<PAGE> 1
As filed with the Securities and Exchange Commission on April 29, 1997
1933 Act Registration No. 33-25137
1940 Act File No. 811-5682
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / x /
Pre-Effective Amendment No. / x /
Post-Effective Amendment No. 10 / x /
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / x /
Amendment No. 12 / x /
THE BRADFORD FUNDS, INC.
THE BRADFORD MONEY FUND
(Exact Name of Registrant as Specified in Charter)
400 Bellevue Parkway, Wilmington, DE 19809
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code:
(302) 791-9300
Copy to:
R. Patrick Shepherd, Esq. Joseph M. Berl, Esq.
J. C. Bradford & Co. LLC Baker & Hostetler LLP
330 Commerce Street Washington Square
Nashville, Tennessee 37201 Suite 1100
(Name and Address of Agent 1050 Connecticut Ave., N.W.
for Service) Washington, D.C. 20036
Approximate Date of Proposed Public Offering: Immediately upon effectiveness
It is proposed that this filing will become effective (check appropriate box):
immediately upon filing pursuant to paragraph (b)
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X on April 30, 1997, pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(1)
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on (date) pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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on (date) pursuant to paragraph (a)(2) of Rule 485
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<PAGE> 2
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company
Act of 1940. On February 26, 1997, the Registrant filed its Rule 24f-2 Notice
with respect to the fiscal year ended December 31, 1996.
-2-
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THE BRADFORD FUNDS, INC.
THE BRADFORD MONEY FUND
Registration Statement on Form N-1A
-----------------------------------
CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
-----------------------------------
<TABLE>
<CAPTION>
Form N-1A
Item No. Prospectus Heading
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<S> <C> <C>
1. Cover Page . . . . . . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . . . . . . Fund Expenses
3. Condensed Financial Information. . . . . . Financial Highlights; Yield Information
4. General Description of
Registrant . . . . . . . . . . . . . . . Cover Page; The Fund;
Investment Objective
and Policies
5. Management of the Fund . . . . . . . . . . Management
5A. Management's Discussion of Fund
Performance . . . . . . . . . . . . . . Not Applicable
6. Capital Stock and Other
Securities . . . . . . . . . . . . . . . Description of Shares;
Determination of Net
Asset Value; Dividends
and Distributions;
Taxes; Other Information
7. Purchase of Securities Being
Offered. . . . . . . . . . . . . . . . . Cover Page; Fund
Expenses; Purchase and
Redemption of Shares;
Distribution of Shares;
Determination of Net
Asset Value
8. Redemption or Repurchase . . . . . . . . . Fund Expenses; Purchase
and Redemption of Shares
9. Pending Legal Proceedings. . . . . . . . . None
</TABLE>
<PAGE> 4
THE BRADFORD FUNDS, INC.
THE BRADFORD MONEY FUND
400 BELLEVUE PARKWAY
WILMINGTON, DELAWARE 19809
(302) 791-9300
The Bradford Funds, Inc. (the "Company") is an open-end, diversified
management investment company authorized to issue shares of multiple portfolios.
The Company is currently offering shares of one portfolio, The Bradford Money
Fund (the "Money Fund" or the "Fund"). The investment objective of the Money
Fund is to provide as high a level of current interest income as is consistent
with maintaining liquidity and stability of principal. It seeks to achieve this
objective by investing in high quality, U.S. dollar-denominated money market
instruments such as short-term U.S. Government securities, bank certificates of
deposit, commercial paper and repurchase agreements.
For more detailed information on how to purchase or redeem shares of the
Fund, please refer to the section of this Prospectus entitled "Purchase and
Redemption of Shares."
THE SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, NOR ARE SUCH SHARES FEDERALLY INSURED OR GUARANTEED BY THE
U.S. GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER GOVERNMENTAL AGENCY. AN INVESTMENT IN THE FUND INVOLVES
CERTAIN INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. THE FUND
WILL ATTEMPT TO MAINTAIN A CONSTANT NET ASSET VALUE OF $1.00 PER SHARE, ALTHOUGH
THERE CAN BE NO ASSURANCE THAT IT WILL ALWAYS BE ABLE TO DO SO.
J.C. Bradford & Co. LLC acts as distributor and transfer agent for the
Fund's shares, and Bradford Capital Management, Ltd. serves as investment
adviser for the Fund.
This Prospectus contains concise information that a prospective investor
should know before investing. Please read it carefully and keep it for future
reference. A Statement of Additional Information, dated April 30, 1997, has been
filed with the Securities and Exchange Commission and is incorporated by
reference into this Prospectus. It may be obtained free of charge upon oral or
written request of the Fund at the address and telephone number set forth above.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PROSPECTUS APRIL 30, 1997
<PAGE> 5
CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fund Expenses............................................... 2
Financial Highlights........................................ 3
Yield Information........................................... 4
The Fund.................................................... 4
Investment Objective and Policies........................... 4
Purchase and Redemption of Shares........................... 8
Determination of Net Asset Value............................ 11
Management.................................................. 11
Distribution of Shares...................................... 13
Dividends and Distributions................................. 13
Taxes....................................................... 14
Description of Shares....................................... 14
Other Information........................................... 15
</TABLE>
FUND EXPENSES
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<TABLE>
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge on Purchases......................... None
Maximum Sales Charge on Reinvested Dividends.............. None
Redemption Fees or Deferred Sales Charge.................. None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE
NET ASSETS)
Advisory Fee.............................................. .36%(1)
Rule 12b-1 (Distribution Plan) Fees....................... .20%
Other Expenses............................................ .21%
Administration Fee..................................... .05%
Transfer Agency Fees................................... .11%
Other.................................................. .05%
Total Fund Operating Expenses........................ .77%(1)
====
</TABLE>
The purpose of the above table is to assist investors in understanding the
various costs and expenses that an investor in shares of the Money Fund can be
expected to bear directly (shareholder transaction expenses) or indirectly
(annual operating expenses). "Other Expenses" includes such expenses as
custodial, transfer agent and administration fees and audit, legal, printing and
other business operating expenses, but excludes extraordinary expenses or any
fees charged by J.C. Bradford & Co. LLC to its customer accounts which may have
invested in shares of the Money Fund. For further details, see "MANAGEMENT" and
"DISTRIBUTION OF SHARES."
- ---------------
(1)For the year ended December 31, 1996 and the year ending December 31,
1997, Bradford Capital Management, Ltd., as investment adviser, has agreed with
the Company to waive five basis points or charge only 0.30% on the Fund's
average daily net assets in excess of $1 billion. Absent such voluntary fee
reduction, Advisory Fees and Total Fund Operating Expenses for the year ended
December 31, 1996 would have been .37% and .78%, respectively. (See
"MANAGEMENT -- Investment Adviser.")
2
<PAGE> 6
The following example applies the above-stated expenses to a hypothetical
$1,000 investment in the Fund over the time periods shown below, assuming a 5%
annual rate of return on the investment and also assuming that the shares were
redeemed at the end of each stated period and that all dividends and
distributions were reinvested. The amounts of expenses shown below are
cumulative for the periods shown.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------ ------- ------- --------
<C> <C> <C> <C>
$8 $25 $43 $ 95
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. EXPENSES ARE SUBJECT TO CHANGE AND ACTUAL EXPENSES MAY BE LESS OR
GREATER THAN THOSE ILLUSTRATED ABOVE.
FINANCIAL HIGHLIGHTS
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The following data with respect to a share of the Fund outstanding during
the periods indicated has been derived from financial statements audited by
Deloitte & Touche LLP, independent auditors for the Company, as indicated in
their report which is included in the Statement of Additional Information and
may be obtained by shareholders. Further financial information is included in
the Statement of Additional Information.
SELECTED FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income................ .0468 .0515 .0343 .0247 .0308 .0531
Net Realized Gain on Investments..... -- -- -- -- .0001 --
---------- ---------- -------- -------- -------- --------
Total From Investment
Operations..................... .0468 .0515 .0343 .0247 .0309 .0531
---------- ---------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividend to Shareholders from Net
Investment Income.................. (.0468) (.0515) (.0343) (.0247) (.0308) (.0531)
Dividend to Shareholders from Net
Realized Gains..................... -- -- -- -- (.0001) --
---------- ---------- -------- -------- -------- --------
Total Distributions............ (.0468) (.0515) (.0343) (.0247) (.0309) (.0531)
---------- ---------- -------- -------- -------- --------
Net Asset Value, End of Period........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ======== ======== ======== ========
TOTAL RETURN.......................... 4.78% 5.28% 3.48% 2.50% 3.13% 5.44%
RATIO/SUPPLEMENT DATA:
Net Assets, End of Period
(in thousands)..................... $1,234,321 $1,009,370 $677,177 $719,337 $652,622 $605,089
Ratio of Expenses to Average Daily
Net Assets......................... .77%(b) .80%(b) .80%(b) .81%(b) .85% .88%
Ratio of Net Investment Income to
Average Daily Net Assets........... 4.68%(b) 5.15%(b) 3.39%(b) 2.47%(b) 3.08% 5.31%
<CAPTION>
FOR THE PERIOD
FEBRUARY 8,
FOR THE 1989(A)
YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31,
1990 1989
------------ --------------
<S> <C> <C>
Net Asset Value, Beginning of
Period............................... $ 1.00 $ 1.00
-------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income................ .0736 .0747
Net Realized Gain on Investments..... -- --
-------- --------
Total From Investment
Operations..................... .0736 .0747
-------- --------
LESS DISTRIBUTIONS:
Dividend to Shareholders from Net
Investment Income.................. (.0736) (.0747)
Dividend to Shareholders from Net
Realized Gains..................... -- --
-------- --------
Total Distributions............ (.0736) (.0747)
-------- --------
Net Asset Value, End of Period........ $ 1.00 $ 1.00
======== ========
TOTAL RETURN.......................... 7.61% 8.73%(c)
RATIO/SUPPLEMENT DATA:
Net Assets, End of Period
(in thousands)..................... $542,724 $470,485
Ratio of Expenses to Average Daily
Net Assets......................... .92% .97%(c)
Ratio of Net Investment Income to
Average Daily Net Assets........... 7.36% 8.33%(c)
</TABLE>
- ------------
(a) Commencement of Operations
(b) During the period a portion of the Advisory and/or Distribution fees was
voluntarily reduced. If such voluntary fee reductions had not occurred, the
Ratio of Expenses to Average Daily Net Assets would have been .78%, .81%,
.83% and .84%, respectively, and the Ratio of Net Investment Income to
Average Daily Net Assets would have been 4.67%, 5.14%, 3.36% and 2.44%,
respectively.
(c) Annualized.
3
<PAGE> 7
YIELD INFORMATION
- --------------------------------------------------------------------------------
The yield of any investment is generally a function of investment
objective, portfolio quality and maturity, and operating expenses. The yield on
shares of the Money Fund will fluctuate and the yield for any given period is
not an indication or representation of future results. Any fees charged by J.C.
Bradford & Co. LLC or any of its affiliates to its customer accounts which may
have invested in shares of the Money Fund will not be included in such yield
calculations; such fees, if included, would reduce the actual yields from those
quoted.
From time to time the Money Fund may advertise "yield" and "effective
yield." Both yield figures are based on historical earnings and are not intended
to indicate future performance. The "yield" of the Money Fund refers to the
income generated by an investment in the Fund over a seven-day period (which
period will be stated in the advertisement). This income is then "annualized."
That is, the amount of income generated by the investment during that seven days
is assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. The "effective yield" is calculated similarly but,
when annualized, the income earned by an investment in the Fund is assumed to be
reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment.
THE FUND
- --------------------------------------------------------------------------------
The Bradford Funds, Inc. (the "Company") is an open-end diversified
management investment company authorized to issue shares of multiple portfolios.
The Company is currently offering shares of one investment portfolio, The
Bradford Money Fund (the "Money Fund" or the "Fund"). Accordingly, the "Company"
and the "Money Fund" (or the "Fund") are used interchangeably in this
Prospectus, unless the context indicates otherwise. The directors of the Company
may determine to offer shares of additional portfolios in the future.
The Company was incorporated in Maryland on October 26, 1988, and commenced
operations on February 8, 1989.
INVESTMENT OBJECTIVE AND POLICIES
- --------------------------------------------------------------------------------
GENERAL
The Money Fund's investment objective is to provide as high a level of
current interest income as is consistent with maintaining liquidity and
stability of principal. There is no assurance that the investment objective of
the Money Fund will be achieved.
Portfolio obligations held by the Money Fund will have remaining maturities
of 397 days (13 months) or less (except that portfolio securities which are
subject to repurchase agreements may bear maturities exceeding 397 days if such
agreements call for delivery in 397 days or less). The dollar-weighted average
maturity of the Money Fund will be 90 days or less. In pursuing its investment
objective, the Fund may invest in a broad range of high quality, U.S. dollar-
denominated instruments, such as short-term U.S. Government securities, bank
certificates of deposit, commercial paper and repurchase agreements, that may be
available in the money markets and that meet the requirements set forth in the
following paragraph ("Money Market Instruments").
All instruments at the time of purchase (i) will be determined by the
Fund's adviser, pursuant to guidelines established by the Company's Board of
Directors, to present minimum credit risk and (ii) will be "Eligible Securities"
as defined in the rules under the Investment Company Act of 1940, as amended
(the "1940 Act"). "Eligible Securities" include (i) securities rated by at least
two major rating organizations ("Rating Agencies") in one of the two highest
4
<PAGE> 8
short-term rating categories for short-term debt obligations (or, for securities
rated by only one Rating Agency, so rated by such Rating Agency) and (ii) for
securities that are unrated, those determined to be of comparable quality
pursuant to guidelines established by the Company's Board of Directors. Pursuant
to the rules under the 1940 Act, the Fund is also required to diversify its
investments so that, with minor exceptions and except for United States
Government securities, (a) not more than 5% of its total assets is invested in
securities of any one issuer, (b) not more than 5% of its total assets is
invested in securities of issuers rated by Rating Agencies at the time of
investment in the second highest rating category for short-term debt obligations
or deemed to be of comparable quality to securities rated in the second highest
rating category for short-term debt obligations ("Second Tier Securities") and
(c) not more than the greater of 1% or one million dollars is invested in the
securities of any one issuer that are Second Tier Securities; however, the Fund
does not currently intend to invest in any Second Tier Securities.
The Rating Agencies and their respective short-term rating categories are
described in the Appendix to the Statement of Additional Information.
MONEY MARKET INSTRUMENTS
The following descriptions illustrate the types of Money Market Instruments
in which the Fund may invest.
(1) U.S. GOVERNMENT OBLIGATIONS. The Money Fund may purchase obligations
issued or guaranteed by the U.S. Government or its agencies and
instrumentalities ("U.S. Government securities"). Obligations of certain
agencies and instrumentalities of the U.S. Government (e.g., U.S. Treasury notes
and bills) are backed by the full faith and credit of the United States. Others
are backed by the right of the issuer to borrow from the U.S. Treasury (e.g.,
obligations of the Private Export Funding Corporation) or are backed only by the
credit of the agency or instrumentality issuing the obligation (e.g.,
obligations of the Federal Home Loan Bank and the Farm Credit System).
The Fund may also invest in separately traded principal and interest
components of securities issued or guaranteed by the U.S. Treasury. The
principal and interest components of selected securities are traded
independently under the Separate Trading of Registered Interest and Principal of
Securities Program ("STRIPS"). Under the STRIPS program, the principal and
interest components are individually numbered and separately issued by the U.S.
Treasury at the request of depository financial institutions, which then trade
the component parts independently.
(2) BANK OBLIGATIONS. The Money Fund may purchase U.S. dollar-denominated
bank obligations, such as certificates of deposit, bankers' acceptances and time
deposits, including instruments issued or supported by the credit of U.S. or
foreign banks or savings institutions. Such investments will be limited to banks
having total assets at the time of purchase in excess of $10 billion. The Fund
may invest in obligations of foreign banks, domestic branches of foreign banks
and foreign branches of U.S. banks which the investment adviser believes present
minimal credit risk and which are Eligible Securities. Such investments may
nevertheless entail risks that are different from those of investments in U.S.
banks and domestic branches thereof due to differences in political, regulatory
and economic systems and conditions.
(3) COMMERCIAL PAPER. The Money Fund may purchase commercial paper rated
(at the time of purchase) in accordance with the guidelines set forth above
under "General." The Money Fund may also purchase unrated commercial paper or
other corporate obligations, provided that such obligations are due within 397
days of the date of purchase and are determined by the Fund's investment adviser
to be of comparable quality pursuant to guidelines approved by the Company's
Board of Directors. Such guidelines provide, for instance, that unrated
instruments may be purchased when the issuer's obligation to pay the principal
of and interest on the unrated instrument is supported by an irrevocable,
unconditional letter or line of credit, commitment to lend or guarantee which
was not in effect at the time the instrument was rated, which has a term
coextensive with that of the underlying instrument, and which is of sufficient
quality to ensure that the instrument is comparable to instruments that are
rated within the allowed ratings.
5
<PAGE> 9
Commercial paper issues in which the Money Fund may invest include
securities issued by corporations without registration under the Securities Act
of 1933 (the "1933 Act") in reliance on the exemption from such registration
afforded by Section 3(a)(3) thereof, and commercial paper issued in reliance on
the so-called "private placement" exemption from registration which is afforded
by Section 4(2) of the 1933 Act ("Section 4(2) paper"). Section 4(2) paper is
restricted as to disposition under the Federal securities laws, and generally is
sold to institutional investors such as the Fund who agree that they are
purchasing the paper for investment and not with a view to public distribution.
Any resale must also generally be made in an exempt transaction. Section 4(2)
paper is normally resold to other institutional investors through or with the
assistance of the issuer or investment dealers who make a market in Section 4(2)
paper, thus providing liquidity. Pursuant to procedures adopted by the Board of
Directors of the Company, the Fund's investment adviser may determine Section
4(2) paper to be liquid if such paper is readily saleable.
(4) VARIABLE RATE NOTES. The Money Fund may purchase variable rate demand
notes, which are unsecured instruments that permit the indebtedness thereunder
to vary (subject to an agreed maximum) and provide for periodic adjustments in
the interest rate. Although the notes are not normally traded and there may be
no active secondary market in the notes, the Fund will be able (at any time or
during specified periods not exceeding thirteen months, depending upon the note
involved) to demand payment of any such note. The Money Fund may also acquire
variable rate notes. A variable rate note is one whose terms provide for the
adjustment of its interest rate on set dates and which, upon such adjustment,
can reasonably be expected to have a market value that approximates its
amortized cost. Variable rate demand notes and variable rate notes are not
typically rated by credit rating agencies, but the notes must be determined by
the Fund's investment adviser to be of comparable quality to the Fund's other
commercial paper investments pursuant to the guidelines of the Company's Board
of Directors referred to above. The Money Fund invests in variable rate demand
notes and variable rate notes only when the Fund's investment adviser believes
the investment to involve minimal credit risk.
(5) REPURCHASE AGREEMENTS. The Money Fund may enter into repurchase
agreements with respect to U.S. Government securities. A repurchase agreement
involves the Fund's purchase of securities subject to the seller's agreement, at
the time of sale, to repurchase the securities at an agreed upon time and place.
Although the securities held by the Money Fund subject to a repurchase agreement
may have stated maturities exceeding 397 days, the repurchase agreement must
call for delivery in less than 397 days. The Fund may enter into repurchase
agreements only with banks whose securities would be acceptable for purchase by
the Fund and non-bank dealers of U.S. Government securities that are listed on
the Federal Reserve Bank of New York's list of reporting dealers. The Fund's
investment adviser will also consider the creditworthiness of a seller in
determining whether to have the Fund enter into a repurchase agreement and will
continue to monitor the creditworthiness of the seller during the term of the
repurchase agreement. The seller under a repurchase agreement will be required
to maintain securities in a segregated account having a value (marked to market
daily) not less than 100% of the repurchase price (including an amount
representing accrued interest). Default by the seller would, however, expose the
Fund to possible losses which may include a decline in value of such securities
to an amount less than 100% of the repurchase price and any loss resulting from
any delay in foreclosing on such securities.
6
<PAGE> 10
OTHER INVESTMENT PRACTICES
The following is a description of other types of investment practices in
which the Money Fund may engage:
(1) REVERSE REPURCHASE AGREEMENTS. The Money Fund may enter into
reverse repurchase agreements with respect to portfolio securities for
temporary purposes such as the funding of redemption requests. Reverse
repurchase agreements are repurchase agreements in which the Fund is the
seller of, rather than the purchaser of, securities and agrees to
repurchase them at an agreed upon time and place. At the time the Fund
enters into a reverse repurchase agreement, it will place in a segregated
custodial account liquid assets such as U.S. Government securities or other
liquid high quality debt securities having a value equal to or greater than
the repurchase price (including an amount representing accrued interest)
and will subsequently monitor the account to ensure that such value is
maintained. Reverse repurchase agreements involve the risk that the market
value of the securities sold by the Fund may decline below the price of the
securities the Fund is obligated to repurchase. The use of reverse
repurchase agreements is considered to be borrowing by the Fund under the
1940 Act.
(2) WHEN-ISSUED SECURITIES. The Money Fund may purchase money market
Instruments on a "when-issued" basis. When-issued securities are securities
purchased for delivery beyond the normal settlement date at a stated price
and yield. The Fund will generally not pay for such securities or start
earning interest on them until they are received. Securities purchased on a
when-issued basis are recorded as an asset (with the purchase price being
recorded as a liability) at the time the commitment is entered into and are
subject to changes in value prior to delivery based upon changes in the
general level of interest rates. The Fund expects that commitments to
purchase when-issued securities will not exceed 25% of the value of its
total assets absent unusual market conditions. The Fund does not intend to
purchase when-issued securities for speculative purposes but only in
furtherance of its investment objective.
OTHER INFORMATION
The Money Fund will limit its purchase of illiquid obligations to 10% of
the value of the Fund's total assets. Illiquid obligations include time deposits
with maturities longer than seven days, securities with restrictions on
disposition, Section 4(2) paper which is not determined to be liquid, and
repurchase agreements with maturities longer than seven days.
INVESTMENT RESTRICTIONS
The Money Fund's policies described above may be changed by the Company's
Board of Directors without the affirmative vote of the holders of a "majority of
the outstanding shares" of the Fund as defined in the Statement of Additional
Information. The Fund may not, however, change its investment objective or
certain of its investment restrictions, including those summarized below,
without such a vote of shareholders. A more detailed description of the
following investment restrictions, together with other investment restrictions
that cannot be changed without such a vote of shareholders, is contained in the
Statement of Additional Information under "Investment Objective and Policies."
The Money Fund may not:
(1) Borrow money, except from banks for temporary purposes and except
for reverse repurchase agreements, and then in amounts not in excess of 10%
of the value of the Fund's assets; or mortgage, pledge or hypothecate any
of its assets except in connection with any such borrowing and in amounts
not in excess of 10% of the value of the Fund's assets; or purchase
portfolio securities while borrowings in excess of 5% of the value of the
Fund's assets are outstanding;
7
<PAGE> 11
(2) Invest 25% or more of its total assets in the securities of
issuers in any particular industry (other than U.S. Government securities
or repurchase agreements relating thereto or obligations of domestic
branches of U.S. banks and those U.S. branches of foreign banks that are
subject to the same regulation as U.S. banks); or
(3) Purchase securities of any one issuer, other than U.S. Government
securities and repurchase agreements relating thereto, if immediately after
such purchase more than 5% of the value of its total assets would be
invested in the securities of such issuer, or more than 10% of the
outstanding securities of any class (taking all debt issues of an issuer as
a single class) or more than 10% of the outstanding voting securities of
such issuer would be owned by the Fund, except that up to 25% of the value
of the Fund's total assets may be invested without regard to such 5%
limitation.
Notwithstanding the foregoing paragraph, in order to maintain a stable net
asset value per share, the Money Fund follows the practice of limiting its
investment in the securities of any one issuer in the manner prescribed by Rule
2a-7 of the 1940 Act. Those limitations are described above under "INVESTMENT
OBJECTIVE AND POLICIES -- General."
If a percentage restriction is adhered to at the time of an investment,
borrowing or other designated action, a later increase or decrease in percentage
resulting from changes in values or assets will not constitute a violation of
such restriction.
PURCHASE AND REDEMPTION OF SHARES
- --------------------------------------------------------------------------------
PURCHASE PROCEDURES
GENERAL. Shares of the Money Fund are offered without a sales charge on a
continuous basis by J.C. Bradford & Co. LLC, the Fund's Distributor ("Bradford"
or the "Distributor") exclusively to customers of Bradford and other
broker-dealers which may in the future enter into dealer agreements with the
Distributor. All investments must be made through your Bradford account
executive or such other broker-dealers. The Distributor's principal office is
located at 330 Commerce Street, Nashville, Tennessee 37201.
The minimum initial investment in the Fund is $250 ($100 for retirement
accounts), with no minimum subsequent investment. These minimums, however, are
not applicable to purchases made under a cash management program offered by
Bradford or another broker-dealer. See "Purchases Pursuant to BCM Program"
below. The Distributor in its sole discretion may accept or reject any order for
purchases of shares.
In the interests of economy and convenience, share certificates will not be
issued. All purchases and redemptions of shares and dividend reinvestments will
be confirmed to the shareholder in the individual account statement which will
generally be sent to all shareholders monthly by Bradford or other participating
broker-dealers.
Shares of the Money Fund are offered at the net asset value per share next
determined following receipt of an order by the Fund. The net asset value per
share for the Fund is normally expected to be $1.00. See "DETERMINATION OF NET
ASSET VALUE."
PURCHASES PURSUANT TO BRADFORD'S REGULAR SECURITIES ACCOUNT. Purchases of
shares of the Fund may be made through a regular cash securities account
maintained with Bradford. Such an account may be opened and maintained at no
charge to investors. Bradford accountholders may elect optional check writing
privileges. See "Redemption Procedures -- Redemption by Check." Any available
cash in an account with at least the minimum required investment in the Money
Fund is automatically invested at least once a week in additional shares of the
Money Fund or in shares of one of two other no-load mutual funds designated by
the accountholder and made available in connection with the account. Available
cash is transmitted to the Fund for investment after the close of business on
the date on which it becomes subject to automatic investment and is invested in
the Fund at 12:00 noon on the following business day.
8
<PAGE> 12
Available cash subject to weekly automatic investment is typically invested at
12:00 noon on the last business day of each week. Shares so purchased will
receive the next dividend declared after such shares are issued, which will be
immediately prior to the 4:00 p.m. pricing on that business day. See
"DETERMINATION OF NET ASSET VALUE."
Shares of the Fund are redeemed automatically at net asset value as
necessary to satisfy debit balances resulting from settlement of securities
transactions, to satisfy checks written in connection with the check writing
privilege or otherwise arising under the account. See "Redemption
Procedures -- Redemption by Check." Bradford reserves the right to waive or
modify criteria for participation in an account or to terminate participation in
an account for any reason.
PURCHASES PURSUANT TO BCM PROGRAM. Shares of the Money Fund may be
purchased in connection with the BCM program pursuant to which available cash
will be automatically invested periodically in shares of the Fund. The BCM
program is an integrated financial services account under which participants
maintain a conventional margin account known as a Securities Account that may be
used to purchase and sell securities and options on margin or on a fully-paid
basis. Participants must pay all customary transaction fees incurred in the use
of a margin account, including normal brokerage fees for securities and options
transactions and interest on margin loans, if any. Available cash in the
Securities Account is automatically invested daily in shares of the Money Fund,
in shares of one of two other no-load mutual funds designated by the participant
and made available in connection with the account, or in the Bradford credit-
interest program. Available cash is transmitted to the Fund for investment after
the close of business on the date on which it becomes subject to automatic
investment and is invested in the Fund at 12:00 noon on the following business
day. Shares so purchased will receive the next dividend declared after such
shares are issued, which will be immediately prior to the 4:00 p.m. pricing on
that business day.
Shares of the Fund are redeemed automatically at net asset value as
necessary to satisfy debit balances resulting from settlement of securities
transactions or otherwise arising under the BCM program as a result, for
example, of transactions made using the program's optional Visa Gold Card or to
satisfy checks written in connection with the program's check writing privilege
on an account maintained at PNC Bank, N.A. ("PNC"). Bradford will charge
participants in the BCM program an annual administrative fee of up to $80 to
cover fees and administrative and processing costs incurred in connection with
the services provided by PNC, as well as the cost of establishing, maintaining
and servicing the BCM program. See the BCM Program Agreement, available from
your Bradford account executive, for the specific terms and conditions of the
Visa Gold card and check writing features.
Bradford reserves the right to waive or modify criteria for participation
in the BCM program or to terminate participation in the BCM program for any
reason. For more information on the BCM program, contact your Bradford account
executive.
Bradford is the only firm which currently proposes to offer purchases of
the Money Fund's Shares pursuant to such a program. Other brokerage firms may
offer similar arrangements in the future. The manner and frequency with which
such automatic purchases will be effected will depend upon the terms of the
particular program. (For a summary of the manner and frequency with which
automatic purchases will be effected under the BCM program, see the third
preceding paragraph.) Purchases made under such a program will be effected
through your brokerage account at the participating brokerage firm. Investments
made pursuant to such a program are not subject to the Fund's minimum investment
requirements; however, a participating brokerage firm may impose its own minimum
initial and subsequent investment requirements. Under such a program, shares of
the Fund are automatically redeemed as necessary to satisfy a participant's
debit balance in the account with the participating firm. Additional
requirements or charges not described in this Prospectus may be imposed by
participating brokerage firms, but are not imposed by the Fund. Investors are
referred to descriptions of brokerage firms' programs for specific information
regarding services offered and applicable charges.
9
<PAGE> 13
RETIREMENT PLANS. The Distributor maintains prototype plans for Individual
Retirement Accounts ("IRAs") and Simplified Employee Pension Accounts and a
prototype defined contribution plan with adoption agreements for a profit-
sharing plan feature, a money purchase pension plan feature, and a cash or
deferred arrangement (401(k) plan). The Distributor will act as custodian for
such accounts. Money Fund shares may be purchased in conjunction with any such
account. For further information as to applications and annual fees, contact the
Distributor or your Bradford account executive.
REDEMPTION PROCEDURES
AUTOMATIC REDEMPTION. Bradford will redeem each day a sufficient number of
shares of the Money Fund to cover debit balances created by transactions through
the BCM program or in regular accounts. For debit balances resulting from the
settlement of securities transactions, Fund shares will be redeemed at 12:00
noon on the date of settlement, and for all other transactions that result in a
debit balance or charge (except those described below), Fund shares will be
redeemed at 12:00 noon on the following business day. Bradford also reserves the
right to redeem shares of the Money Fund held in an Account which Bradford has
terminated as described above under "Purchase Procedures -- Purchases Pursuant
to the BCM Program."
REDEMPTION BY REQUEST. Shares of the Money Fund, in any amount, may be
redeemed at any time at their current net asset value next determined after a
request is received by the Fund. To redeem shares of the Money Fund, an investor
must make a redemption request orally or in writing through his or her Bradford
account executive or other broker-dealer. Immediately following the receipt of
such a request, the account executive or broker-dealer will transmit such
request to the Distributor, which will forward requests for redemption to the
Fund by 12:00 noon on each business day.
REDEMPTION BY CHECK. As discussed above under "Purchases Pursuant to BCM
Program," check writing privileges are included in the BCM program, and may be
available through a brokerage account or similar program at a participating
brokerage firm. Upon request, the Money Fund will provide any investor who does
not have check writing privileges in connection with his or her brokerage
account with forms of drafts ("checks") payable through PNC. These checks may be
made payable to the order of anyone, and are subject to a minimum amount of
$500. There is no per-check charge. An investor wishing to use this check
writing redemption procedure should complete specimen signature cards available
from his or her Bradford account executive. For a fee imposed by PNC, an
investor will be able to stop payment on a check redemption. The Fund or PNC may
terminate this redemption service at any time upon 30 days' prior notice and
neither shall incur any liability for honoring checks, for effecting redemptions
to pay checks, nor for returning checks which have not been accepted.
When a check is presented to PNC for clearance, Bradford, as transfer
agent, will cause the Money Fund to redeem a sufficient number of full and
fractional shares owned by the shareholder to cover the amount of the check.
This procedure enables the shareholder to continue to receive dividends on those
shares equalling the amount being redeemed by check until such time as the check
is presented to PNC. Checks may not be presented for cash payment at the offices
of PNC because, under rules under the 1940 Act, redemptions may be effected only
at the redemption price next determined after the redemption request is
presented to J.C. Bradford & Co. LLC as the Fund's transfer and dividend
disbursing agent. This limitation does not affect checks used for the payment of
bills or cashed at other banks.
ADDITIONAL REDEMPTION INFORMATION. Ordinarily, the Money Fund will make
payment for all shares redeemed within one business day, but in no event (except
as described below) will payment be made more than seven days after receipt by
the Fund of a redemption request. However, payment may be postponed or the right
of redemption (by any of the above-described methods) suspended for more than
seven days under unusual circumstances, such as
10
<PAGE> 14
when trading is not taking place on the New York Stock Exchange. Payment of
redemption proceeds may also be delayed for a period of up to fifteen days after
purchase pending clearance of any check delivered in payment for those shares.
The Fund imposes no charge when shares are redeemed. The Fund reserves the
right to redeem any account involuntary upon 30 day's prior written notice if
such account falls below the minimum initial investment. Accordingly, a
shareholder making a minimum investment may not redeem any portion of his or her
investment without becoming subject to possible involuntary liquidation.
DETERMINATION OF NET ASSET VALUE
- --------------------------------------------------------------------------------
The net asset value per share of the Money Fund for the purpose of pricing
purchase and redemption orders is determined twice each day, once at 12:00 noon
Eastern time and once as of the close of trading (currently 4:00 p.m Eastern
time) on the New York Stock Exchange ("NYSE") (and immediately after the Fund
has declared any applicable dividend) on each day that the NYSE and the Federal
Reserve Bank of Philadelphia (the "FRB") are both open for business. Currently,
the NYSE or the FRB, or both, are closed on the following holidays as legally
observed: New Year's Day, Martin Luther King's Birthday, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veteran's Day,
Thanksgiving Day and Christmas Day. The Fund's net asset value per share is
calculated by adding the value of all securities and other assets of the Fund,
subtracting its liabilities and dividing the result by the number of its
outstanding shares.
The Money Fund seeks to maintain a net asset value of $1.00 per share for
purposes of purchases and redemptions, and values its portfolio securities on
the basis of the amortized cost method of valuation described in the Statement
of Additional Information under the heading "VALUATION OF SHARES." There can be
no assurance that net asset value per share will not vary.
MANAGEMENT
- --------------------------------------------------------------------------------
BOARD OF DIRECTORS
The business and affairs of the Company and the Money Fund are managed
under the direction of the Company's Board of Directors in accordance with the
laws of Maryland governing corporations.
INVESTMENT ADVISER
Bradford Capital Management, Ltd. (the "Adviser") serves as the investment
adviser for the Money Fund. The address of the Adviser is J.C Bradford Financial
Center, 330 Commerce Street, Nashville, Tennessee 37201.
The Adviser was formed on September 15, 1988, as a Tennessee limited
partnership for the purpose of becoming the Company's investment adviser. J.C.B.
Financial Services, Inc. acts as the general partner to the Adviser (the
"General Partner") and J.C. Bradford & Co. LLC, a Tennessee limited liability
company ("Bradford" or the "Distributor"), is the Adviser's limited partner.
The General Partner is a wholly owned subsidiary of Bradford & Co.,
Incorporated ("Bradford Incorporated"). Bradford Incorporated, through the
General Partner and other subsidiaries, is engaged in various aspects of the
financial services industry. All of the outstanding voting securities of
Bradford Incorporated are owned by various partners of Bradford. Bradford is an
investment firm which conducts a substantial brokerage and investment banking
business and also acts as the Distributor and transfer agent for the Fund.
11
<PAGE> 15
Subject to the authority of the Company's Board of Directors, the Adviser
furnishes the Money Fund with investment advice and, in general, supervises the
investment program of the Fund. The Adviser furnishes, at its own expense,
office space, equipment and personnel (other than the services of directors of
the Company who are not affiliated persons of the Adviser as defined in the 1940
Act) for supervising the investment program of, and placing orders for the
portfolio transactions for, the Fund.
For the advisory services provided and expenses assumed by it, the Adviser
receives from the Fund a fee, computed daily and payable monthly, at an annual
rate of .40% of the first $500 million of the Fund's daily net assets and .35%
of daily net assets in excess of $500 million. For 1996, the fee approximated
.36% of the Fund's average net assets. The Adviser may in its discretion from
time to time agree to waive voluntarily all or any portion of its advisory fee
or to reimburse the Fund for a portion of the expenses of its operations.
Currently the Adviser has agreed to waive indefinitely 5 basis points or charge
only .30% on the Fund's average daily net assets in excess of $1 billion.
ADMINISTRATOR, TRANSFER AND DIVIDEND DISBURSING AGENT
PFPC, Inc. ("PFPC"), a wholly-owned subsidiary of PNC Bank Corp., a
multi-bank holding company, serves as the Money Fund's administrator. PFPC's
address is 400 Bellevue Parkway, Wilmington, Delaware 19809.
The administrative services to be provided by PFPC include maintenance of
the Fund's books and records, preparation of regulatory filings and shareholder
reports, and computation of net asset values and daily dividends. For these
services to the Fund, PFPC receives a fee, computed daily and payable monthly,
at an annual rate of .10% of the first $200 million of the Fund's daily net
assets, .075% of the next $200 million of net assets, .05% of the next $200
million of net assets, .025% of the next $100 million of net assets, and .01% of
net assets over $700 million.
Bradford, 330 Commerce Street, Nashville, Tennessee 37201, serves as the
Fund's transfer and dividend disbursing agent.
EXPENSES
The expenses of the Money Fund are deducted from the total income of the
Fund before dividends are paid. These expenses include all expenses of the Fund
which are not expressly assumed by the Adviser, PFPC, the Distributor or the
transfer agent under their respective agreements with the Fund. For 1996, the
Fund's total operating expenses were approximately .77% of its average net
assets.
The Adviser has agreed to reimburse the Fund for the amount, if any, by
which the total operating and management expenses of the Fund for any fiscal
year exceeds the most restrictive applicable state blue sky expense limitation
in effect from time to time, to the extent required by such limitation. The
Adviser may assume additional expenses of the Fund or waive a portion of its
compensation from time to time, in its discretion, and to the extent that the
Adviser assumes additional expenses of the Fund or the Fund has withheld payment
of any portion of the Adviser's compensation during the fiscal year, the Adviser
may determine at any time prior to the end of such fiscal year whether or not to
be reimbursed by the Fund for such expenses or to waive its entitlement to such
compensation. Assumption of additional expenses or waiver of a portion of the
Adviser's compensation will have the effect of lowering the Fund's overall
expense ratio and of increasing yield to investors.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The portfolio securities in which the Money Fund invests are traded
primarily in the over-the-counter market. Where possible, the Fund will deal
directly with the dealers who make a market in the securities involved except in
those circumstances where better prices and execution are available elsewhere.
Such dealers usually are acting as
12
<PAGE> 16
principal for their own account. On occasion, securities may be purchased
directly from the issuer. Such portfolio securities are generally traded on a
net basis and do not normally involve either brokerage commissions or transfer
taxes. The cost of executing portfolio transactions will primarily consist of
dealer spreads and underwriting commissions. Under the 1940 Act, persons
affiliated with the Fund are prohibited from dealing with the Fund as a
principal in the purchase and sale of securities unless an exemptive order
allowing such transactions is obtained from the Securities and Exchange
Commission.
In determining which brokers or dealers to use for the portfolio
transactions of the Fund, the Adviser will attempt to obtain the best net price
and the most favorable execution in light of the overall quality of brokerage
and research services provided. In selecting brokers or dealers, the Adviser may
consider a number of factors, including but not limited to, the skill of the
firm's securities traders and the firm's financial responsibility and
administrative efficiency. Non-exchange portfolio transactions for the Fund may
occasionally be effected through the Distributor, on an agency basis. In
effecting a portfolio transaction through the Distributor, the Fund intends to
comply with Section 17(e)(1) of the 1940 Act.
DISTRIBUTION OF SHARES
- --------------------------------------------------------------------------------
Bradford acts as Distributor of the shares of the Money Fund pursuant to a
Plan of Distribution (the "Plan") of the Fund and a related Distribution
Agreement between Bradford and the Company on behalf of the Fund. The Company
has adopted the Plan pursuant to Rule 12b-1 under the 1940 Act. Pursuant to the
Plan and the Distribution Agreement, the Distributor is entitled to
reimbursement each month for its current costs incurred in services related to
the distribution and promotion of the shares of the Fund. These expenses
include, but are not limited to, administrative and sales-related costs
(including reasonable allocations of overhead), compensation paid to account
executives and other directly involved branch office personnel of the
Distributor and to broker-dealers which have entered into sales agreements with
the Distributor, expenses incurred in the printing of prospectuses, statements
of additional information and reports used for sales purposes, expenses of
preparation and printing of sales literature and advertising, and other sales
expenses. Reimbursement may not exceed .20% per annum of the daily net assets of
the Fund. Bradford may periodically reduce all or a portion of the amounts for
which it is entitled to reimbursement under the Plan with respect to the Money
Fund to increase the net income of the Money Fund available for distribution as
dividends. The voluntary reduction of such fee will cause the yield of the Money
Fund to be higher than it would otherwise be in the absence of such fee
reduction.
With respect to shares of the Fund which are sold by an account executive
or other directly involved branch office personnel, compensation may be paid to
such persons pursuant to written agreements in an amount not to exceed .20% per
annum of that portion of the daily net assets of the Fund which is attributable
to shares sold by such persons.
DIVIDENDS AND DISTRIBUTIONS
- --------------------------------------------------------------------------------
The Money Fund will distribute substantially all of its net investment
income and net realized capital gains, if any, to shareholders. All
distributions are reinvested in the form of additional full and fractional
shares of the Money Fund unless a shareholder elects otherwise by notice to
Bradford in writing.
The net investment income earned by the Fund will be declared as a dividend
on a daily basis and paid monthly. Dividends are payable to shareholders of
record immediately prior to the determination of net asset value made as of the
close of trading on the NYSE on days on which there is a determination of net
asset value, and as of 4:00 p.m. (Eastern time) on days on which there is no
determination of net asset value. Net short-term capital gains, if any, will be
distributed at least annually.
13
<PAGE> 17
The net income of the Fund for dividend purposes consists of interest
accrued and discount earned (including both original issue and market discount)
on the Fund's assets, less amortization of market premium and accrued expenses
of the Fund for such period. To effect its policy of maintaining a net asset
value of $1.00 per share, the Fund, under certain circumstances, may withhold
dividends or make distributions from capital or capital gains.
TAXES
- --------------------------------------------------------------------------------
The following discussion is only a brief summary of some of the important
federal income tax considerations generally affecting the Money Fund and
shareholders and is not intended as a substitute for careful tax planning.
Distributions to shareholders may also be subject to state and local taxes
depending on each shareholder's particular situation. Investors in the Fund
should consult their tax advisers with specific reference to their own tax
situation.
The Fund has qualified, and expects to remain qualified, as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). If the Fund so qualifies each year, the Fund will not be
required to pay federal income tax on amounts distributed to shareholders,
provided the Fund distributes at least 90% of its net investment income (i.e.,
net income excluding net long-term capital gains) each year. If the Fund were to
fail in any year to comply with the provisions of Subchapter M of the Code, it
would become subject to a corporate-level tax.
Shareholders, unless otherwise exempt, will be subject to federal income
tax on amounts so distributed (except distributions that are treated as a return
of capital), regardless of whether such distributions are reinvested in shares
of the Fund. The Fund does not intend to make distributions that will be
eligible for the corporate dividends received deduction. Distributions out of
the "net capital gain" (the excess of net long-term capital gain over net
short-term capital loss), if any, will be taxed to shareholders as long-term
capital gain regardless of the length of time a shareholder has held his shares.
The net capital gain of the Fund is expected to be minimal. All other
distributions, to the extent they are taxable, are taxed to shareholders as
ordinary income. Bradford or other participating broker-dealers will send
written notices to shareholders annually regarding the tax status, as capital
gain or ordinary income, of distributions made by the Fund.
DESCRIPTION OF SHARES
- --------------------------------------------------------------------------------
The Company is authorized to issue shares of capital stock, par value $.001
per share, in multiple portfolios at the discretion of the Board of Directors.
To date, the Board has authorized the issuance of shares of only one portfolio,
The Bradford Money Fund. Each share in the Fund is entitled to one vote for the
election of directors and any other matter submitted to a shareholder vote, but
not to cumulate votes in the election of directors. Fractional shares (which are
carried out to three decimal places) will have fractional voting rights. All
shares in the Fund are fully paid and non-assessable and have no preemptive or
conversion rights.
Upon liquidation of the Fund, shareholders are entitled to share pro rata
in the net assets belonging to the Fund available for distribution.
As a general matter, the Fund does not intend to hold annual or other
regular meetings of shareholders except as required by the 1940 Act or other
applicable law. Under certain circumstances, shareholders have the right to call
for a meeting of shareholders to consider the removal of one or more directors
or for other purposes.
As of April 17, 1997, to the Fund's knowledge no person held beneficially
25% or more of the outstanding shares of the Fund. All of the Fund's outstanding
shares were then owned of record by Bradford.
14
<PAGE> 18
OTHER INFORMATION
- --------------------------------------------------------------------------------
REPORTS AND INQUIRIES
Shareholders will receive unaudited semi-annual reports describing the
Fund's investment operations and annual financial statements audited by
independent auditors. Shareholder inquires should be addressed to the Fund at
the address set forth above or to your Bradford account executive.
15
<PAGE> 19
================================================================================
================================================================================
================================================================================
================================================================================
================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE
ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE
FUND'S STATEMENT OF ADDITIONAL INFORMATION INCORPORATED HEREIN BY
REFERENCE IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR ITS
DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY
THE FUND OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE MADE.
THE BRADFORD FUNDS, INC.
THE BRADFORD MONEY FUND
INVESTMENT ADVISER
BRADFORD CAPITAL MANAGEMENT, LTD.
NASHVILLE, TENNESSEE
TRANSFER AGENT AND DISTRIBUTOR
J.C. BRADFORD & CO. LLC
NASHVILLE, TENNESSEE
CUSTODIAN
PNC BANK, N.A.
PHILADELPHIA, PENNSYLVANIA
ADMINISTRATOR
PFPC, INC.
WILMINGTON, DELAWARE
COUNSEL
BAKER & HOSTETLER LLP
WASHINGTON, D.C.
AUDITORS
DELOITTE & TOUCHE LLP
NASHVILLE, TENNESSEE
- ------------------------------------------------------------
THE
BRADFORD
MONEY
FUND
PROSPECTUS
- ------------------------------------------------------------
MEMBERS NEW YORK STOCK EXCHANGE
Member S.I.P.C.
APRIL 30, 1997
<PAGE> 20
THE BRADFORD FUNDS, INC.
THE BRADFORD MONEY FUND
400 Bellevue Parkway
Wilmington, Delaware 19809
(302) 791-9300
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information provides supplementary
information pertaining to The Bradford Funds, Inc. (the "Company"), an
open-end, diversified management investment company currently offering shares
in one investment portfolio, The Bradford Money Fund (the "Money Fund" or
"Fund"). This is not a prospectus and should be read only in conjunction with
the Prospectus of the Fund dated April 30, 1997 (the "Prospectus"). A copy of
the Prospectus may be obtained upon request free of charge from the Fund at the
address and telephone number set forth above. This Statement of Additional
Information is dated April 30, 1997.
CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2
INVESTMENT OBJECTIVE AND POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2
DIRECTORS AND OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-8
INVESTMENT ADVISORY, ADMINISTRATION, SERVICING
AND DISTRIBUTION ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-12
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-16
PURCHASE AND REDEMPTION INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-18
VALUATION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-18
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-20
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-22
DESCRIPTION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-24
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-26
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-27
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
</TABLE>
No person has been authorized to give any information or to make any
representations not contained in the Prospectus or this Statement of Additional
Information in connection with the offering made by the Prospectus and, if
given or made, such information or representations must not be relied upon as
having been authorized by the Fund or its distributor. The Prospectus does not
constitute an offering by the Fund or by the distributor in any jurisdiction in
which such offering may not lawfully be made.
<PAGE> 21
GENERAL
The Bradford Funds, Inc. (the "Company") is an open-end, diversified
management investment company currently offering shares in one investment
portfolio, The Bradford Money Fund (the "Money Fund" or the "Fund").
Accordingly, the "Company" and the "Money Fund" (or the "Fund") are used
interchangeably in this Statement of Additional Information, unless the context
indicates otherwise. The Board of Directors of the Company may determine to
offer shares of additional portfolios in the future. The shares of the Money
Fund are offered by the Prospectus dated April 30, 1997. The Company commenced
operations on February 8, 1989.
INVESTMENT OBJECTIVE AND POLICIES
The following supplements the information contained in the Prospectus
concerning the investment objective and policies of the Money Fund. A
description of ratings of short-term commercial paper is set forth in the
Appendix hereto.
Additional Information on Money Fund Investments.
(1) U.S. Government Obligations. Examples of types of U.S.
Government obligations in which the Fund may invest include U.S. Treasury
bills, Treasury notes and Treasury bonds and the obligations of Federal Home
Loan Banks, Federal Farm Credit Banks, Federal Land Banks, the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, Government National Mortgage
Association, General Services Administration, Student Loan Marketing
Association, Central Bank for Cooperatives, Federal Home Loan Mortgage
Corporation, Federal Intermediate Credit Banks, Maritime Administration,
International Bank for Reconstruction and Development (the "World Bank"), the
Asian-American Development Bank and the Inter-American Development Bank.
(2) Bank Obligations. Investments in bank obligations may include
obligations of foreign banks, domestic branches of foreign banks and foreign
branches of domestic banks. Such investments may entail risks that are
different from those of investments in U.S. banks and domestic branches
thereof, such as unfavorable political and economic conditions, possible
withholding taxes on interest income, seizure or nationalization of foreign
deposits, currency controls, interest limitations, or other governmental
restrictions which might affect the payment of principal or interest on the
securities held in the Fund. Additionally, these institutions may be subject
to less stringent reserve requirements and different accounting, auditing,
reporting and recordkeeping requirements than those applicable to domestic
branches of U.S. banks. For purposes of the Money Fund's investment policies
with respect to bank obligations, the total assets of a bank or savings
institution will be deemed to include the assets of its domestic and foreign
branches.
B-2
<PAGE> 22
(3) Commercial Paper. "Section 4(2) paper," as described in the
Prospectus, is commercial paper which is issued in reliance on the "private
placement" exemption from registration which is afforded by Section 4(2) of the
Securities Act of 1933 (the "1933 Act"). The Fund will not purchase Section
4(2) paper which has not been determined to be liquid in excess of 10% of the
total assets of the Money Fund. The Company's Board of Directors has delegated
to Bradford Capital Management, Ltd., the Fund's investment adviser (the
"Adviser"), the day-to-day authority to determine whether a particular issue of
Section 4(2) paper, including Section 4(2) paper that is eligible for resale
under Rule 144A under the 1933 Act ("144A Paper"), should be treated as liquid.
Rule 144A provides a safe-harbor exemption from the registration requirements
of the 1933 Act for resales to "qualified institutional buyers" as defined in
the Rule. With the exception of registered broker-dealers, a qualified
institutional buyer must generally own and invest on a discretionary basis at
least $100 million in securities.
The Adviser may deem Section 4(2) paper liquid if (i) it believes
that, based on the trading markets for such security, such security can be
disposed of within seven days in the ordinary course of business at
approximately the amount at which the Fund has valued the security and (ii) it
is rated by at least two Rating Agencies (as defined in the Prospectus), or by
the only Rating Agency that has rated the paper, in the highest short-term
category, or with respect to 144A paper only, is a comparable unrated security.
In making such determination, the Adviser generally considers any and all
factors that it deems relevant, which may include (i) the credit quality of the
issuer; (ii) the frequency of trades and quotes for the security; (iii) the
number of dealers willing to purchase or sell the security and the number of
other potential purchasers; (iv) dealer undertakings to make a market in the
security; and (v) the nature of the security and the nature of market-place
trades. In addition, with respect to Section 4(2) paper which is not 144A
paper, it must not be traded flat or be in default as to principal or interest.
The Adviser may also consider whether there are any significant
differences between the particular issue of Section 4(2) paper and commercial
paper issued pursuant to the exemption contained in Section 3(a)(3) of the 1933
Act.
Treatment of Section 4(2) paper as liquid could have the effect of
decreasing the level of the Fund's liquidity to the extent that buyers,
including qualified institutional buyers, become, for a time, uninterested in
purchasing these securities.
(4) Variable Rate Notes. The Fund may acquire variable rate
demand notes and variable rate notes (collectively, "variable rate notes"),
subject to the Fund's investment objective, policies and restrictions.
Variable amount master demand notes are unsecured demand notes that permit the
indebtedness thereunder to vary and
B-3
<PAGE> 23
provide for periodic adjustments in the interest rate according to the terms of
the instrument. Because master demand notes are direct lending arrangements
between a Fund and the issuer, they are not normally traded. A variable rate
note is one whose terms provide for the adjustment of its interest rate on set
dates and which, upon such adjustment, can reasonably be expected to have a
market value that approximates its par value. Such notes are frequently not
rated by credit rating agencies; however, unrated variable rate notes purchased
by the Fund will be determined by the Adviser to be of comparable quality at
the time of purchase to rated instruments eligible for purchase under the
Fund's investment policies. In making such determinations, the Adviser will
consider the earning power, cash flow and other liquidity ratios of the issuers
of such notes (such issuers include financial, merchandising, bank holding and
other companies) and will continuously monitor their financial condition.
Although there may be no active secondary market with respect to a particular
variable rate note purchased by the Fund, the Fund may resell the note at any
time to a third party. The absence of an active secondary market, however,
could make it difficult for the Fund to dispose of a variable rate note in the
event the issuer of the note defaulted on its payment obligations and the Fund
could, as a result or for other reasons, suffer a loss to the extent of the
default. To the extent that the Fund is not entitled to receive the principal
amount of a note within seven days of demand, such a note will be treated as an
illiquid security for purposes of calculation of the 10% limitation on the
Fund's investment in illiquid securities as set forth in the Fund's investment
restrictions. Variable rate notes may be secured by bank letters of credit.
Variable rate notes invested in by the Fund may have maturities of
more than 397 days, as follows:
1. An instrument that is issued or guaranteed by the United
States Government or any agency thereof which has a variable rate of interest
readjusted no less frequently than every 397 days will be deemed by the Fund to
have a maturity equal to the period remaining until the next readjustment of
the interest rate.
2. A variable rate note that is subject to a demand feature will
be deemed by the Fund to have a maturity equal to the longer of the period
remaining until the next readjustment of the interest rate or the period
remaining until the principal amount can be recovered through demand.
As used above, a note is "subject to a demand feature" where the Fund
is entitled to receive the principal amount of the note either at any time on
no more than thirty days' notice or at specific intervals not exceeding 397
days and upon no more than 30 days' notice.
(5) Repurchase Agreements. The repurchase price under the
repurchase agreements described in the Prospectus generally equals
B-4
<PAGE> 24
the price paid by the Fund plus an amount representing accrued interest
negotiated on the basis of short-term rates existing at the time of purchase
(which may be more or less than the rate on the securities underlying the
repurchase agreement). Securities subject to repurchase agreements will be
held by the Fund's custodian in the Federal Reserve/Treasury book-entry system
or by another authorized securities depository.
If the Fund were required to foreclose upon securities underlying a
repurchase agreement with remaining maturities of greater than 397 days, these
instruments would have to be taken into account in calculating the Fund's
dollar-weighted average portfolio maturity. The Fund would have to dispose of
the securities as soon as possible if they were to cause such average maturity
to exceed ninety days or were to exceed thirteen months to maturity.
Unrated Securities.
In those instances in which the Fund purchases securities that are
considered "Unrated Securities" within the meaning of Rule 2a-7, the Board has
delegated to the Adviser, subject to quarterly review by the Board, the
responsibility to determine whether such securities are of comparable quality.
Unrated instruments purchased for the Fund may be considered of
comparable quality when, at the time of purchase (i) the security at the time
of issuance had (A) a maturity of greater than one year but currently has a
remaining maturity of less than thirteen months, and (B) does not have a
long-term rating from any Rating Agency that is not within the two highest
rating categories, (ii) the issuer's obligation to pay the principal of and
interest on the instrument is supported by an irrevocable, unconditional letter
or line of credit, commitment to lend or guarantee which has a term coextensive
with that of the underlying instrument and which is of sufficient quality to
ensure that the instrument is comparable to instruments that are rated within
the allowed rating categories, or (iii) the issuer thereof is believed by the
Adviser to have a financial condition comparable to those issuing rated
securities in which the Fund may invest, and the unrated instrument has
comparable priority and security and other relevant characteristics to such
rated securities, provided that with respect to instruments other than
Government securities (as defined in Section 2(a)(16) of the Investment Company
Act of 1940, as amended (the "1940 Act")) not more than 5% of the Fund's assets
may be invested pursuant to subparagraph (iii), and the Adviser will promptly
(and in no event later than the next meeting) report to the Board any unrated
instruments for the Board to consider approval or ratification of comparability
of quality and credit risk determination.
If an instrument has received a rating but is subject to an
irrevocable, unconditional letter or line of credit, commitment to lend or
guarantee that was not considered or in effect when the instrument (or the
issuer) was given its rating, the Adviser may
B-5
<PAGE> 25
evaluate the instrument as if it were unrated, provided that the letter or line
of credit, commitment or guarantee has a term coextensive with that of the
instrument involved.
When-Issued Securities.
"When-issued" and delayed delivery securities include securities
purchased for delivery beyond the normal settlement date at a stated price and
yield. While the Money Fund holds such securities, the Fund will maintain in a
segregated account cash, U.S. Government securities or other liquid, high grade
debt securities of an amount at least equal to the purchase price of the
securities to be purchased. Normally, the custodian for the Fund will set
aside portfolio securities to satisfy a purchase commitment. Because
securities purchased on a when issued basis may fluctuate in value prior to
delivery based upon changes in the general level of interest rates, the Fund
may be required subsequently to place additional assets in the separate account
in order to ensure that the value of the account remains equal to the amount of
the Fund's commitment. Because the Fund's liquidity and ability to manage its
portfolio might be affected when it sets aside cash or portfolio securities to
cover such purchase commitments, the Fund expects that commitments to purchase
"when-issued" securities will not exceed 25% of the value of its total assets
absent unusual market conditions. When the Fund engages in when-issued
transactions, it relies on the seller to consummate the trade. Failure of the
seller to do so may result in the Fund's incurring a loss or missing an
opportunity to obtain a price considered to be advantageous.
Investment Restrictions.
The Money Fund may not:
(1) issue senior securities (as defined in the 1940 Act) or borrow
money, except from banks for temporary purposes and for reverse repurchase
agreements, and then in an aggregate amount not in excess of 10% of the value
of the Fund's assets; or mortgage, pledge or hypothecate any of its assets
except in connection with such borrowings and in amounts not in excess of 10%
of the value of the Fund's assets; or purchase portfolio securities while
borrowings in excess of 5% of the value of the Fund's assets are outstanding.
(2) purchase securities of any one issuer (other than securities
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities and repurchase agreements relating thereto) if immediately
after such purchase more than 5% of the Fund's total assets would be invested
in the securities of such issuer, or more than 10% of the outstanding
securities of any class (taking all debt issues of an issuer as a single class)
or more than 10% of the outstanding voting securities of such issuer would be
owned by the
B-6
<PAGE> 26
Fund, except that up to 25% of the value of the Fund's total assets may be
invested without regard to such 5% limitation;
(3) purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions;
(4) underwrite securities of other issuers, except to the extent
that, in connection with the disposition of portfolio securities, the Fund may
be deemed an underwriter under Federal securities laws;
(5) make short sales of securities or maintain a short position or
write, purchase or sell put or call options or straddles, spreads or
combinations thereof;
(6) purchase or sell real estate, provided that the Fund may
invest in securities secured by real estate or interests therein or issued by
companies which invest in real estate or interests therein;
(7) purchase or sell commodities or commodity contracts or
commodity futures contracts;
(8) invest in oil, gas or mineral exploration or development
programs;
(9) make loans except that the Fund may purchase or hold debt
obligations in accordance with its investment objective, policies and
limitations and may enter into repurchase agreements;
(10) purchase any securities issued by any other investment company
except in connection with the merger, consolidation, acquisition or
reorganization of all the securities or assets of such an issuer;
(11) make investments for the purpose of exercising control or
management;
(12) invest 25% or more of its total assets in the securities of
issuers in any particular industry (other than securities issued or guaranteed
by the U.S. Government or its agencies and instrumentalities, or repurchase
agreements relating thereto, or obligations of domestic branches of U.S. banks
and those U.S. branches of foreign banks that are subject to the same
regulation as U.S. banks); or
(13) invest more than 5% of its total assets in securities of
issuers (including their predecessors) with less than three years of continuous
operations.
If a percentage restriction is satisfied at the time of an investment,
borrowing or other designated action, a later increase
B-7
<PAGE> 27
or decrease in percentage resulting from changes in values or assets will not
constitute a violation of such restriction. However, if due to market
fluctuations or other reasons the assets of the Fund fall below 300% of its
borrowings, the Fund will, in accordance with the 1940 Act, reduce the
borrowings of the Fund so that such borrowings have 300% asset coverage.
The foregoing investment limitations cannot be changed without the
affirmative vote of a majority of the outstanding shares of the Fund, as
defined in "DESCRIPTION OF SHARES."
Notwithstanding investment restriction no. 2 above and for purposes of
maintaining a stable net asset value pursuant to Rule 2a-7 under the 1940 Act
(see "VALUATION OF SHARES" below), the Fund will, with respect to 100% of its
total assets, limit its investments in the securities of any one issuer in the
manner provided by such Rule, which limitations are referred to under
"INVESTMENT OBJECTIVE AND POLICIES -- General" in the Prospectus.
With respect to limitation (12) above concerning industry
concentration, neither all finance companies, as a group, nor all utility
companies, as a group, are considered a single industry for purposes of this
policy. The Fund will consider wholly owned finance subsidiaries to be in the
industries of their parent companies if their activities are primarily related
to financing the activities of such parent companies, and will categorize
utility companies according to their services; for example, gas, gas
transmission, electric and gas, electric and telephone will each be considered
a separate industry. The policy and practices stated in this paragraph may be
changed without the affirmative vote of a majority of the outstanding shares of
the Fund, but any such change may require the approval of the SEC and would be
disclosed in the Prospectus or in the Statement of Additional Information.
In order to permit the sale of its shares in certain states, the Fund
may make commitments more restrictive than the investment limitations described
above. Should the Fund determine that any such commitment is no longer in its
best interest, it will revoke the commitment and terminate sales of its shares
in the state involved.
DIRECTORS AND OFFICERS
The directors and executive officers of the Company, their business
addresses, ages and principal occupations during the past five years are:
B-8
<PAGE> 28
<TABLE>
<CAPTION>
Position(s)
Name, Address Held With Principal Occupation(s)
and Age Company During Past Five Years
- ------------- ---------- -----------------------
<S> <C> <C>
Allan L. Erb* President and Partner in charge of Financial Products
330 Commerce Street Director Department since 1986; General Partner/Voting
Nashville, TN 37201 Member since 1990.**
Age: 50
Douglas C. Altenbern Director Private investor since October 1990 and
1025 Chancery Lane Chairman and Chief Executive Officer of
Nashville, TN 37215 PayAmerica, Inc. (salary processing) since
Age: 60 June, 1993.
William Carter* Director Limited Partner/Equity Member.**
3605 Glenwood Avenue
Suite 100
Raleigh, NC 27612
Age: 50
Richard W. Hanselman Director Private investor since 1986.
3017 Poston Avenue
Nashville, TN 37203
Age: 69
Edward J. Roach Director Certified Public Accountant and Vice President
Suite 100 and Treasurer of Temporary Investment Fund,
400 Bellevue Parkway Inc., Trust for Federal Securities, Municipal
Wilmington, DE 19809 Fund for Temporary Investment, Independence
Age: 72 Square Income Securities, Inc., Municipal Fund
for California Investors, Inc. and (since 1995)
Provident Institutional Funds, Inc.; Treasurer
of Chestnut Street Exchange Fund; and President
and Treasurer of The RBB Fund, Inc. and
Municipal Fund for New York Investors, Inc.
(each a management investment company).
Michael R. Shea* Vice President and Director Director of Taxable Fixed Income Department
330 Commerce Street since 1974; Voting Member/General Partner since
Nashville, TN 37201 1981.**
Age: 54
</TABLE>
B-9
<PAGE> 29
<TABLE>
<S> <C> <C>
William T. Spitz Director Treasurer, Vanderbilt
102 Alumni Hall University, since November 1985.
Vanderbilt
University
Nashville, TN 37240
Age: 46
R. Patrick Shepherd Vice President General Counsel and Director of Legal and
330 Commerce St. Compliance Departments since 1983; Voting
Nashville, TN 37201 Member/General Partner since 1987.**
Age: 41
Judy K. Abroms Vice President Equity Member/Limited Partner since 1994; from
330 Commerce St. 1990 to 1994, Investment Limited Partner.**
Nashville, TN 37201
Age: 53
Randall R. Harness Secretary and Chief Financial Partner
330 Commerce St. Treasurer since 1976; Voting Member/General Partner since
Nashville, TN 37201 1981.**
Age: 54
</TABLE>
_______________________
* "Interested" director of the Fund as that term is defined in the 1940
Act.
** Positions are with J. C. Bradford & Co. LLC.
Messrs. Erb, Carter, Shea, Harness and Shepherd and Ms. Abroms hold
positions with J. C. Bradford & Co. LLC ("Bradford") as described above and,
except for Mr. Carter, are also officers of the Adviser, serving in comparable
positions to those they hold with the Company. The only other officer of the
Adviser is Robert P. DeBastiani. Mr. DeBastiani has been an Equity
Member/Limited Partner of Bradford since July 1990 and has served as
Institutional Trader for Taxable Fixed Income Securities of Bradford since
April 1987. Prior to that he served as a fixed income trader with First
American National Bank, Nashville, Tennessee (August 1986 to April 1987); First
Eastern Bank, Wilkes-Barre, Pennsylvania (April 1984 to August 1986); and
Lincoln First Bank, Rochester, New York (July 1983 to April 1984).
The Fund pays directors who are not "affiliated persons" of the
Adviser, as that term is defined in the 1940 Act, a fee of $2,000 annually plus
$1,875 per meeting attended. Directors who are not affiliated persons of the
Adviser are also reimbursed for any expenses incurred in attending meetings of
the Board of Directors or any committee thereof.
B-10
<PAGE> 30
The following table sets forth information regarding all compensation
paid by the Fund to its directors, who are not affiliated "persons" of the
Fund, for their services as directors during the fiscal year ended December 31,
1996. The Fund has no pension or retirement plans nor does it pay compensation
to its executive officers.
COMPENSATION TABLE
<TABLE>
<CAPTION>
Total Compensation
Name and Position Aggregate Compensation From the Fund and
With the Fund From the Fund the Fund Complex*
----------------- ---------------------- ------------------
<S> <C> <C>
Douglas C. Altenbern $9,000 $9,000
Director
Richard W. Hanselman $9,000 $9,000
Director
Edward J. Roach $9,000 $9,000
Director
William T. Spitz $9,000 $9,000
Director
</TABLE>
_______________________
*For purposes of this Table, Fund Complex means one or more mutual
funds, including the Money Fund, which have a common investment adviser or
affiliated investment advisers or which hold themselves out to the public as
being related. The Money Fund is currently the only member of its Fund
Complex.
The Fund currently has no employees, as substantially all of the
services necessary for the operation of the Fund are performed by the Adviser;
PNCBank, N.A. ("PNC"), the Fund's custodian; PFPC, Inc. ("PFPC"), the Fund's
administrator; and Bradford, the Fund's distributor and transfer and dividend
disbursing agent. No officer or employee of the Adviser, PNC, PFPC or Bradford
receives any compensation from the Fund.
Certain of the directors and officers and the organizations with which
they are associated have had in the past, and may in the future have,
transactions with Bradford and its affiliates. The Fund believes that all such
transactions have been and are expected to be in the ordinary course of
business and the terms of such transactions have been and are expected to be
substantially the same as the prevailing terms for comparable transactions of
other customers.
B-11
<PAGE> 31
INVESTMENT ADVISORY, ADMINISTRATION,
SERVICING AND DISTRIBUTION ARRANGEMENTS
General. Bradford Capital Management, Ltd. serves as the investment
adviser for the Fund. The Adviser is a Tennessee limited partnership. J.C.B.
Financial Services, Inc. acts as the general partner to the Adviser (the
"General Partner") and J. C. Bradford & Co. LLC ("Bradford" or the
"Distributor"), the Fund's distributor, is the Adviser's limited partner.
The General Partner is a wholly owned subsidiary of Bradford & Co.,
Incorporated ("Bradford Incorporated"). Bradford Incorporated, through the
General Partner and other subsidiaries, is engaged in various aspects of the
financial services industry. All of the outstanding voting securities of
Bradford Incorporated are owned by various partners of Bradford. Bradford is
an investment firm which conducts a substantial brokerage and investment
banking business and also acts as the distributor of the Fund.
Advisory Agreement. The advisory services provided by the Adviser,
the fees received by it for such services and applicable expense limitations
are described in the Prospectus. The Adviser renders advisory services to the
Fund pursuant to an Investment Advisory Agreement dated January 12, 1989. The
Investment Advisory Agreement is hereinafter referred to as the Advisory
Contract.
As required by various state regulations, the Adviser will reimburse
the Fund if and to the extent that the aggregate operating expenses of the Fund
exceed applicable state limits for the fiscal year, to the extent required by
such state regulations. Currently, the Fund is not subject to any such
limitations.
The Fund bears all of its own expenses not specifically assumed by the
Adviser. These expenses include, but are not limited to, organizational costs,
fees paid to the Adviser and the administrator, fees and expenses of directors
who are not affiliated with the Adviser, taxes, interest, legal fees, custodian
and transfer agency fees, auditing fees, brokerage fees and commissions, fees
and expenses of registering and qualifying the Money Fund and its shares for
distribution under Federal and state securities laws, expenses of preparing,
printing and distributing prospectuses and statements of additional information
annually to existing shareholders, the expense of reports to shareholders,
shareholders' meetings and proxy solicitations, fidelity bond and directors'
and officers' liability insurance premiums, distribution expenses pursuant to
the Rule 12b-1 plan, and other expenses which are not expressly assumed by the
Adviser.
Under the Advisory Contract, the Adviser will not be liable for any
error of judgment, or act or omission, or mistake of law or for any loss
suffered by the Fund in connection with the perfor-
B-12
<PAGE> 32
mance of the Advisory Contract, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Adviser in the
performance of its duties or from reckless disregard of its duties and
obligations thereunder.
The Adviser has licensed the name "Bradford" to the Fund on a
royalty-free basis and the Adviser has reserved to itself the right to grant
the non-exclusive right to use the name "Bradford" to any other person. At
such time as the Advisory Contract is no longer in effect, the Adviser may
require the Fund to cease using the name "Bradford."
The Advisory Contract provides that the Adviser may render similar
services to others so long as its services under such Contract are not impaired
thereby.
The Advisory Contract was last approved with respect to the Fund on
October 15, 1996, by a vote of the Company's Board of Directors, including a
majority of those directors who are not parties to the Advisory Contract or
"interested persons" (as defined in the 1940 Act) of such parties. The
Advisory Contract was also approved by the Fund's shareholders at their first
meeting held on October 18, 1989. The Advisory Contract will, unless sooner
terminated pursuant to its terms, continue in effect until January 12, 1998,
and thereafter for successive one year periods so long as it is approved
annually (a) by a majority of the directors who are not parties to the Advisory
Contract or "interested persons" of the Company or of the Adviser, as defined
in the 1940 Act, cast in person at a meeting called for the purpose of voting
on such approval, and (b) either by the Board of Directors of the Company or by
a vote of holders of a majority of outstanding shares (as defined in
"DESCRIPTION OF SHARES") of the Fund. The Advisory Contract is terminable by
vote of the Company's Board of Directors or by the holders of a majority of the
outstanding shares of the Fund (as so defined), at any time without penalty, on
60 days' written notice to the Adviser. The Advisory Contract may also be
terminated by the Adviser on 60 days' written notice to the Company. The
Advisory Contract terminates automatically in the event of assignment thereof
as defined in the 1940 Act.
For the fiscal years ended December 31, 1994, 1995 and 1996, the
Adviser's fees under the Advisory Contract were $2,821,994, $3,359,005 and
$4,309,221, respectively. The Adviser may, from time to time, voluntarily
waive all or a portion of its investment advisory fees. For the years ended
December 31, 1995 and 1996, the Adviser waived $2,131 and $79,731,
respectively, which were payable to it under the Advisory Contract. Such fee
waiver causes the yield of the Fund to be higher than it would be in the
absence of such a waiver.
Custodian, Transfer Agency and Administration Agreements. PNC Bank,
N.A. ("PNC"), 17th and Chestnut Streets, Philadelphia,
B-13
<PAGE> 33
Pennsylvania 19103, is custodian of the Fund's assets pursuant to a Custodian
Agreement dated January 13, 1989 (the "Custodian Agreement"). Under the
Custodian Agreement, PNC (a) maintains a separate account or accounts in the
name of the Fund, (b) holds and transfers portfolio securities for the account
of the Fund, (c) makes receipts and disbursements of money on behalf of the
Fund, (d) collects and receives all income and other payments and distributions
on account of the Fund's portfolio securities and (e) makes periodic reports to
the Company's Board of Directors concerning the Fund's operations. PNC is
authorized to select one or more banks or trust companies to serve as
sub-custodian on behalf of the Company, provided that PNC remains responsible
for the performance of all duties under the Custodian Agreement and holds the
Company harmless from the acts and omissions of any sub-custodian.
Bradford serves as the transfer and dividend disbursing agent for the
Fund's shares pursuant to a Transfer Agency Agreement dated April 26, 1991, as
amended as of February 22, 1993 (the "Transfer Agency Agreement"), under which
Bradford (a) issues and redeems shares of the Fund, (b) pays or arranges for
the payment of dividends and distributions, (c) addresses and mails
communications by the Fund to record owners of shares, including reports to
shareholders and proxy materials for its meetings of shareholders, (d)
maintains shareholder accounts and, if requested, sub-accounts, and (e) makes
periodic reports to the Company's Board of Directors concerning the operations
of the Fund. The Fund pays Bradford a fee at an annual rate of $11.50 for each
active Fund account, in addition to the following fees: check writing fee of
$.25 per check; $7.50 for each stop payment (paid by shareholder); $15.00 per
return of check for nonsufficient funds (paid by shareholder); and $2.00 per
check copy (paid by shareholder). In addition, the Fund reimburses Bradford
for its payment of the following expenses: toll free telephone lines (if
required by the Fund), envelopes, checks, postage, hardware and telephone lines
for remote terminals (if required by the Fund), certificate issuance fees,
microfiche and microfilm, and proxy solicitation expenses (if required by the
Fund).
PFPC, an affiliate of PNC and a wholly owned subsidiary of PNC Bank
Corp., a multi-bank holding company, serves as administrator to the Fund
pursuant to an Administration and Accounting Services Agreement dated January
13, 1989, as amended (the "Administration Agreement"), under which PFPC
provides various administrative and accounting services. These services
include (a) maintenance of the Fund's books and records, (b) preparation of
regulatory filings and shareholder reports, (c) computation of net asset values
and daily dividends, (d) accounting with respect to income and expense items,
cash balances, market value, yield, portfolio turnover and average maturity of
the Fund and its assets, (e) preparation of financial statements and tax
returns, and (f) reconciliation of trades. For its services to the Fund under
the Administration Agreement, PFPC
B-14
<PAGE> 34
receives a fee computed as described in the Prospectus, subject to a minimum
fee of $8,333 per month.
For the fiscal years ended December 31, 1994, 1995 and 1996, the fees
of PFPC as administrator to the Fund were $478,203, $493,829 and $521,057,
respectively.
Distribution Agreement. Pursuant to the terms of the Distribution
Agreement dated January 12, 1989 (the "Distribution Contract"), entered into
between Bradford and the Company on behalf of the Fund, and a Plan of
Distribution (the "Plan"), which was adopted and the continuation of which has
been approved in the manner prescribed by Rule 12b-1 under the 1940 Act,
Bradford uses its best efforts to distribute the shares of the Fund, and
Bradford is reimbursed for certain current distribution expenses as described
in the Prospectus.
The Plan was last approved by the Company's Board of Directors,
including the directors who are not "interested persons" of the Company (as
defined in the 1940 Act) and who have no direct or indirect financial interest
in the operation of the Plan or any agreements relating to the Plan ("Rule
12b-1 directors"), on October 15, 1996. In approving the Plan, the Company's
directors concluded, in the exercise of reasonable business judgment and in
light of their fiduciary duties under state law, and under Sections 36(a) and
(b) of the 1940 Act, that there is a reasonable likelihood that the Plan and
the services provided to the Fund pursuant thereto will benefit the Fund and
its shareholders. The Plan was also approved by the Fund's shareholders on
October 18, 1989.
Among other things, the Plan provides that: (a) Bradford is required
to submit quarterly reports to the directors of the Company (which are reviewed
by the directors) regarding all amounts expended under the Plan and the
purposes for which such expenditures were made; (b) the Plan will continue in
effect only so long as it is approved at least annually by the Company's Board
of Directors, including the Rule 12b-1 directors, and any material amendment
thereto is approved by the Company's Board of Directors, including the Rule
12b-1 directors, acting in person at a meeting called for such purpose; (c) the
aggregate amount to be spent by the Fund on the distribution of the Fund's
shares under the Plan shall not be materially increased without the affirmative
vote of the holders of a majority of the Fund's outstanding shares (as defined
in "DESCRIPTION OF SHARES") and (d) while the Plan remains in effect, the
selection and nomination of the Company's directors who are not "interested
persons" of the Company (as defined in the 1940 Act) shall be committed to the
discretion of the directors who are not interested persons of the Company.
For the fiscal year ended December 31, 1996, the Fund reimbursed
Bradford for distribution expenses totalling $2,318,922. Bradford's
distribution expenses for the Fund consisted principally
B-15
<PAGE> 35
of the following: allocated expenses of Bradford's money fund operations
department; allocated expenses of Bradford's branch office overhead; allocated
expenses of Bradford's financial services department, including mutual fund
sales; statement processing; allocated expenses of management sales and branch
administration, marketing and training departments; and compensation paid to
account executives. Directors and officers of the Company who are affiliated
with Bradford may have a direct or indirect financial interest in the operation
of the Plan. No director of the Company who is not an "interested person" of
the Company (as defined in the 1940 Act) has any such financial interest.
Bradford may, from time to time, voluntarily waive all or a portion of the fees
payable to it under the Plan. For the year ended December 31, 1996, Bradford
waived $1,373 which were payable to it under the Plan. Such fee waiver will
cause the yield of the Fund to be higher than it would be in the absence of
such a waiver.
PORTFOLIO TRANSACTIONS
The Adviser is responsible for decisions to buy and sell securities
for the Fund, the selection of brokers or dealers to effect the transactions
and the negotiation of brokerage commissions, if any. Transactions are
typically effected with dealers acting as principal for their own account. The
Fund did not pay any brokerage commissions during the three most recent fiscal
years.
In determining which brokers to use for the portfolio transactions
effected on an agency basis, the Adviser will attempt to obtain the best net
price and the most favorable execution in light of the overall quality of
brokerage and research services provided. In so selecting brokers, the Adviser
may consider a number of factors, including, but not limited to, the skill of
the firm's securities traders and the firm's financial responsibility and
administrative efficiency.
When consistent with these objectives, brokerage may be placed with
broker-dealers who furnish investment research or services to the Adviser.
Such research or services include advice as to the value of securities; the
advisability of investing in, purchasing or selling securities; and the
availability of securities, or purchasers or sellers of securities; as well as
analyses and reports concerning issues, industries, securities, economic
factors and trends, portfolio strategy and the performance of accounts. This
allows the Adviser to supplement its own investment research activities and
enables the Adviser to obtain the views and information of individuals and
research staffs of many different securities firms prior to making investment
decisions for the Fund. In the event portfolio transactions are effected with
brokers or dealers who furnish research services to the Adviser, the Adviser
receives a benefit, not capable of evaluation in dollar amounts, without
providing any direct monetary benefit to the Fund from these trans-
B-16
<PAGE> 36
actions. These services may indirectly benefit not just the Fund but also
other accounts which the Adviser may manage.
The Adviser is authorized to cause the Fund to pay an amount of
commission for effecting a securities transaction in excess of the amount of
commission another broker or dealer would have charged if the Adviser
determines that such amount of commission is reasonable in relation to the
overall quality of the brokerage and research services provided by such broker
or dealer, viewed in terms of either that particular transaction or the
Adviser's overall responsibilities with respect to the accounts as to which it
exercises investment discretion. Under the terms of the Advisory Contract, the
Fund may not pay any compensation in the form of brokerage commissions to the
Distributor (1) which would exceed the amount permitted under Section 17(e) of
the 1940 Act and the rules and regulations thereunder or (2) for research
services within the meaning of Section 28(e) of the Securities Exchange Act of
1934. In payment of brokerage commissions to the Distributor acting as agent
in over-the-counter transactions, the Adviser intends to comply with Section
17(e)(2)(C) of the 1940 Act which requires that such commissions not exceed one
percent of the purchase or sale price of the securities involved.
The Fund purchases only securities with remaining maturities of 397
days (13 months) or less and may attempt to maximize yield through portfolio
trading. This may involve selling portfolio instruments and purchasing
different instruments to take advantage of disparities of yield in different
segments of the high-grade money market or among particular instruments within
the same segment of the market. Accordingly, its portfolio turnover rate may
be relatively high. However, because brokerage commissions are not normally
paid with respect to investments made by the Fund, the turnover rate should not
materially adversely affect the Fund's net asset value or net income.
Investment decisions for the Fund and for other investment accounts
that the Adviser may manage in the future, including other portfolios which may
be created by the Company, will be made independently of each other in the
light of differing investment objectives or circumstances. However, the same
investment decision may be made for two or more of such accounts. In such
cases, purchases or sales will be averaged as to price and allocated as to
amount according to a formula deemed equitable to each such account. While in
some cases this practice could have a detrimental effect upon the price or
value of the security as far as the Fund is concerned, in other cases it could
be beneficial to the Fund. The Fund will not purchase securities during the
existence of any underwriting or selling group relating to such security of
which the Adviser or any affiliated person (as defined in the 1940 Act) thereof
is a member except pursuant to procedures adopted by the Company's Board of
Directors pursuant to Rule 10f-3 under the 1940 Act. Among other things, these
procedures, which
B-17
<PAGE> 37
will be reviewed by the Company's directors annually, require that the
commission paid in connection with such a purchase be reasonable and fair, that
the purchase be at not more than the public offering price prior to the end of
the first business day after the date of the public offer, and that the Adviser
not participate in or benefit from the sale to the Fund.
The Fund has from time to time during 1996 held securities of its
regular brokers or dealers, as defined in Rule 10b-1 under the 1940 Act, or
their parent companies, including those of Ford Motor Credit Corp., Goldman
Sachs & Co. and Merrill Lynch & Co., Inc. At December 31, 1996, the Fund held
the following amounts of commercial paper or notes of Ford Motor Credit Corp.,
Goldman Sachs & Co. and Merrill Lynch & Co., Inc.: $53,158,249, $4,941,407 and
$59,103,353, respectively.
PURCHASE AND REDEMPTION INFORMATION
The Fund reserves the right, if conditions exist which make cash
payments undesirable, to honor any request for redemption or repurchase of the
Fund's shares by making payment in whole or in part in securities chosen by the
Fund and valued in the same way as they would be valued for purposes of
computing the Fund's net asset value. If payment is made in securities, a
shareholder will incur transaction costs in converting these securities into
cash. The Company has elected, however, to be governed by Rule 18f-1 under the
1940 Act so that the Fund is obligated to redeem its shares solely in cash up
to the lesser of $250,000 or 1% of its net asset value during any 90-day period
for any one shareholder of the Fund.
Under the 1940 Act, the Fund may suspend the right of redemption or
postpone the date of payment upon redemption for any period during which the
New York Stock Exchange (the "NYSE") is closed (other than customary weekend
and holiday closings), or during which trading on the NYSE is restricted, or
during which (as determined by the SEC by rule or regulation) an emergency
exists as a result of which disposal or valuation of portfolio securities is
not reasonably practicable, or for such other periods as the SEC may permit.
VALUATION OF SHARES
The method for determining the net asset value per share of the Fund
is summarized in the Prospectus under the heading "DETERMINATION OF NET ASSET
VALUE." The Fund intends to use its best efforts to maintain its net asset
value of $1.00 per share. Net asset value per share, the value of an
individual share in the Fund, is computed by dividing the Fund's net assets by
the number of its outstanding shares. The Fund's "net assets" equal the value
of the Fund's investments and other securities less its liabilities. The
Fund's net asset value per share is computed twice each day, once at 12:00 noon
Eastern time and once as of the close of
B-18
<PAGE> 38
trading (currently 4:00 p.m. Eastern time) on the NYSE on each day, Monday
through Friday, when the NYSE and the Federal Reserve Bank of Philadelphia (the
"FRB") are both open for business.
The Fund calculates the value of its portfolio securities by using the
amortized cost method of valuation in accordance with Rule 2a-7 under the 1940
Act. Under this method, the market value of an instrument is approximated by
amortizing the difference between the acquisition cost and value at maturity of
the instrument on a straight-line basis over the remaining life of the
instrument. The effect of changes in the market value of a security as a
result of fluctuating interest rates is not taken into account. The market
value of debt securities usually reflects yields generally available on
securities of similar quality. When such yields decline, market values can be
expected to increase, and when yields increase, market values can be expected
to decline. The amortized cost method of valuation may result in the value of
a security being higher or lower than its market price, the price the Fund
would receive if the security were sold prior to maturity. In addition, if a
large number of redemptions take place at a time when interest rates have
increased, the Fund may have to sell portfolio securities prior to maturity and
at a price which might be lower than their value under the amortized cost
method of valuation.
Pursuant to Rule 2a-7, the Board of Directors of the Company has
determined, in good faith, that it is in the best interests of the Fund and its
shareholders to maintain a stable net asset value per share by virtue of the
amortized cost method of valuation. The Fund will continue to use this method
only so long as the Board of Directors believes that it fairly reflects net
asset value per share calculated using market quotations. In accordance with
Rule 2a-7, the Board of Directors of the Company has, as a particular
responsibility within the overall duty of care owed to the Fund's shareholders,
established written procedures reasonably designed, taking into account current
market conditions and the Fund's investment objective, to stabilize the Fund's
net asset value per share at a single value. These procedures include the
periodic determination of any deviation of current net asset value per share,
calculated using available market quotations (or an appropriate substitute
which reflects current market conditions), from the Fund's amortized cost price
per share, the periodic review by the Board of the amount of any such deviation
and the method used to calculate any such deviation, the maintenance of records
of such determinations and the Board's review thereof, the prompt consideration
by the Board if any such deviation exceeds 1/2 of 1%, and the taking of such
remedial action by the Board as it deems appropriate where it believes the
extent of any such deviation may result in material dilution or other unfair
results to investors or existing shareholders. Such remedial action may
include redemptions in kind, selling portfolio instruments prior to realizing
capital gains or losses, shortening the average portfolio maturity,
B-19
<PAGE> 39
withholding dividends or utilizing a net asset value per share as determined by
using available market quotations. The Fund will, in further compliance with
Rule 2a-7, maintain a dollar-weighted average portfolio maturity appropriate
to its objective of maintaining a stable net asset value and not exceeding 90
days; will not purchase any instrument with a remaining maturity of greater
than 397 days (thirteen months); will limit its portfolio investments to those
U.S. dollar-denominated instruments which the Adviser, pursuant to the
procedures established by the Board, determines present minimal credit risks
and which are Eligible Securities (as defined in Rule 2a-7); will generally
limit its investment in the securities of any one issuer to no more than five
percent of the Fund's assets, measured at the time of purchase; will limit its
investment in securities which are Second Tier Securities (as defined in Rule
2a-7) to no more than five percent of the Fund's assets, with investment in the
Second Tier Securities of any one issuer being limited to the greater of one
million dollars or one percent of the Fund's assets; will, in the event that a
portfolio security goes into default or the rating of a portfolio security is
downgraded so that it no longer is an Eligible Security, and in certain other
circumstances, reassess promptly whether the security presents minimal credit
risks, determine whether continuing to hold the security is in the best
interest of the Fund, and record such actions in the Fund's records; will
notify the SEC if it holds defaulted securities which amount to one half of one
percent or more of the Fund's assets; and will record, maintain and preserve a
written copy of the above-described procedures and a written record of the
Board's considerations and actions taken in connection with the discharge of
its above-described responsibilities.
In determining the approximate market value of portfolio investments,
the Fund may use outside organizations, which may-use a matrix or formula
method that takes into consideration market indices, matrices, yield curves and
other specific adjustments. This may result in the securities being valued at
a price different from the price that would have been determined had the matrix
or formula method not been used. All cash, receivables and current payables
are carried at their face value. Other assets, if any, are valued at fair
value as determined in good faith by the Company's Board of Directors.
PERFORMANCE INFORMATION
The Fund's current and effective yields are computed using
standardized methods required by the SEC. The annualized yields for the Fund
are computed by: (a) determining the net change in the value of a hypothetical
account having a balance of one share at the beginning of a seven-calendar-day
period; (b) dividing the net change by the value of the account at the
beginning of the period to obtain the base period return; and (c) annualizing
the results (i.e., multiplying the base period return by 365/7). The net
B-20
<PAGE> 40
change in the value of the account reflects the value of additional shares
purchased with dividends declared and all dividends declared on both the
original share and such additional shares, but does not include realized gains
and losses or unrealized appreciation and depreciation. Compound effective
yields are computed by adding 1 to the base period return (calculated as
described above), raising the sum to a power equal to 365/7 and subtracting 1.
The yield for the seven day period ending December 31, 1996, for the
Fund was 4.66%, and the effective yield for the same period was 4.77%.
Yield may fluctuate daily and does not provide a basis for determining
future yields. Because the yields of the Fund will fluctuate, they cannot be
compared with yields on savings accounts or other investment alternatives that
provide an agreed to or guaranteed fixed yield for a stated period of time.
However, yield information may be useful to an investor considering temporary
investments in money market instruments. In comparing the yield of one money
market fund to another, consideration should be given to each fund's investment
policies, including the types of investments made, lengths of maturities of the
portfolio securities, the method used by each fund to compute the yield and
whether there are any special account charges which may reduce the effective
yield.
The yields on certain obligations, including the money market
instruments in which the Fund invests (such as commercial paper and bank
obligations), are dependent on a variety of factors, including general money
market conditions, conditions in the particular market for the obligation, the
financial condition of the issuer, the size of the offering, the maturity of
the obligation and the ratings of the issue. The ratings issued by Moody's
Investors Service and Standard & Poor's Corporation represent their respective
opinions as to the quality of the obligations they undertake to rate. Ratings,
however, are general and are not absolute standards of quality. Consequently,
obligations with the same rating, maturity and interest rate may have different
market prices. In addition, subsequent to its purchase by the Fund, an issue
may cease to be rated or may have its rating reduced below the minimum required
for purchase. In such an event, the Adviser will consider whether the Fund
should continue to hold the obligation.
From time to time, in advertisements or in reports to shareholders,
the yields of the Fund may be quoted and compared to those of other mutual
funds with similar investment objectives. For example, the yield of the Fund
may be compared to the IBC Financial Data, Inc.'s Money Fund Averages, which
are averages compiled by IBC Financial Data, Inc.'s Money Fund Report of
Holliston, MA 01746, a widely recognized independent publication that monitors
the performance of money market funds, or to the data prepared by
B-21
<PAGE> 41
Lipper Analytical Services, Inc., a widely recognized independent service that
monitors the performance of mutual funds.
TAXES
The Fund has qualified, and intends to remain qualified, as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"). As a regulated investment company, the Fund
is generally not subject to U.S. Federal income tax on its income and gains
distributed to shareholders, provided the Fund distributes to its shareholders
at least 90% of its net investment income (i.e., net income exclusive of net
long-term capital gains) each year.
To so qualify, the Fund must, among other things, (i) derive in each
taxable year at least 90% of its gross income from dividends, interest,
payments with respect to securities loans, and gains from the sale or other
disposition of stock or securities or foreign currencies, or other income
derived with respect to its business of investing in such stock, securities or
currencies; (ii) derive less than 30% of its gross income from gains (without,
in most cases, deduction for losses) from the sale or other disposition of
stock, securities, options, futures, forward contracts or foreign currencies
held for less than three months; and (iii) diversify its investments so that,
at the end of each quarter of its taxable year, (a) at least 50% of the value
of its assets is represented by cash, cash items, U.S. Government securities,
and other securities limited, in respect of any one issuer, to a value not
greater than 5% of the value of the Fund's total assets and 10% of the
outstanding voting securities of such issuer and (b) not more than 25% of the
value of its assets is invested in the securities of any one issuer (other than
the U.S. Government). In addition, to utilize the tax provisions specially
applicable to regulated investment companies, the Fund must distribute to its
shareholders at least 90% of its investment company taxable income for the year
and 90% of its interest income which is excludable from income under Section
103(a) of the Code. In general, the Fund's investment company taxable income
will be its taxable income subject to certain adjustments and excluding the
excess of any net long-term capital gain for the taxable year over the net
short-term capital loss, if any, for such year.
As described in the Prospectus under "Taxes," shareholders (other than
tax-exempt shareholders) are subject to federal income tax on distributions of
income and capital gains, regardless of whether they reinvest such
distributions in shares of the Fund. Distributions of net investment income
are taxable to shareholders as ordinary income. The Fund does not intend to
make distributions that will be eligible for the corporate dividends received
deduction. Distributions of net capital gains (the excess of net long-capital
gains over net short-term capital losses) are taxable to shareholders as
long-term capital gains regardless of the length of
B-22
<PAGE> 42
time shares of the Fund have been held. The net capital gains of the Fund are
expected to be minimal. Shareholders will be advised annually as to the
federal tax status, as capital gain or ordinary income, of distributions made
by the Fund during the year.
Any gain or loss realized upon a taxable disposition of Fund shares by
a shareholder who is not a dealer in securities generally will be treated as
long-term capital gain or loss if the shares have been held for more than one
year, and otherwise as short-term capital gain or loss. Any loss realized upon
a taxable disposition of Fund shares may be deferred if other Fund shares are
purchased (under the dividend reinvestment plan or otherwise) within 30 days
before or after the disposition.
The Fund may acquire certain securities at a discount. Current
federal income tax law requires that a holder (such as the Fund) of such a
security include in taxable income a portion of the discount which accrues on
such security during the tax year even if the Fund receives no payment in cash
on the security during the year. As a regulated investment company, the Fund
must pay out 90% of its net investment income each year, will be subject to
corporate-level tax to the extent it does not distribute all its income and
gains, and will be subject to a 4% excise tax if the additional distribution
requirement described below is not met. The foregoing rules would apply with
respect to any accrued discount included in the Fund's income, even though the
Fund may not receive cash corresponding to the accrued discount. Distributions
will be made from the cash assets of the Fund or by liquidating portfolio
securities, if necessary. If a distribution of cash necessitates the
liquidation of portfolio securities, the Adviser will select which securities
to sell. The Fund may realize a gain or loss from such sales, and any gain so
realized would also need to be distributed.
If for any taxable year the Fund does not qualify as a regulated
investment company, all of its taxable income and gains will be subject to tax
at regular corporate rates without any deduction for distributions to
shareholders, and all distributions will be taxable as ordinary dividends to
the extent of the Fund's current and accumulated earnings and profits. Such
distributions will be eligible for the dividends received deduction in the case
of corporate shareholders. However, additional federal income taxes may be
imposed on the Fund if it requalifies in a subsequent taxable year as a
regulated investment company.
A non-deductible 4% excise tax will be imposed on the Fund to the
extent the Fund does not distribute during each calendar year (i) 98% of its
ordinary income for such calendar year, (ii) 98% of its capital gain net income
for the one-year period ending October 31 of such calendar year (or the Fund's
actual taxable year ending December 31, if elected) and (iii) certain other
amounts not distributed in previous years. The Fund intends to distribute its
B-23
<PAGE> 43
income and gains in a manner so as to avoid the imposition of such 4% excise
tax.
For purposes of applying the distribution requirements described
above, and for purposes of determining the taxable income of shareholders each
year, dividends declared by the Fund in October, November or December of a
year, payable to shareholders as of a record date in such a month, and paid
during the following January, will be treated for Federal income tax purposes
as paid by the Fund and received by shareholders as of December 31 of the
calendar year declared.
Federal income tax is required to be withheld at the rate of 31% of
all taxable distributions payable to shareholders, including the proceeds of
any redemptions, who fail to provide the Fund with their correct taxpayer
identification number or to make required certifications, or who have been
notified by the Internal Revenue Service that they are subject to backup
withholding. Corporate shareholders and certain other shareholders specified
in the Code generally are exempt from such backup withholding.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations presently in effect, which are
subject to change by legislative or administrative action. No determination
can be made as to whether future legislation addressing the federal income tax
consequences to the Fund or its shareholders will be enacted.
The tax consequences to a foreign shareholder of an investment in the
Fund may be different from those described herein. Foreign shareholders are
advised to consult their own tax advisers with respect to the particular tax
consequences to them of an investment in the Fund.
Distributions to shareholders may also be subject to state and local
taxes, depending on each shareholder's particular situation. Investors are
urged to consult their own tax advisers with respect to the particular tax
consequences to them of an investment in the Fund.
DESCRIPTION OF SHARES
The Adviser provided the initial capital for the Fund by purchasing
100,000 shares for $100,000. Such shares were acquired for investment and were
redeemed on February 23, 1994. The organizational expenses of the Fund have
been borne by the Fund and were amortized over a 60-month period and if in the
future additional portfolios are offered by the Company, the organizational
expenses will be allocated among the portfolios in a manner deemed equitable by
the Board of Directors. As of April 17, 1997, to the Fund's knowledge no
person held beneficially 5% or more of the outstanding shares of the Fund, and
the directors and officers of the Company
B-24
<PAGE> 44
as a group owned less than 1% of such outstanding shares. All of the Fund's
outstanding shares were then owned of record by Bradford.
As a general matter, the Fund will not hold annual or other meetings
of shareholders. Under the Company's Articles of Incorporation and By-Laws, an
annual meeting of shareholders is not required to be held in any year in which
the Fund is not required under the 1940 Act to submit for shareholder approval
(i) the election of director(s), (ii) any contract with an investment adviser
or principal underwriter (as such terms are defined in the 1940 Act) or any
renewal or amendment thereof, or (iii) the selection of the Fund's independent
public accountants. Each duly elected director serves until the election and
qualification of his successor, if any, or until such director sooner dies,
resigns, retires or is removed by the shareholders. Under certain
circumstances shareholders have the right to call for a meeting of shareholders
to consider the removal of one or more directors. The Company will assist in
shareholder communication in such matters.
Should the Fund in the future offer shares of one or more other
portfolios, the Articles of Incorporation provide that on any matter submitted
to a vote of the shareholders of the Company, all shares entitled to vote,
irrespective of portfolio, would be voted in the aggregate and not by portfolio
except that (a) as to any matter with respect to which a separate vote of any
portfolio is required by the 1940 Act (such as the Fund's Rule 12b-1 Plan) or
other applicable law, such requirements as to a separate vote by that portfolio
would apply in lieu of the aggregate voting as described above, and (b) as to
any matter which does not affect the interest of all portfolios, only
shareholders of the affected portfolio or portfolios would be entitled to vote
thereon.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted by the provisions of such Act or applicable state law, or otherwise,
to the holders of the outstanding voting securities of an investment company
such as the Company shall not be deemed to have been effectively acted upon
unless approved by the holders of a majority of the outstanding shares (as
defined below) of each portfolio affected by such matter. Rule 18f-2 further
provides that a portfolio shall be deemed to be affected by a matter unless it
is clear that the interests of each portfolio in the matter are identical or
that the matter does not affect any interest of such portfolio. However, such
Rule exempts the selection of independent public accountants and the election
of directors from its separate voting requirements.
As used in the Prospectus and in this Statement of Additional
Information, the term "majority of the outstanding shares" of the Company or a
particular portfolio of the Company means the vote of the lesser of (i) 67% or
more of the shares of the Company or such portfolio present at a meeting, if
the holders of more than 50% of
B-25
<PAGE> 45
the outstanding shares of the Company or such portfolio are present or
represented by proxy, or (ii) more than 50% of the outstanding shares of the
Company or such portfolio.
For information relating to possible mandatory redemption of shares at
the election of the Fund, see the discussion under "PURCHASE AND REDEMPTION OF
SHARES -- Redemption Procedures" in the Prospectus.
MISCELLANEOUS
Counsel. The law firm of Baker & Hostetler LLP, Washington Square,
Suite 1100, 1050 Connecticut Avenue, N.W., Washington, D.C. 20036-5304, serves
as counsel to the Company and will pass upon the legality of the shares offered
hereby.
Independent Auditors. Deloitte & Touche LLP, Third National Financial
Center, Nashville, Tennessee 37219, serves as the Company's independent
auditors. The financial statements of the Fund appearing in this Statement of
Additional Information have been audited by Deloitte & Touche LLP, as set forth
in their report appearing elsewhere herein, and have been included in reliance
on their report given on their authority as experts in accounting and auditing.
B-26
<PAGE> 46
FINANCIAL STATEMENTS
B-27
<PAGE> 47
THE BRADFORD FUNDS, INC.
THE BRADFORD MONEY FUND
Statement of Net Assets
December 31, 1996
<TABLE>
<CAPTION>
PERCENTAGE PAR
OF PORTFOLIO MATURITY (000) VALUE
------------ -------- -------- --------------
<S> <C> <C> <C> <C>
AGENCY OBLIGATIONS............................... 20.3%
Federal Home Loan Bank
5.22% 01/09/97 $ 9,000 $ 8,989,560
5.30% 01/16/97 2,000 1,999,980
6.90% 02/24/97 1,000 1,001,642
5.36% 02/25/97 15,000 14,877,167
5.35% 03/20/97 10,000 9,884,083
Federal Home Loan Mortgage Corporation
7.75% 01/27/97 15,000 15,021,450
5.23% 02/07/97 18,325 18,226,498
5.23% 03/05/97 14,000 13,871,988
5.29% 03/10/97 5,500 5,445,043
5.29% 03/17/97 15,173 15,005,939
5.31% 03/17/97 13,500 13,350,656
5.30% 03/19/97 19,000 18,784,614
5.31% 03/21/97 18,500 18,284,429
5.34% 03/25/97 16,500 16,296,857
Federal National Mortgage Association
7.68% 01/27/97 5,000 5,008,623
5.23% 01/29/97 16,000 15,934,978
5.36% 02/27/97 9,500 9,419,377
5.22% 03/06/97 14,000 13,870,080
5.34% 03/12/97 11,140 11,024,330
5.28% 03/13/97 14,500 14,349,007
5.05% 03/14/97 10,000 9,993,362
--------------
TOTAL AGENCY OBLIGATIONS 250,639,663
--------------
COMMERCIAL PAPER................................. 74.0%
Agriculture...................................... 3.7%
Cargill, Inc. (A-1+, P-1)
5.27% 01/15/97 19,000 18,961,061
5.28% 02/05/97 16,500 16,415,300
5.28% 03/12/97 5,000 4,948,667
Golden Peanuts Co. (A-1+, P-1)
5.31% 01/13/97 5,000 4,991,150
--------------
45,316,178
--------------
Automobiles...................................... 1.4%
Daimler-Benz (A-1, P-1)
5.32% 01/28/97 11,000 10,956,110
5.32% 02/07/97 6,500 6,464,459
--------------
17,420,569
--------------
</TABLE>
See accompanying notes to financial statements.
B-28
<PAGE> 48
THE BRADFORD FUNDS, INC.
THE BRADFORD MONEY FUND
Statement of Net Assets -- (Continued)
December 31, 1996
<TABLE>
<CAPTION>
PERCENTAGE PAR
OF PORTFOLIO MATURITY (000) VALUE
------------ -------- -------- --------------
<S> <C> <C> <C> <C>
Chemicals........................................ 2.8%
Dupont (E.I.) de Nemours & Co. (A-1+, P-1)
5.27% 01/10/97 $ 6,000 $ 5,992,095
5.34% 01/21/97 14,000 13,958,467
5.26% 02/06/97 15,000 14,921,100
--------------
34,871,662
--------------
Communications................................... 2.4%
Knight-Ridder, Inc. (A-1+, P-1)
5.30% 01/07/97 20,000 19,982,333
5.30% 03/20/97 9,800 9,687,463
--------------
29,669,796
--------------
Electronics...................................... 2.6%
Avnet, Inc. (A-1, P-1)
5.33% 01/23/97 10,000 9,967,427
5.42% 02/14/97 10,000 9,933,756
5.48% 02/28/97 7,000 6,938,198
5.34% 03/14/97 5,000 4,946,600
--------------
31,785,981
--------------
Entertainment.................................... 5.1%
Walt Disney Co., Inc. (A-1, P-1)
5.35% 01/22/97 15,000 14,953,187
5.27% 01/30/97 14,000 13,940,566
5.39% 02/04/97 10,000 9,949,094
5.25% 02/28/97 8,259 8,189,143
5.25% 03/27/97 16,000 15,801,667
--------------
62,833,657
--------------
Finance.......................................... 18.9%
Ford Motor Credit Co. (A-1, P-1)
5.31% 01/08/97 16,500 16,482,964
5.31% 01/23/97 11,000 10,964,305
5.31% 02/07/97 5,500 5,469,984
5.29% 02/10/97 8,500 8,450,039
5.27% 04/30/97 12,000 11,790,957
General Electric Capital Corp. (A-1, P-1)
5.39% 01/13/97 11,000 10,980,236
5.30% 01/14/97 10,000 9,980,861
5.32% 01/16/97 6,740 6,725,060
5.30% 01/17/97 10,000 9,976,444
5.32% 01/17/97 4,560 4,549,218
5.30% 01/27/97 2,000 1,992,344
</TABLE>
See accompanying notes to financial statements.
B-29
<PAGE> 49
THE BRADFORD FUNDS, INC.
THE BRADFORD MONEY FUND
Statement of Net Assets -- (Continued)
December 31, 1996
<TABLE>
<CAPTION>
PERCENTAGE PAR
OF PORTFOLIO MATURITY (000) VALUE
------------ -------- -------- --------------
<S> <C> <C> <C> <C>
Finance -- (Continued)
5.31% 02/10/97 $ 6,000 $ 5,964,600
5.30% 02/14/97 1,500 1,490,283
5.31% 03/25/97 11,000 10,865,333
J. C. Penney Funding Corp. (A-1, P-1)
5.31% 01/31/97 14,000 13,938,050
Met Life Funding Corp. (A-1+, P-1)
5.29% 01/09/97 15,000 14,982,366
5.29% 01/24/97 13,000 12,956,064
5.27% 02/10/97 14,000 13,918,022
5.25% 03/14/97 15,000 14,842,500
USAA Capital Corp. (A-1+, P-1)
5.30% 01/02/97 6,000 5,999,117
5.30% 01/29/97 6,000 5,975,267
5.26% 02/24/97 14,000 13,889,330
5.28% 02/26/97 15,000 14,876,800
5.29% 03/31/97 6,500 6,414,993
--------------
233,475,137
--------------
Financial Services............................... 8.3%
Bear Stearns Companies, Inc. (A-1, P-1)
5.30% 02/20/97 14,000 13,896,944
5.30% 03/31/97 3,000 2,960,692
C.S. First Boston, Inc. (A-1, P-1)
5.33% 02/03/97 10,000 9,951,142
Dean Witter, Discover & Co. (A-1, P-1)
5.31% 01/22/97 11,500 11,464,379
Goldman Sachs Group L.P. (A-1+, P-1)
5.34% 03/21/97 5,000 4,941,407
Merrill Lynch & Co., Inc. (A-1+, P-1)
5.34% 01/03/97 9,000 8,997,330
5.33% 01/24/97 1,500 1,494,892
5.34% 02/11/97 12,000 11,927,020
5.45% 02/18/97 11,000 10,920,067
5.32% 03/03/97 24,500 24,279,146
5.33% 03/10/97 1,500 1,484,898
--------------
102,317,917
--------------
</TABLE>
See accompanying notes to financial statements.
B-30
<PAGE> 50
THE BRADFORD FUNDS, INC.
THE BRADFORD MONEY FUND
Statement of Net Assets -- (Continued)
December 31, 1996
<TABLE>
<CAPTION>
PERCENTAGE PAR
OF PORTFOLIO MATURITY (000) VALUE
------------ -------- -------- --------------
<S> <C> <C> <C> <C>
Food............................................. 2.9%
CPC International, Inc. (A-1, P-1)
5.35% 02/19/97 $10,000 $ 9,927,181
5.43% 02/19/97 2,000 1,985,218
5.29% 03/14/97 17,000 16,820,140
5.30% 04/03/97 7,200 7,102,480
--------------
35,835,019
--------------
Household Items.................................. 1.5%
Procter & Gamble Co. (A-1+, P-1)
5.27% 01/10/97 7,000 6,990,777
5.28% 01/23/97 6,000 5,980,640
5.25% 02/03/97 5,550 5,523,291
--------------
18,494,708
--------------
Industrial....................................... 3.9%
RR Donnelley & Sons (A-1, P-1)
5.31% 01/06/97 15,000 14,988,938
5.32% 01/13/97 10,000 9,982,267
5.28% 02/18/97 6,050 6,007,408
Schering-Plough Corp. (A-1+, P-1)
5.25% 03/11/97 4,700 4,652,706
5.27% 03/11/97 3,000 2,969,698
5.25% 06/17/97 10,366 10,113,545
--------------
48,714,562
--------------
Pharmaceutical................................... 2.1%
Eli Lilly & Co. (A-1+, P-1)
5.28% 01/28/97 22,000 21,912,880
Warner Lambert Co. (A-1+, P-1)
5.28% 01/15/97 4,500 4,490,760
--------------
26,403,640
--------------
Publishing....................................... 1.8%
McGraw-Hill, Inc. (A-1, P-1)
5.30% 01/14/97 11,335 11,313,306
5.30% 03/04/97 5,842 5,788,676
5.30% 03/21/97 5,400 5,337,195
--------------
22,439,177
--------------
</TABLE>
See accompanying notes to financial statements.
B-31
<PAGE> 51
THE BRADFORD FUNDS, INC.
THE BRADFORD MONEY FUND
Statement of Net Assets -- (Continued)
December 31, 1996
<TABLE>
<CAPTION>
PERCENTAGE PAR
OF PORTFOLIO MATURITY (000) VALUE
------------ -------- -------- --------------
<S> <C> <C> <C> <C>
Technology....................................... 5.0%
Lucent Technologies (A-1, P-1)
5.26% 02/13/97 $12,000 $ 11,924,607
5.29% 02/21/97 2,000 1,985,012
5.25% 03/11/97 13,500 13,364,156
5.28% 03/26/97 7,000 6,913,760
5.28% 04/25/97 8,000 7,866,240
5.28% 04/28/97 10,000 9,828,400
5.28% 04/29/97 10,000 9,826,933
--------------
61,709,108
--------------
Telecommunications............................... 3.5%
Ameritech Corp. (A-1+, P-1)
5.29% 01/21/97 21,000 20,938,283
5.29% 03/18/97 22,000 21,754,541
--------------
42,692,824
--------------
Utilities-Electric............................... 1.1%
Southern California Edison Co. (A-1, P-1)
5.34% 04/04/97 13,500 13,313,768
--------------
Utilities-Telephone.............................. 7.0%
Bell South Telecommunications (A-1+, P-1)
5.28% 01/22/97 15,000 14,953,800
5.26% 02/12/97 9,000 8,944,770
5.28% 02/12/97 14,500 14,410,680
5.27% 02/27/97 13,000 12,891,526
5.32% 03/13/97 10,000 9,895,078
U.S. West Communications Group (A-1, P-1)
5.30% 01/09/97 10,000 9,988,222
5.30% 01/10/97 14,600 14,580,655
--------------
85,664,731
--------------
TOTAL COMMERCIAL PAPER....... 912,958,434
--------------
U.S. TREASURY OBLIGATIONS........................ 1.4%
U.S. Treasury Notes
6.50% 04/30/97 11,000 11,031,672
6.50% 05/15/97 6,500 6,519,684
--------------
TOTAL U.S. TREASURY OBLIGATIONS 17,551,356
--------------
</TABLE>
See accompanying notes to financial statements.
B-32
<PAGE> 52
THE BRADFORD FUNDS, INC.
THE BRADFORD MONEY FUND
Statement of Net Assets -- (Concluded)
December 31, 1996
<TABLE>
<CAPTION>
PERCENTAGE PAR
OF PORTFOLIO MATURITY (000) VALUE
------------ -------- -------- --------------
<S> <C> <C> <C> <C>
VARIABLE RATE OBLIGATIONS........................ 3.9%
Federal Home Loan Bank Notes
5.78% 01/02/97 $10,000 $ 10,000,000
5.75% 03/31/97 3,500 3,498,436
Federal National Mortgage Association Notes
5.18% 03/14/97 5,000 5,000,000
Student Loan Marketing Association Notes
5.41% 01/07/97 5,000 4,999,124
5.44% 01/07/97 2,225 2,221,183
5.57% 01/07/97 4,000 3,999,007
Bear Stearns (A-1, P-1)
5.66% 01/15/97 10,000 10,000,000
5.72% 01/31/97 8,000 8,000,000
--------------
TOTAL VARIABLE RATE OBLIGATIONS 47,717,750
--------------
TOTAL INVESTMENTS................................ 99.6% 1,228,867,203
(Amortized Cost $1,228,867,203)*
OTHER ASSETS IN EXCESS OF LIABILITIES............ 0.4% 5,454,212
---------- --------------
NET ASSETS....................................... 100.0% $1,234,321,415
========== ==============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SHARE
(1,234,321,415 / 1,234,335,754) $1.00
==============
</TABLE>
- ---------------
* Also cost for Federal Income Tax purposes.
See accompanying notes to financial statements.
B-33
<PAGE> 53
THE BRADFORD FUNDS, INC.
THE BRADFORD MONEY FUND
Statement of Operations
For the Year Ended December 31, 1996
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest............................................... $63,355,525
-----------
EXPENSES
Advisory fees.......................................... 4,309,221
Administration fees.................................... 521,057
Distribution fees...................................... 2,318,922
Directors' fees........................................ 56,000
Custodian fees......................................... 134,528
Transfer agent fees.................................... 1,250,560
Legal fees............................................. 40,000
Audit fees............................................. 20,500
SEC registration fees.................................. 59,187
Blue sky registration fees............................. 65,000
Insurance expense...................................... 23,867
Printing and Postage fees.............................. 190,116
Miscellaneous fees..................................... 25,000
-----------
TOTAL EXPENSES.................................... 9,013,958
Waiver of Advisory and Distribution Fees............... (81,104)
-----------
NET EXPENSES...................................... 8,932,854
-----------
NET INVESTMENT INCOME....................................... 54,422,671
NET REALIZED LOSS ON INVESTMENTS............................ (139)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $54,422,532
===========
</TABLE>
See accompanying notes to financial statements.
B-34
<PAGE> 54
THE BRADFORD FUNDS, INC.
THE BRADFORD MONEY FUND
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- -----------------
<S> <C> <C>
Increase in Net Assets:
Operations:
Net investment income.................................. $ 54,422,671 $ 45,828,662
Net realized loss on investments....................... (139) (864)
--------------- ---------------
Net increase in net assets resulting from operations... 54,422,532 45,827,798
--------------- ---------------
Dividends to shareholders from:
Net investment income ($.0468 and $.0515 per share,
respectively)........................................ (54,422,671) (45,828,662)
--------------- ---------------
Total dividends to shareholders........................... (54,422,671) (45,828,662)
--------------- ---------------
Capital Stock Transactions:
Proceeds from sale of capital shares................... 5,268,446,578 4,174,590,024
Value of shares issued in reinvestment of dividends.... 51,941,658 43,866,080
Cost of shares repurchased............................. (5,095,436,397) (3,886,262,837)
--------------- ---------------
Increase in net assets derived from capital stock
transactions......................................... 224,951,839 332,193,267
--------------- ---------------
Total increase in assets.................................. 224,951,700 332,192,403
--------------- ---------------
Net Assets:
Beginning of year......................................... 1,009,369,715 677,177,312
--------------- ---------------
End of year............................................... $ 1,234,321,415 $ 1,009,369,715
=============== ===============
</TABLE>
See accompanying notes to financial statements.
B-35
<PAGE> 55
THE BRADFORD FUNDS, INC.
THE BRADFORD MONEY FUND
Financial Highlights
(for a share outstanding through each period)
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income........................ .0468 .0515 .0343 .0247 .0308
Net Realized Gain on Investments............. -- -- -- -- .0001
---------- ---------- -------- -------- --------
Total From Investment Operations....... .0468 .0515 .0343 .0247 .0309
---------- ---------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividend to Shareholders from Net Investment
Income..................................... (.0468) (.0515) (.0343) (.0247) (.0308)
Dividend to Shareholders from Net Realized
Gains...................................... -- -- -- -- (.0001)
---------- ---------- -------- -------- --------
Total Distributions.................... (.0468) (.0515) (.0343) (.0247) (.0309)
---------- ---------- -------- -------- --------
Net Asset Value, End of Year................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ======== ======== ========
TOTAL RETURN................................... 4.78% 5.28% 3.48% 2.50% 3.13%
RATIO/SUPPLEMENT DATA:
Net Assets, End of Year (in thousands)....... $1,234,321 $1,009,370 $677,177 $719,337 $652,622
Ratio of Expenses to Average Daily Net
Assets................................... .77%(a) .80%(a) .80%(a) 81%(a) .85%
Ratio of Net Investment Income to Average
Daily Net Assets......................... 4.68%(a) 5.15%(a) 3.39%(a) 2.47%(a) 3.08%
</TABLE>
- ---------------
(a) During the period a portion of the Advisory and Distribution fees were
voluntarily reduced. If such voluntary fee reductions had not occurred, the
Ratio of Expenses to Average Daily Net Assets would have been .78%, .81%,
.83% and .84%, respectively, and the Ratio of Net Investment Income to
Average Daily Net Assets would have been 4.67%, 5.14%, 3.36% and 2.44%,
respectively.
See accompanying notes to financial statements.
B-36
<PAGE> 56
THE BRADFORD FUNDS, INC.
THE BRADFORD MONEY FUND
Notes to Financial Statements
December 31, 1996
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Bradford Funds, Inc, (the "Company"), an open-end, diversified
management investment company, was incorporated in Maryland on October 26, 1988.
The Company is authorized to issue 1.5 billion shares of multiple portfolios.
The Company is currently offering shares of one portfolio, The Bradford Money
Fund (the "Fund"). The only transaction occurring in the Fund between the date
of incorporation and the commencement of operations was the sale and issuance of
100,000 shares of capital stock for $100,000 to Bradford Capital Management,
Ltd. ("Bradford Capital Management"), the Fund's investment adviser, on January
10, 1989. The investment objective of the Fund is to provide as high a level of
current interest income as is consistent with maintaining liquidity and
stability of principal. It seeks to achieve this objective by investing in high
quality, U.S. dollar-denominated instruments, such as short-term U.S. Government
securities, bank certificates of deposit, commercial paper and repurchase
agreements. The ability of issuers of debt securities held by the Fund to meet
their obligations may be affected by economic developments in a specific
industry or region.
A) SECURITY VALUATION -- Portfolio securities are valued under the
amortized cost method, which approximates current market value. Under this
method, securities are valued at cost when purchased and thereafter a constant
proportionate amortization of any discount or premium is recorded until maturity
of the security. The Fund seeks to maintain net asset value per share at $1.00.
B) SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are
accounted for on the trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and
income tax purposes. Interest income is recorded on the accrual basis.
C) DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment income
are declared daily and paid monthly. Net realized capital gains, if any, will be
distributed at least annually.
D) FEDERAL INCOME TAXES -- The Fund intends to qualify for and elect the
tax treatment applicable to regulated investment companies under the Internal
Revenue Code and make the requisite distributions to its shareholders which will
be sufficient to relieve it from Federal income and Federal excise taxes.
Therefore, no provision has been recorded for Federal income or Federal excise
taxes.
E) REPURCHASE AGREEMENTS -- Money market instruments may be purchased from
financial institutions, such as banks and non-bank dealers, subject to the
seller's agreement to repurchase them at an agreed upon date and price.
Collateral for repurchase agreements may have longer maturities than the maximum
permissible remaining maturity of portfolio investments. The seller will be
required on a daily basis to maintain the value of the securities subject to the
agreement at not less than the repurchase price. If the seller defaults and the
value of the collateral declines or if bankruptcy proceedings are commenced with
respect to the seller of the security, realization of the collateral by the Fund
may be delayed or limited. The agreements are conditioned upon the collateral
being deposited under the Federal Reserve book-entry system or with the Fund's
custodian or a third party sub-custodian.
B-37
<PAGE> 57
THE BRADFORD FUNDS, INC.
THE BRADFORD MONEY FUND
Notes to Financial Statements -- (Continued)
December 31, 1996
NOTE 2 -- INVESTMENT ADVISORY, ADMINISTRATION, DISTRIBUTION AND TRANSFER AGENCY
AGREEMENTS
The Fund has entered into an investment advisory agreement with Bradford
Capital Management. J.C.B. Financial Services, Inc. acts as the general partner
to the adviser and J.C. Bradford & Co. L.L.C., a Tennessee limited liability
company ("Bradford"), is the adviser's limited partner. The general partner is a
wholly owned subsidiary of Bradford & Co., Incorporated. The Fund has also
entered into an Administration and Accounting Services Agreement with PFPC Inc.
("PFPC"), and distribution and transfer agency agreements with Bradford.
For the advisory services provided and expenses assumed by it, Bradford
Capital Management is entitled to receive from the Fund a fee, computed daily
and payable monthly, at an annual rate of .40% of the first $500 million of the
Fund's daily net assets and .35% of the daily net assets of the Fund in excess
of $500 million. Bradford Capital Management may, in its discretion from time to
time, waive voluntarily all or any portion of its advisory fee or reimburse the
Fund for a portion of the expenses of its operations. Bradford Capital
Management has agreed to waive indefinitely a portion of its advisory fee such
that it is receiving .30% of the Fund's average daily net assets in excess of $1
billion. For the year ended December 31, 1996, such waivers amounted to $79,731.
Advisory fees, before such waiver amounted to $4,309,221 for the year ended
December 31, 1996.
As required by various state regulations, Bradford Capital Management will
reimburse the Fund if and to the extent that the aggregate operating expenses of
the Fund exceed applicable state limits for the first fiscal year. Currently,
the most restrictive of such applicable limits known to the Fund is 2.5% of the
first $30 million of average annual net assets, 2% of the next $70 million of
average annual net assets, and 1.5% of the remaining average annual net assets.
Certain expenses such as brokerage commissions, taxes, interest, and
extraordinary items are excluded from this limitation. No such reimbursements
were required for the year ended December 31, 1996.
For the administration services provided, PFPC is entitled to receive from
the Fund a fee, computed daily and payable monthly, at an annual rate of .10% of
the first $200 million of daily net assets; .075% of the next $200 million of
daily net assets; .05% of the next $200 million of daily net assets; .025% of
the next $100 million of daily net assets; and .01% of the daily net assets in
excess of $700 million. Such fees amounted to $521,057 for the year ended
December 31, 1996.
The Fund has adopted a Plan of Distribution and pursuant thereto has
entered into an agreement under which the distributor, Bradford, is entitled to
receive from the Fund reimbursement of its distribution costs at an annual rate
of up to .20% of daily net assets. Bradford may, in its discretion from time to
time, waive voluntarily all or any portion of its distribution fees. For the
year ended December 31, 1996, Bradford agreed voluntarily to reduce the amount
of its Rule 12b-1 fees to the extent necessary to cause the Fund's total
expenses not to exceed .80% of average net assets. Waivers during the year
amounted to $1,373. Distribution fees, before such waiver amounted to $2,318,922
for the year ended December 31, 1996.
For the transfer agency services provided, Bradford is entitled to receive
a fee, computed and paid monthly, at an annual rate of $11.50 per active
account.
B-38
<PAGE> 58
THE BRADFORD FUNDS, INC.
THE BRADFORD MONEY FUND
Notes to Financial Statements -- (Concluded)
December 31, 1996
NOTE 3 -- CAPITAL STOCK
Transactions in capital stock of the Fund were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
------------------ ------------------
<S> <C> <C>
Shares sold................................................. 5,268,446,578 4,174,590,024
Shares issued in connection with reinvestment of dividends
from net investment income................................ 51,941,658 43,866,080
Shares redeemed............................................. (5,095,436,397) (3,886,262,837)
--------------- ---------------
Net increase................................................ 224,951,839 332,193,267
=============== ===============
</TABLE>
NOTE 4 -- NET ASSETS
Net assets consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, 1996 DECEMBER 31, 1995
------------------ ------------------
<S> <C> <C>
Capital stock, at par....................................... $ 1,234,336 $ 1,009,384
Paid-in capital in excess of par............................ 1,233,101,418 1,008,374,531
Net accumulated realized capital loss....................... (14,339) (14,200)
--------------- ---------------
$ 1,234,321,415 $ 1,009,369,715
=============== ===============
</TABLE>
B-39
<PAGE> 59
INDEPENDENT AUDITORS' REPORT
Shareholders and Board of Directors
The Bradford Funds, Inc.
The Bradford Money Fund
We have audited the accompanying statement of net assets of The Bradford
Funds, Inc., The Bradford Money Fund as of December 31, 1996 and the related
statements of operations for the year then ended and of changes in net assets
for each of the two years in the period ended and the financial highlights for
each of the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
December 31, 1996 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of The Bradford Funds,
Inc., The Bradford Money Fund as of December 31, 1996, the results of its
operations, changes in its net assets and the financial highlights for the
respective stated years in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Nashville, Tennessee
January 17, 1997
B-40
<PAGE> 60
APPENDIX
COMMERCIAL PAPER RATINGS
Standard & Poor's Corporation. Commercial paper ratings are
graded into four categories, ranging from "A" for the highest quality
obligations to "D" for the lowest. Issues assigned the A rating are regarded
as having the greatest capacity for timely payment. Issues in this category
are further refined with designation 1, 2, and 3 to indicate the relative
degree of safety. The "A-1" designation indicates that the degree of safety
regarding timely payment is very strong. Those issues determined to possess
overwhelming safety characteristics will be denoted with a plus sign
designation.
Moody's Investors Service, Inc. Moody's commercial paper
ratings are opinions of the ability of the issuers to repay punctually
promissory obligations not having an original maturity in excess of nine
months. Moody's makes no representation that such obligations are exempt from
registration under the Securities Act of 1933, nor does it represent that any
specific note is a valid obligation of a rated issuer or issued in conformity
with any applicable law. Moody's employs the following three designations, all
judged to be investment grade, to indicate the relative repayment capacity of
rated issuers:
Prime-1 Superior capacity for repayment of short-term promissory
obligations.
Prime-2 Strong capacity for repayment of short-term promissory
obligations.
Prime-3 Acceptable capacity for repayment of short-term promissory
obligations.
Duff and Phelps, Inc. Duff & Phelps' commercial paper ratings
are consistent with the short-term rating criteria utilized by money market
participants. The ratings apply to obligations with maturities (when issued)
of under one year.
Duff & Phelps refines the traditional "1" category. As a
consequence, Duff & Phelps has incorporated gradations of "1+" (one plus) and
"1-" (one minus), to, respectively, indicate the "highest" certainty of timely
payment or simply "high" certainty of timely payment. The Duff 2 category has
not been similarly refined but could be at some later date.
Duff 1 Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors
are minor.
A-1
<PAGE> 61
Duff 2 Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing internal funds needs may
enlarge total financing requirements, access to capital markets is
good. Risk factors are small.
Duff 3 Satisfactory liquidity and other protection factors qualify issue as
investment grade. Risk factors are larger and subject to more
variation. Nevertheless, timely payment is expected.
All Duff & Phelps' short-term ratings (Duff 1, Duff 2 and Duff 3) are
considered investment grade. No ratings are issued for companies whose
commercial paper is not deemed to be of investment grade.
Fitch Investor Service, Inc. Fitch Investor Service, Inc. shortterm ratings,
as described by the company, are:
Fitch-1: (Highest Grade) Commercial paper assigned this rating is regarded as
having the strongest degree of assurance for timely payment.
Fitch-2: (Very Good Grade) Issues assigned this rating reflect an assurance
of timely payment only slightly less in degree than the strongest
issues.
Fitch-3: (Good Grade) Commercial paper carrying this rating has a satisfactory
degree of assurance for timely payment but the margin of safety is
not as great as the two higher categories.
NOTE: Plus (+). This sign is used after a rating symbol in the first three
rating categories to designate the relative position of an issuer
within the rating category.
IBCA Limited and IBCA, Inc. (with respect to debt issued by banks, bank
holding companies, United Kingdom building societies, broker-dealers and
broker-dealers' parent companies, and banksupported debt). IBCA Short Term
Ratings are as follows:
A1+ Obligations supported by the highest capacity for timely repayment.
A1 Obligations supported by a very strong capacity for timely repayment.
A2 Obligations supported by a strong capacity for timely repayment,
although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.
A-2
<PAGE> 62
B1 Obligations supported by an adequate capacity for timely repayment.
Such capacity is more susceptible to adverse changes in business,
economic, or financial conditions than for obligations in higher
categories.
B2 Obligations for which the capacity for timely repayment is susceptible
to adverse changes in business, economic or financial conditions.
C1 Obligations for which there is an adequate capacity to ensure timely
repayment.
D1 Obligations which have a high risk of default or which are currently
in default.
IBCA considers A1+ a gradation of A1.
A-3
<PAGE> 63
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Included in the Prospectus:
Financial Highlights for the period February 8, 1989 through
December 31, 1989 and for the years ended December 31, 1990,
1991, 1992, 1993, 1994, 1995 and 1996.
Included in Part B:
Statement of Net Assets as of December 31, 1996.
Statement of Operations for the year ended December 31, 1996.
Statement of Changes in Net Assets for the years ended
December 31, 1996 and 1995.
Financial Highlights for the years ended December 31, 1996,
1995, 1994, 1993 and 1992.
Notes to Financial Statements, December 31, 1996.
Independent Auditors' Report dated January 17, 1997.
All required financial statements are included in Part B. All other
financial statements and schedules are inapplicable.
(b) Exhibits
(1) Articles of Incorporation of the Registrant are
incorporated by reference to Exhibit (1) of
Post-Effective Amendment No. 9 to Registrant's
Registration Statement on Form N-1A (No. 33-25137)
filed on April 24, 1996.
(1.1) Amendment to Articles of Incorporation dated February
9, 1989, is incorporated by reference to Exhibit
(1.1) of Post-Effective Amendment No. 9 to
Registrant's Registration Statement on Form N-1A (No.
33-25137) filed on April 24, 1996.
(1.2) Articles Supplementary to Articles of Incorporation
approved July 19, 1989, are incorporated by reference
to Exhibit (1.2) of Post-Effective
C-1
<PAGE> 64
Amendment No. 9 to Registrant's Registration
Statement on Form N-1A (No. 33-25137) filed on April
24, 1996.
(1.3) Articles Supplementary to Articles of Incorporation
approved April 25, 1991, are incorporated by
reference to Exhibit (1.3) of Post-Effective
Amendment No. 9 to Registrant's Registration
Statement on Form N-1A (No. 33-25137) filed on April
24, 1996.
(1.4) Articles Supplementary to Articles of Incorporation
approved August 3, 1995, are incorporated by
reference to Exhibit (1.4) of Post-Effective
Amendment No. 9 to Registrant's Registration
Statement on Form N-1A (No. 33-25137) filed on April
24, 1996.
(1.5) Articles Supplementary to Articles of Incorporation
approved February 14, 1997.
(2) Bylaws of the Registrant are incorporated by
reference to Exhibit (2) of Post-Effective Amendment
No. 9 to Registrant's Registration Statement on Form
N-1A (No. 33-25137) filed on April 24, 1996.
(2.1) Amendment dated December 14, 1988 to Article III,
Section 6 of the Bylaws is incorporated by reference
to Exhibit (2.1) of Post-Effective Amendment No. 9 to
Registrant's Registration Statement on Form N-1A (No.
33-25137) filed on April 24, 1996.
(2.2) Amendment dated January 31, 1989, to Article II,
Section 2 of the Bylaws is incorporated by reference
to Exhibit (2.2) of Post-Effective Amendment No. 9 to
Registrant's Registration Statement on Form N-1A (No.
33-25137) filed on April 24, 1996.
(2.3) Amendment dated July 19, 1989, to Article I, Section
2 of the Bylaws is incorporated by reference to
Exhibit (2.3) of Post-Effective Amendment No. 9 to
Registrant's Registration Statement on Form N-1A (No.
33-25137) filed on April 24, 1996.
(3) Not Applicable
(4) Not Applicable
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<PAGE> 65
(5) Form of Investment Advisory Agreement between the
Registrant on behalf of the Fund and the Adviser is
incorporated by reference to Exhibit (5) of
Post-Effective Amendment No. 9 to Registrant's
Registration Statement on Form N-1A (No. 33-25137)
filed on April 24, 1996.
(6) Form of Distribution Agreement between the Registrant
on behalf of the Fund and Bradford is incorporated by
reference to Exhibit (6) of Post-Effective Amendment
No. 9 to Registrant's Registration Statement on Form
N-1A (No. 33-25137) filed on April 24, 1996.
(7) Not Applicable
(8) Form of Custodian Agreement between the Registrant on
behalf of the Fund and the Custodian is incorporated
by reference to Exhibit (8) of Post-Effective
Amendment No. 9 to Registrant's Registration
Statement on Form N-1A (No. 33-25137) filed on April
24, 1996.
(8.1) Form of Revised Fee Letter dated January 13, 1994,
relating to Custodian Agreement between the
Registrant on behalf of the Fund and the Custodian is
incorporated by reference to Exhibit (8.1) of
Post-Effective Amendment No. 9 to Registrant's
Registration Statement on Form N-1A (No. 33-25137)
filed on April 24, 1996.
(9)(a) Form of Transfer Agency Agreement between the
Registrant on behalf of the Fund and Bradford is
incorporated by reference to Exhibit (9)(a) of
Post-Effective Amendment No. 9 to Registrant's
Registration Statement on Form N-1A (No. 33-25137)
filed on April 24, 1996.
(a)-1 Fee Letter dated as of February 1, 1993, relating to
the Transfer Agency Agreement between the Registrant
on behalf of the Fund and Bradford is incorporated by
reference to Exhibit (9)(a)-1 of Post-Effective
Amendment No. 9 to Registrant's Registration Statement
on Form N-1A (No. 33-25137) filed on April 24, 1996.
(b) Form of Administration and Accounting Services
Agreement between the Registrant on behalf of the
Fund and PFPC is incorporated by reference to Exhibit
(9)(b) of Post-Effective Amendment No. 9 to
Registrant's Registration Statement on Form N-1A (No.
33-25137) filed on April 24, 1996.
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<PAGE> 66
(b)-1 Form of letter amendment to Administration and
Accounting Services Agreement between the Registrant
on behalf of the Fund and PFPC is incorporated by
reference to Exhibit (9)(b)-1 of Post-Effective
Amendment No. 9 to Registrant's Registration
Statement on Form N-1A (No. 33- 25137) filed on April
24, 1996.
(b)-2 Form of Revised Fee Letter dated January 13, 1994
relating to Administration and Accounting Services
Agreement between the Registrant on behalf of the
Fund and PFPC is incorporated by reference to Exhibit
(9)(b)-2 of Post-Effective Amendment No. 9 to
Registrant's Registration Statement on Form N-1A (No.
33-25137) filed on April 24, 1996.
(c) Form of Bradford Capital Management Account
Agreements and Account Summary Descriptions.
*(10) Opinion of Counsel.
(11) Consent of Deloitte & Touche LLP
(12) Not Applicable
(13) Form of Initial Capital Agreement between Bradford
Capital Management, Ltd. and the Registrant on behalf
of the Fund is incorporated by reference to Exhibit
(13) of Post-Effective Amendment No. 9 to
Registrant's Registration Statement on Form N-1A (No.
33-25137) filed on April 24, 1996.
(14)(a) IRA Adoption Agreement and Disclosure Statement
relating thereto are incorporated by reference to
Exhibit (14)(a) of Post-Effective Amendment No. 9 to
Registrant's Registration Statement on Form N-1A (No.
33-25137) filed on April 24, 1996.
(b) J.C. Bradford Prototype Qualified Retirement Plan and
Trust (Model Plan), Adoption Agreements, Summary Plan
Description and Summary Plan Description General
Information Sheets are incorporated by reference to
Exhibit (14)(b) of Post-Effective Amendment No. 9 to
Registrant's Registration Statement on Form N-1A (No.
33-25137) filed on April 24, 1996.
__________________________________
* Filed with Registrant's Notice filed pursuant to Rule 24f-2 on February 26,
1997.
C-4
<PAGE> 67
(c) J.C. Bradford & Co. Prototype Simplified Employee
Pension Plan, Adoption Agreement and Participant
Salary Deferral Agreement are incorporated by
reference to Exhibit (14)(c) of Post-Effective
Amendment No. 9 to Registrant's Registration
Statement on Form N-1A (No. 33-25137) filed on April
24, 1996.
(d) J.C. Bradford & Co. Simplified Standardized Adoption
Agreements and General Information Sheets are
incorporated by reference to Exhibit (14)(d) of
Post-Effective Amendment No. 9 to Registrant's
Registration Statement on Form N-1A (No. 33-25137)
filed on April 24, 1996.
(e) J.C. Bradford & Co. Flexible Nonstandardized Safe
Harbor 401(k) Profit Sharing Plan Adoption Agreement,
Flexible Standardized 401(k) Profit Sharing Plan
Adoption Agreement and Prototype Plan Document for
Qualified Retirement Plans (401(k) Profit Sharing).
(15) Form of Rule 12b-1 Plan of Registrant on behalf of
the Fund is incorporated by reference to Exhibit (15)
of Post-Effective Amendment No. 9 to Registrant's
Registration Statement on Form N-1A (No. 33-25137)
filed on April 24, 1996.
(16) Schedule for Computation of Performance Quotations.
(17) Financial Data Schedule.
(18) None.
(19) (a) Consent of Baker & Hostetler LLP.
(b) Powers of Attorney for Allan L. Erb, Douglas
C. Altenbern, William Carter, Richard W.
Hanselman, Michael R. Shea, Edward J. Roach,
William T. Spitz and Randall R. Harness are
incorporated by reference to Exhibit (19)(b)
of Post-Effective Amendment No. 9 to
Registrant's Registration Statement on Form
N-1A (No. 33-25137) filed on April 24, 1996.
Item 25. Persons Controlled by or Under Common Control
with Registrant
None.
C-5
<PAGE> 68
Item 26. Number of Holders of Securities
<TABLE>
<CAPTION>
(1) (2)
Number of Record Holders
Title of Class as of March 31, 1997*
-------------- ------------------------
<S> <C>
Common Stock,
par value $.001
per share 117,578
</TABLE>
Item 27. Indemnification
Article VIII of the Registrant's Articles of Incorporation provides
for indemnification of any director or officer of Registrant to the fullest
extent permitted by law, including the advance of expenses under the procedures
and to the full extent permitted by law. This provision does not authorize
indemnification of any director or officer against any liability to Registrant
or its security holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office. Registrant will advance
indemnification expenses only in accordance with the requirements imposed by
the Securities and Exchange Commission as set forth in Investment Company Act
Releases 7,221 and 11,330.
Insofar as the indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer
__________________________
* Shares are registered in the name of J.C. Bradford & Co. LLC for the
sub-accounts of these holders.
C-6
<PAGE> 69
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
Mutual fund and director and officer liability policies may be
purchased jointly by the Registrant, Bradford Capital Management, Ltd. and
Bradford to insure such persons and their respective partners, directors,
officers and employees, subject to the policies' coverage limits and exclusions
and varying deductibles, against loss resulting from claims by reason of any
act, error, omission, misstatement, misleading statement, neglect or breach of
duty.
Item 28. Business and Other Connections of Investment
Adviser
Information on the business of the Adviser is described in the section
of the Prospectus, filed as part of this Registration Statement, entitled
"MANAGEMENT."
Set forth below is a list of the general partner and all officers of
Bradford Capital Management, Ltd. and, with respect to each such person, the
name and business address of all companies (if any) with which such person has
been connected at any time since January 1, 1995, as well as the capacity in
which such person was connected:
<TABLE>
<CAPTION>
Name and
Position with Name and Principal Business Connection with
Investment Adviser Address of Other Company Other Company
------------------ --------------------------- ---------------
<S> <C> <C>
Allan L. Erb J. C. Bradford & Co. LLC Voting Member
President 330 Commerce Street
Nashville, TN 37201
Michael R. Shea J. C. Bradford & Co. LLC Voting Member
Vice President 330 Commerce Street
Nashville, TN 37201
Judy K. Abroms J. C. Bradford & Co. LLC Equity Member
Vice President 330 Commerce Street
Nashville, TN 37201
</TABLE>
C-7
<PAGE> 70
<TABLE>
<S> <C> <C>
R. Patrick Shepherd J. C. Bradford & Co. LLC Voting Member and Secretary
Vice President 330 Commerce Street
Nashville, TN 37201
JCB Financial Secretary
Services, Inc.
330 Commerce Street
Nashville, TN 37201
Randall R. Harness J. C. Bradford & Co. LLC Voting Member and Assistant
Secretary/Treasurer 330 Commerce Street Secretary
Nashville, TN 37201
JCB Financial Treasurer
Services, Inc.
330 Commerce Street
Nashville, TN 37201
J. C. Bradford & Secretary/Treasurer
Co. Inc.
330 Commerce Street
Nashville, TN 37201
Robert P. DeBastiani J. C. Bradford & Co. LLC Equity Member
Vice President 330 Commerce Street
Nashville, TN 37201
JCB Financial Bradford & Co., Subsidiary
Services, Inc. Incorporated
General Partner 330 Commerce Street
Nashville, TN 37201
</TABLE>
Item 29. Principal Underwriters
(a) J. C. Bradford & Co. LLC does not act as principal
underwriter, distributor or investment adviser of any investment company other
than the Registrant.
(b) The name, positions and offices with J. C. Bradford & Co. LLC,
and positions and offices with the Registrant, of each voting member and
officer of J. C. Bradford & Co. LLC, 330 Commerce Street, Nashville, Tennessee
37201, are as follows:
<TABLE>
<CAPTION>
Positions and
Positions and Offices Offices with
Name with Underwriter Registrant
- -------------------- --------------------- -------------
<S> <C> <C>
J. C. Bradford, Jr. Senior Partner, Chief Manager None
Managing Partner
W. Lucas Simons, Jr. Voting Member None
C. Taxon Malott Voting Member Voting Member None
Victor A. Ptak Voting Member None
</TABLE>
c-8
<PAGE> 71
<TABLE>
<S> <C> <C>
M. Alton Ross, Jr. Voting Member None
J. Ronald Scott Voting Member None
F. Mitchell Johnson Voting Member None
Park B. Smith Chief Financial Partner and Assistant None
James M. Avent, Jr. Secretary Treasurer
R. R. Harness Voting Member Vice President and
Director
Michael R. Shea Voting Member and Vice President
Secretary
R. Patrick Sheperd Voting Member None
Voting Member None
John Felber Voting Member None
James S. Frazer, III Voting Member None
Douglas O. Kitchen Voting Member None
Louis B. Todd, Jr. Voting Member None
Marc Garrett Voting Member None
Eric L. Broder Voting Member None
Frank F. Venable, Jr. Voting Member None
Barry B. Polston Voting Member None
Allan L. Erb President and
Director
Jeffrey E. Powell Voting Member None
</TABLE>
Item 30. Location of Accounts and Records
The Articles of Incorporation, By-Laws and minute books of the
Registrant are in the physical possession of Baker & Hostetler LLP, 65 East
State Street, Suite 2100, Columbus, Ohio 43215. All other accounts, books and
other documents required to be maintained under Section 31(a) of the Investment
Company Act of 1940 and the rules and regulations promulgated thereunder are in
the physical possession of Bradford Capital Management, Ltd., 330 Commerce
Street, Nashville, Tennessee 37201 (records relating to investment advisory
functions), J. C. Bradford & Co. LLC, 330 Commerce Street, Nashville, Tennessee
37201 (records relating to transfer agency and dividend disbursing functions),
or PFPC, Inc., 400 Bellevue Parkway, Wilmington, Delaware 19809 (all other
records).
Item 31. Management Services
Not applicable.
Item 32. Undertakings
Not applicable.
C-9
<PAGE> 72
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Nashville and State of Tennessee on the 28th day of April, 1997.
THE BRADFORD FUNDS, INC.
THE BRADFORD MONEY FUND
By /s/ Allan L. Erb
--------------------------
Allan L. Erb
President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment has been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ Allan L. Erb Principal Executive April 28, 1997
- ------------------------ Officer and Director
Allan L. Erb
/s/ Randall R. Harness Principal Financial April 28, 1997
- ------------------------ and Accounting Officer
Randall R. Harness
/s/*Douglas C. Altenbern Director April 28, 1997
- ------------------------
Douglas C. Altenbern
/s/*William Carter Director April 28, 1997
- ------------------------
William Carter
/s/*Richard W. Hanselman Director April 28, 1997
- ------------------------
Richard W. Hanselman
/s/ *Edward J. Roach Director April 28, 1997
- ------------------------
Edward J. Roach
/s/ Michael R. Shea Director April 28, 1997
- ------------------------
Michael R. Shea
/s/*William T. Spitz Director April 28, 1997
- ------------------------
William T. Spitz
*By /s/ Allan L. Erb April 28, 1997
- ------------------------
Allan L. Erb
Attorney-in-Fact
</TABLE>
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<PAGE> 73
EXHIBIT INDEX
Exhibit Description Page
- ------- ----------- ----
(1) Articles of Incorporation of the Registrant were filed as
Exhibit (1) to Post- Effective Amendment No. 9 to Registrant's
Registration Statement on Form N-1A (No. 33-25137) on April
24, 1996.
(1.1) Amendment to Articles of Incorporation dated February 9, 1989,
was filed as Exhibit (1.1) to Post-Effective Amendment No. 9
to Registrant's Registration Statement on Form N-1A (No. 33-
25137) on April 24, 1996.
(1.2) Articles Supplementary to Articles of Incorporation approved
July 19, 1989, were filed as Exhibit (1.2) to Post-Effective
Amendment No. 9 to Registrant's Registration Statement on Form
N-1A (No. 33-25137) on April 24, 1996.
(1.3) Articles Supplementary to Articles of Incorporation approved
April 25, 1991, were filed as Exhibit (1.3) to Post-Effective
Amendment No. 9 to Registrant's Registration Statement on Form
N-1A (No. 33-25137) on April 24, 1996.
(1.4) Articles Supplementary to Articles of Incorporation approved
August 3, 1995, were filed as Exhibit (1.4) to Post-Effective
Amendment No. 9 to Registrant's Registration Statement on Form
N-1A (No. 33-25137) on April 24, 1996.
(1.5) Articles Supplementary to Articles of Incorporation approved
February 14, 1997.
(2) Bylaws of the Registrant were filed as Exhibit (2) to
Post-Effective Amendment No. 9 to Registrant's Registration
Statement on Form N-1A (No. 33-25137) on April 24, 1996.
(2.1) Amendment dated December 14, 1988, to Article III, Section 6
of the Bylaws was filed as Exhibit (2.1) to Post-Effective
Amendment No. 9 to Registrant's Registration Statement on Form
N-1A (No. 33-25137) on April 24, 1996.
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<PAGE> 74
(2.2) Amendment dated January 31, 1989, to Article II, Section 2 of
the Bylaws was filed as Exhibit (2.2) to Post-Effective
Amendment No. 9 to Registrant's Registration Statement on Form
N-1A (No. 33-25137) on April 24, 1996.
(2.3) Amendment dated July 19, 1989, to Article I, Section 2 of the
Bylaws was filed as Exhibit (2.3) to Post-Effective Amendment
No. 9 to Registrant's Registration Statement on Form N-1A (No.
33- 25137) on April 24, 1996.
(5) Form of Investment Advisory Agreement between the Registrant
on behalf of the Fund and the Adviser was filed as Exhibit (5)
to Post-Effective Amendment No. 9 to Registrant's Registration
Statement on Form N-1A (No. 33-25137) on April 24, 1996.
(6) Form of Distribution Agreement between the Registrant on
behalf of the Fund and Bradford was filed as Exhibit (6) to
Post-Effective Amendment No. 9 to Registrant's Registration
Statement on Form N-1A (No. 33-25137) on April 24, 1996.
(8) Form of Custodian Agreement between the Registrant on behalf
of the Fund and the Custodian was filed as Exhibit (8) to
Post-Effective Amendment No. 9 to Registrant's Registration
Statement on Form N-1A (No. 33-25137) on April 24, 1996.
(8.1) Form of Revised Fee Letter relating to Custodian Agreement
between the Fund and the Custodian was filed as Exhibit (8.1)
to Post-Effective Amendment No. 9 to Registrant's Registration
Statement on Form N-1A (No. 33-25137) on April 24, 1996.
(9)(a) Form of Transfer Agency Agreement between the Registrant on
behalf of the Fund and Bradford was filed as Exhibit (9)(a) to
Post-Effective Amendment No. 9 to Registrant's Registration
Statement on Form N-1A (No. 33-25137) on April 24, 1996.
(a)-1 Fee Letter dated as of February 22, 1993, relating to the
Transfer Agency Agreement between the Registrant on behalf of
the Fund and Bradford was filed as Exhibit (9)(a)-1 to
Post-Effective Amendment No. 9 to Registrant's
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<PAGE> 75
Registration Statement on Form N-1A (No. 33-25137) on April
24, 1996.
(b) Form of Administration and Accounting Services Agreement
between the Registrant on behalf of the Fund and PFPC was
filed as Exhibit (9)(b) to Post-Effective Amendment No. 9 to
Registrant's Registration Statement on Form N-1A (No.
33-25137) on April 24, 1996.
(b)-1 Form of letter amendment to Administration and Accounting
Services Agreement between the Registrant on behalf of the
Fund and PFPC was filed as Exhibit (9)(b)-1 to Post- Effective
Amendment No. 9 to Registrant's Registration Statement on Form
N-1A (No. 33- 25137) on April 24, 1996.
(b)-2 Form of Revised Fee Letter relating to Administration and
Accounting Services Agreement between the Registrant on behalf
of the Fund and PFPC was filed as Exhibit (9)(b)-2 to
Post-Effective Amendment No. 9 to Registrant's Registration
Statement on Form N-1A (No. 33-25137) on April 24, 1996.
(c) Form of Bradford Capital Management Account Agreements and
Account Summary Descriptions.
(11) Consent of Deloitte & Touche LLP
(13) Form of Initial Capital Agreement between Bradford Capital
Management, Ltd. and the Registrant on behalf of the Fund was
filed as Exhibit (13) to Post-Effective Amendment No. 9 to
Registrant's Registration Statement on Form N-1A (No.
33-25137) on April 24, 1996.
(14)(a) IRA Adoption Agreement and Disclosure Statement relating
thereto were filed as Exhibit (14)(a) to Post-Effective
Amendment No. 9 to Registrant's Registration Statement on Form
N-1A (No. 33- 25137) on April 24, 1996.
(b) J.C. Bradford Prototype Qualified Retirement Plan and Trust
(Model Plan), Adoption Agreements, Summary Plan Description
and Summary Plan Description and General Information Sheets
were filed as Exhibit (14)(b) to Post-Effective Amendment No.
9 to Registrant's Registration Statement on Form N-1A (No.
33-25137) on April 24, 1996.
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<PAGE> 76
(c) J.C. Bradford & Co. Prototype Simplified Employee Pension
Plan, Adoption Agreement and Participant Salary Deferral
Agreement were filed as Exhibit (14)(c) to Post-Effective
Amendment No. 9 to Registrant's Registration Statement on Form
N-1A (No. 33-25137) on April 24, 1996.
(d) J.C. Bradford & Co. Simplified Standardized Adoption
Agreements and General Information Sheets were filed as
Exhibit (14)(d) to Post-Effective Amendment No. 9 to
Registrant's Registration Statement on Form N-1A (No.
33-25137) on April 24, 1996.
(e) J.C. Bradford & Co. Flexible Nonstandardized Safe Harbor
401(k) Profit Sharing Plan Adoption Agreement, Flexible
Standardized 401(k) Profit Sharing Plan Adoption Agreement and
Prototype Plan Document for Qualified Retirement Plans (401(k)
Profit Sharing).
(15) Form of Rule 12b-1 Plan of Registrant on behalf of the Fund
was filed as Exhibit (15) to Post-Effective Amendment No. 9 to
Registrant's Registration Statement on Form N-1A (No.
33-25137) on April 24, 1996.
(16) Schedule for Computation of Performance Quotations.
(17) Financial Data Schedule.
(18) None.
(19) (a) Consent of Baker & Hostetler LLP.
(b) Power of Attorney for Allan L. Erb, Douglas C.
Altenbern, William Carter, Richard W. Hanselman,
Michael R. Shea, Edward J. Roach, William T. Spitz
and Randall R. Harness were filed as Exhibit (19)(b)
to Post-Effective Amendment No. 9 to Registrant's
Registration Statement on Form N-1A (No. 33-25137) on
April 24, 1996.
C-14
<PAGE> 77
As filed with the Securities and Exchange Commission April 29, 1997
1933 Act Registration No. 33-25137
1940 Act File No. 811-5682
EXHIBITS TO
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / x /
----
Post-Effective Amendment No. 10 / x /
----
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / x /
----
Amendment No. 12
The Bradford Funds, Inc.
The Bradford Money Fund
(Exact Name of Registrant as Specified in Charter)
400 Bellevue Parkway
Wilmington, Delaware 19809
(Address of Principal Executive Offices)
Registrant's Telephone Number:
(302) 791-9300
C-15
<PAGE> 1
EXHIBIT (1.5)
<PAGE> 2
THE BRADFORD FUNDS, INC.
ARTICLES SUPPLEMENTARY
INCREASING AUTHORIZED STOCK
AS AUTHORIZED BY SECTION 2-105(c) OF
THE MARYLAND GENERAL CORPORATION LAW
The Bradford Funds, Inc., a Maryland corporation (hereinafter, the
"Corporation"), having its principal office in Maryland at 32 South Street,
Baltimore, Maryland 21202-3422 c/o The Corporation Trust Incorporated, hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: In accordance with Section 2-105(c) of the Maryland
General Corporation Law, the Board of Directors has increased the
authorized capital stock of the Corporation to 5,000,000,000 shares of
Common Stock (par value $.001 per share).
SECOND: The Corporation is registered as an open-end
investment company under the Investment Company Act of 1940.
THIRD: (a) As of immediately before the increase the total
number of shares of stock of all classes which the Corporation has
authority to issue is 1,500,000,000 shares of Common Stock (par value
$.001 per share).
(b) As increased the total number of shares
of stock of all classes which the Corporation has authority to issue
is 5,000,000,000 shares of Common Stock (par value $.001 per share).
(c) The aggregate par value of all shares
having a par value is $1,500,000 before the increase and $5,000,000 as
increased.
IN WITNESS WHEREOF, The Bradford Funds, Inc. has caused these Articles
Supplementary to be signed in its name and on its behalf by its President and
witnessed by its Secretary on February 10, 1997.
ATTEST: THE BRADFORD FUNDS, INC.
/s/ Randall R. Harness By /s/ Allan L. Erb
- ----------------------------- --------------------------
Randall R. Harness, Secretary Allan L. Erb, President
<PAGE> 3
THE UNDERSIGNED, President of The Bradford Funds, Inc., who executed
on behalf of the Corporation the foregoing Articles Supplementary, of which
this Certificate is made a part, hereby acknowledges in the name and on behalf
of the Corporation the foregoing Articles Supplementary to be the corporate act
of the Corporation and hereby certifies that the matters and facts set forth
herein with respect to the authorization and approval thereof are true in all
material respects under the penalties of perjury.
/s/ Allan L. Erb
-------------------------------
Allan L. Erb, President
2
<PAGE> 1
EXHIBIT 9C
BRADFORD
CAPITAL
MANAGEMENT
Account Summary
Description
J.C. BRADFORD & CO.
MEMBERS NEW YORK STOCK EXCHANGE
MEMBER S.I.P.C.
<PAGE> 2
BRADFORD CAPITAL MANAGEMENT
ACCOUNT SUMMARY DESCRIPTION
The Bradford Capital Management (the "Account") is an integrated financial
services program that allows clients of J.C. Bradford & Co. ("Bradford") to
provide for the centralization of their assets. Through an Account, an investor
may be able to employ efficiently seven financial services.
- - Bradford securities margin account (the "Securities Account")
- - One of three no-load money-market portfolios:* Bradford Money Fund,
Bedford Tax-Free Money Market Portfolio, and Bedford Government Obligation
Money Market Portfolio; or J.C. Bradford & Co. Immediate Credit Interest
- - A check-writing privilege on an account maintained at Provident
National Bank ("Provident")
- - An optional Visa Gold(R) card provided by a Provident affiliate,
PNC National Bank, ("PNC") which offers access to the Account through
the national Plus ATM network
- - A consolidated quarterly statement and a year-end statement by Bradford
- - Direct Investment of salary and/or government payments
- - Direct payment of recurring eligible expenses
- -----------------
* The funds are obligated to reimburse Bradford for certain expenses incurred in
distribution and promotion of the Fund shares. See "Distribution of Shares in
the enclosed Fund Prospectus.
To participate, an investor must place cash, marginable securities or a
combination of the two having a gross market value of no less than $10,000
("Combined Asset Value"), in a Securities Account and must enter into an Account
Agreement and a Customer's Agreement with Bradford. Any cash in a Securities
that can be withdrawn or transferred to the participant on demand without giving
rise to interest charges ("Available Cash") will be invested automatically in
whichever of the funds the investor designates (the "Designated Fund") or in
the J.C. Bradford & Co. Immediate Credit Interest (the "Credit Interest"). To
cover transactions involving charges incurred in utilizing the check-writing
privilege ("Check Charges") and use of the Visa Gold card ("Visa Gold
Transactions") payment will be made from and to the extent of (1) any available
Cash in a Securities Account, including any cash in Credit Interest; (2) the
proceeds of the redemption of shares of the Funds, if any; and (3) when
necessary, the margin loads extended by Bradford up to the margin load of the
marginable securities. A Participant will be required to maintain sufficient
assets in the Account to cover payments for Check Charges and Visa Gold
Transactions due. For purposes of the Summary Description, Participant refers
to those parties in whose name the Account is established.
A Participant will pay brokerage fees for securities transactions and interest
on any margin loans incurred in the use of his Securities Account at rates
customarily charged by Bradford. In addition, a Participant will pay for
certain banking services provided by PNC in connection with the check-writing
privilege.
Bradford will charge each Account an annual administrative fee of $50. This
fee will be $80 if the Participant selects a Visa Gold card. These annual fees
will be applied toward the administrative and processing costs incurred
in connection with the services, as well as, toward other costs of establishing
and maintaining the Account.
Bradford reserves the right to change its annual administrative and other fees
at any time. Bradford has the right to reject any application to open an
Account and to terminate an Account for any reason. The conditions for
establishing an Account may be altered or waived by Bradford, either with
respect to services generally or with respect to special groups or limited
categories of individuals.
FEATURES OF THE BRADFORD CAPITAL
MANAGEMENT ACCOUNT
The financial services provided to a Participant and certain other features of
the Account are described below.
ACCOUNT SERVICES
SECURITIES ACCOUNT. Securities Accounts may be opened directly with Bradford
or, if approved by Bradford, with certain brokers that clear through Bradford.
Securities Accounts are established and maintained pursuant to rules
administered by the Securities and Exchange Commission, the Board of Governors
of the Federal Reserve System, the National Association of Securities Dealers,
Inc., The New York Stock Exchange, Inc., and other national securities exchanges
registered under the Securities Exchange Act of 1934. Participants may use
Securities Accounts to purchase and sell securities on margin or on a fully-paid
basis. All customary transactional fees incurred in the use of the Securities
Account, including brokerage fees for securities transactions and interest on
margin loans, if any, must be paid by the Participant. The interest rates
charged by Bradford for margin loans are based on the published base rate
depending upon the amount owed as more fully explained in the Customer
Agreement. Under rules of the Board of Governors of the Federal Reserve
System, the maximum loan value of marginable common stock is presently 50% of
its current market value.
THE DESIGNATED FUNDS. Each of the Designated Funds offers an investor a
different investment objective, as more fully described in the accompanying
Prospectuses. Bradford Money Fund is a no-load,
<PAGE> 3
short-term, taxable money market fund; Bedford Tax-Free Money Market Portfolio
is a no-load, short-term, tax exempt money market portfolio; and Bedford
Government Obligations Money Market Portfolio is a no-load, short-term
government money market portfolio. The purchase or redemption of shares of any
of these Designated Funds is at net asset value without any sales charge, as set
forth in the accompanying Prospectuses.
Available Cash will be automatically invested daily in shares of the
Designated Fund.
A Participant may have Available Cash invested in only one Designated Fund at
any one time. However, upon notice to Bradford, shares of that portfolio may be
redeemed and the proceeds reinvested at no charge in shares of another
Designated Fund. See "Purchase and Redemption of Shares" in the Prospectuses.
Shares of Designated Fund are redeemed automatically at net asset value as
necessary to satisfy debit balances resulting from securities transactions in
the Securities Account, Check Charges and Visa Gold Transactions or for other
Account charges. A Participant may also redeem Designated Fund shares upon oral
or written request to Bradford.
Each of the Designated Funds declares dividends daily and pays dividends
monthly. Such dividends are reinvested in additional shares. Although each of
the Designated Funds provides a Participant with a means of earning cash,
interests in the Designated Funds are not bank accounts and are not protected by
the Federal Deposit Insurance Corporation. However, shares of the Designated
Fund held in the Securities Account are subject to Securities Investor
Protection Act, which protects brokerage clients from losses up to $500,000
(including $100,000 in cash) arising from the insolvency of the brokerage firm.
As added protection against such losses, Bradford has obtained an additional
$49,500,000 of insurance coverage from Aetna Casualty & Surety Company which
generally follows the conditions and limitations of the Securities Investors
Protection Act.
INVESTMENT IN SHARES OF THE DESIGNATED FUND IS ONLY ONE OF THE SERVICES
PROVIDED AS PART OF THE ACCOUNT. INVESTORS ARE ADVISED TO READ THE PROSPECTUS
FOR THE APPROPRIATE DESIGNATED FUND IN CONJUNCTION WITH THE ACCOUNT AGREEMENT,
THE CUSTOMER'S AGREEMENT WITH BRADFORD, AND THE APPLICATION FORMS AND
AGREEMENTS PROVIDED BY PNC. IF THE INVESTOR'S OBJECTIVE IS TO INVEST ONLY IN
SHARES OF ANY OF THE DESIGNATED FUNDS, THE ACCOUNT MAY NOT BE AN APPROPRIATE
INVESTMENT.
CREDIT INTEREST. An alternative to the Designated Fund is the J.C. Bradford
Immediate Credit Interest Program, a service which enables the Available Cash to
earn interest while waiting for a reinvestment opportunity. Available Cash of
$1,000 or more starts earning interest immediately at the J.C. Bradford & Co.
Money Market Rate as described in the Immediate Credit Interest Form (JCB-017
7/94).
The Available Cash is used automatically as necessary to satisfy debit
balances resulting from securities transactions in the Securities Account, Check
Charges and Visa Gold Transactions, or for other Account charges.
CHECK-WRITING PRIVILEGE. Participants may write checks on an account
maintained at Provident. There is no minimum dollar amount as to checks
written, and no per-check charge (excessive check charge may apply). Upon
approval of an Account, a Participant will receive 200 personalized checks at no
cost. When notified, Bradford will reimburse Provident for all such checks
paid, and will debit Participant's Account accordingly. The Participant will
also be charged for certain banking services provided by Provident in connection
with the check-writing privilege, such as stop payment orders; copies of
cancelled checks; insufficient funds; or excessive number of checks written on a
monthly basis. Additional checks will be supplied upon payment of a fee.
Provident will notify Bradford each Provident business day of checks written by
Participants that were presented to Provident for payment.
STATEMENTS. All automatic purchases and redemptions of Designated Fund shares
and dividend reinvestment, as well as margin interest charges, if any,
Securities Transactions, dividends on securities held in the Securities Account
and Check Charges will be reflected on a monthly Account statement sent to
each Participant. A statement will only be received quarterly, however,
whenever the activity in the Account has been limited to a money fund dividend
or interest on Credit Interest balances. If a Participant has elected certain
optional features such as the Visa Gold card, Direct Investment, or Automatic
Debit, these also will be reflected on the Bradford Statement.
In addition, each participant will receive a year-end statement summarizing
the entire year's buys and sells as well as dividend and interest activity.
AUTOMATIC DEBIT. A Participant may arrange to have eligible recurring
payments automatically debited from the Account. These payments will be debited
through arrangements with Provident and deducted from the Account accordingly.
Eligible payments are defined as: insurance premiums, mortgages, utilities, and
automatic investment plans.
<PAGE> 4
VISA GOLD CARD (OPTIONAL). Participants may apply for and receive a Visa Gold
card for use in connection with the Account. Account Participants may authorize
the issuance of additional cards. Additional cardholders who are not Account
Participants are not authorized to buy or sell securities or to use the
check-writing privilege associated with the Account. The fee for the Account
with the optional Visa Gold card includes the issuance of up to three cards.
There is a charge for the issuance of each additional card.
A Participant and any additional cardholder may use the credit card to charge
goods and services wherever the Visa Gold card is accepted. A Participant may
also obtain cash advances at participating financial institutions or any Plus
System automatic teller location. The amount of purchase and cash advances may
not exceed the available credit on the Visa Gold card.
Each Participant agrees to accept financial responsibility for all Visa Gold
charges and cash advance transactions effected by any cardholder, including
additional cardholders, in accordance with the Credit Card Agreement.
Each month, PNC will prepare a statement listing all Visa Gold transactions
and/or other activity processed since the previous statement. The statement
will set forth the date on which PNC will request payment from Bradford. The
Participant's Account will then be debited for the amount appearing on the Visa
Gold statement as decreased by any adjustments or payment since the statement
was prepared. A Participant should notify PNC of any disputed charges as soon
as possible receiving the Visa Gold statement. If notification is received no
fewer than three business days prior to the date on which the Account is to be
debited, appropriate adjustments to the debit amount will be made.
Whenever a cardholder effects a Visa Gold cash advance, PNC will notify
Bradford and the Account will be debited immediately for that amount.
Bradford will debit a Participant's Account only up to an amount equal to the
Combined Asset Value. Should the Combined Asset value of the Account not be
sufficient to cover Visa Gold Transactions, a Participant will receive timely
notice and will be required to transfer assets to the Account from which these
obligations can be satisfied. Failure to make prompt payment may result in such
action by PNC as may be permitted under the Credit Card Agreement, including the
termination of the Visa Gold card or the imposition of delinquency charge.
Termination of the Visa Gold card will not necessarily result in Bradford's
termination of the Account.
If any Visa Gold card is lost or stolen, a Participant should report the loss
immediately by PNC by calling 1-800-635-1629. This number is available 24 hours
a day, seven days a week.
DIRECT INVESTMENT. A Participant may arrange to have recurring payments
received from payments received from either the Federal government or private
employers credited directly to the Account. These payments are credited through
arrangements with Provident and applied to the Account accordingly.
OTHER INFORMATION
Bradford reserves the right to terminate any Participant's Account for any
reason. Although a Participant's Account will not be terminated solely because
its value falls below $10,000, Bradford may terminate the Account if its average
value is less than $3,000 for each of two consecutive months. Bradford will
terminate an Account, however, only after giving the Participant 30 days'
notice to permit the Participant to restore the Account value to $3,000. New
York Stock Exchange rules require that a minimum of $2,000 of equity be
maintained in the Securities Account. Individuals will be prohibited from
maintaining both an Account and a non-Account margin account. Upon termination
of a Participant's Account, Bradford will redeem automatically the Participant's
Designated Fund shares and after payment of all charges to Bradford, make the
proceeds available to the Participant.
Bradford, in its discretion, may waive or modify certain of the conditions for
participating in the program. Bradford has waived the $10,000 minimum for any
employee of Bradford or its subsidiaries, who may open an Account by placing in
a Securities Account cash, marginable securities or a combination of the two
having a gross market value of no less than $2,000. New York Stock Exchange
Rules require that the average value of a Securities Account maintained by such
an employee not be less than $2,000.
Participants (except Participants in Alaska, Hawaii or Puerto Rico) who have
questions about their Securities Accounts or their Designated Fund shares should
call (800) 251-1060, and those in Alaska, Hawaii or Puerto Rico should call
(615) 748-9000. Participants with questions concerning Visa Card Transactions
or Check Charges should call the toll-free number appearing on their Provident
statements. Bradford Brokers will not have information available to them to
answer questions concerning the Visa Card or Visa Card Transactions.
Investors should be aware that the check-writing feature of an Account is
intended to afford Participants easy access to the assets in their Account and
that an Account is not a bank account. From time to time, certain state
administrative agencies have questioned whether the operation of arrangements
<PAGE> 5
similar to the Account constitutes banking under the laws of their states. In
addition, legislation has been proposed in certain states that, if enacted,
could require a modification of the Account in those states. Bradford and the
Designated Funds are not banks and they believe that the operation of he
Account does not constitute banking under the laws of any state. Final adverse
rulings in any state that the Account constitutes unauthorized banking or the
adoption of legislation by any state affecting the Account could force Bradford
to terminate accounts of Participants who are residents of any such state.
* * *
No dealer, salesman, or other person has been authorized to give any
information or to make any representations, other than those contained in the
Summary Description or accompanying Prospectuses or the Statements of Additional
Information, in connection with the offers contained therein, and if given or
made, such other information or representations must not be relied upon as
having been authorized by the Funds, their Investment Adviser, or their
Distributor. These Prospectuses do not constitute an offer in any state in
which such offer may not lawfully be made.
* * *
THIS SUMMARY DESCRIPTION MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS OF THE
BRADFORD MONEY FUND, THE BEDFORD TAX-FREE MONEY MARKET PORTFOLIO, OR THE
BEDFORD GOVERNMENT OBLIGATION MONEY MARKET PORTFOLIO.
<PAGE> 6
BRADFORD CAPITAL MANAGEMENT PROGRAM
<TABLE>
<S> <C>
Enter information as it should
appear on checks Account Number |_|_|_|_|_|_|_|_|_|_|
Name & Address
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
Additional Check Information |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
</TABLE>
<TABLE>
<CAPTION>
CIRCLE ONE ADDRESS ON CHECKS TYPE OF BCM
<S> <C> <C>
1 Bradford Money Fund [ ] YES [ ] RETAIL 50.00
2 RBB/Bradford Tax Exempt [ ] NO [ ] SMART 150.00
3 RBB/Bradford Govt Obliation [ ] PENSION/PROFIT SHARING 100.00
4 Credit Interest [ ] IRA 50.00
Choose one TYPE OF CHECKS
[ ] Regular Pricing [ ] WALLET
[ ] (see Type of BCM) (no charge for first order.
Other__________________ $15 for reorder of 200 checks)
[ ] BUSINESS
(prices may vary)
- --------------------------------------------------------------------------------------------------------------------------------
PLEASE BE SURE TO SIGN BOTH AGREEMENT AREAS AS WELL AS THE SIGNATURE CARD BELOW. THANK YOU.
- --------------------------------------------------------------------------------------------------------------------------------
YOU THEREBY CONSENT AND AGREE TO THE TERMS AND CONDITIONS OF THE ATTACHED BRADFORD CAPITAL MANAGEMENT AGREEMENT.
BRADFORD FOR USE BY INDIVIDUAL OR JOINT ACCOUNT
CAPITAL X X
--------------------------------- -------------------------------------
MANAGEMENT Customer's Signature Joint Party's Signature
AGREEMENT | | | | | | | | | | |
--------------------------------- -------------------------------------
SIGNATURES (Date) (Date)
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
YOU THEREBY CONSENT AND AGREE TO THE TERMS AND CONDITIONS OF THE ATTACHED SECURITIES ACCOUNT MARGIN AGREEMENT.
SECURITIES FOR USE BY INDIVIDUAL OR JOINT ACCOUNT.
ACCOUNT X X
--------------------------------- -------------------------------------
MARGIN Customer's Signature Joint Party's Signature
AGREEMENT | | | | | | | | | | |
--------------------------------- -------------------------------------
SIGNATURES (Date) (Date)
MARGIN ACCOUNTS AND THE LENDING AGREEMENT BECOME OPERATIVE ONLY WHEN TRANSACTIONS
ARE EFFECTED ON A GENERAL MARGIN ACCOUNT BASIS.
- --------------------------------------------------------------------------------------------------------------------------------
THE BROKERS OF SIGNATURE CARD
J.C. BRADFORD & CO.
BRADFORD CAPITAL MANAGEMENT PROGRAM Authorized Signature Card
for Checking Privileges at
Account Title PNC Bank
(as it appears on application) Number of Signatures [ ] One must sign
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_| Required on Checks [ ] Two must sign
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
[ ] New Account
[ ] Change to account
- -------------------------------------------------------------------------------------------
AUTHORIZED SIGNATURES
NOTE: ONLY BLUE OR BLACK INK IS TO BE USED WHEN PREPARING AND SIGNING THE SIGNATURE CARD
- -------------------------------------------------------------------------------------------
1. 2.
- -------------------------------------------------------------------------------------------
3. 4.
- -------------------------------------------------------------------------------------------
5. 6.
- -------------------------------------------------------------------------------------------
Signature(s) Guaranteed Today's Date
- ---------------------------------------------------- -------------------------
(PLEASE RETURN ALL ABOVE SIGNATURES TO YOUR BRADFORD BROKER)
11/95
Service Numbers
------- -------
BRADFORD CAPITAL MANAGEMENT LINE
1-800-377-4267
(for balances 24 hours)
Automated VISA Acct. Information Check Inquiries
1-800-762-2273 1-800-222-2367
PNC Service Corp. PNC Bank
Customer Service - 764 Mail Stop 17th Street
Pittsburgh, PA 15265 Philadelphia, PA 19103
Lost or Stolen Credit Card
1-800-222-2367
</TABLE>
DETACH AND RETAIN THIS ROLODEX CARD FOR YOUR USE.
<PAGE> 7
BRADFORD CAPITAL
MANAGEMENT
A COMPREHENSIVE
ACCOUNT FOR
MANAGING YOUR ASSETS
---------------------------------------------------------
J.C. BRADFORD & CO.
MEMBERS NEW YORK STOCK EXCHANGE, INC.
MEMBER S.I.P.C.
---------------------------------------------------------
BROKER'S NAME
---------------------------------------------------------
PHONE NUMBER
---------------------------------------------------------
ADDRESS
---------------------------------------------------------
ACCOUNT NUMBER
PLEASE RETAIN THIS
ROLODEX CARD FOR
YOUR CONVENIENCE
<PAGE> 8
VISA GOLD APPLICATION
<TABLE>
<S> <C> <C> <C>
APPLICANT TYPE OF ACCOUNT [ ] JOINT [ ] INDIVIDUAL
- ------------------------------------------------------------------------------------------------------------------------------------
Brokerage account number (leave blank) Checking privilege number (leave blank) Social Security Number
| |
- ------------------------------------------------------------------------------------------------------------------------------------
First Name M.I. Last Name (indicate Jr., Sr., etc.) Date of Birth No. of dependents Home Telephone
(excluding self)
| | | ( )
- ------------------------------------------------------------------------------------------------------------------------------------
Home Street Address City State Zip Code How Long?
| Yrs. ____ Mos. _____
- ------------------------------------------------------------------------------------------------------------------------------------
Name of business or employer Type of business Position How Long? Gross Monthly Income
Check if
[ ] Self-Employed
| | | Yrs. _____ Mos._____ | [ ] Retired | $
- ------------------------------------------------------------------------------------------------------------------------------------
Business street address City State Zip Code Business Telephone
| | | ( )
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER INCOME - COMPLETE FOR APPLICANT AND CO-APPLICANT Name of address of source of other income Gross monthly amount
Alimony, child support or separate maintenance income
need not be revealed if you do not wish to have it
considered as a basis for repaying this obligation.
|
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Current Mortgage holder Landlord Purchase price Current Market value Balance owed Monthly payment or rent
|$ |$ |$ |$
- ------------------------------------------------------------------------------------------------------------------------------------
OTHER DEBTS: Complete for Type of debt (check all that apply) Total outstanding Total other
Applicant and Co-Applicant. balances payments
For all installment loans, [ ] Visa [ ] Finance company loan [ ] Bank loan
credit cards, charge accounts, etc. |[ ] MasterCard [ ] Department store [ ] Other | |
- ------------------------------------------------------------------------------------------------------------------------------------
Checking account# Name of Institution Current balance Savings/Money Mkt. acct. # Name of Institution Current balance
|
- ------------------------------------------------------------------------------------------------------------------------------------
Co-Applicant [ ] (Complete Both Lines Below)
- ------------------------------------------------------------------------------------------------------------------------------------
First name M.I. Last name (indicate Jr., Sr., etc.) Date of Birth Relationship to applicant Social Security Number
| | |
- ------------------------------------------------------------------------------------------------------------------------------------
Name of business or employer Type of business Position How long? Check if: Gross monthly income
[ ] self-empl.
| | |Yrs.___ Mos.___ [ ] retired |$
- ------------------------------------------------------------------------------------------------------------------------------------
ADDITIONAL CARD: There is no charge for the first three cards First name M.I. Last name Relationship
issued on each account. Additional cards are provided at a one-
time cost of $10 each. Please issue a card on my/our account to: | |
- ------------------------------------------------------------------------------------------------------------------------------------
AGREEMENT: I certify that the information contained in this application is complete and accurate and authorize PNC National Bank
("Bank") to: (1) check my credit and employment history and answer questions about its credit experience with me; (2) retain this
application: and (3) obtain from and exchange my financial information with any of Bank's affiliates or correspondents. If the
application is approved, I agree to be bound by the terms of Bank's Credit Card Agreement as is in effect from time to time. I have
read and agree to the terms and conditions of the brokerage account.
Signature X Date Co-Applicant X Date
------------------------------- ---------------- ----------------------------------- -------------------
DISCLOSURE SUMMARY
- ------------------------------------------------------------------------------------------------------------------------------------
Annual Percentage Balance Calculation Transaction Fee Over-the-Credit
Rate on Purchases Grace Period For Method for Membership Fees For Cash Advances Limit Fees
and Cash Advances Purchases Purchases
- ------------------------------------------------------------------------------------------------------------------------------------
16.99% You have 25 days Average Daily No separate fee $1.00 for each Late Payment
to repay your Balance Automatic Teller fee: $7 (after
entire balance (Including (ATM) transaction 25 days) Over-
before being new purchases) the-Credit-
charged a finance Limit fee: $7
charge for new (if 10% over
purchases. Limit)
- ------------------------------------------------------------------------------------------------------------------------------------
The information about the costs of the card described in this application is accurate as of 11/1/91. The information may change
after that date.
To find out what has changed, write us at: PNC National Bank, Disclosure Information Dept., P.O. Box 8029, Wilmingtin, DE 19899,
and ask for the latest information regarding the Bradford Capital Management Account Visa Gold Card provided by PNC National
Bank, Member FDIC.
</TABLE>
<PAGE> 9
SECURITIES ACCOUNT MARGIN AGREEMENT
CONSENT TO LOAN OF SECURITIES
In consideration of the acceptance by J.C. Bradford & Co. ("Bradford") of
the account(s) in which the undersigned applicants(s) (all such signatories
hereto, whether acting in their individual or representative capacities, are
referred to in this Agreement as "you") have an interest, alone or with others,
which you have opened or open in the future, with Bradford for the purchase and
sale of securities or commodities you agree as follows:
1. RULES AND REGULATIONS: All transactions for your account shall be subject
to the then applicable constitution, rules, regulations, customs and usages of
the exchange or market and its clearing house, if any, where executed by
Bradford or its agents; and where applicable, the Securities Exchange Act of
1934, as amended; the Commodity Exchange Act, as amended; the rules and
regulations of the Securities and Exchange Commission, the Board of Governors
of the Federal Reserve System and the Commodity Futures Trading Commission.
2. WAIVER: You agree that no provision of this Agreement shall be waived,
altered, modified or amended unless committed to in writing and signed by a
partner of Bradford. No waiver of any provision of this Agreement shall be
deemed a waiver of any other provision, nor a continuing waiver of the
provision(s) so waived.
3. SEVERABILITY: If any provision of this Agreement is held to be
invalid, void or unenforceable by reason of any law, rule, administrative order
or judicial decision, that determination shall not affect the validity of the
remaining provisions of this Agreement.
4. SECURITY INTEREST: All monies, securities, commodities or contracts
relating thereto and all other property in any account in which you have an
interest (held either individually, jointly or otherwise) or which may at any
time be in Bradford's possession for any purpose, including safekeeping, shall
be subject to a general lien for the discharge of all obligations you may have
to Bradford, however and whenever arising. All securities and other property
shall be held by Bradford as security for the payment of all such obligations or
indebtedness in any account in which you may have an interest.
5. LOAN OR PLEDGE OF SECURITIES: All monies, securities and commodities or
contracts relating thereto and all other property which Bradford may at any
time be carrying for you or in which you may have an interest, may from time to
time and without notice be carried in Bradford's general loans and may be
pledged, repledged, hypothecated or rehypothecated, separately or in common
with other securities or any other property for the sum due Bradford thereon or
for a greater sum without retaining in Bradford's possession and control for
delivery a like amount of similar securities or commodities. Subject to
applicable law, Bradford, without notice to you, may apply and/or transfer any
or all monies, securities, commodities or contracts relating thereto and all
other property interchangeably between accounts or to accounts in which you
have an interest or which are guaranteed by you (except regulated commodity
accounts). Bradford is hereby specifically authorized to transfer to your cash
account on settlement day any excess funds available in any of your other
accounts, including but not limited to any free balances in any margin account,
sufficient to make full payment of cash purchases. You agree that any debit
occurring in any of your accounts may be transferred at Bradford's option to
your margin account. You hereby authorize Bradford, from time to time, to
lend, separately or together with property of others, to itself or others, any
property it may be carrying for you on margin. This authorization shall apply
to all accounts for you.
6. INTEREST CHARGES: Debit balances in your accounts shall be charged
interest or service charges in accordance with Bradford's policies and at
prevailing rates determined by Bradford.
7. LIQUIDATION: You understand that, notwithstanding a general policy of
giving customers notice of margin deficiency, Bradford is not obligated to
request additional margin from you in the event your account falls below
minimum maintenance requirements. More importantly, there may be circumstances
where Bradford will liquidate securities and/or other property in the account
without notice to you to ensure that minimum maintenance requirements are
satisfied. Bradford shall have the right in accordance with its general
policies regarding margin maintenance requirements to require additional
collateral or the liquidation of any securities and other property whenever in
its discretion it considers it necessary for its protection, including in the
event of, but not limited to: Your failure to promptly meet any call for
additional collateral; the filing of a petition in bankruptcy by or against
you; the appointment of a receiver is filed by or against you; an attachment
is levied against any account in which you have an interest or; you death. In
such event, Bradford is authorized to sell any and all securities and other
property in any account of yours, whether carried individually or jointly with
others, to buy all securities or other property which may be short in such
account(s), to cancel any open orders and to close any or all outstanding
contracts, all without demand for margin or additional margin, other notice of
sale or purchase, or other notice of advertisement each of which is expressly
waived by you. Any such sales or purchases may be made at Bradford's
discretion on any exchange or other market where such business is usually
transacted or at public auction or private sale, and Bradford may be the
purchaser for its own account. It is understood a prior demand, or call, or
prior notice of the time and place of such sale or purchase shall not be
considered a waiver of Bradford's right to sell or buy without demand or notice
as herein provided.
8. MARGIN: You will at all times maintain positions and margins in your
accounts as Bradford, in its discretion, may from time to time require and will
pay on demand any debit balance owing with respect to such accounts.
9. GOVERNING LAW: This agreement shall be governed by the laws of the State
of New York, and shall insure to Bradford's successors and assigns, and shall
be binding on you, your heirs, executors, administrators and assigns.
10. ARBITRATION DISCLOSURES:
- - ARBITRATION IS FINAL AND BINDING ON THE PARTIES.
- - THE PARTIES ARE WAIVING THEIR RIGHT TO SEEK REMEDIES IN COURT, INCLUDING
THE RIGHT TO JURY TRIAL.
- - PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED THAN AND DIFFERENT FROM
COURT PROCEEDINGS.
- - THE ARBITRATORS' AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL
REASONING AND ANY PARTY'S RIGHT TO APPEAL OR TO SEEK MODIFICATION OF
RULINGS BY THE ARBITRATORS IS STRICTLY LIMITED.
- - THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS
WHO WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY.
11. ARBITRATION: I AGREE, AND BY CARRYING AN ACCOUNT FOR ME, BRADFORD AGREES,
THAT ALL CONTROVERSIES WHICH MAY ARISE BETWEEN US CONCERNING ANY TRANSACTION
WHETHER CONSTRUCTION, PERFORMANCE OR BREACH OF THIS OR ANY OTHER AGREEMENT
BETWEEN US, WHETHER ENTERED INTO PRIOR, ON OR SUBSEQUENT TO THE DATE HEREOF,
SHALL BE DETERMINED BY ARBITRATION. ANY ARBITRATION UNDER THIS AGREEMENT SHALL
BE GOVERNED BY THE ARBITRATION AND SUBSTANTIVE LAWS OF THE STATE OF NEW YORK,
BEFORE THE NEW YORK STOCK EXCHANGE, INC. OR AN ARBITRATION FACILITY PROVIDED BY
ANY OTHER EXCHANGE OF WHICH BRADFORD IS A MEMBER, OR THE NATIONAL ASSOCIATION OF
SECURITIES DEALERS, INC. AND IN ACCORDANCE WITH THE ARBITRATION RULES
PERTAINING TO THE SELECTED ORGANIZATION. I MAY ELECT IN THE FIRST INSTANCE
WHETHER ARBITRATION SHALL BE BY AN EXCHANGE OR SELF-REGULATORY ORGANIZATION OF
WHICH THE BROKER IS A MEMBER, BUT IF I FAIL TO MAKE SUCH ELECTION BY REGISTERED
LETTER OR TELEGRAM ADDRESSED TO BRADFORD AT ITS MAIN OFFICE BEFORE THE
EXPIRATION OF FIVE (5) DAYS AFTER RECEIPT OF A WRITTEN REQUEST FROM BRADFORD
TO MAKE SUCH ELECTION, THEN BRADFORD SHALL MAKE SUCH ELECTION. THE AWARD OF
THE ARBITRATORS, OR OF THE MAJORITY OF THEM, SHALL BE FINAL, AND JUDGMENT UPON
THE AWARD RENDERED MAY BE ENTERED IN ANY COURT, STATE OR FEDERAL, HAVING
JURISDICTION.
<PAGE> 10
12. SALE ORDERS/DELIVERIES: You agree that when placing a sell order, all
"short" sale orders shall be designated as "short" and all "long" sale orders
shall be designated as "long". You represent that any sell order which you
designate as "long" shall be for securities then owned by you and if such
securities are not then deliverable from your account, that you will deliver
them on or before settlement date. In the case of the sale of any security,
commodity or other property by Bradford at your direction, Bradford's
inability to deliver the same to the purchaser by reason of your failure to
supply Bradford therewith, you authorize Bradford to borrow such security,
commodity or other property necessary to make delivery thereof and you agree to
be responsible for any loss which Bradford may sustain thereby and any premiums
which it may be required to pay thereon and for any additional loss which it
may sustain by reason of its inability to borrow the security, commodity or
other property sold on you behalf.
13. BROKER: You understand that in all transactions between you and Bradford,
Bradford shall be acting as broker for you, except when Bradford discloses to
you that, with respect to such transaction, it is acting as dealers for its
account or as broker for some other person.
14. COMMUNICATIONS: Confirmations of transactions and statements of your
account shall be conclusive if not objected to in writing to Bradford within 5
days and 10 days respectively after transmitted to you by mail or otherwise.
Communications may be sent to you at the address shown on Bradford's records
for your account or at such other address as you may hereafter provide to
Bradford in writing. All communications sent, whether by mail, telegraph,
messenger or otherwise will be deemed given, whether actually received or not.
15. REPRESENTATIONS: You represent that you are of legal age, are not an
employee or member of any exchange or a member firm or any corporation of which
any exchange owns a majority interest or the NASD or of a bank, trust company,
insurance company or other employer engaged in the business of a broker-dealer
and that you will promptly notify Bradford if you become so employed. You
further represent that, unless otherwise disclosed to Bradford in writing, no
one except you has and interest in the account or accounts maintained with
Bradford in your name.
16. AGREMENT CONTAINS ENTIRE UNDERSTANDING/ASSIGNMENT: This Agreement
contains the entire understanding between you and Bradford concerning the
subject matter of this Agreement. You may not assign the rights and
obligations hereunder without first obtaining the prior written consent of
Bradford.
BY SIGNING THIS AGREEMENT YOU ACKNOWLEDGE THAT:
1. THE SECURITIES IN YOUR MARGIN ACCOUNT MAY BE LOANED TO BRADFORD OR LOANED
OUT TO OTHERS AND;
2. THAT YOU HAVE RECEIVED A COPY OF THIS AGREEMENT; AND
3. THIS AGREEMENT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE AT PARAGRAPH 11.
CREDIT CHARGE SUMMARY
We are furnishing the following information in order that you may be informed
of the terms and conditions governing our charges for credit extended to or
maintained for you.
1. CASH ACCOUNTS. Generally, interest is not charged on debit balances in cash
accounts, unless there is also a margin debit balance in your account, in
which case interest is charged on the total debit balance. However,
interest may also be charged on cash account debit balances in unusual
circumstances, such as: as prepayment (payment prior to settlement date) of
the proceeds of a sale, in which case there would be interest charged for
the number of days of early payment; a late payment (after settlement date)
for securities purchased; or a debit balance arising from a sell-out or
buy-in following a customer's failure to pay for securities purchased or
to deliver securities sold.
2. RATE. The annual rate of charge will be determined in accordance with the
following:
AVERAGE DEBIT BALANCE MAXIMUM CREDIT RATE
Less than $25,000 Base Rate + 1.75%
$25,000 - $49,999 Base Rate + 1.50%
$50,000 - $99,999 Base Rate + 1.00%
$100,000 - $499,999 Base Rate + .50%
Over $500,000 Base Rate + .25%
Our Base Rate will generally be Prime Rate as quoted in the Wall Street
Journal. When your interest rate is to be increased for any reason, other
than to adjust to changes in the base rate, at least 30 days prior written
notice will be given.
3. COMPUTATION OF CHARGES. As stated in our margin agreement, our margin
accounts and related finance charges are governed by the laws of the State
of New York. In computing credit charges, balances are calculated daily
for all types of accounts of a customer, except credit balances in short
accounts (Type 5).
In computing credit charges, cash and margin (Type 1 & 2 Daily Balances)
are netted against each other. Each net debit is added to obtain an
aggregate debit for the period. This aggregate is multiplied times the
interest rate and then divided by 360 days to obtain the interest charges.
For those days that have a net credit, this net of cash and margin accounts
is carried over and netted against other accounts carried for you (other
than short accounts). The same method is then used (adding, multiplying by
the rate and dividing by 360).
If you sell short (or short against the box), and the market value of
the security you sold increases above your selling price, the increase
will be charged to your Margin Account (type 2) with an offsetting credit
to your Short Account (type 5) and interest will be charged in the Margin
Account on the increase. Conversely, interest is reduced by any decrease
in market value. This is known as "Marking to the Market."
Our interest is calculated and posted on the last Friday of the month
with the last day of the period being the previous day. Interest for
December will similarly be calculated and posted on the last working day of
the calendar year. To enable you to confirm the accuracy of the monthly
interest charge as shown on your statement, the following information will
be shown on the statement: the interest rate, the average balance, the
member of days in the interest period, the beginning and ending dates of
the interest period, and the ending debit balance.
4. COLLATERAL. Your Customer Agreement with us provides a lien on all
securities which we hold for you to secure the discharge of all your
obligations to us, and gives us the right at any time to require you to
deposit such additional collateral as, in our sole discretion, we determine
is necessary as security for your obligations to us. Without limiting our
aforesaid discretionary authority, we have some general guidelines which
may be changed or discontinued by us at any time. For instance, if your
account should fall below 30% equity at any time, a call will be sent to
you for additional cash or collateral to bring your equity up to 30%. We
may also decline to extend credit on certain securities because of price,
market conditions, concentration; etc., which we feel would be both to your
interest and the Firm's to be on a fully paid basis. There may be times
also when the firm is extending credit on particular securities, but due
to market or other conditions may feel it necessary to call on you for
sufficient cash or collateral in the order to make that security fully paid
for.
<PAGE> 11
This agreement sets forth the terms and conditions governing the Bradford
Capital Management Account ("BCM Account"), for which the undersigned
applicants(s) (all such signatories hereto, whether acting in their individual
or representative capacities, are referred to in this Agreement as "you") are
making application with J.C. Bradford & Co. ("Bradford"). You enter into this
agreement in conjunction with related agreements with Provident National Bank,
its subsidiaries and affiliates, as well as the Customer's Agreement between
yourself and Bradford. This agreement is subject to, and may be modified from
time to time by disclosure in the prospectuses pertaining to Bradford Money
Fund, Bedford Tax-Free Money Market Portfolio and Bedford Government
Obligations Money Market Portfolio (the "Designated Funds"), and any supplement
or amendment thereto as of the time of filing or effectiveness thereof
(hereafter referred to as the "Prospectuses"). Bradford will charge your BCM
Account an annual administration fee. Such fee is currently $50 and Bradford
serves the right to change the fee at its sole and absolute discretion. Detail
description of the Account may be found in the Bradford Capital Management
Account Summary Description which should be read.
ACCOUNT OVERVIEW: The BCM Account is the conventional Bradford securities
margin account (the "Securities Account") that is linked to the Designated
Funds you selected on the Account Application, or the J.C. Bradford Immediate
Credit Interest Program ("Credit Interest"); a checkwriting privilege through
Provident National Bank ("Provident"); and optional Visa Gold Card including
ATM access, from PNC National Bank ("PNC"), an affiliate of Provident; direct
investment of your salary and government payments. Another feature of this
Account is the consolidated monthly statement from Bradford. The principal
attributes of each component of the Bradford Capital Management Account and
their relation to one another are described below.
THE SECURITIES ACCOUNT: The securities Account will be governed by the federal
securities laws, the rules and regulations of the Securities and Exchange
Commission, the Board of Governors of the Federal Reserve System, the
Securities Investor Protection Corporation, the New York Stock Exchange Inc.
and the National Association of Securities Dealers, Inc. and by the Customer's
Agreement.
With a BCM Account, your securities held by Bradford are protected for up to
$50 million through a combination of S.I.P.C. and Aetna Casualty & Surety Co.
insurance.
You may use the Securities Account to purchase and sell securities, including
options, on margin or otherwise. We require that a minimum of three thousand
dollars ($3,000) of equity be maintained in the Securities Account.
THE DESIGNATED FUND: You authorize Bradford to invest automatically in
Designated Fund shares any Available Cash in the undersigned's Securities
Account (that is, any cash that does not result from a loan from Bradford, and,
thus may be transferred out of your Securities Account without giving rise to
interest charges). Such automatic investment of Available Cash in Designated
Fund shares will occur daily at the net asset value per share next determined.
Shares of the Designated Fund will be redeemed at their net asset value and you
authorize automatic redemptions as necessary, to satisfy debit balances
resulting from securities transactions, from use of the checkwriting privilege,
or the Visa Gold Card, as described below. You may also redeem shares of the
Designated Fund directly by written or oral request to Bradford.
Orders for the purchase or redemption of Designated Fund shares will become
effective as provided in the prospectus.
The Designated fund will declare dividends daily, and pay dividends monthly on
shares of the Designated Fund owned by you. Purchased shares begin to accrue
dividends on the business day on which your order is effective. Dividends are
paid in additional Designated Funds shares.
CREDIT INTEREST: An alternative to the Designated Fund is the J.C. Bradford
Immediate Credit Interest Program, a service which enables your Available Cash
to continually earn interest while waiting for a reinvestment opportunity. Any
Available Cash of $1,000 or more starts earning interest immediately at the
J.C. Bradford & Co. Money Market Rate as described in the Program description.
You authorize use of the Available Cash to satisfy debit balances resulting
from securities transactions, from the use of checkwriting privilege or the
Visa Gold Card as described below.
CHECKWRITING PRIVILEGES: You may access the Combined Asset Value of your BCM
Account through a checkwriting privilege made available as part of the BCM
Account through Provident. The Combined Asset Value of your BCM Account will
consist of: Available Cash in your securities account; Designated Fund shares
(if and); and available margin loan value (if any). Your monthly consolidated
brokerage statement will list each check paid. In addition, Provident will
return paid checks to you along with a monthly checking activity summary.
Certain customary bank fees may be imposed on you for services rendered in
connection with the checkwriting privilege, such as: stop payment, copies of
cancelled checks, insufficient funds, or excessive number of checks written on
a monthly basis.
PAYMENTS: You must maintain a Combined Asset Value sufficient to pay when due
any checks you write and any Visa Gold transactions made by you or any
additional authorized Visa Gold cardholders. Payments for checks and for Visa
Gold transactions will be satisfied from the Combined Asset Value of your BCM
Account. Bradford will debit your account in the following order, first, from
Available Cash in your Securities Account including any cash in Credit
Interest; second, from the proceeds of redeeming Designated Fund shares
(if any); and third, from margin loans extended by Bradford to you up to the
margin value of your marginable securities (if any). Nonmarginable securities
are not available for margin loan and are not a source of funds to cover checks
written or Visa Gold transactions made against the account.
MARGIN LOANS: If we extend a margin loan based on your Securities Account for
any reason, we will begin to charge interest on the day we extend such credit
to you. If we extend such a loan, it will be secured by the securities in your
Securities Account. We will charge the same rate of interest we charge for
other margin loans. By signing this agreement you acknowledged receipt of
Bradford's written explanation of margin interest charges. As with any margin
account, you must be in compliance with all current regulations and New York
Stock Exchange maintenance requirements.
CHECKS AND VISA GOLD CASH ADVANCE TRANSACTIONS: We will debit your account
immediately whenever a check is presented for payment on your behalf; or when
we are notified that you or an additional authorized Visa Gold cardholder has
effected a Visa Gold card cash advance. You authorize us to automatically
transfer funds from your BCM Account to Provident to cover checks or to PNC to
cover Visa Gold cash advances.
You agree that neither Bradford, nor Provident will be liable for any loss you
incur in connection with the checkwritting privilege unless we are negligent in
fulfilling this Agreement. In no event will we, Bradford, Provident or PNC, be
liable for consequential, special or indirect damages or loss.
<PAGE> 12
ANNUAL FEE: We will deduct an annual fee from your BCM Account for processing
and administrative services. The base fee is currently $50 and Bradford
reserves the right to change the fee at its sole and absolute discretion. We
will notify you before any increase in fee becomes effective.
SERVICES:
APPROVING THE VISA GOLD CARD: If you would like a Visa Gold card as part of
your BCM Account, complete the credit card application included in this
package. This optional service costs an additional $30 per year. PNC, the
card issuing the bank, must approve your application for the credit card before
any Visa Gold services can be linked with your BCM Account. The approval of
your Visa Gold card will be made at the sole discretion of PNC, based on their
credit approval criteria, and not by Bradford. If approved, PNC will issue and
service your Visa Gold card account with a minimum credit line of $5,000.
Credit cards cannot be issued for corporate accounts.
ADDITIONAL CARDS: Each individual applicant who signs the BCM Account
application may apply for and receive a Visa Gold card for use in connection
with your BCM Account. You and other individual cardholders who are BCM
clients may jointly authorize the issuance of additional cards. Additional
cardholders who are not BCM Account clients are not authorized to buy or sell
securities or to use the checkwriting privilege associated with the BCM
Account. The fee for the BCM Account with the optional Visa Gold card includes
the issuance of up to three cards. There is a charge for the issuance of each
additional card.
USING THE VISA GOLD CARD: You, and any additional cardholder may use the credit
card to charge goods and services wherever the Visa Gold card is accepted (Visa
Gold charge transactions). You may also obtain cash advances at participating
financial institutions or any Plus System location (Visa Gold cash advance
transactions). The amount of purchases and cash advances may not exceed the
available credit on your Visa Gold card.
You agree to accept financial responsibility with respect to all Visa Gold
charge and cash advance transactions effected by any cardholder, including
additional cardholders, in accordance with the Credit Card Agreement.
PNC will send you a statement showing your Visa Gold transactions and/or other
activity for the billing period in which such transactions or other activity
occurred.
You authorize Bradford to automatically transfer funds from the Combined
Asset Value of your BCM Account to pay amounts to PNC when requested by PNC.
The amount of any cash advance transactions will be transferred from your BCM
Account on the day such item is presented for payment. Charge transactions from
the most recent billing period will be transferred from your BCM Account once a
month on the payment date indicated on the statement issued you by PNC. If
your Combined Asset Value will not pay the entire amount of newly-billed Visa
Gold charge transactions on the payment date, you will have 10 days to transfer
assets to the BCM account.
If payment is made on or before the applicable due date as provided in the
Credit Card Agreement, and there was no previous balance, then no finance
charges will be assessed. If you do not make funds available for payment when
due, finance charges will accrue as provided in the Credit Card Agreement. In
such event, PNC will request payment from your BCM Account on a daily basis for
all outstanding amounts due in accordance with the Credit Card Agreement.
Whenever finance charges are assessed, the Annual Percentage Rate will be as
stated in the Credit Card Agreement.
For additional information regarding your Visa Gold card account, refer to the
Credit Card Agreement with will accompany your Visa Gold card(s).
DIRECT INVESTMENT SERVICE: You may arrange to have recurring payments
received from either the Federal government or private employee credited to
your BCM Account. These payments are credited through arrangements with
Provident and applied to your Account accordingly.
AUTOMATIC PAYMENT: You may arrange to have eligible recurring payments debited
from your BCM Account. These payments are deducted through arrangements with
Provident and debited to your Account accordingly. Eligible payments are
defined as: insurance premiums, mortgagees, utilities, and automatic
investment plans.
TERMINATION OF THE VISA GOLD CARD FEATURE: Any cardholder who is a BCM Account
client may terminate the Visa Gold feature by notifying PNC in writing. In
any such event, we request that you return all Visa Gold cards, cut in half, to
PNC. Such terminations does not relieve you of responsibility for charge or
cash advance transactions made using the Visa Gold card, nor will it terminate
your BCM Account. PNC may terminate your Visa Gold card feature in accordance
with the terms of the Credit Card Agreement, but such termination need not
terminate your BCM Account.
REVOKING ADDITIONAL CARDHOLDERS' PRIVILEGES: You may revoke the authority of
any additional cardholders who are not BCM clients. To revoke the authority of
any additional cardholder, notify PNC in writing. In any such event, we
request that you return all Visa Gold cards, cut in half, to PNC. You remain
liable for any losses incurred either before incurred either before PNC
receives your written notice of revocation or as a result of any use of the
Visa Gold card that occurs before we receive written notice, in accordance with
the Credit Card Agreement.
TERMINATION OF THE BCM ACCOUNT: You may terminate your BCM Account, including
the Securities Account, at any time. Such termination will result in the
cancellation of your checkwriting privilege and all Visa Gold cards and
additional Visa Gold cards issued in connection with your BCM Account. You
will remain responsible, however, for the payment of charges resulting from
your Securities Account transactions, checkwriting privilege or Visa Gold card
transactions, whether arising before or after termination. Bradford, in its
sole discretion, may terminate your BCM Account or any of the features thereof
at any time including your Securities Account, the checkwriting privilege, the
Visa Gold card and any additional Visa Gold cards. If your BCM Account is
terminated, you should promptly destroy all unused checks and Visa Gold
cards(s) by cutting them in half, and returning the destroyed Visa Gold card(s)
to PNC.
CHANGING THIS AGREEMENT: This agreement or Designated Fund prospectuses may be
changed from time to time by Bradford.
LAWS GOVERNING THIS BCM ACCOUNT AGREEMENT: This Agreement is governed by the
laws of Tennessee. However, the Credit Card Agreement is governed by Delaware
and federal law. If the terms and conditions of the Credit Card Agreement
conflict with the description of the Visa Gold card account described herein,
the terms and conditions of the Credit Card Agreement shall govern. The terms
and conditions of this Agreement and the Credit Card Agreement apply to you,
your heirs, executors, administrators, and assigns. It will benefit Bradford's
successors and assigns.
<PAGE> 13
BRADFORD
CAPITAL
MANAGEMENT
Corporate Account Summary
Description
J.C. BRADFORD & CO.
MEMBERS NEW YORK STOCK EXCHANGE
MEMBER S.I.P.C.
<PAGE> 14
BRADFORD CAPITAL MANAGEMENT
ACCOUNT SUMMARY DESCRIPTION
The Bradford Capital Management (the "Account") is an integrated financial
services program that allows clients of J.C. Bradford & Co. ("Bradford") to
provide for the centralization of their assets. Through an Account, an investor
may be able to employ efficiently seven financial services.
- - Bradford securities margin account (the "Securities Account")
- - One of three no-load money-market portfolios:* Bradford Money Fund,
Bradford Municipal Money Market Portfolio, and Bradford Government Obligation
Money Market Portfolio; or J.C. Bradford & Co. Immediate Credit Interest
- - A check-writing privilege on an account maintained at ("PNC")
- - An optional Visa Gold(R) card provided by a PNC
- - A consolidated quarterly statement and a year-end statement by Bradford
- - Direct Investment of salary and/or government payments
- - Direct payment of recurring eligible expenses
- -----------------
* The funds are obligated to reimburse Bradford for certain expenses incurred in
distribution and promotion of the Fund shares. See "Distribution of Shares"
in the enclosed Fund Prospectus.
To participate, an investor must place cash, marginable securities or a
combination of the two having a gross market value of no less than $10,000
("Combined Asset Value"), in a Securities Account and must enter into an Account
Agreement and a Customer's Agreement with Bradford. Any cash in a Securities
that can be withdrawn or transferred to the participant on demand without giving
rise to interest charges ("Available Cash") will be invested automatically in
whichever of the funds the investor designates (the "Designated Fund") or in
the J.C. Bradford & Co. Immediate Credit Interest (the "Credit Interest"). To
cover transactions involving charges incurred in utilizing the check-writing
privilege ("Check Charges") and use of the Visa Gold card ("Visa Gold
Transactions") payment will be made from and to the extent of (1) any available
Cash in a Securities Account, including any cash in Credit Interest; (2) the
proceeds of the redemption of shares of the Funds, if any; and (3) when
necessary, the margin loads extended by Bradford up to the margin load of the
marginable securities. A Participant will be required to maintain sufficient
assets in the Account to cover payments for Check Charges and Visa Gold
Transactions due. For purposes of the Summary Description, Participant refers
to those parties in whose name the Account is established.
A Participant will pay brokerage fees for securities transactions and interest
on any margin loans incurred in the use of his Securities Account at rates
customarily charged by Bradford. In addition, a Participant will pay for
certain banking services provided by PNC in connection with the check-writing
privilege.
Bradford will charge each Account an annual administrative fee of $150.
This annual fee will be applied toward the administrative and processing costs
incurred in connection with the services, as well as, toward other costs of
establishing and maintaining the Account.
Bradford reserves the right to change its annual administrative and other fees
at any time. Bradford has the right to reject any application to open an
Account and to terminate an Account for any reason. The conditions for
establishing an Account may be altered or waived by Bradford, either with
respect to services generally or with respect to special groups or limited
categories of individuals.
FEATURES OF THE BRADFORD CAPITAL
MANAGEMENT ACCOUNT
The financial services provided to a Participant and certain other features of
the Account are described below.
ACCOUNT SERVICES
SECURITIES ACCOUNT. Securities Accounts may be opened directly with Bradford
or, if approved by Bradford, with certain brokers that clear through Bradford.
Securities Accounts are established and maintained pursuant to rules
administered by the Securities and Exchange Commission, the Board of Governors
of the Federal Reserve System, the National Association of Securities Dealers,
Inc., The New York Stock Exchange, Inc., and other national securities exchanges
registered under the Securities Exchange Act of 1934. Participants may use
Securities Accounts to purchase and sell securities on margin or on a fully-paid
basis. All customary transactional fees incurred in the use of the Securities
Account, including brokerage fees for securities transactions and interest on
margin loans, if any, must be paid by the Participant. The interest rates
charged by Bradford for margin loans are based on the published base rate
depending upon the amount owed as more fully explained in the Customer
Agreement. Under rules of the Board of Governors of the Federal Reserve
System, the maximum loan value of marginable common stock is presently 50% of
its current market value.
THE DESIGNATED FUNDS. Each of the Designated Funds offers an investor a
different investment objective, as more fully described in the accompanying
Prospectuses. Bradford Money Fund is a no-load,
<PAGE> 15
short-term, tax exempt money market portfolio; and Bedford
Government Obligations Money Market Portfolio is a no-load, short-term
government money market portfolio. The purchase or redemption of shares of any
of these Designated Funds is at net asset value without any sales charge, as set
forth in the accompanying Prospectuses.
Available Cash will be automatically invested daily in shares of the
Designated Fund.
A Participant may have Available Cash invested in only one Designated Fund at
any one time. However, upon notice to Bradford, shares of that portfolio may be
redeemed and the proceeds reinvested at no charge in shares of another
Designated Fund. See "Purchase and Redemption of Shares" in the Prospectuses.
Shares of Designated Fund are redeemed automatically at net asset value as
necessary to satisfy debit balances resulting from securities transactions in
the Securities Account, Check Charges and Visa Gold Transactions or for other
Account charges. A Participant may also redeem Designated Fund shares upon oral
or written request to Bradford.
Each of the Designated Funds declares dividends daily and pays dividends
monthly. Such dividends are reinvested in additional shares. Although each of
the Designated Funds provides a Participant with a means of earning cash,
interests in the Designated Funds are not bank accounts and are not protected by
the Federal Deposit Insurance Corporation. However, shares of the Designated
Fund held in the Securities Account are subject to Securities Investor
Protection Act, which protects brokerage clients from losses up to $500,000
(including $100,000 in cash) arising from the insolvency of the brokerage firm.
As added protection against such losses, Bradford has obtained an additional
$49,500,000 of insurance coverage from Aetna Casualty & Surety Company which
generally follows the conditions and limitations of the Securities Investors
Protection Act.
INVESTMENT IN SHARES OF THE DESIGNATED FUND IS ONLY ONE OF THE SERVICES
PROVIDED AS PART OF THE ACCOUNT. INVESTORS ARE ADVISED TO READ THE PROSPECTUS
FOR THE APPROPRIATE DESIGNATED FUND IN CONJUNCTION WITH THE ACCOUNT AGREEMENT,
THE CUSTOMER'S AGREEMENT WITH BRADFORD, AND THE APPLICATION FORMS AND
AGREEMENTS PROVIDED BY PNC. IF THE INVESTOR'S OBJECTIVE IS TO INVEST ONLY IN
SHARES OF ANY OF THE DESIGNATED FUNDS, THE ACCOUNT MAY NOT BE AN APPROPRIATE
INVESTMENT.
CREDIT INTEREST. An alternative to the Designated Fund is the J.C. Bradford
Immediate Credit Interest Program, a service which enables the Available Cash to
earn interest while waiting for a reinvestment opportunity. Available Cash of
$1,000 or more starts earning interest immediately at the J.C. Bradford & Co.
Money Market Rate as described in the Immediate Credit Interest Form (JCB-017
7/94).
The Available Cash is used automatically as necessary to satisfy debit
balances resulting from securities transactions in the Securities Account, Check
Charges and Visa Gold Transactions, or for other Account charges.
CHECK-WRITING PRIVILEGE. Participants may write checks on an account
maintained at PNC. There is no minimum dollar amount as to checks
written, and no per-check charge (excessive check charge may apply). Upon
approval of an Account, a Participant will receive 200 personalized checks at no
cost. When notified, Bradford will reimburse PNC for all such checks
paid, and will debit Participant's Account accordingly. The Participant will
also be charged for certain banking services provided by PNC in connection
with the check-writing privilege, such as stop payment orders; copies of
cancelled checks; insufficient funds; or excessive number of checks written on a
monthly basis. Additional checks will be supplied upon payment of a fee.
PNC will notify Bradford each PNC business day of checks written by
Participants that were presented to PNC for payment.
STATEMENTS. All automatic purchases and redemptions of Designated Fund shares
and dividend reinvestment, as well as margin interest charges, if any,
Securities Transactions, dividends on securities held in the Securities Account
and Check Charges will be reflected on a monthly Account statement sent to
each Participant. A statement will only be received quarterly, however,
whenever the activity in the Account has been limited to a money fund dividend
or interest on Credit Interest balances. If a Participant has elected certain
optional features such as the Visa Gold card, Direct Investment, or Automatic
Debit, these also will be reflected on the Bradford Statement.
In addition, each participant will receive a year-end statement summarizing
the entire year's buys and sells as well as dividend and interest activity.
AUTOMATIC DEBIT. A Participant may arrange to have eligible recurring
payments automatically debited from the Account. These payments will be debited
through arrangements with PNC and deducted from the Account accordingly.
Eligible payments are defined as: insurance premiums, mortgages, utilities, and
automatic investment plans.
<PAGE> 16
VISA GOLD CARD (OPTIONAL). Participants may apply for and receive a Visa Gold
card for use in connection with the Account. Account Participants may authorize
the issuance of additional cards. Additional cardholders who are not Account
Participants are not authorized to buy or sell securities or to use the
check-writing privilege associated with the Account. The fee for the Account
with the optional Visa Gold card includes the issuance of up to three cards.
There is a charge for the issuance of each additional card.
A Participant and any additional cardholder may use the credit card to charge
goods and services wherever the Visa Gold card is accepted. A Participant may
also obtain cash advances at participating financial institutions or any Plus
System automatic teller location. The amount of purchase and cash advances may
not exceed the available credit on the Visa Gold card.
Each Participant agrees to accept financial responsibility for all Visa Gold
charges and cash advance transactions effected by any cardholder, including
additional cardholders, in accordance with the Credit Card Agreement.
Each month, PNC will prepare a statement listing all Visa Gold
transactions and/or other activity processed since the previous statement. The
statement will set forth the date on which PNC National Bank will request
payment from Bradford. The Participant's Account will then be debited for the
amount appearing on the Visa Gold statement as decreased by any adjustments or
payment since the statement was prepared. A Participant should notify PNC
National Bank of any disputed charges as soon as possible receiving the Visa
Gold statement. If notification is received no fewer than three business days
prior to the date on which the Account is to be debited, appropriate
adjustments to the debit amount will be made.
Whenever a cardholder effects a Visa Gold cash advance, PNC National Bank
will notify Bradford and the Account will be debited immediately for that
amount.
Bradford will debit a Participant's Account only up to an amount equal to the
Combined Asset Value. Should the Combined Asset value of the Account not be
sufficient to cover Visa Gold Transactions, a Participant will receive timely
notice and will be required to transfer assets to the Account from which these
obligations can be satisfied. Failure to make prompt payment may result in such
action by PNC National Bank as may be permitted under the Credit Card
Agreement, including the termination of the Visa Gold card or the imposition of
delinquency charge. Termination of the Visa Gold card will not necessarily
result in Bradford's termination of the Account.
If any Visa Gold card is lost or stolen, a Participant should report the loss
immediately by PNC by calling 1-800-635-1629. This number is available 24 hours
a day, seven days a week.
DIRECT INVESTMENT. A Participant may arrange to have recurring payments
received from payments received from either the Federal government or private
employers credited directly to the Account. These payments are credited through
arrangements with Provident and applied to the Account accordingly.
OTHER INFORMATION
Bradford reserves the right to terminate any Participant's Account for any
reason. Although a Participant's Account will not be terminated solely because
its value falls below $10,000, Bradford may terminate the Account if its average
value is less than $3,000 for each of two consecutive months. Bradford will
terminate an Account, however, only after giving the Participant 30 days'
notice to permit the Participant to restore the Account value to $3,000. New
York Stock Exchange rules require that a minimum of $2,000 of equity be
maintained in the Securities Account. Individuals will be prohibited from
maintaining both an Account and a non-Account margin account. Upon termination
of a Participant's Account, Bradford will redeem automatically the Participant's
Designated Fund shares and after payment of all charges to Bradford, make the
proceeds available to the Participant.
Bradford, in its discretion, may waive or modify certain of the conditions for
participating in the program. Bradford has waived the $10,000 minimum for any
employee of Bradford or its subsidiaries, who may open an Account by placing in
a Securities Account cash, marginable securities or a combination of the two
having a gross market value of no less than $2,000. New York Stock Exchange
Rules require that the average value of a Securities Account maintained by such
an employee not be less than $2,000.
Participants (except Participants in Alaska, Hawaii or Puerto Rico) who have
questions about their Securities Accounts or their Designated Fund shares should
call (800) 251-1060, and those in Alaska, Hawaii or Puerto Rico should call
(615) 748-9000. Participants with questions concerning Visa Card Transactions
or Check Charges should call the toll-free number appearing on their PNC
statements. Bradford Brokers will not have information available to them to
answer questions concerning the Visa Card or Visa Card Transactions.
Investors should be aware that the check-writing feature of an Account is
intended to afford Participants easy access to the assets in their Account and
<PAGE> 17
that an Account is not a bank account. From time to time, certain state
administrative agencies have questioned whether the operation of arrangements
similar to the Account constitutes banking under the laws of their states. In
addition, legislation has been proposed in certain states that, if enacted,
could require a modification of the Account in those states. Bradford and the
Designated Funds are not banks and they believe that the operation of he
Account does not constitute banking under the laws of any state. Final adverse
rulings in any state that the Account constitutes unauthorized banking or the
adoption of legislation by any state affecting the Account could force Bradford
to terminate accounts of Participants who are residents of any such state.
* * *
No dealer, salesman, or other person has been authorized to give any
information or to make any representations, other than those contained in the
Summary Description or accompanying Prospectuses or the Statements of Additional
Information, in connection with the offers contained therein, and if given or
made, such other information or representations must not be relied upon as
having been authorized by the Funds, their Investment Adviser, or their
Distributor. These Prospectuses do not constitute an offer in any state in
which such offer may not lawfully be made.
* * *
THIS SUMMARY DESCRIPTION MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS OF THE
BRADFORD MONEY FUND, THE BRADFORD MUNICIPAL MONEY MARKET PORTFOLIO, OR THE
BRADFORD GOVERNMENT OBLIGATION MONEY MARKET PORTFOLIO.
<PAGE> 18
BRADFORD CAPITAL MANAGEMENT PROGRAM
<TABLE>
<S> <C>
Enter information as it should
appear on checks Account Number |_|_|_|_|_|_|_|_|_|_|
Name & Address
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
Additional Check Information |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
</TABLE>
<TABLE>
<CAPTION>
CIRCLE ONE ADDRESS ON CHECKS
<S> <C>
1 Bradford Money Fund [ ] YES
2 RBB/Bradford Tax Exempt [ ] NO
3 RBB/Bradford Govt Obliation
4 Credit Interest
Choose one TYPE OF CHECKS
[ ] Checking Only [ ] WALLET
[ ] Checking and Credit Card (no charge for first order.
$15 for reorder of 200 checks)
[ ] BUSINESS
(prices may vary)
- --------------------------------------------------------------------------------------------------------------------------------
PLEASE BE SURE TO SIGN BOTH AGREEMENT AREAS AS WELL AS THE SIGNATURE CARD BELOW. THANK YOU.
- --------------------------------------------------------------------------------------------------------------------------------
YOU THEREBY CONSENT AND AGREE TO THE TERMS AND CONDITIONS OF THE ATTACHED BRADFORD CAPITAL MANAGEMENT AGREEMENT.
BRADFORD FOR USE BY INDIVIDUAL OR JOINT ACCOUNT
CAPITAL X X
--------------------------------- -------------------------------------
MANAGEMENT Customer's Signature Joint Party's Signature
AGREEMENT X | | | | | | | | | | | X
--------------------------------- -------------------------------------
SIGNATURES (Date) (Date)
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
YOU THEREBY CONSENT AND AGREE TO THE TERMS AND CONDITIONS OF THE ATTACHED SECURITIES ACCOUNT MARGIN AGREEMENT.
SECURITIES FOR USE BY INDIVIDUAL OR JOINT ACCOUNT.
ACCOUNT
--------------------------------- -------------------------------------
MARGIN Customer's Signature Joint Party's Signature
AGREEMENT | | | | | | | | | | |
--------------------------------- -------------------------------------
SIGNATURES (Date) (Date)
MARGIN ACCOUNTS AND THE LENDING AGREEMENT BECOME OPERATIVE ONLY WHEN TRANSACTIONS
ARE EFFECTED ON A GENERAL MARGIN ACCOUNT BASIS.
- --------------------------------------------------------------------------------------------------------------------------------
THE BROKERS OF SIGNATURE CARD
J.C. BRADFORD & CO.
BRADFORD CAPITAL MANAGEMENT PROGRAM Authorized Signature Card
for Checking Privileges at
Account Title PNC Bank
(as it appears on application) Number of Signatures [ ] One must sign
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_| Required on Checks [ ] Two must sign
|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
[ ] New Account
[ ] Change to account
- -------------------------------------------------------------------------------------------
AUTHORIZED SIGNATURES
NOTE: ONLY BLUE OR BLACK INK IS TO BE USED WHEN PREPARING AND SIGNING THE SIGNATURE CARD
- -------------------------------------------------------------------------------------------
1. 2.
- -------------------------------------------------------------------------------------------
3. 4.
- -------------------------------------------------------------------------------------------
5. 6.
- -------------------------------------------------------------------------------------------
Signature(s) Guaranteed Today's Date
- ---------------------------------------------------- -------------------------
(PLEASE RETURN ALL ABOVE SIGNATURES TO YOUR BRADFORD BROKER) 11/95
Service Numbers
------- -------
BRADFORD CAPITAL MANAGEMENT LINE
1-800-377-4267
(for balances 24 hours)
Automated VISA Acct. Information Check Inquiries
1-800-762-2273 1-800-222-2367
PNC Service Corp. PNC Bank
Customer Service - 764 Mail Stop 17th Street
Pittsburgh, PA 15265 Philadelphia, PA 19103
Lost or Stolen Credit Card
1-800-222-2367
</TABLE>
DETACH AND RETAIN THIS ROLODEX CARD FOR YOUR USE.
<PAGE> 19
BRADFORD CAPITAL
MANAGEMENT
A COMPREHENSIVE
ACCOUNT FOR
MANAGING YOUR ASSETS
J.C. BRADFORD & CO.
MEMBERS NEW YORK STOCK EXCHANGE, INC.
MEMBER SIPC
J.C. BRADFORD & CO.
MEMBERS NEW YORK STOCK EXCHANGE, INC.
MEMBER S.I.P.C.
- --------------------------------------------------------------------------------
BROKER'S NAME
- --------------------------------------------------------------------------------
PHONE NUMBER
- --------------------------------------------------------------------------------
ADDRESS
- --------------------------------------------------------------------------------
ACCOUNT NUMBER
PLEASE RETAIN THIS
ROLODEX CARD FOR
YOUR CONVENIENCE
<PAGE> 20
SURETY AGREEMENT
IN CONSIDERATION of credit granted by PNC NATIONAL BANK (hereinafter referred
to as "Bank") to
- -------------------------------------------------------------------------------
(Fill in Name of business or partnership)
(hereinafter referred to as "Debtor"), the undersigned (each jointly and
severally if more than one and hereinafter jointly and severally referred to as
"Surety") hereby:
1. Becomes an unconditional surety to Bank, its successors, endorsees
and assigns for the prompt payment when due of all existing and future
liabilities and obligations of Debtor to Bank, whether absolute or contingent,
direct or indirect, sole, joint or several of any nature whatsoever and out of
whatever transactions arising, including, without limitation, continuing
interest thereon and any reasonable costs and legal expenses incurred by Bank
in the enforcement thereof (hereinafter collectively referred to as the "Debtor
Liabilities");
2. Assents to all agreements made or to be made between Bank and any
other person(s) liable, either absolutely or contingently, on any Debtor
Liabilities, including Debtor and any co-maker, endorser, surety, or guarantor
(any such person being hereinafter referred to as an "Obligor"), and further
agrees that Surety's liability hereunder shall not be reduced or diminished by
such agreements in any way;
3. Consents that Bank may, at its sole option, without in any way
affecting Surety's liability hereunder: (a) exchange, surrender or release any
or all collateral security or any guaranty or surety held by Bank for any of
the Debtor Liabilities; (b) renew, extend, modify, supplement, amend, release,
alter or compromise the terms of any or all of the Debtor Liabilities; and (c)
waive any of Bank's rights or remedies against Debtor; and
4. Warrants that the address specified herein, immediately opposite
Surety's name, is Surety's current and correct residence address if Surety is a
natural person, or principal place of business address if Surety is a
corporation, partnership, or other legal entity, and agrees to notify Bank, in
the manner hereinafter specified, within three days of change in Surety's
address.
CONTINUING SURETY
This Surety Agreement shall be a continuing one and shall be binding
upon Surety regardless of how long before or after the date hereof any of the
Debtor Liabilities was or is incurred; provided, however, that Surety, and if
more than one, any such Surety may give Bank written notice, in the manner
hereinafter specified, of such Surety's intention to exclude from that Surety's
liabilities hereunder any Debtor Liabilities incurred on or after the Effective
Date of such notice. The Effective Date of any such notice is defined as the
fifth banking day following proper receipt by Bank thereof or any later date
specified therein. It is expressly provided, however, that no such notice
shall reduce, diminish or release the notifying Surety's liabilities hereunder
with respect to: (a) any Debtor Liabilities that are incurred prior to the
Effective Date of such notice; (b) any Debtor Liabilities which Bank, in good
faith, permits to be incurred pursuant to an agreement entered into prior to
the Effective Date of such notice, if such agreement by its terms obligates Bank
to permit such Debtor Liabilities to be incurred, notwithstanding the existence
of any fact on the basis of which Bank could have refused to allow such Debtor
Liabilities to be incurred; (c) any Debtor Liabilities that constitute
renewals, extensions or modifications of Debtor Liabilities described in (a) or
(b) above; or (d) continuing interest on Debtor Liabilities described in (a),
(b) or (c) above and any reasonable costs and legal expenses incurred by Bank
in the enforcement thereof.
UNCONDITIONAL LIABILITY
Surety's liability hereunder is absolute and unconditional and shall not
be reduced, diminished or released in any way by reason of: (a) any failure by
Bank to obtain, retain or preserve, or the lack of enforcement of, any rights
against any person including without limitation any Obligor or in any property;
(b) the invalidity of any such rights which Bank may attempt to obtain; (c) any
delay in enforcing or any failure to enforce such rights even if such rights
are thereby lost; or (d) any delay in making demand on any Obligor for
performance or payment of the Debtor Liabilities or any of them. Bank may
apply any payment received on account of the Debtor Liabilities to or on
account of such of the Debtor Liabilities, and in such order, as Bank in its
sole discretion may elect.
SECURITY INTEREST
As security for the prompt payment when due of the liabilities of
Surety hereunder, Surety (and if more than one, each of them) hereby grants to
Bank a lien and security interest in all property of Surety now or at any time
hereafter in Bank's possession or which it may have the right to have in its
possession in any capacity, including but not limited to any balance or share
of any deposit, trust, agency or escrow account, or otherwise, now or hereafter
owed by Bank from time to time to Surety in any regard or in any capacity, and
whether or not due. Surety assumes full responsibility for preservation of all
collateral and the taking of any action to preserve any rights therein or
against prior parties thereto. If any liability of Surety hereunder
is not paid to Bank when due, Bank may forthwith: (a) set-off against the
liabilities of Surety hereunder all moneys owed by Bank in any capacity to
Surety, whether due or not, and Bank shall be deemed to have made such set-off
immediately upon any such liability of Surety becoming due, even though entered
on Bank's books subsequent thereto; and (b) sell all or any part of any
property held as security on any exchange or brokers' board or at any public or
private sale, at the option of Bank, at any time or times, without
advertisement or demand upon or notice to Surety (all of which are hereby
waived), except such notice, if any, as may be required by law and cannot be
waived, with the right on the part of Bank or its nominee to become the
purchaser thereof at any such sale free from any equity of redemption and from
all other claims. Said lien and security interest shall be independent of any
right of set-off which the Bank may have.
WAIVERS
Surety hereby waives all notices of any character whatsoever with
respect to this Surety Agreement and the Debtor Liabilities, including but not
limited to, notice of the present existence of future incurring of any Debtor
Liabilities; of the amount, terms and conditions thereof; and of any defaults
thereon. Surety hereby consents to the taking of, or failure to take, from
time to time without notice to Surety, any action of any nature whatsoever with
respect to the Debtor Liabilities and with respect to any rights against any
person or persons (including without limitation any Obligor) or in any
property, including without limitation any renewals, extensions, modifications,
postponements, compromises, indulgences, waivers, surrenders, exchanges and
releases, and Surety will remain fully liable hereunder notwithstanding any of
the foregoing. The granting of an express written release of any Surety's
liability hereunder shall be effective only with respect to the liability
hereunder of any one or more Sureties who are specifically so expressly
released, but shall in no way affect the liability hereunder of any Surety not
so expressly released. The death or incapacity of any Surety shall in no way
affect the liability hereunder of any other Surety, except as provided herein.
Surety hereby waives the benefit of all laws nor or hereafter in effect in any
way limiting or restricting the liability of Surety hereunder, including
without limitation: (a) all defenses whatsoever to Surety's liability hereunder
except the defense of payments made to Bank on account of the Debtor
Liabilities and the Surety's liability hereunder; (b) all right to stay of
execution and exemption of property in any action to enforce the liability of
Surety hereunder; and (c) Surety hereby expressly waives: (i) notice of
acceptance hereof: (ii) any presentment, demand, protest, dishonor, notice of
dishonor or any other notice of any kind; and (iii) any right of
indemnification and any and all other rights at law or in equity of a surety
and/or a guarantor.
<PAGE> 21
So long as the Debtor Liabilities have not been paid in full, no
payment by any Surety shall entitle Surety, to subrogation, contribution, or
otherwise, to succeed to any of the rights of Bank, including rights to any
payment made on account of the Debtor Liabilities, regardless of the source of
such payment. Surety hereby waives any benefit of and any right to participate
in any collateral security now or hereafter held by Bank or any failure or
refusal by Bank to perfect an interest in any collateral.
PAYMENT OF COSTS
In addition to all other liability of Surety hereunder, Surety also
agrees to pay to Bank on demand all costs and expenses (including reasonable
attorney's fees and legal expenses) which may be incurred in the enforcement of
the liability of Surety hereunder.
ACCELERATION OF LIABILITIES
Upon the occurrence of any of the following events, all of the Debtor
Liabilities shall, at Bank's sole option, be deemed to be forthwith due and
payable for the purposes of this Surety Agreement and the liability of Surety
hereunder, whether or not Bank has any such rights against any other Obligor,
and whether or not Bank elects to exercise any of its rights or remedies
against any other person, including without limitation any other Obligor: (1)
the nonpayment when due of any amount payable under or on any of the Debtor
Liabilities, or the failure of Surety to observe or perform any agreement of any
nature whatsoever with Bank; (2) if Surety becomes insolvent or makes an
assignment for the benefit of creditors, or if any petition is filed by or
against Surety under any provision of any state or federal law or statute
alleging that Surety is insolvent or unable to pay debts as they mature or
under any provision of the Federal Bankruptcy Act; (3) the entry of any
judgment against Surety which remains unsatisfied for fifteen (15) days or the
issuing of any attachment, levy or garnishment against any property of Surety or
the occurrence of any substantial change in the financial condition of Surety
which, in the sole, reasonable judgment of Bank, is materially adverse; (4) the
dissolution, merger, consolidation or reorganization of Surety, if Surety is a
corporation or partnership, without the express prior written consent of Bank;
(5) the death, incarceration or adjudication of legal imcompetence of Surety,
if Surety is a natural person; (6) if any information heretofore or hereafter
furnished to Bank by Surety or delivered to Bank in connection with any of the
Debtor Liabilities, should prove to be materially false or incorrect; (7) the
failure of Surety to furnish to Bank such financial and other information as
Bank may reasonably request or require; (8) the occurrence of an Event of
Default or a default under any agreement between Surety and Bank.
NOTICES TO BANK BY SURETY
Any notice to Bank by Surety pursuant to the provisions hereof shall be
sent certified mail, return receipt requested, to:
PNC National Bank
Revolving Credit Department
P.O. Box 8928
Wilmington, DE 19899-8928
Notice by any one or more Surety shall not, in any way, reduce,
diminish or release the liability of any other Surety. In the event that this
Agreement is preceded or followed by any other guaranty or surety agreements(s),
all rights granted Bank in such agreement(s) shall be deemed to be cumulative.
MISCELLANEOUS
This Agreement shall be binding upon Surety and Surety's heirs,
executors, administrators, successors, assigns, and other legal
representatives, and shall inure to the benefit of the Bank, its endorsees,
successors and assigns forever. If any provision of this Agreement shall for
any reason be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision hereof, but this
Agreement shall be construed as if such invalid or unenforceable provision had
never been contained herein. Surety intends to be legally bound hereby. All
issues arising hereunder shall be governed by the laws of Delaware.
Executed this ____ day of _____________, 19__.
INDIVIDUALS SIGN BELOW
- ------------------------------------ --------------------------------------
Name Residence Address
- ------------------------------------ --------------------------------------
Name Residence Address
- ------------------------------------ --------------------------------------
Name Residence Address
<PAGE> 22
SURETY AGREEMENT MUST BE SIGNED
AND ACCOMPANY VISA GOLD APPLICATION
<TABLE>
APPLICANT
<S> <C> <C> <C>
Type of Account [ ] Corporation [ ] Partnership Legal Name of Corporation, Trust or other Applicant
[ ] Other ______________________ |_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|_|
__________________________________________________________________________________________________________________
PERSON APPLYING FOR THIS ACCOUNT ON BEHALF OF THE APPLICANT
First Name M.I. Last Name (indicate Jr., Sr., etc.) Date of Birth No. of dependents Home Telephone
(excluding self)
Home Street Address City State Zip How Long?
Yrs. ____ Mos. _____
Social Security No. Relationship to Entity (title, function) How Long? Check if Gross Monthly Income
[ ] Self-Employed
Yrs. _____ Mos._____ [ ] Retired $
Business Street Address City State Zip Business Telephone
Other Monthly Income - Person Applying Should Complete. Income from Name & Address of Source Other Monthly Income
alimony, child support or separate maintenance need not be revealed of Other Monthly Income $
if you do not wish to have it considered for repaying this obligation.
Other Debts Type of Debt (check all that apply) Total Outstanding Total Other
Person applying for Entity Complete. [ ] Visa(R) [ ] Finance company loan Balances Monthly
List all installment loans, credit cards, [ ] Mastercard(R) [ ] Department store Payments
charge accounts, etc. [ ] Bank loan [ ] Other
Savings Money Name of
Market Accounts Institution Current Balance Checking Account # Name of Institution Current Balances
____________________________________________________________________________________________________________________________________
ADDITIONAL CARDHOLDER(S) (IF APPLICABLE)
Additional Card: There is no extra charge for the first three cards issued in each account. Additional cards are provided at a
one-time cost of $10 each. Please issue a card on my/our account to:
First Name M.I. Last Name (indicate Jr., Sr., etc.) Relationship
First Name M.I. Last Name (indicate Jr., Sr., etc.) Relationship
- ------------------------------------------------------------------------------------------------------------------------------------
AGREEMENT: The person signing below certifies and warrants that he/she is authorized to sign this application on behalf of the
applicant; that the applicant will be bound by the terms of PNC's Credit-Card Agreement as in effect from time to time and the
Bradford Capital Management Account Agreement and will repay any obligations incurred under either of said agreements. The person
signing below also agrees to be individually bound by the terms of PNC's Credit Card Agreement as in effect from time to time and
the Bradford Capital Management Account Agreement and be personally responsible for any obligations incurred under either of said
agreements. The person signing below has the authority to authorize on behalf of the applicant and does authorize PNC National Bank
to: (1) check the credit and employment history of the signer as well as the applicant; (2) retain this application; and (3) obtain
from and exchange the signer's and applicant's financial information with any of Bank's affiliates or correspondents.
- ------------------------------------------------------------------------------------------------------------------------------------
PERSON APPLYING ON BEHALF OF APPLICANT (INDIVIDUALLY AND AS AUTHORIZED SIGNER FOR APPLICANT) DATE
X
- ------------------------------------------------------------------------------------------------------------------------------------
Disclosure Summary
Late Payment and
Annual Percentage Balance Calculation Transaction Fee Over-the-Credit
Rate on Purchases Grace Period For Method for Membership Fees For Cash Advances Limit Fees
and Cash Advances Purchases Purchases
- ------------------------------------------------------------------------------------------------------------------------------------
16.99% You have 25 days Average Daily No separate fee $1.00 for each Late Payment
to repay your Balance Automatic Teller fee: $7 (after
entire balance (Including (ATM) transaction 25 days) Over-
before being new purchases) the-Credit-
charged a finance Limit fee: $7
charge for new (if 10% over
purchases Limit)
The information about the costs of the card described in this application is accurate as of 11/1/91. The information may change
after that date.
To find out what has changed, write us at: PNC National Bank, Disclosure Information Dept., P.O. Box 8929, Wilmington, DE 19899,
and ask for the latest information regarding the Bradford Cash Management Account Visa Gold Card Provided by PNC, Wilmington, DE.
Member FDIC.
</TABLE>
<PAGE> 23
SECURITIES ACCOUNT MARGIN AGREEMENT
CONSENT TO LOAN OF SECURITIES
In consideration of the acceptance by J.C. Bradford & Co. ("Bradford") of
the account(s) in which the undersigned applicants(s) (all such signatories
hereto, whether acting in their individual or representative capacities, are
referred to in this Agreement as "you") have an interest, alone or with others,
which you have opened or open in the future, with Bradford for the purchase and
sale of securities or commodities you agree as follows:
1. RULES AND REGULATIONS: All transactions for your account shall be subject
to the then applicable constitution, rules, regulations, customs and usages of
the exchange or market and its clearing house, if any, where executed by
Bradford or its agents; and where applicable, the Securities Exchange Act of
1934, as amended; the Commodity Exchange Act, as amended; the rules and
regulations of the Securities and Exchange Commission, the Board of Governors
of the Federal Reserve System and the Commodity Futures Trading Commission.
2. WAIVER: You agree that no provision of this Agreement shall be waived,
altered, modified or amended unless committed to in writing and signed by a
partner of Bradford. No waiver of any provision of this Agreement shall be
deemed a waiver of any other provision, nor a continuing waiver of the
provision(s) so waived.
3. SEVERABILITY: If any provision of this Agreement is held to be
invalid, void or unenforceable by reason of any law, rule, administrative order
or judicial decision, that determination shall not affect the validity of the
remaining provisions of this Agreement.
4. SECURITY INTEREST: All monies, securities, commodities or contracts
relating thereto and all other property in any account in which you have an
interest (held either individually, jointly or otherwise) or which may at any
time be in Bradford's possession for any purpose, including safekeeping, shall
be subject to a general lien for the discharge of all obligations you may have
to Bradford, however and whenever arising. All securities and other property
shall be held by Bradford as security for the payment of all such obligations or
indebtedness in any account in which you may have an interest.
5. LOAN OR PLEDGE OF SECURITIES: All monies, securities and commodities or
contracts relating thereto and all other property which Bradford may at any
time be carrying for you or in which you may have an interest, may from time to
time and without notice be carried in Bradford's general loans and may be
pledged, repledged, hypothecated or rehypothecated, separately or in common
with other securities or any other property for the sum due Bradford thereon or
for a greater sum without retaining in Bradford's possession and control for
delivery a like amount of similar securities or commodities. Subject to
applicable law, Bradford, without notice to you, may apply and/or transfer any
or all monies, securities, commodities or contracts relating thereto and all
other property interchangeably between accounts or to accounts in which you
have an interest or which are guaranteed by you (except regulated commodity
accounts). Bradford is hereby specifically authorized to transfer to your cash
account on settlement day any excess funds available in any of your other
accounts, including but not limited to any free balances in any margin account,
sufficient to make full payment of cash purchases. You agree that any debit
occurring in any of your accounts may be transferred at Bradford's option to
your margin account. You hereby authorize Bradford, from time to time, to
lend, separately or together with property of others, to itself or others, any
property it may be carrying for you on margin. This authorization shall apply
to all accounts for you.
6. INTEREST CHARGES: Debit balances in your accounts shall be charged
interest or service charges in accordance with Bradford's policies and at
prevailing rates determined by Bradford.
7. LIQUIDATION: You understand that, notwithstanding a general policy of
giving customers notice of margin deficiency, Bradford is not obligated to
request additional margin from you in the event your account falls below
minimum maintenance requirements. More importantly, there may be circumstances
where Bradford will liquidate securities and/or other property in the account
without notice to you to ensure that minimum maintenance requirements are
satisfied. Bradford shall have the right in accordance with its general
policies regarding margin maintenance requirements to require additional
collateral or the liquidation of any securities and other property whenever in
its discretion it considers it necessary for its protection, including in the
event of, but not limited to: Your failure to promptly meet any call for
additional collateral; the filing of a petition in bankruptcy by or against
you; the appointment of a receiver is filed by or against you; an attachment
is levied against any account in which you have an interest or; you death. In
such event, Bradford is authorized to sell any and all securities and other
property in any account of yours, whether carried individually or jointly with
others, to buy all securities or other property which may be short in such
account(s), to cancel any open orders and to close any or all outstanding
contracts, all without demand for margin or additional margin, other notice of
sale or purchase, or other notice of advertisement each of which is expressly
waived by you. Any such sales or purchases may be made at Bradford's
discretion on any exchange or other market where such business is usually
transacted or at public auction or private sale, and Bradford may be the
purchaser for its own account. It is understood a prior demand, or call, or
prior notice of the time and place of such sale or purchase shall not be
considered a waiver of Bradford's right to sell or buy without demand or notice
as herein provided.
8. MARGIN: You will at all times maintain positions and margins in your
accounts as Bradford, in its discretion, may from time to time require and will
pay on demand any debit balance owing with respect to such accounts.
9. GOVERNING LAW: This agreement shall be governed by the laws of the State
of New York, and shall insure to Bradford's successors and assigns, and shall
be binding on you, your heirs, executors, administrators and assigns.
10. ARBITRATION DISCLOSURES:
- - ARBITRATION IS FINAL AND BINDING ON THE PARTIES.
- - THE PARTIES ARE WAIVING THEIR RIGHT TO SEEK REMEDIES IN COURT, INCLUDING
THE RIGHT TO JURY TRIAL.
- - PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED THAN AND DIFFERENT FROM
COURT PROCEEDINGS.
- - THE ARBITRATORS' AWARD IS NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL
REASONING AND ANY PARTY'S RIGHT TO APPEAL OR TO SEEK MODIFICATION OF
RULINGS BY THE ARBITRATORS IS STRICTLY LIMITED.
- - THE PANEL OF ARBITRATORS WILL TYPICALLY INCLUDE A MINORITY OF ARBITRATORS
WHO WERE OR ARE AFFILIATED WITH THE SECURITIES INDUSTRY.
11. ARBITRATION: I AGREE, AND BY CARRYING AN ACCOUNT FOR ME, BRADFORD AGREES,
THAT ALL CONTROVERSIES WHICH MAY ARISE BETWEEN US CONCERNING ANY TRANSACTION
WHETHER CONSTRUCTION, PERFORMANCE OR BREACH OF THIS OR ANY OTHER AGREEMENT
BETWEEN US, WHETHER ENTERED INTO PRIOR, ON OR SUBSEQUENT TO THE DATE HEREOF,
SHALL BE DETERMINED BY ARBITRATION. ANY ARBITRATION UNDER THIS AGREEMENT SHALL
BE GOVERNED BY THE ARBITRATION AND SUBSTANTIVE LAWS OF THE STATE OF NEW YORK,
BEFORE THE NEW YORK STOCK EXCHANGE, INC. OR AN ARBITRATION FACILITY PROVIDED BY
ANY OTHER EXCHANGE OF WHICH BRADFORD IS A MEMBER, OR THE NATIONAL ASSOCIATION OF
SECURITIES DEALERS, INC. AND IN ACCORDANCE WITH THE ARBITRATION RULES
PERTAINING TO THE SELECTED ORGANIZATION. I MAY ELECT IN THE FIRST INSTANCE
WHETHER ARBITRATION SHALL BE BY AN EXCHANGE OR SELF-REGULATORY ORGANIZATION OF
WHICH THE BROKER IS A MEMBER, BUT IF I FAIL TO MAKE SUCH ELECTION BY REGISTERED
LETTER OR TELEGRAM ADDRESSED TO BRADFORD AT ITS MAIN OFFICE BEFORE THE
EXPIRATION OF FIVE (5) DAYS AFTER RECEIPT OF A WRITTEN REQUEST FROM BRADFORD
TO MAKE SUCH ELECTION, THEN BRADFORD SHALL MAKE SUCH ELECTION. THE AWARD OF
THE ARBITRATORS, OR OF THE MAJORITY OF THEM, SHALL BE FINAL, AND JUDGMENT UPON
THE AWARD RENDERED MAY BE ENTERED IN ANY COURT, STATE OR FEDERAL, HAVING
JURISDICTION.
<PAGE> 24
12. SALE ORDERS/DELIVERIES: You agree that when placing a sell order, all
"short" sale orders shall be designated as "short" and all "long" sale orders
shall be designated as "long". You represent that any sell order which you
designate as "long" shall be for securities then owned by you and if such
securities are not then deliverable from your account, that you will deliver
them on or before settlement date. In the case of the sale of any security,
commodity or other property by Bradford at your direction, Bradford's
inability to deliver the same to the purchaser by reason of your failure to
supply Bradford therewith, you authorize Bradford to borrow such security,
commodity or other property necessary to make delivery thereof and you agree to
be responsible for any loss which Bradford may sustain thereby and any premiums
which it may be required to pay thereon and for any additional loss which it
may sustain by reason of its inability to borrow the security, commodity or
other property sold on your behalf.
13. BROKER: You understand that in all transactions between you and Bradford,
Bradford shall be acting as broker for you, except when Bradford discloses to
you that, with respect to such transaction, it is acting as dealers for its
account or as broker for some other person.
14. COMMUNICATIONS: Confirmations of transactions and statements of your
account shall be conclusive if not objected to in writing to Bradford within 5
days and 10 days respectively after transmitted to you by mail or otherwise.
Communications may be sent to you at the address shown on Bradford's records
for your account or at such other address as you may hereafter provide to
Bradford in writing. All communications sent, whether by mail, telegraph,
messenger or otherwise will be deemed given, whether actually received or not.
15. REPRESENTATIONS: You represent that you are of legal age, are not an
employee or member of any exchange or a member firm or any corporation of which
any exchange owns a majority interest or the NASD or of a bank, trust company,
insurance company or other employer engaged in the business of a broker-dealer
and that you will promptly notify Bradford if you become so employed. You
further represent that, unless otherwise disclosed to Bradford in writing, no
one except you has and interest in the account or accounts maintained with
Bradford in your name.
16. AGREEMENT CONTAINS ENTIRE UNDERSTANDING/ASSIGNMENT: This Agreement
contains the entire understanding between you and Bradford concerning the
subject matter of this Agreement. You may not assign the rights and
obligations hereunder without first obtaining the prior written consent of
Bradford.
BY SIGNING THIS AGREEMENT YOU ACKNOWLEDGE THAT:
1. THE SECURITIES IN YOUR MARGIN ACCOUNT MAY BE LOANED TO BRADFORD OR LOANED
OUT TO OTHERS AND;
2. THAT YOU HAVE RECEIVED A COPY OF THIS AGREEMENT; AND
3. THIS AGREEMENT CONTAINS A PRE-DISPUTE ARBITRATION CLAUSE AT PARAGRAPH 11.
CREDIT CHARGE SUMMARY
We are furnishing the following information in order that you may be informed
of the terms and conditions governing our charges for credit extended to or
maintained for you.
1. CASH ACCOUNTS. Generally, interest is not charged on debit balances in cash
accounts, unless there is also a margin debit balance in your account, in
which case interest is charged on the total debit balance. However,
interest may also be charged on cash account debit balances in unusual
circumstances, such as: as prepayment (payment prior to settlement date) of
the proceeds of a sale, in which case there would be interest charged for
the number of days of early payment; a late payment (after settlement date)
for securities purchased; or a debit balance arising from a sell-out or
buy-in following a customer's failure to pay for securities purchased or
to deliver securities sold.
2. RATE. The annual rate of charge will be determined in accordance with the
following:
AVERAGE DEBIT BALANCE MAXIMUM CREDIT RATE
Less than $25,000 Base Rate + 1.75%
$25,000 - $49,999 Base Rate + 1.50%
$50,000 - $99,999 Base Rate + 1.00%
$100,000 - $499,999 Base Rate + .50%
Over $500,000 Base Rate + .25%
Our Base Rate will generally be Prime Rate as quoted in the Wall Street
Journal. When your interest rate is to be increased for any reason, other
than to adjust to changes in the base rate, at least 30 days prior written
notice will be given.
3. COMPUTATION OF CHARGES. As stated in our margin agreement, our margin
accounts and related finance charges are governed by the laws of the State
of New York. In computing credit charges, balances are calculated daily
for all types of accounts of a customer, except credit balances in short
accounts (Type 5).
In computing credit charges, cash and margin (Type 1 & 2 Daily Balances)
are netted against each other. Each net debit is added to obtain an
aggregate debit for the period. This aggregate is multiplied times the
interest rate and then divided by 360 days to obtain the interest charges.
For those days that have a net credit, this net of cash and margin accounts
is carried over and netted against other accounts carried for you (other
than short accounts). The same method is then used (adding, multiplying by
the rate and dividing by 360).
If you sell short (or short against the box), and the market value of
the security you sold increases above your selling price, the increase
will be charged to your Margin Account (type 2) with an offsetting credit
to your Short Account (type 5) and interest will be charged in the Margin
Account on the increase. Conversely, interest is reduced by any decrease
in market value. This is known as "Marking to the Market."
Our interest is calculated and posted on the last Friday of the month
with the last day of the period being the previous day. Interest for
December will similarly be calculated and posted on the last working day of
the calendar year. To enable you to confirm the accuracy of the monthly
interest charge as shown on your statement, the following information will
be shown on the statement: the interest rate, the average balance, the
member of days in the interest period, the beginning and ending dates of
the interest period, and the ending debit balance.
4. COLLATERAL. Your Customer Agreement with us provides a lien on all
securities which we hold for you to secure the discharge of all your
obligations to us, and gives us the right at any time to require you to
deposit such additional collateral as, in our sole discretion, we determine
is necessary as security for your obligations to us. Without limiting our
aforesaid discretionary authority, we have some general guidelines which
may be changed or discontinued by us at any time. For instance, if your
account should fall below 30% equity at any time, a call will be sent to
you for additional cash or collateral to bring your equity up to 30%. We
may also decline to extend credit on certain securities because of price,
market conditions, concentration; etc., which we feel would be both to your
interest and the Firm's to be on a fully paid basis. There may be times
also when the firm is extending credit on particular securities, but due
to market or other conditions may feel it necessary to call on you for
sufficient cash or collateral in the order to make that security fully paid
for.
<PAGE> 25
BRADFORD CAPITAL MANAGEMENT ACCOUNT FOR CORPORATE ACCOUNT
ACCOUNT AGREEMENT
This agreement sets forth the terms and conditions governing the Bradford
Capital Management Account ("BCM Account"), for which the undersigned
applicants(s) (all such signatories hereto, whether acting in their individual
or representative capacities, are referred to in this Agreement as "you") are
making application with J.C. Bradford & Co. ("Bradford"). You enter into this
agreement in conjunction with related agreements with Provident National Bank,
its subsidiaries and affiliates, as well as the Customer's Agreement between
yourself and Bradford. This agreement is subject to, and may be modified from
time to time by disclosure in the prospectuses pertaining to Bradford Money
Fund, Bedford Tax-Free Money Market Portfolio and Bedford Government
Obligations Money Market Portfolio (the "Designated Funds"), and any supplement
or amendment thereto as of the time of filing or effectiveness thereof
(hereafter referred to as the "Prospectuses"). Bradford will charge your BCM
Account an annual administration fee. Such fee is currently $50 and Bradford
serves the right to change the fee at its sole and absolute discretion. Detail
description of the Account may be found in the Bradford Capital Management
Account Summary Description which should be read.
ACCOUNT OVERVIEW: The BCM Account is a conventional Bradford securities
margin account (the "Securities Account") that is linked to the Designated
Funds you selected on the Account Application, or the J.C. Bradford Immediate
Credit Interest Program ("Credit Interest"); a checkwriting privilege through
Provident National Bank ("Provident"); and optional Visa Gold Card including
ATM access, from PNC National Bank ("PNC"), an affiliate of Provident; direct
investment of your salary and government payments. Another feature of this
Account is the consolidated monthly statement from Bradford. The principal
attributes of each component of the Bradford Capital Management Account and
their relation to one another are described below.
THE SECURITIES ACCOUNT: The securities Account will be governed by the federal
securities laws, the rules and regulations of the Securities and Exchange
Commission, the Board of Governors of the Federal Reserve System, the
Securities Investor Protection Corporation, the New York Stock Exchange Inc.
and the National Association of Securities Dealers, Inc. and by the Customer's
Agreement.
With a BCM Account, your securities held by Bradford are protected for up to
$50 million through a combination of S.I.P.C. and Aetna Casualty & Surety Co.
Insurance.
You may use the Securities Account to purchase and sell securities, including
options, on margin or otherwise. We require that a minimum of three thousand
dollars ($3,000) of equity be maintained in the Securities Account.
THE DESIGNATED FUND: You authorize Bradford to invest automatically in
Designated Fund shares any Available Cash in the undersigned's Securities
Account (that is, any cash that does not result from a loan from Bradford, and,
thus may be transferred out of your Securities Account without giving rise to
interest charges). Such automatic investment of Available Cash in Designated
Fund shares will occur daily at the net asset value per share next determined.
CREDIT INTEREST: An alternative to the Designated Fund is the J.C. Bradford
Immediate Credit Interest Program, a service which enables your Available Cash
to continually earn interest while waiting for a reinvestment opportunity. Any
Available Cash of $1,000 or more starts earning interest immediately at the
J.C. Bradford & Co. Money Market Rate as described in the Program description.
You authorize use of the Available Cash to satisfy debit balances resulting
from securities transactions, from the use of checkwriting privilege or the
Visa Gold Card as described below.
CHECKWRITING SECURITIES: You may access the Combined Asset Value of your BCM
Account through PNC Bank. The Combined Asset Value of your BCM Account will
consist of: Available Cash in your securities account; Designated Fund shares
(if any); and available margin loan value (if any). Your monthly consolidated
brokerage statement will list each check paid. In addition, Provident will
return paid checks to you along with a monthly checking activity summary.
Certain customary bank fees may be imposed on you for services rendered in
connection with the checkwriting privilege, such as: stop payment, copies of
cancelled checks, insufficient funds, or excessive number of checks written on
a monthly basis.
PAYMENTS: You must maintain a Combined Asset Value sufficient to pay when due
any checks you write and any Visa Gold transactions made by you or any
additional authorized Visa Gold cardholders. Payments for checks and for Visa
Gold transactions will be satisfied from the Combined Asset Value of your BCM
Account. Bradford will debit your account in the following order, first, from
Available Cash in your Securities Account including any cash in Credit
Interest; second, from the proceeds of redeeming Designated Fund shares
(if any); and third, from margin loans extended by Bradford to you up to the
margin value of your marginable securities (if any). Nonmarginable securities
are not available for margin loan and are not a source of funds to cover checks
written or Visa Gold transactions made against the account.
MARGIN LOANS: If we extend a margin loan based on your Securities Account for
any reason, we will begin to charge interest on the day we extend such credit
to you. If we extend such a loan, it will be secured by the securities in your
Securities Account. We will charge the same rate of interest we charge for
other margin loans. By signing this agreement you acknowledged receipt of
Bradford's written explanation of margin interest charges. As with any margin
account, you must be in compliance with all current regulations and New York
Stock Exchange maintenance requirements.
<PAGE> 26
CHECKS AND VISA GOLD CASH ADVANCE TRANSACTIONS: We will debit your account
immediately whenever a check is presented for payment on your behalf; or when
we are notified that you or an additional authorized Visa Gold cardholder has
effected a Visa Gold card cash advance. You authorize us to automatically
transfer funds from your BCM Account to PNC to cover checks or to PNC to
cover Visa Gold cash advances.
You agree that neither Bradford, nor PNC will be liable for any loss you incur
in connection with the checkwritting privilege unless we are negligent in
fulfilling this Agreement. In no event will we, Bradford or PNC, be liable for
consequential, special or indirect damages or loss.
ANNUAL FEE: We will deduct an annual fee from your BCM Account for processing
and administrative services. The base fee is currently $150 and Bradford
reserves the right to change the fee at its sole and absolute discretion. We
will notify you before any increase in fee becomes effective.
SERVICES:
APPROVING THE VISA GOLD CARD: Each individual applicant who signs the BCM
Account and complete the credit card application included in this package.
This optional service costs an additional $30 per year. PNC, the card issuing
the bank, must approve your application for the credit card before any Visa
Gold services can be linked with your BCM Account. The approval of your Visa
Gold card will be made at the sole discretion of PNC, based on their credit
approval criteria, and not by Bradford. If approved, PNC will issue and
service your Visa Gold card account with a minimum credit line of $5,000.
USING THE VISA GOLD CARD: You, and any additional cardholder may use the credit
card to charge goods and services wherever the Visa Gold card is accepted (Visa
Gold charge transactions). You may also obtain cash advances at participating
financial institutions or any Plus System location (Visa Gold cash advance
transactions). The amount of purchases and cash advances may not exceed the
available credit on your Visa Gold card.
You agree to accept financial responsibility with respect to all Visa Gold
charge and cash advance transactions effected by any cardholder, including
additional cardholders, in accordance with the Credit Card Agreement.
PNC will send you a statement showing your Visa Gold transactions and/or other
activity for the billing period in which such transactions or other activity
occurred.
You authorize Bradford to automatically transfer funds from the Combined Asset
Value of your BCM Account on the day such item is presented for payment.
Charge transactions from the most recent billing period will be transferred
from your BCM Account once a month on the payment date indicated on the
statement issued you by PNC. If your Combined Asset Value will not pay the
entire amount of newly-billed Visa Gold charge transactions on the payment
date, you will have 10 days to transfer assets to the BCM Account.
If payment is made on or before the applicable payment due date as provided in
the Credit Card Agreement, and there was no previous balance, then no finance
charges will accrue as provided in the Credit Card Agreement. In such event,
PNC will request payment from your BCM Account on a daily basis for all
outstanding amounts due in accordance with the Credit Card Agreement. Whenever
finance charges are assessed, the Annual Percentage Rate will be as stated in
the Credit Card Agreement.
For additional information regarding your Visa Gold card account, refer to the
Credit Card Agreement with will accompany your Visa Gold card(s).
TERMINATION OF THE VISA GOLD CARD FEATURE: Any cardholder who is a BCM Account
client may terminate the Visa Gold feature by notifying PNC in writing. In
any such event, we request that you return all Visa Gold cards, cut in half, to
PNC. Such terminations does not relieve you of responsibility for charge or
cash advance transactions made using the Visa Gold card, nor will it terminate
your BCM Account.
TERMINATION OF THE BCM ACCOUNT: You may terminate your BCM Account, including
the Securities Account, at any time. Such termination will result in the
cancellation of your checkwriting privilege and all Visa Gold cards and
additional Visa Gold cards issued in connection with your BCM Account. You
will remain responsible, however, for the payment of charges resulting from
your Securities Account transactions, checkwriting privilege or Visa Gold card
transactions, whether arising before or after termination. Bradford, in its
sole discretion, may terminate your BCM Account or any of the features thereof
at any time including your Securities Account, the checkwriting privilege, the
Visa Gold card and any additional Visa Gold cards. If your BCM Account is
terminated, you should promptly destroy all unused checks and Visa Gold
cards(s) by cutting them in half, and returning the destroyed Visa Gold card(s)
to PNC.
CHANGING THIS AGREEMENT: This agreement or Designated Fund prospectuses may be
changed from time to time by Bradford.
LAWS GOVERNING THIS BCM ACCOUNT AGREEMENT: This Agreement is governed by the
laws of Tennessee. However, the Credit Card Agreement is governed by Delaware
and federal law. If the terms and conditions of the Credit Card Agreement
conflict with the description of the Visa Gold card account described herein,
the terms and conditions of the Credit Card Agreement shall govern. The terms
and conditions of this Agreement and the Credit Card Agreement apply to you,
your heirs, executors, administrators, and assigns. It will benefit Bradford's
successors and assigns.
<PAGE> 1
EXHIBIT (11)
<PAGE> 2
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 10 to Registration
Statement No. 33-25137 of The Bradford Funds, Inc., The Bradford Money Fund of
our report dated January 17, 1997, appearing in the Statement of Additional
Information, which is a part of such Registration Statement, and to the
references to us under the headings "Financial Highlights" in the Prospectus
and "Miscellaneous" in the Statement of Additional Information, which are a
part of such Registration Statement.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Nashville, Tennessee
April 18, 1997
<PAGE> 1
EXHIBIT 14E
J.C. Bradford & Co. Flexible Standardized 401(k) Profit Sharing Plan
ADOPTION AGREEMENT
_______________________________________________________________________________
_______________________________________________________________________________
SECTION 1. EMPLOYER INFORMATION
_______________________________________________________________________________
Name of Employer_____________________________________________________________
Address______________________________________________________________________
City_________________________ State____________________ Zip__________________
Telephone______________ Employer's Federal Tax Identification Number_________
Type of Business (Check only one) __ Sole Proprietorship __ Partnership
__ C Corporation __ S Corporation
__ Other (Specify)___________________________________________________________
__ Check here if Related Employers may participate in this Plan and attach a
Related Employer Participation Agreement for each Related Employer who will
participate in this Plan.
Business Code________________
Name of Plan_________________________________________________________________
Name of Trust (if different from Plan name)__________________________________
Plan Sequence Number ___ (Enter 001 if this is the first qualified plan the
Employer has ever maintained, enter 002 if it is the
second, etc.)
Trust Identification Number (if applicable)_____________
Account Number (Optional)_____________
_______________________________________________________________________________
SECTION 2. EFFECTIVE DATES
Complete Parts A and B
_______________________________________________________________________________
PART A. GENERAL EFFECTIVE DATES (Check and Complete Option 1 or 2):
OPTION 1: __ This is the initial adoption of a profit sharing plan by
the Employer.
The Effective Date of this Plan is _________, 19 ___.
NOTE: The effective date is usually the first day of the
Plan Year in which this Adoption Agreement is signed.
OPTION 2: __ This is an amendment and restatement of an existing
profit sharing plan (a Prior Plan).
The Prior Plan was initially effective on _____, 19 ___.
The Effective Date of this amendment and restatement is
_______, 19 ___.
NOTE: The effective date is usually the first day of the
Plan Year in which this Adoption Agreement is signed.
PART B. COMMENCEMENT OF ELECTIVE DEFERRALS:
Elective Deferrals may commence on_________________________________
NOTE: This date may be no earlier than the date this Adoption
Agreement is signed because Elective Deferrals cannot be made
retroactively.
_______________________________________________________________________________
SECTION 3. RELEVANT TIME PERIODS
Complete Parts A through C
_______________________________________________________________________________
PART A. EMPLOYER'S FISCAL YEAR:
The Employer's fiscal year ends (Specify month and date)___________
<PAGE> 2
Page 2
PART B. PLAN YEAR MEANS:
OPTION 1: __ The 12-consecutive month period which coincides with the
Employer's fiscal year.
OPTION 2: __ The calendar year.
OPTION 3: __ Other 12-consecutive month period (Specify)_______________
NOTE: If no option is selected, Option 1 will be deemed to be selected.
If the initial Plan Year is less than 12 months (a short Plan Year)
specify such Plan Year's beginning and ending dates____________________
PART C. LIMITATION YEAR MEANS:
OPTION 1: __ The Plan Year.
OPTION 2: __ The calendar year.
OPTION 3: __ Other 12-consecutive month period (Specify) ______________
NOTE: If no option is selected, Option 1 will be deemed to be selected.
_______________________________________________________________________________
SECTION 4. ELIGIBILITY REQUIREMENTS
Complete Parts A through F
_______________________________________________________________________________
PART A. YEARS OF ELIGIBILITY SERVICE REQUIREMENTS:
1. ELECTIVE DEFERRALS.
An Employee will be eligible to become a Contributing Participant in
the Plan (and thus be eligible to make Elective Deferrals) and
receive Matching Contributions (including Qualified Matching
Contributions, if applicable) after completing_____(enter 0, 1 or
any fraction less than 1) Years of Eligibility Service.
2. EMPLOYER PROFIT SHARING CONTRIBUTIONS.
An Employee will be eligible to become a Participant in the Plan for
purposes of receiving an allocation of any Employer Profit Sharing
Contribution made pursuant to Section 10 of the Adoption Agreement
after completing______(enter 0, 1, 2 or any fraction less than 2)
Years of Eligibility Service.
NOTE: If more than 1 year is selected for Item 2, the immediate 100%
vesting schedule of Section 12 will automatically apply for
contributions described in such item. If either item is left blank,
the Years of Eligibility Service required for such item will be deemed
to be 0. If a fraction is selected, an Employee will not be required
to complete any specified number of Hours of Service to receive credit
for a fractional year. If a single Entry Date is selected in
Section 4, Part F for an item, the Years of Eligibility Service
required for such item cannot exceed 1 1/2 (1/2 for Elective Deferrals).
PART B. AGE REQUIREMENTS:
1. ELECTIVE DEFERRALS.
An Employee will be eligible to become a Contributing Participant
(and thus be eligible to make Elective Deferrals) and receive
Matching Contributions, if applicable) after attaining age _____
(no more than 21).
2. EMPLOYER PROFIT SHARING CONTRIBUTIONS.
An Employee will be eligible to become a Participant in the Plan for
purposes of receiving an allocation of any Employer Profit Sharing
Contribution made pursuant to Section 10 of the Adoption Agreement
after attaining age____(no more than 21).
NOTE: If either of the above items in this Section 4, Part B is left
blank, it will be deemed there is no age requirement for such item. If
a single Entry Date is selected in Section 4, Part F for an item, no age
requirement can exceed 20 1/2 for such item.
PART C. EMPLOYEES EMPLOYED AS OF EFFECTIVE DATE:
Will all Employees employed as of the Effective Date of this Plan who
have not otherwise met the requirements of Part A or Part B above be
considered to have met those requirements as of the Effective Date?
__ Yes __ No
NOTE: If a box is not checked for any item in this Section 4, Part C,
"No" will be deemed to be selected.
<PAGE> 3
Page 3
PART D. EXCLUSION OF CERTAIN CLASSES OF EMPLOYEES:
All Employees will be eligible to become Participants in the Plan
except:
a. __ Those Employees included in a unit of Employees covered by a
collective bargaining agreement between the Employer and the
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 Section 1.410(b)-9 of the
regulations. 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.
b. __ Those Employees who are non-resident aliens (within the meaning
of Section 7701(b)(1)(B) of the Code) and who received no earned
income (within the meaning of Section 911(d)(2) of the Code) from
the Employer which constitutes income from sources within the
United States (within the meaning of Section 861(a)(3) of the
Code).
PART E. HOURS REQUIRED FOR ELIGIBILITY PURPOSES:
1. ________Hours of Service (no more than 1,000) shall be required to
constitute a Year of Eligibility Service.
2. ________Hours of Service (no more than 500 but less than the number
specified in Section 4, Part E, Item 1, above) must be exceeded to
avoid a Break in Eligibility Service.
3. For purposes of determining Years of Eligibility Service, Employees
shall be given credit for Hours of Service with the following
predecessor employer(s): (Complete if applicable)
____________________________________________________________________
PART F. ENTRY DATES:
The Entry Dates for participation shall be (Choose one):
OPTION 1: __ The first day of the Plan Year and the first day of the
seventh month of the Plan Year.
OPTION 2: __ Other (Specify)___________________________________________
NOTE: If no option is selected, Option 1 will be deemed to be selected.
Option 2 can be selected for an item only if the eligibility
requirements and Entry Dates are coordinated such that each Employee
will become a Participant in the Plan no later than the earlier of:
(1) the first day of the Plan Year beginning after the date the
Employee satisfies the age and service requirements of Section 410(a)
of the Code; or (2) 6 months after the date the Employee satisfies such
requirements.
_______________________________________________________________________________
SECTION 5. METHOD OF DETERMINING SERVICE
Complete Part A or B
_______________________________________________________________________________
PART A. HOURS OF SERVICE EQUIVALENCIES:
Service 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. (Choose one):
OPTION 1: __ On the basis of actual hours for which an Employee is paid
or entitled to payment.
OPTION 2: __ One the basis of days worked. An Employee will be
credited with 10 Hours of Service if under Section 1.24 of
the Plan such Employee would be credited with at least
1 Hour of Service during the day.
OPTION 3: __ On the basis of weeks worked. An Employee will be credited
with 45 Hours of Service if under Section 1.24 of the Plan
such Employee would be credited with at least 1 Hour of
Service during the week.
OPTION 4: __ On the basis of months worked. An Employee will be
credited with 190 Hours of Service if under Section 1.24
of the Plan such Employee would be credited with at least
1 Hour of Service during the month.
NOTE: If no option is selected, Option 1 will be deemed to be selected.
This Section 5, Part A will not apply if the Elapsed Time Method of
Section 5, Part B is selected.
<PAGE> 4
Page 4
PART B. ELAPSED TIME METHOD:
In lieu of tracking Hours of Service of Employees, will the elapsed
time method described in Section 2.07 of the Plan be used? (Choose one)
OPTION 1: __ Yes.
OPTION 2: __ No.
NOTE: If no option is selected, Option 1 will be deemed to be selected.
_______________________________________________________________________________
SECTION 6. ELECTIVE DEFERRALS
_______________________________________________________________________________
PART A: AUTHORIZATION OF ELECTIVE DEFERRALS:
Will Elective Deferrals be permitted under this Plan? (Choose one)
OPTION 1: __ Yes.
OPTION 2: __ No.
NOTE: If no option is selected, Option 1 will be deemed to be selected.
Complete the remainder of Section 6 only if Option 1 is selected.
PART B: LIMITS ON ELECTIVE DEFERRALS:
If Elective Deferrals are permitted under the Plan, a Contributing
Participant may elect under a salary reduction agreement to have his or
her Compensation reduced by an amount as described below (Choose one):
OPTION 1: __ An amount equal to a percentage of the Contributing
Participant's Compensation from ___% to ___% in increments of ___%.
OPTION 2: __ An amount of the Contributing Participant's Compensation
not less than ____________ and not more than _________.
The amount of such reduction shall be contributed to the Plan by the
Employer on behalf of the Contributing Participant. For any taxable
year, a Contributing Participant's Elective Deferrals shall not exceed
the limit contained in Section 402(g) of the Code in effect at the
beginning of such taxable year.
PART C. ELECTIVE DEFERRALS BASED ON BONUSES:
Instead of or in addition to making Elective Deferrals through payroll
deduction, may a Contributing Participant elect to contribute to the
Plan, as an Elective Deferral, part or all of a bonus rather than
receive such bonus in cash? (Choose one)
OPTION 1: __ Yes.
OPTION 2: __ No.
NOTE: If no option is selected, Option 2 will be deemed to be selected.
PART D. RETURN AS A CONTRIBUTING PARTICIPANT AFTER CEASING ELECTIVE DEFERRALS:
A Participant who ceases Elective Deferrals by revoking a salary
reduction agreement may return as a Contributing Participant as of such
times established by the Plan Administrator in a uniform and
nondiscriminatory manner.
PART E. CHANGING ELECTIVE DEFERRAL AMOUNTS:
A Contributing Participant may modify a salary reduction agreement to
prospectively increased or decrease the amount of his or her Elective
Deferrals as of such times established by the Plan Administrator in a
uniform and nondiscriminatory manner.
PART F. CLAIMING EXCESS ELECTIVE DEFERRALS:
Participants who claim Excess Elective Deferrals for the preceding
calendar year must submit their claims in writing to the Plan
Administrator by (Choose one):
OPTION 1: __ March 1.
OPTION 2: __ Other (Specify a date not later than April 15) ___________
NOTE: If no option is selected, Option 1 will be deemed to be selected.
<PAGE> 5
Page 5
SECTION 7. MATCHING CONTRIBUTIONS
PART A. AUTHORIZATION OF MATCHING CONTRIBUTIONS:
Will the Employer make Matching Contributions to the Plan on
behalf of Qualifying Contributing Participants? (Choose one)
OPTION 1: / / Yes, but only with respect to a Contributing
Participant's Elective Deferrals.
OPTION 2: / / Yes, but only with respect to a Participant's
Nondeductible Employee Contributions.
OPTION 3: / / Yes, with respect to both Elective Deferrals and
Nondeductible Employee Contributions.
OPTION 4: / / No.
NOTE: If no option is selected, Option 4 will be deemed to be
selected. Complete the remainder of Section 7 only if Option 1,
2 or 3 is selected.
PART B. MATCHING CONTRIBUTION FORMULA:
If the Employer will make Matching Contributions, then the amount
of such Matching Contributions made on behalf of a Qualifying
Contributing Participant each Plan Year shall be (Choose one):
OPTION 1: / / An amount equal to _______% of such Contributing
Participant's Elective Deferral (and/or
Nondeductible Employee Contribution, if
applicable).
OPTION 2: / / An amount equal to the sum of ________% of the
portion of such Contributing Participant's
Elective Deferral (and/or Nondeductible Employee
Contribution, if applicable) which does not
exceed _______% of the Contributing
Participant's Compensation plus ________% of the
portion of such Contributing Participant's
Elective Deferral (and/or Nondeductible Employee
Contribution, if applicable) which exceeds
_______% of the Contributing Participant's
Compensation.
OPTION 3: / / Such amount, if any, equal to that percentage of
each Contributing Participant's Elective
Deferral (and/or Nondeductible Employee
Contribution, if applicable) which the Employer,
in its sole discretion, determines from year to
year.
OPTION 4: / / Other Formula. (Specify) _____________________
NOTE: If Option 4 is selected, the formula specified can only
allow Matching Contributions to be made with respect to a
Contributing Participant's Elective Deferrals (and/or
Nondeductible Employee Contribution, if applicable).
PART C. LIMIT ON MATCHING CONTRIBUTIONS:
Notwithstanding the Matching Contribution formula specified
above, no Matching Contribution will be made with respect to a
Contributing Participant's Elective Deferrals (and/or
Nondeductible Employee Contributions, if applicable) in excess of
__________ or ___________% of such Contributing Participant's
Compensation.
PART D. QUALIFYING CONTRIBUTING PARTICIPANTS:
A Contributing Participant who satisfies the eligibility
requirements described in Section 4 will be a Qualifying
Contributing Participant and thus entitled to share in Matching
Contributions for any Plan Year only if the Participant is a
Contributing Participant and satisfies the following additional
conditions (Check one or more Options):
OPTION 1: / / No Additional Conditions.
OPTION 2: / / Hours of Service Requirement. The Contributing
Participant completes at least ____________ (not
more than 500) Hours of Service during the Plan
Year. However, this condition will be waived
for the following reasons (Check at least one):
/ / The Contributing Participant's Death.
/ / The Contributing Participant's
Termination of Employment after having
incurred a Disability.
/ / The Contributing Participant's
Termination of Employment after having
reached Normal Retirement Age.
/ / This condition will not be waived.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
<PAGE> 6
Page 6
SECTION 8. QUALIFIED NONELECTIVE CONTRIBUTIONS
PART A. AUTHORIZATION OF QUALIFIED NONELECTIVE CONTRIBUTIONS:
Will the Employer make Qualified Nonelective Contributions to the
Plan? (Choose One)
OPTION 1: / / Yes.
OPTION 2: / / No.
If the Employer elects to make Qualified Nonelective
Contributions, then the amount, if any, of such contribution to
the Plan for each Plan Year shall be an amount determined by the
Employer.
NOTE: If no option is selected, Option 1 will be deemed to be
selected. Complete the remainder of Section 8 only if Option 1
is selected.
PART B. PARTICIPANTS ENTITLED TO QUALIFIED NONELECTIVE CONTRIBUTIONS:
Allocation of Qualified Nonelective Contributions shall be made
to the Individual Accounts of (Choose one):
OPTION 1: / / Only Participants who are not Highly Compensated
Employees.
OPTION 2. / / All Participants.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
PART C. ALLOCATION OF QUALIFIED NONELECTIVE CONTRIBUTIONS:
Allocation of Qualified Nonelective Contributions to Participants
entitled thereto shall be made (Choose one):
OPTION 1: / / In the ratio which each Participant's
Compensation for the Plan Year bears to the
total Compensation of all Participants for such
Plan Year.
OPTION 2: / / In the ratio which each Participant's
Compensation not in excess of ___________ for
the Plan Year bears to the total Compensation of
all Participants not in excess of _____________
for such Plan Year.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
SECTION 9. QUALIFIED MATCHING CONTRIBUTIONS
PART A. AUTHORIZATION OF QUALIFIED MATCHING CONTRIBUTIONS:
Will the Employer make Qualified Matching Contributions to the
Plan on behalf of Qualifying Contributing Participants? (Choose
One)
OPTION 1: / / Yes, but only with respect to a Contributing
Participant's Elective Deferrals.
OPTION 2: / / Yes, but only with respect to a Participant's
Nondeductible Employee Contributions.
OPTION 3: / / Yes, with respect to both Elective Deferrals and
Nondeductible Employee Contributions.
OPTION 4: / / No.
NOTE: If no option is selected, Option 3 will be deemed to be
selected. Complete the remainder of Section 9 only if Option 1,
2 or 3 is selected.
PART B. QUALIFIED MATCHING CONTRIBUTION FORMULA:
If the Employer will make Qualified Matching Contributions, then
the amount of such Qualified Matching Contributions made on
behalf of a Qualifying Contributing Participant each Plan Year
shall be (Choose one):
OPTION 1: / / An amount equal to ________% of such
Contributing Participant's Elective Deferral
(and/or Nondeductible Employee Contribution, if
applicable).
OPTION 2: / / An amount equal to the sum of ________% of the
portion of such Contributing Participant's
Elective Deferral (and/or Nondeductible Employee
Contribution, if applicable) which does not
exceed _________% of the Contributing
Participant's Compensation plus _________% of
the portion of such Contributing Participant's
Elective Deferral (and/or Nondeductible Employee
Contribution, if applicable) which exceeds _____%
of the Contributing Participant's Compensation.
<PAGE> 7
Page 7
OPTION 3: / / Such amount, if any, as determined by the
Employer in its sole discretion, equal to that
percentage of the Elective Deferrals (and/or
Nondeductible Employee Contribution, if
applicable) of each Contributing Participant
entitled thereto which would be sufficient to
cause the Plan to satisfy the Actual
Contribution Percentage tests (described in
Section 11.402 of the Plan) for the Plan Year.
OPTION 4: / / Other Formula. (Specify) _____________________
NOTE: If no option is selected, Option 3 will be deemed to be
selected.
PART C. PARTICIPANTS ENTITLED TO QUALIFIED MATCHING CONTRIBUTIONS:
Qualified Matching Contributions, if made to the Plan, will be
made on behalf of (Choose one):
OPTION 1: / / Only Contributing Participants who make Elective
Deferrals who are not Highly Compensated
Employees.
OPTION 2: / / All Contributing Participants who make Elective
Deferrals.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
PART D. LIMIT ON QUALIFIED MATCHING CONTRIBUTIONS:
Notwithstanding the Qualified Matching Contribution formula
specified above, the Employer will not match a Contributing
Participant's Elective Deferrals (and/or Nondeductible Employee
Contribution, if applicable) in excess of _____________ or
__________% of such Contributing Participant's Compensation.
SECTION 10. EMPLOYER PROFIT SHARING CONTRIBUTIONS
Complete Parts A, B and C
PART A. CONTRIBUTION FORMULA:
For each Plan Year the Employer will contribute an Amount to be
determined from year to year.
PART B. ALLOCATION FORMULA (Choose one):
OPTION 1: / / Pro Rata Formula. Employer Profit Sharing
Contributions shall be allocated to the
Individual Accounts of Qualifying Participants
in the ratio that each Qualifying Participant's
Compensation for the Plan Year bears to the
total Compensation of all Qualifying
Participants for the Plan Year.
OPTION 2: / / Integrated Formula. Employer Profit Sharing
Contributions shall be allocated as follows
(Start with Step 3 if this Plan is not a
Top-Heavy Plan):
Step 1. Employer Profit Sharing Contributions
shall first be allocated pro rata to
Qualifying Participants in the manner
described in Section 10, Part B, Option
1. The percent so allocated shall not
exceed 3% of each Qualifying
Participant's Compensation.
Step 2. Any Employer Profit Sharing
Contributions remaining after the
allocation in Step 1 shall be allocated
to each Qualifying Participant's
Individual Account in the ratio that
each Qualifying Participant's
Compensation for the Plan Year in excess
of the integration level bears to all
Qualifying Participants' Compensation in
excess of the integration level, but not
in excess of 3%.
Step 3. Any Employer Profit Sharing
Contributions remaining after the
allocation in Step 2 shall be allocated
to each Qualifying Participant's
Individual Account in the ratio that the
sum of each Qualifying Participant's
total Compensation and Compensation in
excess of the integration level bears to
the sum of all Qualifying Participants'
total Compensation and Compensation in
excess of the integration level, but not
in excess of the profit sharing maximum
disparity rate as described in Section
3.01 (B)(3) of the Plan.
Step 4. Any Employer Profit Sharing
Contributions remaining after the
allocation in Step 3 shall be allocated
pro rata to Qualifying Participants in
the manner described in Section 10, Part
B, Option 1.
<PAGE> 8
Page 8
The integration level shall be (Choose one):
SUBOPTION (A): / / The Taxable Wage Base.
SUBOPTION (B): / / __________________ (a dollar amount less
than the Taxable Wage Base).
SUBOPTION (C): / / ___________% (not more than 100%) of the
Taxable Wage Base.
NOTE: If no option is selected, Suboption (a) will be
deemed to be selected,
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
PART C. QUALIFYING PARTICIPANTS:
A Participant will be a Qualifying Participant and thus entitled
to share in the Employer Profit Sharing Contribution for any Plan
Year only if the Participant is a Participant on at least one day
of such Plan Year and satisfies the following additional
conditions (Check one or more Options):
OPTION 1: / / No Additional Conditions.
OPTION 2: / / Hours of Service Requirement. The Participant
completes at least ________ (not more than 500)
Hours of Service during the Plan Year. However,
this condition will be waived for the following
reasons (Check at least one):
/ / The Participant's Death.
/ / The Participant's Termination of
Employment after having incurred a
Disability.
/ / The Participant's Termination of
Employment after having reached Normal
Retirement Age.
/ / This condition will not be waived.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
SECTION 11. COMPENSATION
Complete Parts A through D
PART A. BASIC DEFINITION:
Compensation will mean all of each Participant's (Choose one):
Option 1: / / W-2 wages.
Option 2: / / Section 3401(a) wages.
Option 3: / / 415 safe-harbor compensation.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
PART B. MEASURING PERIOD FOR COMPENSATION:
Compensation shall be determined over the following applicable
period (Choose one):
Option 1: / / The Plan Year.
Option 2: / / The calendar year ending with or within the Plan
Year.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
PART C. INCLUSION OF ELECTIVE DEFERRALS:
Does Compensation include Employer Contributions made pursuant to
a salary reduction agreement which are not includible in the
gross income of the Employee under Sections 125, 402(e)(3),
402(h)(1)(B), and 403(b) of the Code? / / Yes / / No
NOTE: If neither box is checked, "Yes' will be deemed to be
selected.
PART D. PRE-ENTRY DATE COMPENSATION:
For the Plan Year in which an Employee enters the Plan, the
Employee's Compensation which shall be taken into account for
purposes of the Plan shall be (Choose one):
OPTION 1: / / The Employee's Compensation only from the time
the Employee became a Participant in the Plan.
OPTION 2: / / The Employee's Compensation for the whole of
such Plan Year.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
<PAGE> 9
Page 9
SECTION 12. VESTING AND FORFEITURES
Complete Parts A through G
PART A. VESTING SCHEDULE FOR EMPLOYER PROFIT SHARING CONTRIBUTIONS. A
Participant shall become Vested in his or her Individual Account
derived from Profit Sharing Contributions made pursuant to
Section 10 of the Adoption Agreement as follows (Choose one):
<TABLE>
<CAPTION>
YEARS OF VESTED PERCENTAGE
VESTING SERVICE Option 1 / / Option 2 / / Option 3 / / Option 4 / / Option 5 / / (Complete if Chosen)
<S> <C> <C> <C> <C> <C> <C>
1 0% 0% 100% 0% ___%
2 0% 20% 100% 0% ___%
3 0% 40% 100% 20% ___% (not less than 20%)
4 0% 60% 100% 40% ___% (not less than 40%)
5 100% 80% 100% 60% ___% (not less than 60%)
6 100% 100% 100% 80% ___% (not less than 80%)
7 100% 100% 100% 100% ___% (not less than 100%)
</TABLE>
NOTE: If no option is selected, Option 3 will be deemed to be selected.
PART B. VESTING SCHEDULE FOR MATCHING CONTRIBUTIONS. A Participant shall
become Vested in his or her Individual Account derived from
Matching Contributions made pursuant to Section 7 of the Adoption
Agreement as follows (Choose one):
<TABLE>
<CAPTION>
YEARS OF VESTED PERCENTAGE
VESTING SERVICE Option 1 / / Option 2 / / Option 3 / / Option 4 / / Option 5 / / (Complete if Chosen)
<S> <C> <C> <C> <C> <C>
1 0% 0% 100% 0% ___%
2 0% 20% 100% 0% ___%
3 0% 40% 100% 20% ___% (not less than 20%)
4 0% 60% 100% 40% ___% (not less than 40%)
5 100% 80% 100% 60% ___% (not less than 60%)
6 100% 100% 100% 80% ___% (not less than 80 %)
7 100% 100% 100% 100% ___% (not less than 100 %)
</TABLE>
NOTE: If no option is selected, Option 3 will be deemed to be selected.
PART C. HOURS REQUIRED FOR VESTING PURPOSES:
1. _______ Hours of Service (no more than 1,000) shall be
required to constitute a Year of Vesting Service.
2. _______ Hours of Service (no more than 500 but less than
the number specified in Section 12, Part C, Item 1, above)
must be exceeded to avoid a Break in Vesting Service.
3. For purposes of determining Years of Vesting Service,
Employees shall be given credit for Hours of Service with
the following predecessor employer(s): (Complete if
applicable)
PART D. EXCLUSION OF CERTAIN YEARS OF VESTING SERVICE:
All of an Employee's Years of Vesting Service with the Employer
are counted to determine the vesting percentage in the
Participant's Individual Account except (Check any that apply):
/ / Years of Vesting Service before the Employee reaches age
18.
/ / Years of Vesting Service before the Employer maintained
this Plan or a predecessor plan.
<PAGE> 10
Page 10
PART E. ALLOCATION OF FORFEITURES OF EMPLOYER PROFIT SHARING
CONTRIBUTIONS:
Forfeitures of Employer Profit Sharing Contributions shall be
(Choose one):
OPTION 1: / / Allocated to the Individual Accounts of the
Participants specified below in the manner as
described in Section 10, Part B (for Employer
Profit Sharing Contributions).
The Participants entitled to receive allocations
of such Forfeitures shall be (Choose one):
SUBOPTION (A): / / Only Qualifying
Participants.
SUBOPTION (B): / / All Participants.
OPTION 2: / / Applied to reduce Employer Profit Sharing
Contributions (Choose one):
SUBOPTION (A): / / For the Plan Year for
which the Forfeiture
arises.
SUBOPTION (B): / / For any Plan Year
subsequent to the Plan Year
for which the Forfeiture
arises.
OPTION 3: / / Applied first to the payment of the Plan's
administrative expenses and any excess applied to
reduce Employer Profit Sharing Contributions
(Choose one):
SUBOPTION (A): / / For the Plan Year for
which the Forfeiture
arises.
SUBOPTION (B): / / For any Plan Year
subsequent to the Plan Year
for which the Forfeitures
arises.
NOTE: If no option is selected, Option 1 and Suboption (a) will
be deemed to be selected.
PART F. ALLOCATION OF FORFEITURES OF MATCHING CONTRIBUTIONS:
Forfeitures of Matching Contributions shall be (Choose one):
OPTION 1: / / Allocated, after all other Forfeitures under the
Plan, to each Participant's Individual Account
in the ratio which each Participant's
Compensation for the Plan Year bears to the
total Compensation of all Participants for such
Plan Year.
The Participants entitled to receive allocations
of such Forfeitures shall be (Choose one):
SUBOPTION (A): / / Only Qualifying
Contributing Participants.
SUBOPTION (B): / / Only Qualifying
Participants.
SUBOPTION (C): / / All Participants.
OPTION 2: / / Applied to reduce Matching Contributions (Choose
one):
SUBOPTION (A): / / For the Plan Year for
which the Forfeiture
arises.
SUBOPTION (B): / / For any Plan Year
subsequent to the Plan Year
for which the Forfeiture
arises.
OPTION 3: / / Applied first to the payment of the Plan's
administrative expenses and any excess applied
to reduce Matching Contributions (Choose one):
SUBOPTION (A): / / For the Plan Year for
which the Forfeiture
arises.
SUBOPTION (B): / / For any Plan Year
subsequent to the Plan Year
for which the Forfeitures
arises.
NOTE: If no option is selected, Option 1 and Suboption (a) will
be deemed to be selected.
PART G. ALLOCATION OF FORFEITURES OF EXCESS AGGREGATE CONTRIBUTIONS:
Forfeitures of Excess Aggregate Contributions shall be (Choose
one):
OPTION 1: / / Allocated, after all other Forfeitures under the
Plan, to each Contributing Participant's
Matching Contribution account in the ratio which
each Contributing Participant's Compensation for
the Plan Year bears to the total Compensation of
all Contributing Participants for such Plan
Year. Such Forfeitures will not be allocated to
the account of any Highly Compensated Employee.
OPTION 2: / / Applied to reduce Matching Contributions (Choose
one):
SUBOPTION (A) / / For the Plan Year for
which the Forfeiture
arises.
SUBOPTION (B): / / For any Plan Year
subsequent to the Plan Year
for which the Forfeiture
arises.
<PAGE> 11
Page 11
OPTION 3: / / Applied first to the payment of the Plan's
administrative expenses and any excess applied to reduce
Matching Contributions (Choose one):
SUBOPTION (A): / / For the Plan Year for which the
Forfeiture arises.
SUBOPTION (B): / / For any Plan Year subsequent to the
Plan Year for which the Forfeitures
arises.
NOTE: If no option is selected, Option 2 and Suboption (a) will be
deemed to be selected.
- --------------------------------------------------------------------------------
SECTION 13. NORMAL RETIREMENT AGE AND EARLY RETIREMENT AGE
- --------------------------------------------------------------------------------
Part A. THE NORMAL RETIREMENT AGE UNDER THE PLAN SHALL BE (Check and complete
one option):
OPTION 1: / / Age 65.
OPTION 2: / / Age _______ (not to exceed 65).
OPTION 3: / / The later of age ______ (not to exceed 65) or the
______ (not to exceed 5th) anniversary of the first day
of the first Plan Year in which the Participant
commenced participation in the Plan.
NOTE: If no option is selected, Option 1 will be deemed to be selected.
PART B. EARLY RETIREMENT AGE (Choose one option):
OPTION 1: / / An Early Retirement Age is not applicable under the
Plan.
OPTION 2: / / Age _______ (not less than 55 nor more than 65).
OPTION 3: / / A Participant satisfies the Plan's Early Retirement
Age conditions by ________ attaining age _______ (not
less than 55) and completing Years of Vesting Service.
NOTE: If no option is selected, Option 1 will be deemed to be selected.
- --------------------------------------------------------------------------------
SECTION 14. DISTRIBUTIONS
- --------------------------------------------------------------------------------
DISTRIBUTABLE EVENTS. Answer each of the following items.
<TABLE>
<S> <C> <C>
A. Termination of Employment Before Normal Retirement Age. May a Participant
who has not reached Normal Retirement Age request a distribution from the Plan / / Yes / / No
upon Termination of Employment?
B. Disability. May a Participant who has incurred a Disability request a distribution
from the Plan? / / Yes / / No
C. Attainment of Normal Retirement Age. May a Participant who has attained
Normal Retirement Age but has not incurred a Termination of Employment request
distribution from the Plan? / / Yes / / No
D. Attainment of Age 59 1/2. Will Participants who have attained age 59 1/2 be
permitted to withdraw Elective Deferrals while still employed by the Employer? / / Yes / / No
E. Hardship Withdrawals of Elective Deferrals. Will Participants be permitted to
withdraw Elective Deferrals on account of hardship pursuant to Section 11.503 of
the Plan? / / Yes / / No
F. In-Service Withdrawals. Will Participants be permitted to request a distribution
during service pursuant to Section 6.01(A)(3) of the Plan? / / Yes / / No
G. Hardship Withdrawals. Will Participants be permitted to make hardship
withdrawals pursuant to Section 6.01(A)(4) of the Plan? / / Yes / / No
H. Withdrawals of Rollover or Transfer Contributions. Will Employees be permitted
to withdraw their Rollover or Transfer Contributions at any time? / / Yes / / No
</TABLE>
NOTE: If a box is not checked for an item, "Yes" will be deemed to be
selected for that item. Section 411(d)(6) of the Code prohibits the
elimination of protected benefits. In general, protected benefits
include the forms and timing of payout options. If the Plan is being
adopted to amend and replace a Prior Plan that permitted a distribution
option described above, you must answer "Yes" to that item.
<PAGE> 12
Page 12
- --------------------------------------------------------------------------------
SECTION 15. JOINT AND SURVIVOR ANNUITY
- --------------------------------------------------------------------------------
Part A. Retirement Equity Act Safe Harbor:
Will the safe harbor provisions of Section 6.05(F) of the Plan apply?
(Choose only one option)
OPTION 1: / / Yes.
OPTION 2: / / No.
NOTE: You must select "No" if you are adopting this Plan as an
amendment and restatement of a Prior Plan that was subject to the joint
and survivor annuity requirements.
Part B. Survivor Annuity Percentage: (Complete only if your answer in Section
15, Part A is "No".
The survivor annuity portion of the Joint and Survivor Annuity shall be
a percentage equal to ____% (at least 50% but no more than 100%) of the
amount paid to the Participant prior to his or her death.
- --------------------------------------------------------------------------------
SECTION 16. OTHER OPTIONS
Answer "Yes" or "No" to each of the following questions by checking the
appropriate box.
- --------------------------------------------------------------------------------
If a box is not checked for a question, the answer will be deemed to be "No."
<TABLE>
<S> <C> <C>
A. Loans: Will loans to Participants pursuant to Section 6.08 of the / / Yes / / No
Plan be permitted?
B. Insurance: Will the Plan allow for the investment in insurance
policies pursuant to Section 5.13 of the Plan? / / Yes / / No
C. Employer Securities: Will the Plan allow for the investment in
qualifying Employer securities or qualifying Employer real property? / / Yes / / No
D. Rollover Contributions: Will Employees be permitted to make rollover
contributions to the Plan pursuant to Section 3.03 of the Plan? / / Yes / / No
/ / Yes, but only after
becoming a
Participant.
E. Transfer Contributions: Will Employees be permitted to make transfer
contributions to the Plan pursuant to Section 3.04 of the Plan? / / Yes / / No
/ / Yes, but only after
becoming a
Participant.
F. Nondeductible Employee Contributions: Will Employees be permitted to
make Nondeductible Employee Contributions pursuant to Section 11.305
of the Plan? / / Yes / / No
Check here if such contributions will be mandatory. / /
G. Will Participants be permitted to direct the investment of their
Plan assets pursuant to Section 5.14 of the Plan? / / Yes / / No
</TABLE>
- --------------------------------------------------------------------------------
SECTION 17. LIMITATION ON ALLOCATIONS
More Than One Plan
- --------------------------------------------------------------------------------
If you maintain or ever maintained another qualified plan (other than a
paired standardized money purchase pension plan using the same Basic Plan
Document as this Plan) in which any Participant in this Plan is (or was) a
Participant or could become a Participant, you must complete this section.
You must also complete this section if you maintain a welfare benefit
fund, as defined in Section 419(e) of the Code, or an individual medical
account, as defined in Section 415(l)(2) of the Code, under which amounts
are treated as annual additions with respect to any Participant in this
Plan.
PART A. INDIVIDUALLY DESIGNED DEFINED CONTRIBUTION PLAN:
If the Participant is covered under another qualified defined contribution
plan maintained by the Employer, other than a master or prototype plan:
1. / / The provisions of Section 3.05(B)(1) through 3.05(B)(6) of the Plan
will apply as if the other plan were a master or prototype plan.
<PAGE> 13
Page 13
2. / / Other method. (Provide the method under which the plans will limit
total annual additions to the maximum permissible amount, and will
properly reduce any excess amounts, in a manner that precludes
Employer discretion.) ___________________________________
PART B. DEFINED BENEFIT PLAN:
If the Participant is or has ever been a participant in a defined benefit
plan maintained by the Employer, the Employer will provide below the
language which will satisfy the 1.0 limitation of Section 415(e) of the
Code.
1. / / If the projected annual addition to this Plan to the account of a
Participant for any limitation year would cause the 1.0
limitation of Section 415(e) of the Code to be exceeded, the
annual benefit of the defined benefit plan for such limitation
year shall be reduced so that the 1.0 limitation shall be
satisfied.
If it is not possible to reduce the annual benefit of the defined
benefit plan and the projected annual addition to this Plan to
the account of a Participant for a limitation year would cause
the 1.0 limitation to be exceeded, the Employer shall reduce the
Employer Contribution which is to be allocated to this Plan on
behalf of such Participant so that the 1.0 limitation will be
satisfied. (The provisions of Section 415(e) of the Code are
incorporated herein by reference under the authority of Section
1106(h) of the Tax Reform Act of 1986.)
2. / / Other method. (Provide language describing another method. Such
language must preclude Employer discretion.)
SECTION 18. TOP-HEAVY ISSUES
Complete Parts A and B
PART A. MINIMUM ALLOCATION OR BENEFIT:
For any Plan Year with respect to which this Plan is a Top-Heavy
Plan, any minimum allocation required pursuant to Section 3.01(E)
of the Plan shall be made (Choose one):
OPTION 1: / / To this Plan.
OPTION 2: / / To the following other plan maintained by the
Employer (Specify name and plan number of
plan) __________________________________________
OPTION 3: In accordance with the method described on an
attachment to this Adoption Agreement. (Attach
language describing the method that will be used
to satisfy Section 416 of the Code. Such method
must preclude Employer discretion.)
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
PART B. TOP-HEAVY VESTING SCHEDULE:
Pursuant to Section 6.01(C) of the Plan, the vesting schedule
that will apply when this Plan is a Top-Heavy Plan (unless the
Plan's regular vesting schedule provides for more rapid vesting)
shall be (Choose one):
OPTION 1: / / 6 Year Graded.
OPTION 2: / / 3 Year Cliff.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
SECTION 19. PROTOTYPE SPONSOR
Name of Prototype Sponsor ____________________________________
Address _______________________________________________________
Telephone Number ______________________________________________
PERMISSIBLE INVESTMENTS
The assets of the Plan shall be invested only in those
investments described below (To be completed by the Prototype
Sponsor): _____________________________________________________
<PAGE> 14
Page 14
SECTION 20. TRUSTEE OR CUSTODIAN
OPTION A: / / Financial Organization as Trustee or Custodian
CHECK ONE: / / Custodian, / / Trustee without full trust powers, or
/ / Trustee with full trust powers
Financial Organization___________________________________________________
Signature _______________________________________________________________
Type Name _______________________________________________________________
COLLECTIVE OR COMMINGLED FUNDS
List any collective or commingled funds maintained by the financial
organization Trustee in which assets of the Plan may be invested (Complete
if applicable).___________________________________________________________
OPTION B: / / Individual Trustee(s)
Signature ____________________________ Signature ___________________________
Type Name ____________________________ Type Name ___________________________
Signature ____________________________ Signature ___________________________
Type Name ____________________________ Type Name ___________________________
SECTION 21. RELIANCE
An Employer who has ever maintained or who later adopts any plan (including a
welfare benefit fund, as defined in Section 419(e) of the Code, which provides
post-retirement medical benefits allocated to separate accounts for key
employees, as defined in Section 419A(d)(3) of the Code, or an individual
medical account, as defined in Section 415(l)(2) of the Code) in addition to
this Plan (other than a paired standardized money purchase pension plan using
the same Basic Plan Document as this Plan) may not rely on the opinion letter
issued by the National Office of the Internal Revenue Service as evidence that
this Plan is qualified under Section 401 of the Internal Revenue Code. If the
Employer who adopts or maintains multiple plans wishes to obtain reliance that
his or her plan(s) are qualified, application for a determination letter should
be made to the appropriate Key District Director of Internal Revenue.
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
Section 401 of the Code unless the terms of the Plan, as herein adopted or
amended, that pertain to the requirements of Sections 401(a)(4), 401(a)(17),
401(l), 401(a)(5), 410(b) and 414(s) of the Code, 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 later
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 No. 04.
SECTION 22. EMPLOYER SIGNATURE
Important: Please read before signing
I am an authorized representative of the Employer named above and I
state the following:
1. I acknowledge that I have relied upon my own advisors regarding
the completion of this Adoption Agreement and the legal tax
implications of adopting this Plan.
2. I understand that my failure to properly complete this Adoption
Agreement may result in disqualification of the Plan.
3. I understand that the Prototype Sponsor will inform me of any
amendments made to the Plan and will notify me should it
discontinue or abandon the Plan.
4. I have received a copy of this Adoption Agreement and the
corresponding Basic Plan Document.
Signature for Employer_________________________ Date Signed ______________
Type Name______________________________ Title ____________________________
<PAGE> 15
J.C. BRADFORD & CO. FLEXIBLE NONSTANDARDIZED SAFE HARBOR 401(K) PROFIT
SHARING PLAN ADOPTION AGREEMENT
_______________________________________________________________________________
SECTION 1. EMPLOYER INFORMATION
Name of Employer_____________________________________________________________
Address______________________________________________________________________
City_________________________ State____________________ Zip__________________
Telephone______________ Employer's Federal Tax Identification Number_________
Type of Business (Check only one) / / Sole Proprietorship / / Partnership
/ / C Corporation / / S Corporation
/ / Other (Specify)___________________________________________________________
/ / Check here if Related Employers may participate in this Plan and attach a
Related Employer Participation Agreement for each Related Employer who will
participate in this Plan.
Business Code________________
Name of Plan_________________________________________________________________
Name of Trust (if different from Plan name)__________________________________
Plan Sequence Number ___ (Enter 001 if this is the first qualified plan the
Employer has ever maintained, enter 002 if it is the
second, etc.)
Trust Identification Number (if applicable)_____________
Account Number (Optional)_____________
SECTION 2. EFFECTIVE DATES
Complete Parts A and B
PART A. GENERAL EFFECTIVE DATES (Check and Complete Option 1 or 2):
OPTION 1: / / This is the initial adoption of a profit sharing plan by
the Employer.
The Effective Date of this Plan is _________, 19 ___.
NOTE: The effective date is usually the first day of the
Plan Year in which this Adoption Agreement is signed.
OPTION 2: / / This is an amendment and restatement of an existing
profit sharing plan (a Prior Plan).
The Prior Plan was initially effective on _____, 19 ___.
The Effective Date of this amendment and restatement is
_______, 19 ___.
NOTE: The effective date is usually the first day of the
Plan Year in which this Adoption Agreement is signed.
PART B. COMMENCEMENT OF ELECTIVE DEFERRALS:
Elective Deferrals may commence on_________________________________
NOTE: This date may be no earlier than the date this Adoption
Agreement is signed because Elective Deferrals cannot be made
retroactively.
SECTION 3. RELEVANT TIME PERIODS
Complete Parts A through C
PART A. EMPLOYER'S FISCAL YEAR:
The Employer's fiscal year ends (Specify month and date)___________
<PAGE> 16
Page 2
PART B. PLAN YEAR MEANS:
OPTION 1: / / The 12-consecutive month period which coincides with the
Employer's fiscal year.
OPTION 2: / / The calendar year.
OPTION 3: / / Other 12-consecutive month period (Specify)_______________
NOTE: If no option is selected, Option 1 will be deemed to be selected.
If the initial Plan Year is less than 12 months (a short Plan Year)
specify such Plan Year's beginning and ending dates____________________
PART C. LIMITATION YEAR MEANS:
OPTION 1: / / The Plan Year.
OPTION 2: / / The calendar year.
OPTION 3: / / Other 12-consecutive month period (Specify) ______________
NOTE: If no option is selected, Option 1 will be deemed to be selected.
SECTION 4. ELIGIBILITY REQUIREMENTS
Complete Parts A through G
PART A. YEARS OF ELIGIBILITY SERVICE REQUIREMENTS:
1. ELECTIVE DEFERRALS.
An Employee will be eligible to become a Contributing Participant in
the Plan (and thus be eligible to make Elective Deferrals) and
receive Matching Contributions (including Qualified Matching
Contributions, if applicable) after completing_____(enter 0, 1 or
any fraction less than 1) Years of Eligibility Service.
2. EMPLOYER PROFIT SHARING CONTRIBUTIONS.
An Employee will be eligible to become a Participant in the Plan for
purposes of receiving an allocation of any Employer Profit Sharing
Contribution made pursuant to Section 10 of the Adoption Agreement
after completing______(enter 0, 1, 2 or any fraction less than 2)
Years of Eligibility Service.
NOTE: If more than 1 year is selected for Item 2, the immediate 100%
vesting schedule of Section 12 will automatically apply for
contributions described in such item. If either item is left blank,
the Years of Eligibility Service required for such item will be deemed
to be 0. If a fraction is selected, an Employee will not be required
to complete any specified number of Hours of Service to receive credit
for a fractional year. If a single Entry Date is selected in
Section 4, Part G for an item, the Years of Eligibility Service
required for such item cannot exceed 1 1/2 (1/2 for Elective Deferrals).
PART B. AGE REQUIREMENTS:
1. ELECTIVE DEFERRALS.
An Employee will be eligible to become a Contributing Participant
(and thus be eligible to make Elective Deferrals) and receive
Matching Contributions (including Qualified Matching Contributions,
if applicable) after attaining age _____ (no more than 21).
2. EMPLOYER PROFIT SHARING CONTRIBUTIONS.
An Employee will be eligible to become a Participant in the Plan for
purposes of receiving an allocation of any Employer Profit Sharing
Contribution made pursuant to Section 10 of the Adoption Agreement
after attaining age____(no more than 21).
NOTE: If either of the above items in this Section 4, Part B is left
blank, it will be deemed there is no age requirement for such item. If
a single Entry Date is selected in Section 4, Part G for an item, no age
requirement can exceed 20 1/2 for such item.
PART C. EMPLOYEES EMPLOYED AS OF EFFECTIVE DATE:
Will all Employees employed as of the Effective Date of this Plan who
have not otherwise met the requirements of Part A or Part B above be
considered to have met those requirements as of the Effective Date?
/ / Yes / / No
NOTE: If a box is not checked for any item in this Section 4, Part C,
"No" will be deemed to be selected.
<PAGE> 17
Page 3
PART D. EXCLUSION OF CERTAIN CLASSES OF EMPLOYEES:
All Employees will be eligible to become Participants in the Plan
except:
a. / / Those 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 Section 1.410(b)-9 of the
regulations. 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.
b. / / Those Employees who are non-resident aliens (within the meaning
of Section 7701(b)(1)(B) of the Code) and who received no earned
income (within the meaning of Section 911(d)(2) of the Code) from
the Employer which constitutes income from sources within the
United States (within the meaning of Section 861(a)(3) of the
Code).
c. / / Those Employees of a Related Employer that has not excuted a
Related Employer Participation Agreement
d. / / Other (Define)___________________________________________________
PART E. ELECTION NOT TO PARTICIPATE:
May an Employee or a Paticipant elect not to participate in this Plan
pursuant to Dection 2.08 of the Plan?
OPTION 1: / / Yes.
OPTION 2: / / No.
NOTE: If no option is selected, Option 2 will be deemed to be selected.
PART F. HOURS REQUIRED FOR ELIGIBILITY PURPOSES:
1. ________Hours of Service (no more than 1,000) shall be required to
constitute a Year of Eligibility Service.
2. ________Hours of Service (no more than 500 but less than the number
specified in Section 4, Part E, Item 1, above) must be exceeded to
avoid a Break in Eligibility Service.
3. For purposes of determining Years of Eligibility Service, Employees
shall be given credit for Hours of Service with the following
predecessor employer(s): (Complete if applicable)
_____________________________________________________________________
PART G. ENTRY DATES:
The Entry Dates for participation shall be (Choose one):
/ / OPTION 1: / / The first day of the Plan Year and the first day of the
seventh month of the Plan Year.
/ / OPTION 2: / / Other (Specify)___________________________________________
NOTE: If no option is selected, Option 1 will be deemed to be selected.
Option 2 can be selected for an item only if the eligibility
requirements and Entry Dates are coordinated such that each Employee
will become a Participant in the Plan no later than the earlier of:
(1) the first day of the Plan Year beginning after the date the
Employee satisfies the age and service requirements of Section 410(a)
of the Code; or (2) 6 months after the date the Employee satisfies such
requirements.
SECTION 5. METHOD OF DETERMINING SERVICE
Complete Part A or B
PART A. HOURS OF SERVICE EQUIVALENCIES:
Service 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. (Choose one):
/ / OPTION 1: / / On the basis of actual hours for which an Employee is paid
or entitled to payment.
/ / OPTION 2: / / On the basis of days worked. An Employee will be
credited with 10 Hours of Service if under Section 1.24
of the Plan such Employee would be credited with at least
1 Hour of Service during the day.
<PAGE> 18
Page 4
OPTION 3: / / On the basis of weeks worked. An Employee will be
credited with 45 Hours of Service if under Section 1.24
of the Plan such Employee would be credited with at
least 1 Hour of Service during the week.
OPTION 4: / / On the basis of months worked. An Employee will be
credited with 190 Hours of Service if under Section 1.24
of the Plan such Employee would be credited with at least
1 Hour of Service during the month.
NOTE: If no option is selected, Option 1 will be deemed to be selected.
This Section 5, Part A will not apply if the Elapsed Time Method of
Section 5, Part B is selected.
PART B. ELAPSED TIME METHOD:
In lieu of tracking Hours of Service of Employees, will the elapsed
time method described in Section 2.07 of the Plan be used? (Choose one)
OPTION 1: / / No.
OPTION 2: / / Yes.
NOTE: If no option is selected, Option 1 will be deemed to be selected.
SECTION 6. ELECTIVE DEFERRALS
PART A: AUTHORIZATION OF ELECTIVE DEFERRALS:
Will Elective Deferrals be permitted under this Plan? (Choose one)
OPTION 1: / / Yes.
OPTION 2: / / No.
NOTE: If no option is selected, Option 1 will be deemed to be selected.
Complete the remainder of Section 6 only if Option 1 is selected.
PART B: LIMITS ON ELECTIVE DEFERRALS:
If Elective Deferrals are permitted under the Plan, a Contributing
Participant may elect under a salary reduction agreement to have his or
her Compensation reduced by an amount as described below (Choose one):
OPTION 1: / / An amount equal to a percentage of the Contributing
Participant's Compensation from ___% to ___% in increments of ___%.
OPTION 2: / / An amount of the Contributing Participant's Compensation
not less than ____________ and not more than _________.
The amount of such reduction shall be contributed to the Plan by the
Employer on behalf of the Contributing Participant. For any taxable
year, a Contributing Participant's Elective Deferrals shall not exceed
the limit contained in Section 402(g) of the Code in effect at the
beginning of such taxable year.
PART C. ELECTIVE DEFERRALS BASED ON BONUSES:
Instead of or in addition to making Elective Deferrals through payroll
deduction, may a Contributing Participant elect to contribute to the
Plan, as an Elective Deferral, part or all of a bonus rather than
receive such bonus in cash? (Choose one)
OPTION 1: / / Yes.
OPTION 2: / / No.
NOTE: If no option is selected, Option 2 will be deemed to be selected.
PART D. RETURN AS A CONTRIBUTING PARTICIPANT AFTER CEASING ELECTIVE DEFERRALS:
A Participant who ceases Elective Deferrals by revoking a salary
reduction agreement may return as a Contributing Participant as of such
times established by the Plan Administrator in a uniform and
nondiscriminatory manner.
<PAGE> 19
Page 5
PART E. CHANGING ELECTIVE DEFERRAL AMOUNTS:
A Contributing Participant may modify a salary reduction agreement to
prospectively increased or decrease the amount of his or her Elective
Deferrals as of such times established by the Plan Administrator in a
uniform and nondiscriminatory manner.
PART F. CLAIMING EXCESS ELECTIVE DEFERRALS:
Participants who claim Excess Elective Deferrals for the preceding
calendar year must submit their claims in writing to the Plan
Administrator by (Choose one):
OPTION 1: / / March 1.
OPTION 2: / / Other (Specify a date not later than April 15) ___________
NOTE: If no option is selected, Option 1 will be deemed to be selected.
SECTION 7. MATCHING CONTRIBUTIONS
PART A. AUTHORIZATION OF MATCHING CONTRIBUTIONS:
Will the Employer make Matching Contributions to the Plan on
behalf of Qualifying Contributing Participants? (Choose one)
OPTION 1: / / Yes, but only with respect to a Contributing
Participant's Elective Deferrals.
OPTION 2: / / Yes, but only with respect to a Participant's
Nondeductible Employee Contributions.
OPTION 3: / / Yes, with respect to both Elective Deferrals and
Nondeductible Employee Contributions.
OPTION 4: / / No.
NOTE: If no option is selected, Option 4 will be deemed to be
selected. Complete the remainder of Section 7 only if Option 1,
2 or 3 is selected.
PART B. MATCHING CONTRIBUTION FORMULA:
If the Employer will make Matching Contributions, then the amount
of such Matching Contributions made on behalf of a Qualifying
Contributing Participant each Plan Year shall be (Choose one):
OPTION 1: / / An amount equal to _______% of such Contributing
Participant's Elective Deferral (and/or
Nondeductible Employee Contribution, if
applicable).
OPTION 2: / / An amount equal to the sum of ________% of the
portion of such Contributing Participant's
Elective Deferral (and/or Nondeductible Employee
Contribution, if applicable) which does not
exceed _______% of the Contributing
Participant's Compensation plus ________% of the
portion of such Contributing Participant's
Elective Deferral (and/or Nondeductible Employee
Contribution, if applicable) which exceeds
_______% of the Contributing Participant's
Compensation.
OPTION 3: / / Such amount, if any, equal to that percentage of
each Contributing Participant's Elective
Deferral (and/or Nondeductible Employee
Contribution, if applicable) which the Employer,
in its sole discretion, determines from year to
year.
OPTION 4: / / Other Formula. (Specify) _____________________
NOTE: If Option 4 is selected, the formula specified can only
allow Matching Contributions to be made with respect to a
Contributing Participant's Elective Deferrals (and/or
Nondeductible Employee Contribution, if applicable).
PART C. LIMIT ON MATCHING CONTRIBUTIONS:
Notwithstanding the Matching Contribution formula specified
above, no Matching Contribution will be made with respect to a
Contributing Participant's Elective Deferrals (and/or
Nondeductible Employee Contributions, if applicable) in excess of
__________ or ___________% of such Contributing Participant's
Compensation.
<PAGE> 20
Page 6
PART D. QUALIFYING CONTRIBUTING PARTICIPANTS:
A Contributing Participant who satisfies the eligibility
requirements described in Section 4 will be a Qualifying
Contributing Participant and thus entitled to share in Matching
Contributions for any Plan Year only if the Participant is a
Contributing Participant and satisfies the following additional
conditions (Check one or more Options):
OPTION 1: / / No Additional Conditions.
OPTION 2: / / Hours of Service Requirement. The Contributing
Participant completes at least ____________
Hours of Service during the Plan Year.
However, this condition will be waived for
the following reasons (Check at least one):
/ / The Contributing Participant's Death.
/ / The Contributing Participant's
Termination of Employment after having
incurred a Disability.
/ / The Contributing Participant's
Termination of Employment after having
reached Normal Retirement Age.
/ / This condition will not be waived.
OPTION 3: / / Last Day Requirement. The Participant is an
Employee of the Employer on the last day of the
Plan Year. However, this condition will be
waived for the following reasons
(Check at least one):
/ / The Contributing Participant's Death.
/ / The Contributing Participant's
Termination of Employment after having
incurred a Disability.
/ / The Contributing Participant's
Termination of Employment after having
reached Normal Retirement Age.
/ / This condition will not be waived.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
SECTION 8. QUALIFIED NONELECTIVE CONTRIBUTIONS
PART A. AUTHORIZATION OF QUALIFIED NONELECTIVE CONTRIBUTIONS:
Will the Employer make Qualified Nonelective Contributions to the
Plan? (Choose One)
OPTION 1: / / Yes.
OPTION 2: / / No.
If the Employer elects to make Qualified Nonelective
Contributions, then the amount, if any, of such contribution to
the Plan for each Plan Year shall be an amount determined by the
Employer.
NOTE: If no option is selected, Option 1 will be deemed to be
selected. Complete the remainder of Section 8 only if Option 1
is selected.
PART B. PARTICIPANTS ENTITLED TO QUALIFIED NONELECTIVE CONTRIBUTIONS:
Allocation of Qualified Nonelective Contributions shall be made
to the Individual Accounts of (Choose one):
OPTION 1: / / Only Participants who are not Highly Compensated
Employees.
OPTION 2. / / All Participants.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
PART C. ALLOCATION OF QUALIFIED NONELECTIVE CONTRIBUTIONS:
Allocation of Qualified Nonelective Contributions to Participants
entitled thereto shall be made (Choose one):
OPTION 1: / / In the ratio which each Participant's
Compensation for the Plan Year bears to the
total Compensation of all Participants for such
Plan Year.
OPTION 2: / / In the ratio which each Participant's
Compensation not in excess of ___________ for
the Plan Year bears to the total Compensation of
all Participants not in excess of _____________
for such Plan Year.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
<PAGE> 21
Page 7
SECTION 9. QUALIFIED MATCHING CONTRIBUTIONS
PART A. AUTHORIZATION OF QUALIFIED MATCHING CONTRIBUTIONS:
Will the Employer make Qualified Matching Contributions to the
Plan on behalf of Qualifying Contributing Participants? (Choose
One)
OPTION 1: / / Yes, but only with respect to a Contributing
Participant's Elective Deferrals.
OPTION 2: / / Yes, but only with respect to a Participant's
Nondeductible Employee Contributions.
OPTION 3: / / Yes, with respect to both Elective Deferrals and
Nondeductible Employee Contributions.
OPTION 4: / / No.
NOTE: If no option is selected, Option 3 will be deemed to be
selected. Complete the remainder of Section 9 only if Option 1,
2 or 3 is selected.
PART B. QUALIFIED MATCHING CONTRIBUTION FORMULA:
If the Employer will make Qualified Matching Contributions, then
the amount of such Qualified Matching Contributions made on
behalf of a Qualifying Contributing Participant each Plan Year
shall be (Choose one):
OPTION 1: / / An amount equal to ________% of such
Contributing Participant's Elective Deferral
(and/or Nondeductible Employee Contribution, if
applicable).
OPTION 2: / / An amount equal to the sum of ________% of the
portion of such Contributing Participant's
Elective Deferral (and/or Nondeductible Employee
Contribution, if applicable) which does not
exceed _________% of the Contributing
Participant's Compensation plus _________% of
the portion of such Contributing Participant's
Elective Deferral (and/or Nondeductible Employee
Contribution, if applicable) which exceeds ____%
of the Contributing Participant's Compensation.
OPTION 3: / / Such amount, if any, as determined by the
Employer in its sole discretion, equal to that
percentage of the Elective Deferrals (and/or
Nondeductible Employee Contribution, if
applicable) of each Contributing Participant
entitled thereto which would be sufficient to
cause the Plan to satisfy the Actual
Contribution Percentage tests (described in
Section 11.402 of the Plan) for the Plan Year.
OPTION 4: / / Other Formula. (Specify) _____________________
NOTE: If no option is selected, Option 3 will be deemed to be
selected.
PART C. PARTICIPANTS ENTITLED TO QUALIFIED MATCHING CONTRIBUTIONS:
Qualified Matching Contributions, if made to the Plan, will be
made on behalf of (Choose one):
OPTION 1: / / Only Contributing Participants who make Elective
Deferrals who are not Highly Compensated
Employees.
OPTION 2: / / All Contributing Participants who make Elective
Deferrals.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
PART D. LIMIT ON QUALIFIED MATCHING CONTRIBUTIONS:
Notwithstanding the Qualified Matching Contribution formula
specified above, the Employer will not match a Contributing
Participant's Elective Deferrals (and/or Nondeductible Employee
Contribution, if applicable) in excess of _____________ or
__________% of such Contributing Participant's Compensation.
SECTION 10. EMPLOYER PROFIT SHARING CONTRIBUTIONS
Complete Parts A, B and C
PART A. CONTRIBUTION FORMULA:
For each Plan Year the Employer will contribute an Amount to be
determined from year to year.
PART B. ALLOCATION FORMULA (Choose one):
OPTION 1: / / Pro Rata Formula. Employer Profit Sharing
Contributions shall be allocated to the
Individual Accounts of Qualifying Participants
in the ratio that each Qualifying Participant's
Compensation for the Plan Year bears to the
total Compensation of all Qualifying
Participants for the Plan Year.
<PAGE> 22
Page 8
OPTION 2: / / Integrated Formula. Employer Profit Sharing
Contributions shall be allocated as follows
(Start with Step 3 if this Plan is not a
Top-Heavy Plan):
Step 1. Employer Profit Sharing Contributions
shall first be allocated pro rata to
Qualifying Participants in the manner
described in Section 10, Part B, Option
1. The percent so allocated shall not
exceed 3% of each Qualifying
Participant's Compensation.
Step 2. Any Employer Profit Sharing
Contributions remaining after the
allocation in Step 1 shall be allocated
to each Qualifying Participant's
Individual Account in the ratio that
each Qualifying Participant's
Compensation for the Plan Year in excess
of the integration level bears to all
Qualifying Participants' Compensation in
excess of the integration level, but not
in excess of 3%.
Step 3. Any Employer Profit Sharing
Contributions remaining after the
allocation in Step 2 shall be allocated
to each Qualifying Participant's
Individual Account in the ratio that the
sum of each Qualifying Participant's
total Compensation and Compensation in
excess of the integration level bears to
the sum of all Qualifying Participants'
total Compensation and Compensation in
excess of the integration level, but not
in excess of the profit sharing maximum
disparity rate as described in Section
3.01 (B)(3) of the Plan.
Step 4. Any Employer Profit Sharing
Contributions remaining after the
allocation in Step 3 shall be allocated
pro rata to Qualifying Participants in
the manner described in Section 10, Part
B, Option 1.
The integration level shall be (Choose one):
SUBOPTION (A): / / The Taxable Wage Base.
SUBOPTION (B): / / __________________ (a dollar amount less
than the Taxable Wage Base).
SUBOPTION (C): / / ___________% (not more than 100%) of the
Taxable Wage Base.
NOTE: If no option is selected, Suboption (a) will be deemed
to be selected,
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
PART C. QUALIFYING PARTICIPANTS:
A Participant will be a Qualifying Participant and thus entitled
to share in the Employer Profit Sharing Contribution for any Plan
Year only if the Participant is a Participant on at least one day
of such Plan Year and satisfies the following additional
conditions (Check one or more Options):
OPTION 1: / / No Additional Conditions.
OPTION 2: / / Hours of Service Requirement. The Participant
completes at least ________ Hours of Service
during the Plan Year. However, this condition
will be waived for the following reasons
(Check at least one):
/ / The Participant's Death.
/ / The Participant's Termination of
Employment after having incurred a
Disability.
/ / The Participant's Termination of
Employment after having reached Normal
Retirement Age.
/ / This condition will not be waived.
OPTION 3: / / Last Day Requirement. The Participant is an
Employee on the last day of the Plan Year.
However, this condition will be waived for the
following reasons
(Check at least one):
/ / The Participant's Death.
/ / The Participant's Termination of
Employment after having incurred a
Disability.
/ / The Participant's Termination of
Employment after having reached Normal
Retirement Age.
/ / This condition will not be waived.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
<PAGE> 23
Page 9
SECTION 11. COMPENSATION
Complete Parts A through E
PART A. BASIC DEFINITION:
Compensation will mean all of each Participant's (Choose one):
Option 1: / / W-2 wages.
Option 2: / / Section 3401(a) wages.
Option 3: / / 415 safe-harbor compensation.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
PART B. MEASURING PERIOD FOR COMPENSATION:
Compensation shall be determined over the following applicable
period (Choose one):
Option 1: / / The Plan Year.
Option 2: / / The calendar year ending with or within the Plan
Year.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
PART C. INCLUSION OF ELECTIVE DEFERRALS:
Does Compensation include Employer Contributions made pursuant to
a salary reduction agreement which are not includible in the
gross income of the Employee under Sections 125, 402(e)(3),
402(h)(1)(B), and 403(b) of the Code? / / Yes / / No
NOTE: If neither box is checked, "Yes" will be deemed to be
selected.
PART D. PRE-ENTRY DATE COMPENSATION:
For the Plan Year in which an Employee enters the Plan, the
Employee's Compensation which shall be taken into account for
purposes of the Plan shall be (Choose one):
OPTION 1: / / The Employee's Compensation only from the time
the Employee became a Participant in the Plan.
OPTION 2: / / The Employee's Compensation for the whole of
such Plan Year.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
PART E. EXCLUSIONS FROM COMPENSATION:
Compensation shall not include the following (Check any that
apply):
/ / Bonuses / / Commissions
/ / Overtime / / Other (Specify) _____________________________
NOTE: No exclusions from Compensation are permitted if the
integrated allocation formula in Section 10, Part B is selected.
SECTION 12. VESTING AND FORFEITURES
Complete Parts A through G
PART A. VESTING SCHEDULE FOR EMPLOYER PROFIT SHARING CONTRIBUTIONS. A
Participant shall become Vested in his or her Individual Account
derived from Profit Sharing Contributions made pursuant to
Section 10 of the Adoption Agreement as follows (Choose one):
<TABLE>
<CAPTION>
YEARS OF VESTED PERCENTAGE
VESTING SERVICE Option 1 / / Option 2 / / Option 3 / / Option 4 / / Option 5 / / (Complete if Chosen)
<S> <C> <C> <C> <C> <C> <C>
1 0% 0% 100% 0% ___%
2 0% 20% 100% 0% ___%
3 0% 40% 100% 20% ___% (not less than 20%)
4 0% 60% 100% 40% ___% (not less than 40%)
5 100% 80% 100% 60% ___% (not less than 60%)
6 100% 100% 100% 80% ___% (not less than 80%)
7 100% 100% 100% 100% ___% (not less than 100%)
</TABLE>
NOTE: If no option is selected, Option 3 will be deemed to be selected.
<PAGE> 24
Page 10
PART B. VESTING SCHEDULE FOR MATCHING CONTRIBUTIONS. A Participant shall
become Vested in his or her Individual Account derived from
Matching Contributions made pursuant to Section 7 of the Adoption
Agreement as follows (Choose one):
<TABLE>
<CAPTION>
YEARS OF VESTED PERCENTAGE
VESTING SERVICE Option 1 / / Option 2 / / Option 3 / / Option 4 / / Option 5 / / (Complete if Chosen)
<S> <C> <C> <C> <C> <C>
1 0% 0% 100% 0% ___%
2 0% 20% 100% 0% ___%
3 0% 40% 100% 20% ___% (not less than 20%)
4 0% 60% 100% 40% ___% (not less than 40%)
5 100% 80% 100% 60% ___% (not less than 60%)
6 100% 100% 100% 80% ___% (not less than 80 %)
7 100% 100% 100% 100% ___% (not less than 100 %)
</TABLE>
NOTE: If no option is selected, Option 3 will be deemed to be selected.
PART C. HOURS REQUIRED FOR VESTING PURPOSES:
1. _______ Hours of Service (no more than 1,000) shall be
required to constitute a Year of Vesting Service.
2. _______ Hours of Service (no more than 500 but less than
the number specified in Section 12, Part C, Item 1, above)
must be exceeded to avoid a Break in Vesting Service.
3. For purposes of determining Years of Vesting Service,
Employees shall be given credit for Hours of Service with
the following predecessor employer(s): (Complete if
applicable)
PART D. EXCLUSION OF CERTAIN YEARS OF VESTING SERVICE:
All of an Employee's Years of Vesting Service with the Employer
are counted to determine the vesting percentage in the
Participant's Individual Account except (Check any that apply):
/ / Years of Vesting Service before the Employee reaches age
18.
/ / Years of Vesting Service before the Employer maintained
this Plan or a predecessor plan.
PART E. ALLOCATION OF FORFEITURES OF EMPLOYER PROFIT SHARING
CONTRIBUTIONS:
Forfeitures of Employer Profit Sharing Contributions shall be
(Choose one):
OPTION 1: / / Allocated to the Individual Accounts of the
Participants specified below in the manner as
described in Section 10, Part B (for Employer
Profit Sharing Contributions).
The Participants entitled to receive allocations
of such Forfeitures shall be (Choose one):
SUBOPTION (A): / / Only Qualifying
Participants.
SUBOPTION (B): / / All Participants.
OPTION 2: / / Applied to reduce Employer Profit Sharing
Contributions (Choose one):
SUBOPTION (A): / / For the Plan Year for
which the Forfeiture
arises.
SUBOPTION (B): / / For any Plan Year
subsequent to the Plan Year
for which the Forfeiture
arises.
OPTION 3: / / Applied first to the payment of the Plan's
administrative expenses and any excess applied to
reduce Employer Profit Sharing Contributions
(Choose one):
SUBOPTION (A): / / For the Plan Year for
which the Forfeiture
arises.
SUBOPTION (B): / / For any Plan Year
subsequent to the Plan Year
for which the Forfeitures
arises.
NOTE: If no option is selected, Option 1 and Suboption (a) will
be deemed to be selected.
<PAGE> 25
Page 11
PART F. ALLOCATION OF FORFEITURES OF MATCHING CONTRIBUTIONS:
Forfeitures of Matching Contributions shall be (Choose one):
OPTION 1: / / Allocated, after all other Forfeitures under the
Plan, to each Participant's Individual Account
in the ratio which each Participant's
Compensation for the Plan Year bears to the
total Compensation of all Participants for such
Plan Year.
The Participants entitled to receive allocations
of such Forfeitures shall be (Choose one):
SUBOPTION (A): / / Only Qualifying
Contributing Participants.
SUBOPTION (B): / / Only Qualifying
Participants.
SUBOPTION (C): / / All Participants.
OPTION 2: / / Applied to reduce Matching Contributions (Choose
one):
SUBOPTION (A): / / For the Plan Year for
which the Forfeiture
arises.
SUBOPTION (B): / / For any Plan Year
subsequent to the Plan Year
for which the Forfeiture
arises.
OPTION 3: / / Applied first to the payment of the Plan's
administrative expenses and any excess applied
to reduce Matching Contributions (Choose one):
SUBOPTION (A): / / For the Plan Year for
which the Forfeiture
arises.
SUBOPTION (B): / / For any Plan Year
subsequent to the Plan Year
for which the Forfeitures
arises.
NOTE: If no option is selected, Option 1 and Suboption (a) will
be deemed to be selected.
PART G. ALLOCATION OF FORFEITURES OF EXCESS AGGREGATE CONTRIBUTIONS:
Forfeitures of Excess Aggregate Contributions shall be (Choose
one):
OPTION 1: / / Allocated, after all other Forfeitures under the
Plan, to each Contributing Participant's
Matching Contribution account in the ratio which
each Contributing Participant's Compensation for
the Plan Year bears to the total Compensation of
all Contributing Participants for such Plan
Year. Such Forfeitures will not be allocated to
the account of any Highly Compensated Employee.
OPTION 2: / / Applied to reduce Matching Contributions (Choose
one):
SUBOPTION (A) / / For the Plan Year for
which the Forfeiture
arises.
SUBOPTION (B): / / For any Plan Year
subsequent to the Plan Year
for which the Forfeiture
arises.
OPTION 3: / / Applied first to the payment of the Plan's
administrative expenses and any excess applied
to reduce Matching Contributions (Choose one):
SUBOPTION (A): / / For the Plan Year for
which the Forfeiture
arises.
SUBOPTION (B): / / For any Plan Year
subsequent to the Plan
Year for which the
Forfeitures arises.
NOTE: If no option is selected, Option 2 and Suboption (a) will be
deemed to be selected.
SECTION 13. NORMAL RETIREMENT AGE AND EARLY RETIREMENT AGE
Part A. THE NORMAL RETIREMENT AGE UNDER THE PLAN SHALL BE (Check and complete
one option):
OPTION 1: / / Age 65.
OPTION 2: / / Age _______ (not to exceed 65).
OPTION 3: / / The later of age ______ (not to exceed 65) or
the ______ (not to exceed 5th) anniversary of
the first day of the first Plan Year in which
the Participant commenced participation in the
Plan.
NOTE: If no option is selected, Option 1 will be deemed to be selected.
<PAGE> 26
Page 12
PART B. EARLY RETIREMENT AGE (Choose one option):
OPTION 1: / / An Early Retirement Age is not applicable under the
Plan.
OPTION 2: / / Age _______ (not less than 55 nor more than 65).
OPTION 3: / / A Participant satisfies the Plan's Early Retirement
Age conditions by attaining age _______ (not less than
55) and completing _______ Years of Vesting Service.
NOTE: If no option is selected, Option 1 will be deemed to be selected.
SECTION 14. DISTRIBUTIONS
DISTRIBUTABLE EVENTS. Answer each of the following items.
<TABLE>
<S> <C> <C>
A. Termination of Employment Before Normal Retirement Age. May a Participant
who has not reached Normal Retirement Age request a distribution from the Plan? / / Yes / / No
B. Disability. May a Participant who has incurred a Disability request a distribution
from the Plan? / / Yes / / No
C. Attainment of Normal Retirement Age. May a Participant who has attained
Normal Retirement Age but has not incurred a Termination of Employment request
distribution from the Plan? / / Yes / / No
D. Attainment of Age 59 1/2. Will Participants who have attained age 59 1/2 be
permitted to withdraw Elective Deferrals while still employed by the Employer? / / Yes / / No
E. Hardship Withdrawals of Elective Deferrals. Will Participants be permitted to
withdraw Elective Deferrals on account of hardship pursuant to Section 11.503 of
the Plan? / / Yes / / No
F. In-Service Withdrawals. Will Participants be permitted to request a distribution
during service pursuant to Section 6.01(A)(3) of the Plan? / / Yes / / No
G. Hardship Withdrawals. Will Participants be permitted to make hardship
withdrawals pursuant to Section 6.01(A)(4) of the Plan? / / Yes / / No
H. Withdrawals of Rollover or Transfer Contributions. Will Employees be permitted
to withdraw their Rollover or Transfer Contributions at any time? / / Yes / / No
</TABLE>
NOTE: If a box is not checked for an item, "Yes" will be deemed to be
selected for that item. Section 411(d)(6) of the Code prohibits the
elimination of protected benefits. In general, protected benefits
include the forms and timing of payout options. If the Plan is being
adopted to amend and replace a Prior Plan that permitted a distribution
option described above, you must answer "Yes" to that item.
SECTION 15. JOINT AND SURVIVOR ANNUITY
Part A. Retirement Equity Act Safe Harbor:
Will the safe harbor provisions of Section 6.05(F) of the Plan apply?
(Choose only one option)
OPTION 1: / / Yes.
OPTION 2: / / No.
NOTE: You must select "No" if you are adopting this Plan as an
amendment and restatement of a Prior Plan that was subject to the joint
and survivor annuity requirements.
Part B. Survivor Annuity Percentage: (Complete only if your answer in Section
15, Part A is "No").
The survivor annuity portion of the Joint and Survivor Annuity shall be
a percentage equal to _____% (at least 50% but no more than 100%) of
the amount paid to the Participant prior to his or her death.
<PAGE> 27
Page 13
SECTION 16. OTHER OPTIONS
Answer "Yes" or "No" to each of the following questions by checking the
appropriate box. If a box is not checked for a question, the answer will be
deemed to be "No."
<TABLE>
<S> <C> <C>
A. Loans: Will loans to Participants pursuant to Section 6.08 of the / / Yes / / No
Plan be permitted?
B. Insurance: Will the Plan allow for the investment in insurance
policies pursuant to Section 5.13 of the Plan? / / Yes / / No
C. Employer Securities: Will the Plan allow for the investment in
qualifying Employer securities or qualifying Employer real property? / / Yes / / No
D. Rollover Contributions: Will Employees be permitted to make rollover
contributions to the Plan pursuant to Section 3.03 of the Plan? / / Yes / / No
/ / Yes, but only after
becoming a
Participant.
E. Transfer Contributions: Will Employees be permitted to make transfer
contributions to the Plan pursuant to Section 3.04 of the Plan? / / Yes / / No
/ / Yes, but only after
becoming a
Participant.
F. Nondeductible Employee Contributions: Will Employees be permitted to
make Nondeductible Employee Contributions pursuant to Section 11.305
of the Plan? / / Yes / / No
Check here if such contributions will be mandatory. / /
G. Will Participants be permitted to direct the investment of their
Plan assets pursuant to Section 5.14 of the Plan? / / Yes / / No
</TABLE>
SECTION 17. LIMITATION ON ALLOCATIONS
More Than One Plan
If you maintain or ever maintained another qualified plan (other than a
paired standardized money purchase pension plan using the same Basic Plan
Document as this Plan) in which any Participant in this Plan is (or was) a
Participant or could become a Participant, you must complete this section.
You must also complete this section if you maintain a welfare benefit
fund, as defined in Section 419(e) of the Code, or an individual medical
account, as defined in Section 415(l)(2) of the Code, under which amounts
are treated as annual additions with respect to any Participant in this
Plan.
PART A. INDIVIDUALLY DESIGNED DEFINED CONTRIBUTION PLAN:
If the Participant is covered under another qualified defined contribution
plan maintained by the Employer, other than a master or prototype plan:
1. / / The provisions of Section 3.05(B)(1) through 3.05(B)(6) of the
Plan will apply as if the other plan were a master or prototype
plan.
2. / / Other method. (Provide the method under which the plans will limit
total annual additions to the maximum permissible amount, and will
properly reduce any excess amounts, in a manner that precludes
Employer discretion.) ___________________________________
PART B. DEFINED BENEFIT PLAN:
If the Participant is or has ever been a participant in a defined benefit
plan maintained by the Employer, the Employer will provide below the
language which will satisfy the 1.0 limitation of Section 415(e) of the
Code.
1. / / If the projected annual addition to this Plan to the account of a
Participant for any limitation year would cause the 1.0
limitation of Section 415(e) of the Code to be exceeded, the
annual benefit of the defined benefit plan for such limitation
year shall be reduced so that the 1.0 limitation shall be
satisfied.
If it is not possible to reduce the annual benefit of the defined
benefit plan and the projected annual addition to this Plan to
the account of a Participant for a limitation year would cause
the 1.0 limitation to be exceeded, the Employer shall reduce the
Employer Contribution which is to be allocated to this Plan on
behalf of such Participant so that the 1.0 limitation will be
satisfied. (The provisions of Section 415(e) of the Code are
incorporated herein by reference under the authority of Section
1106(h) of the Tax Reform Act of 1986.)
2. / / Other method. (Provide language describing another method. Such
language must preclude Employer discretion.) ____________________
<PAGE> 28
Page 14
SECTION 18. TOP-HEAVY ISSUES
Complete Parts A and B
PART A. MINIMUM ALLOCATION OR BENEFIT:
For any Plan Year with respect to which this Plan is a Top-Heavy
Plan, any minimum allocation required pursuant to Section 3.01(E)
of the Plan shall be made (Choose one):
OPTION 1: / / To this Plan.
OPTION 2: / / To the following other plan maintained by the
Employer (Specify name and plan number of
plan) __________________________________________
OPTION 3: / / In accordance with the method described on an
attachment to this Adoption Agreement. (Attach
language describing the method that will be used
to satisfy Section 416 of the Code. Such method
must preclude Employer discretion.)
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
PART B. TOP-HEAVY VESTING SCHEDULE:
Pursuant to Section 6.01(C) of the Plan, the vesting schedule
that will apply when this Plan is a Top-Heavy Plan (unless the
Plan's regular vesting schedule provides for more rapid vesting)
shall be (Choose one):
OPTION 1: / / 6 Year Graded.
OPTION 2: / / 3 Year Cliff.
NOTE: If no option is selected, Option 1 will be deemed to be
selected.
SECTION 19. PROTOTYPE SPONSOR
Name of Prototype Sponsor ____________________________________
Address _______________________________________________________
Telephone Number ______________________________________________
PERMISSIBLE INVESTMENTS
The assets of the Plan shall be invested only in those
investments described below (To be completed by the Prototype
Sponsor): _____________________________________________________
SECTION 20. TRUSTEE OR CUSTODIAN
OPTION A: / / Financial Organization as Trustee or Custodian
CHECK ONE: / / Custodian, / / Trustee without full trust powers, or
/ / Trustee with full trust powers
Financial Organization___________________________________________________
Signature _______________________________________________________________
Type Name _______________________________________________________________
COLLECTIVE OR COMMINGLED FUNDS
List any collective or commingled funds maintained by the financial
organization Trustee in which assets of the Plan may be invested (Complete
if applicable).___________________________________________________________
OPTION B: / / Individual Trustee(s)
Signature ____________________________ Signature ___________________________
Type Name ____________________________ Type Name ___________________________
Signature ____________________________ Signature ___________________________
Type Name ____________________________ Type Name ___________________________
<PAGE> 29
Page 15
SECTION 21. RELIANCE
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
Section 401 of the Internal Revenue Code. In Order to obtain reliance with
respect to plan qualification, the Employer must apply to the appropriate Key
District office for a determination letter.
This Adoption Agreement may be used only in conjunction with Basic Plan
Document No. 04.
SECTION 22. EMPLOYER SIGNATURE
Important: Please read before signing
I am an authorized representative of the Employer named above and I
state the following:
1. I acknowledge that I have relied upon my own advisors regarding
the completion of this Adoption Agreement and the legal tax
implications of adopting this Plan.
2. I understand that my failure to properly complete this Adoption
Agreement may result in disqualification of the Plan.
3. I understand that the Prototype Sponsor will inform me of any
amendments made to the Plan and will notify me should it
discontinue or abandon the Plan.
4. I have received a copy of this Adoption Agreement and the
corresponding Basic Plan Document.
Signature for Employer_________________________ Date Signed ______________
Type Name______________________________ Title ____________________________
<PAGE> 30
IRS Approved
Prototype Plan Document
FOR
Qualified
Retirement Plans
(401(K) PROFIT SHARING)
J.C. BRADFORD & CO.
<PAGE> 31
===============================
QUALIFIED
RETIREMENT
PLAN
BASIC PLAN
DOCUMENT
===============================
<PAGE> 32
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION ONE DEFINITIONS
1.01 Adoption Agreement .............................................. 1
1.02 Basic Plan Document ............................................. 1
1.03 Beneficiary ..................................................... 1
1.04 Break In Eligibility Service .................................... 1
1.05 Break In Vesting Service ........................................ 1
1.06 Code ............................................................ 1
1.07 Compensation .................................................... 1
1.08 Custodian ....................................................... 2
1.09 Disability ...................................................... 2
1.10 Early Retirement Age ............................................ 2
1.11 Earned Income ................................................... 2
1.12 Effective Date .................................................. 2
1.13 Eligibility Computation Period .................................. 2
1.14 Employee ........................................................ 2
1.15 Employer ........................................................ 2
1.16 Employer Contribution ........................................... 3
1.17 Employment Commencement Date .................................... 3
1.18 Employer Profit Sharing Contribution ............................ 3
1.19 Entry Dates ..................................................... 3
1.20 ERISA ........................................................... 3
1.21 Forfeiture ...................................................... 3
1.22 Fund ............................................................ 3
1.23 Highly Compensated Employee ..................................... 3
1.24 Hours of Service - Means ........................................ 3
1.25 Individual Account .............................................. 4
1.26 Investment Fund ................................................. 4
1.27 Key Employee .................................................... 4
1.28 Leased Employee ................................................. 4
1.29 Nondeductible Employee Contributions: ........................... 4
1.30 Normal Retirement Age ........................................... 4
1.31 Owner - Employee ................................................ 4
1.32 Participant ..................................................... 4
1.33 Plan ............................................................ 4
1.34 Plan Administrator .............................................. 4
1.35 Plan Year ....................................................... 4
1.36 Prior Plan ...................................................... 4
1.37 Prototype Plan .................................................. 4
1.38 Qualifying Participant .......................................... 4
1.39 Related Employer ................................................ 5
1.40 Related Employer Participation Agreement ........................ 5
1.41 Self-Employed Individual ........................................ 5
1.42 Separate Fund ................................................... 5
1.43 Taxable Wage Base ............................................... 5
1.44 Termination of Employment ....................................... 5
1.45 Top-Heavy Plan .................................................. 5
1.46 Trustee ......................................................... 5
1.47 Valuation Date .................................................. 5
1.48 Vested .......................................................... 5
1.49 Year Of Eligibility Service ..................................... 5
1.50 Year Of Vesting Service ......................................... 5
SECTION TWO ELIGIBILITY AND PARTICIPATION
2.01 Eligibility To Participate ...................................... 6
2.02 Plan Entry ...................................................... 6
2.03 Transfer To Or From Ineligible Class ............................ 6
2.04 Return As A Participant After Break In Eligibility Service ...... 6
2.05 Determinations Under This Section ............................... 6
2.06 Terms Of Employment ............................................. 6
2.07 Special Rules Where Elapsed Time Method Is Being Used ........... 6
2.08 Election Not To Participate ..................................... 7
</TABLE>
<PAGE> 33
<TABLE>
<S> <C> <C>
SECTION THREE CONTRIBUTIONS
3.01 Employer Contributions .......................................... 7
3.02 Nondeductible Employee Contributions ............................ 9
3.03 Rollover Contributions .......................................... 9
3.04 Transfer Contributions .......................................... 9
3.05 Limitation On Allocations ....................................... 9
SECTION FOUR INDIVIDUAL ACCOUNTS OF PARTICIPANTS AND VALUATION
4.01 Individual Accounts ............................................. 12
4.02 Valuation Of Fund ............................................... 12
4.03 Valuation Of Individual Accounts ................................ 12
4.04 Modification Of Method For Valuing Individual Accounts .......... 12
4.05 Segregation Of Assets ........................................... 12
4.06 Statement of Individual Accounts ................................ 12
SECTION FIVE
5.01 Creation Of Fund ................................................ 13
5.02 Investment Authority ............................................ 13
5.03 Financial Organization Custodian Or Trustee
Without Full Trust Powers ....................................... 13
5.04 Financial Organization Trustee With Full Trust Powers
And Individual Trustee .......................................... 13
5.05 Division Of Fund Into Investment Funds .......................... 14
5.06 Compensation And Expenses ....................................... 14
5.07 Not Obligated To Question Data .................................. 14
5.08 Liability For Withholding On Distributions ...................... 15
5.09 Resignation Or Removal Of Trustee (Or Custodian) ................ 15
5.10 Degree Of Care - Limitations Of Liability ....................... 15
5.11 Indemnification Of Prototype Sponsor And Trustee (Or Custodian).. 15
5.12 Investment Managers ............................................. 15
5.13 Matters Relating To Insurance ................................... 16
5.14 Direction Of Investments By Participant ......................... 16
SECTION SIX VESTING AND DISTRIBUTION
6.01 Distribution To Participant ..................................... 16
6.02 Form Of Distribution To A Participant ........................... 19
6.03 Distributions Upon The Death Of A Participant ................... 19
6.04 Form Of Distribution To Beneficiary ............................. 20
6.05 Joint And Survivor Annuity Requirements ......................... 20
6.06 Distribution Requirements ....................................... 22
6.07 Annuity Contracts ............................................... 24
6.08 Loans To Participants ........................................... 24
6.09 Distribution In Kind ............................................ 25
6.10 Direct Rollovers Of Eligible Rollover Distributions ............. 25
6.11 Procedure For Missing Participants Or Beneficiaries ............. 26
SECTION SEVEN CLAIMS PROCEDURE
7.01 Filing A Claim For Plan Distributions ........................... 26
7.02 Denial Of Claim ................................................. 26
7.03 Remedies Available .............................................. 26
SECTION EIGHT PLAN ADMINISTRATOR
8.01 Employer Is Plan Administrator .................................. 26
8.02 Powers And Duties Of The Plan Administrator ..................... 26
8.03 Expenses And Compensation ....................................... 27
8.04 Information From Employer ....................................... 27
SECTION NINE AMENDMENT AND TERMINATION
9.01 Right Of Prototype Sponsor To Amend The Plan .................... 27
9.02 Right Of Employer To Amend The Plan ............................. 27
9.03 Limitation On Power To Amend .................................... 27
9.04 Amendment Of Vesting Schedule ................................... 28
</TABLE>
<PAGE> 34
<TABLE>
<S> <C> <C>
9.05 Permanency ...................................................... 28
9.06 Method And Procedure For Termination ............................ 28
9.07 Continuance Of Plan by Successor Employer ....................... 28
9.08 Failure Of Plan Qualification ................................... 28
SECTION TEN MISCELLANEOUS
10.01 State Community Property Laws ................................... 28
10.02 Headings ........................................................ 28
10.03 Gender And Number ............................................... 28
10.04 Plan Merger Or Consolidation .................................... 28
10.05 Standard Of Fiduciary Conduct ................................... 28
10.06 General Undertaking Of All Parties .............................. 29
10.07 Agreement Binds Heirs, Etc ...................................... 29
10.08 Determination Of Top-Heavy Status ............................... 29
10.09 Special Limitations For Owner-Employees ......................... 30
10.10 Inalienability Of Benefits ...................................... 30
10.11 Cannot Eliminate Protected Benefits ............................. 30
SECTION ELEVEN 401(k) PROVISIONS
11.100 Definitions ..................................................... 30
11.101 Actual Deferral Percentage (ADP) ................................ 30
11.102 Aggregate Limit ................................................. 31
11.103 Average Contribution Percentage (ACP) ........................... 31
11.104 Contributing Participant ........................................ 31
11.105 Contribution Percentage ......................................... 31
11.106 Contribution Percentage Amounts ................................. 31
11.107 Elective Deferrals .............................................. 31
11.108 Eligible Participant ............................................ 31
11.109 Excess Aggregate Contributions .................................. 31
11.110 Excess Contributions ............................................ 31
11.111 Excess Elective Deferrals ....................................... 31
11.112 Matching Contribution ........................................... 32
11.113 Qualified Nonelective Contributions ............................. 32
11.114 Qualified Matching Contributions ................................ 32
11.115 Qualifying Contributing Participant ............................. 32
11.201 Requirements To Enroll As A Contributing Participant ............ 32
11.202 Changing Elective Deferral Amounts .............................. 32
11.203 Ceasing Elective Deferrals ...................................... 32
11.204 Return As A Contributing Participant After Ceasing
Elective Deferrals .............................................. 32
11.205 Certain One-Time Irrevocable Elections .......................... 32
11.300 Contributions ................................................... 32
11.301 Contributions By Employer ....................................... 32
11.302 Matching Contributions .......................................... 33
11.303 Qualified Nonelective Contributions ............................. 33
11.304 Qualified Matching Contributions ................................ 33
11.305 Nondeductible Employee Contributions ............................ 33
11.400 Nondiscrimination testing ....................................... 33
11.401 Actual Deferral Percentage Test (ADP) ........................... 33
11.402 Limits On Nondeductible Employee Contributions
And Matching Contributions ...................................... 34
11.500 Distribution Provisions ......................................... 35
11.501 General Rule .................................................... 35
11.502 Distribution Requirements ....................................... 35
11.503 Hardship Distribution ........................................... 35
11.504 Distribution Of Excess Elective Deferrals ....................... 35
11.505 Distribution Of Excess Contributions ............................ 36
11.506 Distribution Of Excess Aggregate Contributions .................. 36
11.507 Recharacterization .............................................. 36
11.508 Distribution Of Elective Deferrals If Excess Annual Additions ... 37
11.600 Vesting ......................................................... 37
11.601 100% Vesting On Certain Contributions ........................... 37
11.602 Forfeitures And Vesting Of Matching Contributions ............... 37
</TABLE>
<PAGE> 35
QUALIFIED RETIREMENT PLAN AND TRUST
Defined Contribution Basic Plan Document 04
SECTION ONE DEFINITIONS
The following words and phrases when used in the Plan with
initial capital letters shall, for the purpose of this Plan,
have the meanings set forth below unless the context indicates
that other meanings are intended:
1.01 ADOPTION AGREEMENT
Means the document executed by the Employer through which it
adopts the Plan and Trust and thereby agrees to be bound by
all terms and conditions of the Plan and Trust.
1.02 BASIC PLAN DOCUMENT
Means this prototype Plan and Trust document.
1.03 BENEFICIARY
Means the individual or individuals designated pursuant to
Section 6.03(A) of the Plan.
1.04 BREAK IN ELIGIBILITY SERVICE
Means a 12 consecutive month period which coincides with an
Eligibility Computation Period during which an Employee fails
to complete more than 500 Hours of Service (or such lesser
number of Hours of Service specified in the Adoption Agreement
for this purpose).
1.05 BREAK IN VESTING SERVICE
Means a Plan Year (or other vesting computation period described
in Section 1.50) during which an Employee fails to complete more
than 500 Hours of Service (or such lesser number of Hours of
Service specified in the Adoption Agreement for this purpose).
1.06 CODE
Means the Internal Revenue Code of 1986 as amended from
time-to-time.
1.07 COMPENSATION
A. BASIC DEFINITION
For Plan Years beginning on or after January 1, 1989, the
following definition of Compensation shall apply:
As elected by the Employer in the Adoption Agreement (and if
no election is made, W-2 wages will be deemed to have been
selected), Compensation shall mean one of the following:
1. W-2 wages. Compensation is defined as information
required to be reported under Sections 6041 and 6051,
and 6052 of the Code (Wages, tips and other
compensation as reported on Form W-2). Compensation
is defined as wages within the meaning of Section
3401(a) of the Code and all other payments of
compensation to an Employee by the Employer (in the
course of the Employer's trade or business) for which
the Employer is required to furnish the Employee a
written statement under Sections 6041(d) and
6051(a)(3), and 6052 of the Code. Compensation must
be determined without regard to any rules under
Section 3401(a) that limit the remuneration included
in wages based on the nature or location of the
employment or the services performed (such as the
exception for agricultural labor in Section
3401(a)(2)).
2. Section 3401(a) wages. Compensation is defined as
wages within the meaning of Section 3401(a) of the
Code, for the purposes of income tax withholding at
the source but determined without regard to any rules
that limit the remuneration included in wages based
on the nature or location of the employment or the
services performed (such as the exception for
agricultural labor in Section 3401(a)(2)).
3. 415 safe-harbor compensation. Compensation is defined
as wages, salaries, and fees for professional
services and other amounts received (without regard
to whether or not an amount is paid in cash) for
personal services actually rendered in the course of
employment with the Employer maintaining the Plan to
the extent that the amounts are includable in gross
income (including, but not limited to, commissions
paid salesmen, compensation for services on the basis
of a percentage of profits, commissions on insurance
premiums, tips, bonuses, fringe benefits, and
reimbursements or other expense allowances under a
nonaccountable plan (as described in 1.62-2(c)), and
excluding the following:
a. Employer contributions to a plan of deferred
compensation which are not includible in the
Employee's gross income for the taxable year
in which contributed, or employer
contributions under a simplified employee
pension plan to the extent such
contributions are deductible by the
Employee, or any distributions from a plan
of deferred compensation;
b. Amounts realized from the exercise of a
nonqualified stock option, or when
restricted stock (or property) held by the
Employee either becomes freely transferable
or is no longer subject to a substantial
risk of forfeiture;
c. Amounts realized from the sale, exchange or
other disposition of stock acquired under a
qualified stock option; and
d. Other amounts which received special tax
benefits, or contributions made by the
Employer (whether or not under a salary
reduction agreement) towards the purchase of
an annuity contract described in Section
403(b) of the Code (whether or not the
contributions are actually excludable from
the gross income of the Employee).
For any Self-Employed Individual covered under the Plan,
Compensation will mean Earned Income.
B. DETERMINATION PERIOD AND OTHER RULES
Compensation shall include only that Compensation which is
actually paid to the Participant during the determination
period. Except as provided elsewhere in this Plan, the
determination period shall be the Plan Year unless the
Employer has selected another period in the Adoption
Agreement. If the Employer makes no election, the
determination period shall be the Plan Year.
Unless otherwise indicated in the Adoption Agreement,
Compensation shall include any amount which is contributed by
the Employer pursuant to a salary reduction agreement and
which is not includible in the gross income of the Employee
under Sections 125, 402(e)(3), 402(h)(1)(B) or 403(b) of the
Code.
<PAGE> 36
2
Where this Plan is being adopted as an amendment and
restatement to bring a Prior Plan into compliance with the Tax
Reform Act of 1986, such Prior Plan's definition of
Compensation shall apply for Plan Years beginning before
January 1, 1989.
C. LIMITS ON COMPENSATION
For years beginning after December 31, 1988 and before January
1, 1994, the annual Compensation of each Participant taken
into account for determining all benefits provided under the
Plan for any determination period shall not exceed $200,000.
This limitation shall be adjusted by the Secretary at the same
time and in the same manner as under Section 415(d) of the
Code, except that the dollar increase in effect on January 1
of any calendar year is effective for Plan Years beginning in
such calendar year and the first adjustment to the $200,000
limitation is effective on January 1, 1990.
For Plan Years beginning on or after January 1, 1994, the
annual Compensation of each Participant taken into account for
determining all benefits provided under the Plan for any Plan
Year shall not exceed $150,000, as adjusted for increases in
the cost-of-living in accordance with Section 401(a)(17)(B) of
the Internal Revenue Code. The cost-of-living adjustment in
effect for a calendar year applies to any determination period
beginning in such calendar year.
If the period for determining Compensation used in calculating
an Employee's allocation for a determination period is a short
Plan Year (i.e., shorter than 12 months), the annual
Compensation limit is an amount equal to the otherwise
applicable annual Compensation limit multiplied by a fraction,
the numerator of which is the number of months in the short
Plan Year, and the denominator of which is 12.
In determining the Compensation of a Participant for purposes
of this limitation, the rules of Section 414(q)(6) of the Code
shall apply, except in applying such rules, the term "family"
shall include only the spouse of the Participant and any
lineal descendants of the Participant who have not attained
age 19 before the close of the year. If, as a result of the
application of such rules the adjusted $200,000 limitation is
exceeded, then (except for purposes of determining the portion
of Compensation up to the integration level, if this Plan
provides for permitted disparity), the limitation shall be
prorated among the affected individuals in proportion to
each such individual's Compensation as determined under this
Section prior to the application of this limitation.
If Compensation for any prior determination period is taken
into account in determining an Employee's allocations or
benefits for the current determination period, the
Compensation for such prior determination period is subject to
the applicable annual Compensation limit in effect for that
prior period. For this purpose, in determining allocations in
Plan Years beginning on or after January 1, 1989, the annual
Compensation limit in effect for determination periods
beginning before that date is $200,000. In addition, in
determining allocations in Plan Years beginning on or after
January l, 1994, the annual Compensation limit in effect for
determination periods beginning before that date is $150,000
1.08 CUSTODIAN
Means an entity specified in the Adoption Agreement as Custodian
or any duly appointed successor as provided in Section 5.09.
1.09 DISABILITY
Unless the Employer has elected a different definition in the
Adoption Agreement, 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 12 months. The
permanence and degree of such impairment shall be supported by
medical evidence.
1.10 EARLY RETIREMENT AGE
Means the age specified in the Adoption Agreement. The Plan will
not have an Early Retirement Age if none is specified in the
Adoption Agreement.
1.11 EARNED INCOME
Means the net earnings from self-employment in the trade or
business with respect to which the Plan is established, for
which personal services of the 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 Section 404 of the Code.
Net earnings shall be determined with regard to the deduction
allowed to the Employer by Section 164(f) of the Code for taxable
years beginning after December 31, 1989.
1.12 EFFECTIVE DATE
Means the date the Plan becomes effective as indicated in the
Adoption Agreement. However, as indicated in the Adoption
Agreement, certain provisions may have specific effective dates.
Further, where a separate date is stated in the Plan as of which
a particular Plan provision becomes effective, such date will
control with respect to that provision.
1.13 ELIGIBILITY COMPUTATION PERIOD
An Employee's initial Eligibility Computation Period shall be the
12 consecutive month period commencing on the Employee's
Employment Commencement Date. The Employee's subsequent
Eligibility Computation Periods shall be the 12 consecutive month
periods commencing on the anniversaries of his or her Employment
Commencement Date; provided, however, if pursuant to the Adoption
Agreement, an Employee is required to complete one or less Years
of Eligibility Service to become a Participant, then his or her
subsequent Eligibility Computation Periods shall be the Plan
Years commencing with the Plan Year beginning during his or her
initial Eligibility Computation Period. An Employee does not
complete a Year of Eligibility Service before the end of the 12
consecutive month period regardless of when during such period
the Employee completes the required number of Hours of Service.
1.14 EMPLOYEE
Means any person employed by an Employer maintaining the Plan or
of any other employer required to be aggregated with such
Employer under Sections 414(b), (c), (m) or (o) of the Code.
The term Employee shall also include any Leased Employee deemed
to be an Employee of any Employer described in the previous
paragraph as provided in Section 414(n) or (o) of the Code.
1.15 EMPLOYER
Means any corporation, partnership, sole-proprietorship or other
entity named in the Adoption Agreement and any successor who by
merger, consolidation, purchase or otherwise assumes the
obligations of the Plan. A partnership is considered to be the
Employer of each of the partners and a sole-proprietorship is
considered to be the Employer of a sole proprietor. Where this
Plan is being maintained by a union or other entity that
represents its member Employees in the negotiation of collective
bargaining agreements, the term Employer shall mean such union or
other entity.
<PAGE> 37
3
1.16 EMPLOYER CONTRIBUTION
Means the amount contributed by the Employer each year as
determined under this Plan.
1.17 EMPLOYMENT COMMENCEMENT DATE
An Employee's Employment Commencement date means the date the
Employee first performs an Hour of Service for the Employer.
1.18 EMPLOYER PROFIT SHARING CONTRIBUTION
Means an Employer Contribution made pursuant to the Section of
the Adoption Agreement titled "Employer Profit Sharing
Contributions." The Employer may make Employer Profit Sharing
Contributions without regard to current or accumulated earnings
or profits.
1.19 ENTRY DATES
Means the first day of the Plan Year and the first day of the
seventh month of the Plan Year, unless the Employer has specified
different dates in the Adoption Agreement.
1.20 ERISA
Means the Employee Retirement Income Security Act of 1974 as
amended from time-to-time.
1.21 FORFEITURE
Means that portion of a Participant's Individual Account derived
from Employer Contributions which he or she is not entitled to
receive (i.e., the nonvested portion).
1.22 FUND
Means the Plan assets held by the Trustee for the Participants'
exclusive benefit.
1.23 HIGHLY COMPENSATED EMPLOYEE
The term Highly Compensated Employee includes highly compensated
active employees and highly compensated former employees.
A highly compensated active employee includes any Employee who
performs service for the Employer during the determination year
and who, during the look-back year (a) received Compensation from
the Employer in excess of $75,000 (as adjusted pursuant to
Section 415(d) of the Code); (b) received Compensation from the
Employer in excess of $50,000 (as adjusted pursuant to Section
415(d) of the Code) and was a member of the top-paid group for
such year; or (c) was an officer of the Employer and received
Compensation during such year that is greater than 50% of the
dollar limitation in effect under Section 415(b)(1)(A) of the
Code. The term Highly Compensated Employee also includes: (a)
Employees who are both described in the preceding sentence if the
term "determination year" is substituted for the term "look-back
year" and the Employee is one of the 100 Employees who received
the most Compensation from the Employer during the determination
year; and (b) Employees who are 5% owners at any time during the
look-back year or determination year.
If no officer has satisfied the Compensation requirement of (c)
above during either a determination year or look-back year, the
highest paid officer for such year shall be treated as a Highly
Compensated Employee.
For this purpose, the determination year shall be the Plan Year.
The look-back year shall be the 12 month period immediately
preceding the determination year.
A highly compensated former employee includes any Employee who
separated from service (or was deemed to have separated) prior to
the determination year, performs no service for the Employer
during the determination year, and was a highly compensated
active employee for either the separation year or any
determination year ending on or after the Employee's 55th
birthday.
If an Employee is, during a determination year or look-back year,
a family member of either a 5% owner who is an active or former
Employee or a Highly Compensated Employee who is one of the 10
most Highly Compensated Employees ranked on the basis of
Compensation paid by the Employer during such year, then the
family member and the 5% owner or top 10 Highly Compensated
Employee shall be aggregated. In such case, the family member and
5% owner or top 10 Highly Compensated Employee shall be treated
as a single Employee receiving Compensation and Plan
contributions or benefits equal to the sum of such Compensation
and contributions or benefits of the family member and 5% owner
or top 10 Highly Compensated Employee. For purposes of this
Section, family member includes the spouse, lineal ascendants and
descendants of the Employee or former Employee and the spouses of
such lineal ascendants and descendants.
The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of
Employees in the top-paid group, the top 100 Employees, the
number of Employees treated as officers and the Compensation that
is considered, will be made in accordance with Section 414(q) of
the Code and the regulations thereunder.
1.24 HOURS OF SERVICE - MEANS
A. Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer. These
hours will be credited to the Employee for the computation
period in which the duties are performed; and
B. Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during
which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation,
holiday, illness, incapacity (including disability), layoff,
jury duty, military duty or leave of absence. No more than 501
Hours of Service will be credited under this paragraph for any
single continuous period (whether or not such period occurs in
a single computation period). Hours under this paragraph shall
be calculated and credited pursuant to Section 2530.200b-2 of
the Department of Labor Regulations which is incorporated
herein by this reference; and
C. Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The
same Hours of Service will not be credited both under
paragraph (A) or paragraph (B), as the case may be, and under
this paragraph (C). These hours will be credited to the
Employee for the computation period or periods to which the
award or agreement pertains rather than the computation period
in which the award, agreement, or payment is made.
D. Solely for purposes of determining whether a Break in
Eligibility Service or a Break in Vesting Service has occurred
in a computation period (the computation period for purposes
of determining whether a Break in Vesting Service has occurred
is the Plan Year or other vesting computation period described
in Section 1.50), an individual who is absent from work for
maternity or paternity reasons shall receive credit for the
Hours of Service which would otherwise have been credited to
such individual but for such absence, or in any case in which
such hours cannot be determined, 8 Hours of Service per day of
such absence. For purposes of this paragraph, an absence from
work for maternity or paternity reasons means an
<PAGE> 38
4
absence (1) by reason of the pregnancy of the individual, (2)
by reason of a birth of a child of the individual, (3) by
reason of the placement of a child with the individual in
connection with the adoption of such child by such individual,
or (4) for purposes of caring for such child for a period
beginning immediately following such birth or placement. The
Hours of Service credited under this paragraph shall be
credited (1) in the Eligibility Computation Period or Plan
Year or other vesting computation period described in Section
1.50 in which the absence begins if the crediting is necessary
to prevent a Break in Eligibility Service or a Break in
Vesting Service in the applicable period, or (2) in all other
cases, in tile following Eligibility Computation Period or
Plan Year or other vesting computation period described in
Section 1.50.
E. Hours of Service will be credited for employment with other
members of an affiliated service group (under Section 414(m)
of the Code), a controlled group of corporations (under
Section 414(b) of the Code), or a group of trades or
businesses under common control (under Section 414(c) of the
Code) of which the adopting Employer is a member, and any
other entity required to be aggregated with the Employer
pursuant to Section 414(o) of the Code 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) or 414(o) and the regulations thereunder.
F. Where the Employer maintains the plan of a predecessor
employer, service for such predecessor employer shall be
treated as service for the Employer.
G. The above method for determining Hours of Service may be
altered as specified in the Adoption Agreement,
1.25 INDIVIDUAL ACCOUNT
Means the account established and maintained under this Plan for
each Participant in accordance with Section 4.01.
1.26 INVESTMENT FUND
Means a subdivision of the Fund established pursuant to Section
5.05.
1.27 KEY EMPLOYEE
Means any person who is determined to be a Key Employee under
Section 10.08.
1.28 LEASED EMPLOYEE
Means any person (other than an Employee of the recipient) who
pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the
recipient (or for the recipient and related persons determined in
accordance with Section 414(n)(6) of the Code) on a substantially
full time basis for a period of at least one year, 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: (1) such employee is covered by a money purchase
pension plan providing: (a) a nonintegrated employer contribution
rate of at least 10% of compensation, as defined in Section
413(c)(3) of the Code, but including amounts contributed pursuant
to a salary reduction agreement which are excludable from the
employee's gross income under Section 125, Section 402(e)(3),
Section 402(h)(1)(B) or Section 403(b) of the Code, (b) immediate
participation, and (c) full and immediate vesting; and (2) Leased
Employees do not constitute more than 20% of the recipient's
nonhighly compensated work force.
1.29 NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS
Means any contribution made to the Plan by or on behalf of a
Participant that is included in the Participant's gross income in
the year in which made and that is maintained under a separate
account to which earnings and losses are allocated.
1.30 NORMAL RETIREMENT AGE
Means the age specified in the Adoption Agreement. However, if
the Employer enforces a mandatory retirement age which is less
than the Normal Retirement Age, such mandatory age is deemed to
be the Normal Retirement Age. If no age is specified in the
Adoption Agreement, the Normal Retirement Age shall be age 65.
1.31 OWNER-EMPLOYEE
Means an individual who is a sole proprietor, or who is a partner
owning more than 10% of either the capital or profits interest of
the partnership.
1.32 PARTICIPANT
Means any Employee or former Employee of the Employer who has met
the Plan's eligibility requirements, has entered the Plan and who
is or may become eligible to receive a benefit of any type from
this Plan or whose Beneficiary may be eligible to receive any
such benefit.
1.33 PLAN
Means the prototype defined contribution plan adopted by the
Employer. The Plan consists of this Basic Plan Document plus the
corresponding Adoption Agreement as completed and signed by the
Employer.
1.34 PLAN ADMINISTRATOR
Means the person or persons determined to be the Plan
Administrator in accordance with Section 8.01.
1.35 PLAN YEAR
Means the 12 consecutive month period which coincides with the
Employer's fiscal year or such other 12 consecutive month period
as is designated in the Adoption Agreement.
1.36 PRIOR PLAN
Means a plan which was amended or replaced by adoption of this
Plan document as indicated in the Adoption Agreement.
1.37 PROTOTYPE SPONSOR
Means the entity specified in the Adoption Agreement that makes
this prototype plan available to employers for adoption.
1.38 QUALIFYING PARTICIPANT
Means a Participant who has satisfied the requirements described
in Section 3.01(B)(2) to be entitled to share in any Employer
Contribution (and Forfeitures, if applicable) for a Plan Year.
<PAGE> 39
5
1.39 RELATED EMPLOYER
Means an employer that may be required to be aggregated with the
Employer adopting this Plan for certain qualification
requirements under Sections 414(b), (c), (m) or (o) of the Code
(or any other employer that has ownership in common with the
Employer). A Related Employer may participate in this Plan if so
indicated in the Section of the Adoption Agreement titled
"Employer Information" or if such Related Employer executes a
Related Employer Participation Agreement.
1.40 RELATED EMPLOYER PARTICIPATION AGREEMENT
Means the agreement under this prototype Plan that a Related
Employer may execute to participate in this Plan.
1.41 SELF-EMPLOYED INDIVIDUAL
Means an individual who has Earned Income for the taxable year
from the trade or business for which the Plan is established;
also, an individual who would have had Earned Income but for the
fact that the trade or business had no net profits for the
taxable year.
1.42 SEPARATE FUND
Means a subdivision of the Fund held in the name of a particular
Participant representing certain assets held for that
Participant. The assets which comprise a Participant's Separate
Fund are those assets earmarked for him or her and those assets
subject to the Participant's individual direction pursuant to
Section 5.14.
1.43 TAXABLE WAGE BASE
Means, with respect to any taxable year, the contribution and
benefit base in effect under Section 230 of the Social Security
Act at the beginning of the Plan Year.
1.44 TERMINATION OF EMPLOYMENT
A Termination of Employment of an Employee of an Employer shall
occur whenever his or her status as an Employee of such Employer
ceases for any reason other than death. An Employee who does not
return to work for the Employer on or before the expiration of an
authorized leave of absence from such Employer shall be deemed to
have incurred a Termination of Employment when such leave ends.
1.45 TOP-HEAVY PLAN
This Plan is a Top-Heavy Plan for any Plan Year if it is
determined to be such pursuant to Section 10.08.
1.46 TRUSTEE
Means an individual, individuals or corporation specified in the
Adoption Agreement as Trustee or any duly appointed successor as
provided in Section 5.09. Trustee shall mean Custodian in the
event the financial organization named as Trustee does not have
full trust powers.
1.47 VALUATION DATE
Means the date or dates as specified in the Adoption Agreement.
If no date is specified in the Adoption Agreement, the Valuation
Date shall be the last day of the Plan Year and each other date
designated by the Plan Administrator which is selected in a
uniform and nondiscriminatory manner when the assets of the Fund
are valued at their then fair market value.
1.48 VESTED
Means nonforfeitable, that is, a claim which is unconditional and
legally enforceable against the Plan obtained by a Participant or
the Participant's Beneficiary to that part of an immediate or
deferred benefit under the Plan which arises from a Participant's
Years of Vesting Service.
1.49 YEAR OF ELIGIBILITY SERVICE
Means a 12 consecutive month period which coincides with an
Eligibility Computation Period during which an Employee completes
at least 1,000 Hours of Service (or such lesser number of Hours
of Service specified in the Adoption Agreement for this purpose).
An Employee does not complete a Year of Eligibility Service
before the end of the 12 consecutive month period regardless of
when during such period the Employee completes the required
number of Hours of Service.
1.50 YEAR OF VESTING SERVICE
Means a Plan Year during which an Employee completes at least
1,000 Hours of Service (or such lesser number of Hours of Service
specified in the Adoption Agreement for this purpose).
Notwithstanding the preceding sentence, where the Employer so
indicates in the Adoption Agreement, vesting shall be computed by
reference to the 12 consecutive month period beginning with the
Employee's Employment Commencement Date and each successive 12
month period commencing on the anniversaries thereof.
In the case of a Participant who has 5 or more consecutive Breaks
in Vesting Service, all Years of Vesting Service after such
Breaks in Vesting Service will be disregarded for the purpose of
determining the Vested portion of his or her Individual Account
derived from Employer Contributions that accrued before such
breaks. Such Participant's prebreak service will count in vesting
the postbreak Individual Account derived from Employer
Contributions only if either:
(A) such Participant had any Vested right to any portion of his
or her Individual Account derived from Employer
Contributions at the time of his or her Termination of
Employment; or
(B) upon returning to service, the number of consecutive Breaks
in Vesting Service is less than his or her number of Years
of Vesting Service before such breaks.
Separate subaccounts will be maintained for the Participant's
prebreak and postbreak portions of his or her Individual Account
derived from Employer Contributions. Both subaccounts will share
in the gains and losses of the Fund.
Years of Vesting Service shall not include any period of time
excluded from Years of Vesting Service in the Adoption Agreement.
In the event the Plan Year is changed to a new 12-month period,
Employees shall receive credit for Years of Vesting Service, in
accordance with the preceding provisions of this definition, for
each of the Plan Years (the old and new Plan Years) which overlap
as a result of such change.
<PAGE> 40
6
SECTION TWO ELIGIBILITY AND PARTICIPATION
2.01 ELIGIBILITY TO PARTICIPATE
Each Employee of the Employer, except those Employees who belong
to a class of Employees which is excluded from participation as
indicated in the Adoption Agreement, shall be eligible to
participate in this Plan upon the satisfaction of the age and
Years of Eligibility Service requirements specified in the
Adoption Agreement.
2.02 PLAN ENTRY
A. If this Plan is a replacement of a Prior Plan by amendment or
restatement, each Employee of the Employer who was a
Participant in said Prior Plan before the Effective Date shall
continue to be a Participant in this Plan.
B. An Employee will become a Participant in the Plan as of the
Effective Date if the Employee has met the eligibility
requirements of Section 2.01 as of such date. After the
Effective Date, each Employee shall become a Participant on
the first Entry Date following the date the Employee satisfies
the eligibility requirements of Section 2.01 unless otherwise
indicated in the Adoption Agreement.
C. The Plan Administrator shall notify each Employee who becomes
eligible to be a Participant under this Plan and shall furnish
the Employee with the application form, enrollment forms or
other documents which are required of Participants. The
eligible Employee shall execute such forms or documents and
make available such information as may be required in the
administration of the Plan.
2.03 TRANSFER TO OR FROM INELIGIBLE CLASS
If an Employee who had been a Participant becomes ineligible to
participate because he or she is no longer a member of an
eligible class of Employees, but has not incurred a Break in
Eligibility Service, such Employee shall participate immediately
upon his or her return to an eligible class of Employees. If such
Employee incurs a Break in Eligibility Service, his or her
eligibility to participate shall be determined by Section 2.04.
An Employee who is not a member of the eligible class of
Employees will become a Participant immediately upon becoming a
member of the eligible class provided such Employee has satisfied
the age and Years of Eligibility Service requirements. If such
Employee has not satisfied the age and Years of Eligibility
Service requirements as of the date he or she becomes a member of
the eligible class, such Employee shall become a Participant on
the first Entry Date following the date he or she satisfies those
requirements unless otherwise indicated in the Adoption
Agreement.
2.04 RETURN AS A PARTICIPANT AFTER BREAK IN ELIGIBILITY SERVICE
A. EMPLOYEE NOT PARTICIPANT BEFORE BREAK - If an Employee incurs
a Break in Eligibility Service before satisfying the Plan's
eligibility requirements, such Employee's Years of Eligibility
Service before such Break in Eligibility Service will not be
taken into account.
B. NONVESTED PARTICIPANTS - In the case of a Participant who does
not have a Vested interest in his or her Individual Account
derived from Employer Contributions, Years of Eligibility
Service before a period of consecutive Breaks in Eligibility
Service will not be taken into account for eligibility
purposes if the number of consecutive Breaks in Eligibility
Service in such period equals or exceeds the greater of 5 or
the aggregate number of Years of Eligibility Service before
such break. Such aggregate number of Years of Eligibility
Service will not include any Years of Eligibility Service
disregarded under the preceding sentence by reason of prior
breaks.
If a Participant's Years of Eligibility Service are
disregarded pursuant to the preceding paragraph, such
Participant will be treated as a new Employee for eligibility
purposes. If a Participant's Years of Eligibility Service may
not be disregarded pursuant to the preceding paragraph, such
Participant shall continue to participate in the Plan, or, if
terminated, shall participate immediately upon reemployment.
C. VESTED PARTICIPANTS - A Participant who has sustained a Break
in Eligibility Service and who had a Vested interest in all or
a portion of his or her Individual Account derived from
Employer Contributions shall continue to participate in the
Plan, or, if terminated, shall participate immediately upon
reemployment.
2.05 DETERMINATIONS UNDER THIS SECTION
The Plan Administrator shall determine the eligibility of each
Employee to be a Participant. This determination shall be
conclusive and binding upon all persons except as otherwise
provided herein or by law.
2.06 TERMS OF EMPLOYMENT
Neither the fact of the establishment of the Plan nor the fact
that a common law Employee has become a Participant shall give to
that common law Employee any right to continued employment; nor
shall either fact limit the right of the Employer to discharge or
to deal otherwise with a common law Employee without regard to
the effect such treatment may have upon the Employee's rights
under the Plan.
2.07 SPECIAL RULES WHERE ELAPSED TIME METHOD IS BEING USED
This Section 2.07 shall apply where the Employer has indicated in
the Adoption Agreement that the elapsed time method will be used.
When this Section applies, the definitions of year of service,
break in service and hour of service in this Section will replace
the definitions of Year of Eligibility Service, Year of Vesting
Service, Break in Eligibility Service, Break in Vesting Service
and Hours of Service found in the Definitions Section of the Plan
(Section One).
For purposes of determining an Employee's initial or continued
eligibility to participate in the Plan or the Vested interest in
the Participant's Individual Account balance derived from
Employer Contributions, (except for periods of service which may
be disregarded on account of the "rule of parity" described in
Sections 1.50 and 2.04) an Employee will receive credit for the
aggregate of all time period(s) commencing with the Employee's
first day of employment or reemployment and ending on the date a
break in service begins. The first day of employment or
reemployment is the first day the Employee performs an hour of
service. An Employee will also receive credit for any period of
severance of less than 12 consecutive months. Fractional periods
of a year will be expressed in terms of days.
For purposes of this Section, hour of service will mean each hour
for which an Employee is paid or entitled to payment for the
performance of duties for the Employer. Break in service is a
period of severance of at least 12 consecutive months. Period of
severance is a continuous period of time during which the
Employee is not employed by the Employer. Such period begins on
the date the Employee retires, quits or is discharged, or if
earlier, the 12 month anniversary of the date on which the
Employee was otherwise first absent from service.
In the case of an individual who is absent from work for
maternity or paternity reasons, the 12 consecutive month period
beginning on the first anniversary of the first date of such
absence shall not constitute a break in service. For purposes of
this
<PAGE> 41
7
paragraph, an absence from work for maternity or paternity
reasons means an absence (1) by reason of the pregnancy of the
individual, (2) by reason of the birth of a child of the
individual, (3) by reason of the placement of a child with the
individual in connection with the adoption of such child by such
individual, or (4) for purposes of caring for such child for a
period beginning immediately following such birth or placement.
Each Employee will share in Employer Contributions for the period
beginning on the date the Employee commences participation
under the Plan and ending on the date on which such Employee
severs employment with the Employer or is no longer a member of
an eligible class of Employees.
If the Employer is a member of an affiliated service group (under
Section 414(m) of the Code), a controlled group of corporations
(under Section 414(b) of the Code), a group of trades or
businesses under common control (under Section 414(c) of the
Code), or any other entity required to be aggregated with the
Employer pursuant to Section 414(o) of the Code, service will be
credited for any employment for any period of time for any other
member of such group. Service will also be credited for any
individual required under Section 414(n) or Section 414(o) to be
considered an Employee of any Employer aggregated under Section
414(b), (c), or (m) of the Code.
2.08 ELECTION NOT TO PARTICIPATE
This Section 2.08 will apply if this Plan is a nonstandardized
plan and the Adoption Agreement so provides. If this Section
applies, then an Employee or a Participant may elect not to
participate in the Plan for one or more Plan Years. The Employer
may not contribute for an Employee or Participant for any Plan
Year during which such Employee's or Participant's election not
to participate is in effect. Any election not to participate must
be in writing and filed with the Plan Administrator.
The Plan Administrator shall establish such uniform and
nondiscriminatory rules as it deems necessary or advisable to
carry out the terms of this Section, including, but not limited
to, rules prescribing the timing of the filing of elections not
to participate and the procedures for electing to re-participate
in the Plan.
An Employee or Participant continues to earn credit for vesting
and eligibility purposes for each Year of Vesting Service or Year
of Eligibility Service he or she completes and his or her
Individual Account (if any) will share in the gains or losses of
the Fund during the periods he or she elects not to participate.
SECTION THREE CONTRIBUTIONS
3.01 EMPLOYER CONTRIBUTIONS
A. OBLIGATION TO CONTRIBUTE - The Employer shall make
contributions to the Plan in accordance with the contribution
formula specified in the Adoption Agreement. If this Plan is a
profit sharing plan, the Employer shall, in its sole
discretion, make contributions without regard to current or
accumulated earnings or profits.
B. ALLOCATION FORMULA AND THE RIGHT TO SHARE IN THE EMPLOYER
CONTRIBUTION
1. General - The Employer Contribution for any Plan Year will
be allocated or contributed to the Individual Accounts of
Qualifying Participants in accordance with the allocation
or contribution formula specified in the Adoption
Agreement. The Employer Contribution for any Plan Year
will be allocated to each Participant's Individual Account
as of the last day of that Plan Year.
Any Employer Contribution for a Plan Year must satisfy
Section 401(a)(4) and the regulations thereunder for such
Plan Year.
2. Qualifying Participants - A Participant is a Qualifying
Participant and is entitled to share in the Employer
Contribution for any Plan Year if the Participant was a
Participant on at least one day during the Plan Year and
satisfies any additional conditions specified in the
Adoption Agreement. If this Plan is a standardized plan,
unless the Employer specifies more favorable conditions in
the Adoption Agreement, a Participant will not be a
qualifying Participant for a Plan Year if he or she incurs
a Termination of Employment during such Plan Year with not
more than 500 Hours of Service if he or she is not an
Employee on the last day of the Plan Year. The
determination of whether a Participant is entitled to
share in the Employer Contribution shall be made as of the
last day of each Plan Year.
3. Special Rules for Integrated Plans - This Plan may not
allocate contributions based on an integrated formula if
the Employer maintains any other plan that provides for
allocation of contributions based on an integrated formula
that benefits any of the same Participants. If the
Employer has selected the integrated contribution or
allocation formula in the Adoption Agreement, then the
maximum disparity rate shall be determined in accordance
with the following table.
<TABLE>
<CAPTION>
MAXIMUM DISPARITY RATE
Top-Heavy Nonstandardized and
Integration Level Money Purchase Profit Sharing Non-Top-Heavy Profit Sharing
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Taxable Wage Base (TWB) 5.7% 2.7% 5.7%
More than $0 but not more
than 20% of TWB 5.7% 2.7% 5.7%
More than 20% of TWB but
not more than 80% of TWB 4.3% 1.3% 4.3%
More than 80% of TWB but
not more than TWB 5.4% 2.4% 5.4%
</TABLE>
<PAGE> 42
8
C. ALLOCATION OF FORFEITURES - Forfeitures for a Plan Year which
arise as a result of the application of Section 6.01(D) shall
be allocated as follows:
1. Profit Sharing Plan - If this is a profit sharing plan,
unless the Adoption Agreement indicates otherwise,
Forfeitures shall be allocated in the manner provided in
Section 3.01(B) (for Employer Contributions) to the
Individual Accounts of Qualifying Participants who are
entitled to share in the Employer Contribution for such
Plan Year. Forfeitures shall be allocated as of the last
day of the Plan Year during which the Forfeiture arose (or
any subsequent Plan Year if indicated in the Adoption
Agreement).
2. Money Purchase Pension and Target Benefit Plan - If this
Plan is a money purchase plan or a target benefit plan,
unless the Adoption Agreement indicates otherwise,
Forfeitures shall be applied towards the reduction of
Employer Contributions to the Plan. Forfeitures shall be
allocated as of the last day of the Plan Year during which
Forfeiture arose (or any subsequent Plan Year if indicated
in the Adoption Agreement).
D. TIMING OF EMPLOYER CONTRIBUTION - The Employer Contribution
for each Plan Year shall be delivered to the Trustee (or
Custodian, if applicable) not later than the due date for
filing the Employer's income tax return for its fiscal year in
which the Plan Year ends, including extensions thereof.
E. MINIMUM ALLOCATION FOR TOP-HEAVY PLANS - The contribution and
allocation provisions of this Section 3.01(E) shall apply for
any Plan Year with respect to which this Plan is a Top-Heavy
Plan.
1. Except as otherwise provided in (3) and (4) below, the
Employer Contributions and Forfeitures allocated on behalf
of any Participant who is not a Key Employee shall not be
less than the lesser of 3% of such Participant's
Compensation or (in the case where the Employer has no
defined benefit plan which designates this Plan to satisfy
Section 401 of the Code) the largest percentage of
Employer Contributions and Forfeitures, as a percentage of
the first $200,000 ($150,000 for Plan Years beginning
after December 31, 1993), (increased by any cost of living
adjustment made by the Secretary of Treasury or the
Secretary's delegate) of the Key Employee's Compensation,
allocated on behalf of any Key Employee for that year. The
minimum allocation is determined without regard to any
Social Security contribution. The Employer may, in the
Adoption Agreement, limit the Participants who are
entitled to receive the minimum allocation. This minimum
allocation shall be made even though under other Plan
provisions, the Participant would not otherwise be
entitled to receive an allocation, or would have
received a lesser allocation for the year because of (a)
the Participant's failure to complete 1,000 Hours of
Service (or any equivalent provided in the Plan), or (b)
the Participant's failure to make mandatory Nondeductible
Employee Contributions to the Plan, or (c) Compensation
less than a stated amount.
2. For purposes of computing the minimum allocation,
Compensation shall mean Compensation as defined in Section
1.07 of the Plan and shall include any amounts contributed
by the Employer pursuant to a salary reduction agreement
and which is not includible in the gross income of the
Employee under Sections 125, 402(e)(3), 402(h)(l)(B) or
403(b) of the Code even if the Employer has elected to
exclude such contributions in the definition of
Compensation used for other purposes under the Plan.
3. The provision in (1) above shall not apply to any
Participant who was not employed by the Employer on the
last day of the Plan Year.
4. The provision in (1) above shall not apply to any
Participant to the extent the Participant is covered under
any other plan or plans of the Employer and the Employer
has provided in the adoption agreement that the minimum
allocation or benefit requirement applicable to Top-Heavy
Plans will be met in the other plan or plans.
5. The minimum allocation required under this Section 3.01(E)
and Section 3.01(F)(1) (to the extent required to be
nonforfeitable under Code Section 416(b)) may not be
forfeited under Code Section 411(a)(3)(B) or 411(a)(3)(D).
F. SPECIAL REQUIREMENTS FOR PAIRED PLANS - The Employer maintains
paired plans if the Employer has adopted both a standardized
profit sharing plan and a standardized money purchase pension
plan using this Basic Plan Document.
1. Minimum Allocation - When the paired plans are top-heavy,
the top heavy requirements set forth in Section 3.01(E)(1)
of the Plan shall apply.
a. Same eligibility requirements. In satisfying the
top-heavy minimum allocation requirements set forth
in Section 3.01(E) of the Plan, if the Employees
benefiting under each of the paired plans are
identical, the top-heavy minimum allocation shall be
made to the money purchase pension plan.
b. Different eligibility requirements. In satisfying the
top-heavy minimum allocation requirements set forth
in Section 3.01(E) of the Plan, if the Employees
benefiting under each of the paired plans are not
identical, the top-heavy minimum allocation will be
made to both of the paired plans.
A Participant is treated as benefiting under the Plan
for any Plan Year during which the Participant
received or is deemed to receive an allocation in
accordance with Section 1.410(b)-3(a).
2. Only One Plan Can Be Integrated - If the Employer
maintains paired plans, only one of the Plans may
provide for the disparity in contributions which is
permitted under Section 401(1) of the Code. In the event
that both Adoption Agreements provide for such
integration, only the money purchase pension plan shall
be deemed to be integrated.
G. RETURN OF THE EMPLOYER CONTRIBUTION TO THE EMPLOYER UNDER
SPECIAL CIRCUMSTANCES - Any contribution made by the Employer
because of a mistake of fact must be returned to the Employer
within one year of the contribution.
In the event that the Commissioner of Internal Revenue
determines that the Plan is not initially qualified under the
Code, any contributions made incident to that initial
qualification by the Employer must be returned to the Employer
within one year after the date the initial qualification is
denied, but only if the application for qualification is made
by the time prescribed by law for filing the Employer's return
for the taxable year in which the Plan is adopted, or such
later date as the Secretary of the Treasury may prescribe.
In the event that a contribution made by the Employer under
this Plan is conditioned on deductibility and is not
deductible under Code Section 404, the contribution, to the
extent of the amount disallowed, must be returned to the
Employer within one year after the deduction is disallowed.
H. OMISSION OF PARTICIPANT
1. If the Plan is a money purchase plan or a target benefit
plan and, if in any Plan Year any Employee who should be
included as a Participant is erroneously omitted and
discovery of such omission is not made until after a
contribution by the Employer for the year has been made
and allocated, the Employer shall make a subsequent
contribution to
<PAGE> 43
9
include earnings thereon, with respect to the omitted
Employee in the amount which the Employer would have
contributed with respect to that Employee had he or she
not been omitted.
2. If the Plan is a profit sharing plan, and if in any Plan
Year, any Employee who should be included as a Participant
is erroneously omitted and discovery of such omission is
not made until after the Employer Contribution has been
made and allocated, then the Plan Administrator must re-do
the allocation (if a correction can be made) and inform
the Employee. Alternatively, the Employer may choose to
contribute for the omitted Employee the amount to include
earnings thereon, which the Employer would have
contributed for the Employee.
3.02 NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS
This Plan will not accept Nondeductible Employee Contributions
and matching contributions for Plan Years beginning after the
Plan Year in which this Plan is adopted by the Employer.
Nondeductible Employee Contributions for Plan Years beginning
after December 31, 1986, together with any matching contributions
as defined in Section 401(m) of the Code, will be limited so as
to meet the nondiscrimination test of Section 401(m) of the
Code.
A separate account will be maintained by the Plan Administrator
for the Nondeductible Employee Contributions of each Participant.
A Participant may, upon a written request submitted to the Plan
Administrator withdraw the lesser of the portion of his or her
Individual Account attributable to his or her Nondeductible
Employee Contributions or the amount he or she contributed as
Nondeductible Employee Contributions.
Nondeductible Employee Contributions and earnings thereon will be
nonforfeitable at all times. No Forfeiture will occur solely as a
result of an Employee's withdrawal of Nondeductible Employee
Contributions.
The Plan Administrator will not accept deductible employee
contributions which are made for a taxable year beginning after
December 31, 1986. Contributions made prior to that date will be
maintained in a separate account which will be nonforfeitable at
all times. The account will share in the gains and losses of the
Fund in the same manner as described in Section 4.03 of the Plan.
No part of the deductible employee contribution account will be
used to purchase life insurance. Subject to Section 6.05, joint
and survivor annuity requirements (if applicable), the
Participant may withdraw any part of the deductible employee
contribution account by making a written application to the Plan
Administrator.
3.03 ROLLOVER CONTRIBUTIONS
If so indicated in the Adoption Agreement, an Employee may
contribute a rollover contribution to the Plan. The Plan
Administrator may require the Employee to submit a written
certification that the contribution qualifies as a rollover
contribution under the applicable provisions of the Code. If it
is later determined that all or part of a rollover contribution
was ineligible to be rolled into the Plan, the Plan Administrator
shall direct that any ineligible amounts, plus earnings
attributable thereto, be distributed from the Plan to the
Employee as soon as administratively feasible.
A separate account shall be maintained by the Plan Administrator
for each Employee's rollover contributions which will be
nonforfeitable at all times. Such account will share in the
income and gains and losses of the Fund in the manner described
in Section 4.03 and shall be subject to the Plan's provisions
governing distributions.
The Employer may, in a uniform and nondiscriminatory manner, only
allow Employees who have become Participants in the Plan to make
rollover contributions.
3.04 TRANSFER CONTRIBUTIONS
If so indicated in the Adoption Agreement, the Trustee (or
Custodian, if applicable) may receive any amounts transferred to
it from the trustee or custodian of another plan qualified under
Code Section 401(a). If it is later determined that all or part
of a transfer contribution was ineligible to be transferred into
the Plan, the Plan Administrator shall direct that any ineligible
amounts, plus earnings attributable thereto, be distributed from
the Plan to the Employee as soon as administratively feasible.
A separate account shall be maintained by the Plan Administrator
for each Employee's transfer contributions which will be
nonforfeitable at all times. Such account will share in the
income and gains and losses of the Fund in the manner described
in Section 4.03 and shall be subject to the Plan's provisions
governing distributions.
The Employer may, in a uniform and nondiscriminatory manner, only
allow Employees who have become Participants in the Plan to make
transfer contributions.
3.05 LIMITATION ON ALLOCATIONS
A. 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 Section
419(e) of the Code maintained by the Employer, or an
individual medical account, as defined in Section 415(I)(2) of
the Code, or a simplified employee pension plan, as defined in
Section 408(k) of the Code, maintained by the Employer, which
provides an annual addition as defined in Section 3.08(E)(1),
the following rules shall apply:
1. The amount of annual additions which may be credited to
the Participant's Individual Account for any limitation
year will not exceed the lesser of the maximum permissible
amount or any other limitation contained in this Plan. If
the Employer Contribution that would otherwise be
contributed or allocated to the Participant's Individual
Account would cause the annual additions for the
limitation year to exceed the maximum permissible amount,
the amount contributed or allocated will be reduced so
that the annual additions for the limitation year will
equal the maximum permissible amount.
2. Prior to determining the Participant's actual Compensation
for the limitation year, the Employer may determine the
maximum permissible amount for a Participant on the basis
of a reasonable estimation of the Participant's
Compensation for the limitation year, uniformly determined
for all Participants similarly situated.
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 Compensation for the limitation year.
4. If pursuant to Section 3.05(A)(3) or as a result of the
allocation of Forfeitures there is an excess amount, the
excess will be disposed of as follows:
a. Any Nondeductible Employee Contributions, to the
extent they would reduce the excess amount, will be
returned to the Participant;
b. If after the application of paragraph (a) an excess
amount still exists, and the Participant is covered
by the Plan at the end of the limitation year, the
excess amount in the Participant's Individual Account
will be used to reduce
<PAGE> 44
10
Employer Contributions (including any allocation of
Forfeitures) for such Participant in the next
limitation year, and each succeeding limitation year
if necessary;
c. If after the application of paragraph (b) an excess
amount still exists and the Participant is not
covered by the Plan at the end of a limitation year,
the excess amount will be held unallocated in a
suspense account. The suspense account will be
applied to reduce future Employer Contributions
(including allocation of any Forfeitures) for all
remaining Participants in the next limitation year,
and each succeeding limitation year if necessary;
d. If a suspense account is in existence at any time
during a limitation year pursuant to this Section, it
will not participate in the allocation of the Fund's
investment gains and losses. If a suspense account is
in existence at any time during a particular
limitation year, all amounts in the suspense account
must be allocated and reallocated to Participants'
Individual Accounts before any Employer Contributions
or any Nondeductible Employee Contributions may be
made to the Plan for that limitation year. Excess
amounts may not be distributed to Participants or
former Participants.
B. If in addition to this Plan, the Participant is covered under
another qualified master or prototype defined contribution
plan maintained by the Employer, a welfare benefit fund
maintained by the Employer, an individual medical account
maintained by the Employer, or a simplified employee pension
maintained by the Employer that provides an annual addition as
defined in Section 3.05(E)(1), during any limitation year,
the following rules apply:
1. The annual additions which may be credited to a
Participant's Individual Account under this Plan for any
such limitation year will not exceed the maximum
permissible amount reduced by the annual additions
credited to a Participant's Individual Account under the
other qualified master or prototype plans, welfare benefit
funds, individual medical accounts and simplified employee
pensions for the same limitation year. If the annual
additions with respect to the Participant under other
qualified master or prototype defined contribution plans,
welfare benefit funds, individual medical accounts and
simplified employee pensions maintained by the Employer
are less than the maximum permissible amount and the
Employer Contribution that would otherwise be contributed
or allocated to the Participant's Individual Account under
this Plan would cause the annual additions for the
limitation year to exceed this limitation, the amount
contributed or allocated will be reduced so that the
annual additions under all such plans and funds for the
limitation year will equal the maximum permissible amount.
If the annual additions with respect to the Participant
under such other 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, no amount will be contributed or
allocated to the Participant's Individual Account under
this Plan for the limitation year.
2. Prior to determining the Participant's actual Compensation
for the limitation year, the Employer may determine the
maximum permissible amount for a Participant in the manner
described in Section 3.05(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 Compensation for the limitation year.
4. If, pursuant to Section 3.05(B)(3) or as a result of the
allocation of Forfeitures a Participant's annual additions
under this Plan and such other plans would result in an
excess amount for a limitation year, the excess amount
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.
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 excess amount
attributed to this Plan will be the product of,
a. the total excess amount allocated as of such date,
times
b. the ratio of (i) the annual additions allocated to
the Participant for the limitation year as of such
date under this Plan to (ii) the total annual
additions allocated to the Participant for the
limitation year as of such date under this and all
the other qualified prototype defined contribution
plans.
6. Any excess amount attributed to the Plan will be disposed
in the manner described in Section 3.05(A)(4).
C. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer which is not a
master or prototype plan, annual additions which may be
credited to the Participant's Individual Account under this
Plan for any limitation year will be limited in accordance
with Sections 3.05(B)(1) through 3.05(B)(6) as though the
other plan were a master or prototype plan unless the Employer
provides other limitations in the Section of the Adoption
Agreement titled "Limitation on Allocation - More Than One
Plan."
D. If the Employer maintains, or at any time maintained, a
qualified defined benefit plan covering any Participant in
this Plan, the sum of the Participant's defined benefit plan
fraction and defined contribution plan fraction will not
exceed 1.0 in any limitation year. The annual additions which
may be credited to the Participant's Individual Account under
this Plan for any limitation year will be limited in
accordance with the Section of the Adoption Agreement titled
"Limitation on Allocation - More Than One Plan."
E. The following terms shall have the following meanings when
used in this Section 3.05:
1. Annual additions: The sum of the following amounts
credited to a Participant's Individual Account for the
limitation year:
a. Employer Contributions,
b. Nondeductible Employee Contributions,
c. Forfeitures,
d. amounts allocated, after March 31, 1984, to an
individual medical account, as defined in Section
415(1)(2) of the Code, which is part of a pension or
annuity plan maintained by the Employer are treated
as annual additions to a defined contribution plan.
Also amounts derived from contributions paid or
accrued after December 31, 1985, in taxable years
ending after such date, which are attributable to
post-retirement medical benefits, allocated to the
separate account of a key employee, as defined in
Section 419A(d)(3) of the Code, under a welfare
benefit fund, as
<PAGE> 45
11
defined in Section 419(e) of the Code, maintained by
the Employer are treated as annual additions to a
defined contribution plan, and
e. allocations under a simplified employee pension.
For this purpose, any excess amount applied under Section
3.05(A)(4) or 3.05(B)(6) in the limitation year to reduce
Employer Contributions will be considered annual additions
for such limitation year.
2. Compensation: Means Compensation as defined in Section
1.07 of the Plan except that Compensation for purposes of
this Section 3.05 shall not include any amounts
contributed by the Employer pursuant to a salary reduction
agreement and which is not includible in the gross income
of the Employee under Sections 125, 402(e)(3),
402(h)(1)(B) or 403(b) of the Code even if the Employer
has elected to include such contributions in the
definition of Compensation used for other purposes under
the Plan. Further, any other exclusion the Employer has
elected (such as the exclusion of certain types of pay or
pay earned before the Employee enters the Plan) will not
apply for purposes of this Section.
Notwithstanding the preceding sentence, Compensation for a
Participant in a defined contribution plan who is
permanently and totally disabled (as defined in Section
22(e)(3) of the Code) is the Compensation such Participant
would have received for the limitation year if the
Participant had been paid at the rate of Compensation paid
immediately before becoming permanently and totally
disabled; such imputed Compensation for the disabled
Participant may be taken into account only if the
Participant is not a Highly Compensated Employee (as
defined in Section 414(q) of the Code) and contributions
made on behalf of such Participant are nonforfeitable when
made.
3. Defined benefit fraction: A fraction, the numerator of
which is the sum of the Participant's projected annual
benefits under all the defined benefit plans (whether or
not terminated) maintained by the Employer, and the
denominator of which is the lesser of 125% of the dollar
limitation determined for the limitation year under
Section 415(b) and (d) of the Code or 140% of the highest
average compensation, including any adjustments under
Section 415(b) of the Code.
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first limitation
year beginning after December 31, 1986, in one or more
defined benefit plans maintained by the Employer which
were in existence on May 6, 1986, the denominator of this
fraction will not be less than 125% of the sum of the
annual benefits under such plans which the Participant had
accrued as of the close of the last limitation year
beginning before January 1, 1987, disregarding any changes
in the terms and conditions of the plan after May 5, 1986.
The preceding sentence applies only if the defined benefit
plans individually and in the aggregate satisfied the
requirements of Section 415 of the Code for all limitation
years beginning before January 1, 1987.
4. Defined contribution dollar limitation: $30,000 or if
greater, one-fourth of the defined benefit dollar
limitation set forth in Section 415(b)(1) of the Code as
in effect for the limitation year.
5. Defined contribution fraction: A fraction, the numerator
of which is the sum of the annual additions to the
Participant's account under all the defined contribution
plans (whether or not terminated) maintained by the
Employer for the current and all prior limitation years
(including the annual additions attributable to the
Participant's nondeductible employee contributions to all
defined benefit plans, whether or not terminated,
maintained by the Employer, and the annual additions
attributable to all welfare benefit funds, as defined in
Section 419(e) of the Code, individual medical accounts,
and simplified employee pensions, maintained by the
Employer), and the denominator of which is the sum of the
maximum aggregate amounts for the current and all prior
limitation years of service with the Employer (regardless
of whether a defined contribution plan was maintained by
the Employer). The maximum aggregate amount in any
limitation year is the lesser of 125% of the dollar
limitation determined under Section 415(b) and (d) of the
Code in effect under Section 415(c)(1)(A) of the Code or
35% of the Participant's Compensation for such year.
If the Employee was a Participant as of the end of the
first day of the first limitation year beginning after
December 31, 1986, in one or more defined contribution
plans maintained by the Employer which were in existence
on May 6, 1986, the numerator of this fraction will be
adjusted if the sum of this fraction and the defined
benefit fraction would otherwise exceed 1.0 under the
terms of this Plan. Under the adjustment, an amount equal
to the product of (1) the excess of the sum of the
fractions over 1.0 times (2) the denominator of this
fraction, will be permanently subtracted from the
numerator of this fraction. The adjustment is calculated
using the fractions as they would be computed as of the
end of the last limitation year beginning before January
1, 1987, and disregarding any changes in the terms and
conditions of the Plan made after May 5, 1986, but using
the Section 415 limitation applicable to the first
limitation year beginning on or after January 1, 1987.
The annual addition for any limitation year beginning
before January 1, 1987, shall not be recomputed to treat
all Nondeductible Employee Contributions as annual
additions.
6. Employer: For purposes of this Section 3.05, Employer
shall mean the Employer that adopts this Plan, and all
members of a controlled group of corporations (as defined
in Section 414(b) of the Code as modified by Section
415(h)), all commonly controlled trades or businesses (as
defined in Section 414(c) as modified by Section 415(h))
or affiliated service groups (as defined in Section
414(m)) of which the adopting Employer is a part, and any
other entity required to be aggregated with the Employer
pursuant to regulations under Section 414(o) of the Code.
7. Excess amount: The excess of the Participant's annual
additions for the limitation year over the maximum
permissible amount.
8. Highest average compensation: The average compensation for
the three consecutive years of service with the Employer
that produces the highest average.
9. Limitations year A calendar year, or the 12-consecutive
month period elected by the Employer in the Adoption
Agreement. All qualified plans maintained by the Employer
must use the same limitation year. If the limitation year
is amended to a different 12-consecutive month period, the
new limitation year must begin on a date within the
limitation year in which the amendment is made.
10. Master or prototype plan: A plan the form of which is the
subject of a favorable opinion letter from the Internal
Revenue Service.
11. Maximum permissible amount: The maximum annual addition
that may be contributed or allocated to a Participant's
Individual Account under the Plan for any limitation year
shall not exceed the lesser of:
a. the defined contribution dollar limitation, or
b. 25% of the Participant's Compensation for the
limitation year.
<PAGE> 46
12
The compensation limitation referred to in (b)
shall not apply to any contribution for medical
benefits (within the meaning of Section 401(h) or
Section 419A(f)(2) of the Code) which is otherwise
treated as an annual addition under Section
415(1)(1) or 419A(d)(2) of the Code.
If a short limitation year is created because
of an amendment changing the limitation year to a
different 12 - consecutive month period, the maximum
permissible amount will not exceed the defined
contribution dollar limitation multiplied by the
following fraction:
Number of months in the short limitation year
---------------------------------------------
12
12. Projected annual benefit: The annual retirement benefit
(adjusted to an actuarially equivalent straight life
annuity if such benefit is expressed in a form other than
a straight life annuity or qualified joint and survivor
annuity) to which the Participant would be entitled under
the terms of the Plan assuming:
a. the Participant will continue employment until
Normal Retirement Age under the Plan (or current
age, if later), and
b. the Participant's Compensation for the current
limitation year and all other relevant factors used
to determine benefits under the Plan will remain
constant for all future limitation years.
Straight life annuity means an annuity payable
in equal installments for the life of the
Participant that terminates upon the Participants's
death.
SECTION FOUR INDIVIDUAL ACCOUNTS OF PARTICIPANTS AND VALUATION
4.01 INDIVIDUAL ACCOUNTS
A. The Plan Administrator shall establish and maintain
an Individual Account in the name of each Participant
to reflect the total value of his or her interest in the
Fund. Each Individual Account established hereunder shall
consist of such subaccounts as may be needed for each
Participant including:
1. a subaccount to reflect Employer Contributions and
Forfeitures allocated on behalf of a Participant;
2. a subaccount to reflect a Participant's rollover
contributions;
3. a subaccount to reflect a Participant's transfer
contributions;
4. a subaccount to reflect a Participant's Nondeductible
Employee Contributions; and
5. a subaccount to reflect a Participant's deductible
employee contributions.
B. The Plan Administrator may establish additional accounts
as it may deem necessary for the proper administration
of the Plan, including, but not limited to, a suspense
account for Forfeitures as required pursuant to Section
6.01(D).
4.02 VALUATION OF FUND
The Fund will be valued each Valuation Date at fair market value.
4.03 VALUATION OF INDIVIDUAL ACCOUNTS
A. Where all or a portion of the assets of a Participant's
Individual Account are invested in a Separate Fund for
the Participant, then the value of that portion of such
Participant's Individual Account at any relevant time equals
the sum of the fair market values of the assets in such
Separate Fund, less any applicable charges or penalties.
B. The fair market value of the remainder of each Individual
Account is determined in the following manner:
1. First, the portion of the Individual Account invested in
each Investment Fund as of the previous Valuation Date
is determined. Each such portion is reduced by any
withdrawal made from the applicable Investment Fund to or
for the benefit of a Participant or the Participant's
Beneficiary, further reduced by any amounts forfeited by
the Participant pursuant to Section 6.01(D) and further
reduced by any transfer to another Investment Fund since
the previous Valuation Date and is increased by any
amount transferred from another Investment Fund since the
previous Valuation Date. The resulting amounts are the
net Individual Account portions invested in the
Investment Funds.
2. Secondly, the net Individual Account portions invested
in each Investment Fund are adjusted upwards or
downwards, pro rata (i.e., ratio of each net Individual
Account portion to the sum of all net Individual Account
portions) so that the sum of all the net Individual
Account portions invested in an Investment Fund will
equal the then fair market value of the Investment Fund.
Notwithstanding the previous sentence, for the first Plan
Year only, the net Individual Account portions shall be
the sum of all contributions made to each Participant's
Individual Account during the first Plan Year.
3. Thirdly, any contributions to the Plan and Forfeitures
are allocated in accordance with the appropriate
allocation provisions of Section 3. For purposes of
Section 4, contributions made by the Employer for any
Plan Year but after that Plan Year will be considered to
have been made on the last day of that Plan Year
regardless of when paid to the Trustee (or Custodian, if
applicable).
Amounts contributed between Valuation Dates will not be
credited with investment gains or losses until the next
following Valuation Date.
4. Finally the portions of the Individual Account invested
in each Investment Fund (determined in accordance with
(1),(2) and (3) above) are added together.
4.04 MODIFICATION OF METHOD FOR VALUING INDIVIDUAL ACCOUNTS
If necessary or appropriate, the Plan Administrator may
establish different or additional procedures (which shall be
uniform and nondiscriminatory) for determining the fair market
value of the Individual Accounts.
4.05 SEGREGATION OF ASSETS
If a Participant elects a mode of distribution other than a
lump sum, the Plan Administrator may place that Participant's
account balance into a segregated Investment Fund for the
purpose of maintaining the necessary liquidity to provide
benefit installments on a periodic basis.
4.06 STATEMENT OF INDIVIDUAL ACCOUNTS
No later than 270 days after the close of each Plan Year, the
Plan Administrator shall furnish a statement to each Participant
indicating the Individual Account balances of such Participant
as of the last Valuation Date in such Plan Year.
<PAGE> 47
13
SECTION FIVE TRUSTEE OR CUSTODIAN
5.01 CREATION OF FUND
By adopting this Plan, the Employer establishes the Fund which
shall consist of the assets of the Plan held by the Trustee (or
Custodian, if applicable) pursuant to this Section 5. Assets
within the Fund may be pooled on behalf of all Participants,
earmarked on behalf of each Participant or be a combination of
pooled and earmarked. To the extent that assets are earmarked
for a particular Participant, they will be held in a Separate
Fund for that Participant.
No part of the corpus or income of the Fund may be used for, or
diverted to, purposes other than for the exclusive benefit of
Participants or their Beneficiaries.
5.02 INVESTMENT AUTHORITY
Except as provided in Section 5.14 (relating to individual
direction of investments by Participants), the Employer, not the
Trustee (or Custodian, if applicable), shall have exclusive
management and control over the investment of the Fund into any
permitted investment. Notwithstanding the preceding sentence, a
Trustee may make an agreement with the Employer whereby the
Trustee will manage the investment of all or a portion of the
Fund. Any such agreement shall be in writing and set forth such
matters as the Trustee deems necessary or desirable.
5.03 FINANCIAL ORGANIZATION CUSTODIAN OR TRUSTEE WITHOUT
FULL TRUST POWERS
This Section 5.03 applies where a financial organization has
indicated in the Adoption Agreement that it will serve, with
respect to this Plan, as Custodian or as Trustee without full
trust powers (under applicable law). Hereinafter, a financial
organization Trustee without full trust powers (under applicable
law) shall be referred to as a Custodian. The Custodian shall
have no discretionary authority with respect to the management
of the Plan or the Fund but will act only as directed by the
entity who has such authority.
A. PERMISSIBLE INVESTMENTS - The assets of the Plan shall be
invested only in those investments which are available
through the Custodian in the ordinary course of
business which the Custodian may legally hold in a qualified
plan and which the Custodian chooses to make available to
Employers for qualified plan investments. Notwithstanding
the preceding sentence, the Prototype Sponsor may, as a
condition of making the Plan available to the Employer, limit
the types of property in which the assets of the Plan may be
invested.
B. RESPONSIBILITIES OF THE CUSTODIAN - The responsibilities of
the Custodian shall be limited to the following:
1. To receive Plan contributions and to hold, invest
and reinvest the Fund without distinction between
principal and interest; provided, however, that nothing
in this Plan shall require the Custodian to maintain
physical custody of stock certificates (or other indicia
of ownership of any type of asset) representing assets
within the Fund;
2. To maintain accurate records of contributions, earnings,
withdrawals and other information the Custodian deems
relevant with respect to the Plan;
3. To make disbursements from the Fund to Participants or
Beneficiaries upon the proper authorization of the Plan
Administrator; and
4. To furnish to the Plan Administrator a statement
which reflects the value of the investments in the
hands of the Custodian as of the end of each Plan Year
and as of any other times as the Custodian and Plan
Administrator may agree.
C. POWERS OF THE CUSTODIAN - Except as otherwise provided in
this Plan, the Custodian shall have the power to take
any action with respect to the Fund which it deems necessary
or advisable to discharge its responsibilities under this
Plan including, but not limited to, the following powers:
1. To invest all or a portion of the Fund (including
idle cash balances) in time deposits, savings accounts,
money market accounts or similar investments bearing a
reasonable rate of interest in the Custodian's own
savings department or the savings department of another
financial organization;
2. 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 or subscription rights 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 pay any assessment 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;
3. To hold securities or other property of the Fund in its
own name, in the name of its nominee or in bearer form;
and
4. 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.
5.04 FINANCIAL ORGANIZATION TRUSTEE WITH FULL TRUST POWERS AND
INDIVIDUAL TRUSTEE
This Section 5.04 applies where a financial organization has
indicated in the Adoption Agreement that it will serve as
Trustee with full trust powers. This Section also applies where
one or more individuals are named in the Adoption Agreement to
serve as Trustee(s).
A. PERMISSIBLE INVESTMENTS - The Trustee may invest the
assets of the Plan in property of any character, real
or personal, including but not limited to the following:
stocks, including shares of open-end investment companies
(mutual funds); bonds; notes; debentures; options; limited
partnership interests; mortgages; real estate or any
interests therein; unit investment trusts; Treasury Bills,
and other U.S. Government obligations; common trust funds,
combined investment trusts, collective trust funds or
commingled funds maintained by a bank or similar financial
organization (whether or not the Trustee hereunder); savings
accounts, time deposits or money market accounts of a bank or
similar financial organization (whether or not the Trustee
hereunder); annuity contracts; life insurance policies; or in
such other investments as is deemed proper without regard to
investments authorized by statute or rule of law governing
the investment of trust funds but with regard to ERISA and
this Plan.
Notwithstanding the preceding sentence, the Prototype
Sponsor may, as a condition of making the Plan available to
the Employer, limit the types of property in which the assets
of the Plan may be invested.
B. RESPONSIBILITIES OF THE TRUSTEE - The responsibilities of
the Trustee shall be limited to the following:
1. To receive Plan contributions and to hold, invest
and reinvest the Fund without distinction between
principal and interest; provided, however, that nothing
in this Plan shall require the Trustee to maintain
physical custody of stock certificates (or other indicia
of ownership) representing assets within the Fund;
<PAGE> 48
14
2. To maintain accurate records of contributions, earnings,
withdrawals and other information the Trustee deems
relevant with respect to the Plan;
3. To make disbursements from the Fund to Participants or
Beneficiaries upon the proper authorization of the Plan
Administrator; and
4. To furnish to the Plan Administrator a statement which
reflects the value of the investments in the hands of
the Trustee as of the end of each Plan Year and as of any
other times as the Trustee and Plan Administrator may
agree.
C. POWERS OF THE TRUSTEE - Except as otherwise provided in
this Plan, the Trustee shall have the power to take any
action with respect to the Fund which it deems necessary
or advisable to discharge its responsibilities under this
Plan including, but not limited to, the following powers:
1. To hold any securities or other property of the Fund in
its own name, in the name of its nominee or in bearer
form;
2. To purchase or subscribe for securities issued, or real
property owned, by the Employer or any trade or
business under common control with the Employer but only
if the prudent investment and diversification
requirements of ERISA are satisfied;
3. To sell, exchange, convey, transfer 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 of the purchase money or to inquire into
the validity, expediency, or propriety of any such sale
or other disposition, with or without advertisement;
4. 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 or subscription rights 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;
5. To invest any part or all of the Fund (including idle
cash balances) in certificates of deposit, demand or
time deposits, savings accounts, money market accounts or
similar investments of the Trustee (if the Trustee is a
bank or similar financial organization), the Prototype
Sponsor or any affiliate of such Trustee or Prototype
Sponsor, which bear a reasonable rate of interest;
6. To provide sweep services without the receipt by the
Trustee of additional compensation or other
consideration (other than reimbursement of direct
expenses properly and actually incurred in the
performance of such services);
7. To hold in the form of cash for distribution or
investment such portion of the Fund as, at any time and
from time-to time, the Trustee shall deem prudent and
deposit such cash in interest bearing or noninterest
bearing accounts;
8. 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;
9. 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;
10. To employ suitable agents and counsel, to contract with
agents to perform administrative and recordkeeping
duties and to pay their reasonable expenses, fees and
compensation, and such agent or counsel may or may not be
agent or counsel for the Employer;
11. To cause any part or all of the Fund, without limitation
as to amount, to be commingled with the funds of other
trusts (including trusts for qualified employee benefit
plans) by causing such money to be invested as a part of
any pooled, common, collective or commingled trust fund
(including any such fund described in the Adoption
Agreement) heretofore or hereafter created by any Trustee
(if the Trustee is a bank), by the Prototype Sponsor, by
any affiliate bank of such a Trustee or by such a Trustee
or the Prototype Sponsor, or by such an affiliate in
participation with others; the instrument or instruments
establishing such trust fund or funds, as amended, being
made part of this Plan and trust so long as any portion
of the Fund shall be invested through the medium thereof;
and
12. Generally to do all such acts, execute all such
instruments, initiate such proceedings, and exercise
all such rights and privileges with relation to property
constituting the Fund as if the Trustee were the absolute
owner thereof.
5.05 DIVISION OF FUND INTO INVESTMENT FUNDS
The Employer may direct the Trustee (or Custodian) from
time-to-time to divide and redivide the Fund into one or more
Investment Funds. Such Investment Funds may include, but not be
limited to, Investment Funds representing the assets under the
control of an investment manager pursuant to Section 5.12 and
Investment Funds representing investment options available for
individual direction by Participants pursuant to Section 5.14.
Upon each division or redivision, the Employer may specify the
part of the Fund to be allocated to each such Investment Fund
and the terms and conditions, if any, under which the
assets in such Investment Fund shall be invested.
5.06 COMPENSATION AND EXPENSES
The Trustee (or Custodian, if applicable) shall receive such
reasonable compensation as may be agreed upon by the Trustee (or
Custodian) and the Employer. The Trustee (or Custodian) shall be
entitled to reimbursement by the Employer for all proper
expenses incurred in carrying out his or her duties under this
Plan, including reasonable legal, accounting and actuarial
expenses. If not paid by the Employer, such compensation and
expenses may be charged against the Fund.
All taxes of any kind that may be levied or assessed under
existing or future laws upon, or in respect of, the Fund or
the income thereof shall be paid from the Fund.
5.07 NOT OBLIGATED TO QUESTION DATA
The Employer shall furnish the Trustee (or Custodian, if
applicable) and Plan Administrator the information which each
party deems necessary for the administration of the Plan
including, but not limited to, changes in a Participant's
status, eligibility, mailing addresses and other such data as
may be required. The Trustee (or Custodian) and Plan
Administrator shall be entitled to act on such information as is
supplied them and shall have no duty or responsibility to
further verify or question such information.
<PAGE> 49
15
5.08 LIABILITY FOR WITHHOLDING ON DISTRIBUTIONS
The Plan Administrator shall be responsible for withholding
federal income taxes from distributions from the Plan, unless
the Participant (or Beneficiary, where applicable) elects not to
have such taxes withheld. The Trustee (or Custodian) or other
payor may act as agent for the Plan Administrator to withhold
such taxes and to make the appropriate distribution reports, if
the Plan Administrator furnishes all the information to the
Trustee (or Custodian) or other payor it may need to do
withholding and reporting.
5.09 RESIGNATION OR REMOVAL OF TRUSTEE (OR CUSTODIAN)
The Trustee (or Custodian, if applicable) may resign at any
time by giving 30 days advance written notice to the Employer.
The resignation shall become effective 30 days after receipt of
such notice unless a shorter period is agreed upon.
The Employer may remove any Trustee (or Custodian) at any time
by giving written notice to such Trustee (or Custodian) and such
removal shall be effective 30 days after receipt of such notice
unless a shorter period is agreed upon. The Employer shall have
the power to appoint a successor Trustee (or Custodian).
Upon such resignation or removal, if the resigning or removed
Trustee (or Custodian) is the sole Trustee (or Custodian), he or
she shall transfer all of the assets of the Fund then held by
such Trustee (or Custodian) as expeditiously as possible to the
successor Trustee (or Custodian) after paying or reserving such
reasonable amount as he or she shall deem necessary to provide
for the expense in the settlement of the accounts and the amount
of any compensation due him or her and any sums chargeable
against the Fund for which he or she may be liable. If the Funds
as reserved are not sufficient for such purpose, then he or she
shall be entitled to reimbursement from the successor Trustee
(or Custodian) out of the assets in the successor Trustee's (or
Custodian's) hands under this Plan. If the amount reserved shall
be in excess of the amount actually needed, the former Trustee
(or Custodian) shall return such excess to the successor Trustee
(or Custodian).
Upon receipt of the transferred assets, the successor Trustee
(or Custodian) shall thereupon succeed to all of the powers
and responsibilities given to the Trustee (or Custodian) by this
Plan.
The resigning or removed Trustee (or Custodian) shall render an
accounting to the Employer and unless objected to by the
Employer within 30 days of its receipt, the accounting shall be
deemed to have been approved and the resigning or removed
Trustee (or Custodian) shall be released and discharged as to
all matters set forth in the accounting. Where a financial
organization is serving as Trustee (or Custodian) and it is
merged with or bought by another organization (or comes under
the control of any federal or state agency), that organization
shall serve as the successor Trustee (or Custodian) of this
Plan, but only if it is the type of organization that can so
serve under applicable law.
Where the Trustee or Custodian is serving as a nonbank trustee
or custodian pursuant to Section 1.401-12(n) of the Income
Tax Regulations, the Employer will appoint a successor Trustee
(or Custodian) upon notification by the Commissioner of Internal
Revenue that such substitution is required because the Trustee
(or Custodian) has failed to comply with the requirements of
Section 1.401-12(n) or is not keeping such records or making
such returns or rendering such statements as are required by
forms or regulations.
5.10 DEGREE OF CARE - LIMITATIONS OF LIABILITY
The Trustee (or Custodian) shall not be liable for any losses
incurred by the Fund by any direction to invest communicated by
the Employer, Plan Administrator, investment manager appointed
pursuant to Section 5.12 or any Participant or Beneficiary. The
Trustee (or Custodian) shall be under no liability for
distributions made or other action taken or not taken at the
written direction of the Plan Administrator. It is specifically
understood that the Trustee (or Custodian) shall have no duty or
responsibility with respect to the determination of matters
pertaining to the eligibility of any Employee to become a
Participant or remain a Participant hereunder, the amount of
benefit to which a Participant or Beneficiary shall be entitled
to receive hereunder, whether a distribution to Participant or
Beneficiary is appropriate under the terms of the Plan or the
size and type of any policy to be purchased from any insurer for
any Participant hereunder or similar matters; it being
understood that all such responsibilities under the Plan are
vested in the Plan Administrator.
5.11 INDEMNIFICATION OF PROTOTYPE SPONSOR AND TRUSTEE (OR CUSTODIAN)
Notwithstanding any other provision herein, and except as may be
otherwise provided by ERISA, the Employer shall indemnify and
hold harmless the Trustee (or Custodian, if applicable) and
the Prototype Sponsor, their officers, directors, employees,
agents, their heirs, executors, successors and assigns, from and
against any and all liabilities, damages, judgments,
settlements, losses, costs, charges, or expenses (including
legal expenses) at any time arising out of or incurred in
connection with any action taken by such parties in the
performance of their duties with respect to this Plan, unless
there has been a final adjudication of gross negligence or
willful misconduct in the performance of such duties.
Further, except as may be otherwise provided by ERISA, the
Employer will indemnify the Trustee (or Custodian) and Prototype
Sponsor from any liability, claim or expense (including legal
expense) which the Trustee (or Custodian) and Prototype Sponsor
shall incur by reason of or which results, in whole or in part,
from the Trustee's (or Custodian's) or Prototype Sponsor's
reliance on the facts and other directions and elections the
Employer communicates or fails to communicate.
5.12 INVESTMENT MANAGERS
A. DEFINITION OF INVESTMENT MANAGER - The Employer may appoint
one or more investment managers to make investment
decisions with respect to all or a portion of the Fund. The
investment manager shall be any firm or individual registered
as an investment adviser under the Investment Advisers Act of
1940, a bank as defined in said Act or an insurance company
qualified under the laws of more than one state to perform
services consisting of the management, acquisition or
disposition of any assets of the Plan.
B. INVESTMENT MANAGER'S AUTHORITY - A separate Investment Fund
shall be established representing the assets of the
Fund invested at the direction of the investment manager. The
investment manager so appointed shall direct the Trustee (or
Custodian, if applicable) with respect to the investment of
such Investment Fund. The investments which may be acquired
at the direction of the investment manager are those
described in Section 5.03(A) (for Custodians) or Section
5.04(A) (for Trustees).
C. WRITTEN AGREEMENT - The appointment of any investment
manager shall be by written agreement between the
Employer and the investment manager and a copy of such
agreement (and any modification or termination thereof) must
be given to the Trustee (or Custodian).
The agreement shall set forth, among other matters, the
effective date of the investment manager's appointment and an
acknowledgement by the investment manager that it is a
fiduciary of the Plan under ERISA.
<PAGE> 50
16
D. CONCERNING THE TRUSTEE (OR CUSTODIAN) - Written notice
of each appointment of an investment manager shall be
given to the Trustee (or Custodian) in advance of the
effective date of such appointment. Such notice shall specify
which portion of the Fund will constitute the Investment Fund
subject to the investment manager's direction. The Trustee
(or Custodian) shall comply with the investment direction
given to it by the investment manager and will not be liable
for any loss which may result by reason of any action (or
inaction) it takes at the direction of the investment
manager.
5.13 MATTERS RELATING TO INSURANCE
A. If a life insurance policy is to be purchased for a
Participant, the aggregate premium for certain life
insurance for each Participant must be less than a certain
percentage of the aggregate Employer Contributions and
Forfeitures allocated to a Participant's Individual Account
at any particular time as follows:
1. Ordinary Life Insurance - For purposes of these
incidental insurance provisions, ordinary life
insurance contracts are contracts with both
non decreasing death benefits and nonincreasing premiums.
If such contracts are purchased, less than 50% of the
aggregate Employer Contributions and Forfeitures
allocated to any Participant's Individual Account will be
used to pay the premiums attributable to them.
2. Term and Universal Life Insurance - No more than
25% of the aggregate Employer Contributions and
Forfeitures allocated to any Participant's Individual
Account will be used to pay the premiums on term life
insurance contracts, universal life insurance contracts,
and all other life insurance contracts which are not
ordinary life.
3. Combination - The sum 50% of the ordinary life insurance
premiums and all other life insurance premiums will not
exceed 25% of the aggregate Employer Contributions and
Forfeitures allocated to any Participant's Individual
Account.
If this Plan is a profit sharing plan, the above
incidental benefits limits do not apply to life insurance
contracts purchased with Employer Contributions and
Forfeitures that have been in the Participant's
Individual Account for at least 2 full Plan Years,
measured from the date such contributions were allocated.
B. Any dividends or credits earned on insurance contracts for a
Participant shall be allocated to such Participant's
Individual Account.
C. Subject to Section 6.05, the contracts on a Participant's
life will be converted to cash or an annuity or
distributed to the Participant upon commencement of benefits.
D. The Trustee (or Custodian, if applicable) shall apply for
and will be the owner of any insurance contract(s)
purchased under the terms of this Plan. The insurance
contract(s) must provide that proceeds will be payable to the
Trustee (or Custodian), however, the Trustee (or Custodian)
shall be required to pay over all proceeds of the contract(s)
to the Participant's designated Beneficiary in accordance
with the distribution provisions of this Plan. A
Participant's spouse will be the designated Beneficiary of
the proceeds in all circumstances unless a qualified election
has been made in accordance with Section 6.05. Under no
circumstances shall the Fund retain any part of the proceeds.
In the event of any conflict between the terms of this Plan
and the terms of any insurance contract purchased hereunder,
the Plan provisions shall control.
E. The Plan Administrator may direct the Trustee (or Custodian)
to sell and distribute insurance or annuity contracts
to a Participant (or other party as may be permitted) in
accordance with applicable law or regulations.
5.14 DIRECTION OF INVESTMENTS BY PARTICIPANT
If so indicated in the Adoption Agreement, each Participant may
individually direct the Trustee (or Custodian, if applicable)
regarding the investment of part or all of his or her Individual
Account. To the extent so directed, the Employer, Plan
Administrator, Trustee (or Custodian) and all other fiduciaries
are relieved of their fiduciary responsibility under Section 404
of ERISA.
The Plan Administrator shall direct that a Separate Fund be
established in the name of each Participant who directs the
investment of part or all of his or her Individual Account. Each
Separate Fund shall be charged or credited (as appropriate) with
the earnings, gains, losses or expenses attributable to such
Separate Fund. No fiduciary shall be liable for any loss which
results from a Participant's individual direction. The assets
subject to individual direction shall not be invested in
collectibles as that term is defined in Section 408(m) of the
Code.
The Plan Administrator shall establish such uniform and
nondiscriminatory rules relating to individual direction as it
deems necessary or advisable including but not limited to, rules
describing (1) which portions of Participant's Individual
Account can be individually directed; (2) the frequency of
investment changes; (3) the forms and procedures for making
investment changes; and (4) the effect of a Participant's
failure to make a valid direction.
The Plan Administrator may, in a uniform and nondiscriminatory
manner, limit the available investments for Participants'
individual direction to certain specified investment options
(including, but not limited to, certain mutual funds, investment
contracts, deposit accounts and group trusts). The Plan
Administrator may permit, in a uniform and nondiscriminatory
manner, a Beneficiary of a deceased Participant or the alternate
payee under a qualified domestic relations order (as defined in
Section 414(p) of the Code) to individually direct in accordance
with this Section.
SECTION SIX VESTING AND DISTRIBUTION
6.01 DISTRIBUTION TO PARTICIPANT
A. DISTRIBUTABLE EVENTS
1. Entitlement to Distribution - The Vested portion
of a Participant's Individual Account shall be
distributable to the Participant upon (1) the occurrence
of any of the distributable events specified in the
Adoption Agreement; (2) the Participant's Termination of
Employment after attaining Normal Retirement Age; (3)
the termination of the Plan; and (4) the Participant's
Termination of Employment after satisfying any Early
Retirement Age conditions.
If a Participant separates from service before
satisfying the Early Retirement Age requirement, but has
satisfied the service requirement, the Participant will
be entitled to elect an early retirement benefit upon
satisfaction of such age requirement.
2. Written Request: When Distributed - A Participant
entitled to distribution who wishes to receive a
distribution must submit a written request to the Plan
Administrator. Such request shall be made upon a form
provided by the Plan Administrator. Upon a valid
request, the Plan Administrator shall direct the Trustee
(or Custodian, if applicable) to commence distribution no
later than the time specified in the Adoption Agreement
for this purpose and, if not specified in the Adoption
Agreement, then no later than 90 days following the later
of:
<PAGE> 51
17
a. the close of the Plan Year within which the
event occurs which entitles the Participant
to distribution; or
b. the close of the Plan Year in which the request is
received.
3. Special Rules for Withdrawals During Service - If this
is a profit sharing plan and the Adoption Agreement so
provides, a Participant may elect to receive a
distribution of all or part of the Vested portion of his
or her Individual Account, subject to the requirements of
Section 6.05 and further subject to the following limits:
a. Participant for 5 or more years. An Employee who
has been a Participant in the Plan for 5 or
more years may withdraw up to the entire Vested
portion of his or her Individual Account.
b. Participant for less than 5 years. An Employee who
has been a Participant in the Plan for less
than 5 years may withdraw only the amount which has
been in his or her Individual Account attributable
to Employer Contributions for at least 2 full Plan
Years, measured from the date such contributions
were allocated. However, if the distribution is on
account of hardship, the Participant may withdraw up
to his or her entire Vested portion of the
Participant's Individual Account. For this purpose,
hardship shall have the meaning set forth in Section
6.01(A)(4) of the Code.
4. Special Rules for Hardship Withdrawals - If this is a
profit sharing plan and the Adoption Agreements so
provides, a Participant may elect to receive a hardship
distribution of all or part of the Vested portion of his
or her Individual Account, subject to the requirements of
Section 6.05 and further subject to the following limits:
a. Participant for 5 or more years. An Employee who
has been a Participant in the Plan for 5 or
more years may withdraw up to the entire Vested
portion of his or her Individual Account.
b. Participant for less than 5 years. An Employee who
has been a Participant in the Plan for less
than 5 years may withdraw only the amount which has
been in his or her Individual Account attributable
to Employer Contributions for at least 2 full Plan
Years, measured from the date such contributions
were allocated.
For purposes of this Section 6.01 (A)(4) and
Section 6.01(A)(3) hardship is defined as an
immediate and heavy financial need of the
Participant where such Participant lacks other
available resources. The following are the only
financial needs considered immediate and heavy:
expenses incurred or necessary for medical care,
described in Section 213(d) of the Code, of the
Employee, the Employee's spouse or dependents; the
purchase (excluding mortgage payments) of a
principal residence for the Employee; payment of
tuition and related educational fees for the next 12
months of post-secondary education for the Employee,
the Employee's spouse, children or dependents; or
the need to prevent the eviction of the Employee
from, or a foreclosure on the mortgage of, the
Employee's principal residence.
A distribution will be considered as necessary
to satisfy an immediate and heavy financial need of
the Employee only if:
1) The employee has obtained all distributions,
other than hardship distributions, and all
nontaxable loans under all plans maintained by
the Employer;
2) The distribution is not in excess of the amount
of an immediate and heavy financial need
(including amounts necessary to pay any federal,
state or local income taxes or penalties
reasonably anticipated to result from the
distribution).
5. One-Time In-Service Withdrawal Option - If this is a
profit sharing plan and the Employer has elected the
one-time in-service withdrawal option in the Adoption
Agreement, then Participants will be permitted only one
in-service withdrawal during the course of such
Participants employment with the Employer. The amount
which the Participant can withdraw will be limited to the
lesser of the amount determined under the limits set
forth in Section 6.01(A)(3) or the percentage of the
Participant's Individual Account specified by the
Employer in the Adoption Agreement. Distributions under
this Section will be subject to the requirements of
Section 6.05.
6. Commencement of Benefits - Notwithstanding any other
provision, unless the Participant elects otherwise,
distribution of benefits will begin no later than the
60th day after the latest of the close of the Plan Year
in which:
a. the Participant attains Normal Retirement Age;
b. occurs the 10th anniversary of the year in which
the Participant commenced participation in the
Plan; or
c. the Participant incurs a Termination of Employment.
Notwithstanding the foregoing, the failure of a
Participant and spouse to consent to a distribution
while a benefit is immediately distributable, within
the meaning of Section 6.02(B) of the Plan, shall be
deemed to be an election to defer commencement of
payment of any benefit sufficient to satisfy this
Section.
B. DETERMINING THE VESTED PORTION - In determining the Vested
portion of a Participant's Individual Account, the following
rules apply:
1. Employer Contributions and Forfeitures - The Vested
portion of a Participant's Individual Account derived
from Employer Contributions and Forfeitures is determined
by applying the vesting schedule selected in the Adoption
Agreement (or the vesting schedule described in Section
6.01(C) if the Plan is a Top-Heavy Plan).
2. Rollover and Transfer Contributions - A Participant is
fully Vested in his or her rollover contributions and
transfer contributions.
3. Fully Vested Under Certain Circumstances - A Participant
is fully Vested in his or her Individual Account if any
of the following occurs:
a. the Participant reaches Normal Retirement Age;
b. the Plan is terminated do partially terminated; or
c. there exists a complete discontinuance of
contributions under the Plan.
Further, unless otherwise indicated in the Adoption
Agreement, a Participant is fully Vested if the Participant
dies, incurs a Disability, or satisfies the conditions for
Early Retirement Age (if applicable).
<PAGE> 52
18
4. Participants in a Prior Plan - if a Participant was a
participant in a Prior Plan on the Effective Date, his
or her Vested percentage shall not be less than it would
have been under such Prior Plan as computed on the
Effective Date.
C. MINIMUM VESTING SCHEDULE FOR TOP-HEAVY PLANS - The following
vesting provisions apply for any Plan Year in which this
Plan is a Top-Heavy Plan.
Notwithstanding the other provisions of this Section
6.01 or the vesting schedule selected in the Adoption
Agreement (unless those provisions or that schedule provide
for more rapid vesting), a Participant's Vested portion of
his or her Individual Account attributable to Employer
Contributions and Forfeitures shall be determined in
accordance with the vesting schedule elected by the Employer
in the Adoption Agreement (and if no election is made the 6
year graded schedule will be deemed to have been elected) as
described below:
<TABLE>
<CAPTION>
6 YEAR GRADED 3 YEAR CLIFF
YEARS OF VESTING SERVICE VESTED PERCENTAGE YEARS OF VESTING SERVICE VESTED PERCENTAGE
<S> <C> <C> <C>
1 0 1 0
2 20 2 0
3 40 3 100
4 60
5 80
6 100
</TABLE>
This minimum vesting schedule applies to all benefits
within the meaning of Section 411(a)(7) of the Code, except
those attributable to Nondeductible Employee Contributions
including benefits accrued before the effective date of
Section 416 of the Code and benefits accrued before the Plan
became a Top-Heavy Plan. Further, no decrease in a
Participant's Vested percentage may occur in the event the
Plan's status as a Top-Heavy Plan changes for any Plan Year.
However, this Section 6.01 (C) does not apply to the
Individual Account of any Employee who does not have an Hour
of Service after the Plan has initially become a Top-Heavy
Plan and such Employee's Individual Account attributable to
Employer Contributions and Forfeitures will be determined
without regard to this Section.
If this Plan ceases to be a Top-Heavy Plan, then in
accordance with the above restrictions, the vesting schedule
as selected in the Adoption Agreement will govern. If the
vesting schedule under the Plan shifts in or out of top-heavy
status, such shift is an amendment to the vesting schedule and
the election in Section 9.04 applies.
D. BREAK IN VESTING SERVICE AND FORFEITURES - If a
Participant incurs a Termination of Employment, any portion
of his or her Individual Account which is not Vested shall
be held in a suspense account. Such suspense account shall
share in any increase or decrease in the fair market value
of the assets of the Fund in accordance with Section 4 of
the Plan. The disposition of such suspense account shall be
as follows:
1. Breaks in Vesting Service - If a Participant neither
receives nor is deemed to receive a distribution
pursuant to Section 6.01(D)(3) or (4) and the Participant
returns to the service of the Employer before incurring 5
consecutive Breaks in Vesting Service, there shall be no
Forfeiture and the amount in such suspense account shall
be recredited to such Participant's Individual Account.
2. Five Consecutive Breaks in Vesting Service - If a
Participant neither receives nor is deemed to receive a
distribution pursuant to Section 6.01(D)(3) or (4) and the
Participant does not return to the service of the Employer
before incurring 5 consecutive Breaks in Vesting Service,
the portion of the Participant's Individual Account which
is not Vested shall be treated as a Forfeiture and
allocated in accordance with Section 3.01(C).
3. Cash-out of Certain Participants - If the value of the
Vested portion of such Participant's Individual Account
derived from Nondeductible Employee Contributions and
Employer Contributions does not exceed $3,500, the
Participant shall receive a distribution of the entire
Vested portion of such Individual Account and the portion
which is not Vested shall be treated as a Forfeiture and
allocated in accordance with Section 3.01(C). For purposes
of this Section, if the value of the Vested portion of a
Participant's Individual Account is zero, the Participant
shall be deemed to have received a distribution of such
Vested Individual Account. A Participant's Vested
Individual Account balance shall not include accumulated
deductible employee contributions within the meaning of
Section 72(o)(5)(B) of the Code for Plan Years beginning
prior to January 1, 1989.
4. Participants Who Elect to Receive Distributions - If
such Participant elects to receive a distribution, in
accordance with Section 6.02(B), of the value of the
Vested portion of his or her Individual Account derived
from Nondeductible Employee Contributions and Employer
Contributions, the portion which is not Vested shall be
treated as a Forfeiture and allocated in accordance with
Section 3.01(C).
5. Re-employed Participants - If a Participant receives or
is deemed to receive a distribution pursuant to Section
6.01(D)(3) or (4) above and the Participant resumes
employment covered under this Plan, the Participant's
Employer-derived Individual Account balance will be
restored to the amount on the date of distribution if the
Participant repays to the Plan the full amount of the
distribution attributable to Employer Contributions before
the earlier of 5 years after the first date on which the
Participant is subsequently re-employed by the Employer,
or the date the Participant incurs 5 consecutive Breaks in
Vesting Service following the date of the distribution.
Any restoration of a Participant's Individual Account
pursuant to Section 6.01(D)(5) shall be made from other
Forfeitures, income or gain to the Fund or contributions
made by the Employer.
E. DISTRIBUTION PRIOR TO FULL VESTING - If a distribution is
made to a Participant who was not then fully Vested in
his or her Individual Account derived from Employer
Contributions and the Participant may increase his or her
Vested percentage in his or her Individual Account, then the
following rules shall apply:
1. a separate account will be established for the
Participant's interest in the Plan as of the time of the
distribution, and
2. at any relevant time the Participant's Vested portion of
the separate account will be equal to an amount ("X")
determined by the formula: X=P (AB + (R x D)) - (R x D)
where "P" is the Vested percentage at the relevant time,
"AB" is the separate account balance at the relevant time;
"D" is the amount of the distribution; and "R" is the
ratio of the separate account balance at the relevant time
to the separate account balance after distribution.
<PAGE> 53
6.02 FORM OF DISTRIBUTION TO A PARTICIPANT
A. VALUE OF INDIVIDUAL ACCOUNT DOES NOT EXCEED $3,500 - If
the value of the Vested portion of a Participant's
Individual Account derived from Nondeductible Employee
Contributions and Employer Contributions does not exceed
$3,500, distribution from the Plan shall be made to the
Participant in a single lump sum in lieu of all other forms of
distribution from the Plan as soon as administratively
feasible.
B. VALUE OF INDIVIDUAL ACCOUNT EXCEEDS $3,500
1. If the value of the Vested portion of a Participant's
Individual Account derived from Nondeductible Employee
Contributions and Employer Contributions exceeds (or at
the time of any prior distribution exceeded) $3,500, and
the Individual Account is immediately distributable, the
Participant and the Participant's spouse (or where either
the Participant or the spouse died, the survivor) must
consent to any distribution of such Individual Account.
The consent of the Participant and the Participant's
spouse shall be obtained in writing within the 90-day
period ending on the annuity starting date. The annuity
starting date is the first day of the first period for
which an amount is paid as an annuity or any other form.
The Plan Administrator shall notify the Participant and
the Participant's spouse of the right to defer any
distribution until the Participant's Individual Account is
no longer immediately distributable. Such notification
shall include a general description of the material
features, and an explanation of the relative values of,
the optional forms of benefit available under the Plan in
a manner that would satisfy the notice requirements of
Section 417(a)(3) of the Code, and shall be provided no
less than 30 days and no more than 90 days prior to the
annuity starting date.
If a distribution is one to which Sections 401(a)(11)
and 417 of the Internal Revenue Code do not apply, such
distribution may commence less than 30 days after the
notice required under Section 1.411(a)-11(c) of the Income
Tax Regulations is given, provided that:
a. the Plan Administrator clearly informs the
Participant that the Participant has a right to
a period of at least 30 days after receiving the
notice to consider the decision of whether or not to
elect a distribution (and, if applicable, a
particular distribution option), and
b. the Participant, after receiving the notice,
affirmatively elects a distribution.
Notwithstanding the foregoing, only the
Participant need consent to the commencement of a
distribution in the form of a qualified joint and
survivor annuity while the Individual Account is
immediately distributable. Neither the consent of the
Participant nor the Participant's spouse shall be
required to the extent that a distribution is
required to satisfy Section 401(a)(9) or Section 415
of the Code. In addition, upon termination of this
Plan if the Plan does not offer an annuity option
(purchased from a commercial provider), the
Participant's Individual Account may, without the
Participant's consent, be distributed to the
Participant or transferred to another defined
contribution plan (other than an employee stock
ownership plan as defined in Section 4975(e)(7) of
the Code) within the same controlled group.
An Individual Account is immediately
distributable if any part of the Individual Account
could be distributed to the Participant (or surviving
spouse) before the Participant attains or would have
attained (if not deceased) the later of Normal
Retirement Age or age 62.
2. For purposes of determining the applicability of the
foregoing consent requirements to distributions made
before the first day of the first Plan Year beginning
after December 31, 1988, the Vested portion of a
Participant's Individual Account shall not include amounts
attributable to accumulated deductible employee
contributions within the meaning of Section 72(o)(5)(B) of
the Code.
C. OTHER FORMS OF DISTRIBUTION TO PARTICIPANT - If the value of
the Vested portion of a Participant's Individual Account
exceeds $3,500 and the Participant has property waived
the joint and survivor annuity, as described in Section 6.05,
the Participant may request in writing that the Vested portion
of his or her Individual Account be paid to him or her in one
or more of the following forms of payment: (1) in a lump sum;
(2) in installment payments over a period not to exceed the
life expectancy of the Participant or the joint and last
survivor life expectancy of the Participant and his or her
designated Beneficiary; or (3) applied to the purchase of an
annuity contract.
Notwithstanding anything in this Section 6.02 to the
contrary, a Participant cannot elect payments in the form of
an annuity if the Retirement Equity Act safe harbor rules of
Section 6.05(F) apply.
6.03 DISTRIBUTIONS UPON THE DEATH OF A PARTICIPANT
A. DESIGNATION OF BENEFICIARY - SPOUSAL CONSENT - Each
Participant may designate, upon a form provided by and
delivered to the Plan Administrator, one or more primary and
contingent Beneficiaries to receive all or a specified portion
of the Participant's Individual Account in the event of his or
her death. A Participant may change or revoke such Beneficiary
designation from time to time by completing and delivering the
proper form to the Plan Administrator.
In the event that a Participant wishes to designate a
primary Beneficiary who is not his or her spouse, his or her
spouse must consent in writing to such designation, and the
spouse's consent must acknowledge the effect of such
designation and be witnessed by a notary public or plan
representative. Notwithstanding this consent requirement, if
the Participant establishes to the satisfaction of the Plan
Administrator that such written consent may not be obtained
because there is no spouse or the spouse cannot be located, no
consent shall be required. Any change of Beneficiary will
require a new spousal consent.
B. PAYMENT TO BENEFICIARY - If a Participant dies before the
Participant's entire Individual Account has been paid to
him or her, such deceased Participant's Individual Account
shall be payable to any surviving Beneficiary designated by
the Participant, or, if no Beneficiary survives the
Participant, to the Participant's estate.
C. WRITTEN REQUEST WHEN DISTRIBUTED - A Beneficiary of a
deceased Participant entitled to a distribution who
wishes to receive a distribution must submit a written request
to the Plan Administrator. Such request shall be made upon a
form provided by the Plan Administrator. Upon a valid request,
the Plan Administrator shall direct the Trustee (or Custodian)
to commence distribution no later than the time specified in
the Adoption Agreement for this purpose and if not specified
in the Adoption Agreement, then no later than 90 days
following the later of:
1. the close of the Plan Year within which the Participant
dies; or
2. the close of the Plan Year in which the request is
received.
<PAGE> 54
20
6.04 FORM OF DISTRIBUTION TO BENEFICIARY
A. VALUE OF INDIVIDUAL ACCOUNT DOES NOT EXCEED $3,500 - If the
value of the Participant's Individual Account derived
from Nondeductible Employee Contributions and Employer
Contributions does not exceed $3,500, the Plan Administrator
shall direct the Trustee (or Custodian, if applicable) to make
a distribution to the Beneficiary in a single lump sum in lieu
of all other forms of distribution from the Plan.
B. VALUE OF INDIVIDUAL ACCOUNT EXCEEDS $3,500 - If the value of
a Participant's Individual Account derived from
Nondeductible Employee Contributions and Employer
Contributions exceeds $3,500 the preretirement survivor
annuity requirements of Section 6.05 shall apply unless
waived in accordance with that Section or unless the
Retirement Equity Act safe harbor rules of Section 6.05(F)
apply. However, a surviving spouse Beneficiary may elect any
form of payment allowable under the Plan in lieu of the
preretirement survivor annuity. Any such payment to the
surviving spouse must meet the requirements of Section 6.06.
C. OTHER FORMS OF DISTRIBUTION TO BENEFICIARY - If the value of
a Participant's Individual Account exceeds $3,500 and
the Participant has properly waived the preretirement
survivor annuity, as described in Section 6.05 (if
applicable) or if the Beneficiary is the Participant's
surviving spouse, the Beneficiary may, subject to the
requirements of Section 6.06, request in writing that the
Participant's Individual Account be paid as follows: (1) in a
lump sum; or (2) in installment payments over a period not
to exceed the life expectancy of such Beneficiary.
6.05 JOINT AND SURVIVOR ANNUITY REQUIREMENTS
A. The provisions of this Section shall apply to any Participant
who is credited with at least one Hour of Eligibility Service
with the Employer on or after August 23, 1984, and such other
Participants as provided in Section 6.05(G).
B. QUALIFIED JOINT AND SURVIVOR ANNUITY - Unless an optional
form of benefit is selected pursuant to a qualified
election within the 90-day period ending on the annuity
starting date, a married Participant's Vested account balance
will be paid in the form of a qualified joint and survivor
annuity and an unmarried Participant's Vested account balance
will be paid in the form of a life annuity. The Participant
may elect to have such annuity distributed upon attainment of
the earliest retirement age under the Plan.
C. QUALIFIED PRERETIREMENT SURVIVOR ANNUITY - Unless an optional
form of benefit has been selected within the election
period pursuant to a qualified election, if a Participant
dies before the annuity starting date then the Participant's
Vested account balance shall be applied toward the purchase
of an annuity for the life of the surviving spouse. The
surviving spouse may elect to have such annuity distributed
within a reasonable period after the Participant's death.
D. DEFINITIONS
1. Election Period - The period which begins on the first
day of the Plan Year in which the Participant attains
age 35 and ends on the date of the Participant's death.
If a Participant separates from service prior to the
first day of the Plan Year in which age 35 is attained,
with respect to the account balance as of the date of
separation, the election period shall begin on the date
of separation.
Pre-age 35 waiver- A Participant who will not yet attain
age 35 as of the end of any current Plan Year may make
special qualified election to waive the qualified
preretirement survivor annuity for the period beginning
on the date of such election and ending on the first day
of the Plan Year in which the Participant will attain age
35. Such election shall not be valid unless the
Participant receives a written explanation of the
qualified preretirement survivor annuity in such terms as
are comparable to the explanation required under Section
6.05(E)(1). Qualified preretirement survivor annuity
coverage will be automatically reinstated as of the first
day of the Plan Year in which the Participant attains age
35. Any new waiver on or after such date shall be subject
to the full requirements of this Section 6.05.
2. Earliest Retirement Age - The earliest date on which,
under the Plan, the Participant could elect to receive
retirement benefits.
3. Qualified Election - A waiver of a qualified joint and
survivor annuity or a qualified preretirement survivor
annuity. Any waiver of a qualified joint and survivor
annuity or a qualified preretirement survivor annuity
shall not be effective unless: (a) the Participant's
spouse consents in writing to the election, (b) the
election designates a specific Beneficiary, including any
class of beneficiaries or any contingent beneficiaries,
which may not be changed without spousal consent (or the
spouse expressly permits designations by the Participant
without any further spousal consent); (c) the spouse's
consent acknowledges the effect of the election; and (d)
the spouse's consent is witnessed by a plan
representative or notary public. Additionally, a
Participant's waiver of the qualified joint and survivor
annuity shall not be effective unless the election
designates a form of benefit payment which may not be
changed without spousal consent (or the spouse expressly
permits designations by the Participant without any
further spousal consent). If it is established to the
satisfaction of a plan representative that there is no
spouse or that the spouse cannot be located, a waiver
will be deemed a qualified election.
Any consent by a spouse obtained under this provision
(or establishment that the consent of a spouse may not be
obtained) shall be effective only with respect to such
spouse. A consent that permits designations by the
Participant without any requirement of further consent by
such spouse must acknowledge that the spouse has the
right to limit consent to a specific Beneficiary, and a
specific form of benefit where applicable, and that the
spouse voluntarily elects to relinquish either or both of
such rights. A revocation of a prior waiver may be made
by a Participant without the consent of the spouse at any
time before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained
under this provision shall be valid unless the
Participant has received notice as provided in Section
6.05(E) below.
4. Qualified Joint and Survivor Annuity - An immediate
annuity for the life of the Participant with a survivor
annuity for the life of the spouse which is not less than
50% and not more than 100% of the amount of the annuity
which is payable during the joint lives of the
Participant and the spouse and which is the amount of
benefit which can be purchased with the Participant's
vested account balance. The percentage of the survivor
annuity under the Plan shall be 50% (unless a different
percentage is elected by the Employer in the Adoption
Agreement).
5. Spouse (surviving spouse) - The spouse or surviving
spouse of the Participant, provided that a former
spouse will be treated as the spouse or surviving spouse
and a current spouse will not be treated as the spouse or
surviving spouse to the extent provided under a qualified
domestic relations order as described in Section 414(p)
of the Code.
6. Annuity Starting Date- The first day of the first period
for which an amount is paid as an annuity or any other
form.
<PAGE> 55
21
7. Vested Account Balance - The aggregate value of the
Participant's Vested account balances derived from
Employer and Nondeductible Employee Contributions
(including rollovers), whether Vested before or upon
death, including the proceeds of insurance contracts, if
any, on the Participant's life. The provisions of this
Section 6.05 shall apply to a Participant who is Vested
in amounts attributable to Employer Contributions,
Nondeductible Employee Contributions (or both) at the
time of death or distribution.
E. NOTICE REQUIREMENTS
1. In the case of a qualified joint and survivor annuity,
the Plan Administrator shall no less than 30 days and
not more than 90 days prior to the annuity starting date
provide each Participant a written explanation of: (a)
the terms and conditions of a qualified joint and
survivor annuity; (b) the Participant's right to make and
the effect of an election to waive the qualified joint
and survivor annuity form of benefit; (c) the rights of a
Participant's spouse; and (d) the right to make, and the
effect of, a revocation of a previous election to waive
the qualified joint and survivor annuity.
2. In the case of a qualified preretirement annuity as
described in Section 6.05(C), the Plan Administrator
shall provide each Participant within the applicable
period for such Participant a written explanation of the
qualified preretirement survivor annuity in such terms
and in such manner as would be comparable to the
explanation provided for meeting the requirements of
Section 6.05(E)(3) applicable to a qualified joint and
survivor annuity
The applicable period for a Participant is whichever of
the following periods ends last: (a) the period beginning
with the first day of the Plan Year in which the
Participant attains age 32 and ending with the close of
the Plan Year preceding the Plan Year in which the
Participant attains age 35; (b) a reasonable period
ending after the individual becomes a Participant; (c) a
reasonable period ending after Section 6.05(E)(3) ceases
to apply to the Participant; and (d) a reasonable period
ending after this Section 6.05 first applies to the
Participant. Notwithstanding the foregoing, notice must
be provided within a reasonable period ending after
separation from service in the case of a Participant who
separates from service before attaining age 35.
For purposes of applying the preceding paragraph, a
reasonable period ending after the enumerated events
described in (b), (c) and (d) is the end of the two-year
period beginning one year prior to the date the
applicable event occurs, and ending one year after that
date. In the case of a Participant who separates from
service before the Plan Year in which age 35 is attained,
notice shall be provided within the two-year period
beginning one year prior to separation and ending one
year after separation. If such a Participant thereafter
returns to employment with the Employer, the applicable
period for such Participant shall be redetermined.
3. Notwithstanding the other requirements of this Section
6.05(E), the respective notices prescribed by this
Section 6.05(E), need not be given to a Participant if
(a) the Plan "fully subsidizes" the costs of a qualified
joint and survivor annuity or qualified preretirement
survivor annuity, and (b) the Plan does not allow the
Participant to waive the qualified joint and survivor
annuity or qualified preretirement survivor annuity and
does not allow a married Participant to designate a
nonspouse beneficiary. For purposes of this Section
6.05(E)(3), a plan fully subsidizes the costs of a
benefit if no increase in cost, or decrease in benefits
to the Participant may result from the Participant's
failure to elect another benefit.
F. RETIREMENT EQUITY ACT SAFE HARBOR RULES
1. If the Employer so indicates in the Adoption Agreement,
this Section 6.05(F) shall apply to a Participant in a
profit sharing plan, and shall always apply to any
distribution, made on or after the first day of the first
Plan Year beginning after December 31, 1988, from or
under a separate account attributable solely to
accumulated deductible employee contributions, as defined
in Section 72(o)(5)(B) of the Code, and maintained on
behalf of a Participant in a money purchase pension plan,
(including a target benefit plan) if the following
conditions are satisfied:
a. the Participant does not or cannot elect payments
in the form of a life annuity; and
b. on the death of a Participant, the Participant's
Vested account balance will be paid to the
Participant's surviving spouse, but if there is no
surviving spouse, or if the surviving spouse has
consented in a manner conforming to a qualified
election, then to the Participant's designated
Beneficiary. The surviving spouse may elect to have
distribution of the Vested account balance commence
within the 90-day period following the date of the
Participant's death. The account balance shall be
adjusted for gains or losses occurring after the
Participant's death in accordance with the
provisions of the Plan governing the adjustment of
account balances for other types of distributions.
This Section 6.05(F) shall not be operative with
respect to a Participant in a profit sharing plan if
the plan is a direct or indirect transferee of a
defined benefit plan, money purchase plan, a target
benefit plan, stock bonus, or profit sharing plan
which is subject to the survivor annuity
requirements of Section 401(a)(11) and Section 417
of the code. If this Section 6.05(F) is operative,
then the provisions of this Section 6.05 other than
Section 6.05(G) shall be inoperative.
2. The Participant may waive the spousal death benefit
described in this Section 6.05(F) at any time provided
that no such waiver shall be effective unless it
satisfies the conditions of Section 6.05(D)(3) (other
than the notification requirement referred to therein)
that would apply to the Participant's waiver of the
qualified preretirement survivor annuity.
3. For purposes of this Section 6.05(F), Vested account
balance shall mean, in the case of a money purchase
pension plan or a target benefit plan, the Participant's
separate account balance attributable solely to
accumulated deductible employee contributions within the
meaning of Section 72(o)(5)(B) of the Code. In the case
of a profit sharing plan, Vested account balance shall
have the same meaning as provided in Section 6.05(D)(7).
G. TRANSITIONAL RULES
1. Any living Participant not receiving benefits on August
23, 1984, who would otherwise not receive the benefits
prescribed by the previous subsections of this Section
6.05 must be given the opportunity to elect to have the
prior subsections of this Section apply if such
Participant is credited with at least one Hour of Service
under this Plan or a predecessor plan in a Plan Year
beginning on or after January 1, 1976, and such
Participant had at least 10 Years of Vesting Service when
he or she separated from service.
2. Any living Participant not receiving benefits on August
23, 1984, who was credited with at least one Hour of
Service under this Plan or a predecessor plan on or after
September 2, 1974, and who is not otherwise credited with
any service in a Plan Year be on or after January 1,
1976, must be given the opportunity to have his or her
benefits paid in accordance with Section 6.05(G)(4).
3. The respective opportunities to elect (as described in
Section 6.05(G)(1) and (2) above) must be afforded to
the appropriate Participants during the period commencing
on August 23, 1984, and ending on the date benefits would
otherwise commence to said Participants.
<PAGE> 56
22
4. Any Participant who has elected pursuant to Section
6.05(G)(2) and any Participant who does not elect under
Section 6.05(G)(1) or who meets the requirements of
Section 6.05(G)(1) except that such Participant does not
have at least 10 Years of Vesting Service when he or she
separates from service, shall have his or her benefits
distributed in accordance with all of the following
requirements if benefits would have been payable in the
form of a life annuity:
a. Automatic Joint and Survivor Annuity - If benefits
in the form of a life annuity become payable to a
married Participant who:
(1) begins to receive payments under the Plan on or
after Normal Retirement Age; or
(2) dies on or after Normal Retirement Age while
still working for the Employer; or
(3) begins to receive payments on or after the
qualified early retirement age; or
(4) separates from service on or after attaining
Normal Retirement Age (or the qualified early
retirement age) and after satisfying the
eligibility requirements for the payment of
benefits under the Plan and thereafter dies
before beginning to receive such benefits;
then such benefits will be received under this
Plan in the form of a qualified joint and
survivor annuity, unless the Participant has
elected otherwise during the election period.
The election period must be at least 6 months
before the Participant attains qualified early
retirement age and ends not more than 90 days
before the commencement of benefits. Any
election hereunder will be in writing and may be
changed by the Participant at any time.
b. Election of Early Survivor Annuity - A Participant
who is employed after attaining the qualified
early retirement age will be given the opportunity
to elect, during the election period, to have a
survivor annuity payable on death. If the
Participant elects the survivor annuity, payments
under such annuity must not be less than the
payments which would have been made to the spouse
under the qualified joint and survivor annuity if
the Participant had retired on the day before his or
her death. Any election under this provision will
be in writing and may be changed by the Participant
at any time. The election period begins on the
later of (1) the 90th day before the Participant
attains the qualified early retirement age, or (2)
the date on which participation begins, and ends on
the date the Participant terminates employment.
c. For purposes of Section 6.05(G)(4):
1. Qualified early retirement age is the latest of:
a. the earliest date, under the Plan, on which
the Participant may elect to receive
retirement benefits,
b. the first day of the 120th month beginning
before the Participant reaches Normal
Retirement Age,or
c. the date the Participant begins
participation.
2. Qualified joint and survivor annuity is an
annuity for the life of the Participant with a
survivor annuity for the life of the spouse as
described in Section 6.05(D)(4) of this Plan.
6.06 DISTRIBUTION REQUIREMENTS
A. GENERAL RULES
1. Subject to Section 6.05 joint and Survivor Annuity
Requirements, the requirements of this Section shall
apply to any distribution of a Participant's interest and
will take precedence over any inconsistent provisions of
this Plan. Unless otherwise specified, the provisions of
this Section 6.06 apply to calendar years beginning after
December 31, 1984.
2. All distributions required under this Section 6.06 shall
be determined and made in accordance with the Income Tax
Regulations under Section 401(a)(9), including the minimum
distribution incidental benefit requirement of Section
1.401(a)(9)-2 of the proposed regulations.
B. REQUIRED BEGINNING DATE - The entire interest of a
Participant must be distributed or begin to be distributed
no later than the Participant's required beginning date.
C. LIMITS ON DISTRIBUTION PERIODS - As of the first distribution
calendar year, distributions, if not made in a single sum,
may only be made over one of the following periods (or a
combination thereof):
1. the life of the Participant,
2. the life of the Participant and a designated Beneficiary,
3. a period certain not extending beyond the life
expectancy of the Participant, or
4. a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a designated
Beneficiary.
D. DETERMINATION OF AMOUNT TO BE DISTRIBUTED EACH YEAR - If the
Participant's interest is to be distributed in other than
a single sum, the following minimum distribution rules
shall apply on or after the required beginning date:
1. Individual Account
a. If a Participant's benefit is to be distributed
over (1) a period not extending beyond the life
expectancy of the Participant or the joint life and
last survivor expectancy of the Participant and the
Participant's designated Beneficiary or (2) a period
not extending beyond the hie expectancy of the
designated Beneficiary, the amount required to be
distributed for each calendar year, beginning with
distributions for the first distribution calendar
year, must at least equal the quotient obtained by
dividing the Participant's benefit by the applicable
life expectancy.
b. For calendar years beginning before January 1, 1989,
if the Participant's spouse is not the designated
Beneficiary, the method of distribution selected
must assure that at least 50% of the present value
of the amount available for distribution is paid
within the life expectancy, of the Participant.
c. 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 (1) the applicable life
expectancy or (2) if the Participant's spouse is not
the
<PAGE> 57
23
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 Income Tax
Regulations. Distributions after the death of the
Participant shall be distributed using the
applicable life expectancy in Section 6.05(D)(1)(a)
above as the relevant divisor without regard to
proposed regulations 1.401(a)(9)-2.
d. The minimum distribution required for the
Participant's first distribution calendar year
must be made on or before the Participant's required
beginning date. The minimum distribution for other
calendar years,including the minimum distribution
for the distribution calendar year in which the
Employee's required beginning date occurs, must be
made on or before December 31 of that distribution
calendar year.
2. Other Forms-if the Participant's benefit is distributed
in the form of an annuity purchased from an insurance
company, distributions thereunder shall be made in
accordance with the requirements of Section 401(a)(9) of
the Code and the regulations thereunder.
E. Death Distribution Provisions
1. Distribution Beginning Before Death - If the Participant
dies after distribution of his or her interest has
begun, the remaining portion of such interest will
continue to be distributed at least as rapidly as under
the method of distribution being used prior to the
Participant's death.
2. Distribution Beginning After Death - If the Participant
dies before distribution of his or her interest begins,
distribution of the Participant's entire interest shall
be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's
death except to the extent that an election is made to
receive distributions in accordance with (a) or (b)
below:
a. if any portion of the Participant's interest is
payable to a designated Beneficiary,
distributions may be made over the life or over a
period certain not greater than the life expectancy
of the designated Beneficiary commencing on or
before December 31 of the calendar year immediately
following the calendar year in which the Participant
died;
b. if the designated Beneficiary is the Participant's
surviving spouse, the date distributions are
required to begin in accordance with (a) above shall
not be earlier than the later of (1) December 31 of
the calendar year immediately following the calendar
year in which the Participant dies or (2) December
31 of the calendar year in which the Participant
would have attained age 70 1/2.
If the Participant has not made an election
pursuant to this Section 6.05(E)(2) by the time of
his or her death, the Participant's designated
Beneficiary must elect the method of distribution no
later than the earlier of (1) December 31 of the
calendar year in which distributions would be
required to begin under this Section 6.05(E)(2), or
(2) December 31 of the calendar year which contains
the fifth anniversary of the date of death of the
Participant. If the Participant has no designated
Beneficiary, or if the designated Beneficiary does
not elect a method of distribution, distribution of
the Participant's entire interest must be completed
by December 31 of the calendar year containing the
fifth anniversary of the Participant's death.
3. For purposes of Section 6.06(E)(2) above, if the
surviving spouse dies after the Participant, but before
payments to such spouse begin, the provisions of Section
6.06(E)(2), with the exception of paragraph (b) therein,
shall be applied as if the surviving spouse were the
Participant.
4. For purposes of this Section 6.06(E), any amount paid to
a child of the Participant will be treated as if it had
been paid to the surviving spouse if the amount becomes
payable to the surviving spouse when the child reaches
the age of majority.
5. For purposes of this Section 6.06(E), distribution of a
Participant's interest is considered to begin on the
Participant's required beginning date (or, if Section
6.06(E)(3) above is applicable, the date distribution is
required to begin to the surviving spouse pursuant to
Section 6.06(E)(2) above). If Distribution in the form of
an annuity irrevocably commences to the Participant
before the required beginning date, the date distribution
is considered to begin is the date distribution actually
commences.
F. Definitions
1. Applicable Life Expectancy - The life expectancy (or
joint and last survivor expectancy) calculated using
the attained age of the Participant (or designated
Beneficiary) as of the Participant's (or designated
Beneficiary's) birthday in the applicable calendar year
reduced by one for each calendar year which has elapsed
since the date life expectancy was first calculated. If
life expectancy is being recalculated, the applicable
life expectancy shall be the life expectancy as so
recalculated. The applicable calendar year shall be the
first distribution calendar year, and if life expectancy
is being recalculated such succeeding calendar year.
2. Designated Beneficiary - The individual who is designated
as the Beneficiary under the Plan in accordance with
Section 401(a)(9) of the Code and the regulations
thereunder.
3. Distribution Calendar Year - A calendar year for which a
minimum distribution is required. For distributions
beginning before the Participant's death, the first
distribution calendar year is the calendar year
immediately preceding the calendar year which contains
the Participant's required beginning date. For
distributions beginning after the Participant's death,
the first distribution calendar year is the calendar year
in which distributions are required to begin pursuant to
Section 6.05(E) above.
4. Life Expectancy - Life expectancy and joint and last
survivor expectancy are computed by use of the expected
return multiples in Tables V and VI of Section 1.72-9 of
the Income Tax Regulations.
Unless otherwise elected by the Participant (or spouse,
in the case of distributions described in Section
6.05(E)(2)(b) above) by the time distributions are
required to begin, life expectancies shall be
recalculated annually. Such election shall be
irrevocable as to the Participant (or spouse) and shall
apply to all subsequent years. The life expectancy of a
nonspouse Beneficiary may not be recalculated.
5. Participant's Benefit
a. The account balances of the last valuation date in
the valuation calendar year (the calendar year
immediately preceding the distribution calendar
year) increased by the amount of any Contributions
or Forfeitures allocated to the account balance as
of dates in the valuation calendar year after the
valuation date and decreased by distributions made
in the valuation calendar year after the valuation
date.
<PAGE> 58
24
b. Exception for second distribution calendar year.
For purposes of paragraph (a) above, 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.
6. Required Beginning Date
a. General Rule - The required beginning date of a
Participant is the first day of April of the
calendar year following the calendar year in which
the Participant attains age 70 1/2.
b. Transitional Rules - The required beginning date of
a Participant who attains age 70 1/2 before
January 1, 1988, shall be determined in accordance
with (1) or (2) below:
(1) Non 5% Owners - The required beginning date of
a Participant who is not a 5% owner is the
first day of April of the calendar year
following the calendar year in which the later
of retirement or attainment of age 70 1/2
occurs.
(2) 5% Owners - The required beginning date of a
Participant who is a 5% owner during any year
beginning after December 31,1979, is the first
day of April following the later of:
(a) the calendar year in which the Participant
attains age 70 1/2, or
(b) the earlier of the calendar year with or
within which ends the Plan Year in
which the Participant becomes a 5% owner, or
the calendar year in which the Participant
retires.
The required beginning date of a
Participant who is not a 5% owner who
attains age 70 1/2 during 1988 and who has
not retired as of January 1, 1989, is April
1, 1990.
c. 5% Owner - A Participant is treated as a 5% owner
for purposes of this Section 6.06(F)(6) if such
Participant is a 5% owner as defined in Section
416(i) of the Code (determined in accordance with
Section 416 but without regard to whether the Plan
is top-heavy) at any time during the Plan Year ending
with or within the calendar year in which such owner
attains age 66 1/2 or any subsequent Plan Year.
d. Once distributions have begun to a 5% owner under
this Section 6.06(F)(6) they must continue to
be distributed, even if the Participant ceases to be
a 5% owner in a subsequent year.
G. TRANSITIONAL RULE
1. Notwithstanding the other requirements of this Section
6.06 and subject to the requirements of Section 6.05,
Joint and Survivor Annuity Requirements, distribution on
behalf of any Employee, including a 5% owner, may be made
in accordance with all of the following requirements
(regardless of when such distribution commences):
a. The distribution by the Fund is one which would not
have qualified such Fund under Section 401(a)(9) of
the Code as in effect prior to amendment by the
Deficit Reduction Act of 1984.
b. The distribution is in accordance with a method of
distribution designated by the Employee whose
interest in the Fund is being distributed or, if the
Employee is deceased, by a Beneficiary of such
Employee.
c. Such designation was in writing, was signed by the
Employee or the Beneficiary, and was made before
January 1, 1984.
d. The Employee had accrued a benefit under the Plan
as of December 31,1983.
e. The method of distribution designated by the
Employee or the Beneficiary specifies the time
at which distribution will commence, the period over
which distributions will be made, and in the case of
any distribution upon the Employee's death, the
Beneficiaries of the Employee listed in order of
priority.
2. A distribution upon death will not be covered by this
transitional rule unless the information in the
designation contains the required information described
above with respect to the distributions to be made upon
the death of the Employee.
3. For any distribution which commences before January 1,
1984, but continues after December 31,1983, the
Employee, or the Beneficiary, to whom such distribution
is being made, will be presumed to have designated the
method of distribution under which the distribution is
being made if the method of distribution was specified
in writing and the distribution satisfies the
requirements in Sections 6.06(G)(1)(a) and (e).
4. If a designation is revoked, any subsequent distribution
must satisfy the requirements of Section 401(a)(9) of
the Code and the regulations thereunder. If a
designation is revoked subsequent to the date
distributions are required to begin, the Plan must
distribute by the end of the calendar year following the
calendar year in which the revocation occurs the total
amount not yet distributed which would have been required
to have been distributed to satisfy Section 401(a)(9) of
the Code and the regulations thereunder, but for the
Section 242(b)(2) election. For calendar years beginning
after December 31, 1988, such distributions must meet the
minimum distribution incidental benefit requirements in
Section 1.401(a)(9)-2 of the Proposed Income Tax
Regulations. Any changes in the designation will be
considered to be a revocation of the designation.
However, the mere substitution or addition of another
Beneficiary (one not named in the designation) under the
designation will not be considered to be a revocation of
the designation, so long as such substitution or addition
does not alter the period over which distributions are to
be made under the designation, directly or indirectly
(for example, by altering the relevant measuring life).
In the case in which an amount is transferred or rolled
over from one plan to another plan, the rules in Q&A J-2
and Q&A J-3 shall apply.
6.07 ANNUITY CONTRACTS
Any annuity contract distributed under the Plan (if permitted
or required by this Section 6) must be nontransferable. The
terms of any annuity contract purchased and distributed by the
Plan to a Participant or spouse shall comply with the
requirements of the Plan.
6.08 LOANS TO PARTICIPANTS
If the Adoption Agreement so indicates, a Participant may
receive a loan from the Fund, subject to the following rules:
A. Loans shall be made available to all Participants on a
reasonably equivalent basis.
B. Loans shall not be made available to Highly Compensated
Employees (as defined in Section 414(q) of the Code) in
an amount greater than the amount made available to other
Employees.
<PAGE> 59
25
C. Loans must be adequately secured and bear a reasonable
interest rate.
D. No Participant loan shall exceed the present value of the
Vested portion of a Participant's Individual Account.
E. A Participant must obtain the consent of his or her spouse,
if any, to the use of the Individual Account as security for
the loan. Spousal consent shall be obtained no earlier than
the beginning of the 90 day period that ends on the date on
which the loan is to be so secured. 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 account
balance is used for renegotiation, extension, renewal, or
other revision of the loan. Notwithstanding the foregoing,
no spousal consent is necessary if, at the time the loan is
secured, no consent would be required for a distribution
under Section 417(a)(2)(B). In addition, spousal consent is
not required if the Plan or the Participant is not subject to
Section 401(a)(11) at the time the Individual Account is used
as security, or if the total Individual Account subject to
the security is less than or equal to $3,500.
F. In the event of default, foreclosure on the note and
attachment of security will not occur until a
distributable event occurs in the Plan. Notwithstanding the
preceding sentence, a Participant's default on a loan will be
treated as a distributable event and as soon as
administratively feasible after the default, the
Participant's Vested Individual Account will be reduced by
the lesser of the amount in default (plus accrued interest)
or the amount secured. If this Plan is a 401(k) plan, then
to the extent the loan is attributable to a Participant's
Elective Deferrals, Qualified Nonelective Contributions or
Qualified Matching Contributions, the Participant's
Individual Account will not be reduced unless the Participant
has attained age 59 1/2 or has another distributable event.
A Participant will be deemed to have consented to the
provision at the time the loan is made to the Participant.
G. No loans will be made to any shareholder-employee or
Owner-Employee. For purposes of this requirement, a
shareholder-employee means an employee or officer of an
electing small business (Subchapter S) corporation who owns
(or is considered as owning within the meaning of Section
318(a)(1) of the Code), on any day during the taxable year of
such corporation, more than 5% of the outstanding stock of
the corporation.
If a valid spousal consent has been obtained in accordance
with 6.08E, then, notwithstanding any other provisions of
this Plan, the portion of the Participant's Vested Individual
Account used as a security interest held by the Plan by
reason of a loan outstanding to the Participant shall be
taken into account for purposes of determining the amount of
the account balance payable at the time of death or
distribution, but only if the reduction is used as repayment
of the loan. If less than 100% of the Participant's Vested
Individual Account (determined without regard to the
preceding sentence) is payable to the surviving spouse, then
the account balance shall be adjusted by first reducing the
Vested Individual Account by the amount of the security used
as repayment of the loan, and then determining the benefit
payable to the surviving spouse.
To avoid taxation to the Participant, no loan to any
Participant can be made to the extent that such loan when
added to the outstanding balance of all other loans to the
Participant would exceed the lesser of (a) $50,000 reduced by
the excess (if any) of the highest outstanding balance of
loans during the one year period ending on the day before the
loan is made, over the outstanding balance of loans from the
Plan on the date the loan is made, or (b) 50% of the present
value of the nonforfeitable Individual Account of the
Participant or, if greater, the total Individual Account up
to $10,000. For the purpose of the above limitation, all
loans from all plans of the Employer and other members of a
group of employers described in Sections 414(b), 414(c), and
414(m) of the Code are aggregated. Furthermore, any loan
shall by its terms require that repayment (principal and
interest) be amortized in level payments, not less frequently
than quarterly, over a period not extending beyond 5 years
from the date of the loan, unless such loan is used to
acquire a dwelling unit which within a reasonable time
(determined at the time the loan is made) will be used as the
principal residence of the Participant. An assignment or
pledge of any portion of the Participant's interest in the
Plan and a loan, pledge, or assignment with respect to any
insurance contract purchased under the Plan, will be treated
as a loan under this paragraph.
The Plan Administrator shall administer the loan
program in accordance with a written document. Such written
document shall include, at a minimum, the following: (i) the
identity of the person or positions authorized to administer
the Participant loan program; (ii) the procedure for applying
for loans; (iii) the basis on which loans will be approved or
denied; (iv) limitations (if any) on the types and amounts of
loans offered; (v) the procedure under the program for
determining a reasonable rate of interest; (vi) the types of
collateral which may secure a Participant loan; and (vii) the
events constituting default and the steps that will be taken
to preserve Plan assets in the event of such default.
6.09 DISTRIBUTION IN KIND
The Plan Administrator may cause any distribution under this
Plan to be made either in a form actually held in the Fund, or
in cash by converting assets other than cash into cash, or in
any combination of the two foregoing ways.
6.10 DIRECT ROLLOVERS OF ELIGIBLE ROLLOVER DISTRIBUTIONS
A. DIRECT ROLLOVER OPTION
This Section applies to distributions made on or after
January 1, 1993. Notwithstanding any provision of the Plan to
the contrary that would otherwise limit a distributee's
election under this Section, a distributee may elect, at the
time and in the manner prescribed by the Plan Administrator,
to have any portion of an eligible rollover distribution that
is equal to at least $500 paid directly to an eligible
retirement plan specified by the distributee in a direct
rollover.
B. DEFINITIONS
1. Eligible rollover distribution - An eligible rollover
distribution is any distribution of all or any portion
of the balance to the credit of the distributee, except
that an eligible rollover distribution does not include:
a. any distribution that is one of a series of
substantially equal periodic payments (not less
frequently than annually) made for the life (or life
expectancy) of the 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;
b. any distribution to the extent such distribution is
required under Section 401(a)(9) of the Code;
c. the portion of any other distribution that is not
includible in gross income (determined without
regard to the exclusion for net unrealized
appreciation with respect to employer securities);
and
d. any other distribution(s) that is reasonably
expected to total less than $200 during a year.
2. Eligible retirement plan- An eligible retirement plan is
an individual retirement account described in Section
408(a) of the Code, an individual retirement annuity
described in Section 408(b) of the Code, an annuity plan
described in Section
<PAGE> 60
26
403(a) of the Code, or a qualified trust described in
Section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution. However, in
the case of an eligible rollover distribution to the
surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement
annuity.
3. Distributee - A distributes includes an Employee
or former Employee. In addition, the Employee's or
former Employee's surviving spouse and the Employee's or
former Employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations
order, as defined in Section 414(p) of the Code, are
distributees with regard to the interest of the spouse or
former spouse.
4. Direct Rollover- A direct rollover is a payment by the
Plan to the eligible retirement plan specified by the
distributee.
6.11 PROCEDURE FOR MISSING PARTICIPANTS OR BENEFICIARIES
The Plan Administrator must use all reasonable measures to
locate Participants or Beneficiaries who are entitled to
distributions from the Plan. In the event that the Plan
Administrator cannot locate a Participant or Beneficiary who is
entitled to a distribution from the Plan after using all
reasonable measures to locate him or her, the Plan Administrator
may, consistent with applicable laws, regulations and other
pronouncements under ERISA, use any reasonable procedure to
dispose of distributable plan assets, including any of the
following: (1) establish a bank account for and in the name of
the Participant or Beneficiary and transfer the assets to such
bank account, (2) purchase an annuity contract with the assets
in the name of the Participant or Beneficiary, or (3) after the
expiration of 5 years after the benefit becomes payable, treat
the amount distributable as a Forfeiture and allocate it in
accordance with the terms of the Plan and if the Participant or
Beneficiary is later located, restore such benefit to the Plan.
SECTION SEVEN CLAIMS PROCEDURE
7.01 FILING A CLAIM FOR PLAN DISTRIBUTIONS
A Participant or Beneficiary who desires to make a claim for
the Vested portion of the Participant's Individual Account shall
file a written request with the Plan Administrator on a form to
be furnished to him or her by the Plan Administrator for such
purpose. The request shall set forth the basis of the claim. The
Plan Administrator is authorized to conduct such examinations as
may be necessary to facilitate the payment of any benefits to
which the Participant or Beneficiary may be entitled under the
terms of the Plan.
7.02 DENIAL OF CLAIM
Whenever a claim for a Plan distribution by any Participant or
Beneficiary has been wholly or partially denied, the Plan
Administrator must furnish such Participant or Beneficiary
written notice of the denial within 60 days of the date the
original claim was filed. This notice shall set forth the
specific reasons for the denial, specific reference to pertinent
Plan provisions on which the denial is based, a description of
any additional information or material needed to perfect the
claim, an explanation of why such additional information or
material is necessary and an explanation of the procedures for
appeal.
7.03 REMEDIES AVAILABLE
The Participant or Beneficiary shall have 60 days from receipt
of the denial notice in which to make written application for
review by the Plan Administrator. The Participant or Beneficiary
may request that the review be in the nature of a hearing. The
Participant or Beneficiary shall have the right to
representation, to review pertinent documents and to submit
comments in writing. The Plan Administrator shall issue a
decision on such review within 60 days after receipt of an
application for review as provided for in Section 7.02. Upon a
decision unfavorable to the Participant or Beneficiary, such
Participant or Beneficiary shall be entitled to bring such
actions in law or equity as may be necessary or appropriate to
protect or clarify his or her right to benefits under this Plan.
SECTION EIGHT PLAN ADMINISTRATOR
8.01 EMPLOYER IS PLAN ADMINISTRATOR
A. The Employer shall be the Plan Administrator unless
the managing body of the Employer designates a person
or persons other than the Employer as the Plan Administrator
and so notifies the Trustee (or Custodian, if applicable).
The Employer shall also be the Plan Administrator if the
person or persons so designated cease to be the Plan
Administrator. The Employer may establish an administrative
committee that will carry out the Plan Administrator's
duties. Members of the administrative committee may allocate
the Plan Administrator's duties among themselves.
B. If the managing body of the Employer designates a person or
persons other than the Employer as Plan Administrator, such
person or persons shall serve at the pleasure of the Employer
and shall serve pursuant to such procedures as such managing
body may provide. Each such person shall be bonded as may be
required by law.
8.02 POWERS AND DUTIES OF THE PLAN ADMINISTRATOR
A. The Plan Administrator may, by appointment, allocate the
duties of the Plan Administrator among several individuals or
entities. Such appointments shall not be effective until the
party designated accepts such appointment in writing.
B. The Plan Administrator shall have the authority to control
and manage the operation and administration of the Plan. The
Plan Administrator shall administer the Plan for the
exclusive benefit of the Participants and their Beneficiaries
in accordance with the specific terms of the Plan.
C. The Plan Administrator shall be charged with the duties of
the general administration of the Plan, including, but not
limited to the following:
1. To determine all questions of interpretation or policy in
a manner consistent with the Plan's documents and the
Plan Administrator's construction or determination in
good faith shall be conclusive and binding on all persons
except as otherwise provided herein or by law. Any
interpretation or construction shall be done in a
nondiscriminatory manner and shall be consistent with the
intent that the Plan shall continue to be deemed a
qualified plan under the terms of Section 401(a) of the
Code, as amended from time-to-time, and shall comply with
the terms of ERISA, as amended from time-to-time;
2. To determine all questions relating to the eligibility
of Employees to become or remain Participants hereunder;
3. To compute the amounts necessary or desirable to be
contributed to the Plan;
4. To compute the amount and kind of benefits to
which a Participant or Beneficiary shall be entitled
under the Plan and to direct the Trustee (or Custodian,
if applicable) with respect to all disbursements under
the Plan, and, when requested by
<PAGE> 61
27
the Trustee (or Custodian), to furnish the Trustee (or
Custodian) with instructions, in writing, on matters
pertaining to the Plan and the Trustee (or Custodian) may
rely and act thereon;
5. To maintain all records necessary for the administration
of the Plan;
6. To be responsible for preparing and filing such
disclosure and tax forms as may be required from
time-to-time by the Secretary of Labor or the Secretary
of the Treasury; and
7. To furnish each Employee, Participant or Beneficiary
such notices, information and reports under such
circumstances as may be required by law.
D. The Plan Administrator shall have all of the powers necessary
or appropriate to accomplish his or her duties under the
Plan, including, but not limited to, the following:
1. To appoint and retain such persons as may be necessary
to carry out the functions of the Plan Administrator;
2. To appoint and retain counsel, specialists or other
persons as the Plan Administrator deems necessary or
advisable in the administration of the Plan,
3. To resolve all questions of administration of the Plan;
4. To establish such uniform and nondiscriminatory rules
which it deems necessary to carry out the terms of
the Plan;
5. To make any adjustments in a uniform and nondiscriminatory
manner which it deems necessary to correct any
arithmetical or accounting errors which may have been made
for any Plan Year; and
6. To correct any defect, supply any omission 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.
8.03 EXPENSES AND COMPENSATION
All reasonable expenses of administration including, but not
limited to, those involved in retaining necessary professional
assistance may be paid from the assets of the Fund.
Alternatively, the Employer may, in its discretion, pay any or
all such expenses. Pursuant to uniform and nondiscriminatory
rules that the Plan Administrator may establish from time to
time, administrative expenses and expenses unique to a
particular Participant may be charged to a Participant's
Individual Account or the Plan Administrator may allow
Participants to pay such fees outside of the Plan. The Employer
shall furnish the Plan Administrator with such clerical and
other assistance as the Plan Administrator may need in the
performance of his or her duties.
8.04 INFORMATION FROM EMPLOYER
To enable the Plan Administrator to perform his or her duties,
the Employer shall supply full and timely information to the
Plan Administrator (or his or her designated agents) on all
matters relating to the Compensation of all Participants, their
regular employment, retirement, death, Disability or Termination
of Employment, and such other pertinent facts as the Plan
Administrator (or his or her agents) may require. The Plan
Administrator shall advise the Trustee (or Custodian, if
applicable) of such of the foregoing facts as may be pertinent
to the Trustee's (or Custodian's) duties under the Plan. The
Plan Administrator (or his or her agents) is entitled to rely on
such information as is supplied by the Employer and shall have
no duty or responsibility to verify such information.
SECTION NINE AMENDMENT AND TERMINATION
9.01 RIGHT OF PROTOTYPE SPONSOR TO AMEND THE PLAN
A. The Employer, by adopting the Plan, expressly delegates to
the Prototype Sponsor the power, but not the duty, to
amend the Plan without any further action or consent of the
Employer as the Prototype Sponsor deems necessary for the
purpose of adjusting the Plan to comply with all laws and
regulations governing pension or profit sharing plans.
Specifically, it is understood that the amendments may be
made unilaterally by the Prototype Sponsor. However, it
shall be understood that the Prototype Sponsor shall be under
no obligation to amend the Plan documents and the Employer
expressly waives any rights or claims against the Prototype
Sponsor for not exercising this power to amend. For purposes
of Prototype Sponsor amendments, the mass submitter shall be
recognized as the agent of the Prototype Sponsor. If the
Prototype Sponsor does not adopt the amendments made by the
mass submitter, it will no longer be identical to or a minor
modifier of the mass submitter plan.
B. An amendment the Prototype Sponsor shall be accomplished
by giving written notice to the Employer of the
amendment to be made. The notice shall set forth the text of
such amendment and the date such amendment is to be
effective. Such amendment shall take effect unless within the
30 day period after such notice is provided, or within such
shorter period as the notice may specify, the Employer gives
the Prototype Sponsor written notice of refusal to consent to
the amendment. Such written notice of refusal shall have the
effect of withdrawing the Plan as a prototype plan and shall
cause the Plan to be considered an individually designed
plan. The right of the Prototype Sponsor to cause the Plan to
be amended shall terminate should the Plan cease to conform
as a prototype plan as provided in this or any other section.
9.02 RIGHT OF EMPLOYER TO AMEND THE PLAN
The Employer may (1) change the choice of options in the
Adoption Agreement; (2) add overriding language in the Adoption
Agreement when such language is necessary to satisfy Section
415 or Section 416 of the Code because of the required
aggregation of multiple plans; and (3) add certain model
amendments published by the Internal Revenue Service which
specifically provide that their adoption will not cause the
Plan to be treated as individually designed. An Employer that
amends the Plan for any other reason, including a waiver of the
minimum funding requirement under Section 412(d) of the Code,
will no longer participate in this prototype plan and will be
considered to have an individually designed plan.
An Employer who wishes to amend the Plan to change the options
it has chosen in the Adoption Agreement must complete and
deliver a new Adoption Agreement to the Prototype Sponsor and
Trustee (or Custodian, if applicable). Such amendment shall
become effective upon execution by the Employer and Trustee (or
Custodian).
The Employer further reserves the right to replace the Plan in
its entirety by adopting another retirement plan which the
Employer designates as a replacement plan.
9.03 LIMITATION ON POWER TO AMEND
No amendment to the Plan shall be effective to the extent that
it has the effect of decreasing a Participant's accrued
benefit. Notwithstanding the preceding sentence, a
Participant's Individual Account may be reduced to the extent
permitted under
<PAGE> 62
28
Section 412(c)(8) of the Code. For purposes of this paragraph,
a plan amendment which has the effect of decreasing a
Participant's Individual Account or eliminating an optional form
of benefit with respect to benefits attributable to service
before the amendment shall be treated as reducing an accrued
benefit. Furthermore, if the vesting schedule of a Plan is
amended, in the case of an Employee who is a Participant as of
the later of the date such amendment is adopted or the date it
becomes effective, the Vested percentage (determined as of such
date) of such Employee's Individual Account derived from
Employer Contributions wilt not be less than the percentage
computed under the Plan without regard to such amendment.
9.04 AMENDMENT OF VESTING SCHEDULE
If the Plan's vesting schedule is amended, or the Plan is
amended in any way that directly or indirectly affected the
computation of the Participant's Vested percentage, or if the
Plan is deemed amended by an automatic change to or from a
top-heavy vesting schedule, each Participant with at least 3
Years of Vesting Service with the Employer may elect, within the
time set forth below, to have the Vested percentage computed
under the Plan without regard to such amendment.
For Participants who do not have at least 1 Hour of Service in
any Plan Year beginning after December 31, 1988, the preceding
sentence shall be applied by substituting "5 Years of Vesting
Service" for "3 Years of Vesting Service" where such language
appears.
The Period during which the election may be made shall commence
with the date the amendment is adopted or deemed to be made and
shall end the later of:
A. 60 days after the amendment is adopted;
B. 60 days after the amendment becomes effective; or
C. 60 days after the Participant is issued written notice of
the amendment by the Employer or Plan Administrator.
9.05 PERMANENCY
The Employer expects to continue this Plan and make the
necessary contributions thereto indefinitely, but such
continuance and payment is not assumed as a contractual
obligation. Neither the Adoption Agreement nor the Plan nor any
amendment or modification thereof nor the making of
contributions hereunder shall be construed as giving any
Participant or any person whomsoever any legal or equitable
right against the Employer, the Trustee (or Custodian, if
applicable) the Plan Administrator or the Prototype Sponsor
except as specifically provided herein, or as provided by law.
9.06 METHOD AND PROCEDURE FOR TERMINATION
The Plan may be terminated by the Employer at any time by
appropriate action of its managing body. Such termination shall
be effective on the date specified by the Employer. The Plan
shall terminate if the Employer shall be dissolved, terminated,
or declared bankrupt. Written notice of the termination and
effective date thereof shall be given to the Trustee (or
Custodian), Plan Administrator, Prototype Sponsor, Participants
and Beneficiaries of deceased Participants, and the required
filings (such as the Form 5500 series and others) must be made
with the Internal Revenue Service and any the regulatory body as
required by current laws and regulations. Until all of the
assets have been distributed from the Fund, the Employer must
keep the Plan in compliance with current laws and regulations
by (a) making appropriate amendments to the Plan and (b) taking
such other measures as may be required.
9.07 CONTINUANCE OF PLAN BY SUCCESSOR EMPLOYER
Notwithstanding the preceding Section 9.06, a successor of the
Employer may continue the Plan and be substituted in the place
of the present Employer. The successor and the present Employer
(or, if deceased, the executor of the estate of a deceased
Self-Employed Individual who was the Employer) must execute a
written instrument authorizing such substitution and the
successor must complete and sign a new plan document.
9.08 FAILURE OF PLAN QUALIFICATION
If the Plan fails to retain its qualified status, the Plan will
no longer be considered to be part of a prototype plan, and such
Employer can no longer participate under this prototype. In such
event, the Plan will be considered an individually designed
plan.
SECTION TEN MISCELLANEOUS
10.01 STATE COMMUNITY PROPERTY LAWS
The terms and conditions of this Plan shall be applicable
without regard to the community property laws of any state.
10.02 HEADINGS
The headings of the Plan have been inserted for convenience of
reference only and are to be ignored in any construction of the
provisions hereof.
10.03 GENDER AND NUMBER
Whenever any words are used herein in the masculine gender they
shall be construed as though they were also used in the feminine
gender in all cases where they would so apply, and whenever any
words are used herein in the singular form they shall be
construed as though they were also used in the plural form in
all cases where they would so apply.
10.04 PLAN MERGER OR CONSOLIDATION
In the case of any merger or consolidation of the Plan with, or
transfer of assets or liabilities of such Plan to, any other
plan, each Participant shall be entitled to receive benefits
immediately after the merger, consolidation, or transfer (if the
Plan had then terminated) which are equal to or greater than the
benefits he or she would have been entitled to receive
immediately before the merger, consolidation, or transfer (if
the Plan had then terminated). The Trustee (or Custodian) has
the authority to enter into merger agreements or agreements to
directly transfer the assets of this Plan but only if such
agreements are made with trustees or custodians of other
retirement plans described in Section 401(a) of the Code.
10.05 STANDARD OF FIDUCIARY CONDUCT
The Employer, Plan Administrator, Trustee and any other
fiduciary under this Plan shall discharge their duties with
respect to this Plan solely in the interests of Participants and
their Beneficiaries and with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent
man acting in like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character and with
like aims. No fiduciary shall cause the Plan to engage in any
transaction known as a "prohibited transaction" under ERISA.
<PAGE> 63
29
10.06 GENERAL UNDERTAKING OF ALL PARTIES
All parties to this Plan and all persons claiming any interest
whatsoever hereunder agree to perform any and all acts and
execute any and all documents and papers which may be necessary
or desirable for the carrying out of this Plan and any of its
provisions.
10.07 AGREEMENT BINDS HEIRS, ETC.
This Plan shall be binding upon the heirs, executors,
administrators, successors and assigns, as those terms shall
apply to any and all parties hereto, present and future.
10.08 DETERMINATION OF TOP-HEAVY STATUS
A. For any Plan Year beginning after December 31,1983, this Plan
is a Top-Heavy Plan if any of the following conditions exist:
1. If the top-heavy ratio for this Plan exceeds 60% and
this Plan is not part of any required aggregation group
or permissive aggregation group of plans.
2. If this Plan is part of a required aggregation group of
plans but not part of a permissive aggregation group
and the top-heavy ratio for the group of plans exceeds
60%.
3. If this Plan is a part of a required aggregation group
the top- heavy ratio for the permissive aggregation
group exceeds 60%.
For purposes of this Section 10.08, the following terms
shall have the meanings indicated below:
B. Key Employee - Any Employee or former Employee (and the
Beneficiaries of such Employee) who at any time during
the determination period was an officer of the Employer if
such individual's annual compensation exceeds 50% of the
dollar limitation under Section 415(b)(1)(A) of the Code, an
owner (or considered an owner under Section 318 of the Code)
of one of the 10 largest interests in the Employer if such
individual's compensation exceeds 100% of the dollar
limitation under Section 415(c)(1)(A) of the Code, a 5% owner
of the Employer, or a 1% owner of the Employer who has an
annual compensation of more than $150,000. Annual
compensation means compensation as defined in Section
415(c)(3) of the Code, but including amounts contributed by
the Employer pursuant to a salary reduction agreement which
are excludable from the Employee's gross income under Section
125, Section 402(e)(3), Section 402(h)(1)(B) or Section
403(b) of the Code. The determination period is the Plan
Year containing the determination date and the 4 preceding
Plan Years.
The determination of who is a Key Employee will be made
in accordance with Section 416(i)(1) of the Code and the
regulations thereunder.
C. Top-heavy ratio
1. If the Employer maintains one or more defined
contribution plans (including any simplified employee
pension plan) and the Employer has not maintained any
defined benefit plan which during the 5-year period
ending on the determination date(s) has or has had
accrued benefits, the top-heavy ratio for this Plan alone
or for the required or permissive aggregation group as
appropriate is a fraction, the numerator of which is the
sum of the account balances of all Key Employees as of
the determination date(s) (including any part of any
account balance distributed in the 5-year period ending
on the determination date(s)), and the denominator of
which is the sum of all account balances (including any
part of any account balance distributed in the 5-year
period ending on the determination date(s)), both
computed in accordance with Section 416 of the Code and
the regulations thereunder. Both the numerator and the
denominator of the top-heavy ratio are increased to
reflect any contribution not actually made as of the
determination date, but which is required to be taken
into account on that date under Section 416 of the Code
and the regulations thereunder.
2. If the Employer maintains one or more defined
contribution plans (including any simplified employee
pension plan) and the Employer maintains or has
maintained one or more defined benefit plans which during
the 5-year period ending on the determination date(s) has
or has had any accrued benefits, the top-heavy ratio for
any required or permissive aggregation group as
appropriate is a fraction, the numerator of which is the
sum of account balances under the aggregated defined
contribution plan or plans for all Key Employees,
determined in accordance with (1) above, and the present
value of accrued benefits under the aggregated defined
benefit plan or plans for all Key Employees as of the
determination date(s), and the denominator of which is
the sum of the account balances under the aggregated
defined contribution plan or plans for all Participants,
determined in accordance with (1) above, and the present
value of accrued benefits under the defined benefit plan
or plans for all Participants as of the determination
date(s), all determined in accordance with Section 416 of
the Code and the regulations thereunder. The accrued
benefits under a defined benefit plan in both the
numerator and denominator of the top-heavy ratio are
increased for any distribution of an accrued benefit made
in the 5-year period ending on the determination date.
3. For purposes of (1) and (2) above, the value of account
balances and the present value of accrued benefits will
be determined as of the most recent valuation date that
falls within or ends with the 12-month period ending on
the determination date, except as provided in Section 416
of the Code and the regulations thereunder for the first
and second plan years of a defined benefit plan. The
account balances and accrued benefits of a Participant
(a) who is not a Key Employee but who was a Key
Employee in a Prior Year, or (b) who has not been
credited with at least one Hour of Service with any
employer maintaining the plan at any time during the
5-year period ending on the determination date will be
disregarded. These calculation of the top-heavy ratio,
and the extent to which distributions, rollovers, and
transfers are taken into account will be made in
accordance with Section 416 of the Code and the
regulations thereunder. Deductible employee contributions
will not be taken into account for purposes of computing
the top-heavy ratio. When aggregating plans the value of
account balances and accrued benefits will be calculated
with reference to the determination dates that fall
within the same calendar year.
The accrued benefit of a Participant other than a Key
Employee shall be determined under (a) the method, if
any, that uniformly applies for accrual purposes under
all defined benefit plans maintained by the Employer, or
(b) if there is no such method, as if such benefit
accrued not more rapidly than the slowest accrual rate
permitted under the fractional rule of Section
411(b)(1)(C) of the Code.
4. Permissive aggregation group: The required aggregation
group of plans plus any other plan or plans of the
Employer which, when considered as a group with the
required aggregation group, would continue to satisfy the
requirements of Sections 401(a)(4) and 410 of the Code.
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30
5. Required aggregation group: (a) Each qualified plan of
the Employer in which at least one Key Employee
participates or at any time during the determination
period (regardless of whether the Plan has been
terminated), and (b) any other qualified plan of the
Employer which enables a plan described in (a) to meet
the requirements of Sections 401(a)(4) or 410 of the
Code.
6. Determination date: For any Plan Year subsequent to the
first Plan Year, the last day of the preceding Plan
Year. For the first Plan Year of the Plan, the last day
of that year.
7. Valuation date: For purposes of calculating the top-heavy
ratio, the valuation date shall be the last day of each
Plan Year.
8. Present value: For purposes of establishing the
"present value" of benefits under a defined benefit
plan to compute the top-heavy ratio, any benefit shall be
discounted only for mortality and interest based on the
interest rate and mortality table specified for this
purpose in the defined benefit plan,unless otherwise
indicated in the Adoption Agreement.
10.09 SPECIAL LIMITATIONS FOR OWNER-EMPLOYEES
If this Plan provides contributions or benefits for one or more
Owner-Employees who control both the business for which this
Plan is established and one or more other trades or businesses,
this Plan and the plan established for other trades or
businesses must, when looked at as a single plan, satisfy
Sections 401(a) and (d) of the Code for the employees of those
trades or businesses.
If the Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or
businesses, the employees of the other trades or businesses must
be included in a plan which satisfies Sections 401(a) and (d) of
the Code and which provides contributions and benefits not less
favorable than provided for Owner-Employees under this Plan.
If an individual is covered as an Owner-Employee under the
plans of two or more trades or businesses which are not
controlled and the individual controls a trade or business, then
the contributions or benefits of the employees under the plan of
the trade or business which is controlled must be as favorable
as those provided for him or her under the most favorable plan
of the trade or business which is not controlled.
For purposes of the preceding 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:
A. own the entire interest in a unincorporated trade or
business, or
B. in the case of a partnership, own more than 50% of either
the capital interest or the profit interest in the
partnership.
For purposes of the preceding sentence, an Owner-Employee,
or two or more Owner-Employees, shall be treated as owning
any interest in a partnership which is owned, directly or
indirectly, by a partnership which such Owner-Employee, or
such two or more Owner-Employees, are considered to control
within the meaning of the preceding sentence.
10.10 INALIENABILITY OF BENEFITS
No benefit or interest available hereunder will be subject to
assignment or alienation, either voluntarily or involuntarily.
The preceding sentence shall also apply to the creation,
assignment, or recognition of a right to any benefit payable
with respect to a Participant pursuant to a domestic relations
order, unless such order is determined to be a qualified
domestic relations order, as defined in Section 414(p) of the
Code.
Generally, a domestic relations order cannot be a qualified
domestic relations order until January 1, 1985. However, in the
case of a domestic relations order entered before such date, the
Plan Administrator:
(1) shall treat such order as a qualified domestic relations
order if such Plan Administrator is paying benefits
pursuant to such order on such date, and
(2) may treat any other such order entered before such date as
a qualified domestic relations order even if such
order does not meet the requirements of Section 414(p) of
the Code.
Notwithstanding any provision of the Plan to the contrary, a
distribution to an alternate payee under a qualified domestic
relations order shall be permitted even if the Participant
affected by such order is not otherwise entitled to a
distribution and even if such Participant has not attained
earliest retirement age as defined in Section 414(p) of the
Code.
10.11 CANNOT ELIMINATE PROTECTED BENEFITS
Pursuant to Section 411(d)(6) of the Code, and the regulations
thereunder, the Employer cannot reduce, eliminate or make
subject to Employer discretion any Section 411(d)(6) protected
benefit. Where this Plan document is being adopted to amend
another plan that contains a protected benefit not provided for
in this document, the Employer may attach a supplement to the
Adoption Agreement that describes such protected benefit which
shall become part of the Plan.
SECTION ELEVEN 401(k) PROVISIONS
In addition to Sections 1 through 10, the provisions of this
Section 11 shall apply if the Employer has established a 401(k)
cash or deferred arrangement (CODA) by completing and signing
the appropriate Adoption Agreement.
11.100 DEFINITIONS
The following words and phrases when used in the Plan with
initial capital letters shall, for the purposes of this Plan,
have the meanings set forth below unless the context indicates
that other meanings are intended.
11.101 ACTUAL DEFERRAL PERCENTAGE (ADP)
Means, for a specified group of Participants for a Plan Year,
the average of the ratios (calculated separately for each
Participant in such group) of (1) the amount of Employer
Contributions actually paid over to the Fund on behalf of such
Participant for the Plan Year to (2) the Participant's
Compensation for such Plan Year (taking into account only that
Compensation paid to the Employee during the portion of the Plan
Year he or she was an eligible Participant, unless otherwise
indicated in the Adoption Agreement). For purposes of
calculating the ADP, Employer Contributions on behalf of any
Participant shall include: (1) any Elective Deferrals made
pursuant to the Participant's deferral election, (including
Excess Elective Deferrals of Highly Compensated Employees), but
excluding (a) Excess Elective Deferrals of Non-highly
Compensated Employees that arise solely from Elective Deferrals
made under the Plan or plans of this Employer and (b) Elective
Deferrals that are taken into account in the Contribution
Percentage test (provided the ADP test is satisfied both with
and without exclusion of these Elective
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Deferrals); and (2) at the election of the Employer, Qualified
Nonelective Contributions and Qualified Matching Contributions.
For purposes of computing Actual Deferral Percentages, an
Employee who would be a Participant but for the failure to make
Elective Deferrals shall be treated as a Participant on whose
behalf no Elective Deferrals are made.
11.102 AGGREGATE LIMIT
Means the sum of (1)125% of the greater of the ADP of the
Participants who are not Highly Compensated Employees for the
Plan Year or the ACP of the Participants who are not Highly
Compensated Employees under the Plan subject to Code Section
401(m) for the Plan Year beginning with or within the Plan Year
of the CODA; and (2) the lesser of 200% or two plus the lesser
of such ADP or ACP. "Lesser" is substituted for "greater" in
"(1)" above, and "greater" is substituted for "lesser" after
"two plus the" in "(2)" if it would result in a larger Aggregate
Limit.
11.103 AVERAGE CONTRIBUTION PERCENTAGE (ACP)
Means the average of the Contribution Percentages of the
Eligible Participants in a group.
11.104 CONTRIBUTING PARTICIPANT
Means a Participant who has enrolled as a Contributing
Participant pursuant to Section 11.201 and on whose behalf the
Employer is contributing Elective Deferrals to the Plan (or is
making Nondeductible Employee Contributions).
11.105 CONTRIBUTION PERCENTAGE
Means the ratio (expressed as a percentage) of the
Participant's Contribution Percentage Amounts to the
Participant's Compensation for the Plan Year (taking into
account only the Compensation paid to the Employee during the
portion of the Plan Year he or she was an eligible Participant,
unless otherwise indicated in the Adoption Agreement).
11.106 CONTRIBUTION PERCENTAGE AMOUNTS
Means the sum of the Nondeductible Employee Contributions,
Matching Contributions, and Qualified Matching Contributions
made under the Plan on behalf of the Participant for the Plan
Year. Such Contribution Percentage Amounts shall not include
Matching Contributions that are forfeited either to correct
Excess Aggregate Contributions or because the contributions to
which they relate are Excess Deferrals, Excess Contributions,
Excess Aggregate Contributions or excess annual additions which
are distributed pursuant to Section 11.508. If so elected in the
Adoption Agreement, the Employer may include Qualified
Nonelective Contributions in the Contribution Percentage Amount.
The Employer also may elect to use Elective Deferrals in the
Contribution Percentage Amounts so long as the ADP test is met
before the Elective Deferrals are used in the ACP test and
continues to be met following the exclusion of those Elective
Deferrals that are used to meet the ACP test.
11.107 ELECTIVE DEFERRALS
Means any Employer Contributions made to the Plan at the
election of the Participant, in lieu of cash compensation, and
shall include contributions made pursuant to a salary reduction
agreement or other deferral mechanism. With respect to any
taxable year, a Participant's Elective Deferral is the sum of
all Employer contributions made on behalf of such Participant
pursuant to an election to defer under any qualified CODA as
described in Section 401(k) of the Code, any simplified employee
pension cash or deferred arrangement as described in Section
402(h)(1)(B), any eligible deferred compensation plan
under Section 457, any plan as described under Section
501(c)(18), and any Employer contributions made on the behalf of
a Participant for the purchase of an annuity contract under
Section 403(b) pursuant to a salary reduction agreement.
Elective Deferrals shall not include any deferrals properly
distributed as excess annual additions.
No Participant shall be permitted to have Elective Deferrals
made under this Plan, or any other qualified plan maintained by
the Employer, during any taxable year, in excess of the dollar
limitation contained in Section 402(g) of the Code in effect at
the beginning of such taxable years.
Elective Deferrals may not be taken into account for purposes
of satisfying the minimum allocation requirement applicable to
Top-Heavy Plans described in Section 3.01(E).
11.108 ELIGIBLE PARTICIPANT
Means any Employee who is eligible to make a Nondeductible
Employee Contribution or an Elective Deferral (if the Employer
takes such contributions into account in the calculation of the
Contribution Percentage), or to receive a Matching Contribution
(including Forfeitures thereof) or a Qualified Matching
Contribution.
If a Nondeductible Employee Contribution is required as a
condition of participation in the Plan, any Employee who would
be a Participant in the Plan if such Employee made such a
contribution shall be treated as an Eligible Participant on
behalf of whom no Nondeductible Employee Contributions are made.
11.109 EXCESS AGGREGATE CONTRIBUTIONS
Means, with respect to any Plan Year, the excess of
A. The aggregate Contribution Percentage Amounts taken into
account in computing the numerator of the Contribution
Percentage actually made on behalf of Highly Compensated
Employees for such Plan Year, over
B. The maximum Contribution Percentage Amounts permitted by the
ACP test (determined by reducing contributions made on
behalf of Highly Compensated Employees in order of their
Contribution Percentages beginning with the highest of such
percentages).
Such determination shall be made after first determining
Excess Elective Deferrals pursuant to Section 11.112 and then
determining Excess Contributions pursuant to Section 11.111.
11.110 EXCESS CONTRIBUTIONS
Means, with respect to any Plan Year, the excess of:
A. The aggregate amount of Employer Contributions actually
taken into account in computing the ADP of Highly
Compensated Employees for such Plan Year, over
B. The maximum amount of such contributions permitted by
the ADP test (determined by reducing contributions made
on behalf of Highly Compensated Employees in order of the
ADPs, beginning with the highest of such percentages).
11.111 EXCESS ELECTIVE DEFERRALS
Means those Elective Deferrals that are includible in a
Participant's gross income under Section 402(g) of the Code to
the extent such Participant's Elective Deferrals for a taxable
year exceed the dollar limitation under such Code section.
Excess Elective Deferrals shall be treated as annual additions
under the Plan, unless such amounts are distributed no later
than the first April 15 following the close of the
Participant's taxable year.
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32
11.112 MATCHING CONTRIBUTION
Means an Employer Contribution made to this or any other
defined contribution plan on behalf of a Participant on account
of an Elective Deferral or a Nondeductible Employee Contribution
made by such Participant under a plan maintained by the
Employer.
Matching Contributions may not be taken into account for
purposes of satisfying the minimum allocation requirement
applicable to Top-Heavy Plans described in Section 3.01(E).
11.113 QUALIFIED NONELECTIVE CONTRIBUTIONS
Means contributions (other than Matching Contributions or
Qualified Matching Contributions) made by the Employer and
allocated to Participants' Individual Accounts that the
Participants may not elect to receive in cash until distributed
from the Plan; that are nonforfeitable when made; and that are
distributable only in accordance with the distribution
provisions that are applicable to Elective Deferrals and
Qualified Matching Contributions.
Qualified Nonelective Contribution may be taken into account
for purposes of satisfying the minimum allocation requirement
applicable to Top-Heavy Plans described in Section 3.01(E).
11.114 QUALIFIED MATCHING CONTRIBUTIONS
Means Matching Contributions which are subject to the
distribution and nonforfeitability requirements under Section
401(k) of the Code when made.
11.115 QUALIFYING CONTRIBUTING PARTICIPANT
Means a Contributing Participant who satisfies the requirements
described in Section 11.302 to be entitled to receive a Matching
Contribution (and Forfeitures, if applicable) for a Plan Year.
11.200 CONTRIBUTING PARTICIPANT
11.201 REQUIREMENTS TO ENROLL AS A CONTRIBUTING PARTICIPANT
A. Each Employee who satisfies the eligibility requirements
specified in the Adoption Agreement may enroll as a
Contributing Participant as of any subsequent Entry Date
(or earlier if required by Section 2.03) specified in the
Adoption Agreement for this purpose. A Participant who wishes
to enroll as a Contributing Participant must complete, sign
and file a salary reduction agreement (or agreement to make
Nondeductible Employee Contributions) with the Plan
Administrator.
B. Notwithstanding the times set forth in Section 11.201(A) as
of which a Participant may enroll as a Contributing
Participant, the Plan Administrator shall have the authority
to designate, in a nondiscriminatory manner, additional
enrollment times during the 12 month period beginning on the
Effective Date (or the date that Elective Deferrals may
commence, if later) in order that an orderly first enrollment
might be completed. In addition, if the Employer has
indicated in the Adoption Agreement that Elective Deferrals
may be based on bonuses, then Participants shall be afforded
a reasonable period of time prior to the issuance of such
bonuses to elect to defer them into the Plan.
11.202 CHANGING ELECTIVE DEFERRAL AMOUNTS
A Contributing Participant may modify his or her salary
reduction agreement (or agreement to make Nondeductible Employee
Contributions) to increase or decrease (within the limits placed
on Elective Deferrals (or Nondeductible Employee Contributions)
in the Adoption Agreement) the amount of his or her Compensation
deferred into the Plan. Such modification may only be made as of
the dates specified in the Adoption Agreement for this purpose,
or as of any other more frequent date(s)if the Plan
Administrator permits in a uniform and nondiscriminatory manner.
A Contributing Participant who desires to make such a
modification shall complete, sign and file a new salary
reduction agreement (or agreement to make Nondeductible Employee
Contribution) with the Plan Administrator. The Plan
Administrator may prescribe such uniform and nondiscriminatory
rules it deems appropriate to carry out the terms of this
Section.
11.203 CEASING ELECTIVE DEFERRALS
A Participant may cease Elective Deferrals (or Nondeductible
Employee Contributions) and thus withdraw as a Contributing
Participant as of the dates specified in the Adoption Agreement
for this purpose (or as of any other date if the Plan
Administrator so permits in a uniform and nondiscriminatory
manner by revoking the authorization to the Employer to make
Elective Deferrals (or Nondeductible Employee Contributions) on
his or her behalf. A Participant who desires to withdraw as a
Contributing Participant shall give written notice of withdrawal
to the Plan Administrator at least thirty days (or such lesser
period of days as the Plan Administrator shall permit in a
uniform and nondiscriminatory manner) before the effective date
of withdrawal. A Participant shall cease to be a Contributing
Participant upon his or her Termination of Employment, or an
account of termination of the Plan.
11.204 RETURN AS A CONTRIBUTING PARTICIPANT AFTER CEASING ELECTIVE
DEFERRALS
A Participant who has withdrawn as a Contributing Participant
under Section 11.203 (or because the Participant has taken a
hardship withdrawal pursuant to Section 11.503) may not again
become a Contributing Participant until the dates set forth in
the Adoption Agreement for this purpose, unless the Plan
Administrator, in a uniform and nondiscriminatory manner,
permits withdrawing Participants to resume their status as
Contributing Participants sooner.
11.205 CERTAIN ONE-TIME IRREVOCABLE ELECTIONS
This Section 11.205 applies where the Employer has indicated in
the Adoption Agreement that an Employee may make a one-time
irrevocable election to have the Employer make contributions to
the Plan on such Employee's behalf. In such event, an Employee
may elect, upon the Employee's first becoming eligible to
participate in the Plan, to have contributions equal to a
specified amount or percentage of the Employee's Compensation
(including no amount of Compensation) made by the Employer on
the Employee's behalf to the Plan (and to any other plan of the
Employer) for the duration of the Employee's employment with the
Employer. Any contributions made pursuant to a one-time
irrevocable election described in the Section are not treated as
made pursuant to a cash or deferred election, are not Elective
Deferrals and are not includible in an Employee's gross income.
The Plan Administrator shall establish such uniform and
nondiscriminatory procedures as it deems necessary or advisable
to administer this provision.
11.300 CONTRIBUTIONS
11.301 CONTRIBUTIONS BY EMPLOYER
The Employer shall make contributions to the Plan in accordance
with the contribution formulas specified in the Adoption
Agreement.
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33
11.302 MATCHING CONTRIBUTIONS
The Employer may elect to make Matching Contributions under the
Plan on behalf of Qualifying Contributing Participants as
provided in the Adoption Agreement. To be a Qualifying
Contributing Participant for a Plan Year, the Participant must
make Elective Deferrals (or Nondeductible Employee
Contributions, if the Employer has agreed to match such
contributions) for the Plan Year, satisfy any age and Years of
Eligibility Service requirements that are specified for Matching
Contributions in the Adoption Agreement and also satisfy any
additional conditions set forth in the Adoption Agreement for
this purpose. In a uniform and nondiscriminatory manner, the
Employer may make Matching Contributions at the same time as it
contributes Elective Deferrals or at any other time as permitted
laws and regulations.
11.303 QUALIFIED NONELECTIVE CONTRIBUTIONS
The Employer may elect to make Qualified Nonelective
Contributions under the Plan on behalf of Participants as
provided in the Adoption Agreement.
In addition, in lieu of distributing Excess Contributions as
provided in Section 11.505 of the Plan, or Excess Aggregate
Contributions as provided in Section 11.506 of the Plan, and to
the extent elected by the Employer in the Adoption Agreement,
the Employer may make Qualified Nonelective Contributions on
behalf of Participants who are not Highly Compensated Employees
that are sufficient to satisfy either the Actual Deferral
Percentage test or the Average Contribution Percentage test, or
both, pursuant to regulations under the Code.
11.304 QUALIFIED MATCHING CONTRIBUTIONS
The Employer may elect to make Qualified Matching Contributions
under the Plan on behalf of Participants as provided in the
Adoption Agreement.
11.305 NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS
Notwithstanding Section 3.02, if the Employer so allows in the
Adoption Agreement, a Participant may contribute Nondeductible
Employee Contributions to the Plan.
If the Employer has indicated in the Adoption Agreement that
Nondeductible Employee Contributions will be mandatory, then the
Employer shall establish uniform and nondiscriminatory rules and
procedures for Nondeductible Employee Contributions as it deems
necessary and advisable including, but not limited to, rules
describing in amounts or percentages of Compensation
Participants may or must contribute to the Plan.
A separate account will be maintained by the Plan Administrator
for the Nondeductible Employee Contributions for each
Participant.
A Participant may, upon a written request submitted to the Plan
Administrator, withdraw the lesser of the portion of his or her
Individual Account attributable to his or her Nondeductible
Employee Contributions or the amount he or she contributed as
Nondeductible Employee Contributions.
Nondeductible Employee Contributions and earnings thereon will
be nonforfeitable at all times. No Forfeiture will occur solely
as a result of an Employee's withdrawal of Nondeductible
Employee Contributions.
11.400 NONDISCRIMINATION TESTING
11.401 ACTUAL DEFERRAL PERCENTAGE TEST (ADP)
A. LIMITS ON HIGHLY COMPENSATED EMPLOYEES - The Actual Deferral
Percentage (hereinafter "ADP") for Participants who are
Highly Compensated Employees for each Plan Year and the ADP
for Participants who are not Highly Compensated Employees for
the same Plan Year must satisfy one of the following tests:
1. The ADP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ADP
for Participants who are not Highly Compensated Employees
for the same Plan Year multiplied by 1.25; or
2. The ADP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ADP
for Participants who are not Highly Compensated Employees
for the same Plan Year multiplied by 2.0 provided that
the ADP for Participants who are Highly Compensated
Employees does not exceed the ADP for Participants who
are not Highly Compensated Employees by more than 2
percentage points.
B. SPECIAL RULES
1. The ADP for any Participant who is a Highly Compensated
Employee for the Plan Year and who is eligible to have
Elective Deferrals (and Qualified Nonelective
Contributions or Qualified Matching Contributions, or
both, if treated as Elective Deferrals for purposes of
the ADP test) allocated to his or her Individual Accounts
under two or more arrangements described in Section
401(k) of the Code, that are maintained by the Employer,
shall be determined as if such Elective Deferrals (and,
if applicable, such Qualified Nonelective Contributions
or Qualified. Matching Contributions, or both) were made
under a single arrangement. If a Highly Compensated
Employee participates in two or more cash or deferred
arrangements that have different Plan Years, all cash or
deferred arrangements ending with or within the same
calendar year shall be treated as a single arrangement.
Notwithstanding the foregoing, certain plans shall be
treated as separate if mandatory disaggregated under
regulations under Section 401(k) of the Code.
2. In the event that this Plan satisfies the requirements
of Sections 401(k), 401(a)(4), or 410(b) of the
Code only if aggregated with one or more other plans, or
if one or more other plans satisfy the requirements of
such sections of the Code only if aggregated with this
Plan, then this Section 11.401 shall be applied by
determining the ADP of Employees as if all such plans
were a single plan. For Plan Years beginning after
December 31, 1989, plans maybe aggregated in order to
satisfy Section 401(k) of the Code only if they have the
same Plan Year.
3. For purposes of determining the ADP of a Participant who
is a 5% owner or one of the 10 most highly paid Highly
Compensated Employees, the Elective Deferrals (and
Qualified Nonelective Contributions or Qualified Matching
Contributions, or both, if treated as Elective Deferrals
for purposes of the ADP test) and Compensation of such
Participant shall include the Elective Deferrals (and, if
applicable, Qualified Nonelective Contributions and
Qualified Matching Contributions, or both) and
Compensation for the Plan Year of family members (as
defined in Section 414(q)(6)of the Code). Family
members, with respect to such Highly Compensated
Employees, shall be disregarded as separate Employees in
determining the ADP both for Participants who are not
Highly Compensated Employees and for Participants who are
Highly Compensated Employees.
4. For purposes of determining the ADP test, Elective
Deferrals, Qualified Nonelective Contributions and
Qualified Matching Contributions must be made before the
last day of the 12 month period immediately following the
Plan Year to which contributions relate.
<PAGE> 68
34
5. The Employer shall maintain records sufficient to
demonstrate satisfaction of the ADP test and the amount
of Qualified Nonelective Contributions or Qualified
Matching Contributions, or both, used in such test.
6. The determination and treatment of the ADP amounts of
any Participant shall satisfy such other requirements
as may be prescribed by the Secretary of the Treasury.
7. If the Employer elects to take Qualified Matching
Contributions into account as Elective Deferrals for
purposes of the ADP test, then (subject to such other
requirements as may be prescribed by the Secretary of the
Treasury) unless otherwise indicated in the Adoption
Agreement, only the amount of such Qualified Matching
Contributions that are needed to meet the ADP test shall
be taken into account.
8. In the event that the Plan Administrator determines that
it is not likely that the ADP test will be satisfied
for a particular Plan Year unless certain steps are taken
prior to the end of such Plan Year, the Plan
Administrator may require Contributing Participants who
are Highly Compensated Employees to reduce their Elective
Deferrals for such Plan Year in order to satisfy that
requirement. Said reduction shall also be required by the
Plan Administrator in the event that the Plan
Administrator anticipates that the Employer will not be
able to deduct all Employer Contributions from its income
for Federal income tax purposes.
11.402 LIMITS ON NONDEDUCTIBLE EMPLOYEE CONTRIBUTIONS AND MATCHING
CONTRIBUTIONS
A. LIMITS ON HIGHLY COMPENSATED EMPLOYEES - The Average
Contribution Percentage (hereinafter "ACP") for
Participants who are Highly Compensated Employees for each
Plan Year and the ACP for Participants who are not Highly
Compensated Employees for the same Plan Year must satisfy one
of the following tests:
1. The ACP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ACP
for Participants who are not Highly Compensated Employees
for the same Plan Year multiplied by 1.25; or
2. The ACP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ACP
for Participants who are not Highly Compensated Employees
for the same Plan Year multiplied by 2, provided that the
ACP for the Participants who are Highly Compensated
Employees does not exceed the ACP for Participants who
are not Highly Compensated Employees by more than 2
percentage points.
B. SPECIAL RULES
1. Multiple Use - If one or more Highly Compensated Employees
participate in both a CODA and a plan subject to the
ACP test maintained by the Employer and the sum of the
ADP and ACP of those Highly Compensated Employees subject
to either or both tests exceeds the Aggregate Limit,
then, as elected in the Adoption Agreement, the ACP or
the ADP of those Highly Compensated Employees who also
participate in a CODA will be reduced (beginning with
such Highly Compensated Employee whose ACP (or ADP, if
elected) is the highest) so that the limit is not
exceeded. The amount by which each Highly Compensated
Employee's Contribution Percentage Amounts (or ADP if
elected) is reduced shall be treated as an Excess
Aggregate Contribution (or Excess Contribution, if
elected). The ADP and ACP of the Highly Compensated
Employees are determined after any corrections required
to meet the ADP and ACP tests. Multiple use does not
occur if the ADP and ACP of the Highly Compensated
Employees does not exceed 1.25 multiplied by the ADP and
ACP of the Participants who are not Highly Compensated
Employees.
2. For purposes of this Section 11.402, the Contribution
Percentage for any Participant who is a Highly
compensated Employee and who is eligible to have
Contribution Percentage Amounts allocated to his or her
Individual Account under two or more plans described in
Section 401(a) of the Code, or arrangements described in
Section 401(k) of the Code that are maintained by the
Employer, shall be determined as if the total of such
Contribution Percentage Amounts was made under each plan.
If a Highly Compensated Employee participates in two or
more cash or deferred arrangements that have different
plan years, all cash or deferred arrangements ending with
or within the same calendar year shall be treated as a
single arrangement. Notwithstanding the foregoing,
certain plans shall be treated as separate if mandatorily
disaggregated under regulations under Section 401(m) of
the Code.
3. In the event that this Plan satisfies the requirements of
Sections 401(m), 401(a)(4) or 410(b) of the Code only
if aggregated with one or more other plans, or if one or
more other plans satisfy the requirements of such
Sections of the Code only if aggregated with this Plan,
then this Section shall be applied by determining the
Contribution Percentage of Employees as if all such plans
were a single plan. For Plan Years beginning after
December 31, 1989, plans maybe aggregated in order to
satisfy Section 401(m) of the Code only if they have the
same Plan Year.
4. For purposes of determining the Contribution Percentage
of a Participant who is a 5% owner or one of the 10
most highly paid Highly Compensated Employees, the
Contribution Percentage Amounts and Compensation of such
Participant shall include the Contribution Percentage
Amounts and Compensation for the Plan Year of family
members, (as defined in Section 414(q)(6) of the Code).
Family members, with respect to Highly Compensated
Employees, shall be disregarded as separate Employees in
determining the Contribution Percentage both for
Participants who are not Highly Compensated Employees and
for Participants who are Highly Compensated Employees.
5. For purposes of determining the Contribution Percentage
test, Nondeductible Employee Contributions are
considered to have been made in the Plan Year in which
contributed to the Fund. Matching Contributions and
Qualified Nonelective Contributions will be considered
made for a Plan Year if made no later than the end of the
12 month period beginning on the day after the close of
the Plan Year.
6. The Employer shall maintain records sufficient to
demonstrate satisfaction of the ACP test and the amount
of Qualified Nonelective Contributions or Qualified
Matching Contributions, or both, used in such test.
7. The determination and treatment of the Contribution
Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
8. If the Employer elects to take Qualified Nonelective
Contributions into account as Contribution Percentage
Amounts for purposes of the ACP test, then (subject to
such other requirements as may be prescribed by the
Secretary of the Treasury) unless otherwise indicated in
the Adoption Agreement, only the amount of such Qualified
Nonelective Contributions that are needed to meet the ACP
test shall be taken into account.
9. If the Employer elects to take Elective Deferrals into
account as Contribution Percentage Amounts for purposes
of the ACP test, then (subject to such other requirements
as may be prescribed by the Secretary of the Treasury)
unless otherwise indicated in the Adoption Agreement,
only the amount of such Elective Deferrals that needed
to meet the ACP test shall be taken into account.
<PAGE> 69
35
11.500 DISTRIBUTION PROVISIONS
11.501 GENERAL RULE
Distributions from the Plan are subject to the provisions of
Section 6 and the provisions of this Section 11. In the event
of a conflict between the provisions of Section 6 and Section
11, the provisions of Section 11 shall control.
11.502 DISTRIBUTION REQUIREMENTS
Elective Deferrals, Qualified Nonelective Contributions, and
Qualified Matching Contributions, and income allocable to each
are not distributable to a Participant or his or her Beneficiary
or Beneficiaries, in accordance with such Participant's or
Beneficiary or Beneficiaries' election, earlier than upon
separation from service, death or disability.
Such amounts may also be distributed upon:
A. Termination of the Plan without the establishment of another
defined contribution plan, other than an employee stock
ownership plan (as defined in Section 4975(e) or Section 409
of the Code) or a simplified employee pension plan as defined
in Section 408(k).
B. The disposition by a corporation to an unrelated corporation
of substantially all of the assets (within the meaning
of Section 409(d)(2) of the Code used in a trade or business
of such corporation if such corporation continues to maintain
this Plan after the disposition, but only with respect to
Employees who continue employment with the corporation
acquiring such assets.
C. The disposition by a corporation to an unrelated entity of
such corporation's interest in a subsidiary (within the
meaning of Section 409(d)(3) of the Code) if such corporation
continues to maintain this Plan, but only with respect to
Employees who continue employment with such subsidiary.
D. The attainment of age 59 1/2 in the case of a profit sharing
plan.
E. If the Employer has so elected in the Adoption Agreement,
the hardship of the Participant as described in Section
11.503.
All distributions that may be made pursuant to one or more of
the foregoing distributable events are subject to the spousal
and Participant consent requirements (if applicable)
contained in Section 401(a)(11) and 417 of the Code. In
addition, distributions after March 31, 1988, that are
triggered by any of the first three events enumerated above
must be made in a lump sum.
11.503 HARDSHIP DISTRIBUTION
A. GENERAL - If the Employer has so elected in the Adoption
Agreement, distribution of Elective Deferrals (and any
earnings credited to a Participant's account as of the end of
the last Plan Year, ending before July 1, 1989) may be made
to a Participant in the event of hardship. For the purposes
of this Section, hardship is defined as an immediate and
heavy financial need of the Employee where such Employee
lacks other available resources. Hardship distributions are
subject to the spousal consent requirements contained in
Sections 401(a)(11) and 417 of the Code.
B. SPECIAL RULES
1. The following are the only financial needs considered
immediate and heavy: expenses incurred or necessary for
medical care, described Section 213(d) of the Code, of
the Employee, the Employee's spouse or dependent is; the
purchase (excluding mortgage payments) of a principal
residence for the Employee; payment of tuition and
related educational fees for the next 12 months of
post-secondary education for the Employee, the Employee's
spouse, children or dependents; or the need to prevent
the eviction of the Employee from, or a foreclosure on
the mortgage of, the Employee's principal residence.
2. A disposition will be considered as necessary to satisfy
an immediate and heavy financial need of the Employee
only if:
a. The Employee has obtained all distributions, other
than hardship distributions, and all nontaxable
loans under all plans maintained by the Employer;
b. All plans maintained by the Employer provide that
the Employee's Elective Deferrals (and
Nondeductible Employee Contributions) will be
suspended for 12 months after the receipt of the
hardship distribution;
c. The distribution is not in excess of the amount of
an immediate and heavy financial need
(including amounts necessary to pay any Federal,
state or local income taxes or penalties reasonably
anticipated to result from the distribution); and
d. All plans maintained by the Employer provide that
the Employee may not make Elective Deferrals
for the Employee's taxable year immediately
following the taxable year of the hardship
distribution in excess of the applicable limit under
Section 402(g) of the Code for such taxable year
less the amount of such Employee's Elective
Deferrals for the taxable year of the hardship
distribution.
11.504 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS
A. GENERAL RULE - A Participant may assign to this Plan any
Excess Elective Deferrals made during a taxable
year of the Participant by notifying the Plan Administrator
on or before the date specified in the Adoption Agreement of
the amount of the Excess Elective Deferrals to be assigned to
the Plan. A Participant is deemed to notify the Plan
Administrator of any Excess Elective Deferrals that arise by
taking into account only those Elective Deferrals made to
this Plan and any other plans of the Employer.
Notwithstanding any other provision of the Plan, Excess
Elective Deferrals, plus any income and minus any loss
allocable thereto, shall be distributed no later than April
15 to any Participant to whose Individual Account Excess
Elective Deferrals were assigned for the preceding year and
who claims Excess Elective Deferrals for such taxable year.
B. DETERMINATION OF INCOME OR LOSS - Excess Elective Deferrals
shall be adjusted for any income or loss up to the date
of distribution. The income of loss allocable to Excess
Elective Deferrals is the sum of: (1) income or loss
allocable to the Participant's Elective Deferral account for
the taxable year multiplied by a fraction, the numerator of
which is such Participant's Elective Deferrals for the year
and the denominator is the Participant's Individual Account
balance attributable to Elective Deferrals without regard to
any income or loss occurring during such taxable year; and
(2) 10% of the amount determined under (1) multiplied by the
number of whole calendar months between the end of the
Participant's taxable year and the date of distribution,
counting the month of distribution if distribution occurs
after the 15th of such month. Notwithstanding the preceding
sentence, the Plan Administrator may compute the income or
loss allocable to
<PAGE> 70
36
Excess Elective Deferrals in the manner described in
Section 4 (i.e., the usual manner used by the
Plan for allocating income or loss to Participants'
Individual Accounts), provided such method is used
consistently for all Participants and for all corrective
distributions under the Plan for the Plan Year.
11.505 DISTRIBUTION OF EXCESS CONTRIBUTIONS
A. GENERAL RULE - Notwithstanding any other provision of this
Plan, Excess Contributions, plus any income and minus
any loss allocable thereto, shall be distributed no later
than the last day of each Plan Year to Participants to whose
Individual Accounts such Excess Contributions were allocated
for the preceding Plan Year. If such excess amounts are
distributed more than 2 1/2 months after the last day of the
Plan Year in which such excess amounts arose, a 10% excise
tax will be imposed on the Employer maintaining the Plan with
respect to such amounts. Such distributions shall be made to
Highly Compensated Employees on the basis of the respective
portions of the Excess Contributions attributable to each of
such Employees. Excess Contributions of Participants who are
subject to the family member aggregation rules shall be
allocated among the family members in proportion to the
Elective Deferrals (and amounts treated as Elective
Deferrals) of each family member that is combined to
determine the combined ADP.
Excess Contributions (including the amounts recharacterized)
shall be treated as annual additions under the Plan.
B. DETERMINATION OF INCOME OR LOSS - Excess Contributions shall
be adjusted for any income or loss up to the date of
distribution. The income or loss allocable to Excess
Contributions is the sum of: (1) income or loss allocable to
Participant's Elective Deferral account (and if applicable,
the Qualified Nonelective Contribution account or the
Qualified Matching Contributions account or both, for the
Plan Year multiplied by a fraction, the numerator of which is
such Participant's Excess Contributions for the year and the
denominator is the Participant's Individual Account balance
attributable to Elective Deferrals (and Qualified Nonelective
Contributions or Qualified Matching Contributions, or both,
if any of such contributions are included in the ADP test)
without regard to any income or loss occurring during such
Plan Year, and (2) 10% of the amount determined under (1)
multiplied by the number of whole calendar months between the
end of the Plan Year and the date of distribution, counting
the month of distribution if distribution occurs after the
15th of such month. Notwithstanding the preceding sentence,
the Plan Administrator may compute the income or loss
allocable to Excess Contributions in the manner described in
Section 4 (i.e., the usual manner used by the Plan for
allocating income or loss to Participants Individual
Accounts), provided such method is used consistently for all
Participants and for all corrective distributions under the
Plan for the Plan Year.
C. ACCOUNTING FOR EXCESS CONTRIBUTIONS - Excess Contributions
shall be distributed from the Participant's Elective
Deferral account and Qualified Matching Contribution account
(if applicable) in proportion to the Participant's Elective
Deferrals and Qualified Matching Contributions (to the extent
used in the ADP test)for the Plan Year. Excess Contributions
shall be distributed from the Participant's Qualified
Nonelective Contribution account only to the extent that such
Excess Contributions exceed the balance in the Participant's
Elective Deferral account and Qualified Matching Contribution
account.
11.506 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS
A. GENERAL RULE - Notwithstanding any other provision of this
Plan, Excess Aggregate Contributions, plus any income
and minus any loss Allocable thereto, shall be forfeited, if
forfeitable, or if not forfeitable, distributed no later than
the last day of each Plan Year to Participants to whose
accounts such Excess Aggregate Contributions were allocated
for the preceding Plan Year. Excess Aggregate Contributors
of Participants who are subject to the family member
aggregation rules shall be allocated among the family members
in proportion to the Employee and Matching Contributions (or
amounts treated as Matching Contributions) of each family
member that is combined to determine the combined ACP. If
such Excess Aggregate Contributions are distributed more than
2 1/2 months after the last day of the Plan Year in which
such excess amounts arose, a 10% excise tax will be imposed
on the Employer maintaining the Plan with respect to those
amounts.
Excess Aggregate Contributions shall be treated as annual
additions under the Plan.
B. DETERMINATION OF INCOME OR LOSS - Excess Aggregate
Contributions shall be adjusted for any income or loss
up to the date of distribution. The income or loss allocable
to Excess Aggregate Contributions is the sum of: (1) income
or loss allocable to the Participant's Nondeductible Employee
Contribution account, Matching Contribution account (if any,
and if all amounts therein are not used in the ADP test) and,
if applicable, Qualified Nonelective Contribution account
and Elective Deferral account for the Plan Year multiplied by
a fraction, the numerator of which is such Participant's
Excess Aggregate Contributions for the year and the
denominator is the Participant's Individual Account
balance(s) attributable to Contribution Percentage Amounts
without regard to any income or loss occurring during such
Plan Year; and (2) 10% of the amount determined under (1)
multiplied by the number of whole calendar months between the
end of the Plan Year and the date of distribution, counting
the month of distribution if distribution occurs after the
15th of such month. Notwithstanding the preceding sentence,
the Plan Administrator may compute the income or loss
allocable to Excess Aggregate Contributions in the manner
described in Section 4 (i.e., the usual manner used by the
Plan for allocating income or loss to Participants'
Individual Accounts), provided such method is used
consistently for all Participants and for all corrective
distributions under the Plan for the Plan Year.
C. FORFEITURES OF EXCESS AGGREGATE CONTRIBUTIONS - Forfeitures
of Excess Aggregate Contributions may either be
reallocated to the accounts of Contributing Participants who
are not Highly Compensated Employees or applied to reduce
Employer Contributions, as elected by the Employer in the
Adoption Agreement.
D. ACCOUNTING FOR EXCESS AGGREGATE CONTRIBUTIONS - Excess
Aggregate Contributions shall be forfeited, if
forfeitable or distributed on a pro rata basis from the
Participant's Nondeductible Employee Contribution account,
Matching Contribution account, and Qualified Matching
Contribution account (and, if applicable, the Participant's
Qualified Nonelective Contribution account or Elective
Deferral account, or both).
11.507 RECHARACTERIZATION
A Participant may treat his or her Excess Contributions
as an amount distributed to the Participant and then contributed
by the Participant to the Plan. Recharacterized amounts will
remain nonforfeitable and subject to the same distribution
requirements as Elective Deferrals. Amounts may not be
recharacterized by a Highly Compensated Employee to the extent
that such amount in combination with other Nondeductible
Employee Contributions made by that Employee would exceed any
stated limit under the Plan on Nondeductible Employee
Contributions.
Recharacterization must occur no later than two and one-half
months after the last day of the Plan Year in which such Excess
Contributions arose and is deemed to occur no earlier than the
date the last Highly Compensated Employee is informed in writing
of the amount recharacterized and the consequences thereof.
Recharacterized amounts will be taxable to the Participant for
the Participant's tax year in which the Participant would have
received them in cash.
<PAGE> 71
37
11.508 DISTRIBUTION OF ELECTIVE DEFERRALS IF EXCESS ANNUAL ADDITIONS
Notwithstanding any other provision of the Plan, a
Participant's Elective Deferrals shall be distributed to him or
her to the extent that the distribution will reduce an excess
annual addition (as that term is described in Section 3.05 of
the Plan).
11.600 VESTING
11.601 100% VESTING ON CERTAIN CONTRIBUTIONS
The Participant's accrued benefit derived from Elective
Deferrals, Qualified Nonelective Contributions, Nondeductible
Employee Contributions, and Qualified Matching Contributions is
nonforfeitable. Separate accounts for Elective Deferrals,
Qualified Nonelective Contributions, Nondeductible Employee
Contributions, Matching Contributions, and Qualified Matching
Contributions will be maintained for each Participant. Each
account will be credited with the applicable contributions and
earnings thereon.
11.602 FORFEITURES AND VESTING OF MATCHING CONTRIBUTIONS
Matching Contributions shall be Vested in accordance with the
vesting schedule for Matching Contributions in the Adoption
Agreement. In any event, Matching Contributions shall be fully
Vested at Normal Retirement Age, upon the complete or partial
termination of the profit sharing plan, or upon the complete
discontinuance of Employer Contributions. Notwithstanding any
other provisions of the Plan, Matching Contributions or
Qualified Matching Contributions must be forfeited if the
contributions to which they relate are Excess Elective
Deferrals, Excess Contributions, Excess Aggregate Contributions
or excess annual additions which are distributed pursuant to
Section 11.508. Such Forfeitures shall be allocated in
accordance with Section 3.01 (C).
When a Participant incurs a Termination of Employment, whether
a Forfeiture arises with respect to Matching Contributions shall
be determined in accordance with Section 6.01 (D).
<PAGE> 1
J.C. BRADFORD
EXHIBIT 16
YIELD COMPUTATION SCHEDULE
BRADFORD MONEY FUND
<TABLE>
<CAPTION>
7 Day Yield Calculation 30 Day Yield Calculation
Base Period 7 Days 30 Day Yield
beginning Account Balance - 1 share at $1.00 1.000000000 1.000000000
----------------------- ------------------------
<S> <C> <C>
Dividend Declaration
December 2 0.000127939
December 3 0.000128293
December 4 0.000128288
December 5 0.000127523
December 6 0.000127573
December 7 0.000127573
December 8 0.000127573
December 9 0.000127972
December 10 0.000128122
December 11 0.000127912
December 12 0.000127852
December 13 0.000128007
December 14 0.000128007
December 15 0.000128007
December 16 0.000127601
December 17 0.000128331
December 18 0.000128120
December 19 0.000128127
December 20 0.000127694
December 21 0.000127694
December 22 0.000127694
December 23 0.000127582
December 24 0.000127654
December 25 0.000127654 0.000127654
December 26 0.000127713 0.000127713
December 27 0.000128021 0.000128021
December 28 0.000128021 0.000128021
December 29 0.000128021 0.000128021
December 30 0.000127624 0.000127624
December 31 0.000127256 0.000127256
less: Deductions from shareholders accounts 0.000000000 0.000000000
----------- -----------
period return 0.000894310 0.003835448
----------- -----------
ending Account Balance 1.000894310 1.003835448
less: Beginning Account Balance 1.000000000 1.000000000
----------- -----------
(Difference / Beginning Account Balance) 0.000894310 0.003835448
Yield Quotation 4.66% 4.67%
(Base Period * 365 / Base Period)
Effective Yield Quotation 4.77% 4.77%
[(Base Period Return - 1) [ to the power of] 365 / Base Period] - 1
</TABLE>
The quotations were computed based on the seven and thiry days ending December
31, 1996.
<PAGE> 1
EXHIBIT (19)(a)
<PAGE> 2
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the references to our
firm under the caption "MISCELLANEOUS - Counsel" included in or made a part of
the Registration Statement on Form N-1A, File No. 33-25137, filed under the
Securities Act of 1933, as amended, of The Bradford Funds, Inc., The Bradford
Money Fund.
BAKER & HOSTETLER LLP
Columbus, Ohio
April 28, 1997
<PAGE> 1
[ARTICLE] 6
[CIK] 0000841899
[NAME] THE BRADFORD FUNDS, INC.
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] DEC-31-1996
[INVESTMENTS-AT-COST] 1,228,867,203
[INVESTMENTS-AT-VALUE] 0
[RECEIVABLES] 1,294,613
[ASSETS-OTHER] 6,465,465
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 1,236,627,281
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 2,305,866
[TOTAL-LIABILITIES] 2,305,866
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1,234,335,754
[SHARES-COMMON-STOCK] 1,234,335,754
[SHARES-COMMON-PRIOR] 1,136,795,850
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (14,339)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 1,234,321,415
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 63,355,525
[OTHER-INCOME] 0
[EXPENSES-NET] 8,932,854
[NET-INVESTMENT-INCOME] 54,422,671
[REALIZED-GAINS-CURRENT] (139)
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 54,422,532
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (54,422,671)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 5,268,446,578
[NUMBER-OF-SHARES-REDEEMED] (5,095,436,397)
[SHARES-REINVESTED] 51,941,658
[NET-CHANGE-IN-ASSETS] 224,951,700
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (14,339)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 4,309,221
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 9,013,958
[AVERAGE-NET-ASSETS] 1,163,046,707
[PER-SHARE-NAV-BEGIN] 1.00
[PER-SHARE-NII] .047
[PER-SHARE-GAIN-APPREC] 0
[PER-SHARE-DIVIDEND] .047
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 1.00
[EXPENSE-RATIO] .77
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
