer under Code Sections 414(b), (c), (m) and (o). The term "Employee" shall
also include any Leased Employee deemed to be an Employee of any Employer or
Affiliated Employer described in the immediately preceding sentence as provided
in Code Sections 414(n) and (o).
1.26 "Employer " means the entity specified in the Adoption Agreement, any
Participating Employer which shall adopt this Plan, any successor which shall
maintain this Plan and any predecessor which has maintained this Plan.
1.27 "Employer Contribution Account" means the Account to which, in the
case of a Profit Sharing Plan or Money Purchase Plan, the Employer's
contributions are allocated.
1.28 "Excess Aggregate Contributions" means, with respect to a Plan Year,
the amount by which Matching Contributions, voluntary Employee contributions
made pursuant to Section 4.6 and Excess Contributions recharacterized as
voluntary Employee contributions pursuant to Section 11.6(a)(2) (and, if
applicable, Elective Contributions and Qualified Non-Elective Contributions
treated as Matching Contributions) made on behalf of Active Participants who are
Highly Compensated Employees exceeds the amount of such contributions permitted
under Section 11.7(a).
1.29 "Excess Compensation" means, with respect to a Plan that is integrated
with Social Security, a Participant's Compensation which is in excess of the
integration level specified in the Adoption Agreement.
1.30 "Excess Contributions" means, with respect to a Plan Year, the amount
by which Elective Contributions, (and, if applicable, Qualified Matching
Contributions and Qualified Non-Elective Contributions treated as Elective
Contributions) made on behalf of Active Participants who are Highly Compensated
Employees exceeds the amount of such contributions permitted under Section
11.5(a).
1.31 "Excess Deferred Compensation" means, with respect to any taxable year
of a Participant, the amount by which such Active Participant's Deferred
Compensation and any other elective deferrals pursuant to Section 11.3 actually
made on behalf of such Active Participant for such taxable year exceeds the
dollar limitation provided for in Code Section 402(g), which is incorporated
herein by reference.
1.32 "Family Member" means an Employee, who during the Determination Year
or Look-Back Year, is the spouse or lineal descendant or ascendant (or the
spouse thereof of either) of either a Five Percent Owner who is an active or
former Employee or one of the ten Highly Compensated Employees paid the greatest
415 Compensation. For purposes of this Section 1.32, the determination of 415
Compensation shall be made by including amounts that would otherwise be excluded
from gross income by reason of Code Sections 125, 402(e)(3), 402(h)(1)(B) and,
in the case of Employer contributions made pursuant to a salary reduction
agreement, Code Section 403(b).
<PAGE>
1.33 "Fiduciary" means 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 monies or other property of the Plan or has any
authority or responsibility to do so, or (c) has any discretionary authority or
discretionary responsibility in the administration of the Plan.
1.34 "Fiscal Year" means the Employer's accounting year as specified in the
Adoption Agreement.
1.35 "Five Percent Owner" means any individual who owns (or is considered
as owning within the meaning of Code Section 318) more than five percent of the
outstanding stock of the Employer or an Affiliated Employer or stock possessing
more than five percent of the total combined voting power of all stock of the
Employer or an Affiliated Employer or, in the case of an unincorporated
business, any individual who owns more than five percent of the capital or
profits interest in the Employer or an Affiliated Employer. In determining
percentage ownership hereunder, the Employer or any Affiliated Employer shall
not be treated as having Affiliated Employers.
1.36 "Fixed Non-Elective Contribution" means the Employer's contributions
to the Plan that are made pursuant to Section 11.1(a)(4) and which are not used
to satisfy the Actual Deferral Percentage test or the Actual Contribution
Percentage test. "Fixed Non-Elective Account" means the Account to which Fixed
Non-Elective Contributions are allocated.
1.37 "Forfeiture" means that portion of a Participant's Accrued Benefit
that is not Vested and which occurs on the earlier of:
(a)the distribution of the Participant's Vested Accrued Benefit, or
(b)the last day of the Plan Year in which the Participant incurs five
consecutive 1-Year Breaks in Service.
For purposes of Section 1.37(a), in the case of a Participant whose Vested
Accrued Benefit is zero, such Participant shall be deemed to have received a
distribution of his Vested Accrued Benefit upon his termination of employment.
In addition, the term Forfeiture shall also include amounts deemed to be
Forfeitures pursuant to any other provision of this Plan.
1.38 "414(s) Compensation" means, with respect to any Employee, the 415
Compensation paid to him during a Plan Year, except that, for any Plan Year, the
Employer may elect to take into account only 415 Compensation paid while an
Employee is an Active Participant. Any such election must apply, on a uniform
and consistent basis, to all Employees who are Active Participants during such
Plan Year.
In addition, if specified in the Adoption Agreement, 414(s) Compensation shall
also include amounts which are not currently includible in the Participant's
gross income by reason of Code Section 125, 402(e)(3), 402(h)(1)(B), or 403(b).
<PAGE>
The annual 414(s) Compensation of each Participant for any Plan Year shall not
exceed $150,000, as adjusted for increases in the cost-of-living in accordance
with Code Section 401(a)(17)(B). The cost-of-living adjustment in effect for a
calendar year applies to any Plan Year beginning in such calendar year. If a
Plan Year consists of fewer than twelve months the $150,000 limitation (as
adjusted) is an amount equal to the $150,000 limitation (as adjusted) multiplied
by a fraction, the numerator of which is the number of months in the short
determination period, and the denominator of which is twelve.
In applying this limitation, a Highly Compensated Employee and any Family
Members of such Highly Compensated Employee shall be treated as a single Highly
Compensated Employee, except that, for this purpose, Family Members shall
include only the Highly Compensated Employee's spouse and any lineal descendants
who have not attained age nineteen before the close of the Plan Year. If the
414(s) Compensation of the Employees treated as a single Highly Compensated
Employee exceeds the $150,000 limitation, as adjusted, then such limitation
shall be prorated among the affected Employees in proportion to each such
Employee's 414(s) Compensation as determined under this Section 1.38 prior to
the application of the immediately preceding paragraph.
1.39 "415 Compensation" means the amounts described in Section 4.4(f)(2).
1.40 "Highly Compensated Employee" means an Employee who performs services
for the Employer or an Affiliated Employer or both during the Determination Year
and is in one or more of the following groups:
(a) Employees who at any time during the Determination Year or Look-Back
Year were Five Percent Owners.
(b) Employees who received 415 Compensation during the Look-Back Year from
the Employer or Affiliated Employer or both in excess of $75,000.
(c) Employees who received 415 Compensation during the Look-Back Year from
the Employer or Affiliated Employer or both in excess of $50,000 and
were in the Top Paid Group of Employees for the Look-Back Year.
(d) Employees who during the Look-Back Year were officers of the Employer
or Affiliated Employer or both (as that term is defined within the
meaning of the Regulations under Code Section 416) and received 415
Compensation during the Look-Back Year from the Employer or Affiliated
Employer or both which was greater than fifty percent of the limit in
effect under Code Section 415(b)(1)(A) for the calendar year in which
such Look-Back Year begins. The number of officers shall be limited to
the lesser of (i) fifty Employees or (ii) the greater of three
Employees or ten percent of all Employees. If there is no officer
whose 415 Compensation is in excess of fifty percent of the Code
Section 415(b)(1)(A) limit, then the highest paid officer of the
Employer or Affiliated Employer or both will be treated as a Highly
Compensated Employee.
<PAGE>
(e) Employees who are in the group consisting of the 100 Employees paid
the greatest 415 Compensation during the Determination Year and are
also described in Section 1.40(b), (c) or (d) when each such Section
is modified to substitute Determination Year for Look-Back Year.
For purposes of this Section 1.40, the determination of 415 Compensation shall
be made by including amounts that would otherwise be excluded from an Employee's
gross income by reason of Code Sections 125, 402(e)(3), 402(h)(1)(B) and, in the
case of Employer contributions made pursuant to a salary reduction agreement,
Code Section 403(b). Additionally, the dollar threshold amounts specified in
Sections 1.40(b) and (c) shall be adjusted at such time and in such manner as is
provided in Regulations. In the case of such an adjustment, the dollar threshold
amounts applicable are those for the calendar year in which the Determination
Year or Look Back Year begins.
In determining who is a Highly Compensated Employee, Employees who are
non-resident aliens and who receive no earned income (within the meaning of Code
Section 911(d)) from the Employer or Affiliated Employer or both constituting
United States source income within the meaning of Code Section 861(a)(3) shall
not be treated as Employees. Additionally, Leased Employees shall be considered
Employees for purposes of this Section 1.40 unless such Leased Employees are
covered by a plan described in Code Section 414(n)(5) and are not covered in any
qualified plan maintained by the Employer or any Affiliated Employer. Also, a
Highly Compensated Employee and any Family Members shall be treated as a single
Highly Compensated Employee receiving Compensation and contributions under the
Plan equal to the sum of such Compensation and contributions of the Highly
Compensated Employee and any Family Members. Finally, Highly Compensated Former
Employees shall be treated as Highly Compensated Employees without regard to
whether they performed services during the Determination Year.
1.41 "Highly Compensated Former Employee" means a former Employee who had a
separation year (as that term is defined within the meaning of Regulations under
Code Section 414(q)) prior to the Determination Year and was a Highly
Compensated Employee in the Determination Year in which he terminated employment
or in any Determination Year ending on or after attaining age fifty-five.
Notwithstanding the foregoing, an Employee who separated from service prior to
1987 will be treated as a Highly Compensated Former Employee only if during the
separation year (or the year preceding the separation year) or any Determination
Year ending on or after the Employee attains age fifty-five (or the last
Determination Year ending before the Employee's fifty-fifth birthday), the
Employee either received 415 Compensation in excess of $50,000 or was a Five
Percent Owner.
1.42 "Hour of Service" means (a) each hour for which an Employee is
directly or indirectly compensated or entitled to compensation by the Employer
for the performance of duties during the applicable computation period; (b) each
hour for which an Employee is directly or indirectly compensated or entitled to
compensation by the Employer (irrespective of whether the employment
relationship has terminated) for reasons other than performance of duties (such
as vacation, holidays, sickness, jury duty, disability, lay-off, military duty
or leave of absence) during the applicable computation period; (c) each hour for
which back pay is awarded or agreed to by the Employer without regard to
mitigation of damages. The same Hours of Service shall not be credited both
under (a) or (b), as the case may be, and under (c).
<PAGE>
Notwithstanding the above, no more than 501 Hours of Service are required to be
credited 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). An hour for which an Employee is directly or indirectly
paid, or entitled to payment, on account of a period during which no duties are
performed is not required to be credited to the Employee if such payment is made
or due under a plan maintained solely for the purpose of complying with
applicable worker's compensation or unemployment compensation or disability
insurance laws. Hours of Service are not required to be credited for a payment
which solely reimburses an Employee for medical or medically related expenses
incurred by the Employee.
For purposes of this Section 1.42, a payment shall be deemed to be made by or
due from the Employer regardless of whether such payment is made by or due from
the Employer directly, or indirectly through, among others, a trust fund or
insurer, to which the Employer contributes or pays premiums, and regardless of
whether contributions made or due to the trust fund, insurer, or other entity
are for the benefit of particular Employees or are on behalf of a group of
Employees in the aggregate.
Hours of Service will be credited for employment with other members of an
affiliated service group (under Code Section 414(m)), a controlled group of
corporations (under Code Section 414(b)), or a group of trades or businesses
under common control (under Code Section 414(c)) of which the Employer is a
member, and any other entity required to be aggregated with the Employer
pursuant to Code Section 414(o) and the regulations thereunder.
Hours of Service will also be credited for any individual considered an Employee
for purposes of this Plan under Code Sections 414(n) and (o) and the regulations
thereunder.
Hours of Service will be determined on the basis of the method selected in the
Adoption Agreement. The provisions of Department of Labor regulations
2530.200b-2 are incorporated herein by reference.
1.43 "Joint and Survivor Annuity" means, in the case of a married
Participant, an annuity for the life of a Participant with a survivor annuity
for the life of the Participant's spouse which is not less than fifty percent,
nor greater than 100% of the amount of the annuity payable during the joint
lives of the Participant and the Participant's spouse. In the case of an
unmarried Participant, "Joint and Survivor Annuity" means a straight life
annuity which is an annuity payable in equal installments for the life of the
Participant and that terminates upon the Participant's death. The amount of the
Joint and Survivor Annuity will be the amount of benefit which can be purchased
with the Participant's Vested Accrued Benefit under the Plan.
1.44 "Key Employee" means an Employee as defined in Code Section 416(i) and
the Regulations thereunder. Generally, any Employee or former Employee (as well
as each of his Beneficiaries) is considered a Key Employee if he, at any time
during the Plan Year that contains the Determination Date or any of the
preceding four Plan Years, has been included in one of the following categories:
(a) An officer of the Employer or an Affiliated Employer or both (as that
term is defined within the meaning of the Regulations under Code
Section 416) having annual 415 Compensation greater than fifty percent
of the amount in effect under Code Section 415(b)(1)(A) for the
calendar year in which such Plan Year ends.
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(b) One of the ten Employees having annual 415 Compensation from the
Employer or Affiliated Employer or both for a Plan Year greater than
the dollar limitation in effect under Code Section 415(c)(1)(A) for
the calendar year in which such Plan Year ends and owning (or
considered as owning within the meaning of Code Section 318) both more
than a one-half percent interest and the largest interests in the
Employer or an Affiliated Employer. In determining percentage
ownership hereunder, the Employer or any Affiliated Employer shall not
be treated as having Affiliated Employers.
(c) A Five Percent Owner.
(d) A one percent owner of the Employer having annual 415 Compensation
from the Employer or Affiliated Employer or both of more than
$150,000. The term "one percent owner" means any individual who owns
(or is considered as owning within the meaning of Code Section 318)
more than one percent of the outstanding stock of the Employer or an
Affiliated Employer or stock possessing more than one percent of the
total combined voting power of all stock of the Employer or an
Affiliated Employer or, in the case of an unincorporated business, any
individual who owns more than one percent of the capital or profits
interest in the Employer or an Affiliated Employer. In determining
percentage ownership hereunder, the Employer or any Affiliated
Employers shall not be treated as having Affiliated Employers.
For purposes of this Section 1.44, the determination of 415 Compensation shall
be made by including amounts that would otherwise be excluded from a
Participant's gross income by reason of the application of Code Sections 125,
402(e)(3), 402(h)(1)(B) and, in the case of Employer contributions made pursuant
to a salary reduction agreement, Code Section 403(b).
1.45 "Leased Employee" means any individual (other than an employee of the
recipient) who pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the recipient (or for
the recipient and related persons determined in accordance with Code Section
414(n)(6) on a substantially full time basis for a period of at least one year,
and such services are of a type historically performed by employees in the
business field of the recipient employer. 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: (a)
such employee is covered by a money purchase pension plan providing: (i) a
nonintegrated employer contribution rate of at least ten percent of
compensation, as defined in Code Section 415(c)(3), but including amounts
contributed pursuant to a salary reduction agreement which are excludable from
the employee's gross income under Code Section 125, 402(e)(3), 402(h)(1)(B) or
403(b), (ii) immediate participation, and (iii) full and immediate vesting; and
(b) Leased Employees do not constitute more than 20 percent of the recipients's
nonhighly compensated work force.
1.46 "Look-Back Year" means the twelve-month period immediately preceding
the Determination Year.
<PAGE>
1.47 "Matching Contribution" means the Employer's contributions to the Plan
that are made pursuant to Section 11.1(a)(2) and which are not used to satisfy
the Actual Deferral Percentage test. "Matching Account" means the Account to
which Matching Contributions are allocated.
1.48 "Maximum Excess Percentage" means the greater of five and seven-tenths
percent or the percentage equal to the portion of the rate of tax under Code
Section 3111(a) in effect at the beginning of the Plan Year or, in the case of a
Profit Sharing Plan or Money Purchase Plan, at the beginning of the period
specified in the Adoption Agreement for determining a Year of Service for
purposes of entitlement to an allocation; provided, however, that if the
integration level specified in the Adoption Agreement is less than the Taxable
Wage Base in effect at the beginning of the Plan Year or such other period, the
Maximum Excess Percentage will be determined according to the table below:
Integration Level Maximum Excess Percentage
Less than the Taxable Wage 5.4%
Base but greater than
eighty percent of the
Taxable Wage Base
Not greater than eighty 4.3%
percent of the Taxable
Wage Base but greater than
twenty percent of the
Taxable Wage Base
Not greater than twenty 5.7%
percent of the Taxable
Wage Base
Notwithstanding the foregoing to the contrary, the Employer may specify in the
Adoption Agreement a Maximum Excess Percentage that is less than the Maximum
Excess Percentage determined under this Section 1.48.
1.49 "Net Profit" means, with respect to any Fiscal Year, the Employer's
net income or profit for such Fiscal Year determined upon the basis of the
Employer's books of account in accordance with generally accepted accounting
principles, without any reduction for taxes based upon income, or for
contributions made by the Employer to this Plan or any other qualified plan.
1.50 "Non-Elective Accounts" means a Participant's Fixed Non-Elective
Account, Discretionary Non-Elective Account and Qualified Non-Elective Account.
1.51 "Non-Highly Compensated Employee" means any Employee who is not a
Highly Compensated Employee.
1.52 "Non-Key Employee" means any Employee or former Employee (and his
Beneficiaries) who is not a Key Employee.
1.53 "Normal Retirement Age" means the time specified in the Adoption
Agreement when a Participant shall become fully Vested in his Accrued Benefit.
If the Employer enforces a mandatory retirement age, the Normal Retirement Age
is such mandatory retirement age if it occurs earlier than the time specified in
the Adoption Agreement.
<PAGE>
1.54 "Normal Retirement" means a Participant's termination of employment
occurring on or after his attainment of Normal Retirement Age.
1.55 "1-Year Break in Service" means the period specified in the Adoption
Agreement for determining a Year of Service for vesting purposes during which an
Employee has not completed more than 500 Hours of Service or such lesser number
of Hours of Service as specified by the Employer in the Adoption Agreement.
Further, solely for the purpose of determining whether an Employee has incurred
a 1-Year Break in Service, Hours of Service shall be recognized for authorized
leaves of absence and maternity and paternity leaves of absence. The term
"authorized leave of absence" means an unpaid, temporary cessation from active
employment with the Employer or any Affiliated Employer pursuant to an
established nondiscriminatory policy, whether occasioned by illness, military
service, or any other reason. The term "maternity or paternity leave of absence"
means, for Plan Years beginning after December 31, 1984, an absence from work
for any period by reason of the Employee's pregnancy, birth of the Employee's
child, placement of a child with the Employee in connection with the adoption of
such child, or any absence for the purpose of caring for such child for a period
immediately following such birth or placement. For this purpose, Hours of
Service shall be credited for the Plan Year in which the absence from work
begins only if credit therefor is necessary to prevent the Employee from
incurring a 1-Year Break in Service or, in any other case, in the immediately
following Plan Year. The Hours of Service credited for a maternity or paternity
leave of absence shall be those which would normally have been credited but for
such absence or, in any case in which the Administrator is unable to determine
such hours normally credited, eight Hours of Service per day. The total Hours of
Service required to be credited for a maternity or paternity leave of absence
shall not exceed 501.
1.56 "Owner-Employee" means a sole proprietor who owns the entire interest
in the Employer or a partner who owns more than ten percent of either the
capital interest or the profits interest in the Employer and who receives income
for personal services from the Employer.
1.57 "Paired Plans" means the Employer has adopted two or more of the
following Standardized Adoption Agreements: (a) Profit Sharing Plan (Paired Plan
#03-001), (b) Money Purchase Plan (Paired Plan #03-002) and (c) 401(k) Profit
Sharing Plan (Paired Plan #03-003).
1.58 "Participant" means any individual who is an Active Participant or who
has an Accrued Benefit under the Plan.
1.59 "Participating Employer" means any entity which shall adopt this Plan
pursuant to the provisions of Article X.
1.60 "Plan" means this instrument (hereinafter referred to as The AAL
Mutual Funds Prototype Defined Contribution Plan and Trust Basic Plan Document
#01), including all amendments thereto, and the Adoption Agreement as adopted by
the Employer.
1.61 "Plan Year" means the twelve consecutive month period as specified in
the Adoption Agreement.
1.62 "Pre-Retirement Survivor Annuity" means an immediate annuity for the
life of the Participant's spouse, the value of which must be equal to fifty
percent of the Participant's Accrued Benefit under the Plan as of the date of
death.
<PAGE>
1.63 "Qualified Domestic Relations Order" means a Domestic Relations Order
which meets the requirements of the following paragraphs:
(a) The Domestic Relations Order creates or recognizes the existence of an
Alternate Payee's right to, or assigns to an Alternate Payee the right
to, receive all or a portion of a Participant's Accrued Benefit under
the Plan.
(b) The Domestic Relations Order clearly specifies the facts described in
the following subparagraphs:
(1) The name and last known mailing address, if any, of the
Participant and the name and mailing address of each Alternate
Payee covered by the Domestic Relations Order;
(2) The amount or percentage of the Participant's Accrued Benefit to
be paid by the Plan to each Alternate Payee, or the manner in
which such amount or percentage is to be determined;
(3) The number of payments or period to which the Domestic Relations
Order applies; and
(4) The plans (including this Plan) to which the Domestic Relations
Order applies.
(c) The Domestic Relations Order does not contain any of the
provisions described in the following subparagraphs:
(1) Except as provided in Section 6.12, any type or form of
benefit, or any option, which is not otherwise provided
for under the Plan;
(2) The payment of benefits to an Alternate Payee that have
a value exceeding the Participant's Vested Accrued
Benefit.
(3) The payment of benefits to an Alternate Payee if such
benefits are required to be paid to another Alternate
Payee under another Domestic Relations Order which has
previously been determined to be a Qualified Domestic
Relations Order.
1.64 "Qualified Matching Contribution" means Matching Contributions which
are used to satisfy the Actual Deferral Percentage test. Qualified Matching
Contributions are nonforfeitable when made and are distributable only as
specified in Sections 11.3(e) and 11.9. "Qualified Matching Account" means the
Account to which Qualified Matching Contributions are allocated. A Participant's
Qualified Matching Account shall be fully vested and shall not be subject to
Forfeiture for any reason other than Section 6.9.
<PAGE>
1.65 "Qualified Non-Elective Contribution" means Fixed Non-Elective
Contributions which are used to satisfy the Actual Deferral Percentage test or
the Actual Contribution Percentage test. Qualified Non-Elective Contributions
are nonforfeitable when made and are distributable only as specified in Sections
11.3(e) and 11.9. In addition, the Employer's contributions to the Plan that are
made pursuant to Sections 11.6(b) and 11.8(g) and which are used to satisfy the
Actual Deferral Percentage test or the Actual Contribution Percentage test shall
be considered Qualified Non-Elective Contributions. "Qualified Non-Elective
Account" means the Account to which Qualified Non-Elective Contributions are
allocated. A Participant's Qualified Non-Elective Account shall be fully vested
at all times and shall not be subject to Forfeiture for any reason other than
Section 6.9.
1.66 "Qualified Voluntary Employee Contribution Account" means the Account
to which a Participant's tax deductible qualified voluntary employee
contributions made pursuant to Section 4.7 have been allocated.
1.67 "Regulation" means the Income Tax Regulations as promulgated by the
Secretary of the Treasury or his delegate, and as amended from time to time.
1.68 "Rollover Account" means the Account to which amounts transferred from
another qualified plan or individual retirement account are allocated in
accordance with Section 4.5.
1.69 "Self-Employed Individual" means an individual who has Earned Income
for the taxable year from the trade or business with respect to which the Plan
is established and, also, an individual who would have had Earned Income but for
the fact that the trade or business has no Net Profits for the taxable year. A
Self-Employed Individual shall be treated as an Employee.
1.70 "Shareholder-Employee" means an Employee who owns more than five
percent of the Employer's outstanding capital stock during any Fiscal Year in
which the Employer elected to be taxed as a small business corporation under
Subchapter S of the Code.
1.71 "Super Top Heavy Plan" means a plan described in Section 2.2(a).
1.72 "Taxable Wage Base" means, with respect to any Plan Year or other
period specified in the Adoption Agreement, the contribution and benefit base
under Section 230 of the Social Security Act at the beginning of such Plan Year
or other period.
1.73 "Top Heavy Plan" means a plan described in Section 2.2(a).
1.74 "Top Heavy Plan Year" means a Plan Year commencing after December 31,
1983, during which the Plan is a Top Heavy Plan.
<PAGE>
1.75 "Top Paid Group" means the top twenty percent of Employees who
performed services for the Employer or any Affiliated Employer or both during
the Determination Year or Look-Back Year, as the case may be, ranked according
to the amount of 415 Compensation (as determined pursuant to Section 1.40)
received from the Employer or any Affiliated Employer or both during such
Determination or Look-Back Year. All Leased Employees shall be considered
Employees unless such Leased Employees are covered by a plan described in Code
Section 414(n)(5) and are not covered in any qualified plan maintained by the
Employer or any Affiliated Employer. Employees who are non-resident aliens and
who receive no earned income (within the meaning of Code Section 911(d)(2))
constituting United States source income within the meaning of Code Section
861(a)(3) shall not be treated as Employees. Additionally, for the purpose of
determining the number of Employees in the Determination Year or Look-Back Year,
the following additional Employees shall also be excluded; however, such
Employees shall still be considered for the purpose of identifying the
particular Employees in the Top Paid Group:
(a) Employees who have not been employed for six months by the end of such
year;
(b) Employees who normally work less than seventeen and one-half hours per
week for such year;
(c) Employees who normally work less than seven months during such year;
and
(d) Employees who have not attained age twenty-one by the end of such
year.
In addition, if ninety percent or more of the Employees of the Employer and any
Affiliated Employers are covered under agreements the Secretary of Labor finds
to be collective bargaining agreements between Employee representatives and the
Employer or any Affiliated Employer or both, and the Plan covers only Employees
who are not covered under such agreements, then Employees covered by such
agreements shall be excluded from both the total number of Employees and from
the identification of particular Employees in the Top Paid Group.
The Employer may elect to modify Sections 1.75(a) through (d) by substituting
any shorter period of service or lower age than that specified therein. The
Employer may also elect to disregard the provisions of the immediately preceding
paragraph relating to Employees covered under collective bargaining agreements.
Any such elections must be made on a consistent and uniform basis and must apply
to all qualified retirement benefit plans and employee benefit plans maintained
by the Employer or any Affiliated Employer or both with respect to which the
definition of Highly Compensated Employee is applicable.
1.76 "Total and Permanent Disability" means the inability to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or which has lasted or
can be expected to last for a continuous period of not less than twelve months.
The disability of a Participant shall be determined by a licensed physician
chosen by the Employer. However, if the condition constitutes total disability
under the Social Security Act, the Employer may rely upon such determination
that the Participant is Totally and Permanently Disabled for the purposes of
this Plan. The determination of Total and Permanent Disability shall be applied
uniformly to all Participants.
<PAGE>
1.77 "Trustee" means the person or persons named in the Adoption Agreement
and any successors.
1.78 "Trust Fund" means the fund maintained by the Trustee for the
investment of Plan assets.
1.79 "Valuation Date" means the Anniversary Date and such other date or
dates deemed necessary by the Employer for the purpose of valuing the Trust
Fund. The selection by the Employer of a Valuation Date other than the
Anniversary Date shall be made only if the use of such Valuation Date will not
result in discrimination in favor of Highly Compensated Employees.
1.80 "Vested" means the nonforfeitable portion of a Participant's Accrued
Benefit or any of his Accounts.
1.81 "Voluntary Contribution Account" means the Account to which a
Participant's nondeductible voluntary contributions made pursuant to Section 4.6
are allocated.
1.82 "Year of Service" means the computation period of twelve consecutive
months herein set forth and during which an Employee has completed the number of
Hours of Service specified in the Adoption Agreement.
For purposes of eligibility for participation, the initial computation period
shall begin with the date on which the Employee first performs an Hour of
Service (employment commencement date). Each subsequent computation period shall
begin, as specified in the Adoption Agreement, on the anniversary of the
Employee's employment commencement date or on the first day of the Plan Year
beginning with the Plan Year which includes the first anniversary of his
employment commencement date.
For purposes of vesting, the computation period shall be the Plan Year or, in
the case of the Profit Sharing Plan or Money Purchase Plan, any other
twelve-month period specified in the Adoption Agreement. If there is a change in
the computation period, the twelve-month period ending on the day immediately
preceding the first day of the new computation period shall also be considered a
computation period.
For purposes of determining a Participant's entitlement to an allocation under
Section 4.3, the computation period shall be the Plan Year or, in the case of
the Profit Sharing Plan or Money Purchase Plan, any other twelve-month period
specified in the Adoption Agreement. If a computation period is less than twelve
months, the determination of whether an Employee has completed a Year of Service
for purposes of entitlement to an allocation shall be proportionately reduced
based on the number of days in the short computation period.
Years of Service with any predecessor employer which maintained this Plan shall
be recognized. Years of Service with any other employer shall be recognized as
specified in the Adoption Agreement.
Years of Service with any Affiliated Employer shall be recognized.
ARTICLE II
TOP HEAVY PROVISIONS AND ADMINISTRATION
2.1 TOP HEAVY PLAN REQUIREMENTS
For any Top Heavy Plan Year, the Plan shall provide the special vesting
requirements of Code Section 416(b) pursuant to Section 6.4(c) of the Plan and
the special minimum contribution requirements of Code Section 416(c) pursuant to
Section 4.3(d).
2.2 DETERMINATION OF TOP HEAVY STATUS
(a) This Plan shall be a Top Heavy Plan for any Plan Year beginning after
December 31, 1983, in which, as of the Determination Date, the
Aggregate Accounts of Key Employees under this Plan exceed sixty
percent of the Aggregate Accounts of all Key and Non-Key Employees
under this Plan. This Plan shall be a Super Top Heavy Plan for any
Plan Year beginning after December 31, 1983, in which, as of the
Determination Date, the Aggregate Accounts of Key Employees under this
Plan exceed ninety percent of the Aggregate Accounts of all Key and
Non-Key Employees under this Plan. This Plan shall also be a Top Heavy
Plan or Super Top Heavy Plan if this Plan is part of an Aggregation
Group which is a Top Heavy Group or a Super Top Heavy Group.
(b) If any Employee is a Non-Key Employee for any Plan Year, but was a Key
Employee for any prior Plan Year, such Employee's Present Value of
Accrued Benefit and Aggregate Account shall not be taken into account
for the purpose of determining whether this Plan is a Top Heavy Plan
or a Super Top Heavy Plan. In addition, if an Employee has not
performed any services for the Employer or any Affiliated Employer at
any time during the five year period ending on the Determination Date,
the Present Value of Accrued Benefit and Aggregate Account of such
Employee shall not be taken into account for the purpose of
determining whether this Plan is a Top Heavy Plan or a Super Top Heavy
Plan.
(c) An Employee's Aggregate Account as of any Determination Date shall be
the value of his accounts under all defined contribution plans
(including this Plan) maintained by the Employer or any Affiliated
Employer as of the most recent valuation date occurring within the
twelve month period ending on the Determination Date adjusted as
follows:
(1) An Employee's accounts shall be reduced by any amount
attributable to qualified voluntary employee contributions;
(2) An Employee's accounts shall be increased by any contributions
due as of the Determination Date. In the case of a plan not
subject to Code Section 412, the amount of contributions due as
of a Determination Date shall be the amount of any contributions
actually made after the valuation date but before the
Determination Date, except for the first Plan Year when the
amount of contributions due as of a Determination Date shall
include the amount of any
<PAGE>
contributions made after the Determination Date that are
allocated as of a date in that first Plan Year. In the case of a
plan subject to Code Section 412, the amount of contributions due
as of a Determination Date shall include contributions that would
be allocated as of a date not later than the Determination Date,
even though such contributions are not yet made or required to be
made.
(3) An Employee's accounts shall be increased by any distributions
made within a plan year that includes the Determination Date or
within the four preceding plan years. However, in the case of
distributions made after a valuation date and prior to the
Determination Date, such distributions are not taken into account
to the extent that such distributions are already reflected in
the value of an Employee's account as of the valuation date. In
the case of a distribution of an annuity contract, the amount of
such distribution is deemed to be the current actuarial value of
the contract, determined on the date of its distribution. All
distributions, including distributions made prior to plan years
beginning on or after January 1, 1984, and distributions under a
terminated plan which if it had not been terminated would have
been required to be included in an Aggregation Group, will also
be taken into account.
(4) With respect to unrelated rollovers and plan-to-plan transfers
(ones which are both initiated by an Employee and made from a
plan maintained by one employer to a plan maintained by another
employer), in the case of the transferor plan, such rollovers or
plan-to-plan transfers shall be treated as distributions for
purposes of this Section 2.2. In the case of the transferee plan,
such rollovers or plan-to-plan transfers accepted after December
31, 1983, shall not be included as part of an Employee's
accounts. However, rollovers or plan-to-plan transfers accepted
prior to January 1, 1984, shall be included as part of an
Employee's accounts.
(5) With respect to related rollovers and plan-to-plan transfers
(ones either not initiated by the Employee or made to a plan
maintained by the same employer), in the case of the transferor
plan, such rollovers or plan-to-plan transfers shall not be
treated as distributions for purposes of this Section 2.2. In the
case of the transferee plan, such rollovers or plan-to-plan
transfers shall be included as part of an Employee's accounts,
irrespective of the date on which the rollover or plan-to-plan
transfer is accepted.
(6) In determining whether two employers are to be treated as the
same employer for purposes of Sections 2.2(c)(4) and (5), the
Employer and any Affiliated Employer shall be treated as the same
employer.
<PAGE>
(d) The term "Aggregation Group" means either a Required
Aggregation Group or a Permissive Aggregation Group as
hereinafter defined.
(1) Each qualified plan of the Employer or any Affiliated Employer,
including for this purpose any Simplified Employee Pension Plan,
within the meaning of Code Section 408(k), in which a Key
Employee is a participant in the plan year containing the
Determination Date or any of the four preceding plan years, and
each other qualified plan of the Employer or an Affiliated
Employer, which enables any qualified plan in which a Key
Employee participates to meet the requirements of Code Section
401(a)(4) or 410(b), will be required to be aggregated. Such a
group shall be known as a Required Aggregation Group. In the case
of a Required Aggregation Group, each plan in the group will be
considered a Top Heavy Plan or Super Top Heavy Plan if the
Required Aggregation Group is a Top Heavy Group or Super Top
Heavy Group. No plan in the Required Aggregation Group will be
considered a Top Heavy Plan or Super Top Heavy Plan if the
Required Aggregation Group is not a Top Heavy Group or Super Top
Heavy Group.
(2) The Employer may also include any other plan of the Employer or
an Affiliated Employer, including any Simplified Employee Pension
Plan, within the meaning of Code Section 408(k), not required to
be included in the Required Aggregation Group, provided the
resulting group, taken as a whole, would continue to satisfy the
provisions of Code Sections 401(a)(4) and 410(b). Such a group
shall be known as a Permissive Aggregation Group. In the case of
a Permissive Aggregation Group, only a plan that is part of the
Required Aggregation Group will be considered a Top Heavy Plan or
Super Top Heavy Plan if the Permissive Aggregation Group is a Top
Heavy Group or Super Top Heavy Group. No plan in the Permissive
Aggregation Group will be considered a Top Heavy Plan or Super
Top Heavy Plan if the Permissive Aggregation Group is not a Top
Heavy Group or Super Top Heavy Group.
(3) Only those plans of the Employer or an Affiliated Employer whose
Determination Dates fall within the same calendar year shall be
aggregated in order to determine whether an Aggregation Group is
a Top Heavy Group or Super Top Heavy Group.
(4) An Aggregation Group shall include any terminated plan of the
Employer or an Affiliated Employer if it was maintained within
the last five plan years ending on the Determination Date.
(e) The term "Present Value of Accrued Benefit," in the case of a defined
benefit plan, shall be determined as follows:
<PAGE>
(1) In the case of an Employee other than a Key Employee, by using
the single accrual method used for all plans of the Employer and
any Affiliated Employer or, if no such single method exists, by
using a method which results in benefits accruing not more
rapidly than the slowest accrual rate permitted under Code
Section 411(b)(1)(C);
(2) As of the most recent valuation date occurring within the twelve
month period ending on the Determination Date;
(3) For the first plan year, as if (i) an Employee terminated
employment on the Determination Date or (ii) the Employee
terminated employment on the valuation date, but taking into
account the estimated accrued benefit under the defined benefit
plan as of the Determination Date. For the second plan year, the
accrued benefit under the defined benefit plan taken into account
for an Employee must not be less than the accrued benefit taken
into account for the first plan year unless the difference is
attributable to using an estimate of the accrued benefit as of
the Determination Date for the first plan year and using the
actual accrued benefit for the second plan year. For any other
plan year, as if the Employee terminated employment on the
valuation date.
(4) The valuation date must be the same date used for computing
minimum funding costs for the defined benefit plan, regardless of
whether a valuation is performed for the plan year of the defined
benefit plan.
(5) The present value of an Employee's accrued benefit under the
defined benefit plan shall be determined by using the actuarial
assumptions specified in the Adoption Agreement.
(f) The term "Top Heavy Group" means an Aggregation Group in which, as of
the Determination Date, the sum of (1) the Present Value of Accrued
Benefits of Key Employees under all defined benefit plans included in
the Group and (2) the Aggregate Accounts of Key Employees under all
defined contribution plans included in the Group exceeds sixty percent
of a similar sum determined for all Employees. A "Super Top Heavy
Group" shall be determined in the same manner as a Top Heavy Group
except that ninety percent shall be substituted for sixty percent.
(g) The Administrator shall determine whether this Plan is a Top Heavy
Plan. Such determination shall be in accordance with Code Section 416
and the Regulations thereunder.
2.3 POWERS AND RESPONSIBILITIES OF THE EMPLOYER
(a) The Employer shall be empowered to appoint and remove the Trustee and
the Administrator from time to time as it deems necessary for the
proper administration of the Plan.
<PAGE>
(b) The Employer shall establish a funding policy and method. Thus, the
Employer shall determine whether the Plan has a short run need for
liquidity (for example, to pay benefits) or whether liquidity is a
long run goal and investment growth (and stability of same) is a more
current need. The Employer shall communicate such needs and goals to
the Trustee, if he shall have any investment decision making
responsibility, in order to coordinate the investment of the Plan's
assets with such needs and goals. The communication of the funding
policy and method shall not, however, constitute a directive to the
Trustee as to the investment of the Trust Fund. Any such funding
policy and method shall be consistent with the objectives of this Plan
and with the requirements of Title I of the Act.
(c) The Employer shall periodically review the performance of any
Fiduciary or other person to whom duties have been delegated or
allocated by it under the provisions of this Plan or pursuant to
procedures established hereunder. This requirement may be satisfied by
formal periodic review by the Employer or by a qualified person
specifically designated by the Employer, through day-to-day conduct
and evaluation, or through other appropriate ways.
(d) Except as otherwise specifically provided in the Plan, the Employer
shall be responsible for the administration of the Plan and shall be
considered the Named Fiduciary within the meaning of Section 402(a) of
the Act. The Employer shall administer the Plan for the exclusive
benefit of the Participants and their Beneficiaries subject to the
specific terms of the Plan. The Employer shall have the power to
determine all questions arising in connection with the administration,
interpretation, and application of the Plan and any such determination
by the Employer shall be conclusive and binding upon all persons. The
Employer may establish procedures, correct any defect, supply any
information, or reconcile any inconsistency in such manner and to such
extent as shall be deemed necessary or advisable to carry out the
purpose of the Plan; provided, however, that any procedure,
discretionary act, interpretation or construction shall be done in a
nondiscriminatory manner based upon uniform principles consistently
applied and shall be consistent with the intent that the Plan be
treated as a qualified plan under the terms of Code Section 401(a) and
that it comply with the terms of the Act and all regulations issued
pursuant thereto.
2.4 DESIGNATION OF ADMINISTRATOR
The Employer shall appoint one or more Administrators. Any person, including,
but not limited to, the Employees of the Employer, shall be eligible to serve as
an Administrator. Any person so appointed shall signify his acceptance by filing
written acceptance with the Employer. An Administrator may resign by delivering
his written resignation to the Employer or may be removed by the Employer by
delivery of written notice of removal, to take effect at a date specified
therein, or upon delivery to the Administrator if no date is specified. The
Employer, upon the resignation or removal of an Administrator, shall promptly
designate a successor Administrator. If the Employer does not appoint an
Administrator, the Employer shall be the Administrator.
<PAGE>
2.5 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
If more than one person is appointed as Administrator, the Employer may allocate
specific responsibilities to each Administrator as specified in a writing
accepted by each Administrator. In the event that no such allocation of
responsibilities is made by the Employer, the Administrators may allocate the
responsibilities among themselves, in which event the Administrators shall
notify the Employer and the Trustee in writing of such action and shall specify
the responsibilities allocated to each Administrator. The Trustee shall
thereafter accept and act pursuant to the instructions of an Administrator until
such time as the Employer or the remaining Administrators file with the Trustee
a written notice indicating that the authority of such Administrator has been
revoked or otherwise altered.
2.6 RESPONSIBILITIES OF THE ADMINISTRATOR
The primary responsibilities of the Administrator are to assist the Employer in
the administration of the Plan and to carry out those administrative duties
specifically assigned to the Administrator under the Plan.
2.7 RECORDS AND REPORTS
The Employer and Administrator shall keep a record of all actions taken and
shall keep all other books of account, records, and other data that may be
necessary for the proper administration of the Plan. The Administrator shall be
responsible for supplying all information and reports to the Internal Revenue
Service, Department of Labor, Participants, Beneficiaries and others as required
by law.
2.8 APPOINTMENT OF ADVISERS
The Employer, or the Administrator with the consent of the Employer, may appoint
counsel, specialists, advisers, and other persons as the Employer or the
Administrator deems necessary or desirable in connection with the administration
of this Plan.
2.9 INFORMATION FROM EMPLOYER
To enable the Administrator to fulfill his responsibilities under the Plan, the
Employer shall supply full and timely information to the Administrator on all
matters relating to the Compensation of all Participants, their Hours of
Service, their Years of Service, their retirement, death, disability, or
termination of employment and such other pertinent facts as the Administrator
may require; and the Administrator shall advise the Trustee of such of the
foregoing facts as may be pertinent to the Trustee's duties under the Plan. The
Administrator may rely upon such information as is supplied by the Employer and
shall have no duty or responsibility to verify such information.
<PAGE>
2.10 PAYMENT OF FEES AND EXPENSES
Any Administrator who does not receive full time pay from the Employer shall be
entitled to receive compensation for his services as may be charged by the
Administrator pursuant to his regularly published fee schedule or as may
otherwise be agreed upon in writing between the Employer and Administrator. Fees
and all expenses incident to the administration of the Plan, including, but not
limited to, fees of accountants, legal counsel, and other specialists and their
agents, and other costs of administering the Plan shall be paid from the Trust
Fund. Until paid, all such fees and expenses shall constitute a liability of the
Trust Fund. However, the Employer may pay such fees and expenses directly or
may, in the event such fees and expenses have already been paid, reimburse the
Trust Fund. Any reimbursement of the Trust Fund for fees and administration
expenses that have already been paid from the Trust Fund shall not be considered
an Employer contribution.
2.11 MAJORITY ACTIONS
Except where there has been an allocation and delegation of administrative
responsibilities pursuant to Section 2.5, if there shall be more than one
Administrator, they shall act by a majority of their number, but they may
authorize one or more of them to sign all papers on their behalf.
2.12 CLAIMS PROCEDURE
Claims for benefits under the Plan may be filed in writing with the
Administrator. Written notice of the disposition of a claim shall be furnished
to the claimant within ninety days after the application is filed. In the event
the claim is denied, the reasons for the denial shall be specifically set forth
in the notice in language calculated to be understood by the claimant, pertinent
provisions of the Plan shall be cited and, where appropriate, an explanation as
to how the claimant can perfect the claim will be provided. In addition, the
claimant shall be furnished with an explanation of the Plan's claims review
procedure.
2.13 CLAIMS REVIEW PROCEDURE
Any Employee, former Employee, or Beneficiary of either, who has been denied a
benefit by a decision of the Administrator pursuant to Section 2.12, shall be
entitled to request the Administrator to give further consideration to his claim
by filing with the Administrator a written request that further consideration of
his claim be given by the Administrator. Such a request, together with a written
statement of the reasons why the claimant believes his claim should be allowed,
shall be filed with the Administrator no later than sixty days after receipt of
the written notification provided for in Section 2.12. The Administrator shall
then conduct an investigation within the next sixty days. The claimant may be
represented by an attorney or any other representative of his choosing and shall
have an opportunity to submit written and oral evidence and arguments in support
of his claim. The claimant or his representative shall have an opportunity to
review all documents in the possession of the Administrator or Employer that are
pertinent to the claim at issue and its disallowance. A final decision as to the
allowance of the claim shall be made by the Administrator within sixty days of
receipt of the appeal (unless there has been an extension of sixty days due to
special circumstances,
<PAGE>
provided the delay and the special circumstances occasioning it are communicated
to the claimant within the sixty day period). Such communication shall be
written in a manner calculated to be understood by the claimant and shall
include specific reasons for the decision and specific references to the
pertinent Plan provisions on which the decision is based.
2.14 ADMINISTRATOR INDEMNIFICATION
If a person other than the Employer is acting as Administrator, the Employer
agrees to indemnify and save harmless the Administrator against any and all
claims, losses, damages, expenses (including attorney's fees) and liabilities
the Administrator may incur in the exercise and performance of the
Administrator's powers and duties hereunder, unless the same are determined to
be due to gross negligence or willful misconduct.
ARTICLE III
ELIGIBILITY
3.1 COMMENCEMENT OF ACTIVE PARTICIPATION
(a) An Eligible Employee who has satisfied the age and/or service
requirements specified in the Adoption Agreement shall become an
Active Participant effective as of the date specified in the Adoption
Agreement.
(b) In the event an Employee is transferred to a position in which he
becomes an Eligible Employee, he shall become an Active Participant on
the date of such transfer or, if he has not satisfied on such date the
age and/or service requirements specified in the Adoption Agreement,
as of the date specified in the Adoption Agreement following his
satisfaction of such requirements.
(c) In the event a former Employee is reemployed by the Employer, he shall
become an Active Participant on the date of his reemployment if he is
an Eligible Employee on that date or, if he has not satisfied on such
date the age and/or service requirements specified in the Adoption
Agreement, as of the date specified in the Adoption Agreement
following his satisfaction of such requirements.
3.2 DETERMINATION OF ACTIVE PARTICIPATION
The Administrator shall determine whether an Employee is an Active Participant
based upon information furnished by the Employer. Such determination shall be
conclusive and binding upon all persons as long as the same is made pursuant to
the Plan and the Act. Such determination shall be subject to review pursuant to
Section 2.13.
3.3 DURATION OF ACTIVE PARTICIPATION
An Employee shall cease to be an Active Participant on the earlier of the date
he incurs a termination of employment or ceases to be an Eligible Employee.
ARTICLE IV
CONTRIBUTION AND ALLOCATION
4.1 DETERMINATION OF EMPLOYER'S CONTRIBUTION
(a) The Employer's contribution to a Money Purchase Plan shall be
determined in accordance with the following paragraphs:
(1) For each Plan Year, the Employer shall contribute, on behalf of
each Active Participant described in Section 4.1(a)(2), the
percentage of his Compensation specified in the Adoption
Agreement; provided, however, that in no event shall the amount
contributed on behalf of any Active Participant cause the
limitations of Code Section 415 to be exceeded for that Active
Participant. All contributions by the Employer shall be made in
cash or in such property as is acceptable to the Trustee. The
Employer shall be required to obtain a waiver from the Internal
Revenue Service for any Plan Year in which it is unable to make
the full required contribution to the Plan.
(2) The Employer shall make a contribution on behalf of any Active
Participant during the Plan Year or other twelve-month period
specified in the Adoption Agreement for determining a Year of
Service for purposes of benefit accrual who is an Employee on the
Anniversary Date or the last day of such other twelve-month
period. The Employer shall also make a contribution on behalf of
any Active Participant who is not an Employee on the Anniversary
Date or the last day of such other twelve-month period if such
Active Participant completes a Year of Service for purposes of
benefit accrual.
(3) Notwithstanding the foregoing provisions of this Section 4.1(a),
the Employer's contribution for any Fiscal Year shall not exceed
the maximum amount allowable as a deduction to the Employer under
the provisions of Code Section 404. However, if this Plan is a
Top Heavy Plan to which minimum contributions must be made, the
Employer shall contribute the amount necessary to provide such
minimum contributions even if such amount exceeds that which is
deductible under Code Section 404.
(b) The Employer's contribution to a Profit Sharing Plan shall be
determined in accordance with the following paragraphs:
(1) For each Plan Year, the Employer shall contribute to the Plan
such amount as it shall determine, with or without regard to Net
Profit, as specified in the Adoption Agreement. If this Plan is a
Top Heavy Plan to which minimum contributions must be made, the
Employer shall contribute the amount necessary to provide such
minimum contributions even if such amount exceeds current or
accumulated Net Profit or the amount which is deductible under
Code Section 404.
<PAGE>
(2) All contributions by the Employer shall be made in cash or in
such property as is acceptable to the Trustee.
4.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
The Employer shall generally pay to the Trustee its contribution to the Plan for
each Plan Year within the time prescribed by law, including extensions of time,
for the filing of the Employer's federal income tax return for the Fiscal Year.
4.3 ALLOCATION OF CONTRIBUTIONS, FORFEITURES AND EARNINGS
(a) The Employer shall provide the Administrator with all the information
required by the Administrator in order to make a proper allocation of
the Employer's contributions for each Plan Year. Within a reasonable
period of time after the date of receipt by the Administrator of such
information, the Administrator shall allocate such contribution as of
the last day of the twelve-month period specified in the Adoption
Agreement for determining a Year of Service for purposes of benefit
accrual as follows:
(1) The Employer's contribution to a Money Purchase Plan shall be
allocated to each Active Participant's Employer Contribution
Account in the manner set forth in Section 4.1(a).
(2) The Employer's contribution to an integrated Profit Sharing Plan
that is a Top Heavy Plan or that is treated, pursuant to an
election in the Adoption Agreement, as if it were a Top Heavy
Plan, and that is not subject to the annual overall permitted
disparity limit under Section 4.9 shall be allocated as follows:
(i) The Employer's contribution shall be allocated to each
Active Participant's Employer Contribution Account in the
same proportion that his Compensation bears to the
Compensation of all Active Participants; provided, however,
that there shall not be allocated to any Active Participant
an amount greater than three percent of his Compensation.
(ii) That portion of the Employer's contribution not allocated
under Section 4.3(a)(2)(i) shall be allocated to each Active
Participant's Employer Contribution Account in the same
proportion that his Excess Compensation bears to the Excess
Compensation of all Active Participants; provided, however,
that there shall not be allocated to any Active Participant
an amount greater than three percent (or, if lesser, the
Maximum Excess Percentage) of his Excess Compensation;
provided, further, that in the case of an Active Participant
who has exceeded the cumulative permitted disparity limit
under Section 4.9, the allocation of the Employer's
contribution to such Active Participant shall be based on an
amount equal to his Compensation.
<PAGE>
(iii)That portion of the Employer's contribution not allocated
under Sections 4.3(a)(2)(i) and (ii) shall be allocated to
each Active Participant's Employer Contribution Account in
the same proportion that the sum of his Compensation and
Excess Compensation bears to the sum of the Compensation and
Excess Compensation of all Active Participants; provided,
however, that there shall not be allocated to any Active
Participant an amount greater than the product of the sum of
his Compensation and Excess Compensation and the difference
between the Maximum Excess Percentage and three percent
(such difference cannot be less than zero); provided,
further, that in the case of an Active Participant who has
exceeded the cumulative permitted disparity limit under
Section 4.9, the allocation of the Employer's contribution
to such Active Participant shall be based on an amount equal
to two times his Compensation.
(iv) That portion of the Employer's contribution not allocated
under Sections 4.3(a)(2)(i), (ii), and (iii) shall be
allocated to each Active Participant's Employer's
Contribution Account in the same proportion that his
Compensation bears to the Compensation of all Active
Participants.
(3) The Employer's contribution to an integrated Profit Sharing Plan
that is not a Top-Heavy Plan and that is not subject to the
annual overall permitted disparity limit under Section 4.9 shall
be allocated as follows:
(i) The Employer's contribution shall be allocated to each
Active Participant's Employer Contribution Account in the
same proportion that the sum of his Compensation and Excess
Compensation bears to the sum of the Compensation and Excess
Compensation of all Active Participants; provided, however,
that there shall not be allocated to any Active Participant
an amount greater than the product of the sum of his
Compensation and Excess Compensation and the Maximum Excess
Percentage; provided, further, that in the case of an Active
Participant who has exceeded the cumulative permitted
disparity limit under Section 4.9, the allocation of the
Employer's contribution to such Active Participant shall be
based on an amount equal to two times his Compensation.
(ii) That portion of the Employer's contribution not allocated
under Section 4.3(a)(3)(i) shall be allocated to each Active
Participant's Employer's Contribution Account in the same
proportion that his Compensation bears to the Compensation
of all Active Participants.
<PAGE>
(4) The Employer's contribution to a non-integrated Profit Sharing
Plan (or to an integrated plan that is subject to the annual
overall permitted disparity limits under Section 4.9) shall be
allocated to each Active Participant's Employer Contribution
Account in the same proportion that his Compensation bears to the
total Compensation of all Active Participants.
(5) An Active Participant during the Plan Year or other twelve-month
period specified in the Adoption Agreement for determining a Year
of Service for purposes of benefit accrual who is an Employee on
the Anniversary Date or the last day of such other twelve-month
period shall share in the Employer's contributions. An Active
Participant who is not an Employee on the Anniversary Date or the
last day of such other twelve-month period shall share in the
Employer's contribution if such Active Participant completes a
Year of Service for purposes of benefit accrual.
(6) In no event shall an amount allocated on behalf of an Active
Participant under Section 4.3(a)(2), (3), or (4) cause the
limitations of Code Section 415 to be exceeded for that
Participant. Any amount that would be allocated to an Active
Participant but for the preceding sentence shall be reallocated
instead to the remaining Active Participants pursuant to the
applicable allocation formula under Section 4.3(a)(2), (3), or
(4).
(7) If an Employer maintains two or more Paired Plans only one of
such Paired Plans may provide for the disparity permitted under
Code Section 401(l).
(b) As of each Valuation Date, before the allocation of Employer
contributions and Forfeitures allocable as of such date, any earnings
or losses (including net appreciation or net depreciation) of the
Trust Fund shall be allocated in the same proportion that each
Participant's Accounts bear to the total of all Participants' Accounts
as of such date.
(c) As of the date specified in Section 4.3(a), any Forfeitures occurring
since the last such date shall first be used to restore the previously
forfeited Accrued Benefit of any Participant in accordance with
Section 6.4(g) and shall then be used to satisfy any contribution that
may be required pursuant to Section 4.3(e) or 6.9 or both. The
remaining Forfeitures, if any, shall, in the case of a Profit Sharing
Plan, be allocated as if they were additional Employer contributions,
in the case of a Money Purchase Plan, be treated in accordance with
the Adoption Agreement and, in the case of a 401(k) Profit Sharing
Plan, be handled in accordance with Section 11.4(b).
(d) Minimum Contributions Required for Top Heavy Plan Years.
(1) For any Top Heavy Plan Year, to the extent that Employer
contributions and Forfeitures allocated pursuant to Section
<PAGE>
4.3(a) and Article XI are insufficient to provide a minimum contribution to
each Active Participant who is a Non-Key Employee, the Employer shall contribute
the additional amount necessary to provide such minimum contribution. An Active
Participant who is a Non-Key Employee is treated as having received a minimum
contribution if the sum of the Employer's contributions and Forfeitures
allocated to his Employer Contribution Account or, in the case of a 401(k)
Profit Sharing Plan, his Non-Elective Accounts, equals three percent of his 415
Compensation. However, if such sum is less than three percent of his 415
Compensation and this Plan does not enable a defined benefit plan, which is
included in the same Required Aggregation Group (as defined in Section 2.2), to
meet the requirements of Code Section 401(a)(4) or 410(b), then the minimum
contribution shall be equal to a Non-Key Employee's 415 Compensation multiplied
by a percentage which is equal to the largest percentage determined for any Key
Employee by dividing the employer contributions and forfeitures allocated on
behalf of such Key Employee under this Plan and all other plans included in the
same Required Aggregation Group by such Key Employee's 415 Compensation. In
determining whether a minimum contribution has been provided to an Active
Participant who is a Non-Key Employee, there shall be taken into account any
employer contributions (not including, however, employer contributions which are
subject to Code Sections 401(k) and 401(m)) and forfeitures allocated to such
Non-Key Employee under any other defined contribution plan which is included
with this Plan in a Required Aggregation Group.
(2) If a Non-Key Employee, who is an Active Participant, also participates
in one or more other defined contribution plans maintained by the
Employer or any Affiliated Employer, which are included in the same
Required Aggregation Group, it is not necessary to provide minimum
contributions to such Non-Key Employee under this Plan and all such
other defined contribution plans. In that event, the minimum
contribution will be provided as specified in the Adoption Agreement.
However, if a Non-Key Employee is an Active Participant in two or more
Paired Plans, then the minimum contribution shall be provided under
the Money Purchase Plan, if any, and then under the Profit Sharing
Plan.
(3) If a Non-Key Employee, who is an Active Participant, also participates
in one or more defined benefit plans maintained by the Employer or any
Affiliated Employer, which are included in the same Required
Aggregation Group, it is not necessary to provide a minimum
contribution under this Plan and a minimum benefit under any such
other defined benefit plan. In that event, the Employer shall specify
in the Adoption Agreement whether a minimum contribution will be
provided under this Plan or whether a minimum benefit will be provided
under such other defined benefit plan. If a minimum contribution is
provided under this
<PAGE>
Plan in lieu of providing a minimum benefit under such other defined
benefit plan, then the minimum contribution for each Non-Key Employee
who is an Active Participant and who also participates in one or more
defined benefit plans maintained by the Employer or Affiliated
Employer shall be equal to five percent of his 415 Compensation.
(4) The minimum contribution provided for in this Section 4.3(d) shall be
provided on behalf of all Non-Key Employees who are Active
Participants and are employed, in the case of a Profit Sharing or
Money Purchase Plan, on the last day of the twelve-month period
specified in the Adoption Agreement for determining a Year of Service
for purposes of benefit accrual and, in the case of a 401(k) Profit
Sharing Plan, on the Anniversary Date, including Non-Key Employees who
have (i) failed to complete a Year of Service, (ii) declined to make
mandatory contributions (if required) to the Plan, (iii) failed to
make Elective Contributions in the case of a 401(k) Profit Sharing
Plan; or (iv) been excluded from participation because of their level
of Compensation. Minimum contributions shall be allocated to a Non-Key
Employee's Employer Contribution Account, in the case of a Profit
Sharing or Money Purchase Plan, or as specified in Section 11.4(c), in
the case of a 401(k) Profit Sharing Plan.
(5) The Employer shall specify in the Adoption Agreement whether a minimum
contribution shall be provided to all Active Participants otherwise
entitled to an allocation under this Section 4.3(d) without regard to
whether an Active Participant is a Non-Key Employee.
(e) If any Active Participant who is entitled to allocation of the
Employer's contributions and Forfeitures, if any, is erroneously
omitted and discovery of such omission is not made until after
the allocation of contributions and Forfeitures has been made,
the Employer, in lieu of directing a reallocation, may make a
subsequent contribution so that the omitted Active Participant
receives an allocation which he would have received had he not
been omitted. Such contribution shall be made regardless of
whether or not it is deductible in whole or in part for any
Fiscal Year under applicable provisions of the Code.
(f) If any individual who should not have been entitled to an
allocation of the Employer's contributions and Forfeitures
receives an allocation and discovery of such incorrect allocation
is not made until after the allocation of contributions and
Forfeitures has been made, the Employer, subject to the
provisions of Section 9.7, shall not be entitled to recover the
contribution allocated to the ineligible individual regardless of
whether or not a deduction is allowable with respect to such
contribution. In such event, the Employer may direct a
reallocation or, in lieu thereof, the amount allocated to the
ineligible individual shall constitute a Forfeiture for the
period in which the discovery is made.
<PAGE>
(g) If a Participant is reemployed after incurring five consecutive
1-Year Breaks in Service, then separate Accounts shall be
maintained with respect to his Vested Accrued Benefit
attributable to Employer contributions made prior to his
termination of employment and with respect to his Accrued Benefit
attributable to Employer contributions made after his
reemployment. Maintenance of separate Accounts is no longer
necessary once a Participant is fully Vested in his Accrued
Benefit attributable to Employer contributions made after his
reemployment.
(h) A Participant shall be 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 Regulation
1.410(b)-3(a).
(i) There shall be no reduction in or cessation of the allocation of
Employer contributions and Forfeitures on account of an Active
Participant's attainment of any specified age.
4.4 MAXIMUM ANNUAL ADDITIONS
(a)(1) If the Participant does not participate in, and has never
participated in, another qualified plan maintained by the Employer, or
a welfare benefit fund (as defined in Code Section 419(e)) maintained
by the Employer, or an individual medical account (as defined in Code
Section 415(l)(2)) maintained by the Employer, or a simplified
employee pension (as defined in Code Section 408(k)) maintained by the
Employer, the amount of Annual Additions which may be allocated to the
Participant's Accounts during any Limitation Year shall not exceed the
Maximum Permissible Amount. If the Employer contribution that would
otherwise be allocated to a Participant's Accounts would cause the
Annual Additions during the Limitation Year to exceed the Maximum
Permissible Amount, the amount allocated will be reduced so that the
Annual Additions allocated during the Limitation Year will equal the
Maximum Permissible Amount.
(2) Prior to determining the Participant's actual 415 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 415 Compensation for the
Limitation Year, uniformly determined for all Participants
similarly situated.
(3) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for such
Limitation Year shall be determined on the basis of the
Participant's actual 415 Compensation for such Limitation Year.
(4) If, pursuant to Section 4.4(a)(2), or, as a result of the
allocation of Forfeitures or, as a result of a reasonable error
in determining the amount of Elective Contributions in the case
of a 401(k) Profit Sharing Plan, there is an Excess Amount, the
Excess Amount will be disposed of as follows:
<PAGE>
(i) Any nondeductible voluntary Employee contributions, to the
extent they would reduce the Excess Amount, will be returned
to the Participant;
(ii) If, after the application of Section 4.4(a)(4)(i), an Excess
Amount still exists, then any Elective Contributions, to the
extent they would reduce the Excess Amount, will be returned
to the Participant;
(iii)If, after the application of Sections 4.4(a)(4)(i) and (ii),
an Excess Amount still exists, then the Excess Amount must
be held unallocated in a suspense account until the
following Limitation Year. In such following Limitation
Year, the Excess Amount, in the case of a Profit Sharing
Plan, will be allocated among the Active Participants
entitled to an allocation under Section 4.3 as if such
Excess Amount were an Employer contribution, in the case of
a Money Purchase Plan, will be used to reduce Employer
contributions for such Limitation Year or, in the case of a
401(k) Profit Sharing Plan, will be handled in the following
order:
(A) If the Plan provides for Discretionary Non-Elective Contributions,
such Excess Amount will be allocated among the Active Participants
entitled to an allocation under Section 11.4(a)(3) as if such Excess
Amount were a Discretionary Non-Elective Contribution.
(B) If Section 4.4(a)(4)(iii)(A) is not applicable and the Plan provides
for Fixed Non-Elective Contributions, such Excess Amount will be used
to reduce such contributions.
(C) If Sections 4.4(a)(4)(iii)(A) and (B) are not applicable and the Plan
provides for Matching Contributions, such Excess Amount will be used
to reduce such contributions.
Any Matching Contributions or Qualified Matching Contributions that are
allocated to a Participant's Matching Account or Qualified Matching Account and
that are made on account of Elective Contributions returned to a Participant
pursuant to Section 4.4(a)(4)(ii) shall be forfeited. The forfeiture of Matching
Contributions or Qualified Matching Contributions shall be deemed to occur in
the Limitation Year following the Limitation Year to which the Excess Amount
relates and shall be treated in accordance with the election made in the
Adoption Agreement.
(iv) If a suspense account is in existence at any time during a
Limitation Year pursuant to this Section 4.4(a), it will not
participate in the allocation of investment gains and
losses. If a suspense account is in existence at any time
during a particular Limitation Year, all amounts
<PAGE>
in the suspense account must be handled in the manner
described in Section 4.4(a)(4)(iii) before any Employer
contributions or any Employee contributions may be made to
the Plan during that Limitation Year. Excess Amounts may not
be distributed to Participants.
(b)(1) This Section 4.4(b) applies if, in addition to this Plan, the
Participant is covered under another qualified Master or
Prototype defined contribution plan (including Paired Plans)
maintained by the Employer, or a welfare benefit fund maintained
by the Employer, or an individual medical account maintained by
the Employer, or a simplified employee pension maintained by the
Employer during any Limitation Year. The Annual Additions which
may be allocated to a Participant's Accounts under this Plan
during any such Limitation Year shall not exceed the Maximum
Permissible Amount reduced by the Annual Additions allocated to a
Participant under such other qualified Master or Prototype
defined contribution plans, welfare benefit funds, individual
medical accounts, and simplified employee pensions during the
same Limitation Year. If the Annual Additions with respect to the
Participant under such other qualified Master or Prototype
defined contribution plans, welfare benefit funds, individual
medical accounts, and simplified employee pensions are less than
the Maximum Permissible Amount, and the Annual Additions that
would otherwise be allocated to the Participant's Accounts under
this Plan would cause the Annual Additions allocated during the
Limitation Year to exceed the Maximum Permissible Amount, then
the Annual Additions allocated under this Plan will be reduced so
that the Annual Additions under all such plans and funds for the
Limitation Year will equal the Maximum Permissible Amount. If the
Annual Additions with respect to the Participant under such other
qualified Master or Prototype defined contribution plans, welfare
benefit funds, individual medical accounts, and simplified
employee pensions in the aggregate are equal to or greater than
the Maximum Permissible Amount, then no Annual Additions will be
allocated to the Participant's Accounts under this Plan during
the Limitation Year.
(2) Prior to determining the Participant's actual 415
Compensation for the Limitation Year, the Employer may
determine the Maximum Permissible Amount for a Participant
in the manner described in Section 4.4(a)(2).
(3) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the
Limitation Year will be determined on the basis of the
Participant's actual 415 Compensation for the Limitation
Year.
(4) If, pursuant to Section 4.4(b)(2), or, as a result of the
allocation of Forfeitures or, as a result of a reasonable
error in determining the amount of Elective Contributions in
the case of a 401(k) Profit Sharing Plan, a Participant's
Annual Additions under this Plan and such other plans and
funds
<PAGE>
would result in an Excess Amount for a Limitation Year, the
Excess Amount will be deemed to consist of the Annual
Additions last allocated, except that Annual Additions
attributable to a simplified employee pension will be deemed
to have been allocated first, followed by Annual Additions
to a welfare benefit fund or individual medical account,
regardless of the actual allocation date, and Annual
Additions attributable to Elective Contributions and
voluntary Employee contributions will be deemed to have been
allocated last regardless of the actual allocation date.
(5) 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 Employer shall specify
in the Adoption Agreement the Excess Amount attributed to
this Plan.
(6) Any Excess Amount attributed to this Plan will be disposed
in the manner described in Section 4.4(a)(4).
(c) If a Participant is covered under another qualified defined
contribution plan maintained by the Employer which is not a Master or
Prototype defined contribution plan, Annual Additions which may be
allocated to the Participant's Accounts under this Plan during any
Limitation Year will be limited in accordance with Section 4.4(b),
unless the Employer provides other limitations in the Adoption
Agreement.
(d) If the Employer maintains, or at any time maintained, a defined
benefit plan covering any Participant in this Plan, the sum of the
Participant's Defined Benefit Fraction and Defined Contribution
Fraction will not exceed 1.0 during any Limitation Year. During any
Limitation Year that the sum of the Defined Benefit Fraction and the
Defined Contribution Fraction on behalf of a Participant does exceed
1.0, then the Employer shall reduce the Participant's Projected Annual
Benefit under the defined benefit plan or its contribution on behalf
of such Participant to this Plan to the extent necessary to prevent
the sum of the Defined Contribution Fraction and the Defined Benefit
Fraction from exceeding 1.0. The Employer shall specify in its
Adoption Agreement which reduction shall apply.
(e) If the Employer maintains, or at any time maintained, a defined
benefit plan, then for any Top Heavy Plan Year the denominators of the
Defined Benefit Fraction and Defined Contribution Fraction will be
determined by substituting 100% for 125% unless enhanced minimum
benefits or contributions are provided in such defined benefit plan or
in this Plan, as specified in the Adoption Agreement. The enhanced
minimum contribution for this Plan is one percent of a Non-Key
Employee's 415 Compensation or two and one-half percent of a Non-Key
Employee's 415 Compensation in the event the Employer has specified in
the Adoption Agreement to provide the Non-Key Employees described in
Section 4.3(d)(3) with a minimum contribution of five percent of 415
Compensation.
<PAGE>
(f) For purposes of this Section, the following terms shall be defined as
follows:
(1) Annual Additions means the sum credited to a Participant's
Accounts during any Limitation Year of (i) Employer
contributions, (ii) effective with respect to Limitation Years
beginning after December 31, 1986, Employee contributions, (iii)
Forfeitures, (iv) amounts allocated, after March 31, 1984, to an
individual medical account, as defined in Code Section 415(l)(2),
which is part of a pension or annuity plan maintained by the
Employer, (v) 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 Code Section 419A(d)(3)) under a welfare benefit fund (as
defined in Code Section 419(e)) maintained by the Employer and
(vi) amounts allocated under a simplified employee pension.
Notwithstanding the foregoing, for Limitation Years beginning
prior to January 1, 1987, only that portion of Employee
contributions equal to the lesser of Employee contributions in
excess of six percent of 415 Compensation or one-half of Employee
contributions shall be considered Annual Additions. Any Excess
Amount under Section 4.4(a)(4) which, during any Limitation Year,
is allocated or used to reduce Employer contributions shall be
considered an Annual Addition during such Limitation Year.
(2) The term "415 Compensation" means a Participant's Earned Income,
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 to the extent
that the amounts are includible in gross income (including, but
not limited to, commissions paid salesmen, compensation for
services on the basis of a percentage of profits, commissions on
insurance premiums, tips, bonuses, fringe benefits,
reimbursements and expense allowances under a nonaccountable plan
(as described in Regulation Section 1.62 - 2(c))) but excluding
the following:
(i) Employer contributions to a plan of deferred compensation
which are not includible in the Employee's gross income for
the taxable year in which contributed, or Employer
contributions under a simplified employee pension plan to
the extent such contributions are excludable from the
Employee's gross income, or any distributions from a plan of
deferred compensation;
(ii) Amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by an
Employee becomes freely transferable or is no longer subject
to a substantial risk of forfeiture;
<PAGE>
(iii)Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock
option; and
(iv) Other amounts which received special tax benefits, or
contributions made by an Employer (whether or not under a
salary reduction agreement) towards the purchase of an
annuity contract described in Code Section 403(b) (whether
or not the contributions are excludable from the gross
income of the Employee). For purposes of applying the
limitations of this Section 4.4, 415 Compensation for any
Limitation Year is the 415 Compensation actually paid during
such Limitation Year.
(3) The term "Defined Benefit Fraction" means a fraction, the
numerator of which is the sum of the Participant's Projected
Annual Benefits under all defined benefit plans (whether or not
terminated) maintained by the Employer, and the denominator of
which is the lesser of 125% of the dollar limitation determined
for the Limitation Year under Code Sections 415(b)(1)(A) and (d)
or 140% of his average 415 Compensation for his high three years
under Code Section 415(b)(1)(B) and the Regulations thereunder.
Notwithstanding the preceding sentence, if the Participant
participated 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 will not be less than
125% of the sum of the Participant's accrued benefits under such
plans determined as of the close of the last Limitation Year
beginning before January 1, 1987, disregarding, however, any
changes in the terms and conditions of such plans after May 5,
1986. The preceding sentence applies only if the defined benefit
plans individually and in the aggregate satisfied the
requirements of Code Section 415 for all Limitation Years
beginning before January 1, 1987.
(4) The term "Defined Contribution Dollar Limitation" means the
dollar limitation set forth in Code Section 415(b)(1)(A) as in
effect for a Limitation Year. If a short Limitation Year is
created because of an amendment changing the Limitation Year to a
different twelve consecutive month period, the Defined
Contribution Dollar Limitation will be reduced by multiplying
such limitation by the following fraction:
number of months in the short Limitation Year
---------------------------------------------
twelve
(5) The term "Defined Contribution Fraction" means a fraction, the
numerator of which is the sum of the Annual Additions allocated
to the Participant's accounts under all defined contribution
plans (whether or not terminated) maintained by
<PAGE>
the Employer during the current and all prior Limitation Years,
and the denominator of which is the sum of the maximum aggregate
amounts determined separately for the current and all prior
Limitation Years (regardless of whether a defined contribution
plan was maintained by the Employer). The Administrator may make
reasonable assumptions in projecting the Defined Contribution
Fraction to Normal Retirement Age. The maximum aggregate amount
for any Limitation Year is the lesser of 125% of the Defined
Contribution Dollar Limitation or thirty five percent of the
Participant's 415 Compensation during such Limitation Year. For
Limitation Years beginning prior to January 1, 1987, Annual
Additions shall not be recomputed to treat all Employee
contributions as Annual Additions.
If the Employee participated as of the first day of the first Limitation Year
beginning after December 31, 1986, in one or more defined contribution plans
(including this Plan) and defined benefit plans maintained by the Employer which
were in existence on May 6, 1986, and such plans satisfied the requirements of
Code Section 415 for the last Limitation Year beginning before January 1, 1987,
then the numerator of the Defined Contribution Fraction will be adjusted if the
sum of the Defined Contribution Fraction and the Defined Benefit Fraction would
otherwise exceed one. Under the adjustment, an amount equal to the product of
(i) the excess of the sum of the fractions over one and (ii) the denominator of
the Defined Contribution Fraction will be permanently subtracted from the
numerator of the Defined Contribution Fraction. The adjustment is calculated by
determining the fractions as of the last day of the Limitation Year beginning
before January 1, 1987, but, for this purpose, disregarding any changes in the
terms and conditions of all such plans made after May 6, 1986, and applying Code
Section 415 as in effect on the first day of the Limitation Year beginning on or
after January 1, 1987.
(6) The term "Employer" means the Employer and all Affiliated
Employers.
(7) The term "Excess Amount" means the excess of the Participant's
Annual Additions during a Limitation Year over the Maximum
Permissible Amount.
(8) The term "Limitation Year" means the twelve consecutive month
period used to determine whether an Active Participant has
completed a Year of Service for purposes of determining his
entitlement to an allocation under Section 4.3. If the Limitation
Year is amended to a different twelve consecutive month period,
the new Limitation Year must begin on a date within the
Limitation Year in which the amendment is made.
(9) The term "Master or Prototype Plan" means a plan the form of
which is the subject of a favorable opinion letter from the
Internal Revenue Service.
<PAGE>
(10) The term "Maximum Permissible Amount" means the maximum Annual
Additions that may be allocated to a Participant's accounts under
this Plan and any other defined contribution plans maintained by
the Employer for any Limitation Year, which shall not exceed the
lesser of:
(i) The Defined Contribution Dollar Limitation, or
(ii) Twenty-five percent of the Participant's 415 Compensation
for the Limitation Year.
The limitation referred to in Section 4.4(f)(10)(ii) shall not apply to any
contribution for medical benefits (within the meaning of Code Section 401(h) or
419A(f)(2)) which is otherwise treated as an Annual Addition under Code Sections
415(l)(1) or 419A(d)(2).
(11) The term "Projected Annual Benefit" means 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 a qualified joint and survivor annuity
under Code Section 417) to which a Participant participating in a
defined benefit plan would be entitled under the terms of such
plan assuming:
(i) The Participant will continue employment until the normal
retirement age under such plan (or current age, if later),
and
(ii) The Participant's 415 Compensation during the current
Limitation Year and all other relevant factors used to
determine benefits under such plan will remain constant for
all future Limitation Years.
(g) Notwithstanding anything contained in this Section 4.4 to the
contrary, the limitations, adjustments and other requirements
prescribed in this Section shall at all times comply with the
provisions of Code Section 415 and the Regulations thereunder, the
terms of which are specifically incorporated herein by reference.
4.5 TRANSFERS FROM QUALIFIED PLANS
(a) If specified in the Adoption Agreement and with the consent of the
Employer, amounts may be transferred from other qualified plans, with
respect to an Eligible Employee, provided that the trust from which
such funds are transferred permits the transfer to be made and the
transfer will not jeopardize the qualification of the Plan or create
adverse tax consequences for the Employer. The amounts transferred
shall be credited to a separate account herein referred to as a
"Rollover Account". A Participant's Rollover Account shall be fully
Vested at all times and shall not be subject to forfeiture for any
reason other than Section 6.9.
<PAGE>
(b) Amounts in a Participant's Rollover Account shall be held by the
Trustee pursuant to the provisions of this Plan and may not be
withdrawn by, or distributed to the Participant, in whole or in part,
except as provided in Sections 4.5(d).
(c) Amounts attributable to elective contributions (as defined in
Regulation 1.401(k)-1(g)(4)), including amounts treated as elective
contributions, which are transferred from another qualified plan in a
plan-to-plan transfer shall be subject to the distribution limitations
provided for in Regulation 1.401(k)-1(d) and Section 11.3(e). Also,
amounts attributable to employer contributions under a pension plan,
which are transferred from another qualified plan in a plan-to-plan
transfer, shall not be distributed prior to a Participant's
termination of employment. The provisions of this Section 4.5(c) shall
not apply, however, if the plan-to-plan transfer complies with the
requirements of Regulation 1.411(d)-4 Q&A-3(b).
(d) If specified in the Adoption Agreement, a Participant may elect,
subject to the provisions of Section 4.5(c), to withdraw all or any
portion of the balance credited to his Rollover Account in a manner
which is consistent with and satisfies the provisions of Section 6.5.
A withdrawal under this Section 4.5 shall not cause the Forfeiture of
any Account to which Employer contributions have been allocated.
(e) For purposes of this Section, the term "qualified plan" shall mean any
tax qualified plan under Code Section 401(a). The term "amounts
transferred from other qualified plans" shall mean: (1) amounts
transferred to this Plan directly from another qualified plan; (2)
distributions received by an Employee from another qualified plan
which are eligible for tax free rollover to a qualified plan and which
are transferred by the Employee to this Plan within sixty days
following his receipt thereof; (3) amounts distributed to the Employee
from a conduit individual retirement account and transferred by the
Employee to this Plan within sixty days of his receipt thereof
provided that the conduit individual retirement account has no assets
other than assets (and the earnings on said assets) which (i) were
previously distributed to the Employee by another qualified plan (ii)
were eligible for tax-free rollover to a qualified plan and (iii) were
deposited in such conduit individual retirement account within sixty
days of receipt thereof.
(f) Prior to accepting any transfers to which this Section 4.5 applies,
the Employer may require the Employee to establish that the amounts to
be transferred to this Plan meet the requirements of this Section 4.5
and may also require the Employee to provide an opinion of counsel
satisfactory to the Employer that the amounts to be transferred meet
the requirements of this Section 4.5.
(g) Notwithstanding the foregoing provisions of this Section 4.5 to the
contrary, a transfer directly to this Plan from another qualified plan
(or a transaction having the effect of such a transfer
<PAGE>
shall only be permitted if it will not result in the elimination or
reduction of any "Section 411(d)(6) protected benefit" as described in
Section 8.1(e).
4.6 VOLUNTARY CONTRIBUTIONS
(a) If this is an amendment to a Plan that had previously allowed
voluntary Employee contributions, then, except as provided in 4.6(b)
below, this Plan will not accept voluntary Employee contributions for
Plan Years beginning after the Plan Year in which this Plan is adopted
by the Employer.
(b) For 401(k) Profit Sharing Plans, if elected in the Adoption Agreement,
each Active Participant may elect to make contributions to the Plan.
Such contributions, if paid to or withheld by the Employer, shall be
paid to the Trustee within a reasonable period of time but in no event
later than ninety days after the receipt or withholding of the
contribution. Amounts contributed under this Section 4.6 shall be
credited to a separate account herein referred to as a "Voluntary
Contribution Account." A Participant's Voluntary Contribution Account
shall be fully vested at all times and shall not be subject to
Forfeiture for any reason other than Section 6.9.
(c) A Participant may elect to withdraw all or any portion of the balance
of his Voluntary Contribution Account in a manner which is consistent
with and satisfies the provisions of Section 6.5. If the Administrator
further subdivides a Participant's Voluntary Contribution Account with
respect to voluntary contributions (and earnings thereon) which were
made on or before a specified date, a Participant shall be permitted
to designate which sub-account shall be the source of his withdrawal.
In the event such a withdrawal is made, or in the event a Participant
has received a hardship distribution pursuant to Regulation
1.401(k)-1(d)(2)(iii)(B) from this Plan or any other plan maintained
by the Employer or an Affiliated Employer, then such Participant shall
be barred from making any voluntary contributions for a period of
twelve months after receipt of the withdrawal or distribution. A
withdrawal under this Section 4.6 shall not cause the Forfeiture of
any Account to which Employer contributions have been allocated.
4.7 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS
(a) If this is an amendment to a Plan that previously permitted deductible
voluntary contributions, then each Participant who made a "Qualified
Voluntary Employee Contribution" within the meaning of Code Section
219(e)(2) as it existed prior to the enactment of the Tax Reform Act
of 1986, shall have his contribution held in a separate Qualified
Voluntary Employee Contribution Account which shall be fully Vested at
all times and shall not be subject to Forfeiture for any reason other
than Section 6.9. Such contributions, however, shall not be permitted
if they are attributable to taxable years beginning after December 31,
1986.
<PAGE>
(b) A Participant may elect to withdraw all or any portion of the balance
of his Qualified Voluntary Employee Contribution Account. Any
withdrawal shall be made in a manner which is consistent with and
satisfies the provisions of Section 6.5. A withdrawal under this
Section 4.7 shall not cause the Forfeiture of any Account to which
Employer contributions have been allocated.
4.8 MANDATORY EMPLOYEE CONTRIBUTIONS
(a) If this is an amended Plan that permitted mandatory Employee
contributions prior to such amendment, then each Participant who made
mandatory Employee contributions shall have his contribution held in a
separate Mandatory Employee Contribution Account which shall be fully
Vested at all times and shall not be subject to Forfeiture for any
reason other than Section 6.9. Such contributions shall not be
permitted under this Plan.
(b) A Participant may elect to withdraw all or any portion of the balance
of his Mandatory Employee Contribution Account. Any such withdrawal
shall be made in a manner which is consistent with and satisfies the
provisions of Section 6.5. A withdrawal under this Section 4.8 shall
not cause the Forfeiture of any Account to which Employer
contributions have been allocated.
4.9 OVERALL PERMITTED DISPARITY LIMITS
(a) Annual overall permitted disparity limit. For any Plan Year this Plan
benefits any Active Participant who benefits under another qualified
plan or simplified employee pension, as defined in Code Section
408(k), maintained by the Employer or an Affiliated Employer that
provides for permitted disparity (or imputes disparity), Employer
contributions in the case of a Profit Sharing Plan, Discretionary
Non-Elective Contributions in the case of a 401(k) Profit Sharing
Plan, and Forfeitures, if applicable, will be allocated in accordance
with Section 4.3(a)(4). In the case of a Money Purchase Plan subject
to this Section 4.9(a), the Employer contribution determined under
Section 4.1(a) shall be allocated to each Active Participant's
Employer Contribution Account in the same proportion that his
Compensation bears to the Compensation of all Active Participants.
(b) Cumulative permitted disparity limit. Effective for Plan Years
beginning on or after January 1, 1995, the cumulative permitted
disparity limit for a Participant is thirty-five total cumulative
permitted disparity years. The term "total cumulative permitted
disparity 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 or an Affiliated Employer.
For purposes of determining the Participant's cumulative permitted
disparity limit, all Plan Years ending in the same calendar year are
treated as the same year. If the Participant has not benefited under a
defined benefit or target benefit plan for any Plan Year beginning on
or
<PAGE>
after January 1, 1994, the Participant has no cumulative
permitted disparity limit.
ARTICLE V
VALUATIONS
5.1 VALUATION OF THE TRUST FUND
As of each Valuation Date the Trustee shall determine the net worth of the
assets comprising the Trust Fund as it exists on the Valuation Date. In
determining such net worth, the Trustee shall value the assets comprising the
Trust Fund at their fair market value as of the Valuation Date and shall deduct
all fees and expenses for which the Trustee and Administrator have not yet
obtained reimbursement from the Employer or the Trust Fund.
ARTICLE VI
DETERMINATION AND DISTRIBUTION OF BENEFITS
6.1 DETERMINATION OF BENEFITS UPON RETIREMENT
Upon Normal Retirement or Early Retirement, a Participant's Accrued Benefit
shall be paid to the Participant at the time and in the manner provided for
under Section 6.5.
6.2 DETERMINATION OF BENEFITS UPON DEATH
(a) Upon the death of a Participant prior to Normal or Early Retirement or
other termination of employment, a Participant's Accrued Benefit shall
become fully Vested and shall be paid to such Participant's
Beneficiary at the time and in the manner provided for under Section
6.6.
(b) Upon the death of a Participant subsequent to Normal or Early
Retirement or other termination of employment, the distribution of the
Participant's remaining Accrued Benefit shall be paid to such
Participant's Beneficiary at the time and in the manner provided for
under Section 6.6.
(c) The Administrator may require such proper proof of death and such
evidence of the right of any person to receive payment of the Accrued
Benefit of a deceased Participant as the Administrator may deem
desirable. The Administrator's determination of death and of the right
of any person to receive payment shall be conclusive.
(d) Unless otherwise provided in Section 6.6, the Participant's spouse
will receive a Pre-Retirement Survivor Annuity. That portion of a
Participant's Accrued Benefit not payable in the form of a
Pre-Retirement Survivor Annuity (or his entire Accrued Benefit if the
Pre-Retirement Survivor Annuity has been waived in the manner
prescribed in Section 6.6) shall be paid to his Beneficiary designated
on a form satisfactory to the Administrator. A Participant may at any
time change his Beneficiary by filing written notice of such change
with the Administrator. However, any such change of Beneficiary is
subject to the spousal consent provisions of Sections 6.5(a)(2) and
6.6(b). In the event no valid designation of Beneficiary exists at the
time of the Participant's death, his Accrued Benefit shall be paid to
the following persons in the order named:
(1) Spouse, (2) Children, (3) Parents, (4) A trust created either in
the Participant's will or in a lifetime instrument of which the
Participant was a grantor, or (5) The personal representative or
administrator of the Participant's estate.
Multiple Beneficiaries in the same class shall share equally in any distribution
hereunder, unless the Beneficiary designation specifically provides otherwise.
6.3 DETERMINATION OF BENEFITS IN EVENT OF DISABILITY
In the event of a Participant's Total and Permanent Disability prior to Normal
or Early Retirement or other termination of employment, a Participant's Accrued
Benefit shall become fully Vested and shall be paid to such Participant at the
time and in the manner provided for under Section 6.5.
6.4 DETERMINATION OF BENEFITS UPON TERMINATION
(a) In the event of a Participant's termination of employment for a reason
other than Normal or Early Retirement, Total and Permanent Disability
or death, the Vested portion of a Participant's Accrued Benefit shall
be paid to such Participant at the time and in the manner provided for
under Section 6.5.
(b) The Vested portion of a Participant's Accrued Benefit shall be an
amount equal to the sum of those Accounts of the Participant in which
he is fully Vested plus a percentage of such Participant's Employer
Contribution Account, in the case of a Profit Sharing or Money
Purchase Plan, or Discretionary Non-Elective Account, Fixed
Non-Elective Account or Matching Account, in the case of a 401(k)
Profit Sharing Plan, based on the Participant's number of Years of
Service and the vesting schedule specified in the Adoption Agreement.
(c) For any Top Heavy Plan Year, one of the minimum top heavy vesting
schedules, as elected by the Employer in the Adoption Agreement, will
automatically apply to the Plan. The minimum top heavy vesting
schedule applies to his entire Accrued Benefit, excluding the portion
thereof attributable to Employee contributions, but including that
portion accrued before the effective date of Code Section 416 and
accrued before the Plan became a Top Heavy Plan. However, this Section
does not apply to the Accrued Benefit of any Participant who does not
have an Hour of Service after the Plan becomes a Top Heavy Plan and
the Vested percentage of such Participant shall be determined without
regard to this Section 6.4(c). If, in any subsequent Plan Year, the
Plan ceases to be a Top Heavy Plan, the Administrator shall continue
to use the vesting schedule in effect while the Plan was a Top Heavy
Plan.
(d) Notwithstanding the foregoing provisions of Sections 6.4(b) and (c) to
the contrary, upon the complete discontinuance of the Employer's
contributions to the Plan, in the case of a Profit Sharing Plan or
401(k) Profit Sharing Plan, or upon any full or partial termination of
the Plan, the Accrued Benefit of any affected Participant shall become
fully Vested and shall not thereafter be subject to Forfeiture.
(e) If this is an amended or restated Plan, then, notwithstanding the
vesting schedule specified in the Adoption Agreement, the Vested
percentage of a Participant shall not be less than the Vested
percentage determined as of the later of the effective date or
adoption date of the amendment or restatement. The computation of a
Participant's Vested percentage shall not be reduced as the result of
any direct or indirect amendment to this Plan.
<PAGE>
(f) If the Plan's vesting schedule is amended or if the Plan is amended in
any way that directly or indirectly affects the computation of the
Participant's Vested percentage or if the Plan is deemed amended
because it is a Top Heavy Plan, then each Participant with at least
three Years of Service as of the expiration date of the election
period may elect to have his Vested percentage computed under the Plan
without regard to such amendment. Notwithstanding the foregoing, for
Plan Years beginning before January 1, 1989, or with respect to
Employees who fail to complete at least one Hour of Service in a Plan
Year beginning after December 31, 1988, five shall be substituted for
three in the preceding sentence. If a Participant fails to make such
an election, then such Participant shall be subject to the new vesting
schedule. The Participant's election period shall commence on the
adoption date of the amendment and shall end sixty days after the
latest of:
(1) the adoption date of the amendment,
(2) the effective date of the amendment, or
(3) the date the Participant receives written notice of the amendment
from the Employer or Administrator.
Notwithstanding the foregoing, no election need be provided to a Participant
whose Vested percentage under the Plan as amended cannot be less at any time
than his Vested percentage determined without regard to such amendment.
(g) If any Participant who had a termination of employment is reemployed
by the Employer before incurring five consecutive 1-Year Breaks in
Service and such Participant had received a distribution of his entire
Vested Accrued Benefit prior to his reemployment, then the non-Vested
portion of his Accrued Benefit, which was previously forfeited, shall
be restored to him only if he repays the full amount previously
distributed to him before the earlier of five years after the date on
which the Participant is subsequently reemployed by the Employer or
the close of the first period of five consecutive 1-Year Breaks in
Service commencing after the distribution. In the event such
Participant does repay the full amount previously distributed to him,
the non-Vested portion of his Accrued Benefit which was previously
forfeited must be restored in full, unadjusted by any gains or losses
occurring subsequent to the Valuation Date preceding the date of
distribution. The optional forms of benefit (within the meaning of
Code 411(d)(6)) available at the time the Participant's Vested Accrued
Benefit was distributed to him shall continue to be available to his
Accrued Benefit as restored under this Section 6.4(g). Any amount to
be restored pursuant to this Section 6.4(g) shall first be taken from
Forfeitures, if any, and then from earnings, if any, of the Trust
Fund. If there are no Forfeitures or earnings or they are not
sufficient to provide the amount required to be restored, then the
Employer shall make a contribution sufficient to restore to the
Participant the amount required under this Section 6.4(g). The
provisions of this Section 6.4(g) shall not apply
<PAGE>
to any Participant who was fully Vested in his Accrued Benefit at the
time he received a distribution of his Accrued Benefit from the Plan.
(h) In determining Years of Service for purposes of determining a
Participant's Vested percentage, Years of Service shall be excluded as
specified in the Adoption Agreement.
(i) If a distribution is made at a time when a Participant is not fully
Vested in one of his Accounts and the Participant may increase the
Vested percentage of such Account, then at any relevant time the
Participant's Vested portion of such Account shall be equal to an
amount ("X") determined by the formula:
X = P x (AB + D) - D
For purposes of applying the formula: P is the Vested percentage at the relevant
time, AB is the balance of his Account at the relevant time, and D is the amount
of the distribution.
6.5 DISTRIBUTION OF BENEFITS
(a)(1) Unless otherwise elected as provided below, a Participant who is
married on the Annuity Starting Date and who does not die before the
Annuity Starting Date shall receive his Vested Accrued Benefit in the
form of a Joint and Survivor Annuity that provides survivor benefits
following the Participant's death to the Participant's surviving
spouse during the spouse's lifetime at a rate equal to fifty percent
of the rate at which such benefits were payable to the Participant.
This Joint and 50% Survivor Annuity shall be considered the automatic
form of payment for married Participants. However, the Participant may
elect, without regard to the provisions of Section 6.5(a)(2), to
receive a smaller benefit with continuation of payments to the spouse
at a rate of more than fifty percent but less than or equal to 100% of
the rate payable to the Participant during his lifetime, which
alternative Joint and Survivor Annuity shall be equal in value to the
automatic Joint and 50% Survivor Annuity. An unmarried Participant
shall automatically receive the value of his Vested Accrued Benefit in
the form of a life annuity. Such unmarried Participant, however, may
elect in writing to waive the life annuity. The election to waive the
life annuity must comply with the provisions of this Section 6.5 as if
it were an election to waive the Joint and 50% Survivor Annuity by a
married Participant, but without having to satisfy the spousal consent
requirements of Section 6.5(a)(2).
(2) Any election by the Participant to waive the Joint and Survivor
Annuity must be in writing, must specify the optional form of
benefit and, if applicable, the Beneficiary designated by the
Participant and must specify that such optional form of benefit
and Beneficiary cannot be changed without the consent of his
spouse unless the spouse's consent acknowledges the spouse's
right to limit consent only to a specific
<PAGE>
Beneficiary or to a specific optional form of benefit and the
spouse voluntarily elects to relinquish both of such rights. Such
election shall be valid only if it is made during the election
period and is consented to by his spouse unless the Participant
establishes to the satisfaction of the Administrator that his
spouse's consent cannot be obtained (i) because his spouse cannot
be located, or (ii) because the Participant is legally separated
or has been abandoned (within the meaning of local law) and the
Participant has a court order to such effect (and there is no
Qualified Domestic Relations Order which provides otherwise), or
(iii) because of other circumstances prescribed by Regulations,
or (iv) because his spouse's consent is not required by reason of
the spouse's previous consent which permits the Participant to
change the form of benefit or Beneficiary without any requirement
of further consent by his spouse. The consent of the
Participant's spouse must be in writing, must acknowledge the
effect of the election and must be witnessed by a Plan
representative or notary public. Any consent by a spouse (or
establishment that the consent of a spouse may not be obtained)
shall be effective only with respect to such spouse. A
Participant may revoke in writing any previous election at any
time during the election period. There is no limit on the number
of elections or revocations that can be made. A revocation of a
prior election may be made by a Participant without his spouse's
consent, but any subsequent election will require a new consent
from the Participant's spouse. For purposes of this Section
6.5(a)(2), a change in the form of benefit or Beneficiary by the
Participant shall not be considered a revocation if the previous
consent of the spouse expressly permits the Participant to change
the form of benefit or Beneficiary without the requirement of
further consent by his spouse. Once a spouse has consented to a
Participant's election, such spouse's consent cannot be revoked
unless the Participant also revokes his election.
(3) The election period to waive the Joint and Survivor Annuity shall
be the ninety day period ending on the Annuity Starting Date.
(4) With regard to the election described in Section 6.5(a)(2), the
Administrator shall provide to the Participant no less than
thirty days and no more than ninety days before the Annuity
Starting Date a written explanation of:
(i) the terms and conditions of the Joint and Survivor Annuity,
(ii) the Participant's right to make an election to waive the
Joint and Survivor Annuity,
(iii)the right of the Participant's spouse to consent to any
election to waive the Joint and Survivor Annuity,
(iv) the right of the Participant to revoke such election, and
the effect of such revocation, and
<PAGE>
(v) the material features and the relative values of the various
optional forms of benefit under the Plan.
(b) In the event a married Participant elects, pursuant to Section
6.5(a)(2), not to receive his Vested Accrued Benefit in the form of a
Joint and Survivor Annuity or, if such Participant is not married, in
the form of a life annuity, then the Administrator, pursuant to the
election of the Participant, shall direct the distribution of a
Participant's Accrued Benefit in one or more of the following methods
which are permitted under the Adoption Agreement:
(1) One lump-sum payment in cash or in property.
(2) Payments for a period certain in monthly, quarterly, semiannual
or annual cash installments. In order to provide such
installments, the Employer may direct that an amount equal to the
Participant's Vested Accounts be segregated from the general
Trust Fund and be invested separately, and that such separate
fund be used for the payment of installments.
(3) Purchase of an annuity providing payments for the life of the
Participant or for the joint lives of the Participant and his
designated Beneficiary, with or without a period certain, or for
a period certain only.
At the written election of the Participant, any lump sum payment may be
transferred directly to the trustee or other funding agent of another qualified
retirement plan. Installment payments must commence and must be made over a
period or term which satisfies the requirements of Section 6.5(d). Any annuity
distributed to a Participant shall be nontransferable and the terms of such
annuity shall comply with the requirements of the Plan. The provisions of this
Section 6.5(b) are also subject to the provisions of Section 6.5(c)(2).
(c)(1) In the case of a Participant whose termination of employment
constitutes a Normal or Early Retirement or is on account of Total and
Permanent Disability, the payment of a Participant's Accrued Benefit
shall begin at such time as elected by the Participant. In the case of
a Participant whose employment is terminated for a reason other than
Normal or Early Retirement, Total or Permanent Disability or death,
the payment of a Participant's Vested Accrued Benefit shall begin at
such time as elected by the Participant after he has satisfied the
conditions, if any, specified by the Employer in the Adoption
Agreement. Notwithstanding the foregoing provisions of this Section
6.5(c)(1), payment of a Participant's Accrued Benefit shall not begin
less than thirty days after the explanation described in Section
6.5(a)(4) is given unless, however, Section 6.13 applies, in which
event, payment may begin before then if the Administrator clearly
informs the Participant of his right to a period of thirty days after
receiving said explanation to consider his decision whether or not to
elect payment (and, if
<PAGE>
applicable, the method of payment) and the Participant, after
receiving the explanation, affirmatively elects the payment of his
Accrued Benefit. The provisions of this Section 6.5(c)(1) are subject
to the provisions of Sections 6.5(d) and 6.7.
(2) Notwithstanding the provisions of Section 6.5(c)(1), if the
Vested Accrued Benefit of a Participant does not exceed $3,500,
then the Administrator shall direct that the Participant's Vested
Accrued Benefit be paid as soon as administratively practicable
in the form of a single lump sum payment. No lump sum payment may
be made under this Section 6.5(c)(2) after the Annuity Starting
Date unless the Participant and, in the case in which benefits
are being paid in the form of a Joint and Survivor Annuity, his
spouse, consent in writing to such payment.
(3) In the event the payment of a Participant's Vested Accrued
Benefit is to be deferred (as a result of either the
Participant's election or otherwise), the Employer may direct
that the Vested portion of the Participant's Accounts be
segregated from the general Trust Fund and be invested
separately.
(d)(1) Subject to Section 6.5(a), the requirements of this Section 6.5(d)
shall apply to any distribution of a Participant's Accrued Benefit and
will take precedence over any inconsistent provisions of this Plan.
Unless otherwise specified, the provisions of this Section 6.5(d)
apply to calendar years beginning after December 31, 1984. All
distributions required under this Section 6.5(d) shall be determined
and made in accordance with the proposed Regulations under Code
Section 401(a)(9), including the minimum distribution incidental
benefit requirement of Section 1.401(a)(9)-2 of the proposed
Regulations.
(2) The entire Accrued Benefit of a Participant must be distributed
or begin to be distributed no later than the Participant's
required beginning date.
(3) As of the first distribution calendar year, distributions, if not
made in a lump sum, may only be made over one of the following
periods (or a combination thereof):
(i) the life of the Participant,
(ii) the life of the Participant and a designated Beneficiary,
(iii)a period certain not extending beyond the life expectancy
of the Participant, or
(iv) a period certain not extending beyond the joint life and
last survivor expectancy of the Participant and a designated
Beneficiary.
<PAGE>
(4) If the Participant's Accrued Benefit is to be distributed in
other than a lump sum, the following rules shall apply on or
after the required beginning date:
(i) If a Participant's benefit is to be distributed over 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, 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
fifty 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 (A) the applicable
life expectancy or (B) if the Participant's spouse is not
the designated Beneficiary, the applicable divisor
determined from the table set forth in Q&A-4 of section
1.401(a)(9)-2 of the proposed Regulations.
(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
Participant's required beginning date occurs, must be made
on or before December 31 of that distribution calendar year.
(v) If the Participant's benefit is distributed in the form of
an annuity, distributions thereunder shall be made in
accordance with the requirements of Code Section 401(a)(9)
and the proposed Regulations thereunder.
(5) (i) The term "applicable life expectancy" means the life
expectancy of the Participant (or the joint life and last
survivor expectancy of the Participant and his designated
Beneficiary) calculated using the attained age of the Participant
and, if applicable, his designated Beneficiary as of the
Participant's birthday and, if applicable, his designated
Beneficiary's birthday in the applicable calendar year reduced
<PAGE>
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, each such succeeding calendar year.
(ii) For purposes of this Section 6.5(d), the life expectancy of
a Participant and, if applicable, a Participant's spouse
shall be recalculated annually in accordance with
Regulations or shall not be so recalculated, as specified in
the Adoption Agreement. If the Adoption Agreement so
provides, a Participant may elect whether his life
expectancy, that of his spouse, or both, will be
recalculated and such election, once made, shall be
irrevocable. If no election is made by the Participant prior
to the time distributions must commence, then the life
expectancy of the Participant and his spouse shall not be
recalculated. Life expectancies shall be computed using the
expected return multiples in Tables V and VI of Regulation
1.72-9.
(iii)The term "designated Beneficiary" means the individual who
is designated as the Beneficiary under the Plan in
accordance with Code Section 401(a)(9) and the proposed
Regulations thereunder.
(iv) The term "distribution calendar year" means a calendar year
for which a minimum distribution is required. The first
distribution calendar year is the calendar year immediately
preceding the calendar year which contains the Participant's
required beginning date.
(v) The term "Participant's benefit" means the Participant's
Accrued Benefit 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
Participant's Accounts during the valuation calendar year
and after such Valuation Date and decreased by distributions
made during the valuation calendar year and after such
Valuation Date. However, 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.
(vi) Except as provided below, the term "required beginning date"
means the April 1 of the calendar year following the
<PAGE>
calendar year in which the Participant attains age seventy
and one-half. However, in the case of a Participant who
attains age seventy and one-half before January 1, 1988, the
required beginning date of a Participant is the April 1 of
the calendar year following the later of (A) the calendar
year in which the Participant attains age seventy and
one-half or (B) the calendar year in which the Participant
retires or, if earlier, the calendar year with or within
which ends the Plan Year in which the Participant becomes a
Five Percent Owner. Section 6.5(d)(6)(vi)(B) shall not apply
to any Participant unless the Participant was not a Five
Percent Owner at any time during the Plan Year ending with
or within the calendar year in which the Participant
attained age sixty-six and one-half or during any subsequent
Plan Year. Notwithstanding the foregoing provisions of this
Section 6.5(d)(vi) to the contrary, the required beginning
date of a Participant who is not a Five Percent Owner, who
attains age seventy and one-half during 1988 and who has not
retired as of January 1, 1989, is April 1, 1990.
(6) Subject to the Participant's spouse's right of consent afforded
under Section 6.5(a)(2), the restrictions imposed by Section
6.5(d) shall not apply if a Participant has, prior to January 1,
1984, made a written designation to have his Vested Accrued
Benefit paid in an alternative method acceptable under Code
Section 401(a) as in effect prior to the enactment of the Tax
Equity and Fiscal Responsibility Act of 1982.
(e) Benefits paid in the form of installments or under an annuity under
Sections 6.5(b)(2) and (3) shall not be suspended in the event a
Participant, who terminated employment, is reemployed by the Employer
or any Affiliated Employer.
6.6 DISTRIBUTION OF BENEFITS UPON DEATH
(a) Subject to the provisions of Section 6.6(h)(2), upon the death of a
Participant subsequent to the Annuity Starting Date, his Beneficiary
shall be entitled to whatever death benefit may be available under the
settlement arrangements pursuant to which the Participant's benefit is
made payable. Upon the death of a Participant prior to the Annuity
Starting Date, death benefits (including any Pre-Retirement Survivor
Annuity payable to the Participant's surviving spouse) shall, subject
to the provisions of Sections 6.6(f) and (h), be paid at such time as
directed by the Beneficiary (or surviving spouse in the case of a
Pre-Retirement Survivor Annuity) and in the manner provided for under
Section 6.6(g). Notwithstanding the foregoing provisions of this
Section 6.6(a) to the contrary, after the Participant's death, a
surviving spouse may elect to receive the amount that would otherwise
have been paid to the surviving spouse as a Pre-Retirement Survivor
Annuity in any other form of benefit permitted under Section 6.6(g).
<PAGE>
(b) Any election by a Participant to waive the Pre-Retirement Survivor
Annuity must be in writing, must specify the Beneficiary designated by
the Participant and must specify that such Beneficiary cannot be
changed without the consent of his spouse unless the spouse's consent
acknowledges the spouse's right to limit consent only to a specific
Beneficiary and the spouse voluntarily elects to relinquish such
right. The Participant's election will be valid only if it is made
during the election period and is consented to by his spouse unless
the Participant establishes to the satisfaction of the Administrator
that his spouse's consent cannot be obtained (1) because his spouse
cannot be located, or (2) because the Participant is legally separated
or has been abandoned (within the meaning of local law) and the
Participant has a court order to such effect (and there is no
Qualified Domestic Relations Order which provides otherwise), or (3)
because of other circumstances prescribed by Regulations or (4)
because his spouse's consent is not required by reason of the spouse's
previous consent which permits the Participant to change a Beneficiary
without any requirement of further consent by his spouse. The consent
of the Participant's spouse must be in writing, must specify the
Beneficiary designated by the Participant, must acknowledge the effect
of the election and must be witnessed by a Plan representative or
notary public. Any consent by a spouse (or establishment that the
consent of a spouse may not be obtained) shall be effective only with
respect to such spouse. A Participant may revoke in writing any
previous election at any time during the election period. There is no
limit on the number of elections or revocations that can be made. A
revocation of a prior election may be made by a Participant without
his spouse's consent, but any subsequent election will require a new
consent from the Participant's spouse. Once a spouse has consented to
a Participant's election, the spouse's consent cannot be revoked
unless the Participant also revokes his election. For purposes of this
Section 6.6(b), a change in Beneficiary by the Participant shall not
be considered a revocation if the previous consent of the spouse
expressly permits the Participant to change a Beneficiary without the
requirement of further consent by his spouse.
(c) The election period to waive the Pre-Retirement Survivor Annuity shall
begin on the first day of the Plan Year in which the Participant
attains age thirty-five and shall end on the date of the Participant's
death. A waiver of the Pre-Retirement Survivor Annuity (with spousal
consent) may be made prior to the election period specified in the
preceding sentence provided a written explanation of the
Pre-Retirement Survivor Annuity is given to the Participant and such
waiver becomes invalid as of the first day of the Plan Year in which
the Participant attains age thirty-five.
(d) The Administrator shall provide each Participant within the applicable
period a written explanation of the Pre-Retirement Survivor Annuity
containing information comparable to that required pursuant to Section
6.5(a)(4). For purposes of this Section 6.6(d), the term "applicable
period" means, with respect to a Participant, whichever of the
following periods ends last:
<PAGE>
(1) The period beginning with the first day of the Plan Year in which
the Participant attains age thirty-two and ending with the last
day of the Plan Year preceding the Plan Year in which the
Participant attains age thirty-five.
(2) A reasonable period after he becomes an Active Participant.
(3) A reasonable period ending after Code Section 401(a)(11) applies
to the Participant.
(4) A reasonable period after termination of employment in the case
of a Participant who terminates before attaining age thirty-five.
For purposes of Sections 6.6(d)(2) through (4), a reasonable period is the end
of the one-year period beginning with the date on which the applicable event
occurs.
(e) The Pre-Retirement Survivor Annuity provided for in this Section 6.6
shall apply only to Participants who are credited with an Hour of
Service on or after August 23, 1984. Participants who are not credited
with an Hour of Service on or after August 23, 1984, shall be provided
with rights to the Pre-Retirement Survivor Annuity in accordance with
Section 303(e)(2) of the Retirement Equity Act of 1984.
(f) If the value of any death benefit (including the Pre-Retirement
Survivor Annuity) does not exceed $3,500, then the Administrator shall
direct that such death benefit be paid as soon as administratively
practicable after the Participant's death in the form of a single
lump-sum payment. No distribution may be made under this Section
6.6(f) after benefit payments have commenced unless the Beneficiary
(or surviving spouse in the case of the Pre-Retirement Survivor
Annuity) consents in writing.
(g) Death benefits not paid in the form of a Pre-Retirement Survivor
Annuity shall be paid to the Participant's Beneficiary (including a
spouse who waives the Pre-Retirement Survivor Annuity after the
Participant's death) in one or more of the following methods, as
elected by the Beneficiary, which are permitted under the Adoption
Agreement:
(1) One lump-sum payment in cash or in property.
(2) Payment for a period certain in monthly, quarterly, semi-annual
or annual cash installments. In order to provide such
installments, the Employer may direct that an amount equal to
that part of the Participant's Vested Accrued Benefit payable to
such Beneficiary be segregated from the general Trust Fund and be
invested separately, and that such separate fund be used for the
payment of installments.
<PAGE>
(3) Purchase of an annuity providing payments for the life of the
Beneficiary, with or without a period certain, or for a period
certain only.
Installment payments must commence and must be made over a period or term which
satisfies the requirements of Section 6.6(h). Any annuity distributed to a
Beneficiary shall be nontransferable and the terms of such annuity shall comply
with the requirements of the Plan.
(h) Notwithstanding any provision in the Plan to the contrary,
distributions made on or after January 1, 1985, whether under the Plan
or through the purchase of an annuity, shall be made in accordance
with the following requirements and shall otherwise comply with Code
Section 401(a)(9) and the Regulations thereunder, the provisions of
which are incorporated herein by reference.
(1) If it is determined, pursuant to Regulations, that the
distribution of a Participant's Vested Accrued Benefit has begun
and the Participant dies before it has been distributed to him,
the remaining portion of his Vested Accrued Benefit shall be
distributed at least as rapidly as under the method of
distribution selected pursuant to Section 6.5 which was in effect
on the date of his death.
(2) If a Participant dies before the distribution of his Vested
Accrued Benefit has begun or before distributions are deemed to
have begun pursuant to Regulations under Code Section 401(a)(9),
then his Vested Accrued Benefit shall be distributed to his
Beneficiary in accordance with the following rules subject to the
selections made in the Adoption Agreement and Section 6.6(h)(3):
(i) In the event a Beneficiary is not a designated Beneficiary
or in the event the Employer has so specified in the
Adoption Agreement, the Participant's entire Vested Accrued
Benefit shall be distributed to his Beneficiary by the
December 31 of the calendar year in which occurs the fifth
anniversary of the Participant's death;
(ii) In the event a Beneficiary is a designated Beneficiary and
the Employer has so specified in the Adoption Agreement, a
Participant's Vested Accrued Benefit shall be distributed
over the life of such designated Beneficiary (or over a
period not extending beyond the life expectancy of such
designated Beneficiary) provided such distribution begins
not later than the December 31 of the calendar year
immediately following the calendar year in which the
Participant dies;
(iii)In the event the Participant's spouse (determined as of the
date of the Participant's death) is his designated
Beneficiary, the provisions of Section
<PAGE>
6.6(h)(2)(ii), if selected by the Employer in the Adoption
Agreement, shall apply except that the requirement that distributions
commence within one year of the Participant's death shall not apply.
In lieu thereof, distributions must commence on or before the later of
(A) the December 31 of the calendar year immediately following the
calendar year in which the Participant dies or (B) the December 31 of
the calendar year in which the Participant would have attained age
seventy and one-half. If the surviving spouse dies before
distributions to such spouse begin, then the provisions of this
Section 6.6(h)(2) shall apply as if the spouse were the Participant,
except, however, that the provisions of this Section 6.6(h)(2)(iii)
shall not apply to the surviving spouse of such spouse.
Notwithstanding the foregoing provisions of this Section 6.6(h)(2) or any
selections made in the Adoption Agreement, the commencement of the payment of a
Pre-Retirement Survivor Annuity to the Participant's surviving spouse may be
postponed until the later of (iv) the December 31 of the calendar year
immediately following the calendar year in which the Participant dies or (v) the
December 31 of the calendar year in which the Participant would have attained
age seventy and one-half.
(3) If the Adoption Agreement so provides, a designated Beneficiary
may elect to receive his benefits at any time and in any manner
that satisfy the provisions of Section 6.6(h)(2). The election by
a designated Beneficiary must be made not later than the December
31 of the calendar year following the calendar year of the
Participant's death. However, with respect to a designated
Beneficiary who is the Participant's surviving spouse, the
election must be made by the earlier of (i) the December 31 of
the calendar year immediately following the calendar year in
which the Participant dies or, if later, the calendar year in
which the Participant would have attained age seventy and
one-half or (ii) the December 31 of the calendar year which
contains the fifth anniversary of the date of the Participant's
death. An election by a designated Beneficiary must be in writing
and shall be irrevocable as of the last day of the election
period stated herein. In the absence of an election by a
designated Beneficiary who is not the surviving spouse of the
Participant, the provisions of Section 6.6(h)(2)(i) shall apply.
In the absence of an election by a designated Beneficiary who is
the surviving spouse of the Participant the provisions of
Sections 6.6(h)(2)(ii) and (iii) shall apply.
(4) If a Participant's benefit is to be distributed over 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
<PAGE>
at least equal the quotient obtained by dividing the
Participant's benefit by the applicable life expectancy. If a
Participant's benefit is to be distributed in the form of an
annuity, distributions thereunder shall be made in accordance
with the requirements of Code Section 401(a)(9) and the proposed
Regulations thereunder.
(5) (i) The term "applicable life expectancy" means the life
expectancy of the Participant's designated Beneficiary in the
applicable calendar year reduced by one for each calendar year
which has elapsed since the date life expectancy was first
calculated. If, in the case of the Participant's surviving
spouse, 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, each
such succeeding calendar year.
(ii) For purposes of this Section 6.6(h), the life expectancy of
a Participant's spouse shall be recalculated annually in
accordance with Regulations or shall not be so recalculated,
as specified in the Adoption Agreement. If the Adoption
Agreement so provides, the Participant's spouse may elect
whether his life expectancy will be recalculated and such
election, once made, shall be irrevocable. If no election is
made by the Participant's spouse prior to the time
distributions must commence, then the life expectancy of the
Participant's spouse shall not be recalculated. Life
expectancy shall be computed using the return multiples in
Tables V and VI of Regulation Section 1.72-9.
(iii)The term "designated Beneficiary" shall mean that term as
defined in Section 6.5(d)(6)(iii).
(iv) The term "distribution calendar year" means a calendar year
for which a minimum distribution is required. The first
distribution calendar year is the calendar year in which
distributions must begin as described in Sections
6.6(h)(2)(ii) and (iii).
(v) The term "Participant's benefit" means the Participant's
Accrued Benefit 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
Participant's Accounts during the valuation calendar year
and after such Valuation Date and decreased by distributions
made during the valuation calendar year and after such
Valuation Date.
<PAGE>
(6) Subject to the Participant's spouse's right of consent afforded
under the Plan, the restrictions imposed by this Section 6.6(h)
shall not apply if a Participant has, prior to January 1, 1984,
made a written designation to have his Vested Accrued Benefit
paid in an alternative method acceptable under Code Section
401(a) as in effect prior to the enactment of the Tax Equity and
Fiscal Responsibility Act of 1982.
6.7 TIME OF DISTRIBUTION
Unless a Participant elects in writing to defer the receipt of his Vested
Accrued Benefit, the payment of his Vested Accrued Benefit shall begin not later
than sixty days after the close of the Plan Year in which the latest of the
following events occurs: (a) the date on which the Participant attains the
earlier of age sixty-five or the Normal Retirement Age specified in the Adoption
Agreement; (b) the tenth anniversary of the date on which the Participant became
an Active Participant under the Plan; or (c) the date the Participant terminates
his service with the Employer or any Affiliated Employer. If the latest of the
events described in the preceding sentence occurs prior to the Participant's
attaining age sixty-two, then the Participant shall be treated as having elected
to defer the receipt of his Vested Accrued Benefit until the attainment of that
age. If a Participant elects in writing to defer the receipt of his Vested
Accrued Benefit, such writing must be signed by the Participant and must
designate the form of benefit and the time at which such benefit shall commence.
Any such designation must be consistent with the provisions of Section 6.5(d).
6.8 DISTRIBUTION TO INCOMPETENTS
If a Participant or Beneficiary is declared incompetent by a court having
jurisdiction, and a guardian of his estate is appointed, any benefits to which
he is entitled shall be paid to the guardian.
6.9 LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN
In the event that benefits payable to a Participant or his Beneficiary hereunder
shall remain unpaid solely by reason of the inability of the Administrator,
after sending a registered letter, return receipt requested, to the last known
address of the Participant or his Beneficiary, and after further diligent
effort, to ascertain the whereabouts of such Participant or his Beneficiary, the
amount so distributable shall be treated as a Forfeiture pursuant to the Plan.
In the event a Participant or Beneficiary is located subsequent to the
allocation of the Forfeiture, the amount so forfeited shall be restored, first
from Forfeitures, if any, then from earnings of the Trust Fund, if any, and then
from an additional Employer contribution if necessary. Notwithstanding the
above, in the event a Participant or his Beneficiary cannot be located upon
termination of the Plan, any amount payable to such Participant or Beneficiary
shall be transferred at the earliest possible date to the State of the
Participant's or Beneficiary's last known address pursuant to the terms of that
State's abandoned property law. Upon such transfer, the Trustee, Employer and
Administrator shall have no further liability or responsibility for the amount
so transferred.
<PAGE>
6.10 IN-SERVICE DISTRIBUTIONS
At such time as a Participant shall have satisfied the conditions, if any,
specified in the Adoption Agreement, the Administrator, at the election of the
Participant, shall direct the distribution to him of all or any portion of his
Employer Contribution Account, in the case of a Profit Sharing Plan or Money
Purchase Plan, and the Accounts specified in the Adoption Agreement, in the case
of a 401(k) Profit Sharing Plan, determined as of the preceding Valuation Date.
In the case of a Money Purchase Plan, however, a distribution pursuant to this
Section 6.10 cannot be made prior to the Participant's attainment of Normal
Retirement Age. Notwithstanding the foregoing, the amount distributed shall not
exceed the Vested portion of any such Account and, unless it has been five or
more years since the date on which an Employee became an Active Participant or
unless the distribution is being made on account of a stated event (for example,
attainment of a stated age, layoff, disability), the amount so distributed
cannot be greater than the Vested portion of such Account reduced by the amount
of any Employer contributions made within two years of the date of distribution.
(For this purpose the two-year period is measured from the date contributions
are actually made and not from the date as of which they are allocated.) In the
event such a distribution is made, an Active Participant shall continue to be
treated as an Active Participant for all purposes under the Plan. Any
distribution made pursuant to this Section 6.10 shall be made in a manner that
is consistent with and satisfies the provisions of Section 6.5. If the Account
from which a distribution is made is not fully Vested at the time of the
distribution, a Participant's Vested percentage shall be determined pursuant to
the provisions of Section 6.4(i). The Employer may direct the Administrator to
charge the Participant or his Account for the fee assessed by the Administrator
to process a distribution under this Section 6.10.
6.11 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) For Profit Sharing Plans, if elected in the Adoption Agreement, the
Employer, at the request of the Participant, shall direct the
distribution to any Participant of an amount up to the lesser of 100%
of his Vested Employer Contribution Account, determined as of the
preceding Valuation Date or the amount necessary to satisfy an
immediate and heavy financial need of the Participant. The Employer,
on the basis of all relevant facts and circumstances, shall determine
whether a Participant has an immediate and heavy financial need. An
immediate and heavy financial need shall include but shall not be
limited to the following circumstances:
(1) Expenses for medical care described in Code Section 213(d)
previously incurred by the Participant, his spouse, or any of his
dependents (as defined in Code Section 152) or expenses necessary
for such individuals to obtain medical care;
(2) The purchase (excluding mortgage payments) of a principal
residence for the Participant;
(3) Payment of funeral expenses for a member of the Participant's
family;
<PAGE>
(4) Payment of tuition, related educational fees, and room and board
expenses for the next twelve months of post-secondary education
for the Participant, or his spouse, children or dependents; or
(5) The need to prevent the eviction of the Participant from his
principal residence or foreclosure on the mortgage of the
Participant's principal residence.
(b) Any distribution made pursuant to this Section 6.11 shall be made in a
manner which is consistent with and satisfies the provisions of
Section 6.5. If the Participant's Employer Contribution Account is not
fully Vested at the time of the distribution, his Vested percentage
shall be determined pursuant to the provisions of Section 6.4(i). In
the event that a hardship distribution is made to a Participant who is
an Active Participant, such Participant shall continue to be treated
as an Active Participant for all purposes under the Plan.
(c) The Employer may direct the Administrator to charge the Participant
for the fee assessed by the Administrator to process a distribution
under this Section 6.11.
6.12 LIMITATIONS ON BENEFITS AND DISTRIBUTIONS
All rights and benefits, including elections, provided to a Participant in this
Plan shall be subject to the rights afforded to any Alternate Payee under a
Qualified Domestic Relations Order. Furthermore, a distribution to an Alternate
Payee shall be permitted if such distribution is authorized by a Qualified
Domestic Relations Order, even if the affected Participant has not reached the
"earliest retirement age" within the meaning of Code Section 414(p).
6.13 SPECIAL RULE FOR NON-ANNUITY PLANS
If elected in the Adoption Agreement, the following shall apply:
(a) The Participant shall be prohibited from having his Vested Accrued
Benefit paid in the form of a life annuity;
(b) Upon the death of the Participant, the Participant's entire Accrued
Benefit will be paid to his surviving spouse or, if there is no
surviving spouse or if the surviving spouse has consented to the
designation of a Beneficiary in a manner consistent with the
provisions of Section 6.6(b), to the Participant's designated
Beneficiary; and
(c) The provisions of Sections 6.5 and 6.6, to the extent they relate to
the Joint and Survivor Annuity and Qualified Pre-Retirement Survivor
Annuity, shall be inoperative with respect to the Plan.
This Section 6.13 shall not apply to any Participant if it is determined that
this Plan is a direct or indirect transferee of a defined benefit plan, money
purchase plan or target benefit plan, or of a stock bonus plan or profit sharing
plan which was subject to the survivor annuity requirements of Code Sections
<PAGE>
401(a)(11) and 417 with respect to such Participant. However, this Section 6.13
shall apply to such Participant to the extent that the amounts so transferred
are accounted for separately from the Participant's other Accounts under the
Plan
6.14 DIRECT ROLLOVERS
(a) Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this part, a
distributee may elect, at the time and in the manner prescribed by the
Administrator, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by
the distributee in a direct rollover.
(b) Definitions.
(1) The term "eligible rollover distribution" means 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: (i) 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; (ii) any
distribution to the extent such distribution is required under
Code Section 401(a)(9); (iii) 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 (iv) any other distributions(s) that is
reasonably expected to total less than $200 during a year.
(2) The terms "eligible retirement plan" means an individual
retirement account described in Code Section 408(a), an
individual retirement annuity described in Code Section 408(b),
an annuity plan described in Code Section 403(a), or a qualified
trust described in Code Section 401(a), 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.
(3) The term "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 are distributees with regard to the interest of the spouse
or former spouse.
(4) The term "direct rollover" means a payment by the Plan to the
eligible retirement plan specified by the distributee.
ARTICLE VII
TRUSTEE
7.1 BASIC RESPONSIBILITIES OF THE TRUSTEE
The Trustee shall have the following categories of responsibilities:
(a) Consistent with the funding policy and method determined by the
Employer pursuant to Section 2.3(b), to invest, manage, and control
the Trust;
(b) At the direction of the Administrator, to pay benefits required under
the Plan to be paid to a Participant or, in the event of his death, to
his Beneficiary;
(c) To maintain records of receipts and disbursements and to furnish to
the Employer or Administrator or both for each Plan Year a written
annual report pursuant to Section 7.8.
Notwithstanding the foregoing provisions of this Section 7.1, the responsibility
described in Section 7.1(a) above shall not apply to Emjay Corporation or any
other person affiliated with Emjay Corporation if it is a Trustee of the Plan.
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE
The Trustee shall maintain a Trust Fund for the purpose of accumulating the
funds necessary to pay benefits under the Plan. The Trustee shall invest and
reinvest the principal and income of the Trust Fund, without distinction between
principal and income, in AAL Mutual Funds or such other investments permitted by
AAL Capital Management Corporation or its successor. In making investment
decisions, the Trustee shall at all times consider, among other factors, the
short and long-term financial needs of the Plan on the basis of information
furnished by the Employer. The investment powers and duties described in this
Section 7.2 shall be exercised at the direction of the Employer if Emjay
Corporation or any other person affiliated with Emjay Corporation is a Trustee
of the Plan; provided, however, that in the event the Employer neglects to
provide appropriate directions regarding the investment of the Trust Fund, Emjay
Corporation (or any such affiliated person) shall invest any uninvested cash in
any AAL money market mutual fund or in any other investment for the short-term
holding of cash that is permitted by AAL Management Corporation or its
successor.
7.3 OTHER POWERS OF THE TRUSTEE
The Trustee, in addition to all powers and authorities under common law,
statutory authority, including the Act, and other provisions of this Plan, shall
have the following powers and authorities to be exercised in the Trustee's sole
discretion except as otherwise provided in Section 7.3(m) below:
(a) To purchase, or subscribe for, any securities or other property and to
retain the same;
(b) To sell, exchange, convey, transfer, grant options to purchase, or
otherwise dispose of any securities or other property held by the
Trustee, by private contract or at public auction. No person dealing
with the Trustee shall be bound to see to the application
<PAGE>
of the purchase money or to inquire into the validity, expediency, or
propriety of any such sale or other disposition, with or without
advertisement;
(c) To vote upon any stocks, bonds, or other securities; to give general
or special proxies or powers of attorney with or without power of
substitution; to exercise any conversion privileges, subscription
rights or other options, and to make any payments incidental thereto;
to oppose, or to consent to, or otherwise participate in, corporate
reorganizations or other changes affecting corporate securities, and
to delegate discretionary powers, and to pay any assessments or
charges in connection therewith; and generally to exercise any of the
powers of an owner with respect to stocks, bonds, securities, or other
property;
(d) To cause any securities or other property to be registered in the
Trustee's own name or in the name of one or more of the Trustee's
nominees, and to hold any investments in bearer form, but the books
and records of the Trustee shall at all times show that all such
investments are part of the Trust Fund;
(e) To borrow or raise money for the purposes of the Plan in such amount,
and upon such terms and conditions, as the Trustee shall deem
advisable; and for any sum so borrowed, to issue a promissory note as
Trustee, and to secure the repayment thereof by pledging all or any
part of the Trust Fund; and no person lending money to the Trustee
shall be bound to see to the application of the money lent or to
inquire into the validity, expediency, or propriety of any borrowing;
(f) To keep such portion of the Trust Fund in cash or cash balances as the
Trustee may, from time to time, deem to be in the best interests of
the Plan, without liability for interest thereon;
(g) To accept and retain for such time as it may deem advisable any
securities or other property received or acquired by it as Trustee
hereunder, whether or not such securities or other property would
normally be purchased as investments hereunder;
(h) To make, execute, acknowledge, and deliver any and all documents of
transfer and conveyance and any and all other instruments that may be
necessary or appropriate to carry out the powers herein granted;
(i) To settle, compromise, or submit to arbitration any claims, debts, or
damages due or owing to or from the Plan, to commence or defend suits
or legal or administrative proceedings, and to represent the Plan in
all suits and legal and administrative proceedings; provided, however,
the Trustee shall be under no duty or obligation to commence or defend
suits or legal or administrative proceedings or to represent the Plan
in such suits and proceedings unless the Trustee shall have been
indemnified to its satisfaction against all expenses and liabilities
which the Trustee may sustain or anticipate by reason thereof;
<PAGE>
(j) To employ suitable agents and counsel and to pay their reasonable
expenses and compensation, and such agent or counsel may or may not be
agent or counsel for the Employer;
(k) To pool all or any part of the assets of the Trust Fund, from time to
time, with the assets of any other qualified plan of the Employer or
any Affiliated Employer, and to commingle such assets and make joint
or common investments and carry joint accounts on behalf of this Plan
and such other plan or plans, allocating undivided shares or interests
in such investments or accounts or any pooled assets of the two or
more plans in accordance with their respective interests;
(l) To do all such acts and exercise all such rights and privileges,
although not specifically mentioned herein, as the Trustee may
deem necessary to carry out the purposes of the Plan.
(m) The powers and authorities set forth in paragraphs (a), (b), (c), (e),
(f), (g), and (k) shall only be exercised at the direction of the
Employer if Emjay Corporation or any other person affiliated with
Emjay Corporation is a Trustee of the Plan.
7.4 PARTICIPANT DIRECTION OF INVESTMENTS
If elected in the Adoption Agreement, a Participant may direct the investment of
those of his Accounts to which the right to direct the investment thereof has
been extended as set forth in the Adoption Agreement. The Employer may select
two or more investment alternatives for the investment of a Participant's
Accounts to which the right to direct the investment thereof applies. The
Employer shall establish rules and regulations relating to the investment of a
Participant's Accounts under this Section 7.4(b), including but not limited to
rules relating to the frequency with which a Participant may change the
investment of his Accounts or relating to the investment of a Participant's
Accounts in the event of the Participant's failure to select any such
alternatives.
7.5 LOANS TO PARTICIPANTS
(a) If permitted in the Adoption Agreement, the Trustee, as directed by
the Employer, may make loans to Participants under the following
circumstances: (1) loans shall be made available to all Participants
and Beneficiaries on a reasonably equivalent basis; (2) loans shall
not be made available to Highly Compensated Employees in an amount
greater than the amount made available to other Participants; (3)
loans shall bear a reasonable rate of interest; and (4) loans shall be
adequately secured.
(b) Loans shall not be made to any Shareholder-Employee or Owner-Employee
unless an exemption for such loan is obtained pursuant to Act Section
408 and further provided that such loan would not be subject to tax
pursuant to Code Section 4975.
(c) The amount of any loan made pursuant to this Section 8.5 shall
ordinarily be limited to the lesser of:
<PAGE>
(1) $50,000, reduced by the excess (if any) of the highest
outstanding balance of loans to the Participant during the one
year period ending on the day before the date on which such loan
is made, over the outstanding balance of loans to the Participant
on the date on which such loan is made, or
(2) the greater of (i) one-half of the Participant's Vested Accrued
Benefit under the Plan, or (ii) $10,000.
For purposes of this limit, this Plan and all other plans of the Employer and
any Affiliated Employer shall be treated as one plan. In determining whether the
loan limitation has been exceeded, there shall be taken into account all other
loans outstanding at the time the loan is to be made. Notwithstanding the
foregoing provisions of this Section 7.5(c) to the contrary, in no event shall
the amount of any loan plus the amount of loans then outstanding from this Plan
exceed eighty percent of the Participant's Vested Accrued Benefit.
(d) All loans shall be secured with such property, including the
Participant's Vested Accrued Benefit (but not including that portion
of his Accrued Benefit attributable to his Qualified Voluntary
Employee Contribution Account) as the Trustee deems to be adequate
under the circumstances. However, if a Participant's Vested Accrued
Benefit is to be used as security for a loan, not more than fifty
percent of such Vested Accrued Benefit may be so used.
(e) Loans shall ordinarily provide for level amortization with payments to
be made not less frequently than quarterly over a period which
generally shall not exceed five years. However, loans used to acquire
any dwelling unit which, within a reasonable time, is to be used
(determined at the time the loan is made) as a principal residence of
the Participant may provide for a period of repayment that exceeds
five years. Notwithstanding the foregoing, loans made prior to January
1, 1987, which are used to acquire, construct, reconstruct or
substantially rehabilitate any dwelling unit which, within a
reasonable period of time is to be used (determined at the time the
loan is made) as a principal residence of the Participant or a member
of his family (within the meaning of Code Section 267(c)(4)) may
provide for periodic repayment over a reasonable period of time that
may exceed five years. Additionally, loans made prior to January 1,
1987, may provide for periodic payments which are made less frequently
than quarterly and which do not necessarily result in level
amortization.
(f) An assignment or pledge of any portion of a Participant's Accrued
Benefit and a loan, pledge, or assignment with respect to any
insurance Contract purchased under the Plan, shall be treated as a
loan under this Section 7.5.
(g) Any loan made pursuant to this Section 7.5 after August 18, 1985,
which is secured by the Vested Accrued Benefit of a Participant, shall
require the written consent of the Participant's spouse. No spousal
consent shall be required, however,
<PAGE>
if the Participant's Accrued Benefit subject to the security is not in
excess of $3,500 or if the Plan is not subject to the spousal consent
requirements on account of Section 6.13. Spousal consent shall be
obtained no earlier than the beginning of the ninety-day period that
ends on the date on which the loan is to be so secured. The 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 loan secured by the Participant's Vested Accrued
Benefit is renegotiated, extended, renewed or otherwise revised. Any
security interest held by the Plan by reason of an outstanding loan to
the Participant shall be taken into account in determining the amount
of any death benefit including the Pre-Retirement Survivor Annuity.
(h) Foreclosure on the note and attachment of security will occur at the
time of default on the loan. However, if the loan is secured, in the
case of a 401(k) Profit Sharing Plan, by the Participant's Elective
Account, Qualified Matching Account or Qualified Non-Elective Account
or, in the case of a Money Purchase Plan, by the Participant's
Employer Contribution Account, then, in the event of default,
foreclosure on the note and attachment of security will not occur
until such time as the Vested Accrued Benefit of the Participant may
be distributed under the Plan. Notwithstanding the provisions of
Section 7.4, the Employer may direct that a loan be earmarked to one
or more of the Accounts of a borrowing Participant in the event of the
Participant's bankruptcy, in the event the amount of the loan (plus
accrued interest) exceeds the Vested Accrued Benefit of the
Participant or in the event of any other circumstance that requires
the protection of the interests of the other Participants. Any fees
associated with the earmarking of a loan as provided in the
immediately preceding sentence may be charged to the Accounts of the
borrowing Participant.
(i) If elected in the Adoption Agreement, a loan shall be made to a
Participant only if necessary to satisfy an immediate and heavy
financial need of the Participant. The Employer, on the basis of all
relevant facts and circumstances, shall determine whether a
Participant has an immediate and heavy financial need. An immediate
and heavy financial need shall include but shall not be limited to the
following circumstances:
(1) Expenses described in Code Section 213(d) previously incurred by
the Participant, his spouse, or any of his dependents (as defined
in Code Section 152) or expenses necessary for such individual to
obtain medical care;
(2) The purchase (excluding mortgage payments) of a principal
residence for the Participant;
(3) Funeral expenses for a member of the Participant's family;
<PAGE>
(4) Payment of tuition, related educational fees, and room and board
expenses for the next twelve months of post-secondary education
for the Participant, or his spouse, children or dependents; or
(5) The need to prevent the eviction of the Participant from his
principal residence or foreclosure on the mortgage of the
Participant's principal residence.
(j) The Employer shall specify in the Adoption Agreement what, if any,
minimum amount must be borrowed and whether a Participant can have
more than one loan outstanding at the same time. The Employer shall
also promulgate other rules and regulations relating to Participant
loans including but not limited to the frequency with which loans may
be made and whether the fees of the Trustee and Administrator
applicable to the origination and maintenance of the loan shall be
charged to the borrowing Participant or his Accounts. All such rules
and regulations shall be applied in a uniform and nondiscriminatory
manner.
7.6 DUTIES OF THE TRUSTEE REGARDING PAYMENTS
At the direction of the Administrator or Employer, the Trustee shall, from time
to time, in accordance with the terms of the Plan, make payments out of the
Trust Fund. The Trustee shall not be responsible in any way for the application
of such payments.
7.7 TRUSTEE'S COMPENSATION AND EXPENSES AND TAXES
The Trustee shall be paid such reasonable compensation as set forth in the
Trustee's regularly published fee schedule or as agreed upon in writing by the
Employer and the Trustee. However, an individual serving as Trustee who already
receives full-time pay from the Employer shall not receive compensation from the
Plan. In addition, the Trustee shall be reimbursed for any reasonable expenses,
including reasonable counsel fees incurred by it as Trustee. Until paid, all
such compensation and expenses shall constitute a liability of the Trust Fund.
However, the Employer may pay such compensation and expenses directly or may, in
the event such compensation and expenses have already been paid, reimburse the
Trust Fund. All taxes of any kind that may be levied or assessed under existing
or future laws upon, or in respect of, the Trust Fund or the income thereof,
shall be paid from the Trust Fund.
7.8 ANNUAL REPORT OF THE TRUSTEE
Within a reasonable period of time after the later of the Anniversary Date or
receipt of the Employer's contribution for each Plan Year, the Trustee, or its
agent, shall furnish to the Employer and Administrator a written statement of
account with respect to the Plan Year for which such contribution was made
setting forth:
(a) the net income, or loss, of the Trust Fund;
(b) the gains, or losses, realized by the Trust Fund upon sales or other
disposition of the assets;
(c) the increase, or decrease, in the value of the Trust Fund;
<PAGE>
(d) all payments and distributions made from the Trust Fund; and
(e) such further information as the Employer, Administrator or both deem
appropriate.
The Employer, upon its receipt of each such statement of account, shall
acknowledge receipt thereof in writing and advise the Trustee of its approval or
disapproval thereof. Failure by the Employer to disapprove any such statement of
account within thirty days after its receipt thereof shall be deemed an approval
thereof. The approval by the Employer of any statement of account shall be
binding as to all matters embraced therein as between the Employer and the
Trustee to the same extent as if the account of the Trustee had been settled by
judgment or decree in an action for a judicial settlement of its account in a
court of competent jurisdiction in which the Trustee, the Employer and all
persons having or claiming an interest in the Plan were parties; provided,
however, that nothing herein contained shall deprive the Trustee of its right to
have its accounts judicially settled if the Trustee so desires.
7.9 AUDIT
(a) If an audit of the Plan's records shall be required by the Act and the
regulations thereunder for any Plan Year, the Employer shall engage an
independent qualified public accountant for that purpose. Such
accountant shall, after an audit of the books and records of the Plan
in accordance with generally accepted auditing standards and within a
reasonable period after the close of the Plan Year, furnish to the
Employer, Administrator and Trustee a report of his audit setting
forth his opinion as to whether any statements, schedules or lists,
which are required by Act Section 103 or the Secretary of Labor to be
filed with the Plan's annual report, are presented fairly and in
conformity with generally accepted accounting principles applied
consistently.
(b) All auditing and accounting fees shall be an expense of and may, at
the election of the Employer, be paid from the Trust Fund.
(c) If some or all of the information necessary to comply with Act Section
103 is maintained by a bank, insurance company, or similar
institution, regulated and supervised and subject to periodic
examination by a state or federal agency, it shall transmit and
certify the accuracy of that information to the Administrator as
provided in Act Section 103(b) within 120 days after the end of the
Plan Year or such other date as may be prescribed under regulations of
the Secretary of Labor.
7.10 RESIGNATION, REMOVAL AND SUCCESSION OF TRUSTEE
(a) The Trustee may resign at any time by delivering to the Employer, at
least thirty days before its effective date, a written notice of his
resignation.
(b) The Employer may remove the Trustee by sending, by registered or
certified mail, addressed to the Trustee at his last known address, at
least thirty days before its effective date, a written notice of his
removal.
<PAGE>
(c) Upon the death, resignation, incapacity or removal of any Trustee who
is the sole Trustee, the Employer shall appoint a successor. In the
case of a Trustee who is not the sole Trustee, the Employer may
appoint a successor. Any successor,upon accepting such appointment in
writing and delivering his written acceptance to the Employer, shall,
without further act, become vested with all the estate, rights,
powers, discretions and duties of his predecessor with like respect as
if he were originally named as a Trustee herein. Until such a
successor is appointed, the remaining Trustee or Trustees, if any,
shall have full authority to act under the terms of the Plan.
(d) The Employer may designate one or more successors prior to the death,
resignation, incapacity, or removal of a Trustee. In the event a
successor is so designated by the Employer and accepts such
designation, the successor shall, without further act, become vested
with all the estate, rights, powers, discretions and duties of his
predecessor with the like effect as if he were originally named as
Trustee herein, immediately upon the death, resignation, incapacity or
removal of his predecessor.
(e) Whenever any Trustee hereunder ceases to serve as such, he shall
furnish to the Employer and Administrator a written statement of
account with respect to the portion of the Plan Year during which he
served as Trustee. This statement shall be either (1) included as part
of the annual statement of account for the Plan Year required under
Section 7.8 or (2) set forth in a special statement. Any such special
statement of account should be rendered to the Employer not later than
the due date of the annual statement of account for the Plan Year. The
procedures set forth in Section 7.8 for the approval by the Employer
of annual statements of account shall apply to any special statement
of account rendered hereunder and approval by the Employer of any such
special statement in the manner provided in Section 7.8 shall have the
same effect upon the statement as the Employer's approval of an annual
statement of account. No successor to the Trustee shall have any duty
or responsibility to investigate the acts or transactions of any
predecessor who has rendered all statements of account required by
Sections 7.8 and 7.10.
7.11 TRANSFER OF INTEREST
The Trustee, on behalf of any Participant, may accept funds transferred from
another trust forming part of a pension, profit sharing or stock bonus plan
meeting the requirements of Code Section 401(a) or a "conduit" Individual
Retirement Account meeting the requirements of Code Section 408, provided the
conditions precedent to such transfer set forth in Section 4.5 are satisfied.
The Trustee may act upon the direction of the Administrator or Employer without
determining the facts concerning a transfer.
7.12 TRUSTEE INDEMNIFICATION
The Employer agrees to indemnify and save harmless the Trustee against any and
all claims, losses, damages, expenses and liabilities the
<PAGE>
Trustee may incur in the exercise and performance of the Trustee's powers and
duties hereunder, unless the same are determined to be due to gross negligence
or willful misconduct.
7.13 ALLOCATION AND DELEGATION OF RESPONSIBILITIES
In the event two or more persons are acting as Trustee hereunder, the Trustees
may allocate specific responsibilities under the Plan among themselves in which
event the Trustees shall apprise the Employer and the Administrator of the
manner in which such responsibilities have been allocated. Each Trustee shall be
responsible only for its allocated responsibilities and shall not be liable for
any act or failure to act by any other Trustee to the extent permitted under the
Act.
ARTICLE VIII
AMENDMENT, TERMINATION, AND MERGERS
8.1 AMENDMENT
(a) The Employer shall have the right at any time to amend this Plan
subject to the limitations of this Section 8.1. However, any amendment
which affects the rights, duties or responsibilities of the Trustee
and Administrator may only be made with the Trustee's and
Administrator's written consent. Any such amendment shall become
effective as provided therein upon its execution.
(b) 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 Code Section 415 or 416 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 an individually designed plan. If the Employer amends
the Plan for any other reason, including a waiver of the minimum
funding requirement under Code Section 412(d), then the Employer will
no longer be treated as maintaining this Prototype Plan (as defined in
Section 4.4(f)(9)) and will instead be considered to have an
individually designed plan.
(c) AAL Capital Management Corporation, the sponsor of this Prototype
Plan, may amend this Plan, without the Employer's consent, in order to
conform the Plan to any requirement for qualification under the Code.
Any such amendment, however, shall not amend the Plan in any manner
which would modify any election made by the Employer in the Adoption
Agreement without the Employer's written consent. AAL Capital
Management Corporation shall provide a copy of any such amendment to
each Employer who has adopted the Prototype Plan after first having
received a ruling or favorable determination (if such ruling or
favorable determination is required) from the Internal Revenue Service
that the Plan as amended qualifies under Code Section 401(a).
(d) No amendment to the Plan shall be effective if it (1) authorizes or
permits any part of the Trust Fund (other than such part as is
required to pay taxes and administration expenses) to be used for or
diverted to any purpose other than for the exclusive benefit of the
Participants or their Beneficiaries; (2) causes any reduction in the
Accrued Benefit of any Participant; or (3) causes or permits any
portion of the Trust Fund to revert to or become the property of the
Employer or any Affiliated Employer.
(e) Except as permitted by Regulations (including Regulation 1.411(d)-4),
no Plan amendment or transaction having the effect of a Plan amendment
(such as a merger, plan transfer or similar transaction) shall be
effective if it eliminates or reduces any Section 411(d)(6) protected
benefits or adds or modifies conditions relating to Section 411(d)(6)
protected benefits the result of which is a further restriction on
such benefits unless
<PAGE>
such protected benefits are preserved with respect to benefits accrued as
of the later of the adoption date or effective date of the amendment.
The term "Section 411(d)(6) protected benefits" means the benefits
described in Code Section 411(d)(6)(A), early retirement benefits and
retirement-type subsidies described in Code Section 411(d)(6)(B)(i)
and optional forms of benefit described in Code Section
411(d)(6)(B)(ii).
8.2 TERMINATION
(a) The Employer shall have the right at any time to terminate the Plan by
delivering to the Trustee and Administrator written notice of such
termination. Upon termination, the Accrued Benefit of each Participant
shall become fully Vested and shall not thereafter be subject to
Forfeiture.
(b) Upon the termination of the Plan, the Employer shall direct the
distribution of the Trust Fund to Participants in a manner which is
consistent with and satisfies the provisions of Section 6.5.
Distributions to a Participant shall be made in cash (or in property
if permitted in the Adoption Agreement) or through the purchase of an
annuity from an insurance company. Except as permitted by Regulations,
the termination of the Plan shall not result in the reduction of
Section 411(d)(6) protected benefits as described in Section 8.1.
8.3 MERGER OR CONSOLIDATION
This Plan may be merged or consolidated with, or its assets, liabilities or both
may be transferred to any other plan only if the benefits which would be
received by a Participant under this Plan, in the event of a termination of the
Plan immediately after such transfer, merger or consolidation, are at least
equal to the benefits the Participant would have received if the Plan had
terminated immediately before the transfer, merger or consolidation. Any such
transfer, merger or consolidation must not otherwise result in the elimination
or reduction of any Section 411(d)(6) protected benefits as described in Section
8.1(e).
ARTICLE IX
MISCELLANEOUS
9.1 EMPLOYER ADOPTIONS
(a) Any person may become the Employer hereunder by executing the Adoption
Agreement in form satisfactory to the Trustee, and it shall provide
such additional information as the Trustee may require. The consent of
the Trustee to act as such shall be signified by its execution of the
Adoption Agreement.
(b) Except as otherwise provided in this Plan, the affiliation of the
Employer with and the participation of its Employees in the Plan shall
be separate and apart from that of any other employer and its
employees hereunder.
9.2 PARTICIPANT'S RIGHTS
This Plan shall not be deemed to constitute a contract between the Employer and
any Employee or to be a consideration or an inducement for the employment of any
Employee. Nothing contained in this Plan shall be deemed to give any Employee
the right to be retained in the service of the Employer or to interfere with the
right of the Employer to discharge any Employee at any time regardless of the
effect which such discharge shall have upon him as a Participant under this
Plan.
9.3 ALIENATION
(a) Subject to the exceptions provided below, no benefit which shall be
payable to any person (including a Participant or his Beneficiary)
shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or charge, and any attempt
to anticipate, alienate, sell, transfer, assign, pledge, encumber or
charge the same shall be void; and no such benefit shall in any manner
be liable for, or subject to, the debts, contracts, liabilities,
engagements or torts of any such person, nor shall it be subject to
attachment or legal process for or against such person, and the same
shall not be recognized except to such extent as may be required by
law.
(b) Section 9.3(a) shall not apply to the extent a Participant or
Beneficiary is indebted to the Plan as a result of a loan made
pursuant to Section 7.5. At the time a distribution is to be made to
or for a Participant's or Beneficiary's benefit, such portion of the
amount to be distributed as shall equal such indebtedness shall be
paid to the Plan to apply against or discharge such indebtedness.
Prior to making a payment, however, the Participant or Beneficiary
must be given written notice by the Administrator that such
indebtedness is to be so paid in whole or part from such distribution.
If the Participant or Beneficiary does not agree that the indebtedness
is a valid claim against his Vested Accrued Benefit, he shall
<PAGE>
be entitled to a review of the validity of the claim in accordance with
the procedures set forth in Sections 2.12 and 2.13.
(c) Section 9.3(a) shall not apply to a Qualified Domestic Relations Order
and those other Domestic Relations Orders permitted to be so treated
by the Administrator under the provisions of the Retirement Equity Act
of 1984. The Administrator shall establish a written procedure to
determine the qualified status of Domestic Relations Orders and to
administer distributions under Qualified Domestic Relations Orders.
9.4 CONSTRUCTION OF PLAN
This Plan and Trust shall be construed and enforced according to the Act and the
laws of the State of Wisconsin, or where all or a portion of the assets of such
Plan and Trust are maintained by a Trustee not domiciled in Wisconsin, the laws
of the State of the domicile of the Trustee, other than any laws respecting
choice of law, to the extent not pre-exempted by the Act.
9.5 GENDER AND NUMBER
Wherever any words are used herein in the masculine, feminine or neuter gender,
they shall be construed as though they were also used in another gender in all
cases where they would so apply, and whenever any words are used herein in the
singular or plural form, they shall be construed as though they were also used
in the other form in all cases where they would so apply.
9.6 LEGAL ACTION
To the extent permitted by applicable law, in the event any claim, suit or
proceeding is brought regarding the Plan to which the Trustee or the
Administrator may be a party, they shall be entitled to be reimbursed from the
Trust Fund for any and all costs, attorney's fees, and other expenses pertaining
thereto incurred by them for which they shall have become liable.
9.7 PROHIBITION AGAINST DIVERSION OF FUNDS
(a) Except as provided below and otherwise specifically permitted by law,
it shall be impossible by operation of the Plan, by termination, by
power of revocation or amendment, by the happening of any contingency,
by collateral arrangement or by any other means, for any part of the
Trust Fund or any amounts contributed thereto to be used for, or
diverted to, purposes other than the exclusive benefit of Participants
or their Beneficiaries.
(b) In the event the Employer shall make a contribution under a mistake of
fact pursuant to Section 403(c)(2)(A) of the Act, the Employer may
demand repayment of such contribution at any time within one year
following the time of payment and the Trustee shall return such amount
to the Employer within the one year period. Earnings of the Plan
attributable to the contributions may not be returned to the Employer
but any losses attributable thereto must reduce the amount so
returned.
<PAGE>
(c) Notwithstanding anything herein to the contrary, if, pursuant to a
timely application (within the meaning of Act Section 403(c)(2)(B))
filed by or on behalf of the Plan, the Commissioner of Internal
Revenue Service or his delegate should determine that the Plan does
not initially qualify as a tax-exempt plan under Code Section 401, and
such determination is not contested or, if contested, is finally
upheld, then the Plan shall be void ab initio and all amounts
contributed to the Plan by the Employer, less expenses paid, shall be
returned within one year and the Plan shall terminate, and the Trustee
shall be discharged from all further obligations.
(d) Except as specifically stated in the Plan, if any contribution by the
Employer to the Trust Fund is conditioned upon the deductibility of
the contribution by the Employer under the Code, then, to the extent
any deduction for such contribution is disallowed, the Employer may,
within one year following a final determination of the disallowance,
whether by agreement with the Internal Revenue Service or by final
decision of a court of competent jurisdiction, demand repayment of
such disallowed contribution and the Trustee shall return such
contribution within one year following the disallowance. Earnings of
the Plan attributable to the disallowed contribution may not be
returned to the Employer but any losses attributable thereto must
reduce the amount so returned.
9.8 BONDING
Every Fiduciary, except a bank or an insurance company, or any other person
handling Plan funds, unless exempted by the Act and regulations thereunder,
shall be bonded in an amount not less than ten percent of the amount of the
funds such Fiduciary or other person handles; provided, however, that the
minimum bond shall be $1,000 and the maximum bond shall be $500,000. The amount
of funds handled shall be determined at the beginning of each Plan Year by the
amount of funds handled by such person, group, or class to be covered and their
predecessors, if any, during the preceding Plan Year, or if there is no
preceding Plan Year, then by the amount of the funds to be handled during the
then current Plan Year. The bond shall provide protection to the Plan against
any loss by reason of acts of fraud or dishonesty by the Fiduciary or such other
person alone or in connivance with others. The surety shall be a corporate
surety company (as such term is used in Act Section 412(a)(2)), and the bond
shall be in a form approved by the Secretary of Labor. The cost of such bonds
shall be an expense of the Trust Fund unless paid by the Employer.
9.9 EMPLOYER'S, ADMINISTRATOR'S AND TRUSTEE'S PROTECTIVE CLAUSE
Neither the Employer, nor the Administrator, nor the Trustee, nor their
successors, shall be responsible for the validity of any annuity contract
purchased on behalf of a Participant or for the failure on the part of an
insurance company to make payments provided by any such annuity contract, or for
the action of any person which may delay payment or render an annuity contract
null and void or unenforceable in whole or in part.
<PAGE>
9.10 INSURANCE COMPANY PROTECTIVE CLAUSE
Any insurance company who shall issue an annuity contract shall not have any
responsibility for the validity of this Plan or for the tax or legal aspects of
this Plan. Any insurance company shall be protected and held harmless in acting
in accordance with any written direction of the Trustee, Employer or
Administrator and shall have no duty to see to the application of any funds paid
to the Trustee, nor be required to question any actions directed by the Trustee,
Employer or Administrator. Regardless of any provision of this Plan, an
insurance company shall not be required to take or permit any action or allow
any benefit or privilege contrary to the terms of any annuity contract which it
issues hereunder or of the rules of the insurance company.
9.11 RECEIPT AND RELEASE FOR PAYMENTS
Any payment to any Participant, his legal representative, Beneficiary, or to any
guardian or committee appointed for such Participant or Beneficiary in
accordance with the provisions of this Plan, shall, to the extent thereof, be in
full satisfaction of all claims hereunder against the Trustee and the Employer.
9.12 ACTION BY THE EMPLOYER
Whenever the Employer under the terms of the Plan is permitted or required to do
or perform any act or matter or thing, it shall be done and performed by a
person duly authorized by its legally constituted authority.
9.13 HEADINGS
The headings and subheadings of this Plan have been inserted for convenience of
reference and are to be ignored in any construction of the provisions hereof.
9.14 APPROVAL BY INTERNAL REVENUE SERVICE
In order to obtain reliance, the Employer, upon its initial execution of the
Adoption Agreement, or upon an amendment of any of its elective provisions, may
file an application with the Internal Revenue Service requesting a determination
letter that the Plan as adopted or amended by the Employer qualifies as a
tax-exempt plan under Code Section 401. The preceding sentence may not apply
where an application for a determination letter is not required pursuant to
current Revenue Procedures to obtain reliance. If, after initial approval of
this Plan by the Internal Revenue Service or, where an application is not
required to obtain reliance, after the Plan is established or amended, the
Employer at a later date fails to retain the Plan's qualified status, then the
Employer shall no longer be regarded as participating in a Prototype Plan (as
defined in Section 4.4(f)(9)) and the Plan for such Employer shall be regarded
as an individually designed plan.
9.15 UNIFORMITY
All provisions of this Plan shall be interpreted and applied in a uniform,
nondiscriminatory manner.
<PAGE>
9.16 OWNER EMPLOYEES
(a) If this Plan provides contributions or benefits for one or more
Owner-Employees who control both the trade or business with respect to
which this Plan is established and one or more other trades or
businesses, this Plan and any plan or plans established for other
trades or businesses must, when looked at as a single plan, satisfy
Code Sections 401(a) and 401(d).
(b) If the Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or businesses,
the employees of the other trades or businesses must be included in a
plan which satisfies Code Sections 401(a) and 401(d) and which
provides contributions and benefits not less favorable than those
provided for Owner-Employees under the Plan.
(c) 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 provided for the employees under the plan of the trade or
business 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.
(d) For the purpose of the preceding paragraphs, 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 own the entire interest in an unincorporated trade or
business, or in the case of a partnership, own more than fifty percent
of either the capital interest or the profits interest in the
partnership. For the purpose 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 X
PARTICIPATING EMPLOYERS
10.1 ELECTION TO BECOME A PARTICIPATING EMPLOYER
With the consent of the Employer and Trustee, any Affiliated Employer may adopt
this Plan and participate herein and be considered a Participating Employer, by
a properly executed document evidencing the adoption of the Plan by such
Participating Employer.
10.2 SINGLE TRUST FUND
Unless otherwise directed by the Employer, the Trustee shall be required to
commingle, hold and invest as a single Trust Fund all contributions made by
Participating Employers as well as all increments thereof.
10.3 DESIGNATION OF AGENT
With respect to all of its relations with the Trustee and Administrator for the
purpose of this Plan, each Participating Employer shall be deemed to have
irrevocably designated the Employer as its agent.
10.4 EMPLOYEE TRANSFERS
It is anticipated that an Employee may be transferred between Participating
Employers. In the event of any such transfer the Employee involved shall not be
treated as having had a termination of employment.
10.5 PARTICIPATING EMPLOYER CONTRIBUTIONS AND FORFEITURES
Any Participating Employer contributions or Forfeitures subject to allocation
during any Plan Year shall be allocated among all Participants of all
Participating Employers in accordance with the provisions of this Plan. Any such
allocation shall be made without regard to which Participating Employer actually
made the contribution or without regard to the Participating Employer of any
Participant all or part of whose Accrued Benefit shall be forfeited.
10.6 PLAN EXPENSES
Any expenses of the Plan which are not paid by the Trust Fund shall be paid by
the Participating Employers in whatever proportion shall be determined by the
Employer.
10.7 AMENDMENT
Amendment of this Plan by the Employer at any time when there shall be a
Participating Employer hereunder shall only be by the written action of each and
every Participating Employer and with the consent of the Trustee where such
consent is necessary in accordance with the terms of this Plan.
10.8 DISCONTINUANCE OF PARTICIPATION
Any Participating Employer shall be permitted to discontinue or revoke its
participation in the Plan. At the time of any such discontinuance or revocation,
satisfactory evidence thereof shall be delivered to the Trustee. The Trustee
shall thereafter transfer, deliver and assign a portion of the Trust
<PAGE>
Fund equal in value to the Accounts of such Participants to itself (or to any
other person designated by such Participating Employer) as the Trustee of a
separate plan of the Participating Employer. Any discontinuance of participation
by a Participating Employer shall be effected in such a manner as to satisfy the
requirements of Section 8.3.
10.9 EMPLOYER'S AUTHORITY
The Employer shall have authority to make any and all necessary rules or
regulations, binding upon all Participating Employers and all Participants, to
effectuate the purpose of this Article.
ARTICLE XI
CASH OR DEFERRED PROVISIONS
Notwithstanding any provisions in the Plan to the contrary, the provisions of
this Article shall apply with respect to any 401(k) Profit Sharing Plan.
11.1 DETERMINATION OF EMPLOYER'S CONTRIBUTION
(a) For each Plan Year, the Employer shall contribute to the Plan:
(1) The aggregate amount of Deferred Compensation resulting from the
deferral elections of Active Participants made pursuant to
Section 11.3, which amount shall be deemed the Employer's
Elective Contribution.
(2) If elected in the Adoption Agreement, a Matching Contribution or
Qualified Matching Contribution, as specified in the Adoption
Agreement, to be made on an ongoing basis, year end basis or
both, also as specified in the Adoption Agreement.
(3) If elected in the Adoption Agreement, a Discretionary
Non-Elective Contribution.
(4) If elected in the Adoption Agreement, a Fixed Non-Elective
Contribution or Qualified Non-Elective Contribution, as specified
in the Adoption Agreement, to be made on either an ongoing or
year end basis, also as specified in the Adoption Agreement.
(b) Notwithstanding the foregoing, the Employer's contributions for any
Fiscal Year shall not exceed the maximum amount allowable as a
deduction to the Employer under the provisions of Code Section 404.
However, if this Plan is a Top Heavy Plan to which a minimum
contribution must be made, the Employer shall contribute the amount
necessary to provide such minimum contribution even if such amount
exceeds current or accumulated Net Profit or the amount which is
deductible under Code Section 404.
(c) All contributions by the Employer shall be made in cash or in such
property as is acceptable to the Trustee.
11.2 TIME OF PAYMENT OF EMPLOYER'S CONTRIBUTION
Except as otherwise provided in this Section 11.2, the Employer shall generally
pay to the Trustee its contributions to the Plan for each Plan Year within the
time prescribed by law, including extensions of time, for the filing of the
Employer's federal income tax return for the Fiscal Year. Elective
Contributions, however, shall be paid to the Trustee as of the earliest date on
which such contributions can reasonably be segregated from the Employer's
general assets, but in any event within ninety days from the date on which such
amounts would otherwise have been payable in cash to Active
<PAGE>
Participants. Notwithstanding the initial sentence of this Section 11.2,
Matching Contributions, Qualified Matching Contributions and Qualified
Non-Elective Contributions shall be paid to the Trustee not later than the last
day of the twelve-month period immediately following the close of the Plan Year
to which such contributions relate.
11.3 PARTICIPANT'S DEFERRAL ELECTION
(a) Each Active Participant may elect, subject to the limitations of this
Section 11.3 and the Adoption Agreement, to defer a part of the
Compensation he would have received for the Plan Year but for his
deferral election. In addition, if elected in the Adoption Agreement,
each Active Participant may elect to defer all or any portion of his
Compensation that is payable as a bonus. A deferral election (or
modification of an earlier election) may not be made with respect to
Compensation which is currently available on or before the date the
Participant executed such election or, if later, the later of the date
the Employer adopts this Plan or the date the Plan first becomes
effective. Any elections or modifications thereof made pursuant to
this Section 11.3(a) shall become effective as soon as is
administratively feasible.
(b) An Active Participant's deferral election shall be valid until
modified or revoked by such Participant at such time or times as are
provided for in the Adoption Agreement. Such modification or
revocation shall be effective as soon as is administratively feasible.
Except to the extent the Employer otherwise elects in the Adoption
Agreement, the Employer may, in its sole discretion, allow an Active
Participant to modify or revoke his deferral election at any time
during a Plan Year provided all Active Participants similarly situated
are treated in a similar manner.
(c) Notwithstanding the provisions of Section 11.3(b), an Active
Participant's deferral election shall be deemed amended upon notice to
such Active Participant from the Employer or Administrator that a
reduction in or revocation of his deferral election is required to
prevent:
(1) an Active Participant's Deferred Compensation from exceeding the
limit set forth in Section 11.3(g);
(2) the Annual Additions (as defined in Section 4.4(f)(1)) from
exceeding the Maximum Permissible Amount (as defined in Section
4.4(f)(10)); or
(3) the sum of the Elective Contributions and, if applicable,
Qualified Matching Contributions and Qualified Non-Elective
Contributions from exceeding an amount which would cause the Plan
to violate the Actual Deferral Percentage test set forth in
Section 11.5.
<PAGE>
(d) The amount by which an Active Participant's Compensation is reduced
pursuant to his deferral election shall be that Active Participant's
Deferred Compensation and shall be treated as an Elective Contribution
which is to be allocated to his Elective Account. The balance in each
Participant's Elective Account shall be fully Vested at all times and
shall not be subject to Forfeiture for any reason other than Section
6.9.
(e) Amounts held in a Participant's Elective Account may be distributed as
permitted under the Plan, but in no event prior to the earliest to
occur of the following:
(1) a Participant's termination of employment, Total and Permanent
Disability, or death;
(2) a Participant's attainment of age fifty-nine and one half;
(3) the proven financial hardship of a Participant, subject to the
limitations of Section 11.9;
(4) the termination of the Plan without (i) the existence at the time
of termination of another defined contribution plan (other than
an employee stock ownership plan as defined in Code Section
4975(e)(7) or a simplified employee pension under Code Section
408(k)) or (ii) the establishment of a successor defined
contribution plan (other than an employee stock ownership plan as
defined in Code Section 4975(e)(7) or a simplified employee
pension under Code Section 408(k)) by the Employer or an
Affiliated Employer within the period ending twelve months after
distribution of all assets from the Plan as a result of its
termination;
(5) the date of the sale by the Employer to a person that is not an
Affiliated Employer of substantially all of the assets (within
the meaning of Code Section 409(d)(2)) used by the Employer in a
trade or business of the Employer with respect to a Participant
who continues employment with the person acquiring such assets;
or
(6) the date of the sale by the Employer of its interest in a
subsidiary (within the meaning of Code Section 409(d)(3)) to a
person that is not an Affiliated Employer with respect to a
Participant who continues employment with such subsidiary.
(f) In the event an Active Participant has received a hardship
distribution pursuant to Regulation 1.401(k)-1(d)(2)(iv) from any
other plan maintained by the Employer or Affiliated
<PAGE>
Employer or from his Elective Account pursuant to Section 11.9, then such
Active Participant shall not be permitted to elect to have Deferred
Compensation contributed to the Plan on his behalf for a period of
twelve months following the receipt of the distribution. Furthermore,
the dollar limitation under Code Section 402(g) shall be reduced, with
respect to the Active Participant's taxable year following the taxable
year in which the hardship distribution is made, by the amount of his
Deferred Compensation for the taxable year in which the hardship
distribution was made.
(g) For any Plan Year beginning after December 31, 1987, a Participant's
Deferred Compensation under this Plan and any elective deferrals
(within the meaning of Code Section 402(g)) under all other plans,
contracts or arrangements of the Employer or an Affiliated Employer or
both shall not exceed the limitation imposed by Code Section 402(g),
as in effect for the calendar year in which a Participant's taxable
year begins. This dollar limitation shall be adjusted annually at the
same time and in the same manner as under Code Section 415(d).
(h) If a Participant has Excess Deferred Compensation for his taxable
year, such Participant may, not later than the April 15 following such
taxable year, notify the Administrator in writing as to what portion,
if any, of the Excess Deferred Compensation will be assigned to this
Plan; provided, however, that the amount of Excess Deferred
Compensation assigned to this Plan cannot exceed the Participant's
Deferred Compensation. If, however, a Participant has Excess Deferred
Compensation for a taxable year, taking into account only a
Participant's Deferred Compensation and any elective deferrals (within
the meaning of Code Section 402(g)) under all other plans, contracts
or arrangements of the Employer or an Affiliated Employer or both,
then such Participant shall be required, not later than March 15
following such taxable year, to notify the Administrator in writing as
to what portion, if any, of the Excess Deferred Compensation will be
assigned to this Plan, provided that the amount of Excess Deferred
Compensation assigned to the Plan cannot exceed the Participant's
Deferred Compensation. In either event, the Administrator shall direct
the Trustee to distribute the portion so assigned (and any Income
allocable thereto) to the Participant not later than the April 15
following the close of the Participant's taxable year. Any
distribution of less than the entire amount of Excess Deferred
Compensation assigned to this Plan and allocable Income shall be
treated as a pro rata distribution of Excess Deferred Compensation and
Income. Any distribution of Excess Deferred Compensation assigned to
this Plan (and any Income allocable thereto) on or before the last day
of the Participant's taxable year must satisfy all of the following
conditions:
(1) the Participant shall designate the distribution as one
attributable to Excess Deferred Compensation;
<PAGE>
(2) the distribution must be made after the date on which the Plan
received the Excess Deferred Compensation; and
(3) the Administrator must designate the distribution as a
distribution of Excess Deferred Compensation.
For the purpose of this Section 11.3, the term "Income" means the amount of
income or loss allocable to the Excess Deferred Compensation assigned to this
Plan for the taxable year of the Participant. The income or loss allocable to
the Participant's taxable year is determined by multiplying the income or loss
allocable to the Participant's Elective Account for such taxable year by a
fraction. The numerator is the Participant's Excess Deferred Compensation
assigned to this Plan for the taxable year of the Participant and the
denominator is the balance, as of the last day of the Participant's taxable
year, of the Participant's Elective Account, reduced by the gain allocable to
the Participant's Elective Account during such taxable year and increased by the
loss allocable to the Participant's Elective Account during such taxable year.
(i) Notwithstanding the provisions of Section 11.3(h), the amount of
Excess Deferred Compensation to be distributed under Section 11.3(h)
shall be reduced, but not below zero, by any distribution or
recharacterization of Excess Contributions pursuant to Section 11.6(a)
for the Plan Year beginning with or within the taxable year of the
Participant.
(j) The Employer and the Administrator shall adopt whatever procedures
that are necessary to implement the deferral elections provided in
this Section 11.3.
11.4 ALLOCATION OF CONTRIBUTION AND FORFEITURES
(a) The Employer shall provide the Administrator with all the information
required by the Administrator to make a proper allocation of the
Employer's contributions for each Plan Year. Within a reasonable
period of time after the date of receipt by the Administrator of such
information, the Administrator shall allocate such contribution as
follows:
(1) With respect to Elective Contributions made pursuant to Section
11.1(a)(1), to each Active Participant's Elective Account in an
amount equal to the Deferred Compensation of such Active
Participant for the Plan Year. Elective contributions shall be
allocated as of the date of their receipt, but in event no later
than the Anniversary Date for the Plan Year to which such
contributions relate.
(2) With respect to any Matching Contributions or Qualified Matching
Contributions made pursuant to Section 11.1(a)(2), to each Active
Participant's Matching Account or Qualified Matching Account, as
the case may be, in an amount equal to the percentage, as
determined under the Adoption Agreement, of his Deferred
Compensation. In the case of Matching Contributions or Qualified
Matching Contributions
<PAGE>
made on an ongoing basis, an Active Participant shall not be
required to complete a Year of Service or to be employed on the
Anniversary Date in order to be entitled to an allocation of
Matching Contributions or Qualified Matching Contributions. In
the case of Matching Contributions or Qualified Matching
Contributions made on a year end basis, an Active Participant
during the Plan Year shall be entitled to an allocation of
Matching Contributions or Qualified Matching Contributions for
that Plan Year in accordance with the provisions of Section
11.4(a)(5). Contributions under this Section 11.4(a)(2) shall be
allocated as of the date of their receipt (but in no event later
than the Anniversary Date for the Plan Year to which such
contributions relate) if made on an ongoing basis or as of the
Anniversary Date for the Plan Year, if made on a year end basis.
Notwithstanding the foregoing provisions of this Section
11.4(a)(2) to the contrary, any Matching Contributions or
Qualified Matching Contributions that are allocated to a
Participant's Matching Account or Qualified Matching Account and
that are made on account of Excess Deferrals shall be forfeited.
Any Matching Contributions or Qualified Matching Contributions
that are allocated to a Participant's Matching Account or
Qualified Matching Account and that are made on account of Excess
Contributions that are distributed pursuant to Section 11.6(a)(1)
shall be forfeited. Finally, any Matching Contributions or
Qualified Matching Contributions that are allocated to a
Participant's Matching Account or Qualified Matching Account and
that are made on account of Excess Contributions that are
recharacterized pursuant to Section 11.6(a)(2) and that are
ultimately distributed pursuant to Section 11.8(a)(1) shall be
forfeited. The forfeiture of Matching Contributions or Qualified
Matching Contributions made on account of Excess Contributions
shall be deemed to occur in the Plan Year following the Plan Year
to which the Excess Contributions relate and shall be treated in
accordance with the election made in the Adoption Agreement. The
forfeiture of Matching Contributions or Qualified Matching
Contributions made on account of Excess Deferrals shall be deemed
to occur in the Plan Year following the Plan Year in which ends
the taxable year of the Active Participant to which the Excess
Deferrals relate and shall be treated in accordance with the
election made in the Adoption Agreement.
(3) Any Discretionary Non-Elective Contributions made pursuant to
Section 11.1(a)(3) shall be allocated to each Active
Participant's Discretionary Non-Elective Account in accordance
with the provisions of Sections 4.3(a)(2) through (6) and the
Adoption Agreement. An Active Participant during the Plan Year
shall share in the allocation of Discretionary Non-Elective
Contributions in accordance with the provisions of Section
11.4(a)(5). Discretionary Non-Elective Contributions shall be
allocated as of the Anniversary Date for any Plan Year.
<PAGE>
(4) With respect to any Fixed Non-Elective Contributions or Qualified
Non-Elective Contribution made pursuant to Section 11.1(a)(4), to
each Active Participant's Fixed Non-Elective Account or Qualified
Non-Elective Account, as the case may be, in an amount equal to
the percentage of the Active Participant's Compensation specified
in the Adoption Agreement. In the case of Fixed Non-Elective
Contributions or Qualified Non-Elective Contributions made on an
ongoing basis, an Active Participant shall not be required to
complete a Year of Service or to be employed on the Anniversary
Date in order to be entitled to an allocation of Fixed
Non-Elective Contributions or Qualified Non-Elective
Contributions. In the case of Fixed Non-Elective Contributions or
Qualified Non-Elective Contributions made on a year end basis, an
Active Participant during the Plan Year shall be entitled to an
allocation of Fixed Non-Elective Contributions or Qualified
Non-Elective Contributions for the Plan Year in accordance with
the provisions of Section 11.4(a)(5). Contributions under this
Section 11.4(a)(4) shall be allocated as of the date of their
receipt (but in no event later than the Anniversary Date for the
Plan Year to which such contributions relate) if made on an
ongoing basis or as of the Anniversary Date for the Plan Year, if
made on a year end basis.
(5) An Active Participant during the Plan Year who is an Employee on
the Anniversary Date shall be entitled to an allocation. An
Active Participant who is not an Employee on the Anniversary Date
shall be entitled to an allocation if such Active Participant
completes a Year of Service for purposes of benefit accrual.
(b) Any Forfeitures arising since the preceding Anniversary Date shall
first be used to restore the previously forfeited Accrued Benefit of
any Participant in accordance with Section 6.4(g) and shall then be
used to satisfy any contribution that may be required pursuant to
Section 4.3(g) or 6.9 or both. The remaining Forfeitures, if any,
shall be treated in accordance with the Adoption Agreement. If,
pursuant to the Adoption Agreement, Forfeitures are used to reduce
Matching Contributions, Qualified Matching Contributions, Fixed
Non-Elective Contributions or Qualified Non-Elective Contributions and
the contributions to which such Forfeitures are applied are made on an
ongoing basis only or, in the case of Matching Contributions or
Qualified Matching Contributions, are made on both ongoing and year
end bases, then such Forfeitures shall be used to reduce the amount to
be contributed by the Employer for the Plan Year following the Plan
Year in which the Forfeiture occurs. If, however, for the Plan Year
following the Plan Year in which the Forfeiture occurs, the Employer
does not make a Matching Contribution or Qualified Matching
Contribution, then any such Forfeitures used to reduce Matching
Contributions or Qualified Matching Contributions shall be allocated
as of the Anniversary Date of such following Plan Year to each Active
Participant's Matching Account
<PAGE>
or Qualified Matching Account in the same proportion that his Elective
Contributions for such following Plan Year bear to the total Elective
Contributions of all Active Participants for such following Plan Year.
In the case of a Plan that provides for only Elective Contributions,
any Forfeitures not used as described in the first sentence of this
Section 11.4(b) shall be allocated to each Active Participant's
Elective Account in the same proportion that his Elective
Contributions bear to the total Elective Contributions of all Active
Participants.
(c) Minimum contributions made pursuant to Section 4.3(d) shall be
allocated to a Participant's Qualified Non-Elective Account or, if the
Plan does not provide for Qualified Non-Elective Contributions, then
minimum contributions shall be allocated to a Qualified Non-Elective
Account to be established for each Participant.
11.5 ACTUAL DEFERRAL PERCENTAGE TESTS
(a) For each Plan Year the Plan shall satisfy either of the following
tests:
(1) The Actual Deferral Percentage for those Active Participants who
are Highly Compensated Employees shall not be more than 1.25
times the Actual Deferral Percentage of the Active Participants
who are Non-Highly Compensated Employees, or
(2) The excess of the Actual Deferral Percentage for the Active
Participants who are Highly Compensated Employees over the Actual
Deferral Percentage for Active Participants who are Non-Highly
Compensated Employees shall not be more than two percentage
points. Additionally, the Actual Deferral Percentage for the
Active Participants who are Highly Compensated Employees shall
not be more than two times the Actual Deferral Percentage for the
Active Participants who are Non-Highly Compensated Employees. The
provisions of Code Section 401(k)(3) and Regulation 1.401(k)-1(b)
are incorporated herein by reference.
However, to prevent the multiple use of the alternative method set forth in
Section 11.5(a)(2) and Code Section 401(m)(9)(A), any Highly Compensated
Employee eligible to make a deferral election pursuant to Section 11.3 and to
make Employee contributions or to receive an allocation of Matching
Contributions under this Plan or under any other plan maintained by the Employer
or an Affiliated Employer shall have his Actual Contribution Ratio or Actual
Deferral Ratio, as specified in the Adoption Agreement, reduced pursuant to
Regulation 1.401(m)-2, the provisions of which are incorporated herein by
reference.
<PAGE>
(b) For purposes of this Section 11.5, the term "Actual Deferral
Percentage" means, with respect to the group of Active Participants
who are Highly Compensated Employees and the group of Active
Participants who are Non-Highly Compensated Employees for a Plan Year,
the average of the Actual Deferral Ratios, calculated separately for
each Active Participant in each group. An Active Participant's Actual
Deferral Ratio is the amount of Elective Contributions, Qualified
Matching Contributions and Qualified Non-Elective Contributions, which
have not been taken into account for purposes of calculating an Active
Participant's Actual Contribution Ratio under Section 12.7(c),
allocated to each Active Participant's Elective Account, Qualified
Matching Account and Qualified Non-Elective Account for such Plan
Year, divided by the Active Participant's 414(s) Compensation for such
Plan Year. However, there shall not be taken into account for purposes
of calculating an Active Participant's Actual Deferral Ratio, any
Qualified Matching Contributions forfeited pursuant to Section
11.4(a)(2). For purposes of determining the Actual Deferral Percentage
of each group, there shall be taken into account any Active
Participant on whose behalf no Elective Contributions are made for the
Plan Year. The Actual Deferral Ratio for each Active Participant and
the Actual Deferral Percentage for each group shall be calculated to
the nearest one-hundredth of one percent of the Active Participant's
414(s) Compensation. Elective Contributions allocated to the Elective
Account of each Active Participant who is a Non-Highly Compensated
Employee shall be reduced by any Excess Deferred Compensation assigned
to this Plan under Section 11.3(h) as a result of the operation of
Code Section 401(a)(30).
(c) For the purpose of determining the Actual Deferral Ratio of an Active
Participant who is a Highly Compensated Employee and who has Family
Members, the following shall apply:
(1) The combined Actual Deferral Ratio for the family group (which
shall be treated as one Highly Compensated Employee) shall be the
ratio determined by aggregating Elective Contributions, Qualified
Matching Contributions, Qualified Non-Elective Contributions and
414(s) Compensation of the Highly Compensated Employee and all
Family Members.
(2) The Elective Contributions, Qualified Matching Contributions,
Qualified Non-Elective Contributions and 414(s) Compensation of
all Family Members who are Non-Highly Compensated Employees shall
be disregarded for purposes of determining the Actual Deferral
Percentage of the group of Active Participants who are Non-Highly
Compensated Employees.
(3) If an Active Participant is required to be aggregated as a member
of more than one family group in the Plan, all Active
Participants who are members of those family groups that include
the Active Participant are treated as one family group.
<PAGE>
(d) For purposes of this Section 11.5, if this Plan and any other plans of
the Employer or any Affiliated Employer, which include cash or
deferred arrangements, are considered one plan for purposes of Code
Section 401(a)(4) or 410(b) (other than the average benefits test
under Code Section 410(b)(2)(a)(ii)), the cash or deferred
arrangements included in this Plan and such other plans shall be
treated as one cash or deferred arrangement. In addition, this Plan
and any other plan of the Employer or an Affiliated Employer which
include cash or deferred arrangements may be treated as a single cash
or deferred arrangement for purposes of this Section 12.5. In such a
case, the aggregated cash or deferred arrangements and this Plan and
the other plans including such arrangements must be treated as one
arrangement and one plan for purposes of Code Sections 401(a)(4),
401(k) and 410(b). Notwithstanding the above, contributions to an
employee stock ownership plan as defined in Code Section 4975(e)(7)
shall not be aggregated with this Plan, and this Section 11.5(d) shall
not apply unless this Plan and such other plans including cash or
deferred arrangements have the same Plan Year.
(e) For purposes of this Section 11.5, if a Highly Compensated Employee is
an Active Participant under this Plan and he also participates in any
other plans containing a cash or deferred arrangements (other than a
cash or deferred arrangement which is part of an employee stock
ownership plan as defined in Code Section 4975(e)(7)) of the Employer
or an Affiliated Employer, all cash or deferred arrangements under
this Plan and such other plans shall be treated as one cash or
deferred arrangement for the purpose of determining the Actual
Deferral Ratio with respect to such Highly Compensated Employee.
However, if the cash or deferred arrangements under this Plan and such
other plans have different plan years, this Section 11.5(e) shall be
applied by treating all such cash or deferred arrangements with plan
years ending with or within the same calendar year as a single cash or
deferred arrangement.
11.6 ADJUSTMENT TO ACTUAL DEFERRAL PERCENTAGE TESTS
In the event the Plan does not satisfy one of the Actual Deferral Percentage
tests, the Administrator shall correct Excess Contributions pursuant to any one
of the options set forth below:
(a) On or before the fifteenth day of the third month following the end of
each Plan Year, the Highly Compensated Employee who is the Active
Participant having the highest Actual Deferral Ratio shall have his
portion of Excess Contributions distributed to him and/or at his
election recharacterized as a voluntary Employee contribution pursuant
to Section 4.6 until one of the Actual Deferral Percentage tests is
satisfied, or until his Actual Deferral Ratio equals the Actual
Deferral Ratio of the Highly Compensated Employee having the second
highest Actual Deferral Ratio. This process shall continue until one
of such tests is satisfied. For each Highly Compensated Employee, the
amount
<PAGE>
of Excess Contributions is equal to the Elective Contributions,
Qualified Matching Contributions and Qualified Non-Elective
Contributions made on behalf of such Highly Compensated Employee
(determined prior to the application of this Section 11.6(a)) minus
the amount determined by multiplying the Highly Compensated Employee's
Actual Deferral Ratio (determined after application of this Section
11.6(a)) by his 414(s) Compensation. However, in determining the
amount of Excess Contributions to be distributed and/or
recharacterized with respect to a Highly Compensated Employee as
determined herein, such amount shall be reduced by any Excess Deferred
Compensation previously distributed to such Highly Compensated
Employee for his taxable year ending with or within such Plan Year.
Any distribution and/or recharacterization of Excess Contributions
shall be made in accordance with the following:
(1) With respect to the distribution of Excess Contributions, such
distribution:
(i) may be postponed but not later than the last day of the Plan
Year following the Plan Year in which Excess Contributions
are allocated;
(ii) shall be made first from Deferred Compensation with respect
to which Qualified Matching Contributions are not made and,
thereafter, simultaneously from Deferred Compensation with
respect to which Qualified Matching Contributions are made
and the Qualified Matching Contributions which relate to
such Deferred Compensation;
(iii)shall be made from Qualified Non-Elective Contributions only
to the extent that the amount of Excess Contributions
exceeds the sum of the Participant's Deferred Compensation
and Qualified Matching Contributions.
(iv) shall be adjusted for Income;
(v) shall be treated as a pro rata distribution of Excess
Contributions and Income if less than the entire amount of
Excess Contributions and Income is distributed; and
(vi) shall be designated by the Employer as a distribution of
Excess Contributions (and Income).
(2) With respect to the recharacterization of Excess Contributions,
such recharacterized amounts:
(i) shall be deemed to have occurred on the date on which the
last of those Highly Compensated Employees with Excess
Contributions to be recharacterized is notified of the
recharacterization and the tax consequences of such
recharacterization;
<PAGE>
(ii) shall not exceed the amount of Deferred Compensation of any
Highly Compensated Employee for any Plan Year;
(iii)shall be treated as voluntary Employee contributions for
purposes of Code Section 401(a)(4) and Regulation
1.401(k)-1(b). However, for purposes of Code Sections 404,
411, 412, 415, 416 and 417, recharacterized Excess
Contributions continue to be treated as Deferred
Compensation. Excess Contributions recharacterized as
voluntary Employee contributions shall continue to be
nonforfeitable and shall be subject to the restrictions set
forth in Section 11.3(e);
(iv) are not permitted if the Deferred Compensation
recharacterized plus voluntary Employee contributions
actually made by such Highly Compensated Employee exceed the
maximum amount of voluntary Employee contributions
(determined prior to application of Section 11.7) that such
Highly Compensated Employee is permitted to make under the
Plan in the absence of recharacterization;
(3) The determination and correction of Excess Contributions of an
Active Participant who is a Highly Compensated Employee and whose
Actual Deferral Ratio is determined under the provisions of
Section 11.5(c)(1) shall be accomplished by reducing the Actual
Deferral Ratio as required herein and the Excess Contributions
shall be allocated among the Highly Compensated Employee and his
Family Members in proportion to the Elective Contributions,
Qualified Matching Contributions and Qualified Non-Elective
Contributions allocated to the Highly Compensated Employee and
such Family Members.
(b) Within twelve months after the end of the Plan Year, the Employer may
make a special Qualified Non-Elective Contribution on behalf of Active
Participants who are Non-Highly Compensated Employees in an amount
sufficient to satisfy one of the Actual Deferral Percentage tests.
Such contribution shall be allocated to the Qualified Non-Elective
Account of each Active Participant who is a Non-Highly Compensated
Employee in the same proportion that each such Active Participant's
414(s) Compensation for the Plan Year bears to the total 414(s)
Compensation of all such Active Participants.
(c) For purposes of this Section 11.6, Income means the income or loss
allocable to Excess Contributions for the Plan Year. The income or
loss allocable to Excess Contributions for the Plan Year is determined
by multiplying the income or loss for the Plan Year by a fraction. The
numerator is the Excess Contributions for the Plan Year. The
denominator is the sum of the Participant's Elective Account,
Qualified Matching Account and Qualified Non-Elective Account as of
the end of the Plan Year, reduced by the gain allocable to such
Accounts for the Plan Year and increased by the loss allocable to such
Accounts for the Plan Year.
<PAGE>
(d) Any amounts not distributed within two and one-half months after the
end of the Plan Year shall be subject to the ten percent excise tax
imposed by Code Section 4979 on the Employer.
11.7 ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) For each Plan Year the Plan shall satisfy either of the following
tests:
(1) The Actual Contribution Percentage for those Active Participants
who are Highly Compensated Employees shall not be more than 1.25
times the Actual Contribution Percentage of the Active
Participants who are Non-Highly Compensated Employees, or
(2) The excess of the Actual Contribution Percentage for the Active
Participants who are Highly Compensated Employees over the Actual
Contribution Percentage for Active Participants who are
Non-Highly Compensated Employees shall not be more than two
percentage points. Additionally, the Actual Contribution
Percentage for the Active Participants who are Highly Compensated
Employees shall not be more than two times the Actual
Contribution Percentage for the Active Participants who are
Non-Highly Compensated Employees. The provisions of Code Section
401(m)(2) and Regulation 1.401(m)-1(b) are incorporated herein by
reference.
However, to prevent the multiple use of the alternative method described in
Section 11.7(a)(2) and Code Section 401(m)(9)(A), any Highly Compensated
Employee eligible to make a deferral election pursuant to Section 11.3 or under
any other cash or deferred arrangement maintained by the Employer or an
Affiliated Employer and to make Employee contributions or to receive an
allocation of Matching Contributions under this Plan shall have his Actual
Deferral Ratio or Actual Contribution Ratio, as specified in the Adoption
Agreement, reduced pursuant to Regulation 1.401(m)-2, the provisions of which
are incorporated herein by reference.
(b) For purposes of this Section 11.7, the term "Actual Contribution
Percentage" means, with respect to the group of Active Participants
who are Highly Compensated Employees and the group of Active
Participants who are Non-Highly Compensated Employees, the average of
the Actual Contribution Ratios calculated separately for each Active
Participant in each group. An Active Participant's Actual Contribution
Ratio is the amount of Employer Matching Contributions, voluntary
Employee contributions made pursuant to Section 4.6 and Excess
Contributions recharacterized as voluntary Employee contributions
pursuant to Section 11.6 on behalf of each such Active Participant for
such Plan Year divided by the Active Participant's 414(s) Compensation
for such Plan Year. However, there shall not be taken into account for
purposes of calculating an Active Participant's Actual Contribution
Ratio, any
<PAGE>
Matching Contributions forfeited pursuant to Section 11.4(a)(2). For
purposes of determining the Actual Contribution Percentage of each
group, there shall be taken into account any Active Participant to
whose Matching Account no Matching Contributions are allocated or who
fails to make any voluntary Employee contributions pursuant to Section
4.6. The Actual Contribution Ratio for each Active Participant and the
Actual Contribution Percentage for each group shall be calculated to
the nearest one-hundredth of one percent of the Active Participant's
414(s) Compensation.
(c) For purposes of Section 11.7(b), only Matching Contributions
contributed to the Plan prior to the end of the succeeding Plan Year
shall be taken into account. Voluntary Employee contributions made
pursuant to Section 4.6 shall be taken into account for a Plan Year
only if contributed to the Plan during such Plan Year (or within
thirty days thereafter). Excess Contributions recharacterized as
voluntary Employee contributions shall be taken into account for the
Plan Year in which they are includable in the gross income of the
Highly Compensated Employee. In addition, the Administrator may elect
to treat as Matching Contributions any Qualified Non-Elective
Contributions, which have not been taken into account for purposes of
calculating an Active Participant's Actual Deferral Ratio under
Section 11.5(b), and Elective Contributions made to this Plan or the
equivalent thereof made to any other plan maintained by the Employer
or an Affiliated Employer, subject to Regulation 1.401(m)-1(b)(2),
which is incorporated herein by reference. However, the Plan Year must
be the same as the plan year of any other plan of the Employer or
Affiliated Employer which is to be taken into account for purposes of
this Section 11.7(c).
(d) For the purpose of determining the Actual Contribution Ratio of an
Active Participant who is a Highly Compensated Employee and who has
Family Members, the following shall apply:
(1) The combined Actual Contribution Ratio for the family group
(which shall be treated as one Highly Compensated Employee) shall
be the ratio determined by aggregating Matching Contributions,
voluntary Employee contributions made pursuant to Section 4.6,
Excess Contributions recharacterized as voluntary Employee
contributions pursuant to Section 11.6 and 414(s) Compensation of
the Highly Compensated Employees and all Family Members.
(2) The Matching Contributions, voluntary Employee contributions made
pursuant to Section 4.6, Excess Contributions recharacterized as
voluntary Employee contributions pursuant to Section 11.6 and
414(s) Compensation of all Family Members who are Non-Highly
Compensated Employees shall be disregarded for purposes of
determining the Actual Contribution Percentage of the group of
Active Participants who are Non-Highly Compensated Employees.
<PAGE>
(3) If an Active Participant is required to be aggregated as a member
of more than one family group in the Plan, all Active
Participants who are members of those family groups that include
the Active Participant are treated as one family group.
(e) For purposes of this Section 11.7, if this Plan and any other plans of
the Employer or Affiliated Employer to which Matching Contributions,
voluntary Employee contributions, or both, are made are treated as one
plan for purposes of Code Section 401(a)(4) or 410(b) (other than the
average benefits test under Code Section 410(b)(2)(A)(ii), this Plan
and such other plans shall be treated as one plan for purposes of Code
Section 401(m). In addition, this Plan and any other plan of the
Employer or any Affiliated Employer to which Matching Contributions,
voluntary Employee contributions, or both, are made may be considered
as a single plan for purposes of determining whether or not such plans
satisfy Code Section 401(m). In such a case, the aggregated plans must
satisfy Code Sections 401(a)(4) and 410(b) as though such aggregated
plans were a single plan. Notwithstanding the above, contributions to
an employee stock ownership plan as defined in Code Section 4975(e)(7)
shall not be aggregated with this Plan and this Section 11.7(e) shall
not apply unless all such plans which are to be treated as a single
plan have the same Plan Year.
(f) For purposes of this Section 11.7, if a Highly Compensated Employee is
an Active Participant under this Plan and he also participates in any
other plans (other than an employee stock ownership plan as defined in
Code Section 4975(e)(7)) which are maintained by the Employer or an
Affiliated Employer and to which Matching Contributions, voluntary
Employee contributions, or both, are made, all such contributions on
behalf of such Highly Compensated Employee shall be aggregated for
purposes of determining such Highly Compensated Employee's Actual
Contribution Ratio. However, if this Plan and such other plans have
different plan years, this Section 11.7(f) shall be applied by
treating all plans with plan years ending with or within the same
calendar year as a single plan.
11.8 ADJUSTMENT TO ACTUAL CONTRIBUTION PERCENTAGE TESTS
(a) In the event the Plan does not satisfy one of the Actual Contribution
Percentage tests, the Administrator (on or before the fifteenth day of
the third month following the end of the Plan Year, but in no event
later than the close of the following Plan Year) shall direct the
Trustee to distribute to the Highly Compensated Employee having the
highest Actual Contribution Ratio, his portion of Excess Aggregate
Contributions (and Income allocable to such contributions) or, if
forfeitable, forfeit the non-Vested portion of his Excess Aggregate
Contributions attributable to Matching Contributions (and Income
allocable to such Forfeitures) until either one of the tests set forth
in Section 11.7(a) is satisfied, or until his Actual Contribution
Ratio equals the Actual Contribution Ratio of the Highly Compensated
Employee having the second highest
<PAGE>
Actual Contribution Ratio. This process shall continue until one of
the tests set forth in Section 11.7(a) is satisfied. The distribution
and/or Forfeiture of Excess Aggregate Contributions shall be made in
the following order:
(1) Voluntary Employee contributions including Excess Contributions
recharacterized as voluntary Employee contributions pursuant to
Section 11.6(a)(2);
(2) Matching Contributions.
(b) Any distribution of less than the entire amount of Excess Aggregate
Contributions (and allocable Income) shall be treated as a pro rata
distribution of Excess Aggregate Contributions and Income. Forfeitures
of Excess Aggregate Contributions (and allocable Income) shall be
deemed to occur in the Plan Year following the Plan Year to which they
relate and shall be treated in accordance with the election made in
the Adoption Agreement.
(c) Excess Aggregate Contributions attributable to amounts other than
voluntary Employee contributions, including forfeited Matching
Contributions, shall be treated as Employer contributions for purposes
of Code Sections 404 and 415.
(d) For each Highly Compensated Employee, the amount of Excess Aggregate
Contributions is equal to the Matching Contributions, voluntary
Employee contributions made pursuant to Section 4.6 and Excess
Contributions recharacterized as voluntary Employee contributions
pursuant to Section 11.6(a)(2) (determined prior to the application of
Section 11.8(a)) minus the amount determined by multiplying the Highly
Compensated Employee's Actual Contribution Ratio (determined after
application of Section 11.8(a)) by his 414(s) Compensation. In no
event shall the amount of Excess Aggregate Contribution with respect
to any Highly Compensated Employee exceed the amount of Matching
Contributions, voluntary Employee contributions made pursuant to
Section 4.6 and Excess Contributions recharacterized as voluntary
Employee contributions pursuant to Section 11.6(a)(2).
(e) The determination of the amount of Excess Aggregate Contributions with
respect to any Plan Year shall be made after first determining the
Excess Contributions, if any, to be treated as voluntary Employee
contributions due to recharacterization under Section 11.6(a)(2).
(f) The determination and correction of Excess Aggregate Contributions of
a Highly Compensated Employee whose Actual Contribution Ratio is
determined under the family aggregation rules shall be accomplished by
reducing the Actual Contribution Ratio as required herein and the
Excess Aggregate Contributions shall be allocated among the Highly
Compensated Employee and his Family Members in proportion to the
Matching Contributions, voluntary Employee contributions made pursuant
to Section 4.6 and Excess Contributions recharacterized as voluntary
Employee
<PAGE>
contributions pursuant to Section 11.6 allocated to the Highly Compensated
Employee and such Family Members.
(g) Within twelve months after the end of the Plan Year, the Employer may
make a special Qualified Non-Elective Contribution on behalf of Active
Participants who are Non-Highly Compensated Employees in an amount
sufficient to satisfy one of the Actual Contribution Percentage tests.
Such contribution shall be allocated to the Qualified Non-Elective
Account of each Active Participant who is a Non-Highly Compensated
Employee in the same proportion that each such Active Participant's
414(s) Compensation for the Plan Year bears to the total 414(s)
Compensation of all such Active Participants.
(h) For purposes of this Section 11.8, Income means the income or loss
allocable to Excess Aggregate Contributions for the Plan Year. The
income or loss allocable to Excess Aggregate Contributions for the
Plan Year is determined by multiplying the income or loss for the Plan
Year by a fraction. The numerator is the Excess Aggregate
Contributions for the Plan Year. The denominator is the sum of the
Participant's Matching Account and Voluntary Contribution Account
(including any portion of his Elective Account and Qualified
Non-Elective Account attributable to Elective Contributions and
Qualified Non-Elective Contributions taken into account under Section
11.7(c)) as of the end of the Plan Year reduced by the gain allocable
to such Accounts for the Plan Year and increased by the loss allocable
to such Accounts for the Plan Year.
The Income allocable to Excess Aggregate Contributions resulting from
recharacterization of Elective Contributions shall be determined and distributed
as if such recharacterized Elective Contributions had been distributed as Excess
Contributions.
(i) Any amounts not distributed within two and one-half months after the
end of the Plan Year shall be subject to the ten percent excise tax
imposed by Code Section 4979 on the Employer.
11.9 ADVANCE DISTRIBUTION FOR HARDSHIP
(a) If and to the extent elected by the Employer in the Adoption
Agreement, at the request of the Participant, the Employer shall
direct the Trustee to distribute to any Participant an amount up to
the lesser of 100% of his Vested Accrued Benefit as determined as of
the preceding Valuation Date or the amount necessary to satisfy the
immediate and heavy financial need of the Participant. The Employer,
on the basis of all relevant facts and circumstances, shall determine
whether a Participant has an immediate and heavy financial need. In
the case of a distribution from a Participant's Elective Account, an
immediate and heavy financial need can only result if it is made on
account of:
<PAGE>
(1) Expenses for medical care described in Code Section 213(d)
previously incurred by the Participant, his spouse, or any of his
dependents (as defined in Code Section 152) or necessary for such
individuals to obtain medical care;
(2) The purchase (excluding mortgage payments) of a principal
residence for the Participant;
(3) Payment of tuition, related educational fees, and room and board
expenses for the next twelve months of post-secondary education
for the Participant, his spouse, children, or dependents; or
(4) The need to prevent the eviction of the Participant from his
principal residence or foreclosure on the mortgage of the
Participant's principal residence.
(b) A distribution from an Account other than a Participant's Elective
Account shall be made on account of any of the circumstances listed
above or any other like circumstance which the Employer determines
results in an immediate and heavy financial need.
(c) No distribution from a Participant's Elective Account shall be made
pursuant to this Section 11.9 unless the Employer, based upon the
Participant's representation and such other facts as are known to the
Employer, determines that all of the following conditions are
satisfied:
(1) The distribution is not in excess of the amount of the immediate
and heavy financial need of the Participant;
(2) The Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans currently
available under this Plan and all other plans maintained by the
Employer or an Affiliated Employer;
(3) The Plan and all other plans maintained by the Employer and any
Affiliated Employer provide that the Elective Contributions and
voluntary Employee contributions made by the Participant will be
suspended for at least twelve months after receipt of the
hardship distribution; and
(4) The Plan and all other plans maintained by the Employer, and any
Affiliated Employer provide that the Participant's Deferred
Compensation for the Participant's taxable year immediately
following the taxable year of the hardship distribution will not
exceed the applicable limit under Code Section 402(g) for such
next taxable year less the amount of such Participant's Deferred
Compensation for the taxable year in which the hardship
distribution occurs.
<PAGE>
(d) Notwithstanding the above, distributions from a Participant's Elective
Account shall be limited solely to the Participant's Deferred
Compensation and any income attributable thereto credited to the
Participant's Elective Account as of December 31, 1988. Distributions
from a Participant's Qualified Matching Account and Qualified
Non-Elective Account shall not be permitted.
(e) Any distribution made pursuant to this Section 11.9 shall be made in a
manner which is consistent with and satisfies the provisions of
Section 6.5.
(f) The Employer may direct the Administrator to charge the Participant or
his Account for the fees assessed by the Administrator to process a
distribution under this Section 11.9.
<PAGE>
ADOPTION AGREEMENT FOR
THE AAL MUTUAL FUNDS PROTOTYPE
STANDARDIZED 401(k) PROFIT SHARING
PLAN AND TRUST
(WITH PAIRING PROVISIONS)
The undersigned Employer adopts The AAL Mutual Funds Standardized
401(k) Profit Sharing Plan for those Employees who shall qualify as Participants
hereunder, to be known as the
A1
(Enter Plan Name)
The Plan shall be effective as of the date specified below. The Employer hereby
selects the following Plan specifications:
CAUTION: The failure to properly fill out this Adoption Agreement may result in
disqualification of the Plan.
EMPLOYER INFORMATION
B1 NAME OF EMPLOYER
B2 ADDRESS
City State Zip
B3 NAME(S) OF TRUSTEE(S)
NOTE: The Trustee has all investment decision making responsibility unless the
Trustee is Emjay Corporation, in which case the Employer has all investment
decision making responsibility.
B4 ADDRESS OF TRUSTEE(S) a. ( ) Use Employer Address.
b. ( )
Street
City State Zip
B5 EMPLOYER FISCAL YEAR means the 12 consecutive month period commencing on
(e.g., January 1) and ending on
month day month day
Copyright 1995 AAL Capital Management Corporation
<PAGE>
PLAN INFORMATION
C1 EFFECTIVE DATE
This Adoption Agreement for The AAL Mutual Funds Standardized 401(k)
Profit Sharing Plan and Trust shall:
a. ( ) establish a new Plan effective as of (hereinafter called the
"Effective Date").
b. ( ) constitute an amendment and restatement in its entirety of a
previously established qualified Plan of the Employer which was
effective (hereinafter called the "Effective Date"). Except as
specifically provided in the Plan, the effective date of this
amendment and restatement is .
C2 PLAN YEAR means the 12 consecutive month period commencing on
(e.g., January 1) and ending on
month day month day
IS THERE A SHORT PLAN YEAR?
a. ( ) No.
b. ( ) Yes, beginning
month day year
and ending
month day year
C3 ANNIVERSARY DATE of Plan (Annual Valuation Date).
month day
C4 NAME OF PLAN ADMINISTRATOR. ( Document provides for the Employer
to appoint an Administrator. If none is named, the Employer will
become the Administrator.)
a. ( ) Employer (Use Employer Address).
b. ( ) Name
Address
City State Zip
<PAGE>
ELIGIBILITY, VESTING AND RETIREMENT AGE
D1 ELIGIBLE EMPLOYEES (Plan Section 1.24) shall mean:
a. ( ) all Employees.
b. ( ) all Employees except those checked below:
1. ( ) Employees included in a unit of Employees covered by a
collective bargaining agreement between the Employer and
"employee representatives", if retirement benefits were the
subject of good faith bargaining and and if two percent or
less of the employees who are covered pursuant to that
agreement are professionals as defined in Regulation Section
1.410 (b)-9. For this purpose, the term "employee
representatives" does not include any organization more than
half of whose members are Employees who are owners,
officers, or executives of the Employer. 2. ( ) Employees
who are non-resident aliens and who receive no earned income
(within the meaning of Code Section 911(d)(2)) from the
Employer which constitutes income from sources within the
United States (within the meaning of Code Section
861(a)(3)).
NOTE: The term "Employee" includes any individual employed by an Affiliated
Employer or a Leased Employee.
D2 HOURS OF SERVICE (Plan Section 1.42) will be determined on the basis of
the method selected below. Only one method may be selected. The method
selected will be applied to all Employees covered under the Plan.
a. ( ) On the basis of actual hours for which an Employee is paid or
entitled to payment. b. ( ) On the basis of days worked. An
Employee will be credited with 10 Hours of Service if under the
Plan such Employee would be credited with at least 1 Hour of
Service during the day. c. ( ) On the basis of weeks worked. An
Employee will be credited with 45 Hours of Service if under the
Plan such Employee would be credited with at least 1 Hour of
Service during the week. d. ( ) On the basis of semi-monthly
payroll periods. An Employee will be credited with 95 Hours of
Service if under the Plan such Employee would be credited with at
least 1 Hour of Service during the semi-monthly payroll period.
e. ( ) On the basis of months worked. An Employee will be
credited with 190 Hours of Service if under the Plan such
Employee would be credited with at least 1 Hour of Service during
the month.
<PAGE>
D3 YEAR OF SERVICE (Plan Section 1.82) and 1-YEAR BREAK IN SERVICE (Plan
Section 1.55) will be determined as follows:
ELIGIBILITY. If the Plan provides for a service requirement of 1 Year
of Service the eligibility computation periods following the initial
eligibility computation period shall be based on (check either a. or b.):
a. ( ) Anniversary of the initial eligibility computation period.
b. ( ) Plan Year.
To complete a Year of Service for purposes of Eligibility, the following number
of Hours of Service must be completed during the eligibility computation period
(check one):
c. ( ) 1000.
d. ( ) 750.
e. ( ) Other
(Cannot specify more than 1000).
VESTING. To complete a Year of Service for purposes of Vesting, the following
number of Hours of Service must be completed during the Plan Year. (check one):
f. ( ) 1000.
g. ( ) 750.
h. ( ) Other
(Cannot specify more than 1000).
BENEFIT ACCRUAL. To complete a Year of Service for purposes of benefit accrual,
the following number of Hours of Service must be completed during the Plan Year:
Year End
Matching/Qualified
Matching Contributions
Discretionary Non-Elective
Contributions
Year End
Fixed/Qualified
Non-Elective Contributions
Note: If the Plan does not provide a certain form of contribution, leave the
line blank. Not more than 501 may be specified.
1-YEAR BREAK IN SERVICE. The number of Hours of Service required to avoid a
1-Year Break in Service shall be (checked either i. or j.):
i. ( ) 501 Hours of Service.
j. ( ) Other
(Cannot specify more than 501).
<PAGE>
D4 CONDITIONS OF ELIGIBILITY (Plan Section 3.1). Any Eligible Employee may
become an Active Participant under the Plan if such Eligible Employee
has satisfied the age and service requirements, if any, specified below
(Check either a. OR b. and c., and if applicable, d.):
a. ( ) NO AGE OR SERVICE REQUIRED.
b. ( ) SERVICE REQUIREMENT.(May not exceed 1 Year of Service.)
1. ( ) N/A - No service requirement.
2. ( ) 1/2 Year of Service.
3. ( ) 1 Year of Service.
4. ( ) Other
.
NOTE: If the service requirement selected is other than a 1
Year of Service, an Employee will not be required to
complete any specified number of Hours of Service to
satisfy such service requirement.
c. ( ) AGE REQUIREMENT (may not exceed 21).
1. ( ) N/A - No age requirement.
2. ( ) 201/2.
3. ( ) 21.
4. ( ) Other
d. ( ) FOR NEW PLANS ONLY - The age and/or service requirements
above are waived as specified below in the case of any Eligible
Employee who is employed on
(check whichever is applicable):
1. ( ) Age requirement only.
2. ( ) Service requirement only.
3. ( ) Both age and service requirements.
Note: A new Plan shall include any existing Plan that is amended to add a cash
or deferred arrangement under Code Section 401(k).
D5 EFFECTIVE DATE OF PARTICIPATION (Plan Section 3.1) An Eligible Employee
shall become an Active Participant as of:
a. ( ) The first day of the Plan Year in which he meets the
requirements in D4 above.
b. ( ) The first day of the Plan Year in which he meets the
requirements in D4 above, if he meets such requirements in the
first 6 months of the Plan Year, or as of the first day of the
next succeeding Plan Year if he meets such requirements in the
last 6 months of the Plan Year.
c. ( ) The earlier of the first day of the seventh month or the
first day of the Plan Year coinciding with or next following the
date on which he meets the requirements in D4 above.
d. ( ) The first day of the Plan Year next following the date on
which he meets the requirements in D4 above. (Service requirement
must be1/2Year of Service or less and age requirement must be
201/2or less.)
e. ( ) The first day of the Plan Year, or the first day of any month
thereafter coinciding with or next following the date on which he
meets the requirements in D4 above.
f. ( ) The first day of the Plan Year quarter coinciding with or
next following the date on which he meets the requirements in D4
above.
g. ( ) Other provided that an Eligible Employee who has satisfied
the maximum age and service requirements that are permissible in
D4 above, shall become an Active Participant no later than the
earlier of (1) 6 months after such requirements are satisfied, or
(2) the first day of the first Plan Year after such requirements
are satisfied, unless the Employee separates from service before
such date.
<PAGE>
D6 VESTING OF PARTICIPANT'S INTEREST (Plan Section 6.4 (b)). The vesting
schedule, based on number of Years of Service, shall be as follows:
a. ( ) 100% upon entering Plan.
b. ( ) 0-2 years 0% c. ( ) 0-4 years 0%
3 years 100% 5 years 100%
d. ( ) 0-1 year 0% e. ( ) 1 year 25%
2 years 20% 2 years 50%
3 years 40% 3 years 75%
4 years 60% 4 years 100%
5 years 80%
6 years 100%
f. ( ) 1 year 20% g. ( ) 0-2 years 0%
2 years 40% 3 years 20%
3 years 60% 4 years 40%
4 years 80% 5 years 60%
5 years 100% 6 years 80%
7 years 100%
h. ( ) Other. Must be at least as liberal as either c. or g. above.
Years of Service Percentage
D7 FOR AMENDED PLANS (Plan Section 6.4 (f)). If the vesting schedule has
been amended to a less favorable schedule, enter the pre-amended
schedule below:
a. ( ) N/A - Vesting schedule has not been amended or amended
schedule is more favorable in all years.
b. ( ) Years of Service Percentage
<PAGE>
D8 TOP HEAVY VESTING (Plan Section 6.4 (c)) If this Plan becomes a Top
Heavy Plan, the following vesting schedule shall apply and shall be
treated as a Plan amendment pursuant to this Plan. Once effective, this
schedule shall continue to apply whether or not the Plan is a Top Heavy
Plan.
a. ( ) N/A (D6a., b., d., e. or f. was selected).
b. ( ) 0-1 year 0% c. ( ) 0-2 years 0%
2 years 20% 3 year 100%
3 years 40%
4 years 60%
5 years 80%
6 years 100%
d. ( ) Other. Must be at least as liberal as either b. or c. above.
Years of Service Percentage
NOTE: This section does not apply to the Accounts of any
Participant who does not have an Hour of Service
after the Plan becomes a Top Heavy Plan. The Vested
percentage of the Accounts of such a Participant will
be determined without regard to this Section D8.
D9 VESTING (Plan Section 6.4 (h)). In determining Years of Service for
vesting purposes, Years of Service attributable to the following shall
be EXCLUDED:
a. ( ) Service prior to the Effective Date of the Plan or a
predecessor plan.
b. ( ) N/A.
c. ( ) Service prior to the vesting computation period in which an
Employee attains age eighteen.
d. ( ) N/A.
D10 PLAN SHALL RECOGNIZE SERVICE WITH PREDECESSOR EMPLOYER (Plan
Section 1.82).
a. ( ) No.
b. ( ) Yes. Service with________________shall be recognized
for the following purposes under the Plan:
1. ( ) Eligibility.
2. ( ) Vesting.
3. ( ) Both eligibility and vesting.
<PAGE>
D11 NORMAL RETIREMENT AGE (Plan Section 1.53) means (check one):
a. ( ) the date on which a Participant attains age
(not to exceed 65).
b. ( ) the later of the date a Participant attains age
(not to exceed 65) or the first
day of the Plan Year in which occurs the
(not to exceed fifth) anniversary
of the date he became an Active Participant.
c. ( ) Other
but in no event later than the date a Participant
attains age 65 or, if later, the first day of the
Plan Year in which occurs the fifth anniversary of
the date he became an Active Participant.
D12 EARLY RETIREMENT (Plan Section 1.21) means a Participant's termination
of employment occurring on or after (check one):
a. ( ) the date on which a Participant attains age
b. ( ) date on which a Participant attains age and has completed at
least____________ Years of Service for vesting purposes.
c. ( ) the later of the date on which a Participant attains age or
the anniversary of the date on which he first became an Active
Participant.
d. ( ) the later of the date on which a Participant attains age or
the anniversary of the date on which he was first credited with
an Hour of Service.
e. ( )
f. ( ) N/A - No Early Retirement provision provided.
CONTRIBUTIONS, ALLOCATIONS AND DISTRIBUTIONS
E1 COMPENSATION (Plan Section 1.15)
a. COMPENSATION shall be taken into account from the first day of
the Plan Year in which an Eligible Employee becomes an Active
Participant pursuant to Section 3.1 (a) of the Plan for the
following purposes:
1. Discrentionary Non-Elective Contributions. ( )Yes ( )No ( )N/A.
2. Year End Fixed Non-Elective Contributions.( )Yes ( )No ( )N/A.
3. Year End Matching Contributions. ( ) Yes ( ) No ( ) N/A.
b. Shall amounts which are not currently includible in the
Participant's gross income by reason of the application of
Code Sections 125, 402(e)(3), 402(h)(1)(B) and 403(b) be
treated as Compensation?
1. ( ) Yes.
2. ( ) No.
<PAGE>
E2 DEFERRAL ELECTIONS - ELECTIVE CONTRIBUTIONS (Plan Section 11.3)
a. Each Active Participant may elect to have his Compensation reduced by:
1. ( ) %.
2. ( ) Up to %.
3.( ) From % to %.
4. ( ) Up to any percentage which will not cause the amount of
Elective Contributions allocated to a Participant's Elective
Account to exceed the limits of Code Sections 402(g) and 415.
b. An Active Participant may change his deferral election in a.
above (check one)...
1. ( ) annually, on the first day of the Plan Year.
2. ( ) on the first day of the Plan Year and six months following
the first day of the Plan Year.
3. ( ) on the first day of each quarter of the Plan Year
4. ( ) on the first day of each month of the Plan Year.
5. ( ) at such times as the Employer may determine.
c. Shall Active Participants be allowed to make a special deferral
election with respect to bonuses?
1. ( ) Yes.
2. ( ) No.
E3 MATCHING CONTRIBUTIONS (Plan Section11.1(a) (2)).
a. Shall the Employer make Matching Contributions ?
1. ( ) Yes.
2. ( ) No.
b. If the Employer shall make Matching contributions, on what basis
shall such contributions be made (check one)?
1. ( ) Ongoing.
2. ( ) Year end.
3. ( ) Both ongoing and year end.
Note: Matching contributions made on an ongoing basis are allocated
when made and without regard to whether an Active Participant
has completed a Year of Service or is employed on the
Anniversary Date.
<PAGE>
c If the Employer shall make Matching Contributions on an ongoing
basis, such contributions (check one)...
1. ( ) shall be determined by multiplying each Active
Participant's Deferred Compensation by a percentage to be
determined by the Employer.
2. ( ) shall be determined by multiplying each Active
Participants Deferred Compensation by --------- %.
3. ( ) shall equal --------- % of the Deferred Compensation of
the Active Participant which does not exceed --------- % of
his Compensation (Level 1) plus --------- % of the Deferred
Compensation of the Active Participant which exceeds
--------- % of his Compensation, but does not exceed
--------- % of such Active Participant's Compensation (Level
2). If the Plan provides for more than 2 levels of Matching
Contributions describe below:
Note: The Matching Contribution percentage at any level cannot exceed the
Matching Contribution percentage at any lower level.
d. If c. 1. or c. 2. is selected, what limitation will apply upon the
amount of Deferred Compensation that may be taken into account for
purposes of determining an Active Participant's allocation of Matching
Contributions (check one) ?
1. ( ) N/A; there is no limitation on the amount of Deferred
Compensation taken into account.
2. ( ) Only Deferred Compensation up to --------- % (insert
percentage) of an Active Participant's Compensation will be taken
into account. 3. ( ) Only Deferred Compensation up to a
percentage, determined by the Employer, of an Active
Participant's Compensation will be taken into account.
e. Shall there be a dollar limitation on the amount of Matching
Contributions made on an ongoing basis (check either 1. or 2.) ?
1. ( ) Yes. Specify dollar amount. $
2. ( ) No.
f. If the Employer shall make Matching Contributions on a year end basis,
must there be current or accumulated Net Profit ?
1. ( ) Yes.
2. ( ) No.
<PAGE>
g. If the Employer shall make Matching Contributions on a year end basis,
such contributions (check one)...
1. ( ) shall be determined by multiplying each Active Participant's
Deferred Compensation by a percentage to be determined by the
Employer.
2. ( ) shall be determined by multiplying each Active Participant's
Deferred Compensation by --------- %.
3. ( ) shall equal --------- % of the Deferred Compensation of the
Active Participant which does not exceed --------- % of his
Compensation (Level 1) plus ------- % of the Deferred
Compensation of the Active Participant which exceeds --------- %
of his Compensation, but does not exceed --------- % of such
Active Participant's Compensation (Level 2). If the Plan provides
for more than 2 levels of Matching Contributions describe below:
Note: The Matching Contribution percentage at any level cannot exceed the
Matching Contribution percentage at any lower level.
h. If g.1. or g.2. is selected, what limitation will apply upon the
amount of Deferred Compensation that may be taken into account
for purposes of determining an Active Participant's allocation of
Matching Contributions (check one) ?
1. ( ) N/A; there is no limitation on the amount of Deferred
Compensation taken into account.
2. ( ) Only Deferred Compensation up to --------- % (insert
percentage) of an Active Participant's Compensation will be
taken into account. 3. ( ) Only Deferred Compensation up to
a percentage, determined by the Employer, of an Active
Participant's Compensation will be taken into account.
i. Shall there be a dollar limitation on the amount of Matching
Contributions made on a year end basis (check either 1. or 2.) ?
1. ( ) Yes. Specify dollar amount. $
.
2. ( ) No.
<PAGE>
j. If the Employer shall make Matching Contributions, such
contributions shall be (check either 1. or 2.)...
1. ( ) vested in accordance with the schedule elected in
Service D6 or, if applicable, Section D8.
2. ( ) fully vested at all times.
If 2. is selected, Matching Contributions shall (check one)...
3. ( ) be Qualified Matching Contributions at all times.
4. ( ) be Qualified Matching Contributions only if, at the time
Matching Contributions are made, the Employer advises the
Administrator that such contributions are Qualified Matching
Contributions; otherwise, such contributions shall not be
Qualified Matching Contributions.
5. ( ) not be Qualified Matching Contributions.
E4 DISCRETIONARY NON-ELECTIVE CONTRIBUTIONS (Plan Section 11.1 (a) (3)).
a. Shall the Employer make Discretionary Non-Elective Contributions
?
1. ( ) Yes.
2. ( ) No.
b. If the Employer shall make Discretionary Non-Elective
Contributions, such contributions shall be (checked 1. or 2.)...
1. ( ) Discretionary, out of current or accumulated Net Profit,
to be determined by the Employer. 2. ( ) Discretionary, not
limited to Net Profit, to be determined by the Employer.
c. If the Employer shall make Discretionary Non-Elective
Contributions, such contributions and Forfeitures, if any, shall
be allocated as follows (check either 1. or 2.):
1. ( ) On a non-integrated basis.
2. ( ) On an integrated basis.
If 2. is selected, the integration level will be (check one)
3. ( ) $ ---------
4. ( ) ---------
% of the Taxable Wage Base in effect at the beginning of the
Plan Year.
5. ( ) Twenty percent of the Taxable Wage Base in effect at the
beginning of the Plan Year.
and the Maximum Excess Percentage will be (check either 6. or 7.)...
6. ( ) The percentage determined under the Plan.
7. ( ) ---------%.
<PAGE>
Shall the allocation of the Employer's Discretionary Non-Elective Contributions
and Forfeitures, if any, be done on the assumption that the Plan is a Top Heavy
Plan (check either 8. or 9.) ?
8. ( ) Yes.
9. ( ) No.
E5 FIXED NON-ELECTIVE CONTRIBUTIONS (Plan Section 11.1 (a) (4)).
a. Shall the Employer make Fixed Non-Elective Contributions ?
1. ( ) Yes.
2. ( ) No.
b. If the Employer shall make Fixed Non-Elective Contributions, on
what basis shall such contributions be made (check either 1. or
2.) ?
1. ( ) Ongoing.
2. ( ) Year end.
Note: Fixed contributions made on an ongoing basis are allocated when made and
without regard to whether an Active Participant has completed a Year of Service
or is employed on the Anniversary Date.
c. If the Employer shall make Fixed Non-Elective Contributions on a
year end basis, must there be current or accumulated Net Profit ?
1. ( ) Yes.
2. ( ) No.
d. If the Employer shall make Fixed Non-Elective Contributions, such
contributions shall be equal to --------- % of the Compensation
of each Active Participant.
<PAGE>
e. If the Employer shall make Fixed Non-Elective Contributions, such
contributions shall be (check either 1. or 2.)
1. ( ) vested in accordance with the schedule elected in
Section D6 or, if applicable, Section D8.
2. ( ) fully vested at all times.
If 2. is selected, Fixed Non-Elective Contributions shall (check one)...
3 ( ) be Qualified Non-Elective Contributions at all times.
4. ( ) be Qualified Non-Elective Contributions only if, at the time
Fixed Non-Elective Contributions are made, the Employer advises
the Administrator that such contributions are Qualified
Non-Elective Contributions; otherwise, such contributions shall
not be Qualified NonElective Contributions. 5. ( ) not be
Qualified Non-Elective Contributions.
E6 MULTIPLE USE OF ALTERNATE LIMITATION (Plan Sections 11.5 and 11.7) shall be
avoided by distributing the following (check one)...
a. ( ) Excess Contributions.
b. ( ) Excess Aggregate Contributions.
c. ( ) N/A.
<PAGE>
E7 FORFEITURES (Plan Section 11.4 (b)).
a. Forfeitures arising from a Participant's Discretionary
Non-Elective Account shall be (check one)...
1. ( ) allocated as if they are additional Discretionary
Non-Elective Contributions under the Plan.
2. ( ) used to reduce the Employer's Matching Contributions
under the Plan.
3. ( ) used to reduce the Employer's Fixed Non-Elective
Contributions under the Plan.
4. ( ) N/A; Plan does not provide for Discretionary
Non-Elective Contributions.
b. Forfeitures from a Participant's Fixed Non-Elective Account shall
be (check one)...
1. ( ) used to reduce the Employer's Fixed Non-Elective
Contributions under the Plan.
2. ( ) used to reduce the Employer's Matching Contributions
under the Plan.
3. ( ) allocated as if they are additional Discretionary
Non-Elective Contributions under the Plan.
4. ( ) N/A; Plan does not provide for Fixed Non-Elective
Contributions.
c. Forfeitures from a Participant's Matching Account shall be (check
one)...
1. ( ) used to reduce the Employer's Matching Contributions
under the Plan.
2. ( ) allocated as if they are additional Discretionary
Non-Elective Contributions under the Plan.
3. ( ) used to reduce the Employer's Fixed Non-Elective
Contributions under the Plan.
4. ( ) N/A; Plan does not provide for Matching Contributions.
<PAGE>
E8 LIMITATIONS ON ALLOCATIONS (Plan Section 4.4)
a. If any Active Participant is covered under one or more defined
contribution plans maintained by the Employer or any Affiliated
Employer, all of which are Prototype Plans, or under a welfare benefit
fund, as defined in code Section 419(e), or an individual medical
account, as defined in code Section 415(1)(2), then the Excess Amount
attributed to this Plan shall equal. . .
1. ( ) N/A.
2. ( ) The product of:
(i) The total Excess Amount allocated as of
such date (including any amount which would
have been allocated but for the limitations
of Code Section 415), times
(ii) the ratio of (A) the amount allocated
to the Participant as of such date under
this Plan divided by (B) the total amount
allocated as of such date under this Plan
and all such other defined contribution
plans (determined without regard to the
limitations of Code Section 415).
3. ( ) The total Excess Amount.
4. ( ) No part of the Excess Amount.
NOTE: If the Employer adopts Paired Plan #001, Paired Plan
#002 or both such Paired Plans, the Employer must
coordinate its elections under each Adoption
Agreement.
b. If any Active Participant is covered under one or more qualified
defined contribution plans maintained by the Employer or an Affiliated
Employer which are not Prototype Plans, then. . .
1. ( ) N/A.
2. ( ) The provisions of Section 4.4(b) of the Plan will apply as if
the other plan or plans were Prototype Plans.
3. ( ) Provide the method under which this Plan and such other
defined contribution plans will limit total Annual Additions to
the Maximum Permissible Amount, and will properly reduce any
Excess Amount in a manner that precludes Employer discretion.
<PAGE>
c. If any Participant is or ever has been a participant in
a
defined
benefit plan maintained
by the Employer or any Affiliated Employer, then. . .
1. ( ) N/A.
2. ( ) In any Limitation Year, the Annual Additions credited to the
Participant under this Plan may not cause the sum of the Defined
Benefit Fraction and the Defined Contribution Fraction to exceed
1.0. If the Employer's contribution that would otherwise be made
on the Participant's behalf during the Limitation Year would
cause the 1.0 limitation to be exceeded, the rate of contribution
under this Plan will be reduced so that the sum of the fractions
equals 1.0. If the 1.0 limitation is exceeded because of an
Excess Amount, such Excess Amount will be reduced in accordance
with Section 4.4(a)(4) of the Plan.
3. ( ) In any Limitation Year, the Projected Annual Benefit of a
Participant under a defined benefit plan may not cause the sum of
the Defined Benefit Fraction and the Defined Contribution
Fraction to exceed 1.0. If the Projected Annual Benefit of a
Participant during the Limitation Year would cause the 1.0
limitation to be exceeded, then the Projected Annual Benefit
shall be reduced so that the sum of the fractions does not exceed
1.0.
4. ( ) Provide the method under which this Plan and any defined
benefit plan will satisfy the 1.0 limitation in a manner that
precludes Employer discretion.
E9 DISTRIBUTIONS UPON DEATH (Plan Section 6.6(h)). Distributions upon
the death of a Participant prior to receiving any benefits shall (check
one). . .
a. ( ) be made pursuant to the election of the Beneficiary.
b. ( ) begin within one year of death for a designated Beneficiary
and be payable over the life (or over a period not exceeding the
life expectancy) of such Beneficiary, except that if the
Beneficiary is the Participant's spouse, within the time the
Participant would have attained age 70 1/2.
c. ( ) be made within 5 years of death for all Beneficiaries.
E10 LIFE EXPECTANCIES (Plan Sections 6.5(d) and 6.6(h)) for minimum
distributions required pursuant to Code Section 401(a)(9) shall (check
one). . .
a. ( ) be recalculated at the election of the Participant or his
spouse, as the case may be.
b. ( ) be recalculated.
c. ( ) not be recalculated.
<PAGE>
E11 CONDITIONS FOR DISTRIBUTIONS UPON TERMINATION (Plan Section 6.5(c)(1)).
Distributions upon termination of employment pursuant to Section 6.4(a)
of the Plan shall not be made unless the following conditions have been
satisfied (check one):
a. ( ) N/A. Immediate distributions may be made at the Participant's
election.
b. ( ) The first day of the Plan Year following the Plan Year in
which the Participant has incurred 1-Year Break(s) in Service.
c. ( ) The Participant's --------- anniversary of his termination of
employment.
d. ( ) The first day of the Plan Year following the Plan Year in
which occurs the Participant's anniversary of his termination of
employment.
e. ( ) The day on which the Participant attains age (age inserted
cannot be later than Normal Retirement Age).
f. ( ) The Participant has satisfied the conditions for Early
Retirement, has attained Normal Retirement Age or has become
Totally and Permanently Disabled.
g. ( ) The Participant's Vested Accrued Benefit under the Plan is
not greater than $ --------- .If h - is Vested Accrued Benefit
exceeds such amount, then no distribution shall be made until the
Participant has satisfied the conditions for Early Retire
--------- ment, has attained Normal Retirement Age or has become
Totally and Permanently Disabled. --------- -----
NOTE: Regardless of the above, for a Participant whose Vested Accrued Benefit is
$3,500 or less, the Plan provides for immediate payment of his Vested Accrued
Benefit.
E12 FORM OF DISTRIBUTIONS (Plan Sections 6.5 and 6.6). Distributions
under the Plan may be made. . .
a. 1. ( ) in lump sums.
2. ( ) in lump sums or installments.
b. AND, pursuant to Plan Secton 6.13,
1. ( ) no annuities are allowed (avoids Joint and Survivor Annuity
rules).
2. ( ) annuities are allowed (Plan Section 6.13 shall not apply).
NOTE: b.1. above may not be elected if this is an amendment to a plan which
permitted annuities as a form of distributions.
c. AND may be made in. . .
1. ( ) cash only (except for annuity contracts).
2. ( ) cash or property.
<PAGE>
TOP HEAVY REQUIREMENTS
F1 TOP HEAVY DUPLICATIONS/DEFINED BENEFIT PLAN (Plan Section 4.3(d)). When
a Non-Key Employee is an Active Participant in this Plan and a
participant in a defined benefit plan maintained by the Employer or an
Affiliated Employer, indicate which method shall be utilized to avoid
duplication of top heavy minimum benefits and contributions (check
one).
a. ( ) N/A; neither the Employer nor any Affiliated Employer
maintains a defined benefit plan.
b. ( ) N/A; this Plan and the defined benefit plan will both provide
top heavy minimum contributions and benefits.
c. ( ) A minimum, non-integrated contribution of 5% of each Non-Key
Employee's 415 Compensation shall be provided in this Plan.
d. ( ) A top heavy minimum benefit shall be provided under the
defined benefit plan.
e. ( ) Specify the method under which this Plan and such other
defined benefit plan will provide top heavy minimum benefits or
contributions for Non-Key Employees that will preclude Employer
discretion.
F2 ENHANCED MINIMUMS (Plan Section 4.4(e)). When the Employer, an
Affiliated Employer or both maintain a defined benefit plan, indicate
whether this Plan or the defined benefit plan will provide an enhanced
top heavy minimum benefit or contribution in order to preserve the use
of 1.25 in the computation of the denominator of the Defined Benefit
Fraction and Defined Contribution Fraction (check one):
a. ( ) N/A; neither the Employer nor any Affiliated Employer
maintains a defined benefit plan.
b. ( ) N/A; an enhanced top heavy minimum benefit or contribution
will not be provided.
c. ( ) The enhanced top heavy minimum contribution will be provided
in this Plan.
d. ( ) The enhanced top heavy minimum benefit will be provided in
the defined benefit plan.
F3 PRESENT VALUE OF ACCRUED BENEFIT (Plan Section 2.2). Where the Employer or
an Affiliated Employer maintains a defined benefit plan in addition to this
Plan, the present value of accrued benefits under the defined benefit plan
shall be determined on the basis of the following assumptions:
a. ( ) N/A; neither the Employer nor any Affiliated Employer
maintains a defined benefit plan.
b. ( ) Preretirement Interest Rate _______
Postretirement Interest Rate _______
Preretirement Mortality _______
Postretirement Mortality _______
<PAGE>
F4 TOP HEAVY DUPLICATIONS/DEFINED
CONTRIBUTION PLAN (Plan Section 4.3(d)).
When a Non-Key Employee is an Active Part
icipant
in this Plan and is a participant in another defined contribution plan
(other than a Paired Pla n) maintained by the Employer or an Affiliated
Employer, indicate which method shall be utilized to avoid duplication
of top heavy minimum contributions.
a. ( ) N/A; neither the Employer nor any Affiliated Employer
maintains another defined contribution plan (other than a Paired
Plan).
b. ( ) N/A; this Plan and such other defined contribution plan will
both provide top heavy minimum contributions.
c. ( ) The top heavy minimum contribution shall be provided in this
Plan.
d. ( ) The top heavy minimum contribution shall be provided in such
other defined contribution plan.
e. ( ) Specify the method under which the Plan and such other
defined contribution plan will provide top heavy minimum
contributions for Non-Key Employees that will preclude Employer
discretion.
F5 TOP HEAVY MINIMUM CONTRIBUTIONS (Plan Section 4.3(d)) shall be provided
(check either a. or b.). . .
a. ( ) only to Non-Key Employees.
b. ( ) without regard to whether an Active Participant is a
Non-Key Employee.
MISCELLANEOUS
G1 LOANS TO PARTICIPANTS (Plan Section 7.5).
a. ( ) Yes, loans may be made.
b. ( ) Yes, loans may be made but only in the event of a
financial hardship.
c. ( ) No, loans may not be made.
If YES, must the loan be for a minimum amount (check either d. or e.)?
d. ( ) Yes. The minimum loan amount must be $
(insert dollar amount
not greater than $1000).
e. ( ) No.
If loans are permitted, can a Participant have more than one loan outstanding at
the same time (check either f. or g.)? ------------------
f. ( ) Yes.
g. ( ) No.
<PAGE>
G2 PARTICIPANT INVESTMENT OF ACCOUNTS (Plan Section 7.4).
a. ( ) No, Participants are not permitted to direct the investment
of their Accounts.
b. ( ) Yes, Participants are permitted to direct the investment of
their Accounts, but only if they have attained age . (Indicate
age or N/A, if attainment of a certain age is not required.)
If YES, Participant direction extends to all Accounts except for the
Accounts checked below:
c. ( ) Elective Account.
d. ( ) Discretionary Non-Elective Account.
e. ( ) Fixed Non-Elective Account.
f. ( ) Qualified Non-Elective Account
g. ( ) Matching Account.
h. ( ) Qualified Matching Account.
i. ( ) Rollover Account.
j. ( ) Voluntary Contribution Account.
k. ( ) Qualified Voluntary Employee Contribution Account.
l. ( ) Mandatory Contribution Account.
NOTE: INVESTMENT OF THE TRUST FUND IS RESTRICTED TO AAL MUTUAL FUNDS OR SUCH
OTHER INVESTMENTS PERMITTED BY AAL CAPITAL MANAGEMENT CORPORATION (PLAN SECTION
7.2).
G3 TRANSFERS FROM QUALIFIED PLANS (Plan Section 4.5).
a. ( ) Yes, transfers from qualified plans (and rollovers) will be
allowed.
b. ( ) No, transfers from qualified plans (and rollovers) will not
be allowed.
If YES, withdrawals from a Participant's Rollover Account shall. . .
c. ( ) be permitted.
d. ( ) not be permitted.
<PAGE>
G4 HARDSHIP DISTRIBUTIONS (Plan Section 11.9).
a. ( ) Yes, hardship distributions are permitted.
b. ( ) No, hardship distributions are not permitted.
If YES, hardship distributions are permitted from (check c. or d.)...
c. ( ) Elective Accounts only.
d. ( ) All Accounts except for the Accounts checked below...
1. ( ) Discretionary Non-Elective Account.
2. ( ) Fixed Non-Elective Account.
3. ( ) Matching Accounts.
4. ( ) Elective Account.
5. ( ) Rollover Account.
Note: Hardship distributions from a Participant's Qualified
Non-Elective Account and Qualified Matching Account are not
permitted. Hardship distributions from a Participant's
Elective Account are subject to the provisions of Section
11.9.
G5 IN-SERVICE DISTRIBUTIONS (Plan Section 6.10).
a. In the case of a Participant's Elective Account, shall
distributions on or after the Participant's attainment of an age
no earlier than age 59 1/2 be permitted ?
1. ( ) Yes.
2. ( ) No.
If YES, what age must the Participant attain?
3. ( ) 591/2.
4. ( ) Other --------
.
b. In the case of a Participant's Accounts, other than his Elective
Account, shall in-service distributions be permitted ?
1. ( ) Yes, in-service distributions are permitted.
2. ( ) Yes, in-service distributions are permitted, but only if
the Participant has attained age --------- .
3. ( ) Yes, in-service distributions are permitted, but only if
the Participant has completed --------- Years of Service for
Vesting purposes.
4. ( ) Yes, in-service distributions are permitted, but only if
the Participant has attained age ____ and has completed ____
Years of Service for Vesting purposes.
5. ( ) No, in-service distributions are not permitted.
If YES, indicate the Accounts of the Participant from which in-service
distributions will be permitted (check whichever is applicable).
6. ( ) Discretionary Non-Elective Account.
7. ( ) Fixed Non-Elective Account.
8. ( ) Matching Account.
9. ( ) Rollover Account.
<PAGE>
G6 EMPLOYEES' VOLUNTARY CONTRIBUTIONS (Plan Section 4.6)
a. ( ) Yes, voluntary contributions are permitted.
b. ( ) No, voluntary contributions are not permitted.
Note: Voluntary contributions are subject to strict discrimination rules.
An Employer who has ever maintained or who later adopts any plan in addition to
this Plan (including a welfare benefit fund, as defined in Code Section 419(e),
which provides post-retirement medical benefits allocated to separate accounts
for Key Employees, as defined in Code Section 419A(d)(3), or an individual
medical account, as defined in Code Section 415(1)(2)) (other than Paired Plans
#001, #002) may not rely on the opinion letter issued by the National Office of
the Internal Revenue Service as evidence that this Plan is qualified under Code
Section 401. If the Employer who adopts or maintains multiple plans wishes to
obtain reliance that this Plan is qualified, application for a determination
letter should be made to the appropriate Key District Office.
The Employer may not rely on the opinion letter issued by the National Office of
the Internal Revenue Service as evidence that this Plan is qualified under Code
Section 401 unless the terms of the Plan, as herein adopted or amended, that
pertain to the requirements of Code Sections 401(a)(4), 401(a)(17), 401(1),
401(a)(5), 410(b) and 414(s), as amended by the Tax Reform Act of 1986 or later
laws, (a) are made effective retroactively to the first day of the first Plan
Year beginning after December 31, 1988 (or such other date on which these
requirements first become effective with respect to this Plan); or (b) are made
effective no later than the first day on which the Employer is no longer
entitled, under regulations, to rely on a reasonable, good faith interpretation
of these requirements, and the prior provisions of the Plan constitute such an
interpretation.
This Adoption Agreement may be used only in conjunction with Basic Plan Document
#01. This Adoption Agreement and the Basic Plan Document shall together be known
as The AAL Mutual Funds Standardized 401(k) Profit Sharing Plan #003.
The adoption of this Plan, its qualification by the IRS, and the related tax
consequences are the responsibility of the Employer and its independent tax and
legal advisors.
AAL Capital Management Corporation will notify the Employer of any amendments
made to the Plan or of the discontinuance or abandonment of the Plan provided
this Plan has been acknowledged by AAL Capital Management Corporation or its
authorized representative. Furthermore, in order to be eligible to receive such
notification, we agree to notify AAL Captial Managment Corporation of any change
in address.
<PAGE>
IN WITNESS WHEREOF, the Employer and Trustee hereby cause this Plan to be
executed on this
day of_____, 19____
Furthermore, this Plan may not be used unless acknowledged by AAL Capital
Management Corporation or its authorized representative.
EMPLOYER: TRUSTEE:
(enter name) (enter name)
By: By:
PARTICIPATING EMPLOYER:
(enter name)
By:
This Plan may not be used, and shall not be deemed to be a Prototype Plan,
unless an authorized representative of AAL Capital Management Corporation has
acknowledged the use of the Plan. Such acknowledgment is for ministerial
purposes only. It acknowledges that the Employer is using the Plan but does not
represent that this Plan, including the choices selected on the Adoption
Agreement, has been reviewed by a representative of the sponsor or constitutes a
qualified retirement plan.
AAL Capital Management Corporation
By: ------------------------------------
AAL Capital Management Corporation
222 W. College Avenue
Appleton, WI 54919
(414) 734-5721
1
<PAGE>
ADOPTION AGREEMENT FOR
THE AAL MUTUAL FUNDS PROTOTYPE
STANDARDIZED MONEY PURCHASE
PLAN AND TRUST
(WITH PAIRING PROVISIONS)
The undersigned Employer adopts The AAL Mutual Funds Standardized Money
Purchase Plan for those Employees who shall qualify as Participants hereunder,
to be known as the
A1
(Enter Plan Name)
The Plan shall be effective as of the date specified below. The Employer hereby
selects the following Plan specifications:
CAUTION: The failure to properly fill out this Adoption Agreement may result in
disqualification of the Plan.
EMPLOYER INFORMATION
B1 NAME OF EMPLOYER
B2 ADDRESS
City State Zip
B3 NAME(S) OF TRUSTEE(S)
NOTE: The Trustee has all investment decision making responsibility unless the
Trustee is Emjay Corporation, in which case the Employer has all investment
decision making respon sibility.
B4 ADDRESS OF TRUSTEE(S)
a. ( ) Use Employer Address.
b. ( )
Street City State Zip
B5 EMPLOYER FISCAL YEAR means the 12 consecutive month period commencing
on (e.g., January 1) and ending on
month day month day
Copyright 1995 AAL Capital Management Corporation
<PAGE>
PLAN INFORMATION
C1 EFFECTIVE DATE
This Adoption Agreement for The AAL Mutual Funds Standardized Money
Purchase Plan and Trust shall:
a. ( ) establish a new Plan effective as of
(hereinafter called the "Effective Date").
b. ( ) constitute an amendment and restatement in its entirety
of a previously established qualified Plan of the Employer
which was effective (hereinafter called the "Effective
Date"). Except as specifically provided in the Plan, the
effective date of this amendment and restatement is .
C2 PLAN YEAR means the 12 consecutive month period commencing on
(e.g., January 1) and ending on
month day month day
IS THERE A SHORT PLAN YEAR?
a. ( ) No.
b. ( ) Yes, beginning
month day year
and ending .
month day year
C3 ANNIVERSARY DATE of Plan (Annual Valuation Date).
month day
C4 NAME OF PLAN ADMINISTRATOR. ( Document provides for the Employer to
appoint an Administrator. If none is named, the Employer will become the
Administrator.)
a. ( ) Employer (Use Employer Address).
b. ( ) Name
Address
City State Zip
<PAGE>
ELIGIBILITY, VESTING AND RETIREMENT AGE
D1 ELIGIBLE EMPLOYEES (Plan Section 1.24) shall mean:
a. ( ) all Employees.
b. ( ) all Employees except those checked below:
1. ( ) Employees included in a unit of Employees covered by a
collective bargaining agreement between the Employer and
"employee representatives" , if retirement benefits were the
subject of good faith bargaining and if two percent or less
of the employees who are covered pursuant to that agreement
are professionals as defined in Regulation Section 1.410
(b)-9. For this purpose, the term "employee representatives"
does not include any organization more than half of whose
members are Employees who are owners, officers, or
executives of the Employer.
2. ( ) Employees who are non-resident aliens and who receive no
earned income (within the meaning of Code Section 911(d)(2))
from the Employer which constitutes income from sources
within the United States (within the meaning of Code Section
861(a)(3)).
NOTE: The term "Employee" includes any individual employed by an Affiliated
Employer or a Leased Employee.
D2 HOURS OF SERVICE (Plan Section 1.42) will be determined on the basis of
the method selected below. Only one method may be selected. The method
selected will be applied to all Employees covered under the Plan.
a. ( ) On the basis of actual hours for which an Employee is paid or
entitled to payment.
b. ( ) On the basis of days worked. An Employee will be credited
with 10 Hours of Service if under the Plan such Employee would be
credited with at least 1 Hour of Service during the day.
c. ( ) On the basis of weeks worked. An Employee will be credited
with 45 Hours of Service if under the Plan such Employee would be
credited with at least 1 Hour of Service during the week.
d. ( ) On the basis of semi-monthly payroll periods. An Employee
will be credited with 95 Hours of Service if under the Plan such
Employee would be credited with at least 1 Hour of Service during
the semi-monthly payroll period.
e. ( ) On the basis of months worked. An Employee will be credited
with 190 Hours of Service if under the Plan such Employee would
be credited with at least 1 Hour of Service during the month.
D3 YEAR OF SERVICE (Plan Section 1.82) and 1-YEAR BREAK IN SERVICE (Plan
Section 1.55) will be determined as follows:
ELIGIBILITY. If the Plan provides for a service requirement of 1 Year or 2 Years
of Service the eligibility computation periods following the initial eligibility
computation period shall be based on (check either a. or b.):
a. ( ) Anniversary of the initial eligibility computation period.
b. ( ) Plan Year.
<PAGE>
To complete a Year of Service for purposes of Eligibility, the following number
of Hours of Service must be completed during the eligibility computation period
(check one):
c. ( ) 1000.
d. ( ) 750.
e. ( ) Other
(Cannot specify more than 1000).
VESTING. To determine the Vested percentage of a Participant's Accrued Benefit,
the vesting computation period shall be based on (check either f. or g.):
f. ( ) Plan Year.
g. ( ) 12-month period beginning .
To complete a Year of Service for purposes of Vesting, the following number of
Hours of Service must be completed during the vesting computation period (check
one):
h. ( ) 1000.
i. ( ) 750.
j. ( ) Other (Cannot specify more than 1000).
BENEFIT ACCRUAL. To be entitled to an allocation of the Employer's contribution,
the accrual computation period shall be based on (check either k. or l.):
k. ( ) Plan Year.
l. ( ) 12-month period beginning
.
To complete a Year of Service for purposes of Benefit Accrual, the following
number of Hours of Service must be completed during the accrual computation
period (check one):
m. ( ) 501.
n. ( ) Other
(Cannot specify more than 501).
1-YEAR BREAK IN SERVICE. The number of Hours of Service required to avoid a
1-Year Break in Service shall be (checked either o. or p.):
o. ( ) 501 Hours of Service.
p. ( ) Other
(Cannot specify more than 501).
<PAGE>
D4 CONDITIONS OF ELIGIBILITY (Plan Section 3.1). Any Eligible Employee may
become an Active Participant under the Plan if such Eligible Employee
has satisfied the age and service requirements, if any, specified below
(Check either a. OR b. and c., and if applicable, d.):
a. ( ) NO AGE OR SERVICE REQUIRED.
b. ( ) SERVICE REQUIREMENT. (May not exceed 2 Years of Service. If
more than 1 Year of Service is required, 100% immediate vesting
is mandatory.)
1. ( ) N/A - No service requirement.
2. ( ) 1/2 Year of Service.
3. ( ) 1 Year of Service.
4. ( ) 11/2Years of Service.
5. ( ) 2 Years of Service.
6. ( ) Other
.
NOTE: If the service requirement selected is other than a
whole number of Years of Service, an Employee will
not be required to complete any specified number of
Hours of Service to satisfy such service requirement.
c. ( ) AGE REQUIREMENT (may not exceed 21).
1. ( ) N/A - No age requirement.
2. ( ) 201/2.
3. ( ) 21.
4. ( ) Other
d. ( ) FOR NEW PLANS ONLY - The age and/or service requirements
above are waived as specified below in the case of any Eligible
Employee who is employed on (check whichever is applicable):
1. ( ) Age requirement only.
2. ( ) Service requirement only.
3. ( ) Both age and service requirements.
D5 EFFECTIVE DATE OF PARTICIPATION (Plan Section 3.1) An Eligible Employee
shall become an Active Participant as of:
a. ( ) The first day of the Plan Yearin which he meets the
requirements in D4 above.
b. ( ) The first day of the Plan Year in which he meets the
requirements in D4 above, if he meets such requirements in the
first 6 months of the Plan Year, or as of the first day of the
next succeeding Plan Year if he meets such requirements in the
last 6 months of the Plan Year.
c. ( ) The earlier of the first day of the seventh month or the
first day of the Plan Year coinciding with or next following the
date on which he meets the requirements in D4 above.
<PAGE>
d. ( ) The first day of the Plan Year next following the date on
which he meets the requirements in D4 above. (Service requirement
must be1/2Year of Service or less or 11/2Years of Service or less
if 100% immediate vesting is selected, and age requirement must
be 201/2or less.)
e. ( ) The first day of the Plan Year or the first day of any month
thereafter coinciding with or next following the date on which he
meets the requirements in D4 above.
f. ( ) The first day of the Plan Year quarter coinciding with or
next following the date on which he meets the requirements in D4
above.
g. ( ) Other provided that an Eligible Employee who has satisfied
the maximum age and service requirements that are permissible in
D4 above, shall become an Active Participant no later than the
earlier of (1) 6 months after such requirements are satisfied, or
(2) the first day of the first Plan Year after such requirements
are satisfied, unless the Emyee separates from service before
such date.
D6 VESTING OF PARTICIPANT'S INTEREST (Plan Section 6.4 (b)). The vesting
schedule, based on number of Years of Service, shall be as follows:
a. ( ) 100% upon entering Plan. (Required if service requirement in
D4 is greater than 1 Year of Service.)
b.( ) 0-2 years 0% c.( ) 0-4 years 0%
3 years 100% 5 years 100%
d.( ) 0-1 year 0% e.( ) 1 year 25%
2 years 20% 2 years 50%
3 years 40% 3 years 75%
4 years 60% 4 years 100%
5 years 80%
6 years 100%
f.( ) 1 year 20% g.( ) 0-2 years 0%
2 years 40% 3 years 20%
3 years 60% 4 years 40%
4 years 80% 5 years 60%
5 years 100% 6 years 80%
7 years 100%
h.( ) Other. Must be at least as liberal as either c. or g. above.
Years of Service Percentage
<PAGE>
D7 FOR AMENDED PLANS (Plan Section 6.4 (f)). If the vesting schedule has
been amended to a less favorable schedule, enter the pre-amended
schedule below:
a. ( ) N/A - Vesting schedule has not been amended or amended
schedule is more favorable in all years.
b. ( ) Years of Service Percentage
D8 TOP HEAVY VESTING (Plan Section 6.4 (c)) If this Plan becomes a Top
Heavy Plan, the following vesting schedule shall apply and shall be
treated as a Plan amendment pursuant to this Plan. Once effective, this
schedule shall continue to apply whether or not the Plan is a Top Heavy
Plan.
a. ( ) N/A (D6a., b., d., e. or f. was selected).
b. ( ) 0-1 year 0% c. ( ) 0-2 years 0%
2 years 20% 3 years 100%
3 years 40%
4 years 60%
5 years 80%
6 years 100%
d. ( ) Other. Must be at least as liberal as either b. or c. above.
Years of Service Percentage
NOTE: This section does not apply to the Employer
Contribution Account of any Participant who does not
have an Hour of Service after the Plan becomes a Top
Heavy Plan. The Vested percentage of the Employer
Contribution Account of such a Participant will be
determined without regard to this Section D8.
D9 VESTING (Plan Section 6.4 (h)). In determining Years of Service for
vesting purposes, Years of Service attributable to the following shall
be EXCLUDED:
a. ( ) Service prior to the Effective Date of the Plan or a
predecessor plan.
b. ( ) N/A.
c. ( ) Service prior to the vesting computation period in which an
Employee attains age eighteen.
d. ( ) N/A.
<PAGE>
D10 PLAN SHALL RECOGNIZE SERVICE WITH PREDECESSOR EMPLOYER (Plan
Section 1.82).
a. ( ) No.
b. ( ) Yes. Service with shall be recognized for the
following purposes under the Plan:
1. ( ) Eligibility.
2. ( ) Vesting.
3. ( ) Both eligibility and vesting.
D11 NORMAL RETIREMENT AGE (Plan Section 1.53) means (check one):
a. ( ) the date on which a Participant attains age (not to exceed
65).
b. ( ) the later of the date a Participant attains age (not to
exceed 65) or the first day of the Plan Year in which occurs the
(not to exceed fifth) anniversary of the date he became an Active
Participant.
c. ( ) Other , but in no event later than the date a Participant
attains age 65 or, if later, the first day of the Plan Year in
which occurs the fifth anniversary of the date he became an
Active Participant.
D12 EARLY RETIREME
NT (Plan Section 1.21) means a Participant's termination of employment
occurring on or after (check one):
a. ( ) the date on which a Participant attains age .
b. ( ) date on which a Participant attains age and has completed at
least Years of Service for vesting purposes.
c. ( ) the later of the date on which a Participant attains age or
the anniversary of the date on which he first became an Active
Participant.
d. ( ) the later of the date on which a Participant attains
age or the anniversary of the date on which he was first
credited with an Hour of Service. e. ( )
f. ( ) N/A - No Early Retirement provision provided.
CONTRIBUTIONS, ALLOCATIONS AND DISTRIBUTIONS
E1 a. COMPENSATION (Plan Section 1.15) shall be based on (check one):
1. ( ) the 12-month period designated in Section D3 for the purpose
of determining a Year of Service for benefit accrual.
2. ( ) the Fiscal Year ending during the Plan Year.
3. ( ) the calendar year ending during the Plan Year.
<PAGE>
b. For the Plan Year in which an Eligible Employee becomes an Active
Participant pursuant to Section 3.1(a) of the Plan, Compensation shall
be recognized from. . .
1. ( ) the first day of the period selected in a. above.
2. ( ) the date the Eligible Employee becomes an Active Participant.
c. Shall amounts which are not currently includible in the Participant's
gross income by reason of the application of Code Sections 125,
402(e)(3), 402(h)(1)(B) and 403(b) be treated as Compensation?
1. ( ) Yes.
2. ( ) No.
E2 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION (Plan Section 4.1).
The Employer's contribution shall be (checked either a. or b.)...
a. ( ) % of each Active Participant's Compensation.
b. ( ) % (base contribution percentage) of each Active Participants's
Compensation, plus % (excess contribution percentage) of each Active
Participant's Compensation in excess of (check one)...
1. ( ) $ .
2. ( ) % of the Taxable Wage Base in effect at the beginning of the
12-month period designated in Section D3 for the purpose of
determining a Year of Service for benefit accrual. ------
3. ( ) Twenty percent of the Taxable Wage Base in effect at the
beginning of the 12-month period designated in Section D3 for the
purpose of determinig a Year of Service for benefit accrual.
NOTE: If E2b. is selected the excess contribution percentage cannot exceed the
Maximum Excess Percentage under Plan Section 1.52. Section E2b. cannot be
selected if the annual overall permitted disparity limit under
Plan Section 4.9(a) applies.
<PAGE>
E3 FORFEITURES (Plan Section 4.3 (c)).
a. ( ) Forfeitures shalll be used to reduce the Employer's
contributionunder the plan.
b. ( ) Forfeitures shall be allocated to all Active Participants
entitles to an allocation for the Plan Year in the proportion
that each Active Participant's Compensation bears to the
Compensation of all Active Participants.
E4 LIMITATIONS ON ALLOCATIONS (Plan Section 4.4)
a. If any Active Participant is covered under one or more defined
contribution plans maintained by the Employer or any Affiliated
Employer, all of which are Prototype Plans, or under a welfare
benefit fund, as defined in Code Section 419(e), or an individual
medical account, as defined in Code Section 415(1)(2), then the
Excess Amount attributed to this Plan shall equal. . .
1. ( ) N/A.
2. ( ) The product of:
(i) The total Excess Amount allocated as of
such date (including any amount which would
have been allocated but for the limitations
of Code Section 415), times
(ii) the ratio of (A) the amount allocated
to the Participant as of such date under this Plan
divided by (B) the total amount allocated as of such
date under this Plan and all such other defined
contribution plans (determined without regard to the
limitations of Code Section 415).
<PAGE>
3. ( ) The total Excess Amount.
4. ( ) No part of the Excess Amount.
NOTE: If the Employer adopts Paired Plan #001, Paired Plan
#003 or both such Paired Plans, the Employer must
coordinate its elections under each Adoption
Agreement.
b. If any Active Participant is covered under one or more qualified
defined contribution plans maintained by the Employer or an
Affiliated Employer which are not Prototype Plans, then. . .
1. ( ) N/A.
2. ( ) The provisions of Section 4.4(b) of the Plan will apply
as if the other plan or plans were Prototype Plans.
3. ( ) Provide the method under which this Plan and such other
defined contribution plans will limit total Annual Additions
to the Maximum Permissible Amount, and will properly reduce
any Excess Amount in a manner that precludes Employer
discretion.
c. If any Participant is or ever has been a participant in a defined
benefit plan maintained by the Employer or any Affiliated Employer,
then. . .
1. ( ) N/A.
2. ( ) In any Limitation Year, the Annual Additions credited to
the Participant under this Plan may not cause the sum of the
Defined Benefit Fraction and the Defined Contribution
Fraction to exceed 1.0. If the Employer's contribution that
would otherwise be made on the Participant's behalf during
the Limitation Year would cause the 1.0 limitation to be
exceeded, the rate of contribution under this Plan will be
reduced so that the sum of the fractions equals 1.0. If the
1.0 limitation is exceeded because of an Excess Amount, such
Excess Amount will be reduced in accordance with Section
4.4(a)(4) of the Plan.
3. ( ) In any Limitation Year, the Projected Annual Benefit of
a Participant under a defined benefit plan may not cause the
sum of the Defined Benefit Fraction and the Defined
Contribution Fraction to exceed 1.0. If the Projected Annual
Benefit of a Participant during the Limitation Year would
cause the 1.0 limitation to be exceeded, then the Projected
Annual Benefit shall be reduced so that the sum of the
fractions does not exceed 1.0.
4. ( ) Provide the method under which this Plan and any defined
benefit plan will satisfy the 1.0 limitation in a manner
that precludes Employer discretion.
<PAGE>
E5 DISTRIBUTIONS UPON DEATH (Plan Section 6.6(h)). Distributions upon the
death of a Participant prior to receiving any benefits shall (check
one). . .
a. ( ) be made pursuant to the election of the Beneficiary.
b. ( ) begin within one year of death for a designated Beneficiary
and be payable over the life (or over a period not exceeding the
life expectancy) of such Beneficiary, except that if the
Beneficiary is the Participant's spouse, within the time the
Participant would have attained age 70 1/2.
c. ( ) be made within 5 years of death for all Beneficiaries.
E6 LIFE EXPECTANCIES (Plan Sections 6.5(d) and 6.6(h)) for minimum
distributions required pursuant to Code Section 401(a)(9) shall (check
one). . .
a. ( ) be recalculated at the election of the Participant or his
spouse, as the case may be.
b. ( ) be recalculated.
c. ( ) not be recalculated.
E7 CONDITIONS FOR DISTRIBUTIONS UPON TERMINATION (Plan Section 6.5(c)(1)).
Distributions upon termination of employment pursuant to Section 6.4(a)
of the Plan shall not be made unless the following conditions have been
satisfied (check one):
a. ( ) N/A. Immediate distributions may be made at the Participant's
election.
b. ( ) The first day of the Plan Year following the Plan Year in which
the Participant has incurred 1-Year Break(s) in Service.
c. ( ) The Participant's anniversary of his termination of employment.
d. ( ) The first day of the Plan Year following the Plan Year in which
occurs the Participant's anniversary of his termination of employment.
e. ( ) The day on which the Participant attains age (age inserted cannot
be later than Normal Retirement Age).
f. ( ) The Participant has satisfied the conditions for Early Retirement,
has attained Normal Retirement Age or has become Totally and
Permanently Disabled.
g. ( ) The Particiapnt's Vested Accurred Benefit under the Plan is not
greater than $ . If his Vested Accrued Benefit exceeds such amount,
then no distribution shall be made until the Participant has satisfied
the conditions for Early Retirement, has attained Normal
Retirement Age or has become Totally and permanently
Disabled.
NOTE: Regardless of the above, for a Participant whose Vested Accrued Benefit is
$3,500 or less, the Plan provides for immediate payment of his Vested Accrued
Benefit.
<PAGE>
E8 FORM OF DISTRIBUTIONS (Plan Sections 6.5 and 6.6). Distributions under
the Plan may be made in annuites and. . .
a. ( ) N/A - no other forms are available
b. ( ) in lump sums.
c. ( ) in lump sums or installments.
AND may be made in...
d. ( ) cash only (except for annuity contracts).
e. ( ) cash or property.
TOP HEAVY REQUIREMENTS
F1 TOP HEAVY DUPLICATIONS/DEFINED BENEFIT PLAN (Plan Section 4.3(d)). When
a Non-Key Employee is an Active Participant in this Plan and a
participant in a defined benefit plan maintained by the Employer or an
Affiliated Employer, indicate which method shall be utilized to avoid
duplication of top heavy minimum benefits and contributions (check
one).
a. ( ) N/A; neither the Employer nor any Affiliated Employer maintains a
defined benefit plan.
b. ( ) N/A; this Plan and the defined benefit plan will both provide top
heavy minimum contributions and benefits.
c. ( ) A minimum, non-integrated contribution of 5% of each Non-Key
Employee's 415 Compensation shall be provided in this Plan.
d. ( ) A top heavy minimum benefit shall be provided under the defined
benefit plan.
e. ( ) Specify the method under which this Plan and such other defined
benefit plan will provide top heavy minimum benefits or contributions
for Non-Key Employees that will preclude Employer discretion.
F2 ENHANCED MINIMUMS (Plan Section 4.4(e)). When the Employer, an
Affiliated Employer or both maintain a defined benefit plan, indicate
whether this Plan or the defined benefit plan will provide an enhanced
top heavy minimum benefit or contribution in order to preserve the use
of 1.25 in the computation of the denominator of the Defined Benefit
Fraction and Defined Contribution Fraction (check one):
a. ( ) N/A; neither the Employer nor any Affiliated Employer maintains a
defined benefit plan.
b. ( ) N/A; an enhanced top heavy minimum benefit or contribution will
not be provided.
c. ( ) The enhanced top heavy minimum contribution will be provided in
this Plan.
d. ( ) The enhanced top heavy minimum benefit will be provided in the
defined benefit plan.
<PAGE>
F3 PRESENT VALUE OF ACCRUED BENEFIT (Plan Section 2.2). Where the Employer or
an Affiliated Employer maintains a defined benefit plan in addition to this
Plan, the present value of accrued benefits under the defined benefit plan
shall be determined on the basis of the following assumptions:
a. ( ) N/A; neither the Employer nor any Affiliated Employer maintains a
defined benefit plan.
b. ( ) Preretirement Interest Rate Postretirement Interest Rate
Preretirement Mortality Postretirement Mortality
F4 TOP HEAVY DUPLICATIONS/DEFINED
CONTRIBUTION PLAN (Plan Section 4.3(d)).
When a Non-Key Employee is an Active Participant
in this Plan and is a participant in another
defined contribution plan (other than a Paired Plan) maintained by the
Employer or an Affiliated
Employer, indicate which method shall be utilized to avoid duplication
of top heavy minimum contributions.
a. ( ) N/A; neither the Employer nor any Affiliated Employer maintains
another defined contribution plan (other than a Paired Plan).
b. ( ) N/A; this Plan and such other defined contribution plan will both
provide top heavy minimum contributions.
c. ( ) The top heavy minimum contribution shall be provided in this Plan.
d. ( ) The top heavy minimum contribution shall be provided in such other
defined contribution plan.
e. ( ) Specify the method under which the Plan and such other defined
contribution plan will provide top heavy minimum contributions for
Non-Key Employees that will preclude Employer discretions.
F5 TOP HEAVY MINIMUM CONTRIBUTIONS (Plan Section 4.3(d)) shall be provided
(check either a. or b.). . .
a. ( ) only to Non-Key Employees.
b. ( ) without regard to whether an Active Participant is a Non-Key
Employee.
<PAGE>
MISCELLANEOUS
G1 LOANS TO PARTICIPANTS (Plan Section 7.5).
a. ( ) Yes, loans may be made.
b. ( ) Yes, loans may be made but only in the event of a
financial hardship.
c. ( ) No, loans may not be made.
If YES, must the loan be for a minimum amount (check either d. or e.)?
d. ( ) Yes. The minimum loan amount must be $
(insert dollar amount not greater than $1000).
e. ( ) No.
If loans are permitted, can a Participant have more than one loan outstanding at
the same time (check either f. or g.)?
f. ( ) Yes.
g. ( ) No.
G2 PARTICIPANT INVESTMENT OF ACCOUNTS (Plan Section 7.4).
a. ( ) No, Participants are not permitted to direct the investment of
their Accounts.
b. ( ) Yes, Participants are permitted to direct the investment of their
Accounts, but only if they have attained age . (Indicate age or N/A,
if attainment of a certain age is not required.)
If YES, Participant direction extends to all Accounts except for the
Accounts checked below:
c. ( ) Employer Contribution Account.
d. ( ) Rollover Account.
e. ( ) Voluntary Contribution Account.
f. ( ) Qualified Voluntary Employee Contribution Account.
g. ( ) Mandatory Contribution Account.
NOTE: INVESTMENT OF THE TRUST FUND IS RESTRICTED TO AAL MUTUAL FUNDS OR SUCH
OTHER INVESTMENTS PERMITTED BY AAL CAPITAL MANAGEMENT CORPORATION (PLAN SECTION
7.2).
G3 TRANSFERS FROM QUALIFIED PLANS (Plan Section 4.5).
a. ( ) Yes, transfers from qualified plans (and rollovers) will be
allowed.
b. ( ) No, transfers from qualified plans (and rollovers) will not be
allowed.
If YES, withdrawals from a Participant's Rollover Account shall. . .
c. ( ) be permitted.
d. ( ) not be permitted.
<PAGE>
G4 IN-SERVICE DISTRIBUTIONS (Plan Section 6.10).
a. ( ) Yes, in-service distributions are permitted.
b. ( ) No, in-service distributions are not permitted.
Note: If a. is selected, distributions may be made only after the Participant
has attained Normal Retirement Age.
-
An Employer who has ever maintained or who later adopts any plan in addition to
this Plan (including a welfare benefit fund, as defin ed in Code Section 419(e),
which provides post-retirement medical benefits allocated to separate accounts
for Key Employees, as defined in Code Section 419A(d)(3), or an individual
medical account, as defined in Code Section 415(1)(2)) (other than Paired Plans
#001, #003) may not rely on the opinion letter issued by the National Office of
the Internal Revenue Service as evidence that this Plan is qualified under Code
Section 401. If the Employer who adopts or maintains multiple plans wishes to
obtain reliance that this Plan is qualified, application for a determination
letter should be made to the appropriate Key District Office.
The Employer may not rely on the opinion letter issued by the National Office of
the Internal Revenue Service as evidence that this Plan is qualified under Code
Section 401 unless the terms of the Plan, as herein adopted or amended, that
pertain to the requirements of Code Sections 401(a)(4), 401(a)(17), 401(1),
401(a)(5), 410(b) and 414(s), as amended by the Tax Reform Act of 1986 or later
laws, (a) are made effective retroactively to the first day of the first Plan
Year beginning after December 31, 1988 (or such other date on which these
requirements first become effective with respect to this Plan); or (b) are made
effective no later than the first day on which the Employer is no longer
entitled, under regulations, to rely on a reasonable, good faith interpretation
of these requirements, and the prior provisions of the Plan constitute such an
interpretation.
This Adoption Agreement may be used only in conjunction with Basic Plan Document
#01. This Adoption Agreement and the Basic Plan Document shall together be known
as The AAL Mutual Funds Standardized Money Purchasing Plan #002.
The adoption of this Plan, its qualification by the IRS, and the related tax
consequences are the responsibility of the Employer and its independent tax and
legal advisors.
AAL Capital Management Corporation will notify the Employer of any amendments
made to the Plan or of the discontinuance or abandonment of the Plan provided
this Plan has been acknowledged by AAL Capital Management Corporation or its
authorized representative. Furthermore, in order to be eligible to receive such
notification, we agree to notify AAL Captial Managment Corporation of any change
in address.
<PAGE>
IN WITNESS WHEREOF, the Employer and Trustee hereby cause this Plan to be
executed on this day of , 19 . Furthermore, this Plan may not be used unless
acknowledged by AAL Capital Management Corporation or its authorized
representative.
EMPLOYER: TRUSTEE:
(enter name)
(enter name)
By: By:
PARTICIPATING EMPLOYER:
(enter name)
By:
This Plan may not be used, and shall not be deemed to be a Prototype Plan,
unless an authorized representative of AAL Capital Management Corporation has
acknowledged the use of the Plan. Such acknowledgment is for ministerial
purposes only. It acknowledges that the Employer is using the Plan but does not
represent that this Plan, including the choices selected on the Adoption
Agreement, has been reviewed by a representative of the sponsor or constitutes a
qualified retirement plan.
AAL Capital Management Corporation
By:
AAL Capital Managemant Corporation
222 W. College Avenue
Appleton, WI 54919
(414) 734-5721
<PAGE>
ADOPTION AGREEMENT FOR
THE AAL MUTUAL FUNDS PROTOTYPE
STANDARDIZED PROFIT SHARING
PLAN AND TRUST
(WITH PAIRING PROVISIONS)
The undersigned Employer adopts The AAL Mutual Funds Standardized
Profit Sharing Plan for those Employees who shall qualify as Participants
hereunder, to be known as the
A1
(Enter Plan Name)
The Plan shall be effective as of the date specified below. The Employer hereby
selects the following Plan specifications:
CAUTION: The failure to properly fill out this Adoption Agreement may result in
disqualification of the Plan.
EMPLOYER INFORMATION
B1 NAME OF EMPLOYER
B2 ADDRESS
City State Zip
B3 NAME(S) OF TRUSTEE(S)
NOTE: The Trustee has all investment decision making responsibility unless the
Trustee is Emjay Corporation, in which case the Employer has all investment
decision making responsibility.
B4 ADDRESS OF TRUSTEE(S) a. ( ) Use Employer Address.
b. ( )
Street
City State Zip
B5 EMPLOYER FISCAL YEAR means the 12 consecutive month period commencing
on (e.g., January 1) and ending on
month day month day
Copyright 1995 AAL Capital Management Corporation
<PAGE>
PLAN INFORMATION
C1
EFFECTIVE DATE
This Adoption Agreement for The AAL Mutual Funds Standardized Profit
Sharing Plan and Trust shall:
a. ( ) establish a new Plan effective as of (hereinafter called the
"Effective Date").
b. ( ) constitute an amendment and restatement in its entirety of a
previously established qualified Plan of the Employer which was
effective (hereinafter called the "Effective Date"). Except as
specifically provided in the Plan, the effective date of this
amendment and restatement is .
C2 PLAN YEAR means the 12 consecutive month period commencing on
(e.g., January 1) and ending on
month day month day
IS THERE A SHORT PLAN YEAR?
a. ( ) No.
b. ( ) Yes, beginning
month day year
and ending .
month day year
C3 ANNIVERSARY DATE of Plan (Annual Valuation Date).
month day
C4 NAME OF PLAN ADMINISTRATOR. ( Document provides for the Employer to
appoint an Administrator. If none is named, the Employer will become the
Administrator.)
a. ( ) Employer (Use Employer Address).
b. ( ) Name
Address
City State Zip
<PAGE>
ELIGIBILITY, VESTING AND RETIREMENT AGE
D1 ELIGIBLE EMPLOYEES (Plan Section 1.24) shall mean:
a. ( ) all Employees.
b. ( ) all Employees except those checked below:
1. ( ) Employees whose employment is governed by a collective
bargaining agreement between the Employer and "employee
representatives" under which retirement benefits are the subject
of good faith bargaining.
2. ( ) Employees who are non-resident aliens and who receive no
earned income (within the meaning of Code Section 911(d)(2)) from
the Employer which constitutes income from sources within the
United States (within the meaning of Code Section 861(a)(3)).
NOTE: The term "Employee" includes any individual employed by an Affiliated
Employer or a Leased Employee.
D2 HOURS OF SERVICE (Plan Section 1.42) will be determined on the basis of
the method selected below. Only one method may be selected. The method
selected will be applied to all Employees covered under the Plan.
a. ( ) On the basis of actual hours for which an Employee is paid or
entitled to payment.
b. ( ) On the basis of days worked. An Employee will be credited
with 10 Hours of Service if under the Plan such Employee would be
credited with at least 1 Hour of Service during the day.
c. ( ) On the basis of weeks worked. An Employee will be credited
with 45 Hours of Service if under the Plan such Employee would be
credited with at least 1 Hour of Service during the week.
d. ( ) On the basis of semi-monthly payroll periods. An Employee
will be credited with 95 Hours of Service if under the Plan such
Employee would be credited with at least 1 Hour of Service during
the semi-monthly payroll period.
e. ( ) On the basis of months worked. An Employee will be credited
with 190 Hours of Service if under the Plan such Employee would
be credited with at least 1 Hour of Service during the month.
D3 YEAR OF SERVICE (Plan Section 1.82) and 1-YEAR BREAK IN SERVICE (Plan
Section 1.55) will be determined as follows:
ELIGIBILITY. If the Plan provides for a service requirement of 1 Year or 2 Years
of Service the eligibility computation periods following the initial eligibility
computation period shall be based on (check either a. or b.):
a. ( ) Anniversary of the initial eligibility computation period.
b. ( ) Plan Year.
<PAGE>
To complete a Year of Service for purposes of Eligibility, the following number
of Hours of Service must be completed during the eligibility computation period
(check one):
c. ( ) 1000.
d. ( ) 750.
e. ( ) Other (Cannot specify more than 1000).
VESTING. To determine the Vested percentage of a Participant's Accrued Benefit,
the vesting computation period shall be based on (check either f. or g.):
f. ( ) Plan Year.
g. ( ) 12-month period beginning .
To complete a Year of Service for purposes of Vesting, the following number of
Hours of Service must be completed during the vesting computation period (check
one):
h. ( ) 1000.
I. ( ) 750.
j. ( ) Other (Cannot specify more than 1000).
BENEFIT ACCRUAL. To be entitled to an allocation of the Employer's contribution,
the accrual computation period shall be based on (check either k. or l.):
k. ( ) Plan Year.
l. ( ) 12-month peri
od beginning
To complete a Year of Service for purposes of Benefit Accrual, the following
number of Hours of Service must be completed during the accrual computation
period (check one):
m. ( ) 501.
n. ( ) Other (Cannot specify more than 501).
1-YEAR BREAK IN SERVICE. The number of Hours of Service required to avoid a
1-Year Break in Service shall be (checked either o. or p.):
o. ( ) 501 Hours of Service.
p. ( ) Other
(Cannot specify more than 501).
<PAGE>
D4 CONDITIONS OF ELIGIBILITY (Plan Section 3.1). Any Eligible Employee may
become an Active Participant under the Plan if such Eligible Employee
has satisfied the age and service requirements, if any, specified below
(Check either a. OR b. and c., and if applicable, d.):
a. ( ) NO AGE OR SERVICE REQUIRED.
b. ( ) SERVICE REQUIREMENT. (May not exceed 2 Years of Service. If
more than 1 Year of Service is required, 100% immediate vesting
is mandatory.)
1. ( ) N/A - No service requirement.
2. ( )1/2 Year of Service.
3. ( ) 1 Year of Service.
4. ( ) 11/2Years of Service.
5. ( ) 2 Years of Service.
6. ( ) Other .
NOTE: If the service requirement selected is other than a
whole number of Years of Service, an Employee will
not be required to complete any specified number of
Hours of Service to satisfy such service requirement.
c. ( ) AGE REQUIREMENT (may not exceed 21).
1. ( ) N/A - No age requirement.
2. ( ) 201/2 .
3. ( ) 21.
4. ( ) Other
d. ( ) FOR NEW PLANS ONLY - The age and/or service requirements
above are waived as specified below in the case of any Eligible
Employee who is employed on (check whichever is applicable):
1. ( ) Age requirement only.
2. ( ) Service requirement only.
3. ( ) Both age and service requirements.
D5 EFFECTIVE DA ------------------
TE OF PARTICIPATION (Plan Section 3.1) An Eligible Employee shall
become an Active Participant as of:
a. ( ) The first day of the Plan Year in which he meets the
requirements in D4 above.
b. ( ) The first day of the Plan Year in which he meets the
requirements in D4 above, if he meets such requirements in the
first 6 months of the Plan Year, or as of the first day of the
next succeeding Plan Year if he meets such requirements in the
last 6 months of the Plan Year.
c. ( ) The earlier of the first day of the seventh month or the
first day of the Plan Year coinciding with or next following the
date on which he meets the requirements in D4 above.
<PAGE>
d. ( ) The first day of the Plan Year next following the date on
which he meets the requirements in D4 above. (Service requirement
must be1/2Year of Service or less or 11/2Years of Service or less
if 100% immediate vesting is selected, and age requirement must
be 201/2or less.)
e. ( ) The first day of the month coinciding with or next following
the date on which he meets the requirements in D4 above.
f. ( ) The first day of the Plan Year quarter coinciding with or
next following the date on which he meets the requirements in D4
above.
g. ( ) Other provided that an Eligible Employee who has satisfied
the maximum age and service requirements that are permissible in
D4 above, shall become an Active Participant no later than the
earlier of (1) 6 months after such requirements are satisfied, or
(2) the first day of the first Plan Year after such requirements
are satisfied, unless the Employee separates from service before
such date.
D6 VESTING OF PARTICIPANT'S INTEREST (Plan Section 6.4 (b)). The vesting
schedule, based on number of Years of Service, shall be as follows:
a. ( ) 100% upon entering Plan. (Required if service requirement in
D4 is greater than 1 Year of Service.)
b. ( ) 0-2 years 0% c. ( ) 0-4 years 0%
3 years 100% 5 years 100%
d. ( ) 0-1 year 0% e. ( ) 1 year 25%
2 years 20% 2 years 50%
3 years 40% 3 years 75%
4 years 60% 4 years 100%
5 years 80%
6 years 100%
f. ( ) 1 year 20% g. ( ) 0-2 years 0%
2 years 40% 3 years 20%
3 years 60% 4 years 40%
4 years 80% 5 years 60%
5 years 100% 6 years 80%
7 years 100%
h. ( ) Other. Must be at least as liberal as either c. or g. above.
Years of Service Percentage
<PAGE>
D7 FOR AMENDED PLANS (Plan Section 6.4 (f)). If the vesting schedule has
been amended to a less favorable schedule, enter the pre-amended
schedule below:
a. ( ) N/A - Vesting schedule has not been amended or amended
schedule is more favorable in all years.
b. ( ) Years of Service Percentage
D8 TOP HEAVY VESTING (Plan Section 6.4 (c)) If this Plan becomes a Top
Heavy Plan, the following vesting schedule shall apply and shall be
treated as a Plan amendment pursuant to this Plan. Once effective, this
schedule shall continue to apply whether or not the Plan is a Top Heavy
Plan.
a. ( ) N/A (D6a., b., d., e. or f. was selected).
b. ( ) 0-1 year 0% c.( ) 0-2 years 0%
2 years 20% 3 years 100%
3 years 40%
4 years 60%
5 years 80%
6 years 100%
d. ( ) Other. Must be at least as liberal as either b. or c. above.
Years of Service Percentage
NOTE: This section does not apply to the Employer
Contribution Account of any Participant who does not
have an Hour of Service after the Plan becomes a Top
Heavy Plan. The Vested percentage of the Employer
Contribution Account of such a Participant will be
determined without regard to this Section D8.
<PAGE>
D9 VESTING (Plan Section 6.4 (h)). In determining Years of Service for
vesting purposes, Years of Service attributable to the following shall
be EXCLUDED:
a. ( ) Service prior to the Effective Date of the Plan or a
predecessor plan.
b. ( ) N/A.
c. ( ) Service prior to the vesting computation period in which an
Employee attains age eighteen.
d. ( ) N/A.
D10 PLAN SHALL RECOGNIZE SERVICE WITH ANOTHER EMPLOYER (Plan Section
1.82).
a. ( ) No.
b. ( ) Yes. Service with shall be recognized for the
following purposes under the Plan:
1. ( ) Eligibility.
2. ( ) Vesting.
3. ( ) Both eligibility and vesting.
D11 NORMAL RETIREMENT AGE (Plan Section 1.53) means (check one):
a. ( ) the date on which a Participant attains age (not to exceed
65).
b. ( ) the later of the date a Participant attains age (not to
exceed 65) or the first day of the Plan Year in which occurs the
(not to exceed fifth) anniversary of the date he became an Active
Participant.
c. ( ) Other , but in no event later than the date a Participant
attains age 65 or, if later, the first day of the Plan Year in
which occurs the fifth anniversary of the date he became an
Active Participant.
D12 EARLY RETIREMENT (Plan Section 1.21) means a Participant's termination of
employment occurring on or after (check one):
a. ( ) the date on which a Participant attains age .
b. ( ) date on which a Participant attains age and has completed at
least Years of Service for vesting purposes.
c. ( ) the later of the date on which a Participant attains age or
the anniversary of the date on which he first became an Active
Participant.
d. ( ) the later of the date on which a Participant attains age or
the anniversary of the date on which he w as first credited with
an Hour of Service.
e. ( )
f. ( ) N/A - No Early Retirement provision provided.
<PAGE>
CONTRIBUTIONS, ALLOCATIONS AND DISTRIBUTIONS
E1 a. COMPENSATION (Plan Section 1.15) shall be based on (check one):
1. ( ) the 12-month period designated in Section D3 for the
purpose of determining a Year of Service for benefit
accrual.
2. ( ) the Fiscal Year ending during the Plan Year.
3. ( ) the calendar year ending during the Plan Year.
b. For the Plan Year in which an Eligible Employee becomes an Active
Participant pursuant to Section 3.1(a) of the Plan, Compensation
shall be recognized from. . .
1. ( ) the first day of the period selected in a. above.
2. ( ) the date the Eligible Employee becomes an Active
Participant.
c. Shall amounts which are not currently includible in the
Participant's gross income by reason of the application of
Code Sections 125, 402(e)(3), 402(h)(1)(B) and 403(b) be
treated as Compensation?
1. ( ) Yes.
2. ( ) No.
E2 FORMULA FOR DETERMINING EMPLOYER'S CONTRIBUTION (Plan Section 4.1).
a. ( ) Discretionary, out of current or accumulated Net Profits, to be
determined by the Employer.
b. ( ) Discretionary, not limited to Net Profits, to be determined by the
Employer.
NOTE: If E2b. is selected the excess contribution percentage cannot exceed the
Maximum Excess Percentage under Plan Section 1.52. Section E2b. cannot be
selected if the annual overall permitted disparity limit under Plan Section
4.9(a) applies.
E3 ALLOCATION OF EMPLOYER CONTRIBUTIONS AND FORFEITURES (Plan Section
4.3).
The Employer's contributions and Forfeitures, if any, shall be allocated as
follows (check either a. or b.):
a. ( ) On a non-integrated basis.
b. ( ) On an integrated basis.
If b. is selected the integration level will be (check one). . .
c. ( ) $ .
d. ( ) % of the Taxable Wage Base in effect at the beginning of the
12-month period designated in Section D3 for the purpose of
determining a Year of Service for benefit accrual.
e. ( ) Twenty percent of the Taxable Wage Base in effect at the
beginning of the 12- month period designated in
Section D3 for the purpose of determining a Year of ---------
Service for benefit accrual.
<PAGE>
and the Maximum Excess Percentage will be (check either f. or g.). . .
f. ( ) The percentage determined under the Plan.
g. ( ) %.
Shall the allocation of the Employer's contributions and Forfeitures,
if any, be done on the assumption that the Plan is a Top Heavy Plan
(check either h. or i.)?
h. ( ) ---------
Yes.
I. ( ) No.
E4 LIMITATIONS ON ALLOCATIONS (Plan Section 4.4)
a. If any Active Participant is covered under one or more defined
contribution plans maintained by the Employer or any Affiliated
Employer, all of which are Prototype Plans, or under a welfare
benefit fund, as defined in code Section 419(e), or an individual
medical account, as defined in code Section 415(1)(2), then the
Excess Amount attributed to this Plan shall equal. . .
1. ( ) N/A.
2. ( ) The product of:
(i) The total Excess Amount allocated as of
such date (including any amount which would
have been allocated but for the limitations
of Code Section 415), times
(ii) the ratio of (A) the amount allocated
to the Participant as of such date under
this Plan divided by (B) the total amount
allocated as of such date under this Plan
and all such other defined contribution
plans (determined without regard to the
limitations of Code Section 415).
3. ( ) The total Excess Amount.
4. ( ) No part of the Excess Amount.
NOTE: If the Employer adopts Paired Plan #002, Paired Plan
#003 or both such Paired Plans, the Employer must
coordinate its elections under each Adoption
Agreement.
b. If any Active Participant is covered under one or more qualified
defined contribution plans maintained by the Employer or an
Affiliated Employer which are not Prototype Plans, then. . .
1. ( ) N/A.
2. ( ) The provisions of Section 4.4(b) of the Plan will apply
as if the other plan or plans were Prototype Plans.
<PAGE>
3. ( ) Provide the method under which this Plan and such other
defined contribution plans will limit total Annual Additions
to the Maximum Permissible Amount, and will properly reduce
any Excess Amount in a manner that precludes Employer
discretion.
c. If any Participant is or ever has been a participant in a defined
benefit plan maintained by the Employer or any Affiliated
Employer, then. . .
1. ( ) N/A.
2. ( ) In any Limitation Year, the Annual Additions credited to
the Participant under this Plan may not cause the sum of the
Defined Benefit Fraction and the Defined Contribution
Fraction to exceed 1.0. If the Employer's contribution that
would otherwise be made on the Participant's behalf during
the Limitation Year would cause the 1.0 limitation to be
exceeded, the rate of contribution under this Plan will be
reduced so that the sum of the fractions equals 1.0. If the
1.0 limitation is exceeded because of an Excess Amount, such
Excess Amount will be reduced in accordance with Section
4.4(a)(4) of the Plan.
3. ( ) In any Limitation Year, the Projected Annual Benefit of
a Participant under a defined benefit plan may not cause the
sum of the Defined Benefit Fraction and the Defined
Contribution Fraction to exceed 1.0. If the Projected Annual
Benefit of a Participant during the Limitation Year would
cause the 1.0 limitation to be exceeded, then the Projected
Annual Benefit shall be reduced so that the sum of the
fractions does not exceed 1.0.
4. ( ) Provide the method under which this Plan and any defined
benefit plan will satisfy the 1.0 limitation in a manner
that precludes Employer discretion.
E5 DISTRIBUTIONS UPON DEATH (Plan Section 6.6(h)). Distributions upon
the death of a Participant prior to receiving any benefits shall (check
one). . .
a. ( ) be made pursuant to the election of the Beneficiary.
b. ( ) begin within one year of death for a designated Beneficiary and be
payable over the life (or over a period not exceeding the life
expectancy) of such Beneficiary, except that if the Beneficiary is the
Participant's spouse, within the time the Participant would have
attained age 70 1/2.
c. ( ) be made within 5 years of death for all Beneficiaries.
d. ( ) other
<PAGE>
E6 LIFE EXPECTANCIES (Plan Sections 6.5(d) and 6.6(h)) for minimum
distributions required pursuant to Code Section 401(a)(9) shall (check
one). . .
a. ( ) be recalculated at the election of the Participant or
his spouse, as the case may
be.
b. ( ) be recalculated.
c. ( ) not be recalculated.
E7 CONDITIONS FOR DISTRIBUTIONS UPON TERMINATION (Plan Section 6.5(c)(1)).
Distributions upon termination of employment pursuant to Section 6.4(a)
of the Plan shall not be made unless the following conditions have been
satisfied (check one):
a. ( ) N/A. Immediate distributions may be made at the Participant's
election.
b. ( ) The Participant has incurred 1-Year Break(s) in Service.
c. ( ) The Participant has satisfied the conditions for Early Retirement,
has attained Normal Retirement Age or has become Totally and
Permanently Disabled.
d. ( ) The Participant's Vested Accrued Benefit under the Plan is less
than $ . If the Participant's Vested Accrued Benefit exceeds such
amount, then no distribution shall be made until the
Participant has satisfied the conditions for Early Retirement, has
attained Normal Retirement Age or has become Totally and Permanently
Disabled.
e. ( ) Other -------------
NOTE: Regardless of the above, for a Participant whose Vested Accrued Benefit is
$3,500 or less, the Plan provides for immediate payment of his Vested Accrued
Benefit.
E8 FORM OF DISTRIBUTIONS (Plan Sections 6.5 and 6.6). Distributions
under the Plan may be made. . .
a. 1. ( ) in lump sums.
2. ( ) in lump sums or installments.
b. AND, pursuant to Plan Secton 6.13,
1. ( ) no annuities are allowed (avoids Joint and Survivor
Annuity rules).
2. ( ) annuities are allowed (Plan Section 6.13 shall not
apply).
NOTE: b.1. above may not be elected if this is an amendment to a plan which
permitted annuities as a form of distributions.
c. AND may be made in. . .
1. ( ) cash only (except for annuity contracts).
2. ( ) cash or property.
<PAGE>
TOP HEAVY REQUIREMENTS
F1 TOP HEAVY DUPLICATIONS/DEFINED BENEFIT PLAN (Plan Section 4.3(d)). When
a Non-Key Employee is an Active Participant in this Plan and a
participant in a defined benefit plan maintained by the Employer or an
Affiliated Employer, indicate which method shall be utilized to avoid
duplication of top heavy minimum benefits and contributions (check
one).
a. ( ) N/A; neither the Employer nor any Affiliated Employer maintains a
defined benefit plan.
b. ( ) N/A; this Plan and the defined benefit plan will both provide top
heavy minimum contributions and benefits.
c. ( ) A minimum, non-integrated contribution of 5% of each Non-Key
Employee's 415 Compensation shall be provided in this Plan.
d. ( ) A top heavy minimum benefit shall be provided under the defined
benefit plan.
e. ( ) Specify the method under which this Plan and such other defined
benefit plan will provide top heavy minimum benefits or contributions
for Non-Key Employees that will preclude Employer discretion.
F2 ENHANCED MINIMUMS (Plan Section 4.4(e)). When the Employer, an
Affiliated Employer or both maintained a defined benefit plan, indicate
whether this Plan or the defined benefit plan will provide an e nhanced
top heavy minimum benefit or contribution in order to preserve the use
of 1.25 in the computation of the denominator of the Defined Benefit
Fraction and Defined Contribution Fraction (check one):
a. ( ) N/A; neither the Employer nor any Affiliated Employer maintains a
defined benefit plan.
b. ( ) N/A; an enhanced top heavy minimum benefit or contribution will
not be provided.
c. ( ) The enhanced top heavy minimum contribution will be provided in
this Plan.
d. ( ) The enhanced top heavy minimum benefit will be provided in the
defined benefit plan.
F3 PRESENT VALUE OF ACCRUED BENEFIT (Plan Section 2.2). Where the Employer or
an Affiliated Employer maintains a defined benefit plan in addition to
this Plan, the present value of accrued benefits under the defined
benefit plan shall be determined on the basis of the following
assumptions:
a. ( ) N/A; neither the Employer nor any Affiliated Employer maintains a
defined benefit plan.
b. ( ) Preretirement Interest Rate
Postretirement Interest Rate
Preretirement Mortality
Postretirement Mortality
F4 TOP HEAVY DUPLICATIONS/DEFINED CONTRIBUTION PLAN (Plan Section 4.3(d)).
<PAGE>
When a Non-Key Employee is an Active Participant in this Plan and is a
participant in another defined contribution plan (other than a Paired
Plan) maintained by the Employer or an Affiliated Employer, indicate
which method shall be utilized to avoid duplication of top heavy
minimum contributions.
a. ( ) N/A; neither the Employer nor any Affiliated Employer maintains
another defined contribution plan (other than a Paired Plan).
b. ( ) N/A; this Plan and such other defined contribution plan will both
provide top heavy minimum contributions.
c. ( ) The top heavy minimum contribution shall be provided in this Plan.
d. ( ) The top heavy minimum contribution shall be provided in such other
defined contribution plan.
e. ( ) Specify the method under which the Plan and such other defined
contribution plan will provide top heavy minimum contributions for
Non-Key Employees that will preclude Employer discretions.
F5 TOP HEAVY MINIMUM CONTRIBUTIONS (Plan Section 4.3(d)) shall be provided
(check either a. or b.). . .
a. ( ) only to Non-Key Employees.
b. ( ) without regard to whether an Active Participant is a
Non-Key Employee.
MISCELLANEOUS
G1 LOANS TO PARTICIPANTS (Plan Section 7.5).
a. ( ) Yes, loans may be made.
b. ( ) Yes, loans may be made but only in the event of a
financial hardship.
c. ( ) No, loans may not be made.
If YES, must the loan be for a minimum amount (check either d. or e.)?
d. ( ) Yes. The minimum loan amount must be $
(insert dollar amount not greater than $1000).
e. ( ) No.
If loans are permitted, can a Participant have more than one loan
outstanding at the same time (check either f. or g.)?
f. ( ) Yes.
g. ( ) No.
G2 PARTICIPANT INVESTMENT OF ACCOUNTS (Plan Section 7.4).
a. ( ) No, Participants are not permitted to direct the investment of
their Accounts.
b. ( ) Yes, Participants are permitted to direct the investment of their
Accounts, but only if they have attained age . (Indicate age or N/A,
if attainment of a
<PAGE>
certain age is not required.)
If YES, Participant direction extends to all Accounts except for the
Accounts checked below:
c. ( ) Employer Contribution Account
d. ( ) Rollover Account.
e. ( ) Voluntary Contribution Account.
f. ( ) Qualified Voluntary Employee Contribution Account.
g. ( ) Mandatory Contribution Account.
NOTE: INVESTMENT OF THE TRUST FUND IS RESTRICTED TO AAL MUTUAL FUNDS OR SUCH
OTHER INVESTMENTS PERMITTED BY AAL CAPITAL MANAGEMENT CORPORATION (PLAN SECTION
7.2).
G3 TRANSFERS FROM QUALIFIED PLANS (Plan Section 4.5).
a. ( ) Yes, transfers from qualified plans (and rollovers) will be
allowed.
b. ( ) No, transfers from qualified plans (and rollovers) will not be
allowed.
If YES, withdrawals from a Participant's Rollover Account shall. . .
c. ( ) be permitted.
d. ( ) not be permitted.
G4 HARDSHIP DISTRIBUTIONS (Plan Section 6.11).
a. ( ) Yes, hardship distributions are permitted.
b. ( ) No, hardship distributions are not permitted.
G5 IN-SERVICE DISTRIBUTIONS (Plan Section 6.10).
a. ( ) Yes, in-service distributions are permitted.
b. ( ) Yes, in-service distributions are permitted, but only if the
Participant has attained age .
c. ( ) Yes, in-service distributions are permitted, but only upon the
occurrence of the following circumstance(s) .
d. ( ) No, in-service distributions are not permitted.
<PAGE>
An Employer who has ever maintained or who later adopts any plan in addition to
this Plan (including a welfare benefit fund, as defined in Code Section 419(e),
which provides post-retirement medical benefits allocated to separate accounts
for Key Employees, as defined in Code Section 419A(d)(3), or an individual
medical account, as defined in Code Section 415(1)(2)) (other than Paired Plans)
may not rely on the opinion letter issued by the National Office of the Internal
Revenue Service as evidence that this Plan is qualified under Code Section 401.
If the Employer who adopts or maintains multiple plans wishes to obtain reliance
that this Plan is qualified, application for a determination letter should be
made to the appropriate Key District Office.
The Employer may not rely on the opinion letter issued by the National Office of
the Internal Revenue Service as evidence that this Plan is qualified under Code
Section 401 unless the terms of the Plan, as herein adopted or amended, that
pertain to the requirements of Code Sections 401(a)(4), 401(a)(17), 401(1),
401(a)(5), 410(b) and 414(s), as amended by the Tax Reform Act of 1986 or later
laws, (a) are made effective retroactively to the first day of the first Plan
Year beginning after December 31, 1988 (or such other date on which these
requirements first become effective with respect to this Plan); or (b) are made
effective no later than the first day on which the Employer is no longer
entitled, under regulations, to rely on a reasonable, good faith interpretation
of these requirements, and the prior provisions of the Plan constitute such an
interpretation.
This Adoption Agreement may be used only in conjunction with Basic Plan Document
#01. This Adoption Agreement and the Basic Plan Document shall together be known
as The AAL Mutual Funds Standardized Profit Sharing Plan #001.
The adoption of this Plan, its qualification by the IRS, and the related tax
consequences are the responsibility of the Employer and its independent tax and
legal advisors.
AAL Capital Management Corporation will notify the Employer of any amendments
made to the Plan or of the discontinuance or abandonment of the Plan provided
this Plan has been acknowledged by AAL Capital Management Corporation or its
authorized representative. Furthermore, in order to be eligible to receive such
notification, we agree to notify AAL Captial Managment Corporation of any change
<PAGE>
IN WITNESS WHEREOF, the Employer and Trustee hereby cause this Plan to be
executed on this day of , 19 . Furthermore, this Plan may not be used unless
acknowledged by AAL Capital Management Corporation or its authorized
representative.
EMPLOYER: TRUSTEE:
(enter name)
(enter name)
By: By:
PARTICIPATING EMPLOYER:
(enter name)
By:
This Plan may not be used, and shall not be deemed to be a Prototype Plan,
unless an authorized representative of AAL Capital Management Corporation has
acknowledged the use of the Plan. Such acknowledgment is for ministerial
purposes only. It acknowledges that the Employer is using the Plan but does not
represent that this Plan, including the choices selected on the Adoption
Agreement, has been reviewed by a representative of the sponsor or constitutes a
qualified retirement plan.
AAL Capital Management Corporation
By:
AAL Capital Management Corporation
222 W. College Ave.
Appleton, WI 54919
(414) 734-5721
<PAGE>
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