File No. 33-63498
As filed on ^ February 26, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No.
Post-Effective Amendment No. ^ 6 X
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. ^ 7 X
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INVESCO INTERNATIONAL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
7800 E. Union Avenue, Denver, Colorado 80237
(Address of Principal Executive Offices)
P.O. Box 173706, Denver, Colorado 80217-3706
(Mailing Address)
Registrant's Telephone Number, including Area Code: (303) 930-6300
Glen A. Payne, Esq.
7800 E. Union Avenue
Denver, Colorado 80237
(Name and Address of Agent for Service)
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Copies to:
Ronald M. Feiman, Esq.
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 W. 47th St.
New York, New York 10036
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Approximate Date of Proposed Public Offering: As soon as practicable
after this post-effective amendment becomes effective.
It is proposed that this filing will become effective (check
appropriate box)
immediately upon filing pursuant to paragraph (b)
_X_ on March 1, ^ 1998, pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(1)
on February 25, 1998, pursuant to paragraph (a)(1)
^ 75 days after filing pursuant to paragraph (a)(2) on
_________________, pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has previously elected to register an indefinite number of shares of
its common stock pursuant to Rule 24f-2 under the Investment Company Act.
Registrant's Rule 24f-2 Notice for the fiscal year ended October 31, ^ 1997, was
filed on or about December ^ 19, 1997.
Page 1 of 520
Exhibit index is located at page 160
<PAGE>
^
INVESCO INTERNATIONAL FUNDS, INC.
-----------------------------------
CROSS-REFERENCE SHEET
Form N-1A
Item Caption
Part A Prospectus
1....................... Cover Page
2....................... Annual Fund Expenses
3....................... Not Applicable
4....................... Investment Objective and
Policies; The Fund(s) and ^
Its/Their Management
5....................... The Fund(s) and ^ Its/Their
Management; Additional
Information
5A...................... Not Applicable
6....................... Services Provided by the Fund(s);
Taxes, Dividends and Other
Distributions; Additional
Information
7....................... How Shares Can Be Purchased;
Services Provided by the Fund(s)
8....................... Services Provided by the Fund(s);
How to Redeem Shares
9....................... Not Applicable
Part B Statement of Additional
Information
10....................... Cover Page
11....................... Table of Contents
<PAGE>
Form N-1A
Item Caption
12....................... The Funds and Their Management
13....................... Investment Practices; Investment
Policies and Restrictions
14....................... The Funds and Their Management
15....................... The Funds and Their Management
16....................... The Funds and Their Management
17....................... Investment Practices; Investment
Policies and Restrictions
18....................... Additional Information
19....................... How Shares Can Be Purchased; How
Shares Are Valued; Services
Provided by the Funds;
Tax-Deferred Retirement Plans;
How to Redeem Shares
20....................... Dividends, Other Distributions
and Taxes
21....................... How Shares Can Be Purchased
22....................... Calculation of Yield
23....................... Additional Information
Part C Other Information
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
<PAGE>
PROSPECTUS
March 1, ^ 1998
INVESCO EUROPEAN FUND
INVESCO PACIFIC BASIN FUND
INVESCO EUROPEAN FUND seeks to achieve capital appreciation by
investing principally in equity securities of companies domiciled in specified
European countries.
INVESCO PACIFIC BASIN FUND seeks to achieve capital appreciation by
investing principally in equity securities of companies domiciled in specified
Far Eastern or Western Pacific countries.
Each Fund is a series of INVESCO International Funds, Inc. (the
"Company"), an open-end management investment company consisting of ^ four
separate funds, each of which represents a separate portfolio of investments.
This ^ Prospectus relates to shares of INVESCO European Fund and INVESCO Pacific
Basin Fund (also sometimes jointly referred to as the "Funds"). ^ Separate
Prospectuses are available upon request from INVESCO ^ Distributors, Inc.
("IDI") for the Company's ^ other funds, INVESCO International Growth Fund and
INVESCO Emerging Markets Fund. Investors may purchase shares of any or all of
the Funds. Additional funds may be offered in the future.
Both Funds' investments may consist in part of securities that may
be deemed to be speculative. ^ See "Investment Objectives and ^
Policies."
This ^ Prospectus provides you with the basic information you should
know before investing in either of the Funds. You should read it and keep it for
future reference. A Statement of Additional Information containing further
information about the Funds, dated March 1, ^ 1998, has been filed with the
Securities and Exchange Commission and is incorporated by reference into this ^
Prospectus. To obtain a free copy, write to INVESCO ^ Distributors, Inc., P. O.
Box 173706, Denver, Colorado 80217-3706; ^ call 1-800-525-8085; or ^ visit our
web site at http://www.invesco.com.
<PAGE>
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. SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER FINANCIAL INSTITUTION. THE SHARES
OF THE FUNDS ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. ^
TABLE OF CONTENTS
Page
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ANNUAL FUND EXPENSES...........................................................6
FINANCIAL HIGHLIGHTS...........................................................8
PERFORMANCE DATA..............................................................12
INVESTMENT OBJECTIVES AND POLICIES............................................12
RISK FACTORS..................................................................16
THE FUNDS AND THEIR MANAGEMENT................................................18
HOW SHARES CAN BE PURCHASED...................................................21
SERVICES PROVIDED BY THE FUNDS................................................24
HOW TO REDEEM SHARES..........................................................27
TAXES, DIVIDENDS AND ^ OTHER DISTRIBUTIONS....................................29
ADDITIONAL INFORMATION........................................................31
<PAGE>
ANNUAL FUND EXPENSES
The Funds whose shares are offered through this ^ Prospectus are
INVESCO European Fund and INVESCO Pacific Basin Fund. These Funds are 100%
no-load; there are no fees to purchase, exchange or redeem shares^. Effective
November 1 and December 1, 1997, respectively, the European Fund and the Pacific
Basin Fund were authorized to pay a Rule 12b-1 distribution fee of up to one
quarter of one percent of each Fund's average net assets each year. The 12b-1
fee is assessed against all shares but only with respect to new sales of shares,
exchanges into the Funds and reinvestments of dividends and capital gain
distibutions occurring on or after November 1, 1997 ("New Assets"). (See "How
Shares Can Be Purchased - Distribution Expenses.") Lower expenses benefit Fund
shareholders by increasing the Fund's total return.
Shareholder Transaction Expenses European Pacific Basin
Sales load "charge" on purchases None None
Sales load "charge" on reinvested
dividends None None
Redemption fees None None
Exchange fees None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee ^ 0.75% 0.75%
12b-1 Fees ^(1) 0.25% 0.25%
Other Expenses ^ 0.50% 0.97%
Transfer Agency ^ Fee(2) 0.27% 0.54%
General Services, Administrative
Services, Registration,
^ Postage(3) 0.23% 0.43%
Total Fund Operating ^ Expenses(4) 1.50% 1.97%
^(1) There were no 12b-1 fees for the period ending October 31, 1997.
The 12b-1 fees for the period ending October 31, 1998 may be less than 0.25% of
the New Assets.
(2) Consists of the transfer agency fee described under "Additional
Information - Transfer and Dividend Disbursing Agent."
^(3) Includes, but is not limited to, fees and expenses of directors,
custodian bank, legal counsel and independent accountants, securities pricing
services, costs of administrative services furnished under an Administrative
Services Agreement, costs of registration of Fund shares under applicable laws,
and costs of printing and distributing reports to shareholders.
^(4) It should be noted that the Funds' actual total operating expenses
were lower than the figures shown because the Funds' custodian fees and transfer
agency fees were reduced under ^ expense offset ^ arrangements. However, as a
result of an SEC requirement for mutual funds to state their total operating
<PAGE>
expenses without crediting any such expense offset arrangement, the figures
shown above do not reflect these reductions. In comparing expenses for different
years, please note that the Ratios of Expenses to Average Net Assets shown under
"Financial Highlights" do reflect any reductions for periods prior to the fiscal
year ended October 31, ^ 1995. See "The Funds and Their Management."
Example
A shareholder would pay the following expenses on a $1,000 investment
for the periods shown, assuming ^ a 5% annual return and (2) redemption at the
end of each time period:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
INVESCO European Fund ^ $15 $48 $82 $180
INVESCO Pacific Basin Fund ^ $20 $62 $107 $231
The purpose of the foregoing table and Example is to assist investors
in understanding the various costs and expenses that an investor in ^ a Fund
will bear directly or indirectly. Such expenses are paid from the ^ Fund's
assets. (See "The Funds and Their Management.") The Funds charge no sales ^
loads, redemption ^ fees or exchange ^ fees. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES, AND ACTUAL EXPENSES MAY
BE GREATER OR LESS THAN THOSE SHOWN. The assumed 5% annual return is
hypothetical and should not be considered a representation of past or future
annual returns, which may be greater or less than the assumed amount.
As a result of the 0.25% 12b-1 fee paid by each Fund, investors who own
Fund shares for a long period of time may pay more than the economic equivalent
of the maximum front-end sales charge permitted for mutual funds by the National
Association of Securities Dealers, Inc.
<PAGE>
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding Throughout Each Period)
The following information has been audited by Price Waterhouse LLP,
independent accountants. This information should be read in conjunction with
audited financial statements and the Report of Independent Accountants thereon
appearing in the ^ Company's 1997 Annual Report to Shareholders which is
incorporated by reference into the Statement of Additional Information. Both are
available without charge by contacting INVESCO ^ Distributors, Inc. at the
address or telephone number on the cover of this ^ Prospectus.
<TABLE>
<CAPTION>
Year Ended October 31
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1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 ^
European Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $15.85 $14.09 $12.95 $12.20 $10.14 $11.14 $11.04 $10.03 ^ $9.04 $7.98
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INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.07 0.05 0.23 0.16 0.14 0.20 0.22 0.26 0.11 0.09^
Net Gains or (Losses) on
Securities (Both Realized
and Unrealized) 2.63 3.00 1.12 0.75 2.06 (1.00) 0.26 1.01 0.99 1.05^
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Total from Investment
Operations 2.70 3.05 1.35 0.91 2.20 (0.80) 0.48 1.27 1.10 1.14^
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LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.07 0.08 0.21 0.16 0.14 0.20 0.21 0.26 0.11 0.08^
Distributions from
Capital Gains 1.14 1.21 0.00 0.00 0.00 0.00 0.17 0.00 0.00 0.00^
---------------------------------------------------------------------------------------------------
Total Distributions 1.21 1.29 0.21 0.16 0.14 0.20 0.38 0.26 0.11 0.08^
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<PAGE>
Net Asset Value -
End of Period $17.34 $15.85 $14.09 $12.95 $12.20 $10.14 $11.14 $11.04 $10.03 $9.04^
====================================================================================================
TOTAL RETURN 18.07% 23.47% 10.42% 7.43% 21.78% (7.22%) 4.34% 12.70% 12.12% 14.34%^
RATIOS
Net Assets - End of Period
($000 Omitted) $324,819 $300,588 $224,200 $349,842 $270,544 $117,276 $74,497 $83,521 $10,910 $6,801^
Ratio of Expenses to Average
Net Assets 1.25%@ 1.36%@ 1.40%@ 1.20% 1.28% 1.29% 1.43% 1.29% 1.78% 1.88%^
Ratio of Net Investment
Income to Average
Net Assets 0.33% 0.37% 1.26% 1.28% 1.76% 2.23% 1.83% 3.38% 1.57% 1.08%^
Portfolio Turnover Rate 90% 91% 96% 70% 44% 87% 61% 20% 118% 75%^
Average Commission Rate
Paid^^ $0.0414 $0.0367 - - - - - - - -^
</TABLE>
@ Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold, which is required to be disclosed
for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Year Ended October 31
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1997 1996 1995 1994 1993< 1992 1991 1990 1989 1988 ^
Pacific Basin Fund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $14.11 $13.83 $17.07 $15.11 $11.02 $13.19 $11.95 $14.24 $12.24 ^ $9.68
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INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income (Loss) (0.09) (0.02) 0.06 0.04 0.04 0.07 0.11 0.05 0.02(0.02) ^
Net Gains or (Losses) on
Securities (Both Realized
and Unrealized) (3.45) 0.51 (1.45) 2.28 4.09 (2.18) 1.23 (1.97) 2.00 2.58 ^
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Total from Investment
Operations (3.54) 0.49 (1.39) 2.32 4.13 (2.11) 1.34 (1.92) 2.02 2.56 ^
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LESS DISTRIBUTIONS
Dividends from Net
Investment ^ Income+ 0.00 0.03 0.06 0.04 0.04 0.06 0.10 0.09 0.02 0.00 ^
Distributions from
Capital Gains 0.83 0.18 1.79 0.32 0.00 0.00 0.00 0.28 0.00 0.00 ^
---------------------------------------------------------------------------------------------
Total Distributions 0.83 0.21 1.85 0.36 0.04 0.06 0.10 0.37 0.02 0.00 ^
----------------------------------------------------------------------------------------------
Net Asset Value -
End of Period $9.74 $14.11 $13.83 $17.07 $15.11 $11.02 $13.19 $11.95 $14.24 $12.24^
==============================================================================================
TOTAL RETURN (26.65%) 3.55% (8.31%) 15.63% 37.51% (16.03%) 11.27% (13.47%) 16.54% 26.36%^
RATIOS
<PAGE>
Net Assets - End of Period
($000 Omitted) $63,943 $149,870 $154,374 $352,888 $299,192 $26,488 $27,683 $16,871 $23,642$28,364^
Ratio of Expenses to
Average Net Assets 1.72%@ 1.60%@ 1.52%@ 1.24% 1.22% 1.78% 1.87% 1.79% 1.62% 1.62%^
Ratio of Net Investment
Income (Loss) to
Average Net Assets (0.44%) (0.04%) 0.37% 0.28% 0.63% 0.66% 0.99% 0.36% 0.13%(0.12%)^
Portfolio Turnover Rate 86% 70% 56% 70% 30% 123% 89% 93% 86% 69%^
Average Commission Rate
Paid^ ^ $0.0093 $0.0148 - - - - - - - -^
</TABLE>
< The per share information was computed based on weighted average shares.
+ Distributions in excess of net investment income for the year ended October
31, 1997 and 1996 aggregated less than $0.01 on a per share basis.
@ Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold, which is required to be disclosed
for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
PERFORMANCE DATA
From time to time, the Funds advertise their total return performance.
These figures are based upon historical investment results and are not intended
to indicate future performance. The "total return" of a Fund refers to the
annual rate of return of an investment in the Fund. Total return is computed by
calculating the percentage change in value of an investment of $1,000, assuming
reinvestment of all income dividends and capital gain distributions, to the end
of a specified period. Periods of one year, five years and ten years or life of
the Fund are used if available. Cumulative total return reflects actual
performance over a stated period of time. Average annual total return is a
hypothetical rate of return that, if achieved annually, would have produced the
same cumulative total return if performance had been constant over the entire
period. Any ^ given report of total return performance should not be considered
as representative of future performance. The Funds charge no sales load,
redemption fee or exchange fee which would affect the total return computation.
In conjunction with performance reports and/or analyses of shareholder
service for the Funds, comparative data between the Funds' performance for a
given period and the performance of recognized indices of investment results for
the same period, and/or assessments of the quality of shareholder service, may
be provided to shareholders. Such indices include indices provided by Dow Jones
& Company, Standard & Poor's ^, Lipper Analytical Services, Inc., Lehman
Brothers, National Association of Securities Dealers Automated Quotations, Frank
Russell Company, Value Line Investment Survey, the American Stock Exchange,
Morgan Stanley Capital International, Wilshire Associates, the Financial
Times-Stock Exchange, the New York Stock Exchange, the Nikkei Stock Average and
the Deutcher Aktienindex, all of which are unmanaged market indicators. In
addition, rankings, ratings and comparisons of investment performance and/or
assessments of the quality of shareholder service appearing in publications such
as Money, Forbes, Kiplinger's Personal Finance, Morningstar and similar sources
which utilize information compiled (i) internally; (ii) by Lipper Analytical
Services, Inc.; or (iii) by other recognized analytical services, may be used in
advertising. The Lipper Analytical Services, Inc. mutual fund rankings and
comparisons, which may be used by the Funds in performance reports, will be
drawn from the "European Region Funds," in the case of INVESCO European Fund,
and "Pacific Region Funds," in the case of INVESCO Pacific Basin Fund, Lipper
mutual fund groupings, in addition to the broad-based Lipper general fund
groupings.
INVESTMENT OBJECTIVES AND POLICIES
The Company consists of ^ four separate portfolios of investments, each
represented by a different class of the Company's common stock. This ^
Prospectus relates to the INVESCO European Fund and INVESCO Pacific Basin Fund;
^ separate ^ prospectuses for the INVESCO International Growth Fund ^ and the
INVESCO Emerging Markets Fund are available.
<PAGE>
The investment objective of the INVESCO European and Pacific Basin
Funds is to seek capital appreciation. Each Fund invests primarily in the equity
securities (common stocks and securities convertible into common stocks,
including convertible debt obligations and convertible preferred stock) of
companies domiciled in a particular geographic region, which may be either
established, well-capitalized companies or newly-formed, small-cap companies.
The Funds have not established any minimum investment standards, such as an
issuer's asset level, earnings history, type of industry, dividend payment
history, etc., with respect to the Funds' investments in foreign equity
securities and, therefore, investors in the Funds should consider that
investments may consist in part of securities which may be deemed to be
speculative.
INVESCO European Fund. Under normal conditions, at least 80% of the
total assets of INVESCO European Fund are invested in the equity securities of
companies domiciled in the following European countries: England, France,
Germany, Belgium, Italy, the Netherlands, Switzerland, Denmark, Sweden, Norway,
Finland and Spain. The economies of these countries may vary widely in their
condition and may be subject to sudden changes that could have a positive or
negative impact on the Fund. The securities in which the Fund invests typically
will be listed on the principal stock exchanges in such countries but also may
be traded on regional stock exchanges or on the over-the-counter market in these
countries. There are no limitations on the percentage of the Fund's assets which
may be invested in companies domiciled in any one country.
INVESCO Pacific Basin Fund. Under normal conditions, at least 80% of
the total assets of INVESCO Pacific Basin Fund are invested in the equity
securities of companies domiciled in the following Far Eastern or Western
Pacific countries: Japan, Australia, Hong Kong, Malaysia, Singapore and the
Philippines. The economies of these countries may vary widely in their condition
and may be subject to sudden changes that could have a positive or negative
impact on the Fund. The equity securities in which the Fund invests typically
will be listed on the principal stock exchanges in such countries but also may
be traded on regional stock exchanges or on the over-the-counter market in these
countries. While it is anticipated that substantial investments will be made in
companies domiciled in Japan, there are no limitations on the percentage of the
Fund's assets which may be invested in companies domiciled in any one Far
Eastern or Western Pacific country.
The balance of each Fund's total assets may be held as cash or invested
in any securities or other instruments deemed appropriate at the time of
investment by the Funds' investment adviser and sub-adviser (collectively, "Fund
Management"), consistent with the ^ Fund's investment policies and restrictions.
These investments include debt securities issued by companies domiciled in the
<PAGE>
Funds' respective geographic sectors, and debt or equity securities issued by
companies domiciled outside the Funds' respective geographic sectors. Such debt
securities either will be investment grade (rated Baa or higher by Moody's
Investors Service, Inc. ("Moody's") or BBB or higher by Standard & Poor's ^, a
division of The McGraw-Hill Companies, Inc. ("S&P")) or, if unrated, will have
been determined by Fund Management to be of investment grade quality. The Funds
are not required to dispose of debt securities whose ratings are down-graded
below investment grade. Such equity securities may be issued by either
established, well-capitalized companies or newly-formed, small-cap companies and
may be traded on national or regional stock exchanges or in the over-the-counter
market. This portion of each Fund's assets also may be invested in short-term
debt obligations maturing no later than one year from the date of purchase,
which are determined by Fund Management to be of high quality. Investments in
high-quality, short-term debt securities will consist of U.S. government and
agency securities, domestic bank certificates of deposit, commercial paper rated
A-2 or higher by S&P or P-2 or higher by Moody's, and repurchase agreements with
banks and securities dealers. In addition, each Fund may hold cash or invest
temporarily in such short-term securities in an amount up to 100% of its total
assets as a temporary defensive measure if Fund Management determines it to be
appropriate for purposes of enhancing liquidity or preserving capital in light
of prevailing market or economic conditions. While a Fund is in a defensive
position, the opportunity to achieve capital growth will be limited and, to the
extent that this assessment of market conditions is incorrect, the Fund will be
foregoing the opportunity to benefit from capital growth resulting from
increases in the value of equity investments. There can be no assurance that ^ a
Fund will be able to achieve ^ its investment objective.
The investment objective of each Fund and its investment policies, ^
where indicated ^, are deemed to be fundamental policies and thus may not be
changed without prior approval by the holders of a majority of the outstanding
voting securities of the Fund, as defined in the Investment Company Act of 1940
(the "1940 Act"). In addition, each Fund is subject to certain investment
restrictions which are ^ identified as fundamental in the Statement of
Additional Information and which may not be altered without similar approval of
the Fund's shareholders. One of those restrictions limits each Fund's borrowing
of money to borrowings from banks for temporary or emergency purposes (but not
for investment) in an amount not to exceed 10% of net assets of the Fund.
Repurchase Agreements. Investments in short-term securities may include
repurchase agreements. The Funds may enter into repurchase agreements with
respect to debt instruments eligible for investment by the Funds^ with member
banks of the Federal Reserve System, registered broker-dealers and registered
government securities dealers, which are deemed creditworthy. A repurchase
<PAGE>
agreement, which may be considered a "loan" under the 1940 Act, is a means of
investing monies for a short period. In a repurchase agreement, a Fund acquires
a debt instrument (generally a security issued by the U.S. government or an
agency thereof, a banker's acceptance or a certificate of deposit) subject to
resale to the seller at an agreed-upon price and date (normally, the next
business day). In the event that the original seller defaults on its obligation
to repurchase the security, a Fund could incur costs or delays in seeking to
sell such security. To minimize risk, the securities underlying each repurchase
agreement will be maintained with the Funds' custodian in an amount at least
equal to the repurchase price under the agreement (including accrued interest),
and such agreements will be effected only with parties that meet certain
creditworthiness standards established by the Company's board of directors. A
Fund will not enter into a repurchase agreement maturing in more than seven days
if as a result more than 10% of its total assets would be invested in such
repurchase agreements and other illiquid securities. The Funds have not adopted
any limit on the amount of their total assets that may be invested in repurchase
agreements maturing in seven days or less.
Securities Lending. The Funds also may lend their securities to
qualified brokers, dealers, banks or other financial institutions. This practice
permits ^ a Fund to earn income which, in turn, can be invested in additional
securities to pursue the Funds' investment objectives. Loans of securities by ^
a Fund will be collateralized by cash, letters of credit, or securities issued
or guaranteed by the U.S. government or its agencies equal to at least 100% of
the current market value of the loaned securities, determined on a daily basis.
Lending securities involves certain risks, the most significant of which is the
risk that a borrower may fail to return a portfolio security. The Funds monitor
the creditworthiness of borrowers in order to minimize such risks. ^ A Fund will
not lend any security if, as a result of such loan, the aggregate value of
securities then on loan would exceed 33-1/3% of ^ the Fund's net assets (taken
at market value).
Country Funds. The Funds may invest in companies domiciled in certain
countries by purchasing common shares of closed-end investment companies
organized to invest in the securities markets of particular countries (so-called
"country funds"). They may do so, however, only where it is not possible for
non-residents to make direct investments in securities of companies in those
countries and where the investment objective of the country fund is consistent
with the Funds' objective of seeking capital appreciation. The Funds may not
purchase shares of a country fund if (a) such a purchase would cause a Fund to
own more than 3% of the total outstanding voting stock of a particular country
fund, or (b) such a purchase would cause a Fund to have more than 5% of its
total assets invested in a particular country fund or more than 10% of its total
assets invested in the securities of other investment companies. Investment in
certain country funds may involve the payment of substantial premiums above the
value of such country funds' portfolio securities. Investing in shares of such
<PAGE>
country funds presents the additional risk that the market price of the funds'
shares may fall below the funds' net asset values (i.e., that the country funds
will trade at a discount from their net asset values). The Funds do not intend
to invest in country funds which are trading at a premium unless, in the
judgment of Fund Management, the potential benefits of such investments justify
the payment of the applicable premiums. To the extent the Funds invest in
country funds, the investment return will be reduced by the operating expenses
of such funds, including fees paid to the investment managers of those funds,
resulting in duplication of advisory fees paid on any Fund assets invested in
country funds. At such time as direct investment in a country is allowed, the
Funds will invest directly in securities of companies domiciled in such country.
RISK FACTORS
Investors should consider the special factors associated with the
policies discussed below in determining the appropriateness of an investment in
either of the Funds. The Funds' policies regarding investments in foreign
securities and foreign currencies are not fundamental and may be changed by vote
of the Company's board of directors.
Foreign Securities. The Funds may invest in foreign securities and may
do so without limitation on the percentage of assets which may be so invested.
Investments in securities of foreign companies and in foreign markets involve
certain additional risks not associated with investments in domestic companies
and markets. For U.S. investors, the returns on foreign securities are
influenced not only by the returns on the foreign investments themselves but
also by currency fluctuations. That is, when the U.S. dollar generally rises
against a foreign ^ currency, returns ^ for a U.S. investor on foreign
securities denominated in that foreign currency may decrease. By contrast, in a
period when the U.S. dollar generally declines, those returns may increase.
Other aspects of international investing to consider include:
-less publicly available information than is generally
available about U.S. issuers;
-differences in accounting, auditing and financial reporting
standards;
-generally higher commission rates on foreign portfolio
transactions and longer settlement periods;
-smaller trading volumes and generally lower liquidity of foreign stock
markets, which may cause greater price volatility;
-less government regulation of stock exchanges, brokers and
listed companies abroad than in the United States; and
<PAGE>
-investments in certain countries may be subject to foreign withholding
taxes, which may reduce dividend income or capital gains payable to
shareholders.
There is also the possibility of expropriation or confiscatory
taxation; adverse changes in investment or exchange control regulations;
political instability; potential restrictions on the flow of international
capital; and the possibility of the Funds experiencing difficulties in pursuing
legal remedies and collecting judgments.
When the Funds invest in foreign securities, such securities are
usually denominated in foreign currency and the Funds may temporarily hold funds
in foreign currencies. Thus, the Funds' share values are affected by changes in
currency exchange rates. Because the Funds' assets will be invested in foreign
securities and because substantially all revenues will be received in foreign
currencies, the dollar equivalent of the Funds' net assets and distributions
would be adversely affected by a reduction in the value of the foreign currency
relative to the United States dollar. The Funds will pay dividends in dollars
and in such event will incur currency conversion costs.
Forward Foreign Currency Contracts. The Funds may enter into contracts
to purchase or sell foreign currencies at a future date ("forward contracts") as
a hedge against fluctuations in foreign exchange rates pending the settlement of
transactions in foreign securities or during the time the Funds hold foreign
securities. A forward contract is an agreement between contracting parties to
exchange an amount of currency at some future time at an agreed-upon rate.
Although the Funds have not adopted any limitations on their ability to use
forward contracts as a hedge against fluctuations in foreign exchange rates, the
Funds do not attempt to hedge all of their foreign investment positions and will
enter into forward contracts only to the extent, if any, deemed appropriate by
Fund Management. The Funds will not enter into a forward contract for a term of
more than one year or for purposes of speculation. Investors should be aware
that hedging against a decline in the value of a currency in the foregoing
manner does not eliminate fluctuations in the prices of portfolio securities or
prevent losses if the prices of such securities decline. Furthermore, such
hedging transactions preclude the opportunity for gain if the value of the
hedged currency should rise. No predictions can be made with respect to whether
the total of such transactions will result in a better or a worse position than
had the Funds not entered into any forward contracts. Forward contracts may,
from time to time, be considered illiquid, in which case they would be subject
to the Funds' limitation on investing in illiquid securities, discussed below.
For additional information regarding forward foreign currency contracts, see the
Company's Statement of Additional Information.
^
<PAGE>
Illiquid and Rule 144A Securities. The Funds are authorized to invest
in securities which are illiquid becuase they are subject to restrictions on
their resale ("restricted securities") or because, based upon their nature or
the market for such securities, they are not readily marketable. However, a Fund
will not purchase any such security if the purchase would cause the Fund to
invest more than 10% of its total assets, measures at the time of purchase, in
illiquid securities. Repurchase agreements maturing in more than seven days will
be considered as illiquid for purposes of this restriction. Investments in
illiquid securities involve certain risks to the extent that the Fund may be
unable to dispose of such a security at the time desired or at a reasonable
price. In addition, in order to resell a restricted security, the Fund might
have to bear the expense and incur the delays associated with effecting
registration.
The securities that may be purchased subject to the foregoing
restriction include restricted securities that are not registered for sale to
the general public but that can be resold to institutional investors ("Rule 144A
Securities"). The liquidity of a Fund's investments in Rule 144A Securities
could be impaired if dealers or institutional investors become uninterested in
purchasing these securities. The Company's board of directors has delegated to
Fund Management the authority to determine the liquidity of Rule 144A Securities
pursuant to guidelines approved by the board. For more information concerning
Rule 144A Securities, see the Statement of Additional Information.
Portfolio Turnover. There are no fixed limitations regarding portfolio
turnover. Although the Funds do not trade for short-term profits, securities may
be sold without regard to the time they have been held in a Fund when, in the
opinion of Fund Management, investment considerations warrant such action. As a
result, under certain market conditions, the portfolio turnover rate for each
Fund may exceed 100% and may be higher than that of other investment companies
seeking capital appreciation. Increased portfolio turnover would cause a Fund to
incur greater brokerage costs than would otherwise be the case and may result in
the acceleration of capital gains that are taxable when distributed to
shareholders. The Funds' portfolio turnover rates are set forth under "Financial
Highlights" and, along with the Company's brokerage allocation policies, are
discussed in the Statement of Additional Information.
THE FUNDS AND THEIR MANAGEMENT
The Company is a no-load mutual fund, registered with the Securities
and Exchange Commission as an open-end, diversified management investment
company. It was incorporated on April 2, 1993, under the laws of Maryland. On
July 1, 1993, the Company assumed all of the assets and liabilities of the
Funds' predecessor portfolios, the European Portfolio and Pacific Basin
Portfolio of Financial Strategic Portfolios, Inc., which was incorporated under
the laws of Maryland on August 10, 1983. All financial and other information
about the Funds for periods prior to July 1, 1993, relates to such former
portfolios. On July 1, 1993, the Company also assumed, through its INVESCO
International Growth Fund, all of the assets and liabilities of that fund's
predecessor, the Financial International Growth Fund of Financial Series Trust,
a Massachusetts business trust organized on July 15, 1987. The overall
supervision of each Fund is the responsibility of the Company's board of
directors.
<PAGE>
^ INVESCO Funds Group, Inc. ^("IFG"), 7800 E. Union Avenue, Denver,
Colorado, serves as the Company's investment adviser pursuant to an investment
advisory agreement with the Company. Under this agreement, ^ IFG is primarily
responsible for providing the Funds with various administrative services and
supervising the Funds' daily business affairs. These services are subject to
review by the Company's board of directors.
^
Pursuant to an agreement with IFG, INVESCO^ Asset Management Limited
("IAML") serves as the sub-adviser to INVESCO European Fund and INVESCO Pacific
Basin Fund. In that capacity, IAML has the primary responsibility, under the
supervision of ^ IFG, for providing portfolio management services to the Funds.
^ IAML also acts as sub-adviser to the INVESCO International Growth Fund, the
INVESCO European Small Company Fund and the INVESCO Latin American Growth Fund.
Although the Funds are not parties to the sub-advisory agreement, that agreement
has been approved by the shareholders of the Funds.
Under a Distribution Agreement effective September 30, 1997, INVESCO
Distributors, Inc. ("IDI") became the Funds' distributor. IDI, established in
1997, is a registered broker-dealer that acts as distributor for all retail
funds advised by IFG. Prior to September 30, 1997, IFG served as the Funds'
distributor.
IFG, IAML and IDI are indirect wholly owned subsidiaries of AMVESCAP
PLC. AMVESCAP PLC is a publicly-traded holding company that, through its
subsidiaries, engages in the business of investment management on an
international basis. INVESCO PLC changed its name to AMVESCO PLC on March 3,
1997 and to AMVESCAP PLC on May 8, 1997, as part of a merger between a direct
subsidiary of INVESCO PLC and A I M Management Group Inc., that created one of
the largest independent investment management businesses in the world. IFG and
IAML continue to operate under their existing names. AMVESCAP PLC has
approximately $192.2 billion in assets under management. IFG was established in
1932 and, as of October 31, 1997, managed 14 mutual funds, consisting of 45
separate portfolios, with combined assets of approximately $16.3 billion on
behalf of 851,389 shareholders.
Each Fund is managed by a team of portfolio managers. A senior
investment policy group determines the country-by-country allocation of each
Fund's assets, overall stock selection methodology and the ongoing
implementation and risk control policies applicable to each Fund's portfolio.
Individual country specialists are responsible for managing security selection
for their assigned country's share of the allocation within the parameters
established by the investment policy group.
Each Fund pays ^ IFG a monthly advisory fee which is based upon a
percentage of the average net assets of the Fund, determined daily. The maximum
advisory fee payable under the agreement is computed at the annual rate of 0.75%
on the first $350 million of the average net assets of a Fund; 0.65% on the next
$350 million of a Fund's average net assets; and 0.55% on a Fund's average net
assets in excess of $700 million. For the fiscal year ended October 31, ^ 1997,
the Funds paid fees equal to the following ^ percentages of their net assets ^:
INVESCO European Fund, ^ 0.74%; INVESCO Pacific Basin Fund, 0.75%.
Out of the advisory fees which it receives from the Funds, ^ IFG pays
IAML, as sub-adviser to these Funds, a monthly fee with respect to each Fund
computed at the following annual rates: prior to January 1, 1998, 0.45% on the
first $350 million of a Fund's average net assets^, 0.40% on the next $350
million of a Fund's average net assets^, and 0.35% on a Fund's average net
assets in excess of $700 million and effective January 1, 1998, 0.25% on the
first $350 million of a Fund's average net assets, 0.2167% on the next $350
<PAGE>
million of a Fund's average net assets and 0.1833% on a Fund's average net
assets in excess of $700 million. No fee is paid by either Fund to IAML.
The Company also has entered into an Administrative Services Agreement
dated February 28, 1997 (the "Administrative Agreement"), with ^ IFG. Pursuant
to the Administrative Agreement, ^ IFG performs certain administrative,
recordkeeping and internal sub-accounting services, including without
limitation, maintaining general ledger and capital stock accounts, preparing a
daily trial balance, calculating net asset value daily, providing selected
general ledger reports, and providing sub-accounting and recordkeeping services
for shareholder accounts in the Funds maintained by certain retirement and
employee benefit plans for the benefit of participants in such plans. For such
services, each Fund pays ^ IFG a fee consisting of a base fee of $10,000 per
year, plus an additional incremental fee computed at the annual rate of 0.015%
per year of the average net assets of the Fund. ^ IFG also is paid a fee by the
Company for providing transfer agent services. See "Additional Information."
Each Fund's expenses, which are accrued daily, are deducted from its
total income before dividends are paid. Total expenses of the Funds (prior to
any expense offset ^ arrangements), including investment advisory fees (but
excluding brokerage commissions, which are a cost of acquiring securities), as a
percentage of their average net assets for the fiscal year ended October 31, ^
1997, were ^ 1.25% for INVESCO European Fund and ^ 1.72% for INVESCO Pacific
Basin Fund. Out of this fee, IFG paid an amount equal to the following
percentage of each Fund's average net assets to IAML: INVESCO European Fund
0.45% and INVESCO Pacific Basin Fund 0.45%.
Fund Management places orders for the purchase and sale of portfolio
securities with brokers and dealers based upon its evaluation of ^ such
broker-dealers' financial responsibility coupled with their ability to effect
transactions at the best available prices. As discussed under "How Shares Can Be
Purchased -Distribution Expenses," the Company may market shares of the Funds
through intermediary brokers or dealers that have entered into Dealer Agreements
with IDI as the Funds' distributor. The Funds may place orders for portfolio
transactions with qualified broker-dealers that recommend the Funds to clients,
or sell shares of the Funds to clients, or act as agent in the purchase of Fund
shares for clients, if Fund Management believes that the quality of execution of
the transaction and level of commission are comparable to those available from
other qualified brokerage firms.
Fund Management permits investment and other personnel to purchase and
sell securities for their own accounts, subject to compliance policies governing
personal investing. These policies require Fund Management's personnel to
conduct their personal investment activities in a manner that Fund Management
believes is not detrimental to the Funds or Fund Management's other advisory
clients. See the Statement of Additional Information for more detailed
information.
<PAGE>
HOW SHARES CAN BE PURCHASED
Shares of each Fund are sold on a continuous basis by ^ IDI, as the
Funds' distributor, at the net asset value per share next calculated after
receipt of a purchase order in good form. No sales charge is imposed upon the
sale of shares of a Fund. To purchase shares of one or both of the Funds, send a
check made payable to INVESCO Funds Group, Inc., together with a completed
application form, to:
INVESCO FUNDS GROUP, INC.
Post Office Box 173706
Denver, Colorado 80217-3706
PURCHASE ORDERS MUST SPECIFY THE FUND IN WHICH THE INVESTMENT IS TO BE
MADE.
The minimum initial purchase must be at least $1,000, with subsequent
investments of not less than $50, except that: (1) those shareholders
establishing an EasiVest or direct payroll purchase account, as described below
in the ^ Prospectus section entitled "Services Provided by the Funds," may open
an account without making any initial investment if they agree to make minimum ^
purchases of $50; (2) those shareholders investing in an Individual Retirement
Account ("IRA"), or through omnibus accounts where individual shareholder
recordkeeping and sub-accounting are not required, may make initial minimum
purchases of $250; (3) Fund Management may permit a lesser amount to be invested
in the Funds under a federal income tax-sheltered retirement plan (other than an
IRA) or under a group investment plan qualifying as a sophisticated investor;
and (4) Fund Management reserves the right to increase, reduce or waive the
minimum purchase requirements in its sole discretion where it determines such
action is in the best interests of the Fund. The minimum initial purchase
requirement of $1,000, as described above, does not apply to shareholder
account(s) in any of the INVESCO funds opened prior to January 1, 1993, and thus
is not a minimum balance requirement for those existing accounts. However, for
shareholders already having accounts in any of the INVESCO funds, all initial
share purchases in a new fund account, including those made using the exchange
privilege, must meet the fund's applicable minimum investment requirement.
The purchase of Fund shares can be expedited by placing bank wire,
overnight courier or telephone orders. Overnight courier orders must meet the
above minimum investment requirements. In no case can a bank wire order or a
telephone order be in an amount less than $1,000. For further information, the
purchaser may call the Company's office by using the telephone number on the
cover of this Prospectus. Orders sent by overnight courier, including Express
Mail, should be sent to the street address, not Post Office Box, of INVESCO ^
Funds Group, Inc., at 7800 E. Union Avenue, Denver, Colorado 80237.
<PAGE>
Orders to purchase shares of either Fund can be placed by telephone.
Shares will be issued at the net asset value next determined after receipt of
telephone instructions. Generally, payments for telephone orders must be
received by the Company within three business days or the transaction may be
cancelled. In the event of such cancellation, the purchaser will be held
responsible for any loss resulting from a decline in the value of the shares. In
order to avoid such losses, purchasers should send payments for telephone
purchases by overnight courier or bank wire. ^ IFG has agreed to indemnify the
Funds for any losses resulting from the cancellation of telephone purchases.
If your check does not clear, or if a telephone purchase must be
cancelled due to non-payment, you will be responsible for any related loss the
Company or ^ IFG incurs. If you are already a shareholder in the INVESCO funds,
the Company, on behalf of the Funds, has the option to redeem shares from any
identically registered account in the Company or any other INVESCO fund as
reimbursement for any loss incurred. You also may be prohibited or restricted
from making future purchases in any of the INVESCO funds.
Persons who invest in the Funds through a securities broker may be
charged a commission or transaction fee by the broker for the handling of the
transaction, if the broker so elects. Any investor may deal directly with the
Funds in any transaction. In that event, there is no such charge. ^ IDI or IFG
may from time to time make payments from ^ their revenues to securities dealers
and other financial institutions that provide distribution-related and/or
administrative services for the Funds.
Each Fund reserves the right in its sole discretion to reject any order
for purchase of its shares (including purchases by exchange) when, in the
judgment of Fund Management, such rejection is in the best interest of the Fund.
Net asset value per share is computed once each day that the New York
Stock Exchange is open as of the close of regular trading on that Exchange
^(generally 4:00 p.m., New York time) and also may be computed on other days
under certain circumstances. Net asset value per share for each Fund is
calculated by dividing the market value of all of the Fund's securities plus the
value of its other assets (including dividends and interest accrued but not
collected), less all liabilities (including accrued expenses), by the number of
outstanding shares of that Fund. If market quotations are not readily available,
a security will be valued at fair value as determined in good faith by the board
of directors. Debt securities with remaining maturities of 60 days or less at
the time of purchase will be valued at amortized cost, absent unusual
circumstances, so long as the Company's board of directors believes that such
value represents fair value.
<PAGE>
Distribution Expenses. Each Fund is authorized under a Plan and Agreement of
Distribution pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the "Plan") to use its assets to finance certain activities relating to the
distribution of its shares to investors. The Plan applies to New Assets (new
sales of shares, exchanges into each Fund and reinvestments of dividends and
capital gains distributions) of the Fund after November 1, 1997 for the European
Fund and after December 1, 1997 for the Pacific Basin Fund. Under this Plan,
monthly payments may be made by each Fund to IDI to permit IDI, at its
discretion, to engage in certain activities and provide certain services
approved by the board of directors of the Company in connection with the
distribution of each Fund's shares to investors. These activities and services
may include the payment of compensation (including incentive compensation and/or
continuing compensation based on the amount of customer assets maintained in
each Fund) to securities dealers and other financial institutions and
organizations, which may include IFG and IDI affiliated companies, to obtain
various distribution-related and/or administrative services for each Fund. Such
services may include, among other things, processing new shareholder account
applications, preparing and transmitting to each Fund's Transfer Agent computer
processable tapes of all transactions by customers, and serving as the primary
source of information to customers in answering questions concerning the Funds
and their transactions with the Funds.
In addition, other permissible activities and services include
advertising, the preparation, printing and distribution of sales literature,
printing and distribution of prospectuses to prospective investors, and such
other services and promotional activities for the Funds as may from time to time
be agreed upon by the Company and its board of directors, including public
relations efforts and marketing programs to communicate with investors and
prospective investors. These services and activities may be conducted by the
staff of IFG, IDI or their affiliates or by third parties.
Under the Plan, the Company's payments to IDI on behalf of each Fund
are limited to an amount computed at an annual rate of 0.25% of each Fund's New
Assets. IDI is not entitled to payment for overhead expenses under the Plan, but
may be paid for all or a portion of the compensation paid for salaries and other
employee benefits for the personnel of IFG or IDI whose primary responsibilities
involve marketing shares of the INVESCO funds, including the Funds. Payments by
each Fund under the Plan, for any month, may be made to compensate IDI for
permissible activities engaged in and services provided by IDI during the
rolling 12-month period in which that month falls. Therefore, any obligations
incurred by IDI in excess of the limitations described above will not be paid by
the Funds under the Plan, and will be borne by IDI. In addition, IDI and its
affiliates may from time to time make additional payments from its revenues to
securities dealers, financial advisers and financial institutions that provide
distribution-related and/or administrative services for the Funds. No further
payments will be made by the Funds under the Plan in the event of the Plan's
<PAGE>
termination. Payments made by the Funds may not be used to finance directly the
distribution of shares of any other Fund of the Company or other mutual funds
advised by IFG or distributed by IDI. However, payments received by IDI which
are not used to finance the distribution of shares of a Fund become part of
IDI's revenues and may be used by IDI for activities that promote distribution
of any of the mutual funds advised by IFG. Subject to review by the Funds'
directors, payments made by each Fund under the Plan for compensation of
marketing personnel, as noted above, are based on an allocation formula designed
to ensure that all such payments are appropriate. IDI will bear any
distribution- and service-related expenses in excess of the amounts which are
compensated pursuant to the Plan. The Plan also authorizes any financing of
distributions which may result from IDI's use of its own resources, including
profits from investment advisory fees received from a Fund, providing that such
fees are legitimate and not excessive. For more information, see "How Shares Can
Be Purchased - Distribution Plan" in the Statement of Additional Information.
SERVICES PROVIDED BY THE FUNDS
Shareholder Accounts. ^ IFG maintains a share account that reflects the
current holdings of each shareholder. Share certificates will be issued only
upon specific request. Because certificates must be carefully safeguarded and
must be surrendered in order to exchange or redeem Fund shares, most
shareholders do not request share certificates in order to facilitate such
transactions. Each shareholder is sent a detailed confirmation for each
transaction in shares of the Funds. Shareholders whose only transactions are
through the EasiVest, direct payroll purchase, automatic monthly exchange or
periodic withdrawal programs, or are reinvestments of dividends or capital gains
in the same or another fund, will receive confirmations of those transactions on
their quarterly statements. These programs are discussed below. For information
regarding a shareholder's account and transactions, the shareholder may call the
Funds' office by using the telephone number on the cover of this Prospectus.
Reinvestment of Distributions. Dividends and other distributions are
automatically reinvested in additional shares of the Fund making the
distribution at the net asset value per share of that Fund in effect on the
ex-dividend or ex-distribution date. A shareholder may, however, elect to
reinvest dividends and other distributions in certain of the other no-load
mutual funds advised by IFG and distributed by ^ IDI, or to receive payment of
all dividends and other distributions in excess of ten dollars by check by
giving written notice to ^ IFG at least two weeks prior to the ^ record date on
which the change is to take effect. Further information concerning these options
can be obtained by contacting ^ IFG.
Periodic Withdrawal Plan. A Periodic Withdrawal Plan is available to
shareholders who own or purchase shares of any mutual funds advised by ^ IFG
<PAGE>
having a total value of $10,000 or more; provided, however, that at the time the
Plan is established, the shareholder owns shares having a value of at least
$5,000 in the fund from which withdrawals will be made. Under the Periodic
Withdrawal Plan, ^ IFG, as agent, will make specified monthly or quarterly
payments of any amount selected (minimum payment of $100) to the party
designated by the shareholder. Notice of all changes concerning the Periodic
Withdrawal Plan must be received by ^ IFG at least two weeks prior to the next
scheduled check. Further information regarding the Periodic Withdrawal Plan and
its requirements and tax consequences can be obtained by contacting ^ IFG.
Exchange ^ Policy. Shares of either Fund may be exchanged for shares of
any other fund of the Company, as well as for shares of any of the following
other no-load mutual funds, which are also advised by IFG and distributed by ^
IDI, on the basis of their respective net asset values at the time of the
exchange: INVESCO Capital Appreciation Funds, Inc. (formerly, INVESCO Dynamics
Fund, Inc.), INVESCO Diversified Funds, Inc.^, INVESCO Emerging Opportunity
Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income Funds, Inc., INVESCO
Industrial Income Fund, Inc., INVESCO Money Market Funds, Inc., INVESCO Multiple
Asset Funds, Inc., INVESCO Specialty Funds, Inc., INVESCO Strategic Portfolios,
Inc., INVESCO Tax-Free Income Funds, Inc. and INVESCO Value Trust.
An exchange involves the redemption of shares in a Fund and investment
of the redemption proceeds in shares of another fund of the Company or in one of
the funds listed above. Exchanges will be made at the net asset value per share
next determined after receipt of an exchange request in proper order. Any gain
or loss realized on an exchange is recognizable for federal income tax purposes
by the shareholder. Exchange requests may be made either by telephone or by
written request to ^ IFG, using the telephone number or address on the cover of
this ^ Prospectus. Exchanges made by telephone must be in an amount of at least
$250 if the exchange is being made into an existing account of one of the
INVESCO funds. All exchanges that establish a new account must meet the Fund's
applicable minimum initial investment requirements. Written exchange requests
into an existing account have no minimum requirements other than the Fund's
applicable minimum subsequent investment requirements.
The ^ option to exchange Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing the New Account
Application or a Telephone Transaction Authorization Form or otherwise utilizing
the telephone exchange ^ option, the investor has agreed that the Funds will not
be liable for following instructions communicated by telephone that they
reasonably believe to be genuine. The Funds employ procedures, which they
believe are reasonable, designed to confirm that exchange instructions are
genuine. These may include recording telephone instructions and providing
written confirmations of exchange transactions. As a result of this policy, the
<PAGE>
investor may bear the risk of any loss due to unauthorized or fraudulent
instructions; provided, however, that if a Fund fails to follow these or other
reasonable procedures, the Fund may be liable.
In order to prevent abuse of this ^ policy to the disadvantage of other
shareholders, the Funds reserve the right to terminate the exchange ^ option of
any shareholder who requests more than four exchanges a year. The Funds will
determine whether to do so based on a consideration of both the number of
exchanges any particular shareholder, or group of shareholders, has requested
and the time period over which those exchange requests have been made, together
with the level of expense to the Fund which will result from effecting
additional exchange requests. The exchange ^ policy also may be modified or
terminated at any time. Except for those limited instances where redemptions of
the exchanged security are suspended under Section 22(e) of the 1940 Act, or
where sales of the fund into which the shareholder is exchanging are temporarily
stopped, notice of all such modifications or termination of the exchange ^
policy will be given at least 60 days prior to the date of termination or the
effective date of the modification.
Before making an exchange, the shareholder should review the
prospectuses of the funds involved and consider their differences, and should be
aware that the exchange privilege may only be available in those states where
exchanges may legally be made, which will require that the shares being acquired
are registered for sale in the shareholder's state of residence. Shareholders
interested in exercising the exchange ^ option may contact ^ IFG for information
concerning their particular exchanges.
Automatic Monthly Exchange. Shareholders who have accounts in one or
more of the mutual funds distributed by ^ IDI may arrange for a fixed dollar
amount of their fund shares to be automatically exchanged for shares of any
other INVESCO mutual fund listed under "Exchange ^ Policy" on a monthly basis.
The minimum monthly exchange in this program is $50.00. This automatic exchange
program can be changed by the shareholder at any time by notifying ^ IFG at
least two weeks prior to the date the change is to be made. Further information
regarding this service can be obtained by contacting ^ IFG.
EasiVest. For shareholders who want to maintain a schedule of monthly
investments, EasiVest uses various methods to draw a preauthorized amount from
the shareholder's bank account to purchase Fund shares. This automatic
investment program can be changed by the shareholder at any time by ^ contacting
IFG at least two weeks prior to the date the change is to be made. Further
information regarding this service can be obtained by contacting ^ IFG.
Direct Payroll Purchase. Shareholders may elect to have their
employers make automatic purchases of Fund shares for them by deducting a
specified amount from their regular paychecks. This automatic investment program
can be modified or terminated at any time by the shareholder, by notifying the
employer. Further information regarding this service can be obtained by
contacting ^ IFG.
<PAGE>
Tax-Deferred Retirement Plans. Shares of either Fund may be purchased
for self-employed individual retirement plans, various IRAs, simplified employee
pension plans and corporate retirement plans. In addition, shares can be used to
fund tax-qualified plans established under Section 403(b) of the Internal
Revenue Code of 1986 by educational institutions, including public school
systems and private schools, and certain kinds of non-profit organizations,
which provide deferred compensation arrangements for their employees.
Prototype forms for the establishment of these various plans including,
where applicable, disclosure statements required by the Internal Revenue
Service, are available from ^ IFG. INVESCO Trust Company, a subsidiary of ^ IFG,
is qualified to serve as trustee or custodian under these plans and provides the
required services at competitive rates. Retirement plans (other than IRAs)
receive monthly statements reflecting all transactions in their Fund accounts.
IRAs receive the confirmations and quarterly statements described under
"Shareholder Accounts." For complete information, including prototype forms and
service charges, call ^ IFG at the telephone number listed on the cover of this
^ Prospectus or send a written request to: Retirement Services, INVESCO Funds
Group, Inc., Post Office Box 173706, Denver, Colorado 80217-3706.
HOW TO REDEEM SHARES
Shares of either Fund may be redeemed at any time at their net asset
value next determined after a request in proper form is received at the Funds'
office. (See "How Shares Can Be Purchased.") Net asset value per share at the
time of the redemption may be more or less than the price you paid to purchase
your shares, depending primarily upon the Fund's investment performance.
If the shares to be redeemed are represented by stock certificates, a
written request for redemption signed by the registered shareholder(s) and the
certificates must be forwarded to INVESCO Funds Group, Inc., Post Office Box
173706, Denver, Colorado 80217-3706. Redemption requests sent by overnight
courier, including Express Mail, should be sent to the street address, not Post
Office Box, of INVESCO Funds Group, Inc. at 7800 E. Union Avenue, Denver,
Colorado 80237. If no certificates have been issued, a written redemption
request signed by each registered owner of the account may be submitted to ^ IFG
at the address noted above. If shares are held in the name of a corporation,
additional documentation may be necessary. Call or write for ^ specific
information. If payment for the redeemed shares is to be made to someone other
than the registered owner(s), the signature(s) must be guaranteed by a financial
institution which qualifies as an eligible guarantor institution. Redemption
procedures with respect
<PAGE>
to accounts registered in the names of broker-dealers may differ from those
applicable to other shareholders.
BE CAREFUL TO SPECIFY THE ACCOUNT FROM WHICH THE REDEMPTION IS TO BE
MADE. SHAREHOLDERS HAVE A SEPARATE ACCOUNT FOR EACH FUND IN WHICH THEY INVEST.
Payment of redemption proceeds will be mailed within seven days
following receipt of the required documents. However, payment may be postponed
under unusual circumstances, such as when normal trading is not taking place on
the New York Stock Exchange or an emergency as defined by the Securities and
Exchange Commission exists. If the shares to be redeemed were purchased by check
and that check has not yet cleared, payment will be made promptly upon clearance
of the purchase check (which will take up to 15 days).
If a shareholder participates in EasiVest, the Funds' automatic monthly
investment program, and redeems all of the shares in a Fund account, ^ IFG will
terminate any further EasiVest purchases unless otherwise instructed by the
shareholder.
Because of the high relative costs of handling small accounts, should
the value of any shareholder's account fall below $250 as a result of
shareholder action, the Company reserves the right to effect the involuntary
redemption of all shares in such account, in which case the account would be
liquidated and the proceeds forwarded to the shareholder. Prior to any such
redemption, a shareholder will be notified and given 60 days to increase the
value of the account to $250 or more.
Fund shareholders (other than shareholders holding Fund shares in
accounts of IRA plans) may request expedited redemption of shares having a
minimum value of $250 (or redemption of all shares if their value is less than
$250) held in accounts maintained in their name by telephoning redemption
instructions to ^ IFG, using the telephone number on the cover of this ^
Prospectus. The redemption proceeds, at the shareholder's option, either will be
mailed to the address listed for the shareholder's Fund account, or wired
(minimum of $1,000) or mailed to the bank which the shareholder has designated
to receive the proceeds of telephone redemptions. The Funds charge no fee for
effecting such telephone redemptions. Unless Fund Management permits a larger
redemption request to be placed by telephone, a shareholder may not place a
redemption request by telephone in excess of $25,000. ^ These telephone
redemption privileges may be modified or terminated in the future at the
discretion of Fund Management.
For federal income tax-deferred retirement plans sponsored by INVESCO
Trust Company, the term "shareholders" is defined to mean plan trustees that
file a written request to be able to redeem Fund shares by telephone.
Shareholders should understand that, while the Funds will attempt to process all
telephone redemption requests on an expedited basis, there may be times,
particularly in periods of severe economic or market disruption, when (a) they
r
<PAGE>
may encounte difficulty in placing a telephone redemption request, and (b)
processing telephone redemptions may require up to seven days following receipt
of the redemption request, or additional time because of the unusual
circumstances set forth above.
The privilege of redeeming Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing a New Account
Application or a Telephone Transaction Authorization Form or otherwise utilizing
telephone redemption privileges, the shareholder has agreed that the Funds will
not be liable for following instructions communicated by telephone that they
reasonably believe to be genuine. The Funds employ procedures, which they
believe are reasonable, designed to confirm that telephone instructions are
genuine. These may include recording telephone instructions and providing
written confirmation of transactions initiated by telephone. As a result of this
policy, the investor may bear the risk of any loss due to unauthorized or
fraudulent instructions; provided, however, that if a Fund fails to follow these
or other reasonable procedures, the Fund may be liable.
TAXES, DIVIDENDS AND ^ OTHER DISTRIBUTIONS
Taxes. Each Fund intends to distribute to shareholders ^ all of its net
investment income, net capital gains and net gains from foreign currency
transactions, if any^. Distribution of substantially all net investment income
to shareholders allows each Fund to maintain its tax status as a regulated
investment company. ^ Due to their tax status as regulated investment companies,
the Funds do not expect to pay any federal income or excise taxes.
^ Shareholders must include all dividends and ^ other distributions in
taxable income for federal, state and local income tax purposes unless
shareholders are exempt from income taxes. Dividends and other distributions are
taxable whether they are received in cash or automatically invested in shares of
a Fund or another fund in the INVESCO group.
Net realized capital gains of a Fund are classified as short-term and
long-term gains depending upon how long the Fund held the security that gave
rise to the gains. Short-term capital gains are included in income from
dividends and interest as ordinary income and are taxed at the taxpayer's
marginal tax rate. The Taxpayer Relief Act of 1997 (the "Tax Act"), enacted in
August 1997, changed the taxation of long-term capital gains by applying
different capital gains rates depending on the taxpayer's holding period and
marginal rate of federal income tax. Long-term gains realized on the sale of
securities held for more than one year but not for more than 18 months are
taxable at a rate of 28%. This category of long-term gains is often referred to
as "mid-term" gains but is technically termed "28% rate gains." Long-term gains
realized on the sale of securities held for more than 18 months are taxable at a
rate of 20%. At the end of each year, information regarding the tax status of
<PAGE>
dividends and other distributions is provided to shareholders. Shareholders
should consult their tax adviser as to the effect of the Tax Act on
distributions by the Funds of net capital gain.
Shareholders may realize capital gains or losses when they sell their
shares at more or less than the price originally paid. Capital gain on shares
held for more than one year will be long-term capital gain, in which event it
will be subject to federal income tax at the rates indicated above.
Each Fund may be subject to the withholding of foreign taxes on
dividends or interest it receives on foreign securities. Foreign taxes withheld
will be treated as an expense of the Fund ^.
^ Individual and other non-corporate shareholders may be subject to
backup withholding of 31% on dividends, capital ^ gains and other distributions
and redemption proceeds. ^ You can avoid backup withholding on ^ your account by
ensuring that ^ we have a correct, certified tax identification number, unless
you are subject to backup withholding for other reasons.^
^ We encourage you to consult a tax adviser with respect to these
matters. For further information see "Dividends, Other Distributions and Taxes"
in the Statement of Additional Information.
Dividends and Other Distributions. The Funds earn ordinary or net
investment income in the form of ^ interest and dividends on investments.
Dividends paid by a Fund will be based solely on the income earned by it. The
Funds' policy is to distribute ^ all of this income, less ^ expenses, to
shareholders ^ on an annual basis, at the discretion of the Company's board of
directors. Dividends are automatically reinvested in additional shares of a
Fund, unless cash distributions are requested, at the net asset value on the
ex-dividend date.
In addition, each Fund realizes capital gains and losses when it sells
securities or derivatives for more or less than it paid. If total gains on sales
exceed total losses (including losses carried forward from previous years), the
Fund has a net realized capital gain. Net realized capital gains, if any,
together with gains, if any, realized on foreign currency transactions, are
distributed to shareholders at least annually, usually in December. Capital gain
distributions are automatically reinvested in additional shares of the Fund,
unless cash distributions are requested, at the net asset value on the
ex-dividend date.
Dividends and other ^ distributions are paid to shareholders who hold
shares on the record date of the distribution regardless of how long the shares
have been held. The Fund's share price will then drop by the amount of the
distribution on the ^ ex-dividend or ex-distribution ^ date. If a shareholder
purchases shares immediately prior to the distribution, the shareholder will, in
<PAGE>
effect, have "bought" the distribution by paying full purchase price, a portion
of which is then returned in the form of a taxable distribution.
^
ADDITIONAL INFORMATION
Voting Rights. All shares of the Company's funds have equal voting
rights. When shareholders are entitled to vote upon a matter, each shareholder
is entitled to one vote for each share owned and a corresponding fractional vote
for each fractional share owned. Voting with respect to certain matters, such as
ratification of independent accountants and the election of directors, will be
by all funds of the Company voting together. In other cases, such as voting upon
the investment advisory contract for the individual funds, voting is on a
fund-by-fund basis. To the extent permitted by law, when not all funds are
affected by a matter to be voted upon, only shareholders of the fund or funds
affected by the matter will be entitled to vote thereon. The Company is not
generally required and does not expect to hold regular annual meetings of
shareholders. However, the board of directors will call special meetings of
shareholders for the purpose, among other reasons, of voting upon the question
of removal of a director or directors when requested to do so in writing by the
holders of 10% or more of the outstanding shares of the Company or as may be
required by applicable law or the Company's Articles of Incorporation. The
Company will assist shareholders in communicating with other shareholders as
required by the 1940 Act. Directors may be removed by action of the holders of a
majority of the outstanding shares of the Company.
Shareholder Inquiries. All inquiries regarding the Funds should be
directed to the Funds at the telephone number or mailing address set forth on
the cover page of this ^ Prospectus.
Transfer and Dividend Disbursing Agent. INVESCO Funds Group, Inc., 7800
E. Union Ave., Denver, Colorado 80237, also acts as registrar, transfer agent
and dividend disbursing agent for each Fund pursuant to a Transfer Agency
Agreement which provides that the Fund will pay an annual fee of $20.00 per
shareholder account or, where applicable, per participant in an omnibus account
^. The transfer agency fee is not charged to each shareholder's or participant's
account but is an expense of the Fund to be paid from the Fund's assets.
Registered broker-dealers, third party administrators of tax-qualified
retirement plans and other entities, including affiliates of ^ IFG, may provide
sub-transfer agency or recordkeeping services to the ^ Funds which reduce or
eliminate the need for identical services to be provided ^ on behalf of a Fund
by IFG. In such cases, ^ IFG may pay the third party an annual sub-transfer
agency or ^ recordkeeping fee out of the transfer agency fee which is paid to ^
IFG by the ^ Funds.
<PAGE>
PROSPECTUS
March 1, 1998
INVESCO EUROPEAN FUND
INVESCO PACIFIC BASIN FUND
Two no-load mutual funds seeking
capital appreciation through
investments in designated
geographical sectors
^ INVESCO FUNDS
INVESCO Distributors, Inc.
Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
1-800-525-8085
PAL(R): 1-800-424-8085
http://www.invesco.com
^ In Denver, visit one of our
convenient Investor Centers:
Cherry Creek,
155-B Fillmore Street;
Denver Tech Center,
7800 East Union Avenue,
Lobby Level
In addition, all documents filed by the Company with the Securities and Exchange
Commission can be located on a web site maintained by the Commission at
http://www.sec.gov.
<PAGE>
PROSPECTUS
March 1, ^ 1998
INVESCO INTERNATIONAL GROWTH FUND
INVESCO INTERNATIONAL GROWTH FUND (the "Fund") seeks to achieve a high
total return through capital appreciation and current income by investing
substantially all of its assets in foreign securities. This Fund invests
principally in equity securities. The term "foreign securities" refers to
securities of issuers, wherever organized, which in the judgment of management
have their principal business activities outside of the United States. In
determining whether an issuer's principal activities are outside of the United
States, consideration is given to such factors as the location of the issuer's
assets, personnel, sales and earnings. The Fund's investments may consist in
part of securities which may be deemed to be speculative. (See "Investment
Objective and Policies.")
The Fund is a series of INVESCO International Funds, Inc. (the
"Company"), an open ^-end management investment company consisting of ^ four
separate funds, each of which represents a separate portfolio of investments.
This ^ Prospectus relates to shares of ^ the International Growth Fund. ^
Separate Prospectuses are available upon request from INVESCO ^ Distributors,
Inc. ("IDI") for the Company's other funds, INVESCO European Fund ^, INVESCO
Pacific Basin Fund and INVESCO Emerging Markets Fund. Additional funds may be
offered in the future.
This ^ Prospectus provides you with the basic information you should
know before investing in the Fund. You should read it and keep it for future
reference. A Statement of Additional Information containing further information
about the Fund, dated March 1, ^ 1998, has been filed with the Securities and
Exchange Commission, and is incorporated by reference into this ^ Prospectus. To
obtain a free copy, write to INVESCO ^ Distributors, Inc., P.O. Box 173706,
Denver, Colorado 80217 ^-3706; call 1-800-525-8085; or visit our web site at:
http://www.invesco.com.
<PAGE>
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. SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER FINANCIAL INSTITUTION. THE SHARES
OF THE FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. ^
TABLE OF CONTENTS
Page
----
ANNUAL FUND EXPENSES..........................................................35
FINANCIAL HIGHLIGHTS..........................................................37
PERFORMANCE DATA..............................................................39
INVESTMENT OBJECTIVE AND POLICIES.............................................39
RISK FACTORS..................................................................42
THE FUND AND ITS MANAGEMENT...................................................45
HOW SHARES CAN BE PURCHASED...................................................48
SERVICES PROVIDED BY THE FUND.................................................51
HOW TO REDEEM SHARES..........................................................55
TAXES, DIVIDENDS AND ^ OTHER DISTRIBUTIONS....................................57
ADDITIONAL INFORMATION........................................................58
<PAGE>
ANNUAL FUND EXPENSES
The Fund is 100% no ^-load; there are no fees to purchase, exchange or
redeem shares^. Effective November 1, 1997, the Fund was authorized to pay a
Rule 12b-1 distribution fee of up to one quarter of one percent of the Fund's
average net assets each year. The 12b-1 fee is assessed against all shares but
only with respect to new sales of shares, exchanges into the Fund and
reinvestments of dividends and capital gain distributions occurring on or after
November 1, 1997 ("New Assets"). (See "How Shares Can Be Purchased -Distribution
Expenses.") Lower expenses benefit Fund shareholders by increasing the Fund's
total return.
Shareholder Transaction Expenses
Sales load "charge" on purchases None
Sales load "charge" on reinvested dividends None
Redemption fees None
Exchange fees None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee 1.00%
12b ^-1 Fees(1) 0.25%
Other Expenses ^ 0.71%
Transfer Agency ^ Fee(2) 0.38%
General Services, Administrative
Services, Registration, ^ Postage(3) 0.33%
Total Fund Operating ^ Expenses(4) 1.96%
^(1) There were no 12b-1 fees for the period ending October 31, 1997.
The 12b-1 fees for the period ending October 31, 1998 may be less than 0.25% of
New Assets.
(2) Consists of the transfer agency fee described under "Additional
Information ^- Transfer and Dividend Disbursing Agent."
^(3) Includes, but is not limited to, fees and expenses of directors,
custodian bank, legal counsel and independent accountants, securities pricing
services, costs of administrative services furnished under an Administrative
Services Agreement, costs of registration of Fund shares under applicable laws,
and costs of printing and distributing reports to shareholders.
^(4) It should be noted that the Fund's actual total operating expenses
were lower than the figures shown because the Fund's custodian fees and transfer
agency fees were reduced under ^ expense offset ^ arrangements. However, as a
result of an SEC requirement for mutual funds to state their total operating
expenses without crediting any such expense offset ^ arrangements, the figures
shown above do not reflect these reductions. In comparing expenses for different
years, please note that the Ratios of Expenses to Average Net Assets shown under
"Financial
<PAGE>
Highlights" do reflect any reductions for periods prior to the
fiscal year ended October 31, ^ 1995. See "The Fund and Its
Management."
Example
A shareholder would pay the following expenses on a $1,000 investment
for the periods shown, assuming (1) a 5% annual return and (2) redemption at the
end of each time period^.
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$18 ^ $54 $94 $203
The purpose of the foregoing table and Example is to assist investors
in understanding the various costs and expenses that an investor in this Fund
will bear directly or indirectly. Such expenses are paid from this Fund's
assets. (See "The Fund and Its Management.") This Fund charges no sales load,
redemption fee or exchange fee ^. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. The assumed 5% annual return is hypothetical and should
not be considered a representation of past or future annual returns, which may
be greater or less than the assumed amount.
As a result of the 0.25% 12b-1 fee paid by the Fund, investors who own
Fund shares for a long period of time may pay more than the economic equivalent
of the maximum front-end sales charge permitted for mutual funds by the National
Association of Securities Dealers, Inc.
<PAGE>
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding Throughout Each Period)
The following information for each of the ^ four years in the period
ended October 31, ^ 1997, the period January 1, 1993 to October 31, 1993, and
each of the four years in the period ended December 31, 1992 has been audited by
Price Waterhouse LLP, independent accountants. Prior years' information was
audited by another independent accounting firm. This information should be read
in conjunction with the audited financial statements and the Report of
Independent Accountants thereon appearing in the ^ Company's 1997 Annual Report
to Shareholders which is incorporated by reference into the Statement of
Additional Information. Both are available without charge by contacting INVESCO
^ Distributors, Inc. at the address or telephone number on the cover of this ^
Prospectus. All per share data has been adjusted to reflect an 80 to 1 stock
split which was effected on January 2, 1991.
<TABLE>
<CAPTION>
^ Period
Year Ended
Ended ^ October ^
October 31 31 Year Ended December 31
^----------------------------------- ---------- -----------------------------------------------------
^ 1997 1996 1995 1994< 1993^< 1992 1991 1990 1989 1988 ^
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
International Growth Fund
PER SHARE DATA
Net Asset Value ^-
Beginning of Period $16.91 $15.78 $17.29 $15.75 $12.57 $14.51 $13.69 $16.16 $14.49 $12.51
^----------------------------------- --------- -----------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.06 0.07 0.08 0.04 0.08 0.12 0.17 0.26 0.18 0.08 ^
Net Gains or (Losses) on
Securities (Both Realized
and Unrealized) 0.37 1.77 (0.61) 1.57 3.16 (1.94) 0.82 (2.65) 2.16 1.98
^---------------------------------- --------- -----------------------------------------------------
Total from Investment
Operations 0.43 1.84 (0.53) 1.61 3.24 (1.82) 0.99 (2.39) 2.34 2.06
^---------------------------------- --------- -----------------------------------------------------
<PAGE>
LESS DISTRIBUTIONS
Dividends from Net
Investment Income+ 0.08 0.15 0.09 0.07 0.06 0.11 0.17 0.02 0.17 0.08 ^
In Excess of Net
Investment Income 0.00 0.00 0.03 ^ 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Distributions from
Capital Gains 0.80 0.56 0.86 0.00 0.00 0.01 0.00 0.06 0.50 0.00
^---------------------------------- --------- -----------------------------------------------------
Total Distributions 0.88 0.71 0.98 0.07 0.06 0.12 0.17 0.08 0.67 0.08
^---------------------------------- --------- -----------------------------------------------------
^ Net Asset Value -
^ End of Period $16.46 $16.91 $15.78 $17.29 $15.75 $12.57 $14.51 $13.69 $16.16 $14.49 ^
==============^==================== ======== =====================================================
TOTAL RETURN 2.65% 12.01% (2.84%) 10.21% 29.08%* (12.52%) 7.19% (14.62%) 16.07% 16.61% ^
RATIOS
Net Assets ^- End of Period
($000 Omitted) $84,779 $94,586 $75,391 $161,884 $108,677 $35,192 $42,039 $39,237 $41,456 $12,099 ^
Ratio of Expenses to
Average Net Assets# 1.71%@ 1.80%@ 1.81%@ 1.50% 1.43%~ 1.36% 1.48% 1.48% 1.24% 1.26% ^
Ratio of Net Investment
Income to Average Net
Assets# 0.26% 0.43% 0.41% 0.46% 0.94%~ 0.83% 1.17% 1.85% 1.18% 1.14% ^
Portfolio Turnover Rate 57% 64% 62% 87% 46%* 50% 71% 78% 35% 73% ^
Average Commission Rate
Paid^^ $0.0042 $0.0329 ^- - - - - - - -
</TABLE>
< The per share information was computed based on weighted average shares.
^ + Distributions in excess of net investment income for the years ended
October 31, 1997 and 1996 aggregated less than $0.01 on a per share basis.^
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
# Various expenses of the Fund were voluntarily absorbed by IFG for the years
ended December 31, 1990, 1989^ and 1988. If such expenses had not been
voluntarily absorbed, ratio of expenses to average net assets would have been
1.49%, 1.71%^ and 2.00%, respectively, and ratio of net investment income to
average net assets would have been 1.84%, 0.71%^ and 0.40% ^, respectively.
@ Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
~ Annualized
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold, which is required to be disclosed
for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
PERFORMANCE DATA
From time to time, the Fund advertises its total return performance.
These figures are based upon historical investment results and are not intended
to indicate future performance. The "total return" of the Fund refers to the
annual rate of return of an investment in the Fund. Total return is computed by
calculating the percentage change in value of an investment of $1,000, assuming
reinvestment of all income dividends and capital gain distributions, to the end
of a specified period. Periods of one year, five years and ten years or life of
Fund are used if available. Cumulative total return reflects actual performance
over a stated period of time. Average annual total return is a hypothetical rate
of return that, if achieved annually, would have produced the same cumulative
total return if performance had been constant over the entire period. Any ^
given report of total return performance should not be considered as
representative of future performance. The Fund charges no sales load, redemption
fee or exchange fee which would affect the total return computation.
In conjunction with performance reports and/or analyses of shareholder
service for the Fund, comparative data between the Fund's performance for a
given period and the performance of recognized bond indices and indices of
investment results for the same period, and/or assessments of the quality of
shareholder service, may be provided to shareholders. Such indices include
indices provided by Dow Jones & Company, Standard & Poor's ^, Lipper Analytical
Services, Inc., Lehman Brothers, National Association of Securities Dealers
Automated Quotations, Frank Russell Company, Value Line Investment Survey, the
American Stock Exchange, Morgan Stanley Capital International, Wilshire
Associates, the Financial Times ^-Stock Exchange, the New York Stock Exchange,
the Nikkei Stock Average and the Deutcher Aktienindex, all of which are
unmanaged market indicators. In addition, rankings, ratings and comparisons of
investment performance and/or assessments of the quality of shareholder service
appearing in publications such as Money, Forbes, Kiplinger's Personal Finance,
Morningstar and similar sources which utilize information compiled (i)
internally; (ii) by Lipper Analytical Services, Inc.; or (iii) by other
recognized analytical services, may be used in advertising. The Lipper
Analytical Services, Inc. mutual fund ranking and comparisons, which may be used
by the Fund in performance reports, will be drawn from the "International Funds"
Lipper mutual fund groupings, in addition to the broad ^-based Lipper general
fund groupings.
INVESTMENT OBJECTIVE AND POLICIES
The Company consists of ^ four separate portfolios of investments, each
represented by a different class of the Company's common stock. This ^
Prospectus relates to INVESCO International Growth Fund; ^ separate ^
prospectuses for INVESCO European Fund and INVESCO Pacific Basin Fund ^ and for
the INVESCO Emerging Markets Fund are available.
<PAGE>
The investment objective of the INVESCO International Growth Fund is to
seek a high total return on investment through capital appreciation and current
income. Funds having an investment objective of seeking a high total return may
be limited in their ability to obtain their objective by the limitations on the
types of securities in which they may invest. Therefore, no assurance can be
given that the Fund will be able to achieve its investment objective.
The Fund intends to accomplish its objective by investing substantially
all of its assets in foreign securities. The term "foreign securities" refers to
securities of issuers, wherever organized, which in the judgment of the Fund's
investment adviser or sub ^-adviser (collectively, "Fund Management") have their
principal business activities outside of the United States. The determination of
whether an issuer's principal activities are outside of the United States will
be based on the location of the issuer's assets, personnel, sales and earnings,
and specifically whether more than 50% of the issuer's assets are located, or
more than 50% of the issuer's gross income is earned, outside of the United
States. During normal market conditions, at least 65% of the Fund's total assets
will be invested in foreign securities representing at least three different
countries outside of the United States.
The Fund invests principally in equity securities (common stocks and
securities convertible into common stocks, including convertible debt
obligations and convertible preferred stock), although it also may purchase debt
securities. Such debt securities either will be investment grade (rated Baa or
higher by Moody's Investors Service, Inc. ("Moody's") or BBB or higher by
Standard & Poor's ^, a division of The McGraw ^-Hill Companies, Inc. ("S&P"))
or, if unrated, will have been determined by Fund Management to be of investment
grade quality. The Fund is not required to dispose of debt securities whose
ratings are downgraded below investment grade. The Fund has not established any
minimum investment standards, such as an issuer's asset level, earnings history,
type of industry, dividend payment history, etc., with respect to the Fund's
equity investments in foreign securities and, therefore, investors in this Fund
should consider that investments may consist in part of securities which may be
deemed to be speculative. When market, business or economic conditions indicate,
in the judgment of Fund Management, that a different investment stance should be
assumed, up to 100% of the assets of the Fund may be invested temporarily in
domestic securities consisting of obligations issued or guaranteed by the United
States or any instrumentality thereof, domestic bank certificates of deposit,
commercial paper rated A ^-2 or higher by S&P or P ^-2 or higher by Moody's, and
repurchase agreements with banks and securities dealers. While the Fund is in
such a defensive position, the opportunity to achieve a high total return will
<PAGE>
be limited and, to the extent that this assessment of market conditions is
incorrect, the Fund will be foregoing the opportunity to benefit from capital
appreciation resulting from increases in the value of equity investments.
It is presently anticipated that the Fund may invest in companies based
in (or governments of or within) various areas of the world, including the Far
East (Japan, Hong Kong, Korea, Singapore and Malaysia), Western Europe (United
Kingdom, Germany, France, Italy and Switzerland), Australia and Canada. The
economies of these countries may vary widely in their condition and may be
subject to sudden changes that could have a positive or negative impact on the
Fund. Of course, the Fund may invest in such other areas and countries as Fund
Management may determine from time to time. The securities in which the Fund
invests typically will be traded on the principal stock exchanges in such
countries but also may be traded on regional stock exchanges or on the over
^-the ^-counter market in such countries.
The Fund also may invest in companies located in developing countries.
In general, Fund Management considers any country that is not included in the
Morgan Stanley Capital International ("MSCI") World Index to be a developing
country. As of the date of this prospectus, the MSCI World Index consists of the
United States, Canada, Japan, Australia, New Zealand, Hong Kong, Malaysia,
Singapore and the nations of Western Europe (other than Greece, Portugal and
Turkey). (In addition, the MSCI World Index includes certain South African gold
mining companies, although Fund Management considers South Africa to be a
developing country.) Thus, with the exceptions noted above, developing countries
generally include the countries located in Central and South America, Middle and
Eastern Europe, Asia and Africa. Investors should recognize that, compared to
the United States and other developed countries, developing countries may have
relatively unstable governments, economies based on only a few industries, and
securities markets which trade a small number of securities. Prices in these
markets tend to be volatile. In addition, investments in developing countries
are subject to the same risks as those involved in foreign investments
generally. See "Risk Factors." The Fund will limit its investments in developing
countries to no more than 20% of its total assets.
When the Fund invests in foreign securities, such securities are
usually denominated in foreign currency and the Fund may temporarily hold funds
in foreign currencies. Thus, the Fund's share value is affected by changes in
currency exchange rates. Because the Fund's assets will be invested in foreign
securities and because substantially all revenues will be received in foreign
currencies, the dollar equivalent of the Fund's net assets and distributions
would be adversely affected by a reduction in the value of the foreign currency
relative to the United States dollar. The Fund will pay dividends in dollars and
in such event will incur currency conversion costs. As one way of managing
exchange rate risk, the Fund may enter into forward foreign currency exchange
contracts (i.e., purchasing or selling foreign currencies at a future date).
<PAGE>
The investment objective of the Fund and its investment policies, ^
where indicated ^, are deemed to be fundamental policies and thus may not be
changed without prior approval by the holders of a majority of the outstanding
voting securities, as defined in the Investment Company Act of 1940 (the "1940
Act"). In addition, the Fund is subject to certain investment restrictions ^,
identified in the Statement of Additional Information ^, which may not be
altered without approval of shareholders. One of those restrictions limits the
Fund's borrowing of money to borrowings from banks for temporary or emergency
purposes (but not for investment) in an amount not to exceed 5% of total assets
of the Fund.
For additional information concerning the investment objectives and
operation of the INVESCO International Growth Fund, see "Investment Objectives
and Policies" in the Statement of Additional Information.
RISK FACTORS
Investors should consider the special factors associated with the
policies discussed below in determining the appropriateness of an investment in
the Fund. The Fund's policies regarding investments in foreign securities and
foreign currencies are not fundamental and may be changed by vote of the
Company's board of directors.
Foreign Securities. The Fund may invest in foreign securities and may
do so without limitation on the percentage of assets which may be so invested.
Investments in securities of foreign companies and in foreign markets involve
certain additional risks not associated with investments in domestic companies
and markets. For U.S. investors, the returns on foreign securities are
influenced not only by the returns on the foreign investments themselves but
also by currency fluctuations. That is, when the U.S. dollar generally rises
against a foreign ^ currency, returns ^ for a U.S. investor on foreign
securities denominated in that foreign currency may decrease. By contrast, in a
period when the U.S. dollar generally declines, those returns may increase.
Other aspects of international investing to consider include:
^-less publicly available information than is generally
available about U.S. issuers;
^-differences in accounting, auditing and financial reporting
standards;
^-generally higher commission rates on foreign portfolio
transactions and longer settlement periods;
^-smaller trading volumes and generally lower liquidity of foreign
stock markets, which may cause greater price volatility;
<PAGE>
^-less government regulation of stock exchanges, brokers and
listed companies abroad than in the United States; and
^-investments in certain countries may be subject to foreign
withholding taxes, which may reduce dividend income or capital gains payable to
shareholders.
There is also the possibility of expropriation or confiscatory
taxation; adverse changes in investment or exchange control regulations;
political instability; potential restrictions on the flow of international
capital; and the possibility of the Fund experiencing difficulties in pursuing
legal remedies and collecting judgments.
Repurchase Agreements. The Fund may enter into repurchase agreements
with respect to debt instruments eligible for investment by the Fund with member
banks of the Federal Reserve System, registered broker ^-dealers and registered
government securities dealers, which are deemed creditworthy. A repurchase
agreement, which may be considered a "loan" under the 1940 Act, is a means of
investing monies for a short period. In a repurchase agreement, the Fund
acquires a debt instrument (generally a security issued by the U.S. government
or an agency thereof, a banker's acceptance or a certificate of deposit),
subject to resale to the seller at an agreed ^-upon price and date (normally,
the next business day). In the event that the original seller defaults on its
obligation to repurchase the security, the Fund could incur costs or delays in
seeking to sell such security. To minimize risk, the securities underlying each
repurchase agreement will be maintained with the Fund's custodian in an amount
at least equal to the repurchase price under the agreement (including accrued
interest), and such agreements will be effected only with parties that meet
certain creditworthiness standards established by the Company's board of
directors. Although the Fund has not adopted any limit on the amount of its
total assets that may be invested in repurchase agreements, the Fund intends
that at no time will the market value of its securities subject to repurchase
agreements exceed 20% of the total assets of the Fund.
Restricted Securities. The Fund may invest from time to time in
securities subject to legal or contractual restrictions on resale ("restricted
securities") or securities without readily available market quotations or
illiquid securities (those which cannot be sold in the ordinary course of
business within seven days at approximately the valuation given to them by the
Fund). However, on the date of purchase, no such investment may increase the
Fund's holdings of restricted securities to more than 2% of the Fund's total
assets or its holdings of illiquid securities or those without readily available
market quotations to more than 5% of the value of the Fund's total assets. The
restricted securities that may be purchased subject to the foregoing 2%
limitation include securities that can be resold to institutional investors
pursuant to Rule 144A under the Securities Act of 1933. The Fund is not required
<PAGE>
to receive registration rights in connection with the purchase of restricted
securities and, in the absence of such rights, marketability and value can be
adversely affected because the Fund may be unable to dispose of such securities
at the time desired or at a reasonable price. In addition, in order to resell a
restricted security, the Fund might have to bear the expense and incur delays
associated with effecting registration.
Forward Foreign Currency Contracts. The Fund may enter into contracts
to purchase or sell foreign currencies at a future date ("forward contracts") as
a hedge against fluctuations in foreign exchange rates pending the settlement of
transactions in foreign securities or during the time the Fund holds foreign
securities. A forward contract is an agreement between contracting parties to
exchange an amount of currency at some future time at an agreed ^-upon rate.
Although the Fund has not adopted any limitations on its ability to use forward
contracts as a hedge against fluctuations in foreign exchange rates, it does not
attempt to hedge all of its foreign investment positions and will enter into
forward contracts only to the extent, if any, deemed appropriate by Fund
Management. The Fund will not enter into a forward contract for a term of more
than one year or for purposes of speculation. Investors should be aware that
hedging against a decline in the value of a currency in the foregoing manner
does not eliminate fluctuations in the prices of portfolio securities or prevent
losses if the prices of such securities decline. Furthermore, such hedging
transactions preclude the opportunity for gain if the value of the hedged
currency should rise. No predictions can be made with respect to whether the
total of such transactions will result in a better or a worse position than had
the Fund not entered into any forward contracts. Forward contracts may, from
time to time, be considered illiquid, in which case they would be subject to the
Fund's limitation on investing in illiquid securities, discussed above. For
additional information regarding forward contracts, see the Company's Statement
of Additional Information.
Securities Lending. The Fund also may lend its securities to qualified
brokers, dealers, banks or other financial institutions. This practice permits
the Fund to earn income which, in turn, can be invested in additional securities
to pursue the Fund's investment objective. Loans of securities by the Fund will
be collateralized by cash, letters of credit, or securities issued or guaranteed
by the U.S. government or its agencies equal to at least 100% of the current
market value of the loaned securities, determined on a daily basis. Lending
securities involves certain risks, the most significant of which is the risk
that a borrower may fail to return a portfolio security. The Fund monitors the
creditworthiness of borrowers in order to minimize such risks. The Fund will not
lend any security if, as a result of such loan, the aggregate value of
securities then on loan would exceed 10% of the Fund's total assets (taken at
market value).
Portfolio Turnover. There are no fixed limitations regarding portfolio
turnover for the Fund. Although the Fund does not trade for short ^-term
<PAGE>
profits, securities may be sold without regard to the time they have been held
in the Fund when, in the opinion of Fund Management, investment considerations
warrant such action. As a result, under certain market conditions, the portfolio
turnover rate for the Fund may exceed 100%. Increased portfolio turnover would
cause the Fund to incur greater brokerage costs than would otherwise be the case
and may result in the acceleration of capital gains that are taxable when
distributed to shareholders. The Fund's portfolio turnover rate is set forth
under "Financial Highlights" and, along with the Company's brokerage allocation
policies, is discussed in the Statement of Additional Information.
THE FUND AND ITS MANAGEMENT
The Company is a no ^-load mutual fund, registered with the Securities
and Exchange Commission as an open ^-end, diversified management investment
company. It was incorporated on April 2, 1993, under the laws of Maryland. On
July 1, 1993, the Company assumed all of the assets and liabilities of the
Fund's predecessor portfolio, the Financial International Growth Fund of
Financial Series Trust, a Massachusetts business trust organized on July 15,
1987. All financial and other information about the Fund for periods prior to
July 1, 1993, relates to such former fund. On July 1, 1993, the Company also
assumed, through its INVESCO European and Pacific Basin Funds, all of the assets
and liabilities of those funds' predecessors, the European and Pacific Basin
Portfolios of Financial Strategic Portfolios, Inc., which was incorporated under
the laws of Maryland on August 10, 1983. The overall supervision of the Fund is
the responsibility of the Company's board of directors.
Pursuant to an agreement with the Company, INVESCO Funds Group, Inc.
^("IFG"), 7800 E. Union Avenue, Denver, Colorado, serves as the Company's
investment adviser. Under this agreement, ^ IFG is primarily responsible for
providing the Fund with portfolio management and various administrative services
and supervising the Fund's daily business affairs. These services are subject to
review by the ^ Company's board of directors.
^
Pursuant to an agreement with IFG, INVESCO^ Asset Management Limited
("IAML") serves as the sub-adviser to the Fund. In that capacity, IAML has the
primary responsibility, under the supervision of ^ IFG, for providing portfolio
management services to the Fund. ^ IAML also acts as sub-adviser to the INVESCO
European Fund, the INVESCO Pacific Basin Fund, the INVESCO European Small
Company Fund and the INVESCO Latin American Growth Fund. Although the Fund is
not a party to the sub-advisory agreement, that agreement has been approved by
the shareholders of the Fund.
Under a Distribution Agreement effective September 30, 1997, INVESCO
Distributors, Inc. ("IDI") became the Fund's distributor. IDI, established in
<PAGE>
1997, is a registered broker-dealer that acts as distributor for all retail
funds advised by IFG. Prior to September 30, 1997, IFG served as the Fund's
distributor.
IFG, IAML and IDI are indirect wholly owned subsidiaries of AMVESCAP
PLC. AMVESCAP PLC is a publicly-traded holding company that, through its
subsidiaries, engages in the business of investment management on an
international basis. INVESCO PLC changed its name to AMVESCO PLC on March 3,
1997 and to AMVESCAP PLC on May 8, 1997, as part of a merger between a direct
subsidiary of INVESCO PLC and A I M Management Group Inc., that created one of
the largest independent investment management businesses in the world. IFG and
IAML continue to operate under their existing names. AMVESCAP PLC has
approximately $192.2 billion in assets under management. IFG was established in
1932 and, as of October 31, 1997, managed 14 mutual funds, consisting of 45
separate portfolios, with combined assets of approximately $16.3 billion on
behalf of 851,389 shareholders.
The Fund is managed by ^ INVESCO's International Equity Team. Richard
D. Beggs is part of a senior investment policy group which determines the
country ^-by ^-country allocation of the ^ Fund's assets, overall stock
selection methodology and the ongoing implementation and risk control policies
applicable to the ^ Fund's portfolio. Individual country specialists are
responsible for managing security selection for their assigned ^ country's share
of the allocation within the parameters established by the investment policy
group.
Mr. Beggs has been the lead portfolio manager of the Fund since
November 1997. Mr. Beggs was previously a Fund Manager with Cazenove Fund
Management (1994 to 1995) and worked in U.S. Sales with Cazenove & Co. (1989 to
1994). Mr. Beggs received a B.A. in Economics and Statistics from the University
of Exeter in Devon.
The Fund pays IFG ^ a monthly advisory fee which is based upon a
percentage of the average net assets of the Fund, determined daily. The maximum
advisory fee payable under the agreement is computed at an annual rate of 1.00%
on the first $500 million of the Fund's average net assets; 0.75% on the next
$500 million of the Fund's average net assets; and 0.65% on the average net
assets of the Fund in excess of $1 billion. For the fiscal period ended October
31, ^ 1997, the advisory fees paid to ^ IFG amounted to an annual rate of 1.00%
of the average net assets of the Fund. ^
Out of the advisory fees which it receives from the Fund, ^ IFG pays
IAML, as sub-adviser to the Fund, a monthly fee, which is computed at the
following annual rates ^: prior to January 1, 1998, 0.25% on the first $500
million of the Fund's average net assets, 0.1875% on the next $500 million of
the Fund's average net assets and 0.1625% on the Fund's average net assets in
excess of $1 billion and effective January 1, 1998, 0.3333% on the first $500
million of the Fund's average net assets, 0.25% on the next $500 million of the
s
<PAGE>
Fund's average net assets and 0.2167% on the Fund's average net assets in
excess of $1 billion. No fee is paid by the Fund to IAML.
The Company also has entered into an Administrative Services Agreement
dated February 28, 1997 (the "Administrative Agreement"), with ^ IFG. Pursuant
to the Administrative Agreement, ^ IFG performs certain administrative,
recordkeeping and internal accounting services, including without limitation,
maintaining general ledger and capital stock accounts, preparing a daily trial
balance, calculating net asset value daily, providing selected general ledger
reports, and providing sub ^-accounting and recordkeeping services for
shareholder accounts in the Fund maintained by certain retirement and employee
benefit plans for the benefit of participants of such plans. For such services,
the Fund pays ^ IFG a fee consisting of a base fee of $10,000 per year, plus an
additional incremental fee computed at an annual rate of 0.015% per annum of the
average net assets of the Fund. ^ IFG also is paid a fee by the Company for
providing transfer agent services. See "Additional Information."
The Fund's expenses, which are accrued daily, are deducted from its
total income before dividends are paid. Total expenses of the Fund (prior to any
expense offset ^ arrangements), including investment advisory fees (but
excluding brokerage commissions, which are a cost of acquiring securities), as a
percentage of its average net assets for the fiscal period ended October 31, ^
1997, were ^ 1.71%.
Fund Management places orders for the purchase and sale of portfolio
securities with brokers and dealers based upon its evaluation of such broker
^-dealers' financial responsibility coupled with ^ their ability to effect
transactions at the best available prices. As discussed under "How Shares Can Be
Purchased -Distribution Expenses," the Company may market shares of the Fund
through intermediary brokers or dealers that have entered into Dealer Agreements
with IDI as the Fund's distributor. The Fund may place orders for portfolio
transactions with qualified broker ^-dealers which recommend the Fund to
clients, or sell shares of the Fund to clients, or act as agent in the purchase
of Fund shares for clients, if Fund Management believes that the quality of
execution of the transaction and level of commission are comparable to those
available from other qualified brokerage firms.
Fund Management permits investment and other personnel to purchase and
sell securities for their own accounts, subject to compliance policies governing
personal investing. These policies require Fund Management's personnel to
conduct their personal investment activities in a manner that Fund Management
believes is not detrimental to the Fund or Fund Management's other advisory
clients. See the Statement of Additional Information for more detailed
information.
<PAGE>
HOW SHARES CAN BE PURCHASED
The Fund's shares are sold on a continuous basis by ^ IDI, as the
Fund's ^ distributor, at the net asset value per share next calculated after
receipt of a purchase order in good form. No sales charge is imposed upon the
sale of shares of the Fund. To purchase shares of the Fund, send a check made
payable to INVESCO Funds Group, Inc., together with a completed application
form, to:
INVESCO FUNDS GROUP, INC.
Post Office Box 173706
Denver, Colorado 80217 ^-3706
PURCHASE ORDERS MUST SPECIFY THE FUND IN WHICH THE INVESTMENT IS TO BE
MADE.
The minimum initial purchase must be at least $1,000, with subsequent
investments of not less than $50, except that: (1) those shareholders
establishing an EasiVest or direct payroll purchase account, as described below
in the ^ Prospectus section entitled "Services Provided by the Fund," may open
an account without making any initial investment if they agree to make minimum
monthly purchases of $50; (2) those shareholders investing in an Individual
Retirement Account ("IRA"), or through omnibus accounts where individual
shareholder recordkeeping and sub ^-accounting are not required, may make
initial minimum purchases of $250; (3) Fund Management may permit a lesser
amount to be invested in the Fund under a federal income tax ^-sheltered
retirement plan (other than an IRA) or under a group investment plan qualifying
as a sophisticated investor; and (4) Fund Management reserves the right to
reduce or waive the minimum purchase requirements in its sole discretion where
it determines such action is in the best interests of the Fund. The minimum
initial purchase requirement of $1,000, as described above, does not apply to
shareholder account(s) in any of the INVESCO funds opened prior to January 1,
1993, and thus is not a minimum balance requirement for those existing accounts.
However, for shareholders already having accounts in any of the INVESCO funds,
all initial share purchases in a new fund account, including those made using
the exchange privilege, must meet the fund's applicable minimum investment
requirement.
The purchase of Fund shares can be expedited by placing bank wire,
overnight courier or telephone orders. Overnight courier orders must meet the
above minimum investment requirements. In no case can a bank wire order or a
telephone order be in an amount less than $1,000. For further information, the
purchaser may call the Company's office by using the telephone number on the
cover of this prospectus. Orders sent by overnight courier, including Express
Mail, should be sent to the street address, not Post Office Box, of INVESCO
Funds Group, Inc., 7800 E. Union Avenue, Denver, Colorado 80237.
Orders to purchase shares of the Fund can be placed by telephone.
Shares will be issued at the net asset value next determined after receipt of
telephone instructions. Generally, payments for telephone orders must be
<PAGE>
received by the Fund within three business days or the transaction may be
cancelled. In the event of such cancellation, the purchaser will be held
responsible for any loss resulting from a decline in the value of the shares. In
order to avoid such losses, purchasers should send payments for telephone
purchases by overnight courier or bank wire. ^ IFG has agreed to indemnify the
Fund for any losses resulting from the cancellation of telephone purchases.
If your check does not clear, or if a telephone purchase must be
cancelled due to nonpayment, you will be responsible for any related loss the
Company or ^ IFG incurs. If you are already a shareholder in the INVESCO funds,
the Company, on behalf of the Fund, has the option to redeem shares from any
identically registered account in the Company or any other INVESCO fund as
reimbursement for any loss incurred. You also may be prohibited or restricted
from making future purchases in any of the INVESCO funds.
Persons who invest in this Fund through a securities broker may be
charged a commission or transaction fee by the broker for the handling of the
transaction, if the broker so elects. Any investor may deal directly with the
Company in any transaction. In that event, there is no such charge. ^ IFG or IDI
may from time to time make payments from its revenues to securities dealers and
other financial institutions that provide distribution ^-related and/or
administrative services for the Fund.
The ^ Fund reserves the right in its sole discretion to reject any
order for purchase of its shares (including purchases by exchange) when, in the
judgment of Fund Management, such rejection is in the best interest of the ^
Fund.
Net asset value per share is computed once each day that the New York
Stock Exchange is open as of the close of regular trading on that Exchange
^(generally 4:00 p.m., New York time) and also may be computed on other days
under certain circumstances. Net asset value per share for the Fund is
calculated by dividing the market value of all of the Fund's securities plus the
value of its other assets (including dividends and interest accrued but not
collected), less all liabilities (including accrued expenses), by the number of
outstanding shares of the Fund. If market quotations are not readily available,
a security will be valued at fair value as determined in good faith by the board
of directors. Debt securities with remaining maturities of 60 days or less at
the time of purchase will be valued at amortized cost, absent unusual
circumstances, so long as the Company's board of directors believes that such
value represents fair value.
Distribution Expenses. The Fund is authorized under a Plan and
Agreement of Distribution pursuant to Rule 12b-1 under the Investment Company
Act of 1940 (the "Plan") to use its assets to finance certain activities
relating to the distribution of its shares to investors. The Plan applies to New
Assets (new sales of shares, exchanges into the Fund and reinvestments of
<PAGE>
dividends and capital gains distributions) of the Fund after November 1, 1997.
Under this Plan, monthly payments may be made by the Fund to IDI to permit IDI,
at its discretion, to engage in certain activities and provide certain services
approved by the board of directors of the Company in connection with the
distribution of the Fund's shares to investors. These activities and services
may include the payment of compensation (including incentive compensation and/or
continuing compensation based on the amount of customer assets maintained in the
Fund) to securities dealers and other financial institutions and organizations,
which may include IFG and IDI affiliated companies, to obtain various
distribution-related and/or administrative services for the Fund. Such services
may include, among other things, processing new shareholder account
applications, preparing and transmitting to the Fund's Transfer Agent computer
processable tapes of all transactions by customers, and serving as the primary
source of information to customers in answering questions concerning the Fund
and their transactions with the Fund.
In addition, other permissible activities and services include
advertising, the preparation, printing and distribution of sales literature,
printing and distribution of prospectuses to prospective investors, and such
other services and promotional activities for the Funds as may from time to time
be agreed upon by the Company and its board of directors, including public
relations efforts and marketing programs to communicate with investors and
prospective investors. These services and activities may be conducted by the
staff of IFG, IDI or their affiliates or by third parties.
Under the Plan, the Company's payments to IDI on behalf of the Fund are
limited to an amount computed at an annual rate of 0.25% of the Fund's New
Assets. IDI is not entitled to payment for overhead expenses under the Plan, but
may be paid for all or a portion of the compensation paid for salaries and other
employee benefits for the personnel of IFG or IDI whose primary responsibilities
involve marketing shares of the INVESCO funds, including the Fund. Payment
amounts by the Fund under the Plan, for any month, may be made to compensate IDI
for permissible activities engaged in and services provided by IDI during the
rolling 12-month period in which that month falls. Therefore, any obligations
incurred by IDI in excess of the limitations described above will not be paid by
the Fund under the Plan, and will be borne by IDI. In addition, IDI and its
affiliates may from time to time make additional payments from its revenues to
securities dealers, financial advisers and financial institutions that provide
distribution-related and/or administrative services for the Fund. No further
payments will be made by the Fund under the Plan in the event of the Plan's
termination. Payments made by the Fund may not be used to finance directly the
distribution of shares of any other Fund of the Company or other mutual fund
advised by IFG or distributed by IDI. However, payments received by IDI which
are not used to finance the distribution of shares of a Fund become part of
<PAGE>
IDI's revenues and may be used by IDI for activities that promote distribution
of any of the mutual funds advised by IFG. Subject to review by the Funds'
directors, payments made by the Fund under the Plan for compensation of
marketing personnel, as noted above, are based on an allocation formula designed
to ensure that all such payments are appropriate. IDI will bear any
distribution- and service-related expenses in excess of the amounts which are
compensated pursuant to the Plan. The Plan also authorizes any financing of
distributions which may result from IDI's use of its own resources, including
profits from investment advisory fees received from a Fund, providing that such
fees are legitimate and not excessive. For more information, see "How Shares Can
Be Purchased - Distribution Plan" in the Statement of Additional Information.
SERVICES PROVIDED BY THE FUND
Shareholder Accounts. ^ IFG maintains a share account that reflects the
current holdings of each shareholder. Share certificates will be issued only
upon specific request. Because certificates must be carefully safeguarded and
must be surrendered in order to exchange or redeem Fund shares, most
shareholders do not request share certificates in order to facilitate such
transactions. Each shareholder is sent a detailed confirmation for each
transaction in shares of the Fund. Shareholders whose only transactions are
through the EasiVest, direct payroll purchase, automatic monthly exchange or
periodic withdrawal programs, or are reinvestments of dividends or capital gains
in the same or another fund, will receive confirmations of those transactions on
their quarterly statements. These programs are discussed below. For information
regarding a shareholder's account and transactions, the shareholder may call the
Fund's office by using the telephone number on the cover of this prospectus.
Reinvestment of Distributions. Dividends and other distributions are
automatically reinvested in additional shares of the Fund at the net asset value
per share in effect on the ex ^-dividend or ex-distribution date. A shareholder
may, however, elect to reinvest dividends and other distributions in certain of
the other no ^-load mutual funds advised by IFG and distributed by ^ IDI, or to
receive payment of all dividends and other distributions in excess of ten
dollars by check by giving written notice to ^ IFG at least two weeks prior to
the record date on which the change is to take effect. Further information
concerning these options can be obtained by contacting ^ IFG.
Periodic Withdrawal Plan. A Periodic Withdrawal Plan is available to
shareholders who own or purchase shares of any mutual funds advised by ^ IFG
having a total value of $10,000 or more; provided, however, that at the time the
Plan is established, the shareholder owns shares having a value of at least
$5,000 in the fund from which the withdrawals will be made. Under the Periodic
Withdrawal Plan, ^ IFG, as agent, will make specified monthly or quarterly
payments of any amount selected (minimum payment of $100) to the party
<PAGE>
designated by the shareholder. Notice of all changes concerning the Periodic
Withdrawal Plan must be received by ^ IFG at least two weeks prior to the next
scheduled check. Further information regarding the Periodic Withdrawal Plan and
its requirements and tax consequences can be obtained by contacting ^ IFG.
Exchange ^ Policy. Shares of this Fund may be exchanged for shares of
any other fund of the Company, as well as for shares of any of the following
other no ^-load mutual funds, which are also advised by IFG and distributed by ^
IDI, on the basis of their respective net asset values at the time of the
exchange: INVESCO Capital Appreciation Funds, Inc. (formerly, INVESCO Dynamics
Fund, Inc.), INVESCO Diversified Funds, Inc.^, INVESCO Emerging Opportunity
Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income Funds, Inc., INVESCO
Industrial Income Fund, Inc., INVESCO Money Market Funds, Inc., INVESCO Multiple
Asset Funds, Inc., INVESCO Specialty Funds, Inc., INVESCO Strategic Portfolios,
Inc., INVESCO Tax ^-Free Income Funds, Inc. and INVESCO Value Trust.
An exchange involves the redemption of shares in the Fund and
investment of the redemption proceeds in shares of another fund of the Company
or in one of the funds listed above. Exchanges will be made at the net asset
value per share next determined after receipt of an exchange request in proper
order. Any gain or loss realized on an exchange is recognizable for federal
income tax purposes by the shareholder. Exchange requests may be made either by
telephone or by written request to ^ IFG using the telephone number or address
on the cover of this ^ Prospectus. Exchanges made by telephone must be in the
amount of at least $250 if the exchange is being made into an existing account
of one of the INVESCO funds. All exchanges that establish a new account must
meet the Fund's applicable minimum initial investment requirements. Written
exchange requests into an existing account have no minimum requirements other
than the Fund's applicable minimum subsequent investment requirements.
The ^ option to exchange Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing the New Account
Application or a Telephone Transaction Authorization Form or otherwise utilizing
the telephone exchange ^ option, the investor has agreed that the Fund will not
be liable for following instructions communicated by telephone that it
reasonably believes to be genuine. The Fund employs procedures, which it
believes are reasonable, designed to confirm that exchange instructions are
genuine. These may include recording telephone instructions and providing
written confirmations of exchange transactions. As a result of this policy, the
investor may bear the risk of any loss due to unauthorized or fraudulent
instructions; provided, however, that if the Fund fails to follow these or other
reasonable procedures, the Fund may be liable.
In order to prevent abuse of this ^ policy to the disadvantage of other
shareholders, the Fund reserves the right to terminate the exchange ^ option of
<PAGE>
any shareholder who requests more than four exchanges a year. The Fund will
determine whether to do so based on a consideration of both the number of
exchanges any particular shareholder, or group of shareholders, has requested
and the time period over which those exchange requests have been made, together
with the level of expense to the Fund which will result from effecting
additional exchange requests. The exchange ^ policy also may be modified or
terminated at any time. Except for those limited instances where redemptions of
the exchanged security are suspended under Section 22(e) of the 1940 Act, or
where sales of the fund into which the shareholder is exchanging are temporarily
stopped, notice of all such modifications or terminations of the exchange ^
policy will be given at least 60 days prior to the date of termination or the
effective date of the modification.
Before making an exchange, the shareholder should review the
prospectuses of the funds involved and consider their differences, and should be
aware that the exchange privilege may only be available in those states where
exchanges may legally be made, which will require that the shares being acquired
are registered for sale in the shareholder's state of residence. Shareholders
interested in exercising the exchange ^ option may contact ^ IFG for information
concerning their particular exchanges.
Automatic Monthly Exchange. Shareholders who have accounts in any one
or more of the mutual funds distributed by ^ IDI may arrange for a fixed dollar
amount of their fund shares to be automatically exchanged for shares of any
other INVESCO mutual fund listed under "Exchange ^ Policy" on a monthly basis.
The minimum monthly exchange in this program is $50.00. This automatic exchange
program can be changed by the shareholder at any time by notifying ^ IFG at
least two weeks prior to the date the change is to be made. Further information
regarding this service can be obtained by contacting ^ IFG.
EasiVest. For shareholders who want to maintain a schedule of monthly
investments, EasiVest uses various methods to draw a preauthorized amount from
the shareholder's bank account to purchase Fund shares. This automatic
investment program can be changed by the shareholder at any time by ^ contacting
IFG at least two weeks prior to the date the change is to be made. Further
information regarding this service can be obtained by contacting ^ IFG.
Direct Payroll Purchase. Shareholders may elect to have their employers
make automatic purchases of Fund shares for them by deducting a specified amount
from their regular paychecks. This automatic investment program can be modified
or terminated at any time by the shareholder, by notifying the employer. Further
information regarding this service can be obtained by contacting ^ IFG.
Tax ^-Deferred Retirement Plans. Shares of this Fund may be purchased
for self ^-employed individual retirement plans, various IRAs, simplified
<PAGE>
employee pension plans and corporate retirement plans. In addition, shares can
be used to fund tax ^-qualified plans established under Section 403(b) of the
Internal Revenue Code by educational institutions, including public school
systems and private schools, and certain kinds of non ^-profit organizations,
which provide deferred compensation arrangements for their employees.
Prototype forms for the establishment of these various plans including,
where applicable, disclosure statements required by the Internal Revenue
Service, are available from ^ IFG. INVESCO Trust Company, a subsidiary of ^ IFG,
is qualified to serve as trustee or custodian under these plans and provides the
required services at competitive rates. Retirement plans (other than IRAs)
receive monthly statements reflecting all transactions in their Fund accounts.
IRAs receive the confirmations and quarterly statements described under
"Shareholder Accounts." For complete information, including prototype forms and
service charges, call INVESCO at the telephone number listed on the cover of
this prospectus or send a written request to: Retirement Services, INVESCO Funds
Group, Inc., Post Office Box 173706, Denver, Colorado 80217 ^-3706.
<PAGE>
HOW TO REDEEM SHARES
Shares of this Fund may be redeemed at any time at their net asset
value next determined after a request in proper form is received at the Fund's
office. (See "How Shares Can Be Purchased.") Net asset value per share of the
Fund at the time of the redemption may be more or less than the price originally
paid to purchase shares, depending primarily upon the Fund's investment
performance.
If the shares to be redeemed are represented by stock certificates, a
written request for redemption signed by the registered shareholder(s) and the
certificates must be forwarded to INVESCO Funds Group, Inc., Post Office Box
173706, Denver, Colorado 80217 ^-3706. Redemption requests sent by overnight
courier, including Express Mail, should be sent to the street address, not Post
Office Box, of INVESCO Funds Group, Inc., at 7800 E. Union Avenue, Denver,
Colorado 80237. If no certificates have been issued, a written redemption
request signed by each registered owner of the account may be submitted to ^ IFG
at the address noted above. If shares are held in the name of a corporation,
additional documentation may be necessary. Call or write for ^ specific
information. If payment for the redeemed shares is to be made to someone other
than the registered owner(s), the signature(s) must be guaranteed by a financial
institution which qualifies as an eligible guarantor institution. Redemption
procedures with respect to accounts registered in the names of broker ^-dealers
may differ from those applicable to other shareholders.
BE CAREFUL TO SPECIFY THE ACCOUNT FROM WHICH THE REDEMPTION IS TO BE
MADE. SHAREHOLDERS HAVE A SEPARATE ACCOUNT FOR EACH FUND IN WHICH THEY INVEST.
Payment of redemption proceeds will be mailed within seven days
following receipt of the required documents. However, payment may be postponed
under unusual circumstances, such as when normal trading is not taking place on
the New York Stock Exchange or an emergency as defined by the Securities and
Exchange Commission exists. If the shares to be redeemed were purchased by check
and that check has not yet cleared, payment will be made promptly upon clearance
of the purchase check (which will take up to 15 days).
If a shareholder participates in EasiVest, the Fund's automatic monthly
investment program, and redeems all of the shares in a Fund account, ^ IFG will
terminate any further EasiVest purchases unless otherwise instructed by the
shareholder.
Because of the high relative costs of handling small accounts, should
the value of any shareholder's account fall below $250 as a result of
shareholder action, the Company reserves the right to effect the involuntary
redemption of all shares in such account, in which case the account would be
liquidated and the proceeds forwarded to the shareholder. Prior to any such
redemption, a shareholder will be notified and given 60 days to increase the
value of the account to $250 or more.
<PAGE>
Fund shareholders (other than shareholders holding Fund shares in
accounts of IRA plans) may request expedited redemption of shares having a
minimum value of $250 (or redemption of all shares if their value is less than
$250) held in accounts maintained in their name by telephoning redemption
instructions to ^ IFG, using the telephone number on the cover of this ^
Prospectus. The redemption proceeds, at the shareholder's option, either will be
mailed to the address listed for the shareholder's Fund account, or wired
(minimum of $1,000) or mailed to the bank which the shareholder has designated
to receive the proceeds of telephone redemptions. The Fund charges no fee for
effecting such telephone redemptions. Unless Fund Management permits a larger
redemption request to be placed by telephone, a shareholder may not place a
redemption request by telephone in excess of $25,000. These telephone redemption
privileges may be modified or terminated in the future at the discretion of Fund
Management.
For federal income tax-deferred retirement plans, the term
"shareholders" is defined to mean plan trustees that file a written request to
be able to redeem Fund shares by telephone. Unless Fund Management permits a
larger redemption request to be placed by telephone, a shareholder may not place
a redemption request by telephone in excess of $25,000. The redemption proceeds,
at the shareholder's option, either will be mailed to the address listed for the
shareholder on its Fund account, or wired (minimum $1,000) or mailed to the bank
which the shareholder has designated to receive the proceeds of telephone
redemptions. The Fund charges no fee for effecting such telephone redemptions.
These telephone redemption privileges may be modified or terminated in the
future at the discretion of Fund Management. Shareholders should understand
that, while the Fund will attempt to process all telephone redemption requests
on an expedited basis, there may be times, particularly in periods of severe
economic or market disruption, when (a) they may encounter difficulty in placing
a telephone redemption request, and (b) processing telephone redemptions will
require up to seven days following receipt of the redemption request, or
additional time because of the unusual circumstances set forth above.
The privilege of redeeming Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing a new account
Application or a Telephone Transaction Authorization Form or otherwise utilizing
telephone redemption privileges, the shareholder has agreed that the Fund will
not be liable for following instructions communicated by telephone that it
reasonably believes to be genuine. The Fund employs procedures, which it
believes are reasonable, designed to confirm that telephone instructions are
genuine. These may include recording telephone instructions and providing
written confirmation of transactions initiated by telephone. As a result of this
policy, the investor may bear the risk of any loss due to unauthorized or
fraudulent instructions; provided, however, that if the Fund fails to follow
these or other reasonable procedures, the Fund may be liable.
<PAGE>
TAXES, DIVIDENDS AND ^ OTHER DISTRIBUTIONS
Taxes. The Fund intends to distribute to shareholders ^ all of its net
investment income, net capital gains and net gains from foreign currency
transactions, if any^. Distribution of substantially all net investment income
to shareholders allows the Fund to maintain its tax status as a regulated
investment company. ^ Due to its tax status as a regulated investment company,
the Fund does not expect to pay any federal income or excise taxes.
^ Shareholders must include all dividends and capital gain
distributions in taxable income for federal, state and local income tax
purposes, unless shareholders are exempt from income taxes. Dividends and other
distributions are taxable whether they are received in cash or automatically
invested in shares of the Fund or another fund in the INVESCO group.
Net realized capital gains of the Fund are classified as short-term and
long-term gains depending upon how long the Fund held the security that gave
rise to the gains. Short-term capital gains are included in income from
dividends and interest as ordinary income and are taxed at the taxpayer's
marginal tax rate. The Taxpayer Relief Act of 1997 (the "Tax Act"), enacted in
August 1997, changed the taxation of long-term capital gains by applying
different capital gains rates depending on the taxpayer's holding period and
marginal rate of federal income tax. Long-term gains realized on the sale of
securities held for more than one year but not for more than 18 months are
taxable at a rate of 28%. This category of long-term gains is often referred to
as "mid-term" gains but is technically termed "28% rate gains." Long-term gains
realized on the sale of securities held for more than 18 months are taxable at a
rate of 20%. At the end of each year, information regarding the tax status of
dividends and other distributions is provided to shareholders. Shareholders
should consult their tax adviser as to the effect of the Tax Act on
distributions by the Fund of net capital gain.
Shareholders may realize capital gains or losses when they sell their
shares at more or less than the price originally paid. Capital gain on shares
held for more than one year will be long-term capital gain, in which event it
will be subject to federal income tax at the rates indicated above.
The Fund may be subject to the withholding of foreign taxes on
dividends or interest it receives on foreign securities. Foreign taxes withheld
will be treated as an expense of the Fund ^.
^ Individual and other non-corporate shareholders may be subject to
backup withholding of 31% on dividends, capital ^ gains, and other distributions
and redemption proceeds. ^ You can avoid backup withholding on ^ your account by
ensuring that ^ we have a correct, certified tax identification number, unless
you are subject to backup withholding for other reasons.^
<PAGE>
^ We encourage you to consult a tax adviser with respect to these
matters. For further information see "Dividends, Other Distributions And Taxes"
in the Statement of Additional Information.
Dividends and Other Distributions. The Fund earns ordinary or net
investment income in the form of dividends ^ on investments. Dividends paid by
the Fund will be based solely on the income earned by it. The Fund's policy is
to distribute ^ all of this income, less ^ expenses, to shareholders ^ on an
annual basis, at the discretion of the Company's board of directors. Dividends
are automatically reinvested in additional shares of the Fund, unless otherwise
requested, at the net asset value on the ex-dividend date.
In addition, the Fund realizes capital gains and losses when it sells
securities or derivatives for more or less than it paid. If total gains on sales
exceed total losses (including losses carried forward from previous years), the
Fund has a net realized capital gain. Net realized capital gains, if any,
together with gains, if any, realized on foreign currency transactions are
distributed to shareholders at least annually, usually in December. Capital gain
distributions are automatically reinvested in additional shares of the Fund,
unless otherwise requested, at the net asset value on the ex-dividend date.
Dividends and other ^ distributions are paid to shareholders who hold
shares on the record date of the distribution, regardless of how long the shares
have been held. The Fund's share price will then drop by the amount of the
distribution on the ^ ex-dividend or ex-distribution ^ date. If a shareholder
purchases shares immediately prior to the distribution, the shareholder will, in
effect, have "bought" the distribution by paying full purchase price, a portion
of which is then returned in the form of a taxable distribution.
^
ADDITIONAL INFORMATION
Voting Rights. All shares of the Company's funds have equal voting
rights. When shareholders are entitled to vote upon a matter, each shareholder
is entitled to one vote for each share owned and a corresponding fractional vote
for each fractional share owned. Voting with respect to certain matters, such as
ratification of independent accountants and the election of directors, will be
by all funds of the Company voting together. In other cases, such as voting upon
the investment advisory contract for an individual fund, voting is on a fund
^-by ^-fund basis. To the extent permitted by law, when not all funds are
affected by a matter to be voted upon, only the shareholders of the fund or
funds affected by the matter will be entitled to vote. The Company is not
generally required and does not expect to hold regular annual meetings of
<PAGE>
shareholders. However, the board of directors will call special meetings of
shareholders for the purpose, among other reasons, of voting upon the question
of removal of a director or directors when requested to do so in writing by the
holders of 10% or more of the outstanding shares of the Company or as may be
required by applicable law or the Company's Articles of Incorporation. The
Company will assist shareholders in communicating with other shareholders as
required by the 1940 Act. Directors may be removed by action of the holders of a
majority of the outstanding shares of the Company.
Shareholder Inquiries. All inquiries regarding the Fund should be
directed to the Fund at the telephone number or mailing address set forth on the
cover page of this ^ Prospectus.
Transfer and Dividend Disbursing Agent. INVESCO Funds Group, Inc., 7800
E. Union Ave., Denver, Colorado 80237, also acts as registrar, transfer agent
and dividend disbursing agent for the Fund pursuant to a Transfer Agency
Agreement which provides that the Fund will pay an annual fee of $20.00 per
shareholder account or, where applicable, per participant in an omnibus account
^. The transfer agency fee is not charged to each shareholder's or participant's
account but is an expense of the Fund to be paid from the Fund's assets.
Registered broker ^-dealers, third party administrators of tax ^-qualified
retirement plans and other entities, including affiliates of ^ IFG, may provide
sub ^-transfer agency services to the Fund which reduce or eliminate the need
for identical services to be provided ^ on behalf of the Fund by IFG. In such
cases, ^ IFG may pay the third party an annual sub ^-transfer agency or record
^-keeping fee out of the transfer agency fee which is paid to ^ IFG by the Fund.
<PAGE>
PROSPECTUS
March 1, 1998
INVESCO INTERNATIONAL GROWTH FUND
A no-load mutual fund
seeking a high total
return through
investments overseas.
^ INVESCO FUNDS
INVESCO Distributors, Inc.
Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
1-800-525-8085
PAL(R): 1-800-424-8085
http://www.invesco.com
^ In Denver, visit one of our
convenient Investor Centers:
Cherry Creek,
155 ^-B Fillmore Street;
Denver Tech Center,
7800 East Union Avenue,
Lobby Level
In addition, all documents filed by the Company with the Securities and Exchange
Commission can be located on a web site maintained by the Commission at
http://www.sec.gov.
<PAGE>
Prospectus
^ March 1, 1998
INVESCO EMERGING MARKETS FUND
INVESCO Emerging Markets Fund (the "Fund") seeks to achieve capital
appreciation. Under normal circumstances, the Fund will invest at least 65% of
its total assets in securities of emerging country issuers. The Fund is not
intended as a complete investment program due to risks of investing in the Fund.
For a description of risks inherent in investing in the Fund see "Risk Factors"
and "Investment Objective and Policies - Portfolio Turnover."
The Fund is a series of INVESCO International Funds, Inc. (the
"Company"), an open-end management investment company consisting of four
separate portfolios of investments. This Prospectus relates to shares of INVESCO
Emerging Markets Fund. Separate prospectuses are available upon request from
INVESCO Distributors, Inc. for the Company's other three funds, INVESCO European
Fund, INVESCO Pacific Basin Fund and INVESCO International Growth Fund.
Investors may purchase shares of any or all of the Funds. Additional funds may
be offered in the future.
This Prospectus provides you with the basic information you should know
before investing in the Fund. You should read it and keep it for future
reference. A Statement of Additional Information containing further information
about the Fund, dated March 1, 1998, has been filed with the Securities and
Exchange Commission and is incorporated by reference into this Prospectus. To
obtain a free copy, write to INVESCO Distributors, Inc., Post Office Box 173706,
Denver, Colorado 80217-3706; call 1-800-525-8085; or visit our web site at
http://www.invesco.com.
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. SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY ANY BANK OR OTHER FINANCIAL INSTITUTION. THE SHARES OF
THE FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
----------
<PAGE>
TABLE OF CONTENTS Page
----
ANNUAL FUND EXPENSES 63
PERFORMANCE DATA 64
INVESTMENT OBJECTIVE AND POLICIES 65
RISK FACTORS 72
THE FUND AND ITS MANAGEMENT 79
HOW SHARES CAN BE PURCHASED 81
SERVICES PROVIDED BY THE FUND 84
HOW TO REDEEM SHARES 88
TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS 90
ADDITIONAL INFORMATION 92
<PAGE>
ANNUAL FUND EXPENSES
The Fund is no-load; there are no fees to purchase, exchange or redeem
shares other than a fee to redeem or exchange shares held less than 3 months
(see "Shareholder Transaction Expenses"). The Fund, however, is authorized to
pay a Rule 12b-1 distribution fee of one quarter of one percent of the Fund's
average net assets each year. (See "How Shares Can Be Purchased - Distribution
Expenses.") Lower expenses benefit Fund shareholders by increasing the Fund's
total return.
Shareholder Transaction Expenses
- --------------------------------
Sales load "charge" on purchases None
Sales load "charge" on reinvested dividends None
Redemption fees 1.00%*
Exchange fees 1.00%*
Annual Fund Operating Expenses
- ------------------------------
(as a percentage of average net assets)
Management Fee 1.00%
12b-1 Fees 0.25%
Other Expenses 0.75%
(after voluntary expense limitation)(1)
Transfer Agency Fee(2) 0.20%
General Services, Administrative 0.55%
Services, Registration, Postage (3)
Total Fund Operating Expenses 2.00%
(after voluntary expense limitation)(1)
*There is a 1% fee retained by the Fund to offset transaction costs and other
expenses associated with short-term redemptions and exchanges, which is imposed
only on redemptions or exchanges of shares held less than ^ three months.
(1) Based on estimated expenses for the current fiscal year, which may
be more or less than actual expenses. Actual expenses are not provided because
the Fund did not begin a public offering of its shares until February 12,
1998. If necessary, certain Fund expenses will be absorbed voluntarily for
at least the first fiscal year of the Fund's operations in order to ensure that
expenses for the Fund will not exceed 2.00% of the Fund's average net assets
pursuant to an agreement among the ^ Company, INVESCO Funds Group, Inc. and
INVESCO Asset Management Limited. If such voluntary expense limit were not in
effect, the Fund's "Other Expenses" and "Total Fund Operating Expenses" for the
fiscal year ending October 31, 1998 would be estimated to be 1.09% and 2.34%,
respectively, of the Fund's average net assets.
(2) Consists of the transfer agency fee described under "Additional
Information-Transfer and Dividend Disbursing Agent."
<PAGE>
(3) Includes, but is not limited to, fees and expenses of directors,
custodian bank, legal counsel and independent accountants, securities pricing
services, costs of administrative services under an Administrative Services
Agreement, costs of registration of Fund shares under applicable laws, and costs
of printing and distributing reports to shareholders.
Example
A shareholder would pay the following expenses on a $1,000 investment
for the periods shown, assuming (1) a 5% annual return and (2) redemption at the
end of each time period:
1 Year 3 Years
------ -------
$21 $63
The purpose of the foregoing table and Example is to assist investor
in understanding the various costs and expenses that an investor in the Fund
will bear directly or indirectly. Such expenses are paid from the Fund's assets.
(See "The Fund and Its Management.") The above figures are estimates, since the
Fund did not commence a public offering of securities until February 12, 1998.
The Fund charges no sales load. The Fund's shares are subject to an annual
distribution fee of 0.25% of its average daily net assets. THE EXAMPLE SHOULD
NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES, AND ACTUAL EXPENSES MAY
BE GREATER OR LESS THAN THOSE SHOWN. The assumed 5% annual return is
hypothetical and should not be considered a representation of future annual
returns, which may be greater or less than the assumed amount.
Because the Fund pays a distribution fee on its shares, investors who
own Fund shares for a long period of time may pay more than the economic
equivalent of the maximum front-end sales charge permitted for mutual funds by
the National Association of Securities Dealers, Inc.
PERFORMANCE DATA
From time to time, the Fund may advertise its total return performance.
These figures are based upon historical earnings and are not intended to
indicate future performance. The "total return" of the Fund refers to the
average annual rate of return of an investment in the Fund. This figure is
computed by calculating the percentage change in value of an investment of
$1,000, assuming reinvestment of all income dividends and other distributions,
to the end of a specified period. Periods of one year, five years, ten years
and/or life of the Fund are generally used.
Thus, a report of total return should not be considered as
representative of future performance. The Fund charges no sales loads which
would affect the total return computation. However, the total return computation
may be affected as a result of the 1% redemption or exchange fee which is
retained by the Fund to offset transaction costs and other expenses associated
<PAGE>
with short-term redemptions and exchanges, which is imposed on redemptions or
exchanges of shares held less than 3 months.
In conjunction with performance reports and/or analyses of shareholder
service for the Fund, comparative data between the Fund's performance for a
given period and the performance of recognized indices of investment results for
the same period, and/or assessments of the quality of shareholder service, may
be provided to shareholders. Such indices include indices provided by Dow Jones
& Company, Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc. ("S&P"), Lipper Analytical Services, Inc., Lehman Brothers,
National Association of Securities Dealers Automated Quotations, Frank Russell
Company, Value Line Investment Survey, the American Stock Exchange, Morgan
Stanley Capital International World Index, Wilshire Associates, the Financial
Times-Stock Exchange, the New York Stock Exchange, the Nikkei Stock Average and
the Deutcher Aktienindex, all of which are unmanaged market indicators. In
addition, rankings, ratings, and comparisons of investment performance and/or
assessments of the quality of shareholder service appearing in publications such
as Money, Forbes, Kiplinger's Personal Finance, Morningstar, and similar sources
which utilize information compiled (i) internally; (ii) by Lipper Analytical
Services, Inc.; or (iii) by other recognized analytical services, may be used in
advertising. The Lipper Analytical Services, Inc. mutual fund rankings and
comparisons, which may be used by the Fund in performance reports, will be drawn
from the "Emerging Markets" Lipper mutual fund grouping, in addition to the
broad-based Lipper general fund grouping.
Further information about the performance of the Fund will be contained
in the Company's annual report to shareholders, which may be obtained without
charge by writing INVESCO Distributors, Inc., P.O. Box 173706, Denver, Colorado
80217-3706; by calling 1-800-525-8085; or by visiting our web site at
http://www.invesco.com. The annual report containing information about the
Fund's first fiscal year of operations will be available on or about December
1, 1998.
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks to achieve capital appreciation. The foregoing
investment objective is fundamental and may not be changed in any material
respect without the approval of the Fund's shareholders. Under normal
circumstances, the Fund will invest at least 65% of its total assets in equity
securities of emerging country issuers.
As used in this Prospectus, the term "emerging country" applies to any
country which, in the opinion of the Fund's investment adviser or sub-adviser
(collectively, "Fund Management"), is generally considered to be a developing or
emerging country by the international financial community. These countries
include countries with low- to middle-income economies according to the
<PAGE>
International Bank for Reconstruction and Development (commonly known as the
World Bank), those listed in World Bank publications as developing or those
having emerging stock markets as defined by the International Finance
Corporation. Emerging countries generally include every nation in the world
except the United States, Canada, Japan, Australia, New Zealand and the nations
in Western Europe other than Greece, Portugal and Turkey. The Fund will focus
its investments in those emerging countries that Fund Management believes have
the potential for rapid growth and that have undertaken economic and securities
market reforms making international investment feasible. The Fund normally will
invest in at least three different emerging countries, although Fund Management
expects the Fund's assets to be allocated among a larger number of emerging
countries. The Fund normally will not invest more than 50% of its total assets
in any one emerging country. The economies of these countries may vary widely in
their condition and may be subject to certain changes that could have a positive
or negative impact on the Fund. Investments in emerging countries involve
certain risks that are discussed below under "Risk Factors."
An "emerging country issuer" is a company that, in the opinion of Fund
Management, has one or more of the following characteristics: (i) its principal
securities trading market is in an emerging country; (ii) the company derives
50% or more of its annual revenue from either goods produced, sales made or
services performed in emerging countries; or (iii) the company is organized
under the laws of, or has its principal office in, an emerging country. Fund
Management will base its determination of whether a company is an emerging
country issuer on publicly available information or inquiries made to the
company.
Under normal conditions, the Fund will invest primarily in equity
securities (common stocks and, to a lesser degree, depository receipts, shares
of unaffiliated investment companies, preferred stocks and securities
convertible into common stocks, such as rights, warrants and convertible debt
securities) that are discussed more fully under "Risk Factors" and in the
Statement of Additional Information. In selecting the equity securities in which
the Fund invests, Fund Management attempts to identify companies that have
demonstrated or, in Fund Management's opinion, are likely to demonstrate in the
future, strong earnings growth or value that reflects the underlying economic
activity within the emerging country or countries in which they operate. Equity
securities may be issued by either established, well-capitalized companies or
newly-formed, small-cap companies, and may trade on regional or national stock
exchanges or in the over-the-counter market. The Fund's investments in small
capitalization stocks may include investments in companies that have limited
operating histories, product lines, and financial and managerial resources.
These companies may be subject to intense competition from larger companies, and
their stock may be subject to more abrupt or erratic market movements than the
stocks of larger, more established companies. Due to these and other factors,
small-cap companies may suffer significant losses as well as realize substantial
growth.
<PAGE>
The balance of the Fund's assets may be invested in debt securities
denominated in the currency of an emerging country, or issued or guaranteed by
an emerging country issuer or the government of an emerging country, as well as
equity or debt securities of U.S. and other developed country issuers, including
non-investment grade and unrated debt securities. Equity securities of developed
country issuers in which the Fund invests may be issued by either established,
well-capitalized companies or newly-formed, small-cap companies, and may trade
on regional or national stock exchanges or in the over-the-counter market. Debt
securities in which the Fund invests must meet the quality standards described
below. In addition, the Fund may hold certain cash and cash equivalent
securities as cash reserves ("cash securities").
As discussed above, consistent with its investment objective, the Fund
may invest in debt securities, including corporate bonds, commercial paper,
securities issued by the U.S. government, its agencies and instrumentalities, or
foreign governments and, to a lesser extent, municipal bonds, asset-backed
securities and zero coupon bonds. The Fund may invest in debt securities that
are rated below BBB by S&P or Baa by Moody's Investors Services, Inc.
("Moody's") or equivalent ratings of other ratings services or, if unrated, that
are judged by Fund Management to be equivalent in quality to debt securities
having such ratings (commonly referred to as "junk bonds"), provided that the
Fund's investments in junk bonds are less than 35% of its total assets at the
time of purchase. The Fund expects that most foreign debt securities in which it
invests will not be rated by U.S. rating services, as discussed more fully
below. In no event will the Fund ever invest in a debt security rated below CCC
by S&P or Caa by Moody's or equivalent ratings of other ratings services or, if
unrated, ^ judged by Fund Management to be equivalent in quality to debt
securities having such ratings. The risks of investing in lower rated debt
securities are discussed below under "Risk Factors."
The amounts invested in equity, debt and cash securities may be varied
from time to time, depending upon Fund Management's assessment of business,
economic and market conditions. In periods of adverse economic and market
conditions, as determined by Fund Management, the Fund may depart from its basic
investment objective and assume a temporary defensive position, with up to 100%
of its assets invested in U.S. government and agency securities, investment
grade corporate bonds, or cash securities such as domestic certificates of
deposit and bankers' acceptances, repurchase agreements and commercial paper.
The Fund reserves the right to hold equity, debt and cash securities in whatever
proportion is deemed desirable at any time for temporary defensive purposes.
While the Fund is in a temporary defensive position, the opportunity to achieve
capital appreciation will be limited; however, the ability to maintain a
temporary defensive position enables the Fund to seek to avoid capital losses
<PAGE>
during market downturns. Under normal market conditions, the Fund does not
expect to have a substantial portion of its assets invested in cash securities.
In order to hedge its portfolio, the Fund may purchase and write
options on securities, including index options, and may invest in futures
contracts for the purchase or sale of foreign currencies, debt securities and
instruments based on financial indices (collectively, "futures contracts"),
options on futures contracts, forward contracts and interest rate swaps and
swap-related products. Interest rate swaps involve the exchange by the Fund with
another party of their respective commitments to pay or receive interest, e.g.,
an exchange of floating rate payments for fixed rate payments. These practices,
some of which may involve instruments known as derivatives, and their risks are
discussed below under "Risk Factors" and in the Statement of Additional
Information.
Additional information on certain types of securities in which the Fund
may invest is set forth below:
Delayed Delivery or When-Issued Securities.
Up to 10% of the value of the Fund's total assets may be committed to
the purchase or sale of securities on a when-issued or delayed-delivery basis --
that is, with settlement taking place in the future. The payment obligation and
the interest rate received on the securities generally are fixed at the time the
Fund enters into the commitment but the Fund would not pay for such securities
or start earning interest on them until they are delivered. However, the Fund
immediately assumes the risk of ownership, and between the date of purchase and
the settlement date, the market value of the securities may fluctuate.
Illiquid and Rule 144A Securities
The Fund is authorized to invest in securities that are illiquid
because they are subject to restrictions on their resale ("restricted
securities") or because, based upon their nature or the market for such
securities, they are not readily marketable. However, the Fund will not purchase
any such security if the purchase would cause the Fund to invest more than 15%
of its net assets, measured at the time of purchase, in illiquid securities.
Securities the proceeds of which are subject to limitations on repatriation of
principal or profits for more than seven days, and those for which there ceases
to be a ready market, will be deemed illiquid for this purpose. In addition,
repurchase agreements maturing in more than seven days will be considered as
illiquid for purposes of this restriction. Investments in illiquid securities
involve certain risks to the extent that the Fund may be unable to dispose of
such a security at the time desired or at a reasonable price. In addition, in
order to resell a restricted security, the Fund might have to bear the expense
and incur the delays associated with effecting registration.
<PAGE>
The securities that may be purchased subject to the foregoing
restriction include restricted securities that are not registered for sale to
the general public, but that can be resold to institutional investors ("Rule
144A Securities")^. Such securities may be purchased without regard to the
foregoing 15% limitation if a liquid institutional trading market exists. The
liquidity of the Fund's investments in Rule 144A Securities could be impaired if
dealers or institutional investors become uninterested in purchasing these
securities. The Company's board of directors has delegated to Fund Management
the authority to determine the liquidity of Rule 144A Securities pursuant to
guidelines approved by the board. For more information concerning Rule 144A
Securities, see the Statement of Additional Information.
Forward Foreign Currency Contracts
The Fund may enter into contracts to purchase or sell foreign
currencies at a future date ("forward contracts") as a hedge against
fluctuations in foreign exchange rates pending the settlement of transactions in
foreign securities or during the time the Fund holds foreign securities. A
forward contract is an agreement between contracting parties to exchange an
amount of currency at some future time at an agreed upon rate. Although the Fund
has not adopted any limitations on its ability to use forward contracts as a
hedge against fluctuations in foreign exchange rates, it does not attempt to
hedge all of its foreign investment positions and will enter into forward
contracts only to the extent, if any, deemed appropriate by Fund Management. The
Fund will not enter into a forward contract for a term of more than one year or
for purposes of speculation. Investors should be aware that hedging against a
decline in the value of a currency in the foregoing manner does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Furthermore, such hedging transactions may
preclude the opportunity for gain if the value of the hedged currency should
rise. No predictions can be made with respect to whether the total of such
transactions will result in a better or a worse position than had the Fund not
entered into any forward contracts. Forward contracts may, from time to time, be
considered illiquid, in which case they would be subject to the Fund's
limitation on investing in illiquid securities, discussed above. For additional
information regarding foreign securities, see the Company's Statement of
Additional Information.
Repurchase Agreements
The Fund may engage in repurchase agreements with banks, registered
broker-dealers, and registered government securities dealers which are deemed
creditworthy. A repurchase agreement is a transaction in which the Fund
purchases a security and simultaneously commits to sell the security to the
seller at an agreed upon price and date (usually not more than seven days) after
the date of purchase. The resale price reflects the purchase price plus an
<PAGE>
agreed upon market rate of interest which is unrelated to the coupon rate or
maturity of the purchased security. The Fund's risk is limited to the ability of
the seller to pay the agreed upon amount on the delivery date. In the event the
seller should default, the underlying security constitutes collateral for the
seller's obligations to pay. This collateral will be held by the Fund's
custodian. The Fund may experience delays and incur costs in realizing on the
collateral if the other party to the agreement becomes insolvent. To the extent
that the proceeds from a sale of the collateral upon a default in the obligation
to repurchase are less than the repurchase price, the Fund would suffer a loss.
Although the Fund has not adopted any limit on the amount of its total assets
that may be invested in repurchase agreements, it is the intention of Fund
Management that the market value of its securities subject to repurchase
agreements not exceed 20% of the total assets of the Fund.
Futures and Options
A futures contract is an agreement to buy or sell a specific amount of
a financial instrument or commodity at a particular price on a particular date.
The Fund will use futures contracts only to hedge against price changes in the
value of its current or intended investments in securities. In the event that an
anticipated decrease in the value of portfolio securities occurs as a result of
a general decrease in prices, the adverse effects of such changes may be offset,
at least in part, by gains on the sale of futures contracts. Conversely, the
increased cost of portfolio securities to be acquired, caused by a general
increase in prices, may be offset, at least in part, by gains on futures
contracts purchased by the Fund. Brokerage fees are paid to trade futures
contracts, and the Fund is required to maintain margin deposits.
Put and call options on futures contracts or securities may be traded
by the Fund in order to protect against declines in the value of portfolio
securities or against increases in the cost of securities to be acquired. The
purchaser of an option purchases the right to effect a transaction in the
underlying future or security at a specified price (the "strike price") before a
specified date (the "expiration date"). In exchange for the right, the purchaser
pays a "premium" to the seller, which represents the price of the right to buy
or to sell the underlying instrument. In exchange for the premium, the seller of
the option becomes obligated to effect a transaction in the underlying future or
security, at the strike price, at any time prior to the expiration date, should
the buyer choose to exercise the option. A call option contract grants the
purchaser the right to buy the underlying future or security, at the strike
price, before the expiration date. A put option contract grants the purchaser
the right to sell the underlying future or security, at the strike price, before
the expiration date. Purchases of options on futures contracts may present less
dollar risk in hedging the Fund's portfolio than the purchase and sale of the
underlying futures contracts, since the potential loss is limited to the amount
of the premium plus related transaction costs. The premium paid for such a put
<PAGE>
or call option plus any transaction costs will reduce the benefit, if any,
realized by the Fund upon exercise or liquidation of the option, and, unless the
price of the underlying futures contract or security changes sufficiently, the
option may expire without value to the Fund.
Although the Fund will enter into futures contracts and options on
futures contracts and securities solely for hedging or other nonspeculative
purposes, their use does involve certain risks. For example, a lack of
correlation between the value of an instrument underlying an option or futures
contract and the assets being hedged, or unexpected adverse price movements,
could render a Fund's hedging strategy unsuccessful and could result in losses.
In addition, there can be no assurance that a liquid secondary market will exist
for any contract purchased or sold, and the Fund may be required to maintain a
position until exercise or expiration, which could result in losses.
Transactions in futures contracts and options are subject to other risks as
well, which are set forth in greater detail in the Statement of Additional
Information and Appendix A therein.
Securities Lending
The Fund may lend its portfolio securities (not to exceed 10% of the
Fund's total assets) to broker-dealers or other institutional investors under
contracts requiring such loans to be callable at any time and to be secured
continuously by collateral in cash, cash equivalents, high quality short-term
government securities or irrevocable letters of credit maintained on a current
basis at an amount at least equal to the market value of the securities loaned,
plus accrued interest and dividends. The Fund will continue to collect the
equivalent of the interest or dividends paid by the issuer on the securities
loaned and will also receive either interest (through investment of cash
collateral) or a fee (if the collateral is government securities). The Fund may
pay finder's and other fees in connection with securities loans. Lending
securities enables the Fund to earn additional income, but could result in a
loss or delay in recovering the securities.
Portfolio Turnover
There are no fixed limitations regarding portfolio turnover for the
Fund. Although the Fund does not trade for short-term profits, securities may be
sold without regard to the time they have been held in the Fund when, in the
opinion of Fund Management, investment considerations warrant such action. As a
result, while it is anticipated that the portfolio turnover rate for the Fund's
portfolio generally will not exceed 200%, under certain market conditions the
portfolio turnover rate may exceed 200%. Increased portfolio turnover would
cause the Fund to incur greater brokerage costs than would otherwise be the
case. The Fund's portfolio turnover rate, along with the Fund's brokerage
allocation policies, are discussed further in the Statement of Additional
Information.
<PAGE>
Investment Restrictions
The Fund is subject to a variety of restrictions regarding its
investments that are set forth in this Prospectus and in the Statement of
Additional Information. Certain of the Fund's investment restrictions are
fundamental, and may not be altered without the approval of the Fund's
shareholders. Such fundamental investment restrictions include the restrictions
which prohibit the Fund from: lending more than 10% of its total assets to other
parties (excluding purchases of commercial paper, debt securities and repurchase
agreements); investing more than 25% of the value of the Fund's total assets in
any one industry (other than government securities); with respect to 75% of its
total assets, purchasing the securities of any one issuer (other than cash items
and government securities) if the purchase would cause the Fund to have more
than 5% of its total assets invested in the issuer or to own more than 10% of
the outstanding voting securities of the issuer; and borrowing money or issuing
senior securities except that the Fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) and may enter into reverse
repurchase agreements in an aggregate amount not exceeding 33-1/3% of its total
assets. However, unless otherwise noted, the Fund's investment restrictions and
its investment policies are not fundamental and may be changed by action of the
Company's board of directors. Unless otherwise noted, all percentage limitations
contained in the Fund's investment policies and restrictions apply at the time
an investment is made. Thus, subsequent changes in the value of an investment
after purchase or in the value of the Fund's total assets will not cause any
such limitation to have been violated or to require the disposition of any
investment, except as otherwise required by law. If the credit ratings of an
issuer are lowered below those specified for investment by the Fund, the Fund is
not required to dispose of the obligations of that issuer. The determination of
whether to sell such an obligation will be made by Fund Management based upon an
assessment of credit risk and the prevailing market price of the investment. If
the Fund borrows money, its share price may be subject to greater fluctuation
until the borrowing is repaid. The Fund attempts to minimize such fluctuations
by not purchasing additional securities when borrowings, including reverse
repurchase agreements, are greater than 5% of the value of the Fund's total
assets. As a fundamental policy in addition to the above, the Fund may,
notwithstanding any other investment policy or limitation (whether or not
fundamental), invest all of its assets in the securities of a single open-end
management investment company with substantially the same fundamental investment
objectives, policies and limitations as the Fund. See "Additional Information -
Master/Feeder Option."
RISK FACTORS
There can be no assurance that the Fund will achieve its investment
objective. The Fund's investments in common stocks and other equity securities
may, of course, decline in value. The Fund's assets will be invested primarily
in emerging country issuers. Investors should recognize that investing in
securities of emerging country issuers involves certain risks and special
<PAGE>
considerations, including those set forth below, which are not typically
associated with investing in securities of U.S. issuers. Further, certain
investments that the Fund may purchase, and investment techniques that the Fund
may use, involve risks, including those set forth below.
Investment in the Fund involves above-average investment risk. It is
designed as a long-term investment and not for short-term trading purposes and
should not be considered a complete investment program. A 1% fee is payable to
the Fund by redeeming or exchanging shareholders for the benefit of the Fund's
other remaining shareholders on the redemption or exchange of shares held less
than 3 months. This fee is described more fully under "Services Provided by the
Fund - Exchange Privilege" and "How to Redeem Shares."
Social, Political and Economic Risks
The emerging countries in which the Fund invests may be subject to a
substantially greater degree of social, political and economic instability than
is the case in the United States and other developed countries. Such instability
may result from, among other things, the following: (i) authoritarian
governments or military involvement in political and economic decision-making,
and changes in government through extra-constitutional means; (ii) popular
unrest associated with demands for improved political, economic and social
conditions; (iii) internal insurgencies and terrorist activities; (iv) hostile
relations with neighboring countries; and (v) drug trafficking. Social,
political and economic instability could significantly disrupt the principal
financial markets in which the Fund invests and adversely affect the value of
the Fund's assets.
The economies of individual emerging countries may differ favorably or
unfavorably and significantly from the U.S. economy in such respects as the rate
of growth of gross domestic product or gross national product, rate of
inflation, currency depreciation, capital reinvestment, resource
self-sufficiency, structural unemployment and balance of payments position.
Governments of many emerging countries have exercised and continue to exercise
substantial influence over many aspects of the private sector. In some cases,
the government owns or controls many companies, including some of the largest in
the country. Accordingly, government actions in the future could have a
significant effect on economic conditions in an emerging country, which could
affect private sector companies and the Fund, and on market conditions, prices
and yields of securities in the Fund's portfolio. There may be the possibility
of nationalization, asset expropriation or future confiscatory levels of
taxation affecting the Fund. In the event of nationalization, expropriation or
other confiscation, the Fund may not be fairly compensated for its loss and
could lose its entire investment in the country involved. The economies of most
emerging countries are heavily dependent upon international trade and
accordingly are affected by protective trade barriers and the economic
<PAGE>
conditions of their trading partners. The enactment by the United States or
other principal trading partners of protectionist trade legislation, reduction
of foreign investment in the local economies and general declines in the
international securities markets could have a significant adverse effect upon
the securities markets of these countries. The economies of emerging countries
generally are less diverse and mature than the economies of the United States
and other developed countries, and are vulnerable to weaknesses in world prices
for the emerging countries' commodity exports and natural resources.
Securities Markets
Securities exchanges and broker-dealers in most emerging countries are
subject to less regulatory scrutiny than in the United States, as are emerging
country issuers. The limited size of the markets for securities may enable
adverse publicity, investors' perceptions or traders' positions or strategies to
affect prices unduly, at times decreasing not only the value but also the
liquidity of the Fund's investments.
The market capitalizations of listed equity securities on exchanges in
emerging countries are significantly smaller than those of the United States and
other major economies. Only a few issuers may constitute a major portion of the
market capitalization and trading equity. A large segment of the ownership of
many emerging country issuers may be held by a limited number of persons and
families, which may limit the number of shares available for investment by the
Fund. As a consequence, individual emerging country securities markets are
vulnerable to the effect of large investors' trading significant blocks of
securities or by large dispositions of securities, e.g., as a result of margin
calls. The resulting limitations on the liquidity of emerging country securities
will influence the Fund's ability to acquire and dispose of such securities at
the price and time it desires to do so.
Other risks and considerations of investing in emerging country
securities markets include the following: generally higher commission rates on
portfolio transactions and longer settlement periods; the smaller trading
volumes and generally lower liquidity of emerging country stock markets, which
may result in greater price volatility; differences in accounting, auditing and
financial reporting standards which may result in less publicly available
information than is generally available with respect to U.S. issuers; foreign
withholding taxes payable on income and/or gain from the Fund's foreign
securities, which may reduce dividend income or capital gains available for
distribution to shareholders; and the possibility of the Fund experiencing
difficulties in pursuing legal remedies and collecting judgments.
In addition, in certain emerging countries there may be limitations on
investment by foreigners in the securities of companies located in those
countries, and restrictions on foreign currency transactions or repatriation of
capital. The Fund's ability to invest may be restricted to the use of investment
<PAGE>
vehicles authorized by the local government, investment in shares of other
investment companies, or investments in American Depository Receipts or American
Depository Shares (collectively, "ADRs"), Global Depository Shares, or other
similar depository securities.
ADRs are instruments, usually issued by a U.S. bank or trust
company, evidencing ownership of securities of a foreign issuer into which the
ADRs may be convertible. ADRs are designed for use in U.S. markets and may be
traded on U.S. securities exchanges or over-the-counter markets. They are
denominated in dollars rather than the currency of the country in which the
underlying securities are issued.
ADRs may be issued in sponsored or unsponsored programs. In sponsored
programs, the issuer makes arrangements to have its securities traded in the
form of ADRs; in unsponsored programs, the issuer may not be directly involved
in the creation of the program. Although the regulatory requirements with
respect to sponsored and unsponsored programs are generally similar, the issuers
of unsponsored ADRs are not obligated to disclose material information in the
United States and, therefore, such information may not be reflected in the
market value of the ADRs. ADRs are subject to certain of the same risks as
direct investments in foreign securities, including the risk that changes in the
value of the currency in which the security underlying an ADR is denominated
relative to the U.S. dollar may adversely affect the value of the ADR.
As indicated above, the Fund may deem it most practical to invest in
certain emerging countries through other investment companies or similar
vehicles, although there can be no assurance that any such vehicles will be
available or will themselves have invested in the securities found most
desirable by the Fund. The Fund will not invest through other entities unless,
in the opinion of Fund Management, the potential advantages of such investment
justify the Fund's bearing its ratable share of the expenses of such entity
(constituting duplicate levels of advisory fees to be borne by the Fund and its
shareholders) and its share of any premium encompassed in the market value of
such entity at the time of the Fund's investment over the market value of the
entity's underlying holdings. In addition, there may be tax ramifications
relating to investment in such entities. Investments by the Fund in other
investment companies are subject to the following limits imposed by the
Investment Company Act of 1940: subject to certain exceptions, no more than 5%
of the Fund's total assets may be invested in any one investment company (but no
more than 3% of the voting stock of the underlying investment company) and no
more than 10% of the Fund's total assets may be invested in other investment
companies in the aggregate. See "Additional Information --Master/Feeder Option."
<PAGE>
Currency Risks
For U.S. investors, the returns on foreign securities are influenced
not only by the returns on the foreign investments themselves, but also by
currency fluctuations (i.e., changes in the value of the currencies in which the
securities are denominated relative to the U.S. dollar). In a period when the
U.S. dollar generally rises against foreign currencies, the returns on foreign
securities for a U.S. investor are diminished. By contrast, in a period when the
U.S. dollar generally declines, the returns on foreign securities generally are
enhanced. Currencies of certain emerging countries have undergone sudden
devaluations relative to the U.S. dollar as a result of corresponding
inflationary trends or for other reasons. Any such devaluation may have a
deleterious effect on the Fund's investments. Inflation may have strong negative
consequences for the economy and political stability of a country that
experiences it, and may seriously affect its securities markets.
The currencies of certain emerging countries are not commonly traded in
foreign exchange markets. Certain emerging countries have managed currencies
that, for foreign exchange purposes, do not float freely against the U.S.
dollar. Other governmental restrictions on the convertibility of their currency
may be imposed.
Debt Securities
The Fund's investments in debt securities generally are subject to both
credit risk and market risk. Credit risk relates to the ability of the issuer to
meet interest or principal payments, or both, as they come due. The ratings
given a security by Moody's, S&P and other ratings services provide a generally
useful guide as to such credit risk. The lower the rating given a security by
such rating service, the greater the credit risk such rating service perceives
to exist with respect to such security. Increasing the amount of Fund assets
invested in unrated or lower grade securities, while intended to increase the
yield produced by those assets, also will increase the credit risk to which
those assets are subject.
Market risk relates to the fact that the market values of the debt
securities in which the Fund invests generally will be affected by changes in
the level of interest rates. An increase in interest rates will tend to reduce
the market values of debt securities, whereas a decline in interest rates will
tend to increase their values. Medium and lower rated securities (Baa, BBB or
the equivalent and lower) and non-rated securities of comparable quality tend to
be subject to wider fluctuations in yields and market values than higher rated
securities and may have speculative characteristics. Although Fund Management
limits the Fund's investments in debt securities to securities it believes are
not highly speculative, both kinds of risk are increased by investing in debt
securities rated below the top three grades by S&P or Moody's or equivalent
ratings of other ratings services or, if unrated, securities determined by Fund
<PAGE>
Management to be of equivalent quality. Of course, relying in part on ratings
assigned by credit agencies in making investments will not protect the Fund from
the risk that the securities in which it invests will decline in value, since
credit ratings represent evaluations of the safety of principal, dividend and
interest payments on preferred stocks and debt securities, not the market value
of such securities, and such ratings may not be changed on a timely basis to
reflect subsequent events. The Fund is not required to sell immediately debt
securities that go into default, but may continue to hold such securities until
such time as Fund Management determines it is in the best interests of the Fund
to sell such securities. Because investment in medium and lower rated securities
involves both greater credit risk and market risk, achievement of the Fund's
investment objectives may be more dependent on Fund Management's own credit
analysis than is the case for funds investing in higher quality securities. In
addition, the share price and yield of the Fund may be expected to fluctuate
more than in the case of funds investing in higher quality, shorter term
securities. Moreover, a significant economic downturn or major increase in
interest rates may result in issuers of lower rated securities experiencing
increased financial stress, which would adversely affect their ability to
service their principal, dividend and interest obligations, meet projected
business goals, and obtain additional financing. Expenses incurred to recover an
investment in a defaulted security may adversely affect the Fund's net asset
value. Finally, while Fund Management attempts to limit purchases of medium and
lower rated securities to securities having a secondary market, the secondary
market for such securities may be less liquid than the market for higher quality
securities. The reduced liquidity of the secondary market for such securities
may adversely affect the market price of, and ability of the Fund to value,
particular securities at certain times, thereby making it difficult to make
specific valuation determinations.
The Fund expects that most emerging country debt securities in which it
invests will not be rated by U.S. rating services. Although bonds in the lowest
investment grade debt category (those rated BBB by S&P, Baa by Moody's or the
equivalent) are regarded as having adequate capability to pay principal and
interest, they have speculative characteristics. Adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to make
principal and interest payments than is the case for higher rated bonds. Lower
rated bonds by Moody's (categories Ba, B, Caa) are of poorer quality and also
have speculative characteristics. Bonds rated Caa may be in default or there may
be present elements of danger with respect to principal or interest. Lower rated
bonds by S&P (categories BB, B, CCC) include those that are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with their terms; BB indicates
the lowest degree of speculation and CCC a high degree of speculation. While
such bonds likely will have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
<PAGE>
conditions. Bonds having equivalent ratings from other ratings services will
have characteristics similar to those of the corresponding S&P and Moody's
ratings. For a specific description of S&P and Moody's corporate bond rating
category, please refer to Appendix B to the Statement of Additional Information.
In certain emerging countries, the central government and its agencies
are the largest debtors to local and foreign banks and others. Sovereign debt
involves the risk that the government, as a result of political considerations
or cash flow difficulties, may fail to make scheduled payments of interest or
principal and may require holders to participate in rescheduling of payments or
even to make additional loans. If an emerging country government defaults on its
sovereign debt, there is likely to be no legal proceeding under which the debt
may be ordered repaid, in whole or in part. The ability or willingness of a
foreign sovereign debtor to make payments of principal and interest in a timely
manner may be influenced by, among other factors, its cash flow, the magnitude
of its foreign reserves, the availability of foreign exchange on the payment
date, the debt service burden to the economy as a whole, the debtor's then
current relationship with the International Monetary Fund and its then current
political constraints. Some of the emerging countries issuing such instruments
have experienced high rates of inflation in recent years and have extensive
internal debt. Among other effects, high inflation and internal debt service
requirements may adversely affect the cost and availability of future domestic
sovereign borrowing to finance governmental programs, and may have other adverse
social, political and economic consequences, including effects on the
willingness of such countries to service their sovereign debt. An emerging
country government's willingness and ability to make timely payments on its
sovereign debt also are likely to be heavily affected by the country's balance
of trade and its access to trade and other international credits. If a country's
exports are concentrated in a few commodities, such country would be more
significantly exposed to a decline in the international prices of one of more of
such commodities. A rise in protectionism on the part of its trading partners,
or unwillingness by such partners to make payment for goods in hard currency,
could also adversely affect the country's ability to export its products and
repay its debts. Sovereign debtors may also be dependent on expected receipts
from such agencies and others abroad to reduce principal and interest arrearages
on their debt. However, failure by the sovereign debtor or other entity to
implement economic reforms negotiated with multilateral agencies or others, to
achieve specified levels of economic performance, or to make other debt payments
when due, may cause third parties to terminate their commitments to provide
funds to the sovereign debtor, which may further impair such debtor's
willingness or ability to service its debts.
The Fund may invest in debt securities issued under the "Brady Plan" in
connection with restructurings in emerging country debt markets or earlier
loans. These securities, often referred to as "Brady Bonds," are, in some cases,
<PAGE>
denominated in U.S. dollars and collateralized as to principal by U.S. Treasury
zero coupon bonds having the same maturity. At least one year's interest
payments, on a rolling basis, are collateralized by cash or other investments.
Brady Bonds are actively traded on an over-the-counter basis in the secondary
market for emerging country debt securities. "Brady Bonds" are lower rated bonds
and highly volatile.
THE FUND AND ITS MANAGEMENT
The Company is a no-load mutual fund, registered with the Securities
and Exchange Commission as an open-end, diversified management investment
company. It was incorporated on April 2, 1993, under the laws of Maryland. On
July 1, 1993, the Company assumed all of the assets and liabilities of the
European Portfolio and Pacific Basin Portfolio of Financial Strategic
Portfolios, Inc., which was incorporated under the laws of Maryland on August
10, 1983. On July 1, 1993, the Company also assumed, through its INVESCO
International Growth Fund, all of the assets and liabilities of that fund's
predecessor, the Financial International Growth Fund of Financial Series Trust,
a Massachusetts business trust organized on July 15, 1987. The overall
supervision of each Fund is the responsibility of the Company's board of
directors.
INVESCO Funds Group, Inc. ("IFG"), 7800 E. Union Avenue, Denver,
Colorado, serves as the Company's investment adviser pursuant to an investment
advisory agreement. Under this agreement, IFG provides the Fund with various
management services and supervises the Fund's daily business affairs. INVESCO
Distributors, Inc. ("IDI") provides services relating to the distribution and
sale of the Fund's shares pursuant to a distribution agreement.
IFG has contracted with INVESCO Asset Management Limited ("IAML") for
investment sub-advisory and research services on behalf of the Fund. IAML,
subject to the supervision of IFG, is primarily responsible for selecting and
managing the Fund's investments. Although the Company is not a party to the
sub-advisory agreement, the agreement has been approved by the initial
shareholder of the Fund. Services provided by IFG and IAML are subject to review
by the Company's board of directors.
IFG, IAML and IDI are indirect wholly-owned subsidiaries of AMVESCAP
PLC. AMVESCAP PLC is a publicly-traded holding company that, through its
subsidiaries, engages in the business of investment management on an
international basis. INVESCO PLC changed its name to AMVESCO PLC on March 3,
1997 and to AMVESCAP PLC on May 8, 1997 as part of a merger between a direct
subsidiary of INVESCO PLC and A I M Management Group Inc., that created one of
the largest independent investment management businesses in the world. IFG and
IAML continued to operate under their existing names. Together, IFG and IAML
constitute "Fund Management." AMVESCAP PLC has approximately $192.2 billion in
assets under management. IFG was established in 1932 and, as of September 30,
<PAGE>
1997, managed 14 mutual funds, consisting of 45 separate portfolios, with
combined assets of approximately $16.3 billion on behalf of 851,389
shareholders.
The Fund is managed by a team of portfolio managers. A senior
investment policy group determines the country-by-country allocation of the
Fund's assets, overall stock selection methodology and the ongoing
implementation and risk control policies applicable to the Fund's portfolio.
Individual country specialists are responsible for managing security selection
for their assigned country's share of the allocation within the parameters
established by the investment policy group.
The Fund pays IFG a monthly advisory fee which is based upon a
percentage of the average net assets of the Fund, determined daily. The maximum
advisory fee is computed at the following annual ^ rates: 1.00% on the first
$500 million of the Fund's average net assets, 0.85% on the next $500 million of
the Fund's average net assets and 0.75% on the Fund's average net assets over $1
billion.
Out of its advisory fee which it receives from the Fund, IFG pays IAML,
as sub-adviser to the Fund, a monthly fee, which is computed at the annual rate
of 0.333% on the first $500 million of the Fund's average net assets, 0.2833% on
the next $500 million of the Fund's average net assets and 0.25% on the Fund's
average net assets in excess of $1 billion. No fee is paid by the Fund to IAML.
The Company also has entered into an Administrative Services Agreement
(the "Administrative Agreement") with IFG. Pursuant to the Administrative
Agreement, IFG performs certain administrative, recordkeeping and internal
sub-accounting services, including without limitation, maintaining general
ledger and capital stock accounts, preparing a daily trial balance, calculating
net asset value daily, providing selected general ledger reports and providing
sub-accounting and recordkeeping services for Fund shareholder accounts
maintained by certain retirement and employee benefit plans for the benefit of
participants in such plans. For such services, the Fund pays IFG a fee
consisting of a base fee of $10,000 per year, plus an additional incremental fee
computed at the annual rate of 0.015% per year of the average net assets of the
Fund. IFG also is paid a fee by the Fund for providing transfer agent services.
See "Additional Information."
The Fund's expenses, which are accrued daily, are generally deducted
from the Fund's total income before dividends are paid. These expenses include
the fees of the investment adviser, distribution fees, legal, transfer agent,
custodian and auditor's fees, commissions, taxes, compensation of independent
directors, insurance premiums, printing, and other expenses relating to the
Fund's operations which are not expressly assumed by IFG under its agreements
with the Company. If necessary, certain expenses for the Fund will be absorbed
by IFG and IAML voluntarily for at least the first fiscal year of the Fund's
operations in order to ensure that the Fund's total expenses do not exceed
2.00%. This commitment may be changed following consultation with the Company's
<PAGE>
board of directors. As of this date, IFG held all of the outstanding shares of
the Fund and should be regarded as the control person of the Fund.
Fund Management places orders for the purchase and sale of portfolio
securities with brokers and dealers based upon Fund Management's evaluation of
their financial responsibility coupled with their ability to effect transactions
at the best available prices. As discussed under "How Shares Can Be Purchased
- -Distribution Expenses," the Company may market shares of the Fund through
intermediary brokers or dealers that have entered into Dealer Agreements with
IFG or IDI, as the Company's Distributor. The Fund may place orders for
portfolio transactions with qualified broker/dealers that recommend the Fund, or
sell shares of the Fund to clients, or act as agent in the purchase of Fund
shares for clients, if Fund Management believes that the quality of the
execution of the transaction and level of commission are comparable to those
available from other qualified brokerage firms.
Fund Management permits investment and other personnel to purchase and
sell securities for their own accounts, subject to policies governing personal
investing. These policies require investment and other personnel to conduct
their personal investment activities in a manner that Fund Management believes
is not detrimental to the Fund or Fund Management's other advisory clients. See
the Statement of Additional Information for more detailed information.
HOW SHARES CAN BE PURCHASED
Shares of the Fund are sold on a continuous basis by IDI, as the Fund's
distributor, at the net asset value per share next calculated after receipt of a
purchase order in good form. No sales charge is imposed upon the sale of shares
of the Fund. To purchase shares of the Fund, send a check made payable to
INVESCO Funds Group, Inc., together with a completed application form, to:
INVESCO Funds Group, Inc.
Post Office Box 173706
Denver, Colorado 80217-3706
PURCHASE ORDERS MUST SPECIFY THE FUND IN WHICH THE INVESTMENT IS TO BE
MADE.
The minimum initial purchase must be at least $1,000, with subsequent
investments of not less than $50, except that: (1) those shareholders
establishing an EasiVest or direct payroll purchase account, as described below
in the section entitled "Services Provided by the Fund," may open an account
without making any initial investment if they agree to make regular, minimum
purchases of at least $50; (2) Fund Management may permit a lesser amount to be
invested in the Fund under a federal income tax-deferred retirement plan (other
than an Individual Retirement Account ("IRA")), or under a group investment plan
<PAGE>
qualifying as a sophisticated investor; (3) those shareholders investing in an
IRA, or through omnibus accounts where individual shareholder recordkeeping and
sub-accounting are not required, may make initial minimum purchases of $250; and
(4) Fund Management reserves the right to increase, reduce or waive the minimum
purchase requirements in its sole discretion where it determines such action is
in the best interests of the Fund.
The purchase of Fund shares can be expedited by placing bank wire,
overnight courier or telephone orders. Overnight courier orders must meet the
above minimum requirements. In no case can a bank wire or telephone order be in
an amount less than $1,000. For further information, the purchaser may call the
Fund's office by using the telephone number on the cover of this Prospectus.
Orders sent by overnight courier, including Express Mail, should be sent to the
street address, not Post Office Box, of INVESCO Funds Group, Inc., at 7800 E.
Union Avenue, Suite 300, Denver, CO 80237.
Orders to purchase Fund shares can be placed by telephone. Shares of
the Fund will be issued at the net asset value next determined after receipt of
telephone instructions. Generally, payments for telephone orders must be
received by the Fund within three business days or the transaction may be
canceled. In the event of such cancellation, the purchaser will be held
responsible for any loss resulting from a decline in the value of the shares. In
order to avoid such losses, purchasers should send payments for telephone
purchases by overnight courier or bank wire. IFG has agreed to indemnify the
Fund for any losses resulting from the cancellation of telephone purchases.
If your check does not clear, or if a telephone purchase must be
cancelled due to nonpayment, you will be responsible for any related loss the
Fund or IFG incurs. If you are already a shareholder in the INVESCO funds, the
Fund has the option to redeem shares from any identically registered account in
the Fund or any other INVESCO fund as reimbursement for any loss incurred. You
also may be prohibited or restricted from making future purchases in any of the
INVESCO funds.
Persons who invest in the Fund through a securities broker may be
charged a commission or transaction fee for the handling of the transaction if
the broker so elects. Any investor may deal directly with the Fund in any
transaction. In that event, there is no such charge. IFG or IDI may from time to
time make payments from its revenues to securities dealers and other financial
institutions that provide distribution-related and/or administrative services
for the Fund.
The Fund reserves the right in its sole discretion to reject any order
for purchase of its shares (including purchases by exchange) when, in the
judgment of management, such rejection is in the best interest of the Fund.
<PAGE>
Net asset value per share is computed once each day that the New York
Stock Exchange is open, as of the close of regular trading on that Exchange
(generally 4:00 p.m., New York time) and also may be computed on other days
under certain circumstances. Net asset value per share for the Fund is
calculated by dividing the market value of the Fund's securities plus the value
of its other assets (including dividends and interest accrued but not
collected), less all liabilities (including accrued expenses), by the number of
outstanding shares of that Fund. If market quotations are not readily available,
a security or other asset will be valued at fair value as determined in good
faith by the board of directors. Debt securities with remaining maturities of 60
days or less at the time of purchase will be valued at amortized cost, absent
unusual circumstances, so long as the Company's board of directors believes that
such value represents fair value.
Distribution Expenses. The Fund is authorized under a Plan and
Agreement of Distribution pursuant to Rule 12b-1 under the Investment Company
Act of 1940 (the "Plan") to use its assets to finance certain activities
relating to the distribution of its shares to investors. Under the Plan, monthly
payments may be made by the Fund to IDI to permit it, at IDI's discretion, to
engage in certain activities, and provide certain services approved by the Board
in connection with the distribution of the Fund's shares to investors. These
activities and services may include the payment of compensation (including
incentive compensation and/or continuing compensation based on the amount of
customer assets maintained in the Fund) to securities dealers and other
financial institutions and organizations, which may include IFG-affiliated
companies, to obtain various distribution-related and/or administrative services
for the Fund (except administrative services already provided under separate
agreements with IFG-affiliated companies). Such services may include, among
other things, processing new shareholder account applications, preparing and
transmitting to the Fund's transfer agent computer-processable tapes of all
transactions by customers, and serving as the primary source of information to
customers in answering questions concerning the Fund and their transactions with
the Fund.
In addition, other permissible activities and services include
advertising, the preparation, printing and distribution of sales literature,
printing and distribution of prospectuses to prospective investors, and such
other services and promotional activities for the Fund as may from time to time
be agreed upon by the Company and the Board, including public relations efforts
and marketing programs to communicate with investors and prospective investors.
These services and activities may be conducted by the staff of IFG or its
affiliates or by third parties.
Under the Plan, the Company's payments to IDI on behalf of the Fund are
limited to an amount computed at an annual rate of 0.25% of the Fund's average
net assets. IDI is not entitled to payment for overhead expenses under the Plan,
but may be paid for all or a portion of the compensation paid for salaries and
<PAGE>
other employee benefits for the personnel of IFG or IDI whose primary
responsibilities involve marketing shares of the INVESCO Mutual Funds, including
the Fund. ^ Payments by the Fund under the Plan, for any month, may be made to
compensate IDI for permissible activities engaged in and services provided by
IDI during the rolling 12-month period in which that month falls, although this
period is expanded to 24 months for obligations incurred during the first 24
months of the Fund's operations. Therefore, any obligations incurred by IDI in
excess of the limitations described above will not be paid by the Fund under the
Plan, and will be borne by IDI. In addition, IDI may from time to time make
additional payments from its revenues to securities dealers, financial advisers
and financial institutions that provide distribution-related and/or
administrative services for the Fund. No further payments will be made by the
Fund under the Plan in the event of its termination. Payments made by the Fund
may not be used to finance directly the distribution of shares of any other Fund
of the Company or other mutual funds advised by IFG. However, payments received
by IDI which are not used to finance the distribution of shares of the Fund
become part of IDI's revenues and may be used by IDI for ^ activities ^ that
promote distribution of any of the mutual funds advised by IFG ^. Subject to
review by the Fund's directors^, payments made by the Fund under the Plan for
compensation of marketing personnel, as noted above, are based on an allocation
formula designed to ensure that all such payments are appropriate. IDI will bear
any distribution- and service-related expenses in excess of the amounts which
are compensated pursuant to the Plan. The Plan also authorizes any financing of
distribution which may result from IDI's use of its own resources, including
profits from investment advisory fees received from the Fund, provided that such
fees are legitimate and not excessive. For more information see "How Shares Can
Be Purchased" in the Statement of Additional information.
SERVICES PROVIDED BY THE FUND
Shareholder Accounts. IFG maintains a share account that reflects the
current holdings of each shareholder. Share certificates will be issued only
upon specific request. Since certificates must be carefully safeguarded, and
must be surrendered in order to exchange or redeem Fund shares, most
shareholders do not request share certificates in order to facilitate such
transactions. Each shareholder is sent a detailed confirmation of each
transaction in shares of the Fund. Shareholders whose only transactions are
through the EasiVest, direct payroll purchase, automatic monthly exchange or
periodic withdrawal programs, or are reinvestments of dividends or capital gains
in the same or another fund, will receive confirmations of those transactions on
their quarterly statements. These programs are discussed below. For information
regarding a shareholder's account and transactions, the shareholder may call the
Fund's office by using the telephone number on the cover of this Prospectus.
<PAGE>
Reinvestment of Distributions. Dividends and other distributions are
automatically reinvested in additional shares of the Fund at the net asset value
per share in effect on the ex-dividend date. A shareholder may, however, elect
to reinvest dividends and other distributions in certain of the other no-load
mutual funds advised by IFG and distributed by IDI, or to receive payment of all
dividends and other distributions in excess of $10.00 by check by giving written
notice to IFG at least two weeks prior to the record date on which the change is
to take effect. Further information concerning these options can be obtained by
contacting IFG.
Periodic Withdrawal Plan. A Periodic Withdrawal Plan is available to
shareholders who own or purchase shares of any mutual funds advised by IFG
having a total value of $10,000 or more; provided, however, that at the time the
Plan is established, the shareholder owns shares having a value of at least
$5,000 in the fund from which the withdrawals will be made. Under the Periodic
Withdrawal Plan, IFG, as agent, will make specified monthly or quarterly
payments of any amount selected (minimum payment of $100) to the party
designated by the shareholder. Notice of all changes concerning the Periodic
Withdrawal Plan must be received by IFG at least two weeks prior to the next
scheduled check. Further information regarding the Periodic Withdrawal Plan and
its requirements and tax consequences can be obtained by contacting IFG.
Exchange Policy. Shares of the Fund may be exchanged for shares of the
other fund of the Company, as well as for shares of any of the following other
no-load mutual funds, which are also advised by IFG, on the basis of their
respective net asset values at the time of the exchange: INVESCO Capital
Appreciation Funds, Inc. (formerly, INVESCO Dynamics Fund, Inc.), INVESCO
Diversified Funds, Inc., INVESCO Emerging Opportunity Funds, Inc., INVESCO
Growth Fund, Inc., INVESCO Income Funds, Inc., INVESCO Industrial Income Fund,
Inc., INVESCO Money Market Funds, Inc., INVESCO Multiple Asset Funds, Inc.,
INVESCO Specialty Funds, Inc., INVESCO Strategic Portfolios, Inc., INVESCO
Tax-Free Income Funds, Inc. and INVESCO Value Trust.
Upon an exchange of shares held less than 3 months (other than shares
acquired through reinvestment of dividends or other distributions), a fee of 1%
of the current net asset value of the shares being exchanged will be assessed
and retained by the Fund for the benefit of the Fund's other shareholders. This
fee is intended to encourage long-term investment in the Fund, to avoid
transaction and other expenses caused by early redemptions, and to facilitate
portfolio management. The fee is not a deferred sales charge, is not a
commission paid to IFG, and does not benefit IFG in any way. The fee applies to
redemptions from the Fund and exchanges into any of the other no-load mutual
funds which are also advised by IFG and distributed by IDI. The Fund will use
the "first-in, first-out" method to determine the 3 month holding period. Under
<PAGE>
this method the date of redemption or exchange will be compared with the
earliest purchase date of shares held in the account. If this holding period is
less than 3 months, the redemption/exchange fee will be assessed on the current
net asset value of those shares.
An exchange involves the redemption of shares in the Fund and
investment of the redemption proceeds in shares of another fund of the Company
or in shares of one of the INVESCO funds listed above. Exchanges will be made at
the net asset value per share next determined after receipt of an exchange
request in proper order. Any gain or loss realized on such an exchange is
recognizable for federal income tax purposes by the shareholder. Exchange
requests may be made either by telephone or by written request to IFG, using the
telephone number or address on the cover of this Prospectus. Exchanges made by
telephone must be in an amount of at least $250, if the exchange is being made
into an existing account of one of the INVESCO funds. All exchanges that
establish a new account must meet the Fund's applicable minimum initial
investment requirements. Written exchange requests into an existing account have
no minimum requirements other than the Fund's applicable minimum subsequent
investment requirements.
The option to exchange Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing the New Account
Application, a Telephone Transaction Authorization Form or otherwise utilizing
the telephone exchange option, the investor has agreed that the Fund will not be
liable for following instructions communicated by telephone that it reasonably
believes to be genuine. The Fund employs procedures, which it believes are
reasonable, designed to confirm that exchange instructions are genuine. These
may include recording telephone instructions and providing written confirmations
of exchange transactions. As a result of this policy, the investor may bear the
risk of any loss due to unauthorized or fraudulent instructions; provided,
however, that if the Fund fails to follow these or other reasonable procedures,
the Fund may be liable.
In order to prevent abuse of this policy to the disadvantage of other
shareholders, the Fund reserves the right to terminate the exchange option of
any shareholder who requests more than four exchanges in a year. The Fund will
determine whether to do so based on a consideration of both the number of
exchanges any particular shareholder or group of shareholders has requested and
the time period over which those exchange requests have been made, together with
the level of expense to the Fund which will result from effecting additional
exchange requests. The exchange option also may be modified or terminated at any
time. Except for those limited instances where redemptions of the exchanged
security are suspended under Section 22(e) of the Investment Company Act of
1940, or where sales of the fund into which the shareholder is exchanging are
temporarily stopped, notice of all such modifications or termination of the
exchange policy will be given at least 60 days prior to the date of termination
or the effective date of the modification.
<PAGE>
Before making an exchange, the shareholder should review the
prospectuses of the funds involved and consider their differences, and should be
aware that the exchange option may only be available in those states where
exchanges legally may be made, which will require that the shares being acquired
are registered for sale in the shareholder's state of residence. Shareholders
interested in exercising the exchange option may contact IFG for information
concerning their particular exchanges.
Automatic Monthly Exchange. Shareholders who have accounts in any one
or more of the mutual funds distributed by IDI may arrange for a fixed dollar
amount of their fund shares to be automatically exchanged for shares of any
other INVESCO mutual fund listed under "Exchange Policy" on a monthly basis. The
minimum monthly exchange in this program is $50.00. This automatic exchange
program can be changed by the shareholder at any time by notifying IFG at least
two weeks prior to the date the change is to be made. Further information
regarding this service can be obtained by contacting IFG.
EasiVest. For shareholders who want to maintain a schedule of monthly
investments, EasiVest uses various methods to draw a preauthorized amount from
the shareholder's bank account to purchase Fund shares. This automatic
investment program can be changed by the shareholder at any time by notifying
IFG at least two weeks prior to the date the change is to be made. Further
information regarding this service can be obtained by contacting IFG.
Direct Payroll Purchase. Shareholders may elect to have their employer
make automatic purchases of Fund shares for them by deducting a specified amount
from their regular paychecks. This automatic investment program can be modified
or terminated at any time by the shareholder, by notifying the employer. Further
information regarding this service can be obtained by contacting IFG.
Tax-Deferred Retirement Plans. Shares of the Fund may be purchased for
self-employed individual retirement plans, ^ various IRAs, simplified employee
pension plans and corporate retirement plans. In addition, shares can be used to
fund tax- qualified plans established under Section 403(b) of the Internal
Revenue Code of 1986, as amended, by educational institutions, including public
school systems and private schools, and certain kinds of non-profit
organizations, which provide deferred compensation arrangements for their
employees.
Prototype forms for the establishment of these various plans,
including, where applicable, disclosure statements required by the Internal
Revenue Service, are available from IFG. INVESCO Trust Company, a subsidiary of
IFG, is qualified to serve as trustee or custodian under these plans and
provides the required services at competitive rates. Retirement plans (other
than IRAs) receive monthly statements reflecting all transactions in their Fund
<PAGE>
accounts. IRAs receive the confirmations and quarterly statements described
under "Shareholder Accounts." For complete information, including prototype
forms and service charges, call IFG at the telephone number listed on the cover
of this Prospectus or send a written request to: Retirement Services, INVESCO
Funds Group, Inc., Post Office Box 173706, Denver, Colorado 80217-3706.
HOW TO REDEEM SHARES
Shares of the Fund may be redeemed at any time at their current net
asset value per share next determined after a request in proper form is received
at the Fund's office. (See "How Shares Can Be Purchased.") Net asset value per
share at the time of redemption may be more or less than the price you paid to
purchase your shares. Upon the redemption of shares held less than 3 months
(other than shares acquired through reinvestment of dividends or other
distributions), a fee of 1% of the current net asset value of the shares will be
assessed and retained by the Fund for the benefit of the Fund's other
shareholders. This fee is intended to encourage long-term investment in the
Fund, to avoid transaction and other expenses caused by early redemptions, and
to facilitate portfolio management. The fee is not a deferred sales charge, is
not a commission paid to IFG, and does not benefit IFG in any way. The fee
applies to redemptions from the Fund and exchanges into any of the other no-load
mutual funds which are also advised by IFG and distributed by IDI. The Fund will
use the "first-in, first-out" method to determine the 3 month holding period.
Under this method the date of redemption or exchange will be compared with the
earliest purchase date of shares held in the account. If this holding period is
less than 3 months, the redemption/exchange fee will be assessed on the current
net asset value of those shares.
If the shares to be redeemed are represented by stock certificates, a
written request for redemption signed by the registered shareholder(s) and the
certificates must be forwarded to INVESCO Funds Group, Inc., Post Office Box
173706, Denver, Colorado 80217-3706. Redemption requests sent by overnight
courier, including Express Mail, should be sent to the street address, not Post
Office Box, of INVESCO Funds Group, Inc. at 7800 E. Union Avenue, Denver, CO
80237. If no certificates have been issued, a written redemption request signed
by each registered owner of the account must be submitted to IFG at the address
noted above. If shares are held in the name of a corporation, additional
documentation may be necessary. Call or write for specific information. If
payment for the redeemed shares is to be made to someone other than the
registered owner(s) of the account, the signature(s) must be guaranteed by a
financial institution which qualifies as an eligible guarantor institution.
Redemption procedures with respect to accounts registered in the names of
broker-dealers may differ from those applicable to other shareholders.
<PAGE>
Be careful to specify the account from which the redemption is to be
made. Shareholders have a separate account for each Fund in which they invest.
Payment of redemption proceeds will be mailed within seven days
following receipt of the required documents. However, payment may be postponed
under unusual circumstances, such as when normal trading is not taking place on
the New York Stock Exchange, or an emergency as defined by the Securities and
Exchange Commission exists. If the shares to be redeemed were purchased by check
and that check has not yet cleared, payment will be made after the Fund has
allowed a reasonable time for clearance of the purchase check (which will take
up to 15 days).
If a shareholder participates in EasiVest, the Fund's automatic monthly
investment program, and redeems all of the shares in his or her Fund account,
IFG will terminate any EasiVest purchases unless otherwise instructed by the
shareholder.
Because of the high relative costs of handling small accounts, should
the value of any shareholder's account fall below $250 as a result of
shareholder action, the Fund reserves the right to effect the involuntary
redemption of all shares in such account, in which case the account would be
liquidated and the proceeds forwarded to the shareholder. Prior to any such
redemption, a shareholder will be notified and given 60 days to increase the
value of the account to $250 or more.
Fund shareholders (other than shareholders holding Fund shares in
accounts of IRA plans) may request expedited redemption of shares having a
minimum value of $250 (or redemption of all shares if their value is less than
$250) held in accounts maintained in their name by telephoning redemption
instructions to IFG, using the telephone number on the cover of this Prospectus.
The redemption proceeds, at the shareholder's option, either will be mailed to
the address listed for the shareholder's Fund account, or wired (minimum of
$1,000) or mailed to the bank which the shareholder has designated to receive
the proceeds of telephone redemptions. The Fund charges no fee for effecting
such telephone redemptions. Unless IFG permits a larger redemption request to be
placed by telephone, a shareholder may not place a redemption request by
telephone in excess of $25,000. These telephone redemption privileges may be
modified or terminated in the future at the discretion of Fund Management.
For INVESCO Trust Company-sponsored federal income tax-sheltered
retirement plans, the term "shareholders" is defined to mean plan trustees that
file a written request to be able to redeem Fund shares by telephone.
Shareholders should understand that, while the Fund will attempt to process all
telephone redemption requests on an expedited basis, there may be times,
particularly in periods of severe economic or market disruption, when (a) they
may encounter difficulty in placing a telephone redemption request, and (b)
<PAGE>
processing telephone redemptions will require up to seven days following receipt
of the redemption request, or additional time because of the unusual
circumstances set forth above.
The privilege of redeeming Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing a New Account
Application, a Telephone Transaction Authorization Form or otherwise utilizing
telephone redemption privileges, the shareholder has agreed that the Fund will
not be liable for following instructions communicated by telephone that it
reasonably believe to be genuine. The Fund employs procedures, which it believes
are reasonable, designed to confirm that telephone instructions are genuine.
These may include recording telephone instructions and providing written
confirmation of transactions initiated by telephone. As a result of this policy,
the investor may bear the risk of any loss due to unauthorized or fraudulent
instructions; provided, however, that if the Fund fails to follow these or other
reasonable procedures, the Fund may be liable.
TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS
Taxes. The Fund intends to distribute to shareholders all of its net
investment income, net capital gains and net gains from foreign currency
transactions, if any^. Distribution of substantially all net investment income
to shareholders allows the Fund to maintain its tax status as a regulated
investment company. ^ Due to its tax status as a regulated investment company,
the Fund does not expect to pay any federal income or excise taxes.
Unless shareholders are exempt from income taxes, they must include all
dividends and other distributions in taxable income for federal, state and local
income tax purposes. Dividends and other distributions are taxable whether they
are received in cash or automatically reinvested in shares of the Fund or
another fund in the INVESCO group.
Net realized capital gains of the Fund are classified as short-term and
long-term gains depending upon how long the Fund held the security that gave
rise to the gains. Short-term capital gains are included in income from
dividends and interest as ordinary income and are taxed at the taxpayer's
marginal tax rate. The Taxpayer Relief At of 1997 (the "Tax Act"), enacted in
August 1997, changed the taxation of long-term capital gains by applying
different capital gains rates depending on the taxpayer's holding period and
marginal rate of federal income tax. Long-term gains realized on the sale of
securities held for more than one year but not for more than 18 months are
taxable at a rate of 28%. This category of long-term gains is often referred to
as "mid-term" gains but is technically termed "28% rate gains." Long-term gains
realized on the sale of securities held for more than 18 months are taxable at a
rate of 20%. The Tax Act, however, does not address the application of these
rules to distributions of net capital gain (excess of long-term capital gain
over short-term capital losses)
<PAGE>
by a regulated investment company, including whether such distributions may be
treated by its shareholders in accordance with the Fund's holding period for the
assets it sold that generated the gain. The application of the new capital gain
rules must be determined by further legislation or future regulations that are
not available as this Prospectus is being prepared. At the end of each year,
information regarding the tax status of dividends and other distribuitons is
provided to shareholders. Shareholders should consult their tax advisers as to
the effect of the Tax Act on distribuitons by the Funds of net capital gain.
Shareholders also may realize capital gains or losses when they sell
their Fund shares at more or less than the price originally paid. Capital gain
on shares held for more than one year will be long-term capital gain, in which
event it will be subject to federal income tax at the rates indicated above.
The Fund may be subject to withholding of foreign taxes on dividends or
interest received on foreign securities. Foreign taxes withheld will be treated
as an expense of the Fund.
Individuals and certain other non-corporate shareholders may be subject
to backup withholding of 31% on dividends, capital gain and other distributions
and redemption proceeds. Unless you are subject to backup withholding for other
reasons, you can avoid backup withholding on your Fund account by ensuring that
we have a correct, certified tax identification number.
We encourage you to consult a tax adviser with respect to these
matters. For further information see "Dividends, Other Distributions and Taxes"
in the Statement of Additional Information.
Dividends and Other Distributions. The Fund earns ordinary or net
investment income in the form of interest and dividends on its investments.
Dividends paid by the Fund will be based solely on the income earned by it. The
Fund's policy is to distribute substantially all of this income, less Fund
expenses, to shareholders on an annual basis, at the discretion of the fund's
board of directors. Dividends are automatically reinvested in additional shares
of the Fund, unless cash distributions are requested, at the net asset value on
the ^ ex-dividend date.
In addition, the Fund realizes capital gains and losses when it sells
securities or derivatives for more or less than it paid. If total gains on sales
exceed total losses (including losses carried forward from previous years), the
Fund has a net realized capital gain. Net realized capital gains, if any,
together with gains, if any, realized on foreign currency transactions, are
distributed to shareholders at least annually, usually in December. Capital gain
distributions are automatically reinvested in additional shares of the Fund,
unless cash distributions are requested, at the net asset value on the ^
ex-dividend date.
<PAGE>
Dividend and other distributions are paid to shareholders who hold
shares on the record date of the distribution, regardless of how long the shares
have been held by the shareholder. The Fund's share price will then drop by the
amount of the distribution on the ex-dividend or ex-distribution date. If a
shareholder purchases shares immediately prior to the distribution, the
shareholder will, in effect, have "bought" the distribution by paying the full
purchase price, a portion of which is then returned in the form of a taxable
distribution.
ADDITIONAL INFORMATION
Voting Rights. All shares of the Fund have equal voting rights, based
on one vote for each share owned and a corresponding fractional vote for each
fractional share owned. Voting with respect to certain matters, such as
ratification of independent accountants and the election of directors, will be
by all Funds of the Company voting together. In other cases, such as voting upon
an investment advisory contract, voting is on a Fund-by-Fund basis. When all
Funds are not affected by a matter to be voted upon, only shareholders of the
Fund affected by the matter will be entitled to vote thereon. The Company is not
generally required, and does not expect, to hold regular annual meetings of
shareholders. However, the board of directors will call special meetings of
shareholders for the purpose, among other reasons, of voting upon the question
of removal of a director or directors when requested to do so in writing by the
holders of 10% or more of the outstanding shares of the Company or as may be
required by applicable law or the Company's Articles of Incorporation. The
Company will assist shareholders in communicating with other shareholders as
required by the Investment Company Act of 1940. Directors may be removed by
action of the holders of a majority or more of the outstanding shares of the
Company.
Master/Feeder Option. The Company may in the future seek to achieve the
Fund's investment objective by investing all of the Fund's assets in another
investment company or partnership having the same investment objective and
substantially the same investment policies and restrictions as those applicable
to the Fund. It is expected that any such investment company would be managed by
IFG in substantially the same manner as the existing Fund. If permitted by
applicable laws and policies then in effect, any such investment may be made in
the sole discretion of the Company's board of directors without further approval
of the shareholders of the Fund. However, Fund shareholders will be given at
least 30 days prior notice of any such investment. Such investment would be made
only if the Company's board of directors determines it to be in the best
interests of the Fund and its shareholders. In making that determination, the
board will consider, among other things, the benefits to shareholders and/or the
opportunity to reduce costs and achieve operational efficiencies. No assurance
can be given that costs will be materially reduced if this option is
implemented.
<PAGE>
Shareholder Inquiries. All inquiries regarding the Fund should be
directed to the Fund at the telephone number or mailing address set forth on the
cover page of this Prospectus.
Transfer and Dividend Disbursing Agent. INVESCO Funds Group, Inc., 7800
E. Union Ave., Denver, Colorado 80237, acts as registrar, transfer agent, and
dividend disbursing agent for the Fund pursuant to a Transfer Agency Agreement
which provides that the Fund will pay an annual fee of $20.00 per shareholder
account or, where applicable, per participant in an omnibus account. The
transfer agency fee is not charged to each shareholder's or participant's
account, but is an expense of the Fund to be paid from the Fund's assets.
Registered broker-dealers, third party administrators of tax-qualified
retirement plans and other entities, including affiliates of IFG, may provide
sub-transfer agency services to the Fund which reduce or eliminate the need for
identical services to be provided on behalf of the Fund by IFG. In such cases,
IFG may pay the third party an annual sub-transfer agency or recordkeeping fee
out of the transfer agency fee which is paid to IFG by the Fund.
<PAGE>
PROSPECTUS
March 1, 1998
INVESCO EMERGING MARKETS FUND
A no-load mutual fund seeking
capital appreciation.
^
INVESCO Distributors, Inc., (SM)
^ Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
1-800-525-8085
PAL(R): 1-800-424-8085
http://www.invesco.com
In Denver, visit one of our
convenient Investor Centers:
Cherry Creek
155-B Fillmore Street
Denver Tech Center
7800 East Union Avenue
Lobby Level
In addition, all documents
filed by the Company with
the Securities and Exchange
Commission can be located on
a web site maintained by the
Commission at http://www.sec.gov.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
^ March 1, 1998
INVESCO INTERNATIONAL FUNDS, INC.
A no-load mutual fund seeking capital appreciation through
investment in designated geographical sectors.
Address: Mailing Address:
7800 E. Union Avenue Post Office Box 173706
Denver, Colorado 80237 Denver, Colorado 80217-3706
Telephone:
In continental U.S., 1-800-525-8085
- --------------------------------------------------------------------------------
INVESCO INTERNATIONAL FUNDS, INC. (the "Company") is an open-end
management investment company organized in series form consisting of four funds:
the INVESCO European Fund (the "European Fund"), the INVESCO Pacific Basin Fund
(the "Pacific Basin Fund"), the INVESCO International Growth Fund (the
"International Growth Fund") and the INVESCO Emerging Markets Fund (the
"Emerging Markets Fund")(the "Funds"). The European, Pacific Basin and Emerging
Markets Funds seek to provide investors with capital appreciation. The
International Growth Fund seeks to achieve a high total return on investment
through capital appreciation and current income. Each of the Funds invests
primarily in equity securities. Investors may purchase shares of any or all
Funds. The following are available:
The EUROPEAN FUND seeks to achieve its investment objective by
investing primarily in equity securities of companies domiciled in specific
European countries.
The PACIFIC BASIN FUND seeks to achieve its investment objective by
investing primarily in equity securities of companies domiciled in specific Far
Eastern or Western Pacific countries
The INTERNATIONAL GROWTH FUND seeks to achieve its investment objective
by investing substantially all of its assets in foreign securities. This Fund
invests principally in equity securities. The term "foreign securities" refers
to securities of issuers, wherever organized, which in the judgment of
management have their principal business activities outside of the United
States. In determining whether an issuer's principal activities are outside of
the United States, consideration is given to such factors as the location of the
issuer's assets, personnel, sales and earnings.
<PAGE>
The EMERGING MARKETS FUND seeks to achieve its investment objective by
investing primarily in equity securities of emerging country issuers.
Additional funds may be offered in the future.
Separate ^ Prospectuses for the European^ and Pacific Basin ^,
International Growth, and Emerging Markets Funds dated March 1, ^ 1998, which
provide the basic information you should know before investing in the Funds, may
be obtained without charge from INVESCO Distributors, Inc., Post Office Box
173706, Denver, Colorado 80217-3706. This Statement of Additional Information is
not a prospectus but contains information in addition to and more detailed than
that set forth in each ^ Prospectus. It is intended to provide you additional
information regarding the activities and operations of the Funds and should be
read in conjunction with the ^ Prospectuses.
Investment Adviser: INVESCO FUNDS GROUP, INC.
Distributor: INVESCO DISTRIBUTORS, INC.
TABLE OF CONTENTS
Page
----
INVESTMENT POLICIES AND RESTRICTIONS..........................................97
THE FUNDS AND THEIR MANAGEMENT...............................................113
HOW SHARES CAN BE PURCHASED..................................................127
HOW SHARES ARE VALUED........................................................130
FUND PERFORMANCE.............................................................131
SERVICES PROVIDED BY THE FUNDS...............................................133
TAX-DEFERRED RETIREMENT PLANS................................................134
HOW TO REDEEM SHARES.........................................................134
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES.....................................135
INVESTMENT PRACTICES.........................................................138
ADDITIONAL INFORMATION.......................................................141
APPENDIX A...................................................................145
APPENDIX B...................................................................149
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS
The investment objectives and policies of the Funds are discussed in
their respective ^ Prospectuses under the heading "Investment ^ Objective and
Policies." Further information about the Funds' respective investment policies
and restrictions is set forth below.
Types of Equity Securities
As described in the Prospectuses, equity securities which may be
purchased by the Funds consist of common, preferred and convertible preferred
stocks, and securities having equity characteristics such as rights, warrants
and convertible debt securities. Common stocks and preferred stocks represent
equity ownership interests in a corporation and participate in the corporation's
earnings through dividends which may be declared by the corporation. Unlike
common stocks, preferred stocks are entitled to stated dividends payable from
the corporation's earnings, which in some cases may be "cumulative" if prior
stated dividends have not been paid. Dividends payable on preferred stock have
priority over distributions to holders of common stock, and preferred stocks
generally have preferences on the distribution of assets in the event of the
corporation's liquidation. Preferred stocks may be "participating," which means
that they may be entitled to dividends in excess of the stated dividend in
certain cases. The rights of common and preferred stocks are generally
subordinate to rights associated with a corporation's debt securities. Rights
and warrants are securities which entitle the holder to purchase the securities
of a company (generally, its common stock) at a specified price during a
specified time period. Because of this feature, the values of rights and
warrants are affected by factors similar to those which determine the prices of
common stocks and exhibit similar behavior. Rights and warrants may be purchased
directly or acquired in connection with a corporate reorganization or exchange
offer.
Convertible securities which may be purchased by the Funds include
convertible debt obligations and convertible preferred stock. A convertible
security entitles the holder to exchange it for a fixed number of shares of
common stock (or other equity security), usually at a fixed price within a
specified period of time. Until conversion, the holder receives the interest
paid on a convertible bond or the dividend preference of a preferred stock.
Convertible securities have an "investment value" which is the
theoretical value determined by the yield they provide in comparison with
similar securities without the conversion feature. Investment value changes are
based upon prevailing interest rates and other factors. They also have a
"conversion value" which is the amount that would be received worth in market
value if the security were exchanged for the underlying equity security.
Conversion value fluctuates directly with the price of the underlying security.
<PAGE>
If conversion value is substantially below investment value, the price of the
convertible security is governed principally by its investment value. If the
conversion value is near or above investment value, the price of the convertible
security generally will rise above investment value and may represent a premium
over conversion value due to the combination of the convertible security's right
to interest (or dividend preference) and the possibility of capital appreciation
from the conversion feature. A convertible security's price, when price is
influenced primarily by its conversion value, generally will yield less than a
senior non-convertible security of comparable investment value. Convertible
securities may be purchased at varying price levels above their investment
values or conversion values. However, there is no assurance that any premium
above investment value or conversion value will be recovered because prices
change and, as a result, the ability to achieve capital appreciation through
conversion may be eliminated.
Foreign Securities. The Funds invest primarily in foreign securities.
Investments in non-U.S. securities involve certain risks not associated with
investment in U.S. companies. Non-U.S. companies generally are not subject to
uniform accounting, auditing and financial reporting standards comparable to
those applicable to domestic companies, and there may be less publicly available
information about a foreign company. Although the volume of trading in foreign
securities markets is growing, securities of many non-U.S. companies may be less
liquid and more volatile than securities of comparable U.S. companies.
Transaction costs on foreign securities exchanges are generally higher than in
the United States and there is generally less government supervision and
regulation of exchanges, brokers and issuers in foreign countries than there is
in the United States. Investment in non-U.S. securities may also be subject to
other risks different from those affecting U.S. investments, including local
political or economic developments, expropriation or nationalization of assets,
confiscatory taxation, and imposition of withholding taxes on dividends or
interest payments. Securities denominated in non-U.S. currencies, whether issued
by a non-U.S. or a U.S. issuer, may be affected favorably or unfavorably by
changes in currency rates and exchange control regulations, and costs will be
incurred in connection with conversions from one currency to another. Foreign
currency exchange rates are determined by forces of supply and demand on the
foreign exchange markets. These forces are, in turn, affected by the
international balance of payments and other economic and financial conditions,
government intervention, speculation and other factors. Generally, the foreign
currency exchange transactions of the Funds will be conducted on a spot basis
(i.e., cash basis) at the spot rate for purchasing or selling currency
prevailing in the foreign currency exchange market.
Forward Foreign Currency Contracts. The Funds may enter into
forward currency contracts to purchase or sell foreign currencies (i.e.,
non-U.S. currencies) as a hedge against possible variations in foreign exchange
rates. A forward foreign currency exchange contract ("forward contract") is an
agreement between the
<PAGE>
contracting parties to exchange an amount of currency at some future time at an
agreed- upon rate. The rate can be higher or lower than the spot rate between
the currencies that are the subject of the contract. A forward contract
generally has no deposit requirement, and such transactions do not involve
commissions. By entering into a forward contract for the purchase or sale of the
amount of foreign currency invested in a foreign security transaction, a Fund
can hedge against possible variations in the value of the dollar versus the
subject currency either between the date the foreign security is purchased or
sold and the date on which payment is made or received or during the time the
Fund holds the foreign security. Hedging against a decline in the value of a
currency in the foregoing manner does not eliminate fluctuations in the prices
of portfolio securities or prevent losses if the prices of such securities
decline. Furthermore, such hedging transactions preclude the opportunity for
gain if the value of the hedged currency should rise. The Funds will not
speculate in forward currency contracts. The Funds will not attempt to hedge all
of their non-U.S. portfolio positions and will enter into such transactions only
to the extent, if any, deemed appropriate by their investment adviser and
sub-adviser (collectively, "Fund Management"). The Funds will not enter into
forward contracts for a term of more than one year. Forward contracts may, from
time to time, be considered illiquid, in which case they would be subject to a
Fund's limitations on investing in illiquid securities, discussed in the ^
Prospectuses.
Restricted/144A Securities. As discussed in the Funds' Prospectuses,
each Fund may invest in restricted securities, including restricted securities
that can be resold to institutional investors pursuant to Rule 144A under the
Securities Act of 1933 ("Rule 144A Securities"). In recent years, a large
institutional market has developed for certain ^ Rule 144A Securities.
Institutional investors generally will not seek to sell these instruments to the
general public but instead will often depend on an efficient institutional
market in which ^ Rule 144A Securities can readily be resold or on an issuer's
ability to honor a demand for repayment. Therefore, the fact that there are
contractual or legal restrictions on resale to the general public or certain
institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for restricted securities
that might develop as a result of Rule 144A could provide both readily
ascertainable values for restricted securities and the ability to liquidate an
investment in order to satisfy share redemption orders. An insufficient number
of qualified institutional buyers interested in purchasing Rule 144A-eligible
securities held by a Fund, however, could affect adversely the marketability of
such portfolio securities and the Fund might be unable to dispose of such
securities promptly or at reasonable prices.
<PAGE>
^ Securities Lending. All of the Funds may lend their portfolio
securities to brokers, dealers and other financial institutions, provided that
such loans are callable at any time by the Funds and are at all times secured by
collateral consisting of cash, letters of credit or securities issued or
guaranteed by the U.S. government or its agencies, or any combination thereof,
equal to at least the market value, determined daily, of the loaned securities.
The advantage of such loans is that the Fund continues to own the loaned
securities, while at the same time receiving interest from the borrower of the
securities. Loans will be made only to firms deemed by Fund Management to be
creditworthy under procedures established by the board of directors and when the
amount of interest to be received justifies the inherent risks. A loan may be
terminated by the borrower on one business day's notice or by the Fund at any
time. If at any time the borrower fails to maintain the required amount of
collateral (at least 100% of the market value of the borrowed securities, plus
accrued interest and dividends), the Fund will require the deposit of additional
collateral not later than the business day following the day on which a
collateral deficiency occurs or the collateral appears inadequate. If the
deficiency is not remedied by the end of that period, the Fund will use the
collateral to replace the securities while holding the borrower liable for any
excess of replacement cost over collateral. Upon termination of the loan, the
borrower is required to return the securities to the Fund. Any gain or loss on
the security during the loan period would inure to the Fund.
Repurchase Agreements. All of the Funds may enter into repurchase
agreements with respect to debt instruments eligible for investment by the Funds
with member banks of the Federal Reserve System, registered broker-dealers and
registered government securities dealers, which are deemed creditworthy under
procedures established by the board of directors. A repurchase agreement is a
means of investing monies for a short period. The resale price reflects an
agreed-upon interest rate effective for the period the instrument is held by a
Fund and is unrelated to the interest rate on the underlying instrument. In
these transactions, the collateral securities acquired by a Fund (including
accrued interest earned thereon) must have a total value ^ equal to the value of
the repurchase agreement and are held as collateral by the Company's custodian
bank until the repurchase agreement is completed.
<PAGE>
U.S. Government Obligations
These securities consist of treasury bills, treasury notes, and
treasury bonds, which differ only in their interest rates, maturities, and dates
of issuance. Treasury bills have a maturity of one year or less. Treasury notes
generally have a maturity of one to ten years, and treasury bonds generally have
maturities of more than ten years. U.S. government obligations also include
securities issued or guaranteed by agencies or instrumentalities of the U.S.
government.
Some obligations of U.S. government agencies, which are established
under the authority of an act of Congress, such as Government National Mortgage
Association (GNMA) participation certificates, are supported by the full faith
and credit of the United States Treasury. GNMA Certificates are mortgage-backed
securities representing part ownership of a pool of mortgage loans. These loans
- -- issued by lenders such as mortgage bankers, commercial banks and savings and
loan associations -- are either insured by the Federal Housing Administration or
guaranteed by the Veterans Administration. A "pool" or group of such mortgages
is assembled and, after being approved by GNMA, is offered to investors through
securities dealers. Once approved by GNMA, the timely payment of interest and
principal on each mortgage is guaranteed by GNMA and backed by the full faith
and credit of the U.S. government. The market value of GNMA Certificates is not
guaranteed. GNMA Certificates differ from bonds in that principal is paid back
monthly by the borrower over the term of the loan rather than returned in a lump
sum at maturity. GNMA Certificates are called "pass-through" securities because
both interest and principal payments (including prepayments) are passed through
to the holder of the Certificate. Upon receipt, principal payments will be used
by the Fund to purchase additional securities under its investment objective and
investment policies.
Other U.S. government obligations, such as securities of the Federal
Home Loan Banks, are supported by the right of the issuer to borrow from the
Treasury to repay its obligations. Still others, such as bonds issued by Fannie
Mae, a federally chartered private corporation, are supported only by the credit
of the instrumentality.
Obligations of Domestic Banks
These obligations consist of certificates of deposit ("CDs") and
bankers' acceptances issued by domestic banks (including their foreign branches)
having total assets in excess of $5 billion, which meet the Funds' minimum
rating requirements. CDs are issued against deposits in a commercial bank for a
specified period and rate and are normally negotiable. Eurodollar CDs are
certificates issued by a foreign branch (usually London) of a U.S. domestic
bank, and, as such, the credit is deemed to be that of the domestic bank.
<PAGE>
Bankers' acceptances are short-term credit instruments evidencing the
promise of the bank (by virtue of the bank's "acceptance") to pay at maturity a
draft which has been drawn on it by a customer (the "drawer"). These instruments
are used to finance the import, export, transfer, or storage of goods and
reflect the obligation of both the bank and the drawer to pay the face amount.
Commercial Paper
These obligations are short-term promissory notes issued by domestic
corporations to meet current working capital requirements. Such paper may be
unsecured or backed by a bank letter of credit. Commercial paper issued with a
letter of credit is, in effect, "two party paper," with the issuer directly
responsible for payment, plus a bank's guarantee that if the note is not paid at
maturity by the issuer, the bank will pay the principal and interest to the
buyer. Commercial paper is sold either as interest-bearing or on a discounted
basis, with maturities not exceeding 270 days.
Futures Contracts and Options on Futures ^ Contracts
As described in the Emerging Markets Fund's Prospectus, this Fund may
enter into futures contracts, and purchase and sell ("write") options to buy or
sell futures contracts ^. The Fund will comply with and adhere to all
limitations in the manner and extent to which it effects transactions in futures
and options on such futures currently imposed by the rules and policy guidelines
of the Commodity Futures Trading Commission (the "CFTC") as conditions for
exemption of a mutual fund, or investment advisers thereto, from registration as
a commodity pool operator. Under those restrictions, the Fund will not, as to
any positions, whether long, short or a combination thereof, enter into futures
and options thereon for which the aggregate initial margins and premiums exceed
5% of the fair market value of the Fund's total assets after taking into account
unrealized profits and losses on options it has entered into. In the case of an
option that is "in-the-money," as defined in the Commodity Exchange Act (the
"CEA"), the in-the-money amount may be excluded in computing such 5%. (In
general a call option on a future is "in-the-money" if the value of the future
exceeds the exercise ("strike") price of the call; a put option on a future is
"in-the-money" if the value of the future which is the subject of the put is
exceeded by the strike price of the put.) The Fund may use futures and options
thereon solely for bona fide hedging or for other non-speculative purposes
within the meaning and intent of the applicable provisions of the CEA ^.
Unlike when the Emerging Markets Fund purchases or sells a security, no
price is paid or received by the Fund upon the purchase or sale of a futures
contract. Instead, the Fund will be required to deposit in a segregated asset
account with the broker an amount of cash or qualifying securities (currently
U.S. Treasury bills), currently in a minimum amount of $15,000. This is called
<PAGE>
"initial margin." Such initial margin is in the nature of a performance bond or
good faith deposit on the contract. However, since losses on open contracts are
required to be reflected in cash in the form of variation margin payments, the
Fund may be required to make additional payments during the term of the
contracts to its broker. Such payments would be required, for example, where,
during the term of an interest rate futures contract purchased by the Fund,
there was a general increase in interest rates, thereby making the Fund's
portfolio securities less valuable. In all instances involving the purchase of
financial futures contracts by the Fund, an amount of cash together with such
other securities as permitted by applicable regulatory authorities to be
utilized for such purpose, at least equal to the market value of the futures
contracts, will be deposited in a segregated account with the Fund's custodian
to collateralize the position. At any time prior to the expiration of a futures
contract, the Fund may elect to close its position by taking an opposite
position which will operate to terminate the Fund's position in the futures
contract.^
Where futures are purchased to hedge against a possible increase in the
price of a security before a Fund is able in an orderly fashion to invest in the
security, it is possible that the market may decline instead. If the Fund, as a
result, concluded not to make the planned investment at that time because of
concern as to possible further market decline or for other reasons, the Fund
would realize a loss on the futures contract that is not offset by a reduction
in the price of securities purchased.
In addition to the possibility that there may be an imperfect
correlation or no correlation at all between movements in the futures contract
and the portion of the portfolio being hedged, the price of futures may not
correlate perfectly with movements in the portfolio prices due to certain market
distortions. All participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the underlying
securities and the value of the futures contract. Moreover, the deposit
requirements in the futures market are less onerous than margin requirements in
the securities market and may therefore cause increased participation by
speculators in the futures market. Such increased participation may also cause
temporary price distortions. Due to the possibility of price distortion in the
futures market and because of the imperfect correlation between movements in the
value of the underlying securities and movements in the prices of futures
contracts, the value of futures contracts as a hedging device may be reduced.
In addition, if the Emerging Markets Fund has insufficient available
cash, it may at times have to sell securities to meet variation margin
requirements. Such sales may have to be effected at a time when it may be
disadvantageous to do so.
<PAGE>
Options on Futures Contracts
The Emerging Markets Fund may buy and write options on futures
contracts for hedging purposes. Options on futures contracts are included among
the types of instruments sometimes known as derivatives. The purchase of a call
option on a futures contract is similar in some respects to the purchase of a
call option on an individual security. Depending on the pricing of the option
compared to either the price of the futures contract upon which it is based or
the price of the underlying instrument, ownership of the option may or may not
be less risky than ownership of the futures contract or the underlying
instrument. As with the purchase of futures contracts, when the Fund is not
fully invested it may buy a call option on a futures contract to hedge against a
market advance.
The writing of a call option on a futures contract constitutes a
partial hedge against declining prices of the security or foreign currency which
is deliverable under, or of the index comprising, the futures contract. If the
futures price at the expiration of the option is below the exercise price, the
Emerging Markets Fund will retain the full amount of the option premium which
provides a partial hedge against any decline that may have occurred in the
Fund's portfolio holdings. The writing of a put option on a futures contract
constitutes a partial hedge against increasing prices of the security or foreign
currency which is deliverable under, or of the index comprising, the futures
contract. If the futures price at expiration of the option is higher than the
exercise price, the Fund will retain the full amount of the option premium which
provides a partial hedge against any increase in the price of securities which
the Fund is considering buying. If a call or put option the Fund has written is
exercised, the Fund will incur a loss which will be reduced by the amount of the
premium it received. Depending on the degree of correlation between change in
the value of its portfolio securities and changes in the value of the futures
positions, the Fund's losses from existing options on futures may to some extent
be reduced or increased by changes in the value of portfolio securities.
The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio securities. For
example, the Emerging Markets Fund may buy a put option on a futures contract to
hedge the Fund's portfolio against the risk of falling prices.
The amount of risk the Emerging Markets Fund assumes when it buys an
option on a futures contract is the premium paid for the option plus related
transaction costs. In addition to the correlation risks discussed above, the
purchase of an option also entails the risk that changes in the value of the
underlying futures contract will not be fully reflected in the value of the
options bought.
For a more complete discussion of the risks involved in futures and
options on futures and other securities, refer to Appendix A ("Description of
Futures, Options and Forward Contracts").
<PAGE>
Swaps and Swap-Related Products
Interest rate swaps involve the exchange by the Emerging Markets Fund
with another party of their respective commitments to pay or receive interest,
e.g., an exchange of floating rate payments for fixed rate payments. The
exchange commitments can involve payments to be made in the same currency or in
different currencies. The purchase of an interest rate cap entitles the
purchaser, to the extent that a specified index exceeds a predetermined interest
rate, to receive payments of interest on a contractually-based principal amount
from the party selling the interest rate cap. The purchase of an interest rate
floor entitles the purchaser, to the extent that a specified index falls below a
predetermined interest rate, to receive payments of interest on a
contractually-based principal amount from the party selling the interest rate
floor.
The Emerging Markets Fund may enter into interest rate swaps, caps and
floors, which are included among the types of instruments sometimes known as
derivatives, on either an asset-based or liability-based basis, depending upon
whether it is hedging its assets or its liabilities, and usually will enter into
interest rate swaps on a net basis, i.e., the two payment streams are netted
out, with the Fund receiving or paying, as the case may be, only the net amount
of the two payments. The net amount of the excess, if any, of the Fund's
obligations over its entitlement with respect to each interest rate swap will be
calculated on a daily basis, and an amount of cash or high-grade liquid assets
having an aggregate net asset value at least equal to the accrued excess will be
maintained in a segregated account by the Fund's custodian. If the Fund enters
into an interest rate swap on other than a net basis, the Fund would maintain a
segregated account in the full amount accrued on a daily basis of the Fund's
obligations with respect to the swap. The Fund will not enter into any interest
rate swap, cap or floor transaction unless the unsecured senior debt or the
claims-paying ability of the other party thereto is rated in one of the three
highest rating categories of at least one nationally recognized statistical
rating organization at the time of entering into such transaction. Fund
Management will monitor the creditworthiness of all counterparties on an ongoing
basis. If there is a default by the other party to such a transaction, the Fund
would have contractual remedies pursuant to the agreements related to the
transaction.
The swap market has grown substantially in recent years with a large
number of banks and investment banking firms acting both as principals and as
agents utilizing standardized swap documentation. Caps and floors are more
recent innovations for which standardized documentation has not yet been
developed and, accordingly, they are less liquid than swaps. To the extent the
Emerging Markets Fund sells (i.e., writes) caps and floors, it will maintain in
<PAGE>
a segregated account cash or high-grade liquid assets having an aggregate net
asset value at least equal to the full amount, accrued on a daily basis, of the
Fund's obligations with respect to any caps or floors.
These transactions may in some instances involve the delivery of
securities or other underlying assets by the Fund or its counterparty to
collateralize obligations under the swap. The documentation currently used in
those markets attempts to limit the risk of loss with respect to interest rate
swaps to the net amount of the payments that a party is contractually obligated
to make. If the other party to an interest rate swap that is not collateralized
defaults, the Fund would anticipate losing the net amount of the payments that
the Fund contractually is entitled to receive over the payments that the Fund is
contractually obligated to make. The Fund may buy and sell (i.e., write) caps
and floors without limitation, subject to the segregated account requirement
described above as well as the Fund's other investment restrictions set forth
below.
Investment Restrictions. As described in the section of each Fund's
prospectus entitled "Investment Objective and Policies," the Funds operate under
certain investment restrictions. The following ^ restrictions are fundamental
and may not be changed with respect to a particular Fund without the prior
approval of the holders of a majority of the outstanding voting securities of
that Fund, as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"). For purposes of the following ^ restrictions, all percentage
limitations apply immediately after a purchase or initial investment. Any
subsequent change in a particular percentage resulting from fluctuations in
value does not require elimination of any security from the Fund.
INVESCO Pacific Basin and European Funds
^ The INVESCO Pacific Basin ^ and European Funds, ^ and the Company on
behalf of such Funds, ^ unless otherwise indicated, may not:
(1) issue senior securities as defined in the 1940 Act (except
insofar as the Company may be deemed to have issued a senior
security by reason of entering into a repurchase agreement, or
borrowing money, in accordance with the restrictions described
below, and in accordance with the position of the staff of the
Securities and Exchange Commission set forth in Investment
Company Act Release No. 10666);
(2) mortgage, pledge or hypothecate portfolio securities or borrow
money, except borrowings from banks for temporary or emergency
purposes (but not for investment) are permitted in an amount not
exceeding 10% of total net assets. A Fund will not purchase
additional securities while any borrowings on behalf of that Fund
exist;
<PAGE>
(3) buy or sell commodities, commodity contracts, oil, gas or other
mineral interests or exploration programs (however, the Fund may
purchase securities of companies which invest in the foregoing
and may enter into forward contracts for the purchase or sale of
foreign currencies);
(4) purchase the securities of any company if as a result of such
purchase more than 10% of total assets would be invested in
securities which are subject to legal or contractual restrictions
on resale ("restricted securities") and in securities for which
there are no readily available market quotations; or enter into a
repurchase agreement maturing in more than seven days if as a
result, such repurchase agreements, together with restricted
securities and securities for which there are not readily
available market quotations, would constitute more than 10% of
total assets;
(5) sell short or buy on margin^;
(6) buy or sell real estate or interests therein (however, securities
issued by companies which invest in real estate or interests
therein may be purchased and sold);
(7) invest in the securities of any other investment company except
for a purchase or acquisition in accordance with a plan of
reorganization, merger or consolidation, and except that not more
than 10% of the INVESCO Pacific Basin Fund's and the INVESCO
European Fund's total assets may be invested in shares of
closed-end investment companies within the limits of Section
12(d)(1) of the 1940 Act;
(8) invest in any company for the purpose of exercising control or
management;
(9) engage in the underwriting of any securities, except insofar as
the Company may be deemed an "underwriter" under the 1933 Act in
disposing of a portfolio security;
(10) make loans to any person, except through the purchase of debt
securities in accordance with the investment policies of the
Funds, or the lending of portfolio securities to broker-dealers
or other institutional investors, or the entering into of
repurchase agreements with member banks of the Federal Reserve
System, registered broker-dealers and registered government
securities dealers. The aggregate value of all portfolio
securities loaned may not exceed 33-1/3% of a Fund's total net
assets (taken at current value). No more than 10% of a Fund's
total ^ assets may be invested in repurchase agreements maturing
in more than seven days;
<PAGE>
(11) purchase securities of any company in which any officer or
director of the Company or its investment adviser owns more than
1/2 of 1% of the outstanding securities of such company and in
which the officers and directors of the Company and its
investment adviser, as a group, own more than 5% of such
securities;
(12) purchase securities (except obligations issued or guaranteed by
the U.S. government, its agencies or instrumentalities) if the
purchase would cause a Fund at the time to have more than 5% of
the value of its total assets invested in the securities of any
one issuer or to own more than 10% of the outstanding voting
securities of any one issuer;
(13) invest more than 5% of its total assets in an issuer having a
record, together with predecessors, of less than three years'
continuous operation.
In addition to the above restrictions, a fundamental policy of the
INVESCO Pacific Basin Fund and the INVESCO European Fund is not to invest more
than 25% of their respective total assets (taken at market value at the time of
each investment) in the securities of issuers in any one industry.
In applying restriction (1) above, the INVESCO Pacific Basin and
European Funds will enter into repurchase agreements only if such agreements are
in accordance with all applicable positions of the staff of the Securities and
Exchange Commission, including Investment Company Act Release No. 10666.
INVESCO International Growth Fund
^ The INVESCO International Growth Fund^ and the Company on behalf of
such Fund, ^ unless otherwise indicated, may not:
(1) other than investments by the Fund in obligations issued or
guaranteed by the U.S. government, its agencies or
instrumentalities, invest in the securities of issuers conducting
their principal business activities in the same industry
(investments in obligations issued by a foreign government,
including the agencies or instrumentalities of a foreign
government, are considered to be investments in a single
industry), if immediately after such investment the value of the
Fund's investments in such industry would exceed 25% of the value
of the Fund's total assets;
(2) invest in the securities of any one issuer, other than the U.S.
government, if immediately after such investment more than 5% of
the value of the Fund's total assets, taken at market value,
would be invested in such issuer or more than 10% of such
issuer's outstanding voting securities would be owned by the
Fund;
<PAGE>
(3) underwrite securities of other issuers, except insofar as it may
technically be deemed an "underwriter" under the 1933 Act, as
amended, in connection with the disposition of the Fund's
portfolio securities;
(4) invest in companies for the purpose of exercising control or
management;
(5) issue any class of senior securities or borrow money, except
borrowings from banks for temporary or emergency purposes not in
excess of 5% of the value of the Fund's total assets at the time
the borrowing is made;
(6) mortgage, pledge, hypothecate or in any manner transfer as
security for indebtedness any securities owned or held except to
an extent not greater than 5% of the value of the Fund's total
assets;
(7) sell short or buy on margin, exept for the Fund's purchase or
sale of options or futures, or writing, purchasing or selling ^
put or ^ call options;
(8) purchase or sell real estate or interests in real estate. The
Fund may invest in securities secured by real estate or interests
therein or issued by companies, including real estate investment
trusts, which invest in real estate or interests therein;
(9) purchase or sell commodities or commodity contracts. This
restriction shall not prevent the Fund from purchasing or selling
options on individual securities, security indexes and currencies
or financial futures or options on financial futures, or
undertaking forward foreign currency contracts.
(10) make loans to other persons, provided that the Fund may purchase
debt obligations consistent with its investment objectives and
policies and may lend limited amounts (not to exceed 10% of its
total assets) of its portfolio securities to broker-dealers or
other institutional investors;
(11) purchase securities of other investment companies except (i) in
connection with a merger, consolidation, acquisition or
reorganization, or (ii) by purchase in the open market of
securities of other investment companies involving only customary
brokers' commissions and only if immediately thereafter (i) no
more than 3% of the voting securities of any one investment
company are owned by the Fund, (ii) no more than 5% of the value
of the total assets of the Fund would be invested in any one
investment company, and (iii) no more than 10% of the value of
the total assets of the Fund would be invested
<PAGE>
in the securities of such investment companies. The Company may
invest from time to time a portion of the Fund's cash in
investment companies to which the Adviser serves as investment
adviser; provided that no management or distribution fee will be
charged by the Adviser with respect to any such assets so
invested and provided further that at no time will more than 3%
of the Fund's assets be so invested. Should the Fund purchase
securities of other investment companies, shareholders may incur
additional management and distribution fees;
(12) invest in securities for which there are legal or contractual
restrictions on resale, except that the Fund may invest no more
than 2% of the value of the Fund's total assets in such
securities, or invest in securities for which there is no readily
available market, except that the Fund may invest no more than 5%
of the value of the Fund's total assets in such securities.
In applying restriction (12) above, the INVESCO International Growth
Fund also includes illiquid securities (those which cannot be sold in the
ordinary course of business within seven days at approximately the valuation
given to them by the Fund) among the securities subject to the 5% of total
assets limit.
The Emerging Markets Fund, and the Company on behalf of such Fund,
unless otherwise indicated, may not:
1. With respect to seventy-five percent (75%) of the Fund's total
assets, purchase the securities of any one issuer (except cash
items and "government securities" as defined under the 1940 Act),
if the purchase would cause the Fund to have more than 5% of the
value of its total assets invested in the securities of such
issuer or to own more than 10% of the outstanding voting
securities of such issuer;
2. Borrow money or issue senior securities (as defined in the 1940
Act), except that the Fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) and may
enter into reverse repurchase agreements in an aggregate amount
not exceeding 33-1/3% of the value of its total assets (including
the amount borrowed) less liabilities (other than borrowings).
Any borrowings that come to exceed 33-1/3% of the value of the
Fund's total assets by reason of a decline in total assets will
be reduced within three business days to the extent necessary to
comply with the 33-1/3% limitation. This restriction shall not
prohibit deposits of assets to margin or guarantee positions in
futures, options, swaps or forward contracts, or the segregation
of assets in connection with such contracts.
<PAGE>
3. Invest directly in real estate or interests in real estate;
however, the Fund may own debt or equity securities issued by
companies engaged in those businesses.
4. Purchase or sell physical commodities other than foreign
currencies unless acquired as a result of ownership of securities
(but this shall not prevent the Fund from purchasing or selling
options, futures, swaps and forward contracts or from investing
in securities or other instruments backed by physical
commodities).
5. Lend any security or make any other loan if, as a result, more
than 10% of its total assets would be lent to other parties (but
this limitation does not apply to purchases of commercial paper,
debt securities or to repurchase agreements.)
6. Act as an underwriter of securities issued by others, except to
the extent that it may be deemed an underwriter in connection
with the disposition of portfolio securities of the Fund.
7. Invest more than 25% of the value of its total assets in any
particular industry (other than government securities).
As a fundamental policy in addition to the above, the Emerging Markets
Fund may, notwithstanding any other investment policy or limitation (whether or
not fundamental), invest all of its assets in the securities of a single
open-end management investment company with substantially the same fundamental
investment objectives, policies and limitations as the Fund.
Furthermore, the Company's board of directors has adopted additional
investment restrictions for the Emerging Markets Fund. These restrictions are
operating policies of the Fund and may be changed by the board of directors
without shareholder approval. The additional investment restrictions adopted by
the board of directors to date with respect to the Emerging Markets Fund include
the following:
(a) The Fund will not (i) enter into any futures contracts or options
on futures contracts if immediately thereafter the aggregate
margin deposits on all outstanding futures contracts positions
held by the Fund and premiums paid on outstanding options on
futures contracts, after taking into account unrealized profits
and losses, would exceed 5% of the market value of the total
assets of the Fund, or (ii) enter into any futures contracts if
the aggregate net amount of the Fund's commitments under
outstanding futures contracts positions of the Fund would exceed
the market value of the total assets of the Fund.
<PAGE>
(b) The Fund does not currently intend to sell securities short,
unless it owns or has the right to obtain securities equivalent
in kind and amount to the securities sold short without the
payment of any additional consideration therefor, and provided
that transactions in options, swaps and forward futures contracts
are not deemed to constitute selling securities short.
(c) The Fund does not currently intend to purchase securities on
margin, except that the Fund may obtain such short-term credits
as are necessary for the clearance of transactions, and provided
that margin payments and other deposits in connection with
transactions in options, futures, swaps and forward contracts
shall not be deemed to constitute purchasing securities on
margin.
(d) The Fund does not currently intend to (i) purchase securities of
closed-end investment companies, except in the open market where
no commission except the ordinary broker's commission is paid, or
(ii) purchase or retain securities issued by other open-end
investment companies other than money market funds or funds which
are the only practical means, or one of the few practical means,
of investing in a particular emerging country. Limitations (i)
and (ii) do not apply to securities received as dividends,
through offers of exchange, or as a result of a reorganization,
consolidation, or merger.
(e) The Fund may not mortgage or pledge any securities owned or held
by the Fund in amounts that exceed, in the aggregate, 10% of the
Fund's net assets, provided that this limitation does not apply
to reverse repurchase agreements or in the case of assets
deposited to margin or guarantee positions in futures, options,
swaps or forward contracts or placed in a segregated account in
connection with such contracts.
(f) The Fund does not currently intend to purchase any security or
enter into a repurchase agreement if, as a result, more than 15%
of its net assets would be invested in repurchase agreements not
entitling the holder to payment of principal and interest within
seven days and in securities that are illiquid by virtue of legal
or contractual restrictions on resale or the absence of a readily
available market. The board of directors, or the Fund's
investment adviser acting pursuant to authority delegated by the
board of directors, may determine that a readily available market
exists for securities eligible for resale pursuant to Rule 144A
under the Securities Act of 1933, or any successor to such rule,
and therefore that such securities are not subject to the
foregoing limitation.
<PAGE>
With respect to investment restriction (4) applicable to the Pacific
Basin and European Funds, restriction (12) applicable to the International
Growth Fund and restriction (f) applicable to the Emerging Markets Fund, the
board of directors has delegated to Fund Management the authority to determine
that a liquid market exists for securities eligible for resale pursuant to Rule
144A under the Securities Act of 1933, or any successor to such rule, and that
such securities are not subject to the Funds' limitations on investing in
illiquid securities, securities that are not readily marketable or securities
which do not have readily available market quotations. Under guidelines
established by the board of directors, Fund Management will consider the
following factors, among others, in making this determination: (1) the
unregistered nature of a Rule 144A security; (2) the frequency of trades and
quotes for the security; (3) the number of dealers willing to purchase or sell
the security and the number of other potential purchasers; (4) dealer
undertakings to make a market in the security; and (5) the nature of the
security and the nature of marketplace trades (e.g., the time needed to dispose
of the security, the method of soliciting offers and the mechanics of transfer).
However, Rule 144A Securities are still subject to the Funds' respective
limitations on investments in restricted securities (securities for which there
are legal or contractual restrictions on resale), unless they are readily
marketable outside the United States, in which case they are not deemed to be
restricted.
In applying the industry concentration investment restrictions
applicable to the Funds, the Company uses an industry classification system for
international securities based on information obtained from Bloomberg L.P.,
Moody's International and a modified S&P industry code classification schema
which uses various sources to classify.
THE FUNDS AND THEIR MANAGEMENT
The Company. The Company was incorporated on April 2, 1993, under the
laws of Maryland. On July 1, 1993, the Company, through the European Fund and
Pacific Basin Fund, assumed all of the assets and liabilities of the European
Portfolio and Pacific Basin Portfolio, respectively, of Financial Strategic
Portfolios, Inc., which was incorporated under the laws of Maryland on August
10, 1983. In addition, on July 1, 1993, the Company, through the International
Growth Fund, assumed all of the assets and liabilities of the Financial
International Growth Fund, a series of Financial Series Trust, a Massachusetts
business trust organized on July 15, 1987. All financial and other information
about the Funds for periods prior to July 1, 1993, relates to such former
portfolios and series.
The Investment Adviser. INVESCO Funds Group, Inc., a Delaware
corporation ("IFG"), is employed as the Company's investment adviser. IFG was
established in 1932 and also serves as an investment adviser to INVESCO Capital
<PAGE>
Appreciation Funds, Inc. (formerly, INVESCO Dynamics Fund, Inc.), INVESCO
Diversified Funds, Inc., INVESCO Emerging Opportunity Funds, Inc., INVESCO
Growth Fund, Inc., INVESCO Income Funds, Inc., INVESCO Industrial Income Fund,
Inc., INVESCO Money Market Funds, Inc., INVESCO Multiple Asset Funds, Inc.,
INVESCO Strategic Portfolios, Inc., INVESCO Tax-Free Income Funds, Inc., INVESCO
Value Trust, and INVESCO Variable Investment Funds, Inc.
The Sub-Adviser. IFG, as investment adviser, has contracted with
INVESCO Asset Management Limited ("IAML") to provide investment advisory and
research services on behalf of the Funds. IAML has the primary responsibility
for providing portfolio investment management services to the Funds.
The Distributor. Effective September 30, 1997, INVESCO Distributors,
Inc. ("IDI") became the Funds' distributor. IDI, established in 1997, is a
registered broker-dealer that acts as distributor for all retail funds advised
by IFG. Prior to September 30, 1997, IFG served as the Funds' distributor.
IFG, IAML and IDI are indirect, wholly-owned subsidiaries of AMVESCAP
PLC, a publicly-traded holding company that, through its subsidiaries, engages
in the business of investment management on an international basis. INVESCO PLC
changed its name to AMVESCO PLC on March 3, 1997, and to AMVESCAP PLC on May 8,
1997 as part of a merger between a direct subsidiary of INVESCO PLC and A I M
Management Group Inc., that created one of the largest independent investment
management businesses in the world with approximately $177.5 billion in assets
under management. IFG was established in 1932 and as of ^ October 31, 1997,
managed 14 mutual funds, consisting of ^ 45 separate portfolios, on behalf of ^
851,389 shareholders. AMVESCAP PLC's North American subsidiaries include the
following:
--INVESCO Capital Management, Inc. of Atlanta, Georgia
manages institutional investment portfolios, consisting primarily of
discretionary employee benefit plans for corporations and state and local
governments, and endowment funds. INVESCO Capital Management, Inc. is the sole
shareholder of INVESCO Services, Inc., a registered broker-dealer whose primary
business is the distribution of shares of two registered investment companies.
--INVESCO Management & Research, Inc. of Boston, Massachusetts,
primarily manages pension and endowment accounts.
--PRIMCO Capital Management, Inc. of Louisville, Kentucky, specializes
in managing stable return investments, principally on behalf of Section 401(k)
retirement plans.
--INVESCO Realty Advisors, Inc. of Dallas, Texas is responsible for
providing advisory services in the U.S. real estate markets for AMVESCAP PLC's
clients worldwide. Clients include corporate plans, public pension funds as well
as endowment and foundation accounts.
<PAGE>
--A I M Advisors, Inc. of Houston, Texas provides investment advisory
and administrative services for retail and institutional mutual funds.
--A I M Capital Management, Inc. of Houston, Texas provides investment
advisory services to individuals, corporations, pension plans and other private
investment advisory accounts and also serves as a sub-adviser to certain retail
and institutional mutual funds, one Canadian mutual fund and one portfolio of an
open-end registered investment company that is offered to separate accounts of
insurance companies offering variable annuities and variable life insurance
products.
--A I M Distributors, Inc. and Fund Management Company of Houston,
Texas are registered broker-dealers that act as the principal underwriters for
retail and institutional mutual funds.
The corporate headquarters of AMVESCAP PLC are located at 11 Devonshire
Square, London, ^ EC2M4YR, England.
As indicated in the Funds' Prospectuses, IFG and IAML permit investment
and other personnel to purchase and sell securities for their own accounts in
accordance with compliance policies governing personal investing by directors,
officers and employees of IFG, IAML and their North American affiliates. These
policies require officers, inside directors, investment and other personnel of
IFG, IAML and their North American affiliates to pre-clear all transactions in
securities not otherwise exempt under the policies. Requests for trading
authority will be denied if, among other reasons, the proposed personal
transaction would be contrary to the provisions of the applicable policy or
would be deemed to adversely affect any transaction then known to be under
consideration for or to have been effected on behalf of any client account,
including the Funds.
In addition to the pre-clearance requirement described above, the
policies subject officers, inside directors, investment and other personnel of
IFG, IAML and their North American affiliates to various trading restrictions
and reporting obligations. All reportable transactions are reviewed for
compliance with the policies. The provisions of these policies are administered
by and subject to exceptions authorized by IFG or IAML.
Investment Advisory Agreement. IFG serves as investment adviser to the
Funds pursuant to an investment advisory agreement dated February 28, 1997 (the
"Agreement") with the Company which was approved on November 6, 1996, by a vote
cast in person by a majority of the directors of the Company, including a
majority of the directors who are not "interested persons" of the Company or IFG
at a meeting called for such purpose. The Agreement was approved by shareholders
of each Fund of the Company on January 31, 1997, for an initial term expiring
February 28, 1999. The Agreement was approved by IFG as sole shareholder of the
n
<PAGE>
Emerging Markets Fund with respect to that Fund on ^ January 30, 1998, for an
initial term expiring on ^ January 30, 2000. Thereafter, the Agreement may be
continued from year to year as to each Fund as long as each such continuance is
specifically approved at least annually by the board of directors of the Company
or by a vote of the holders of a majority, as defined in the 1940 Act, of the
outstanding shares of the Fund. Any such continuance must also be approved by a
majority of the Company's directors who are not parties to the Agreement or
interested persons (as defined in the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such continuance. The
Agreement may be terminated at any time without penalty by either party upon
sixty (60) days' written notice and terminates automatically in the event of an
assignment to the extent required by the 1940 Act and the rules thereunder.
The Agreement provides that IFG shall manage the investment portfolios
of the Funds in conformity with each Fund's investment policies (either directly
or by delegation to a sub-adviser which may be a company affiliated with IFG).
Further, IFG shall perform all administrative, internal accounting (including
computation of net asset value), clerical, statistical, secretarial and all
other services necessary or incidental to the administration of the affairs of
the Funds excluding, however, those services that are the subject of separate
agreement between the Company and IFG or any affiliate thereof, including the
distribution and sale of Fund shares and provision of transfer agency, dividend
disbursing agency and registrar services, and services furnished under an
Administrative Services Agreement with IFG discussed below. Services provided
under the Agreement include but are not limited to: supplying the Company with
officers, clerical staff and other employees, if any, who are necessary in
connection with the Funds' operations; furnishing office space, facilities,
equipment and supplies; providing personnel and facilities required to respond
to inquiries related to shareholder accounts; conducting periodic compliance
reviews of the Funds' operations; preparation and review of required documents,
reports and filings by IFG's in-house legal and accounting staff (including the
prospectuses, statement of additional information, proxy statements, shareholder
reports, tax returns, reports to the SEC and other corporate documents of the
Funds), except insofar as the assistance of independent accountants or attorneys
is necessary or desirable; supplying basic telephone service and other
utilities; and preparing and maintaining certain of the books and records
required to be prepared and maintained by the Funds under the 1940 Act. Expenses
not assumed by IFG are borne by the Funds.
As full compensation for its advisory services to the Company, IFG
receives a monthly fee. The fee is calculated daily at an annual rate of:
(a) Pacific Basin and European Funds: 0.75% on the first $350 million
of each Fund's average net assets; 0.65% on the next $350 million
of each Fund's average net assets;
<PAGE>
and 0.55% on each Fund's average net assets in excess of $700
million;
(b) International Growth Fund: 1.00% on the first $500 million of the
Fund's average net assets; 0.75% on the next $500 million of the
Fund's average net assets; and 0.65% on the Fund's average net
assets in excess of $1 billion.
(c) Emerging Markets Fund: 1.00% on the first $500 million of the
Fund's average net assets; 0.85% on the next $500 million of the
Fund's average net assets; and 0.75% on the Fund's average net
assets in excess of $1 billion.
The advisory fee is calculated daily at the applicable annual rate and
paid monthly.
Sub-Advisory Agreement. With respect to the European, Pacific Basin and
International Growth Funds, IAML serves as sub-adviser to the Funds pursuant to
a sub-advisory agreement dated February 28, 1997 (the "Sub-Agreement") with
INVESCO which was approved on November 6, 1996, by a vote cast in person by a
majority of the directors of the Company, including a majority of the directors
who are not "interested persons" of the Company, IFG or IAML, at a meeting
called for such purpose. The Sub-Agreement was approved on January 31, 1997, by
the shareholders of each of the Funds (except Emerging Markets Fund) for an
initial term expiring February 28, 1999. The Sub-Agreement was approved by IFG
as sole shareholder of the Emerging Markets Fund with respect to that Fund on ^
January 30, 1998, for an initial term expiring on ^ January 30, 2000.
Thereafter, the Sub-Agreement may be continued from year to year as to each Fund
as long as each such continuance is specifically approved by the board of
directors of the Company, or by a vote of the holders of a majority of the
outstanding shares of the Fund, as defined in the 1940 Act. Each such
continuance also must be approved by a majority of the directors who are not
parties to the Sub-Agreement or interested persons (as defined in the 1940 Act)
of any such party, cast in person at a meeting called for the purpose of voting
on such continuance. The Sub-Agreement may be terminated at any time without
penalty by either party or the Company upon sixty (60) days' written notice and
terminates automatically in the event of an assignment to the extent required by
the 1940 Act and the rules thereunder.
The Sub-Agreement provides that IAML, subject to the supervision of
IFG, shall manage the investment portfolios of the Funds in conformity with each
such Fund's investment policies. These management services would include: (a)
managing the investment and reinvestment of all the assets, now or hereafter
acquired, of each Fund, and executing all purchases and sales of portfolio
securities; (b) maintaining a continuous investment program for the Funds,
consistent with (i) each Fund's investment policies as set forth in the
Company's Articles of Incorporation, Bylaws and Registration Statement, as from
<PAGE>
time to time amended, under the 1940 Act, as amended, and in any prospectus
and/or statement of additional information of the Company, as from time to time
amended and in use under the 1933 Act and (ii) the Company's status as a
regulated investment company under the Internal Revenue Code of 1986, as
amended; (c) determining what securities are to be purchased or sold for each
Fund, unless otherwise directed by the directors of the Company or IFG, and
executing transactions accordingly; (d) providing the Funds the benefit of all
of the investment analysis and research, the reviews of current economic
conditions and trends, and the consideration of long-range investment policy now
or hereafter generally available to investment advisory customers of IAML; (e)
determining what portion of each applicable Fund should be invested in the
various types of securities authorized for purchase by such Fund; and (f) making
recommendations as to the manner in which voting rights, rights to consent to
Company action and any other rights pertaining to the portfolio securities of
each applicable Fund shall be exercised.
The Sub-Agreement provides that, as compensation for its services, IAML
shall receive from IFG, at the end of each month, a fee based upon the average
daily value of the applicable Fund's net assets. With respect to the European
and Pacific Basin Funds, the fee is calculated at the following annual rates:
prior to January 1, 1998, 0.45% on the first $350 million of each Fund's average
net assets; 0.40% on the next $350 million of each Fund's average net assets;
and 0.35% on each Fund's average net assets in excess of $700 million^ and
effective January 1, 1998, ^ 0.25% on the first $350 million; 0.2166% on the
next $350 million and 0.1833% on each Fund's net assets in excess of $700
million. With respect to the International Growth Fund, the fee is computed at
the following annual rates: prior to January 1, 1998, 0.25% on the first $500
million of the Fund's average net assets; 0.1875% on the next $500 million of
the Fund's average net assets; and 0.1625% on the Fund's average net assets in
excess of $1 billion^ and effective January 1, 1998, ^ 0.333% on the first $500
million; 0.25% on the next $500 million and 0.2167% on the Fund's average net
assets in excess of $1 billion. With respect to the Emerging Markets Fund, the
fee is computed at the annual rate of 0.333% on the first $500 million of the
Fund's average net assets; 0.28% on the next $500 million of the Fund's average
net assets; and 0.25% on the Fund's average net assets in excess of $1 billion.
The sub-advisory fees are paid by INVESCO, NOT the Funds.
Administrative Services Agreement. IFG, either directly or through
affiliated companies, also provides certain administrative, sub-accounting and
recordkeeping services to the Company pursuant to an Administrative Services
Agreement dated February 28, 1997 (the "Administrative Agreement"). The
Administrative Agreement was approved on November 6, 1996, by a vote cast in
person by all of the directors of the Company, including all of the directors
who are not "interested persons" of the Company or IFG, at a meeting called for
such purpose. The Administrative Agreement is for an initial term of one year.
Thereafter, the Administrative Agreement may be continued from year to year as
<PAGE>
long as each such continuance is specifically approved by the board of directors
of the Company, including a majority of the directors who are not parties to the
Administrative Agreement or interested persons (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such continuance. The Administrative Agreement may be terminated at any time
without penalty by IFG on sixty (60) days' written notice, or by the Company
upon thirty (30) days' written notice, and terminates automatically in the event
of an assignment unless the Company's board of directors approves such
assignment.
The Administrative Agreement provides that IFG shall provide the
following services to the Funds: (A) such sub-accounting and recordkeeping
services and functions as are reasonably necessary for the operation of the
Fund; and (B) such sub-accounting, recordkeeping and administrative services and
functions, which may be provided by affiliates of IFG, as are reasonably
necessary for the operation of Fund shareholder accounts maintained by certain
retirement plans and employee benefit plans for the benefit of participants of
such plans. As full compensation for services provided under the Administrative
Agreement, the Company pays a monthly fee to IFG consisting of a base fee of
$10,000 per year per Fund, plus an additional incremental fee computed daily and
paid monthly at an annual rate of 0.015% per year of the average net assets of
each Fund of the Company.
Transfer Agency Agreement. IFG also performs transfer agent, dividend
disbursing agent and registrar services for the Company pursuant to a Transfer
Agency Agreement dated February 28, 1997 which was approved by the board of
directors of the Company, including a majority of the Company's directors who
are not parties to the Transfer Agency Agreement or "interested persons" of any
such party, on November 6, 1996. The Transfer Agency Agreement was for an
initial term expiring February 28, 1998 and has been extended by the board of
directors until May 15, 1998. Thereafter, the Transfer Agency Agreement may be
continued from year to year as to each Fund as long as such continuance is
specifically approved at least annually by the board of directors of the
Company, or by a vote of the holders of a majority of the outstanding shares of
the Fund. Any such continuance also must be approved by a majority of the
Company's directors who are not parties to the Transfer Agency Agreement or
interested persons (as defined by the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such continuance. The
Transfer Agency Agreement may be terminated at any time without penalty by
either party upon sixty (60) days' written notice and terminates automatically
in the event of assignment.
The Transfer Agency Agreement provides that the Company shall pay to
INVESCO an annual fee of $20.00 per shareholder account or, where applicable,
per participant in an omnibus account. This fee is paid monthly at a rate of
1/12 of the annual fee and is based upon the actual number of shareholder
accounts, or, where applicable, per participant in an omnibus account.
<PAGE>
For the fiscal years ended October 31, 1997, 1996 and 1995, the Funds
paid the following advisory fees, administrative services fees and transfer
agency fees:
European Fund
Fiscal Year
Ended Advisory Administrative Transfer
October 31 Fee Services Fee Agency Fee
- ---------- -------- -------------- ----------
1997 $2,679,462 $ 63,965 $ 985,603
1996 1,793,380 45,868 ^ 839,761
1995 1,815,386 46,308 869,684
Pacific Basin Fund
Fiscal Year
Ended Advisory Administrative Transfer
October 31 Fee Services Fee Agency Fee
- ---------- -------- -------------- ----------
1997 $939,420 $28,788 $677,811
1996 1,396,490 37,930 ^ 870,770
1995 1,571,623 41,483 852,343
^
International Growth Fund
Fiscal Year
Ended Advisory Administrative Transfer
October 31 Fee Services Fee Agency Fee
- ---------- -------- -------------- ----------
1997 $987,897 $24,818 $377,527
1996 893,966 23,409 ^ 383,054
1995 963,765 24,541 361,657
^
Emerging Markets Fund
The Emerging Markets Fund paid IFG no advisory, administrative or
transfer agency fees as of the date of this Statement of Additional Information
since ^ the Fund did not commence a public offering of its shares until ^
February 12, 1998.
Officers and Directors of the Company. The overall direction and
supervision of the Company is the responsibility of the board of directors,
which has the primary duty of seeing that the general investment policies and
programs of each of the Funds are carried out and that the Funds' portfolios are
properly administered. The officers of the Company, all of whom are officers and
employees of, and are paid by, IFG, are responsible for the day-to-day
administration of the Company and each of the Funds. The investment adviser for
the Company has the primary responsibility for making investment decisions on
behalf of the Company. These investment decisions are reviewed by the investment
committee of IFG.
<PAGE>
All of the officers and directors of the Company hold comparable
positions with INVESCO Capital Appreciation Funds, Inc. (formerly, INVESCO
Dynamics Fund, Inc.), INVESCO Diversified Funds, Inc., INVESCO Emerging
Opportunity Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income Funds, Inc.,
INVESCO Industrial Income Fund, Inc., INVESCO Money Market Funds, Inc., INVESCO
Multiple Asset Funds, Inc., INVESCO Specialty Funds, Inc., INVESCO Strategic
Portfolios, Inc., INVESCO Tax-Free Income Funds, Inc. and INVESCO Variable
Investment Funds, Inc. All of the directors of the Company also serve as
trustees of INVESCO Value Trust. In addition, all of the directors of the Fund,
with the exception of Dan Hesser, also are directors of INVESCO Treasurer's
Series Trust. All of the officers of the Company also hold comparable positions
with INVESCO Value Trust. Set forth below is information with respect to each of
the Company's officers and directors. Unless otherwise indicated, the address of
the directors and officers is Post Office Box 173706, Denver, Colorado
80217-3706. Their affiliations represent their principal occupations during the
past five years.
CHARLES W. BRADY,*+ ^ Chairman of the Board. Chief Executive
Officer and Director of AMVESCAP PLC, London, England, and of
various subsidiaries thereof; Chairman of the Board of INVESCO
Treasurer's Series Trust. Address: 1315 Peachtree Street, NE,
Atlanta, Georgia. Born: May 11, 1935.
FRED A. DEERING,+# Vice Chairman of the Board. Vice Chairman
of INVESCO Treasurer's Series Trust. Trustee of INVESCO Global
Health Sciences Fund. Formerly, Chairman of the Executive
Committee and Chairman of the Board of Security Life of Denver
Insurance Company, Denver, Colorado; Director of ING America Life
Insurance Company, Urbaine Life Insurance Company and Midwestern
United Life Insurance Company. Address: Security Life Center,
1290 Broadway, Denver, Colorado. Born: January 12, 1928.
DAN J. HESSER,+* President, CEO and Director. Chairman of the
Board, President, and Chief Executive Officer of INVESCO Funds
Group, Inc. and INVESCO Distributors, Inc.; President and Director
of INVESCO Trust Company. President and Chief Operating Officer of
INVESCO Global Health Sciences Fund. Born: December 27, 1939.
VICTOR L. ANDREWS,** Director. Professor Emeritus, Chairman
Emeritus and Chairman of the CFO Roundtable of the Department of
Finance at Georgia State University, Atlanta, Georgia; President,
Andrews Financial Associates, Inc. (consulting firm); since October
1984, Director of the Center for the Study of Regulated Industry of
Georgia State University; formerly, member of the faculties of the
Harvard Business School and the Sloan School of Management of MIT.
Dr. Andrews is also a director of the Southeastern Thrift and Bank
Fund, Inc. and The Sheffield Funds, Inc. Address: ^ 34 Seawatch
Drive, ^ Savannah, Georgia. Born: June 23, 1930.
<PAGE>
BOB R. BAKER,+** Director. President and Chief Executive
Officer of AMC Cancer Research Center, Denver, Colorado, since
January 1989; until mid-December 1988, Vice Chairman of the Board
of First Columbia Financial Corporation (a financial institution),
Englewood, Colorado. Formerly, Chairman of the Board and Chief
Executive Officer of First Columbia Financial Corporation.
Address: 1775 Sherman Street, #1000, Denver, Colorado. Born: August
7, 1936.
LAWRENCE H. BUDNER,# Director. Trust Consultant; prior to
June 30, 1987, Senior Vice President and Senior Trust Officer of
InterFirst Bank, Dallas, Texas. Address: 7608 Glen Albens Circle,
Dallas, Texas. Born: July 25, 1930.
DANIEL D. CHABRIS,+# Director. Financial Consultant;
Assistant Treasurer of Colt Industries Inc., New York, New York,
from 1966 to 1988. Address: 19 Kingsbridge Way, Madison,
Connecticut. Born: August 1, 1923.
WENDY L. GRAMM, Ph.D.,** Director. Self-employed (since 1993);
Professor of Economics and Public Administration, University of
Texas at Arlington. Formerly, Chairman, Commodity Futures Trading
Commission from 1988 to 1993, administrator for Information and
Regulatory Affairs at the Office of Management and Budget from 1985
to 1988, Executive Director of the Presidential Task Force on
Regulatory Relief and Director of the Federal Trade Commission's
Bureau of Economics. Dr. Gramm is also a director of the Chicago
Mercantile Exchange, Enron Corporation, IBP, Inc., State Farm
Insurance Company, State Farm Life Insurance Company, Independent
Women's Forum, International Republic Institute, and the Republican
Women's Federal Forum. Dr. Gramm is also a member of the Board of
Visitors, College of Business Administration, University of Iowa,
and a member of the Board of Visitors, Center for Study of Public
Choice, George Mason University. Address: 4201 Yuma Street, N.W.,
Washington, D.C. Born: January 10, 1945.
HUBERT L. HARRIS, JR.,* Director. Chairman (since 1996) and
President (January 1990 to May 1996) of INVESCO Services, Inc.;
Chief Executive Officer of INVESCO Individual Services Group.
Director of INVESCO Global Health Sciences Fund. Member of the
Executive Committee of the Alumni Board of Trustees of Georgia
Institute of Technology. Address: 1315 Peachtree Street, NE,
Atlanta, Georgia. Born: July 15, 1943.
KENNETH T. KING,# Director. Formerly, Chairman of the Board
of The Capitol Life Insurance Company, Providence Washington
Insurance Company, and Director of numerous subsidiaries thereof in
the U.S. Formerly, Chairman of the Board of The Providence Capitol
Companies in the United Kingdom and Guernsey. Chairman of the
Board of the Symbion Corporation (a high technology company) until
1987. Address: 4080 North Circulo Manzanillo, Tucson, Arizona.
Born: November 16, 1925.
JOHN W. MCINTYRE,# Director. Retired. Formerly, Vice
Chairman of the Board of Directors of The Citizens and Southern
Corporation and Chairman of the Board and Chief Executive Officer
<PAGE>
of The Citizens and Southern Georgia Corp. and Citizens and
Southern National Bank. Director of Golden Poultry Co., Inc.
Trustee of INVESCO Global Health Sciences Fund and Gables
Residential Trust. Address: 7 Piedmont Center, Suite 100, Atlanta,
Georgia. Born: September 14, 1930.
LARRY SOLL, Ph.D.,** Director. Retired. Formerly, Chairman
of the Board (1987 to 1994), Chief Executive Officer (1982 to 1989
and 1993 to 1994) and President (1982 to 1989) of Synergen Corp.
Director of Synergen since its incorporation in 1982. Director of
ISI Pharmaceuticals, Inc. Trustee of INVESCO Global Health
Sciences Fund. Address: 345 Poorman Road, Boulder, Colorado.
Born: April 26, 1942.
GLEN A. PAYNE, Secretary. Senior Vice President (since 1995),
General Counsel and Secretary of INVESCO Funds Group, Inc. and
INVESCO Trust Company (since 1989) and of INVESCO Distributors,
Inc. (since 1997); Vice President (May 1989 to April 1995).
Formerly, employee of a U.S. regulatory agency, Washington, D.C.
(June 1973 through May 1989). Born: September 25, 1947.
RONALD L. GROOMS, Treasurer. Senior Vice President and
Treasurer of INVESCO Funds Group, Inc. and INVESCO Trust Company
(since 1988) and of INVESCO Distributors, Inc. (since 1997). Born:
October 1, 1946.
WILLIAM J. GALVIN, JR., Assistant Secretary. Senior Vice
President of INVESCO Funds Group, Inc. (since 1995) and of INVESCO
Distributors, Inc. (since 1997) and Trust Officer of INVESCO Trust
Company since July 1995 and formerly (August 1992 to July 1995)
Vice President of INVESCO Funds Group, Inc. and ^ Trust Officer of
INVESCO Trust Company. Formerly, Vice President of 440 Financial
Group from June 1990 to August 1992 and Assistant Vice President of
Putnam Companies from November 1986 to June 1990. Born: August
21, 1956.
ALAN I. WATSON, Assistant Secretary. Vice President of
INVESCO Funds Group, Inc. (since 1984) and Trust Officer of INVESCO
Trust Company. Born: September 14, 1941.
JUDY P. WIESE, Assistant Treasurer. Vice President of INVESCO
Funds Group, Inc. (since 1984) and of INVESCO Distributors, Inc.
(since 1997) and Trust Officer of INVESCO Trust Company. Born:
February 3, 1948.
#Member of the audit committee of the Company.
+Member of the executive committee of the Company. On
occasion, the executive committee acts upon the current and
ordinary business of the Company between meetings of the board of
directors. Except for certain powers which, under applicable law,
may only be exercised by the full board of directors, the executive
committee may exercise all powers and authority of the board of
directors in the management of the business of the Company. All
<PAGE>
decisions are subsequently submitted for ratification by the board
of directors.
*These directors are "interested persons" of the Company as defined in
the Investment Company Act of 1940.
**Member of the management liaison committee of the Company.
As of ^ February 6, 1998, officers and directors of the Company, as a
group, beneficially owned less than 1% of the Company's outstanding shares and
1% of each Fund's outstanding shares.
Director Compensation
The following table sets forth, for the fiscal year ended October 31, ^
1997: the compensation paid by the Company to its eligible independent directors
for services rendered in their capacities as directors of the Company; the
benefits accrued as Company expenses with respect to the Defined Benefit
Deferred Compensation Plan discussed below; and the estimated annual benefits to
be received by these directors upon retirement as a result of their service to
the Company. In addition, the table sets forth the total compensation paid by
all of the mutual funds distributed by ^ IDI (including the Company), INVESCO
Advisor Funds, Inc.^, INVESCO Treasurer's Series Trust and INVESCO Global Health
Sciences Fund (collectively, the "INVESCO Complex") to these directors for
services rendered in their capacities as directors or trustees during the year
ended December 31, 1996. As of December 31, ^ 1996, there were ^ 49 funds in the
INVESCO Complex. Dr. Soll became an independent director of the Company
effective May 15, 1997 ^. Dr. Gramm became an independent director of the
Company effective July 29, 1997^.
<TABLE>
<CAPTION>
Total
Compensa-
Benefits Estimated tion From
Aggregate Accrued As Annual INVESCO
Compensa- Part of Benefits Complex
Name of Person, tion From Company Upon Paid To
Position Company (1) Expenses (2) Retirement(3) Directors (1)
- --------------- ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Fred A.Deering, ... $ ^ 4,650 $ 1,028 $ 1,001 $ 98,850
Vice Chairman of
the Board
Victor L. Andrews . ^ 4,627 972 1,159 84,350
Bob R. Baker ...... ^ 4,713 868 1,553 84,850
Lawrence H. Budner ^ 4,528 972 1,159 80,350
Daniel D. Chabris . 4,611 1,109 824 84,850
<PAGE>
A. D. Frazier, Jr. (4) 1,007 0 0 81,500
Wendy Gramm ....... 1,019 0 0 0
Kenneth T. King ... 4,209 1,068 908 71,350
John W. McIntyre .. 4,423 0 0 90,350
Larry Soll ........ 1,983 0 0 17,500
-------- -------- -------- --------
Total ............. $ 35,770 $ 6,017 $ 6,604 $693,950
% of Net Assets ... 0.0079% (5) 0.0013% (5) 0.0045% (6)
(1)The vice chairman of the board, the chairmen of the audit,
management liaison and compensation committees, and the members of the executive
and valuation committees each receive compensation for serving in such
capacities in addition to the compensation paid to all independent directors.
(2)Represents benefits accrued with respect to the Defined Benefit
Deferred Compensation Plan discussed below and not compensation deferred at the
election of the directors.
(3)These figures represent the Company's share of the estimated annual
benefits payable by the INVESCO Complex (excluding INVESCO Global Health
Sciences Fund which does not participate in any retirement plan) upon the
directors' retirement, calculated using the current method of allocating
director compensation among the funds in the INVESCO Complex. These estimated
benefits assume retirement at age 72 and that the basic retainer payable to the
directors will be adjusted periodically for inflation, for increases in the
number of funds in the INVESCO Complex and for other reasons during the period
in which retirement benefits are accrued on behalf of the respective directors.
This results in lower estimated benefits for directors who are closer to
retirement and higher estimated benefits for directors who are further from
retirement. With the exception of Messrs. Frazier and McIntyre and Drs. Gramm
and Soll, each of these directors has served as a director/trustee of one or
more of the funds in the INVESCO Complex for the minimum five-year period
required to be eligible to participate in the Defined Benefit Deferred
Compensation Plan.
^(4)Effective February 28, 1997, Mr. Frazier resigned as a director of
the Company. Effective November 1, 1996 Mr. Frazier was employed by INVESCO PLC
(the predecessor to AMVESCAP PLC), a company affiliated with ^ IFG and did not
receive any ^ director's fees or other compensation from the Company or other
funds in the INVESCO Complex for his ^ services as a director after that date.
^(5)Total as a percentage of the Company's net assets as of October 31,
^ 1997. The Emerging Markets Fund did not incur directors fees as of the date of
this Statement of Additional Information.
<PAGE>
^ (6)Total as a percentage of the net assets of the INVESCO Complex as
of December 31, ^ 1996.
Messrs. Brady, Harris and Hesser, as "interested persons" of the
Company and other funds in the INVESCO Complex, receive compensation as officers
or employees of IFG or its affiliated companies and do not receive any
director's fees or other compensation from the Company or other funds in the
INVESCO Complex for their services as directors.
The boards of directors/trustees of the mutual funds managed by IFG and
INVESCO Treasurer's Series Trust have adopted a Defined Benefit Deferred
Compensation Plan for the non-interested directors and trustees of the funds.
Under this plan, each director or trustee who is not an interested person of the
funds (as defined in the 1940 Act) and who has served for at least five years (a
"qualified director") is entitled to receive, upon retiring from the boards at
the retirement age of 72 (or the retirement age of 73 to 74, if the retirement
date is extended by the boards for one or two years but less than three years)
continuation of payment for one year (the "first year retirement benefit") of
the annual basic retainer payable by the funds to the qualified director at the
time of his or her retirement (the "basic retainer"). Commencing with any such
director's second year of retirement, and commencing with the first year of
retirement of a director whose retirement has been extended by the board for
three years, a qualified director shall receive quarterly payments at an annual
rate equal to 40% of the basic retainer. These payments will continue for the
remainder of the qualified director's life or ten years, whichever is longer
(the "reduced retainer payments"). If a qualified director dies or becomes
disabled after age 72 and before age 74 while still a director of the funds, the
first year retirement benefit and the reduced retainer payments will be made to
the director or to his or her beneficiary or estate. If a qualified director
becomes disabled or dies either prior to age 72 or during his 74th year while
still a director of the funds, the director will not be entitled to receive the
first year retirement benefit; however, the reduced retainer payments will be
made to his or her beneficiary or estate. The plan is administered by a
committee of three directors who are also participants in the plan and one
director who is not a plan participant. The cost of the plan will be allocated
among the INVESCO and Treasurer's Series Trust funds in a manner determined to
be fair and equitable by the committee. The Company is not making any payments
to directors under the plan as of the date of this Statement of Additional
Information. The Company has no stock options or other pension or retirement
plans for management or other personnel and pays no salary or compensation to
any of its officers.
The Company has an audit committee that is comprised of five of the
directors who are not interested persons of the Company. The committee meets
periodically with the Company's independent accountants and officers to review
<PAGE>
accounting principles used by the Funds, the adequacy of internal controls, the
responsibilities and fees of the independent accountants, and other matters.
The Company also has a management liaison committee which meets
quarterly with various management personnel of ^ IFG in order (a) to facilitate
better understanding of management and operations of the Company, and (b) to
review legal and operational matters which have been assigned to the committee
by the board of directors, in furtherance of the board of directors' overall
duty of supervision.
HOW SHARES CAN BE PURCHASED
The shares of each Fund are sold on a continuous basis at the net asset
value per share next calculated after receipt of a purchase order in good form.
The net asset value for each Fund is computed once each day that the New York
Stock Exchange is open as of the close of regular trading on that Exchange but
may also be computed at other times. See "How Shares Are Valued." IDI acts as
the Funds' distributor under a distribution agreement with the Company under
which it receives no compensation and bears all expenses, including the costs of
printing and distribution of prospectuses incident to direct sales and
distribution of each of the Fund's shares on a no-load basis.
Distribution Plan. As discussed in the Prospectuses, the Company has
adopted a Plan and Agreement of Distribution (the "Plan") pursuant to Rule 12b-1
under the 1940 Act . ^ The Plan was approved on May 16, 1997, at a meeting
called for such purpose by a majority of the directors of the Company, including
a majority of the directors who neither are "interested persons" of the Company
nor have any financial interest in the operation of the Plan ("12b-1
directors"). The Plan was approved by shareholders of the European and
International Growth Funds on October 28, 1997, ^ shareholders of the Pacific
Basin Fund on December 1, 1997 and by IFG on behalf of the Emerging Markets Fund
on ^ January 30, 1998, for initial terms expiring October 28, 1998, December 1,
1998^, and ^ January 30, 1999, respectively.
The Plan provides that each Fund may make monthly payments to IDI of
amounts computed at the following annual rates: with respect to the European and
International Growth Funds, no greater than 0.25% of new sales of shares,
exchanges into each Fund and reinvestments of dividends and other distributions
added after November 1, 1997. With respect to the Pacific Basin Fund, no greater
than 0.25% of the Fund's new sales of shares, exchanges into the Fund and
reinvestment of dividends and other distributions added after December 1, 1997
and with respect to the Emerging Markets Fund, no greater than 0.25% of the
Fund's average net assets to permit IDI, at its discretion, to engage in certain
activities and provide certain services in connection with the distribution of
each Fund's shares to investors. ^ Payments by a Fund under the Plan, for any
month, may be made to compensate IDI for permissible activities engaged in and
<PAGE>
services provided by IDI during the rolling 12-month period in which that month
falls, although this period is extended to 24 months for obligations incurred
during the first 24 months of a Fund's operations. As noted in the Prospectuses,
one type of expenditure permitted by the Plan is the payment of compensation to
securities companies and other financial institutions and organizations, which
may include IDI-affiliated companies, in order to obtain various
distribution-related and/or administrative services for the Funds. Each Fund is
authorized by the Plan to use its assets to finance the payments made to obtain
those services. Payments will be made by IDI to broker-dealers who sell shares
of the Funds and may be made to banks, savings and loan associations and other
depository institutions. Although the Glass-Steagall Act limits the ability of
certain banks to act as underwriters of mutual fund shares, the Company does not
believe that these limitations would affect the ability of such banks to enter
into arrangements with IDI, but can give no assurance in this regard. However,
to the extent it is determined otherwise in the future, arrangements with banks
might have to be modified or terminated, and, in that case, the size of one or
more of the Funds possibly could decrease to the extent that the banks would no
longer invest customer assets in a particular Fund. Neither the Company nor its
investment adviser will give any preference to banks or other depository
institutions which enter into such arrangements when selecting investments to be
made by each Fund.
The Plan was not implemented until November 1, 1997 with respect to the
European and International Growth Funds, December 1, 1997 with respect to the
Pacific Basin Fund and ^ February 2, 1998 with respect to the Emerging Markets
Fund.
The nature and scope of services which are provided by securities
dealers and other organizations may vary by dealer but include, among other
things, processing new stockholder account applications, preparing and
transmitting to the Company's Transfer Agent computer-processable tapes of each
Fund's transactions by customers, serving as the primary source of information
to customers in answering questions concerning each Fund, and assisting in other
customer transactions with each Fund.
The Plan provides that it shall continue in effect with respect to each
Fund for so long as such continuance is approved at least annually by the vote
of the board of directors of the Company cast in person at a meeting called for
the purpose of voting on such continuance. The Plan also can be terminated at
any time with respect to any Fund, without penalty, if a majority of the 12b-1
directors, or shareholders of such Fund, vote to terminate the Plan. The Company
may, in its absolute discretion, suspend, discontinue or limit the offering of
the shares of any Fund at any time. In determining whether any such action
should be taken, the board of directors intends to consider all relevant factors
including, without limitation, the size of the Funds, the investment climate for
any particular Fund, general market conditions, and the volume of sales and
<PAGE>
redemptions of Fund shares. The Plan may continue in effect and payments may be
made under the Plan following any such temporary suspension or limitation of the
offering of a Fund's shares; however, the Company is not contractually obligated
to continue the Plan for any particular period of time. Suspension of the
offering of a Fund's shares would not, of course, affect a shareholder's ability
to redeem his or her shares. So long as the Plan is in effect, the selection and
nomination of persons to serve as independent directors of the Company shall be
committed to the independent directors then in office at the time of such
selection or nomination. The Plan may not be amended to increase materially the
amount of any Fund's payments thereunder without approval of the shareholders of
that Fund, and all material amendments to the Plan must be approved by the board
of directors of the Company, including a majority of the 12b-1 directors. Under
the agreement implementing the Plan, IDI or the Funds, the latter by vote of a
majority of the 12b-1 directors or of the holders of a majority of any Fund's
outstanding voting securities, may terminate such agreement without penalty upon
30 days' written notice to the other party. No further payments will be made by
any Fund under the Plan in the event of its termination as to that Fund.
To the extent that the Plan constitutes a plan of distribution adopted
pursuant to Rule 12b-1 under the Act, it shall remain in effect as such, so as
to authorize the use of each Fund's assets in the amounts and for the purposes
set forth therein, notwithstanding the occurrence of an assignment, as defined
by the Act, and rules thereunder. To the extent it constitutes an agreement
pursuant to a plan, each Fund's obligation to make payments to IDI shall
terminate automatically, in the event of such "assignment," in which event the
Funds may continue to make payments, pursuant to the Plan, to IDI or another
organization only upon the approval of new arrangements, which may or may not be
with IDI, regarding the use of the amounts authorized to be paid by it under the
Plan, by the directors, including a majority of the 12b-1 directors, by a vote
cast in person at a meeting called for such purpose.
Information regarding the services rendered under the Plan and the
amounts paid therefor by each Fund are provided to, and reviewed by, the
directors on a quarterly basis. On an annual basis, the directors consider the
continued appropriateness of the Plan at the level of compensation provided
therein.
The only members of the board of directors or officers of the Fund who
are interested persons, as that term is defined in Section 2(a)(19) of the Act,
of the Company who have a direct or indirect financial interest in the operation
of the Plan are the officers and directors of the Company listed under "The
Funds and Their Management -- Officers and Directors of the Company" who are
also officers either of IFG or companies affiliated with IFG. The benefits which
the Company believes will be reasonably likely to flow to the Funds and their
respective shareholders under the Plan include the following:
<PAGE>
(1) Enhanced marketing efforts, if successful, should result in an
increase in net assets through the sale of additional shares and
afford greater resources with which to pursue the investment
objectives of the Funds;
(2) The sale of additional shares reduces the likelihood that
redemption of shares will require the liquidation of securities
of the Funds in amounts and at times that are disadvantageous for
investment purposes;
(3) The positive effect which increased Fund assets will have on its
revenues could allow IFG and its affiliated companies:
(a) To have greater resources to make the financial commitments
necessary to improve the quality and level of each Fund's
shareholder services (in both systems and personnel),
(b) To increase the number and type of mutual funds available to
investors from IFG and its affiliated companies (and support
them in their infancy), and thereby expand the investment
choices available to all shareholders, and
(c) To acquire and retain talented employees who desire to be
associated with a growing organization; and
(4) Increased Fund assets may result in reducing each investor's
share of certain expenses through economies of scale (e.g.
exceeding established breakpoints in the advisory fee schedule
and allocating fixed expenses over a larger asset base), thereby
partially offsetting the costs of the Plan.
HOW SHARES ARE VALUED
As described in the section of each Fund's prospectus entitled "How
Shares Can Be Purchased," the net asset value of shares of each Fund is computed
once each day that the New York Stock Exchange is open as of the close of
regular trading on that Exchange (generally 4:00 p.m., New York time) and
applies to purchase and redemption orders received prior to that time. Net asset
value per share is also computed on any other day on which there is a sufficient
degree of trading in the securities held by a Fund that the current net asset
value per share might be materially affected by changes in the value of the
securities held, but only if on such day the Fund receives a request to purchase
or redeem shares of that Fund. Net asset value per share is not calculated on
days the New York Stock Exchange is closed, such as federal holidays including
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving and Christmas. The net
<PAGE>
asset value per share of each Fund is calculated by dividing the value of all
securities held by the Fund and its other assets (including dividends and
interest accrued but not collected), less the Fund's liabilities (including
accrued expenses), by the number of outstanding shares of that Fund.
Securities traded on national securities exchanges, the NASDAQ National
Market System, the NASDAQ Small Cap market and foreign markets are valued at
their last sale prices on the exchanges or markets where such securities are
primarily traded. Securities traded in the over-the-counter market for which
last sale prices are not available, and listed securities for which no sales
were reported on a particular date, are valued at their highest closing bid
prices (or, for debt securities, yield equivalents thereof) obtained from one or
more dealers making markets for such securities. If market quotations are not
readily available, securities will be valued at their fair values as determined
in good faith by the Company's board of directors or pursuant to procedures
adopted by the board of directors. The above procedures may include the use of
valuations furnished by a pricing service which employs a matrix to determine
valuations for normal institutional-size trading units of debt securities. Prior
to utilizing a pricing service, the Fund's board of directors reviews the
methods used by such service to assure itself that securities will be valued at
their fair values. The Fund's board of directors also periodically monitors the
methods used by such pricing services. Debt securities with remaining maturities
of 60 days or less at the time of purchase are normally valued at amortized
cost.
The value of securities held by each Fund, and other assets used in
computing net asset value, generally is determined as of the time regular
trading in such securities or assets is completed each day. Because regular
trading in most foreign securities markets is completed simultaneously with, or
prior to, the close of regular trading on the New York Stock Exchange, closing
prices for foreign securities usually are available for purposes of computing
the Funds' net asset values. However, in the event that the closing price of a
foreign security is not available in time to calculate a Fund's net asset value
on a particular day, the Company's board of directors has authorized the use of
the market price for the security obtained from an approved pricing service at
an established time during the day which may be prior to the close of regular
trading in the security. The value of all assets and liabilities initially
expressed in foreign currencies will be converted into U.S. dollars at the spot
rate of such currencies against U.S. dollars provided by an approved pricing
service.
FUND PERFORMANCE
As discussed in the section of each Fund's Prospectus entitled
"Performance Data," all of the Funds advertise their total return performance.
Average annual total return performance for each Fund for the indicated periods
ended October 31, ^ 1997, was as follows:
<PAGE>
10 Years/
Life of
Fund 1 Year 5 Years Fund
- -------------------- -------- ------- -------
European ^ 18.07% 16.07% 11.41%
Pacific Basin ^-26.65% 2.06% 2.80%
International Growth (1)^ 2.65% 9.70% 5.38%
Emerging Markets (2) N/A N/A N/A
- -------------------
(1) 109 months (9.08 yrs.)
(2) The Emerging Markets Fund did not operate during these time
periods.
Average annual total return performance for each of the periods indicated was
computed by finding the average annual compounded rates of return that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
P(1 + T) exponent n = ERV
where: P = initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of initial payment
The average annual total return performance figures shown above were
determined by solving the above formula for "T" for each time period and Fund
indicated.
From time to time, evaluations of performance made by independent
sources may also be used in advertisements, sales literature or shareholder
reports, including reprints of, or selections from, editorials or articles about
the Funds. Sources for Fund performance information and articles about the Funds
include, but are not limited to, the following:
American Association of Individual Investors' Journal
Banxquote
Barron's
Business Week
<PAGE>
CDA Investment Technologies
CNBC
CNN
Consumer Digest
Financial Times
Financial World
Forbes
Fortune
Ibbotson Associates, Inc.
Institutional Investor
Investment Company Data, Inc.
Investor's Business Daily
Kiplinger's Personal Finance
Lipper Analytical Services, Inc.'s Mutual Fund Performance
Analysis
Money
Morningstar
Mutual Fund Forecaster
No-Load Analyst
No-Load Fund X
Personal Investor
Smart Money
The New York Times
The No-Load Fund Investor
U.S. News and World Report
United Mutual Fund Selector
USA Today
Wall Street Journal
Wiesenberger Investment Companies Services
Working Woman
Worth
SERVICES PROVIDED BY THE FUNDS
Periodic Withdrawal Plan. As described in the section of each Fund's
prospectus entitled "Services Provided By the Funds," each Fund offers a
Periodic Withdrawal Plan. All dividends and distributions on shares owned by
shareholders participating in this Plan are reinvested in additional shares.
Because withdrawal payments represent the proceeds from sales of shares, the
amount of shareholders' investments in that Fund will be reduced to the extent
that withdrawal payments exceed dividends and other distributions paid and
reinvested. Any gain or loss on such redemptions must be reported for tax
purposes. In each case, shares will be redeemed at the close of business on or
about the 20th day of each month preceding payment and payments will be mailed
within five business days thereafter.
The Periodic Withdrawal Plan involves the use of principal and is not a
guaranteed annuity. Payments under such a Plan do not represent income or a
return on investment.
<PAGE>
Participation in the Periodic Withdrawal Plan may be terminated at any
time by sending a written request to IFG. Upon termination, all future dividends
and capital gain distributions will be reinvested in additional shares unless a
shareholder requests otherwise.
Exchange Policy. As discussed in the section of each Fund's Prospectus
entitled "Services Provided by the Funds," the Funds offer shareholders the
ability to exchange shares of the Funds for shares of certain other mutual funds
advised by IFG. Exchange requests may be made either by telephone or by written
request to IFG, using the telephone number or address on the cover of this
Statement of Additional Information. Exchanges made by telephone must be in an
amount of at least $250 if the exchange is being made into an existing account
of one of the INVESCO funds. All exchanges that establish a new account must
meet the fund's applicable minimum initial investment requirements. Written
exchange requests into an existing account have no minimum requirements other
than the fund's applicable minimum subsequent investment requirements. Any gain
or loss realized on such an exchange is recognized for federal income tax
purposes. This privilege is not an option or right to purchase securities but is
a revocable privilege permitted under the present policies of each of the funds
and is not available in any state or other jurisdiction where the shares of the
mutual fund into which transfer is to be made are not qualified for sale, or
when the net asset value of the shares presented for exchange is less than the
minimum dollar purchase required by the appropriate prospectus.
TAX-DEFERRED RETIREMENT PLANS
As described in the section of each Fund's prospectus entitled
"Services Provided by the Funds," shares of the Funds may be purchased as the
investment medium for various tax-deferred retirement plans. Persons who request
information regarding these plans from IFG will be provided with prototype
documents and other supporting information regarding the type of plan requested.
Each of these plans involves a long-term commitment of assets and is subject to
possible regulatory penalties for excess contributions, premature distributions
or insufficient distributions after age 70-1/2. The legal and tax implications
may vary according to the circumstances of the individual investor. Therefore,
the investor is urged to consult with an attorney or tax adviser prior to the
establishment of such a plan.
HOW TO REDEEM SHARES
Normally, payments for shares redeemed will be mailed within seven (7)
days following receipt of the required documents as described in the section of
each Fund's prospectus entitled "How to Redeem Shares." The right of redemption
may be suspended and payment postponed when: (a) the New York Stock Exchange is
closed for other than customary weekends and holidays; (b) trading on that
exchange is restricted; (c) an emergency exists as a result of which disposal by
a particular Fund of securities owned by it is not reasonably practicable, or it
<PAGE>
is not reasonably practicable for a particular Fund fairly to determine the
value of its net assets; or (d) the Securities and Exchange Commission ("SEC")
by order so permits.
It is possible that in the future conditions may exist which would, in
the opinion of the Company's investment adviser, make it undesirable for a Fund
to pay for redeemed shares in cash. In such cases, the investment adviser may
authorize payment to be made in portfolio securities or other property of the
Fund. However, the Company is obligated under the 1940 Act to redeem for cash
all shares of a Fund presented for redemption by any one shareholder up to
$250,000 (or 1% of the Fund's net assets if that is less) in any 90-day period.
Securities delivered in payment of redemptions are selected entirely by the
investment adviser based on what is in the best interests of the Fund and its
shareholders, and are valued at the value assigned to them in computing the
Fund's net asset value per share. Shareholders receiving such securities are
likely to incur brokerage costs on their subsequent sales of the securities.
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
The ^ Funds intend to continue to conduct ^ their business and satisfy
the applicable diversification of assets and source of income requirements to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). The INVESCO European Fund,
INVESCO Pacific Basin Fund and INVESCO International Growth Fund so qualified
for the taxable year ended October 31, ^ 1997, and ^ intend to continue to
qualify during their current taxable year. The INVESCO Emerging Markets Fund
commenced operation on February 12, 1998 and intends to qualify during its
current taxable year. As a result, because the ^ Funds intend to distribute all
of ^ their income and recognized gains, it is anticipated that the ^ Funds will
pay no federal income or excise taxes and will be accorded conduit or "pass
through" treatment for federal income tax purposes.
Dividends paid by the ^ Funds from net investment income as well as
distributions of net realized short-term capital gains and net realized gains
from certain foreign currency transactions are, for federal income tax purposes,
taxable as ordinary income to shareholders. After the end of each calendar year,
the ^ Funds send shareholders information regarding the amount and character of
dividends paid in the year.
Distributions by the ^ Funds of net capital gain (the excess of net
long-term capital gain over net short-term capital loss) are, for federal income
tax purposes, taxable to the shareholder as long-term capital gains regardless
how long a shareholder has held shares of the Fund. The Taxpayer Relief Act of
1997 (the "Tax Act"), enacted in August 1997, changed the taxation of long-term
capital gains by applying different capital gains rates depending on the
taxpayer's holding period and marginal rate of federal income tax. Long-term
gains realized on the sale of securities held for more than one year but not for
<PAGE>
more than 18 months are taxable at a rate of 28%. This category of long-term
gains is often referred to as "mid-term" gains but is technically termed "28%
rate gains". Long-term gains realized on the sale of securities held for more
than 18 months are taxable at a rate of 20%.^ At the end of each year,
information regarding the tax status of dividends and other distributions is
provided to shareholders. Shareholders should consult their tax advisers as to
the effect of the Tax Act on distributions by the Fund of net capital gain.
All dividends and other distributions are regarded as taxable to the
investor, regardless whether such dividends and distributions are reinvested in
additional shares of the ^ Funds or another fund in the INVESCO group. The net
asset value of Fund shares reflects accrued net investment income and
undistributed realized capital and foreign currency gains; therefore, when a
distribution is made, the net asset value is reduced by the amount of the
distribution. If the net asset value of Fund shares were reduced below a
shareholder's cost as a result of a distribution, such distribution would be
taxable to the shareholder although a portion would be, in effect, a return of
invested capital. However, the net asset value per share will be reduced by the
amount of the distribution, which would reduce any gain (or increase any loss)
for tax purposes on any subsequent redemption of shares by the shareholder.
IFG may provide Fund shareholders with information concerning the
average cost basis of their shares in order to help them prepare their tax
returns. This information is intended as a convenience to shareholders and will
not be reported to the Internal Revenue Service (the "IRS"). The IRS permits the
use of several methods to determine the cost basis of mutual fund shares. The
cost basis information provided by IFG will be computed using the
single-category average cost method, although neither IFG nor the ^ Funds
recommend any particular method of determining cost basis. Other methods may
result in different tax consequences. If a shareholder has reported gains or
losses with respect to shares of ^ a Fund in past years, the shareholder must
continue to use the cost basis method previously used unless the shareholder
applies to the IRS for permission to change the method.
If Fund shares are sold at a loss after being held for six months or
less, the loss will be treated as a long-term, instead of short-term, capital
loss to the extent of any capital gain distributions received on those shares.
^ Each Fund will be subject to a non-deductible 4% excise tax to the
extent it fails to distribute by the end of any calendar year substantially all
of ^ its ordinary income for that year and net capital gains for the one-year
period ending on October 31 of that year, plus certain other amounts.
Dividends and interest received by ^ each Fund may be subject to
income, withholding or other taxes imposed by foreign countries and U.S.
<PAGE>
possessions that would reduce the yield on its securities. Tax conventions
between certain countries and the United States may reduce or eliminate these
foreign taxes, however, and many foreign countries do not ^ impose taxes on
capital gains in respect of investments by foreign investors. Foreign taxes
withheld will be treated as an expense of the Fund.
^ Each Fund may invest in the stock of "passive foreign investment
companies" (PFICs). A PFIC is a foreign corporation (other than a controlled
foreign corporation) that, in general, meets either of the following tests: (1)
at least 75% of its gross income is passive or (2) an average of at least 50% of
its assets produce, or are held for the production of, passive income. Under
certain circumstances, ^ a Fund will be subject to federal income tax on a
portion of any "excess distribution" received on the stock of a PFIC or of any
gain on disposition of the stock (collectively "PFIC income"), plus interest
thereon, even if the Fund distributes the PFIC income as a taxable dividend to
its shareholders. The balance of the PFIC income will be included in the Fund's
investment company taxable income and, accordingly, will not be taxable to the
Fund to the extent that income is distributed to its shareholders.
^ A Fund may elect to "mark-to-market" its stock in any PFIC.
Marking-to-market, in this context, means including in ordinary income for each
taxable year the excess, if any, of the fair market value of the PFIC stock over
the Fund's adjusted tax basis therein as of the end of that year. Once the
election has been made, the Fund also will be allowed to deduct from ordinary
income the excess, if any, of its adjusted basis in PFIC stock over the fair
market value thereof as of the end of the year, but only to the extent of any
net mark-to-market gains with respect to that PFIC stock included by the Fund
for prior taxable years. ^ A Fund's adjusted tax basis in each PFIC's stock with
respect to which it makes this election will be adjusted to reflect the amounts
of income included and deductions taken under the election.
Gains or losses (1) from the disposition of foreign currencies, (2)
from the disposition of debt securities denominated in foreign currency that are
attributable to fluctuations in the value of the foreign currency between the
date of acquisition of each security and the date of disposition, and (3) that
are attributable to fluctuations in exchange rates that occur between the time
the Fund accrues interest, dividends or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time the Fund
actually collects the receivables or pays the liabilities, generally will be
treated as ordinary income or loss. These gains or losses may increase or
decrease the amount of ^ a Fund's investment company taxable income to be
distributed to its shareholders.
Shareholders should consult their own tax advisers regarding specific
questions as to federal, state and local taxes. Dividends and other
distributions generally will be subject to applicable state and local taxes.
<PAGE>
Qualification as a regulated investment company under the Code for federal
income tax purposes does not entail government supervision of management or
investment policies.
INVESTMENT PRACTICES
Portfolio Turnover. There are no fixed limitations regarding portfolio
turnover for any of the Funds. Brokerage costs to each Fund are commensurate
with the rate of portfolio activity. During the fiscal years ended October 31,
1997, 1996^ and 1995 ^, the European Fund's portfolio turnover rates were 90%,
91%^ and 96% ^, respectively; the Pacific Basin Fund's portfolio turnover rates
were 86%, 70%^ and 56% ^, respectively; and the International Growth Fund's
portfolio turnover rates were 57%, 64%^ and 62% ^, respectively. The Emerging
Markets Fund did not operate during these time periods.
In computing the portfolio turnover rate, all investments with
maturities or expiration dates at the time of acquisition of one year or less
are excluded. Subject to this exclusion, the turnover rate is calculated by
dividing (A) the lesser of purchases or sales of portfolio securities for the
fiscal year by (B) the monthly average of the value of portfolio securities
owned by the Fund during the fiscal year.
Placement of Portfolio Brokerage. Either IFG or IAML, as the Company's
investment adviser or sub-adviser, places orders for the purchase and sale of
securities with brokers and dealers based upon their evaluation of the financial
responsibility of the brokers and dealers, and considering the brokers' and
dealers' ability to effect transactions at the best available prices. Fund
Management evaluates the overall reasonableness of brokerage commissions paid by
reviewing the quality of executions obtained on portfolio transactions of each
Fund, viewed in terms of the size of transactions, prevailing market conditions
in the security purchased or sold, and general economic and market conditions.
In seeking to ensure that ^ any commissions or discounts charged the Fund are
consistent with prevailing and reasonable commissions, Fund Management also
endeavors to monitor brokerage industry practices with regard to the commissions
charged by broker-dealers on transactions effected for other comparable
institutional investors. While Fund Management seeks reasonably competitive
rates, the Funds do not necessarily pay the lowest commission ^, spread or
discount available.
Consistent with the standard of seeking to obtain the best execution on
portfolio transactions, Fund Management may select brokers that provide research
services to effect such transactions. Research services consist of statistical
and analytical reports relating to issuers, industries, securities and economic
factors and trends, which may be of assistance or value to Fund Management in
making informed investment decisions. Research services prepared and furnished
by brokers through which the Funds effect securities transactions may be used by
<PAGE>
Fund Management in servicing all of their respective accounts and not all such
services may be used by Fund Management in connection with the Funds.
In recognition of the value of the above-described brokerage and
research services provided by certain brokers, Fund Management, consistent with
the standard of seeking to obtain the best execution on portfolio transactions,
may place orders with such brokers for the execution of transactions for the
Funds on which the commissions are in excess of those which other brokers might
have charged for effecting the same transactions.
Portfolio transactions may be effected through qualified broker-dealers
that recommend the Funds to their clients or who act as agent in the purchase of
any of the Funds' shares for their clients. When a number of brokers and dealers
can provide comparable best price and execution on a particular transaction, the
Company's adviser may consider the sale of Fund shares by a broker or dealer in
selecting among qualified broker-dealers.
Certain financial institutions (including brokers who may sell shares
of the Fund, or affiliates of such brokers) are paid a fee (the "Services Fee")
for recordkeeping, shareholder communications and other services provided by the
brokers to investors purchasing shares of the Fund through no transaction fee
programs ("NTF Programs") offered by the financial institution or its affiliated
broker (an "NTF Program Sponsor"). The Services Fee is based on the average
daily value of the investments in each Fund made in the name of such NTF Program
Sponsor and held in omnibus accounts maintained on behalf of investors
participating in the NTF Program. With respect to certain NTF Programs, the
Company's directors have authorized the Funds to apply dollars generated from
the Fund's Plan and Agreement of Distribution pursuant to Rule 12b-1 under the
1940 Act (the "Plan") to pay the entire Services Fee, subject to the maximum
Rule 12b-1 fee permitted by the Plan. With respect to other NTF Programs, the
Company's directors have authorized the Funds to pay transfer agency fees to IFG
based on the number of investors who have beneficial interests in the NTF
Program Sponsor's omnibus accounts in that Fund. IFG, in turn, pays these
transfer agency fees to the NTF Program Sponsor as a sub-transfer agency or
recordkeeping fee in payment of all or a portion of the Services Fee. In the
event that the sub-transfer agency or recordkeeping fee is insufficient to pay
all of the Services Fee with respect to these NTF Programs, the directors of the
Company have authorized the Funds to apply dollars generated from the Plan to
pay the remainder of the Services Fee, subject to the maximum Rule 12b-1 fee
permitted by the Plan. IFG itself pays the portion of the Fund's Services Fee,
if any, that exceeds the sum of the sub-transfer agency or recordkeeping fee and
Rule 12b-1 fee. The Company's directors have further authorized IFG to place a
portion of the Funds' brokerage transactions with certain NTF Program Sponsors
or their affiliated brokers, if IFG reasonably believes that, in effecting the
Fund's transactions in portfolio securities, the broker is able to provide the
best execution of orders at the most favorable prices. A portion of the
<PAGE>
commissions earned by such a broker from executing portfolio transactions on
behalf of the Funds may be credited by the NTF Program Sponsor against its
Services Fee. Such credit shall be applied first against any sub-transfer agency
or recordkeeping fee payable with respect to the Funds, and second against any
Rule 12b-1 fees used to pay a portion of the Services Fee, on a basis which has
resulted from negotiations between IFG or IDI and the NTF Program Sponsor. Thus,
the Funds pay sub-transfer agency or recordkeeping fees to the NTF Program
Sponsor in payment of the Services Fee only to the extent that such fees are not
offset by the Funds' credits. In the event that the transfer agency fee paid by
the Funds to IFG with respect to investors who have beneficial interests in a
particular NTF Program Sponsor's omnibus accounts in the Funds exceeds the
Services Fee applicable to that Fund, after application of credits, IFG may
carry forward the excess and apply it to future Services Fees payable to that
NTF Program Sponsor with respect to the Funds. The amount of excess transfer
agency fees carried forward will be reviewed for possible adjustment by IFG
prior to each fiscal year-end of the Company. The Company's board of directors
has also authorized the Funds to pay to IDI the full Rule 12b-1 fees
contemplated by the Plan to compensate IDI for expenses incurred by IDI in
engaging in the activities and providing the services on behalf of the Funds
contemplated by the Plan, subject to the maximum Rule 12b-1 fee permitted by the
Plan, notwithstanding that credits have been applied to reduce the portion of
the 12b-1 fee that would have been used to compensate IDI for payments to such
NTF Program Sponsor absent such credits.
The aggregate dollar amounts of brokerage commissions paid by the ^
Company for the fiscal years ended October 31, ^ 1997, 1996 and 1995 were
$2,845,570, $2,717,105 and $105,752, respectively. The aggregate dollar amounts
of brokerage commissions paid by the INVESCO European, Pacific Basin and
International Growth Funds for the fiscal years ended October 31, 1997, 1996 and
1995, were $1,477,524, $1,070,781 and $51,678, respectively, for the INVESCO
European Fund ^; $1,007,320, $1,284,787^ and $18,451 ^ respectively, for the
INVESCO Pacific Basin Fund; and $360,726, $361,537 and $35,623 for the INVESCO
International Growth Fund. For the fiscal year ended October 31, ^ 1997, brokers
providing research services received ^ $0 in commissions on portfolio
transactions effected for the ^ Company on aggregate portfolio transactions of ^
$0. The Company paid $0 in compensation to brokers for the sale of shares of
these Funds during the fiscal year ended October 31, ^ 1997. The Emerging
Markets Fund did not incur any brokerage commissions during these time periods.
The increased brokerage commissions paid by the Funds in fiscal 1996
versus the prior fiscal years were primarily the result of the increased volume
of purchases and sales of Fund shares by investors, which resulted in higher
levels of purchases and sales of portfolio securities and corresponding
increases in the amounts of brokerage commissions.
<PAGE>
At October 31, ^ 1997, each of the Funds held securities of its regular
brokers or dealers, or their parents, as follows:
Value of
Securities
Fund Broker or Dealer at ^ 10/31/97
- ---- ---------------- -------------
Pacific Basin ^ State Street Bank and Trust $5,661,000
Fund
European Fund $0 ^
International State Street Bank and Trust ^ 289,000
Growth Fund North America
Emerging Markets N/A N/A
Fund(1)
(1) The Emerging Markets Fund was not operating at this time ^.
Neither IFG nor IAML receives any brokerage commissions on portfolio
transactions effected on behalf of any of the Funds, and there is no affiliation
between IFG, IAML or any person affiliated with IFG, IAML or the Funds and any
broker or dealer that executes transactions for the Funds.
ADDITIONAL INFORMATION
Common Stock. The Company has 500,000,000 authorized shares of common
stock with a par value of $0.01 per share. As of October 31, ^ 1997, the
following shares were outstanding: INVESCO European Fund, 18,729,780, INVESCO
International Growth Fund, 5,149,447 and INVESCO Pacific Basin Fund, 6,565,265.
Of the Company's authorized shares, 100,000,000 shares have been allocated to
each of the Company's four Funds. The board of directors has the authority to
designate additional classes of Common Stock without seeking the approval of
shareholders and may classify and reclassify any authorized but unissued shares.
Shares of each class represent the interests of the shareholders of
such class in a particular portfolio of investments of the Company. Each class
of the Company's shares is preferred over all other classes in respect of the
assets specifically allocated to that class, and all income, earnings, profits
and proceeds from such assets, subject only to the rights of creditors, are
allocated to shares of that class. The assets of each class are segregated on
the books of account and are charged with the liabilities of that class and with
a share of the Company's general liabilities. The board of directors determines
those assets and liabilities deemed to be general assets or liabilities of the
Company, and these items are allocated among classes in a manner deemed by the
board of directors to be fair and equitable. Generally, such allocation will be
made based upon the relative total net assets of each class. In the unlikely
<PAGE>
event that a liability allocable to one class exceeds the assets belonging to
the class, all or a portion of such liability may have to be borne by the
holders of shares of the Company's other classes.
All shares, regardless of class, have equal voting rights. Voting with
respect to certain matters, such as ratification of independent accountants or
election of directors, will be by all classes of the Company. When not all ^
series are affected by a matter to be voted upon, such as approval of an
investment advisory contract or changes in a Fund's investment policies, only
shareholders of the ^ Fund affected by the matter may be entitled to vote.
Company shares have noncumulative voting rights, which means that the holders of
a majority of the shares voting for the election of directors can elect 100% of
the directors if they choose to do so. In such event, the holders of the
remaining shares voting for the election of directors will not be able to elect
any person or persons to the board of directors. After they have been elected by
shareholders, the directors will continue to serve until their successors are
elected and have qualified or they are removed from office, or until death,
resignation or retirement. Directors may appoint their own successors, provided
that always at least a majority of the directors have been elected by the
Company's shareholders. It is the intention of the Company not to hold annual
meetings of shareholders. The directors will call annual or special meetings of
shareholders for action by shareholder vote as may be required by the 1940 Act
or the Company's Articles of Incorporation, or at their discretion.
Principal Shareholders. As of ^ January 30, 1998, the following
entities held more than 5% of the Funds' outstanding equity securities.
<PAGE>
Amount and Nature Percent
Name and Address of Ownership of Class
- ---------------- ----------------- --------
Pacific Basin Fund
- ------------------
Charles Schwab & Co., Inc. ^ 2,708,079.6340 37.25%
Special Custody Acct. for
the Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
European Fund
- -------------
Charles Schwab & Co., Inc. ^ 7,712,807.8470 33.49%
Special Custody Acct. for
the Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
National Financial Services Corp. 1,177,226.4810 5.11%
The Exclusive Benefit of Customers
One World Financial Center
200 Liberty Street, 5th Floor
Attn: Kate - Recon
New York, NY 10281-1003
International Growth Fund
- -------------------------
^ The 401(k) Retirement & 157,407.2260 5.10%
Savings Plan for Employees
of Fairfield, Inc.
Attn: Terri Winstead - Benefits
US 52 South P.O. Box 7940
Lafayette, IN 47903
Charles Schwab & Co., Inc. ^ 537,836.5580 17.41%
Special Custody Acct. for
the Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
Emerging Markets Fund
- ---------------------
^ The Emerging Markets Fund was not operating at this time period.
<PAGE>
Independent Accountants. Price Waterhouse LLP, 950 Seventeenth Street,
Denver, Colorado, has been selected as the independent accountants of the
Company. The independent accountants are responsible for auditing the financial
statements of the Company.
Custodian. State Street Bank and Trust Company, P.O. Box 351, Boston,
Massachusetts, has been designated as custodian of the cash and investment
securities of the Company. The bank is also responsible for, among other things,
receipt and delivery of each Fund's investment securities in accordance with
procedures and conditions specified in the custody agreement. Under its contract
with the Company, the custodian is authorized to establish separate accounts in
foreign countries and to cause foreign securities owned by the Company to be
held outside the United States in branches of U.S. banks and, to the extent
permitted by applicable regulations, in certain foreign banks and securities
depositories.
Transfer Agent. The Company is provided with transfer agent, registrar
and dividend disbursing agent services by IFG, 7800 E. Union Avenue, Denver,
Colorado 80237, pursuant to the Transfer Agency Agreement described herein. Such
services include the issuance, cancellation and transfer of shares of each of
the Funds, and the maintenance of records regarding the ownership of such
shares.
Reports to Shareholders. The Company's fiscal year ends on October 31.
The Fund distributes reports at least semiannually to its shareholders.
Financial statements regarding the Company, audited by the independent
accountants, are sent to shareholders annually.
Legal Counsel. The firm of Kirkpatrick & Lockhart LLP, Washington,
D.C., is legal counsel for the Company. The firm of Moye, Giles, O'Keefe,
Vermeire & Gorrell, Denver, Colorado, acts as special counsel to the Funds.
Financial Statements. The Company's audited financial statements and
the notes thereto for the fiscal year ended October 31, ^ 1997 and the report of
Price Waterhouse LLP with respect to such financial statements are incorporated
herein by reference from the Company's Annual Report to Shareholders for the
fiscal year ended October 31, ^ 1997.
Prospectuses. The Company will furnish, without charge, a copy of the
prospectus for each of its Funds, upon request. Such requests should be made to
the Company at the mailing address or telephone number set forth on the first
page of this Statement of Additional Information.
Registration Statement. This Statement of Additional Information and
the ^ Prospectuses do not contain all of the information set forth in the
Registration Statement the Company has filed with the SEC. The complete
Registration Statement may be obtained from the SEC upon payment of the fee
prescribed by the rules and regulations of the SEC.
<PAGE>
APPENDIX A
DESCRIPTION OF FUTURES, OPTIONS AND FORWARD CONTRACTS
Options on Securities
An option on a security provides the purchaser, or "holder," with the
right, but not the obligation, to purchase, in the case of a "call" option, or
sell, in the case of a "put" option, the security or securities underlying the
option, for a fixed exercise price up to a stated expiration date. The holder
pays a non-refundable purchase price for the option, known as the "premium." The
maximum amount of risk the purchaser of the option assumes is equal to the
premium plus related transaction costs, although the entire amount may be lost.
The risk of the seller, or "writer," however, is potentially unlimited, unless
the option is "covered," which is generally accomplished through the writer's
ownership of the underlying security, in the case of a call option, or the
writer's segregation of an amount of cash or securities equal to the exercise
price, in the case of a put option. If the writer's obligation is not so
covered, it is subject to the risk of the full change in value of the underlying
security from the time the option is written until exercise.
Upon exercise of the option, the holder is required to pay the purchase
price of the underlying security, in the case of a call option, or to deliver
the security in return for the purchase price, in the case of a put option.
Conversely, the writer is required to deliver the security, in the case of a
call option, or to purchase the security, in the case of a put option. Options
on securities which have been purchased or written may be closed out prior to
exercise or expiration by entering into an offsetting transaction on the
exchange on which the initial position was established, subject to the
availability of a liquid secondary market.
Options on securities are traded on national securities exchanges, such
as the Chicago Board of Options Exchange and the New York Stock Exchange, which
are regulated by the Securities and Exchange Commission. The Options Clearing
Corporation guarantees the performance of each party to an exchange-traded
option, by in effect taking the opposite side of each such option. A holder or
writer may engage in transactions in exchange-traded options on securities and
options on indices of securities only through a registered broker/dealer which
is a member of the exchange on which the option is traded.
An option position in an exchange-traded option may be closed out only
on an exchange which provides a secondary market for an option of the same
series. Although the Fund will generally purchase or write only those options
for which there appears to be an active secondary market, there is no assurance
that a liquid secondary market on an exchange will exist for any particular
<PAGE>
option at any particular time. In such event it might not be possible to effect
closing transactions in a particular option with the result that the Fund would
have to exercise the option in order to realize any profit. This would result in
the Fund incurring brokerage commissions upon the disposition of underlying
securities acquired through the exercise of a call option or upon the purchase
of underlying securities upon the exercise of a put option. If the Fund as
covered call option writer is unable to effect a closing purchase transaction in
a secondary market, unless the Fund is required to deliver the securities
pursuant to the assignment of an exercise notice, it will not be able to sell
the underlying security until the option expires.
Reasons for the potential absence of a liquid secondary market on an
exchange include the following: (i) there may be insufficient trading interest
in certain options; (ii) restrictions may be imposed by an exchange on opening
transactions or closing transactions or both; (iii) trading halts, suspensions
or other restrictions may be imposed with respect to particular classes or
series of options or underlying securities: (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v) the facilities
of an exchange or a clearing corporation may not at all times be adequate to
handle current trading volume or (vi) one or more exchanges could, for economic
or other reasons, decide or be compelled at some future date to discontinue the
trading of options (or particular class or series of options) in which event the
secondary market on that exchange (or in the class or series of options) would
cease to exist, although outstanding options on that exchange which had been
issued by a clearing corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms. There is no assurance
that higher than anticipated trading activity or other unforeseen events might
not, at a particular time, render certain of the facilities of any of the
clearing corporations inadequate and thereby result in the institution by an
exchange of special procedures which may interfere with the timely execution of
customers' orders. However, the Options Clearing Corporation, based on forecasts
provided by the U.S. exchanges, believes that its facilities are adequate to
handle the volume of reasonably anticipated options transactions, and such
exchanges have advised such clearing corporation that they believe their
facilities will also be adequate to handle reasonably anticipated volume.
In addition, options on securities may be traded over-the-counter
through financial institutions dealing in such options as well as the underlying
instruments. OTC options are purchased from or sold (written) to dealers or
financial institutions which have entered into direct agreements with the Fund.
With OTC options, such variables as expiration date, exercise price and premium
will be agreed upon between the Fund and the transacting dealer, without the
intermediation of a third party such as the OCC. If the transacting dealer fails
to make or take delivery of the securities underlying an option it has written,
in accordance with the terms of that option as written, the Fund would lose the
<PAGE>
premium paid for the option as well as any anticipated benefit of the
transaction. The Fund will engage in OTC option transactions only with primary
U.S. Government securities dealers recognized by the Federal Reserve Bank of New
York.
Futures Contracts
A Futures Contract is a bilateral agreement providing for the purchase
and sale of a specified type and amount of a financial instrument or foreign
currency, or for the making and acceptance of a cash settlement, at a stated
time in the future, for a fixed price. By its terms, a Futures Contract provides
for a specified settlement date on which, in the case of the majority of
interest rate and foreign currency futures contracts, the fixed income
securities or currency underlying the contract are delivered by the seller and
paid for by the purchaser, or on which, in the case of stock index futures
contracts and certain interest rate and foreign currency futures contracts, the
difference between the price at which the contract was entered into and the
contract's closing value is settled between the purchaser and seller in cash.
Futures Contracts differ from options in that they are bilateral agreements,
with both the purchaser and the seller equally obligated to complete the
transaction. In addition, Futures Contracts call for settlement only on the
expiration date, and cannot be "exercised" at any other time during their term.
The purchase or sale of a Futures Contract also differs from the
purchase or sale of a security or the purchase of an option in that no purchase
price is paid or received. Instead, an amount of cash or cash equivalent, which
varies but may be as low as 5% or less of the value of the contract, must be
deposited with the broker as "initial margin." Subsequent payments to and from
the broker, referred to as "variation margin," are made on a daily basis as the
value of the index or instrument underlying the Futures Contract fluctuates,
making positions in the Futures Contract more or less valuable, a process known
as "marking to market."
A Futures Contract may be purchased or sold only on an exchange, known
as a "contract market," designated by the Commodity Futures Trading Commission
for the trading of such contract, and only through a registered futures
commission merchant which is a member of such contract market. A commission must
be paid on each completed purchase and sale transaction. The contract market
clearing house guarantees the performance of each party to a Futures Contract,
by in effect taking the opposite side of such Contract. At any time prior to the
expiration of a Futures Contract, a trader may elect to close out its position
by taking an opposite position on the contract market on which the position was
entered into, subject to the availability of a secondary market, which will
operate to terminate the initial position. At that time, a final determination
of variation margin is made and any loss experienced by the trader is required
to be paid to the contract market clearing house while any profit due to the
trader must be delivered to it.
<PAGE>
Interest rate futures contracts currently are traded on a variety of
fixed income securities, including long-term U.S. Treasury Bonds, Treasury
Notes, Government National Mortgage Association modified pass-through
mortgage-backed securities, U.S. Treasury Bills, bank certificates of deposit
and commercial paper. In addition, interest rate futures contracts include
contracts on indices of municipal securities. Foreign currency futures contracts
currently are traded on the British pound, Canadian dollar, Japanese yen, Swiss
franc, West German mark and on Eurodollar deposits.
Options on Futures Contracts
An Option on a Futures Contract provides the holder with the right to
enter into a "long" position in the underlying Futures Contract, in the case of
a call option, or a "short" position in the underlying Futures Contract, in the
case of a put option, at a fixed exercise price to a stated expiration date.
Upon exercise of the option by the holder, the contract market clearing house
establishes a corresponding short position for the writer of the option, in the
case of a call option, or a corresponding long position, in the case of a put
option. In the event that an option is exercised, the parties will be subject to
all the risks associated with the trading of Futures Contracts, such as payment
of variation margin deposits. In addition, the writer of an Option on a Futures
contract, unlike the holder, is subject to initial and variation margin
requirements on the option position.
A position in an Option on a Futures Contract may be terminated by the
purchaser or seller prior to expiration by effecting a closing purchase or sale
transaction, subject to the availability of a liquid secondary market, which is
the purchase or sale of an option of the same series (i.e., the same exercise
price and expiration date) as the option previously purchased or sold. The
difference between the premiums paid and received represents the trader's profit
or loss on the transaction.
An option, whether based on a Futures Contract, a stock index or a
security, becomes worthless to the holder when it expires. Upon exercise of an
option, the exchange or contract market clearing house assigns exercise notices
on a random basis to those of its members which have written options of the same
series and with the same expiration date. A brokerage firm receiving such
notices then assigns them on a random basis to those of its customers which have
written options of the same series and expiration date. A writer therefore has
no control over whether an option will be exercised against it, nor over the
time of such exercise.
<PAGE>
APPENDIX B
BOND RATINGS
The following is a description of Moody's and S&P's bond ratings:
Moody's Corporate Bond Ratings
Aaa - Bonds rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risk appear somewhat larger than in Aaa securities.
A - Bonds rated A possess many favorable investment attributes, and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa - Bonds rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba - Bonds rated Ba are judged to have speculative elements. Their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of other
terms of the contract over any longer period of time may be small.
Caa - Bonds rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
<PAGE>
S&P Corporate Bond Ratings
AAA - This is the highest rating assigned by Standard & Poor's to a
debt obligation and indicates an extremely strong capacity to pay principal and
interest.
AA - Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A - Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB - Bonds rated BBB are regarded as having an adequate capability to
pay principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in higher rated categories.
BB - Bonds rated BB have less near-term vulnerability to default than
other speculative issues. However, they face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments.
B - Bonds rated B have a greater vulnerability to default but currently
have the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal.
CCC - Bonds rated CCC have a currently identifiable vulnerability to
default and are dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial, or economic conditions, they are not
likely to have the capacity to pay interest and repay principal.
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Page in
Prospectus
----------
(1) Financial statements and schedules
included in Prospectuses (Part A):
Financial Highlights for each of the ten 8
years in the period ended October 31,
1997 with respect to the INVESCO Pacific
Basin Fund and the INVESCO European
Fund.
Financial Highlights for the four years 37
ended October 31, 1997, for the period
from January 1, 1993 to October 31,
1993, for each of the four years in the
period ended December 31, 1992 and for
the period ended December 31, 1988 with
respect to the INVESCO International
Fund. ^
Page in
Statement
of Addi-
tional In-
formation
----------
(2) The following audited financial
statements of the INVESCO European Fund,
the INVESCO Pacific Basin Fund and the
INVESCO International Growth Fund and
the notes thereto for the fiscal year
ended October 31, ^ 1997, and the report
of Price Waterhouse LLP with respect to
such financial statements, are
incorporated in the Statement of
Additional Information by reference from
the Company's Annual Report to
Shareholders for the fiscal year ended
October 31, ^ 1997: Statement of
Investment Securities as of October 31,
^ 1997; Statement of Assets and
Liabilities as of October 31, ^ 1997;
Statement of Operations for the year
ended October 31, ^ 1997; Statement of
Changes in Net Assets for each of the
two years in the period ended October
31, ^ 1997; Financial Highlights for the
INVESCO European Fund and INVESCO
<PAGE>
Pacific Basin Fund for the five years
ended October 31, ^ 1997, and for the
INVESCO International Growth Fund for
the ^ four years ended October 31, ^
1997, the ^ ten-month fiscal period
ended October 31, 1993, ^ the year ended
December 31, 1992, and the year
ended December 31, 1982.
(3) Financial statements and schedules
included in Part C:
None: Schedules have been omitted as all
information has been presented in the
financial statements.
(b) Exhibits:
(1) Articles of Incorporation
(Charter)--dated April 2, 1993.(2)
(a) ^ Articles Supplementary dated ^
November 14, 1997.(3)
(2) Bylaws, as amended July 21, ^ 1993.(3)
(3) Not applicable.
(4) Not required to be filed on EDGAR.
(5) (a) Investment Advisory
Agreement--between Registrant and
INVESCO Funds Group, Inc. dated February
28, 1997. (2)
(i) ^ Amendment to Advisory
Agreement dated ^ January 30, 1998.
(b) Sub-Advisory Agreement between
INVESCO Funds Group, Inc. and INVESCO
Asset Management Limited with respect to
European, Pacific Basin and
International Growth Funds dated
February 28, 1997.(2)
(c) ^ Sub-Advisory Agreement dated ^
January 30, 1998 between INVESCO Funds
Group, Inc. and INVESCO Asset Management
Limited with respect to Emerging Markets
Fund.
(6) (a) Distribution Agreement Between
Registrant and INVESCO Funds Group, Inc.
dated February 28, 1997.(2)
<PAGE>
(b) Distribution Agreement Between
Registrant and INVESCO Distributors,
Inc. dated September 30, ^ 1997.(3)
(7) Defined Benefit Deferred Compensation
Plan for Non-Interested Directors and ^
Trustees.(3)
(8) Custody Agreement Between Registrant and
State Street Bank and Trust Company
dated July 1, ^ 1993.(3)
(a) Amendment to Custody Agreement dated
October 25, 1995.(1)
(b) Data Access Services ^ Addendum.(3)
(c) ^ Additional Fund Letter dated ^
November 13, 1997.
(9) (a) Transfer Agency Agreement Between
Registrant and INVESCO Funds Group, Inc.
dated February 28, 1997.(2)
(b) Administrative Services Agreement
Between Registrant and INVESCO Funds
Group, Inc. dated February 28, 1997.(2)
(10) Opinion and consent of counsel as to the
legality of the securities being
registered, indicating whether they
will, when sold, be legally issued,
fully paid and non-assessable, dated May
21, ^ 1993.(3)
(11) Consent of Independent Accountants.
(12) Not applicable.
(13) Not applicable.
(14) Copies of model plans used in the
establishment of retirement plans as
follows:
(a) Non-standardized Profit Sharing
Plan;
(b) Non-standardized Money Purchase
Pension Plan;
(c) Standardized Profit Sharing Plan
Adoption Agreement;
<PAGE>
(d) Standardized Money Purchase Pension
Plan;
(e) Non-standardized 401(k) Plan
Adoption Agreement;
(f) Standardized 401(k) Paired Profit
Sharing Plan;
(g) Standardized Simplified Profit
Sharing Plan;
^(h) Defined Contribution Master Plan &
Trust Agreement; ^
(15) (a) Plan and Agreement of Distribution dated November
1, 1997 adopted pursuant to Rule 12b-1 under the
Investment Company Act of ^ 1940. (3)
(16) (a) Schedule for computation of
performance data for the European ^
Fund.(3)
(b) Schedule for computation of
performance dated for the Pacific Basin
^ Fund.(3)
(c) Schedule for computation of
performance data for the International
Growth ^ Fund.(3)
(17) (a) Financial Data Schedule for the period ended
October 31, ^ 1997 for INVESCO European Fund.
(b) Financial Data Schedule for the period ended
October 31, ^ 1997 for INVESCO Pacific Basin Fund.
(c) Financial Data Schedule for the period ended
October 31, ^ 1997 for INVESCO International Growth
Fund.
(18) Not applicable.
- ----------------
(1) Previously filed on EDGAR with Post-Effective Amendment No. 3 to
Registrant's Registration Statement on Form N-1A on December 22,
1995, and herein incorporated by reference.
(2) Previously filed on EDGAR with Post-Effective Amendment No. 4 to
Registrant's Registration Statement on Form N-1A on February 25,
1997, and herein incorporated by reference.
<PAGE>
(3)Previously filed on EDGAR with Post-Effective Amendment No. 5 to
Registrant's Registration Statement on Form N-1A on November 17,
1997, and herein incorporated by reference.
Item 25. Persons Controlled by or Under Common Control with
Registrant
No person is presently controlled by or under common
control with Registrant.
Item 26. Number of Holders of Securities
Number of
Record Holders
Title of Class January 31, 1998
-------------- ----------------
INVESCO European Fund ^ 21,809
Common stock
INVESCO Pacific Basin Fund ^ 10,355
Common stock
INVESCO International Growth Fund ^ 7,618
Common Stock
Item 27. Indemnification
Indemnification provisions for officers, directors and
employees of Registrant are set forth in Article VII, Section 2 of the Articles
of Incorporation and are hereby incorporated by reference. See Item 24(b)(1)
above. Under this Article, officers and directors will be indemnified to the
fullest extent permitted to directors by the Maryland General Corporation Law,
subject only to such limitations as may be required by the Investment Company
Act of 1940, as amended, and the rules thereunder. Under the Investment Company
Act of 1940, Fund directors and officers cannot be protected against liability
to the Company or its shareholders to which they would be subject because of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties of their office. The Company also intends to maintain liability insurance
policies covering its directors and officers.
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
See "The Funds and Their Management" in the Funds' respective
^ Prospectuses and in the Statement of Additional Information for information
regarding the business of the investment adviser and sub-adviser. For
information as to the business, profession, vocation or employment of a
substantial nature of each of the officers and directors of INVESCO Funds Group,
Inc., reference is made to the Schedule Ds to the Form ADV filed under the
Investment Advisers Act of 1940 by INVESCO Funds Group, Inc., which schedules
are herein incorporated by reference.
Item 29. Principal Underwriters
(a) INVESCO Capital Appreciation Funds, Inc.
INVESCO Diversified Funds, Inc.
INVESCO Emerging Opportunity Funds, Inc.
INVESCO Growth Fund, Inc.
INVESCO Income Funds, Inc.
INVESCO Industrial Income Fund, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Multiple Asset Funds, Inc.
INVESCO Specialty Funds, Inc.
INVESCO Strategic Portfolios, Inc.
INVESCO Tax-Free Income Funds, Inc.
INVESCO Value Trust
INVESCO Variable Investment Funds, Inc.
<PAGE>
(b)
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ ------------- -------------
William J. Galvin, Jr. Senior Vice Assistant
7800 E. Union Avenue President Secretary
Denver, CO 80237
Ronald L. Grooms Senior Vice Treasurer,
7800 E. Union Avenue President & Chief Fin'l
Denver, CO 80237 Treasurer Officer, and
Chief Acctg.
Off.
Hubert L. Harris, Jr. Director
1315 Peachtree Street, N.E.
Atlanta, GA 30309
Dan J. Hesser Chairman of President,
7800 E. Union Avenue the Board, CEO & Dir.
Denver, CO 80237 President ,
Chief Executive
Officer, &
Director
Gregory E. Hyde Vice President
7800 E. Union Avenue
Denver, CO 80237
Charles P. Mayer Director
7800 E. Union Avenue
Denver, CO 80237
Glen A. Payne Senior Vice Secretary
7800 E. Union Avenue President,
Denver, CO 80237 Secretary &
General Counsel
Judy P. Wiese Vice President Asst. Treas.
7800 E. Union Avenue
Denver, CO 80237
<PAGE>
(c) Not applicable.
Item 30. Location of Accounts and Records
Dan J. Hesser
7800 E. Union Avenue
Denver, CO 80237
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant shall furnish each person to whom a ^
Prospectus is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
The Registrant hereby undertakes that the board of directors
will call a special shareholders meeting for the purpose of voting on the
question of removal of a director or directors of the Company if requested to do
so in writing by the holders of at least 10% of the outstanding shares of the
Company, and to assist the shareholders in communicating with other shareholders
as required by the Investment Company Act of 1940. ^
<PAGE>
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
post-effective amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Denver, County of Denver, and State of
Colorado, on the ^24th day of ^ February, 1998.
Attest: INVESCO International Funds, Inc.
/s/ Glen A. Payne /s/ Dan J. Hesser
- ------------------------- --------------------------------
Glen A. Payne, Secretary Dan J. Hesser, President
Pursuant to the requirements of the Securities Act of 1933, this
post-effective amendment to Registrant's Registration Statement has been signed
by the following persons in the capacities indicated on this ^24th day of ^
February, 1998.
/s/ Dan J. Hesser /s/ Lawrence H. Budner
- ------------------------- --------------------------------
Dan J. Hesser, President & Lawrence H. Budner, Director
Director (Chief Executive Officer)
/s/ Ronald L. Grooms /s/ Daniel D. Chabris
- ------------------------- --------------------------------
Ronald L. Grooms, Treasurer Daniel D. Chabris, Director
(Chief Financial and Accounting
Officer)
/s/ Victor L. Andrews /s/ Fred A. Deering
- ------------------------- --------------------------------
Victor L. Andrews, Director Fred A. Deering, Director
/s/ Bob R. Baker /s/ Larry Soll
- ------------------------- --------------------------------
Bob R. Baker, Director Larry Soll, Director
/s/ Hubert L. Harris, Jr. /s/ Kenneth T. King
- ------------------------- --------------------------------
Hubert L. Harris, Jr., Director Kenneth T. King, Director
/s/ Charles W. Brady /s/ John W. McIntyre
- ------------------------- --------------------------------
Charles W. Brady, Director John W. McIntyre, Director
/s/ Wendy L. Gramm
- -------------------------
Wendy L. Gramm, Director
By* /s/ Glen A. Payne By*
--------------------- ----------------------------
Glen A. Payne Edward F. O'Keefe
Attorney in Fact Attorney in Fact
* Original Powers of Attorney authorizing Edward F. O'Keefe and Glen A. Payne,
and each of them, to execute this post-effective amendment to the Registration
Statement of the Registrant on behalf of the above-named directors and officers
of the Registrant have been filed with the Securities and Exchange Commission on
June 29, 1993, February 24, 1994, February 17, 1995, ^ December 22, 1995, and
November 17, 1997.
<PAGE>
Exhibit Index
Page in
Exhibit Number Registration Statement
- -------------- ----------------------
^ 5(a)(i) 161
5(c) 162
8(c) 170
11 171
14(a) 172
14(b) 210
14(c) 246
14(d) 279
14(e) 309
14(f) 363
14(g) 406
14(h) 415
17(a) 518
17(b) 519
17(c) 520
^
</TABLE>
Amendment to Investment Advisory Agreement
This is an Amendment to the Investment Advisory Agreement made and
entered into between INVESCO International Funds, Inc., a Maryland corporation
(the "Company") and INVESCO Funds Group, Inc., a Delaware corporation ("IFG"),
as of the 30th day of January, 1998 (the "Agreement").
WHEREAS, the Company desires to have IFG perform investment advisory,
statistical, research, and certain administrative and clerical services with
respect to management of the assets of the Company allocable to the INVESCO
Emerging Markets Fund, and IFG is willing and able to perform such services on
the terms and conditions set forth in the Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in the Agreement, it is agreed that the terms and conditions of the
Agreement shall be applicable to the Company's assets allocable to the INVESCO
Emerging Markets Fund, to the same extent as if the INVESCO Emerging Markets
Fund was to be added to the definition of "Funds" as utilized in the Agreement,
and that INVESCO Emerging Markets Fund shall pay IFG a fee for services provided
to them by IFG under the Agreement as follows: 1.00% on the first $500 million
of the Fund's average net assets, 0.85% on the next $500 million of the Fund's
average net assets and 0.75% on the Fund's average net assets over $1 billion.
IN WITNESS WHEREOF, the parties have executed this Agreement on this
30th day of January, 1998.
INVESCO INTERNATIONAL FUNDS, INC.
By: /s/ Dan J. Hesser
-------------------------
Dan J. Hesser,
ATTEST: /s/ Glen A. Payne President
- -------------------------
Glen A. Payne, Secretary
INVESCO FUNDS GROUP, INC.
By: /s/ Ronald L. Grooms
-------------------------
Ronald L. Grooms,
ATTEST: /s/ Glen A. Payne Senior Vice President
- -------------------------
Glen A. Payne, Secretary
SUB ADVISORY AGREEMENT
AGREEMENT made this 30th day of January, 1998, by and between INVESCO
Fund Group, Inc. ("INVESCO"), a Delaware corporation, and INVESCO Asset
Management Limited, a United Kingdom corporation ("the Sub Adviser").
W I T N E S S E T H:
WHEREAS, INVESCO INTERNATIONAL FUNDS, INC. (the "Company") is engaged
in business as a diversified, open end management investment company registered
under the Investment Company Act of 1940, as amended (hereinafter referred to as
the "Investment Company Act") and has one class of shares (the "Shares"), which
is divided into series, each representing an interest in a separate portfolio of
investments, with one such series being designated the INVESCO Emerging Markets
Fund (the "Fund"); and
WHEREAS, INVESCO and the Sub Adviser are engaged in rendering
investment advisory services and are registered as investment advisers under the
Investment Advisers Act of 1940; and
WHEREAS, the Sub-Adviser is a member of the Investment Management
Regulatory Organization ("IMRO") in the United Kingdom and as such is regulated
by IMRO in the conduct of its business; further the Sub-Adviser shall provide
services to INVESCO as a "Business Investor" as defined under the Rules of IMRO
and as such certain rules designed for the protection of private customers shall
not apply; and
WHEREAS, INVESCO has entered into an Investment Advisory Agreement with
the Company (the "INVESCO Investment Advisory Agreement"), pursuant to which
INVESCO is required to provide investment advisory services to the Company, and,
upon receipt of written approval of the Company, is authorized to retain
companies which are affiliated with INVESCO to provide such services; and
WHEREAS, the Sub Adviser is willing to provide investment advisory
services to the Company on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, INVESCO and the Sub Adviser hereby agree as follows:
ARTICLE I
DUTIES OF THE SUB ADVISER
INVESCO hereby employs the Sub Adviser to act as investment adviser to
the Company and to furnish the investment advisory services described below,
subject to the broad supervision of
<PAGE>
INVESCO and Board of Directors of the Company, for the period and on the terms
and conditions set forth in this Agreement. The Sub Adviser hereby accepts such
assignment and agrees during such period, at its own expense, to render such
services and to assume the obligations herein set forth for the compensation
provided for herein. The Sub Adviser shall for all purposes herein be deemed to
be an independent contractor and, unless otherwise expressly provided or
authorized herein, shall have no authority to act for or represent the Company
in any way or otherwise be deemed an agent of the Company.
The Sub Adviser hereby agrees to manage the investment operations of
the Fund, subject to the supervision of the Company's directors (the
"Directors") and INVESCO. Specifically, the Sub Adviser agrees to perform the
following services:
(a) to manage the investment and reinvestment of all the
assets, now or hereafter acquired, of the Fund, and to execute all
purchases and sales of portfolio securities;
(b) to maintain a continuous investment program for the Fund,
consistent with (i) the Fund's investment policies as set forth in the
Company's Articles of Incorporation, Bylaws, and Registration Statement,
as from time to time amended, under the Investment Company Act of 1940, as
amended (the "1940 Act"), and in any prospectus and/or statement of additional
information of the Fund, as from time to time amended and in use under the
Securities Act of 1933, as amended, and (ii) the Company's status as a
regulated investment company under the Internal Revenue Code of 1986, as
amended;
(c) to determine what securities are to be purchased or
sold for the Fund, unless otherwise directed by the Directors of
the Company or INVESCO, and to execute transactions accordingly;
(d) to provide to the Fund the benefit of all of the
investment analysis and research, the reviews of current economic conditions
and trends, and the consideration of long range investment policy now or
hereafter generally available to investment advisory customers of the Sub
Adviser;
(e) to determine what portion of the Fund should be
invested in the various types of securities authorized for
purchase by the Fund; and
(f) to make recommendations as to the manner in which voting
rights, rights to consent to Fund action and any other rights pertaining to
the Fund's portfolio securities shall be exercised.
With respect to execution of transactions for the Fund, the Sub Adviser
is authorized to employ such brokers or dealers as may, in the Sub Adviser's
best judgment, implement the policy of the Fund to obtain prompt and reliable
execution at the most
<PAGE>
favorable price obtainable. In assigning an execution or negotiating the
commission to be paid therefor, the Sub Adviser is authorized to consider the
full range and quality of a broker's services which benefit the Fund, including
but not limited to research and analytical capabilities, reliability of
performance, and financial soundness and responsibility. Research services
prepared and furnished by brokers through which the Sub Adviser effects
securities transactions on behalf of the Fund may be used by the Sub Adviser in
servicing all of its accounts, and not all such services may be used by the Sub
Adviser in connection with the Fund. In the selection of a broker or dealer for
execution of any negotiated transaction, the Sub Adviser shall have no duty or
obligation to seek advance competitive bidding for the most favorable negotiated
commission rate for such transaction, or to select any broker solely on the
basis of its purported or "posted" commission rate for such transaction,
provided, however, that the Sub Adviser shall consider such "posted" commission
rates, if any, together with any other information available at the time as to
the level of commissions known to be charged on comparable transactions by other
qualified brokerage firms, as well as all other relevant factors and
circumstances, including the size of any contemporaneous market in such
securities, the importance to the Fund of speed, efficiency, and confidentiality
of execution, the execution capabilities required by the circumstances of the
particular transactions, and the apparent knowledge or familiarity with sources
from or to whom such securities may be purchased or sold. Where the commission
rate reflects services, reliability and other relevant factors in addition to
the cost of execution, the Sub Adviser shall have the burden of demonstrating
that such expenditures were bona fide and for the benefit of the Fund.
The Sub-Adviser may recommend transactions in which it has directly or
indirectly a material interest, in unregulated collective investment schemes
including any operated or advised by the Sub-Adviser or in margined
transactions. Advice on investments may extend to investments not traded or
exchanges recognized or designated by the Securities and Investments Board.
Both parties acknowledge that the advice given under this Agreement may
involve liabilities in one currency matched by assets in another currency and
that accordingly movements in rates of exchange may have a separate effect,
unfavorable as well as favorable on the gain or loss experienced on an
investment.
In carrying out its duties hereunder, the Sub-Adviser shall comply with
all instructions of INVESCO in connection therewith such instructions may be
given by letter, telex, telephone or facsimile by any Director or Officer of
INVESCO or by any other person authorized by INVESCO.
Any instructions which appear to conflict with the terms of this
Agreement may be confirmed by the Sub-Adviser with INVESCO prior to execution.
<PAGE>
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Sub Adviser assumes and shall pay for maintaining the staff and
personnel necessary to perform its obligations under this Agreement, and shall,
at its own expense, provide the office space, equipment and facilities necessary
to perform its obligations under this Agreement. Except to the extent expressly
assumed by the Sub Adviser herein and except to the extent required by law to be
paid by the Sub Adviser, INVESCO and/or the Company shall pay all costs and
expenses in connection with the operations of the Fund.
ARTICLE III
COMPENSATION OF THE SUB ADVISER
For the services rendered, facilities furnished, and expenses assumed
by the Sub Adviser, INVESCO shall pay to the Sub Adviser a fee, computed daily
and paid as of the last day of each month, using for each daily calculation the
most recently determined net asset value of the Fund, as determined by a
valuation made in accordance with the Fund's procedures for calculating its net
asset value as described in the Fund's Prospectus and/or Statement
of Additional Information. The advisory fee to the Sub Adviser with respect to
the Fund shall be computed at the annual rate of 0.333% of the Fund's daily net
assets up to $500 million; 0.2833% of the Fund's daily net assets in excess of
$500 million but not more than $1 billion; and 0.25% of each Fund's daily net
assets in excess of $1 billion. During any period when the determination of the
Fund's net asset value is suspended by the Directors of the Company, the net
asset value of a share of the Fund as of the last business day prior to such
suspension shall, for the purpose of this Article III, be deemed to be the net
asset value at the close of each succeeding business day until it is again
determined. However, no such fee shall be paid to the Sub Adviser with respect
to any assets of the Fund which may be invested in any other investment company
for which the Sub Adviser serves as investment adviser or sub adviser. The fee
provided for hereunder shall be prorated in any month in which this Agreement is
not in effect for the entire month. The Sub Adviser shall be entitled to receive
fees hereunder only for such periods as the INVESCO Investment Advisory
Agreement remains in effect.
<PAGE>
ARTICLE IV
ACTIVITIES OF THE SUB ADVISER
The services of the Sub Adviser to the Fund are not to be deemed to be
exclusive, the Sub Adviser and any person controlled by or under common control
with the Sub Adviser (for purposes of this Article IV referred to as
"affiliates") being free to render services to others. It is understood that
directors, officers, employees and shareholders of the Fund are or may become
interested in the Sub Adviser and its affiliates, as directors, officers,
employees and shareholders or otherwise and that directors, officers, employees
and shareholders of the Sub Adviser, INVESCO and their affiliates are or may
become interested in the Fund as directors, officers and employees.
ARTICLE V
AVOIDANCE OF INCONSISTENT POSITIONS AND COMPLIANCE WITH
APPLICABLE LAWS
In connection with purchases or sales of securities for the investment
portfolios of the Fund, neither the Sub Adviser nor any of its directors,
officers or employees will act as a principal or agent for any party other than
the Fund or receive any commissions. The Sub Adviser will comply with all
applicable laws in acting hereunder including, without limitation, the 1940 Act;
the Investment Advisers Act of 1940, as amended; the Rules and Regulations of
IMRO; and all rules and regulations duly promulgated under the foregoing.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date it is approved by
a majority of the outstanding voting securities of the Fund. Thereafter, this
Agreement shall remain in force for an initial term of two years from the date
of execution, and from year to year thereafter until its termination in
accordance with this Article VI, but only so long as such continuance is
specifically approved at least annually by (i) the Directors of the Company, or
by the vote of a majority of the outstanding voting securities of the Fund, and
(ii) a majority of those Directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of
any penalty, by INVESCO, the Fund by vote of the Directors of the Company, or by
vote of a majority of the outstanding voting securities of the Fund, or by the
Sub Adviser. A termination by INVESCO or the Sub Adviser shall require sixty
days' written notice to the other party and to the Company, and a termination by
the Company shall require such notice to each of the parties. This Agreement
shall automatically terminate in the event of its assignment to the extent
required by the Investment Company Act of 1940 and the Rules thereunder.
<PAGE>
The Sub Adviser agrees to furnish to the Directors of the Company such
information on an annual basis as may reasonably be necessary to evaluate the
terms of this Agreement.
Termination of this Agreement shall not affect the right of the Sub
Adviser to receive payments on any unpaid balance of the compensation described
in Article III hereof earned prior to such termination.
ARTICLE VII
LIABILITY
The Sub-Adviser agrees to use its best efforts and judgement and due
care in carrying out its duties under this Agreement provided however that the
Sub-Adviser shall not be liable to INVESCO for any loss suffered by INVESCO or
the Fund advised in connection with the subject matter of this Agreement unless
such loss arises from the willful misfeasance, bad faith or negligence in the
performance of the Sub-Adviser's duties and subject and without prejudice to the
foregoing. INVESCO hereby undertakes to indemnify and to keep indemnified the
Sub-Adviser from and against any and all liabilities, obligations, losses,
damages, suits and expenses which may be incurred by or asserted against the
Sub-Adviser for which it is responsible pursuant to Article I hereof provided
always that the Sub-Adviser shall send to INVESCO as soon as possible all
claims, letters, summonses, writs or documents which it receives from third
parties and provide whatever information and assistance INVESCO may require and
no liability of any sort shall be admitted and no undertaking shall be given nor
shall any offer, promise or payment be made or legal expenses incurred by the
Sub-Adviser without written consent of INVESCO who shall be entitled if it so
desires to take over and conduct in the name of the Sub-Adviser the defense of
any action or to prosecute any claim for indemnity or damages or otherwise
against any third party.
ARTICLE VIII
AMENDMENTS OF THIS AGREEMENT
No provision of this Agreement may be orally changed or discharged, but
may only be modified by an instrument in writing signed by the Sub Adviser and
INVESCO. In addition, no amendment to this Agreement shall be effective unless
approved by (1) the vote of a majority of the Directors of the Company,
including a majority of the Directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such amendment and (2) the vote of a majority of the
outstanding voting securities of the Fund (other than an amendment which can be
effective without shareholder approval under applicable law).
<PAGE>
ARTICLE IX
DEFINITIONS OF CERTAIN TERMS
In interpreting the provisions of this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignments," "affiliated
person" and "interested person," when used in this Agreement, shall have the
respective meanings specified in the Investment Company Act and the Rules and
Regulations thereunder, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under said Act.
ARTICLE X
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the
State of Colorado and the applicable provisions of the Investment Company Act.
To the extent that the applicable laws of the State of Colorado, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
ARTICLE XI
MISCELLANEOUS
Advice. Any recommendation or advice given by the Sub-Adviser to
INVESCO hereunder shall be given in writing or by mail, telex, telefacsimile or
by telephone, such telephone advice to be confirmed by mail, telex,
telefacsimile or in writing to such place as INVESCO shall from time to time
require; further the Sub-Adviser shall be free to telephone INVESCO as it sees
fit in the performance of its duties.
Complaints. The Sub-Adviser has in operation a written procedure for
the proper handling of complaints from clients; if the matter of complaint
cannot be resolved to INVESCO's satisfaction, INVESCO has the right of recourse
to IMRO.
Notice. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
Severability. Each provision of this Agreement is intended to be
severable. If any provision of this Agreement shall be held illegal or made
invalid by a court decision, statute, rule or otherwise, such illegality or
invalidity shall not affect the validity or enforceability of the remainder of
this Agreement.
Headings. The headings in this Agreement are inserted for
<PAGE>
convenience and identification only and are in no way intended to describe,
interpret, define or limit the size, extent or intent of this Agreement or any
provision hereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
INVESCO FUNDS GROUP, INC.
ATTEST:
/s/ Glen A. Payne By: /s/ Dan J. Hesser
- ------------------------ ---------------------------------
Glen A. Payne, Secretary Dan J. Hesser, President
INVESCO ASSET MANAGEMENT
LIMITED
ATTEST:
By: /s/ Tristan Hillgrath
/s/ Robert Cackett -------------------------------------
- ------------------------ Tristan Hillgrath
Robert Cackett Chief Executive Officer
Secretary
INVESCO FUNDS INVESCO FUNDS GROUP, INC.
7800 East Union Avenue
Denver, Colorado 80237
Post Office Box 173706
Denver, Colorado 80217-3706
Telephone:303-930-6300
November 13, 1997
Mr. Christopher J. Meyers
Assistant Vice President
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, MA 02171
RE: INVESCO International Funds, Inc.
Dear Chris:
This is to advise you that INVESCO International Funds, Inc. (the "Company") has
established a new series of shares to be known as INVESCO Emerging Markets Fund.
In accordance with the Additional Funds provision in Paragraph 17 of the
Custodian Contract dated July 1, 1993 between the Company and State Street Bank
and Trust Company, the Company hereby requests that you act as Custodian for the
new series under the terms of the Contract.
Please indicate your acceptance of the foregoing by executing two copies of this
Letter Agreement, returning one to the Company and retaining one copy for your
records.
Sincerely,
/s/ Glen A. Payne
- -----------------------------
Glen A. Payne
Secretary
Agreed to this---------- day of November 1997.
STATE STREET BANK AND TRUST COMPANY
By: -----------------------------
Vice President
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 6 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated December 9 , 1997, relating to the financial
statements and financial highlights appearing in the October 31, 1997 Annual
Report to Shareholders of INVESCO International Funds, Inc., which is also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the heading "Financial Highlights" in the Prospectus
and under the headings "Independent Accountants" and "Financial Statements" in
the Statement of Additional Information.
/s/ Price Waterhouse LLP
- -------------------------------------
Price Waterhouse LLP
Denver, Colorado
February 23, 1998.
Adoption Agreement #001
Letter Serial No. D346278a
Nonstandardized Profit Sharing Plan
Nonstandardized Profit Sharing Plan Features
- - Flexible Employer Contributions
- - Ability to exclude classifications of employees
- - May enforce last day requirement for employer contribution
- - Allows integrated contribution formula
Provided by:
The Financial Funds
Managed & Distributed by
INVESCO Funds Group, Inc.
Custodian:
INVESCO Trust Company
A Subsidiary of INVESCO MIM PLC
<PAGE>
Your Adoption Agreement and Basic Plan Document together constitute the rules
and parameters under which your retirement program will operate. Each section of
the Adoption Agreement requires the employer to make a selection. Whenever
possible (balancing complexity and space constraints) we have provided
instructions to the left of key selections. These instructions are intended to
assist you, the employer, in choosing the optional provisions for your
retirement program. They are not intended to substitute or replace competent
advice from your legal counsel or accountant. If further clarification is
necessary, contact your advisors or INVESCO Trust Company. We recommend that you
obtain the advice of your legal or tax advisor before you sign this Adoption
Agreement.
<PAGE>
ADOPTION AGREEMENT #001
NONSTANDARDIZED PROFIT SHARING PLAN
The undersigned, -------------------------- ("Employer"), by executing this
Adoption Agreement, elects to become a participating Employer in the INVESCO
Trust Company Defined Contribution Master Plan (basic plan document #01) by
adopting the accompanying Plan and Trust in full as if the Employer were a
signatory to that Agreement. The employer makes the following elections granted
under the provisions of the Master Plan.
ARTICLE I
DEFINITIONS
1.02 TRUSTEE. The Trustee executing this Adoption Agreement is:
(Choose (a) or (b))
(a) A discretionary Trustee, See Section 10.03[A] of the Plan.
(b) A nondiscretionary Trustee. See Section 10.03[B] of the
Plan. [Note: The Employer may not elect Option (b) if a Custodian
executes the Adoption Agreement.]
1.03 PLAN. The name of the Plan as adopted by the Employer is:
- ----------------------------------------------------.
1.07 EMPLOYEE. The following Employees are not eligible to
participate in the Plan: (Choose (a) or at least one of (b)
through (g))
(a) No exclusions.
(b) Collective bargaining employees (as defined in Section 1.07
of the Plan). [Note: If the Employer excludes union employees
from the Plan, the Employer must be able to provide evidence that
retirement benefits were the subject of good faith bargaining.]
(c) Nonresident aliens who do not receive any earned income (as defined in
Code ss.911(d)(2)) from the Employer which constitutes United States source
income (as defined in Code ss.861(a)(3)).
(d) Commission Salesmen.
(e) Any Employee compensated on a salaried basis.
(f) Any Employee compensated on an hourly basis.
(g) (Specify) --------------------------------------------
Leased Employees. Any Leased Employee treated as an Employee
under Section 1.31 of the Plan, is: (Choose (h) or (i)
(h) Not eligible to participate in the Plan.
<PAGE>
(i) Eligible to participate in the Plan, unless excluded by reason of an
exclusion classification elected under this Adoption Agreement Section 1.07.
Related Employers. If any member of the Employer's related group (as defined in
Section 1.30 of the Plan) executes a Participation Agreement to this Adoption
Agreement, such member's Employees are eligible to participate in this Plan,
unless excluded by reason of an exclusion classification elected under this
Adoption Agreement Section 1.07. In addition: (Choose (j) or (k))
(j) No other related group member's Employees are eligible to
participate in the Plan.
(k) The following nonparticipating related group member's Employees are
eligible to participate in the Plan unless excluded by reason of an exclusion
classification elected under this Adoption Agreement Section
1.07:---------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1.12 COMPENSATION
Treatment of elective contributions. (Choose (a) or (b)
(a) "Compensation" includes elective contributions made by the
Employer on the Employee's behalf.
(b) "Compensation" does not include elective contributions.
Modifications to Compensation definition. (Choose (c) or at least
one of (d) through (j))
(c) No modifications other than as elected under Options (a) or
(b).
(d) The Plan excludes Compensation in excess of $-----------.
e) In lieu of the definition in Section 1.12 of the Plan, Compensation
means any earnings reportable as W-2 wages for Federal income tax withholding
purposes subject to any other election under this Adoption Agreement Section
1.12.
(f) The Plan excludes bonuses.
(g) The Plan excludes overtime.
(h) The Plan excludes Commissions.
(i) The Plan excludes Compensation from a related employer (as defined in
Section 1.30 of the Plan) that has not executed a Participation Agreement in
this Plan unless, pursuant to Adoption Agreement Section 1.07, the Employees of
that related employer are eligible to participate in this Plan.
<PAGE>
(j) (Specify) ---------------------------------------------.
If, for any Plan Year, the Plan uses permitted disparity in the contribution or
allocation formula elected under Article III, any election of Options (f), (g),
(h) or (j) is ineffective for such Plan Year with respect to any Nonhighly
Compensated Employee.
1.17 PLAN YEAR/LIMITATION YEAR.
Plan Year. Plan Year means: (Choose (a) or (b))
(a) The 12 consecutive month period ending every -----------.
(b) (Specify) -------------------------------------------
Limitation Year. The Limitation year is: (Choose (C) or (d))
(c) The Plan Year.
(d) The 12 consecutive month period ending every -----------.
1.18 EFFECTIVE DATE.
New Plan. The "Effective Date" of the Plan is --------------.
Restated Plan. The restated Effective Date is --------------.
This Plan is a substitution and amendment of an existing
retirement plan(s) originally established ------------------.
(Note: See the Effective Date Addendum.)
1.27 HOUR OF SERVICE. The crediting method for Hours of Service
is: (Choose (a) or (b))
(a) The actual method.
(b) The ---------------------------- equivalency method, except:
(1) No exceptions.
(2) The actual method applies for purposes of: (Choose at
least one)
(i) Participation under Article II.
(ii) Vesting under Article V.
(iii) Accrual of benefits under Section 3.06.
[Note: On the blank line, insert "daily," "weekly," "semi-monthly
payroll periods" or "monthly.")
1.29 SERVICE FOR PREDECESSOR EMPLOYER. In addition to the
predecessor service the Plan must credit by reason of Section
1.29 of the Plan, the Plan credits Service with the following
<PAGE>
predecessor employer(s): ----------------------------------
- -----------------------------------------------------------.
Service with the designated predecessor employer(s) applies:
(Choose at least one of (a) or (b); (C) is available only in
addition to (a) or (b))
(a) For purposes of participation under Article II.
(b) For purposes of vesting under Article V.
(c) Except the following Service: ----------------------------.
[Note: If the Plan does not credit any predecessor service under
this provision, insert "N/A" in the first blank line. The
Employer may attach a schedule to this Adoption Agreement, in the
same format as this Section 1.29, designating additional
predecessor employers and the applicable service crediting
elections.]
1.31 LEASED EMPLOYEES. If a Leased Employee is a Participant in
the Plan and also participates in a Plan maintained by the
leasing organization: (Choose (a) or (b))
(a) The Advisory Committee will determine the Leased Employee's allocation
of Employer contributions under Article III without taking into account the
Leased Employee's allocation, if any, under the leasing organization's plan.
(b) The Advisory Committee will reduce a Leased Employee's
allocation of Employer contributions under this Plan by the
Leased Employee's allocation under the leasing organization's
plan, but only to the extent that allocation is attributable to
the Leased Employee's service provided to the Employer. The
leasing organization's plan:
(1) Must be a money purchase plan which would satisfy the definition
under Section 1.31 of a safe harbor plan, irrespective of whether the
safe harbor exception applies.
(2) Must satisfy the features and, if a defined benefit plan, the
method of reduction described in an addendum to this Adoption
Agreement, numbered 1.31.
ARTICLE II
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY.
Eligibility conditions. To become a Participant in the Plan, an Employee must
satisfy the following eligibility conditions:
(Choose (a) or (b) or both)
(a) Attainment of age ------------- (Specify age, not exceeding 21).
<PAGE>
(b) Service requirement. (Choose one of (1) through (4))
(1) One Year of Service.
(2) Two Years of Service, without an intervening Break in
Service. See Section 2.03(A) of the Plan.
(3) ------------- months (not exceeding 24) following the
Employee's Employment Commencement Date.
(4) One Hour of Service.
Plan Entry Date. "Plan Entry Date" means the Effective Date and:
(Choose (c), (d) or (e))
(c) Semi-annual Entry Dates. The first day of the Plan Year and
the first day of the seventh month of the Plan Year.
(d) The first day of the Plan Year.
(e) (Specify entry dates) -----------------------------------.
Time of Participation. An Employee will become a Participant, unless excluded
under Adoption Agreement Section 1.07, on the Plan Entry Date (if employed on
that date):
(f) immediately following
(g) immediately preceding
(h) nearest -------------------------------------------- the date the
Employer completes the eligibility conditions described in Options (a) and (b)
of this Adoption Agreement Section 2.01. [Note: The Employer must coordinate the
selection of (f), (g) or (h) with the "Plan Entry Date" selection in (c), (d) or
(e). Unless otherwise excluded under Section 1.07, the Employee must become a
Participant by the earlier of: (1) the first day of the Plan Year beginning
after the date the Employee completes the age and service requirements of Code
ss.410(a); or (2) 6 months after the date the Employee completes those
requirements.]
Dual eligibility. The eligibility conditions of this Section 2.01
apply to: (Choose (I) or (j))
(i) All Employees of the Employer, except: (Choose (1) or (2))
(1) No exceptions.
(2) Employees who are Participants in the Plan as of the
Effective Date.
(j) Solely to an Employee employed by the Employer after
<PAGE>
- ----------. If the Employee was employed by the Employer on or before the
specified date, the Employee will become a Participant: (Choose (1), (2) or (3))
(1) On the latest of the Effective Date, his Employment
Commencement Date or the date he attains age -----------
(not to exceed 21).
(2) Under the eligibility conditions in effect under the
Plan prior to the restated Effective Date. [For restated
plans only]
(3) (Specify) -------------------------------------.
2.02 YEAR OF SERVICE - PARTICIPATION.
Hours of Service. An Employee must complete: (Choose (a) or (b))
(a) 1,000 Hours of Service
(b) -------------------- Hours of Service
during an eligibility computation period to receive credit
for a Year of Service. [Note: The Hours of Service
requirement may not exceed 1,000.]
Eligibility computation period. After the initial eligibility computation period
described in Section 2.02 of the Plan, the Plan measures the eligibility
computation period as: (Choose (C) or (d))
(c) The 12 consecutive month period beginning with each anniversary of an
Employee's Employment Commencement Date.
(d) The Plan Year, beginning with the Plan Year which includes the first
anniversary of the Employee's Employment Commencement Date.
2.03 BREAK IN SERVICE - PARTICIPATION. The Break in Service rule
described in Section 2.03(B) of the Plan: (Choose (a) or (b))
(a) Does not apply to the Employer's Plan.
(b) Applies to the Employer's Plan.
2.06 ELECTION NOT TO PARTICIPATE. The Plan: (Choose (a) or (b))
(a) Does not permit an eligible Employee or a Participant to
elect not to participate.
(b) Does permit an eligible Employee or a Participant to elect
not to participate in accordance with Section 2.06 and with the
following rules: (Complete (1), (2), (3) and (4))
(1) An election is effective for Plan Year if filed no
<PAGE>
later than -------------------------.
(2) An election not to participate must be effective for at
least ------------------- Plan Year(s).
(3) Following a re-election to participate, the Employee or
Participant:
(i) May not again elect not to participate for any
subsequent Plan Year.
(ii) May again elect not to participate, but not earlier
than the ---------- Plan Year following the Plan Year in
which the re-election first was effective.
(Specify) -------------------------------------------- [Insert "N/A" if
no other rules apply].
ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
3.01 AMOUNT. The amount of the Employer's annual contribution to
the Trust will equal: (Choose (a), (b), (c), (d) or (e))
(a) The amount (or additional amount) the Employer may from time
to time deem advisable.
(b) The amount (or additional amount) the Employer may from time
to time deem advisable, separately determined for each of the
following classifications of Participants: (Choose (1) or (2))
(1) Nonhighly Compensated Employees and Highly Compensated
Employees.
(2) (Specify classifications) ----------------------------
---------------------------------------------------------------
Under this Option (b), the Advisory Committee will allocate the amount
contributed for each Participant classification in accordance with Adoption
Agreement Section 3.04, as if the Participants in that classification were the
only Participants in the Plan.
(c) ---------% of the Compensation of all Participants under the
Plan, determined for the Employer's taxable year for which it
makes the contribution. [Note: The percentage selected may not
exceed 15%.]
(d) ---------% of Net Profits but not more than $-----------.
(e) This Plan is a frozen Plan effective -------------------.
The Employer will not contribute to the Plan with respect to any
period following the stated date.
<PAGE>
Net Profits. The Employer: (Choose (f) or (g))
(f) Need not have Net Profits to make its annual contribution
under this Plan.
(g) Must have current or accumulated Net Profits exceeding
$------------ to make the contributions described in Option -----.
The term "Net Profits" means the Employer's net income or profits for any
taxable year determined by the Employer upon the basis of its books of account
in accordance with generally accepted accounting practices consistently applied
without any deductions for Federal and state taxes upon income or for
contributions made by the Employer under this Plan or under any other employee
benefit plan the Employer maintains. If more than one member of a related group
(as defined in Section 1.30) execute this Adoption Agreement, each participating
member separately will determine Net Profits. "Net Profits" include both current
and accumulated Net Profits. The term "Net Profits" specifically excludes
- -------------------------------------------------------------.
[Note: Enter "N/A" if no exclusions apply.
3.04 CONTRIBUTION ALLOCATION.
Method of Allocation. Subject to any restoration allocation required under
Section 5.04, the Advisory Committee will allocate and credit each annual
Employer contribution (and Participant forfeitures, if any) to the Account of
each Participant who satisfies the conditions of Section 3.06, in accordance
with the allocation method selected under this Section 3.04. If the Employer
elects Option (a)(2) or Option (d), for the first 3% of Compensation allocated
to all Participants, "Compensation" does not include any exclusion of elective
contributions), and the Advisory Committee must take into account the
Participant's Compensation for the entire Plan Year. (Choose an allocation
method under (a), (b), (c) or (d); (e) is mandatory of the Employer elects (b),
(c) or (d); (f) is optional in addition to any other election.)
(a) Nonintegrated Allocation Formula. (Choose (1) or (2))
(1) The Advisory Committee will allocate the annual Employer
contributions (and Participant forfeitures) in the same ratio that each
Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year.
(2) The Advisory Committee will allocate the annual Employer
contributions (and Participant forfeitures) in the same ratio that each
Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year. For purposes of
this Option (2), "Participant" means, in addition to a participant who
<PAGE>
satisfies the requirements of Section 3.06 for the Plan Year, any other
Participant entitled to a top heavy minimum allocation under Section
3.04(B), but such Participant's allocation will not exceed 3% of his
Compensation for the Plan Year.
(b) Two-Tiered Integrated Allocation Formula - Maximum Disparity. First, the
Advisory Committee will allocate the annual Employer contributions (and
Participant forfeitures) in the same ratio that each Participant's Compensation
plus Excess Compensation for the Plan Year bears to the total Compensation plus
Excess Compensation of all Participants for the Plan Year. The allocation under
this paragraph, as a percentage of each Participant's Compensation plus Excess
Compensation, must not exceed the applicable percentage (5.7%, 5.4% or 4.3%)
listed under the Maximum Disparity Table following Option (e).
The Advisory Committee then will allocate any remaining Employer contributions
(and Participant forfeitures) in the same ratio that each Participant's
Compensation for the Plan Year bears to the total Compensation of all
Participants for the Plan Year.
(c) Three-Tiered Integrated Allocation Formula. First, the Advisory Committee
will allocate the annual Employer contributions (and Participant forfeitures) in
the same ratio that each Participant's Compensation for the plan Year bears to
the total Compensation of all Participants for the Plan Year. The allocation
under this paragraph, as a percentage of each Participant's Compensation may not
exceed the applicable percentage (5.7%, 5.4% or 4.3%) listed under the Maximum
Disparity Table following Option (e). Solely for purposes of the allocation in
this first paragraph, "Participant" means, in addition to a Participant who
satisfies the requirements of Section 3.06 for the Plan Year. (Choose (1) or
(2))
(1) No other Participant.
(2) Any other Participant entitled to a top heavy minimum
allocation under Section 3.04(B), but such Participant's allocation
under this Option (c) will not exceed 3% of his Compensation for the
Plan Year.
As a second tier allocation, the Advisory Committee will allocate the annual
Employer contributions (and Participant forfeitures) in the same ratio that each
Participant's Excess Compensation for the Plan Year bears to the total Excess
Compensation of all Participants for the Plan Year. The allocation under this
paragraph, as a percentage of each Participant's Excess Compensation, may not
exceed the allocation percentage in the first paragraph.
Finally, the Advisory Committee will allocate any remaining annual Employer
contributions (and Participant forfeitures) in the same ratio that each
Participant's Compensation for the Plan
<PAGE>
Year bears to the total Compensation of all Participants for the Plan Year.
(d) Four-Tiered Integrated Allocation Formula. First, the Advisory
Committee will allocate the annual Employer contributions (and Participant
forfeitures) in the same ratio that each Participant's Compensation for the Plan
Year bears to the total Compensation of all Participants for the Plan Year, but
not exceeding 3% of each Participant's Compensation. Solely for purposes of this
first tier allocation, a "Participant" means, in addition to any Participant who
satisfies the requirements of Section 3.06 for the Plan Year, any other
Participant entitled to a top heavy minimum allocation under Section 3.04(B) of
the Plan.
As a second tier allocation, the Advisory Committee will allocate the annual
Employer contributions (and Participant forfeitures) in the same ratio that each
Participant's Excess Compensation for the Plan Year bears to the total Excess
Compensation of all Participants for the Plan Year, but not exceeding 3% of each
Participant's Excess Compensation.
As a third tier allocation, the Advisory Committee will allocate the annual
Employer contributions (and Participant forfeitures) in the same ratio that each
Participant's Compensation plus Excess Compensation for the Plan Year bears to
the total Compensation plus Excess Compensation of all Participants for the Plan
Year. The allocation under this paragraph, as a percentage of each Participant's
Compensation plus Excess Compensation, must not exceed the applicable percentage
(2.7%, 2.4% or 1.3%) listed under the Maximum Disparity Table following Option
(e).
The Advisory Committee then will allocate any remaining Employer contributions
(and Participant forfeitures) in the same ratio that each Participant's
Compensation for the Plan Year bears to the total Compensation of all
Participants for the Plan Year.
(e) Excess Compensation. For purposes of Option (b), (c) or (d),
"Excess Compensation" means Compensation in excess of the
following Integration Level: (Choose (1) or (2))
(1) ------% (not exceeding 100%) of the taxable wage base, as
determined under Section 230 of the Social Security Act, in effect on
the first day of the Plan Year: (Choose any combination of (I) and (ii)
or choose (iii))
(i) Rounded to -------- (but not exceeding the taxable
wage base).
(ii) But not greater than $-------------.
(iii) Without any further adjustment or limitation.
(2) $--------------- [Note: Not exceeding the taxable wage
base for the Plan Year in which this Adoption Agreement first is
effective.]
<PAGE>
Maximum Disparity Table. For purpose of Options (b), (c) and (d),
the applicable percentage is:
Integration Level Applicable Applicable
(as percentage of Percentages for Percentages
taxable wage base) Option (b) or Option (C) for Option (d)
100% 5.7% 2.7%
More than 80% but
less than 100% 5.4% 2.4%
More than 20% (but
not less than $10,001)
and not more than 80% 4.3% 1.3%
20% (or $10,000, if
greater) or less 5.7% 2.7%
(f) Allocation offset. The Advisory Committee will reduce a
Participant's allocation otherwise made under this Section 3.04
by the Participant's allocation under the following qualified
plan(s) maintained by the Employer: ------------------------.
The Advisory Committee will determine this allocation reduction:
(Choose (1) or (2))
(1) By treating the term "Employer contribution" as including
all amounts paid or accrued by the Employer during the plan Year to
the qualified plan(s) referenced under this Option (f). If a
Participant under this Plan also participates in that other plan,
the Advisory Committee will treat the amount the Employer contributes
for or during a Plan Year on behalf of a particular Participant under
such other plan as an amount allocated under this Plan to that
Participant's Account for that Plan Year. The Advisory committee will
make the computation of allocation required under the immediately
preceding sentence before making any allocation required by this
Section 3.04.
(2) In accordance with the formula provided in an addendum
to this Adoption Agreement, numbered 3.04(f).
Top Heavy Minimum Allocation - Method of Compliance. If a
Participant's allocation under this Section 3.04 is less than the
top heavy minimum allocation to which he is entitled under
Section 3.04(B): (Choose (g) or (h))
(g) The Employer will make any necessary additional contribution
to the Participant's Account, as described in Section
e.04(B)(7)(a) of the Plan.
<PAGE>
(h) The Employer will satisfy the top heavy minimum allocation under the
following plan(s) it maintains: -------------------. However, the Employer will
make any necessary additional contribution to satisfy the top heavy minimum
allocation for an Employee covered only under this Plan and not under the other
plan(s) designated in this Option (h). See Section 3.04(B)(7)(b) of the Plan.
If the Employer maintains another plan, the Employer may provide in an addendum
to this Adoption Agreement, numbered Section 3.04, any modifications to the Plan
necessary to satisfy the top heavy requirements under Code 416.
Related employers. If two or more related employers (as defined in Section 1.30)
contribute to this Plan, the Advisory Committee must allocate all Employer
contributions and forfeitures to each Participant in the Plan, in accordance
with the elections in this Adoption Agreement Section 3.04: (Choose i) or (j))
(i) Without regard to which contributing related group member
employs the Participant.
(j) Only to the Participants directly employed by the contributing
Employer. If a Participant receives Compensation from more than one contributing
Employer, the Advisory Committee will determine the allocations under this
Adoption Agreement Section 3.04 by prorating among the participating Employers
the Participant's Compensation and, if applicable, the Participant's Integration
Level under Option (e).
3.05 FORFEITURE ALLOCATION. Subject to any restoration allocation
required under Sections 5.04 or 9.14, the Advisory Committee will
allocate a Participant forfeiture in accordance with Section
3.04: (Choose (a) or (b); (c) and (d) are optional in addition to
(a) or (b))
(a) As an Employer contribution for the Plan Year in which the forfeiture
occurs, as if the Participant forfeiture were an additional Employer
contribution for that Plan Year.
(b) To reduce the Employer contribution for the Plan Year:
(Choose (1) or (2))
(1) in which the forfeiture occurs.
(2) immediately following the Plan Year in which the
forfeiture occurs.
(c) First to reduce the Plan's ordinary and necessary administrative
expenses for the Plan Year and then will allocate any remaining forfeitures in
the manner described in Option (a) or in Option (b), whichever applies.
3.06 ACCRUAL OF BENEFIT.
<PAGE>
Compensation Taken Into Account. For the Plan Year in which the
Employee first becomes a Participant, the Advisory Committee will
determine the allocation under Adoption Agreement Section 3.04 by
taking into account: (Choose (a) or (b))
(a) The Employee's Compensation for the entire Plan Year.
(b) The Employee's Compensation only for the portion of the Plan
Year in which the Employee actually is a Participant in the Plan.
Accrual Requirements. Subject to the suspension of accrual
requirements of Section 3.06(E) of the Plan, to receive an
allocation of Employer contributions and Participant forfeitures,
if any, for the Plan Year, a Participant must satisfy the
conditions described in the following elections: (Choose (c) or
at least one of (d) through (f))
(c) Safe Harbor rule. If the Participant is employed by the Employer on the
last day of the Plan Year, the Participant must complete at least one Hour of
Service for that Plan Year. If the Participant is not employed by the Employer
on the last day of the Plan Year, the Participant must complete at least 501
Hours of Service during the Plan Year.
(d) Hours of Service condition. The Participant must complete
the following minimum number of Hours of Service for the Plan
Year: (Choose at least one of (1 through (4))
(1) 1,000 Hours of Service.
(2) (Specify, but the number of Hours of Service may not
exceed 1,000) --------------.
(3) No Hour of Service requirement if the Participant
terminates employment during the Plan Year on account of:
(Choose (i) through (iii)
(i) Death.
(ii) Disability.
(iii) Attainment of Normal Retirement Age in the current
Plan Year or in a prior Plan Year.
(4) --------- Hours of Service (not exceeding 1,000) if the
Participant terminates employment with the Employer during the Plan
Year, subject to any election in Option (3).
(e) Employment conditions. The Participant must be employed by the Employer
on the last day of the Plan year, irrespective of whether he satisfies any Hours
of Service condition under Option (d), unless his employment terminates because
of: (Choose (1) or at least one of (2) through (4))
<PAGE>
(1) No exceptions.
(2) Death.
(3) Disability.
(4) Attainment of Normal Retirement Age in the current Plan
Year or in a prior Plan Year.
(f) (Specify other conditions, if applicable): ----------------.
Suspension of Accrual Requirements. The suspension of accrual
requirements of Section 3.06(E) of the Plan: (Choose (g), (h) or
(i))
(g) Applies to the Employer's Plan.
(h) Does not apply to the Employer's Plan.
(i) Applies in modified form to the Employer's Plan, as
described in an addendum to this Adoption Agreement, numbered
Section 3.06(E).
3.15 MORE THAN ONE PLAN LIMITATION. If the provisions of Section
3.15 apply, the Excess Amount attributed to this Plan equals:
(Choose (a), (b) or (c))
(a) The product of:
(i) the total Excess Amount allocated as of such date (including any
amount which the Advisory Committee would have allocated but for the
limitations of Code ss.415) times
(ii) the ratio of (1) the amount allocated to the Participant as of
such date under this Plan divided by (2) the total amount allocated as
of such date under all qualified defined contribution plans (determined
without regard to the limitations of Code ss.415).
(b) The total Excess Amount.
(c) None of the Excess Amount.
3.18 DEFINED BENEFIT PLAN LIMITATION.
Application of limitation. The limitation under Section 3.18 of
the Plan: (Choose (a) or (b))
(a) Does not apply to the Employer's Plan because the Employer does not
maintain and never has maintained a defined benefit plan covering any
Participant in this Plan.
(b) Applies to the Employer's Plan. To the extent necessary to
satisfy the limitation under Section 3.18, the Employer will reduce: (Choose
(1) or (2))
<PAGE>
(1) The Participant's projected annual benefit under the
defined benefit plan under which the Participant participates.
(2) Its contribution or allocation on behalf of the Participant to
the defined contribution plan under which the Participant participates
and then, if necessary, the Participant's projected annual benefit
under the defined benefit plan under which the Participant
participates.
[Note: If the Employer selects (a), the remaining options in this
Section 3.18 do not apply to the Employer's Plan.]
Coordination with top heavy minimum allocation. The Advisory Committee will
apply the top heavy minimum allocation provisions of Section 3.04(B) of the Plan
with the following modifications:
(Choose (c) or at least one of (d) or (e))
(c) No modifications.
(d) For Non-Key Employees participating only in this Plan, the top heavy
minimum allocation is the minimum allocation described in Section 3.04(B)
determined by substituting -----% (not less than 4%) for "3%", except: (Choose
(1) or (2))
(1) No exceptions.
(2) Plan Years in which the top heavy ratio exceeds 90%.
(e) For Non-Key Employees also participating in the defined
benefit plan, the top heavy minimum is: (Choose (1) or (2))
(1) 5% of Compensation (as determined under Section 3.04(B)
of the Plan) irrespective of the contribution rate of any
Key Employee, except: (Choose (i) or (ii))
(i) No exceptions.
(ii) Substituting "7 1/2%" for "5%" if the top heavy ratio
does not exceed 90%.
(2) 0%. [Note: The employer may not select this Option (2)
unless the defined benefit plan satisfies the top heavy
minimum benefit requirements of Code 416 for these Non-Key
Employees.]
Actuarial Assumptions for Top Heavy Calculation. To determine the
top heavy ratio, the Advisory Committee will use the following
interest rate and mortality assumptions to value accrued benefits
under a defined benefit plan: ---------------------------.
If the elections under this Section 3.18 are not appropriate to
<PAGE>
satisfy the limitations of Section 3.18, or the top heavy requirements under
Code 416, the Employer must provide the appropriate provisions in an addendum to
this Adoption Agreement.
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT
5.01 NORMAL RETIREMENT. Normal Retirement Age under the Plan is:
(Choose (a) or (b))
(a) --------- [State age, but may not exceed age 65].
(b) The later of the date the Participant attains ------- years
of age or the ------------------ anniversary of the first day of
the Plan Year in which the Participant commenced participation in
the Plan. [The age selected may not exceed age 65 and the
anniversary selected may not exceed the 5th.]
5.02 PARTICIPANT DEATH OR DISABILITY. The 100% vesting rule under
Section 5.02 of the Plan: (Choose (a) or choose one or both of
(b) and (c))
(a) Does not apply.
(b) Applies to death.
(c) Applies to disability.
5.03 VESTING SCHEDULE. The Employer elects the following vesting
schedule: (Choose (a) or (b); (C) and (d) are available only in
addition to (b))
(a) Immediate vesting, 100% Nonforfeitable at all times. [Note:
The Employer must elect Option (a) if the eligibility conditions
under Adoption Agreement Section 2.01(b) require 2 years of
service or more than 12 months of employment.]
(b) Graduated Vesting Schedules.
Top Heavy Schedule Non Top Heavy Schedule
(Mandatory) (Optional)
Year of Nonforfeitable Year of Nonforfeitable
Service Percentage Service Percentage
Less than 1 -------- Less than 1 --------
1 -------- 1 --------
2 -------- 2 --------
3 -------- 3 --------
<PAGE>
4 -------- 4 --------
5 -------- 5 --------
6 or more 100% 6 --------
7 or more --------
(c) Minimum vesting. A Participant's Nonforfeitable Accrued Benefit will
never be less than the lesser of $---------- or his entire Accrued Benefit, even
if the application of the graduated vesting schedule under Option (b) would
result in a smaller Nonforfeitable Accrued Benefit.
[Note: Under Option (b), the Employer must complete a Top Heavy
Schedule which satisfies Code ss.416. The Employer, at its option,
may complete a Non Top Heavy Schedule. The Non Top Heavy Schedule
must satisfy Code ss.411(a)(2). Also see Section 7.05 of the Plan.]
(d) The Top Heavy Schedule under Option (b) applies: (Choose (1)
or (2))
(1) Only in a Plan Year for which the Plan is top heavy.
(2) In the Plan Year for which the Plan first is top heavy
and then is all subsequent Plan Years. [Note: The Employer
may not elect Option (d) unless it has completed a Non Top
Heavy Schedule.]
Life Insurance Investments. The Participant's Accrued Benefit
attributable to insurance contracts purchased on his behalf under
Article XI is: (Choose (e) or (f))
(e) Subject to the vesting election under Options (a), or (b).
(f) 100% Nonforfeitable at all times, irrespective of the
vesting election under Option (b).
5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED
PARTICIPANTS/RESTORATION OF FORFEITED ACCRUED BENEFIT. The deemed
cash-out rule described in Section 5.04(C) of the Plan: (Choose (a)
or (b))
(a) Does not apply.
(b) Will apply to determine the timing of forfeitures for 0%
vested Participants.
5.06 YEAR OF SERVICE - VESTING.
Vesting computation period. The Plan measures a Year of Service on the basis of
the following 12 consecutive month periods:
(Choose (a) or (b))
(a) Plan Years.
(b) Employment Years. An Employment Year is the 12 consecutive
<PAGE>
month period measured from the Employee's Employment Commencement Date and each
successive 12 consecutive month period measured from each anniversary of that
Employment Commencement Date.
Hours of Service. The minimum number of Hours of Service an
Employee must complete during a vesting computation period to
receive credit for a Year of Service is: (Choose (c) or (d))
(c) 1,000 Hours of Service.
(d) ----------- Hours of Service. [Note: The Hours of Service
requirement may not exceed 1,000.]
5.08 INCLUDED YEARS OF SERVICE - VESTING. The Employer
specifically excludes the following Years of Service: (Choose (a)
or at least one of (b) through (e))
(a) None other than as specified in Section 5.08(a) of the Plan.
(b) Any Year of Service before the Participant attained the age
of ---------------. [Note: The age selected may not exceed age
18.]
(c) Any Year of Service during the period the Employer did not
maintain this Plan or a predecessor plan.
(d) Any Year of Service before a Break in Service if the number of
consecutive Breaks in Service equals or exceeds the greater of 5 or the
aggregate number of the Years of Service prior to the Break. This exception
applies only if the Participant is 0% vested in his Accrued Benefit derived from
Employer contributions at the time he has a Bread in Service. Furthermore, the
aggregate number of Years of Service before a Break in Service do not include
any Years of Service no required to be taken into account under this exception
by reason of any prior Break in Service.
(e) Any Year of Service earned prior to the effective date of ERISA if the
Plan would have disregarded that Year of Service on account of an Employee's
Separation from Service under a Plan provision in effect and adopted before
January 1, 1974.
ARTICLE VI
TIME AND METHOD OF PAYMENTS OF BENEFITS
Code ss.411(d)(6) Protected Benefits. The elections under this Article VI may
not eliminate Code ss.411(d)(6) protected benefits. To the extent the elections
would eliminate a Code ss.411(d)(6) protected benefit, see Section 13.02 of the
Plan. Furthermore, if the elections liberalize the optional forms of benefit
under the Plan, the more liberal options apply on the later of the adoption date
or the Effective Date of this Adoption Agreement.
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT.
<PAGE>
Distribution date. A distribution date under the Plan means
- -------------------------------------------------------------.
[Note: The Employer must specify the appropriate date(s). The
specified distribution dates primarily establish annuity starting
dates and the notice and consent periods prescribed by the Plan.
The Plan allows the Trustee an administratively practicable
period of time to make the actual distribution relating to a
particular distribution date.]
Nonforfeitable Accrued Benefit Not Exceeding $3,500. Subject to
the limitations of Section 6.01(A)(1), the distribution date for
distribution of a Nonforfeitable Accrued Benefit not exceeding
$3,500 is: (Choose (a), (b), (c), (d) or (e))
(a) ----------------- of the _____________ Plan Year beginning
after the Participant's Separation from Service.
(b) ----------------- following the Participant's Separation
from Service.
(c) ----------------- of the Plan Year after the Participant
incurs ------------------- Break(s) in Service (as defined in
Article V).
(d) ----------------- following the Participant's attainment of
Normal Retirement Age, but not earlier than --------- days
following his Separation from Service.
(e) (Specify) -------------------------------------------------.
Nonforfeitable Accrued Benefit Exceeds $3,500. See the elections
under Section 6.03.
Disability. The distribution date, subject to Section 6.01(A)(3),
is: (Choose (f), (g) or (h))
(f) ------------------ after the Participant terminates
employment because of disability.
(g) The same as if the Participant had terminated employment
without disability.
(h) (Specify) ------------------------------------------------.
Hardship. (Choose (i) or (j))
(i) The Plan does not permit a hardship distribution to a
Participant who has separated from Service.
(j) The Plan permits a hardship distribution to a Participant
who has separated from Service in accordance with the hardship
distribution policy. State in: (Choose (1) or (2))
(1) Section 6.01(A)(4) of the Plan.
<PAGE>
(2) The addendum to this Adoption Agreement, numbered Section 6.01, in
lieu of the policy stated in Section 6.01(A)(4) of the Plan.
Default on a Loan. If a Participant or Beneficiary defaults on a loan made
pursuant to a loan policy adopted by the Advisory Committee pursuant to Section
9.04, the Plan: (Choose (k), (l) or (m))
(k) Treats the default as a distributable event. The Trustee, at the time
of the default, will reduce the Participant's Nonforfeitable Accrued Benefit by
the lesser of the amount in default (plus accrued interest) or the Plan's
security interest in that Nonforfeitable Accrued Benefit.
(l) Does not treat the default as a distributable event. When an otherwise
distributable event first occurs pursuant to Section 6.01 or Section 6.03 of the
Plan, the Trustee will reduce the Participant's Nonforfeitable Accrued Benefit
by the lesser of the amount in default (plus accrued interest) of the Plan's
security interest in that Nonforfeitable Accrued Benefit.
(m) (Specify) ------------------------------------------------.
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. The Advisory Committee
will apply Section 6.02 of the Plan with the following
modifications: (Choose (a) or at least one of (b) (c), (d) and
(e))
(a) No modifications.
(b) Except as required under Section 6.01 of the Plan, a lump
sum distribution is not available: ----------------------------.
(c) An installment distribution: (Choose (1) or at least one of
(2) or (3))
(1) Is not available under the Plan.
(2) May not exceed the lesser of ----------------- years of
the maximum period permitted under Section 6.02.
(3) (Specify) --------------------------------------------.
(d) The Plan permits the following annuity options: ---------
Any Participant who elects a life annuity option is subject to
the requirements of Sections 6.04(A), (B), (C) and (D) of the
Plan. See Section 6.04(E). [Note: The Employer may specify
additional annuity options in an addendum to this Adoption
Agreement, numbered 6.02(d).]
(e) If the Plan invests in qualifying Employer securities, as described in
Section 10.03(F), a Participant eligible to elect distribution under Section
6.03 may elect to receive that
<PAGE>
distribution in Employer securities only in accordance with the provision of the
addendum to this Adoption Agreement, numbered 6.02(e).
6.03 BENEFIT PAYMENT ELECTIONS.
Participant Elections After Separation from Service. A
Participant who is eligible to make distribution elections under
Section 6.03 of the Plan may elect to commence distribution of
his Nonforfeitable Accrued Benefit: (Choose at least one of (a)
through (c))
(a) As of any distribution date, but no earlier than ---------- of the
- --------------------------------- Plan Year beginning after the Participant's
Separation from Service.
(b) As of the following date(s): (Choose at least one of Options
(1) through (6))
(1) Any distribution date after the close of the Plan Year in
which the Participant attains Normal Retirement Age.
(2) Any distribution date following his Separation from
Service.
(3) Any distribution date in the ------------------------
Plan Year(s) beginning after his Separation from Service.
(4) Any distribution date in the Plan Year after the Participant incurs
-------- Break(s) in Service (as defined in Article V).
(5) Any distribution date following attainment of age
----------- and completion of at least ------------ Years of
Service (as defined in Article V).
(6) (Specify) ------------------------------------------.
(c) (Specify) ---------------------------------------------------.
Participant Elections Prior to Separation from Service. Subject
to the restrictions of Article VI, the following distribution
options apply under the Employer's Plan prior to a Participant's
Separation from Service. (Choose (d) or at least one of (e)
through (h))
(d) No distribution options prior to Separation from Service.
(e) Attainment of Specified Age. Until he retires, the
Participant has a continuing election to receive all or any
portion of his Nonforfeitable Accrued Benefit after he attains:
(Choose (1) or (2))
(1) Normal Retirement Age.
<PAGE>
(2) --------------- years of age and is at least ---------%
vested in his Accrued Benefit. [Note: If the percentage is
less than 100%, see the special vesting formula in Section
5.03.]
(f) After a Participant has participated in the Plan for a
period of not less than ------- years and he is 100% vested in
his Accrued Benefit, until he retires, the Participant has a
continuing election to receive all or any portion of his Accrued
Benefit. [Note: The number in the blank space may not be less
than 5.]
(g) Hardship. A Participant may elect a hardship distribution
prior to his Separation from Service in accordance with the
hardship distribution policy: (Choose (1) or (2))
(1) Under Section 6.01(A)(4) of the Plan. In no event may a
Participant receive a hardship distribution under this
Option (g) before he is at least -------------------$ vested
in his Accrued Benefit. [Note: If the percentage in the
blank is less than 100%, see the special vesting formula in
Section 5.03.]
(2) Provided in the addendum to this Adoption Agreement,
numbered Section 6.03.
(h) (Specify) ---------------------------------------------.
[Note: The Employer may use an addendum, numbered 6.03, to
provide additional language authorized by Options (b)(6), (c),
(g)(2) or (h) of this Adoption Agreement Section 6.03.]
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES.
The annuity distribution requirements of Section 6.04: (Choose
(a) or (b))
(a) Apply only to a Participant described in Section 6.04(E) of the Plan
(relating to the profit sharing exception to the joint and survivor
requirements).
(b) Apply to all Participants.
ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT
TO PARTICIPANTS' ACCOUNTS
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. If a distribution
(other than a distribution from a segregated Account) occurs more
than 90 days after the most recent valuation date, the
distribution will include interest at: (Choose (a), (b) or (c))
(a) ----------% per annum. [Note: The percentage may equal 0%.]
<PAGE>
(b) The 90 day Treasury bill rate in effect at the beginning of
the current valuation period.
(c) (Specify) ------------------------------------------------.
ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES
10.03 investment powers. Pursuant to Section 10.03[F] of the
Plan, the aggregate investments in qualifying Employer securities
and in qualifying Employer real property: (Choose (a) or (b))
(a) May not exceed 10% of Plan assets.
(b) May not exceed --------------% of Plan assets. [Note: the
percentage may not exceed 100%.]
10.14 VALUATION OF TRUST. In addition to each Accounting Date,
the Trustee must value the Trust Fund on the following valuation
date(s): (Choose (a) or (b))
(a) No other mandatory valuation dates.
(b) (Specify) ------------------------------------------------.
EFFECTIVE DATE ADDENDUM
(Restated Plans Only)
The Employer must complete this addendum only if the restated Effective Date
specified in Adoption Agreement Section 1.18 is different than the restated
effective date for at least one of the provisions listed in this addendum. In
lieu of the restated Effective Date in Adoption Agreement Section 1.18, the
following special effective dates apply: (Choose whichever elections apply)
(a) Compensation definition. The Compensation definition of
Section 1.12 (other than the $200,000 limitation) is effective
for Plan Years beginning after ---------------------------------.
[Note: May not be effective later than the first day of the first
Plan Year beginning after the Employer executes this Adoption
Agreement to restate the Plan for the Tax Reform Act of 1986, if
applicable.]
(b) Eligibility conditions. The eligibility conditions specified
in Adoption Agreement Section 2.01 are effective for Plan Years
beginning after -----------------------.
(c) Suspension of Years of Service. The suspension of Years of Service rule
elected under Adoption Agreement Section 2.03 is effective for Plan Years
beginning after ---------------------.
(d) Contribution/allocation formula. The contribution formula
<PAGE>
elected under Adoption Agreement Section 3.01 and the method of allocation
elected under Adoption Agreement Section 3.04 is effective for Plan Years
beginning after ---------------------.
(e) Accrual requirements. The accrual requirements of Section
3.06 are effective for Plan Years beginning after -------------.
(f) Employment condition. The employment condition of Section
3.06 is effective for Plan Years beginning after --------------.
(g) Elimination of Net Profits. The requirement for the Employer
not to have net profits to contribute to this Plan is effective
for Plan Years beginning after ----------------. [Note: The date
specified may not be earlier than December 31, 1985.]
(h) Vesting Schedule. The vesting schedule elected under
Adoption Agreement Section 5.03 is effective for Plan Years beginning after
- ---------------.
(i) (Specify) ------------------------------------------------.
For Plan Years prior to the special Effective Date, the terms of the Plan prior
to its restatement under this Adoption Agreement will control for purposes of
the designated provisions. A special Effective Date may not result in the delay
of a Plan provision beyond the permissible Effective Date under any applicable
law requirements.
Execution Page
The Trustee (and Custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian) under the
Master Plan and Trust. The Employer hereby agrees to the provisions of this Plan
and Trust, and in witness of its agreement, the Employer by its duly authorized
officers, has executed this Adoption Agreement, and the Trustee (and Custodian,
if applicable) signified its acceptance, on this ----------- day of
- ----------------, 19--------.
Name and EIN of Employer: -------------------------------------
Signed: -------------------------------------------------------
Name(s) of Trustee: -------------------------------------------
- ---------------------------------------------------------------
Signed: -------------------------------------------------------
- ---------------------------------------------------------------
Name of Custodian: --------------------------------------------
<PAGE>
Signed: -------------------------------------------------------
[Note: A Trustee is mandatory, but a Custodian is optional. See
Section 10.03 of the Plan.]
Plan Number. The 3-digit plan number the Employer assigns to this
Plan for ERISA reporting purposes (Form 5500 Series) is:
- -----------------.
Use of Adoption Agreement. Failure to complete properly the elections in this
Adoption Agreement may result in disqualification of the Employer's Plan. The
3-digit number assigned to this Adoption Agreement (see page 1) is solely for
the Master Plan Sponsor's recordkeeping purposes and does not necessarily
correspond to the plan number the Employer designated in the prior paragraph.
Master Plan Sponsor. The Master Plan Sponsor identified on the first page of the
basic plan document will notify all adopting employers of any amendment of this
Master Plan or of any abandonment or discontinuance by the Master Plan Sponsor
of its maintenance of this Master Plan. For inquiries regarding the adoption of
the Master Plan, the Master Plan Sponsor's intended meaning of any plan
provisions or the effect of the opinion letter issued to the Master Plan
Sponsor, please contact the Master Plan Sponsor at the following address and
telephone number: INVESCO Trust Company, 7800 E. Union Ave., Denver, Colorado,
(303 779-0731).
Reliance on Opinion Letter. The Employer may not rely on the Master Plan
Sponsor's opinion letter covering this Adoption Agreement. For reliance on the
Plan's qualification, the Employer must obtain a determination letter from the
applicable IRS Key District office.
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)
The undersigned Employer, by executing this Participation Agreement, elects to
become a Participating Employer in the Plan identified in Section 1.03 of the
accompanying Adoption Agreement, as if the Participating Employer were a
signatory to that Agreement. The Participating Employer accepts, and agrees to
be bound by, all of the elections granted under the provisions of the Master
Plan as made by, the Signatory Employer to the Execution Page of the Adoption
Agreement.
1. The Effective Date of the undersigned Employer's
participation in the designated Plan is -------------------.
2. The undersigned Employer's adoption of this Plan
constitutes:
(a) The adoption of a new plan by the Participating Employer.
<PAGE>
(b) The adoption of an amendment and restatement of a plan
currently maintained by the Employer, identified as ---------------,
and having an original effective date of -----------------------------.
Dated this ----------- day of ----------------------, 19-------.
Name of Participating Employer: -------------------------------
Signed: -------------------------------------------------------
Participating Employer's EIN: ---------------------------------
Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.
Name of Signatory Employer: -----------------------------------
Accepted: -----------------------------------------------------
[Date]
Signed: -------------------------------------------------------
Name(s) of Trustee: -------------------------------------------
Accepted: -----------------------------------------------------
[Date]
Signed: -------------------------------------------------------
[Note: Each Participating Employer must execute a separate
Participation Agreement. See the Execution Page of the Adoption
Agreement for important Master Plan information.]
NS PSP AA Instructions
Complete the first blank in the paragraph by writing in the business' name in
its entirety.
1.02 Trustee
Option (a) should be chosen when the employer will be the trustee, INVESCO Trust
Company would then act as Custodian. If option (b) is chosen, INVESCO Trust
Company will charge an annual trust fee. Note: See Trustee Comments on page 17
for further explaination of Non-discretionary Trustee.
1.03 Plan
Enter the plan name. Example: ABC Inc. Profit Sharing Plan.
<PAGE>
1.07 Employee
If you want the plan to cover all types of employees, select option (a). If you
want to exclude from the plan any group(s) of employees, select any combination
of (b) or (g).
Leased Employees
You may exclude leased employees from participation (option h). However, the
plan must satisfy the coverage rules of Code Section 410(b) and 401(a)(26),
consult your legal or financial counsel.
Related Employers
You may exclude related employers from participating in the plan (option j).
However, the plan must satisfy the coverage rules of Code Section 410(b) and
401(a)(26), consult your legal or financial counsel.
1.12 Compensation
Treatment of elective contributions - Choose option (a) if you prefer to "add
back" employee elective contributions to compensation for purposes of allocating
employer contributions, forfeitures and for non-discrimination testing.
Modifications to Compensation - You must choose option (C) or any combination of
(d) through (j). Any exclusion of compensation may result in unallowable
discrimination. Your accountant may want to test for any discriminatory effect
of excluding any type of compensation.
1.17 Plan Year
You must define the "plan year." Usually it will follow the business tax year.
Limitation Year - You must define the "limitation year" (12 month period for
testing allocations to each employee's account). For administrative convenience
it should match the plan year.
1.18 Effective Date
New Plan - Enter the first day of your plan year (usually January
1) and the year.
Restated Plan - Effective date - If you are amending for the Tax Reform Act of
1986 enter: January 1, 1987. If you are amending for another reason, enter the
first day of your tax year, example: January 1, 1990. Original established date
- - Enter the original effective date of your plan from your prior Adoption
Agreement.
1.27 Hours of Service
<PAGE>
Choose which method you wish to use for counting hours worked by an employee to
accrue benefits. Option (b), the equivalency method, is explained in Section
1.27 of the plan. Option (a) is usually chosen.
1.29 Service for Predecessor Employer
Under this option, you may elect to count service for a predecessor employer
when you are not maintaining the plan of the predecessor employer. (Used
primarily in the event of a merger or acquisition.)
1.31 Leased Employees
The law requires you to state how your plan would treat a leased employee who
could become a participant, even if you don't intend to ever lease employees.
Choose option (a) covering the employee without regard to the leasing company's
plan or option (b) the reduction method. Usually Option (b)(1) is chosen.
2.01 Eligibility
a. An employee must attain this age to become a participant
(cannot exceed age 21).
b. Pick how long (service) an employee must work to become a
participant.
Plan Entry - Choose when employees enter the plan for purposes of contributions
and benefit accrual. Normally, option (c), semi-annual entry dates, is chosen.
Time of Participation - Choose which plan entry date (before or after) an
employee who meets the eligibility requirements will enter the plan. Normally,
option (f) is chosen.
Dual Eligibility - This section allows you to grandfather into the plan current
employees who have not met the eligibility requirements and apply the
eligibility requirements to newly hired employees. Restated plans usually chose
(i)(2).
2.02 Year of Service
Option (b) should only be chosen if you wish to require less than 1000 hours to
be worked by an employee for eligibility, contributions and vesting. Usually
Option (a) is chosen.
Eligibility Computation Period - Choose whether to measure subsequent
eligibility periods on the employee's anniversary or the plan year. Option (d)
Plan Year is chosen for administrative convenience.
2.03 Break In Service
<PAGE>
This option may impose a complicated re-entry date for employees
who have terminated or whose hours were severely cut back. Option
(a) is chosen for administrative convenience.
2.06 Election Not to Participate
This option allows employees and participants to elect out of participation.
However, these employees are considered when performing all non-discrimination
tests. Option (a) is chosen for administrative convenience.
3.01 Contributions and Forfeitures
Option (a) provides for a discretionary formula. Option (b) allows the employer
to determine the contribution separately for different catagories of
participants. Options (c) and (d) allow the employer to choose a fixed
contribution formula.
Net Profits - An employer may require net profits to make its contribution or
may disregard profits to determine the contribution. If the employer selects
option (g), it must also complete the three blanks.
3.04 Contribution Allocation
Allocation formula. The primary allocation formulas are in Options (a), (b), (c)
and (d). Option (a) is a Nonintegrated formula and allocates the employer
contribution proportionate to total compensation. Options (b), (c) and (d) are
alternatives for integrated plans. Usually option (a)(2) is chosen for non
integrated plans.
The two-tiered formula under Option (b) maximizes the disparity permitted under
the integration rules. Accordingly, the allocation in the first tier results in
an equal allocation percentage based on total compensation and based on excess
compensation. This equal allocation percentage may not exceed the maximum
disparity percentage (5.7%, 5.4%, or 4.3%) described in he second column of the
Maximum Disparity Table. After completion of the first tier allocation, the
second step allocates the remaining contribution proportionate to total
compensation, in the same manner as the nonintegrated formula.
Under the three-tiered formula under Option (c), the plan: (i) first allocates
based on total compensation, but the allocation percentage may not exceed the
maximum disparity percentage determined under the second column of the Maximum
Disparity Table; (ii) then allocates based on excess compensation, but the
allocation percentage may not exceed the maximum disparity percentage determined
under the second column of the Maximum Disparity Table; and (iii) completes the
allocation on the basis of total compensation.
The four-tier allocation under Option (d) is a hybrid of Options
<PAGE>
(b) and (c). The sole purpose of Option (d) is to use the first tier to satisfy
the 3% top heavy minimum, then use a progression of three additional tiers to
make maximum use of the permitted disparity rules. The second tier allocates
solely on the basis of excess compensation, with a maximum allocation under the
second tier equal to 3% of each participant's excess compensation. The third
tier is the same as the first tier under Option (b). The fourth tier is a
prorata allocation based on total compensation.
3.05 Forfeiture Allocation
Choose the method of allocating (dividing up) forfeitures of terminated
non-vested participant balances. Option (a) allocates forfeitures as an extra
discretionary contribution. Option (b) allocates forfeitures to reduce employer
contributions. Option (c) allows you to allocate forfeitures to reduce the
plan's administrative expense.
3.06 Compensation Taken Into Account
If you wish to count a participant's full year's compensation (even if he or she
entered during the year), for contributions choose option (a), if not, choose
option (b).
Accrual Requirements - Specify the service requirements a participant must
satisfy to receive an allocation. You may specify an hours of service
requirement, waive the service requirement for specific contributions and/or
require the participant to be employed on the last day to receive a
contribution.
Suspension of Accrual Requirements
This section allows you to suspend some or all of the accrual requirements found
in Section 3.06(E) of the plan for participants to receive allocations. This
would apply in plan years when a plan may not satisfy coverage and participation
requirements. For administrative convenience choose option (g).
3.15 More than One Plan
This section only applies if you (the employer) maintain another defined
contribution plan (e.g.: profit sharing, money purchase, 401(k) or target
benefit) that covers at least one participant in this plan.
3.18 Defined Benefit Limitation
Check option (a) if you have never maintained a defined benefit plan for any
participants in this plan. If you have or are currently maintaining a defined
benefit under option (b), choose which plan's benefit would be reduced if a
participant's total allocations for a year were to exceed the allowable limit.
<PAGE>
5.01 Normal Retirement Age
Choose what age you (the employer) want the participants to be 100% vested in
their benefits, if still employed (normal retirement age).
5.02 Vesting Death/Disability
You may choose to allow 100% vesting to participants that terminate from service
because of death option (b) or disability option (c).
5.03 Vesting Schedule
Choose what vesting schedule(s) you want to apply to employer discretionary
contributions and matching contributions. If you choose option (b), you must at
a minimum complete the top-heavy vesting schedule. Remember, if the eligibility
requirements are more than one year, option (a) must be chosen.
Complete the Top Heavy Schedule based upon the following:
Year of Service
1
2 (not less than 20%) 3 (not less than 40%) 4 (not less than 60%) 5 (not less
than 80%) 6 (not less than 100%)
Optional: Complete the Non Top Heavy Schedule based upon the
following:
Years of Service
1
2 3 (not less than 20%) 4 (not less than 40%) 5 (not less than 60%) 6 (not less
than 80%) 7 (not less than 100%)
5.04 Cash-Out Rule
If option (b) is chosen, the plan treats a 0% vested terminated participant as
having received a distribution, allowing for forfeitures to be reallocated to
active participants.
5.06 Years of Service
Choose what measuring period the plan should use to determine years of service
for vesting, employee's anniversary year or plan year. For ease of
administration choose option (a).
<PAGE>
5.08 Prior Years of Service
By choosing options (b) through (e) you (the employer) may exclude some prior
years of service for purposes of vesting.
Article 6
The Employer must establish a specific distribution policy for the plan. Treas.
Reg. 1.411(d)-4 prohibits the Employer, the advisory committee or any third
party to retain discretion over when or in what form to pay the participant's
benefit. Under a restated plan, the elections under Article VI, to the extent
they differ from previous plan provisions regarding optional forms of benefit,
may not eliminate an optional form of benefit with respect to the account
balance accrued as of the date the Employer executes the restated adoption
agreement (or, if later, the effective date of that restated adoption
agreement). An optional form of benefits includes the form of payment (e.g.,
lump sum or installments), the timing of payment (e.g., immediately after
separation form service, following a break in service, after attaining normal
retirement age) and the medium of payment (e.g., right to elect distribution in
Employer securities, right to elect distribution in the form of an annuity
contract).
With this in mind, if you are restating an existing plan, pay close attention to
the distribution features under that document and your administrative practice
of distributions. In all cases, try to mirror or liberalize those distribution
features when restating onto this document.
6.01 Distribution Date
A distribution date establishes a predetermined "target" date in a plan year
when the plan will offer distributions. The actual distribution may occur later
than a distribution date as long as the actual distribution is within an
administratively reasonable period of time" from the distribution date. Typical
distribution dates for 401(k) plans are semi-annual dates or quarterly dates.
Nonforfeitable Accrued Benefit Not Exceeding #3500
When a separate participants vested balance does not exceed $3500, the plan
allows the employer to separately establish the timing of these distributions,
separate from the distribution dates. When you complete this section, you need
to balance two concerns: 1) will the timing of the distribution cause the
participant to consider it a "severance benefit" and therefore encourage
separation from service and 2) the administrative concerns of carrying a
non-active account in the plan.
Disability - The plan allows you (the employer) to establish a different target
payout date for disability distributions in options (f) and (h).
<PAGE>
Hardship - This option states whether or not the plan would allow a separated
participant to receive a hardship distribution, prior to receiving a total
distribution of his/her vested account balance.
Default on a Loan - This election does not create a loan policy. You (the
employer) must elect the timing of the plan's foreclosure if a participant's
loan were to be defaulted upon even if you do not intend to offer loans in your
plan.
6.02 Method of Payment
You may choose the standard forms of payment if this is a brand new plan and not
a restatement. Elect any one or combination of options (b) through (e). If no
modifications are necessary, elect option (a).
6.03 Participant Elections After Separation From Service
You must choose when an employee who has separated from service, with a vested
benefit greater than $3500, may elect to commence distributions. This election
will be tied directly to the "distribution date" definition earlier.
Participant Elections Prior to Separation from Service
The following distribution elections apply to employer discretionary account
regardless of vested account balances, prior to employment separation. If you
prefer not to allow any distribution options from these accounts prior to
separation, select option (d).
6.04 Annuity Distributions
the law requires distributions to certain participants to be in the form of
commercial insurance annuities, unless consented to and waived by both the
participant and his or her spouse. Participants that are subject to this
requirement are identified in section 6.04(E) of the Plan. For administrative
convenience choose option (a). If you are restating a plan that was subject to
the joint and survivor annuity rules, you must select Option (b).
9.10 Value of Benefit
This option allows the employer to add interest to a participant's balance, if a
distribution occurs more than 90 days after the most recent plan valuation. You
do not have to provide an interest addition under this section and may complete
option (a) with 0%.
10.03 Investment Powers
Complete this section if you (the employer) wish to allow the
<PAGE>
plan to invest in qualifying employer securities, you should consult your legal
counsel. The term "qualifying employer securities" has a specific meaning under
ERISA and may not include all securities.
10.14 Valuation of Trust
You may use this option to specify mandatory valuation dates, in addition to the
accounting date. Normally, option (a) is chosen.
Instructions for Effective Date Addendum
You must complete the effective date addendum only if the effective dates of any
of the listed items (a) through (j) have an effective date other than your
restated effective date in adoption agreement section 1.18. Since some
provisions in the Tax Reform Act of 1986 were not effective until 1988 or 1989
the few provisions (if any) that have later effective dates must specify when
they are effective.
a. Compensation definition may not be later than the first day
of your 1991 plan year.
b. Eligibility conditions may not be later than the first day
of your 1989 plan year.
c. Suspension of years of service may not be earlier than the
first day of your 1990 plan year.
d. Contribution/allocation formula may not be earlier than the
first day of your 1989 plan year.
e. Accrual requirements may not be earlier than the first day
of your 1989 plan year.
f. Employment condition may not be earlier than the first day
of your 1991 plan year.
g. Elimination of Net Profits may not be earlier than December
31, 1985.
h. Vesting schedule may not be later than the first day of your
1989 plan year.
i. Allocation of Earnings may not be earlier than the first day
of the 1990 plan year.
Execution Page
The Employer must complete the date on which it executes the adoption agreement
and must execute the signature for the Employer. The execution page provides two
lines above the signature line to print or type the name of the Employer and the
Employer's EIN. If the Employer is a sole proprietorship, the
<PAGE>
individual sole proprietor should execute as Employer. If the Employer is a
corporation or a partnership, an officer or a partner, as applicable, should
execute the adoption agreement on behalf of the Employer.
Trustee.
If you selected option (a) of Section 1.02, then the employer will be the
Trustee. An individual must sign as trustee for the employer. INVESCO Trust
Company will then act as custodian.
If you choose to have INVESCO Trust Company act as "Trustee" then option (b) of
Section 1.02 must be chosen. INVESCO does charge an annual fee for this service.
INVESCO Trust company will only serve as a non-discretionary trustee, this means
that there is a person who is the "Named Fiduciary." The Named Fiduciary gives
direction to a non-discretionary trustee, and the non- discretionary trustee
accepts all directions from the Named Fiduciary. The Named Fiduciary is either
the President of the Corporation, the managing partner of the partnership or the
self-employed individual of a sole-proprietorship. The Named Fiduciary is
responsible for selecting plan investment.
The execution page also includes a signature line for the Custodian, if any.
Leave the Custodian lines blank if INVESCO Trust Company will act as custodian.
Plan number. This paragraph designates the number the Employer assigns to the
plan for reporting (Form 5500) purposes. If this is the first plan the Employer
ever maintained, the number must be 001. The Employer's plan number does not
necessarily correspond to the 3-digit adoption agreement number specified at the
top of the first page of the adoption agreement. Consult your Counsel if unsure
what 3-digit plan number to use.
Instructions for the Participation Agreement
This adoption agreement includes a Participation Agreement under which a related
group member of the signatory Employer to the execution page may participate in
the same plan with that Employer. Each related group member wishing to become a
participating Employer should execute a separate Participation Agreement. See
Section 1.30 of the Plan for the definition of related Employers.
Thus, it is possible to exclude the employees of related group members not
participating in the plan. If an Employer is a member of a related group, it
should consider whether the inclusion of other related group members' employees
is necessary to satisfy the coverage requirements of Code ss.410(b) or the
minimum participation requirement of Code ss.401(a)(26). If the Employer
determines inclusion of the employees of a related group member is necessary to
maintain qualification of the plan, the Employer may take one of two approaches:
(1) have the related group member
<PAGE>
execute a Participation Agreement; or (2) elect in Adoption Agreement Section
1.07 to include the employees of that related group member. Under approach (1),
the participation of the related group member will result in the automatic
inclusion of the employees of that related group member, without having to
specify their inclusion in Adoption Agreement Section 1.07. In addition, the
related group member, under approach (1), has the authority to contribute tot he
plan and, in the event another participating related group member makes a
contribution on behalf of that related group member's employees, the
Participation Agreement will ensure the deductibility of that contribution
(assuming the contribution does not exceed the deduction limits of Code ss.404).
The addendum instructions to the appropriate adoption agreement explain the
effect on the allocation of Employer contributions when related group members
maintain a single nonstandardized plan. Under approach (2), the plan will retain
its qualified status, but contributions the Employer makes on behalf of a
nonparticipating related group member's employees may not be deductible (even if
otherwise within the limitations of Code ss.404), resulting in an excise tax to
the contributing Employer.
Unrelated Employers. The Master Plan does not allow the participation in a
single plan of unrelated Employers (i.e., Employers that do not satisfy the
related group definition in Section 1.30 of the plan).
legal\adop-agr\nspspaa.001
Adoption Agreement #002
Letter Serial No. D346279a
Nonstandardized Money Purchase Pension Plan
Nonstandardized Money Purchase Pension Plan Features - Maximum employer
contributions - Ability to exclude classifications of employees - May enforce
last-day requirement for employer contribution - Allows integrated contribution
formula
Provided by:
The Financial Funds
Managed & Distributed by
INVESCO Funds Group, Inc.
Custodian:
INVESCO Trust Company
A Subsidiary of INVESCO MIM PLC
<PAGE>
Your Adoption Agreement and Basic Plan Document together constitute the rules
and parameters under which your retirement program will operate. Each section of
the Adoption Agreement requires the employer to make a selection. Whenever
possible (balancing complexity and space constraints) we have provided
instructions to the left of key selections. These instructions are intended to
assist you, the employer, in choosing the optional provisions for your
retirement program. They are not intended to substitute or replace competent
advice from your legal counsel or accountant. If further clarification is
necessary, contact your advisors or INVESCO Trust Company. We recommend that you
obtain the advice of your legal or tax advisor before you sign this Adoption
Agreement.
<PAGE>
ADOPTION AGREEMENT #002
NONSTANDARDIZED MONEY PURCHASE PLAN
The undersigned, --------------------------------------- ("Employer"), by
executing this Adoption Agreement, elects to become a participating Employer in
the INVESCO Trust company Defined Contribution Master Plan (basic plan document
#01) by adopting the accompanying Plan and Trust in full as if the Employer were
a signatory to that Agreement. The employer makes the following elections
granted under the provisions of the Master Plan.
ARTICLE I
DEFINITIONS
1.02 TRUSTEE. The Trustee executing this Adoption Agreement is:
(Choose (a) or (b))
(a) A discretionary Trustee, See Section 10.03[A] of the Plan.
(b) A nondiscretionary Trustee. See Section 10.03[B] of the
Plan. [Note: The Employer may not elect Option (b) if a Custodian
executes the Adoption Agreement.]
1.03 PLAN. The name of the Plan as adopted by the Employer is
- ---------------------------------------------------------------.
1.07 EMPLOYEE. The following Employees are not eligible to
participate in the Plan: (Choose (a) or at least one of (b)
through (g))
(a) No exclusions.
(b) Collective bargaining employees (as defined in Section 1.07
of the Plan). [Note: If the Employer excludes union employees
from the Plan, the Employer must be able to provide evidence that
retirement benefits were the subject of good faith bargaining.]
(c) Nonresident aliens who do not receive any earned income (as defined in
Code ss.911(d)(2)) from the Employer which constitutes United States source
income (as defined in Code ss.911(d)(2)) from the Employer which constitutes
United States source income (as defined in Code ss.861(a)(3)).
(d) Commission Salesmen.
(e) Any Employee compensated on a salaried basis.
(f) Any Employee compensated on an hourly basis.
(g) (Specify)
Leased Employees. Any Leased Employee treated as an Employee
under Section 1.31 of the Plan, is: (Choose (h) or (i))
<PAGE>
(h) Not eligible to participate in the Plan.
(i) Eligible to participate in the Plan, unless excluded by reason of an
exclusion classification elected under this Adoption Agreement Section 1.07.
Related Employers. If any member of the Employer's related group (as defined in
Section 1.30 of the Plan) executes a Participation Agreement to this Adoption
Agreement, such member's Employees are eligible to participate in this Plan,
unless excluded by reason of an exclusion classification elected under this
Adoption Agreement Section 1.07. In addition: (Choose (j) or (k))
(j) No other related group member's Employees are eligible to
participate in the Plan.
(k) The following nonparticipating related group member's
Employees are eligible to participate in the Plan unless excluded
by reason of an exclusion classification elected under this
Adoption Agreement Section 1.07: --------------------------------
1.12 COMPENSATION
Treatment of elective contributions. (Choose (a) or (b))
(a) "Compensation" includes elective contributions made by the
Employer on the Employee's behalf.
(b) "Compensation" does not include elective contributions.
Modifications to Compensation definition. (Choose (c) or at least
one of (d) through (j))
(c) No modifications other than as elected under Options (a) or
(b).
(d) The plan excludes Compensation in excess of $-------------.
(e) In lieu of the definition in Section 1.12 of the Plan, Compensation
means any earnings reportable as W-2 wages for Federal income tax withholding
purposes, subject to any other election under this Adoption Agreement Section
1.12.
(f) The Plan excludes bonuses.
(g) The Plan excludes overtime.
(h) The Plan excludes Commissions.
(i) The Plan excludes Compensation from a related employer (as defined in
Section 1.30 of the Plan) that has not executed a Participation Agreement in
this Plan unless, pursuant to Adoption Agreement section 1.07, the Employees of
that related employer are eligible to participate in this Plan.
<PAGE>
(j) (Specify) -----------------------------------------------.
If, for any Plan Year, the Plan uses permitted disparity in the contribution or
allocation formula elected under Article III, any election of Options (f), (g),
(h) or (j) is ineffective for such Plan Year with respect to any Nonhighly
Compensated Employee.
1.17 PLAN YEAR/LIMITATION YEAR.
Plan Year. Plan Year means: (Choose (a) or (b))
(a) The 12 consecutive month period ending every -------------.
(b) (Specify) ------------------------------------------------.
Limitation Year. The Limitation Year is: (Choose (c) or (d))
(c) The Plan Year.
(d) The 12 consecutive month period ending every -------------.
1.18 EFFECTIVE DATE.
New Plan. The "Effective Date" of the Plan is -----------------.
Restated Plan. The restated Effective Date is -----------------.
This Plan is a substitution and amendment of an existing retirement plan(s)
originally established ----------------.
(Note: See the Effective Date Addendum.)
1.27 HOUR OF SERVICE. The crediting method for Hours of Service
is: (Choose (a) or (b))
(a) The actual method.
(b) The --------------------------- equivalency method, except:
(1) No exceptions.
(2) The actual method applies for purposes of: (Choose at
least one)
(i) Participation under Article II.
(ii) Vesting under Article V.
(iii) Accrual of benefits under Section 3.06.
[Note: On the blank line, insert "daily," "weekly," "semi-monthly
payroll periods" or "monthly."]
1.29 SERVICE FOR PREDECESSOR EMPLOYER. In addition to the
predecessor service the Plan must credit by reason of Section
<PAGE>
1.29 of the Plan, the Plan credits Service with the following
predecessor employer(s): -------------------------------------
- --------------------------------------------------------------.
Service with the designated predecessor employer(s) applies:
(Choose at least one of (a) or (b); (c) is available only in
addition to (a) or (b))
(a) For purposes of participation under Article II.
(b) For purposes of vesting under Article V.
(c) Except the following Service: ---------------------------.
[Note: If the Plan does not credit any predecessor service under
this provision, insert "N/A" in the first blank line. The
Employer may attach a schedule to this Adoption Agreement, in the
same format as this Section 1.29, designating additional
predecessor employers and the applicable service crediting
elections.]
1.31 LEASED EMPLOYEES. If a Leased Employee is a Participant in
the Plan and also participates in a plan maintained by the
leasing organization: (Choose (a) or (b))
(a) The Advisory Committee will determine the Leased Employee's allocation
of Employer contributions under Article III without taking into account the
Leased Employee's allocation, if any, under the leasing organization's plan.
(b) The Advisory committee will reduce a Leased Employee's
allocation of Employer contributions under this Plan by the
Leased Employee's allocation under the leasing organization's
plan, but only to the extent that allocation is attributable to
the Leased Employee's service provided to the Employer. The
leasing organization's plan:
(1) Must be a money purchase plan which would satisfy the
definition under Section 1.31 of a safe harbor plan, irrespective
of whether the safe harbor exception applies.
(2) Must satisfy the features and, if a defined benefit plan,
the method of reduction described in an addendum to this
Adoption Agreement, numbered 1.31.
ARTICLE II
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY.
Eligibility conditions. To become a Participant in the Plan, an Employee must
satisfy the following eligibility conditions:
(Choose (a) or (b) or both)
<PAGE>
(a) Attainment of age ------------------- (specify age, not
exceeding 21).
(b) Service requirement. (Choose one of (1) through (4))
(1) One Year of Service.
(2) Two Years of Service, without an intervening Break in
Service. See Section 2.03(A) of the Plan.
(3) ---------------- months (not exceeding 24) following
the Employee's Employment Commencement Date.
(4) One Hour of Service.
Plan Entry Date. "Plan Entry Date" means the Effective Date and:
(Choose (c), (d) or (e))
(c) Semi-annual Entry Dates. The first day of the Plan Year and
the first day of the seventh month of the Plan Year.
(d) The first day of the Plan Year.
(e) (Specify entry dates) ---------------------------------.
Time of Participation. An Employee will become a Participant,
unless excluded under Adoption Agreement Section 1.07, on the
Plan Entry Date (if employed on that date): (Choose (f), (g) or
(h))
(f) immediately following
(g) immediately preceding
(h) nearest --------------------------------------------------
the date the Employee completes the eligibility conditions
described in Options (a) and (b) of this Adoption Agreement
Section 2.01. [Note: The Employer must coordinate the selection
of (f), (g) or (h) with the "Plan Entry Date" selection in (c),
(d) or (e). Unless otherwise excluded under Section 1.07, the
Employee must become a Participant by the earlier of: 91) the
first day of the Plan Year beginning after the date the Employee
completes the age and service requirements of Code ss.410(a); or
(2) 6 months after the date the Employee completes those
requirements.]
Dual eligibility. The eligibility conditions of this Section 2.01
apply to: (Choose (i) or (j))
(i) All Employees of the Employer, except: (Choose (1) or (2))
(1) No exceptions.
(2) Employees who are Participants in the Plan as of the
<PAGE>
Effective Date.
(j) Solely to an Employee employed by the Employer after
- -----------------------. If the Employee was employed by the
Employer on or before the specified date, the Employee will
become a Participant: (Choose (1), (2) or (3))
(1) On the latest of the Effective Date, his Employment
Commencement Date or the date he attains age -----------
(not to exceed 21).
(2) Under the eligibility conditions in effect under the
Plan prior to the restated Effective Date. [For restated
plans only]
(3) (Specify) ------------------------------------------.
2.02 YEAR OF SERVICE - PARTICIPATION.
Hours of Service. An Employee must complete: (Choose (a) or (b))
(a) 1,000 Hours of Service
(b) ----------- Hours of Service during an eligibility
computation period to receive credit for a Year of Service.
[Note: The Hours of Service requirement may not exceed 1,000.]
Eligibility computation period. After the initial eligibility
computation period described in Section 2.02 of the Plan, the
Plan measures the eligibility computation period as: (Choose (c)
or (d))
(c) The 12 consecutive month period beginning with each anniversary of an
Employee's Employment Commencement Date.
(d) The Plan Year, beginning with the Plan Year which includes the first
anniversary of the Employee's Employment Commencement Date.
2.03 BREAK IN SERVICE - PARTICIPATION. The Break in Service rule
described in Section 2.03(B) of the plan: (Choose (a) or (b))
(a) Does not apply to the Employer's Plan.
(b) Applies to the Employer's Plan.
2.06 ELECTION NOT TO PARTICIPATE. The Plan: (Choose (a) or (b))
(a) Does not permit an eligible Employee or a Participant to
elect not to participate.
(b) Does permit an eligible Employee or a Participant to elect
not to participate in accordance with Section 2.06 and with the
following rules: (Complete (1), (2) (3) and (4))
<PAGE>
(1) An election is effective for Plan Year if filed no
later than ----------------.
(2) An election not to participate must be effective for at
least ------------------- Plan Year(s).
(3) Following a re-election to participate, the Employee or
Participant:
(i) May not again elect not to participate for any
subsequent Plan Year.
(ii) May again elect not to participate, but not earlier
than the ----------- Plan Year following the Plan Year in
which the re-election first was effective.
(4) (Specify) ----------------------------------------- [Insert
"N/A" if no other rules apply].
ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
3.01 AMOUNT. The amount of the Employer's annual contribution to
the Trust will equal: (Choose (a), (b), (c), (d) or (e); (f) is
mandatory if the Employer elects (b) or (c), or Adoption
Agreement Section 3.04(b)(2))
(a) Nonintegrated Contribution Formula. -----------% of each
Participant's Compensation for the Plan Year.
(b) Integrated Contribution Formula. (Complete both percentages)
- ---------% of each Participant's Compensation for the Plan Year
in excess of the Integration Level. [Note: The second percentage
may not exceed the lesser of the first percentage or the
applicable percentage described in the Maximum Disparity Table.]
(c) Step-rate Integrated Contribution Formula. (Complete both
percentages) -------------% of each Participant's Compensation
for the Plan Year which does not exceed the Integration Level,
plus --------------% of each Participant's Compensation for the
Plan Year in excess of the Integration Level. [Note: The
difference between the second percentage and the first percentage
may not exceed the lesser of the first percentage or the
applicable percentage described in the Maximum Disparity Table.]
(d) Flat Contribution Formula. (Choose (1), (2) or (3); (4) is
optional only in addition to (2) or (3))
(1) $-------------, subject to the limitations of Part 2 of
Article III of the Plan.
(2) For each Participant, $------------- for each
------------------------------------------.
<PAGE>
(3) For each Participant, ---------% of Compensation for
each -----------------------------------------------------.
(4) The contribution on behalf of any Participant: (Choose
(i) or (iii)
(i) May not exceed -----------------------------.
(ii) May not be less than -----------------------.
(e) Frozen Plan Formula. This Plan is a frozen Plan effective
- ----------------. The Employer will not contribute to the Plan
with respect to any period following that stated date.
(f) Integration Level. The Integration Level under the Plan is:
(Choose (1) or (2))
(1) ----------% (not exceeding 100%) of the taxable wage
base, as determined under Section 230 of the Social Security
Act in effect on the first day of the Plan Year. (Choose any
combination of (i) and (ii) or choose (iii))
(i) Rounded to ----------- (but not exceeding the
taxable wage base).
(ii) But not greater than $------------------.
(iii)Without any further adjustment or limitation.
(2) $-------------- [Note: Not exceeding the taxable wage
base for the Plan Year in which this Adoption Agreement
first is effective.
Maximum Disparity Table. For purposes of Options (b) and (c) and
Adoption Agreement Section 3.04(b)(2), the applicable percentage
is:
Integration Level (as Applicable
percentage of taxable wage base) Percentage
100% 5.7%
More than 80% but less than 100% 5.4%
More than 20% (but not less than
$10,001) and not more than 80% 4.3%
20% (or $10,000, if greater) or less 5.7%
Application of contribution formula. The Employer will determine its
contribution under Options (a), (b), (c) or (d) by taking into account only the
Participants who satisfy the conditions under Section 3.06 for an allocation of
Employer contributions and only the Participant's Compensation taken into
account under
<PAGE>
Section 3.06. The Employer contribution on behalf of a Participant may not
exceed the Participant's annual additions limitation described in Part 2 of
Article III, even if the contribution formula otherwise would require a larger
contribution. The Employer will reduce its contribution for a Plan Year if an
allocation offset elected by the Employer under Section 3.04 requires reduction
of that contribution.
Coordination with defined benefit plan. If the Employer maintains a defined
benefit plan under which at least one Participant in this Plan participates, the
Employer will determine its contribution under Options (a), (b), (c) or (d) by
reducing the total contribution, if necessary, to equal the maximum deductible
amount under Code ss.404(a)(7). If the Employer must reduce its contribution,
the Employer determines its contribution with respect to each Participant by
adjusting each percentage under Options (a), (b), (c) or (d) by the same ratio
as the reduced total Employer contribution for the Plan Year bears to the total
Employer contribution determined without application of Code ss.404(a)(7). The
Employer may modify this paragraph by attaching an addendum to this Adoption
Agreement, numbered 3.01, setting forth the modified provision.
Related Employers. Unless obligated by the joint and several liability
provisions of the Code or of ERISA, a related group member, as defined in
Section 1.30 of the Plan, may not contribute to this Plan unless it executes a
Participation Agreement, even if its Employees are Participants in the Plan. The
signatory Employer and any Participating Employer(s) will satisfy the annual
contribution under this Section 3.01 as agreed upon by those Employers. A
Participating Employer may attach a schedule to this Adoption Agreement, in the
same format as this Section 3.01 and Section 3.04, designating separate
contribution and allocation formulas. If a Participating Employer attaches a
separate contribution/allocation schedule, the contributions, and attributable
Participant forfeitures, made by that Participating Employer are allocable only
to the Employees of that Participating Employer. If a Participant receives
Compensation from more than one contributing Employer and that Participant is
subject to two or more contribution/allocation formulas, the Advisory Committee
will apply the contribution/allocation formulas, the Advisory Committee will
apply the contribution/allocation formulas by prorating among the separate
formulas the Participant's Compensation and any integration level applicable to
the Participant.
3.04 CONTRIBUTION ALLOCATION
Method of Allocation. (Choose (a) or (b); (c) is optional to (a)
or (b))
(a) Incorporation of Contribution Formula. Subject to any
restoration allocation required under Section 5.04, the Advisory
Committee will allocate and credit each annual Employer
<PAGE>
contribution to the account of each Participant who satisfies the
conditions of Section 3.06, in accordance with the contribution
formula adopted by the Employer under Adoption Agreement Section
3.01. [Note: The Employer must elect this Option (a) if it elects
Adoption Agreement Section 3.01(b), (c), (d)(2) or (d)(3). The
Employer may not elect this Option (a) with Adoption Agreement
Section 3.01(d)(1).]
(b) Allocation Formula Different From Contribution Formula. (Choose (1) or (2))
[Note: The Employer must elect this Option (b) if it elected Adoption Agreement
Section 3.01(d)(1). The Employer may not elect this Option (b) if it elected
Adoption Agreement Section 3.01(b), (c), (d)(2) or (d)(3).
(1) Nonintegrated Allocation Formula. The Advisory Committee
will allocate the annual Employer contributions in the same ratio that
each Participant's Compensation for the Plan Year bears to the
total Compensation of all Participants for the Plan Year.
(2) Two-Tiered Integrated Allocation Formula - Maximum
Disparity. First, the Advisory Committee will allocate the annual
Employer contributions in the same ratio that each Participant's
Compensation plus Excess Compensation for the Plan Year bears to
the total Compensation plus Excess Compensation of all Participants
for the Plan Year. The allocation under this paragraph, as a
percentage of each Participant's Compensation plus Excess Compensation,
must not exceed the applicable percentage (5.6% or 4.3%) listed
under the Maximum Disparity Table in Adoption Agreement Section 3.01.
A Participant's "Excess Compensation" is his Compensation for the Plan
Year in excess of the Integration Level elected under Adoption
Agreement Section 3.01(f).
The Advisory Committee then will allocate any remaining Employer
contributions in the same ratio that each Participant's Compensation
for the Plan Year bears to the total Compensation of all Participants
for the Plan Year.
(c) Allocation offset. The Advisory Committee will reduce a
Participant's allocation otherwise made under this Section 3.04
by the Participant's allocation under the following qualified
plan(s) maintained by the Employer: --------------------------
- --------------------------------------------------------------.
(1) By treating the term "Employer contribution" as including all
amounts paid or accrued by the Employer during the Plan Year to the
qualified plan(s) referenced under this Option (c). If a Participant
under this Plan also participates in that other plan, the Advisory
Committee will treat the amount the Employer contributes for or during
a Plan Year on behalf of a Particular Participant under such other plan
as an amount allocated under this Plan to that Participant's Account
for that Plan Year. The Advisory
<PAGE>
Committee will make the computation of allocation required under the
immediately preceding sentence before making any allocation required by
this Section 3.04.
(2) In accordance with the formula provided in an addendum
to this Adoption Agreement, numbered 3.04(c).
Top Heavy Minimum Allocation - Method of Compliance. If a
Participant's allocation under this Section 3.04 is less than the
top heavy minimum allocation to which he is entitled under
Section 3.04(B): (Choose (d) or (e))
(d) the Employer will make any necessary additional contribution
to the Participant's Account, as described in Section
3.04(B)(7)(a) of the Plan.
(e) The Employer will satisfy the top heavy minimum allocation under the
following plan(s) it maintains: ----------------------. However, the Employer
will make any necessary additional contribution to satisfy the top heavy minimum
allocation for an Employee covered only under this Plan and not under the other
plan(s) designated in this Option (e). See Section 3.04(B)(7)(b) of the Plan.
If the Employer maintains another plan, the Employer may provide in an addendum
to this Adoption Agreement, numbered Section 3.04, any modifications to the Plan
necessary to satisfy the top heavy requirements under Code ss.416.
3.05 FORFEITURE ALLOCATION. Subject to any restoration allocation
required under Sections 5.04 or 9.14, the Advisory Committee will
allocate a Participant forfeiture: (Choose (a) or (b); (c) is
optional in addition to (a) or (b))
(a) Reduction of Employer contribution. In accordance with
Section 3.04, to reduce the Employer contribution for the Plan
Year: (Choose (1) or (2))
(1) in which the forfeiture occurs.
(2) immediately following the plan Year in which the
forfeiture occurs.
(b) Increased allocation. In addition to the Employer
contribution for the Plan Year in which the forfeiture occurs.
The Advisory Committee will allocate the Participant forfeitures
for a Plan Year to the Account of each Participant who satisfies
the conditions of Section 3.06: (Choose (1) or (2))
(1) in the same ratio that such Participant's Compensation for the
Plan Year bears to the total Compensation of all Participants for the
Plan Year.
(2) as an Employer contribution for the Plan Year, in
<PAGE>
accordance with Option (b) of Adoption Agreement Section 3.04, as if
the Participant forfeiture were an additional Employer contribution for
that Plan Year.
(c) First to reduce the Plan's ordinary and necessary administrative
expenses for the Plan Year, and then will allocate any remaining
forfeitures in the manner described in Option (a) or in Option (b),
whichever applies.
3.06 ACCRUAL OF BENEFIT.
Compensation Taken Into Account. For the Plan Year in which the
Employee first becomes a Participant, the Advisory Committee will
determine the contribution/allocation under Adoption Agreement
Sections 3.01 and 3.04 by taking into account: (Choose (a) or
(b))
(a) The Employee's Compensation for the entire Plan Year.
(b) The Employee's Compensation for the portion of the Plan Year
in which the Employee actually is a Participant in the Plan.
Accrual Requirements. Subject to the suspension of accrual
requirements of Section 3.06(E) of the Plan, to receive an
allocation of Employer contributions and Participant forfeitures,
if any, for the Plan Year, a Participant must satisfy the
conditions described in the following elections: (Choose (c), or
at least one of (d) through (f)
(c) Safe harbor rule. If the Participant is employed by the Employer on the
last day of the Plan Year, the Participant must complete at least one Hour of
Service for that Plan Year. If the Participant is not employed by the Employer
on the last day of the Plan Year, the Participant must complete at least 501
Hours of Service during the Plan Year.
(d) Hours of Service condition. The Participant must complete
the following minimum number of Hours of Service for the Plan
Year: (Choose at least one of (1) through (4))
(1) 1,000 Hours of Service.
(2) (Specify, but the number of Hours of Service may not
exceed 1,000) -------------------------------------.
(3) No Hour of Service requirement if the Participant
terminates employment during the Plan Year on account of:
(Choose at least one of (i) through iii))
(i) Death.
(ii) Disability.
(iii) Attainment of Normal Retirement Age in the current
<PAGE>
Plan Year or in a prior Plan Year.
(4) ----------------- Hours of Service (not exceeding 1,000) if the
Participant terminates employment with the Employer during the Plan
Year, subject to any election in Option (3).
(e) Employment condition. The Participant must be employed by the Employer on
the last day of the Plan Year, irrespective of whether he satisfies any Hours of
Service condition under Option (c), unless his employment terminates because of:
(Choose (1) or at least one of (2) through (4))
(1) No exceptions.
(2) Death.
(3) Disability.
(4) Attainment of Normal Retiement Age in the current Plan
Year or in a prior Plan Year.
(f) (Specify other conditions, if applicable):
-----------------------------------------------------------.
Suspension of Accrual Requirements. The suspension of accrual
requirements of Section 3.06(E) of the Plan: (Choose (g), (h) or
(i))
(g) Applies to the Employer's Plan.
(h) Does not apply to the Employer's Plan.
(i) Applies in modified form to the Employer's Plan, as
described in an addendum to this Adoption Agreement, numbered
Section 3.06(E).
3.15 MORE THAN ONE PLAN LIMITATION. If the provisions of Section
3.15 apply, the Excess Amount attributed to this Plan equals:
(Choose (a), (b) or (c))
(a) The product of:
(i) the total Excess Amount allocated as of such date (including
any amount which the Advisory Committee would have allocated
but for the limitations of Code ss.415, times
(ii) the ratio of (1) the amount allocated to the Participant as of
such date under this Plan divided by (2) the total amount
allocated as of such date under all qualified defined
contribution plans (determined without regard to the
limitations of Code ss.415).
<PAGE>
(b) The total Excess Amount.
(c) None of the Excess Amount.
3.18 DEFINED BENEFIT PLAN LIMITATION.
Application of limitation. The limitation under Section 3.18 of
the Plan: (Choose (a) or (b))
(a) Does not apply to the Employer's Plan because the Employer does not
maintain and never has maintained a defined benefit plan covering any
Participant in this Plan.
(b) Applies to the Employer's Plan. To the extent necessary to
satisfy the limitation under Section 3.18, the Employer will
reduce: (Choose (1) or (2))
(1) The Participant's projected annual benefit under the defined
benefit plan under which the Participant participates.
(2) Its contribution or allocation on behalf of the Participant
to the defined contribution plan under which the Participant
participates and then, if necessary, the Participant's projected
annual benefit under the defined benefit plan under which the
Participant participates.
[Note: If the Employer selects (a), the remaining options in this
Section 3.18 do not apply to the Employer's Plan.]
Coordination with top heavy minimum allocation. The Advisory Committee will
apply the top heavy minimum allocation provisions of Section 3.04(B) of the Plan
with the following modifications:
(Choose (c) or at least one of (d) and (e))
(c) No modifications.
(d) For Non-Key Employees participating only in this Plan, the top heavy
minimum allocation is the minimum allocation described in Section 3.04(B)
determined by substituting ---------% (not less than 4%) for "3%", except:
(Choose (i) or (ii))
(i) No exceptions.
(ii) Plan Years in which the top heavy ratio exceeds 90%.
(e) For Non-Key Employees also participating in the defined
benefit plan, the top heavy minimum is: (Choose (1) or (2))
(1) 5% of Compensation (as determined under Section 3.04(B)
of the Plan) irrespective of the contribution rate of any
Key Employee, except: (Choose (i) or (ii))
(i) No exceptions.
<PAGE>
(ii) Substituting "7 1/2%" for "5%" if the top heavy ratio
does not exceed 90%.
(2) 0%. [Note: The employer may not select this Option (2)
unless the defined benefit plan satisfies the top heavy
minimum benefit requirements of Code ss.416 for these Non-Key
Employees.]
Actuarial Assumptions for Top Heavy Calculation. To determine the
top heavy ratio, the Advisory Committee will use the following
interest rate and mortality assumptions to value accrued benefits
under a defined benefit plan: ----------------------------------
- ----------------------------------------------------------------.
If the elections under this Section 3.18 are not appropriate to satisfy the
limitations of Section 3.18, or the top heavy requirements under Code ss.416,
the Employer must provide the appropriate provisions in an addendum to this
Adoption Agreement.
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING
5.01 NORMAL RETIREMENT. Normal Retirement Age under the Plan is:
(Choose (a) or (b))
(a) -------------------- [State age, but may not exceed age 65.]
(b) The later of the date the Participant attains ----------
years of age or the --------- anniversary of the first day of the
Plan Year in which the Participant commenced participation in the
Plan. [The age selected may not exceed age 65 and the anniversary
selected may not exceed the 5th.]
5.02 PARTICIPANT DEATH OR DISABILITY. The 100% vesting rule under
Section 5.02 of the Plan: (Choose (a) or choose one or both of
(b) and (c))
(a) Does not apply.
(b) Applies to death.
(c) Applies to disability.
5.03 VESTING SCHEDULE. The Employer elects the following vesting
schedule: (Choose (a) or (b); (c) and (d) are available only in
addition to (b))
(a) Immediate vesting. 100% Nonforfeitable at all times. [Note:
The Employer must elect Option (a) if the eligibility conditions
conditions under Adoption Agreement Section 2.01(b) require 2
years of service or more than 12 months of employment.]
(b) Graduated Vesting Schedules.
<PAGE>
Top Heavy Schedule Non Top Heavy Schedule
(Mandatory) (Optional)
Years of Nonforfeitable Years of Nonforfeitable
Service Percentage Service Percentage
Less than 1 _______ Less than 1 _______
1 _______ 1 _______
2 _______ 2 _______
3 _______ 3 _______
4 _______ 4 _______
5 _______ 5 _______
6 or more _______ 6 _______
7 or more _______
(c) Minimum vesting. A Participant's Nonforfeitable Accrued Benefit will
never be less than the lesser of $---------- or his entire Accrued Benefit, even
if the application of the graduated vesting schedule under Option (b) would
result in a small Nonforfeitable Accrued Benefit.
[Note: Under Option (b), the Employer must complete a Top Heavy
Schedule which satisfies Code ss.416. The Employer, at its option,
may complete a Non Top Heavy Schedule. The Non Top Heavy Schedule
must satisfy Code ss.411(a)(2). Also see Section 7.05 of the Plan.]
(d) The Top Heavy Schedule under Option (b) applies: (Choose (1)
or (2))
(1) Only in a Plan Year for which the Plan is top heavy.
(2) In the Plan Year for which the Plan first is top heavy
and then in all subsequent Plan Years. [Note: The Employer
may not elect Option (d) unless it has completed a Non Top
Heavy Schedule.]
Life Insurance Investments. The Participant's Accrued Benefit
attributable to insurance contracts purchased on his behalf under
Article XI is: (Choose (e) or (f))
(e) Subject to the vesting election under Options (a) or (b).
(f) 100% Nonforfeitable at all times, irrespective of the
vesting election under Option (b).
5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED
PARTICIPANTS/RESTORATION OF FORFEITED ACCRUED BENEFIT. The deemed
cash-out rule described in Section 5.04(C) of the Plan: (Choose (a)
or (b))
(a) Does not apply.
(b) Will apply to determine the timing of forfeitures for 0%
vested Participants.
<PAGE>
5.06 YEAR OF SERVICE - VESTING.
Vesting computation period. The Plan measures a Year of Service on the basis of
the following 12 consecutive month periods:
(Choose (a) or (b))
(a) Plan Years.
(b) Employment Years. An Employment Year is the 12 consecutive month period
measured from the Employee's Employment Commencement Date and each successive 12
consecutive month period measured from each anniversary of that Employment
Commencement Date.
Hours of Service. The minimum number of Hours of Service an
Employee must complete during a vesting computation period to
receive credit for a Year of Service is: (Choose (c) or (d))
(c) 1,000 Hours of Service.
(d) ---------- Hours of Service. [Note: The Hours of Service
requirement may not exceed 1,000.]
5.08 INCLUDED YEARS OF SERVICE - VESTING. The Employer
specifically excludes the following Years of Service: (Choose (a)
or at least one of (b) through (e))
(a) None other than as specified in Section 5.08(a) of the Plan.
(b) Any Year of Service before the Participant attained the age
of -----------------. [Note: The age selected may not exceed age
18.]
(c) Any Year of Service during the period the Employer did not
maintain this Plan or a predecessor plan.
(d) Any Year of Service before a Break in Service if the number of
consecutive Breaks in Service equals or exceeds the greater of 5 or the
aggregate number of the Years of Service prior to the Break. This exception
applies only if the Participant is 0% vested in his Accrued Benefit derived from
Employer contributions at the time he has a Bread in Service. Furthermore, the
aggregate number of Years of Service before a Break in Service do not include
any Years of Service not required to be taken into account under this exception
by reason of any prior Break in Service.
(e) Any Year of Service earned prior to the effective date of ERISA if the
Plan would have disregarded that Year of Service on account of an Employee's
Separation from Service under a Plan provision in effect and adopted before
January 1, 1974.
ARTICLE VI
TIME AND METHOD OF PAYMENTS OF BENEFITS
<PAGE>
Code ss.(d)(6) Protected Benefits. The elections under this Article VI may not
eliminate Code ss.411(d)(6) protected benefits. To the extent the elections
would eliminate a Code ss.411(d)(6) protected benefit, see Section 13.02 of the
Plan. Furthermore, if the elections liberalize the optional forms of benefit
under the Plan, the more liberal options apply on the later of the adoption date
or the Effective Date of this Adoption Agreement.
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT.
Distribution date. A distribution date under the Plan means
- --------------------------------------------------------------.
[Note: The Employer must specify the appropriate date(s). The
specified distribution dates primarily establish annuity starting
dates and the notice and consent periods prescribed by the Plan.
The Plan allows the Trustee an administratively practicable
period of time to make the actual distribution relating to a
particular distribution date.]
Nonforfeitable Accrued Benefit Not Exceeding $3,500. Subject to
the limitations of Section 6.01(A)(1), the distribution date for
distribution of a Nonforfeitable Accrued Benefit not exceeding
$3,500 is: (Choose (a), (b), (c), (d) or (e))
(a) ----------------- of the -------------- Plan Year beginning
after the Participant's Separation from Service.
(b) ----------------- following the Participant's Separation
from Service.
(c) ----------------- of the Plan Year after the Participant
incurs ------------------- Break(s) in Service (as defined in
Article V).
(d) ----------------- following the Participant's attainment
of Normal Retirement Age, but not earlier than ------------- days
following his Separation from Service.
(e) (Specify) ---------------------------------------------.
Nonforfeitable Accrued Benefit Exceeds $3,500. See the elections
under Section 6.03.
Disability. The distribution date, subject to Section 6.01(A)(3),
is: (Choose (f), (g) or (h))
(f) ------------------------------------- after the Participant
terminates employment because of disability.
(g) The same as if the Participant had terminated employment
without disability.
(h) (Specify) ----------------------------------------------.
<PAGE>
Hardship. (Choose (i) or (j)
(i) The Plan does not permit a hardship distribution to a
Participant who has separated from Service.
(j) The Plan permits a hardship distribution to a Participant
who has separated from Service in accordance with the hardship
distribution policy stated in: (Choose (1) or (2))
(1) Section 6.01(A)(4) of the Plan.
(2) The addendum to this Adoption Agreement, numbered Section
6.01, in lieu of the policy stated in Section 6.01(A)(4) of the Plan.
Default on a Loan. If a Participant or Beneficiary defaults on a loan made
pursuant to a loan policy adopted by the Advisory Committee pursuant to Section
9.04, the Plan: (Choose (k), (l) or (m))
(k) Treats the default as a distributable event only if the Participant has
incurred a Separation from Service or has attained Normal Retirement Age. If
either condition applies, the Trustee, at the time of the default or, if later,
at the time either condition first occurs, will reduce the Participant's
nonforfeitable Accrued Benefit by the lesser of the amount in default (plus
accrued interest) or the Plan's security interest in that Nonforfeitable Accrued
Benefit.
(l) Does not treat the default as a distributable event. When an otherwise
distributable event first occurs pursuant to Section 6.01 or Section 6.03 of the
Plan, the Trustee will reduce the Participant's Nonforfeitable Accrued Benefit
by the lesser of the amount in default (plus accrued interest) or the Plan's
security interest in that Nonforfeitable Accrued Benefit.
(m) (Specify) ---------------------------------------------.
[Note: Option (m) may not treat default as a distributable event
earlier than the Participant's Separation from Service unless the
Participant has attained Normal Retirement Age.]
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. The Advisory Committee
will apply Section 6.02 of the Plan with the following
modifications: (Choose (a) or at least one of (b), (c) and (d))
(a) No modifications.
(b) Except as required under Section 6.01 of the Plan, a lump
sum distribution is not available: -------------------------.
(c) An installment distribution: (Choose (1) or at least one of
(2) or (3))
(1) Is not available under the Plan.
<PAGE>
(2) May not exceed the lesser of ---------------- years or
the maximum period permitted under Section 6.02.
(3) (Specify) -------------------------------------------.
(d) The Plan permits the following annuity options: -----------.
[Note: The Employer may specify additional annuity options in an
addendum to this Adoption Agreement, numbered 6.02(d).]
6.03 BENEFIT PAYMENT ELECTIONS.
Participant Elections After Separation from Service. A
Participant who is eligible to make distribution elections under
Section 6.03 of the Plan may elect to commence distribution of
his Nonforfeitable Accrued Benefit: (Choose at least one of (a)
through (c))
(a) As of any distribution date, but not earlier than
- ---------------- of the -------------- Plan Year beginning after
the Participant's Separation from Service.
(b) As of the following date(s): (Choose at least one of Options
(1) through (6))
(1) Any distribution date after the close of the Plan Year in
which the Participant attains Normal Retirement Age.
(2) Any distribution date following his Separation from
Service.
(3) Any distribution date in the ----------------- Plan
Year(s) beginning after his Separation from Service.
(4) Any distribution date in the Plan Year after the
Participant incurs ------------------ Break(s) in Service (as defined
in Article V).
(5) Any distribution date following attainment of age -----------
and completion of at least ------------- Years of Service (as defined
in Article V).
(6) (Specify) -----------------------------------------.
(c) (Specify) --------------------------------------------------.
Participant Elections Prior to Separation from Service. Subject
to the restrictions of Article VI, the following distribution
options apply under the Employer's Plan prior to a Participant's
Separation from Service. (Choose (d) or at least one of (e) and
(f)
(d) No distribution options prior to Separation from Service.
(e) Attainment of Normal Retirement Age. Until he retires, the
<PAGE>
Participant has a continuing election to receive all or any portion of his
Nonforfeitable Accrued Benefit after he attains Normal Retirement Age.
(f) (Specify) ------------------------------------. [Note:
Option (f) may not permit in service distributions prior to
attainment of Normal Retirement Age.]
ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT TO PARTICI-
PANTS' ACCOUNTS
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. If a distribution
(other than a distribution from a segregated Account) occurs more
than 90 days after the most recent valuation date, the
distribution will include interest at: (Choose (a), (b) or (c))
(a) -----------------% per annum. [Note: The percentage may
equal 0%.)
(b) The 90 day Treasury bill rate in effect at the beginning of
the current valuation period.
(c) (Specify) ------------------------------------------------.
ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES
10.14 VALUATION OF TRUST. In addition to each Accounting Date,
the Trustee must value the Trust Fund on the following valuation
date(s): (Choose (a) or (b))
(a) No other mandatory valuation dates.
(b) (Specify) ---------------------------------------------.
EFFECTIVE DATE ADDENDUM
(Restated Plans Only)
The Employer must complete this addendum only if the restated Effective Date
specified in Adoption Agreement Section 1.18 is different than the restated
effective date for at least one of the provisions listed in this addendum. In
lieu of the restated Effective Date in Adoption Agreement Section 1.18, the
following special effective dates apply: (Choose whichever elections apply)
(a) Compensation definition. The Compensation definition of
Section 1.12 (other than the $200,000 limitation) is effective
for Plan Years beginning after ----------------------------.
[Note: May not be effective later than the first day of the first
Plan Year beginning after the Employer executes this Adoption
<PAGE>
Agreement to restate the Plan for the Tax Reform Act of 1986, if
applicable.]
(b) Eligibility conditions. the eligibility conditions specified
in Adoption Agreement Section 2.01 are effective for Plan Years
beginning after ------------------------------.
(c) Suspension of Years of Service. The suspension of Years of Service
rule elected under Adoption Agreement Section 2.03 is effective for Plan
Years beginning ---------------------------.
(d) Contribution/allocation formula. The contribution formula
elected under Adoption Agreement Section 3.01 and the method of
allocation elected under Adoption Agreement Section 3.04 is
effective for Plan Years beginning after
- ------------------------.
(e) Reallocation of Forfeitures. The reallocation of forfeitures
under Section 3.05 applies to Plan Years beginning after
- --------------------------------. [Note: The date specified may
not be earlier than December 31, 1985.]
(f) Accrual requirements. The accrual requirements of Section
3.06 are effective for Plan Years beginning after
- --------------------------.
(g) Employment condition. The employment condition of Section
3.06 is effective for Plan Years beginning after
- ---------------------.
(h) Vesting Schedule. The vesting schedule elected under
Adoption Agreement Section 5.03 is effective for Plan Years
beginning after ------------------------------.
(i) (Specify) ------------------------------------------.
For Plan Years prior to the special Effective Date, the terms of the Plan prior
to its restatement under this Adoption Agreement will control for purposes of
the designated provisions. A special Effective Date may not result in the delay
of a Plan provision beyond the permissible Effective Date under any applicable
law requirements.
Execution Page
The Trustee (and Custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian) under the
Master Plan and Trust. The Employer hereby agrees to the provisions of this Plan
and Trust, and in witness of its agreement, the Employer by its duly authorized
officers, has executed this Adoption Agreement, and the Trustee (and Custodian,
if applicable) signified its acceptance on this --------------- day of
- ----------------------, 19-----.
<PAGE>
Name and EIN of Employer: ------------------------------------
Signed: ------------------------------------------------------
Name(s) of Trustee: ------------------------------------------
- --------------------------------------------------------------
Signed: ------------------------------------------------------
- --------------------------------------------------------------
Name of Custodian: -------------------------------------------
Signed: ------------------------------------------------------
[Note: A Trustee is mandatory, but a Custodian is optional. See
Section 10.03 of the Plan.]
Plan Number. The 3-digit plan number the Employer assigns to this
Plan for ERISA reporting purposes (Form 5500 Series) is:
- -----------------------------.
Use of Adoption Agreement. Failure to complete properly the elections in this
Adoption Agreement may result in disqualification of the Employer's Plan. The
3-digit number assigned to this Adoption Agreement (see page 1) is solely for
the Master Plan Sponsor's recordkeeping purposes and does not necessarily
correspond to the plan number the Employer designated in the prior paragraph.
Master Plan Sponsor. The Master Plan Sponsor identified on the first page of the
basic plan document will notify all adopting employees of any amendment of this
Master Plan of any abandonment or discontinuance by the Master Plan Sponsor of
its maintenance of this Master Plan. For inquiries regarding the adoption of the
Master Plan, the Master Plan Sponsor's intended meaning of any plan provisions
or the effect of the opinion letter issued to the Master Plan Sponsor, please
contact the Master Plan Sponsor, please contact the Master Plan Sponsor at the
following address and telephone number: INVESCO Trust Company, 7800 E. Union
Ave., Denver, Colorado (303) 799-0731.
Reliance on Opinion Letter. The Employer may not rely on the Master Plan
Sponsor's opinion letter covering this Adoption Agreement. For reliance on the
Plan's qualification, the Employer must obtain a determination letter from the
applicable IRS Key District Office.
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)
The undersigned Employer, by executing this Participation
<PAGE>
Agreement, elects to become a Participating Employer in the Plan identified in
Section 1.03 of the accompanying Adoption Agreement, as if the Participating
Employer were a signatory to that Agreement. The Participating Employer accepts,
and agrees to be bound by, all of the elections granted under the provisions of
the Adoption Agreement.
1. The Effective Date of the undersigned Employer's
participation in the designated Plan is:
-------------------.
2. The undersigned Employer's adoption of this Plan
constitutes:
(a) The adoption of a new plan by the Participating
Employer.
(b) The adoption of an amendment and restatement of a plan
currently maintained by the Employer, identified as
------------------, and having an original effective date of
--------------------.
Dated this ----------- day of ---------------------, 19---------.
Name of Participating Employer: --------------------------------
Signed: --------------------------------------------------------
Participating Employer's EIN:-----------------------------------
Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.
Name of Signatory Employer: ------------------------------------
Accepted: ------------------------------------------------------
[Date]
Signed: --------------------------------------------------------
Name(s) of Trustee: --------------------------------------------
Accepted: ------------------------------------------------------
[Date]
Signed: --------------------------------------------------------
[note: Each Participating Employer must execute a separate
Participation Agreement. See the Execution Page of the Adoption
Agreement for important Master Plan information.]
<PAGE>
NS MP AA Instructions
Complete the first blank in the paragraph by writing in the business' name in
its entirety.
1.02 Trustee
Option (a) should be chosen when the employer will be the trustee. INVESCO Trust
Company would then act as Custodian. If option (b) is chosen, INVESCO Trust
Company will charge an annual trust fee. Note: See Trustee Comments on page 16
for further explaination of Non-discretionary Trustee.
1.03 Plan
Enter the plan name. Example: ABC Inc. Money Purchase Pension
Plan.
1.07 Employee
If you want the plan to cover all types of employees, select option (a). If you
want to exclude from the plan any group(s) of employees, select any combination
of (b) through (g). When a retirement plan excludes employees in options (d)
through (g) from participation, the plan is subject to a minimum coverage test
to maintain its "tax qualified" status. Your accounting firm should be notified
to perform the test annually.
Leased Employees
You may exclude leased employees from participation (option h). However, the
plan must satisfy the coverage rules of Code Section 410(b) and 401(a)(25),
consult your legal or financial counsel.
Related Employers
You may exclude related employers from participating in the plan (option j).
However, the plan must satisfy the coverage rules of Code Section 410(b) and
401(a)(26), consult your legal or financial counsel.
1.12 Compensation
Treatment of elective contributions - Choose option (a) if you prefer to "add
back" employee elective 401(k), contributions to compensation for purposes of
allocating employer contributions, forfeitures and for non-discrimination
testing.
Modifications to Compensation
Modifications to Compensation - You must choose option (C) or any combination of
(d) through (j). Any exclusion of compensation may result in unallowable
discrimination, your accountant may want to test for any discriminatory effect
of excluding any type of compensation.
<PAGE>
1.17 Plan Year
You must define the "plan year," usually it will follow the business tax year.
Limitation Year - You must define the "limitation year" (12 month period for
testing allocations to each employee's account), for administrative convenience
it should match the plan year.
1.18 Effective Date
New Plan - Enter the first day of your plan year (usually January
1) and the year.
Restated Plan - Effective date - if you are amending for the Tax Reform Act of
1986 enter: January 1, 1987. If you are amending for another reason, enter the
first day of your tax year, example: January 1, 1990. Original established date
- - Enter the original effective date of your plan from your prior Adoption
Agreement.
1.27 Hours of Service
Choose which method you wish to use for counting hours worked by an employee to
accrue benefits. Option (b), the equivalency method, is explained in Section
1.27 of the plan. Option (a) is usually chosen.
1.29 Service for Predecessor Employer
Under this option, you may elect to count service for a predecessor employer
when you are not maintaining the plan of the predecessor employer. (Used
primarily in the event of a merger or acquisition.)
1.31 Leased Employees
The law requires you to state how your plan would treat a leased employee who
could become a participant, even if you don't intend to ever lease employees.
Choose option (a) covering the employee without regard to the leasing company's
plan or option (b) the reduction method. Usually Option (b)(1) is chosen.
2.01 Eligibility
a. An employee must attain this age to become a participant
(cannot exceed age 21).
b. Pick how long (service) an employee must work to become a
participant.
Plan Entry - Choose when employees enter the plan for purposes of
<PAGE>
contributions and benefit accrual. Normally, option (c), semi-
annual entry dates, is chosen.
Time of Participation - Choose which plan entry date (before or after) an
employee who meets the eligibility requirements will enter the plan. Normally,
option (f) is chosen.
Dual Eligibility - This section allows you to include the plan current employees
who have not met the eligibility requirements and apply the eligibility
requirements to newly hired employees.
Restated plans usually chose (i)(2).
2.02 Years of Service
Option (b) should only be chosen if you wish to require less than
1000 hours to be worked by an employee for eligibility. Usually
Option (a) is chosen.
Eligibility Computation Period - Choose whether to measure subsequent
eligibility periods on the employee's anniversary or the plan year. Option (d)
is chosen for administrative convenience.
2.03 Break In Service
This option may impose a complicated re-entry date for employees who have
termination or whose hours were severely cut back. Option (a) is chosen for
administrative convenience.
2.06 Election Not To Participate
this option allows employees and participants to elect out of participation.
However, these employees are considered when performing all non-discrimination
tests. Option (a) is chosen for administrative convenience.
3.01 Contributions and Forfeitures
Amount - The employer must select a definite contribution formula under a money
purchase pension plan. Options (a) and (d) are nonintegrated formulas, options
(b) and (c) are integrated formulas.
Option (d) allows the employer to choose a fixed amount for the contribution
regardless of compensation (options (d)(1) or (d)(2). Alternatively, the
employer may choose a fixed percentage of compensation, based upon units of
time, (option (d)(3)). The employer may choose optoin (d)(4) only in addition to
options (d)(2) or (d)(3). Option (d)(4) allows the employer to establish both a
maximum and/or a minimum contribution.
Options (b) and (c) are two approaches to allowing permitted
disparity in he contribution formula. Option (b) applies the
first percentage to a participant's total compensation. Option (C)
<PAGE>
applies the first percentage only to compensation not exceeding
an integration level.
3.04 Contribution Allocation
There are two approaches for allocating (dividing up) the contribution to
participants. Option (a) mirrors the contribution formula chosen in Section
3.01. Option (a) must be chosen if the employer chose either integrated
contribution formula 3.01(a) or (b) of if the employer chose 3.01(d)(2) or
(d)(3).
Option (b) allows the employer to take a "profit sharing" approach to allocating
the contribution if the employer chose a fixed percentage or amount in Section
3.01. Under option (b) the employer has the choice of pro-rate (nonintegrated)
or a two-tiered integrated formula.
Option (c) is available only in addition to options (a) and (b). Option (c)
reduces a participant's allocation under this plan by an amount accrued under
the employer's other specified plan.
3.05 Forfeiture Allocation
Choose the method of allocating (dividing up) forfeitures of terminated
non-vested participant balances. Option (a) allocates forfeitures to reduce
employer contributions. Option (b) allocates forfeitures to increase employer
allocations.
3.06 Compensation Taken Into Account
If you wish to count a participant's full year's compensation (even if he or she
entered during the year), for contributions choose option (a), if not, choose
Option (b).
Accrual Requirements - Specify the service requirements a participant must
satisfy to receive an allocation. You may specify an hours of service
requirement, waive the service requirement for specific contributions and/or
require the participant to be employed on the last day to receive a
contribution.
Suspension of Accrual Requirements
This section allows you to suspend some or all of the accrual requirements found
in Section 3.06(E) of the plan for participants to receive allocations. This
would apply in plan years when a plan may not satisfy coverage and participation
requirements. For administrative convenience choose option (g).
3.15 More Than One Plan
This section only applies if you (the employer) maintain another defined
contribution plan (e.g.: profit sharing, money purchase, 401(k) or target
benefit) that covers at least one participant in this plan.
<PAGE>
3.18 Defined Benefit Limitation
Check option (a) if you have never maintained a defined benefit plan for any
participants in this plan. If you have or are currently maintaining a defined
benefit under option (b), choose which plan's benefit would be reduced if a
participant's total allocations for a year were to exceed the allowable limit.
5.01 Normal Retirement Age
Choose what age you (the employer) want the participants to be 100% vested in
their benefits, if still employed (normal retirement age).
5.02 Vesting: Death/Disability
You may choose to allow 100% vesting to participants that terminate from service
because of death, option (b) or disability, option (c).
5.03 Vesting Schedule
Choose what vesting schedule(s) you want to apply to employer discretionary
contributions and matching contributions. If you choose option (b), you must at
a minimum complete the top-heavy vesting schedule. Remember, if the eligibility
requirements are more than one year, option (a) must be chosen.
Complete the Top Heavy Schedule based upon the following:
Years of Service
1
2 (not less than 20%)
3 (not less than 40%)
4 (not less than 60%)
5 (not less than 80%)
6 (not less than 100%)
Optional: Complete the Non Top Heavy Schedule based upon the
following:
Years of Service or
1 1 0%
2 2 0
3 (not less than 20%) 3 0
4 (not less than 40%) 4 0
5 (not less than 60%) 5 100
6 (not less than 80%)
7 (not less than 100%)
5.04 Cash-Out Rule
<PAGE>
If option (b) is chosen, the plan treats a 0% vested terminated participant has
having received a distribution, allowing for forfeitures to be reallocated to
active participants.
5.06 Years of Service
Choose what measuring period the plan should use to determine years of service
for vesting, employee's anniversary year or plan year. For ease of
administration choose option (a).
5.08 Prior Years of Service - Vesting
By choosing options (b) through (e) you (the employer) may exclude some prior
years of service for purposes of vesting.
Article 6
The employer must establish a specific distribution policy for the plan. Treas.
Reg. 1.411(d)-4 prohibits the Employer, the advisory committee or any third
party to retain discretion over when or in what form to pay the participant's
benefit (Option Forms of Benefit). Under a restated plan, the elections under
Article VI, to the extent they differ from previous plan provisions regarding
optional forms of benefit, may not eliminate an optional form of benefit with
respect to the account balance accrued as of the date the Employer executes the
restated adoption agreement (or, if later, the effective date of that restated
adoption agreement). An optional form of benefit includes the form of payment
(e.g., lump sum or installments), the timing of payment (e.g., immediately after
separation from service, following a break in service, after attaining normal
retirement age) and the medium of payment (e.g., right to elect distribution in
Employer securities, right to elect distribution in the form of an annuity
contract).
With this in mind, if you are restating an existing plan, pay close attention to
the distribution features under that document and your administrative practice
of distributions. In all cases, try to mirror or liberalize those distribution
features when restating onto this document.
6.01 Distribution Date
A distribution date establishes a predetermined "target" date in a plan year
when the plan will offer distributions. The actual distribution may occur later
than a distribution date as long as the actual distribution is within an
"administratively reasonable period of time" from the distribution date. A
typical distribution date for money purchase plans would be 60 days after the
plan year end.
Nonforfeitable Accrued Benefit Not Exceeding $3500.
When a separated participants vested balance does not exceed
<PAGE>
$3500, the plan allows the employer to separately establish the timing of these
distributions, separate from the distribution dates. When you complete this
section, you need to balance two concerns: 1) will the timing of the
distribution cause the participant to consider it a "severance benefit" and
therefore encourage separation from service and 2) the administrative concerns
of carrying a non-active account in the plan. Usually an employer chooses Option
(a) and writes in "the first distribution date" of the "first" plan year
beginning after the Participant's separation from service.
Disability - The plan allows you (the employer) to establish a different target
payout date for disability distributions in options (f) and (h). Usually an
employer chooses Option (g).
Hardship - This option states whether or not the plan would allow a separated
participant to receive a hardship distribution, prior to receiving a total
distribution of his/her vested account balance.
Default on a Loan - This election does not create a loan policy. You (the
employer) must elect the timing of the plan's foreclosure if a participant's
loan were to be defaulted upon even if you do not intend to offer loans in your
plan.
6.02 Method of Payment
Money purchase pension plans require payouts to be in the form of a commercial
annuity unless properly waived. The employer may in options (b) and (c), if this
is a new plan, limit the alternative method of payment. Caution: an employer
cannot eliminate a prior method of payment by restating the plan onto this
document.
6.03 Participant Elections after Separation from Service
You must choose when an employee who has separated from service, with a vested
benefit greater than $3500, may elect to commence distributions. This election
will be tied directly to the "distribution date" definition earlier.
Participant Elections Prior to Separation from Service
The following distribution elections apply to employer discretionary account
regardless of vested account balances, prior to employment separation. If you
prefer not to allow any distribution options from these accounts prior to
separation, select option (d).
9.10 Value of Benefit
This option allows the employer to add interest to a participant's balance, if a
distribution occurs more than 90 days after the most recent plan valuation. You
do not have to provide an interest addition under this section and may complete
option (a) with 0%.
<PAGE>
10.14 Valuation of Trust
You may use this option to specify mandatory valuation dates, in addition to the
accounting date. Normally, option (a) is chosen.
Instructions for Effective Date Addendum
You must complete the effective date addendum only if the effective dates of any
of the listed items (a) through (j) have an effective date other than your
restated effective date in adoption agreement section 1.18. Since some
provisions in the Tax Reform Act of 1986 were not effective until 1988 or 1989
the few provisions (if any) that have later effective dates must specify when
they are effective.
a. Compensation definition may not be later than the first day
of your 1991 plan year.
b. Eligibility conditions may not be later than the first day
of your 1989 plan year.
c. Suspension of years of service may not be earlier than the
first day of your 1990 plan year.
d. Contribution/allocation formula may not be earlier than the
first day of your 1989 plan year.
e. Reallocation of forfeitures may not be earlier than December
31, 1985.
f. Accrual requirements may not be earlier than the first day
of your 1989 plan year.
g. Employment condition may not be earlier than the first day
of your 1991 plan year.
h. Vesting schedule may not be later than the first day of your
1989 plan year.
i. Allocation of Earnings may not be earlier than the first day
of the 1990 plan year.
Execution Page
The Employer must complete the date on which it executes the adoption agreement
and must execute the signature for the Employer. The execution page provides two
lines above the signature line to print or type the name of the Employer and the
Employer's EIN. If the Employer is a sole proprietorship, the individual sole
proprietor should execute as Employer. If the Employer is a corporation or a
partnership, an officer or a partner, as applicable, should execute the adoption
agreement on behalf of the Employer.
<PAGE>
Trustee
If you selected option (a) of Section 1.02, then the employer will be the
Trustee. An individual must sign as trustee for the employer. INVESCO Trust
Company will then act as custodian.
If you choose to have INVESCO Trust Company act as "Trustee" then option (b) of
Section 1.02 must be chosen. INVESCO does charge an annual fee for this service.
INVESCO Trust Company will only serve as a non-discretionary trustee, this means
that there is a person who is the "Named Fiduciary." The Named Fiduciary gives
direction to a non-discretionary trustee, and the non- discretionary trustee
accepts all directions from the Named Fiduciary. The Named Fiduciary is either
the President of the Corporation, the managing partner of the partnership or the
self-employed individual of a sole-proprietorship. The Named Fiduciary is
responsible for selecting plan investment.
The execution page also includes a signature line for the Custodian, if any.
Leave the Custodian lines blank if INVESCO Trust Company will act as custodian.
Plan number. This paragraph designates the number the Employer assigns to the
plan for reporting (Form 5500) purposes. If this is the first plan the Employer
ever maintained, the number must be 001. The Employer's plan number does not
correspond to the 3- digit adoption agreement number specified at the top of the
first page of the adoption agreement. Consult your Counsel if unsure what
3-digit plan number to use.
Instructions for the Participation Agreement
This adoption agreement includes a Participation Agreement under which a related
group member of the signatory Employer to the execution page may participate in
the same plan with that Employer. Each related group member wishing to become a
participating Employer should execute a separate Participation Agreement. See
Section 1.30 of the Plan for the definition of related Employers.
Thus, it is possible to exclude the employees of related group members not
participating in the plan. If an Employer is a member of a related group, it
should consider whether the inclusion of other related group members' employees
is necessary to satisfy the coverage requirements of Code ss.410(b) or the
minimum participation requirement of Code ss.401(a)(26). If the Employer
determines inclusion of the employees of a related group member is necessary to
maintain qualification of the plan, the Employer may take one of two approaches:
(1) have the related group member execute a Participation Agreement; or (2)
elect in Adoption Agreement Section 1.07 to include the employees of that
related group member. Under approach (1), the participation of the
<PAGE>
related group member will result in the automatic inclusion of the employees of
that related group member, without having to specify their inclusion in Adoption
Agreement Section 1.07. In addition, the related group member, under approach
(1), has the authority to contribute to the plan and, in the event another
participating related group member makes a contribution on behalf of that
related group member's employees, the Participation Agreement will ensure the
deductibility of that contribution (assuming the contribution does not exceed
the deduction limits of Code ss.404). Additional instructions to the appropriate
adoption agreement explain the effect on the allocation of Employer
contributions when related group members maintain a single nonstandardized plan.
Please contact us. Under approach (2), the plan will retain its qualified
status, but contributions the Employer makes on behalf of a nonparticipating
related group member's employees may not be deductible (even if otherwise within
the limitations of Code ss.404), resulting in an excise tax to the contributing
Employer.
Unrelated Employers. The Master Plan does not allow the participation in a
single plan of unrelated Employers (i.e., Employers that do not satisfy the
related group definition in Section 1.30 of the Plan).
legal\adop-agr\nsmpaa.002
Adoption Agreement #003
Letter Serial No. D246280a
Standardized Profit Sharing Plan Adoption Agreement
Features of Standardized Profit Sharing Plan
- - Allows for integration of contributions with Social Security
- - Incorporates top-heavy vesting schedule
- - May be paired with INVESCO Money Purchase Pension Plans
Provided by:
The Financial Funds
Managed & Distributed by
INVESCO Funds Group, Inc.
Custodian:
INVESCO Trust Company
A Subsidiary of INVESCO MIM PLC
<PAGE>
Your Adoption Agreement and Basic Plan Document together constitute the rules
and parameters under which your retirement program will operate. Each section of
the Adoption Agreement requires the employer to make a selection. Whenever
possible (balancing complexity and space constraints) we have provided
instructions to the left of key selections. These instructions are intended to
assist you, the employer, in choosing the optional provisions for your
retirement program. They are not intended to substitute or replace competent
advice from your legal counsel or accountant. If further clarification is
necessary, contact your advisors or INVESCO Trust Company. We recommend that you
obtain the advice of your legal or tax advisor before you sign this Adoption
Agreement.
<PAGE>
ADOPTION AGREEMENT #003
STANDARDIZED PROFIT SHARING PLAN
(PAIRED PROFIT SHARING PLAN)
The undersigned, --------------------------------------------- ("Employer"), by
executing this Adoption Agreement, elects to become a participating Employer in
the INVESCO Trust Company Defined Contribution Master Plan (basic plan document
#01) by adopting the accompanying Plan and Trust in full as if the Employer were
a signatory to that Agreement. The employer makes the following elections
granted under the provisions of the Master Plan.
ARTICLE I
DEFINITIONS
1.02 trustee. The Trustee executing this Adoption Agreement is: (Choose (a)
or (b))
(a) A discretionary Trustee, See Section 10.03[A] of the Plan.
(b) A nondiscretionary Trustee. See Section 10.03[B] of the Plan. [Note:
The Employer may not elect Option (b) if a Custodian executes the Adoption
Agreement.]
1.03 PLAN. The name of the Plan as adopted by the Employer is
- -------------------------------------------------------------.
1.07 EMPLOYEE. The following Employees are not eligible to participate in
the Plan: (Choose (a) or at least one of (b) or (c))
(a) No exclusions.
(b) Collective bargaining employees (as defined in Section 1.07 of the
Plan). [Note: If the Employer excludes union employees from the Plan, the
Employer must be able to provide evidence that retirement benefits were the
subject of good faith bargaining.]
(c) Nonresident aliens who do not receive any earned income (as defined in Code
ss.911(d)(2) from the Employer which constitutes United States source income (as
defined in Code ss.861(a)(3)).
Related Employers/Leased Employees. An Employee of any member of the
Employer's related group (as defined in Section 1.30 of the Plan), and any
Leased Employee treated as an Employee under Section 1.31 of the Plan, is
eligible to participate in the Plan, unless excluded by reason of Options (b) or
(c). [Note: A related group member may not contribute to this Plan unless it
executes a Participation Agreement, even if its Employees are Participants in
the Plan.]
<PAGE>
1.12 COMPENSATION
Treatment of elective contributions. (Choose (a) or (b))
(a) "Compensation" includes elective contributions made by the Employer on
the Employee's behalf.
(b) "Compensation" does not include elective contributions.
Modifications to Compensation definition. (Choose (c) or at least one of
(d) and (e))
(c) No modifications other than as elected under Options (a) or
(b).
(d) The Plan excludes Compensation in excess of $-----------------.
(e) In lieu of the definition in Section 1.12 of the Plan, Compensation means
any earnings reportable as W-2 wages for Federal income tax withholding
purposes, subject to any other election under this Adoption Agreement Section
1.12.
1.17 PLAN YEAR/LIMITATION YEAR.
Plan Year. Plan Year means: (Choose (a) or (b))
(a) The 12 consecutive month period ending every ---------------.
(b) (Specify) --------------------------------------------------.
Limitation Year. The Limitation Year is: (Choose (c) or (d))
(c) The Plan Year.
(d) The 12 consecutive month period ending every ---------------.
1.18 EFFECTIVE DATE.
New Plan. The "Effective Date" of the Plan is ------------------.
Restated Plan. The restated Effective Date is ------------------.
This Plan is a substitution and amendment of an existing
retirement plan(s) originally established ----------------------.
(Note: See the Effective Date Addendum.)
1.27 HOUR OF SERVICE. The crediting method for Hours of Service
is: (Choose (a) or (b))
(a) The actual method.
(b) The ------------------------ equivalency method, except:
(1) No exceptions.
(2) The actual method applies for purposes of: (Choose at
least one)
<PAGE>
(i) Participation under Article II.
(ii) Vesting under Article V.
(iii)Accrual of benefits under Section 3.06.
[Note: On the blank line, insert "daily," "weekly," "semi-monthly payroll
periods" or "monthly."]
1.29 SERVICE FOR PREDECESSOR EMPLOYER. In addition tot he predecessor
service the Plan must credit by reason of Section 1.29 of the Plan, the Plan
credits Service with the following predecessor employer(s):
- -------------------------. Service with the designated predecessor employer(s)
applies: (Choose at least one of (a) or (b))
(a) For purposes of participation under Article II.
(b) For purposes of vesting under Article V.
[Note: If the Plan does not credit any predecessor service under this
provision, insert "N/A" in the first blank line. The Employer may attach a
schedule to this Adoption Agreement, in the same format as this Section 1.29,
designating additional predecessor employers and the applicable service
crediting elections.]
1.31 LEASED EMPLOYEES.
If a Leased Employee participates in a save harbor money purchase plan (as
described in Section 1.31) maintained by the leasing organization, but the
Employer is not eligible for the safe harbor plan exception: (Choose (a) or (b))
(a) The Advisory Committee will determine the Leased Employee's allocation of
Employer contributions under Article III without taking into account the Leased
Employee's allocation under the safe harbor plan.
(b) The Advisory Committee will reduce the Leased Employee's allocation of
Employer contributions under this Plan by the Leased Employee's allocation under
the safe harbor plan, but only to the extent that allocation is attributable to
the Leased Employee's service provided to the Employer. [Note: The Employer may
not elect Option (b) if a Paired Plan or any other plan of the Employer makes a
similar reduction for the same plan of the leasing organization.]
ARTICLE II
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY.
Eligibility conditions. To become a Participant in the Plan, an Employee must
satisfy the following eligibility conditions:
<PAGE>
(Choose (a) or (b) or both)
(a) Attainment of age -------------------- (specify age, not exceeding 21).
(b) Service requirement. (Choose one of (1) through (4))
(1) One Year of Service.
(2) Two Years of Service, without an intervening Break in
Service. See Section 2.03(A) of the Plan.
(3) ------------months (not exceeding 24) following the Employee's
Employment Commencement Date.
(4) One Hour of Service.
Plan Entry Date. "Plan Entry Date" means the Effective Date and: (Choose
(c), (d) or (e))
(c) Semi-annual Entry Dates. The first day of the Plan year and the first
day of the seventh month of the Plan Year.
(d) The first day of the Plan Year.
(e) (Specify entry dates) -------------------------------.
Time of Participation. An Employee will become a Participant, unless
excluded under Adoption Agreement Section 1.07, on the Plan Entry Date (if
employed on that date): (Choose (f), (g) or (h))
(f) immediately following
(g) immediately preceding
(h) nearest the date the Employer completes the eligibility conditions described
in Options (a) and (b) of this Adoption Agreement Section 2.01. [Note: The
Employer must coordinate the selection of (f), (g) or (h) with the "Plan Entry
Date" selection in (c), (d) of (e). Unless otherwise excluded under Section
1.07, the Employee must become a Participant by the earlier of: (1) the first
day of the Plan Year beginning after the date the Employee completes the age and
service requirements of Code ss.410(a); or (2) 6 months after the date the
Employee completes those requirements.]
Dual eligibility. The eligibility conditions of this Section 2.01 apply to:
(Choose (i) or (j))
(I) All Employees of the Employer, except: (Choose (1) or (2))
(1) No exceptions
<PAGE>
(2) Employees who are Participants in the Plan as of the
Effective Date.
(j) Solely to an Employee employed by the Employer after ----------------------.
If the Employee was employed by the specified date, the Employee will become a
Participant: (Choose (1) or (2))
(1) On the latest of the Effective Date, his Employment Commencement Date
or the date he attains age ------------------- (not to exceed 21).
(2) Under the eligibility conditions in effect under the
Plan prior to the restated Effective Date. [For restated
plans only]
2.02 YEAR OF SERVICE - PARTICIPATION.
Hours of Service. An Employee must complete: (Choose (a) or (b))
(a) 1,000 Hours of Service
(b) ------------------------ Hours of Service during an eligibility computation
period to receive credit for a Year of Service. [Note: The Hours of Service
requirement may not exceed 1,000.
Eligibility computation period. After the initial eligibility computation
period described in Section 2.02 of the Plan, the Plan measures the eligibility
computation period as: (Choose (c) or (d))
(c) The 12 consecutive month period beginning with each anniversary of an
Employee's Employment Commencement Date.
(d) The Plan year, beginning with the Plan Year which includes the first
anniversary of the Employee's Employment Commencement Date.
2.03 BREAK IN SERVICE - PARTICIPATION.
The Break in Service rule described in Section 2.03(B) of the Plan: (Choose
(a) or (b))
(a) Does not apply to the Employer's Plan.
(b) Applies to the Employer's Plan.
ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
3.01 AMOUNT.
The amount of the Employer's annual contribution to the Trust will equal:
(Choose (a), (b), (c) or (d))
(a) The amount (or additional amount) the Employer may from time to time deem
advisable.
<PAGE>
(b) -----------------% of the Compensation of all Participants under the Plan,
determined for the Employer's taxable year for which it makes the contribution,
[Note: The percentage selected may not exceed 15%.]
(c) ----------------% of Net Profits but not more than $--------------.
(d) This Plan is a frozen Plan effective ---------------. The Employer will not
contribute to the Plan with respect to any period following the stated date.
Net Profits. The Employer: (Choose (e) or (f))
(e) Need not have Net Profits to make its annual contribution under this Plan.
(f) Must have current or accumulated Net Profits exceeding
$----------------- to make the contributions described in Option
- ------------------.
The term "Net Profits" means the Employer's net income or profits for any
taxable year determined by the Employer upon the basis of its books of account
in accordance with generally accepted accounting practices consistently applied
without any deductions for Federal and state taxes upon income or for
contributions made by the Employer under this Plan or under any other employee
benefit plan the Employer maintains. If more than one member of a related group
(as defined in Section 1.30) execute this Adoption Agreement, each participating
member separately will determine Net Profits. "Net Profits" includes both
current and accumulated net profits. The term "net Profits" specifically
excludes:
- ---------------------------------------------------------------.
[Note: Enter "N/A" if no exclusions apply.]
3.04 CONTRIBUTION ALLOCATION.
Method of Allocation. Subject to any restoration allocation required under
Section 5.04, the Advisory Committee will allocate and credit each annual
Employer contribution (and Participant forfeitures, if any) to the Account of
each Participant who satisfies the conditions of Section 3.06, in accordance
with the allocation method selected under this Section 3.04. (Choose an
allocation method under (a), (b), (c) or (d); (e) is mandatory if the Employer
elects (b), (c) or (d))
(a) Nonintegrated Allocation Formula. The Advisory Committee will allocate the
annual Employer contributions (and Participant forfeitures) in the same ratio
that each Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year.
<PAGE>
(b) Two-Tiered Integrated Allocation Formula - Maximum Disparity. First,
the Advisory Committee will allocate the annual Employer contributions (and
Participant forfeitures) in the same ratio that each Participant's Compensation
plus Excess Compensation for the Plan Year bears to the total Compensation plus
Excess Compensation of all Participants for the Plan Year. The allocation under
this paragraph, as a percentage of each Participant's Compensation plus Excess
Compensation, must not exceed the applicable percentage (5.7%, 5.4% or 4.3%)
listed under the Maximum Disparity Table following Option (e).
The Advisory Committee then will allocate any remaining Employer contributions
(and Participant forfeitures) in the same ratio that each Participant's
Compensation for the Plan Year bears to the total Compensation of all
Participants for the Plan Year.
(c) Three-Tiered Integrated Allocation Formula. First, the Advisory Committee
will allocate the annual Employer contributions (and Participant forfeitures) in
the same ratio that each Participant's Compensation for the Plan Year bears to
the total Compensation of all Participants for the Plan Year. The allocation
under this paragraph, as a percentage of each Participant's Compensation must
not exceed the applicable percentage (5.7%, 5.4% or 4.3%) listed under the
Maximum Disparity Table following Option (e).
As a second tier allocation, the Advisory Committee will allocate the annual
Employer contributions (and Participant forfeitures) in the same ratio that each
Participant's Excess Compensation for the Plan Year bears to the total Excess
Compensation of all Participants for the Plan Year. The allocation under this
paragraph, as a percentage of each Participant's Excess Compensation, may not
exceed the allocation percentage in the first paragraph.
Finally, the advisory Committee will allocate any remaining annual Employer
contributions (and Participant forfeitures) in the same ratio that each
Participant's Compensation for the Plan Year bears to the total Compensation of
all Participants for the Plan Year.
(d) Four-Tiered Integrated Allocation Formula. First, the Advisory Committee
will allocate the annual Employer contributions (and Participant forfeitures) in
the same ratio that each Participant's Compensation for the Plan Year bears to
the total Compensation of all Participants for the Plan Year, but not exceeding
3% of each Participant's Compensation.
As a second tier allocation, the Advisory Committee will allocate the annual
Employer contributions (and Participant forfeitures) in the same ratio that each
Participant's Excess Compensation for the Plan Year bears to the total Excess
Compensation of all Participants for the Plan Year, but not exceeding 3% of each
Participant's Excess Compensation.
<PAGE>
As a third tier allocation, the Advisory Committee will allocate the annual
Employer contributions (and Participant forfeitures) in the same ratio that each
Participant's Compensation plus Excess Compensation for the Plan Year bears to
the total Compensation plus Excess Compensation of all Participants for the Plan
year. The allocation under this paragraph, as a percentage of each Participant's
Compensation plus Excess Compensation, must not exceed the applicable percentage
(2.7%, 2.4% or 1.3%) listed under the Maximum Disparity Table following Option
(e).
The Advisory Committee then will allocate any remaining Employer contributions
(and Participant forfeitures) in the same ratio that each Participant's
Compensation for the Plan Year bears to the total Compensation of all
Participants for the Plan Year.
(e) Excess Compensation. For purposes of Option (b), (c) or (d), "Excess
Compensation" means Compensation in excess of the following Integration Level:
(Choose (1) or (2))
(1) -------% (not exceeding 100%) of the taxable wage base, as determined
under Section 230 of the Social Security Act, in effect on the first day
of the Plan Year: (Choose any combination of (i) and (ii) or choose (iii))
(i) Rounded to ------------------------- (but not exceeding
the taxable wage base).
(ii) But not greater than $----------------.
(iii) Without any further adjustment or limitation.
(2) $------------------. [Note: Not exceeding the taxable
wage base for the Plan Year in which this Adoption Agreement
first is effective.]
Maximum Disparity Table. For purposes of Options (b), (c) and
(d), the applicable percentage is:
Integration Level Applicable Percentages Applicable
(as percentage of for Option (b) or Percentages
taxable wage base) Option (c) For Option (d)
- --------------------------------------------------------------------------------
100% 5.7% 2.7%
More than 80% but
less than 100% 5.4% 2.4%
More than 20%
(but not less than
$10,001) and not
more than 80% 4.3% 1.3%
20% (or $10,000, if
greater) or less 5.7% 2.7%
<PAGE>
Top Heavy Minimum Allocation - Eligible Participant. A Participant is
entitled to the top heavy minimum allocation in Section 3.04(B) of the Plan if
he is employed by the Employer on the last day of the Plan Year, unless: (Choose
(f) or (g))
(f) No exceptions.
(g) The Participant is a Key Employee for the Plan Year.
[Note: If the Employer selects this Option (g), it will have to determine
for each Plan Year who are the Key Employees under the Plan.]
Top Heavy Minimum Allocation - Method of Compliance. If a
Participant's allocation under this Section 3.04 is less than the
top heavy minimum allocation to which he is entitled under
Section 3.04(B): (Choose (h) or (i))
(h) The Employer will make any necessary additional contribution to the
Participant's Account, as described in Section 3.04(B)(7)(a) of the Plan.
(i) The Employer will satisfy the top heavy minimum allocation under the Paired
Pension Plan the Employer also maintains under this Master Plan. However, the
Employer will make any necessary additional contribution to satisfy the top
heavy minimum allocation for an Employee covered only under this Plan and not
under the Paired Pension Plan. See Section 3.04(B)(7)(b) of the Plan.
If the Employer maintains another plan which is not a Paired Pension Plan
offered under this Master Plan, the Employer may provide in an addendum to this
Adoption Agreement, numbered Section 3.04, any modifications to the Plan
necessary to satisfy the top heavy requirements under Code ss.416.
Related employers. If two or more related employers (as defined in Section 1.30)
contribute to this Plan, the Advisory Committee must allocate all Employer
contributions and forfeitures to each Participant in the Plan, in accordance
with the elections in this Adoption Agreement Section 3.04, without regard to
which contributing related group member employs the Participant. A Participant's
Compensation includes Compensation from all related employers, irrespective of
which related employers are contributing to the Plan.
3.05 FORFEITURE ALLOCATION.
Subject to any restoration allocation required under Sections 5.04 or 9.14,
the Advisory Committee will allocate a Participant forfeiture in accordance with
Section 3.04: (Choose (a) or (b); (c) is optional in addition to (a) or (b))
(a) As an Employer contribution for the Plan Year in which the forfeiture
occurs, as if the Participant forfeiture were an additional Employer
contribution for that Plan Year.
<PAGE>
(b) To reduce the Employer contribution for the Plan Year:
(Choose (1) or (2))
(1) in which the forfeiture occurs.
(2) immediately following the Plan Year in which the
forfeiture occurs.
(c) First to reduce the Plan's ordinary and necessary administrative expenses
for the Plan Year and then will allocate any remaining forfeitures in the manner
described in Option (a) or in Option (b), whichever applies.
3.06 ACCRUAL OF BENEFIT.
Compensation Taken Into Account. For the Plan Year in which the
Employee first becomes a Participant, the Advisory Committee will
determine the allocation under Adoption Agreement Section 3.04 by
taking into account: (Choose (a) or (b))
(a) The Employee's Compensation for the entire Plan Year.
(b) The Employee's Compensation only for the portion of the Plan Year in which
the Employee actually is a Participant in the Plan, except (Choose (1) or (2))
(1) No exceptions.
(2) For purposes of the first 3% of Compensation allocated to all
Participants under Options (a), (c) or (d) of Adoption Agreement Section
3.04, whichever applies, the Advisory Committee will take into account the
Employee's
Compensation for the entire Plan Year.
Accrual Requirements. To receive an allocation of Employer contributions and
Participant forfeitures, if any, for the Plan year, a Participant must satisfy
the accrual requirements of this paragraph. If the Participant is employed by
the Employer on the last day of the Plan Year, the Participant must complete at
least one hour of Service for that Plan Year. If the Participant terminates
employment with the Employer during the Plan year, the Participant must complete
at least ------------- Hours of Service (not exceeding 501) during the Plan
Year, except: (Choose (C) or (d))
(c) No exceptions.
(d) No Hour of Service requirement if the Participant terminates
employment during the Plan Year on account of: (Choose at least
one of (1), (2) and (3))
(1) Death.
(2) Disability.
<PAGE>
(3) Attainment of Normal Retirement Age in the current Plan Year or in a
prior Plan Year.
3.15 MORE THAN ONE PLAN LIMITATION.
If the provisions of Section 3.15 apply, the Excess Amount attributed to
this Plan equals: (Choose (a), (b) or (c))
(a) The product of:
(i) the total Excess Amount allocated as of such date (including any
amount which the Advisory Committee would have allocated but for the
limitations of Code ss.415), times
(ii) the ratio of (1) the amount allocated to the Participant as of such
date under this Plan divided by (2) the total amount allocated as of such
date under all qualified defined contribution plans (determined without
regard to the limitations of Code ss.415).
(b) The total Excess Amount.
(c) None of the Excess Amount.
[Note: If the Employer adopts Paired Plans available under this Master
Plan, the Employer must coordinate its elections under Section 3.15 of each
Adoption Agreement.]
3.18 DEFINED BENEFIT PLAN LIMITATION.
Application of limitation. The limitation under Section 3.18 of
the Plan: (Choose (a) or (b))
(a) Does not apply to the Employer's Plan because the Employer does not maintain
and never has maintained a defined benefit plan covering any Participant in this
Plan.
(b) Applies to the Employer's Plan. To the extent necessary to satisfy the
limitation under Section 3.18, the Employer will reduce: (Choose (1) or (2))
(1) The Participant's projected annual benefit under the defined benefit
plan under which the Participant participates.
(2) Its contribution or allocation on behalf of the Participant to the
defined contribution plan under which the Participant participates and
then, if necessary, the Participant's projected annual benefit under the
defined benefit plan under which the Participant participates.
[Note: If the Employer selects (a), the remaining options in this Section
3.18 do not apply to the Employer's Plan.]
Override of 100% Limitation. The Employer elects: (Choose (c) or 9d))
<PAGE>
(c) To apply the 100% limitation described in Section 3.19(1) of the Plan
in all Limitation Years. [Note: This election will avoid having to calculate the
Plan's top heavy ratio for any year.]
(d) Not to apply the 100% limitation for Limitation Years in which the Plan's
top heavy ratio (as determined under Section 1.33 of the Plan) does not exceed
90%, but only if the defined benefit plan satisfies the extra minimum benefit
requirements of Code ss.415(h)(2) (and the applicable Treasury regulations)
after taking into account the Employer's election under Options (e), (f), (g) or
(h) of this Section 3.18. To determine the top heavy ratio, the Advisory
Committee will use the following interest rate and mortality assumptions to
value accrued benefits under a defined benefit plan:
- ---------------------------------------. [Note: This election will require the
Advisory Committee to calculate the Plan's top heavy ratio.]
Coordination with top heavy minimum allocation. The Advisory Committee will
apply the top heavy minimum allocation provisions of Section 3.04(B) of the Plan
with the following modifications:
(Choose (e), (f), (g) or (h))
(e) No modifications.
(f) By substituting 4% for 3% in Paragraph 9b) of Section 3.04(B)(1) of the
Plan, but only for any Plan Year in which Option (d) applies to override the
100% limitation.
(g) By increasing the top heavy minimum allocation to 5% for any Plan Year in
which the 100% limitation applies, and to 7 1/2% for any Plan Year in which
Option (d) applies to override the 100% limitation. The increased percentage
under this Option (g) applies irrespective of whether the highest Participant
contribution rate for the Plan Year is less than that increased percentage.
(h) By eliminating the top heavy minimum allocation. [Note: The Employer
may not select this Option (h) if the defined benefit plan does not guarantee
the top heavy minimum benefit under Code ss.416 for every Participant in this
Plan who is a Non-Key Employee.]
If the elections under this Section 3.18 are not appropriate to satisfy the
limitations of Section 3.18, or the top heavy requirements under Code ss.416,
the Employer must provide the appropriate provisions in an addendum to this
Adoption Agreement.
<PAGE>
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING
5.01 NORMAL RETIREMENT.
Normal Retirement Age under the Plan is: (Choose (a) or (b))
(a) ---------------------------------- [State age, but may not exceed age
65].
(b) The later of the date the Participant attains -------- years of age or the
- -----------nniversary of the first day of the Plan Year in which the Participant
commenced participation in the Plan. [The age selected may not exceed age 65 and
the anniversary selected may not exceed the 5th.]
5.02 PARTICIPANT DEATH OR DISABILITY.
The 100% vesting rule under Section 5.02 of the Plan: (Choose (a) or choose
one or both of (b) and (c))
(a) Does not apply.
(b) Applies to death.
(c) Applies to disability.
5.03 VESTING SCHEDULE.
The Employer elects the following vesting schedule: (Choose (a) or (b); (c)
is available only in addition to (b))
(a) Immediate vesting. 100% Nonforfeitable at all times.
[Note: The Employer must elect Option (a) if the eligibility conditions
under Adoption Agreement Section 2.01(b) require 2 years of service or more than
12 months of employment.]
(b) Graduated Vesting Schedules. (Choose (1), (2) or (3))
(1) 6-year graded (2) 3-year cliff (3) Modified Top
Year of Nonforfeitable Year of Nonforfeitable Year of Nonforfeitable
Service Percentage Service Percentage Service Percentage
- --------------------------------------------------------------------------------
Less Less Less
than 2 0% than 3 0% than 1 ------
2 20% 3 or more 100% 1 ------
3 40% 2 ------
4 60% 3 ------
5 80% 4 ------
6 or more 100% 5 ------
6 or more 100%
[Note: Under Option (b)(3), the vesting schedule must satisfy the
top heavy requirements of Code ss.416.]
<PAGE>
(c) Minimum vesting. A Participant's Nonforfeitable Accrued Benefit will never
be less than the lesser of $------------- or his entire Accrued Benefit, even if
the application of the graduated vesting schedule under Option (b) would result
in a smaller Nonforfeitable Accrued Benefit.
5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/RESTORATION OF
FORFEITED ACCRUED BENEFIT.
The deemed cash-out rule described in Section 4.04(C) of the Plan: (Choose
(a) or (b))
(a) Does not apply.
(b) Will apply to determine the timing of forfeitures for 0%
vested Participants.
5.06 YEAR OF SERVICE - VESTING.
Vesting computation period. The Plan measures a Year of Service on the basis of
the following 12 consecutive month periods:
(Choose (a) or (b))
(a) Plan Years.
(b) Employment Years. An Employment Year is the 12 consecutive month period
measured from the Employee's Employment Commencement Date and each successive 12
consecutive month period measured from each anniversary of that Employment
Commencement Date.
Hours of Service. The minimum number of Hours of Service an Employee must
complete during a vesting computation period to receive credit for a Year of
Service is: (choose (c) or (d))
(c) 1,000 Hours of Service.
(d) ----------- Hours of Service. [Note: The Hours of Service
requirement may not exceed 1,000.]
5.08 INCLUDED YEARS OF SERVICE - VESTING.
The Employer specifically excludes the following Years of Service: (Choose
(a) or at least one of (b), (c) and (d))
(a) None other than as specified in Section 5.08(a) of the Plan.
(b) Any Year of Service before the Participant attained the age of
- --------------------. [Note: The age selected may not exceed age 18.]
(c) Any Year of Service during the period the Employer did not maintain this
Plan or a predecessor plan.
(
<PAGE>
d) Any Year of Service before a Break in Service if the number of
consecutive Breaks in Service equals or exceeds the greater of 5 or the
aggregate number of the Years of Service prior to the Break. This exception
applies only if the Participant is 0% vested in his Accrued Benefit derived from
Employer contributions at the time he has a Break in Service. Furthermore, the
aggregate number of Years of Service before a Break in Service do not include
any Years of Service not required to be taken into account under this exception
by reason of any prior Break in Service.
ARTICLE VI
TIME AND METHOD OF PAYMENTS OF BENEFITS
Code ss.411(d)(6) Protected Benefits. The elections under this Article VI may
not eliminate Code ss.411(d)(6) protected benefit, see Section 13.02 of the
Plan. Furthermore, if the elections liberalize the optional forms of benefit
under the Plan, the more liberal options apply on the later of the adoption ate
or the Effective Date of this Adoption Agreement.
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT.
Distribution date. A distribution date under the Plan means
- --------------------------------------------------------------.
[Note: The Employer must specify the appropriate date(s). The specified
distribution dates primarily establish annuity starting dates and the notice and
consent periods prescribed by the Plan. The Plan allows the Trustee an
administratively practicable period of time to make the actual distribution
relating to a particular distribution date.]
Nonforfeitable Accrued Benefit Not Exceeding $3,500. Subject to the
limitations of Section 6.01(A)(1), the distribution date for distribution of a
Nonforfeitable Accrued Benefit not exceeding $3,500 is: (Choose (a), (b), (c) or
(d))
(a) ---------- of the ---------------- Plan Year beginning after the
Participant's Separation from Service.
(b) ------------------ following the Participant's Separation from
Service.
(c) ------------------------ of the Plan Year after the Participant incurs
- ---------------------------- Break(s) in Service (as defined in Article V).
(d) following the Participant's attainment of Normal Retirement Age, but
not earlier than --------------- days following his Separation from Service.
Nonforfeitable Accrued Benefit Exceeds $3,500. See the elections under
Section 6.03.
Disability. The distribution date, subject to the limitations of Section
6.01(A)(3), is: (Choose (e) or (f))
<PAGE>
(e) ------------------ after the Participant terminates employment because of
disability.
(f) The same as if the Participant had terminated employment without
disability.
Hardship. (Choose (g) or (h))
(g) The Plan does not permit a hardship distribution to a Participant who has
separated from Service.
(h) The Plan permits a hardship distribution to a Participant who has separated
from Service in accordance with the hardship distribution policy stated in
Section 6.01(A)(4) of the Plan.
Default on a Loan. If a Participant or Beneficiary defaults on a loan made
pursuant to a loan policy adopted by the Advisory Committee pursuant to Section
9.04, the Plan: (Choose (i) or (j))
(i) Treats the default as a distributable event. The Trustee, at the time of the
default, will reduce the Participant's Nonforfeitable Accrued Benefit by the
lesser of the amount in default (plus accrued interest) or the Plan's security
interest in that Nonforfeitable Accrued Benefit.
(j) Does not treat the default as a distributable event. When an otherwise
distributable event first occurs pursuant to Section 6.01 or Section 6.03 of the
Plan, the Trustee will reduce the Participant's Nonforfeitable Accrued Benefit
by the lesser of the amount in default (plus accrued interest) or the Plan's
security interest in that Nonforfeitable Accrued Benefit.
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT.
The Advisory Committee will apply Section 6.02 of the Plan with the
following modifications: (Choose (a) or (b))
(a) No modifications.
(b) The Plan permits the following annuity options:
- ----------------------------------------------------------------.
Any Participant who elects a life annuity option is subject to the
requirements of Sections 6.04(A), (B), (C) and (D) of the Plan. See Section
6.04(E). [Note: The Employer may specify additional annuity options in an
addendum to this Adoption Agreement, numbered 6.02(b).]
6.03 BENEFIT PAYMENT ELECTIONS.
Participant Elections After Separation from Service. A Participant who is
eligible to make distribution elections under Section 6.03 of the Plan may elect
to commence distribution of his Nonforfeitable Accrued Benefit: (Choose (a) or
(b))
<PAGE>
(a) As of any distribution date, but not earlier than -------------- of the
- -------- Plan Year beginning after the Participant's Separation from Service.
(b) As of the following date(s): (Choose at least one of Options
(1) and (5))
(1) As of any distribution date after the close of the Plan Year in which
the Participant attains Normal Retirement Age.
(2) Any distribution date following his Separation from
Service.
(3) Any distribution date in the -------------- Plan Year(s) beginning
after his Separation from Service.
(4) Any distribution date in the Plan Year after the Participant incurs
------------ Break(s) in Service (as defined in Article V).
(5) Any distribution date following attainment of age --------- and
completion of at least --------- Years of Service (as defined in Article
V).
Participant Elections Prior to Separation from Service. Subject to the
restrictions of Article VI, the following distribution options apply under the
Employer's Plan prior to a Participant's Separation from Service. (Choose (c) or
at least one of (d) through (f))
(c) No distribution options prior to Separation from Service.
(d) Attainment of Specified Age. Until he retires, the Participant has a
continuing election to receive all or any portion of his Nonforfeitable Accrued
Benefit after he attains: (Choose (1) or (2))
(1) Normal Retirement Age.
(2) ------------------- years of age and is at least ----------%
vested in his Accrued Benefit. [Note: If the percentage is
less than 100%, see the special vesting formula in Section
5.03.]
(e) After a Participant has participated in the Plan for a period of not
less than ------------ years and he is 100% vested in his Accrued Benefit, until
he retires, the Participant has a continuing election to receive all or any
portion of his Accrued Benefit. [Note: The number in the blank space may not be
less than 5.]
(f) Hardship. A Participant may elect a hardship distribution prior to his
Separation from Service in accordance with the hardship distribution policy
under Section 6.01(A)(4) of the Plan. In no event may a Participant receive a
<PAGE>
hardship distribution under this Option (f) before he is at least
- ---------% vested in his Accrued Benefit. [Note: If the percentage in the
blank space is less than 100%, see the special vesting formula in Section 5.03.]
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES.
The annuity distribution requirements of Section 6.04: (Choose
(a) or (b))
(a) Apply only to a Participant described in Section 6.04(E) of the Plan
(relating to the profit sharing exception to the joint and survivor
requirements).
(b) Apply to all Participants.
ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT TO
PARTICIPANTS' ACCOUNTS
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT.
If a distribution (other than a distribution from a segregated Account)
occurs more than 90 days after the most recent valuation date, the distribution
will include interest at: (Choose (a) or (b))
(a) --------------% per annum. [Note: The percentage may equal 0%.]
(b) The 90 day Treasury bill rate in effect at the beginning of the current
valuation period.
ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES
10.14 VALUATION OF TRUST.
In addition to each Accounting Date, the trustee must value the Trust Fund
on the following valuation date(s): (Choose (a) or (b))
(a) No other mandatory valuation dates.
(b) (Specify) -------------------------------------------.
EFFECTIVE DATE ADDENDUM
(Restated Plans Only)
The Employer must complete this addendum only if the restated Effective Date
specified in Adoption Agreement Section 1.18 is different than the restated
effective date for at least one of the provisions listed in this addendum. In
lieu of the restated Effective Date in Adoption Agreement Section 1.18, the
following special effective dates apply: (Choose whichever elections apply)
<PAGE>
(a) Compensation definition. The Compensation definition of Section 1.12
(other than the $200,000 limitation) is effective for Plan Years beginning after
- ----------. [Note: May not be effective later than the first day of the first
Plan Year beginning after the Employer executes this Adoption Agreement to
restate the Plan for the Tax Reform Act of 1986, if applicable.]
(b) Eligibility conditions. The eligibility conditions specified in Adoption
Agreement Section 2.01 are effective for Plan Years beginning after
- -------------.
(c) Suspension of Years of Service. The suspension of Years of Service rule
elected under Adoption Agreement Section 2.03 is effective for Plan Years
beginning after -------------------.
(d) Contribution/allocation formula. The contribution formula elected under
Adoption Agreement Section 3.01 and the method of allocation elected under
Adoption Agreement Section 3.04 is effective for Plan Years beginning after
- -------------------.
(e) Accrual requirements. The accrual requirements of Section 3.06 are
effective for Plan Years beginning after ----------. [Note: If the effective
date is later than Plan Years beginning after December 31, 1989, the accrual
requirements in the Plan prior to its restatement may not be more restrictive
for post-1989 Plan Years than the requirements permitted under Adoption
Agreement Section 3.06.]
(f) Elimination of Net Profits. The requirement for the Employer not to
have net profits to contribute to this Plan is effective for Plan Years
beginning after ---------------------------. [Note: The date specified may
not be earlier than December 31, 1985.]
(g) Vesting Schedule. The vesting schedule elected under Adoption Agreement
Section 5.03 is effective for Plan Years beginning after ---------------------.
For Plan Years prior to the special Effective Date, the terms of the Plan prior
to its restatement under this Adoption Agreement will control for purposes of
the designated provisions. A special Effective Date may not result in the delay
of a Plan provision beyond the permissible Effective Date under any applicable
law requirements.
Execution Page
The Trustee (and custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian) under the
Master Plan and Trust. The Employer hereby agrees to the provisions of this Plan
<PAGE>
and Trust, and in witness of its agreement, the Employer by its duly
authorized officers, has executed this Adoption Agreement, and the Trustee (and
Custodian, if applicable) signified its acceptance, on this ---------- day of
- -----------------, 19----.
Name and EIN of Employer: --------------------------------------
Signed: --------------------------------------------------------
Name(s) of Trustee: --------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Signed: ---------------------------------------------------------
- -----------------------------------------------------------------
Name of Custodian: ----------------------------------------------
Signed: ---------------------------------------------------------
[Note: A Trustee is mandatory, but a Custodian is optional. See
Section 10.03 of the Plan.]
Use of Adoption Agreement. Failure to complete properly the elections in this
Adoption Agreement may result in disqualification of the Employer's Plan. The
3-digit number assigned to this Adoption Agreement (see page 1) is solely for
the Master Plan Sponsor's recordkeeping purposes and does not necessarily
correspond to the plan number the Employer designated in the prior paragraph.
The Master Plan Sponsor offers the following Paired Pension Plan(s) with this
Paired Profit Sharing Plan, identified by 3-digit adoption agreement number:
- -----------------------------------------------------------------
Master Plan Sponsor. The Master Plan Sponsor identified on the first page of the
basic plan document will notify all adopting employers of an amendment of this
Master Plan or of any abandonment or discontinuance by the Master Plan Sponsor
of its maintenance of this Master Plan. For inquiries regarding the adoption of
the Master Plan, the Master Plan Sponsor's intended meaning of any plan
provisions or the effect of the opinion letter issued to the Master Plan
Sponsor, please contact the Master Plan Sponsor at the following address and
telephone number: 7800 E. Union Ave., Denver, Colorado 80201, (303) 779- 0731.
Reliance on Opinion Letter. If the Employer does not maintain (and has never
maintained) any other plan other than this Plan and a Paired Pension Plan, it
may rely on the Master Plan Sponsor's opinion letter covering this Plan for
purposes of plan qualification. For this purpose, the Employer has not
maintained
<PAGE>
another plan if this Plan, or the Paired Pension Plan, amended and restated that
prior plan and the prior plan was the same type of plan as the restated plan. If
the Employer maintains or has maintained another plan other than a Paired
Pension Plan, including a welfare benefit fund, as defined in Code ss.419(e),
which provides post-retirement medical benefits for key employees (as defined in
Code ss.419A(d)(3)), or an individual medical account (as defined in Code
ss.415(1)(2)), the Employer may not rely on this Plan's qualified status unless
it obtains a determination letter from the applicable IRS Key District office.
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)
The undersigned Employer, by executing this Participation Agreement, elects to
become a Participating Employer in the Plan identified in Section 1.03 of the
accompanying Adoption Agreement, as if the Participating Employer were a
signatory to that Agreement. The Participating Employer accepts, and agrees to
be bound by, all of the elections granted under the provisions of the Master
Plan as made by, --------------------------------------------
- --------------------------------------------------- the Signatory Employer to
the Execution Page of the Adoption Agreement.
1. The Effective Date of the undersigned Employer's
participation in the designated Plan is -------------------------------.
2. The undersigned Employer's adoption of this Plan
constitutes:
(a) The adoption of a new plan by the Participating Employer.
(b) The adoption of an amendment and restatement of a plan currently maintained
by the Employer, identified as ------------------------------------- and having
an original effective date of ---------------------------------------.
Dated this ---------------- day of ------------------, 19------.
Name of Participating Employer: ----------------------------------
Signed: ----------------------------------------------------------
Participating Employer's EIN: -------------------------------------
Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.
Name of Signatory Employer: -------------------------------------
Signed: --------------------------------------------------
Accepted:--------------------------------------------------
[Date]
<PAGE>
Name(s) of Trustee: --------------------------------------------
Signed: --------------------------------------------------
Accepted: ------------------------------------------------
[Date]
[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important Master
Plan information.]
STN PSP AA Instructions
Complete the first blank in the paragraph by writing in the business' name in
its entirety.
1.02 Trustee
Option (a) should be chosen when the employer will be the trustee, INVESCO Trust
Company would then act as Custodian. If option (b) is chosen, INVESCO Trust
Company will be the Trustee and will charge an annual trust fee. Note: See
Trustee Comments on page 14 for further explaination of Non-discretionary
Trustee.
1.03 Plan
Enter the plan name. Example: ABC Inc. Profit Sharing Plan.
1.07 Employee
If you want the plan to cover all employees, select option (a). If you want to
exclude from the plan any group(s) of employees, select any combination of (b)
or (c).
Related Employers/Leased Employers
You may not exclude leased employees or related employers from participation
unless they are excluded under options (b) or (c) of Section 1.07.
1.12 Compensation
Treatment of elective contributions
Choose option (a) if you prefer to "add back" employee elective 401(k)
contributions to compensation for purposes of allocating employer contributions,
forfeitures and for non-discrimination testing.
<PAGE>
Modifications to Compensation - You must choose option (c) or any
combination of (d) or (e). Any exclusion of compensation may result in
unallowable discrimination.
1.17 Plan Year
You must define the "plan year," usually it will follow the business tax year.
Limitation Year - You must define the "limitation year" (12 month period for
testing allocations to each employee's account), for administrative convenience
it should match the plan year.
1.18 Effective Date
New Plan - Enter the first day of your plan year (usually January
1) and the year.
Restated Plan 0 Effective date - If you are amending for the Tax Reform Act of
1986 enter: January 1, 1987. If you are amending for another reason, enter the
first day of your tax year, example: January 1, 1990. Originally established
date - Enter the original effective date of your plan from your prior Adoption
Agreement.
1.27 Hours of Service
Choose which method you wish to use for counting hours worked by an
employee to accrue benefits. Option (b), the equivalency method, is explained in
Section 1.27 of the plan. Usually Option (a) is chosen.
1.29 Service for Predecessor Employer
Under this option, you may elect to count service for a predecessor employer
when you are not maintaining the plan of the predecessor employer. (Used
primarily in the event of a merger or acquisition.)
1.31 Leased Employees
The law requires you to state how your plan would treat a leased employee who
could become a participant, even if you don't intend to ever lease employees.
Choose option (a) covering the employee without regard to the leasing company's
plan or option (b) the reduction method. Usually Option (b) is chosen.
2.01 Eligibility
a. An employee must attain this age to become a participant (cannot exceed
age 21).
b. Pick how long (service) an employee must work to become a participant.
<PAGE>
Plan Entry - Choose when employees enter the plan for purposes of contributions
and benefit accrual. Normally, option (c), semi-annual entry dates, is chosen.
Time of Participation - Choose which plan entry date (before or after) an
employee who meets the eligibility requirements will enter the plan. Normally,
option (f) is chosen.
Dual Eligibility - This section allows you to include in the plan current
employees who have not met the eligibility requirements and apply the
eligibility requirements to newly hired employees.
Restated plans usually choose (i)(2).
2.02 Years of Service
Option (b) should only be chosen if you wish to require less than 1000
hours to be worked by an employee for eligibility. Usually Option (a) is chosen.
Eligibility Computation Period - Choose whether to measure subsequent
eligibility periods on the employee's anniversary (Option (c) or the plan year
(Option (d)). Option (d) is chosen for administrative convenience.
2.03 Break in Service
This option may impose a complicated re-entry date for employees who have
terminated or whose hours were severely cut back. Option (a) is chosen for
administrative convenience.
Article III
3.01 Amount
Option (a) provides for a discreationary formula. Option (b) allows the employer
to determine the contribution separately for different catagoaries of
participants. Options (c) and (d) allow the employer to choose a fixed
contribution formula.
Net Profits - An employer may require net profits to make it's contribution or
may disregard profits to determine the contribution. If the employer selects
Option (f) it must also complete the two blanks.
3.04 Contribution Allocation
Allocation formula. The primary allocation formulas are in Options (a), (b), (c)
and (d). Option (a) is a nonintegrated formula and allocates the employer
contribution proportionate to total compensation. Options (b), (c) and (d) are
alternatives for integrated plans. Usually option (a) is chosen for
non-integrated plans.
<PAGE>
The two-tiered formula under Option (b) maximizes the disparity permitted under
the integration rules. Accordingly, the allocation in the first tier results in
an equal allocation percentage based on total compensation and based on excess
compensation. This equal allocation percentage may not exceed the maximum
disparity percentage (5.7%, 5.4% or 4.3%) described in the second column of the
Maximum Disparity Table. After completion of the first tier allocation, the
second step allocates the remaining contribution proportionate to total
compensation, in the same manner as the nonintegrated formula.
Under the three-tiered formula of Option (c), the plan: (i) first allocates
based on total compensation, but the allocation percentage may not exceed the
maximum disparity percentage determined under the second column of the Maximum
Disparity Table; (ii) then allocates based on excess compensation, but the
allocation percentage may not exceed the maximum disparity percentage determined
under the second column of the Maximum Disparity Table; and (iii) completes the
allocation on the basis of total compensation.
The four-tiered allocation under Option (d) is a hybrid of Options (b) and (c).
The sole purpose of Option (d) is to use the first tier to satisfy the 3% top
heavy minimum, then use a progression of three additional tiers to make maximum
use of the permitted disparity rules. The second tier allocates solely on the
basis of excess compensation, with a maximum allocation under the second tier
equal to 3% of each participant's excess compensation. The third tier is the
same as the first tier under Option (c). The fourth tier is a prorata allocation
based on total compensation.
3.05 Forfeiture Allocation
Choose the method of allocating (dividing up) forfeitures of terminated
non-vested participant balances. Option (a) allocates forfeitures as an extra
discretionary contribution. Option (b) allocates forfeitures to reduce employer
contributions. Option (c) allows you to allocate separately forfeitures after
taking into account the plan's administrative expenses.
3.06 Compensation Taken Into Account
If you wish to count a participant's full year's compensation (even if he or she
entered during the year), for contributions choose option (a), if not, choose
option (b).
Accrual Requirements - Specify the service requirements a participant must
satisfy to receive an allocation. You may specify an hours of service
requirement, no greater than 501 hours. Standardized plans have relaxed
contribution requirements. A participant will receive an employer contribution
and forfeitures if they meet either of the two requirements below.
<PAGE>
Requirement #1
If the Participant was employed on the last day of the plan year and worked for
at least one hour during the plan year, or
Requirement #2
If the Participant terminates employment during the plan year after working at
least 501 hours for the employer.
3.15 More Than One Plan
This section only applies if you (the employer) maintain another defined
contribution plan (e.g.: profit sharing, money purchase, 401(k) or target
benefit) that covers at least one participant in this plan.
3.18 Defined Benefit Limitation
Check option (a) if you have never maintained a defined benefit plan for any
participants in this plan. If you have or are currently maintaining a defined
benefit plan. Choose under option (b), which plan's benefit would be reduced if
a participant's total allocations for a year were to exceed the allowable limit.
5.01 Normal Retirement Age
Choose what age you (the employer) want the participants to be 100% vested in
their benefits, if still employed (normal retirement age).
5.02 Vesting Death/Disability
You may choose to allow 100% vesting for participants that terminate from
service because of death option (b) or disability option (c).
5.03 Vesting Schedule
Choose what vesting schedule(s) you want to apply to employer discretionary
contributions and matching contributions. If you choose option (b), you must at
a minimum complete the top-heavy vesting schedule. Remember, if the eligibility
requirements are more than one year, option (a) must be chosen.
Complete the Modified Top Heavy schedule based upon the following:
Years of Service
1
2 (not less than 20%)
3 (not less than 40%)
4 (not less than 60%)
<PAGE>
5 (not less than 80%)
6 (not less than 100%)
5.04 Cash-Out Rule
If option (b) is chosen, the plan treats a 0% vested terminated participant as
having received a distribution, allowing for forfeitures to be reallocated to
active participants.
5.06 Years of Service
Choose what measuring period the plan should use to determine years of service
for vesting, employee's anniversary year or plan year. For ease of
administration choose option (a).
5.08 Prior Years of Service
By choosing options (b) through (d) you (the employer) may exclude some prior
years of service for purposes of vesting.
Article VI
The Employer must establish a specific distribution policy for the plan. Treas.
Reg. 1.411(d)-4 prohibits the Employer, the advisory committee or any third
party to retain discretion over when or in what form to pay the participant's
benefit (Optional Forms of Benefit). Under a restated plan, the elections under
Article VI, to the extent they differ from previous plan provisions regarding
optional forms of benefit, may not eliminate an optional form of benefit with
respect to the account balance accrued as of the date the Employer executes the
restated adoption agreement (or, if later, the effective date of that restated
adoption agreement). An option form of benefit includes the form of payment
(e.g., lump sum or installments), the timing of payment (e.g., immediately after
separation form service, following a break in service, after attaining normal
retirement age) and the medium of payment (e.g. right to elect distribution in
Employer securities, right to elect distribution in the form of an annuity
contract).
With this in mind, if you are restating an existing plan, pay close attention to
the distribution features under that document and your administrative practice
of distributions. In all cases, try to mirror or liberalize those distribution
features when restating onto this document.
6.01 Distribution Date
A distribution date establishes a predetermined "target" date in a plan year
when the plan will offer distributions. The actual distribution may occur later
than a distribution date as long as the actual distribution is within an
<PAGE>
"administratively reasonable period of time" from the distribution date. A
typical distribution date for a Profit Sharing plan is 90 days after the plan
year end.
Nonforfeitable Accrued Benefit Not Exceeding $3,500
When a separated participant's vested balance does not exceed $3,500, the plan
allows the employer to separately establish the timing of these distributions,
separate from the distribution dates. When you complete this section, you need
to balance two concerns: 1) will the timing of the distribution cause the
participant to consider it a "severance benefit" an therefore encourage
separation from service and 2) the administrative concerns of carrying a
non-active account in the plan.
Disability - The plan allows you (the employer) to establish a different target
payout date for disability distributions in options (e) and (f).
Hardship - This option states whether or not the plan would allow a separated
participant to receive a hardship distribution, prior to receiving a total
distribution of his/her vested account balance.
Default on a Loan - This election does not create a loan policy. You (the
employer) must elect the timing of the plan's foreclosure if a participant's
loan were to be defaulted upon even if you do not intend to offer loans in your
plan.
6.02 Method of Payment
You may choose the standard forms of payment if this is a brand new plan and not
a restatment. If the plan is not subject to the annuity requirements of Section
6.04, usually option (a) is chosen. If you choose to allow annuities, option (b)
special waivers and consent rules apply to all distributions.
6.03 Participant Elections After Separation from Service
You must choose when an employee who has separated from service, with a vested
benefit greater than $3,500, may elect to commence distributions. This election
will be tied directly tot he "distribution date" defined earlier.
Participant Elections Prior to Separation from Service
The following distribution elections apply to employer contributions regardless
of vested account balances, prior to employment separation. If you prefer not to
allow any distribution options from these accounts prior to separation, select
option (c).
<PAGE>
6.04 Annuity Distributions
The law requires distributions to certain participants to be in the form of
commercial insurance annuities, unless consented to and waived by both the
participant and his or her spouse. Participants subject to this requirement are
identified in section 6.04(E) of the Plan. For administrative convenience,
choose option (a). If you are restating a plan that was subject to the joint and
survivor annuity rules you must select Option (b).
9.10 Value of Benefit
This option allows the employer to add interest to a participant's balance, if a
distribution occurs more than 90 days after the most recent plan valuation. You
do not have to provide an interest addition under this section and may complete
option (a) with 0%.
10.14 Valuation of Trust
You may use this option to specify mandatory valuation dates, in addition to the
accounting date. Normally option (a) is chosen.
Instructions for Effective Date Addendum
You must complete the effective date addendum only if the effective dates of any
of the listed items (a) through (g) have an effective date other than your
restated effective date in Adoption Agreement Section 1.18. Some provisions in
the Tax Reform Act of 1986 were not effective until 1988 or 1989. The few
provisions, if any, that have later effective dates must specify when they are
effective.
a. Compensation definition may not be later than the first day of your 1991
plan year.
b. Eligibility conditions may not be later than the first day of your 1989
plan year.
c. Suspension of years of service may not be earlier than the first day of
your 1990 plan year.
d. Contribution/allocation formula may not be earlier than the first day of
your 1989 plan year.
e. Accrual requirements may not be earlier than the first day of your 1989
plan year.
f. Elimination of Net Profits may not be earlier than December 31, 1985.
g. Vesting schedule may not be later than the first day of your 1989 plan
year.
<PAGE>
Execution Page
The Employer must complete the date on which it executes the adoption agreement
and must execute the signature for the Employer. The execution page provides one
line above the signature line to print or type the name of the Employer and the
Employer's EIN. If the Employer is a sole proprietorship, he or she should
execute as Employer. If the Employer is a corporation or a partnership, an
officer or a partner, as applicable, should execute the adoption agreement on
behalf of the Employer.
Trustee
If you selected option (a) of Section 1.02 then the employer will be the
Trustee. An individual must sign as trustee for the employer. INVESCO Trust
Company will then act as Custodian.
If you choose to have INVESCO Trust Company act as "Trustee" then option (b) of
Section 1.02 must be chosen. INVESCO does charge an annual fee for this service.
INVESCO Trust Company will only serve as a non-discretionary trustee, this means
that there is a person who is the "Named Fiduciary." The Named Fiduciary gives
direction to a non-discretionary trustee, and the non- discretionary trustee
accepts all directions from the Named Fiduciary. The Named Fiduciary is either
the President of the Corporation, the managing partner of the partnership or the
self-employed individual of a sole proprietorship. The Named Fiduciary is
responsible for selecting plan investments.
The execution page also includes a signature line for the Custodian, if any.
Leave the Custodian lines blank if INVESCO Trust Company will act as custodian.
Plan number. This paragraph designates the number the Employer assigns to the
plan for reporting (Form 5500) purposes. If this is the first plan the Employer
ever maintained, the number must be 001. The Employer's plan number does not
correspond to the 3- digit adoption agreement number specified at the top of the
first page of the adoption agreement. Consult your Counsel if you are unsure
what 3-digit plan number to use.
Instructions for the Participation Agreement
This adoption agreement includes a Participation Agreement under which a related
group member of the signatory Employer to the execution page may participate in
the same plan with that Employer. Each related group member wishing to become a
participating Employer should execute a separate Participation Agreement. See
Section 1.30 of the Plan for the definition of related Employers.
Thus, it is possible to exclude the employees of related group members not
participating in the plan. If an Employer is a member of a related group, it
should consider whether the inclusion of other related group members' employees
<PAGE>
is necessary to satisfy the coverage requirements of Code ss.410(b) or the
minimum participation requirement of Code ss.401(a)(26). If the Employer
determines inclusion of the employees of a related group member is necessary to
maintain qualification of the plan, he Employer may take one or two approaches:
(1) have the related group member execute a Participation Agreement; or (2)
elect in Adoption Agreement Section 1.07 to include the employees of that
related group member. Under approach (1), the participation of the related group
member will result in the automatic inclusion of the employees of that related
group member, without having to specify their inclusion in Adoption Agreement
Section 1.07. In addition, the related group member, under approach (1), has the
authority to contribute to the plan and, in the event another participating
related group member makes a contribution on behalf of that related group
member's employees, the Participation Agreement will ensure the deductibility of
that contribution (assuming the contribution does not exceed the deduction
limits of Code ss.404). Additional instructions to the appropriate adoption
agreement explain the effect on the allocation of Employer contributions when
related group members maintain a single nonstandardized plan. Please contact us.
Under approach (2), the plan will retain its qualified status, but contributions
the Employer makes on behalf of a nonparticipating related group member's
employees may not be deductible (even if otherwise within the limitations of
Code ss.404), resulting in an excise tax to the contributing Employer.
Unrelated Employers. The Master Plan does not allow the participation in a
single plan of unrelated Employers (i.e., Employers that do not satisfy the
related group definition in Section 1.30 of the Plan).
legal\adop-agr\stnpspaa.003
Adoption Agreement #004
Letter Serial No. D246281a
Standardized Money Purchase Pension Plan
Standardized Money Purchase Pension Features
- - Allows for integration of contributions with Social Security
- - Allows for top-heavy vesting schedule
- - May be paired with INVESCO Profit Sharing Plans
Provided by:
The Financial Funds
Managed & Distributed by
INVESCO Funds Group, Inc.
Custodian:
INVESCO Trust Company
A Subsidiary of INVESCO MIM PLC
<PAGE>
Your Adoption Agreement and Basic Plan Document together constitute the rules
and parameters under which your retirement progrma will operate. Each section of
the Adoption Agreemetn requires the employer to make a selection. Whenever
possible (balancing complexity and space constraints) we have provided
instructions to the left of key selections. These instructions are intended to
assist you, the employer, in choosing the optional provisions for your
retirement program. They are not intended to substitute or replace completent
advice from your legal counsel or accountant. If further clarification is
necessary, contact your advisors or INVESCO Trust Company. We recommend that you
obtain the advice of your legal or tax advisor before you sign this Adoption
Agreement.
<PAGE>
ADOPTION AGREEMENT #004
STANDARDIZED MONEY PURCHASE PLAN
(PAIRED PENSION PLAN)
The undersigned, -------------------------------------------- ("Employer"), by
executing this Adoption Agreement, elects to become a participating Employer in
the INVESCO Trust Company Defined Contribution Master Plan (basic plan document
#01) by adopting the accompanying Plan and Trust in full as if the Employer were
a signatory to that Agreement. The employer makes the following elections
granted under the provisions of the Master Plan.
ARTICLE I
DEFINITIONS
1.02 Trustee.
The Trustee executing this Adoption Agreement is: (Choose (a) or (b))
(a) A discretionary Trustee, See Section 10.03[A] of the Plan.
(b) A nondiscretionary Trustee. See Section 10.03[B] of the Plan. [Note:
The Employer may not elect Option (b) if a Custodian executes the Adoption
Agreement.]
1.03 PLAN.
The name of the Plan as adopted by the Employer is
- -------------------------------------------------------------.
1.07 EMPLOYEE.
The following Employees are not eligible to participate in the Plan:
(Choose (a) or at least one of (b) or (c))
(a) No exclusions.
(b) Collective bargaining employees (as defined in Section 1.07 of the
Plan).
[Note: If the Employer excludes union employees from the Plan, the Employer
must be able to provide evidence that retirement benefits were the subject of
good faith bargaining.]
(c) Nonresident aliens who do not receive any earned income (as defined in Code
ss.911(d)(2) from the Employer which constitutes United States source income (as
defined in Code ss.861(a)(3)).
Related Employers/Leased Employees. An Employee of any member of the
Employer's related group (as defined in Section 1.30 of the Plan), and any
Leased Employee treated as an Employee under Section 1.31 of the Plan, is
eligible to participate in the Plan, unless excluded by reason of Options (b) or
(c).
[Note: A related group member may not contribute to this Plan unless it
executes a Participation Agreement, even if its Employees are Participants in
the Plan.]
<PAGE>
1.12 COMPENSATION
Treatment of elective contributions. (Choose (a) or (b))
(a) "Compensation" includes elective contributions made by the
Employer on the Employee's behalf.
(b) "Compensation" does not include elective contributions.
Modifications to Compensation definition. (Choose (c) or at least
one of (d) and (e))
(c) No modifications other than as elected under Options (a) or
(b).
(d) The Plan excludes Compensation in excess of $--------------.
(e) In lieu of the definition in Section 1.12 of the Plan, Compensation means
any earnings reportable as W-2 wages for Federal income tax withholding
purposes, subject to any other election under this Adoption Agreement Section
1.12.
1.17 PLAN YEAR/LIMITATION YEAR.
Plan Year. Plan Year means: (Choose (a) or (b))
(a) The 12 consecutive month period ending every --------------.
(b) (Specify) -------------------------------------------------.
Limitation Year. The Limitation Year is: (Choose (c) or (d))
(c) The Plan Year.
(d) The 12 consecutive month period ending every --------------.
1.18 EFFECTIVE DATE.
New Plan. The "Effective Date" of the Plan is -------------------.
Restated Plan. The restated Effective Date is -------------------. This
Plan is a substitution and amendment of an existing retirement plan(s)
originally established -----------------------. (Note: See the Effective Date
Addendum.)
1.27 HOUR OF SERVICE.
The crediting method for Hours of Service is: (Choose (a) or (b))
(a) The actual method.
(b) The ----------------------- equivalency method, except:
(1) No exceptions.
<PAGE>
(2) The actual method applies for purposes of: (Choose at
least one)
(i) Participation under Article II.
(ii) Vesting under Article V.
(iii) Accrual of benefits under Section 3.06.
[Note: On the blank line, insert "daily," "weekly," "semi-monthly payroll
periods" or "monthly."]
1.29 SERVICE FOR PREDECESSOR EMPLOYER.
In addition to the predecessor service the Plan must credit by reason of
Section 1.29 of the Plan, the Plan credits Service with the following
predecessor employer(s): --------------------------. Service with the designated
predecessor employer(s) applies: (Choose at least one of (a) or (b))
(a) For purposes of participation under Article II.
(b) For purposes of vesting under Article V.
[Note: If the Plan does not credit any predecessor service under this
provision, insert "N/A" in the first blank line. The Employer may attach a
schedule to this Adoption Agreement, in the same format as this Section 1.29,
designating additional predecessor employers and the applicable service
crediting elections.]
1.31 LEASED EMPLOYEES.
If a Leased Employee participates in a save harbor money purchase plan (as
described in Section 1.31) maintained by the leasing organization, but the
Employer is not eligible for the safe harbor plan exception: (Choose (a) or (b))
(a) The Advisory Committee will determine the Leased Employee's allocation of
Employer contributions under Article III without taking into account the Leased
Employee's allocation under the safe harbor plan.
(b) The Advisory Committee will reduce the Leased Employee's allocation of
Employer contributions under this Plan by the Leased Employee's allocation under
the safe harbor plan, but only to the extent that allocation is attributable to
the Leased Employee's service provided to the Employer. [Note: The Employer may
not elect Option (b) if a Paired Plan or any other plan of the Employer makes a
similar reduction for the same plan of the leasing organization.]
ARTICLE II
EMPLOYEE PARTICIPANTS
<PAGE>
2.01 ELIGIBILITY.
Eligibility conditions. To become a Participant in the Plan, an Employee must
satisfy the following eligibility conditions:
(Choose (a) or (b) or both)
(a) Attainment of age -------------------- (specify age, not exceeding 21).
(b) Service requirement. (Choose one of (1) through (4))
(1) One Year of Service.
(2) Two Years of Service, without an intervening Break in
Service. See Section 2.03(A) of the Plan.
(3) --------- months (not exceeding 24) following the Employee's
Employment Commencement Date.
(4) One Hour of Service.
Plan Entry Date. "Plan Entry Date" means the Effective Date and:
(Choose (c), (d) or (e))
(c) Semi-annual Entry Dates. The first day of the Plan year and the first
day of the seventh month of the Plan Year.
(d) The first day of the Plan Year.
(e) (Specify entry dates) --------------------------------.
Time of Participation. An Employee will become a Participant, unless
excluded under Adoption Agreement Section 1.07, on the Plan Entry Date (if
employed on that date): (Choose (f), (g) or (h))
(f) immediately following
(g) immediately preceding
(h) nearest the date the Employer completes the eligibility conditions described
in Options (a) and (b) of this Adoption Agreement Section 2.01. [Note: The
Employer must coordinate the selection of (f), (g) or (h) with the "Plan Entry
Date" selection in (c), (d) of (e). Unless otherwise excluded under Section
1.07, the Employee must become a Participant by the earlier of: (1) the first
day of the Plan Year beginning after the date the Employee completes the age and
service requirements of Code ss.410(a); or (2) 6 months after the date the
Employee completes those requirements.]
Dual eligibility. The eligibility conditions of this Section 2.01 apply to:
(Choose (i) or (j))
(i) All Employees of the Employer, except: (Choose (1) or (2))
<PAGE>
(1) No exceptions
(2) Employees who are Participants in the Plan as of the
Effective Date.
(j) Solely to an Employee employed by the Employer after ---------------------.
If the Employee was employed by the specified date, the Employee will become a
Participant: (Choose (1) or (2))
(1) On the latest of the Effective Date, his Employment Commencement Date
or the date he attains age --------------------- (not to exceed 21).
(2) Under the eligibility conditions in effect under the
Plan prior to the restated Effective Date. [For restated
plans only]
2.02 YEAR OF SERVICE - PARTICIPATION.
Hours of Service. An Employee must complete: (Choose (a) or (b))
(a) 1,000 Hours of Service
(b) ------------------------ Hours of Service during an eligibility computation
period to receive credit for a Year of Service. [Note: The Hours of Service
requirement may not exceed 1,000.
Eligibility computation period. After the initial eligibility computation
period described in Section 2.02 of the Plan, the Plan measures the eligibility
computation period as: (Choose (c) or (d))
(c) The 12 consecutive month period beginning with each anniversary of an
Employee's Employment Commencement Date.
(d) The Plan year, beginning with the Plan Year which includes the first
anniversary of the Employee's Employment Commencement Date.
2.03 BREAK IN SERVICE - PARTICIPATION.
The Break in Service rule described in Section 2.03(B) of the Plan: (Choose
(a) or (b))
(a) Does not apply to the Employer's Plan.
(b) Applies to the Employer's Plan.
ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
3.01 AMOUNT.
The amount of the Employer's annual contribution to the Trust will equal:
(Choose (a), (b), (c) or (d); (e) is mandatory if the Employer elects (b) or
(c))
<PAGE>
(a) Nonintegrated Contribution Formula. ---------------% of each Participant's
Compensation for the Plan Year.
(b) Integrated Contribution Formula. (Complete both percentages)
- ---------% of each Participant's Compensation for the Plan Year plus
- ---------% of each Participant's Compensation for the Plan Year in excess of
the Integration Level.
[Note: The second percentage may not exceed the lesser of the first
percentage or the applicable percentage described in the Maximum Disparity
Table.]
(c) Step-rate Integrated Contribution Formula. (Complete both percentages)
- --------% of each Participant's Compensation for the Plan Year which does not
exceed the Integration Level, plus ---------% of each Participant's Compensation
for the Plan Year in excess of the Integration Level. [Note: The difference
between the second percentage and the first percentage may not exceed the lesser
of the first percentage or the applicable percentage described in the Maximum
Disparity Table.]
[Note: If the Employer maintains Paired Plans, the Employer may not elect
Option (b) or Option (c) if the Paired Plan uses an integrated formula.]
(d) Frozen Plan Formula. This Plan is a frozen Plan effective
- -----------------------------. The Employer will not contribute to the Plan with
respet to any period following that stated date.
(e) Integration Level. The Integration Level under the Plan is:
(Choose (1) or (2))
(1) ------% (not exceeding 100%) of the taxable wage base, as determined
under Section 230 of the Social Security Act, in effect on the first day
of the Plan Year: (Choose any combination of (i) and (ii) or choose (iii))
(i) Rounded to -------------------- (but not exceeding
the taxable wage base).
(ii) But not greater than $----------------------.
(iii)Without any further adjustment or limitation.
(2) $------------- [Note: Not esceeding the taxable wage
base for the Plan Year in which this Adoption Agreement
first is effective.]
Maximum Disparity Table. For purposes of Options (b) and (c), the
applicable percentage is:
<PAGE>
Inegration Level (as Applicable
percentage of taxable wage base) Percentage
-----------------------------------------------------------
100% 5.7%
More than 80% but less than 100% 5.4%
More than 20% (but not less than $10,001)
and not more than 80% 4.3%
20% (or $10,000, if greater) or less 5.7%
Application of contribution formula. The Employer will determine its
contribution under Options (a), (b) or (c) by taking into account only the
Participants who satisfy the conditions under Section 3.06 for an allocation of
Employer contributions and only the Participant's Compensation taken into
account under Section 3.06. The Empoyer contribution on behalf of a Participant
may not exceed the Participant's annual additions limitation described in Part 2
of Article III, even if the contribution formula otherwise would require a
larger contribution.
Coordination with defined benefit plan. If the Employer maintains a defined
benefit plan under which at least one Participant in this Plan participates, the
Employer will determine its contribuion under Options (a), (b) or (c) by
reducign the total contibution, if necessary to equal the maximum deductible
amount under Code ss.404(a)(7). If the Employer must reduce its contribution,
the Employer determines its contibution with respect to each Participant by
adjusting each percentage under Options (a), (b) or (c) by the same ratio as the
reduced total Employer contribution for the Plan Year bears to the total
Employer contribution determined without applciation of Code ss.404(a)(7).
Related Employers. Unless obligated by the joint and several liability
provisions of the code or of ERISA, a related group member, as defined in
Section 1.30 of the Plan, may not contribute tot his Plan unless it executes a
Participation Agreement, even if its Employees are Participants in the Plan. The
signatory Employer and any Participaing Employer(s) will satisfy the annual
contribution under this Section 3.01 as agreed upon by those Employers.
3.04 CONTRIBUTION ALLOCATION.
Method of Allocation. Subject to any restoration allocation required under
Section .04, the Advisory Committee will allocate and credit each annual
Employer contribution to the Account of each Participant who satisfies the
conditions of Section 3.06, in accordance with the contribution formula adopted
by the Employer under Adoption Agreement Section 3.01.
Top Heavy Minimum Allocation - Eligible Participant. A Participant is
entitled to the top heavy minimum allocation in Section 3.04(B) of the Plan if
he is employed by the Employer on the last day of the Plan Year, unless: (Choose
(a) or (b))
(a) No exceptions.
<PAGE>
(b) The Participant is a Key Employee for the Plan Year. [Note: If the
Employer selects this Option (b), it will need to identify the Key Employees
under the Plan.]
Top Heavy Minimum Allocation - Method of Compliance. If a Participant's
allocation under thsi Section 3.04 is less than the top heavy minimum allocation
to which he is entitled under Section 3.04(B): (Choose (c) or (d))
(c) The employer will make any necessary additional contribution to the
Participant's Account, as described in Section 3.04(B)(7)(a) of the Plan.
(d) The Employer will satisfy the top heavy minimum allocation under the Paired
Profit Sharing Plan the Employer also maintains under this Master Plan. However,
the Employer will make any necessary additional contribution to satisfy the top
heavy minimum allocation for an Employee covered only under this Plan and not
under the Paired Profit Sharing Plan. See Section 3.04(B)(7)(b) of the Plan.
If the Employer maintains another plan which is not a Paired Profit Sharing Plan
offered under thsi Master Plan, the Employer may provide in an addendum to this
Adoption Agreement, numbered Section 3.04, any modifications to the Plan
necessary to satisfy the top heavy requirements under Code ss.416.
3.05 FORFEITURE ALLOCATION.
Subject to any restoration allocation required under Sections 5.04 or 9.14,
the Advisory Committee will allocate a Participant forfeiture: (Choose (a) or
(b); (c) is optional in addition to (a) or (b))
(a) Reduction of Employer contribution. In accordance with Section 3.04, to
reduce the Employer contribution for the Plan Year: (Choose (1) or (2))
(1) in which the forfeiture occurs.
(2) immediately following the Plan Year in which the
forfeiture occurs.
(b) Increased allocation. In addition to the Employer contribution for the Plan
Year in which the forfeiure occurs. The Advisory Committee will allocate the
Participant forfeitures for a Plan Year to the Account of each Participant who
satisfies the conditions of Section 3.06, in the same ratio that such
Participant's Compensation for the Plan Year bears to the total Compensation of
all Participants for the Plan Year.
(c) First to reduce the Plan's ordinary and necessary administrative expenses
for the Plan Year and then will allocate any remaining forfeitures in the manner
described in Option (a) or in Option (b), whichever applies.
<PAGE>
3.06 ACCRUAL OF BENEFIT.
Compensation taken into account. For the Plan Year in which the Employee first
becomes a Participant, the Advisory committee will detemine the contribution
under Section 3.01, and, if applicable, the allocation under Option (b) of
Section 3.05, by taking into account: (Choose (a) or (b))
(a) The Employee's Compensation for the entire Plan Year.
(b) The Employee's Compensation only for the portion of the Plan Year in which
the Employee actually is a Participant in the Plan.
Accrual Requirements. To receive an allocation of Employer contributions and
Participant forfeitures, if any, for the Plan year, a Participant must satisfy
the accrual requirements of this paragraph. If the Participant is employed by
the Employer on the last day of the Plan Year, the Participant must complete at
least one hour of Service for that Plan Year. If the Participant terminates
employment with the Employer during the Plan year, the Participant must complete
at least ------------- Hours of Service (not exceeding 501) during the Plan
Year, except: (Choose (c) or (d))
(c) No exceptions.
(d) No Hour of Service requirement if the Participant terminates employment
during the Plan Year on account of: (Choose at least one of (1), (2) and (3))
(1) Death.
(2) Disability.
(3) Attainment of Normal Retirement Age in the current Plan Year or in a
prior Plan Year.
3.15 MORE THAN ONE PLAN LIMITATION.
If the provisions of Section 3.15 apply, the Excess Amount attributed to
this Plan equals: (Choose (a), (b) or (c))
(a) The product of:
(i) the total Excess Amount allocated as of such date (including any
amount which the Advisory Committee would have allocated but for the
limitations of Code ss.415), times
(ii) the ratio of (1) the amount allocated to the Participant as of such
date under this Plan divided by (2) the total amount allocated as of such
date under all qualified defined contribution plans (determined without
regard to the limitations of Code ss.415).
(b) The total Excess Amount.
<PAGE>
(c) None of the Excess Amount.
[Note: If the Employer adopts Paired Plans available under this Master
Plan, the Employer must coordinate its elections under Section 3.15 of each
Adoption Agreement.]
3.18 DEFINED BENEFIT PLAN LIMITATION.
Application of limitation. The limitation under Section 3.18 of the Plan:
(Choose (a) or (b))
(a) Does not apply to the Employer's Plan because the Employer does not maintain
and never has maintained a defined benefit plan covering any Participant in this
Plan.
(b) Applies to the Employer's Plan. To the extent necessary to satisfy the
limitation under Section 3.18, the Employer will reduce: (Choose (1) or (2))
(1) The Participant's projected annual benefit under the defined benefit
plan under which the Participant participates.
(2) Its contribution or allocation on behalf of the Participant to the
defined contribution plan under which the Participant participates and
then, if necessary, the Participant's projected annual benefit under the
defined benefit plan under which the Participant participates.
[Note: If the Employer selects (a), the remaining options in this Section
3.18 do not apply to the Employer's Plan.]
Override of 100% Limitation. The Employer elects: (Choose (c) or 9d))
c) To apply the 100% limitation described in Section 3.19(1) of the Plan
in all Limitation Years.
[Note: This election will avoid having to calculate the Plan's top heavy
ratio for any year.]
(d) Not to apply the 100% limitation for Limitation Years in which the
Plan's top heavy ratio (as determined under Section 1.33 of the Plan) does not
exceed 90%, but only if the defined benefit plan satisfies the extra minimum
benefit requirements of Code ss.416(h)(2) (and the applicable Treasury
regulations) after taking into account the Employer's election under Options
(e), (f), (g) or (h) of this Section 3.18. To determine the top heavy ratio, the
Advisory Committee will use the following interest rate and mortality
assumptions to value accrued benefits under a defined benefit plan:
- -------------------------.
[Note: This election will require the Advisory Committee to calculate the
Plan's top heavy ratio.]
<PAGE>
Coordination with top heavy minimum allocation. The Advisory Committee will
apply the top heavy minimum allocation provisions of Section 3.04(B) of the Plan
with the following modifications: (Choose (e), (f), (g) or (h))
(e) No modifications.
(f) By substituting 4% for 3% in Paragraph 9b) of Section 3.04(B)(1) of the
Plan, but only for any Plan Year in which Option (d) applies to override the
100% limitation.
(g) By increasing the top heavy minimum allocation to 5% for any Plan Year in
which the 100% limitation applies, and to 7 1/2% for any Plan Year in which
Option (d) applies to override the 100% limitation. The increased percentage
under this Option (g) applies irrespective of whether the highest Participant
contribution rate for the Plan Year is less than that increased percentage.
(h) By eliminating the top heavy minimum allocation.
[Note: The Employer may not select this Option (h) if the defined benefit
plan does not guarantee the top heavy minimum benefit under Code ss.416 for
every Participant in this Plan who is a Non-Key Employee.]
If the elections under this Section 3.18 are not appropriate to satisfy the
limitations of Section 3.18, or the top heavy requirements under Code ss.416,
the Employer must provide the appropriate provisions in an addendum to this
Adoption Agreement.
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING
5.01 NORMAL RETIREMENT.
Normal Retirement Age under the Plan is: (Choose (a) or (b))
(a) ------------------------------- [State age, but may not exceed age
65].
(b) The later of the date the Participant attains ---------(------) years of
age or the --------(---------) anniversary of the first day of the Plan Year in
which the Participant commenced participation in the Plan. [The age selected may
not exceed age 65 and the anniversary selected may not exceed the 5th.]
5.02 PARTICIPANT DEATH OR DISABILITY.
The 100% vesting rule under Section 5.02 of the Plan: (Choose (a) or choose
one or both of (b) and (c))
(a) Does not apply.
<PAGE>
(b) Applies to death.
(c) Applies to disability.
5.03 VESTING SCHEDULE.
The Employer elects the following vesting schedule: (Choose (a) or (b); (c)
is available only in addition to (b))
(a) Immediate vesting. 100% Nonforfeitable at all times.
[Note: The Employer must elect Option (a) if the eligibility conditions
under Adoption Agreement Section 2.01(b) require 2 years of service or more than
12 months of employment.]
(b) Graduated Vesting Schedules. (Choose (1), (2) or (3))
(1) 6-year graded (2) 3-year cliff (3) Modified Top
Heavy Schedule
Year of Nonforfeitable Year of Nonforfeitable Year of Nonforfeitable
Service Percentage Service Percentage Service Percentage
- --------------------------------------------------------------------------------
Less Less Less
than 2 0% than 3 0% than 1 ------
2 20% 3 or more 100% 1 ------
3 40% 2 ------
4 60% 3 ------
5 80% 4 ------
6 or more 100% 5 ------
6 or more 100%
[Note: Under Option (b)(3), the vesting schedule must satisfy the
top heavy requirements of Code ss.416.]
(c) Minimum vesting. A Participant's Nonforfeitable Accrued Benefit will never
be less than the lesser of $------------- or his entire Accrued Benefit, even if
the application of the graduated vesting schedule under Option (b) would result
in a smaller Nonforfeitable Accrued Benefit.
5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/RESTORATION OF
FORFEITED ACCRUED BENEFIT.
The deemed cash-out rule described in Section 4.04(C) of the Plan: (Choose
(a) or (b))
(a) Does not apply.
(b) Will apply to determine the timing of forfeitures for 0%
vested Participants.
5.06 YEAR OF SERVICE - VESTING.
Vesting computation period. The Plan measures a Year of Service on the basis of
the following 12 consecutive month periods:
(Choose (a) or (b))
<PAGE>
(a) Plan Years.
(b) Employment Years. An Employment Year is the 12 consecutive month period
measured from the Employee's Employment Commencement Date and each successive 12
consecutive month period measured from each anniversary of that Employment
Commencement Date.
Hours of Service. The minimum number of Hours of Service an Employee must
complete during a vesting computation period to receive credit for a Year of
Service is: (choose (c) or (d))
(c) 1,000 Hours of Service.
(d) ---------------- Hours of Service. [Note: The Hours of Service
requirement may not exceed 1,000.]
5.08 INCLUDED YEARS OF SERVICE - VESTING.
The Employer specifically excludes the following Years of Service: (Choose
(a) or at least one of (b), (c) and (d))
(a) None other than as specified in Section 5.08(a) of the Plan.
(b) Any Year of Service before the Participant attained the age of
- --------------------.
[Note: The age selected may not exceed age 18.]
(c) Any Year of Service during the period the Employer did not maintain this
Plan or a predecessor plan.
(d) Any Year of Service before a Break in Service if the number of consecutive
Breaks in Service equals or exceeds the greater of 5 or the aggregate number of
the Years of Service prior to the Break. This exception applies only if the
Participant is 0% vested in his Accrued Benefit derived from Employer
contributions at the time he has a Break in Service. Furthermore, the aggregate
number of Years of Service before a Break in Service do not include any Years of
Service not required to be taken into account under this exception by reason of
any prior Break in Service.
ARTICLE VI
TIME AND METHOD OF PAYMENTS OF BENEFITS
Code ss.411(d)(6) Protected Benefits. The election under this Article VI may not
eliminate Code ss.411(d)(6) protected benefits. To the extent the elections
would eliminate a Code ss.(d)(6) protected benefit, see Section 13.02 of the
Plan. Furthermore, if the elections liberalize the optional forms of benefit
under the Plan, the more liberal options apply on the later of the adoption date
or the Effective Date of this Adoption Agreement.
<PAGE>
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT.
Distribution date. A distribution date under the Plan means
- --------------------------------------------------------------.
[Note: The Employer must specify the appropriate date(s). The specified
distribution dates primarily establish annuity starting dates and the notice and
consent periods prescribed by the Plan. The Plan allows the Trustee an
administratively practicable period of time to make the actual distribution
relating to a particular distribution date.]
Nonforfeitable Accrued Benefit Not Exceeding $3,500. Subject to the
limitations of Section 6.01(A)(1), the distribution date for distribution of a
Nonforfeitable Accrued Benefit not exceeding $3,500 is: (Choose (a), (b), (c) or
(d))
(a) ----------- of the -------------- Plan Year beginning after the
Participant's Separation from Service.
(b) ---------------------- following the Participant's Separation from
Service.
(c) ------------------------- of the Plan Year after the Participant incurs
- -------------------- Break(s) in Service (as defined in Article V).
(d) ------------- following the Participant's attainment of Normal
Retirement Age, but not earlier than -------------- days following his
Separation from Service.
Nonforfeitable Accrued Benefit Exceeds $3,500. See the elections under
Section 6.03.
Disability. The distribution date, subject to the limitations of Section
6.01(A)(3), is: (Choose (e) or (f))
(e) ----------------- after the Participant terminates employment because
of disability.
(f) The same as if the Participant had terminated employment without
disability.
Hardship. (Choose (g) or (h))
(g) The Plan does not permit a hardship distribution to a Participant who has
separated from Service.
(h) The Plan permits a hardship distribution to a Participant who has separated
from Service in accordance with the hardship distribution policy stated in
Section 6.01(A)(4) of the Plan.
Default on a Loan. If a Participant or Beneficiary defaults on a loan made
pursuant to a loan policy adopted by the Advisory Committee pursuant to Section
9.04, the Plan: (Choose (i) or (j))
<PAGE>
(i) Treats the default as a distributable event only if the
Participant has incurred a Separation from Service or has attained Normal
Retirement Age. If either conditions applies, the Trustee, at the time of
the default or, if later, at the time either conditions first occurs, will
reduce the Participant's Nonforfeitable Accrued Benefit by the lesser of
the amount in default (plus accrued interest) or the Plan's security
interest in that Nonforfeitable Accrued Benefit.
(j) Does not treat the default as a distributable event. When an otherwise
distributable event first occurs pursuant to Section 6.01 or Setion 6.03
of the Plan, the Trustee will reduce the Participant's Nonforfeitable
Accrued Benefit by the lesser of the amount in default (plus accrued
interest) or the Plan's security interest in that Nonforfeitable Accrued
Benefit.
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT.
The Advisory Committee will apply Section 6.02 of the Plan with the
following modifications: (Choose (a) or (b))
(a) No modifications.
(b) The Plan permits the following annuity options:
- ----------------------------------------------------------------.
[Note: The Employer may specify additional annuity options in an
addendum to this Adoption Agreement, numbered 6.02(b).]
6.03 BENEFIT PAYMENT ELECTIONS.
Participant Elections After Separation from Service. A Participant who is
eligible to make distribution elections under Section 6.03 of the Plan may elect
to commence distribution of his Nonforfeitable Accrued Benefit: (Choose (a) or
(b))
(a) As of any distribution date, but not earlier than -------- of the --------
Plan Year beginning after the Participant's Separation from Service.
(b) As of the following date(s): (Choose at least one of Options
(1) through (5))
(1) Any distribution date after the close of the Plan Year in which the
Participant attains Normal Retirement Age.
(2) Any distribution date following his Separation from
Service.
(3) Any distribution date in the ----------------- Plan Year(s) beginning
after his Separation from Service.
(4) Any distribution date in the Plan Year after the
Participant incurs --------------------- Break(s) in Service (as
defined in Article V).
<PAGE>
(5) Any distribution date following attainment of age ----------- and
completion of at least -------- Years of Service (as defined in Article
V).
Participant Elections Prior to Separation from Service. Subject to the
restrictions of Article VI, the following distribution options apply under the
Employer's Plan prior to a Participant's Separation from Service. (Choose (c) or
(d))
(c) No distribution options prior to Separation from Service.
(d) Attainment of Normal Retirement Age. Until he retires, the Participant
has a continuing election to receive all or any portion of his Nonforfeitable
Accrued Benefit after he attains Normal Retirement Age.
ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT TO
PARTICIPANTS' ACCOUNTS
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT.
If a distribution (other than a distribution from a segregated Account)
occurs more than 90 days after the most recent valuation date, the distribution
will include interest at: (Choose (a) or (b))
(a) --------------% per annum. [Note: The percentage may equal 0%.]
(b) The 90 day Treasury bill rate in effect at the beginning of the current
valuation period.
ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES
10.14 VALUATION OF TRUST.
In addition to each Accounting Date, the Trustee must value the Trust Fund
on the following valuation date(s): (Choose (a) or (b))
(a) No other mandatory valuation dates.
(b) (Specify) --------------------------------------.
EFFECTIVE DATE ADDENDUM
(Restated Plans Only)
The Employer must complete this addendum only if the restated Effective
Date specified in Adoption Agreement Section 1.18 is different than the restated
effective date for at least one of the provisions listed in this addendum. In
lieu of the restated Effective Date in Adoption Agreement Section 1.18, the
following special effective dates apply: (Choose whichever elections apply)
<PAGE>
(a) Compensation definition. The Compensation definition of Section 1.12
(other than the $200,000 limitation) is effective for Plan Years beginning after
- -----------------.
[Note: May not be effective later than the first day of the first Plan Year
beginning after the Employer executes this Adoption Agreement to restate the
Plan for the Tax Reform Act of 1986, if applicable.]
(b) Eligibility conditions. The eligibility conditions specified in Adoption
Agreement Section 2.01 are effective for Plan Years beginning after
- -------------------.
(c) Suspension of Years of Service. The suspension of Years of Service rule
elected under Adoption Agreement Section 2.03 is effective for Plan Years
beginning after --------------------.
(d) Contribution/allocation formula. The contribution formula elected under
Adoption Agreement Section 3.01 and the method of allocation elected under
Adoption Agreement Section 3.04 is effective for Plan Years beginning after
- ---------------------.
(e) Reallocation of Forfeitures. The reallocation of forfeitures under
Section 3.05 applies to Plan Years beginning after ------------------.
[Note: The date specified may not be earlier than December 31, 1985.]
(f) Accrual requirements.
The accrual requirements of Section 3.06 are effective for Plan Years
beginning after -----------------. [Note: If the effective date is later than
Plan Years beignning after December 31, 1989, the accrual requirements in the
Plan prior to its restatement may not be more restrictive for post- 1989 Plan
Years than the requirements permitted under Adoption Agreement Section 3.06.]
(g) Vesting schedule. The vesting schedule elected under Adoption Agreement
Section 5.03 is effective for Plan Years beginning after --------------------.
For Plan Years prior to the special Effective Date, the terms of the Plan prior
to its restatement under this Adoption Agreement will control for purposes of
the designated povisions. A special Effective Date may not result in the delay
of a Plan provisionbeyond the permissible Effective Date under any applicable
law requirements.
Execution Page
The Trustee (and custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian) under the
Master Plan and Trust. The Employer hereby agrees to the provisions of this Plan
<PAGE>
and Trust, and in witness of its agreement, the Employer by its duly
authorized officers, has executed this Adoption Agreement, and the Trustee (and
Custodian, if applicable) signified its acceptance, on this --------- day of
- -------------, 19---.
Name and EIN of Employer: ---------------------------------------
Signed: ---------------------------------------------------------
Name(s) of Trustee: ---------------------------------------------
- -----------------------------------------------------------------
Signed: ---------------------------------------------------------
- -----------------------------------------------------------------
Name of Custodian: ----------------------------------------------
Signed: ---------------------------------------------------------
[Note: A Trustee is mandatory, but a Custodian is optional. See
Section 10.03 of the Plan.]
Plan Number: The 3-digit plan number the Employer assigns to this
Plan for ERISA reporting purposes (Form 5500 Series) is:
- ------------------------.
Use of Adoption Agreement. Failure to complete properly the elections in this
Adoption Agreement may result in disqualification of the Employer's Plan. The
3-digit number assigned to this Adoption Agreement (see page 1) is solely for
the Master Plan Sponsor's recordkeeping purposes and does not necessarily
correspond to the plan number the Employer designated in the prior paragraph.
The Master Plan Sponsor offers the following Paired Pension Plan(s) with this
Paired Profit Sharing Plan, identified by 3-digit adoption agreement number: 003
and 009.
Master Plan Sponsor. The Master Plan Sponsor identified on the first page of the
basic plan document will notify all adopting employers of an amendment of this
Master Plan or of any abandonment or discontinuance by the Master Plan Sponsor
of its maintenance of this Master Plan. For inquiries regarding the adoption of
the Master Plan, the Master Plan Sponsor's intended meaning of any plan
provisions or the effect of the opinion letter issued to the Master Plan
Sponsor, please contact the Master Plan Sponsor at the following address and
telephone number: INVESCO Trust Company, 7800 E. Union Ave., Denver, Colorado
80201, (303) 779-0731.
<PAGE>
Reliance on Opinion Letter. If the Employer does not maintain (and has
never maintained) any other plan other than this Plan and a Paired Profit
Sharing Plan, it may rely on the Master Plan Sponsor's opinion letter covering
this Plan for purposes of plan qualification. For this purpose, the Employer has
not maintained another plan if this Plan, or the Paired Profit Sharing Plan,
amended and restated that prior plan and the prior plan was the same type of
plan as the restated plan. If the Employer maintains or has maintained another
plan other than a Paired Profit Sharing Plan, including a welfare benefit fund,
as defined in Code ss.419(e), which provides post-retirement medical benefits
for key employees (as defined in Code ss.419A(d)(3)), or an individual medical
account (as defined in Code ss.415(1)(2)), the Employer may not rely on this
Plan's qualified status unless it obtains a determination letter from the
applicable IRS Key District office.
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)
The undersigned Employer, by executing this Participation Agreement, elects to
become a Participating Employer in the Plan identified in Section 1.03 of the
accompanying Adoption Agreement, as if the Participating Employer were a
signatory to that Agreement. The Participating Employer accepts, and agrees to
be bound by, all of the elections granted under the provisions of the Master
Plan as made by, ----------------------------------, the Signatory Employer to
the Execution Page of the Adoption Agreement.
1. The Effective Date of the undersigned Employer's participation in the
designated Plan is ---------------------------.
2. The undersigned Employer's adoption of this Plan constitutes:
(a) The adoption of a new plan by the Participating Employer.
(b) The adoption of an amendment and restatement of a plan currently
maintained by the Employer, identified as ------------------------------------
and having an original effective date of --------------------------------------.
Dated this ----------------- day of --------------, 19----.
Name of Participating Employer: ------------------------------------
Signed: ------------------------------------------------------------
Participating Employer's EIN: --------------------------------------
Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.
Name of Signatory Employer: ----------------------------------------
<PAGE>
Accepted: -------------------------------------------------
[Date]
Signed: ---------------------------------------------------
Name(s) of Trustee: ---------------------------------------
Accepted: -------------------------------------------------
[Date]
Signed: ---------------------------------------------------
[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important Master
Plan information.]
STD MP AA Instructions
Complete the first blank in the paragraph by writing in the business' name in
its entirety.
1.02 Trustee
Option (a) should be chosen when the employer will be the trustee, INVESCO Trust
Company would then act as Custodian. If option (b) is chosen, INVESCO Trust
Company will be the Trustee and will charge an annual trust fee. Note: See
Trustee Comments on page 14 for further explaination of Non-discretionary
Trustee.
1.03 Plan
Enter the plan name. Example: ABC Inc. Money Purchase Pension
Plan.
1.07 Employee
If you want the plan to cover all types of employees, select option (a). If you
want to exclude from the plan any group(s) of employees, select any combination
of (b) or (c).
Leased Employees
You may not exclude leased employees from participation unless they are excluded
under options (b) or (c) of Section 1.07.
Related Employers
You may not exclude related employers from participating in the plan unless they
are excluded under options (b) or (c) of Section 1.07.
<PAGE>
1.12 Compensation
Treatment of elective contributions - Choose option (a) if you prefer to "add
back" employee elective 401(k) contributions to compensation for purposes of
allocating employer contributions, and forfeitures.
Modification to Compensation
Modifications to Compensation - You must choose option (c) or any combination of
(d) or (e). Any exclusion of compensation may result in unallowable
discrimination.
1.17 Plan Year
You must define the "plan year," usually it will follow the business tax year.
Limitation Year - You must define the "limitation year" (12 month period for
testing allocations to each employee's account), for administrative convenience
it should match the plan year.
1.18 Effective Date
New Plan - Enter the first day of your plan year (usually January 1) and
the year.
Restated Plan - Effective date - If you are amending for the Tax Reform Act of
1986 enter: January 1, 1987. If you are amending for another reason, enter the
first day of your tax year, example: January 1, 1990. Originally established
date - Enter the original effective date of your plan from your prior Adoption
Agreement.
1.27 Hours of Service
Choose which method you wish to use for counting hours worked by an employee to
accrue benefits. Option (b), the equivalency method, is explained in Section
1.27 of the plan. Option (a) is usually chosen.
1.29 Service for Predecessor Employer
Under this option, you may elect to count service for a predecessor employer
when you are not maintaining the plan of the predecessor employer. (Used
primarily in the event of a merger or acquisition.)
1.31 Leased Employees
The law requires you to state how your plan would treat a leased employee who
could become a participant, even if you don't intend to ever lease employees.
Choose option (a) covering the employee without regard to the leasing company's
plan or option (b) the reduction method. Usually Option (b) is chosen.
<PAGE>
2.01 Eligibility
a. An employee must attain this age to become a participant (cannot exceed
age 21).
b. Pick how long (service) an employee must work to become a participant.
Plan Entry - Choose when employees enter the plan for purposes of contributions
and benefit accrual. Normally, option (c), semi-annual entry dates, is chosen.
Time of Participation - Choose which plan entry date (before or after) an
employee who meets the eligibility requirements will enter the plan. Normally,
option (f) is chosen.
Dual Eligibility - This section allows you to include in the plan current
employees who have not met the eligibility requirements and apply the
eligibility requirements to newly hired employees.
Restated plans usually chose (i)(2).
2.02 Years of Service
Option (b) should only be chosen if you wish to require less than 1000
hours to be worked by an employee for eligibility. Usually Option (a) is chosen.
Eligibility Computation Period - Choose whether to measure subsequent
eligibility periods on the employee's anniversary or the plan year. Option (d)
is chosen for administrative convenience.
2.03 Break in Service
This option may impose a complicated re-entry date for employees who have
terminated or whose hours were severely cut back. Option (a) is chosen for
administrative convenience.
3.01 Employer Contributions and Forfeitures
Amount - The employer must select a definite contribution formula under a money
purchase pension plan. Option (a) is a nonintegrated formula, options (b) and
(c) are integrated formulas.
Option (a) allows the employer to choose a fixed amount for the contribution
regardless of compensation.
Options (b) and (c) are two approaches to allowing permitted disparity in the
contribution formula. Option (b) applies the first percentage to a participant's
total compensation.
<PAGE>
3.04 Contribution Allocation
Contribution will be allocated (split up to participants) in the manner elected
to computate the contribution selected under Section 3.01.
3.05 Forfeiture Allocation
Choose the method of allocating (dividing up) forfeitures of terminated
non-vested participant balances. Option (a) allocates forfeitures as a reduction
in contributions. Option (b) allocates forfeitures as an additional employer
contribution.
3.06 Compensation Taken Into Account
If you wish to count a participant's full year's compensation (even if he or she
entered the plan during the year), for contributions choose option (a), if not,
choose option (b).
Accrual Requirements - Specify the service requirements a participant must
satisfy to receive an allocation. You may specify an hours of service
requirement, no greater than 501 hours. Standardized plans have relaxed
contribution requirements. A participant will receive an employer contribution
and forfeitures if they meet either of the two requirements below.
Requirement #1
If the Participant was employed on the last day of the plan year and worked for
at least one hour during the plan year, or
Requirement #2
If the Participant terminates employment during the plan year after working at
least 501 hours for the employer.
3.15 More Than One Plan
This section only applies if you (the employer) maintain another defined
contribution plan (e.g.: profit sharing, money purchase, 401(k) or target
benefit) that covers at least one participant in this plan.
3.18 Defined Benefit Plan Limitation
Check option (a) if you have never maintained a defined benefit plan for any
participants in this plan. If you have or are currently maintaining a defined
benefit under option (b), choose which plan's benefit would be reduced if a
participant's total allocations for a year were to exceed the allowable limit.
5.01 Normal Retirement Age
Choose what age you (the employer) want the participants to be 100% vested in
their benefits, if still employed (normal retirement age).
<PAGE>
5.02 Vesting Death/Disability
You may choose to allow 100% vesting for participants that terminate from
service because of death, option (b) or disability, option (c).
5.03 Vesting Schedule
Choose what vesting schedule(s) you want to apply to employer contributions. If
you choose option (b), you must at a minimum complete the top-heavy vesting
schedule. Remember, if the eligibility requirements are more than one year,
option (a) must be chosen.
Complete the Modified Top Heavy Schedule based upon the following:
Nonforfeitable Percentage
Years of Service
1
2 (not less than 20%)
3 (not less than 40%)
4 (not less than 60%)
5 (not less than 80%)
6 (not less than 100%)
5.04 Cash-Out Rule
If option (b) is chosen, the plan treats a 0% vested terminated participant as
having received a distribution, allowing for forfeitures to be reallocated to
active participants.
5.06 Years of Service
Choose what measuring period the plan should use to determine years of service
for vesting, employee's anniversary year or plan year. For ease of
administration choose Option (a).
5.08 Prior Years of Service
By choosing options (b) through (d) you (the employer) may exclude some prior
years of service for purposes of vesting.
Article 6
The Employer must establish a specific distribution policy for the plan.
Treas. Reg. 1.411(d)-4 prohibits the Employer, the advisory committee or any
third party to retain discretion over when or in what form to pay the
participant's benefit (Optional Forms of Benefit). Under a restated plan, the
elections under Article VI, to the extent they differ from previous plan
<PAGE>
provisions regarding optional forms of benefit, may not eliminate an
optional form of benefit with respect to the account balance accrued as of the
date the Employer executes the restated adoption agreement (or, if later, the
effective date of that restated adoption agreement). An option form of benefit
includes the form of payment (e.g., lump sum or installments), the timing of
payment (e.g., immediately after separation form service, following a break in
service, after attaining normal retirement age) and the medium of payment (e.g.
right to elect distribution in Employer securities, right to elect distribution
in the form of an annuity contract).
With this in mind, if you are restating an existing plan, pay close attention to
the distribution features under that document and your administrative practice
of distributions. In all cases, try to mirror or liberalize those distribution
features when restating onto this document.
6.01 Distribution Date
A distribution date establishes a predetermined "target" date in a plan year
when the plan will offer distributions. The actual distribution may occur later
than a distribution date as long as the actual distribution is within an
administratively reasonable period of time from the distribution date. Typical
distribution dates are annual dates such as March 1.
Nonforfeitable Accrued Benefit Not Exceeding $3,500
When a separated participant's vested balance does not exceed $3,500, the plan
allows the employer to separately establish the timing of these distributions,
separate from the distribution dates. When you complete this section, you need
to balance two concerns: 1) will the timing of the distribution cause the
participant to consider it a "severance benefit" and therefore encourage
separation from service and 2) the administrative concerns of carrying a
non-active account in the plan.
Disability - The plan allows you (the employer) to establish a different target
payout date for disability distributions in options (e) and (f).
Hardship - This option states whether or not the plan would allow a separated
participant to receive a hardship distribution, prior to receiving a total
distribution of his/her vested account balance.
Default on a Loan - This election does not create a loan policy. You (the
employer) must elect the timing of the plan's foreclosure if a participant's
loan were to be defaulted upon even if you do not intend to offer loans in your
plan.
<PAGE>
6.02 Method of Payment
Money purchase pension plans require payouts to be in the form of a
commercial annuity unless properly waived. The employer may in options (b) and
(c), (if this is a new plan), limit the alternative method of payment. Caution:
an employer cannot eliminate a prior method of payment by restating the plan
onto this document.
6.03 Participant Elections After Separation form Service
You must choose when an employee who has separated from service, with a vested
benefit greater than $3,500, may elect to commence distributions. This election
will be tied directly to the "distribution date" defined earlier.
9.10 Value of Benefit
This option allows the employer to add interest to a participant's balance, if a
distribution occurs more than 90 days after the most recent plan valuation. You
do not have to provide an interest addition under this section and may complete
option (a) with 0%.
10.14 Valuation of Trust
You may use this option to specify mandatory valuation dates, in addition to the
accounting date. Normally, option (a) is chosen.
Instructions for Effective Date Addendum
You must complete the effective date addendum only if the effective dates of any
of the listed items (a) through (g) have an effective date other than your
restated effective date in adoption agreement section 1.18. Some provisions in
the Tax Reform Act of 1986 were not effective until 1988 or 1989 the few
provisions (if any) that have later effective dates must specify when they are
effective.
a. Compensation definition may not be later than the first day of your 1991
plan year.
b. Eligibility conditions may not be later than the first day of your 1989
plan year.
c. Suspension of years of service may not be earlier than the first day of
your 1990 plan year.
d. Contribution/allocation formula may not be earlier than the first day of
your 1989 plan year.
e. Reallocation of Forfeitures may not be earlier than December 31, 1989.
f. Accrual requirements may not be earlier than the first day of your 1989
plan year.
<PAGE>
g. Vesting schedule may not be later than the first day of your 1989 plan
year.
Execution Page
The Employer must complete the date on which it executes the adoption agreement
and must execute the signature for the Employer. The execution page provides two
lines above the signature line to print or type the name of the Employer and the
Employer's EIN. If the Employer is a sole proprietorship, the individual sole
proprietor should execute as Employer. If the Employer is a corporation or a
partnership, an officer or a partner, as applicable, should execute the adoption
agreement on behalf of the Employer.
Trustee
If you selected option (a) of Section 1.02, then the employer will be the
Trustee. An individual must sign as trustee for the employer. INVESCO Trust
Company will then act as Custodian.
If you choose to have INVESCO Trust Company act as "Trustee" then option (b) of
Section 1.02 must be chosen. INVESCO does charge an annual fee for this service.
INVESCO Trust Company will only serve as a non-discretionary trustee, this means
that there is a person who is the "Named Fiduciary." The Named Fiduciary gives
direction to a non-discretionary trustee, and the non- discretionary trustee
accepts all directions from the Named Fiduciary. The Named Fiduciary is either
the President of the Corporation, the managing partner of the partnership or the
self-employed individual of a sole proprietorship. The Named Fiduciary is
responsible for selecting plan investments.
The execution page also includes a signature line for the Custodian, if any.
Leave the Custodian lines blank if INVESCO Trust Company will act as custodian.
Plan number. This paragraph designates the number the Employer assigns to the
plan for reporting (Form 5500) purposes. If this is the first plan the Employer
ever maintained, the number must be 001. The Employer's plan number does not
correspond to the 3- digit adoption agreement number specified at the top of the
first page of the adoption agreement. Consult your Counsel if you are unsure
what 3-digit plan number to use.
Instructions for the Participation Agreement
This adoption agreement includes a Participation Agreement under which a related
group member of the signatory Employer to the execution page may participate in
the same plan with that Employer. Each related group member wishing to become a
<PAGE>
participating Employer should execute a separate Participation Agreement.
See Section 1.30 of the Plan for the definition of related Employers.
Thus, it is possible to exclude the employees of related group members not
participating in the plan. If an Employer is a member of a related group, it
should consider whether the inclusion of other related group members' employees
is necessary to satisfy the coverage requirements of Code ss.410(b) or the
minimum participation requirement of Code ss.401(a)(26). If the Employer
determines inclusion of the employees of a related group member is necessary to
maintain qualification of the plan, the Employer may take one or two approaches:
(1) have the related group member execute a Participation Agreement; or (2)
elect in Adoption Agreement Section 1.07 to include the employees of that
related group member. Under approach (1), the participation of the related group
member will result in the automatic inclusion of the employees of that related
group member, without having to specify their inclusion in Adoption Agreement
Section 1.07. In addition, the related group member, under approach (1), has the
authority to contribute to the plan and, in the event another participating
related group member makes a contribution on behalf of that related group
member's employees, the Participation Agreement will ensure the deductibility of
that contribution (assuming the contribution does not exceed the deduction
limits of Code ss.404). Additional instructions to the appropriate adoption
agreement explain the effect on the allocation of Employer contributions when
related group members maintain a single nonstandardized plan. Please contact us.
Under approach (2), the plan will retain its qualified status, but contributions
the Employer makes on behalf of a nonparticipating related group member's
employees may not be deductible (even if otherwise within the limitations of
Code ss.404), resulting in an excise tax to the contributing Employer.
Unrelated Employers. The Master Plan does not allow the participation in a
single plan of unrelated Employers (i.e., Employers that do not satisfy the
related group definition in Section 1.30 of the Plan).
legal\adop-agr\stdmpaa.004
Adoption Agreement #005
D346282a
Nonstandardized 401(k) Plan Adoption Agreement
Nonstandardized 401(k) Plan Considerations
For: Businesses that want the ability of employee pre-tax
contributions.
Compensation: The employer may exclude certain types of
compensation.
Eligibility for Contributions: May require employees to work up
to 1,000 hours and be employed on the last day.
Investment Direction: May allow the employee to direct where
funds are invested.
Eligibility: The employer may exclude certain classifications or
groups of employees.
Provided by:
The Financial Funds
Custodian:
INVESCO Trust Company
A Subsidiary of INVESCO MIM PLC
<PAGE>
Your Adoption Agreement and Basic Plan Document together constitute the rules
and parameters under which your retirement program will operate. Each section of
the Adoption Agreement requires the employer to make a selection. Whenever
possible (balancing complexity and space constraints) we have provided
instructions to the left of key selections. These instructions are intended to
assist you, the employer, in choosing the optional provisions for your
retirement program. They are not intended to substitute or replace competent
advice from your legal counsel or accountant. If further clarification is
necessary, contact your advisors or INVESCO Trust Company. We recommend that you
obtain the advice of your legal or tax advisor before you sign this Adoption
Agreement.
<PAGE>
ADOPTION AGREEMENT #005
NONSTANDARDIZED CODE 401(k)
PROFIT SHARING PLAN
The undersigned, -------------------------------------------- ("Employer"), by
executing this Adoption Agreement, elects to become a participating Employer in
the INVESCO Trust Company Defined Contribution Master Plan (basic plan document
#01) by adopting the accompanying Plan and Trust in full as if the Employer were
a signatory to that Agreement. The employer makes the following elections
granted under the provisions of the Master Plan.
ARTICLE I
DEFINITIONS
1.02 TRUSTEE. The Trustee executing this Adoption Agreement is: (Choose (a)
or (b))
(a) A discretionary Trustee, See Section 10.03[A] of the Plan.
(b) A nondiscretionary Trustee. See Section 10.03[B] of the Plan. [Note:
The Employer may not elect Option (b) if a Custodian executes the Adoption
Agreement.]
1.03 PLAN. The name of the Plan as adopted by the Employer is
- -------------------------------------------------------------.
1.07 EMPLOYEE. The following Employees are not eligible to participate in
the Plan: (Choose (a) or at least one of (b) through (G))
(a) No exclusions.
(b) Collective bargaining employees (as defined in Section 1.07 of the
Plan). [Note: If the Employer excludes union employees from the Plan, the
Employer must be able to provide evidence that retirement benefits were the
subject of good faith bargaining.]
(c) Nonresident aliens who do not receive any earned income (as defined in
Code ss.911(d)(2) from the Employer which constitutes United States source
income (as defined in Code ss.861(a)(3)).
(d) Commission Salesmen.
(e) Any Employee compensated on a salaried basis.
(f) Any Employee compensated on an hourly basis.
(g) (Specify) -------------------------------------------------
- -----------------------------------------------------------------
<PAGE>
Leased Employees. Any Leased Employee treated as an Employee
under Section 1.31 of the Plan, is: (Choose (h) or (i))
(h) Not eligible to participate in the Plan.
(i) Eligible to participate in the Plan, unless excluded by reason of an
exclusion classification elected under this Adoption Agreement Section 1.07.
Related Employers. If any member of the Employer's related group (as defined in
Section 1.30 of the Plan) executes a Participation Agreement to this Adoption
Agreement, such member's Employees are eligible to participate in this Plan,
unless excluded by reason of an exclusion classification elected uner this
Adoption Agreement Section 1.07. In addition: (Choose (j) or (k))
(j) No other related group member's Employees are eligible to participate
in the Plan.
(k) The following nonparticipating related group member's Employees are
eligible to participate in the Plan unless excluded by reason of an exclusion
classification elected under this Adoption Agreement Section 1.07:
- ---------------------------------------
1.12 COMPENSATION
Treatment of elective contributions. (Choose (a) or (b))
(a) "Compensation" includes elective contributions made by the Employer on
the Employee's behalf.
(b) "Compensation" does not include elective contributions.
Modifications to Compensation definition. (Choose (c) or at least one of
(d) through (j))
(c) No modifications other than as elected under Options (a) or
(b).
(d) The Plan excludes Compensation in excess of $---------------.
(e) In lieu of the definition in Section 1.12 of the Plan, Compensation means
any earnings reportable as W-2 wages for Federal income tax withholding
purposes, subject to any other election under this Adoption Agreement Section
1.12.
(f) The Plan excludes bonuses.
(g) The Plan excludes overtime.
(h) The Plan excludes Commissions.
<PAGE>
(i) Compensation will not include Compensation from a related employer (as
defined in Section 1.30 of the Plan) that has not executed a Participation
Agreement in this Plan unless, pursuant to Adoption Agreement Section 1.07, the
Employees of that related employer are eligible to participate in this Plan.
(j) (Specify) ----------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
If, for any Plan Year, the Plan uses permitted disparity in the contribution or
allocation formula elected under Article III, any election of Options (f), (g),
(h) or (j) is ineffective for such Plan Year with respect to any Nonhighly
Compensated Employee.
Special definition for matching contributions. "Compensation" for purposes
of any matching contribution formula under Article III means: (Choose (k) or (l)
only if applicable)
(k) Compensation as defined in this Adoption Agreement Section
1.12.
(l) (Specify) ----------------------------------------------------------------
- --------------------------------------------------------------------------------
Special definition for salary reduction contributions. An Employee's salary
reduction agreement applies to his Compensation determined prior to the
reduction authorized by that salary reduction agreement, with the following
exceptions: (Choose (m) or at least one of (n) or (o), if applicable)
(m) No exceptions.
(n) If the Employee makes elective contributions to another plan maintained by
the Employer, the Advisory Committee will determine the amount of the Employee's
salary reduction contribution for the withholding period: (Choose (1) or (2))
(1) After the reduction for such period of elective
contributions to the other plan(s).
(2) Prior to the reduction for such period of elective
contributions to the other plan(s).
(o) (Specify) ----------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1.17 PLAN YEAR/LIMITATION YEAR.
Plan Year. Plan Year means: (Choose (a) or (b))
(a) The 12 consecutive month period ending every ---------------.
(b) (Specify) ----------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Limitation Year. The Limitation Year is: (Choose (c) or (d))
(c) The Plan Year.
(d) The 12 consecutive month period ending every ---------------.
1.18 EFFECTIVE DATE.
New Plan. The "Effective Date" of the Plan is -----------------.
Restated Plan. The restated Effective Date is -----------------.
This Plan is a substitution and amendment of an existing
retirement plan(s) originally established ---------------------.
(Note: See the Effective Date Addendum.)
1.27 HOUR OF SERVICE. The crediting method for Hours of Service is: (Choose
(a) or (b))
(a) The actual method.
(b) The ---------------------------- equivalency method, except:
(1) No exceptions.
(2) The actual method applies for purposes of: (Choose at
least one)
(i) Participation under Article II.
(ii) Vesting under Article V.
(iii)Accrual of benefits under Section 3.06.
[Note: On the blank line, insert "daily," "weekly," "semi-monthly payroll
periods" or "monthly."]
1.29 SERVICE FOR PREDECESSOR EMPLOYER. In addition to the predecessor
service the Plan must credit by reason of Section 1.29 of the Plan, the Plan
credits Service with the following predecessor employer(s):---------------------
- --------------------------------------------------------------------------------
Service with the designated predecessor employer(s) applies: (Choose at least
one of (a) or (b); (c) is available only in addition to (a) or (b))
(a) For purposes of participation under Article II.
(b) For purposes of vesting under Article V.
(c) Except the following Service: --------------------------/
[Note: If the Plan does not credit any predecessor service under this
provision, insert "N/A" in the first blank line. The Employer may attach a
schedule to this Adoption Agreement, in the same format as this Section 1.29,
designating additional predecessor employers and the applicable service
crediting elections.]
<PAGE>
1.31 LEASED EMPLOYEES. If a Leased Employee is a Participant in the Plan
and also participates in a plan maintained by the leasing organization: (Choose
(a) or (b))
(a) The Advisory Committee will determine the Leased Employee's allocation of
Employer contributions under Article III without taking into account the Leased
Employee's allocation, if any, under the leasing organization's plan.
(b) The Advisory Committee will reduce the Leased Employee's allocation of
Employer nonelective contributions (other than designated qualified nonelective
contributions) under this Plan by the Leased Employee's allocation under the
leasing organization's plan, but only to the extent that allocation is
attributable to the Leased Employee's service provided to the Employer. The
leasing organizationn's plan:
(1) Must be a money purchase plan which would satisfy the definition under
Section 1.31 of a safe harbor plan, irrespective of whether the safe
harbor exception applies.
(2) Must satisfy the features and, if a defined benefit plan, the method
of reduction described in an addendum to this Adoption Agreement, numbered
1.31.
ARTICLE II
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY.
Eligibility conditions. To become a Participant in the Plan, an Employee
must satisfy the following eligibility conditions: (Choose (a) or (b) or both;
(c) is optional as an additional election)
(a) Attainment of age ------------------ (specify age, not exceeding 21).
(b) Service requirement. (Choose one of (1) through (3))
(1) One Year of Service.
(2) ---------- months (not exceeding 12) following the Employee's
Employment Commencement Date.
(3) One Hour of Service.
(c) Special requirements for non-401(k) portion of plan. (Make elections
under (1) and under (2))
<PAGE>
(1) The requirements of this Option (c) apply to
participation in: (Choose at least one of (i) through (iii))
(i) The allocation of Employer nonelective contributions and
Participant forfeitures.
(ii) The allocation of Employer matching contributions (including
forfeitures allocated as matching contributions).
(iii)The allocation of Employer qualified nonelective
contributions.
(2) For participation in the allocations described in (1),
the eligibility conditions are: (Choose at least one of (i)
through (iv))
(i) --------- (one or two) Year(s) of Service, without an
intervening Break in Service (as described in Section 2.03(A) of the
Plan) if the requirement is two Years of Service.
(ii) --------- months (not exceeding 24) following the Employee's
Employment Commencement Date.
(iii)One Hour of Service.
(iv) Attainment of age ----------------- (Specify age, not
exceeding 21).
Plan Entry Date. "Plan Entry Date" means the Effective Date and: (Choose
(d), (e) or (f))
(d) Semi-annual Entry Dates. The first day of the Plan Year and the first
day of the seventh month of the Plan Year.
(e) The first day of the Plan Year.
(f) (Specify entry dates) ----------------------------/
Time of Participation. An Employee will become a Participant (and, if
applicable, will participate int he allocations described in Option (c)(1)),
unless excluded under Adoption Agreement Section 1.07, on the Plan Entry Date
(if employed on that date): (Choose (g), (h) or (I))
(g) immediately following
(h) immediately preceding
(i) nearest --------------------------------------------- the date the
Employer completes the eligibility conditions described in Options (a) and (b)
(or in Option (c)(2) if applicable) of this Adoption Agreement Section 2.01.
<PAGE>
[Note: The Employer must coordinate the selection of (g), (h) or (i) with
the "Plan Entry Date" selection in (d), (e) or (f). Unless otherwise excluded
under Section 1.07, the Employee must become a Participant by the earlier of:
(1) the first day of the Plan Year beginning after the date the Employee
completes the age and service requirements of Code ss.410(a); or (2) 6 months
after the date the Employee completes those requirements.]
Dual eligibility. The eligibility conditions of this Section 2.01
apply to: (Choose (j) or (k))
(j) All Employees of the Employer, except: (Choose (1) or (2))
(1) No exceptions
(2) Employees who are Participants in the Plan as of the
Effective Date.
(k) Solely to an Employee employed by the Employer after ----------------.
If the Employee was employed by the Employer on or before the specified date,
the Employee will become a Participant: (Choose (1), (2) or (3))
(1) On the latest of the Effective Date, his Employment Commencement Date
or the date he attains age ----------------- (not to exceed 21).
(2) Under the eligibility conditions in effect under the Plan prior to the
restated Effective Date. If the restated Plan required more than one Year
of Service to participate, the eligibility conditions under this Option
(2) for participation in the Code 401(k) arrangement under this Plan is
one Year of Service for Plan Years beginning after December 31, 1988. [For
restated plans only]
(3) (Specify)
----------------------------------------------------------
----------------------------------------------------------/
2.02 YEAR OF SERVICE - PARTICIPATION.
Hours of Service. An Employee must complete: (Choose (a) or (b))
(a) 1,000 Hours of Service
(b) -------------- Hours of Service during an eligibility computation
period to receive credit for a Year of Service. [Note: The Hours of Service
requirement may not exceed 1,000.]
Eligibility computation period. After the initial eligibility computation
period described in Section 2.02 of the Plan, the Plan measures the eligibility
computation period as: (Choose (c) or (d))
<PAGE>
(c) The 12 consecutive month period beginning with each anniversary of an
Employee's Employment Commencement Date.
(d) The Plan Year, beginning with the Plan Year which includes the first
anniversary of the Employee's Employment Commencement Date.
2.03 BREAK IN SERVICE - PARTICIPATION. The Break in Service rule described
in Section 2.03(B) of the Plan: (Choose (a) or (b))
(a) Does not apply to the Employer's Plan.
(b) Applies to the Employer's Plan.
2.06 ELECTION NOT TO PARTICIPATE. The Plan: (Choose (a) or (b))
(a) Does not permit an eligible Employee or a Participant to elect not to
participate.
(b) Does permit an eligible Employee or a Participant to elect not to
participate in accordance with Section 2.06 and with the following rules:
(Complete (1), (2), (3) and (4))
(1) An election is effective for Plan Year if filed no later than
---------------------.
(2) An election not to participate must be effective for at least
------------- Plan Year(s).
(3) Following a re-election to participate, the Employee or
Participant:
(i) May not again elect not to participate for any
subsequent Plan Year.
(ii) May again elect not to participate, but not earlier than the
--------------------- Plan Year following the Plan Year in which
the re-election first was effective.
(4) (Specify) --------------------------------------------------------
[Insert "N/A" if no other rules apply].
ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
3.01 AMOUNT.
Part I. [Options (a) through (g)] Amount of Employer's contribution. The
Employer's annual contribution to the Trust will equal the total amount of
deferral contributions, matching contributions, qualified nonelective
contributions and nonelective contributions, as determined under this Section
3.01.
<PAGE>
(Choose any combination of (a), (b), (c) and (d), or choose (e))
(a) Deferral contributions (Code 401(k) arrangement). (Choose
(1) or (2) or both)
(1) Salary reduction arrangement. The Employer must contribute the amount
by which the Participants have reduced their Compensation for the Plan
Year, pursuant to their salary reduction agreements on file with the
Advisory Committee. A reference in the Plan to salary reduction
contributions is a reference to these amounts.
(2) Cash or deferred arrangement. The Employer will contribute on behalf
of each Participant the portion of the Participant's proportionate share
of the cash or deferred contribution which he has not elected to receive
in cash. See Section 14.02 of the Plan. The Employer's cash or deferred
contribution is the amount the Employer may from time to time deem
advisable which the Employer designates as a cash or deferred contribution
prior to making that contribution to the Trust.
(b) Matching contributions. The Employer will make matching contributions in
accordance with the formula(s) elected in Part II of this Adoption Agreement
Section 3.01.
(c) Designated qualified nonelective contributions. The Employer, in its sole
discretion, may contribute an amount which it designates as a qualified
nonelective contribution.
(d) Nonelective contributions. (Choose any combination of (1)
through (4))
(1) Discretionary contribution. The amount (or additional
amount) the Employer may from time to time deem advisable.
(2) The amount (or additional amount) the Employer may from
time to time deem advisable, separately determined for each
of the following classifications of Participants: (Choose
(i) of (ii))
(i) Nonhighly Compensated Employees and Highly
Compensated Employees.
(ii) (Specify classifications) ------------------------------------
------------------------------------------------------.
Under this Option (2), the Advisory Committee will allocate the
amount contributed for each Participant classification in accordance
with Part II of Adoption Agreement Section 3.04, as if the
Participants in that classification were the only Participants in
the Plan.
<PAGE>
(3) ----------------% of the Compensation of all Participants under
the Plan, determined for the Employer's taxable year for
which it makes the contribution. [Note: The percentage
selected may not exceed 15%.]
(4) -----------% of Net Profits but not more than $--------------.
(e) Frozen Plan. This Plan is a frozen Plan effective
- ----------------------. The Employer will not contribute to the Plan with
respect to any period following the stated date.
Net Profits. The Employer: (Choose (f) or (g))
(f) Need not have Net Profits to make its annual contribution under this Plan.
(g) Must have current or accumulated Net Profits exceeding $------------ to
make the following contributions: (Choose at least one)
(1) Cash or deferred contributions described in Option
(a)(2).
(2) Matching contributions described in Option (b), except:
-----------------------------------------------------------.
(3) Qualified nonelective contributions described in Option
(c).
(4) Nonelective contributions described in Option (d).
The term "Net Profits" means the Employer's net income or profits for any
taxable year determined by the Employer upon the basis of its books of account
in accordance with generally accepted accounting practices consistently applied
without any deductions for Federal and state taxes upon income or for
contributions made by the Employer under this Plan or under any other employee
benefit plan the Employer maintains. The term "net Profits" specifically
excludes:
- ---------------------------------------------------------------.
[Note: Enter "N/A" if no exclusions apply.]
If the Employer requires Net Profits for matching contributions and the Employer
does not have sufficient Net Profits uner Option (g), it will reduce the
matching contribution under a fixed formula on a prorata basis for all
Participants. A Participant's share of the reduced contribution will bear the
same ratio as the matching contribution the Participant would have received if
Net Profits were sufficient bears to the total matching contribution all
Participants would have received if Net Profits were sufficient. If more than
one member of a related group (as defined in Section 1.30) execute this Adoption
<PAGE>
Agreement, each participating member will determine net Profits separately
but will not apply this reduction unless, after combining the separately
determined Net Profits, the aggregate Net Profits are insufficient to satisfy
the matching contribution liability. "Net Profits" includes both current and
accumulated Net Profits.
Part II. [Options (h) through (j)] Matching contribution formula. [Note: If
the Employer elected Option (b), complete Options (h), (i) and (j).]
(h) Amount of matching contributions. For each Plan Year, the Employer's
matching contribution is: (Choose any combination of (1), (2), (3), (4) and (5))
(1) An amount equal to -----------% of each Participant's eligible
contributions for the Plan Year.
(2) An amount equal to -----------% of each Participant's first tier of
eligible contributions for the Plan Year, plus the following matching
percentage(s) for the following subsequent tiers of eligible contributions
for the Plan Year: --------------------------------------.
(3) Discretionary formula.
(i) An amount (or additional amount) equal to a matching percentage
the Employer from time to time may deem advisable of the
Participant's eligible contributions for the Plan Year.
(ii) An amount (or additional amount) equal to a matching percentage
the Employer from time to time may deem advisable of each tier of
the Participant's eligible contributions for the Plan Year.
(4) An amount equal to the following percentage of each Participant's
eligible contributions for the Plan Year, based on the Participant's Years
of Service:
Number of Years of Service Matching Percentage
----------- ------------
----------- ------------
----------- ------------
----------- ------------
The Advisory Committee will apply this formula by determining
Years of Service as follows: -------------------------------------------------.
(5) A Participant's matching contribuitons may not: (Choose
(i) or (ii))
(i) Exceed -------------------------------------------.
(ii) Be less than -------------------------------------.
<PAGE>
Related Employers. If two or more related employers (as defined in Section
1.30) contribute to this Plan, the related employers may elect different
matching contribution formulas by attaching to the Adoption Agreement a
separately completd copy of this Part II. [Note: Separate matching contribution
formulas create separate current benefit structures that must satisfy the
minimum participation test of Code 401(a)(26).]
(i) Definition of eligible contributions. Subject to he requirements of
Option (j), the term "eligible contributions" means: (Choose any combination of
(1) through (3))
(1) Salary reduction contributions.
(2) Cash or deferred contributions (including any part of the
Participant's proportionate share of the cash or deferred contribution
which the Employer defers without the Participant's election).
(3) Participant mandatory contributions, as designated in Adoption
Agreement Section 4.01. See Section 14.04 of the Plan.
(j) Amount of eligible contributions taken into account. When determining a
Participant's eligible contributions taken into account under the matching
contributions formula(s), the following rules apply: (Choose any combination of
(1) through (4))
(1) The Advisory Committee will take into account all eligible
contributions credited for the Plan Year.
(2) The Advisory Committee will disregard eligible contributions
exceeding
(3) The Advisory Committee will treat as the first tier of eligible
contributions, an amount not exceeding:
-----------------------------.
The subsequent tiers of eligible contributions are:
- ---------------------------.
(4) (Specify)------------------------------------.
Part III. [Options (k) and (l). Special rules for Code ss.401(k)
Arrangement. (Choose (k) or (l), or both, as applicable)
(k) Salary Reduction Agreements. The following rules and
restrictions apply to an Employee's salary reduction agreement:
(Make a selection under (1), (2), (3) and (4))
(1) Limitation on amount. The Employee's salary reduction
contributions: (Choose (i) or at least one of (ii or (iii))
<PAGE>
(i) No maximum limitation other than as provided in
the Plan.
(ii) May not exceed ------------% of Compensation for the Plan Year,
subject to the annual additions limitation described in Part 2 of
Article III and the 402(g) limitation described in Section 14.07 of
the Plan.
(iii)Based on percentages of Compensation must equal at
least --------------------.
(2) An Employee may revoke, on a prospective basis, a
salary reduction agreement: (Choose (i), (ii), (iii) or
(iv))
(i) Once during any Plan Year but not later than
--------------------- of the Plan Year.
(ii) As of any Plan Entry Date.
(iii)As of the first day of any month.
(iv) (Specify, but must be at least once per Plan Year
-------------------------.
(3) an Employee who revokes his salary reduction agreemetn
may file a new salary reduction agreemetn with an effective
date: (Choose (i), (ii), (iii) or (iv))
(i) No earlier than the first day of the next Plan
Year.
(ii) As of any subsequent Plan Entry Date.
(iii)As of the first day of any month subsequent to the
month in which he revoked an Agreement.
(iv) (Specify, but must be at least once per Plan Year following the
Plan Year of revocation) ----------------------.
(4) A Participant may increase or may decrease, on a
prospective basis, his salary reduction percentage or dollar
amount: (Choose (i), (ii), (iii) or (iv))
(i) As of the beginning of each payroll period.
(ii) As of the first day of each month.
(iii)As of any Plan Entry Date.
(iv) (Specify, but must permit an increase or a
decrease at least once per Plan Year
-----------------------------------.
<PAGE>
(l) Cash or deferred contributions. For each Plan Year for which the Employer
makes a designated cash or deferred contribution, a Participant may elect to
receive directly in cash not more than the following portion (or, if less, the
402(g) limitation described in Section 14.07 of the Plan) of his proportionate
share of that cash or deferred contribution: (Choose (1) or (2))
(1) All or any portion.
(2) ----------------%.
3.04 CONTRIBUTION ALLOCATION. the Advisory Committee will allocate deferral
contributions, matching contributions, qualified nonelective contributions and
nonelective contributions in accordance with Section 14.06 and the elections
under this Adoption Agreement Section 3.04.
Part I. [Options (a) through (d)]. Special Accounting Elections. (Choose
whichever elections are applicable to the Employer's Plan)
(a) Matching Contribuitons Account. The Advisory Committee will allocate
matching contributions to a Participant's: (Choose (1) or (20; (3) is available
only in addition to (1))
(1) Regular Matching Contribution Account.
(2) Qualified Matching Contributions Account.
(3) Except, matching contributions under Option(s) ---------------------
of Adoption Agreement Section 3.01 are allocable to the Qualified Matching
Contributions Account.
(b) Special Allocation Dates for Salary Reduction Contributions. The
advisory Committee will allocate salary reduction contributions as of the
Accounting Date and as of the following additional allocation dates:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(c) Special Allocation Dates for Matching Contributions. The Advisory
Committee will allocate matching contributions as of the Accounting Date and as
of the following additional allocation dates:
- ----------------------------------------------------------.
(d) Designated Qualified Nonelective Contributions - Definition of
Participant. For purposes of allocating the designated qualified nonelective
contribution, "Participant" means: (Choose (1), (2) or (3))
(1) All Participants.
(2) Participants who are Nonhighly Compensated Employees
for the Plan Year.
<PAGE>
(3) (Specify) ----------------------------------------------------------
--------------------------------------------------------------------------
Part II. Method of Allocation - Nonelective Contribution. Subject to any
restoration allocation required under Section 5.04, the Advisory Committee will
allocate and credit each annual nonelective contribution (and Participant
forfeitures treated as nonelective contributions) to the Employer Contributions
Account of each Participant who satisfies the conditions of Section 3.06, in
accordance with the allocation method selected under this Section 3.04. If the
Employer elects Option (e)(2), Optoin (g)(2) or Option (h), for the first 3% of
Compensation allocated to all Participants, "Compensation" does not include an
exclusions elected under Adoptoin Agreement Section 1.12 (other than the
exclusion of elective contributions), and the Advisory Committee must take into
account the Participant's Compensation for the entire Plan Year. (Choose an
allocation method under (e), (f), (g) or (h); (I) is mandatory if the Employer
elects (f), (g) or (h); (j) is optional in addition to any other election.)
(e) Nonintegrated Allocation Formula. (Choose (1) or (2))
(1) The Advisory Committee will allocate the annual nonelective
contributions in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for the
Plan Year.
(2) The Advisory Committee will allocate the annual nonelective
contributions in the same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation of all Participants for the
Plan Year. For purposes of this Option (2), "Participant" means, in
addition to a Participant who satisfies the requirements of Section 3.06
for the Plan Year, any other Participant entitled to a top heavy minimum
allocation under Section 3.04(b), but such Participant's allocation will
not exceed 3% of his Compensation for the Plan Year.
(f) Two-Tiered Integrated Allocation Formula - Maximum Disparity. First, the
Advisory Committee will allocate the annual Employer nonelective contributions
in the same ratio that each Participant's Compensation plus Excess Compensation
of all Participants for the Plan Year bears to the total Compensation plus
Excess Compensation of all Participants for the Plan Year. The allocation under
this paragraph, as a percentage of each Participant's Compensation plus Excess
Compensation, must not exceed the applicable percentage (5.7%, 5.4% or 4.3%)
listed under the Maximum Disparity Table following Option (i).
The Advisory Committee then will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation for the
Plan Year bears to the total Compensation of all Participants for the Plan Year.
<PAGE>
(c) Three-Tiered Integrated Allocation Formula. First, the Advisory Committee
will allocate the annual Employer nonelective contributions in the same ratio
that each Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year. The allocation under this
paragraph, as a percentage of each Participant's Compensation may not exceed the
applicable percentage (5.7%, 5.4% or 4.3%) listed under the Maximum Disparity
Table following Option (I). Solely for purposes of the allocation in this first
paragraph, "Participant" means, in addition to a Participant who satisfies the
requirements of Section 3.06 for the Plan Year: (Choose (1) or (2))
(1) No other Participant.
(2) any other Participant entitled to a top heavy minimum allocation under
Section 3.04(B), but such Participant's allocation under this Option (g) will
not exceed 3% of his Compensation for the Plan Year.
As a second tier allocation, the Advisory Committee will allocate the
nonelective contributions in the same ratio that each Participant's Excess
Compensation for the Plan Year bears to the total Excess Compensation of all
Participants for the Plan Year. The allocation under this paragraph, as a
percentage of each Participant's Excess Compensation, may not exceed the
allocation percentage in the first paragraph.
Finally, the Advisory Committee will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation for the
Plan Year bears to the total Compensation of all Participants for the Plan Year.
(h) Four-Tiered Integrated Allocation Formula. First, the Advisory Committee
will allocate the annual Employer nonelective contributions in the same ratio
that each Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year, but not exceeding 3% of each
Participant's Compensation. Solely for purposes of this first tier allocation, a
"Participant" means, in addition to any Participant who satisfies the
requirements of Section 3.06 for the Plan Year, any other Participant entitled
to a top heavy minimum allocation under Sectoin 3.04(B) of the Plan.
As a second tier allocation, the Advisory Committee will allocate the
nonelective contributions in the same ratio that each Participant's Excess
Compensation for the Plan Year bears to the total Excess Compensation of all
Participants for the Plan Year, but not exceeding 3% of each Participant's
Excess Compensation.
As a third tier allocation, the Advisory Committee will allocate the annual
Employer contributions in the same ratio that each Participant's Compensation
plus Excess Compensation for the Plan Year bears to the total Compensation plus
<PAGE>
Excess Compensation of all Participants for the Plan year. The allocation
under this paragraph, as a percentage of each Participant's Compensation plus
Excess Compensation, must not exceed the applicable percentage (2.7%, 2.4% or
1.3%) listed under the Maximum Disparity Table following Option (i).
The Advisory Committee then will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation for the
Plan Year bears to the total Compensation of all Participants for the Plan Year.
(i) Excess Compensation. For purposes of Option (f), (g) or (h), "Excess
Compensation" means Compensation in excess of the following Integration Level:
(Choose (1) or (2))
(1) --------% (not exceeding 100%) of the taxable wage base, as determined
under Section 230 of the Social Security Act, in effect on the first day
of the Plan Year: (Choose any combination of (i) and (ii) or choose (iii))
(i) Rounded to ----------------------- (but not exceeding
the taxable wage base).
(ii) But not greater than $--------------------.
(iii)Without any further adjustment or limitation.
(2) $------------------. [Note: Not exceeding the taxable
wage base for the Plan Year in which this Adoption Agreement
first is effective.]
Maximum Disparity Table. For purposes of Options (f), (g) and
(h), the applicable percentage is:
Integration Level Applicable Percentages Applicable
(as percentage of for Option (f) or Percentages
taxable wage base) Option (g) For Option (h)
- --------------------------------------------------------------------------------
100% 5.7% 2.7%
More than 80% but
less than 100% 5.4% 2.4%
More than 20%
(but not less than
$10,001) and not
more than 80% 4.3% 1.3%
20% (or $10,000, if
greater) or less 5.7% 2.7%
<PAGE>
(j) Allocation offset. The Advisory Committee will reduce a Participant's
allocation otherwise made under Part II of this Section 3.04 by the
Participant's allocation under the following qualified plan(s) maintained by the
Employer: ----------------. The Advisory Committee will determine this
allocation reduction:
(Choose (1) or (2))
(1) By treating the term "nonelective contribution" as including all
amounts paid or accrued by the Employer during the Plan Year to the
qualified plan(s) referenced under this Option (j). If a Participant under
this Plan also participates in that other plan, the Advisory Committee
will treat the amount the Employer contributes for or during a Plan Year
on behalf of a particular Participant under such other plan as an amount
allocated under this Plan to that Participant's Account for that Plan
Year. The Advisory Committee will make the computation of allocation
required under the immediately preceding sentence before making any
allocation of nonelecive contributions under this Section 3.04.
(2) In accordance with the formula provided in an addendum to this
Adoption Agreement, numbered 3.04(j).
Top Heavy Minimum Allocation - Method of Compliance. If a Participant's
allocation under this Section 3.04 is less than the top heavy minimum allocation
to which he is entitled under Section 3.04(B): (Choose (k) or (l))
(k) The Employer will make any necessary additional contribution to the
Participant's Account, as described in Section 3.04(B)(7)(a) of the Plan.
(l) The Employer will satisfy the top heavy minimum allocation under the
following plan(s) it maintains: ---------------------. However, the Employer
will make any necessary additional contribution to satisfy the top heavy minimum
allocation for an Employee covered only under this Plan and not under the other
plan(s) designated in this Option (l). See Section 3.04(B)(7)(b) of the Plan.
If the Employer maintains another plan, the Employer may provide in an addendum
to this Adoption Agreement, numbered Section 3.04, any modifications to the Plan
necessary to satisfy the top heavy requirements under Code ss.416.
Related employers. If two or more related employers (as defined in Section 1.30)
contribute to this Plan, the Advisory Committee must allocate all Employer
nonelective contributions (and forfeitures treated as nonelective contributions)
to each Participant in the Plan, in accordance with the elections in this
Adoption Agreement Section 3.04: (Choose (m) or (n))
<PAGE>
(m) Without regard to which contributing related group member employes the
Participant.
(n) Only to the Participants directly employed by the contributing Employer. If
a Participant receives Compensation from more than one contributing Employer,
the Advisory Committee will determine the allocations under this Adoption
Agreement Section 3.04 by prorating among the participating Employers the
Participant's Compensation and, if applicable, the Participant's Integration
Level under Option (i).
3.05 FORFEITURE ALLOCATION. Subject to any restoration allocation required
under Sections 5.04 or 9.14, the Advisory Committee will allocate a Participant
forfeiture in accordance with Section 3.04: (Choose (a) or (b); (c) and (d) are
optional in addition to (a) or (b))
(a) As an Employer nonelective contribution for the Plan Year in which the
forfeiture occurs, as if the Participant forfeiture were an additional
nonelective contribution for that Plan Year.
(b) To reduce the Employer matching contributions and nonelective
contributions for the Plan Year: (Choose (1) or (2))
(1) in which the forfeiture occurs.
(2) immediately following the Plan Year in which the
forfeiture occurs.
(c) To the extent attributable to matching contributions:
(Choose (1), (2) or (3))
(1) In the manner elected under Options (a) or (b).
(2) First to reduce Employer matching contributions for the
Plan Year: (Choose (i) or (ii))
(i) in which the forfeiture occurs,
(ii) immediately following the Plan Year in which the forfeiture
occurs, then as elected in Options (a) or (b).
(3) As a discretionary matching contribution for the Plan Year in which
the forfeiture occurs, in lieu of the manner elected under Options (a) or
(b).
(d) First to reduce the Plan's ordinary and necessary administrative expenses
for the Plan Year and then will allocate any remaining forfeitures in the manner
described in Option (a), (b) or (c), whichever applies. If the Employer elects
Option (c), the forfeitures used to reduce Plan expenses: (Choose (1) or (2))
(1) relate proportionately to forfeitures described in
Option (c) and to forfeitures described in Options (a) or (b).
<PAGE>
(2) relate first to forfeitures described in Option
--------------.
Allocation of forfeited excess aggregate contributions. The Advisory Committee
will allocate any forfeited excess aggregate contributions (as described in
Section 14.09): (Choose (e), (f) or (g))
(e) To reduce Employer matching contributions for the Plan Year:
(Choose (1) or (2))
(1) in which the forfeiture occurs.
(2) immediately following the Plan Year in which the
forfeiture occurs.
(f) As Employer discretionary matching contributions for the Plan Year in which
forfeited, except the Advisory Committee will not allocate these forfeitures to
the Highly Compensated Employees who incurred the forfeitures.
(g) In accordance with Options (a) through (d), whichever applies, except the
Advisory Committee will not allocate these forfeitures under Option (a) or under
Option (c)(3) to the Highly Compensated Emplyees who incurred the forfeitures.
3.06 ACCRUAL OF BENEFIT.
Compensation taken into account. For the Plan Year in which the Employee first
becomes a Participant, the Advisory Committee will determine the allocation of
any cash or deferred contribution, designated qualified nonelective contribution
or nonelective contribution by taking into account: (Choose (a) or (b))
(a) The Employee's Compensation for the entire Plan Year.
(b) The Employee's Compensation only for the portion of the Plan Year in which
the Employee actually is a Participant in the Plan.
Accrual Requirements. Subject to the suspension of accrual requirements of
Section 3.06(E) of the Plan, to receive an allocation of cash or deferred
contributions, matching contributions, designated qualified nonelective
contributions, nonelective contributions and Participant forfeitures, if any,
for the Plan Year, a Participant must satisfy the conditions described in the
folloiwng elections: (Choose (c) or at least one of (d) through (f))
(c) Safe harbor rule. If the Participant is employed by the Employer on the
last day of the Plan Year, the Participant must complete at least one Hour of
Service for that Plan Year. If the Participant is not employed by the Employer
on the last day of the Plan Year, the Participant must complete at least 501
Hours of Service during the Plan Year.
<PAGE>
(d) Hours of Service condition. The Participant must complete the following
minimum number of Hours of Service during the Plan Year: (Choose at least one of
(1) through (5))
(1) 1,000 Hours of Service.
(2) (Specify, but the number of Hours of Service may not
exceed 1,000) --------------------------------------------.
(3) No Hour of Service requirement if the Participant terminates
employment during the Plan Year on account of:
(Choose (i), (ii) or (iii))
(i) Death.
(ii) Disability.
(iii)Attainment of Normal Retirement Age in the current Plan Year or
in a prior Plan Year.
(4) ------------ Hours of Service (not exceeding 1,000) if the Participant
terminates employment with the Employer during the Plan Year, subjet to
any election in Option (3).
(5) No Hour of Service requirement for an allocation of the
following contributions: -------------------------------------------------
--------------------------------------------------------------------------
(e) Employment conditions. The Participant must be employed by the Employer on
the last day of the Plan Year, irrespective of whether he satisfies any Hours of
Service condition under Option (d), with the following exceptions: (Choose (1)
or at least one of (2) through (5))
(1) No exceptions.
(2) Termination of employment because of death.
(3) Termination of employment because of disability.
(4) Termination of employment following attainment of
Normal Retirement Age.
(5) No employment conditions for the following
contributions: ---------------------------------.
(f) (Specify other conditions, if applicable): -------------------------------
- --------------------------------------------------------------------------------
Suspension of Accrual Requirements. The suspension of accrual requirements
of Section 3.06(E) of the Plan: (g), (h) or (I))
<PAGE>
(g) Applies to the Employer's Plan.
(h) Does not apply to the Employer's Plan.
(i) Applies in modified form to the Employer's Plan, as described in an addendum
to this Adoption Agreement, numbered Section 3.06(E).
Special accrual requirements for matching contributions. If the Plan allocates
matching contributions on two or more allocation dates for a Plan Year, the
Advisory Committee, unless otherwise specified in Option (1), will apply any
Hours of Service condition by dividing the required Hours of Service on a
prorata basis to the allocation periods included in that Plan Year. Furthermore,
a Participant who satisfies the conditions described in this Adoption Agreement
Section 3.06 will receive an allocation of matching contributions (and
forfeitures treated as matching contributions) only if the Participant satisfies
the following additional condition(s): (Choose (j) or at least one of (k) or
(l))
(j) No additional conditions.
(k) The Participant is not a Highly Compensated Employee for the Plan Year.
This Option (k) applies to: (Choose (1) or (2))
(1) All matching contributions.
(2) Matching contributions described in Option(s) --------- of Adoption
Agreement Section 3.01.
(l) (Specify) ----------------------------------------------------------------
- -------------------------------------------------------------------------------.
3.15 MORE THAN ONE PLAN LIMITATION. If the provisions of Section 3.15
apply, the Excess Amount attributed to this Plan equals: (Choose (a), (b) or
(c))
(a) The product of:
(i) the total Excess Amount allocated as of such date (including any
amount which the Advisory Committee would have allocated but for the
limitations of Code ss.415), times
(ii) the ratio of (1) the amount allocated to the Participant as of such
date under this Plan divided by (2) the total amount allocated as of such
date under all qualified defined contribution plans (determined without
regard to the limitations of Code ss.415).
(b) The total Excess Amount.
(c) None of the Excess Amount.
<PAGE>
3.18 DEFINED BENEFIT PLAN LIMITATION.
Application of limitation. The limitation under Section 3.18 of
the Plan: (Choose (a) or (b))
(a) Does not apply to the Employer's Plan because the Employer does not maintain
and never has maintained a defined benefit plan covering any Participant in this
Plan.
(b) Applies to the Employer's Plan. To the extent necessary to satisfy the
limitation under Section 3.18, the Employer will reduce: (Choose (1) or (2))
(1) The Participant's projected annual benefit under the defined benefit
plan under which the Participant participates.
(2) Its contribution or allocation on behalf of the Participant to the
defined contribution plan under which the Participant participates and
then, if necessary, the Participant's projected annual benefit under the
defined benefit plan under which the Participant participates.
[Note: If the Employer selects (a), the remaining options in this Section
3.18 do not apply to the Employer's Plan.]
Coordination with top heavy minimum allocation. The Advisory Committee will
apply the top heavy minimum allocation provisions of Section 3.04(B) of the Plan
with the following modifications:
(Choose (c), or at least one of (d) or (e))
(c) No modifications.
(d) For Non-Key Employees participating only in this Plan, the top heavy minimum
allocation is the minimum allocation described in Section 3.04(B) determined by
substituting ---------% (not less than 4%) for "3%", except: (Choose (i or (ii))
(i No exceptions.
(ii) Plan Years in which the top heavy ratio exceeds 90%.
(e) For Non-Key Employees also participating in the defined benefit plan,
the top heavy minimum is: (Choose (1) or (2))
(1) 5% of Compensation (as determined under Section 3.04(B)
of the Plan) irrespective of the contribution rate of any
Key Employee, except: (Choose (i) or (ii))
(i) No exceptions.
(ii) Substituting "7 1/2%" for "5%" if the top heavy ratio
does not exceed 90%.
<PAGE>
(2) 0%. [Note: The employer may not select this Option (2)
unless the defined benefit plan satisfies the top heavy
minimum benefit requirements of Code ss.416 for these Non-Key
Employees.]
Actuarial Assumptions for Top Heavy Calculation. To determine the top heavy
ratio, the Advisory Committee will use the following interest rate and mortality
assumptions to value accured benefits under a defined benefit plan:-------------
- -------------------------------------------------------------------------------.
If the elections under this Section 3.18 are not appropriate to satisfy the
limitations of Section 3.18, or the top heavy requirements under Code ss.416,
the Employer must provide the appropriate provisions in an addendum to this
Adoption Agreement.
ARTICLE IV
PARTICIPANT CONTRIBUTIONS
4.01 PARTICIPANT NONDEDUCTIBLE CONTRIBUTIONS. The Plan: (Choose (a) or (b);
(c) is available only with (b))
(a) Does not permit Participant nondeductible contributions.
(b) Permits Participant nondeductible contributions, pursuant to
Section 14.04 of the Plan.
(c) The following portion of the Participant's nondeductible contributions
for the Plan Year are mandatory contributions under Option (i)(3) of Adoption
Agreement Section 3.01: (Choose (1) or (2))
(1) The amount which is not less than: -------------------.
(2) The amount which is not greater than: ----------------.
Allocation dates: The Advisory Committee will allocate nondeductible
contributions for each Plan Year as of the Accounting Date and the following
additional allocation dates:
(Choose (d) or (e))
(d) No other allocation dates.
(e) (Specify) ----------------------------------------------------------------
- -------------------------------------------------------------------------------.
As of an allocation date, the Advisory Committee will credit all nondeductible
contributions made for the relevant allocation period. Unless otherwise
specified in (e), a nondeductible contribution relates to an allocation period
only if actually made to the Trust no later than 30 days after that allocation
period ends.
<PAGE>
4.05 PARTICIPANT CONTRIBUTION - WITHDRAWAL/DISTRIBUTION.
Subject to the restrictions of Article VI, the following distribution options
apply to a Participant's Mandatory Contributions Account, if any, prior to his
Separation from Service: (Choose (a) or at least one of (b) through (d))
(a) No distribution optoins prior to Separation from Service.
(b) The same distribution options applicable to the Deferral Contributions
Account prior to the Participant's Separation from Service, as elected in
Adoption Agreement Section 6.03.
(c) Until he retires, the Participant has a continuing election
to receive all or any portion of his Mandatory Contributions
Account if: (Choose (1) or at least one of (2) through (4))
(1) No conditions.
(2) The mandatory contributions have accumulated for at least
--------------- Plan Years since the Plan Year for which contributed.
(3) The Participant suspends making nondeductible
contributions for a period of months.
(4) (Specify)-----------------------------------------------------------
-------------------------------------------------------------------------.
(d) (Specify) ----------------------------------------------------------------
-------------------------------------------------------------------------.
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING
5.01 NORMAL RETIREMENT. Normal Retirement Age under the Plan is: (Choose
(a) or (b))
(a) ----------------------- [State age, but may not exceed age
65].
(b) The later of the date the Participant attains --------- years of age or the
- --------- anniversary of the first day of the Plan Year in which the Participant
commenced participation in the Plan. [The age selected may not exceed age 65 and
the anniversary selected may not exceed the 5th.]
5.02 PARTICIPANT DEATH OR DISABILITY. The 100% vesting rule under Section
5.02 of the Plan: (Choose (a) or choose one or both of (b) and (c))
(a) Does not apply.
<PAGE>
(b) Applies to death.
(c) Applies to disability.
5.03 VESTING SCHEDULE.
Deferral Contributions Account/Qualified Matching Contributions
Account/Qualified Nonelective Contributions Account/Mandatory Contributions
Account. A Participant has a 100% Nonforfeitable interest at all times in his
Deferral Contributions account, his Qualified Matching Contributions Account,
his Qualified Nonelective Contributions Account and in his Mandatory
Contributions Account.
Regular Matching Contributions Account/Employer contributions Account. With
respect to a Participant's Regular Matching Contributions Account and Employer
Contributions Account, the Employer elects the following vesting schedule:
(Choose (a) or (b); (c) and (d) are available only as additional options)
(a) Immediate vesting. 100% Nonforfeitable at all times. [Note: The
Employer must election Option (a) if the eligibility conditions under Adoption
Agreement Section 2.01(c) require 2 year of service or more than 12 months of
employment.]
(b) Graduated Vesting Schedules.
Top Heavy Schedule Non Top Heavy Schedule
(Mandatory) (Optional)
Years of Nonforfeitable Years of Nonforfeitable
Service Percengage Service Percentage
- --------------------------------------------------------------------------------
Less than 1 ----- Less than 1 -----
1 ----- 1 -----
2 ----- 2 -----
3 ----- 3 -----
4 ----- 4 -----
5 ----- 5 -----
6 or more 100% 6 -----
7 or more -----
(c) Special vesting election for Regular Matching Contributions Account. In
lieu of the election under Options (a) or (b), the Employer elects the following
vesting schedule for a Participant's Regular Matching Contributions Account:
(Choose (1) or (2))
(1) 100% Nonforfeitable at all times.
(2) In accordance with the vesting schedule described in
the addendum to this Adoption Agreement, numbered 5.03(c).
[Note: If the Employer elects this Option (c)(2), the
addendum must designate the applicable vesting schedule(s)
using the same format as used in Option (b).]
<PAGE>
[Note: Under Options (b) and (c)(2), the Employer must complete a Top Heavy
Schedule which satisfies Code ss.411(a)(2). Also see Section 7.05 of the Plan.]
(d) The Top Heavy Schedule under Option (b) (and, if applicable,
under Option (c)(2)) applies: (Choose (1) or (2))
(1) Only in a Plan Year for which the Plan is top heavy.
(2) In the Plan Year for which the Plan first is top heavy
and then in all subsequent Plan Years. [Note: The Employer
may not elect Option (d) unless it has completed a Non Top
Heavy Schedule.]
Minimum Vesting. (Choose (e) or (f))
(e) The Plan does not apply a minimum vesting rule.
(f) A Participant's Nonforfeitable Accrued Benefit will never be less than the
lesser of $--------------- or his entire Accrued Benefit, even if the
application of a graduated vesting schedule under Options (b) or (c) would
result in a smaller Nonforfeitable Accrued Benefit.
Life Insurance Investments. The Participant's Accrued Benefit attributable
to insurance contracts purchased on his behalf under Article XI is: (Choose (g)
or (h))
(g) Subject to the vesting election under Options (a), (b), or
(c).
(h) 100% Nonforfeitable at all times, irrespective of the vesting election
under Options (b) or (c)(2).
5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/RESTORATION OF
FORFEITED ACCRUED BENEFIT. The deemed cash-out rule described in Section 5.04(C)
of the Plan: (Choose (a) or (b))
(a) Does not apply.
(b) Will apply to determine the timing of forfeitures for 0% vested
Participants. A Participant is not a 0% vested Participant if he has a Deferral
Contributions Account.
5.06 YEAR OF SERVICE - VESTING.
Vesting computation period. The Plan measures a Year of Service on the basis of
the following 12 consecutive month periods:
(Choose (a) or (b))
<PAGE>
(a) Plan Years.
(b) Employment Years. An Employment Year is the 12 consecutive month period
measured from the Employee's Employment Commencement Date and each successive 12
consecutive month period measured from each anniversary of that Employment
Commencement Date.
Hours of Service. The minimum number of Hours of Service an Employee must
complete during a vesting computation period to receive credit for a Year of
Service is: (choose (c) or (d))
(c) 1,000 Hours of Service.
(d) ------- Hours of Service. [Note: The Hours of Service
requirement may not exceed 1,000.]
5.08 INCLUDED YEARS OF SERVICE - VESTING. The Employer specifically
excludes the following Years of Service: (Choose (a) or at least one of (b)
through (e))
(a) None other than as specified in Section 5.08(a) of the Plan.
(b) Any Year of Service before the Participant attained the age of
- ------------------. [Note: The age selected may not exceed age 18.]
(c) Any Year of Service during the period the Employer did not maintain this
Plan or a predecessor plan.
(d) Any Year of Service before a Break in Service if the number of consecutive
Breaks in Service equals or exceeds the greater of 5 or the aggregate number of
the Years of Service prior to the Break. This exception applies only if the
Participant is 0% vested in his Accrued Benefit derived from Employer
contributions at the time he has a Break in Service. Furthermore, the aggregate
number of Years of Service before a Break in Service do not include any Years of
Service not required to be taken into account under this exception by reason of
any prior Break in Service.
(e) Any Year of Service earned prior to the effective date of ERISA if the Plan
would have disregarded that Year of Service on account of an Employee's
Separation from Service under a Plan provision in effect and adopted before
January 1, 1974.
ARTICLE VI
TIME AND METHOD OF PAYMENTS OF BENEFITS
Code ss.411(d)(6) Protected Benefits. The elections under this Article VI may
not eliminate Code ss.411(d)(6) protected benefit. To the extent the elections
would eliminate a Code ss.411(d)(6) protected benefit, see Section 13.02 of the
<PAGE>
Plan. Furthermore, if the elections liberalize the optional forms of
benefit under the Plan, the more liberal options apply on the later of the
adoption date or the Effective Date of this Adoption Agreement.
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT.
Distribution date. A distribution date under the Plan means
- --------------------------------------------------------------.
[Note: The Employer must specify the appropriate date(s). The specified
distribution dates primarily establish annuity starting dates and the notice and
consent periods prescribed by the Plan. The Plan allows the Trustee an
administratively practicable period of time to make the actual distribution
relating to a particular distribution date.]
Nonforfeitable Accrued Benefit Not Exceeding $3,500. Subject to the
limitations of Section 6.01(A)(1), the distribution date for distribution of a
Nonforfeitable Accrued Benefit not exceeding $3,500 is: (Choose (a), (b), (c) or
(d)or (e))
(a) ----------- of the -------------- Plan Year beginning after the
Participant's Separation from Service.
(b) ------------------------ following the Participant's Separation from
Service.
(c) --------------------------------- of the Plan Year after the
Participant incurs ---------------------- Break(s) in Service (as defined in
Article V).
(d) -------------- following the Participant's attainment of Normal Retirement
Age, but not earlier than --------------- days following his Separation from
Service.
(e) (Specify) ----------------------------------------------------------------
- -------------------------------------------------------------------------------.
Nonforfeitable Accrued Benefit Exceeds $3,500. See the elections under
Section 6.03.
Disability. The distribution date, subject to the limitations of Section
6.01(A)(3), is: (Choose (f), (g) or (h))
(e) -------------------- after the Participant terminates employment because of
disability.
(f) The same as if the Participant had terminated employment without
disability.
(h) (Specify)----------------------------------------------------------------
- -------------------------------------------------------------------------------.
Hardship. (Choose (i) or (j))
<PAGE>
(i) The Plan does not permit a hardship distribution to a Participant who
has separated from Service.
(h) The Plan permits a hardship distribution to a Participant who has separated
from Service in accordance with the hardship distribution policy stated in
(Choose (1), (2) or (3))
(1) Section 6.01(A)(4) of the Plan.
(2) Section 14.11 of the Plan.
(3) The addendum to this Adoption Agreement, numbered
Section 6.01.
Default on a Loan. If a Participant or Beneficiary defaults on a loan made
pursuant to a loan policy adopted by the Advisory Committee pursuant to Section
9.04, the Plan: (Choose (k), (l) or (m))
(k) Treats the default as a distributable event. the Trustee, at the time of the
default, will reduce the Participant's Nonforfeitable Accrued Benefit by the
lesser of the amount in default (plus accrued interest) or the Plan's security
interest in that Nonforfeitable Accrued Benefit. To the extent the loan is
attributable to the Participant's Deferral Contributions Account, Qualified
Matching Contributions Account or Qualified Nonelective Contributions Account,
the Trustee will not reduce the Participant's Nonforfeitable Accrued Benefit
unless the participant has separated from Service or unless the Participant has
attained age 59 1/2.
(l) Does not treat the default as a distributable event. When an otherwise
distributable event first occurs pursuant to Section 6.01 or Section 6.03 of the
Plan, the Trustee will reduce the Participant's Nonforfeitable Accrued Benefit
by the lesser of the amount in default (plus accrued interest) or the Plan's
security interest in that Nonforfeitable Accrued Benefit.
(m) (Specify) ----------------------------------------------------------------
- -------------------------------------------------------------------------------.
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. The Advisory Committee will
apply Section 6.02 of the Plan with the following modifications: (Choose (a) or
at least one of (b), (c), (d) and (e))
(a) No modifications.
(b) Except as required under Section 6.01 of the Plan, a lump sum
distribution is not available: -------------------------------------------------
- -------------------------------------------------------------------------------.
(c) An installment distribution: (Choose (1) or at least one of
(2) or (3))
<PAGE>
(1) Is not available under the Plan.
(2) May not exceed the lesser of ------------- years of the maximum
period permitted under Section 6.02.
(3) (Specify) ---------------------------------------------------------
-------------------------------------------------------------------------.
(d) The Plan permits the following annuity options: -------------------------
- ----------------------------------------------------------------.
Any Participant who elects a life annuity option is subject to the
requirements of Sections 6.04(A), (B), (C) and (D) of the Plan. See Section
6.04(E). [Note: The Employer may specify additional annuity options in an
addendum to this Adoption Agreement, numbered 6.02(d).]
6.03 BENEFIT PAYMENT ELECTIONS.
Participant Elections After Separation from Service. A Participant who is
eligible to make distribution elections under Section 6.03 of the Plan may elect
to commence distribution of his Nonforfeitable Accrued Benefit: (Choose at least
one of (a) through (c))
(a) As of any distribution date, but not earlier than ---------of the ---------
Plan Year beginning after the Participant's Separation from Service.
(b) As of the following date(s): (Choose at least one of Options (1)
through (6))
(1) Any distribution date after the close of the Plan Year in which the
Participant attains Normal Retirement Age.
(2) Any distribution date following his Separation from
Service.
(3) Any distribution date in the --------------- Plan Year(s) beginning
after his Separation from Service.
(4) Any distribution date in the Plan Year after the Participant incurs
------------ Break(s) in Service (as defined in Article V).
(5) Any distribution date following attainment of age ---------- and
completion of at least -------- Years of Service (as defined in Article
V).
(6) (Specify) ----------------------------------------------------------
-------------------------------------------------------------------------.
(c) (Specify) ----------------------------------------------------------------
-------------------------------------------------------------------------.
<PAGE>
The distribution events described in the election(s) made under Options (a), (b)
or (c) apply equally to all Accounts maintained for the Participant unless
otherwise specified in Option (c).
Participant Elections Prior to Separation from Service - Regular Matching
Contributions Account and Employer Contributions Account. Subject to the
restrictions of Article VI, the following distribution options apply to a
Participant's Regular Matching Contributions Account and Employer Contributions
Account prior to his Separation from Service: (Choose (d) or at least one of (e)
through (h))
(d) No distribution options prior to Separation from Service.
(e) Attainment of Specified Age. Until he retires, the Participant has a
continuing election to receive all or any portion of his Nonforfeitable interest
in these Accounts after he attains: (Choose (1) or (2))
(1) Normal Retirement Age.
(2) ----------- years of age and is at least -----------%
vested in these Accounts. [Note: If the percentage is less
than 100%, see the special vesting formula in Section 5.03.]
(f) After a Participant has participated in the Plan for a period of not
less than ---------- years and he is 100% vested in these Accounts, until he
retires, the Participant has a continuing election to receive all or any portion
of his Accounts. [Note: The number in the blank space may not be less than 5.]
(g) Hardship. A Participant may elect a hardship distribution prior to his
Separation from Service in accordance with the hardship distribution policy:
Choose (1), () or (3); (4) is available only as an additional option)
(1) Under Section 6.01(A)(4) of the Plan.
(2) Under Section 14.11 of the Plan.
(3) Provided in the addendum to this Adoption Agreement,
numbered Setion 6.03.
(4) In no event may a Participant receive a hardship
distribution before he is at least ---------% vested in
these Accounts. [Note: If the percentage in the blank is
less than 100%, see the special vesting formula in Section
5.03.]
(h) (Specify) ---------------------------------------------------------------
- -------------------------------------------------------------------------------.
[Note: The Employer may use an addendum, numbered 6.03, to provide
additional language authorized by Options (b)(6), (g)(3) or (h) of this Adoption
Agreement Section 6.03.]
<PAGE>
Participant Elections Prior to Separation from Service - Deferral Contributions
Account, Qualified Matching Contributions Account and Qualified Nonelective
Contributions Account. Subject to the restrictions of Article VI, the following
distribution options apply to a Participant's Deferral Contributions Account,
Qualified Matching Contributions Account and Qualified Nonelective Contributions
Account prior to his Separation from Service: (Choose (i) or at least one of (j)
through (l))
(i) No distribution options prior to Separation from Service.
(j) Until he retires, the Participant has a continuing election to receive all
or any portion of these Accounts after he attains:
(Choose (1) or (2))
(1) The later of Normal Retirement Age or age 59 1/2.
(2) Age --------------------- (at least 59 1/2).
(k) Hardship. A participant, prior to his separation from service, may elect a
hardship distribution from his Deferral Contributions Account in accordance with
the hardship distribution policy under Section 14.11 of the Plan.
(l) (Specify) ---------------------------------------------------.
[Note: Option (m) may not permit in service distributions prior to age 59
1/2, (other than hardship) and may not modify the hardship policy described in
Section 14.11.]
Sale of trade of business/subsidiary. If the employer sells substantially all of
the assets (within the meaning of Code 409(d)(2) used in a trade or business or
sells a subsidiary (within the meaning of Code 409(d)(3)), a Participant who
continues employment with he acquiring corporation is eligible for distribution
from his Deferral Contributions Account, Qualified Matching Contributions
Account and Qualified Nonelective Contributions Account: (Choose (m) or (n))
(m) Only as described in this Adoption Agreement Section 6.03 for distributions
prior to Separation from Service.
(n) As if he has a Separation from Service. After March 31, 1988, a distribution
authorized solely by reason of this Option (n) must constitute a lump sum
distribution, determined in a manner consistent with Code (k)(10) and the
applicable Treasury regulations.
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES. The
annuity distribution requirements of Section 6.04: (Choose (a) or (b))
<PAGE>
(a) Apply only to a Participant described in Section 6.04(E) of the Plan
(relating to the profit sharing exception to the joint and survivor
requirements).
(b) Apply to all Participants.
ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT TO
PARTICIPANTS' ACCOUNTS
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. If a distribution (other than
a distribution from a segregated Account and other than a corrective
distribution described in Sections 14.07, 14.08, 14.09 or 14.10 of the Plan)
occurs more than 90 days after the most recent valuation date, the distribution
will include interest at: (Choose (a) or (b) (c))
(a) ---------------% per annum. [Note: The percentage may equal 0%.]
(b) The 90 day Treasury bill rate in effect at the beginning of the current
valuation period.
(c) (Specify) ----------------------------------------------------------------
- -------------------------------------------------------------------------------.
9.11 ALLOCATION AND DISTRIBUTION OF NET INCOME GAIN OR LOSS. Pursuant to
Section 14.12, to determine the allocation of net income, gain or loss:
(complete only those items, if any, which are applicable to the Employer's Plan)
(a) For salary reduction contributions, the Advisory Committee will:
(Choose (1), (2), (3), (4) or (5))
(1) Apply Section 9.11 without modification.
(2) Use the segregated account approach described in
Section 14.12.
(3) Use the weighted average method described in Section 14.12, based on a
-------------------------- weighting period.
(4) Treat as part of the relevant Account at the beginning
of the valuation period -----% of the salary reduction
contributions: (Choose (i) or (ii))
(i) made during that valuation period.
(ii) made by the following specified time: ----------
----------------------------------------------------.
(5) Apply the allocation method described in the addendum to this Adoption
Agreement numbered 9.11(a).
<PAGE>
(b) For matching contributions, the Advisory Committee will:
(Choose (1), (2), (3) or (4))
(1) Apply Section 9.11 without modification.
(2) Use the weighted average method described in Section 14.12, based on a
-------------------- weighting period.
(3) Treat as part of the relevant Account at the beginning of the
valuation period ---------% of the Matching contributions allocated during
the valuation period.
(4) Apply the allocation method described in the addendum to this Adoption
Agreement numbered 9.11(b).
(c) For Participant nondeductible contributions, the Advisory Committee
will: (Choose (1), (2), (3), (4) or (5))
(1) Apply Section 9.11 without modification.
(2) Use the segregated account approach described in
Section 14.12.
(3) Use the weighted average method described in Section 14.12, based on a
-------------------- weighting period.
(4) Treat as part of the relevant Account at the beginning
of the valuation period -------------% of the Participant
nondeductible contributions: (Choose (i) or (ii))
(i) made during that valuation period.
(ii) made by the following specified time: ---------------.
(5) Apply the allocation method described in the addendum to this Adoption
Agreement numbered 9.11(c).
ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES
10.03 INVESTMENT POWERS. Pursuant to Section 10.03(F) of the Plan, the
aggregate investments in qualifying Employer securities and in qualifying
Employer real property: (Choose (a) or (b))
(a) May not exceed 10% of Plan assets.
(b) May not exceed --------------% of Plan assets.
[Note: The percentage may not exceed 100%.]
10.14 VALUATION OF TRUST. In addition to each Accounting Date, the Trustee
must value the Trust Fund on the following valuation date(s): (Choose (a) or
(b))
<PAGE>
(a) No other mandatory valuation dates.
(b) (Specify) --------------------------------------------------------------
- -------------------------------------------------------------------------------.
EFFECTIVE DATE ADDENDUM
(Restated Plans Only)
The Employer must complete this addendum only if the restated Effective Date
specified in Adoption Agreement Section 1.18 is different than the restated
effective date for at least one of the provisions listed in this addendum. In
lieu of the restated Effective Date in Adoption Agreement Section 1.18, the
following special effective dates apply: (Choose whichever elections apply)
(a) Compensation definition. The Compensation definition of Section 1.12
(other than the $200,000 limitation) is effective for Plan Years beginning after
- -----------. [Note: May not be effective later than the first day of the first
Plan Year beginning after the Employer executes this Adoption Agreement to
restate the Plan for the Tax Reform Act of 1986, if applicable.]
(b) Eligibility conditions. the eligibility conditions specified in
Adoption Agreement Section 2.01 are effective for Plan Years beginning after
- -----------------.
(c) Suspension of Years of Service. The suspension of Years of Service rule
elected under Adoption Agreement Section 2.03 is effective for Plan Years
beginning after ------------------.
(d) Contribution/allocation formula. The contribution formula elected under
Adoption Agreement Section 3.01 and the method of allocation elected under
Adoption Agreement Section 3.04 is effective for Plan Years beginning after
- ------------------.
(e) Accrual requirements. The accrual requirements of Section 3.06 are
effective for Plan Years beginning after ----------------.
(f) Employment condition. The employment condition of Section 3.06 is
effective for Plan Years beginning after --------------.
(g) Elimination of Net Profits. The requirement for the Employer not to
have net profits to contribute to this Plan is effective for Plan Years
beginning after ------------------------------. [Note: The date specified may
not be earlier than December 31, 1985.]
(h) Vesting Schedule. The vesting schedule elected under Adoption Agreement
Section 5.03 is effective for Plan Years beginning after ----------------------.
(i) Allocation of Earnings. The special allocation provisions elected under
Adoption Agreement Section 9.11 are effective for Plan Years beginning after
- -------------------------------.
<PAGE>
(j) (Specify)-----------------------------------------------------------------
- -------------------------------------------------------------------------------.
For Plan Years prior to the special Effective Date, the terms of the Plan prior
to its restatement under this Adoption Agreement will control for purposes of
the designated provisions. A special Effective Date may not result in the delay
of a Plan provision beyond the permissible Effective Date under any applicable
law requirements.
Execution Page
The Trustee (and Custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian) under the
Master Plan and Trust. The Employer hereby agrees to the provisions of this Plan
and Trust, and in witness of its agreement, the Employer by its duly authorized
officers, has executed this Adoption Agreement, and the Trustee (and Custodian,
if applicable) signified its acceptance, on this ----------- day of
- ----------------, 19---.
Name and EIN of Employer: --------------------------------------------
Signed: --------------------------------------------------------------
Name(s) of Trustee: --------------------------------------------------
Signed: -------------------------------------------------------------
- ----------------------------------------------------------------------
Name of Custodian: ---------------------------------------------------
Signed: --------------------------------------------------------------
[Note: A Trustee is mandatory, but a Custodian is optional. See Section
10.03 of the Plan.]
Plan Number. The 3-digit plan number the Employer assigns to this
Plan for ERISA reporting purposes (Form 5500 Series) is:
- ------------------------------------------------.
Use of Adoption Agreement. Failure to complete properly the elections in this
Adoption Agreement may result in disqualification of the Employer's Plan. The
3-digit number assigned to this Adoption Agreement (see page 1) is solely for
the Master Plan Sponsor's recordkeeping purposes and does not necessarily
correspond to the plan number the Employer designated in the prior paragraph.
<PAGE>
Master Plan Sponsor. The Master Plan Sponsor identified on the first page of the
basic plan document will notify all adopting employers of an amendment of this
Master Plan or of any abandonment or discontinuance by the Master Plan Sponsor
of its maintenance of this Master Plan. For inquiries regarding the adoption of
the Master Plan, the Master Plan Sponsor's intended meaning of any plan
provisions or the effect of the opinion letter issued to the Master Plan Sponsor
at the following address and telephone number: INVESCO Trust Company, 7800 E.
Union Ave., Suite 900, Denver, Colorado (303) 779-0731.
Reliance on Opinion Letter. The Employer may not rely on the Master Plan
Sponsor's opinion letter covreing this Adoption Agreement. For reliance on the
Plan's qualification, the Employer must obtain a determination letter from the
applicable IRS Key District office.
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)
The undersigned Employer, by executing this Participation Agreement, elects to
become a Participating Employer in the Plan identified in Section 1.03 of the
accompanying Adoption Agreement, as if the Participating Employer were a
signatory to that Agreement. The Participating Employer accepts, and agrees to
be bound by, all of the elections granted under the provisions of the Master
Plan as made by, -----------------------------------, the Signatory Employer to
the Execution Page of the Adoption Agreement.
1. The Effective Date of the undersigned Employer's
participation in the designated Plan is ------------------------------.
2. The undersigned Employer's adoption of this Plan
constitutes:
(a) The adoption of a new plan by the Participating Employer.
(b) The adoption of an amendment and restatement of a plan currently maintained
by the Employer, identified as ------------------------------------ and having
an original effective date of --------------------------------------.
Dated this -------------- day of ---------------------, 19-----.
Name of Participating Employer: -------------------------------------
Signed: -------------------------------------------------------------
Participating Employer's EIN: ---------------------------------------
<PAGE>
Acceptance by the Signatory Employer to the Execution Page of the
Adoption Agreement and by the Trustee.
Name of Signatory Employer: -------------------------------------
Accepted: -------------------------------------------------------
[Date]
Signed: ---------------------------------------------------------
Name(s) of Trustee: ---------------------------------------------
Accepted: -------------------------------------------------------
[Date]
Signed: ---------------------------------------------------------
[Note: Each Participating Employer must execute a separate Participation
Agreement. See the Execution Page of the Adoption Agreement for important Master
Plan information.]
STN PSP AA Instructions
Complete the first blank in the paragraph by writing in the business' name in
its entirety.
1.02 Trustee
Option (a) should be chosen when the employer will be the trustee, INVESCO Trust
Company would then act as Custodian. If option (b) is chosen, INVESCO Trust
Company will be the Trustee and will charge an annual trust fee. Note: See
Trustee Comments on page 26 for further explaination of Non-discretionary
Trustee.
1.03 Plan
Enter the plan name. Example: ABC Inc. Employees 401(k) Plan.
1.07 Employee
If you want the plan to cover all employees, select option (a). If you want to
exclude from the plan any group(s) of employees, select any combination of (b)
through (g). When a retirement plan excludes employees in options (d) through
(g) from participation, the plan is subjet to a minimum coverage test to
maintain its "tax qualified" status. Your accounting firm should be notified to
perform the test annually.
Leased Employers
You may exclude leased employees from participation (option h). However, the
plan must satisfy the coverage rules of Code Section 401(b) and 401(a)(26),
consult your legal or financial counsel.
<PAGE>
Related Employers
You may exclude related employers from participating in the plan (option j).
However, the plan must satisfy the coverage rules of Code Section 410(b) and
401(a)(26), consult your legal or financial counsel.
1.12 Compensation
Treatment of elective contributions - Choose option (a) if you prefer to "add
back" employee elective 401(k) contributions to compensation for purposes of
allocating employer contributions, forfeitures and for non-discrimination
testing.
Modifications to Compensation
Modifications to Compensation - You must choose option (c) or any combination of
(d) through (j). Any exclusion of compensation may result in unallowable
discrimination, your accountant may want to test for any discriminatory effect
of excluding any type of compensation.
1.17 Plan Year
You must define the "plan year," usually it will follow the business tax year.
Limitation Year - You must define the "limitation year" (12 month period for
testing allocations to each employee's account), for administrative convenience
it should match the plan year.
1.18 Effective Date
New Plan - Enter the first day of your plan year (usually January
1) and the year.
Restated Plan - Effective date - If you are amending for the Tax Reform Act of
1986 enter: January 1, 1987. If you are amending for another reason, enter the
first day of your tax year, example: January 1, 1990. Originally established
date - Enter the original effective date of your plan from your prior Adoption
Agreement.
1.27 Hours of Service
Choose which method you wish to use for counting hours worked by an employee to
accrue benefits. Option (b), the equivalency method, is explained in Section
1.27 of the plan. Option (a) is usually chosen.
1.29 Service for Predecessor Employer
<PAGE>
Under this option, you may elect to count service for a predecessor
employer when you are not maintaining the plan of the predecessor employer.
(Used primarily in the event of a merger or acquisition.)
1.31 Leased Employees
The law requires you to state how your plan would treat a leased employee who
could become a participant, even if you don't intend to ever lease employees.
Choose option (a) covering the employee without regard to the leasing company's
plan or option (b) the reduction method. Usually Option (b)(1) is chosen.
2.01 Eligibility
a. An employee must attain this age to become a participant (cannot exceed
age 21).
b. Pick how long (service) an employee must work to become a participant.
c. You may choose to have more restrictive eligibility requirements apply to the
employer contributions under the plan. Choose the employer contribution affected
and the conditions which apply to those contributions. Choosing separate
eligibility conditions may cause your plan to be discriminatory, consult your
counsel.
Plan Entry - Choose when employees enter the plan for purposes of contributions
and benefit accrual. Normally, option (d), semi-annual entry dates, is chosen.
Time of Participation - Choose which plan entry date (before or after) an
employee who meets the eligibility requirements will enter the plan. Normally,
option (g) is chosen.
Dual Eligibility - This section allows you to grandfather into the plan current
employees who have not met the eligibility requirements and apply the
eligibility requirements to newly hired employees. Restated plans usually choose
(j)(1).
2.02 Years of Service
Option (b) should only be chosen if you wish to require less than 1000
hours to be worked by an employee for eligibility. Usually Option (a) is chosen.
Eligibility Computation Period - Choose whether to measure subsequent
eligibility periods on the employee's anniversary or the plan year. Option (d)
is chosen for administrative convenience.
2.03 Break in Service
This option may impose a complicated re-entry date for employees who have
terminated or whose hours were severely cut back. Option
<PAGE>
(a) is chosen for administrative convenience.
2.06
This option allows employees and participants to elect out of participation.
However, these employees are considered when performing all non-discrimination
tests. Option (a) is chosen for administrative convenience.
3.01 Contributions allowed
Section 3.01 of this Adoption Agreement consists of three parts. Part I defines
the types of contributions you authorize under the plan. Part II explains the
matching contribution formula, if any. Part III allows you to put limits on the
employee 401(k) contributions. You must complete Part I, but only complete Parts
II and III, if necessary.
Option (a) permits the election of either a salary reduction arrangement (Option
(a)(1), or a cash or deferred arrangement Option (a)(2). The Employer also may
elect both arrangements.
Option (b) authorizes matching contributions. If the Employer elects Option (b),
it must complete Part II to establish the matching contribution formula.
Option (c) authorizes the Employer to make qualified nonelective contributions
(QNCs"). The Employer will designate to the Trustee the amount of its
contributions consisting of QNCs.
The amount of QNCs is solely within the Employer's discretion. Any contribution
designated as QNCs is includible in the ADP test (see Section 14.08 of the Plan)
or in the ACP test (see Section 14.09 of the Plan). The advisory committee may
divide the QNCs between these two tests in any fashion it deems appropriate, but
may not use the same contributions in both tests. As a general rule, the
Employer will make a level of QNCs necessary to satisfy the applicable tests,
unless the Employer wishes to have excess contributions or excess aggregate
contributions distributed to the appropriate highly compensated employees, in
accordance with Sections 14.08 and 14.09.
Option (d) authorizes the Employer to make nonelective contributions in the same
manner it would under a regular profit sharing plan. The choices under Option
(d) are the same as the contribution formula options under the profit sharing
adoption agreements.
Part II Matching Contribution Formula
If the Employer elects Option (b), it must complete Part II, making a selection
under each option provided under Part II.
<PAGE>
The Plan permits matching contributions for salary reduction contributions,
cash or deferred contributions or participant mandatory contributions.
Therefore, the formulas offered under Option (h) refer to "eligible
contributions." The Employer will define eligible contributions under Options
(i) and (j).
Option (h) provides the formulas for determining the matching contribution. The
primary purpose of Option (h) is to establish the level of the matching
contribution (a fixed percentage or discretionary with the Employer) and to
permit the Employer to define a maximum or a minimum matching contribution. The
formula alone will not be sufficient to determine the Employer's actual matching
contribution on a participant's behalf. The characterization of eligible
contributions under Option (i) and any limitations on the amount of eligible
contributions taken into account, as provided under Option (j), are necessary
factors in computing the Employer's matching contribution.
Option (i) designates the character of the matching contributions. If the
Employer elects (i)(3), it also must elect Adoption Agreement Section 4.01(c).
If eligible contribuitons include salary reduction contributions or cash or
deferred contributions, the matching contribution formulas will not apply to
amounts characterized as excess deferrals under Section 14.07 of the Plan.
Option (j) establishes any limitations on the amount of eligible contributions
taken into account under Option (h).
Part III Salary Reduction Agreements
Under Option (k), the Employer must make selections from (1), 92), (3) and (4).
Under (1), Option (ii) prescribes a maximum deferral percentage, Option (iii)
prescribes a minimum deferral percentage and Option (i) prescribes no special
maximum limitation. The Employer may select both Options (ii) and (iii), or both
Options (i) and (iii), but Options (i) and (ii) are mutually exclusive. The
Employer may wish to consider a maximum percentage deferral under Option (ii) to
minimize the potential for Code 415 violations.
Under paragraphs (2) and (3), the Employer elects which restrictions apply to
the participant's right to revoke his/her salary reduction agreement. Under
paragraph (4), the Employer elects which restrictions apply to the participant's
right to increase or decrease his/her salary reduction percentage. The Employer
should consider the effect its elections have on plan administration.
3.04 Contribution Allocation
Part I - Matching Contributions. Select which account you want the matching
contributions to be allocated to. The Regular Matching Account is subject to a
vesting schedule. The Qualified Matching Account is always 100% vested and
contributions may be used to satisfy the deferral non-discrimination test.
<PAGE>
Qualified Non-elective Contributions. Choose which participants would
receive an extra contribution to help satisfy the non-discrimination test for
deferrals (QNEC). For administrative convenience opton (2) is chosen.
Part II - Method of Allocation. Choose the option for allocating the
discretionary employer contribution between all plan participants. You have
choices of non-integrated (pro-rata) or one of four integrated formulas.
Allocation formula. The primary allocation formulas are in Options (e), (f), (g)
and (h). Option (e) is a nonintegrated formula and allocates the employer
contribution proportionate to total compensation. Options (f), (g) and (h) are
alternatives for integrated plans. Usually option (e)(2) is chosen for non-
integrated plans.
The two-tiered formula under Option (f) maximizes the disparity permitted under
the integration rules. Accordingly, the allocation in the first tier results in
an equal allocation percentage based on total compensation and based on excess
compensation. This equal allocation percentage may not exceed the maximum
disparity percentage (5.7%, 5.4% or 4.3%) described in the second column of the
Maximum Disparity Table. After completion of the first tier allocation, the
second step allocates the remaining contribution proportionate to total
compensation, in the same manner as the nonintegrated formula.
Under the three-tiered formula under Option (g), the plan: (i) first allocates
based on total compensation, but the allocation percentage may not exceed the
maximum disparity percentage determined under the second column of the Maximum
Disparity Table; (ii) then allocates based on excess compensation, but the
allocation percentage may not exceed the maximum disparity percentage determined
under the second column of the Maximum Disparity Table; and (iii) completes the
allocation on the basis of total compensation.
The four-tiered allocation under Option (h) is a hybrid of Options (g) and (f).
The sole purpose of Option (h) is to use the first tier to satisfy the 3% top
heavy minimum, then use a progression of three additional tiers to make maximum
use of the permitted disparity rules. The second tier allocates solely on the
basis of excess compensation, with a maximum allocation under the second tier
equal to 3% of each participant's excess compensation. The third tier is the
same as the first tier under Option (g). The fourth tier is a prorata allocation
based on total compensation.
<PAGE>
3.05 Forfeiture Allocation
Choose the method of allocating (dividing up) forfeitures of terminated
non-vested participant balances. Option (a) allocates forfeitures as an extra
discretionary contribution. Option (b) allocates forfeitures to reduce employer
contributions. Options (c) and (d) allow you to allocate separately forfeitures
from matching contributions. Select from options (e), (f) and (g) to determine
how to allocate forfeitures from high paid employee's matching account when the
matching non-discrimination test is not satisfied.
3.06 Compensation Taken Into Account
If you wish to count a participant's full year's compensation (even if he or she
entered during the year), for contributions choose option (a), if not, choose
option (b).
Accrual Requirements - Specify the service requirements a participant must
satisfy to receive an allocation. You may specify an hours of service
requirement, waive the service requirement for specific contributions and/or
require the participant to be employed on the last day to receive a
contribution.
Suspension of Accrual Requirements - This section allows you to suspend some or
all of the accrual requirements found in Section 3.06(E) of the plan for
participants to receive allocations. This would apply in plan years when a plan
may not satisfy coverage and participation requirements. For administrative
convenience choose option (g).
3.15 More Than One Plan
This section only applies if you (the employer) maintain another defined
contribution plan (e.g.: profit sharing, money purchase, 401(k) or target
benefit) that covers at least one participant in this plan.
3.18 Defined Benefit Limitation
Check option (a) if you have never maintained a defined benefit plan for any
participants in this plan. If you have or are currently maintaining a defined
benefit plan under option (b), choose which plan's benefit would be reduced if a
participant's total allocations for a year were to exceed the allowable limit.
4.01 Participant Nondeductible Contributions
This section allows participants to contribute after-tax employee contributions.
These contributions are subject to a special nondiscrimination test. By checking
option (a) these contributions are not allowed.
4.05 Withdrawal Restriction
This section only applies if you checked option (c) of section
<PAGE>
4.01. It states whether or not there are restrictions on participants receiving
their after-tax contributions prior to separation from service.
5.01 Normal Retirement Age
Choose what age you (the employer) want the participants to be 100% vested in
their benefits, if still employed (normal retirement age).
5.02 Vesting Death/Disability
You may choose to allow 100% vesting for participants that terminate from
service because of death option (b) or disability option (c).
5.03 Vesting Schedule
Choose what vesting schedule(s) you want to apply to employer discretionary
contributions and matching contributions. If you choose option (b), you must at
a minimum complete the top-heavy vesting schedule. Remember, if the eligibility
requirements are more than one year, option (a) must be chosen.
Complete the Top Heavy Schedule based upon the following:
Years of Service
1
2 (not less than 20%)
3 (not less than 40%)
4 (not less than 60%)
5 (not less than 80%)
6 (not less than 100%)
Optional: Complete the Non Top Heavy Schedule based upon the
following:
Years of Service
1
2
3 (not less than 20%)
4 (not less than 40%
5 (not less than 60%)
6 (not less than 80%)
7 (not less than 100%)
5.04 Cash-Out Rule
If option (b) is chosen, the plan treats a 0% vested terminated participant as
having received a distribution, allowing for forfeitures to be reallocated to
active participants.
<PAGE>
5.06 Years of Service
Choose what measuring period the plan should use to determine years of service
for vesting, employee's anniversary year or plan year. For ease of
administration choose option (a).
5.08 Prior Years of Service
By choosing options (b) through (e) you (the employer) may exclude some prior
years of service for purposes of vesting.
Article 6
The Employer must establish a specific distribution policy for the plan. Treas.
Reg. 1.411(d)-4 prohibits the Employer, the advisory committee or any third
party to retain discretion over when or in what form to pay the participant's
benefit (Optional Forms of Benefit). Under a restated plan, the elections under
Article VI, to the extent they differ from previous plan provisions regarding
optional forms of benefit, may not eliminate an optional form of benefit with
respect to the account balance accrued as of the date the Employer executes the
restated adoption agreement (or, if later, the effective date of that restated
adoption agreement). An optional form of benefit includes the form of payment
(e.g., lump sum or installments), the timing of payment (e.g., immediately after
separation form service, following a break in service, after attaining normal
retirement age) and the medium of payment (e.g. right to elect distribution in
Employer securities, right to elect distribution in the form of an annuity
contract).
With this in mind, if you are restating an existing plan, pay close attention to
the distribution features under that document and your administrative practice
of distributions. In all cases, try to mirror or liberalize those distribution
features when restating onto this document.
6.01 Distribution Date
A distribution date establishes a predetermined "target" date in a plan year
when the plan will offer distributions. The actual distribution may occur later
than a distribution date as long as the actual distribution is within an
"administratively reasonable period of time" from the distribution date. Typical
distribution dates for 401(k)plans are semi-annual dates or quarterly dates.
Nonforfeitable Accrued Benefit Not Exceeding $3,500
When a separated participants vested balance does not exceed $3,500, the
plan allows the employer to separately establish the timing of these
distributions, separate from the distribution dates. When you complete this
section, you need to balance two concerns: 1) will the timing of the
distribution cause the participant to consider it a "severance benefit" and
therefore encourage separation from service, and 2) the administrative concerns
of carrying a non-active account in the plan.
<PAGE>
Disability - The plan allows you (the employer) to establish a different target
payout date for disability distributions in options (f) and (h).
Hardship - This option states whether or not the plan would allow a separated
participant to receive a hardship distribution, prior to receiving a total
distribution of his/her vested account balance.
Default on a Loan - This election does not create a loan policy. You (the
employer) must elect the timing of the plan's foreclosure if a participant's
loan were to be defaulted upon even if you do not intend to offer loans in you
plan.
6.02 Method of Payment
You may choose the standard forms of payment if this is a brand new plan and not
a restatment. Elect any one or combineation of options (b) through (e). If no
modifications are necessary, elect option (a).
6.03 Participant Elections After Separation from Service
You must choose when an employee who has separated from service, with a vested
benefit greater than $3,500, may elect to commence distributions. This election
will be tied directly to the "distribution date" defined earlier.
Participant Elections Prior to Separation from Service - Employer
Contributions
The following distribution elections apply to all participant's matching and
employer discretionary accounts regardless of vested account balances, prior to
employment separation. If you prefer not to allow any distribution options from
these accounts prior to separation, select option (d).
Participant Elections Prior Separation from Service
Deferrals, QMAC's and QNEC's - The following distribution elections apply to all
participant's deferral, qualified matching, and qualified non-elective
contributions accounts, prior to employment separation. If you prefer not to
allow any distribution options from these accounts prior to employment
separation, select option (I).
<PAGE>
6.04 Annuity Distributions
The law requires distributions to certain participants to be in the form of
commercial insurance annuities, unless consented to and waived by both the
participant and his or her spouse. Participants subject to this requirement are
identified in section 6.04(E) of the Plan. For administrative convenience,
choose option (a). If you are restating a plan that was subject to the joint and
survivor annuity rules you must select Option (b).
9.10 Value of Benefit
This option allows the employer to add interest to a participant's balance, if a
distribution occurs more than 90 days after the most recent plan valuation. You
do not have to provide an interest addition under this section and may complete
option (a) with 0%.
9.11 Allocation of Net Income/Loss
The following elections will state how current year contributions will share, if
at all, in net income, gains or losses of the trust. You must election option
(a) if your plan allows employee deferrals, option (b) if your plan includes a
matching contribution, or option (c) if the plan allows employee after tax
contributions. Only make the elections applicable to your plan.
Option (1) would not include contributions made since the last valuation date in
any earnings or loss calculation. The other choices are based upon a segregated
account approach or a weighted average approach, both are described in section
14.12 of the plan.
Usually option (3) daily weighting is chosen if INVESCO is your recordkeeper,
for 9.11(a)(b) and (c).
10.03 Investment Powers
Complete this section if you (the employer) wish to allow the plan to invest in
qualifying employer securities, you should consult your legal counsel. The term
"qualifying employer securities: has a specific meaning under ERISA and may not
include all securities.
10.14 Valuation of Trust
You may use this option to specify mandatory valuation dates, in addition to the
accounting date. Normally Option (a) is chosen.
Instructions for Effective Date Addendum
You must complete the effective date addendum only if the effective dates
of any of the listed items (a) through (j) have an effective date other than
your restated effective date in adoption agreement Section 1.18. Some some
provisions in the Tax Reform Act of 1986 were not effective until 1988 or 1989.
The few provisions (if any) that have later effective dates must specify when
they are effective.
<PAGE>
a. Compensation definition may not be later than the first day of your 1991
plan year.
b. Eligibility conditions may not be later than the first day of your 1989
plan year.
c. Suspension of years of service may not be earlier than the first day of
your 1990 plan year.
d. Contribution/allocation formula may not be earlier than the first day of
your 1989 plan year.
e. Accrual requirements may not be earlier than the first day of your 1989
plan year.
f. Employment condition may not be earlier than the first day of your 1991
plan year.
g. Elimination of Net Profits may not be earlier than December 31, 1985.
h. Vesting schedule may not be later than the first day of your 1989 plan
year.
i. Allocation of Earnings may not be earlier than the first day of the 1990
plan year.
Execution Page
The Employer must complete the date on which it executes the adoption agreement
and must execute the signature for the Employer. The execution page provides two
lines above the signature line to print or type the name of the Employer and the
Employer's EIN. If the Employer is a sole proprietorship, the individual sole
proprietor should execute as Employer. If the Employer is a corporation or a
partnership, an officer or a partner, as applicable, should execute the adoption
agreement on behalf of the Employer.
Trustee
If you selected option (a) of Section 1.02 then the employer will be the
Trustee. An individual must sign as trustee for the employer. INVESCO Trust
Company will then act as Custodian.
If you choose to have INVESCO Trust Company act as "Trustee" then option (b) of
Section 1.02 must be chosen. INVESCO does charge an annual fee for this service.
INVESCO Trust Company will only serve as a non-discretionary trustee, this means
that there is a person who is the "Named Fiduciary." The Named Fiduciary gives
direction to a non-discretionary trustee, and the non- discretionary trustee
<PAGE>
accepts all directions from the Named Fiduciary. The Named Fiduciary is
either the President of the Corporation, the managing partner of the partnership
or the self-employed individual of a sole proprietorship. The Named Fiduciary is
responsible for selecting plan investments.
The execution page also includes a signature line for the Custodian, if any.
Leave the Custodian lines blank if INVESCO Trust Company will act as custodian.
Plan number. This paragraph designates the number the Employer assigns to the
plan for reporting (Form 5500) purposes. If this is the first plan the Employer
ever maintained, the number must be 001. The Employer's plan number does not
correspond to the 3- digit adoption agreement number specified at the top of the
first page of the adoption agreement. Consult your Counsel if unsure what
3-digit plan number to use.
Instructions for the Participation Agreement
This adoption agreement includes a Participation Agreement under which a related
group member of the signatory Employer to the execution page may participate in
the same plan with that Employer. Each related group member wishing to become a
participating Employer should execute a separate Participation Agreement. See
Section 1.30 of the Plan for the definition of related Employers.
Thus, it is possible to exclude the employees of related group members not
participating in the plan. If an Employer is a member of a related group, it
should consider whether the inclusion of other related group members' employees
is necessary to satisfy the coverage requirements of Code ss.410(b) or the
minimum participation requirement of Code ss.401(a)(26). If the Employer
determines inclusion of the employees of a related group member is necessary to
maintain qualification of the plan, the Employer may take one of two approaches:
(1) have the related group member execute a Participation Agreement; or (2)
elect in Adoption Agreement Section 1.07 to include the employees of that
related group member. Under approach (1), the participation of the related group
member will result in the automatic inclusion of the employees of that related
group member, without having to specify their inclusion in Adoption Agreement
Section 1.07. In addition, the related group member, under approach (1), has the
authority to contribute to the plan and, in the event another participating
related group member makes a contribution on behalf of that related group
member's employees, the Participation Agreement will ensure the deductibility of
that contribution (assuming the contribution does not exceed the deduction
limits of Code ss.404). Additional instructions to the appropriate adoption
<PAGE>
agreement explain the effect on the allocation of Employer contributions
when related group members maintain a single nonstandardized plan. Please
contact us. Under approach (2), the plan will retain its qualified status, but
contributions the Employer makes on behalf of a nonparticipating related group
member's employees may not be deductible (even if otherwise within the
limitations of Code ss.404), resulting in an excise tax to the contributing
Employer.
Unrelated Employers. The Master Plan does not allow the participation in a
single plan of unrelated Employers (i.e., Employers that do not satisfy the
related group definition in Section 1.30 of the Plan).
legal\adop-agr\ns401kaa.005
ADOPTION AGREEMENT #006
STANDARDIZED CODE ss.401(k) PLAN
(PAIRED PROFIT SHARING PLAN)
The undersigned, -------------------------------------------- ("Employer"), by
executing this Adoption Agreement, elects to become a participating Employer in
the INVESCO Trust Company Defined Contribution Master Plan (basic plan document
#01) by adopting the accompanying Plan and Trust in full as if the Employer were
a signatory to that Agreement. The employer makes the following elections
granted under the provisions of the Master Plan.
ARTICLE I
DEFINITIONS
1.02 TRUSTEE. The Trustee executing this Adoption Agreement is:
(Choose (a) or (b))
(a) A discretionary Trustee, See Section 10.03[A] of the Plan.
(b) A nondiscretionary Trustee. See Section 10.03[B] of the Plan. [Note: The
Employer may not elect Option (b) if a Custodian executes the Adoption
Agreement.]
1.03 PLAN. The name of the Plan as adopted by the Employer is
- -------------------------------------------------------------.
1.07 EMPLOYEE. The following Employees are not eligible to participate in the
Plan:
(Choose (a) or at least one of (b) or (c))
(a) No exclusions.
(b) Collective bargaining employees (as defined in Section 1.07 of the Plan).
[Note: If the Employer excludes union employees from the Plan, the Employer must
be able to provide evidence that retirement benefits were the subject of good
faith bargaining.]
(c) Nonresident aliens who do not receive any earned income (as defined in Code
ss.911(d)(2) from the Employer which constitutes United States source income (as
defined in Code ss.861(a)(3)).
Related Employers/Leased Employees. An Employee of any member of the Employer's
related group (as defined in Section 1.30 of the Plan), and any Leased Employee
treated as an Employee under Section 1.31 of the Plan, is eligible to
participate in the Plan, unless excluded by reason of Options (b) or (c).
[Note: A related group member may not contribute to this Plan unless it
executes a Participation Agreement, even if its Employees are Participants
in the Plan.]
<PAGE>
1.12 COMPENSATION
Treatment of elective contributions. (Choose (a) or (b))
(a) "Compensation" includes elective contributions made by the Employer on
the Employee's behalf.
(b) "Compensation" does not include elective contributions.
Modifications to Compensation definition. (Choose (c) or at least one of
(d) and (e))
(c) No modifications other than as elected under Options (a) or (b).
(d) The Plan excludes Compensation in excess of $---------------.
(e) In lieu of the definition in Section 1.12 of the Plan, Compensation means
any earnings reportable as W-2 wages for Federal income tax withholding
purposes, subject to any other election under this Adoption Agreement Section
1.12.
Special definition for salary reduction contributions. An Employee's salary
reduction agreement applies to his Compensation determined prior to the
reduction authorized by that salary reduction agreement, with the following
exceptions: (Choose (f) or any combination of (g) and (h), if applicable)
(f) No exceptions.
(g) The dollar limitation described in Option (d) does not apply.
(h) If the Employee makes elective contributions to another plan maintained by
the Employer, the Advisory Committee will determine the amount of the Employee's
salary reduction contribution for the withholding period: (Choose (1) or (2))
(1) After the reduction for such period of elective
contributions to the other plan(s).
(2) Prior to the reduction for such period of elective
contributions to the other plan(s).
1.17 PLAN YEAR/LIMITATION YEAR.
Plan Year. Plan Year means: (Choose (a) or (b))
(a) The 12 consecutive month period ending every --------------.
(b) (Specify) -------------------------------------------------
- -----------------------------------------------------------------
<PAGE>
Limitation Year. The Limitation Year is: (Choose (c) or (d))
(c) The Plan Year.
(d) The 12 consecutive month period ending every ---------------.
1.18 EFFECTIVE DATE.
New Plan. The "Effective Date" of the Plan is ---------------.
Restated Plan. The restated Effective Date is ---------------.
This Plan is a substitution and amendment of an existing retirement plan(s)
originally established -------------------.
(Note: See the Effective Date Addendum.)
1.27 HOUR OF SERVICE. The crediting method for Hours of Service
is: (Choose (a) or (b))
(a) The actual method.
(b) The ------------------------- equivalency method, except:
(1) No exceptions.
(2) The actual method applies for purposes of: (Choose at
least one)
(i) Participation under Article II.
(ii) Vesting under Article V.
(iii)Accrual of benefits under Section 3.06.
[Note: On the blank line, insert "daily," "weekly," "semi-monthly payroll
periods" or "monthly."]
1.29 SERVICE FOR PREDECESSOR EMPLOYER. In addition to the predecessor service
the Plan must credit by reason of Section 1.29 of the Plan, the Plan credits
Service with the following predecessor employer(s): ---------------------------.
Service with the designated predecessor employer(s) applies:
(Choose at least one of (a) or (b))
(a) For purposes of participation under Article II.
(b) For purposes of vesting under Article V.
[Note: If the Plan does not credit any predecessor service under this
provision, insert "N/A" in the first blank line. The Employer may attach a
schedule to this Adoption Agreement, in the same format as this Section 1.29,
designating additional predecessor employers and the applicable service
crediting elections.]
<PAGE>
1.31 LEASED EMPLOYEES. If a Leased Employee is a Participant in a safe
harbor money purchase plan (as described in Section 1.31) maintained by the
leasing organization, but the Employer is not eligible for the safe harbor plan
exception: (Choose (a) or (b))
(a) The Advisory Committee will determine the Leased Employee's allocation of
Employer contributions under Article III without taking into account the Leased
Employee's allocation, under the safe harbor plan.
(b) The Advisory Committee will reduce the Leased Employee's allocation of
Employer nonelective contributions (other than designated qualified nonelective
contributions) under this Plan by the Leased Employee's allocation under the
safe harbor plan, but only to the extent that allocation is attributable to the
Leased Employee's service provided to the Employer. [Note: The Employer may not
elect Option (b) if a Paired Plan or any other plan of the Employer makes a
similar reduction for the same plan of the leasing organization.]
ARTICLE II
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY.
Eligibility conditions. To become a Participant in the Plan, an Employee must
satisfy the following eligibility conditions:
(Choose (a) or (b) or both)
(a) Attainment of age -------------------- (specify age, not
exceeding 21).
(b) Service requirement. (Choose one of (1), (2) or (3))
(1) One Year of Service.
(2) ----------------- months (not exceeding 12) following the
Employee's Employment Commencement Date.
(3) One Hour of Service.
Plan Entry Date. "Plan Entry Date" means the Effective Date and:
(Choose (c), (d) or (e))
(c) Semi-annual Entry Dates. The first day of the Plan Year and the first
day of the seventh month of the Plan Year.
(d) The first day of the Plan Year.
(e) (Specify entry dates) ----------------------------------.
Time of Participation. An Employee will become a Participant, unless
exclued under Adoption Agreement Section 1.07, on the Plan
<PAGE>
Entry Date (if employed on that date): (Choose (f), (g) or (h))
(f) immediately following
(g) immediately preceding
(h) nearest the date the Employer completes the eligibility conditions described
in Options (a) and (b) of this Adoption Agreement Section 2.01. [Note: The
Employer must coordinate the selection of (f), (g) or (h) with the "Plan Entry
Date" selection in (c), (d) or (e). Unless otherwise excluded under Section
1.07, the Employee must become a Participant by the earlier of: (1) the first
day of the Plan Year beginning after the date the Employee completes the age and
service requirements of Code ss.410(a); or (2) 6 months after the date the
Employee completes those requirements.]
Dual eligibility. The eligibility conditions of this Section 2.01
apply to: (Choose (i) or (j))
(i) All Employees of the Employer, except: (Choose (1) or (2))
(1) No exceptions
(2) Employees who are Participants in the Plan as of the
Effective Date.
(j) Solely to an Employee employed by the Employer after ----------------------.
If the Employee was employed by the Employer on or before the specified date,
the Employee will become a Participant: (Choose (1) or (2))
(1) On the latest of the Effective Date, his Employment Commencement Date
or the date he attains age --------------------- (not to exceed 21).
(2) Under the eligibility conditions in effect under the Plan prior to the
restated Effective Date. If the restated Plan required more than one Year
of Service to participate, the eligibility conditions under this Option
(2) for participation in the Code ss.401(k) arrangement under this Plan is
one Year of Service for Plan Years beginning after December 31, 1988. [For
restated plans only]
2.02 YEAR OF SERVICE - PARTICIPATION.
Hours of Service. An Employee must complete: (Choose (a) or (b))
(a) 1,000 Hours of Service
(b) ---------------------- Hours of Service during an eligibility
computation period to receive credit for a Year of Service. [Note: The Hours of
Service requirement may not exceed 1,000.]
<PAGE>
Eligibility computation period. After the initial eligibility computation
period described in Section 2.02 of the Plan, the Plan measures the eligibility
computation period as: (Choose (c) or (d))
(c) The 12 consecutive month period beginning with each anniversary of an
Employee's Employment Commencement Date.
(d) The Plan Year, beginning with the Plan Year which includes the first
anniversary of the Employee's Employment Commencement Date.
2.03 BREAK IN SERVICE - PARTICIPATION. The Break in Service rule described
in Section 2.03(B) of the Plan: (Choose (a) or (b))
(a) Does not apply to the Employer's Plan.
(b) Applies to the Employer's Plan.
ARTICLE III
EMPLOYER CONTRIBUTIONS AND FORFEITURES
3.01 AMOUNT.
Part I. [Options (a) through (g)] Amount of Employer's contribution. The
Employer's annual contribution to the Trust will equal the total amount of
deferral contributions, matching contributions, qualified nonelective
contributions and nonelective contributions, as determined under this Section
3.01. (Choose any combination of (a), (b), (c) and (d), or choose (e))
(a) Deferral contributions (Code ss.401(k) arrangement). The Employer must
contribute the amount by which the Participants have reduced their Compensation
for the Plan Year, pursuant to their salary reduction agreements on file with
the Advisory Committee. A reference in the Plan to salary reduction
contributions is a reference to these amounts.
(b) Matching contributions. The Employer will make matching contributions in
accordance with the formula(s) elected in Part II of this Adoption Agreement
Section 3.01.
(c) Designated qualified nonelective contributions. The Employer, in its sole
discretion, may contribute an amount which it designates as a qualified
nonelective contribution.
(d) Nonelective contributions.
(1) Discretionary contribution. The amount (or additional amount) the
Employer may from time to time deem advisable.
<PAGE>
(2) ----------% of the Compensation of all Participants under the
Plan, determined for the Employer's taxable year for
which it makes the contribution. [Note: The percentage
selected may not exceed 15%.]
(3) --------% of Net Profits but not more than $----------.
(e) Frozen Plan. This Plan is a frozen Plan effective------------------------.
The Employer will not contribute to the Plan with respect to any period
following the stated date.
Net Profits. The Employer: (Choose (f) or (g))
(f) Need not have Net Profits to make its annual contribution under this Plan.
(g) Must have current or accumulated Net Profits exceeding $----------- to
make the following contributions: (Choose at least one of (1), (2) and (3))
(1) Matching contributions described in Option (b), except:
-----------------------------------------------------------.
(2) Qualified nonelective contributions described in Option
(c).
(3) Nonelective contributions described in Option --------.
The term "Net Profits" means the Employer's net income or profits for any
taxable year determined by the Employer upon the basis of its books of account
in accordance with generally accepted accounting practices consistently applied
without any deductions for Federal and state taxes upon income or for
contributions made by the Employer under this Plan or under any other employee
benefit plan the Employer maintains. The term "Net Profits" specifically
excludes:
- -------------------------------------------------------------------------------.
[Note: Enter "N/A" if no exclusions apply.]
If the Employer requires Net Profits for matching contributions and the Employer
does not have sufficient Net Profits uner Option (g), it will reduce the
matching contribution under a fixed formula on a pro rata basis for all
Participants. A Participant's share of the reduced contribution will bear the
same ratio as the matching contribution the Participant would have received if
Net Profits were sufficient bears to the total matching contribution all
Participants would have received if Net Profits were sufficient. If more than
one member of a related group (as defined in Section 1.30) execute this Adoption
Agreement, each participating member will determine net Profits separately but
will not apply this reduction unless, after combining the separately determined
Net Profits, the aggregate Net Profits are insufficient to satisfy the matching
contribution liability. "Net Profits" includes both current and accumulated Net
Profits.
Part II. [Options (h) and (i)] Matching contribution formula.
<PAGE>
[Note: If the Employer elected Option (b), complete Options (h)
and (i).]
(h) Amount of matching contributions. Subject to Option (i), for each Plan
Year, the Employer's matching contribution is: (Choose any combination of (1),
(2), (3) and (4))
(1) An amount equal to ----------% of each Participant's Salary
Recuction contributions for the Plan Year.
(2) An amount equal to ----------% of each Participant's first tier of
Salary Reduction contributions for the Plan Year, plus the following
matching percentage(s) for the following subsequent tiers of Salary
Reduction contributions for the Plan Year:
-------------------------------------------------.
(3) Discretionary formula.
(i) An amount (or additional amount) equal to a matching percentage
the Employer from time to time may deem advisable of the
Participant's salary reduction contributions for the Plan Year.
(ii) An amount (or additional amount) equal to a matching percentage
the Employer from time to time may deem advisable of each tier of
the Participant's Salary Reduction contributions for the Plan Year.
[Note: Under Options (2) and (3)(ii), the matching percentage for any
subsequent tier of salary reduction contributions may not exceed the matching
percentage for any prior tier.]
(4) A Participant's matching contributions may not:
(i) Exceed ---------------------------------------.
(ii) Be less than ---------------------------------.
(i) Amount of salary reduction contributions taken into account. When
determining a Participant's salry reduction contributions taken into account
under the matching contributions formula(s), the following rules apply: (Choose
any combination of (1) through (3))
(1) The Advisory Committee will take into account all eligible
contributions credited for the Plan Year.
(2) The Advisory Committee will disregard eligible contributions exceeding
------------------------------------.
(3) The Advisory Committee will treat as the first tier of Salary
Recuction contributions, an amount not exceeding:----------------------.
The subsequent tiers of eligible contributions are: -------------------.
<PAGE>
Part III. [Option (j). Special rules for Code ss.401(k) Arrangement.
(Choose (j), if applicable)
(j) Salary Reduction Agreements. The following rules and restrictions apply
to an Employee's salary reduction agreement: (Make a selection under (1), (2),
(3) and (4))
(1) Limitation on amount. The Employee's salary reduction
contributions: (Choose (i) or at least one of (ii) or (iii))
(i) No maximum limitation other than as provided in
the Plan.
(ii) May not exceed -----------% of Compensation for the Plan Year,
subject to the annual additions limitation described in Part 2 of
Article III and the 402(g) limitation described in Section 14.07 of
the Plan.
(iii)Based on percentages of Compensation must equal at
least -----------------.
(2) An Employee may revoke, on a prospective basis, a salary reduction
agreement: (Choose (i), (ii), (iii) or (iv))
(i) Once during any Plan Year but not later than
--------------- of the Plan Year.
(ii) As of any Plan Entry Date.
(iii)As of the first day of any month.
(iv) (Specify, but must be at least once per Plan Year
-------------------------.
(3) An Employee who revokes his salary reduction agreement may file a
new salary reduction agreement with an effective date: (Choose (i),
(ii), (iii) or (iv))
(i) No earlier than the first day of the next Plan
Year.
(ii) As of any subsequent Plan Entry Date.
(iii)As of the first day of any month subsequent to the
month in which he revoked an Agreement.
(iv) (Specify, but must be at least once per Plan Year following the
Plan Year of revocation) ---------------------.
<PAGE>
(4) A Participant may increase or may decrease, on a prospective basis,
his salary reduction percentage or dollar amount:
(Choose (i), (ii), (iii) or (iv))
(i) As of the beginning of each payroll period.
(ii) As of the first day of each month.
(iii)As of any Plan Entry Date.
(iv) (Specify, but must permit an increase or a
decrease at least once per Plan Year
-----------------------------------.
3.04 CONTRIBUTION ALLOCATION. the Advisory Committee will allocate deferral
contributions, matching contributions, qualified nonelective contributions and
nonelective contributions in accordance with Section 14.06 of the Plan and the
elections under this Adoption Agreement Section 3.04.
Part I. [Options (a) through (d)]. Special Accounting Elections. (Choose
whichever elections are applicable to the Employer's Plan)
(a) Matching Contribuitons Account. The Advisory Committee will allocate
matching contributions to a Participant's: (Choose (1) or (2); (3) is available
only in addition to (1))
(1) Regular Matching Contribution Account.
(2) Qualified Matching Contributions Account.
(3) Except, matching contributions under Option(s) --------------------
of Adoption Agreement Section 3.01 are allocable to the Qualified Matching
Contributions Account.
(b) Special Allocation Dates for Salary Reduction Contributions. The
Advisory Committee will allocate salary reduction contributions as of the
Accounting Date and as of the following additional allocation dates:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(c) Special Allocation Dates for Matching Contributions. The Advisory
Committee will allocate matching contributions as of the Accounting Date and as
of the following additional allocation dates:
- ---------------------------------------------------------.
(d) Designated Qualified Nonelective Contributions - Definition of
Participant. For purposes of allocating the designated qualified nonelective
contribution, "Participant" means: (Choose (1) or (2))
(1) All Participants.
(2) Participants who are Nonhighly Compensated Employees.
<PAGE>
Part II. Method of Allocation - Nonelective Contribution. Subject to any
restoration allocation required under Section 5.04, the Advisory Committee will
allocate and credit each annual nonelective contribution (and Participant
forfeitures treated as nonelective contributions) to the Employer Contributions
Account of each Participant who satisfies the conditions of Section 3.06, in
accordance with the allocation method selected under this Part II. (Choose an
allocation method under (e), (f), (g) or (h); (i) is mandatory if the Employer
elects (f), (g) or (h))
(e) Nonintegrated Allocation Formula. The Advisory Committee will allocate the
annual nonelective contributions in the same ratio that each Participant's
Compensation for the Plan Year bears to the total Compensation of all
Participants for the Plan Year.
(f) Two-Tiered Integrated Allocation Formula - Maximum Disparity. First, the
Advisory Committee will allocate the annual nonelective contributions in the
same ratio that each Participant's Compensation plus Excess Compensation for the
Plan Year bears to the total Compensation plus Excess Compensation of all
Participants for the Plan Year. The allocation under this paragraph, as a
percentage of each Participant's Compensation plus Excess Compensation, must not
exceed the applicable percentage (5.7%, 5.4% or 4.3%) listed under the Maximum
Disparity Table following Option (i). The Advisory Committee then will allocate
any remaining nonelective contributions in the same ratio that each
Participant's Compensation for the Plan Year bears to the total Compensation of
all Participants for the Plan Year.
(g) Three-Tiered Integrated Allocation Formula. First, the Advisory Committee
will allocate the annual Employer nonelective contributions in the same ratio
that each Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year. The allocation under this
paragraph, as a percentage of each Participant's Compensation may not exceed the
applicable percentage (5.7%, 5.4% or 4.3%) listed under the Maximum Disparity
Table following Option (I).
As a second tier allocation, the Advisory Committee will allocate the
nonelective contributions in the same ratio that each Participant's Excess
Compensation for the Plan Year bears to the total Excess Compensation of all
Participants for the Plan Year. The allocation under this paragraph, as a
percentage of each Participant's Excess Compensation, may not exceed the
allocation percentage in the first paragraph.
Finally, the Advisory Committee will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation for the
Plan Year bears to the total Compensation of all Participants for the Plan Year.
<PAGE>
(h) Fourth Tier Integrated Allocation Formula. First, the Advisory
Committee will allocate the annual nonelective contributions in the same ratio
that each Participant's Compensation for the Plan Year bears to the total
Compensation of all Participants for the Plan Year, but not exceeding 3% of each
Participant's Compensation.
As a second tier allocation, the Advisory Committee will allocate the
nonelective contributions in the same ratio that each Participant's Excess
Compensation for the Plan Year bears to the total Excess Compensation of all
Participants for the Plan Year, but not exceeding 3% of each Participant's
Excess Compensation.
As a third tier allocation, the Advisory Committee will allocate the annual
contributions in the same ratio that each Participant's Compensation plus Excess
Compensation for the Plan Year bears to the total Compensation plus Excess
Compensation of all Participants for the Plan Year. The allocation under this
paragraph, as a percentage of each Participant's Compensation plus Excess
Compensation, must not exceed the applicable percentage (2.7%, 2.4% or 1.3%)
listed under the Maximum Disparity Table following Option (i).
The Advisory Committee then will allocate any remaining nonelective
contributions in the same ratio that each Participant's Compensation for the
Plan Year bears to the total Compensation of all Participants for the Plan Year.
(i) Excess Compensation. For purposes of Option (f), (g) or (h), "Excess
Compensation" means Compensation in excess of the following Integration Level:
(Choose (1) or (2))
(1) -------% (not exceeding 100%) of the taxable wage base, as determined
under Section 230 of the Social Security Act, in effect on the first day
of the Plan Year: (Choose any combination of (i) and (ii) or choose (iii))
(i) Rounded to --------------------- (but not exceeding
the taxable wage base).
(ii) But not greater than $-------------.
(iii)Without any further adjustment or limitation.
(2) $---------------------. [Note: Not exceeding the taxable
wage base for the Plan Year in which this Adoption Agreement
first is effective.]
Maximum Disparity Table. For purposes of Options (f), (g) and
(h), the applicable percentage is:
Integration Level Applicable Percentages Applicable
(as percentage of for Option (f) or Percentages
taxable wage base) Option (g) For Option (h)
<PAGE>
- --------------------------------------------------------------------------------
100% 5.7% 2.7%
More than 80% but
less than 100% 5.4% 2.4%
More than 20%
(but not less than
$10,001) and not
more than 80% 4.3% 1.3%
20% (or $10,000, if
greater) or less 5.7% 2.7%
Top Heavy Minimum Allocation - Application of Requirement. The Plan applies
the top heavy minimum allocation requirements of Section 3.04(B)(1): (Choose (j)
or (k))
(j) In all Plan years. A Participant is entitled to the top heavy minimum
allocation if he is employed by the Employer on the last day of the Plan Year,
unless: (Choose (1) or (2))
(1) No exceptions.
(2) The Participant is a Key Employee for the Plan Year.
[Note: If the Employer selects this Option (2), it will have
to determine for each Plan Year who are the Key Employees
under the Plan.]
(k) Only in Plan Years for which the Plan is top heavy. A Participant is
entitled to the top heavy minimum allocation if he is employed by the Employer
on the last day of the Plan Year, unless he is a Key Employee. [Note: Option (k)
will require the Advisory Committee to determine whether the Plan is top heavy
for a Plan Year.]
Top Heavy Minimum Allocation - Method of Compliance. If a Participant's
allocation under this Section 3.04 is less than the top heavy minimum allocation
to which he is entitled under Section 3.04(B): (Choose (l) or (m))
(l) The Employer will make any necessary additional contribution to the
Participant's Account, as described in Section 3.04(B)(7)(a) of the Plan.
(m) The Employer will satisfy the top heavy minimum allocation under the Paired
Pension Plan the Employer also maintains under this Master Plan. However, the
Employer will make any necessary additional contribution to satisfy the top
heavy minimum allocation for an Employee covered only under this Plan and not
under the Paired Pension Plan. See Section 3.04(B)(7)(b) of the Plan.
<PAGE>
If the Employer maintains another plan which is not a Paired Pension Plan
offered under this Master Plan, the Employer may provide in an addendum to this
Adoption Agreement, numbered Section 3.04, any modifications to the Plan
necessary to satisfy the top heavy requirements under Code ss.416.
Related employers. If two or more related employers (as defined in Section 1.30)
contribute to this Plan, the Advisory Committee must allocate all Employer
contributions and forfeitures to each Participant in the Plan, in accordance
with the elections in this Adoption Agreement Section 3.04, without regard to
which contributing relating group member employs the Participant. A
Participant's Compensation includes Compensatin from all related employers,
irrespective of which related employers are contributing to the Plan. The
signatory Employer and any Participating Employer(s) will satisfy any fixed
matching contribution formula under Adoption Agreement Section 3.01 as agreed by
those Employers.
3.05 FORFEITURE ALLOCATION. Subject to any restoration allocation required
under Sections 5.04 or 9.14, the Advisory Committee will allocate a Participant
forfeiture in accordance with Section 3.04: (Choose (a) or (b); (c) and (d) are
optional in addition to (a) or (b))
(a) As an Employer nonelective contribution for the Plan Year in which the
forfeiture occurs, as if the Participant forfeiture were an additional
nonelective contribution for that Plan Year.
(b) To reduce the Employer matching contributions and
nonelective contributions for the Plan Year: (Choose (1) or (2))
(1) in which the forfeiture occurs.
(2) immediately following the Plan Year in which the
forfeiture occurs.
(c) To the extent attributable to matching contributions:
(Choose (1), (2) or (3))
(1) In the manner elected under Options (a) or (b).
(2) First to reduce Employer matching contributions for the
Plan Year: (Choose (i) or (ii))
(i) in which the forfeiture occurs,
(ii) immediately following the Plan Year in which the forfeiture
occurs, then as elected in Options (a) or (b).
(3) As a discretionary matching contribution for the Plan Year in which
the forfeiture occurs, in lieu of the manner elected under Options (a) or
(b).
<PAGE>
(d) First to reduce the Plan's ordinary and necessary administrative expenses
for the Plan Year and then will allocate any remaining forfeitures in the manner
described in Options (a), (b) or (c), whichever applies. If the Employer elects
Option (c), the forfeitures used to reduce Plan expenses: (Choose (1) or (2))
(1) relate proportionately to forfeitures described in Option (c) and to
forfeitures described in Options (a) or (b).
(2) relate first to forfeitures described in Option
--------------.
Allocation of forfeited excess aggregate contributions. The Advisory Committee
will allocate any forfeited excess aggregate contributions (as described in
Section 14.09): (Choose (e), (f) or (g))
(e) To reduce Employer matching contributions for the Plan Year:
(Choose (1) or (2))
(1) in which the forfeiture occurs.
(2) immediately following the Plan Year in which the
forfeiture occurs.
(f) As Employer discretionary matching contributions for the Plan Year in which
forfeited, except the Advisory Committee will not allocate these forfeitures to
the Highly Compensated Employees who incurred the forfeitures.
(g) In accordance with Options (a) through (d), whichever applies, except the
Advisory Committee will not allocate these forfeitures under Option (a) or under
Option (c)(3) to the Highly Compensated Emplyees who incurred the forfeitures.
3.06 ACCRUAL OF BENEFIT.
Compensation taken into account. For the Plan Year in which the Employee first
becomes a Participant, the Advisory Committee will determine the allocation of
any designated qualified nonelective contribution or nonelective contribution by
taking into account:
(Choose (a) or (b))
(a) The Employee's Compensation for the entire Plan Year.
(b) The Employee's Compensation for the portion of the Plan Year in which
the Employee actually is a Participant in the Plan, except: (Choose (2) or (2))
(1) No exceptions.
<PAGE>
(2) For purposes of the first 3% of Compensation allocated
under Option (e), (g) or (h) of Adoption Agreement Section
3.04, whichever applies, the Advisory Committee will take into account the
Employee's Compensation for the entire Plan Year.
Accrual Requirements. To receive an allocation of designated qualified
nonelective contributions, nonelective contributiosn and Participant forfeitures
treated as nonelective contributions for the Plan Year, a Participant must
satisfy the accrual requirements of this paragraph. If the Participant is
employed by the Employer on the last day of the Plan Year, the Participant must
complete at least one Hour of Service for that Plan Year. If the Participant
terminates employment with the Employer during the Plan Year, the Participant
must complete at least --------- Hours of Service (not exceeding 501) during the
Plan Year, except: )Choose (c) or (d))
(c) No exceptions.
(d) No Hour of Service requirement if the Participant terminates employment
during the Plan Year on account of: (Choose at least one of (1), (2) and (3))
(1) Death.
(2) Disability.
(3) Attainment of Normal Retirement Age in the current Plan Year or in a
prior Plan Year.
Special accrual requirements for matching contributions. To receive an
allocation of matching contributions (for forfeitures applied to reduce matching
contributions) a Participant must satisfy the following condition(s): (Choose
(e) or any combination of (f), (g) and (h))
(e) No conditions other than making salary reduction contributions.
(f) The accrual requirements prescribed for an allocation of nonelective
contributions.
(g) The Participant does not revoke his salary reduction agreement effective
during the Plan Year.
(h) The Participant is not a Highly Compensated Employee for the Plan Year.
This Option (h) applies to: (Choose (1) or (2))
(1) All matching contributions.
(2) Matching contributions described in Option(s) ------------- of
Adoption Agreement Section 3.01.
3.15 MORE THAN ONE PLAN LIMITATION. If the provisions of Section 3.15
apply, the Excess Amount attributed to this Plan equals:
<PAGE>
(Choose (a), (b) or (c))
(a) The product of:
(i) the total Excess Amount allocated as of such date (including any
amount which the Advisory Committee would have allocated but for the
limitations of Code ss.415), times
(ii) the ratio of (1) the amount allocated to the Participant as of such
date under this Plan divided by (2) the total amount allocated as of such
date under all qualified defined contribution plans (determined without
regard to the limitations of Code ss.415).
(b) The total Excess Amount.
(c) None of the Excess Amount.
[Note: If the Employer adopts Paired Plans available under this
Master Plan, the Employer must coordinate its elections under
Section 3.15 of each Adoption Agreement.]
3.18 DEFINED BENEFIT PLAN LIMITATION.
Application of limitation. The limitation under Section 3.18 of
the Plan: (Choose (a) or (b))
(a) Does not apply to the Employer's Plan because the Employer does not maintain
and never has maintained a defined benefit plan covering any Participant in this
Plan.
(b) Applies to the Employer's Plan. To the extent necessary to satisfy the
limitation under Section 3.18, the Employer will reduce: (Choose (1) or (2))
(1) The Participant's projected annual benefit under the defined benefit
plan under which the Participant participates.
(2) Its contribution or allocation on behalf of the Participant to the
defined contribution plan under which the Participant participates and
then, if necessary, the Participant's projected annual benefit under the
defined benefit plan under which the Participant participates.
[Note: If the Employer selects (a), the remaining options in this Section
3.18 do not apply to the Employer's Plan.]
Override of 100% Limitation. The Employers elects: (Choose (c) or (d))
(c) To apply the 100% limitation described in Section 3.19(1) fo the Plan
in all Limitation Years. [Note: This election will avoid having to calculate the
Plan's top heavy ratio for any year, unless the Employer has elected Adoption
Agreement Section 3.04(k).]
<PAGE>
(d) Not to apply the 100% limitation for Limitation years in which the Plan's
top heavy ratio (as determined under Section 1.33 of the Plan) does not exceed
90%, but only if the defined benefit plan satisfies the extra minimum benefit
requirements of Code ss.416(h)(2) (and the applicable Treasury regulations)
after taking into account the Employer's election under Options (e), (f), (g) or
(h) of this Section 3.18. To determine the top heavy ratio, the Advisory
Committee will use the following interest rate and mortality assumptions to
value accrued benefits under a defined benefit plan. [Note: This election will
require the Advisory Committee to calculate the Plan's top heavy ratio.]
Coordination with top heavy minimum allocation. The Advisory Committee will
apply the top heavy minimum allocation provisions of Section 3.04(B) of the Plan
with the following modifications:
(Choose (e), (f), (g) or (h))
(e) No modifications.
(f) By substituting 4% for 3% in Paragraph (b) of Section 3.04(B)(1) or of
Section 3.04(B)(2) of the Plan, whichever applies, but only for any Plan Year in
which Option (d) applies to override the 100% limitation.
(g) By increasing the top heavy minimum allocation to 5% for any Plan Year in
which the 100% limitation applies, and to 7 1/2% for any Plan Year in which
Option (d) applies to override the 100% limitation. The increased percentage
under this Option (g) applies irrespective of whether the highest contribution
rate for the Plan Year is less than that increased percentage.
(h) By eliminating the top heavy minimum allocation. [Note: The Employer
may not select this Option (h) if the defined benefit plan does not guarantee
the top heavy minimum benefit under Code ss.416 for every Participant in this
Plan who is a Non-Key Employee.]
If the elections under this Section 3.18 are not appropriate to satisfy the
limitations of Section 3.18, or the top heavy requirements under Code ss.416,
the Employer must provide the appropriate provisions in an addendum to this
Adoption Agreement.
ARTICLE IV
PARTICIPANT CONTRIBUTIONS
4.01 PARTICIPANT NONDEDUCTIBLE CONTRIBUTIONS. The Plan: (Choose (a) or (b)
(a) Does not permit Participant nondeductible contributions.
(b) Permits Participant nondeductible contributions, pursuant to
Section 14.04 of the Plan.
<PAGE>
Allocation dates: The Advisory Committee will allocate nondeductible
contributions for each Plan Year as of the Accounting Date and the following
additional allocation dates:
(Choose (c) or (d))
(c) No other allocation dates.
(d) (Specify) ----------------------------------------------------------------
- ----------------------------------------------------------------.
As of an allocation date, the Advisory Committee will credit all nondeductible
contributions made for the relevant allocation period. Unless otherwise
specified in (d), a nondeductible contribution relates to an allocation period
only if actually made to the Trust no later than 30 days after that allocation
period ends.
ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING
5.01 NORMAL RETIREMENT. Normal Retirement Age under the Plan is:
(Choose (a) or (b))
(a) --------------------------- [State age, but may not exceed age
65].
(b) The later of the date the Participant attains --------(-------) years of age
or the ---------(--------) anniversary of the first day of the Plan Year in
which the Participant commenced participation in the Plan. [The age selected may
not exceed age 65 and the anniversary selected may not exceed the 5th.]
5.02 PARTICIPANT DEATH OR DISABILITY. The 100% vesting rule under Section
5.02 of the Plan: (Choose (a) or choose one or both of (b) and (c))
(a) Does not apply.
(b) Applies to death.
(c) Applies to disability.
5.03 VESTING SCHEDULE.
Deferral Contributions Account/Qualified Matching Contributions
Account/Qualified Nonelective Contributions Account. A Participant has a 100%
Nonforfeitable interest at all times in his Deferral Contributions account, his
Qualified Matching Contributions Account and in his Qualified Nonelective
Contributions Account.
<PAGE>
Regular Matching Contributions Account/Employer Contributions Account. With
respect to a Participant's Regular Matching Contributions Account and Employer
Contributions Account, the Employer elects the following vesting schedule:
(Choose (a) or (b); (c) and (d) are available only as additional options)
(a) Immediate vesting. 100% Nonforfeitable at all times.
(b) Graduated Vesting Schedules.
Top Heavy Schedule Non Top Heavy Schedule
(Mandatory) (Optional)
Years of Nonforfeitable Years of Nonforfeitable
Service Percengage Service Percentage
- --------------------------------------------------------------------------------
Less than 1 ----- Less than 1 -----
1 ----- 1 -----
2 ----- 2 -----
3 ----- 3 -----
4 ----- 4 -----
5 ----- 5 -----
6 or more 100% 6 -----
7 or more 100%
(c) Special vesting election for Regular Matching Contributions Account. In
lieu of the election under Options (a) or (b), the Employer elects the following
vesting schedule for a Participant's Regular Matching Contributions Account:
(Choose (1) or (2))
(1) 100% Nonforfeitable at all times.
(2) In accordance with the vesting schedule described in
the addendum to this Adoption Agreement, numbered 5.03(c).
[Note: If the Employer elects this Option (c)(2), the
addendum must designate the applicable vesting schedule(s)
using the same format as used in Option (b).]
[Note: Under Options (b) and (c)(2), the Employer must complete a Top Heavy
Schedule which satisfies Code ss.416. The Employer, at its option, may complete
a Non Top Heavy Schedule only if the Employer elected Adoption Agreement Section
3.04(k). The Non Top Heavy Schedule must satisfy Code 411(a)(2). Also see
Section 7.05 of the Plan.]
(d) The Top Heavy Schedule under Option (b) (and, if applicable, under
Option (c)(2)) applies: (Choose (1) or (2))
(1) Only in a Plan Year for which the Plan is top heavy.
(2) In the Plan Year for which the Plan first is top heavy
and then in all subsequent Plan Years. [Note: The Employer
may not elect Option (d) unless it has completed a Non Top
Heavy Schedule.]
<PAGE>
Minimum Vesting. (Choose (e) or (f))
(e) The Plan does not apply a minimum vesting rule.
(f) A Participant's Nonforfeitable Accrued Benefit will never be less than the
lesser of $-------------- or his entire Accrued Benefit, even if the
application of a graduated vesting schedule under Options (b) or (c) would
result in a smaller Nonforfeitable Accrued Benefit.
5.04 CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS/RESTORATION OF
FORFEITED ACCRUED BENEFIT. The deemed cash-out rule described in Section 5.04(C)
of the Plan: (Choose (a) or (b))
(a) Does not apply.
(b) Will apply to determine the timing of forfeitures for 0% vested
Participants. A Participant is not a 0% vested Participant if he has a Deferral
Contributions Account.
5.06 YEAR OF SERVICE - VESTING.
Vesting computation period. The Plan measures a Year of Service on the basis of
the following 12 consecutive month periods:
(Choose (a) or (b))
(a) Plan Years.
(b) Employment Years. An Employment Year is the 12 consecutive month period
measured from the Employee's Employment Commencement Date and each successive 12
consecutive month period measured from each anniversary of that Employment
Commencement Date.
Hours of Service. The minimum number of Hours of Service an Employee must
complete during a vesting computation period to receive credit for a Year of
Service is: (choose (c) or (d))
(c) 1,000 Hours of Service.
(d) -------------- Hours of Service. [Note: The Hours of Service requirement
may not exceed 1,000.]
5.08 INCLUDED YEARS OF SERVICE - VESTING. The Employer specifically
excludes the following Years of Service: (Choose (a) or at least one of (b), (c)
and (d))
(a) None other than as specified in Section 5.08(a) of the Plan.
(b) Any Year of Service before the Participant attained the age of
- --------------------. [Note: The age selected may not exceed age 18.]
<PAGE>
(c) Any Year of Service during the period the Employer did not maintain this
Plan or a predecessor plan.
(d) Any Year of Service before a Break in Service if the number of consecutive
Breaks in Service equals or exceeds the greater of 5 or the aggregate number of
the Years of Service prior to the Break. This exception applies only if the
Participant is 0% vested in his Accrued Benefit derived from Employer
contributions at the time he has a Break in Service. Furthermore, the aggregate
number of Years of Service before a Break in Service do not include any Years of
Service not required to be taken into account under this exception by reason of
any prior Break in Service.
ARTICLE VI
TIME AND METHOD OF PAYMENTS OF BENEFITS
Code ss.411(d)(6) Protected Benefits. The elections under this Article VI may
not eliminate Code ss.411(d)(6) protected benefit. To the extent the elections
would eliminate a Code ss.411(d)(6) protected benefit, see Section 13.02 of the
Plan. Furthermore, if the elections liberalize the optional forms of benefit
under the Plan, the more liberal options apply on the later of the adoption date
or the Effective Date of this Adoption Agreement.
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT.
Distribution date. A distribution date under the Plan means
- --------------------------------------------------------------.
[Note: The [Employer must specify the appropriate date(s). The specified
distribution dates primarily establish annuity starting dates and the notice and
consent periods prescribed by the Plan. The Plan allows the Trustee an
administratively practicable period of time to make the actual distribution
relating to a particular distribution date.]
Nonforfeitable Accrued Benefit Not Exceeding $3,500. Subject to the
limitations of Section 6.01(A)(1), the distribution date for distribution of a
Nonforfeitable Accrued Benefit not exceeding $3,500 is: (Choose (a), (b), (c) or
(d))
(a) ---------- of the -------------- Plan Year beginning after the
Participant's Separation from Service.
(b) --------------------- following the Participant's Separation from Service.
(c) --------------------- of the Plan Year after the Participant incurs
- ------------------------- Break(s) in Service (as defined in Article V).
<PAGE>
(d) ----------------- following the Participant's attainment of Normal
Retirement Age, but not earlier than --------------- days following his
Separation from Service.
Nonforfeitable Accrued Benefit Exceeds $3,500. See the elections under
Section 6.03.
Disability. The distribution date, subject to the limitations of Section
6.01(A)(3), is: (Choose (e) or (f))
(e) ----------------- after the Participant terminates employment because
of disability.
(f) The same as if the Participant had terminated employment without
disability.
Hardship. (Choose (g) or (h))
(g) The Plan does not permit a hardship distribution to a Participant who has
separated from Service.
(h) The Plan permits a hardship distribution to a Participant who has separated
from Service in accordance with the hardship distribution policy stated in
(Choose (1) or (2))
(1) Section 6.01(A)(4) of the Plan.
(2) Section 14.11 of the Plan.
Default on a Loan. If a Participant or Beneficiary defaults on a loan made
pursuant to a loan policy adopted by the Advisory Committee pursuant to Section
9.04, the Plan: (Choose (i), (j))
(i) Treats the default as a distributable event. the Trustee, at the time of the
default, will reduce the Participant's Nonforfeitable Accrued Benefit by the
lesser of the amount in default (plus accrued interest) or the Plan's security
interest in that Nonforfeitable Accrued Benefit. To the extent the loan is
attributable to the Participant's Deferral Contributions Account, Qualified
Matching Contributions Account or Qualified Nonelective Contributions Account,
the Trustee will not reduce the Participant's Nonforfeitable Accrued Benefit
unless the Participant has separated from Service or unless the Participant has
attained age 59 1/2.
(j) Does not treat the default as a distributable event. When an otherwise
distributable event first occurs pursuant to Section 6.01 or Section 6.03 of the
Plan, the Trustee will reduce the Participant's Nonforfeitable Accrued Benefit
by the lesser of the amount in default (plus accrued interest) or the Plan's
security interest in that Nonforfeitable Accrued Benefit.
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. The Advisory Committee will
apply Section 6.02 of the Plan with the following modifications: (Choose (a) or
(b))
<PAGE>
(a) No modifications.
(b) The Plan permits the following annuity options: -------------------------
- ------------------------------------------------------------------.
Any Participant who elects a life annuity option is subject to the
requirements of Sections 6.04(A), (B), (C) and (D) of the Plan. See Section
6.04(E). [Note: The Employer may specify additional annuity options in an
addendum to this Adoption Agreement, numbered 6.02(b).]
6.03 BENEFIT PAYMENT ELECTIONS.
Participant Elections After Separation from Service. A Participant who is
eligible to make distribution elections under Section 6.03 of the Plan may elect
to commence distribution of his Nonforfeitable Accrued Benefit: (Choose (a) or
(b))
(a) As of any distribution date, but not earlier than -------- of the Plan Year
beginning after the Participant's Separation from Service.
(b) As of the following date(s): (Choose at least one of Options
(1) through (5))
(1) As of any distribution date after the close of the Plan Year in which
the Participant attains Normal Retirement Age.
(2) Any distribution date following his Separation from
Service.
(3) Any distribution date in the -------------- Plan Year(s) beginning
after his Separation from Service.
(4) Any distribution date in the Plan Year after the Participant incurs
---------------- Break(s) in Service (as defined in Article V).
(5) Any distribution date following attainment of age -------- and
completion of at least --------- Years of Service (as defined in Article
V).
The distribution events described in the election(s) made under Options (a) or
(b) apply equally to all Accounts maintained for the Participant.
Participant Elections Prior to Separation from Service - Regular Matching
Contributions Account and Employer Contributions Account. Subject to the
restrictions of Article VI, the following distribution options apply to a
Participant's Regular Matching Contributions Account and Employer Contributions
Account prior to his Separation from Service: (Choose (c) or at least one of (d)
through (f))
(c) No distribution options prior to Separation from Service.
<PAGE>
(d) Attainment of Specified Age. Until he retires, the Participant has a
continuing election to receive all or any portion of his Nonforfeitable interest
in these Accounts after he attains: (Choose (1) or (2))
(1) Normal Retirement Age.
(2) ----------- years of age and is at least --------------%
vested in these Accounts. [Note: If the percentage is less
than 100%, see the special vesting formula in Section 5.03.]
(e) After a Participant has participated in the Plan for a period of not
less than --------- years and he is 100% vested in these Accounts, until he
retires, the Participant has a continuing election to receive all or any portion
of the Accounts. [Note: The number in the blank space may not be less than 5.]
(f) Hardship. A Participant may elect a hardship distribution prior to his
Separation from Service in accordance with the hardship distribution policy:
Choose (1), or (2); (3) is available only as in addition to (1) or (2))
(1) Under Section 6.01(A)(4) of the Plan.
(2) Under Section 14.11 of the Plan.
(3) In no event may a Participant receive a hardship
distribution before he is at least -----------% vested in
these Accounts. [Note: If the percentage in the blank is
less than 100%, see the special vesting formula in Section
5.03.]
Participant Elections Prior to Separation from Service - Deferral Contributions
Account, Qualified Matching Contributions Account and Qualified Nonelective
Contributions Account. Subject to the restrictions of Article VI, the following
distribution options apply to a Participant's Deferral Contributions Account,
Qualified Matching Contributions Account and Qualified Nonelective Contributions
Account prior to his Separation from Service: (Choose (g) or at least one of (h)
or (i))
(g) No distribution options prior to Separation from Service.
(h) Until he retires, the Participant has a continuing election to receive all
or any portion of these Accounts after he attains:
(Choose (1) or (2))
(1) The later of Normal Retirement Age or age 59 1/2.
(2) Age --------------- (at least 59 1/2).
(i) Hardship. A participant, prior to his separation from service, may
elect a hardship distribution in accordance with the hardship distribution
policy under Section 14.11 of the Plan.
<PAGE>
Sale of trade of business/subsidiary. If the employer sells substantially all of
the assets (within the meaning of Code ss.409(d)(2) used in a trade or business
or sells a subsidiary (within the meaning of Code ss.409(d)(3)), a Participant
who continues employment with he acquiring corporation is eligible for
distribution from his Deferral Contributions Account, Qualified Matching
Contributions Account and Qualified Nonelective Contributions Account: (Choose
(j) or (k))
(j) Only as described in this Adoption Agreement Section 6.03 for distributions
prior to Separation from Service.
(k) As if he has a Separation from Service. After March 31, 1988, a distribution
authorized solely by reason of this Option (k) must constitute a lump sum
distribution, determined in a manner consistent with Code ss.(k)(10) and the
applicable Treasury regulations.
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES. The
annuity distribution requirements of Section 6.04: (Choose (a) or (b))
(a) Apply only to a Participant described in Section 6.04(E) of the Plan
(relating to the profit sharing exception to the joint and survivor
requirements).
(b) Apply to all Participants.
ARTICLE IX
ADVISORY COMMITTEE - DUTIES WITH RESPECT TO
PARTICIPANTS' ACCOUNTS
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. If a distribution (other than a
distribution from a segregated Account and other than a corrective distribution
described in Sections 14.07, 14.08, 14.09 or 14.10 of the Plan) occurs more than
90 days after the most recent valuation date, the distribution will include
interest at: (Choose (a) or (b))
(a) -----------------% per annum. [Note: The percentage may equal 0%.]
(b) The 90 day Treasury bill rate in effect at the beginning of the current
valuation period.
9.11 ALLOCATION AND DISTRIBUTION OF NET INCOME GAIN OR LOSS. Pursuant to
Section 14.12, to determine the allocation of net income, gain or loss:
(complete only those items, if any, which are applicable to the Employer's Plan)
(a) For salary reduction contributions, the Advisory Committee will:
(Choose (1), (2), (3) or (4))
<PAGE>
(1) Apply Section 9.11 without modification.
(2) Use the segregated account approach described in
Section 14.12.
(3) Use the weighted average method described in Section 14.12, based on a
------------------------ weighting period.
(4) Treat as part of the relevant Account at the beginning
of the valuation period -----% of the salary reduction
contributions: (Choose (i) or (ii))
(i) made during that valuation period.
(ii) made by the following specified time: --------.
(b) For matching contributions, the Advisory Committee will:
(Choose (1), (2) or (3))
(1) Apply Section 9.11 without modification.
(2) Use the weighted average method described in Section 14.12, based on a
----------------- weighting period.
(3) Treat as part of the relevant Account at the beginning of the
valuation period --------% of the Matching contributions allocated during
the valuation period.
(c) For Participant nondeductible contributions, the Advisory
Committee will: (Choose (1), (2), (3) or (4))
(1) Apply Section 9.11 without modification.
(2) Use the segregated account approach described in
Section 14.12.
(3) Use the weighted average method described in Section 14.12, based on a
--------------------- weighting period.
(4) Treat as part of the relevant Account at the beginning
of the valuation period ----------% of the Participant
nondeductible contributions: (Choose (i) or (ii))
(i) made during that valuation period.
(ii) made by the following specified time: ---------.
ARTICLE X
TRUSTEE AND CUSTODIAN, POWERS AND DUTIES
10.14 VALUATION OF TRUST. In addition to each Accounting Date, the Trustee
must value the Trust Fund on the following valuation date(s): (Choose (a) or
(b))
<PAGE>
(a) No other mandatory valuation dates.
(b) (Specify) ---------------------------------------------------------------
- --------------------------------------------------------------.
EFFECTIVE DATE ADDENDUM
(Restated Plans Only)
The Employer must complete this addendum only if the restated Effective Date
specified in Adoption Agreement Section 1.18 is different than the restated
effective date for at least one of the provisions listed in this addendum. In
lieu of the restated Effective Date in Adoption Agreement Section 1.18, the
following special effective dates apply: (Choose whichever elections apply)
(a) Compensation definition. The Compensation definition of Section 1.12
(other than the $200,000 limitation) is effective for Plan Years beginning after
- -------------------------------. [Note: May not be effective later than the
first day of the first Plan Year beginning after the Employer executes this
Adoption Agreement to restate the Plan for the Tax Reform Act of 1986, if
applicable.]
(b) Eligibility conditions. The eligibility conditions specified in
Adoption Agreement Section 2.01 are effective for Plan Years beginning after
- -------------------------.
(c) Suspension of Years of Service. The suspension of Years of Service rule
elected under Adoption Agreement Section 2.03 is effective for Plan Years
beginning after --------------------.
(d) Contribution/allocation formula. The contribution formula elected under
Adoption Agreement Section 3.01 and the method of allocation elected under
Adoption Agreement Section 3.04 is effective for Plan Years beginning after
- ----------------------.
(e) Accrual requirements. The accrual requirements of Section 3.06 are
effective for Plan Years beginning after ---------. [Note: If the effective
date is later than Plan Years beginning after December 31, 1989, the accrual
requirements in the Plan prior to its restatement may not be more restrictive
for post- 1989 Plan Years than the requirements permitted under Adoption
Agreement Section 3.06.]
(f) Elimination of Net Profits. The requirement for the Employer not to
have net profits to contribute to this Plan is effective for Plan Years
beginning after ------------------------------. [Note: The date specified may
not be earlier than December 31, 1985.]
(g) Vesting Schedule. The vesting schedule elected under Adoption Agreement
Section 5.03 is effective for Plan Years beginning after ---------------------.
<PAGE>
(h) Allocation of Earnings. The special allocation provisions elected under
Adoption Agreement Section 9.11 are effective for Plan Years beginning after
- ------------------------------.
For Plan Years prior to the special Effective Date, the terms of the Plan prior
to its restatement under this Adoption Agreement will control for purposes of
the designated provisions. A special Effective Date may not result in the delay
of a Plan provision beyond the permissible Effective Date under any applicable
law requirements.
Execution Page
The Trustee (and Custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian) under the
Master Plan and Trust. The Employer hereby agrees to the provisions of this Plan
and Trust, and in witness of its agreement, the Employer by its duly authorized
officers, has executed this Adoption Agreement, and the Trustee (and Custodian,
if applicable) signified its acceptance, on this -------- day of
- ---------------, 19---.
Name and EIN of Employer: ----------------------------------------------------
- -----------------------------------------------------------------.
Signed: -------------------------------------------------
Name(s) of Trustee: ---------------------------------------------
- -----------------------------------------------------------------
Signed: ---------------------------------------------------------
- -----------------------------------------------------------------
Name of Custodian: ----------------------------------------------
Signed: ---------------------------------------------------------
[Note: A Trustee is mandatory, but a Custodian is optional. See Section
10.03 of the Plan.]
Plan Number. The 3-digit plan number the Employer assigns to this
Plan for ERISA reporting purposes (Form 5500 Series) is:
- ------------------------------------------------.
Use of Adoption Agreement. Failure to complete properly the elections in this
Adoption Agreement may result in disqualification of the Employer's Plan. The
3-digit number assigned to this Adoption Agreement (see page 1) is solely for
the Master Plan Sponsor's recordkeeping purposes and does not necessarily
<PAGE>
correspond to the plan number the Employer designated in the prior
paragraph. The Master Plan Sponsor offers the following Paired Pension Plan(s)
with this Paired Profit Sharing Plan, identified by 3-digit adoption agreement
number: 004 and 010.
Master Plan Sponsor. The Master Plan Sponsor identified on the first page of the
basic plan document will notify all adopting employers of an amendment of this
Master Plan or of any abandonment or discontinuance by the Master Plan Sponsor
of its maintenance of this Master Plan. For inquiries regarding the adoption of
the Master Plan, the Master Plan Sponsor's intended meaning of any plan
provisions or the effect of the opinion letter issued to the Master Plan Sponsor
at the following address and telephone number: INVESCO Trust Company, 7800 E.
Union Ave., Denver, Colorado (303) 779-0731.
Reliance on Opinion Letter. If the Employer does not maintain (and has never
maintained) any other plan other than this Plan and a Paired Pensnion Plan, it
may rely on the Master Plan Sponsor's opinion letter covering this Plan for
purposes of plan qualification. For this purpose, the Employer has not
maintained another plan if this Plan, or the Paired Pension Plan, amended and
restated that prior plan and the prior plan was the same type of plan as the
restated plan. If the Employer maintains or has maintained another plan other
than a Paired Pension Plan, including a welfare benefit fund, as defined in Code
ss.491(e), which provides post-retirement medical benefits for key employees (as
defined in Code ss.419A(d)(3)), or an individual medical account (as defined in
Code ss.415(l)(2)), the Employer may not rely on this Plan's qualified status
unless it obtains a determination letter from the applicable IRS Key District
office.
PARTICIPATION AGREEMENT
For Participation by Related Group Members (Plan Section 1.30)
The undersigned Employer, by executing this Participation Agreement, elects to
become a Participating Employer in the Plan identified in Section 1.03 of the
accompanying Adoption Agreement, as if the Participating Employer were a
signatory to that Agreement. The Participating Employer accepts, and agrees to
be bound by, all of the elections granted under the provisions of the Master
Plan as made by ------------------------------------, the Signatory Employer to
the Execution Page of the Adoption Agreement.
1. The Effective Date of the undersigned Employer's participation in the
designated Plan is --------------------------.
2. The undersigned Employer's adoption of this Plan
constitutes:
(a) The adoption of a new plan by the Participating Employer.
(b) The adoption of an amendment and restatement of a plan currently
maintained by the Employer, identified as ------------------------------ and
having an original effective date of ------------------------------------------.
<PAGE>
Dated this --------------- day of --------------------, 19-----
Name of Participating Employer: -------------------------------
Signed: -----------------------------------------------
Participating Employer's EIN: ---------------------------------
Acceptance by the Signatory Employer to the Execution Page of the Adoption
Agreement and by the Trustee.
Name of Signatory Employer: -------------------------------------
Accepted: ------------------------------------------
[Date]
Signed: --------------------------------------------
Name(s) of Trustee: --------------------------------
Accepted: ------------------------------------------
[Date]
Signed: --------------------------------------------
[Note: Each Participating Employer must execute a separate
Participation Agreement. See the Execution Page of the Adoption
Agreement for important Master Plan information.]
Std 401(k) AA Instructions
Complete the first blank in the paragraph by writing in the business' name in
its entirety.
1.02 Trustee
Option (a) should be chosen when the employer will be the trustee, INVESCO Trust
Company would then act as Custodian. If option (b) is chosen, INVESCO Trust
Company will charge an annual trust fee. Note: See Trustee Comments on page 20
for further explaination of Non-discretionary Trustee.
1.03 Plan
Enter the plan name. Example: ABC Inc. Employees 401(k) Plan.
1.07 Employee
If you want the plan to cover all employees, select option (a). If you want
to exclude from the plan any group(s) of employees, select any combination of
(b) or (c).
<PAGE>
Leased Employers/Related Employers
You may not exclude leased employees or related employers from participation
unless they are excluded under options (b) or (c) of Section 1.07.
1.12 Compensation
Treatment of elective contributions - Choose option (a) if you prefer to "add
back" employee elective contributions to compensation for purposes of allocating
employer contributions, forfeitures and for non-discrimination testing.
Modifications to Compensation
Modifications to Compensation - You must choose option (c) or any combination of
(d) or (e).
1.17 Plan Year
You must define the "plan year," usually it will follow the business tax year.
Limitation Year - You must define the "limitation year" (12 month period for
testing allocations to each employee's account), for administrative convenience
it should match the plan year.
1.18 Effective Date
New Plan - Enter the first day of your plan year (usually January
1) and the year.
Restated Plan - Effective date - If you are amending for the Tax Reform Act of
1986 enter: January 1, 1987. If you are amending for another reason, enter the
first day of your tax year, example: January 1, 1990. Originally established
date - Enter the original effective date of your plan from your prior Adoption
Agreement.
1.27 Hours of Service
Choose which method you wish to use for counting hours worked by
an employee to accrue benefits. Option (b), the equivalency
method, is explained in Section 1.27 of the plan. Usually Option
(a) is chosen.
1.29 Service for Predecessor Employer
Under this option, you may elect to count service for a predecessor employer
when you are not maintaining the plan of the predecessor employer. (Used
primarily in the event of a merger or acquisition.)
<PAGE>
1.31 Leased Employees
The law requires you to state how your plan would treat a leased employee who
could become a participant, even if you don't intend to ever lease employees.
Choose option (a) covering the employee without regard to the leasing company's
plan or option (b) the reduction method. Usually Option (b) is chosen.
2.01 Eligibility
a. An employee must attain this age to become a participant
(cannot exceed age 21).
b. Pick how long (service) an employee must work to become a
participant.
Plan Entry - Choose when employees enter the plan for purposes of contributions
and benefit accrual. Normally, option (c), semi-annual entry dates, is chosen.
Time of Participation - Choose which plan entry date (before or after) an
employee who meets the eligibility requirements will enter the plan. Normally,
option (f) is chosen.
Dual Eligibility - This section allows you to include into the plan current
employees who have not met the eligibility requirements and apply the
eligibility requirements to newly hired employees. Restated plans usually choose
(i)(2).
2.02 Years of Service
Option (b) should only be chosen if you wish to require less than
1000 hours to be worked by an employee for eligibility. Usually
Option (a) is chosen.
Eligibility Computation Period - Choose whether to measure subsequent
eligibility periods on the employee's anniversary or the plan year. Option (d)
is chosen for administrative convenience.
2.03 Break-in Service
This option may impose a complicated re-entry date for employees who have
terminated or whose hours were severely cut back. Option (a) is chosen for
administrative convenience.
3.01 Contributions allowed
PART I - Employer Contributions
Section 3.01 of this Adoption Agreement consists of three parts. Part I
defines the types of contributions you authorize under the plan. Part II
explains the matching contribution formula, if any. Part III allows you to put
limits on the employee 401(k) contributions. You must complete Part I, but only
complete Parts II and III, if necessary.
<PAGE>
Option (a) authorizes salary reduction contributions.
Option (b) authorizes matching contributions. If the Employer elects Option (b),
it must complete Part II to establish the matching contribution formula.
Option (c) authorizes the Employer to make qualified nonelective contributions
(QNECs"). The Employer will designate to the Trustee the amount of its
contributions consisting of QNECs.
The amount of QNECs is solely within the Employer's discretion. Any contribution
designated as QNECs is includible in the ADP test (see Section 14.08 of the
Plan) or in the ACP test (see Section 14.09 of the Plan). The advisory committee
may divide the QNECs between these two tests in any fashion it deems
appropriate, but may not use the same contributions in both tests. As a general
rule, the Employer will make a level of QNECs necessary to satisfy the
applicable tests, unless the Employer wishes to have excess contributions or
excess aggregate contributions distributed to the appropriate highly compensated
employees, in accordance with Sections 14.08 and 14.09.
Option (d) authorizes the Employer to make nonelective contributions in the same
manner it would under a regular profit sharing plan. the choices under Option
(d) are the same as the contribution formula options under the profit sharing
adoption agreements.
Part II Matching Contribution Formula
If the Employer elects Option (b), it must complete Part II, making a selection
under each option provided under Part II.
The Plan permits matching contributions for salary reduction contributions. The
formulas offered under Option (h) refer to "salary reduction contributions." The
Employer will define salary reduction contributions under Option (i).
Option (h) provides the formulas for determining the matching contribution. The
primary purpose of Option (h) is to establish the level of the matching
contribution (a fixed percentage or discretionary with the Employer). The
formula alone will not be sufficient to determine the Employer's actual matching
contribution on a participant's behalf. Any limitations on the amount of salary
reduction contributions taken into account, as provided under Option (i), are
necessary factors in computing the Employer's matching contribution.
Option (i) establishes any limitation on the amount of eligible contributions
taken into account under Option (h).
<PAGE>
Part III Salary Reduction Agreements
Under Option (j), the Employer must make selections from (1), (2), (3) and (4).
Under (1), Option (ii) prescribes a maximum deferral percentage, Option (iii)
prescribes a minimum deferral percentage and Option (i) prescribes no special
maximum limitation. The Employer may select both Options (ii) and (iii), or both
Options (i) and (iii), but Options (i) and (ii) are mutually exclusive. The
Employer may wish to consider a maximum percentage deferral under Option (ii) to
minimize the potential for Code 415 violations.
Under paragraphs (2) and (3), the Employer elects which restrictions apply to
the participant's right to revoke his/her salary reduction agreement. Under
paragraph (4), the Employer elects which restrictions apply to the participant's
right to increase or decrease his/her salary reduction percentage. The Employer
should consider the effect its elections have on plan administration.
3.04 Contribution Allocation
Part I - Matching Contributions. Select which account you want the matching
contributions to be allocated to, the Regular Matching Account is subject to a
vesting schedule. The Qualified Matching Account is always 100% vested and
contributions may be used to satisfy the deferral non-discrimination test.
Qualified Non-elective Contributions.
Choose which participants would receive an extra contribution to help satisfy
the non-discrimination test for deferrals (QNEC). For administrative convenience
opton (2) is chosen.
Part II - Method of Allocation. Choose the option for allocating the
discretionary employer contribution between all plan participants. You have
choices of non-integrated (pro-rata) or one of four integrated formulas.
Allocation formula. The primary allocation formulas are in Options (e), (f), (g)
and (h). Option (e) is a nonintegrated formula and allocates the employer
contribution proportionate to total compensation. Options (f), (g) and (h) are
alternatives for integrated plans. Usually option (e) is chosen for
proportionate allocation plans.
The two-tiered formula under Option (f) maximizes the disparity permitted
under the integration rules. Accordingly, the allocation in the first tier
results in an equal allocation percentage based on total compensation and based
on excess compensation. This equal allocation percentage may not exceed the
maximum disparity percentage (5.7%, 5.4% or 4.3%) described in the second column
of the Maximum Disparity Table. After completion of the first tier allocation,
the second step allocates the remaining contribution proportionate to total
compensation, in the same manner as the nonintegrated formula.
<PAGE>
Under the three-tiered formula under Option (g), the plan: (i) first allocates
based on total compensation, but the allocation percentage may not exceed the
maximum disparity percentage determined under the second column of the Maximum
Disparity Table; (ii) then allocates based on excess compensation, but the
allocation percentage may not exceed the maximum disparity percentage determined
under the second column of the Maximum Disparity Table; and (iii) completes the
allocation on the basis of total compensation.
The four-tiered allocation under Option (h) is a hybrid of Options (g) and (f).
The sole purpose of Option (h) is to use the first tier to satisfy the 3% top
heavy minimum, then use a progression of three additional tiers to make maximum
use of the permitted disparity rules. The second tier allocates solely on the
basis of excess compensation, with a maximum allocation under the second tier
equal to 3% of each participant's excess compensation. The third tier is the
same as the first tier under Option (g). The fourth tier is a prorata allocation
based on total compensation.
3.05 Forfeiture Allocation
Choose the method of allocating (dividing up) forfeitures of terminated
non-vested participant balances. Option (a) allocates forfeitures as an extra
discretionary contribution. Option (b) allocates forfeitures to reduce employer
contributions. Options (c) and (d) allow you to allocate separately forfeitures
from matching contributions. Select from options (e), (f) and (g) to determine
how to allocate forfeitures from highly compensated employee's matching account
when the matching non-discrimination test is not satisfied.
3.06 Compensation Taken Into Account
If you wish to count a participant's full year's compensation (even if he or she
entered during the year), for contributions choose option (a), if not, choose
option (b).
Accrual Requirements - Specify the service requirements a participant must
satisfy to receive an allocation. You may specify an hours of service
requirement, no greater than 501 hours. Standardized plans have relaxed
contribution requirements. A participant will receive a contribution of QNECs,
forfeitures or profit sharing contributions if they meet either of the two
requirements below:
Requirement #1
If the Participant was employed on the last day of the plan year the participant
must have worked at least one hour for the employer.
<PAGE>
Requirement #2
If the Participant terminates employment during the year and the participant
terminated after earning at leats 501 hours of work with the employer that plan
year.
3.15 More Than One Plan
This section only applies if you (the employer) maintain another defined
contribution plan (e.g.: profit sharing, money purchase, 401(k) or target
benefit) that covers at least one participant in this plan.
3.18 Defined Benefit Limitation
Check option (a) if you have never maintained a defined benefit plan for any
participants in this plan. If you have or are currently maintaining a defined
benefit under option (b), choose which plan's benefit would be reduced if a
participant's total allocations for a year were to exceed the allowable limit.
4.01 Participant Nondeductible Contributions
This section allows participants to contribute after-tax employee contributions.
These contributions are subject to a special nondiscrimination test. By checking
option (a) these contributions are not allowed.
5.01 Normal Retirement Age
Choose what age you (the employer) want the participants to be 100% vested in
their benefits, if still employed (normal retirement age).
5.02 Vesting Death/Disability
You may choose to allow 100% vesting for participants that terminate from
service because of death option (b) or disability option (c).
5.03 Vesting Schedule
Choose what vesting schedule(s) you want to apply to employer discretionary
contributions and matching contributions. If you choose option (b), you must at
a minimum complete the top-heavy vesting schedule.
Complete the Top Heavy Schedule based upon the following:
Years of Service
1
2 (not less than 20%)
3 (not less than 40%)
<PAGE>
4 (not less than 60%)
5 (not less than 80%)
6 (not less than 100%)
Optional: Complete the Non Top Heavy Schedule based upon the
following:
Years of Service or
1 1 - 0%
2 2 - 0%
3 (not less than 20%) 3 - 0%
4 (not less than 40% 4 - 0%
5 (not less than 60%) 5 - 100%
6 (not less than 80%) 6 - 100%
7 (not less than 100%)
5.04 Cash-Out Rule
If option (b) is chosen, the plan treats a 0% vested terminated participant as
having received a distribution, allowing for forfeitures to be reallocated to
active participants.
5.06 Years of Service
Choose what measuring period the plan should use to determine years of service
for vesting, employee's anniversary year or plan year. For ease of
administration choose option (a).
5.08 Prior Years of Service
By choosing options (b) through (d) you (the employer) may exclude some prior
years of service for purposes of vesting.
Article 6
The Employer must establish a specific distribution policy for the plan. Treas.
Reg. 1.411(d)-4 prohibits the Employer, the advisory committee or any third
party to retain discretion over when or in what form to pay the participant's
benefit. Under a restated plan, the elections under Article VI, to the extent
they differ from previous plan provisions regarding optional forms of benefit,
may not eliminate an optional form of benefit with respect to the account
balance accrued as of the date the Employer executes the restated adoption
agreement (or, if later, the effective date of that restated adoption
agreement). An optional form of benefit includes the form of payment (e.g., lump
sum or installments), the timing of payment (e.g., immediately after separation
form service, following a break in service, after attaining normal retirement
age) and the medium of payment (e.g. right to elect distribution in Employer
securities, right to elect distribution in the form of an annuity contract).
<PAGE>
With this in mind, if you are restating an existing plan, pay close
attention to the distribution features under that document and your
administrative practice of distributions. In all cases, try to mirror or
liberalize those distribution features when restating onto this document.
6.01 Distribution Date
A distribution date establishes a predetermined "target" date in a plan year
when the plan will offer distributions. The actual distribution may occur later
than a distribution date as long as the actual distribution is within an
"administratively reasonable period of time" from the distribution date. Typical
distribution dates for 401(k)plans are semi-annual dates or quarterly dates.
Nonforfeitable Accrued Benefit Not Exceeding $3,500
When a separated participants vested balance does not exceed $3,500, the plan
allows the employer to separately establish the timing of these distributions,
separate from the distribution dates. When you complete this section, you need
to balance two concerns: 1) will the timing of the distribution cause the
participant to consider it a "severance benefit" and therefore encourage
separation from service and 2) the administrative concerns of carrying a
non-active account in the plan.
Disability - The plan allows you (the employer) to establish a different target
payout date for disability distributions in options (e) and (f).
Hardship - This option states whether or not the plan would allow a separated
participant to receive a hardship distribution, prior to receiving a total
distribution of his/her vested account balance.
Default on a Loan - This election does not create a loan policy. You (the
employer) must elect the timing of the plan's foreclosure if a participant's
loan were to be defaulted upon even if you do not intend to offer loans in you
plan.
6.02 Method of Payment
You may choose the standard forms of payment if this is a brand new plan and not
a restatment. If the plan is not subject to the annuity requirements of Section
6.04, usually option (a) is chosen. If you choose to allow annuities, special
waivers and consent rules apply to all distributions.
6.03 Participant Elections After Separation from Service
You must choose when an employee who has separated from service, with a vested
benefit greater than $3,500, may elect to commence distributions. This election
will be tied directly to the "distribution date" definition earlier.
<PAGE>
Participant Elections Prior to Separation from Service
The following distribution elections apply to all participant's matching and
employer discretionary account regardless of vested account balances, prior to
employment separation. If you prefer not to allow any distribution options from
these accounts prior to separation, select option (c).
Deferrals, QMAC's and QNEC's - The following distribution elections apply to all
participant's deferral qualified matching, and qualified non-elective
contributions accounts, prior to employment separation. If you prefer not to
allow any distribution options from these accounts prior to employment
separation, select option (g).
6.04 Annuity Distributions
The law requires distributions to certain participants to be in the form of
commercial insurance annuities, unless consented to and waived by both the
participant and his or her spouse. Participants subject to this requirement are
identified in section 6.04(E) of the Plan. For administrative convenience,
choose option (a). If you are restating a plan that was subject to the joint and
survivor annuity rules you must select Option (b).
9.10 Value of Benefit
This option allows the employer to add interest to a participant's balance, if a
distribution occurs more than 90 days after the most recent plan valuation. You
do not have to provide an interest addition under this section and may complete
option (a) with 0%.
9.11 Allocation of Net Income/Loss
The following elections will state how current year contributions will share, if
at all, in net income, gains or losses of the trust. You must election option
(a) if your plan allows employee deferrals, option (b) if your plan includes a
matching contribution, or option (c) if the plan allows employee after tax
contributions. Only make the elections applicable to your plan.
Option (1) would not include contributions made since the last valuation date in
any earnings or loss calculation. The other choices are based upon a segregated
account approach or a weighted average approach, both are described in section
14.12 of the plan.
Usually daily weighting is chosen if INVESCO Trust Company is your recordkeeper,
for 9.11(a)(3), (b)(2) and (c)(3).
<PAGE>
10.14 Valuation of Trust
You may use this option to specify mandatory valuation dates, in addition to the
accounting date. Normally Option (a) is chosen.
Instructions for Effective Date Addendum
You must complete the effective date addendum only if the effective dates of any
of the listed items (a) through (j) have an effective date other than your
restated effective date in adoption agreement Section 1.18. Since some
provisions in the Tax Reform Act of 1986 were not effective until 1988 or 1989
The few provisions (if any) that have later effective dates must specify when
they are effective.
a. Compensation definition may not be later than the first day of your 1991
plan year.
b. Eligibility conditions may not be later than the first day of your 1989
plan year.
c. Suspension of years of service may not be earlier than the first day of
your 1990 plan year.
d. Contribution/allocation formula may not be earlier than the first day of
your 1989 plan year.
e. Accrual requirements may not be earlier than the first day of your 1989
plan year.
f. Elimination of Net Profits may not be earlier than December 31, 1985.
g. Vesting schedule may not be later than the first day of your 1989 plan
year.
h. Allocation of Earnings may not be earlier than the first day of the 1990
plan year.
Execution Page
The Employer must complete the date on which it executes the adoption agreement
and must execute the signature for the Employer. The execution page provides two
lines above the signature line to print or type the name of the Employer and the
Employer's EIN. If the Employer is a sole proprietorship, the individual sole
proprietor should execute as Employer. If the Employer is a corporation or a
partnership, an officer or a partner, as applicable, should execute the adoption
agreement on behalf of the Employer.
Trustee
If you selected option (a) of Section 1.02, then the employer will be the
Trustee. An individual must sign as trustee for the employer. INVESCO Trust
Company will then act as Custodian.
<PAGE>
If you choose to have INVESCO Trust Company act as "Trustee" then option (b) of
Section 1.02 must be chosen. INVESCO does charge an annual fee for this service.
INVESCO Trust Company will only serve as a non-discretionary trustee, this means
that there is a person who is the "Named Fiduciary." The Named Fiduciary gives
direction to a non-discretionary trustee, and the non- discretionary trustee
accepts all directions from the Named Fiduciary. The Named Fiduciary is either
the President of the Corporation, the managing partner of the partnership or the
self-employed individual of a sole-proprietorship. The Named Fiduciary is
responsible for selecting plan investments.
The execution page also includes a signature line for the Custodian, if any.
Leave the Custodian lines blank if INVESCO Trust Company will act as custodian.
Plan number. This paragraph designates the number the Employer assigns to the
plan for reporting (Form 5500) purposes. If this is the first plan the Employer
ever maintained, the number must be 001. The Employer's plan number does not
correspond to the 3- digit adoption agreement number specified at the top of the
first page of the adoption agreement. Consult your Counsel if unsure what
3-digit plan number to use.
Instructions for the Participation Agreement
This adoption agreement includes a Participation Agreement under which a related
group member of the signatory Employer to the execution page may participate in
the same plan with that Employer. Each related group member wishing to become a
participating Employer should execute a separate Participation Agreement. See
Section 1.30 of the Plan for the definition of related Employers.
Thus, it is possible to exclude the employees of related group members not
participating in the plan. If an Employer is a member of a related group, it
should consider whether the inclusion of other related group members' employees
is necessary to satisfy the coverage requirements of Code 410(b) or the minimum
participation requirement of Code 401(a)(26). If the Employer determines
inclusion of the employees of a related group member is necessary to maintain
qualification of the plan, the Employer may take one of two approaches: (1) have
the related group member execute a Participation Agreement; or (2) elect in
Adoption Agreement Section 1.07 to include the employees of that related group
member. Under approach (1), the participation of the related group member will
result in the automatic inclusion of the employees of that related group member,
without having to specify their inclusion in Adoption Agreement Section 1.07. In
addition, the related group member, under approach (1), has the authority to
contribute to the plan and, in the event another participating related group
member makes a contribution on behalf of that related group member's employees,
the Participation Agreement will ensure the deductibility of that contribution
(assuming the contribution does not exceed the deduction limits of Code 404).
<PAGE>
The addendum instructions to the appropriate adoption agreement explain the
effect on the allocation of Employer contributions when related group members
maintain a single non-standardized plan. Under approach (2), the plan will
retain its qualified status, but contributions the Employer makes on behalf of a
nonparticipating related group member's employees may not be deductible (even if
otherwise within the limitations of Code 404), resulting in an excise tax to the
contributing Employer.
Unrelated Employers. The Master Plan does not allow the participation in a
single plan of unrelated Employers (i.e., Employers that do not satisfy the
related group definition in Section 1.30 of the Plan).
legal\adop-agr\st401kaa.006
Adoption Agreement #009
D246284a
Standardized Simplified Profit Sharing Plan
Paired Profit Sharing Plan
Basic Profit Sharing Plan Considerations
For: Corporate or self-employed employers who want the
flexibility of optional contributions.
Maximum Annual Contribution: 15% of compensation up to $30,000.
Eligibility: All employees age 21 or older who have worked for
the employer for 2 years.
Contribution: Optional.
Establishment Deadline: December 31, or the end of the employer's
fiscal year.
Contribution Deadline: April 15, or date for filing tax return.
Benefits: Contribution is tax-deductible; earnings are tax-
deferred.
Financial Programs
Investment Professionals Since 1932
Provided by:
Financial Programs, Inc.
And the Financial Group
of No-Load Mutual Funds
Custodian:
INVESCO Trust Company
A Subsidiary of INVESCO MIM PLC
<PAGE>
[Your Adoption Agreement and Plan document constitute the rules and parameters
under which your retirement program will operate.] These instructions are
intended to assist you, the employer, in choosing the option provisions for your
retirement plan. They are not intended to substitute or replace competent legal
advice from your attorney or accountant. If further clarification is necessary,
contact your counsel or INVESCO Trust Company.
The Standardized Simplified Profit Sharing Plan is designed to make
administration of your retirement plan as simple as possible. If you feel your
situation requires a more complex retirement plan offering additional options,
please call our toll-free number, 800/525-8085, and ask for "Retirement
Services."
Employer's Name -------------------------------------------------------------
Employer ID# ----------------------------------------------------------------
Address ---------------------------------------------------------------------
City, State -------------------------------- Zip -----------------
Telephone Number (----------)------------------------------
One Person Plan: ---- Yes ---- No
Date of Birth ---------------------------------------------
Contribution Frequency ------------------------------------
Instructions for Standardized Simplified Profit Sharing Plan
This Adoption Agreement is an important part of your retirement plan. Please
carefully read the instructions for each option. You may need to refer to the
Plan Document for definitions in the text.
Completes the first blank by putting in the business' name, or, if
self-employed, the owner's name.
1.03 Enter the plan name. Examples, ABC Profit Sharing Plan or John Smith Profit
Sharing Plan.
1.17 Enter the last day of your tax year (usually December 31).
1.18 New Plan - Enter the first day of your tax year, (usually January 1) and
the year.
Restated Plan - effective date - If you are amending for the Tax Reform
Act of 1986, enter: January 1, 1987. If you are amending for another
reason, enter the first day of your tax year, example: January 1, 1990.
<PAGE>
Original established date - Enter the original effective date of your plan
from your prior adoption agreement.
2.01 Eligibility
Restated Plan - Complete the eligibility requirements you originally
choose on your prior Adoption Agreement.
New Plan - Choose an age and/or service requirement applicable to the
owner and all employees.
6.01 Distribution Date
Select a "target date" for payouts from the plan due to separation from service,
death, disability or attainment of age 59 1/2. Usually this date is after the
plan has been valued (e.g.: March 1).
10.0 Provide your Federal tax identification number. Date and sign the Adoption
Agreement. Type the name(s) of trustees, (usually the owner and/or managers) and
sign the document as trustee.
Plan Number
If this is the first retirement plan for your business, enter 001; if the
second, enter 002.
Return your completed Adoption Agreement to INVESCO Trust Company for review and
processing. It will be examined for completeness. We will then sign as
custodian, and return the original document.
INVESCO TRUST COMPANY USE ONLY: Account Number ---------------------
<PAGE>
Adoption Agreement #009
Standardized Simplified Profit Sharing Plan
(Paired Profit Sharing Plan)
The undersigned,
- --------------------------------------------------------------------------------
("Employer"), by executing this Adoption Agreement, elects to become a
participating Employer in the INVESCO Trust Company Defined Contribution Master
Plan (basic plan document #01) by adopting the accompanying Plan and Trust in
full as if the Employer were a signatory to that Agreement. The Employer makes
the following elections granted under the provisions of the Plan.
1.02 TRUSTEE. The Trustee executing this Adoption Agreement is:
(Choose (a) or (b))
(a) A discretionary Trustee.
(b) A nondiscretionary Trustee. See Section 10.03.
1.03 PLAN. The name of the Plan as adopted by the Employer is
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
1.07 EMPLOYEE. The term "Employee" specifically includes all employees of the
Employer.
1.12 COMPENSATION. "Compensation" includes elective contributions and does not
exclude any items other than as specified in Section 1.12 of the Plan.
1.17 PLAN YEAR. Plan Year means the 12 consecutive month period
ending every---------------------------------------------------------.
The Limitation Year is the Plan Year.
1.18 EFFECTIVE DATE. New Plan. The "Effective Date" of the Plan
is ---------------------. Restated Plan. The restated Effective
Date is ---------------------------------------. This Plan is a
substitution and amendment of an existing retirement plan(s)
originally established ---------------------------------------.
1.27 HOUR OF SERVICE. The crediting method for Hours of Service is the monthly
equivalency method.
1.31 LEASED EMPLOYEES. The Advisory Committee will determine the Leased
Employee's allocation of Employer contributions under Article III without taking
into account the Leased Employee's allocation, if any, under the leasing
organization's plan.
2.01 ELIGIBILITY. To become a Participant in the Plan, an Employee must satisfy
the following eligibility conditions:
(Choose (a) or (b))
(a) Age ------ (not exceeding 21).
<PAGE>
(b) ------ (0, 1 or 2) Year(s) of Service without, in the case of 2 Years,
an intervening break in Service.
Plan Entry Date/Time of Participation. "Plan Entry Date" means the effective
date and the first day of the Plan Year. An Employee will become a Participant
on the Plan Entry Date (if employed on that date) nearest the date the Employee
completes the above eligibility conditions.
Dual Eligibility. The above eligibility conditions apply to:
(Choose (c) or (d))
(c) all Employees of the Employer without exception.
(d) Employees who are not Participants in the Plan as of the Effective Date.
2.02 YEAR OF SERVICE - PARTICIPATION. An Employee must complete 1,000 Hours of
Service during an eligibility computation period to receive credit for a Year of
Service. After the initial eligibility computation period described in Section
2.02 of the Plan, the Plan measures the eligibility computation period as the 12
consecutive month period beginning with each anniversary of an Employee's
Employment Commencement Date.
2.03 BREAK IN SERVICE - PARTICIPATION. The Break in Service rule described in
Section 2.03(B) of the Plan applies to the Employer's Plan.
3.01 AMOUNT. The amount of the Employer's annual contribution to the Trust will
equal the amount the Employer may from time to time deem advisable, irrespective
of whether the Employer has Net Profits. If the Employer is a member of a
related group (as defined in Section 1.30), it may not execute this Adoption
Agreement.
3.04 CONTRIBUTION ALLOCATION. The Advisory Committee will allocate the annual
Employer contributions (and Participant forfeitures) in the same ratio that each
Participant's Compensation for the Plan Year bears to the total Compensation of
all Participants for the Plan Year.
Top Heavy Minimum Allocation. The plan will satisfy the top heavy minimum
allocation requirement of Section 3.04(B) as follows: (1) if the Employer does
not maintain a Paired Pension Plan, the Employer will make any necessary
additional contribution to the Participant's Account, as described in Section
3.04(B)(7)(a) of the Plan; and (2) if the Employer maintains a Paired Pension
Plan, that Paired Pension Plan will guarantee the top heavy minimum allocation
and this Plan does not guarantee that minimum.
3.05 FORFEITURE ALLOCATION. Subject to any restoration allocation required under
Section 9.14, the Advisory Committee will allocate a Participant forfeiture, as
an Employer contribution for the Plan Year in which the forfeiture occurs, as if
the Participant forfeiture were an additional Employer contribution for that
Plan Year.
<PAGE>
3.06 ACCRUAL OF BENEFIT. For any Plan Year, the Advisory Committee will
determine the allocation under Section 3.04 by taking into account a
Participant's Compensation for the entire Plan Year. To receive an allocation of
Employer contributions (and Participant forfeitures), the Participant: (a) if he
is employed by the Employer on the last day after the Plan Year, must complete
at least one Hour of Service for that Plan Year, and (b) if he is not employed
by the Employer on the last day of the Plan Year, the Participant must complete
at least 501 Hours of Service during the Plan year, except there is no Hour of
Service requirement if the Participant terminates employment during the Plan
year on account of death, disability or attainment of Normal Retirement Age.
3.15 MORE THAN ONE PLAN LIMITATION. If the provisions of Section 3.15 apply, the
Excess Amount attributed to this Plan equals the produce of: (i) the total
Excess Amount allocated as of such date (including any amount which the Advisory
Committee would have allocated but for the limitations of Code Section 415);
times (ii) the ratio of (1) the amount allocated to the Participant as of such
date under this Plan, divided by (2) the total amount allocated as of such date
under all qualified defined contribution plans (determined without regard to the
limitations of Code Section 415).
3.18 DEFINED BENEFIT PLAN LIMITATION. The limitation under Section 3.18 of the
Plan does not apply to the Employer's Plan if the Employer does not maintain and
never has maintained a defined benefit plan covering any Participant in this
Plan. If the limitation under Section 3.18 does apply, the Employer will reduce
the Participant's projected annual benefit under the defined benefit plan under
which the Participant participates and will apply the 100% limitation described
in Section 3.19(1), unless the Employer provides an alternative compliance
method in an addendum to this Section 3.18.
5.01 NORMAL RETIREMENT. Normal Retirement Age under the Plan is age 59 1/2.
5.02 PARTICIPANT DEATH OR DISABILITY. The 100% vesting rule of Section 5.02
applies to death and to disability.
5.03 VESTING SCHEDULE. Subject to Section 9.14 of the Plan, a Participant's
Accrued Benefit is 100% Nonforfeitable at all times. The deemed cash-out rule
does not apply.
5.06 YEARS OF SERVICE - VESTING. An Employee receives credit for a Year of
Service for vesting purposes if he completes at least 1,000 Hours of Service
during a Plan Year.
<PAGE>
5.08 INCLUDED YEARS OF SERVICE - VESTING. The Employer specifically includes
all Years of Service.
[Note: If Section 6.01 or Section 6.03 liberalizes the optional forms of benefit
under the Plan, the more liberal options apply on the later of the adoption date
or the Effective Date of this Adoption Agreement.]
6.01 TIME OF PAYMENT OF ACCRUED BENEFIT. A distribution date under the Plan
means
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
If a Participant's Nonforfeitable Accrued Benefit does not exceed $3,500, or if
the Participant separates from Service because of disability, the distribution
date, subject to the limitations of Section 6.01(A), is the first distribution
date following the Participant's Separation from Service. The Plan does not
permit a hardship distribution. If a Participant or Beneficiary defaults on a
loan made pursuant to a loan policy adopted by the Advisory Committee pursuant
to Section 9.04, the Plan treats the default as a distributable event. The
Trustee, at the time of the default, will reduce the Participant's
Nonforfeitable Accrued Benefit by the lesser of the amount in default (plus
accrued interest) of the Plan's security interest in that Nonforfeitable Accrued
Benefits.
6.03 BENEFIT PAYMENT ELECTIONS. A Participant who is eligible to make
distribution elections under Section 6.03 of the Plan may elect to commence
distribution of his Nonforfeitable Accrued Benefit as of any distribution date
following his Separation from Service. Furthermore, subject to the restrictions
of Article VI, until he retires, the Participant has a continuing election to
receive all or any portion of his Nonforfeitable Accrued Benefit after he
attains Normal Retirement Age.
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES. The annuity
distribution requirements of Section 6.04 apply only to a Participant described
in Section 6.04(E) of the Plan (relating to the profit sharing plan exception).
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. If a distribution (other than a
distribution from a segregated Account) occurs more than 90 days after the most
recent valuation date, the distribution will include interest at 0% per annum.
10.0 The Trustee (and Custodian, if applicable), by executing this Adoption
Agreement, accepts its position and agrees to all of the obligations,
responsibilities and duties imposed upon the Trustee (or Custodian) under the
Master Plan and Trust. The Employer hereby agrees to the provisions of this Plan
and Trust, and in witness of its agreement, the Employer by its duly authorized
<PAGE>
officers has executed this Adoption Agreement, and the Trustee (and Custodian,
if applicable) signified its acceptance, on this ----- day of---------------,
19-----.
Name and EIN of Employer: ---------------------------------------------------
Signed: ---------------------------------------------------------------------
Name(s) of Trustee: ---------------------------------------------------------
Signed: ---------------------------------------------------------------------
Signed: ---------------------------------------------------------------------
Name of Custodian: INVESCO Trust Company
Signed:----------------------------------------------------------------------
[Note: A Trustee is mandatory, but a Custodian is optional. See Section 10.03
of the Plan.]
Plan Number. The plan's 3-digit number assigned for ERISA reporting purposes
(Form 5500 Series) is: ------------------------------.
Use of Adoption Agreement. Failure to complete properly the elections in this
Adoption Agreement may result in disqualification of the Employer's Plan. The
3-digit number assigned to this Adoption Agreement (see page 1) is solely for
the Master Plan Sponsor's recordkeeping purposes and does not necessarily
correspond to the plan number the Employer designated in the prior paragraph.
The Master Plan Sponsor offers the following Paired Pension Plan(s) with this
Paired Profit Sharing Plan, identified by 3-digit adoption agreement number: 004
and 010.
Master Plan Sponsor. The Master Plan Sponsor identified on the first page of the
basic plan document will notify all adopting employers of any amendment of this
Master Plan or of any abandonment or discontinuance by the Master Plan Sponsor
of its maintenance of this Master Plan. For inquiries regarding the adoption of
the Master Plan, the Master Plan Sponsor's intended meaning of any plan
provisions or the effect of the opinion letter issued to the Master Plan
Sponsor, please contact the Master Plan Sponsor at the following address and
telephone number: INVESCO Trust Company, 7800 East Union Ave., Suite 800,
Denver, Colorado 80237, (303) 779-0731.
Reliance on Opinion Letter. If the Employer does not maintain (and has never
maintained) any other plan other than this Plan and a Paired Pension Plan, it
may rely on the Master Plan Sponsor's opinion letter covering this Plan for
purposes of plan qualification. For this purpose, the Employer has not
maintained another plan if this Plan, or the Paired Pension Plan , amended and
restated that prior plan and the prior plan was the same type of plan as the
<PAGE>
restated plan. If the Employer maintains or has maintained another plan
other than a Paired Pension Plan, including a welfare benefit fund, as defined
in Code Section 419(e), which provides post-retirement medical benefits for key
employees (as defined in Code Section 419A(d)(3)), or an individual medical
account (as defined in Code Section 415(1)(2)), the Employer may not rely on
this Plan's qualified status unless it obtains a determination letter from the
applicable IRS Key District office.
adop-agr\sspsp.009
THE FINANCIAL FUNDS
Defined Contribution
Master Plan
and Trust Agreement
Basic Plan Document #01
Provided by:
The Financial Funds
Managed & Distributed by
INVESCO Funds Group, Inc.
Custodian:
INVESCO Trust Company
A Subsidiary of INVESCO MIM PLC
<PAGE>
INVESCO TRUST COMPANY
DEFINED CONTRIBUTION
MASTER PLAN AND TRUST AGREEMENT
BASIC PLAN DOCUMENT #01
INVESCO Trust Company, Denver, Colorado, in its capacity as Master Plan
Sponsor, establishes this Master Plan intended to conform to and qualify under
ss.401 and ss.501 of the Internal Revenue Code of 1986, as amended. An Employer
establishes a Plan and Trust under this Master Plan by executing an Adoption
Agreement. If the Employer adopts this Plan as a restated Plan in substitution
for, and in amendment of, an existing plan, the provisions of this Plan, as a
restated Plan, apply solely to an Employee whose employment with the Employer
terminates on or after the restated Effective Date of the Employer's Plan. If an
Employee's employment with the Employer terminates prior to the restated
Effective Date, that Employee is entitled to benefits under the Plan as the Plan
existed on the date of the Employee's termination of employment.
ARTICLE I
DEFINITIONS
1.01 "Employer" means each employer who adopts this Plan by
executing an Adoption Agreement.
1.02 "Trustee" means the person or persons who as Trustee execute the
Employer's Adoption Agreement, or any successor in office who in writing accepts
the position of Trustee. The Employer must designate in its Adoption Agreement
whether the Trustee will administer the Trust as a discretionary Trustee or as a
nondiscretionary Trustee. If a person acts as a discretionary Trustee, the
Employer also may appoint a Custodian. See Article X. If the Master Plan Sponsor
is a bank, savings and loan, credit union or similar financial institution, a
person other than the Master Plan Sponsor (or its affiliate) may not serve as
Trustee or as Custodian of the Employer's Plan without the written consent of
the Master Plan Sponsor.
1.03 "Plan" means the retirement plan established or continued by the
Employer in the form of this Agreement, including the Adoption Agreement under
which the Employer has elected to participate in this Master Plan. The Employer
must designate the name of the Plan in its Adoption Agreement. An Employer may
execute more than one Adoption Agreement offered under this Master Plan, each of
which will constitute a separate Plan and Trust established or continued by that
Employer. The Plan and the Trust created by each adopting Employer is a separate
Plan and a separate Trust, independent from the plan and the trust of any other
employer adopting this Master Plan. All section references within the Plan are
Plan section references unless the context clearly indicates otherwise.
<PAGE>
1.04 "Adoption Agreement" means the document executed by each Employer
adopting this Master Plan. The terms of this Master Plan as modified by the
terms of an adopting Employer's Adoption Agreement constitute a separate Plan
and Trust to be construed as a single Agreement. Each elective provision of the
Adoption Agreement corresponds by section reference to the section of the Plan
which grants the election. Each Adoption Agreement offered under this Master
Plan is either a Nonstandardized Plan or a Standardized Plan, as identified in
the preamble to that Adoption Agreement. The provisions of this Master Plan
apply equally to Nonstandardized Plans and to Standardized Plans unless
otherwise specified.
1.05 "Plan Administrator" is the Employer unless the Employer
designates another person to hold the position of Plan Administrator. In
addition to his other duties, the Plan Administrator has full responsibility for
compliance with the reporting and disclosure rules under ERISA as respects this
Agreement.
1.06 "Advisory Committee" means the Employer's Advisory Committee as
from time to time constituted.
1.07 "Employee" means any employee (including a Self-Employed
Individual) of the Employer. The Employer must specify in its Adoption
Agreement any Employee, or class of Employees, not eligible to participate in
the Plan. If the Employer elects to exclude collective bargaining employees, the
exclusion applies to any employee of the Employer included in a unit of
employees covered by an agreement which the Secretary of Labor finds to be a
collective bargaining agreement between employee representatives and one or more
employers unless the collective bargaining agreement requires the employee to be
included within the Plan. The term "employee representatives" does not include
any organization more than half the members of which are owners, officers, or
executives of the Employer.
1.08 "Self-Employed Individual/Owner-Employee." "Self-Employed
Individual" means an individual who has Earned Income (or who would have
had Earned Income but for the fact that the trade or business did not have net
earnings) for the taxable year from the trade or business for which the Plan is
established. "Owner-Employee" means a Self-Employed Individual who is the sole
proprietor in the case of a sole proprietorship. If the Employer is a
partnership, "Owner-Employee" means a Self-Employed Individual who 3 is a
partner and owns more than 10% of either the capital or profits interest of the
partnership.
1.09 "Highly Compensated Employee" means an Employee who, during the
Plan Year or during the preceding 12-month period:
(a) is a more than 5% owner of the Employer (applying the
constructive ownership rules of Code ss.318, and applying the principles
of Code ss.318, for an unincorporated entity);
(b) has Compensation in excess of $75,000 (as adjusted by the
Commissioner of Internal Revenue for the relevant year);
(c) has Compensation in excess of $50,000 (as adjusted by the
Commissioner of Internal Revenue for the relevant year) and is part of the
top-paid 20% group of employees (based on Compensation for the relevant
year); or
<PAGE>
(d) has Compensation in excess of 50% of the dollar amount prescribed
in Code ss.415(b)(1)(A) (relating to defined benefit plans) and is an
officer of the employer.
If the Employee satisfies the definition in clause (b), (c) or (d) in the
Plan Year but does not satisfy clause (b), (c) or (d) during the preceding
12-month period and does not satisfy clause (a) in either period, the Employee
is a Highly Compensated Employee only if he is one of the 100 most highly
compensated Employees for the Plan Year. The number of officers taken into
account under clause (d) will not exceed the greater of 3 or 10% of the total
number (after application of the Code ss.414(q) exclusions) of Employees, but no
more than 50 officers. If no Employee satisfies the Compensation requirement in
clause (d) for the relevant year, the Advisory Committee will treat the highest
paid officer as satisfying clause (d) for that year.
For purposes of this Section 1.09, "Compensation" means Compensation as
defined in Section 1.12, except any exclusions from Compensation elected in the
Employer's Adoption Agreement Section 1.12 do not apply, and Compensation must
include "elective contributions" (as defined in Section 1.12). The Advisory
Committee must make the determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of the top paid 20%
group, the top 100 paid Employees, the number of officers includible in clause
(d) and the relevant Compensation, consistent with Code ss.414(q) and
regulations issued under that Code section. The Employer may make a calendar
year election to determine the Highly Compensated Employees for the Plan Year,
as prescribed by Treasury regulations. A calendar year election must apply to
all plans and arrangements of the Employer. For purposes of applying any
nondiscrimination test required under the Plan or under the Code, in a manner
consistent with applicable Treasury regulations, the Advisory Committee will
treat a Highly Compensated Employee and all family members (a spouse, a lineal
ascendant or descendant, or a spouse of a lineal ascendant or descendant) as a
single Highly Compensated Employee, but only if the Highly Compensated Employee
is a more than 5% owner or is one of the 10 Highly Compensated Employees with
the greatest Compensation for the Plan Year. This aggregation rule applies to a
family member even if that family member is a Highly Compensated Employee
without family aggregation.
The term "Highly Compensated Employee" also includes an former Employee
who separated from Service (or has a deemed Separation from Service, as
determined under Treasury regulations) prior to the Plan Year, performs no
Service for the Employer during the Plan Year, and was a Highly Compensated
Employee either for the separation year or any Plan Year ending on or after his
55th birthday. If the former Employee's Separation from Service occurred prior
to January 1, 1987, he is a Highly Compensated Employee only if he satisfied
clause (a) of this Section 1.09 or received Compensation in excess of $50,000
during: (1) the year of his Separation from Service (or the prior year); or (2)
any year ending after his 54th birthday.
1.10 "Participant" is an Employee who is eligible to be and becomes a
Participant in accordance with the provisions of Section 2.01.
1.11 "Beneficiary" is a person designated by a Participant who is or
may become entitled to a benefit under the Plan. A Beneficiary who becomes
entitled to a benefit under the Plan remains a Beneficiary under the Plan until
the Trustee has fully distributed his benefit to him. A Beneficiary's right to
(and the Plan Administrator's, the Advisory Committee's or a Trustee's duty to
provide to the Beneficiary) information or data concerning the Plan does not
arise until he first becomes entitled to receive a benefit under the Plan.
1.12 "Compensation" means, except a provided in the Employer's
Adoption Agreement, the Participant's Earned Income, wages, salaries, fees
for professional service and other amounts received for personal services
actually rendered in the course of employment with the Employer maintaining the
plan (including, but not limited to, commissions paid salesmen, compensation for
services on the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses). The Employer must elect in its Adoption Agreement
whether to include elective contributions in the definition of Compensation.
"Elective contributions" are amounts excludible from the Employee's gross income
under Code ss.125,402(a)(8), 402(h) or 403(b), and contributed by the Employer,
<PAGE>
at the Employee's election, to a Code ss.401(k) arrangement, a Simplified
Employee Pension, cafeteria plan or tax-sheltered annuity. The term
"Compensation" does not include:
(a) Employer contributions (other than "elective contributions," if
includible in the definition of Compensation under Section 1.12 of the
Employer's Adoption Agreement) to a plan of deferred compensation to the
extent the contributions are not included in the gross income of the
Employee for the taxable year in which contributed, on behalf of an
Employee to a Simplified Employee Pension Plan to the extent such
contributions are excludible from the Employee's gross income, and any
distributions from a plan of deferred compensation, regardless of whether
such amounts are includible in the gross income of the Employee when
distributed.
(b) Amounts realized from the exercise of a non-qualified stock
option, or when estricted stock (or property) held by an 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 stock option described in Part II, Subchapter D,
Chapter 1 of the Code.
(d) Other amounts which receive special tax benefits, such as
premiums for group term life insurance (but only to the extent that the
premiums are not includible in the gross income of the Employee), or
contributions made by an Employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity contract
described in Code 403(b) (whether or not the contributions are excludible
from the gross income of the Employee), other than "elective
contributions," if elected in the Employer's Adoption Agreement.
Any reference in this Plan to Compensation is a reference to the
definition in this Section 1.12, unless the Plan reference specifies a
modification to this definition. The Advisory Committee will take into account
only Compensation actually paid for the relevant period. A Compensation payment
includes Compensation by the Employer through another person under the common
paymaster provisions in Code ss.3121 and 3306.
(A) Limitations on Compensation.
(1) Compensatio dollar limitation. For any Plan Year beginning after
December 31, 1988, the Advisory Committee must take into account only the first
$200,000 (or beginning January 1, 1990, such larger amount as the Commissioner
of Internal Revenue may prescribe) of any Participant's Compensation. For any
Plan Year beginning prior to January 1, 1989, this $200,000 limitation (but
<PAGE>
not the family aggregation requirement described in the next paragraph) applies
only if the Plan is top heavy for such Plan Year or operates as a deemed top
heavy plan for such Plan Year.
(2) Application of compensation limitation to certain family members.
The $200,000 Compensation limitation applies to the combined Compensation
of the Employee and of any family member aggregated with the Employee under
Section 1.09 who is either (I) the Employee's spouse; or (ii) the Employee's
lineal descendant under the age of 19. If, for a Plan Year, the combined
Compensation of the Employee and such family members who are Participants
entitled to an allocation for that Plan Year exceeds the $200,000 (or adjusted)
limitation. "Compensation" for each such Participant, for purposes of the
contribution and allocation provisions of Article III, means his Adjusted
Compensation. Adjusted Compensation is the amount which bears the same ratio to
the $200,000 (or adjusted) limitation as the affected Participant's Compensation
(without regard to the $200,000 Compensation limitation) bears to the combined
Compensation of all the affected Participants in the family unit. If the Plan
uses permitted disparity, the Advisory Committee must determine the integration
level of each affected family member Participant prior to the proration of the
$200,000 Compensation limitation, but the combined integration level of the
affected Participants may not exceed $200,000 (or the adjusted limitation). The
combined Excess Compensation of the affected Participants in the family unit may
not exceed $200,000 (or the adjusted limitation) minus the affected
Participants' combined integration level (as determined under the preceding
sentence). If the combined Excess Compensation exceeds this limitation, the
Advisory Committee will prorate the Excess Compensation limitation among the
affected Participants in the family unit in proportion to each such individual's
Adjusted Compensation minus his integration level. If the Employer's Plan is a
Nonstandardized Plan, the Employer may elect to use a different method in
determining the Adjusted Compensation of the affected Participants by specifying
that method in an addendum to the Adoption Agreement, numbered Section 1.12.
(B) Nondiscrimination. For purposes of determining whether the plan
discriminates in favor of Highly Compensated Employees, Compensation means
Compensation as defined in this Section 1.12, except: (1) the Employer may elect
to include or to exclude elective contributions, irrespective of the Employer's
election in its Adoption Agreement regarding elective contributions; and (2) the
Employer will not give effect to any elections made in the "modifications to
Compensation definition" section of Adoption Agreement Section 1.12. The
Employer's election described in clause (1) must be consistent and uniform with
respect to all Employees and all plans of the Employer for any particular Plan
Year. If the Employer's Plan is a Nonstandardized Plan, the Employer,
<PAGE>
irrespective of clause (2), may elect to exclude from this
nondiscrimination definition of Compensation any items of Compensation
excludible under Code ss.414(s) and the applicable Treasury regulations,
provided such adjusted definition conforms to the nondiscrimination requirements
of those regulations.
1.13 "Earned Income" means net earnings from self-employment in the
trade or business with respect to which the Employer has established the
Plan, provided personal services of the individual are a material income
producing factor. The Advisory Committee will determine net earnings without
regard to items excluded from gross income and the deductions allocable to those
items. The Advisory Committee will determine net earnings after the deduction
allowed to the Self-Employed Individual for all contributions made by the
Employer to a qualified plan and, for Plan Years beginning after December 31,
1989, the deduction allowed to the Self-Employed under Code ss.164(f) for
self-employment taxes.
1.14 "Account" means the separate account(s) which the Advisory
Committee or the Trustee maintains for a participant under the Employer's Plan.
1.15 "Accrued Benefit" means the amount standing in a Participant's
Account(s) as of any date derived from both Employer contributions and Employee
contributions, if any.
1.16 "Nonforfeitable" means a Participant's or Beneficiary's
unconditional claim, legally enforceable against the Plan, to be
Participant's Accrued Benefit.
1.17 "Plan Year" means the fiscal year of the Plan, the consecutive
month period specified in the Employer's Adoption Agreement. The Employer's
Adoption Agreement also must specify the "Limitation Year" applicable to the
limitations on allocations described in Article III. If the Employer maintains
Paired Plans, each Plan must have the same Plan Year.
1.18 "Effective Date" of this Plan is the date specified in the
Employer's Adoption Agreement.
1.19 "Plan Entry Date" means the date(s) specified in Section 2.01 of
the Employer's Adoption Agreement.
1.20 "Accounting Date" is the last day of an Employer's Plan Year.
Unless otherwise specified in the Plan, the Advisory Committee will make
all Plan allocations for a particular Plan Year as of the Accounting Date of
that Plan Year.
1.21 "Trust" means the separate Trust created under the Employer's
Plan.
<PAGE>
1.22 "Trust Fund" means all property of every kind held or acquired
by the Employer's Plan, other than incidental benefit insurance contracts.
1.23 "Nontransferable Annuity" means an annuity which by its terms
provides that it may not be sold, assigned, discounted, pledged as collateral
for a loan or security for the performance of an obligation or for any purpose
to any person other than the insurance company. If the Plan distributes an
annuity contract, the contract must be a Nontransferable Annuity.
1.24 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.25 "Code" means the Internal Revenue Code of 1986, as amended.
1.26 "Service" means any period of time the Employee is in the
employ of the Employer, including any period the Employee is on an unpaid leave
of absence authorized by the Employer under a uniform, nondiscriminatory policy
applicable to all Employees. "Separation from Service" means the Employee no
longer has an employment relationship with the Employer maintaining this Plan.
1.27 "Hour of Service" means:
(a) Each Hour of Service for which the Employer, either directly or
indirectly, pays an Employee, or for which the Employee is entitled to
payment, for the performance of duties.
The Advisory Committee credits Hours of Service under this paragraph (a)
to the Employee for the computation period in which the Employee performs
the duties, irrespective of when paid;
(b) Each Hour of Service for back pay, irrespective of mitigation of
damages, to which the Employer has agreed or for which the Employee has
received an award. The Advisory Committee credits Hours of Service under
this paragraph (b) to the Employee for the computation period(s) to which
the award or the agreement pertains rather than for the computation period
in which the award, agreement or payment is made; and
(c) Each Hour of Service for which the Employer, either directly or
indirectly, pays an Employee, or for which the Employee is entitled to
payment (irrespective of whether the employment relationship is
terminated), for reasons other than for the performance of duties during a
computation period, such as leave of absence, vacation, holiday, sick
leave, illness, incapacity (including disability), layoff, jury duty
<PAGE>
or military duty. The Advisory Committee will credit no more than 501
Hours of Service under this paragraph (c) to an Employee on account of any
single continuous period during which the Employee does not perform any
duties (whether or not such period occurs during a single computation
period). The Advisory Committee credits Hours of Service under this
paragraph (c) in accordance with the rules of paragraphs (b) and (c) of
Labor Reg. ss.530.200b-2, which the Plan, by this reference, specifically
incorporates in full within this paragraph (c). The Advisory Committee
will not credit an Hour of Service under more than one of the above
paragraphs. A computation period for purposes of this Section 1.27 is the
Plan Year, Year of Service period, Break in Service period or other
period, as determined under the Plan provision for which the Advisory
Committee is measuring an Employee's Hours of Service. The Advisory
Committee will resolve any ambiguity with respect to the crediting of an
Hour of Service in favor of the Employee.
(A) Method of crediting Hours of Service. The Employer must elect
in its Adoption Agreement the method the Advisory Committee will use in
crediting an Employee with Hours of Service. For purposes of the Plan, "actual"
method means the determination of Hours of Service from records of hours worked
and hours for which the employer makes payment or for which payment is due from
the Employer. If the employer elects to apply an "equivalency" method for each
equivalency period for which the Advisory Committee would credit the Employee
with at least one Hour of Service, the Advisory Committee will credit the
Employee with: (I) 10 Hours of Service for a daily equivalency; (ii) 45 Hours of
Service for a weekly equivalency; (iii) 95 Hours of Service for a semimonthly
payroll period equivalency; and (iv) 190 Hours of Service for a monthly
equivalency.
(B) Maternity/paternity leave. Solely for purposes of determining
whether the Employee incurs a Break in Service under any provision of this
Plan, the Advisory Committee must credit Hours of Service during an Employee's
unpaid absence period due to maternity or paternity leave. The Advisory
Committee considers an Employee on maternity or paternity leave if the
Employee's absence is due to he Employee's pregnancy, the birth of the
Employee's child, the placement with the Employee of an adopted child, or the
care of the Employee's child immediately following the child's birth or
placement. The Advisory Committee credits Hours of Service under this paragraph
on the basis of the number of Hours of Service the employee would receive if he
were paid during the absence period or, if the Advisory Committee cannot
determine the number of Hours of Service the Employee would receive, on the
basis of 9 hours per day during the absence period. The Advisory Committee will
credit only the number (not exceeding 501) of Hours of Service necessary to
<PAGE>
prevent an Employee's Break in Service. The Advisory Committee credits all
Hours of Service described in this paragraph to the computation period in which
the absence period begins or, if the Employee does not need these Hours of
Service to prevent a Break in Service in the computation period in which his
absence period begins, the Advisory Committee credits these Hours of Service to
the immediately following computation period.
1.28 "Disability" means the Participant, because of a physical or
mental disability, will be unable to perform the duties of his customary
position of employment (or is unable to engage in any substantial gainful
activity) for an indefinite period which the Advisory Committee considers will
be of long continued duration. A Participant also is disabled if he incurs the
permanent loss or loss of use of a member or function of the body, or is
permanently disfigures, and incurs a Separation from Service. The Plan considers
a Participant disabled on the date the Advisory Committee determines the
Participant satisfies the definition of disability. The Advisory Committee may
require a Participant to submit to a physical examination in order to confirm
disability. The Advisory Committee will apply the provisions of this Section
1.28 in a nondiscriminatory, consistent and uniform manner. If the Employer's
Plan is a Nonstandardized Plan, the Employer may provide an alternative
definition of disability in an addendum to its Adoption Agreement, numbered
Section 1.28.
1.29 SERVICE FOR PREDECESSOR EMPLOYER. If the Employer maintains the
plan of a predecessor employer, the Plan treats service of the employee
with the predecessor employer as service with the Employer. If the Employer does
not maintain the plan of a predecessor employer, the Plan does not credit
service with the predecessor employer, unless the Employer identifies the
predecessor in its Adoption Agreement and specifies the purposes for which the
Plan will credit service with that predecessor employer.
1.30 RELATED EMPLOYERS. A related group is a controlled group of
corporations (as defined in Code ss.414(b)), trades or businesses (whether or
not incorporated) which are under common control (as defined in Code ss.414(c))
or an affiliated service group (as defined in Code ss.414(m) or in Code
ss.414(o)). If the Employer is a member of a related group, the term "Employer"
includes the related group members for purposes of crediting Hours of Service,
determining Years of Service and Breaks in Service under Articles II and V,
applying the Participation Test and the Coverage Test under Section 3.06(E),
applying the limitations on allocations in Part 2 of Article III, applying the
top heavy rules and the minimum allocation requirements of Article III, the
definitions of Employee, Highly Compensated Employee, Compensation and Leased
Employee, and for any other purpose required by the applicable Code section or
by a Plan provision. However, an Employer may contribute to the Plan only by
<PAGE>
being a signatory to the Execution Page of the Adoption Agreement or to a
Participation Agreement to the Employer's Adoption Agreement. If one or more of
the Employer's related group members become Participating Employers by executing
a Participation Agreement to the Employer's Adoption Agreement, the term
"Employer" includes the participating related group members for all purposes of
the Plan, and "Plan Administrator" means the Employer that is the signatory to
the Execution Page of the Adoption Agreement.
If the Employer's Plan is a Standardized Plan, all Employees of the
Employer or of any member of the Employer's related group, are eligible to
participate in the Plan, irrespective of whether the related group member
directly employing the Employee is a Participating Employer. If the Employer's
Plan is a Nonstandardized Plan, the Employer must specify in Section 1.07 of its
Adoption Agreement, whether the Employees of related group members that are not
Participating Employers are eligible to participate in the Plan. Under a
Nonstandardized Plan, the Employer may elect to exclude from the definition of
"Compensation" for allocation purposes any Compensation received from a related
employer that has not executed a Participation Agreement and whose Employees are
not eligible to participate in the Plan.
1.31 LEASED EMPLOYEES. The Plan treats a Leased Employee as an
Employee of the Employer. A Leased Employee is an individual (who otherwise
is not an Employee of the Employer) who, pursuant to a leasing agreement between
the Employer (or for the Employer and any persons related to the Employer within
the meaning of Code ss.144(a)(3)) on a substantially full time basis for at
least one year and who performs services historically performed by employees in
the Employer's business field. If a Leased Employee is treated as an Employee by
reason of this Section 1.31 of the Plan, "Compensation" includes Compensation
from the leasing organization which is attributable to services performed for
the Employer.
(A) Safe harbor plan exception. The Plan does not treat a Leased
Employee as an Employee if the leasing organization covers the employee is
a safe harbor plan and, prior to application of this safe harbor plan exception,
20% or less of the Employer's Employees (other than Highly Compensated
Employees) are Leased Employees. A safe harbor plan is a money purchase pension
plan providing immediate participation, full and immediate vesting, and a
nonintegrated contribution formula equal to at least 10% of the employee's
compensation without regard to employment by the leasing organization on a
specified date. The safe harbor plan must determine the 10% contribution on the
basis of compensation as defined in Code ss.415(c)(3) plus elective
contributions (as defined in Section 1.12).
<PAGE>
(B) Other requirements. The Advisory Committee must apply this
Section 1.31 in a manner consistent with Code ss.414(n) and 414(o) and the
regulations issued under those Code sections. The Employer must specify in the
Adoption Agreement the manner in which the Plan will determine the allocation of
Employer contributions and Participant forfeitures on behalf of a Participant if
the Participant is a Leased Employee covered by a plan maintained by the leasing
organization.
1.32 SPECIAL RULES FOR OWNER-EMPLOYEES. The following special
provisions and restrictions apply to Owner-Employees:
(a) If the Plan provides contributions or benefits for an Owner-
Employee or for a group of Owner-Employees who controls the trade or
business with respect to which this Plan is established and the
Owner-Employee or Owner-Employees also control as Owner-Employees one or
more other trades or businesses, plans must exist or be established with
respect to all the controlled trades or businesses so that when the plans
are combined they form a single plan which atisfies the requirements of
Code ss.401(a) and Code ss.401(d) with respect to the employees of the
controlled trades or businesses.
(b) The Plan excludes an Owner-employee or group of Owner-Employees
if the Owner-Employee or group of Owner-Employees controls any other trade
or business, unless the employees of the other controlled trade or
business participate in a plan which satisfies the requirements of Code
ss.401(a) and Code ss.401(d). The other qualified plan must provide
contributions and benefits which are not less favorable than the
contributions and benefits provided for the Owner-Employee or group of
Owner-Employees under this Plan, or if an Owner-Employee is covered under
another qualified plan as an Owner-Employee, then the plan established
with respect to the trade or business he does control must provide
contributions or benefits as favorable as those provided under the most
favorable plan of the trade or business he does not control. If the
exclusion of this paragraph (b) applies and the Employer's Plan is a
Standardized Plan, the Employer may not participate or continue to
participate in this Master Plan and the Employer's Plan becomes an
individually-designed plan for purposes of qualification reliance.
(c) For purposes of paragraphs (a) and (b) of this Section 1.32, an
Owner-Employee or group of Owner-Employees controls a trade or business if
the Owner-Employee or Owner-Employees together (1) own the entire interest
in an unincorporated trade or business, or (2) in the case of a
partnership, own more than 50% of either the capital interest or the
profits interest in the partnership.
<PAGE>
1.33 DETERMINATION OF TOP HEAVY STATUS. If this Plan is the only
qualified plan maintained by the Employer, the Plan is top heavy for a Plan
Year if the top heavy ratio as of the Determination Date exceeds 60%. The top
heavy ratio is a fraction, the numerator of which is the sum of the present
value of Accrued Benefits of all Key Employees as of the Determination Date and
the denominator of which is a similar sum determined for all Employees. The
Advisory Committee must include in the top heavy ratio, as part of the present
value of Accrued Benefits, any contribution not made as of the Determination
Date but includible under Code ss.416 and the applicable Treasury regulations,
and distributions made within the Determination Period. The Advisory Committee
must calculate the top heavy ratio by disregarding the Accrued Benefit (and
distributions, if any, of the Accrued Benefit) of any Non-Key Employee who was
formerly a Key Employee, and by disregarding the Accrued Benefit (including
distributions, if any, of the Accrued Benefit) of an individual who has not
received credit for at least one Hour of Service with the Employer during the
Determination Period. The Advisory Committee must calculate the top heavy ratio,
including the extent to which it must take into account distributions, rollovers
and transfers, in accordance with Code ss.416 and the regulations under that
Code section.
If the Employer maintains other qualified plans (including a simplified
employee pension plan), or maintained another such plan which now is terminated,
this Plan is top heavy only if it is part of the Required Aggregation Group, and
the top heavy ratio for the Required Aggregation Group and for the Permissive
Aggregation Group, if any, each exceeds 60%. The Advisory Committee will
calculate the top heavy ratio in the same manner as required by the first
paragraph of this Section 1.33, taking into account all plans within the
Aggregation Group. To the extent the Advisory Committee must take into account
distributions to a Participant, the Advisory Committee must include
distributions from a terminated plan which would have been part of the Required
Aggregation Group if it were in existence on the Determination Date. The
Advisory Committee will calculate the present value of accrued benefits under
defined benefit plans or simplified employee pension plans included within the
group in accordance with the terms of those plans. Code ss.416 and the
regulations under that Code section. If a Participant in a defined benefit plan
is a Non-Key Employee, the Advisory Committee will determine his accrued benefit
under the accrual method, if any, which is applicable uniformly to all defined
benefit plans maintained by the Employer or, if there is no uniform method, in
accordance with the slowest accrual rate permitted under the fractional rule
accrual method described in Code ss.411(b)(1)(C). If the Employer maintains a
defined benefit plan, the Employer must specify in Adoption Agreement Section
3.18 the actuarial assumptions (interest and mortality only) the Advisory
Committee will use to calculate the present value of benefits from a defined
benefit plan. If an aggregated plan does not have a valuation date coinciding
<PAGE>
with the Determination Date, the Advisory Committee must value the Accrued
Benefits in the aggregated plan as of the most recent valuation date falling
within the twelve-month period ending on the Determination Date, except as Code
ss.416 and applicable Treasury regulations require for the first and second plan
year of a defined benefit plan. The Advisory Committee will calculate the top
heavy ratio with reference to the Determination Dates that fall within the same
calendar year.
(A) Standardized Plan. If the Employer's Plan is a Standardized
Plan, the Plan operates as a deemed top heavy plan in all Plan Years,
except, if the Standardized Plan includes a Code ss.401(k) arrangement, the
Employer may elect to apply the top heavy requirements only in Plan Years for
which the Plan actually is top heavy. Under a deemed top heavy plan, the
Advisory Committee need not determine whether the Plan actually is top heavy.
However, if the Employer, in Adoption Agreement Section 3.18, elects to override
the 100% limitation, the Advisory Committee will need to determine whether a
deemed top heavy Plan's top heavy ratio for a Plan Year exceeds 90%.
(B) Definitions. For purposes of applying the provisions of this
Section 1.33:
(1) "Key Employee" means, as of any Determination Date, any
Employee or former Employee (or Beneficiary of such Employee) who, for any
Plan Year in the Determination Period: (I) has Compensation in excess of
50% of the dollar amount prescribed in Code ss.415(b)(1)(A) (relating
to defined benefit plans) and is an officer of the Employer; (ii) has
Compensation in excess of the dollar amount prescribed in Code
ss.415(c)(1)(A) (relating to defined contribution plans) and is one of
the Employees owning the ten largest interests in the Employer; (iii)
is a more than 5% owner of the Employer; or (iv) is a more than 1%
owner of the employer and has Compensation of more than $150,000. The
constructive ownership rules of Code ss.318 (or the principles of that
section in the case of an unincorporated Employer,) will apply to
determine ownership in the Employer. The number of officers taken into
account under clause (I) will not exceed the greater of 3 or 10% of
the total number (after application of the Code ss.414(q) exclusions)
of Employees, but no more than 50 officers. The Advisory Committee
will make the determination of who is a Key Employee in accordance
with Code ss.416(I)(1) and the regulations under that Code section.
(2) "Non-Key Employee" is an employee who does not meet the
definition of Key Employee.
(3) "Compensation" means Compensation as determined under Section
1.09 for purposes of identifying Highly Compensated Employees.
<PAGE>
(4) "Required Aggregation Group" means: (I) each qualified plan of
the Employer in which at least one Key Employee participates at any time
during the Determination Period; and (ii) any other qualified plan of the
employer which enables a plan described in clause (I) to meet the
requirements of Code ss.401(a)(4) or of Code ss.410.
(5) "Permissive Aggregation Group" is the Required Aggregation Group
plus any other qualified plans maintained by the employer, but only if
such group would satisfy in the aggregate the requirements of Code ss.401
(a)(4) and of Code ss.410. The Advisory Committee will determine the
Permissive Aggregation Group.
(6) "Employer" means the Employer that adopts this Plan and any
related employers described in Section 1.30.
(7) "Determination Date" for any Plan Year is the Accounting Date of
the preceding Plan Year or, in the case of the first Plan Year of the
Plan, the Accounting Date of that Plan Year. The "Determination Period"
is the 5 year period ending on the Determination Date.
1.34 "Paired Plans" means the Employer has adopted two Standardized
Plan Adoption Agreements offered with this Master Plan, one Adoption
Agreement being a Paired Profit Sharing Plan and one Adoption Agreement being a
Paired Pension Plan. A Paired Profit Sharing Plan may include a Code ss.401(k)
arrangement. A Paired Pension Plan must be a money purchase pension plan or a
target benefit pension plan. Paired Plans must be the subject of a favorable
opinion letter issued by the National Office of the Internal Revenue Service.
This Master Plan does not pair any of its Standardized Plan Adoption Agreements
with Standardized Plan Adoption Agreements under a defined benefit master plan.
ARTICLE II
EMPLOYEE PARTICIPANTS
2.01 ELIGIBILITY. Each Employee becomes a Participant in the Plan in
accordance with the participation option selected by the Employer in its
Adoption Agreement. If this Plan is a restated Plan, each Employee who was a
Participant in the Plan on the day before the Effective Date continues as a
Participant in the Plan, irrespective of whether he satisfies the participation
conditions in the restated Plan, unless otherwise provided in the Employer's
Adoption Agreement.
<PAGE>
2.02 YEAR OF SERVICE - PARTICIPATION. For purposes of an Employee's
participation in the Plan under Adoption Agreement Section 2.01, the Plan takes
into account all of his Years of Service with the Employer, except as provided
in Section 2.03. "Year of Service" means an eligibility computation period
during which the Employee completes not less than the number of Hours of Service
specified in the Employer's Adoption Agreement. The initial eligibility
computation period is the first 12 consecutive month period measured from the
Employment Commencement Date. The Plan measures succeeding eligibility
computation periods in accordance with the option selected by the Employee in
its Adoption Agreement. If the Employer elects to measure subsequent periods on
a Plan Year basis, an Employee who receives credit for the required number of
Hours of Service during the initial eligibility computation period and during
the first applicable Plan Year will receive credit for two Years of Service
under Article II. "Employment Commencement Date" means the date on which the
Employee first performs an Hour of Service for the Employer. If the Employer
elects a service condition under Adoption Agreement Section 2.01 based on
months, the Plan does not apply any Hour of Service requirement after the
completion of the first Hour of Service.
2.03 BREAK IN SERVICE - PARTICIPATION. An Employee incurs a "Break in
Service" if during any consecutive month period he does not complete more than
500 Hours of Service with the Employer. The "12 consecutive month period" under
this Section 2.03 is the same 12 consecutive month period for which the Plan
measures "Years of Service" under Section 2.02.
(A) 2-year Eligibility. If the Employer elects a 2 years of service
condition for eligibility purposes under Adoption Agreement Section 2.01, the
Plan treats an Employee who incurs a one year Break in Service and who has never
become a Participant as a new Employee on the date he first performs an Hour of
Service for the Employer after the Break in Service.
(B) Suspension of Years of Service. The Employer must elect in its
Adoption Agreement whether a Participant will incur a suspension of Years of
Service after incurring a one year Break in Service. If this rule applies under
the Employer's Plan, the Plan disregards a Participant's Years of Service (as
defined in Section 2.02) earned prior to a Break in Service until the
Participant completes another Year of Service and the Plan suspends the
Participant's participation in the Plan. If the Participant completes a Year of
Service following his Break in Service, the Plan restores that Participant's
pre-Break Years of Service (and the Participant resumes active participation in
the Plan) retroactively to the first day of the computation period in which the
Participant earns the first post-Break Year of Service. The initial computation
period under this Section 2.03(B) is the 12 consecutive month period measured
from the date the Participant first receives credit for an Hour of Service
following the one year Break in Service period. The Plan measures any subsequent
periods, if necessary, in a manner consistent with the computation period
<PAGE>
selection in Adoption Agreement Section 2.02. This Section 2.03(B) does not
affect a Participant's vesting credit under Article V and, during a suspension
period, the Participant's Account continues to share fully in Trust Fund
allocations under Section 9.11. Furthermore, this Section 2.03(B) will not
result in the restoration of any Year of Service disregarded under the Break in
Service rule of Section 2.03(A).
2.04 PARTICIPATION UPON RE-EMPLOYMENT. A Participant whose employment
with the Employer terminates will re-enter the Plan as a Participant on the
date of his re-employment, subject to the Break in Service rule, if applicable,
under Section 2.03(B). An Employee who satisfies the Plan's eligibility
conditions but who terminates employment with the Employer prior to becoming a
Participant will become a Participant on the later of the Plan Entry Date on
which he would have entered the Plan had he not terminated employment or the
date of his re-employment, subject to the Break in Service rule, if applicable,
under Section 2.03(B). Any Employee who terminates employment prior to
satisfying the Plan's eligibility conditions becomes a Participant in accordance
with Adoption Agreement Section 2.01.
2.05 CHANGE IN EMPLOYEE STATUS. If a Participant has not ncurred a
Separation from Service but ceases to be eligible to participate in the Plan, by
reason of employment within an employment classification excluded by the
Employer under Adoption Agreement Section 1.07, the Advisory Committee must
treat the Participant as an Excluded Employee during the period such a
Participant is subject to the Adoption Agreement exclusion. The Advisory
Committee determines a Participant's sharing in the allocation of Employer
contributions and Participant forfeitures, if applicable, by disregarding his
Compensation paid by the Employer for services rendered in his capacity as an
Excluded Employee. However, during such period of exclusion, the Participant,
without regard to employment classification, continues to receive credit for
vesting under Article V for each included Year of Service and the Participant's
Account continues to share fully in Trust Fund allocations under Section 9.11.
If an Excluded Employee who is not a Participant becomes eligible to
participate in the Plan by reason of a change in employment classification, he
will participate in the Plan immediately if he has satisfied the eligibility
conditions of Section 2.01 and would have been a Participant had he not been an
Excluded Employee during his period of Service. Furthermore, the Plan takes into
account all of the Participant's included Years of Service with the Employer as
an Excluded Employee for purposes of vesting credit under Article V.
<PAGE>
2.06 ELECTION NOT TO PARTICIPATE. If the Employer's Plan is a
Standardized Plan, the Plan does not permit an otherwise eligible Employee
nor any Participant to elect not to participate in the Plan. If the Employer's
Plan is a Nonstandardized Plan, the Employer must specify in its Adoption
Agreement whether an Employee eligible to participate, or any present
Participant, may elect not to participate in the Plan. For an election to be
effective for a particular Plan Year, the Employee or Participant must file the
election in writing with the Plan Administrator not later than the time
specified in the Employer's Adoption Agreement. The employer may not make a
contribution under the Plan for the Employee or for the Participant for the Plan
Year for which the election is effective, nor for any succeeding Plan Year,
unless the Employee or Participant re-elects to participate in the Plan. After
an Employee's or Participant's election not to participate has been effective
for at least the minimum period prescribed by the Employer's Adoption Agreement,
the Employee or Participant may re-elect to participate in the Plan for any Plan
Year and subsequent Plan Years. An Employee or Participant may re-elect to
participate in the Plan by filing his election in writing with the Plan
Administrator not later than the time specified in the Employer's Adoption
Agreement. An Employee or Participant who re-elects to participate may again
elect not to participate only as permitted in the Employer's Adoption Agreement.
If an Employee is a Self- Employed Individual, the Employee's election (except
as permitted by Treasury regulations without creating a Code ss.401(k)
arrangement with respect to that Self-Employed Individual) must be effective no
later than the date the Employee first would become a Participant in the Plan
and the election is irrevocable. The Plan Administrator must furnish an Employee
or a Participant any form required for purposes of an election under this
Section 2.06. An election timely filed is effective for the entire Plan Year.
A Participant who elects not to participate may not receive a distribution
of his Accrued Benefit attributable either to Employer or to Participant
contributions except as provided under Article IV or under Article VI. However,
for each Plan year for which a Participant's election not to participate is
effective, the Participant's Account, if any, continues to share in Trust Fund
allocations under Article IX. Furthermore, the Employee or the Participant
receives vesting credit under Article V for each included Year of Service during
the period the election not to participate is effective.
ARTICLE III
EMPLOYER CONTRIBUTIONS
AND FORFEITURES
Part 1. Amount of Employer Contributions and Plan Allocations:
Sections 3.01 through 3.06.
3.01 AMOUNT. For each Plan Year, the Employer contributes to the trust
the amount determined by application of the contribution option selected by
the Employer in its Adoption Agreement. The Employer may not make a contribution
to the Trust for any Plan Year to the extent the contribution would exceed the
Participants' Maximum Permissible Amounts.
<PAGE>
The Employee contributes to this Plan on the condition its contribution is
not due to a mistake of fact and the Revenue Service will not disallow the
deduction for its contribution. The Trustee, upon written request from the
employer, must return to the Employer the amount of the Employer's contribution
made by the Employer by mistake of fact or the amount of the Employer's
contribution disallowed as a deduction under Code ss.404. The Trustee will not
return any portion of the Employer's contribution under the provisions of this
paragraph more than one year after:
(a) The Employer made the contribution by mistake of fact;
or
(b) The disallowance of the contribution as a deduction,
and then, only to the extent of the disallowance.
The Trustee will not increase the amount of the Employer contribution
returnable under this Section 3.01 for any earnings attributable to the
contribution, but the Trustee will decrease the Employer contribution returnable
for any losses attributable to it. The Trustee may require the Employer to
furnish it whatever evidence the Trustee deems necessary to enable the Trustee
to confirm the amount the Employer has requested be returned is properly
returnable under ERISA.
3.02 DETERMINATION OF CONTRIBUTION. The Employer, from its records,
determines the amount of any contributions to be made by it to the Trust under
the terms of the Plan.
3.03 TIME OF PAYMENT OF CONTRIBUTION. The Employer may pay its
contribution for each Plan Year in one or more installments without interest.
The Employer must make its contribution to the Plan within the time prescribed
by the Code or applicable Treasury regulations. Subject to the consent of the
Trustee, the Employer may make its contribution in property rather than in cash,
provided the contribution of property is not a prohibited transaction under the
Code of under ERISA.
3.04 CONTRIBUTION ALLOCATION.
(A) Method of Allocation. The Employer must specify in its Adoption
Agreement the manner of allocating each annual Employer contribution to this
Trust.
(B) Top Heavy Minimum Allocation. The Plan must comply with the
provisions of this Section 3.04(B), subject to the elections in the
Employer's Adoption Agreement.
<PAGE>
(1) Top Heavy Minimum Allocation Under Standardized Plan. Subject
to the Employer's election under Section 3.04(B)(3), the top heavy minimum
allocation requirement applies to a Standardized Plan for each Plan Year,
irrespective of whether the Plan is top heavy.
(a) Each Participant employed by the Employer on the last day of the
Plan Year will receive a top heavy minimum allocation for that Plan Year.
The Employer may elect in Section 3.04 of its Adoption Agreement to apply
this paragraph (a) only to a Participant who is a Non-Key Employee.
(b) Subject to any overriding elections in section 3.18 of the
Employer's Adoption Agreement, the top heavy minimum allocation is the
lesser of 3% of the Participant's Compensation for the Plan Year or the
highest contribution rate for the Plan Year made on behalf of any
Participant for the Plan Year. However, if the Employee participates in
Paired Plans, the top heavy minimum allocation is 3% of his Compensation.
If, under Adoption Agreement Section 3.04, the Employer elects to apply
paragraph (a) only to a Participant who is a Non-Key Employee, the
Advisory Committee will determine the "highest contribution rate"
described in the first sentence of this paragraph (b) by reference only to
the contribution rates of Participants who are Key Employees for the
Plan Year.
(2) Top Heavy Minimum Allocation Under Nonstandardized Plan. The top
heavy minimum allocation requirement applies to a Nonstandardized Plan only
in Plan Years for which the Plan is top heavy. Except as provided in the
Employer's Adoption Agreement, if the Plan is top heavy in any Plan Year:
(a) Each Non-Key Employee who is a Participant and is employed by the
Employer on the last day of the Plan Year will receive a top heavy minimum
allocation for that Plan Year, irrespective of whether he satisfies the
Hours of Service condition under Section 3.06 of the Employer's Adoption
Agreement; and
(b) The top heavy minimum allocation is the lesser of 3% of the
Non-Key Employee's Compensation for the Plan Year or the highest
contribution rate for the Plan Year made on behalf of any Key Employee.
However, if a defined benefit plan maintained by the Employer which
benefits a Key Employee depends on this Plan to satisfy the
antidiscrimination rules of Code ss.401(a)(4) or the coverage rules of
<PAGE>
Code ss.410 (or another plan benefiting the Key Employee so depends on such
defined benefit plan), the top heavy minimum allocation is 3% of the
Non-Key Employee's Compensation regardless of the contribution rate for the
Key Employees.
(3) Special Election for Standardized Code ss.401(k) Plan. If the
Employer's Plan is a Standardized Code ss.401(k) Plan, the Employer may elect in
Adoption Agreement Section 3.04 to apply the top heavy minimum allocation
requirements of Section 3.04(B)(1) only for Plan Years in which the Plan
actually is a top heavy plan.
(4) Special Definitions. For purposes of this Section 3.04(B), the
term "Participant" includes any Employee otherwise eligible to participate
in the Plan but who is not a Participant because of his Compensation level or
because of his failure to make elective deferrals under a Code ss.401(k)
arrangement or because of his failure to make mandatory contributions. For
purposes of sub- paragraph (1)(b) or (2)(b), "Compensation" means Compensation
as defined in Section 1.12, except Compensation does not include elective
contributions, irrespective of whether the Employer has elected to include these
amount sin Section 1.12 of its Adoption Agreement, any exclusion selected in
Section 1.12 of the Adoption Agreement (other than the exclusion of elective
contributions) does not apply and any modification to the definition of
Compensation in Section 3.06 does not apply.
(5) Determining Contribution Rates. For purposes of this Section
3.04(B), a Participant's contribution rate is the sum of all Employer
contributions (not including Employer contributions to Social security) and
forfeitures allocated to the Participant's Account for the Plan Year divided by
his Compensation for the entire Plan Year. However, for purposes of satisfying a
Participant's top heavy minimum allocation in Plan Years beginning after
December 31, 1998, the Participant's contribution rate does not include an
elective contributions under a Code ss.401(k) arrangement nor any Employer
matching contributions allocated on the basis of those elective contributions or
on the basis of employee contributions, except a Nonstandardized Plan may
include in the contribution rate any matching contributions not necessary to
satisfy the nondiscrimination requirements of Code ss.401(k) or of Code
ss.401(m).
If the Employee is a Participant in Paired Plans, the Advisory Committee
will consider the Paired Plans as a single Plan to determine a Participant's
contribution rate and to determine whether the Plans satisfy this top heavy
minimum allocation requirement. To determine a Participant's contribution rate
under a Nonstandardized Plan, the Advisory Committee must treat all qualified
top heavy defined contribution plans maintained by the Employer (or by any
related Employers described in Section 1.30) as a single plan.
<PAGE>
(b) No Allocations. If, for a Plan Year, there are no allocations of
Employer contributions or forfeitures for any Participant (for purposes of
Section 3.04(B)(1)(b)) or for any Key Employee (for purposes of Section
3.04(B)(2)(b)), the Plan does not require any top heavy minimum allocation for
the Plan Year, unless a top heavy minimum allocation applies because of the
maintenance by the Employer of more than one plan.
(7) Election of Method. The Employer must specify in its Adoption
Agreement the manner in which the Plan will satisfy the top heavy minimum
allocation requirement.
(a) If the Employer elects to make any necessary additional
contribution to this Plan, the Advisory Committee first will allocate the
Employer contributions (and Participant forfeitures, if any) for the Plan
Year in accordance with the provisions of Adoption Agreement Section 3.04.
The Employer then will contribute an additional amount for the Account of
any Participant entitled under this Section 3.04(B) to a top heavy minimum
allocation and whose contribution rate for the Plan Year, under this Plan
and any other plan aggregated under paragraph (5), is less than the top
heavy minimum allocation. The additional amount is the amount necessary to
increase the Participant's contribution rate to the top heavy minimum
allocation. The Advisory Committee will allocate the additional
contribution to the Account of the Participant on whose behalf the
Employer makes the contribution.
(b) If the Employer elects to guarantee the top heavy minimum
allocation under another plan, this Plan does not provide the top heavy
minimum allocation and the Advisory Committee will allocate the annual
Employer contributions (and Participant forfeitures) under the plan solely
in accordance with the allocation method selected under Adoption Agreement
Section 3.04.
3.05 FORFEITURE ALLOCATION. The amount of a Participant's Accrued
Benefit forfeited under the Plan is a Participant forfeiture. The Advisory
Committee will allocate Participant forfeitures in the manner specified by the
Employer in its Adoption Agreement. The Advisory Committee will continue to hold
the undistributed, non-vested portion of a terminated Participant's Accrued
Benefit in his Account solely for his benefit until a forfeiture occurs at the
time specified in Section 5.09 or if applicable, until the time specified in
Section 9.14. Except as provided under Section 5.04, a Participant will not
share in the allocation of a forfeiture of any portion of his Accrued Benefit.
3.06 ACCRUAL OF BENEFIT. The Advisory Committee will determine the
accrualof benefit (Employer contributions and Participant forfeitures) on the
basis of the Plan Year in accordance with the Employer's elections in its
Adoption Agreement.
<PAGE>
(A) Compensation Taken Into Account. The Employer must specify
in its Adoption Agreement the Compensation the Advisory Committee is to
take into account in allocating an Employer contribution to a Participant's
Account for the Plan Year in which the Employee first becomes a Participant. For
all other Plan Years, the Advisory Committee will take into account only the
Compensation determined for the portion of the Plan Year in which the Employee
actually is a Participant. The Advisory Committee must take into account the
Employee's entire Compensation for the Plan Year to determine whether the Plan
satisfies the top heavy minimum allocation requirement of Section 3.04(B). The
Employer, in an addendum to its Adoption Agreement numbered 3.06(A), may elect
to measure Compensation for the Plan Year for allocation purposes on the basis
of a specified period other than the Plan Year.
(B) Hours of Service Requirement. Subject to the applicable
minimum allocation requirement of Section 3.04, the Advisory Committee will
not allocate any portion of an Employer contribution for a Plan Year to any
Participant's Account if the Participant does not complete the applicable
minimum Hours of Service requirement specified in the Employer's Adoption
Agreement.
(C) Employment Requirement. If the Employer's Plan is a Standardized
Plan, a Participant who, during a particular Plan Year, completes the
accrual requirements of Adoption Agreement Section 3.06 will share in the
allocation of Employer contributions for that Plan Year without regard to
whether he is employed by the Employer on the Accounting Date of that Plan Year.
If the Employer's Plan is a Nonstandardized Plan, the Employer must specify in
its Adoption Agreement whether the Participant will accrue a benefit if he is
not employed by the Employer on the Accounting Date of the Plan Year. If the
Employer's Plan is a money purchase plan or a target benefit plan, whether
nonstandardized or Standardized, the Plan conditions benefit accrual on
employment with the Employer on the 1st day of the Plan Year for the Plan Year
in which the Employer terminates the Plan.
(D) Other Requirements. If the Employer's Adoption Agreement
includes options for other requirements affecting the Participant's accrual
of benefits under the Plan, the Advisory Committee will apply this Section 3.06
in accordance with the Employer's Adoption Agreement selections.
(E) Suspension of Accrual Requirements Under Nonstandardized Plan.
If the Employer's Plan is a Nonstandardized Plan, the Employer may elect in
its Adoption Agreement to suspend the accrual requirements elected under
Adoption Agreement Section 3.06 if, for any Plan Year beginning after December
31, 1989, the Plan fails to satisfy the Participation Test or the Coverage Test.
<PAGE>
A Plan satisfies the Participation Test if, on each day of the Plan Year, the
number of Employees who benefit under the Plan is at least equal to the lesser
of 50 or 40% of the total number of Includible Employees as of such day. A Plan
satisfies the Coverage Test if, on the last day of each quarter of the Plan
Year, the number of Nonhighly Compensated Employees who benefit under the Plan
si at least equal to 70% of the total number of Includible Nonhighly Compensated
Employees as of such day. "Includible" Employees are all Employees other than:
(1) those Employees excluded from participating in the Plan for the entire Plan
Year by reason of the collective bargaining unit exclusion or the nonresident
alien exclusion under Adoption Agreement Section 1.07 or by reason of the
participation requirements of Sections 2.01 and 2.03; and (2) any Employee who
incurs a Separation from Service during the Plan Year and fails to complete at
least 401 Hours of Service for the Plan Year. A "Nonhighly Compensated Employee"
is an Employee who is not a Highly Compensated Employee and who is not a family
member aggregated with a Highly Compensated Employee pursuant to Section 1.09 of
the Plan.
For purposes of the Participation Test and the Coverage Test, an Employee
is benefiting under the Plan on a particular date if, under Adoption Agreement
Section 3.04, he is entitled to an allocation for the Plan Year. Under the
Participation Test, when determining whether an Employee is entitled to an
allocation under Adoption Agreement Section 3.04, the Advisory Committee will
disregard any allocation required solely by reason of the top heavy minimum
allocation, unless the top heavy minimum allocation is the only allocation made
under the Plan for the Plan Year.
If this Section 3.06(E) applies for a Plan Year, the Advisory Committee
will suspend the accrual requirements for the Includible Employees who are
Participants, beginning first with the Includible Employee(s) employed with the
Employer on the last day of the Plan Year, then the Includible Employee(s) who
have the latest Separation from Service during the Plan Year, and continuing to
suspend in descending order the accrual requirements for each Includible
Employee who incurred an earlier Separation from Service date, until the Plan
satisfies both the Participation Test and the Coverage Test for the plan Year.
If two or more Includible Employees have a Separation from Service on the same
day, the Advisory Committee will suspend the accrual requirements for all such
Includible Employees irrespective of whether the Plan can satisfy the
Participation Test and the Coverage Test by accruing benefits for fewer than all
such Includible Employees. If the Plan suspends the accrual requirements for an
Includible Employee, that Employee will share in the allocation of Employer
contributions and Participant forfeitures, if any, without regard to the number
of Hours of Service he has earned for the Plan Year and without regard to
whether he is employed by the Employer on the last day of the Plan Year. If the
<PAGE>
Employer's Plan includes Employer matching contributions subject to Code
ss.401(m), this suspension of accrual requirements applies separately to the
Code ss.401(m) portion of the Plan, and the Advisory Committee will treat an
Employee as benefiting under that portion of the Plan if he is an Eligible
Employee for purposes of the Code ss.401(m) nondiscrimination test. The Employer
may modify the operation of this Section 3.06(E)k by electing appropriate
modifications in Section 3.06 of its Adoption Agreement.
Part 2. Limitations On Allocations: sections 3.07 through 3.19
[Note: Sections 3.07 through 3.10 apply only to Participants in this Plan
who do not participate, and who have never participated, in another qualified
plan or in a welfare benefit fund (as defined in Code ss.419(3)) maintained by
the Employer.]
3.07 The amount of Annual Additions which the Advisory Committee
may allocate under this Plan on a Participant's behalf for a Limitation
Year may not exceed the Maximum Permissible Amount. If the amount the Employer
otherwise would contribute to the Participant's Account would cause the Annual
Additions for the Limitation Year to exceed the Maximum Permissible Amount, the
Employer will reduce the amount of its contribution so the Annual Additions for
the Limitation Year will equal the Maximum Permissible Amount. If an allocation
of Employer contributions, pursuant to Section 3.04, would result in an Excess
Amount (other than an Excess Amount resulting from the circumstances described
in Section 3.10) to the Participant's Account, the Advisory Committee will
reallocate the Excess Amount to the remaining Participants who are eligible for
an allocation of Employer contributions for the Plan Year in which the
Limitation Year ends. The Advisory Committee will make this reallocation on the
basis of the allocation method under the Plan as if the Participant whose
Account otherwise would receive the Excess Amount is not eligible for an
allocation of Employer contributions.
3.08 Prior to the determination of the Participant's actual
Compensation for a Limitation Year, the Advisory Committee may determine
the Maximum Permissible Amount on the basis of the Participant's estimated
annual Compensation for such Limitation Year. The Advisory Committee must make
this determination on a reasonable and uniform basis for all Participants
similarly situated. The Advisory Committee must reduce any Employer
contributions (including any allocation of forfeitures) based on estimated
annual Compensation by any Excess Amounts carried over from prior years.
3.09 As soon as is administratively feasible after the end of
the Limitation Year, the Advisory Committee will determine the Maximum
Permissible Amount for such Limitation Year on the basis of the Participant's
actual Compensation for such Limitation Year.
<PAGE>
3.10 If, pursuant to Section 3.09, or because of the allocation
of forfeitures, there is an Excess Amount with respect to a Participant for
a Limitation Year, the Advisory Committee will dispose of such Excess Amount as
follows:
(a) The Advisory Committee will return any nondeductible voluntary
Employee contributions to the Participant to the extent the return would
reduce the Excess Amount.
(b) If, after the application of paragraph (a), an Excess Amount
still exists, and the Plan covers the Participant at the end of the
Limitation Year, then the Advisory Committee will use the Excess Amount(s)
to reduce future Employer contributions (including any allocation of
forfeitures) under the plan for the next Limitation Year and for each
succeeding Limitation Year, as is necessary, for the Participant. If the
Employer's Plan is a profit sharing plan, the Participant may elect to
limit his Compensation for allocation purposes to the extent necessary to
reduce his allocation for the Limitation Year to the Maximum Permissible
Amount and eliminate the Excess Amount.
(c) If, after the application of paragraph (a), an Excess Amount
still exists, and the Plan does not cover the Participant at the end of
the Limitation Year, then the Advisory Committee will hold the Excess
Amount unallocated in a suspense account. The Advisory Committee will
apply the suspense account to reduce Employer Contributions (including
allocation of forfeitures) for all remaining Participants in the next
Limitation Year, and in each succeeding Limitation Year if necessary.
Neither the Employer nor any Employee may contribute to the Plan for any
Limitation Year in which the Plan is unable to allocate fully a suspense
account maintained pursuant to this paragraph (c).
(d) The Advisory Committee will not distribute any Excess
Amount(s) to Participants or to former Participants.
[Note: Sections 3.11 through 3.16 apply only to Participants who, in
addition to this Plan, participate in one or more plans (including Paired
Plans), all of which are qualified Master or Prototype defined contribution
plans or welfare benefit funds (as defined in Code ss.419(e)) maintained by the
Employer during the Limitation Year.]
3.11 The amount of Annual Additions which the Advisory Committee may
allocate under this Plan on a Participant's behalf for a Limitation Year may not
exceed the Maximum Permissible Amount, reduced by the sum of any Annual
Additions allocated to the Participant's Accounts for the same Limitation Year
under this Plan and such other defined contribution plan. If the amount the
<PAGE>
Employer otherwise would contribute to the Participant's Account under this Plan
would cause the Annual Additions for the Limitation Year to exceed this
limitation, the Employer will reduce the amount of its contribution so the
Annual Additions under all such plans for the Limitation Year will equal the
Maximum Permissible Amount. If an allocation of Employer contributions, pursuant
to Section 3.04, would result in an Excess Amount (other than an Excess Amount
resulting from the circumstances described in Section 3.10) to the Participant's
Account, the Advisory Committee will reallocate the Excess Amount to the
remaining Participants who are eligible for an allocation of Employer
contributions for the Plan Year in which the Limitation Year ends. The Advisory
Committee will make this reallocation on the basis of the allocation method
under the Plan as if the Participant whose Account otherwise would receive the
Excess Amount is not eligible for an allocation of Employer contributions.
3.12 Prior to the determination of the Participant's actual
Compensation for the Limitation Year, the Advisory Committee may determine
the amounts referred to in 3.11 above on the basis of the Participant's
estimated annual Compensation for such Limitation year. The Advisory Committee
will make this determination on a reasonable and uniform basis for all
Participants similarly situated. The Advisory Committee must reduce any Employer
contribution (including allocation of forfeitures) based on estimated annual
Compensation by any Excess Amounts carried over from prior years.
3.13 As soon as is administratively feasible after the end of the
Limitation Year, the Advisory Committee will determine the amounts referred to
in 3.11 on the basis of the Participant's actual Compensation for such
Limitation Year.
3.14 If pursuant to Section 3.13, or because of the allocation of
forfeitures, a Participant's Annual Additions under this Plan and all such other
plans result in an Excess Amount, such Excess amount will consist of the Amounts
last allocated. The Advisory Committee will determine the Amounts last allocated
by treating the Annual Additions attributable to a welfare benefit fund as
allocated first, irrespective of the actual allocation date under the welfare
benefit fund.
3.15 The Employer must specify in its Adoption Agreement the Excess
amount attributed to this Plan, if the Advisory Committee allocates an
Excess Amount to a Participant on an allocation date of this Plan which
coincides with an allocation date of another plan.
3.16 The Advisory Committee will dispose of an Excess Amounts
attributed to this Plan as provided in Section 3.10.
<PAGE>
[Note: Section 3.17 applies only to Participants who, in addition to this
Plan, participate in one or more qualified plans which are qualified defined
contribution plans other than a Master or Prototype plan maintained by the
Employer during the Limitation Year.]
3.17 SPECIAL ALLOCATION LIMITATION. The amount of Annual Additions
which the Advisory Committee may allocate under this Plan on behalf of any
Participant are limited in accordance with the provisions of Section 3.11
through 3.16, as though the other plan were a Master or Prototype plan, unless
the Employer provides other limitations in an addendum to the Adoption
Agreement, numbered Section 3.17.
3.18 DEFINED BENEFIT PLAN LIMITATION. If the Employer maintains a
defined benefit plan, or has ever maintained a defined benefit plan which
the Employer has terminated, then the sum of the defined benefit plan fraction
and the defined contribution plan fraction for any Participant for any
Limitation Year must not exceed 1.0. The Employer must provide in Adoption
Agreement Section 3.18 the manner in which the plan will satisfy this
limitation. The Employer also must provide in its Adoption Agreement Section
3.18 the manner in which the plan will satisfy the top heavy requirements of
Code ss.416 after taking into account the existence (or prior maintenance) of
the defined benefit plan.
3.19 DEFINITIONS - ARTICLE III. For purposes of Article III, the
following terms mean:
(a) "Annual Addition" - The sum of the following amounts allocated on
behalf of a Participant for a Limitation Year, of (I) all Employer
contributions; (ii) all forfeitures; and (iii) all Employee contributions.
Except to the extent provided in Treasury regulations, Annual Additions
include excess contributions described in Code ss.401(k), excess
contributions described in Code ss.401(m) and excess deferrals described
in Code ss.402(g), irrespective of whether the plan distributes or
forfeits such excess amounts. Annual Additions also include Excess Amounts
reapplied to reduce Employer contributions under Section 3.10. Amounts
allocated after March 31, 1984, to an individual medical account (as
defined in Code 415(l)(2)) included as part of a defined benefit plan
maintained by the Employer are Annual Additions. Furthermore, Annual
Additions include contributions paid or accrued after December 31, 1985,
for taxable years ending after December 31, 1985, attributable to
post-retirement medical benefits allocated to the separate account of a
key employee (as defined in Code ss.419(d)(3)) under a welfare benefit fun
(as defined in Code ss.419(e)) maintained by the Employer.
<PAGE>
(b) "Compensation" - For purposes of applying the limitations of Part
2 of this Article III, "Compensation" means Compensation as defined in
Section 1.12, except Compensation does not include elective
contributions, irrespective of whether the Employer has elected to
include these amounts as Compensation under Section 1.12 of its
Adoption Agreement, and any exclusion selected in Section 1.12 of the
Adoption Agreement (other than the exclusion of elective
contributions) does not apply.
(c) "Employer" - the Employer that adopts this Plan and any related
employers described in Section 1.30. Solely for purposes of applying the
limitations of Part 2 of this Article III, the advisory Committee will
determine related employers described in Section 1.30 by modifying Code
ss.414(b) and (c) in accordance with Code ss.415(h).
(d) "Excess Amount" - The excess of the Participant's Annual
Additions for the Limitation Year over the Maximum Permissible Amount.
(e) "Limitation Year" - The period selected by the Employer under
Adoption Agreement Section 1.17. All qualified plans of the Employer must
use the same Limitation Year. If the Employer amends the Limitation Year
to a different 12 consecutive month period, the new Limitation Year must
begin on a date within the Limitation Year for which the Employer
makes the amendment, creating a short Limitation year.
(f) "Master or Prototype Plan" - A plan the form of which is the
subject of a favorable notification letter or a favorable opinion letter
from the Internal Revenue Service.
(g) "Maximum Permissible Amount" - The lesser of (I) $30,000 (or, if
greater, one-fourth of the defined benefit dollar limitation under Code
ss.415(b)(1)(A)), or (ii) 25% of the Participant's Compensation for the
Limitation Year. If there is a short Limitation Year because of a change
in Limitation Year, the Advisory Committee will multiply the $30,000 (or
adjusted) limitation by the following fraction:
Number of months in the short Limitation Year
---------------------------------------------
12
(h) "Defined contribution plan" - A retirement plan which provides
for an individual account for each participant and for benefits based
solely on the amount contributed to the participant's account, and
any income, expenses, gains and losses, and any forfeitures of
accounts of other participants which the plan may allocate to such
participant's account. The Advisory Committee must treat all defined
<PAGE>
contribution plans (whether or not terminated) maintained by the Employer
as a single plan. Solely for purposes of the limitations of Part 2 of
this Article III, the Advisory Committee will treat employee contributions
made to a defined benefit plan maintained by the Employer as a separate
defined contribution plan. The Advisory Committee also will treat as a
defined contribution plan an individual medical account (as defined in
Code ss.415(l)(2)) included as part of a defined benefit plan maintained
by the Employer and, for taxable years ending after December 31, 1985, a
welfare benefit fund under Code ss.419(e) maintained by the Employer
to the extent there are post-retirement medical benefits allocated to
the separate account of a key employee (as defined in Code
ss.419A(d)(3)).
(I) "Defined benefit plan" - A retirement plan which does not
provide for individual accounts for Employer contributions. The Advisory
Committee must treat all defined benefit plans (whether or not
terminated) maintained by the Employer as a single plan.
[Note: The definitions in paragraphs (j), (k) and (l) apply only if the
limitation described in Section 3.18 applies to the Employer's Plan.]
(j) "Defined benefit plan fraction" -
Projected annual benefit of the Participant under the defined
benefit plan(s)
--------------------------------------------------------------------------
The lesser of (I) 125% (subject to the "100% limitation" in
paragraph (l)) of the
dollar limitation in effect under Code ss.415(b)(l)(A) for the
Limitation Year,
or (ii) 140% of the Participant's average Compensation for his
high three (3) consecutive Years of Service
To determine the denominator of this fraction, the Advisory Committee will
make any adjustment required under Code ss.415(b) and will determine a
Year of Service, unless otherwise provided in an addendum to Adoption
Agreement Section 3.18, as a Plan Year in which the Employee completed at
least 1,000 Hours of Service. The "projected annual benefit" is the annual
retirement benefit (adjusted to an actuarially equivalent straight life
annuity if the plan expresses such benefit in a form other than a straight
life annuity or qualified joint and survivor annuity) of the Participant
under the terms of the defined benefit plan on the assumptions he
continues employment until his normal retirement age (or current age, if
later) as stated in the defined benefit plan, his compensation continues
at the same rate as in effect in the Limitation Year under consideration
until the date of his normal retirement age and all other relevant factors
used to determine benefits under the defined benefit plan remain constant
as of the current Limitation Year for all future Limitation Years.
<PAGE>
Current Accrued Benefit. If the Participant accrued benefits in one or
more defined benefit plans maintained by the Employer which were in
existence on May 6, 1986, the dollar limitation used in the denominator of
this fraction will not be less than the Participant's Current Accrued
Benefit. A Participant's Current Accrued Benefit is the sum of the annual
benefits under such defined benefit plans which the Participant had
accrued as of the end of the 1986 Limitation year (the last Limitation
Year beginning before January 1, 1987), determined without regard to any
change in the terms or conditions of the Plan made after May 5, 1986, and
without regard to any cost of living adjustment occurring after May 5,
1986. This Current Accrued Benefit rule applies only if the defined
benefit plans individually and in the aggregate satisfied the requirements
of Code ss.415 as in effect at the end of the 1986 Limitation Year.
(k) "Defined contribution plan fraction" -
The sum, as of the close of the Limitation Year, of the
Annual Additions to the Participant's Account under the
defined contribution plan(s)
--------------------------------------------------------------------------
The sum of the lesser of the following amounts
determined for the Limitation Year and for each prior
Year of Service with the Employer: (I) 125% (subject to
the "100% limitation" in paragraph (l) of the dollar
limitation in effect under Code ss.415(c)(l)(A) for
the Limitation year (determined without regard to
the special dollar limitations for employee stock ownership
plans), or (ii) 35% of the Participant's Compensation
for the Limitation Year.
For purposes of determining the defined contribution plan
fraction, the Advisory Committee will not recompute Annual Additions in
Limitation Years beginning prior to January 1, 1987, to treat all Employee
contributions as Annual Additions. If the Plan satisfied Code ss.415 for
Limitation Years beginning prior to January 1, 1987, the Advisory
Committee will redetermine the defined contribution plan fraction and the
defined benefit plan fraction as of the end of the 1986 Limitation Year,
in accordance with this Section 3.19. If the sum of the redetermined
fractions exceeds 1.0, the Advisory Committee will subtract permanently
from the numerator of the defined contribution plan fraction an amount
equal to the produce of (l) the excess of the sum of the fractions over
1.0, times (2) the denominator of the defined contribution plan fraction.
In making the adjustment, the Advisory Committee must disregard any
accrued benefit under the defined benefit plan which is in excess of the
Current Accrued Benefit. This Plan continues any transitional rules
<PAGE>
applicable to the determination of the defined contribution plan fraction
under the Employer's Plan as of the end of the 1986 Limitation Year.
(l) "100% limitation."If the 100% limitation applies, the Advisory
Committee must determine the denominator of the defined benefit plan
fraction and the denominator of the defined contribution plan fraction by
substituting 100% for 125%. If the Employer's Plan is a Standardized Plan,
the 100% limitation applies in all Limitation Years, subject to any
override provisions under Section 3.18 of the Employer's Adoption
Agreement. If the Employer overrides the 100% limitation under a
Standardized Plan, the Employer must specify in its Adoption Agreement the
manner in which the Plan satisfies the extra minimum benefit requirement
of Code ss.416(h) and the 100% limitation must continue to apply if the
Plan's top heavy ratio exceeds 90%. If the Employer's Plan is a
Nonstandardized Plan, the 100% limitation applies only if: (I) the Plan's
top heavy ratio exceeds 90%; or (ii) the plan's top heavy ratio is greater
than 60%, and the Employer does not elect in its Adoption Agreement
Section 3.18 to provide extra minimum benefits which satisfy Code
ss.416(h)(2).
ARTICLE IV
PARTICIPANT CONTRIBUTIONS
4.01 PARTICIPANT NONDEDUCTIBLE CONTRIBUTIONS. This Plan does not
permit Participant nondeductible contributions unless the Employer
maintains its Plan under a Code ss.401(k) Adoption Agreement. If the Employer
does not maintain its Plan under a Code ss.401(k) Adoption Agreement and, prior
to the adoption of this Master Plan, the Plan accepted Participant nondeductible
contributions for a Plan Year beginning after December 31, 1986, those
contributions must satisfy the requirements of Code ss.401(m). This Section 4.01
does not prohibit the Plan's acceptance of Participant nondeductible
contributions prior to the first Plan Year commencing after the Plan Year in
which the Employer adopts this Master Plan.
4.02 PARTICIPANT DEDUCTIBLE CONTRIBUTIONS, A qualified Plan may not
accept Participant deductible contributions after April 15, 1987. If the
Employer's Plan includes Participant deductible contributions ("DECs") made
prior to April 16, 1987, the Advisory Committee must maintain a separate
accounting for the Participant's Accrued Benefit attributable to DECs, including
DECs as part of the Participant's accrued Benefit for all purposes of the Plan,
except for purposes of determining the top heavy ratio under Section 1.33. The
Advisory Committee may not use DECs to purchase life insurance on the
Participant's behalf.
<PAGE>
4.03 PARTICIPANT ROLLOVER CONTRIBUTIONS. Any Participant, with the
Employer's written consent and after filing with the Trustee the form prescribed
by the Advisory Committee, may contribute cash or other property to the Trust
other than as a voluntary contribution if the contribution is a "rollover
contribution" which the Code permits an employee to transfer either directly or
indirectly from one qualified plan to another qualified plan. Before accepting a
rollover contribution, the Trustee may require an Employee to furnish
satisfactory evidence that the proposed transfer is in fact a "rollover
contribution" which the Code permits an employee to make to a qualified plan. A
rollover contribution is not an Annual Addition under Part 2 of Article III.
The Trustee will invest the rollover contribution in a segregated
investment Account for the Participant's sole benefit unless the Trustee (or the
Named Fiduciary, in the case of a nondiscretionary Trustee designation), in its
sole discretion, agrees to invest the rollover contribution as part of the Trust
Fund. The Trustee will not have any investment responsibility with respect to a
Participant's segregated rollover Account. The Participant, however, from time
to time, may direct the Trustee in writing as to the investment of his
segregated rollover Account in property, or property interest, of any kind,
real, personal or mixed; provided however, the Participant may not direct the
Trustee to make loans to his Employer. A Participant's segregated rollover
Account alone will bear any extraordinary expenses resulting from investments
made at the direction of the Participant. As of the Accounting Date (or other
valuation date) for each Plan Year, the Advisory Committee will allocate and
credit the net income (or net loss) from a Participant's segregated rollover
Account and the increase or decrease in the fair market value of the assets of a
segregated rollover Account solely to that Account. The Trustee is not liable
nor responsible for any loss resulting to any Beneficiary, nor to any
Participant, by reason of any sale or investment made or other action taken
pursuant to and in accordance with the direction of the Participant. In all
other respects, the Trustee will hold, administer and distribute a rollover
contribution in the same manner as any Employer contribution made to the Trust.
An eligible Employee, prior to satisfying the Plan's eligibility
conditions, may make a rollover contribution to the Trust to the same extent and
in the same manner as a Participant If an Employee makes a rollover contribution
to the Trust prior to satisfying the plan's eligibility conditions, the Advisory
Committee and Trustee must treat the Employee as a Participant for all purposes
of the plan except the Employee is not a participant for purposes of sharing in
Employer contributions or Participant forfeitures under the Plan until he
actually becomes a Participant in the Plan. If the Employee has a Separation
<PAGE>
from Service prior to becoming a Participant, the Trustee will distribute his
rollover contribution Account to him as if it were an Employer contribution
Account.
4.04 PARTICIPANT CONTRIBUTION - FORFEITABILITY. A Participant's
Accrued Benefit is, at all times, 100% Nonforfeitable to the extent the
value of his Accrued Benefit is derived from his Participant contributions
described in this Article IV.
4.05 PARTICIPANT CONTRIBUTION - WITHDRAWAL/DISTRIBUTION. A
Participant, by giving prior written notice to the Trustee, may withdraw
all or any part of the value of his Accrued Benefit derived from his Participant
contributions described in this Article IV. A distribution of Participant
contributions must comply with the joint and survivor requirements described in
Article VI, if those requirements apply to the Participant. A Participant my not
exercise his right to withdraw the value of his Accrued Benefit derived from his
Participant contributions more than once during any Plan Year. The Trustee, in
accordance with the direction of the advisory Committee, will distribute a
Participant's unwithdrawn Accrued Benefit attributable to his Participant
contributions in accordance with the provisions of Article VI applicable to the
distribution of the Participant's Nonforfeitable Accrued Benefit.
4.06 PARTICIPANT CONTRIBUTION - ACCRUED BENEFIT. The Advisory
Committee must maintain a separate Account(s) in the name of each
Participant to reflect the Participant's Accrued Benefit under the Plan derived
from his Participant contributions. A Participant's Accrued Benefit derived from
his Participant contributions as of any applicable date is the balance of his
separate Participant contribution Account(s).
ARTICLE V
TERMINATION OF SERVICE -
PARTICIPANT VESTING
5.01 NORMAL RETIREMENT AGE. The Employer must define Normal Retirement
Age in its Adoption Agreement. A Participant's Accrued Benefit derived from
Employer contribution is 100% Nonforfeitable upon and after his attaining Normal
Retirement Age (if employed by the Employer on or after that date).
5.02 PARTICIPANT DISABILITY OR DEATH. The Employer may elect in its
Adoption Agreement to provide a Participant's Accrued Benefit derived from
Employer contributions will be 100% Nonforfeitable if the Participant's
Separation from Service is a result of his death or his disability.
5.03 VESTING SCHEDULE. Except as provided in Sections 5.01 and 5.02,
for each Year of Service, a Participant's Nonforfeitable percentage of his
Accrued Benefit derived from Employer contributions equals the percentage in the
vesting schedule completed by the Employer in its Adoption Agreement.
<PAGE>
(A) Election of Special Vesting Formula. If the Trustee makes a
distribution (other than a cash-out distribution described in Section 5.04) to a
partially-vested Participant, and the Participant has not incurred a Forfeiture
Break in Service at the relevant time, the Advisory Committee will establish a
separate Account for the Participant's Accrued Benefit. At any relevant time
following the distribution, the Advisory Committee will determine the
Participant's Nonforfeitable Accrued Benefit derived from Employer contributions
in accordance with the following formula:
P(AB+(RxD))-(RxD).
To apply this formula, "P" is the Participant's current vesting percentage
at the relevant time, "AB" is the Participant's Employer- derived Accrued
Benefit at the relevant time, "R" is the ratio of "AB" to the Participant's
Employer-derived Accrued Benefit immediately following the earlier distribution
and "D" is the amount of the earlier distribution. If, under a restated Plan,
the Plan has made distribution to a partially-vested Participant prior to its
restated Effective date and is unable to apply the cash-out provisions of
Section 5.04 to that prior distribution, this special vesting formula also
applies to that Participant's remaining Account. The Employer, in an addendum to
its Adoption Agreement, numbered Section 5.03, may elect to modify this formula
to read as follows: P(AB+D)-D.
5.04 CASH-0UT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANT/
RESTORATION OF FORFEITED ACCRUED BENEFIT. If, pursuant to Article VI, a
partially-vested Participant receives a cash-out distribution before he incurs a
Forfeiture Break in Service (as defined in Section 5.08), the cash-out
distribution will result in an immediate forfeiture of the nonvested portion of
the Participant's Accrued Benefit derived from Employer contributions. See
Section 5.09. A partially-vested Participant is a Participant whose
Nonforfeitable Percentage determined under Section 5.03 is less than 100%. A
cash-out distribution is a distribution of the entire present value of the
Participant's Nonforfeitable Accrued Benefit.
(A) Restoration and Conditions upon Restoration. A partially-
vested Participant who is re-employed by the Employer after receiving a
cash-out distribution of the Nonforfeitable percentage of his Accrued Benefit
may repay the Trustee the amount of the cash-out distribution attributable to
Employer contributions, unless the Participant no longer has a right to
restoration by reason of the conditions of this Section 5.04(A). If a
partially-vested Participant makes the cash-out distribution repayment, the
Advisory Committee, subject to the conditions of this Section 5.04(A), must
restore his Accrued Benefit attributable to Employer contributions to the same
dollar amount as the dollar amount of his Accrued Benefit on the accounting
Date, or other valuation date, immediately preceding the date of the cash-our
<PAGE>
distribution, unadjusted for any gains or losses occurring subsequent to
that Accounting Date, or other valuation date. Restoration of the Participant's
Accrued Benefit includes restoration of all Code ss.411(d)(6) protected benefits
with respect to that restored Accrued Benefit, in accordance with applicable
Treasury regulations. The Advisory Committee will not restore a reemployed
Participant's Accrued Benefit under this paragraph if:
(1) 5 years have elapsed since the Participant's first re- employment
date with the Employer following the cash-out distribution; or
(2) The Participant incurred a Forfeiture Break in Service (as
defined in Section 5.08). This condition also applies if the
Participant makes repayment within the Plan Year in which he incurs the
Forfeiture Break in Service and that Forfeiture Break in Service would
result in a complete forfeiture of the amount the Advisory Committee
otherwise would restore.
(B) Time and Method of Restoration. If neither of the two conditions
preventing restoration of the Participant's Accrued Benefit applies, the
Advisory Committee will restore the Participant's Accrued Benefit as of the Plan
Year Accounting Date coincident with or immediately following the repayment. To
restore the Participant's Accrued Benefit, the advisory Committee, to the extent
necessary, will allocate to the Participant's Account:
(1) First, the amount, if any, of Participant forfeitures the
Advisory Committee would otherwise allocate under Section 3.05;
(2) Second, the amount, if any, of the Trust Fund net income or gain
for the Plan Year; and
(3) Third, the Employer contribution for the Plan Year to the extent
made under a discretionary formula.
In an addendum to its Adoption Agreement numbered 5.04(B), the Employer
may eliminate as a means of restoration any of the amounts described in clauses
(1), (2) and (3) or may change the order or priority of these amounts. To the
extent the amounts described in clauses (1), (2) and (3) are insufficient to
enable the Advisory Committee to make the required restoration, the Employer
must contribute, without regard to any requirement or condition of Section 3.01,
the additional amount necessary to enable the Advisory Committee to make the
required restoration. If, for a particular Plan Year, the Advisory Committee
must restore the Accrued Benefit of more than one re-employed Participant, then
the Advisory Committee will make the restoration allocations to each such
Participant's Account in the same proportion that a Participant's restored
amount for the Plan Year bears to the restored amount for the Plan Year of all
re-employed Participants.
<PAGE>
The Advisory Committee will not take into account any allocation under this
Section 5.04 in applying the limitation on allocations under Part 2 of Article
III.
(C) 0% Vested Participant. The Employer must specify in its
Adoption Agreement whether the deemed cash-out rule applies to a 0% vested
Participant. A 0% vested Participant is a Participant whose Accrued Benefit
derived from Employer contributions is entirely forfeitable at the time of his
Separation from Service. If the Participant's Account is not entitled to an
allocation of Employer contributions for the Plan Year in which he has a
Separation from Service, the Advisory Committee will apply the deemed cash-out
rule as if the 0% vested Participant received a cash-out distribution on the
date of the Participant's Separation from Service. If the Participant's Account
is entitled to an allocation of Employer contributions or Participant
forfeitures for the Plan Year in which he has a Separation from Service, the
Advisory Committee will apply the deemed cash-out rule as if the 0% vested
Participant received a cash-out distribution on the first day of the first Plan
Year beginning after his Separation from Service. For purposes of applying the
restoration provisions of this Section 5.04, the Advisory Committee will treat
the 0% vested Participant as repaying his cash-out "distribution" on the first
date of his re-employment with the Employer. If the deemed cash-out rule does
not apply to the Employer's Plan a 0% vested Participant will not incur a
forfeiture until he incurs a Forfeiture Break in Service.
5.05 SEGREGATED ACCOUNT FOR REPAID AMOUNT. Until the Advisory
Committee restores the Participant's Accrued Benefit, as described in
Section 5.04, the Trustee will invest the cash-out amount the Participant has
repaid in a segregated Account maintained solely for that Participant. The
Trustee must invest the amount in the Participant's segregated Account in
Federally insured interest bearing savings account(s) or time deposit(s) (or a
combination of both), or in other fixed income investments. Until commingled
with the balance of the Trust Fund on the date the Advisory Committee restores
the Participant's Accrued Benefit, the Participant's segregated Account remains
a part of the Trust, but it alone shares in any income it earns and it alone
bears any expense or loss it incurs. Unless the repayment qualifies as a
rollover contribution, the Advisory Committee will direct the Trustee to repay
to the Participant as soon as is administratively practicable the full amount of
the Participant's segregated Account if the Advisory Committee determines either
of the conditions of Section 5.04(A) prevents restoration as of the applicable
Accounting Date, notwithstanding the Participant's repayment.
5.06 YEAR OF SERVICE - VESTING. For purposes of vesting under
Section 5.03, Year of Service means any 12-consecutive month period
designated in the Employer's Adoption Agreement during which an Employee
completes not less than the number of Hours of Service (not exceeding 1,000)
specified in the Employer's Adoption Agreement. A Year of Service includes any
Year of Service earned prior to the Effective Date of the Plan, except as
provided in Section 5.08.
<PAGE>
5.07 BREAK IN SERVICE - VESTING. For purposes of this Article V, a
Participant incurs a "Break in Service" if during any vesting computation period
he does not complete more than 500 Hours of Service. If, pursuant to Section
5.06, the Plan does not require more than 500 Hours of Service to receive credit
for a Year of Service, a Participant incurs a Break in Service in a vesting
computation period in which he fails to complete a Year of Service.
5.08 INCLUDED YEARS OF SERVICE - VESTING. For purposes of determining
"Years of Service" under Section 5.06, the Plan takes into account all Years of
Service an Employee completes with the Employer except:
(a) For the sole purpose of determining a Participant's Non-
forfeitable percentage of his Accrued Benefit derived from Employer
contributions which accrued for his benefit prior to a Forfeiture Break
in Service, the Plan disregards any Year of Service after the
Participant first incurs a Forfeiture Break in Service. the Participant
incurs a Forfeiture Break in Service when he incurs 5 consecutive Breaks
in Service.
(b) The Plan disregards any Year of Service excluded under
the Employer's Adoption Agreement.
The Plan does not apply the Break in Service rule under Code
ss.411(a)(6)(B). Therefore, an Employee need not complete a Year of Service
after a Break in Service before the Plan takes into account the Employee's
otherwise includible Years of Service under this Article V.
5.09 FORFEITURE OCCURS. A Participant's forfeiture, if any, of his
Accrued Benefit derived from Employer contributions occurs under the Plan
on the earlier of:
(a) The last day of the vesting computation period in which the
Participant first incurs a Forfeiture Break in Service; or
(b) The date the Participant receives a cash-out distribution.
The Advisory Committee determines the percentage of a Participant's
Accrued Benefit forfeiture, if any, under this Section 5.09 solely by reference
to the vesting schedule of Section 5.03. A Participant does not forfeit any
portion of his Accrued Benefit for any other reason or cause except as expressly
provided by this Section 5.09 or as provided under Section 9.14.
<PAGE>
ARTICLE VI
TIME AND METHOD OF PAYMENT OF BENEFITS
6.01 TIME AND METHOD OF PAYMENT OF BENEFITS Unless, pursuant to
Section 6.03, the Participant or the Beneficiary elects in writing to a
different time or method of payment, the Advisory Committee will direct the
Trustee to commence distribution of a Participant's Nonforfeitable Accrued
Benefit in accordance with this Section 6.01. A Participant must consent, in
writing, to any distribution required under this Section 6.01 if the present
value of the Participant's Nonforfeitable Accrued Benefit, at the time of the
distribution to the Participant, exceeds $3,500 and the Participant has not
attained the later of Normal Retirement Age or age 62. Furthermore, the
Participant's spouse also must consent, in writing, to any distribution, for
which Section 6.04 requires the spouse's consent. For all purposes of this
Article VI, the term "annuity starting date" means the first day of the first
period for which the Plan pays an amount as an annuity or in any other form. A
distribution date under this Article VI, unless otherwise specified within the
Plan, is the date or dates the Employer specifies in the Adoption Agreement, or
as soon as administratively practicable following that distribution date. For
purposes of the consent requirements under this Article VI, if the present value
of the Participant's Nonforfeitable Accrued Benefit, at the time of any
distribution, exceeds $3,500, the Advisory Committee must treat that present
value as exceeding $3,500 for purposes of all subsequent Plan distributions to
the Participant.
(A) Separation from Service For a Reason Other Than Death.
(1) Participant's Nonforfeitable Accrued Benefit Not Exceeding
$3,500. If the Participant's Separation from Service is for nay reason
other than death, the Advisory Committee will direct the Trustee to distribute
the Participant's Nonforfeitable Accrued Benefit in a lump sum, on the
distribution date the Employer specifies in the Adoption Agreement, but in no
event later than the 60th day following the close of the Plan Year in which the
Participant attains Normal Retirement Age. If the Participant has attained
Normal Retirement Age at the time of his Separation from Service, the
distribution under this paragraph will occur no later than the 60th day
following the close of the Plan Year in which the Participant's Separation from
Service occurs.
(2) Participant's Nonforfeitable Accrued Benefit Exceeds $3,500.
If the Participant's Separation from Service is for any reason other than
death, the Advisory Committee will direct the Trustee to commence distribution
of the Participant's Nonforfeitable Accrued Benefit in a form and at the time
<PAGE>
elected by the Participant, pursuant to Section 6.03. In the absence of an
election by the Participant, the Advisory Committee will direct the Trustee to
distribute the Participant's Nonforfeitable Accrued Benefit in a lump sum (or,
if applicable, the normal annuity form of distribution required under Section
6.04), on the 60th day following the close of the Plan Year in which the latest
of the following events occurs: (a) the Participant attains Normal Retirement
Age; (b) the Participant attains age 62; or (c) the Participant's Separation
from Service.
(3) Disability. If the Participant's Separation from Service is
because of his disability, the Advisory Committee will direct the Trustee
to pay the Participant's Nonforfeitable Accrued Benefit in lump sum, on the
distribution date the Employer specifies in the Adoption Agreement, subject to
the notice and consent requirements of this Article VI and subject to the
applicable mandatory commencement dates described in Paragraphs (1) and (2).
(4) Hardship. Prior to the time at which the Participant may
receive distribution under Paragraphs (1), (2) or (3), the Participant may
request a distribution from his Nonforfeitable Accrued Benefit in an amount
necessary to satisfy a hardship, if the Employer elects in the Adoption
Agreement to permit hardship distributions. Unless the Employer elects otherwise
in the Adoption Agreement, a hardship distribution must be on account of any of
the following: (a) medical expenses; (b) the purchase (excluding mortgage
payments) of the Participant's principal residence; (c) post-secondary education
tuition, for the next semester or quarter, for the Participant or for the
Participant's spouse, children or dependents; (d) to prevent the eviction of the
Participant from his principal residence or the foreclosure on the mortgage of
the Participant's principal residence; (e) funeral expenses of the Participant's
family member; or (f) the Participant's disability. A partially-vested
Participant may not receive a hardship distribution described in this Paragraph
(A)(4) prior to incurring a Forfeiture Break in Service, unless the hardship
distribution is a cash-out distribution (as defined in Article V). The Advisory
Committee will direct the Trustee to make the hardship distribution as soon as
administratively practicable after the Participant makes a valid request for the
hardship distribution.
(B) Required Beginning Date. If any distribution commencement date
described under Paragraph (A) of this Section 6.01, either by Plan provision or
by Participant election (or nonelection), is later than the Participant's
Required Beginning Date, the Advisory Committee instead must direct the Trustee
to make distribution on the Participant's Required Beginning Date, subject to
the transitional election, if applicable, under Section 6.03(D). A Participant's
Required Beginning Date is the April 1 following the close of the calendar year
in which the Participant attains age 70 1/2. However, if the Participant, prior
<PAGE>
to incurring a Separation from Service, attained age 70 1/2 by January 1,
1988, and, for the five Plan Year period ending in the calendar year in which he
attained age 70 1/2 and for all subsequent years, the Participant was not a more
than 5% owner, the Required Beginning Date is the April 1 following the close of
the calendar year in which the Participant separates from Service or, if
earlier, the April 1 following the close of the calendar year in which the
Participant becomes a more than 5% owner. Furthermore, if a Participant who was
not a more than 5% owner attained age 70 1/2 during 1988 and did not incur a
Separation from Service prior to January 1, 1989, his Required Beginning Date is
April 1, 1990. A mandatory distribution at the Participant's Required Beginning
Date will be in lump sum (or, if applicable, the normal annuity form of
distribution required under Section 6.04) unless the Participant, pursuant to
the provisions of this Article VI, makes a valid election to receive an
alternative form of payment.
(C) Death of the Participant. The Advisory Committee will direct the
Trustee, in accordance with this Section 6.01(C), to distribute to the
Participant's Beneficiary the Participant's Non- forfeitable Accrued Benefit
remaining in the Trust at the time of the Participant's death. Subject tot he
requirements of Section 6.04, the Advisory Committee will determine the death
benefit by reducing the Participant's Nonforfeitable Accrued Benefit by any
security interest the Plan has against that Nonforfeitable Accrued Benefit by
reason of an outstanding Participant loan.
(1) Deceased Participant's Nonforfeitable Accrued Benefit Does Not
Exceed $3,500. The Advisory Committee, subject to the requirements of
Section 6.04, must direct the Trustee to distribute the deceased Participant's
Nonforfeitable Accrued Benefit in a single sum, as soon as administratively
practicable following the Participant's death or, if later, the date on which
the Advisory Committee receives notification of or otherwise confirms the
Participant's death.
(2) Deceased Participant's nonforfeitable Accrued Benefit Exceeds
$3,500. The Advisory Committee will direct the Trustee to distribute the
deceased Participant's Nonforfeitable Accrued Benefit at the time and in the
form elected by the Participant or, if applicable by the Beneficiary, as
permitted under this Article VI. In the absence of an election, subject to the
requirements of Section 6.04, the Advisory Committee will direct the Trustee to
distribute the Participant's undistributed Nonforfeitable Accrued Benefit in a
lump sum on the first distribution date following the close of the Plan Year in
which the Participant's death occurs or, if later, the first distribution date
following the date the Advisory Committee receives notification of or otherwise
confirms the Participant's death.
<PAGE>
If the death benefit is payable in full to the Participant's surviving
spouse, the surviving spouse, in addition to the distribution options provided
in this Section 6.01(C), may elect distribution at any time or in any form
(other than a joint and survivor annuity) this Article VI would permit for a
Participant.
6.02 METHOD OF PAYMENT OF ACCRUED BENEFIT. Subject to the annuity
distribution requirements, if any, prescribed by Section 6.04, and any
restrictions prescribed by Section 6.03, a Participant or Beneficiary may elect
distribution under one, or any combination, of the following methods: (a) by
payment in a lump sum; or (b) by payment in monthly, quarterly or annual
installments over a fixed reasonable period of time, not exceeding the life
expectancy of the Participant, or the joint life and last survivor expectancy of
the Participant and his Beneficiary. The Employer may elect in its Adoption
Agreement to modify the methods of payment available under this Section 6.02.
The distribution options permitted under this Section 6.02 are available
only if the present value of the Participant Nonforfeitable Accrued Benefit, at
the time of the distribution to the Participant, exceeds $3,500. To facilitate
installment payments under this Article VI, the Advisory Committee may direct
the Trustee to segregate all or any part of the Participant's Accrued Benefit in
a separate Account. The Trustee will invest the Participant's segregated Account
in Federally insured interest bearing savings account(s) or time deposit(s) (or
a combination of both), or in other fixed income investments. A segregated
Account remains a part of the Trust, but it alone shares in any income it earns,
and it alone bears any expense or loss it incurs. A Participant or Beneficiary
may elect to receive an installment distribution in the form of a
Nontransferable Annuity Contract. Under an installment distribution, the
Participant or beneficiary, at any time, may elect to accelerate the payment of
all, or any portion, of the Participant's unpaid Nonforfeitable Accrued Benefit,
subject to the requirements of Section 6.04.
(A) Minimum Distribution Requirements for Participants. The
Advisory Committee may not direct the Trustee to distribute the
Participant's Nonforfeitable Accrued Benefit, nor may the Participant elect to
have the Trustee distribute his Nonforfeitable Accrued Benefit, under a method
of payment which, as of the Required Beginning Date, does not satisfy the
minimum distribution requirements under Code ss.401(a)(9) and the applicable
Treasury regulations. The minimum distribution for a calendar year equals the
Participant's Nonforfeitable Accrued Benefit as of the latest valuation date
preceding the beginning of the calendar year divided by the Participant's life
expectancy or, if applicable, the joint and last survivor expectancy of the
Participant and his designated Beneficiary (as determined under Article VIII,
subject to the requirements of the Code ss.(a)(9) regulations). The Advisory
<PAGE>
Committee will increase the Participant's Nonforfeitable Accrued Benefit,
as determined on the relevant valuation date, for contributions or forfeitures
allocated after the valuation date and by December 31 of the valuation calendar
year, and will decrease the valuation by distributions made after the valuation
date and by December 31 of the valuation calendar year. For purposes of this
valuation, the Advisory Committee will treat any portion of the minimum
distribution for the first distribution calendar year made after the close of
that year as a distribution occurring in that first distribution calendar year.
In computing a minimum distribution, the Advisory Committee must use the unisex
life expectancy multiples under Treas. Reg. ss.1.72-0. The Advisory Committee,
only upon the Participant's written request, will compute the minimum
distribution for a calendar year subsequent to the first calendar year for which
the Plan requires a minimum distribution by redetermining the applicable life
expectancy. However, the Advisory Committee may not redetermine the joint life
and last survivor expectancy of the Participant and a nonspouse designated
Beneficiary in a manner which takes into account any adjustment to a life
expectancy other than the Participant's life expectancy.
If the Participant's spouse is not his designated Beneficiary, a method of
payment to the Participant (whether by Participant election or by Advisory
Committee direction) may not provide more than incidental benefits to the
Beneficiary. For Plan Years beginning after December 31, 1988, the Plan must
satisfy the minimum distribution incidental benefit ("MDIB") requirement in the
treasury regulations issued under Code ss.401(a)(9) for distributions made on or
after the Participant's Required Beginning Date and before the Participant's
death. To satisfy the MDIB requirement, the Advisory Committee will compute the
minimum distribution required by this Section 6.02(A) by substituting the
applicable MDIB divisor for the applicable life expectancy factor, if the MDIB
divisor is a lesser number. Following the Participant's death, the Advisory
Committee will compute the minimum distribution required by this Section 6.02(A)
solely on the basis of the applicable life expectancy factor and will disregard
the MDIB factor. For Plan Years beginning prior to January 1, 1989, the Plan
satisfies the incidental benefits requirement if the distributions to the
Participant satisfied the MDIB requirement or if the present value of the
retirement benefits payable solely to the Participant is greater than 50% of the
present value of the total benefits payable to the Participant and his
Beneficiaries. The Advisory Committee must determine whether benefits to the
Beneficiary are incidental as of the date the Trustee is to commence payment of
the retirement benefits to the Participant, or as of any date the Trustee
redetermines the payment period to the Participant.
<PAGE>
The minimum distribution for the first distribution calendar year is due by
the Participant's Required Beginning Date. The minimum distribution for each
subsequent distribution calendar year, including the calendar year in which the
Participant's Required Beginning Date occurs, is due to by December 31 of that
year. If the Participant receives distribution in the form of a Nontransferable
Annuity Contract, the distribution satisfies this Section 6.01(A) if the
contract complies with the requirements of Code ss.401(a)(9) and the applicable
Treasury regulations.
(B) Minimum Distribution Requirements for Beneficiaries. The
method of distribution to the Participant's Beneficiary must satisfy Code
ss.401(a)(9) and the applicable Treasury regulations. If the Participant's death
occurs after his Required Beginning Date of, if earlier, the date the
Participant commences an irrevocable annuity pursuant to Section 6.04, the
method of payment to the Beneficiary must provide for completion of payment over
a period which does not exceed the payment period which had commenced for the
Participant. If the Participant's death occurs prior to his Required Beginning
Date, and the Participant had not commenced an irrevocable annuity pursuant to
Section 6.04, the method of payment to the Beneficiary, subject to Section 6.04,
must provide for completion of payment to the Beneficiary over a period not
exceeding: (I) 5 years after the date of the Participant's death; or (ii) if the
Beneficiary is a designated Beneficiary, the designated Beneficiary's life
expectancy. The Advisory Committee may not direct payment of the Participant's
Nonforfeitable Accrued Benefit over a period described in clause (ii) unless the
Trustee will commence payment to the designated Beneficiary no later than the
December 31 following the close of the calendar year in which the Participant's
death occurred or, if later, and the designated Beneficiary is the Participant's
surviving spouse, December 31 of the calendar year in which the Participant
would have attained age 70 1/2. If the Trustee will make distribution in
accordance with clause (ii), the minimum distribution for a calendar year equals
the Participant's Nonforfeitable Accrued Benefit as of the latest valuation date
preceding the beginning of the calendar year divided by the designated
Beneficiary's life expectancy. The Advisory Committee must use the unisex life
expectancy multiples under Treas. Reg. ss.1.72-9 for purposes of applying this
paragraph. The Advisory Committee, only upon the written request of the
Participant or of the Participant's surviving spouse, will recalculate the life
expectancy of the Participant's surviving spouse not more frequently than
annually, but may not recalculate the life expectancy of a nonspouse designated
Beneficiary after the Trustee commences payment to the designated Beneficiary.
The Advisory Committee will apply this paragraph by treating any amount paid to
the Participant's child, which becomes payable to the Participant's surviving
spouse upon the child's attaining the age of majority, as paid to the
Participant's surviving spouse. Upon the beneficiary's written request, the
Advisory Committee must direct the Trustee to accelerate payment of all, or
any portion, of the Participant's unpaid Accrued Benefit, as soon as
administratively practical following the effective date of that request.
<PAGE>
6.03 BENEFIT PAYMENT ELECTIONS. Not earlier than 90 days, but not
later than 30 days, before the Participant's annuity starting date, the
advisory Committee must provide a benefit notice to a Participant who is
eligible to make an election under this Section 6.03. The benefit notice must
explain the optional forms of benefit in the Plan, including the material
features and relative values of those options, and the Participant's right to
defer distribution until he attains the later of Normal Retirement Age or age
62.
If a Participant or Beneficiary makes an election prescribed by this
Section 6.03, the Advisory Committee will direct the Trustee to distribute the
Participant's Nonforfeitable Accrued Benefit in accordance with that election.
Any election under this Section 6.03 is subject to the requirements of Section
6.02 and of Section 6.04. The Participant or Beneficiary must make an election
under this Section 6.03 by filing his election with the advisory Committee at
any time before the Trustee otherwise would commence to pay a Participant's
Accrued Benefit in accordance with the requirements of Article VI.
(A) Participant Elections After Separation from Service. If the present
value of a Participant's Nonforfeitable Accrued Benefit exceeds $3,500, he may
elect to have the Trustee commence distribution as of any distribution date
permitted under the Employer's Adoption Agreement Section 6.03. The Participant
may reconsider an election at any time prior to the annuity starting date and
elect to commence distribution as of any other distribution date permitted under
the Employer's Adoption Agreement Section 6.03. If the Participant is
partially-vested in his Accrued Benefit, an election under this Paragraph (A) to
distribute prior to the Participant's incurring a Forfeiture Break in Service
(as defined in Section 5.08), must be in the form of a cash-out distribution (as
defined in Article V). A Participant may not receive a cash-out distribution if,
prior to the time the Trustee actually makes the cash-out distribution, the
Participant returns to employment with the Employer. Following his attainment of
Normal Retirement Age, a Participant who has separated from Service may elect
distribution as of any distribution date, irrespective of the elections under
Adoption Agreement Section 6.03.
(B) Participant Elections Prior to Separation from Service. The Employer
must specify in its Adoption Agreement the distribution election rights, if any,
a Participant has prior to his Separation from Service. A Participant must make
an election under this Section 6.03(B) on a form prescribed by the Advisory
Committee at any time during the Plan Year for which his election is to be
effective. In his written election, the Participant must specify the percentage
<PAGE>
or dollar amount he wishes the Trustee to distribute to him. The
Participant's election relates solely to the percentage or dollar amount
specified in his election form and his right to elect to receive an amount, if
any, for a particular Plan Year greater than the dollar amount or percentage
specified in his election form terminates on the Accounting Date. The Trustee
must make a distribution to a Participant in accordance with his election under
this Section 6.03(B) within the 90 day period (or as soon as administratively
practicable) after the Participant files his written election with the Trustee.
The Trustee will distribute the balance of the Participant's Accrued Benefit not
distributed pursuant to his election(s) in accordance with the other
distribution provisions of this Plan.
(C) Death Benefit Elections. If the present value of the
deceased Participant's Nonforfeiture Accrued Benefit exceeds $3,500, the
Participant's Beneficiary may elect to have the Trustee distribute the
Participant's Nonforfeitable Accrued Benefit in a form and within a period
permitted under Section 6.02. The Beneficiary's election is subject to any
restrictions designated in writing by the Participant and not revoked as of his
date of death.
(D) Transitional Elections. Notwithstanding the provisions of
Sections 6.01 and 6.02, if the Participant (or Beneficiary) signed a
written distribution designation prior to January 1, 1984, the Advisory
Committee must distribute the Participant's Nonforfeitable Accrued Benefit in
accordance with that designation, subject however, to the survivor requirements,
if applicable, of Sections 6.04, 6.05 and 6.06. This Section 6.03(D) does not
apply to a pre-1984 distribution designation, and the Advisory Committee will
not comply with that designation, if any of the following applies: (1) the
method of distribution would have disqualified the Plan under Code ss.401(a)(9)
as in effect on December 31, 1983; (2) the Participant did not have an Accrued
Benefit as of December 31, 1983; (3) the distribution designation does not
specify the timing and form of the distribution and the death Beneficiaries (in
order of priority); (4) the substitution of a Beneficiary modifies the payment
period of the distribution; or, (5) the Participant (or Beneficiary) modifies or
revokes the distribution designation. In the event of a revocation, the Plan
must distribute, no later than December 31 of the calendar year following the
year of revocation, the amount which the Participant would have received under
Section 6.02(A) if the distribution designation had not been in effect or, if
the Beneficiary revokes the distribution designation, the amount which the
Beneficiary would have received under Section 6.02(B) if the distribution
designation had not been in effect. The Advisory Committee will apply this
Section 6.03(D) to rollovers and transfers in accordance with Part J of the Code
ss.401(a)(9) Treasury regulations.
<PAGE>
6.04 ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES.
(a) Joint and Survivor Annuity. The Advisory Committee must direct
the Trustee to distribute a married or unmarried Participant's
Nonforfeitable Accrued Benefit in the form of a qualified joint and survivor
annuity, unless the Participant makes a valid waiver election (described in
Section 6.05) within the 90 day period ending on the annuity starting date. If,
as of the annuity starting date, the Participant is married, a qualified joint
and survivor annuity is an immediate annuity which is purchasable with the
Participant's Nonforfeitable Accrued Benefit and which provides a life annuity
for the Participant and a survivor annuity payable for the remaining life of the
Participant's surviving spouse equal to 50% of the amount of the annuity payable
during the life of the Participant. If, as of the annuity starting date, the
Participant is not married, a qualified joint and survivor annuity is an
immediate life annuity for the Participant which is purchasable with the
Participant's Nonforfeitable Accrued Benefit. On or before the annuity starting
date, the Advisory Committee, without Participant or spousal consent, must
direct the Trustee to pay the Participant's Nonforfeitable Accrued Benefit in a
lump sum, in lieu of a qualified joint and survivor annuity, in accordance with
Section 6.01, if the Participant's Nonforfeitable Accrued Benefit is not grater
than $3,500. This Section 6.04(A) applies only to a Participant who has
completed at least one Hour of Service with the Employer after August 22, 1984.
(B) Preretirement Survivor Annuity. If a married Participant dies
prior to his annuity starting date, the Advisory Committee will direct the
Trustee to distribute a portion of the Participant's Nonforfeitable Accrued
Benefit to the Participant's surviving spouse in the form of a preretirement
survivor annuity, unless the Participant has a valid waiver election (as
described in Section 6.06) in effect, or unless the Participant and his spouse
were not married throughout the one year period ending on the date of his death.
A preretirement survivor annuity is an annuity which is purchasable with 50% of
the Participant's Nonforfeitable Accrued Benefit (determined as of the date of
the Participant's death) and which is payable for the life of the Participant's
surviving spouse. The value of the preretirement survivor annuity is
attributable to Employer contributions and to Employee contributions in the same
proportion as the Participant's Nonforfeitable Accrued Benefit is attributable
to those contributions. The portion of the Participant's Nonforfeitable Accrued
Benefit not payable under this paragraph is payable to the Participant's
Beneficiary, in accordance with the other provisions of this Article VI. If the
present value of the preretirement survivor annuity does not exceed $3,500, the
Advisory Committee, on or before the annuity starting date, must direct the
Trustee to make a lump sum distribution to the Participant's surviving spouse,
in lieu of a preretirement survivor annuity. This Section 6.04(B) applies only
<PAGE>
to a Participant who dies after August 22, 1984, and either (I) completes
at least one Hour of Service with the Employer after August 22, 1984, or (ii)
separated from Service with at least 10 Years of Service (as defined in Section
5.06) and completed at least one Hour of Service with the Employer in a Plan
Year beginning after December 31, 1975.
(C) Surviving Spouse Elections. If the present value of the
preretirement survivor annuity exceeds $3,500, the Participant's surviving
spouse may elect to have the Trustee commence payment of the preretirement
survivor annuity at any time following the date of the Participant's death, but
not later than the mandatory distribution periods described in Section 6.02, and
may elect any of the forms of payment described in Section 6.02, in lieu of the
preretirement survivor annuity. In the absence of an election by the surviving
spouse, the Advisory Committee must direct the Trustee to distribute the
preretirement survivor annuity on the first distribution date following the
close of the Plan Year in which the latest of the following events occurs: (I)
the Participant's death; (ii) the date the Advisory Committee receives
notification of or otherwise confirms the Participant's death; (iii) the date
the Participant would have attained Normal Retirement Age; or (iv) the date the
Participant would have attained age 62.
(D) Special Rules. If the Participant has in effect a valid
waiver election regarding the qualified joint and survivor annuity or the
preretirement survivor annuity, the Advisory Committee must direct the Trustee
to distribute the Participant's Nonforfeitable Accrued Benefit in accordance
with Sections 6.01, 6.02 and 6.03. The Advisory Committee will reduce the
Participant's Nonforfeitable Accrued Benefit by any security interest (pursuant
to any offset rights authorized by Section 10.03[E]) held by the Plan by reason
of a Participant loan to determine the value of the Participant's Nonforfeitable
Accrued Benefit distributable in the form of a qualified joint and survivor
annuity or preretirement survivor annuity, provided any post-August 18, 1985,
loan satisfied the spousal consent requirement described in Section 10.03[E] of
the Plan. For purposes of applying this Article VI, the Advisory Committee
treats a former spouse as the Participant's spouse or surviving spouse to the
extent provided under a qualified domestic relations order described in Section
6.07. The provisions of this Section 6.04, and of Sections 6.05 and 6.06, apply
separately to the portion of the Participant's Nonforfeitable Accrued Benefit
subject to the qualified domestic relations order and to the portion of the
Participant's Nonforfeitable Accrued Benefit not subject to that order.
(E) Profit Sharing Plan Election. If this Plan is a profit sharing
plan, the Employer must elect the extent to which the preceding provisions
of Section 6.04 apply. If the Employer elects to apply this Section 6.04 only to
<PAGE>
a Participant described in this Section 6.04(E), the preceding provisions of
this Section 6.04 apply only to the following Participants: (1) a Participant as
respects whom the Plan is a direct or indirect transferee from a plan subject to
the Code ss.417 requirements and the Plan received the transfer after December
31, 1984, unless the transfer is an elective transfer described in Section
13.06; (2) a Participant who elects a life annuity distribution (if Section 6.02
or Section 13.02 of the plan requires the Plan to provide a life annuity
distribution option); and (3) a Participant whose benefits under a defined
benefit plan maintained by the Employer are offset by benefits provided under
this Plan. If the Employer elects to apply this Section 6.04 to all
Participants, the preceding provisions of this Section 6.04 apply to all
Participants described in the first two paragraphs of this Section 6.04, without
regard to the limitations of this Section 6.04(E). Sections 6.05 and 6.06 only
apply to Participants to whom the preceding provisions of this Section 6.04
apply.
6.05 WAIVER ELECTION - QUALIFIED JOINT AND SURVIVOR ANNUITY. Not
earlier than 90 days, but not later than 30 days, before the Participant's
annuity starting date, the Advisory Committee must provide the Participant a
written explanation of the terms and conditions of the qualified joint and
survivor annuity, the Participant's right to make, and the effect of, an
election to waive the joint and survivor form of benefit, the rights of the
Participant's spouse regarding the waiver election and the Participant's right
to make, and the effect of, a revocation of a waiver election. The Plan does not
limit the number of times the Participant may revoke a waiver of the qualified
joint and survivor annuity or make a new waiver during the election period.
A married Participant's waiver election is not valid unless (a) the
Participant's spouse (to whom the survivor annuity is payable under the
qualified joint and survivor annuity), after the Participant has received the
written explanation described in this Section 6.05, has consented in writing to
the waiver election, the spouse's consent acknowledges the effect of the
election, and a notary public or the Plan Administrator (or his representative)
witnesses the spouse's consent, (b)the spouse consents to the alternate form of
payment designated by the Participant or to any change in that designated form
of payment, and (c) unless the spouse is the Participant's sole primary
Beneficiary, the spouse consents to the Participant's Beneficiary designation or
to any change in the Participant's Beneficiary designation. The spouse's consent
to a waiver of the qualified joint and survivor annuity is irrevocable, unless
the Participant revokes the waiver election. The spouse may execute a blanket
consent to any form of payment designation or to any Beneficiary designation
made by the Participant, if the spouse acknowledges the right to limit that
<PAGE>
consent to a specific designation but, in writing, waives that right. The
consent requirements of this Section 6.05 apply to a former spouse of the
Participant, to the extent required under a qualified domestic relations order
described in Section 6.07.
The Advisory Committee will accept as valid a waiver election which does
not satisfy the spousal consent requirements if the Advisory Committee
establishes the Participant does not have a spouse, the Advisory Committee is
not able to locate the Participant's spouse, the Participant is legally
separated or has been abandoned (within the meaning of State law) and the
Participant has a court order to that effect, or other circumstances exist under
which the Secretary of the Treasury will excuse the consent requirement. If the
Participant's spouse is legally incompetent to give consent, the spouse's legal
guardian (even if the guardian is the Participant) may give consent.
6.06 WAIVER ELECTION - PRERETIREMENT SURVIVOR ANNUITY. The
Advisory Committee must provide a written explanation of the preretirement
survivor annuity to each married Participant, within the following period which
ends last: (1) the period beginning on the first day of the Plan Year in which
the Participant attains age 32 and ending on the last day of the Plan Year in
which the Participant attains age 34; (2) a reasonable period after an Employee
becomes a Participant; (3) a reasonable period after the joint and survivor
rules become applicable to the Participant; or (4) a reasonable period after a
fully subsidized preretirement survivor annuity no longer satisfies the
requirements for a fully subsidized benefit. A reasonable period described in
clauses (2), (3) and (4) is the period beginning one year before and ending one
year after the applicable event. If the Participant separates from Service
before attaining age 35, clauses (1), (2), (3) and (4) do not apply and the
Advisory Committee must provide the written explanation within the period
beginning one year before and ending one year after the Separation from Service.
The written explanation must describe, in a manner consistent with Treasury
regulations, the terms and conditions of the preretirement survivor annuity
required under Section 6.05. The Plan does not limit the number of times the
Participant may revoke a waiver of the preretirement survivor annuity or make a
new waiver during the election period.
A Participant's waiver election of the preretirement survivor annuity is
not valid unless (a) the Participant makes the waiver election no earlier than
the first day of the Plan Year in which he attains age 35 and (b) the
Participant's spouse (to whom the preretirement survivor annuity is payable)
satisfies the consent requirements described in Section 6.05, except the spouse
need not consent to the form of benefit payable to the designated Beneficiary.
The spouse's consent to the waiver of the preretirement survivor annuity is
irrevocable, unless the Participant revokes the waiver election. Irrespective of
the time of election requirement described in clause (a), if the Participant
<PAGE>
separates from Service prior to the first day of the Plan Year in which he
attains age 35, the Advisory Committee will accept a waiver election as respects
the Participant's Accrued Benefit attributable to his Service prior to his
Separation from Service. Furthermore, if a Participant who has not separated
from Service makes a valid waiver election, except for the timing requirement of
clause (a), the Advisory Committee will accept that election as valid, but only
until the first day of the Plan Year in which the Participant attains age 35. A
waiver election described in this paragraph is not valid unless made after the
Participant has received the written explanation described in this Section 6.06.
6.07 DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS. Nothing
contained in this Plan prevents the Trustee, in accordance with the
direction of the Advisory Committee, from complying with the provisions of a
qualified domestic relations order (as defined in Code ss.414(0)). This Plan
specifically permits distribution to an alternate payee under a qualified
domestic relations order at any time, irrespective of whether the Participant
has attained his earliest retirement age (as defined under Code ss.414(p)) under
the Plan. A distribution to an alternate payee prior to the Participant's
attainment of earliest retirement age is available only if: (1) the order
specifies distribution at that time or permits an agreement between the Plan and
the alternate payee to authorize an earlier distribution; and (2) if the present
value of the alternate payee's benefits under the Plan exceeds $3,5000, and the
order requires, the alternate payee consents to any distribution occurring prior
to the Participant's attainment of earliest retirement age. The Employer, in an
addendum to its Adoption Agreement numbered 6.07, may elect to limit
distribution to an alternate payee only when the Participant has attained his
earliest retirement age under the Plan. Nothing in this Section 6.07 gives a
Participant a right to receive distribution at a time otherwise not permitted
under the Plan nor does it permit the alternate payee to receive a form of
payment not otherwise permitted under the Plan.
The Advisory Committee must establish reasonable procedures to determine
the qualified status of a domestic relations order. Upon receiving a domestic
relations order, the Advisory Committee promptly will notify the Participant and
any alternate payee named in the order, in writing, of the receipt of the order
and the plan's procedures for determining the qualified status of the order.
Within a reasonable period of time after receiving the domestic relations order,
the Advisory Committee must determine the qualified status of the order and must
notify the Participant and each alternate payee, in writing, of its
determination. The Advisory Committee must provide notice under this paragraph
by mailing to the individual's address specified in the domestic relations
order, or in a manner consistent with Department of Labor regulations.
<PAGE>
If any portion of the Participant's Nonforfeitable Accrued Benefit is
payable during he period the Advisory Committee is making its determination of
the qualified status of the domestic relations order, the Advisory Committee
must make a separate accounting of the amounts payable. If the Advisory
Committee determines the order is a qualified domestic relations order within 18
months of the date amounts first are payable following receipt of the order, the
Advisory Committee will direct the Trustee to distribute the payable amounts in
accordance with the order. If the Advisory Committee does not make its
determination of the qualified status of the order within the 18-month
determination period, the Advisory Committee will direct the Trustee to
distribute the payable amounts in the manner the Plan would distribute if the
order did not exist and will apply the order prospectively if the Advisory
Committee later determines the order is a qualified domestic relations order.
To the extent it is not inconsistent with the provisions of the qualified
domestic relations order, the advisory Committee may direct the Trustee to
invest any partitioned amount in a segregated subaccount or separate account and
to invest the account in Federally insured, interest-bearing savings account(s)
or time deposit(s) (or a combination of both), or in other fixed income
investments. A segregated subaccount remains a part of the Trust, but it alone
shares in any income it earns, and it alone bears any expense or loss it incurs.
The Trustee will make any payments or distributions required under this Section
6.07 by separate benefit checks or other separate distribution to the alternate
payee(s).
ARTICLE VII
EMPLOYER ADMINISTRATIVE PROVISIONS
7.01 INFORMATION TO COMMITTEE. The Employer must supply
current information to the Advisory Committee a to the name, date of birth,
date of employment, annual compensation, leaves of absence, Years of Service and
date of termination of employment of each Employee who is, or who will be
eligible to become, a Participant under the Plan, together with any other
information which the Advisory Committee considers necessary. The Employer's
records as to the current information the Employer furnishes to the Advisory
Committee are conclusive as to all persons.
7.02 NO LIABILITY. The Employer assumes no obligation or
responsibility to any of its Employees, Participants or Beneficiaries for
any act of, or failure to act, on the part of its Advisory Committee (unless the
Employer is the Advisory Committee), the Trustee, the Custodian, if any, or the
Plan Administrator (unless the Employer is the Plan Administrator).
<PAGE>
7.03 INDEMNITY OF CERTAIN FIDUCIARIES. The Employer indemnifies and
saves harmless the Plan Administrator and the members of the Advisory
Committee, and each of them, from and against any and all loss resulting from
liability to which the Plan Administrator and the Advisory Committee, or the
members of the Advisory Committee, may be subjected by reason of any act or
conduct (except willful misconduct or gross negligence) in their official
capacities in the administration of this Trust or Plan or both, including all
expenses reasonably incurred in their defense, in case the Employer fails to
provide such defense. The indemnification provisions of this Section 7.03 do not
relieve the Plan Administrator or any Advisory committee member from any
liability he may have under ERISA for breach of a fiduciary duty. Furthermore,
the Plan Administrator and the Advisory Committee members and the Employer may
execute a letter agreement further delineating the indemnification agreement of
this Section 7.03, provided the letter agreement must be consistent with and
does not violate ERISA. The indemnification provisions of this Section 7.03
extend to the Trustee (or to a Custodian, if any) solely to the extent provided
by a letter agreement executed by the Trustee (or Custodian) and the Employer.
7.04 EMPLOYER DIRECTION OF INVESTMENT. The Employer has the right
to direct the Trustee with respect to the investment and re- investment of
assets comprising the Trust Fund only if the Trustee consents in writing to
permit such direction. If the Trustee consents to Employer direction of
investment, the Trustee and the Employer must execute a letter agreement as a
part of this Plan containing such conditions, limitations and other provisions
they deem appropriate before the Trustee will follow any Employer direction as
respects the investment or re-investment of any part of the Trust Fund.
7.05 AMENDMENT TO VESTING SCHEDULE. Though the Employer reserves the
right to amend the vesting schedule at any time, the Advisory Committee
will not apply the amended vesting schedule to reduce the Nonforfeitable
percentage of any Participant's Accrued Benefit derived from Employer
contributions (determined as of the later of the date the Employer adopts the
amendment, or the date the amendment becomes effective) to a percentage less
than the Nonforfeitable percentage computed under the plan without regard to the
amendment. An amended vesting schedule will apply to a Participant only if the
Participant receives credit for at least one Hour of Service after the new
schedule becomes effective.
If the Employer makes a permissible amendment to the vesting schedule,
each Participant having at least 3 Years of Service with the Employer may elect
to have the percentage of his Nonforfeitable Accrued Benefit computed under the
Plan without regard to the amendment. For Plan Years beginning prior to January
1, 1989, the election described in the preceding sentence applies only to
Participants having at least 5 Years of Service with the Employer. The
<PAGE>
Participant must file his election with the Advisory Committee within 60
days of the latest of (a) the Employer's adoption of the amendment; (b) the
effective date of the amendment; or (c) his receipt of a copy of the amendment.
The Advisory Committee, as soon as practicable, must forward a true copy of any
amendment to the vesting schedule to each affected Participant, together with an
explanation of the effect of the amendment, the appropriate form upon which the
Participant may make an election to remain under the vesting schedule provided
under the Plan prior to the amendment and notice of the time within which the
Participant must make an election to remain under the prior vesting schedule.
The election described in this Section 7.05 does not apply to a Participant if
the amended vesting schedule provides for vesting at least as rapid at all times
as the vesting schedule in effect prior to the amendment. For purposes of this
Section 7.05, an amendment to the vesting schedule includes any Plan amendment
which directly or indirectly affects the computation of the Nonforfeitable
percentage of an Employee's rights to his Employer derived Accrued Benefit.
Furthermore, the Advisory Committee must treat any shift in the vesting
schedule, due to a change in the Plan's top heavy status, as an amendment to the
vesting schedule for purposes of this Section 7.05.
ARTICLE VIII
PARTICIPANT ADMINISTRATIVE PROVISIONS
8.01 BENEFICIARY DESIGNATION. Any Participant may from time to
time designate, in writing, any person or persons, contingently or
successively, to whom the Trustee will pay his Nonforfeitable Accrued Benefit
(including any life insurance proceeds payable to the Participant's Account) in
the event of his death and the Participant may designate the form and method of
payment. The Advisory Committee will prescribe the form for the written
designation of Beneficiary and, upon the Participant's filing the form with the
Advisory Committee, the form effectively revokes all designations filed prior to
that date by the same Participant.
(A) Coordination with survivor requirements. If the joint and
survivor requirements of Article VI apply to the Participant, this Section
8.01 does not impose any special spousal consent requirements on the
Participant's Beneficiary designation. However, in the absence of spousal
consent (as required by Article VI) to the Participant's Beneficiary
designation: (1) any waiver of the joint and survivor annuity or of the
preretirement survivor annuity is not valid; and (2) if the Participant dies
prior to his annuity starting date, the Participant's Beneficiary designation
will apply only to the portion of the death benefit which is not payable as a
preretirement survivor annuity. Regarding clause (2), if the Participant's
surviving spouse is a primary Beneficiary under the Participant's Beneficiary
designation, the Trustee will satisfy the spouse's interest in the Participant's
death benefit first from the portion which is payable as a preretirement
survivor annuity.
<PAGE>
(B) Profit sharing plan exception. If the Plan is a profit sharing
plan, the Beneficiary designation of a married Exempt Participant is not
valid unless the Participant's spouse consents (in a manner described in Section
6.05) to the Beneficiary designation. An "Exempt Participant" is a Participant
who is not subject to the joint and survivor requirements of Article VI. The
spousal consent requirement in this paragraph does not apply if the Exempt
Participant and his spouse are not married throughout the one year period ending
on the date of the Participant's death, or if the Participant's spouse is the
Participant's sole primary Beneficiary.
8.02 NO BENEFICIARY DESIGNATION/DEATH OF BENEFICIARY. If a
Participant fails to name a Beneficiary in accordance with Section 8.01, or
if the Beneficiary named by a Participant predeceases him, then the Trustee will
pay the Participant's Nonforfeitable Accrued Benefit in accordance with Section
6.02 in the following order of priority, unless the Employer specifies a
different order to priority in an addendum to its Adoption Agreement, to:
(a) The Participant's surviving spouse;
(b) The Participant's surviving children, including
adopted children, in equal shares;
(c) The Participant's surviving parents, in equal shares;
or
(d) The Participant's estate.
If the Beneficiary does not predecease the Participant, but dies prior to
distribution of the Participant's entire Nonforfeitable Accrued Benefit, the
Trustee will pay the remaining Nonforfeitable Accrued Benefit to the
Beneficiary's estate unless the Participant's Beneficiary designation provides
otherwise or unless the Employer provides otherwise in its Adoption Agreement.
If the Plan is a profit sharing plan, an the Plan includes Exempt Participants,
the Employer may not specify a different order of priority in the Adoption
Agreement unless the Participant's surviving spouse will be first in the
different order of priority. The Advisory Committee will direct the Trustee as
to the method and to whom the trustee will make payment under this Section 8.02.
8.03 PERSONAL DATA TO COMMITTEE. Each Participant and each Beneficiary
of a deceased Participant must furnish to the Advisory Committee such
evidence, data or information as the Advisory Committee considers necessary or
desirable for the purpose of administering the Plan. The provisions of this Plan
are effective for the benefit of each Participant upon the condition precedent
that each Participant will furnish promptly full, true and complete evidence,
data and information when requested by the Advisory Committee, provided the
Advisory Committee advises each Participant of the effect of his failure to
comply with its request.
<PAGE>
8.04 ADDRESS FOR NOTIFICATION. Each Participant and each Beneficiary
of a deceased Participant must file with the Advisory Committee from time
to time, in writing, his post office address and any change of post office
address. Any communication, statement or notice addressed to a Participant, or
Beneficiary, at his last post office address filed with the Advisory Committee,
or as shown on the records of the Employer, binds the Participant, or
Beneficiary, for all purposes of this Plan.
8.05 ASSIGNMENT OR ALIENATION. Subject to Code ss.414(p) relating to
qualified domestic relations orders, neither a Participant nor a Beneficiary may
anticipate, assign or alienate (either at law or in equity) any benefit provided
under the Plan, and the Trustee will not recognize any such anticipation,
assignment or alienation. Furthermore, a benefit under the Plan is not subject
to attachment, garnishment, levy, execution or other legal or equitable process.
8.06 NOTICE OF CHANGE IN TERMS. The Plan Administrator, within the
time prescribed by ERISA and the applicable regulations, must furnish all
Participants and Beneficiaries a summary description of any material amendment
to the Plan or notice of discontinuance of the Plan and all other information
required by ERISA to be furnished without charge.
8.07 LITIGATION AGAINST THE TRUST. A court of competent jurisdiction
may authorize any appropriate equitable relief to redress violations of
ERISA or to enforce any provisions of ERISA or the terms of the Plan. A
fiduciary may receive reimbursement of expenses properly and actually incurred
in the performance of his duties with the Plan.
8.08 INFORMATION AVAILABLE. Any Participant in the Plan or any
Beneficiary may examine copies of the Plan description, latest annual
report, any bargaining agreement, this Plan and Trust, contract or any other
instrument under which the Plan was established or is operated. The Plan
Administrator will maintain all of the items listed in this Section 8.08 in his
office, or in such other place or places as he may designate from time to time
in order to comply with the regulations issued under ERISA, for examination
during reasonable business hours. Upon the written request of a Participant or
Beneficiary the Plan Administrator must furnish him with a copy of any item
listed in this Section 8.08. The Plan Administrator may make a reasonable charge
to the requesting person for the copy so furnished.
<PAGE>
8.09 APPEAL PROCEDURE FOR DENIAL OF BENEFITS. A Participant
or a Beneficiary ("Claimant") may file with the Advisory Committee a
written claim for benefits, if the Participant or Beneficiary determines the
distribution procedures of the Plan have not provided him his proper
Nonforfeitable Accrued Benefit. The Advisory Committee must render a decision on
the claim within 60 days of the Claimant's written claim for benefits. The Plan
Administrator must provide adequate notice in writing to the Claimant whose
claim for benefits under the Plan the advisory Committee has denied. The Plan
Administrator's notice to the Claimant must set forth:
(a) The specific reason for the denial;
(b) Specific references to pertinent Plan provision on which the
Advisory Committee based its denial;
(c) A description of any additional material and information needed
for the Claimant to perfect his claim and an explanation of why the
material or information is needed; and
(d) That any appeal the Claimant wishes to make of the adverse
determination must be in writing to the Advisory Committee within 75 days
after receipt of the Plan Administrator's notice of denial of benefits,
The Plan Administrator's notice must further advise the Claimant that his
failure to appeal the action to the Advisory Committee in writing within
the 75-day period will render the Advisory Committee's determination
final, binding and conclusive.
If the Claimant should appeal to the Advisory Committee, he, or his duly
authorized representative, may submit, in writing, whatever issues and comments
he, or his duly authorized representative, feels are pertinent. The Claimant, or
his duly authorized representative, may review pertinent Plan documents. The
Advisory Committee will re-examine all facts related to the appeal and make a
final determination as to whether the denial of benefits is justified under the
circumstances. The Advisory Committee must advise the claimant of its decision
within 60 days of the Claimant's written request for review, unless special
circumstances (such as a hearing) would make the rendering of a decision within
the 60-day limit unfeasible, but in no event may the Advisory Committee render a
decision respecting a denial for a claim for benefits later than 120 days after
its receipt of a request for review.
The Plan Administrator's notice of denial of benefits must identify the
name of each member of the Advisory Committee and the name and address of the
Advisory Committee member to whom the Claimant may forward his appeal.
<PAGE>
8.10 PARTICIPANT DIRECTION OF INVESTMENT. A Participant has the
right to direct the Trustee with respect to the investment or re-investment
of the assets comprising the Participant's individual Account only if the
Trustee consents in writing to permit such direction. If the Trustee consents to
Participant direction of investment, the Trustee will accept direction from each
Participant on a written election form (or other written agreement), as a part
of this Plan, containing such conditions, limitations and other provisions the
parties deem appropriate. The Trustee or, with the Trustee's consent, the
Advisory Committee, may establish written procedures, incorporated specifically
as part of this Plan, relating to Participant direction of investment under this
Section 8.10. The Trustee will maintain a segregated investment Account to the
extent a Participant's Account is subject to Participant self- direction. The
Trustee is not liable for any loss, nor is the Trustee liable for any breach,
resulting from a Participant's direction of the investment of any part of his
directed Account.
The Advisory Committee, to the extent provided in a written loan policy
adopted under Section 9.04, will treat a loan made to a Participant as a
Participant direction of investment under this Section 8.10. To the extent of
the loan outstanding at any time, the borrowing Participant's Account alone
shares in any interest paid on the loan, and it alone bears any expense or loss
it incurs in connection with the loan. The Trustee may retain any principal or
interest paid on the borrowing Participant's loan in an interest bearing
segregated Account on behalf of the borrowing Participant until the Trustee (or
the Named Fiduciary, in the case of a nondiscretionary Trustee) deems it
appropriate to add the amount paid to the Participant's separate Account under
the Plan.
If the Trustee consents to Participant direction of investment of his
Account, the Plan treats any post-December 31, 1981, investment by a
Participant's directed Account in collectibles (as defined by Code ss.408(m)) as
a deemed distribution to the Participant for Federal income tax purposes.
ARTICLE IX
ADVISORY COMMITTEE -
DUTIES WITH RESPECT TO
PARTICIPANTS' ACCOUNTS
9.01 MEMBERS' COMPENSATION, EXPENSES. The Employer must appoint
an Advisory Committee to administer the Plan, the members of which may or
may not be Participants in the Plan, or which may be the Plan Administrator
acting alone. In the absence of an Advisory Committee appointment, the Plan
Administrator assumes the powers, duties and responsibilities of the Advisory
Committee. The members of the Advisory Committee will serve without compensation
for services as such, but the Employer will pay all expenses of the Advisory
Committee, except to the extent the Trust properly pays for such expenses,
pursuant to Article X.
<PAGE>
9.02 TERM. Each member of the Advisory Committee serves until the
appointment of his successor.
9.03 POWERS. In case of a vacancy in the membership of the Advisory
Committee, the remaining members of the Advisory Committee may exercise any and
all of the powers, authority, duties and discretion conferred upon the Advisory
Committee pending the filling of the vacancy.
9.04 GENERAL. The Advisory Committee has the following
powers and duties:
(a) To select a Secretary, who need not be a member of the
Advisory Committee;
(b) To determine the rights of eligibility of an Employee to
participate in the Plan, the value of a Participant's Accrued Benefit
and the Nonforfeitable percentage of each Participant's Accrued Benefit;
(c) To adopt rules of procedure and regulations necessary for the
proper and efficient administration of the Plan provided the rules are not
inconsistent with the terms of this Agreement;
(d) To construe and enforce the terms of the Plan and the
rules and regulations it adopts, including interpretation of
the Plan documents and documents related to the Plan's
operation;
(e) To direct the trustee as respects the crediting and distribution
of the Trust;
(f) To review and render decisions respecting a claim for (or denial
of a claim for) a benefit under the Plan;
(g) To furnish the Employer with information which the Employer may
require for tax or other purposes;
(h) To engage the service of agents whom it may deem advisable to
assist it with the performance of its duties;
(i) To engage the services of an Investment Manager or Managers (as
defined in ERISA ss.3(38)), each of whom will have full power and
authority to manage, acquire or dispose (or direct the Trustee with
respect to acquisition or disposition) of any Plan asset under its
control;
(j) To establish, in its sole discretion, a nondiscriminatory
policy (see Section 9.04(A)) which the Trustee must observe in making
loans if any, to Participants and Beneficiaries; and
<PAGE>
(k) To establish and maintain a funding standard account and to make
credits and charges to the account to the extent required by and in
accordance with the provisions of the Code.
The Advisory Committee must exercise all of its powers, duties and
discretion under the Plan in a uniform and nondiscriminatory manner.
(A) Loan policy. If the Advisory Committee adopts a loan policy,
pursuant to paragraph (j), the loan policy must be a written document and
must include: (1) the identity of the person or positions authorized to
administer the participant loan program; (2) a procedure for applying for the
loan; (3) the criteria for approving or denying a loan; (4) the limitations, if
any, on the types and amounts of loans available; (5) the procedure for
determining a reasonable rate of interest; (6) the types of collateral which may
secure the loan; and (7) the events constituting default and the steps the Plan
will take to preserve plan assets in the event of default. This Section 9.04
specifically incorporates a written loan policy as part of the Employer's Plan.
9.05 FUNDING POLICY. The Advisory Committee will review, not less
often than annually, all pertinent Employee information and Plan data in order
to establish the funding policy of the Plan and to determine the appropriate
methods of carrying out the Plan's objectives. The Advisory Committee must
communicate periodically, as it deems appropriate, to the Trustee and to any
Plan Investment Manager the Plan's short-term and long-term financial needs so
investment policy can be coordinated with Plan financial requirements.
9.06 MANNER OF ACTION. The decision of a majority of the members
appointed and qualified controls.
9.07 AUTHORIZED REPRESENTATIVE. The Advisory Committee may authorize
any one of its members, or its Secretary, to sign on its behalf any notices,
directions, applications, certificates, consents, approvals, waivers, letters or
other documents. The Advisory Committee must evidence this authority by an
instrument signed by all members and filed with the Trustee.
9.08 INTERESTED MEMBER. No member of the Advisory Committee may
decide or determine any matter concerning the distribution, nature or
method of settlement of his own benefits under the Plan, except in exercising an
election available to that member in his capacity as a Participant, unless the
Plan Administrator is acting alone in the capacity of the Advisory Committee.
<PAGE>
9.09 INDIVIDUAL ACCOUNTS. The Advisory Committee will maintain, or
direct the Trustee to maintain, a separate Account, or multiple Accounts,
in the name of each Participant to reflect the Participant's Accrued Benefit
under the Plan. If a Participant reenters the Plan subsequent to his having a
Forfeiture Break in Service, the Advisory Committee, or the Trustee, must
maintain a separate Account for the Participant's pre-Forfeiture Break in Serve
Accrued Benefit and a separate Account for his post- Forfeiture Break in Service
Accrued Benefit, unless the Participant's entire Accrued Benefit under the Plan
is 100% Nonforfeitable.
The Advisory Committee will make its allocations, or request the Trustee
to make its allocations, to the Accounts of the Participants in accordance with
the provisions of Section 9.11. The Advisory Committee may direct the Trustee to
maintain a temporary segregated investment Account in the name of a Participant
to prevent a distortion of income, gain or loss allocations under Section 9.11.
The Advisory Committee must maintain records of its activities.
9.10 VALUE OF PARTICIPANT'S ACCRUED BENEFIT. The value of each
Participant's Accrued Benefit consists of that proportion of the net worth (at
fair market value) of the Employer's Trust Fund which the net credit balance in
his Account (exclusive of the cash value of incidental benefit insurance
contracts) bears to the total net credit balance in the accounts (exclusive of
the cash value of the incidental benefit insurance contracts) of all
Participants plus the cash surrender value of any incidental benefit insurance
contracts held by the Trustee on the Participant's life.
For purposes of a distribution under the Plan, the value of a
Participant's Accrued Benefit is its value as of the valuation date immediately
preceding the date of the distribution. Any distribution (other than a
distribution from a segregated Account) made to a Participant (or to his
Beneficiary) more than 90 days after the most recent valuation date may include
interest on the amount of the distribution as an expense of the Trust Fund. The
interest, if any, accrues from such valuation date to the date of the
distribution at the rate established in the Employer's Adoption Agreement.
9.11 ALLOCATION AND DISTRIBUTION OF NET INCOME GAIN OR LOSS. A
"valuation date" under this Plan is each Accounting Date and each interim
valuation date determined under Section 10.14. As of each valuation date the
Advisory Committee must adjust Accounts to reflect net income, gain or loss
since the last valuation date. The valuation period is the period beginning the
day after the lat valuation date and ending on the current valuation date.
<PAGE>
(A) Trust Fund Accounts. The allocation provisions of this
paragraph apply to all Participant Accounts other than segregated
investment Accounts. The Advisory Committee first will adjust the Participant
Accounts, as those Accounts stood at the beginning of the current valuation
period, by reducing the Accounts for any forfeitures arising under Section 5.09
or under Section 9.14, for amounts charged during the valuation period to the
Accounts in accordance with Section 9.13 (relating to distributions) and Section
11.01 (relating to insurance premiums), and for the cash value of incidental
benefit insurance contracts. The Advisory Committee then, subject to the
restoration allocation requirements of Section 5.04 or of Section 9.14, will
allocate the net income, gain or loss pro rate to the adjusted Participant
Accounts. The allocable net income, gain or loss is the net income (or net
loss), including the increase or decrease in the fair market value of assets,
since the last valuation date.
(B) Segregated investment Accounts. A segregated investment
Account receives all income it earns and bears all expense or loss it
incurs. The Advisory Committee will adopt uniform and nondiscriminatory
procedures for determining income or loss of a segregated investment Account in
a manner which reasonably reflects investment directions relating to pooled
investments and investment directions occurring during a valuation period. As of
the valuation date, the Advisory Committee must reduce a segregated Account for
any forfeiture arising under Section 5.09 after the Advisory Committee has made
all other allocations, changes or adjustments to the account for the Plan Year.
(C) Additional rules. An Excess Amount or suspense account
described in Part 2 of the Article III does not share in the allocation of
net income, gain or loss described in this Section 9.11. If the Employer
maintains its Plan under a Code ss.401(k) Adoption Agreement, the Employer may
specify in its Adoption Agreement alternate valuation provisions authorized by
that Adoption Agreement. This Section 9.11 applies solely to the allocation of
net income, gain or loss of the Trust. The Advisory Committee will allocate the
Employer contributions and Participant forfeitures, if any, in accordance with
Article III.
9.12 INDIVIDUAL STATEMENT. As soon as practicable after the
Accounting Date of each Plan Year, but within the time prescribed by ERISA
and the regulations under ERISA, the Plan Administrator will deliver to each
Participant (and to each Beneficiary) a statement reflecting the condition of
his Accrued Benefit in the Trust as of that date and such other information
ERISA requires be furnished the Participant or Beneficiary. No Participant,
except a member of the Advisory Committee, has the right to inspect the records
reflecting the Account of any other Participant.
<PAGE>
9.13 ACCOUNT CHARGED. The Advisory Committee will charge a
Participant's Account for all distributions made from that Account to the
Participant, to his Beneficiary or to an alternate payee. The Advisory Committee
also will charge a Participant's Account for any administrative expenses
incurred by the Plan directly related to that Account.
9.14 UNCLAIMED ACCOUNT PROCEDURE. The Plan does not require either
the Trustee or the Advisory Committee to search for, or to ascertain the
whereabouts of, any Participant or Beneficiary. At the time the Participant's or
Beneficiary's benefit becomes distributable under Article VI, the Advisory
Committee, by certified or registered mail addressed to his last known address
or record with the Advisory Committee or the Employer, must notify any
Participant, or Beneficiary, that he is entitled to a distribution under this
Plan. The notice must quote the provisions of this Section 9.14 and otherwise
must comply with the notice requirements of Article VI. If the Participant, or
Beneficiary, fails to claim his distributive share or make his whereabouts known
in writing to the Advisory Committee within 6 months from the date of mailing of
the notice, the Advisory Committee will treat the Participant's or Beneficiary's
unclaimed payable Accrued Benefit as forfeited and will reallocate the unclaimed
payable Accrued Benefit in accordance with Section 3.05. A forfeiture under this
paragraph will occur at the end of the notice period or, if later, the earliest
date applicable Treasury regulations would permit the forfeiture. Pending
forfeiture, the Advisory Committee, following the expiration of the notice
period, may direct the Trustee to segregate the Nonforfeitable Accrued Benefit
in a segregated Account and to invest that segregated Account in Federally
insured interest bearing savings accounts or time deposits (or in a combination
of both), or in other fixed income investments.
If a Participant or Beneficiary who has incurred a forfeiture of his
Accrued Benefit under the provisions of the first paragraph of this Section 9.14
makes a claim, at any time, for his forfeited Accrued Benefit, the advisory
Committee must restore the Participant's or Beneficiary's forfeited Accrued
Benefit to the same dollar amount as the dollar amount of the Accrued Benefit
forfeited, unadjusted for any gains or losses occurring subsequent to the date
of the forfeiture. The Advisory Committee will make the restoration during the
Plan Year in which the Participant or Beneficiary makes the claim, first from
the amount, if any, of Participant forfeitures the advisory Committee otherwise
would allocate for the Plan Year, then from the amount, if any, of Participant
forfeitures the Advisory Committee otherwise would allocate for the Plan Year,
then from the amount, if any, of the Trust Fund net income or gain fro the Plan
Year and then from the amount, or additional amount, the Employer contributes to
enable the Advisory Committee to make the required restoration. The Advisory
Committee must direct the Trustee to distribute the Participant's or
<PAGE>
Beneficiary's restored Accrued Benefit to him not later than 60 days after
the close of the Plan Year in which the Advisory Committee restores the
forfeited Accrued Benefit. The forfeiture provisions of this Section 9.14 apply
solely to the Participant's or to the Beneficiary's Accrued Benefit derived from
Employer contributions.
ARTICLE X
TRUSTEE AND CUSTODIAN,
POWERS AND DUTIES
10.01 ACCEPTANCE. The Trustee accepts the Trust created under he Plan
and agrees to perform the obligations imposed. The Trustee must provide
bond for the faithful performance of its duties under the Trust to the extent
required by ERISA.
10.02 RECEIPT OF CONTRIBUTIONS. The trustee is accountable to the
Employer for the funds contributed to it by the Employer, but does not have
any duty to see that the contributions received comply with the provisions of
the Plan. The Trustee is not obliged to collect any contributions from the
Employer, nor is obliged to see that funds deposited with it are deposited
according to the provisions of the Plan.
10.03 INVESTMENT POWERS.
(A) Discretionary Trustee Designation. If the Employer, in
Adoption Agreement Section 1.02, designates the Trustee to administer the
Trust as a discretionary Trustee, then the Trustee has full discretion and
authority with regard to the investment of the Trust Fund, except with respect
to a Plan assets under the control or direction of a properly appointed
Investment Manager or with respect to a Plan asset properly subject to Employer,
Participant or Advisory Committee direction of investment. The Trustee must
coordinate its investment policy with Plan financial needs as communicated to it
by the Advisory Committee. The Trustee is authorized and empowered, but not by
way of limitation, with the following powers, rights and duties:
(a) To invest any part or all of the trust Fund in any common or
preferred stocks, open-end or closed-end mutual funds, put and call
options traded on a national exchange, United States retirement plan
bonds, corporate bonds, debentures, convertible debentures, commercial
paper, U.S. Treasury bills, U.S. Treasury notes and other direct or
indirect obligations of the United States Government or its agencies,
improved or unimproved real estate situated in the United States,
limited partnerships, insurance contracts of any type, mortgages,
notes or other property of any kind, real or personal, to buy or sell
options on common stock on a nationally recognized exchange with or
without holding the underlying common stock, to buy and sell
commodities, commodity options and contracts for the future
delivery of commodities, and to make any other investments the Trustee
<PAGE>
deems appropriate, as a prudent man would do under like circumstances
with due regard for the purposes of this Plan. Any investment made or
retained by the Trustee in good faith is proper but must be of a kind
constituting a diversification considered by law suitable for trust
investments.
(b) To retain in cash so much of the Trust Fund as it may deem
advisable to satisfy liquidity needs of the Plan and to deposit any cash
held in the trust Fund in a bank account at reasonable interest.
(c) To invest, if the Trustee is a bank or similar financial
institution supervised by the United States or by a State, in any type
of deposit of the Trustee (or of a bank related to the Trustee within
the meaning of Code ss.414(b)) at a reasonable rate of interest or in
a common trust fund, as described in Code ss.584, or in a collective
investment fund, the provisions of which govern the investment of such
assets and which the Plan incorporates by this reference, which the
Trustee (or its affiliate, as defined in Code ss.1504) maintains
exclusively for the collective investment of money contributed by the
bank (or the affiliate) in its capacity as trustee and which conforms to
the rules of the Comptroller of the Currency.
(d) To manage, sell, contract to sell, grant options to purchase,
convey, exchange, transfer, abandon, improve, repair, insure, lease for
any term even though commencing in the future or extending beyond the
term of the trust, and otherwise deal with all property, real or
personal, in such manner, for such considerations and on such terms
and conditions as the Trustee decides.
(e) To credit and distribute the Trust as directed by the
Advisory Committee. The Trustee is not obliged to inquire as to whether
any payee or distributee is entitled to any payment or whether the
distribution is proper or within the terms of the Plan, or as to the
manner of making any payment or distribution. The Trustee is accountable
only to the Advisory Committee for any payment or distribution made by it
in good faith on the order or direction of the Advisory Committee.
(f) To borrow money, to assume indebtedness, extend mortgages and
encumber by mortgage or pledge.
(g) To compromise, contest, arbitrate or abandon claims and demands
in its discretion.
(h) To have with respect to the Trust all of the rights of an
individual owner, including the power to give proxies, to participate
in any voting trusts, mergers, consolidations or liquidations, and to
exercise or sell stock subscriptions or conversion rights.
<PAGE>
(i) To lease for oil, gas and other mineral purposes and to create
mineral severances by grant or reservation; to pool or unitize interest
in oil, gas and other minerals; and to enter into operating agreements
and to execute division and transfer orders.
(j) To hold any securities or other property in the name of the
Trustee or its nominee, with depositories or agent depositories or in
another form as it may deem best, with or without disclosing the trust
relationship.
(k) To perform any and all other acts in its judgment
necessary or appropriate for the proper and advantageous management,
investment and distribution of the Trust.
(l) To retain any funds or property subject to any dispute
without liability for the payment of interest, and to decline to make
payment or delivery of the funds or property until final adjudication
is made by a court of competent jurisdiction.
(m) To file all tax returns required of the Trustee.
(n) To furnish to the Employer, the Plan Administrator and the
Advisory Committee an annual statement of account showing the
condition of the Trust Fund and all investments, receipts,
disbursements and other transactions effected by the Trustee during
the Plan Year covered by the statement and also stating the assets of the
Trust held at the end of the Plan Year, which accounts are conclusive
on all persons, including the Employer, the Plan Administrator and the
Advisory Committee, except as to any act or transaction concerning
which the Employer, the Plan Administrator or the Advisory Committee
files with the Trustee written exceptions or objections within 90 days
after the receipt of the accounts or for which ERISA authorizes a longer
period within which to object.
(o) To begin, maintain or defend any litigation necessary in
connection with the administration of the Plan, except that the
Trustee is not obliged or required to do so unless indemnified to its
satisfaction.
(B) Nondiscretionary Trustee Designation/Appointment of Custodian.
If the Employer, in its Adoption Agreement Section 1.02, designates the
Trustee to administer the Trust as a nondiscretionary Trustee, then the Trustee
will not have any discretion or authority with regard to the investment of the
<PAGE>
Trust Fund, but must act solely as a directed trustee of the funds
contributed to it. A nondiscretionary Trustee, as directed trustee of the funds
held by it under the Employer's Plan, is authorized and empowered, by way of
limitation, with the following powers, rights and duties, each of which the
nondiscretionary Trustee exercises solely as directed trustee in accordance with
the written direction of the Named Fiduciary (except to the extent a Plan asset
is subject to the control and management of a properly appointed Investment
Manager or subject to Advisory Committee or Participant direction of
investment):
(a) To invest any part or all of the trust Fund in any common or
preferred stocks, open-end or closed-end mutual funds, put and call
options traded on a national exchange, United States retirement plan
bonds, corporate bonds, debentures, convertible debentures, commercial
paper, U.S. Treasury bills, U.S. Treasury notes and other direct or
indirect obligations of the United States Government or its agencies,
improved or unimproved real estate situated in the United States,
limited partnerships, insurance contracts of any type, mortgages,
notes or other property of any kind, real or personal, to buy or sell
options on common stock on a nationally recognized options exchange with
or without holding the underlying common stock, to buy and sell
commodities, commodity options and contracts for the future delivery of
commodities, and to make any other investments the Named Fiduciary deems
appropriate.
(b) To retain in cash so much of the Trust Fund as the Named
Fiduciary may direct in writing to satisfy liquidity needs of the Plan
and to deposit any cash held in the trust Fund in a bank account at
reasonable interest, including, specific authority to invest in any
type of deposit of the trustee (or of a bank related to the Trustee
within the meaning of Code ss.414(b)) at a reasonable rate of interest.
(c) To sell, contract to sell, grant options to purchase,
convey, exchange, transfer, abandon, improve, repair, insure, lease for
any term even though commencing in the future or extending beyond the
term of the Trust, and otherwise deal with all property, real or
personal, in such manner, for such considerations and on such terms
and conditions as the Named Fiduciary directs in writing.
(d) To credit and distribute the Trust as directed by the
Advisory Committee. The Trustee is not obliged to inquire as to whether
any payee or distributee is entitled to any payment or whether the
distribution is proper or within the terms of the Plan, or as to the
manner of making any payment of distribution. The Trustee is accountable
only to the Advisory Committee for any payment or distribution made by it
in good faith on the order or direction of the Advisory Committee.
<PAGE>
(e) To borrow money, to assume indebtedness, extend mortgages and
encumber by mortgage or pledge.
(f) To have with respect to the Trust all of the rights of an
individual owner, including the power to give proxies, to participate
in any voting trusts, mergers, consolidations or liquidations, and to
exercise or sell stock subscriptions or conversion rights, provided
the exercise of any such powers is in accordance with and at the
written direction of the Named Fiduciary.
(g) To lease for oil, gas and other mineral purposes and to create
mineral severances by grant or reservation; to pool or unitize interests
in oil, gas and other minerals; and to enter into operating agreements
and to execute division and transfer orders, provided the exercise of
any such powers is in accordance with and at the written direction of
the Named Fiduciary.
(h) To hold any securities or other property in the name of
the nondiscretionary Trustee or its nominee, with depositories or
agent depositories or in another form as the Name Fiduciary may deem
best, with or without disclosing the custodial relationship.
(i) To retain any funds or property subject to any dispute
without liability for the payment of interest, and to decline to make
payment or delivery of the funds or property until a court of competent
jurisdiction makes final adjudication.
(j) To file all tax returns required of the trustee.
(k) To furnish to the Named Fiduciary, the Employer, the Plan
Administrator and the Advisory Committee an annual statement of account
showing the condition of the Trust Fund and all investments, receipts,
disbursements and other transactions effected by he nondiscretionary
Trustee during the Plan Year covered by the statement and also stating the
assets of the Trust held at the end of the Plan Year, which accounts are
conclusive on all persons, including the Named Fiduciary, the Employer,
the Plan Administrator and the Advisory Committee, except as to any act or
transaction concerning which the Named Fiduciary, the Employer, the Plan
Administrator or the Advisory Committee files with the nondiscretionary
Trustee written exceptions or objections within 90 days after the receipt
of the accounts or for which ERISA authorizes a longer period within which
to object.
(l) To begin, maintain or defend any litigation necessary in
connection with the administration of the Plan, except that the Trustee is
not obliged or required to do so unless indemnified to its satisfaction.
<PAGE>
Appointment of Custodian. The Employer may appoint a Custodian under the
Plan, the acceptance by the Custodian indicated on the execution page of the
Employer's Adoption Agreement. If the employer appoints a Custodian, the
Employer's Plan must have a discretionary Trustee, as described in Section
10.03(A). A Custodian has the same powers, rights and duties as a
nondiscretionary Trustee, as described in this Section 10.03(B). The Custodian
accepts the terms of the Plan and Trust by executing the Employer's Adoption
Agreement. Any reference in the Plan to a Trustee also is a reference to a
Custodian where the context of the Plan dictates. A limitation of the Trustee's
liability by Plan provision also acts as a limitation of the Custodian's
liability. Any action taken by the Custodian at the discretionary Trustee's
direction satisfies any provision in the Plan referring to the Trustee's taking
that action.
Modification of Powers/Limited Responsibility. The Employer and the
Custodian or nondiscretionary Trustee, by letter agreement, may limit the powers
of the custodian or nondiscretionary Trustee to any combination of powers listed
within this Section 10.03(B). If there is a Custodian or a nondiscretionary
Trustee under the Employer's Plan, then the Employer, in adopting this Plan
acknowledges the Custodian or nondiscretionary Trustee has no discretion with
respect to the investment or re-investment of the Trust Fund and that the
Custodian or nondiscretionary Trustee is acting solely as custodian or as
directed trustee with respect to the assets comprising the Trust Fund.
(C) Limitation of Powers of Certain Custodians. If a Custodian is
a bank which, under its governing state law, does not possess trust powers,
then paragraphs (a), (c), (e), (f), (g) of Section 10.03(B), Section 10.16 and
Article XI do not apply to that bank and that bank only has the power and
authority to exercise the remaining powers, rights and duties under Section
10.03(B).
(D) Named Fiduciary/Limitation of Liability of Nondiscretionary
Trustee or Custodian. Under a nondiscretionary Trustee designation, the
Named Fiduciary under the Employer's Plan has the sole responsibility for the
management and control of the Employer's Trust Fund, except with respect to a
Plan asset under the control or direction of a properly appointed Investment
Manager or with respect to a Plan asset properly subject to Participant or
Advisory Committee direction of investment. If the Employer appoints a
Custodian, the Named Fiduciary is the discretionary Trustee. Under a
nondiscretionary Trustee designation, unless the Employer designates in writing
another person or persons to serve as Named Fiduciary, the Named Fiduciary under
the Plan is the president of a corporate Employer, the managing partner of a
<PAGE>
partnership Employer or the sole proprietor, as appropriate. The Named
Fiduciary will exercise its management and control of the Trust Fund through its
written direction to the nondiscretionary Trustee or to the Custodian, whichever
applies to the Employer's Plan.
The nondiscretionary Trustee or Custodian has no duty to review or to make
recommendations regarding investments made at the written direction of the Named
Fiduciary. The nondiscretionary Trustee or Custodian must retain any investment
obtained at the written direction of the Named Fiduciary to dispose of such
investment. The nondiscretionary Trustee or Custodian is not liable in any
manner or for any reason for making, retaining or disposing of any investment
pursuant to any written direction described in this paragraph. Furthermore, the
Employer agrees to indemnify and to hold the nondiscretionary Trustee or
Custodian harmless from any damages, costs or expenses, including reasonable
counsel fees, which the nondiscretionary Trustee or Custodian may incur as a
result of any claim asserted against the nondiscretionary Trustee, the custodian
or the Trust arising out of the nondiscretionary Trustee's or Custodian's
compliance with any written direction described in this paragraph.
(E) Participant Loans. This Section 10.03(E) specifically authorizes the
Trustee to make loans on a nondiscriminatory basis to a Participant or to a
Beneficiary in accordance with the loan policy established by the Advisory
Committee, provided: (1) the loan policy satisfies the requirements of Section
9.04; (2) loans are available to all Participants and Beneficiaries on a
reasonably equivalent basis and are not available in a greater amount for Highly
Compensated Employees than for other Employees; (3) any loan is adequately
secured and bears a reasonable rate of interest; (4) the loan provides for
repayment within a specified time; (5) the default provisions of the note
prohibit offset of the Participant's Nonforfeitable Accrued Benefit prior to the
time the Trustee otherwise would distribute the Participant's Nonforfeitable
Accrued Benefit; and (7) the loan otherwise conforms to the exemption provided
by Code ss.4975(d)(1). If the joint and survivor requirements of Article VI
apply to the Participant, the Participant may not pledge any portion of his
Accrued Benefit as security for a loan made after August 18, 1985, unless,
within the 90 day period ending on the date the pledge becomes effective, the
Participant's spouse, if any, consents (in a manner described in Section 6.05
other than the requirement relating to the consent of a subsequent spouse) to
the security or, by separate consent, to an increase in the amount of security.
If the employer is an unincorporated trade or business, a Participant who is an
Owner- Employee may not receive a loan from the Plan, unless he has obtained a
prohibited transaction exemption from the Department of Labor. If the Employer
is an "S Corporation," a Participant who is a shareholder-employee (an employee
or an officer) who, at any time during the Employer's taxable year, owns more
<PAGE>
than 5%, either directly or by attribution under Code ss.318(a)(1), of the
Employer's outstanding stock may not receive a loan from the Plan, unless he has
obtained a prohibited transaction exemption from the Department of Labor. If the
Employer is not an unincorporated trade or business nor an "S Corporation," this
Section 10.03(E) does not impose any restrictions on the class of Participants
eligible for a loan from the Plan.
(F) Investment in qualifying Employer securities and qualifying
Employer real property. The investment options in this Section 10.03(F)
include the ability to invest in qualifying Employer securities or qualifying
Employer real property, as defined in and as limited by ERISA. If the Employer's
Plan is a Nonstandardized profit sharing plan, it may elect in its Adoption
Agreement to permit the aggregate investments in qualifying Employer securities
and in qualifying Employer real property to exceed 10% of the value of Plan
assets.
10.04 RECORDS AND STATEMENTS. The records of the Trustee pertaining to
the Plan must be open to the inspection of the Plan Administrator, the
Advisory Committee and the Employer at all reasonable times and may be audited
from time to time by any person or persons as the Employer, Plan Administrator
or Advisory Committee may specify in writing. The Trustee must furnish the Plan
Administrator or Advisory Committee with whatever information relating to the
trust Fund the Plan Administrator or Advisory Committee considers necessary.
10.05 FEES AND EXPENSES FROM FUND. A Trustee or Custodian will
receive reasonable annual compensation as may be agreed upon from time to
time between the Employer and the Trustee or Custodian. No person who is
receiving full pay from the Employer may receive compensation for services as
Trustee or as Custodian. The Trustee will pay from the trust fund all fees and
expenses reasonably incurred by the Plan, to the extent such fees and expenses
are for the ordinary and necessary administration and operation of the Plan,
unless the Employer pays such fees and expenses. Any fee or expense paid,
directly or indirectly, by the Employer is not an Employer contribution to the
Plan, provided the fee or expense relates to the ordinary and necessary
administration of the Fund.
10.06 PARTIES TO LITIGATION. Except as otherwise provided by ERISA,
no Participant or Beneficiary is a necessary party or is required to
receive notice of process in any court proceeding involving the Plan, the Trust
Fund or any fiduciary of the Plan. Any final judgment entered in any proceeding
will be conclusive upon the employer, the Plan Administrator, the Advisory
Committee, the Trustee, Custodian, Participants and Beneficiaries.
<PAGE>
10.07 PROFESSIONAL AGENTS. The Trustee may employ and pay
from the Trust Fund reasonable compensation to agents, attorneys, accountants
and other persons to advise the Trustee as in its opinion may be necessary. The
Trustee may delegate to any agent, attorney, accountant or other person selected
by it any non-trustee power or duty vested in it by the Plan, and the Trustee
may act or refrain from acting on the advice or opinion of any agent, attorney,
accountant or other person so selected.
10.08 DISTRIBUTION OF CASH OR PROPERTY. The Trustee may make
distribution under the Plan in cash or property, or partly in each, at its
fair market value as determined by the Trustee. For purposes of a distribution
to a Participant or to a Participant's designated Beneficiary or surviving
spouse, "property" includes a Nontransferable Annuity Contract, provided the
contract satisfies the requirements of this Plan.
10.09 DISTRIBUTION DIRECTIONS. If no one claims a payment or
distribution made from the Trust, the Trustee must promptly notify the
Advisory Committee and then dispose of the payment in accordance with the
subsequent direction of the Advisory Committee.
10.10 THIRD PARTY/MULTIPLE TRUSTEES. No person dealing with the Trustee
is obligated to see to the proper application of any money paid or property
delivered to the Trustee, or to inquire whether the Trustee has acted pursuant
to any of the terms of the Plan. Each person dealing with the Trustee may act
upon any notice, request or representation in writing by the Trustee, or by the
Trustee's duly authorized agent, and is not liable to any person in so acting.
The certificate of the Trustee that it is acting in accordance with the Plan
will be conclusive in favor of any person relying on the certificate. If more
than two persons controls with respect to any decision regarding the
administration or investment of the Trust Fund or of any portion of the Trust
Fund with respect to which such persons act as Trustee. However, the signature
of only one Trustee is necessary to effect any transaction on behalf of the
Trust.
10.11 RESIGNATION. The Trustee or Custodian may resign its position at
any time by giving 30 days' written notice in advance to the Employer and
to the Advisory Committee. If the Employer fails to appoint a successor Trustee
within 60 days of its receipt of the trustee's written notice of resignation,
the Trustee will treat the employer as having appointed itself as Trustee and as
having filed its acceptance of appointment with the former Trustee. The
employer, in its sole discretion, may replace a Custodian. If the Employer does
not replace a Custodian, the discretionary Trustee will assume possession of
Plan assets held by the former Custodian.
<PAGE>
10.12 REMOVAL. The employer, by giving 30 days' written notice in
advance to the trustee, may remove any Trustee or Custodian. In the event
of the resignation or removal of a Trustee, the employer must appoint a
successor Trustee if it intends to continue the Plan. If two or more persons
hold the position of Trustee, in the event of the removal of one such person,
during any period the selection of a replacement is pending, or during any
period such person is unable to serve for any reason, the remaining person or
persons will act as the Trustee.
10.13 INTERIM DUTIES AND SUCCESSOR TRUSTEE. Each successor
Trustee succeeds to the title to the Trust vested in his predecessor by
accepting in writing his appointment as successor Trustee and by filing the
acceptance with the former Trustee and the advisory Committee without the
signing or filing of any further statement. The resigning or removed Trustee,
upon receipt of acceptance in writing of the Trust by the successor Trustee,
must execute all documents and do all acts necessary to vest the title of record
in any successor Trustee. Each successor Trustee has and enjoys all of the
powers, both discretionary and ministerial, conferred under this Agreement upon
his predecessor. A successor Trustee is not personally liable for any act or
failure to act of any predecessor Trustee, except as required under ERISA. With
the approval of the Employer and the Advisory Committee, a successor Trustee,
with respect to the Plan, may accept the account rendered and the property
delivered to it by a predecessor Trustee without incurring any liability or
responsibility for so doing.
10.14 VALUATION OF TRUST. The Trustee must value the Trust Fund as of
each Accounting Date to determine the fair market value of each
Participant's Accrued Benefit in the Trust. The Trustee also must value the
Trust Fund on such other valuation dates as directed in writing by the Advisory
Committee or as required by the Employer's Adoption Agreement.
10.15 LIMITATION ON LIABILITY - IF INVESTMENT MANAGER, ANCILLARY
TRUSTEE OR INDEPENDENT FIDUCIARY APPOINTED. The Trustee is not liable for
the acts or omissions of any Investment Manager the Advisory Committee may
appoint, nor is the Trustee under any obligation to invest or otherwise manage
any asset of the Plan which is subject tot he management of a properly appointed
Investment Manager. The Advisory Committee, the Trustee and any properly
appointed Investment Manager may execute a letter agreement as a part of this
Plan delineating the duties, responsibilities and liabilities of the Investment
Manager with respect to any part of the trust Fund under the control of the
Investment Manager.
The limitation on liability described in this Section 10.15 also applies
to the acts or omissions of any ancillary trustee or independent fiduciary
properly appointed under Section 10.17 of the Plan. However, if a discretionary
Trustee, pursuant to the delegation described in Section 10.17 of the Plan,
<PAGE>
appoints an ancillary trustee, the discretionary Trustee is responsible for
the periodic review of the ancillary trustee's actions and must exercise its
delegated authority in accordance with the terms of the Plan and in a manner
consistent with ERISA. The Employer, the discretionary Trustee and an ancillary
trustee may execute a letter agreement as a part of this Plan delineating any
indemnification agreement between the parties.
10.16 INVESTMENT IN GROUP TRUST FUND. The Employer, by adopting this
Plan, specifically authorizes the Trustee to invest all or any portion of
the assets comprising the Trust Fund in any group trust fund which at the time
of the investment provides for the pooling of the assets of plans qualified
under Code ss.401(a). This authorization applies solely to a group trust fund
exempt from taxation under Code ss.501(a) and the trust agreement of which
satisfies the requirements of Revenue Rule 81-100. The provisions of the group
trust fund agreement, as amended from time to time, are by this reference
incorporated within this Plan and Trust. The provisions of the group trust fund
will govern any investment of Plan assets in that fund. The Employer must
specify in an attachment to its adoption agreement the group trust fund(s) to
which this authorization applies. If the Trustee is acting as a nondiscretionary
Trustee, the investment in the group trust fund is available only in accordance
with a proper direction, by the Named Fiduciary, in accordance with Section
10.03(B). Pursuant to paragraph (c) of Section 10.03(A) of the Plan, a Trustee
has the authority to invest in certain common trust funds and collective
investment funds without the need for the authorizing addendum described in this
Section 10.16.
Furthermore, at the Employer's direction, the Trustee, for collective
investment purposes, may combine into one trust fund the Trust created under
this Plan with the Trust created under any other qualified retirement plan the
Employer maintains. However, the Trustee must maintain separate records of
account for the assets of each Trust in order to reflect properly each
Participant's Accrued Benefit under the plan(s) in which he is a Participant.
10.17 APPOINTMENT OF ANCILLARY TRUSTEE OR INDEPENDENT FIDUCIARY.
The employer, in writing, may appoint a person in any State to act as
ancillary trustee with respect to a designated portion of the Trust Fund,
subject to the consent required under Section 1.02 if the Master Plan Sponsor is
a financial institution. An ancillary trustee must acknowledge in writing its
acceptance of the terms and conditions of its appointment as ancillary trustee
and its fiduciary status under ERISA. The ancillary trustee has the rights,
powers, duties and discretion as the Employer may delegate, subject to any
limitations or directions specified in the instrument evidencing appointment of
the ancillary trustee and to the terms of the Plan or of ERISA. The investment
<PAGE>
powers delegated to the ancillary trustee may include any investment powers
delegated to the ancillary trustee may include any investment powers available
under Section 10.03 of the Plan including the right to invest any portion of the
assets of the Trust Fund in a common trust fund, as described in Code ss.584, or
in any collective investment fund, the provisions of which govern the investment
of such assets and which the Plan incorporates by this reference, but only if
the ancillary trustee is a bank or similar financial institution supervised by
the United States or by a State and the ancillary trustee (or its affiliate, as
defined in Code ss.1504) maintains the common trust fund or collective
investment fund exclusively for the collective investment of money contributed
by the ancillary trustee (or its affiliate) in a trustee capacity and which
conforms to the rules of the Comptroller of the currency. The Employer also may
appoint as an ancillary trustee, the trustee of any group trust fund designated
for investment pursuant to the provisions of Section 10.16 of the plan.
The ancillary trustee may resign its position at any time by providing at
least 30 days' advance written notice to the Employer, unless the Employer
waives this notice requirement. The employer, in writing, may remove an
ancillary trustee at any time. In the event of resignation or removal, the
Employer may appoint another ancillary trustee, return the assets to the control
and management of the Trustee or receive such assets in the capacity of
ancillary trustee. The Employer may delegate its responsibilities under this
Section 10.17 to a discretionary Trustee under the Plan, but not to a
nondiscretionary Trustee or to a Custodian, subject to the acceptance by the
discretionary Trustee of that delegation.
If the U.S. Department of Labor ("the Department") requires engagement of
an independent fiduciary to have control or management of all or a portion of
the Trust Fund, the Employer will appoint such independent fiduciary, as
directed by the Department. The independent fiduciary will have the duties,
responsibilities and powers prescribed by the Department and will exercise those
duties, responsibilities and powers in accordance with the terms, restrictions
and conditions established by the Department and, to the extent not inconsistent
with ERISA, the terms of the Plan. The independent fiduciary must accept its
appointment in writing and must acknowledge its status as a fiduciary of the
Plan.
ARTICLE XI
PROVISIONS RELATING TO
INSURANCE AND INSURANCE COMPANY
11.01 INSURANCE BENEFIT. The Employer may elect to provide incidental
life insurance benefits for insurable Participants who consent to life
insurance benefits by signing the appropriate insurance company application
form. The Trustee will not purchase any incidental life insurance benefit for
<PAGE>
any Participant prior to an allocation to the Participant's Account. At an
insured Participant's written direction, the Trustee will use all or any portion
of the Participant's nondeductible voluntary contributions, if any, to pay
insurance premiums covering the Participant's life. This Section 11.01 also
authorizes the purchase of life insurance, for the benefit of the Participant,
on the life of a family member of the Participant or on any person in whom the
Participant has an insurable interest. However, if the policy is on the joint
lives of the Participant and another person, the Trustee may not maintain that
policy if that other person predeceases the Participant.
The Employer will direct the Trustee as to the insurance company and
insurance agent through which the Trustee is to purchase the insurance
contracts, the amount of the coverage and the applicable dividend plan. Each
application for a policy, and the policies themselves, must designate the
Trustee as sole owner, with the right reserved to the Trustee to exercise any
right or option contained in the policies, subject to the terms and provisions
of this Agreement. The Trustee must be the named beneficiary for the Account of
the insured Participant. Proceeds of insurance contracts paid to the
Participant's Account under this Article XI are subject to the distribution
requirements of Article V and of Article VI. The Trustee will not retain any
such proceeds for the benefit of the Trust.
The Trustee will charge the premiums on any incidental benefit insurance
contract covering the life of a Participant against the Account of that
Participant. The Trustee will hold all incidental benefit insurance contracts
issued under the Plan as assets of the Trust created under the Plan.
(A) Incidental insurance benefits. The aggregate of life
insurance premiums paid for the benefit of a Participant, at all times, may
not exceed the following percentages of the aggregate of the Employer's
contributions allocated to any Participant's Account: (i) 49% in the case of the
purchase of ordinary life insurance contracts; or (ii) 25% in the case of the
purchase of term life insurance or universal life insurance contracts. If the
Trustee purchases a combination of ordinary life insurance contract(s) and term
life insurance or universal life insurance contract(s), then the sum of one-half
of the premiums paid for the ordinary life insurance contract(s) and the
premiums paid for the term life insurance or universal life insurance
contract(s) may not exceed 25% of the Employer contributions allocated to any
Participant's Account.
(B) Exception for certain profit sharing plans. If the Employer's
Plan is a profit sharing plan, the incidental insurance benefits
requirement does not apply to the Plan if the Plan purchases life insurance
benefits only from Employer contributions accumulated in the Participant's
Account for at least two years (measured from the allocation date).
<PAGE>
11.02 LIMITATION ON LIFE INSURANCE PROTECTION. The Trustee will not
continue any life insurance protection for any Participant beyond his annuity
starting date (as defined in Article VI). If the trustee holds any incidental
benefit insurance contract(s) for the benefit of a Participant when he
terminates his employment (other than by reason of death), the Trustee must
proceed as follows:
(a) If the entire cash value of the contract(s) is vested in the
terminating Participant, or if the contract(s) will have no cash value at
the end of the policy year in which termination of employment occurs, the
Trustee will transfer the contract(s) to the Participant endorsed so as to
vest in the transferee all right, title and interest to the contract(s),
free and clear of the Trust; subject however, to restrictions as to
surrender or payment of benefits as the issuing insurance company may
permit and as the Advisory Committee directs;
(b) If only part of the cash value of the contract(s) is vested in
the terminating Participant, the Trustee, to the extent the Participant's
interest in the cash value of the contract(s) is not vested, may adjust
the Participant's interest in the value of his Account attributable to
Trust assets other than incidental benefit insurance contracts and proceed
as in (a), or the Trustee must effect a loan from the issuing insurance
company on the sole security of the contract(s) for an amount equal to the
difference between the cash value of the contract(s) at the end of the
policy year in which termination of employment occurs and the amount of
the cash value that is vested in the terminating Participant, and the
Trustee must transfer the contract(s) endorsed so as to vest in the
transferee all right, title and interest to the contract(s), free and
clear of the Trust; subject however, to the restrictions as to surrender
or payment of benefits as the issuing insurance company may permit and the
Advisory Committee directs;
(c) If no part of the cash value of the contract(s) is vested in the
terminating Participant, the Trustee must surrender the contract(s) for
cash proceeds as may be available.
In accordance with the written direction of the Advisory Committee, the
Trustee will make any transfer of contract(s) under this Section 11.02 on the
Participant's annuity starting date (or as soon as administratively practicable
after that date). The Trustee may not transfer any contract under this Section
11.02 which contains a method of payment not specifically authorized by Article
<PAGE>
VI or which fails to comply with the joint and survivor annuity
requirements, if applicable, of Article VI. In this regard, the Trustee either
must convert such a contract to cash and distribute the cash instead of the
contract, of before making the transfer, require the issuing company to delete
the unauthorized method of payment option from the contract.
11.03 DEFINITIONS. For purposes of this Article XI:
(a) "Policy" means an ordinary life insurance contract or a term
life insurance contract issued by an insurer on the life of a Participant.
(b) "Issuing insurance company" is any life insurance company which
has issued a policy upon application by the Trustee under the terms of
this Agreement.
(c) "Contract" or "Contracts" means a policy of insurance. In the
event of any conflict between the provisions of this Plan and the terms
of any contract or policy of insurance issued in accordance with this
Article XI, the provisions of the Plan control.
(d) "Insurable Participant" means a Participant to whom an insurance
company, upon an application being submitted in accordance with the Plan,
will issue insurance coverage, either as a standard risk or as a risk in
an extra mortality classification.
11.04 DIVIDEND PLAN. The dividend plan is premium reduction nless the
Advisory Committee directs the Trustee to the contrary. The Trustee must use all
dividends for a contract to purchase insurance benefits or additional insurance
benefits for the Participant on whose life the insurance company has issued the
contract. Furthermore, the Trustee must arrange, where possible, for all
policies issued on the lives of Participants under the Plan to have the same
premium due date and all ordinary life insurance contracts to contain guaranteed
cash values with as uniform basic options as are possible to obtain. The term
"dividends" includes policy dividends, refunds of premiums and other credits.
11.05 INSURANCE COMPANY NOT A PARTY TO AGREEMENT. No insurance company,
solely in its capacity as an issuing insurance company, is a party to this
Agreement nor is the company responsible for its validity.
11.06 INSURANCE COMPANY NOT RESPONSIBLE FOR TRUSTEE'S ACTIONS. No
insurance company, solely in its capacity as an issuing insurance company, need
examine the terms of this Agreement nor is responsible for any action taken by
the Trustee.
<PAGE>
11.07 INSURANCE COMPANY RELIANCE ON TRUSTEE'S SIGNATURE. For
the purpose of making application to an insurance company and in the exercise of
any right or option contained in any policy, the insurance company may rely upon
the signature of the trustee and is saved harmless and completely discharged in
acting at the direction and authorization of the Trustee.
11.08 ACQUITTANCE. An insurance company is discharged from all
liability for any amount paid to the Trustee or paid in accordance with the
direction of the Trustee, and is not obliged to see to the distribution or
further application of any moneys it so pays.
11.09 DUTIES OF INSURANCE COMPANY. Each insurance company must keep
such records, make such identification of contracts, funds and accounts
within funds, and supply such information as may be necessary for the proper
administration of the Plan under which it is carrying insurance benefits.
Note: The provisions of this Article XI are not applicable, and the Plan
may not invest in insurance contracts, if a Custodian signatory to the Adoption
Agreement is a bank which has not acquired trust powers from its governing state
banking authority.
ARTICLE XII
MISCELLANEOUS
12.01 EVIDENCE. Anyone required to give evidence under the terms of
the Plan may do so by certificate, affidavit, document or other information
which the person to act in reliance may consider pertinent, reliable and
genuine, and to have been signed, made or presented by the proper party or
parties. The Advisory Committee and the Trustee are fully protected in acting
and relying upon any evidence described under the immediately preceding
sentence.
12.02 NO RESPONSIBILITY FOR EMPLOYER ACTION. Neither the trustee nor
the advisory Committee has any obligation or responsibility with respect to
any action required by the Plan to be taken by the Employer, any Participant or
eligible Employee, or for the failure of any of the above persons to act or make
any payment or contribution, or to otherwise provide any benefit contemplated
under this Plan. Furthermore, the Plan does not require the Trustee or the
Advisory Committee to collect any contribution required under the Plan, or to
determine the correctness of the amount of any Employer contribution. Neither
the Trustee nor the advisory Committee need inquire into or be responsible for
any action or failure to act on the part of the others, or on the part of any
other person who has any responsibility regarding the management, administration
or operation of the Plan, whether by the express terms of the Plan or by a
separate agreement authorized by the Plan or by the applicable provisions of
ERISA. Any action required of a corporate Employer must be by its Board of
Directors or its designate.
<PAGE>
12.03 FIDUCIARIES NOT INSURERS. The Trustee, the Advisory Committee,
the Plan Administrator and the Employer in no way guarantee the Trust Fund
from loss or depreciation. The Employer does not guarantee the payment of any
money which may be or becomes due to any person from the Trust Fund. The
liability of the Advisory Committee and the Trustee to make any payment from the
Trust Fund at any time and all times is limited to the then available assets of
the Trust.
12.04 WAIVER OF NOTICE. Any person entitled to notice under the Plan
may waiver the notice, unless the Code or Treasury regulations prescribe
the notice or ERISA specifically or impliedly prohibits such a waiver.
12.05 SUCCESSORS. The Plan is binding upon all persons entitled
to benefits under the plan, their respective heirs and legal
representatives, upon the Employer, its successors and assigns, and upon the
Trustee, the Advisory Committee, the Plan Administrator and their successors.
12.06 WORD USAGE. Words used in the masculine also apply to the
feminine where applicable, and wherever the context of the Employer's Plan
dictates, the plural includes the singular and the singular includes the plural.
12.07 STATE LAW. The law of the state of the Employer's principal place
of business (unless otherwise designated in an addendum to the Employer's
Adoption Agreement) will determine all questions arising with respect to the
provisions of this Agreement except to the extent superseded by Federal law.
12.08 EMPLOYER'S RIGHT TO PARTICIPATE. If the Employer's Plan fails
to qualify or to maintain qualification or if the Employer makes any
amendment or modification to a provision of this Plan (other than a proper
completion of an elective provision under the Adoption Agreement or the
attachment of an addendum authorized by the Plan or by the Adoption Agreement),
the Employer may no longer participate under this Master Plan. The Employer also
may not participate (or continue to participate) in this Master Plan if the
Trustee or Custodian (or a change in the trustee or Custodian) does not satisfy
the requirements of Section 1.02 of the Plan. If the Employer is not entitled to
participate under this Master Plan, the Employer's Plan is an
individually-designed plan and the reliance procedures specified in the
applicable Adoption Agreement no longer will apply.
<PAGE>
12.09 EMPLOYMENT NOT GUARANTEED. Nothing contained in this Plan, or
with respect to the establishment of the Trust, or any modification or
amendment to the Plan or Trust, or in the creation of any Account, or the
payment of any benefit, gives any Employee, Employee-Participant or any
Beneficiary any right to continue employment, any legal or equitable right
against the Employer, or Employee of the Employer, or against the Trustee, or
its agents or employees, or against the Plan Administrator, except as expressly
provided by the Plan, the Trust, ERISA or by a separate agreement.
ARTICLE XIII
EXCLUSIVE BENEFIT,
AMENDMENT, TERMINATION
13.01 EXCLUSIVE BENEFIT. Except as provided under Article III,
the Employer has no beneficial interest in any asset of the Trust and no
part of any asset in the Trust may ever revert to or be repaid to an Employer,
either directly or indirectly; nor, prior to the satisfaction of all liabilities
with respect to the Participants and their Beneficiaries under the Plan, may any
part of the corpus or income of the Trust Fund, or any asset of the Trust, be
(at any time) used for, or diverted to, purposes other than the exclusive
benefit of the Participants or their Beneficiaries. However, if the Commissioner
of Internal Revenue, upon the Employer's request for initial approval of this
Plan, determines the Trust created under the Plan is not a qualified trust
exempt from Federal income tax, then (and only then) the Trustee, upon written
notice from the Employer, will return the Employer's contributions (and
increment attributable to the contributions) to the Employer. The Trustee must
make the return of the Employer contribution under this Section 13.01 within one
year of a final disposition of the Employer's request for initial approval of
the Plan. The Employer's Plan and Trust will terminate upon the trustee's return
of the Employer's contributions.
13.02 AMENDMENT BY EMPLOYER. The employer has the right at
any time and from time to time:
(a) To amend the elective provisions of the Adoption Agreement in any
manner it deems necessary or advisable in order to qualify (or maintain
qualification of) this Plan and the Trust created under it under the
provisions of Code ss.401(a);
(b) To amend the Plan to allow the Plan to operate under
a waiver of the minimum funding requirement; and
(c) To amend this Agreement in any other manner.
No amendment may authorize or permit any of the trust Fund (other than the
part which is required to pay taxes and administration expenses) to be used for
or diverted to purposes other than for the exclusive benefit of the Participants
or their Beneficiaries or estates. No amendment may cause or permit any portion
<PAGE>
of the Trust Fund to revert to or become a property of the Employer. The
Employer also may not make any amendment which affects the rights, duties or
responsibilities of the Trustee, the Plan Administrator or the Advisory
committee without the written consent of the affected Trustee, the Plan
Administrator or the affected member of the Advisory Committee. The employer
must make all amendments in writing. Each amendment must state the date to which
it is either retroactively or prospectively effective. See Section 12.08 for the
effect of certain amendments adopted by the Employer.
(A) Code ss.411(d)(6) protected benefits. An amendment (including the
adoption of this Plan as a restatement of an existing plan) may not decrease a
Participant's Accrued Benefit, except to the extent permitted under Code
ss.412(c)(8), and may not reduce or eliminate Code ss.411(d)(6) protected
benefits determined immediately prior to the adoption date (or, if later, the
effective date) of the amendment. An amendment reduces or eliminates Code
ss.411(d)(6) protected benefits if the amendment has the effect of either (1)
eliminating or reducing an early retirement benefit or a retirement type subsidy
(as defined in Treasury regulations, eliminating an optional form of benefit.
The Advisory Committee must disregard an amendment to the extent application of
the amendment would fail to satisfy this paragraph. If the Advisory Committee
must disregard an amendment because the amendment would violate clause (1) or
clause (2), the Advisory Committee must maintain a schedule of the early
retirement option or other optional forms of benefit the Plan must continue for
the affected Participants.
13.03 AMENDMENT BY MASTER PLAN SPONSOR. The Master Plan Sponsor
(or PPD, as agent of the Master Plan Sponsor), without the Employer's
consent, may amend the Plan and Trust, from time to time, in order to conform
the Plan and Trust to any requirement for qualification of the Plan and Trust
under the Internal Revenue Code. The Master Plan Sponsor may not amend the Plan
in any manner which would modify any election made by the Employer under the
Plan without the Employer's written consent. Furthermore, the Master Plan
Sponsor may not amend the Plan in any manner which would violate the
proscription of Section 13.02. A Trustee does not have the power to amend the
Plan or Trust.
13.04 DISCONTINUANCE. The Employer has the right, at any time, to \
suspend or discontinue its contributions under the Plan, and to terminate,
at any time, this Plan and the Trust created under this Agreement. The Plan will
terminate upon the first to occur of the following:
(a) The date terminated by action of the Employer;
<PAGE>
(b) The dissolution or merger of the Employer, unless the
successor makes provision to continue the Plan, in which event the
successor must substitute itself as the Employer under this Plan. Any
termination of the Plan resulting from this paragraph (b) is not effective
until compliance with any applicable notice requirements under ERISA.
13.05 FULL VESTING ON TERMINATION. Upon either full or partial
termination of the Plan, or, if applicable, upon complete discontinuance of
profit sharing plan contributions to the Plan, an affected Participant's right
to his Accrued Benefit is 100% Nonforfeitable, irrespective of the
Nonforfeitable percentage which otherwise would apply under Article V.
13.06 MERGER/DIRECT TRANSFER. The trustee may not consent to, or
by a party to, any merger or consolidation with another plan, or to a
transfer of assets or liabilities to another plan, unless immediately after the
merger, consolidation or transfer, the surviving Plan provides each Participant
a benefit equal to or greater than the benefit each Participant would have
received had the Plan terminated immediately before the merger or consolidation
or transfer. The trustee possesses the specific authority to enter into merger
agreements or direct transfer of assets agreements with the trustees of other
retirement plans described in Code ss.401(a), including an elective transfer,
and to accept the direct transfer of plan assets, or to transfer plan assets, as
a party to any such agreement.
The Trustee may accept a direct transfer of plan assets on behalf of an
Employee prior to the date the Employee satisfies the Plan's eligibility
conditions. If the Trustee accepts such a direct transfer of plan assets, the
Advisory Committee and Trustee must treat the Employee as a Participant for all
purposes of the Plan except the Employee is not a Participant for purposes of
sharing in Employer contributions or Participant forfeitures under the Plan
until he actually becomes a Participant in the Plan.
(A) Elective transfers. The Trustee, after August 9, 1988, may not
consent to, or be a party to a merger, consolidation or transfer of assets
with a defined benefit plan, except with respect to an elective transfer, or
unless the transferred benefits are in the form of paid-up individual annuity
contracts guaranteeing the payment of the transferred benefits in accordance
with the terms of the transferor plan and in a manner consistent with the Code
and with ERISA. The Trustee will hold, administer and distribute the transferred
assets as a part of the trust Fund and the Trustee must maintain a separate
Employer contribution Account for the benefit of the Employee on whose behalf
the Trustee accepted the transfer in order to reflect the value of the
transferred assets. Unless a transfer of assets to this Plan is an elective
transfer, the Plan will preserve all Code ss.411(d)(6) protected benefits with
<PAGE>
respect to those transferred assets, in the manner described in Section
13.02. A transfer is an elective transfer if: (1) the transfer satisfies the
first paragraph of this Section 13.06; (2) the transfer is voluntary, under a
fully informed election by the Participant; (3) the Participant has an
alternative that retains his Code ss.411(d)(6) protected benefits (including an
option to leave his benefit in the transferor plan, if that plan is not
terminating); (4) the transfer satisfies the applicable spousal consent
requirements of the Code; (5) the transferor plan satisfies the joint and
survivor notice requirements of the Code, if the Participant's transferred
benefit is subject to those requirements; (6) the Participant has a right to
immediate distribution rom the transferor plan, in lieu of the elective
transfer; (7) the transferred benefit is at least the greater of the single sum
distribution provided by the transferor plan for which the Participant is
eligible or the present value of the Participant's accrued benefit under the
transferor plan payable at that plan"s normal retirement age; (8) the
Participant has a 100% Nonforfeitable interest in the transferred benefit; and
(9) the transfer otherwise satisfies applicable Treasury regulations. An
elective transfer may occur between qualified plans of any type. Any direct
transfer of assets from a defined benefit plan after August 9, 1988, which does
not satisfy the requirements of this paragraph will render the Employer's Plan
individually-designed. See Section 12.08.
(B) Distribution restrictions under Code ss.401(k). If the Plan
receives a direct transfer (by merger otherwise) of elective contributions
(or amounts treated as elective contributions) under a Plan with a Code
ss.401(k) arrangement, the distribution restrictions of Code ss.401(k)(2) and
(10) continue to apply to those transferred elective contributions.
13.07 TERMINATION.
(a) Procedure. Upon termination of the Plan, the distribution
provisions of Article VI remain operative, with the following exceptions:
(1) If the present value of the Participant's Nonforfeitable
Accrued Benefit does not exceed $3,500, the Advisory Committee will direct
the Trustee to distribute the Participant's Nonforfeitable Accrued Benefit to
him in lump sum as soon as administratively practicable after the Plan
terminates; and
(2) If the present value of the Participant's Nonforfeitable
Accrued Benefit exceeds $3,500, the Participant or the Beneficiary, in
addition to the distribution events permitted under Article VI, may elect to
have the Trustee commence distribution of his Nonforfeitable Accrued Benefit as
soon as administratively practicable after the Plan terminates.
<PAGE>
To liquidate the Trust, the Advisory committee will purchase a deferred
annuity contract for each Participant which protects the Participant's
distribution rights under the plan, if the Participant's Nonforfeitable Accrued
Benefit exceeds $3,500 and the Participant does not elect an immediate
distribution pursuant to
Paragraph (2).
If the Employer's Plan is a profit sharing plan, in lieu of the preceding
provisions of this Section 13.07 and the distribution provisions of Article VI,
the Advisory Committee will direct the Trustee to distribute each Participant's
Nonforfeitable Accrued Benefit, in lump sum, as soon as administratively
practicable after the termination of the Plan, irrespective of the present value
of the Participant's Nonforfeitable Accrued Benefit and whether the Participant
consents to that distribution. This paragraph does not apply if: (1) the Plan
provides an annuity option; or (2) as of the period between the Plan termination
date and the final distribution of assets, the Employer maintains any other
defined contribution plan (other than an ESOP). The Employer, in an addendum to
its Adoption Agreement numbered 13.07, may elect not to have this paragraph
apply.
The Trust will continue until the trustee in accordance with the direction
of the Advisory Committee has distributed all of the benefits under the Plan. On
each valuation date, the Advisory Committee will credit any part of a
Participant's Accrued Benefit retained in the trust with its proportionate share
of the Trust's income, expenses, gains and losses, both realized and unrealized.
Upon termination of the Plan, the amount, if any, in a suspense account under
Article III will revert to the Employer, subject to the conditions of the
treasury regulations permitting such a reversion. A resolution or amendment to
freeze all future benefit accrual but otherwise to continue maintenance of this
Plan, is not a termination for purposes of this Section 13.07.
(B) Distribution restrictions under Code ss.401(k). If the Employer's
Plan includes a Code ss.401(k) arrangement or if transferred assets
described in Section 13.06 are subject to the distribution restrictions of Code
ss.401(k)(2) and (10), the special distribution provisions of this Section 13.07
are subject to the restrictions of this paragraph. The portion of the
Participant's Nonforfeitable Accrued Benefit attributable to elective
contributions (or to amounts treated under the Code ss.401(k) arrangement as
elective contributions) is not distributable on account of Plan termination, as
described in this Section 13.07, unless: (a) the Participant otherwise is
entitled under the Plan to a distribution of that portion of his Nonforfeitable
Accrued Benefit; or (b) the Plan termination occurs without the establishment of
a successor plan. A successor plan under clause (b) is a defined contribution
plan (other than an ESOP) maintained by the Employer (or by a related employer)
<PAGE>
at the time of the termination of the Plan or within the period ending
twelve months after the final distribution of assets. A distribution made after
March 31, 1988, pursuant to clause (b), must be part of a lump sum distribution
to the Participant of his Nonforfeitable Accrued Benefit.
ARTICLE XIV
CODE ss.401(k) AND CODE ss.401(m) ARRANGEMENTS
14.01 APPLICATION. This Article XIV applies to an Employer's Plan
only if the Employer is maintaining the terms of the Code ss.401(k)
arrangement, if any, under the Plan. If the Employer's Plan is a Standardized
Plan, the Code ss.401(k) arrangement must be a salary reduction arrangement. If
the Employer's Plan is a Nonstandardized Plan, the Code ss.401(k) arrangement
may be a salary reduction arrangement or a cash or deferred arrangement.
(A) Salary Reduction Arrangement. If the Employer elects a
salary reduction arrangement, any Employee eligible to participate in the
Plan may file a salary reduction agreement with the Advisory Committee. The
salary reduction agreement may not be effective earlier than the following date
which occurs last: (i) the Employee's Plan Entry Date (or, in the case of a
reemployed Employee, his participation date under Article II); (ii) the
execution date of the employee's salary reduction agreement; (iii) the date the
Employer adopts the Code ss.401(k) arrangement by executing the Adoption
Agreement; or (iv) the effective date of the Code ss.401(k) arrangement, as
specified in the Employer's Adoption Agreement. Regarding clause (i), an
Employee subject to the Break in Service rule of Section 2.03(B) of the Plan may
not enter into a salary reduction agreement until the Employee has completed a
sufficient number of Hours of Service to receive credit for a Year of Service
(as defined in Section 2.02) following his reemployment commencement date. A
salary reduction agreement will apply only to Compensation which becomes
currently available to the Employee after the effective date of the salary
reduction agreement. The Employer will apply a reduction election to all
Compensation (and to increases in such Compensation) unless the Employee
specifies in his salary reduction agreement to limit the election to certain
Compensation. The Employer will specify in Adoption Agreement Section 3.01 the
rules and restrictions applicable to the Employees salary reduction agreements.
(B) Cash or deferred arrangement. If the Employer elects a
cash or deferred arrangement, a Participant may elect to make a cash
election against his proportionate share of the Employer's Cash or Deferred
Contribution, in accordance with the Employer's elections in Adoption Agreement
Section 3.01. A Participant's proportionate share of the Employer's Cash or
Deferred Contribution is the percentage of the total Cash or Deferred
Contribution which bears the same ratio that the Participant's Compensation for
<PAGE>
the Plan Year bears to the total Compensation of all Participants for the
Plan Year. For purposes of determining each Participant's proportionate share of
the Cash or Deferred Contribution, a Participant's Compensation is his
Compensation as determined under Section 1.12 of the Plan (as modified by
Section 3.06 for allocation purposes), excluding any effect the proportionate
share may have on the Participant's Compensation for the Plan Year. The Advisory
Committee will determine the proportionate share prior to the Employer's actual
contribution to the Trust, to provide the Participants the opportunity to file
cash elections. The Employer will pay directly to the Participant the portion of
his proportionate share the Participant has elected to receive in cash.
(C) Election not to participate. A Participant's or Employee's
election not to participate, pursuant to Section 2.06, includes his right
to enter into a salary reduction agreement or to share in the allocation of a
Cash or Deferred Contribution, unless the Participant or Employee limits the
effect of the election to the non-401(k) portions of the Plan.
14.03 DEFINITIONS. For purposes of this Article XIV:
(a) "Highly Compensated Employee" means an Eligible Employee who
satisfies the definition in Section 1.09 of the Plan. Family members
aggregated as a single Employee under Section 1.09 constitute a single
Highly Compensated Employee, whether a particular family member is
a Highly Compensated Employee or a Nonhighly Compensated Employee
without the application of family aggregation.
(b) "Nonhighly Compensated Employee" means an Eligible Employee who
is not a Highly Compensated Employee and who is not a family member
treated as a Highly Compensated Employee.
(c) "Eligible Employee" means, for purposes of the ADP test described
in Section 14.08, an Employee who is eligible to enter into a salary
reduction agreement for the Plan Year, irrespective of whether he actually
enters into such an agreement, and a Participant who is eligible for an
allocation of the Employer's Cash or Deferred Contribution for the Plan
Year. For purposes of the ACP test described in Section 14.09, an
"Eligible Employee" means a Participant who is eligible to receive an
allocation of matching contributions (or would be eligible if he made the
type of contributions necessary to receive an allocation of matching
contributions) and a Participant who is eligible to make nondeductible
contributions, irrespective of whether he actually makes nondeductible
contributions. An Employee continues to be an Eligible Employee during
a period the Plan suspends the Employee's right to make elective
deferrals or nondeductible contributions following a hardship
distribution.
<PAGE>
(d) "Highly Compensated Group" means the group of Eligible
Employees who are Highly Compensated Employees for the Plan
Year.
(f) "Compensation" means, except as specifically provided in this
Article XIV, Compensation as defined for nondiscrimination purposes
in Section 1.12(B) of the Plan. For Plan Years beginning prior to
the later of January 1, 1992, or 60 days after the Treasury issues
final regulations under Code ss.401(k) and ss.401(m), the Plan may limit
Compensation taken into account to Compensation received only for the
portion of the Plan Year in which the Employee was an Eligible
Employee and only for the portion of the Plan Year in which the
Plan or the Code ss.401(k) arrangement was in effect. For subsequent
Plan Years, Compensation must include Compensation for the entire Plan
Year, irrespective of whether the Plan or the Code ss.401(k) arrangement
was in effect for the entire Plan Year or whether the Employee begins,
resumes or ceases to be an Eligible Employee during the Plan Year.
(g) "Deferral contributions" are Salary Reduction Contributions
and Cash or Deferred Contributions the Employer contributes to the Trust
on behalf of an Eligible Employee, irrespective of whether, in the case
of Cash or Deferred Contributions, the contribution is at the
election of the Employee.
(h) "Elective deferrals" are all Salary Reduction Contributions
and that portion of any Cash or Deferred Contribution which the
Employer contributes to the Trust at the election of an Eligible
Employee. Any portion of a Cash or Deferred Contribution contributed
to the Trust because of the Employee's failure to make a cash election
is an elective deferral. However, any portion of a Cash or Deferred
Contribution over which the Employee does not have a cash election
is not an elective deferral. Elective deferrals do not include
amounts which have become currently available to the Employee prior
to the election nor amounts designated as nondeductible contributions
at the time of deferral or contribution.
(i) "Matching contributions" are contributions made by the
Employer on account of elective deferrals under a Code ss.401(k)
arrangement or on account of employee contributions. Matching
contributions also include Participant forfeitures allocated on account
of such elective deferrals or employee contributions.
(j) "Nonelective contributions" are contributions made by the
Employer which are not subject to a deferral election by an Employee and
which are not matching contributions.
<PAGE>
(k) "Qualified matching contributions" are matching contributions
which are 100% Nonforfeitable at all times and which are subject to the
distribution restrictions described in paragraph (m). Matching
contributions are not 100% Nonforfeitable at all times if the Employee has
a 100% Nonforfeitable interest because of his Years of Service taken into
account under a vesting schedule. Any matching contributions allocated to
a Participant's Qualified Matching Contributions Account under the Plan
automatically satisfy the definition of qualified matching contributions.
(l) "Qualified nonelective contributions" are nonelective
contributions which are 100% Nonforfeitable at all times and which are
subject to the distribution restrictions described in paragraph (m).
Nonelective contributions are not 100% Nonforfeitable at all times if the
Employee has a 100% Nonforfeitable interest because of his Years of
Service taken into account under a vesting schedule. Any nonelective
contributions allocated to a Participant's Qualified Nonelective
Contributions Account under the Plan automatically satisfy the
definition of qualified nonelective contributions.
(m) "Distribution restrictions" means the Employee may not receive a
distribution of the specified contributions (nor earnings on those
contributions) except in the event of (l) the Participant's death,
disability, termination of employment or attainment of age 59 1/2, (2)
financial hardship satisfying the requirements of Code ss.401(k) and the
applicable Treasury regulations, (3) a plan termination, without
establishment of a successor defined contribution plan (other than an
ESOP), (4) a sale of substantially all of the assets (within the meaning
of Code ss.409(d)(2)) used in a trade or business, but only to an employee
who continues employment with the corporation acquiring those assets, or
(5) a sale by a corporation of its interest in a subsidiary (within the
meaning of Code ss.409(d)(3)), but only to an employee who continues
employment with the subsidiary. For Plan Years beginning after December
31, 1988, a distribution on account of financial hardship, as described in
clause (2), may not include earnings on elective deferrals credited as of
a date later than December 31, 1988, and may not include qualified
matching contributions and qualified nonelective contributions, nor any
earnings on such contributions, irrespective of when credited. A
distribution described in clauses (3), (4) or (5), if made after March 31,
1988, must be a lump sum distribution, as required under Code
ss.401(k)(10).
(n) "Employee contributions" are contributions made by a Participant
on an after-tax basis, whether voluntary or mandatory, and designated, at
the time of contribution, as an employee (or nondeductible) contribution.
<PAGE>
Elective deferrals and deferral contributions are not employee
contributions. Participant nondeductible contributions, made pursuant
to Section 4.01 of the Plan, are employee contributions.
14.04 MATCHING CONTRIBUTIONS/EMPLOYEE CONTRIBUTIONS. The Employer may
elect in Adoption Agreement Section 3.01 to provide matching contributions. The
Employer also may elect in Adoption Agreement Section 4.01 to permit or to
require a Participant to make nondeductible contributions.
(A) Mandatory contributions. Any Participant nondeductible
contributions eligible for matching contributions are mandatory
contributions. The Advisory Committee will maintain a separate accounting,
pursuant to Section 4.06 of the Plan, to reflect the Participant's Accrued
Benefit derived from his mandatory contributions. The Employer, under Adoption
Agreement Section 4.05, may prescribe special distribution restrictions which
will apply to the Mandatory Contributions Account prior to the Participant's
Separation from Service. Following his Separation from Service, the general
distribution provisions of Article VI apply to the distribution of the
Participant's Mandatory Contributions Account.
14.05 TIME OF PAYMENT OF CONTRIBUTIONS. The Employer must make Salary
Reduction Contributions to the Trust within an administratively reasonable
period of time after withholding the corresponding Compensation from the
Participant. Furthermore, the Employer must make Salary Reduction Contributions,
Cash or Deferred Contributions, Employer matching contributions (including
qualified Employer matching contributions) and qualified Employer nonelective
contributions no later than the time prescribed by the Code or by applicable
Treasury regulations. Salary Reduction Contributions and Cash or Deferred
Contributions are Employer contributions for all purposes under this Plan,
except to the extent the Code or Treasury regulations prohibit the use of these
contributions to satisfy the qualification requirements of the Code.
14.06 SPECIAL LOCATION PROVISIONS--DEFERRAL CONTRIBUTIONS, MATCHING
CONTRIBUTIONS AND QUALIFIED NONELECTIVE CONTRIBUTIONS. To make allocations under
the Plan, the Advisory Committee must establish a Deferral Contributions
Account, a Qualified Matching Contributions Account, a Regular Matching
Contributions Account, a Qualified Nonelective Contributions Account and an
Employer Contributions Account for each Participant.
(A) Deferral contributions. The Advisory Committee will allocate to
each Participant's Deferral Contributions Account the amount of Deferral
Contributions the Employer makes to the Trust on behalf of the Participant. The
Advisory Committee will make this allocation as of the last day of each Plan
Year unless, in Adoption Agreement Section 3.04, the Employer elects more
frequent allocation dates for salary reduction contributions.
<PAGE>
(B) Matching contributions. The employer must specify in its
Adoption Agreement whether the Advisory Committee will allocate matching
contributions to the Qualified Matching Contributions Account or to the Regular
Matching Contributions Account of each Participant. The Advisory Committee will
make this allocation as of the last day of each Plan Year unless, in Adoption
Agreement Section 3.04, the Employer elects more frequent allocation dates for
matching contributions.
(1) To the extent the Employer makes matching contributions under a
fixed matching contribution formula, the Advisory Committee will allocate
the matching contribution to the Account of the Participant on whose
behalf the Employer makes that contribution. A fixed matching
contribution formula is a formula under which the Employer contributes
a certain percentage or dollar amount on behalf of a Participant based on
that Participant's deferral contributions or nondeductible contributions
eligible for a match, as specified in Section 3.01 of the Employer's
Adoption Agreement. The employer may contribute on a Participant's behalf
under a specific matching contribution formula only if the Participant
satisfies the accrual requirements for matching contributions specified in
Section 3.06 of the Employer's Adoption Agreement and only to the extent
the matching contribution does not exceed the Participant's annual
additions limitation in Part 2 of Article III.
(2) To the extent the Employer makes matching contributions under a
discretionary formula, the Advisory Committee will allocate the
discretionary matching contributions to the Account of each Participant
who satisfies the accrual requirements for matching contributions
specified in Section 3.06 of the Employer's Adoption Agreement. The
allocation of discretionary matching contributions to a Participant's
Account is in the same proportion that each Participant's eligible
contributions bear to the total eligible contributions of all
Participants. If the discretionary formula is a tiered formula, the
Advisory Committee will make this allocation separately with respect to
each tier of eligible contributions, allocating in such manner the amount
of the matching contributions made with respect to that tier. "Eligible
contributions" are the Participant's deferral contributions or
nondeductible contributions eligible for an allocation of matching
contributions, as specified in Section 3.01 of the Employer's Adoption
Agreement.
If the matching contribution formula applies both to deferral
contributions and to Participant nondeductible contributions, the matching
contributions apply first to deferral contributions. Furthermore, the matching
contribution formula does not apply to deferral contributions that are excess
<PAGE>
deferrals under Section 14.07. For this purpose: (a) excess deferrals
relate first to deferral contributions for the Plan Year not otherwise eligible
for a matching contribution; and (2) if the Plan Year is not a calendar year,
the excess deferrals for a Plan Year are the last elective deferrals made for a
calendar year.
(C) Qualified nonelective contributions. If the employer, at the
time of contribution, designates a contribution to be a qualified
nonelective contribution for the Plan Year, the Advisory Committee will allocate
that qualified nonelective contribution to the Qualified Nonelective
Contributions Account of each Participant eligible for an allocation of that
designated contribution, as specified in Section 3.04 of the Employer's Adoption
Agreement. The Advisory Committee will make the allocation to each eligible
Participant's Account in the same ratio that the Participant's Compensation for
the Plan Year bears to the total Compensation of all eligible Participants for
the Plan Year. The Advisory Committee will determine a Participant's
Compensation in accordance with the general definition of Compensation under
Section 1.12 of the Plan, as modified by the Employer in Sections 1.12 and 3.06
of its Adoption Agreement.
(D) Nonelective contributions. To the extent the Employer makes
nonelective contributions for the Plan Year which, at the time of contribution,
it does not designate as qualified nonelective contributions, the Advisory
Committee will allocate those contributions in accordance with the elections
under Section 3.04 of the Employer's Adoption Agreement. For purposes of the
special nondiscrimination tests described in Sections 14.08 and 14.09, the
Advisory Committee may treat nonelective contributions allocated under this
paragraph as qualified nonelective contributions, if the contributions otherwise
satisfy the definition of qualified nonelective contributions.
14.07 ANNUAL ELECTIVE DEFERRAL LIMITATION.
(A) Annual Elective Deferral Limitation. An Employee's elective
deferrals for a calendar year beginning after December 31, 1986, may not
exceed the 402(g) limitation. The 402(g) limitation is the greater of $7,000 or
the adjusted amount determined by the Secretary of the Treasury. If, pursuant to
a salary reduction agreement or pursuant to a cash or deferral election, the
Employer determines the Employee's elective deferrals to the Plan for a calendar
year would exceed the 402(g) limitation, the Employer will suspend the
Employee's salary reduction agreement, if any, until the following January 1 and
pay in cash the portion of a cash or deferral election which would result in the
Employee's elective deferrals for the calendar year exceeding the 402(g)
limitation. If the Advisory Committee determines an Employee's elective
deferrals already contributed to the Plan for a calendar year exceed the 402(g)
<PAGE>
limitation, the Advisory Committee will distribute the amount in excess of
the 402(g) limitation (the "excess deferral"), as adjusted for allocable income,
no later than April 15 of the following calendar year. If the Advisory Committee
distributes the excess deferral by the appropriate April 15, it may make the
distribution irrespective of any other provision under this Plan or under the
Code. The Advisory Committee will reduce the amount of excess deferrals for a
calendar year distributable to the Employee by the amount of excess
contributions (as determined in Section 14.08), if any, previously distributed
to the Employee for the Plan Year beginning in that calendar year.
If an Employee participates in another plan under which he makes elective
deferrals pursuant to a Code ss.401(k) arrangement, elective deferrals under a
Simplified Employee Pension, or salary reduction contributions to a
tax-sheltered annuity, irrespective of whether the Employer maintains the other
plan, he may provide the Advisory Committee a written claim for excess deferrals
made for a calendar year. The Employee must submit the claim no later than the
March 1 following the close of the particular calendar year and the claim must
specify the amount of the Employee's elective deferrals under this Plan which
are excess deferrals. If the Advisory Committee receives a timely claim, it will
distribute the excess deferral (as adjusted for allocable income) the Employee
has assigned to this Plan, in accordance with the distribution procedure
described in the immediately preceding paragraph.
(B) Allocable income. For purposes of making a distribution of
excess deferrals pursuant to this Section 14.07, allocable income means net
income or net loss allocable to the excess deferrals for the calendar year in
which the Employee made the excess deferral and for the "gap period" measured
from the beginning of the next calendar year to the date of the distribution. If
the distribution of the excess deferral occurs during the calendar year in which
the Employee made the excess deferral, the Advisory Committee will treat as a
"gap period" the period from the first day of that calendar year to the date of
the distribution. The Advisory Committee will determine allocable income in the
same manner as described in Section 14.08(F) for excess contributions, except
the numerator of the allocation fraction will be the amount of the Employee's
excess deferrals and the denominator of the allocation fraction will be the
Employee's Accrued Benefit attributable to his elective deferrals.
14.08 ACTUAL DEFERRAL PERCENTAGE ("ADP") TEST. For each Plan Year,
the Advisory Committee must determine whether the Plan's Code ss.401(k)
arrangement satisfies either of the following ADP tests:
(i) The average ADP for the Highly Compensated Group does
not exceed 1.25 times the average ADP of the Nonhighly
Compensated Group; or
<PAGE>
(ii) The average ADP for the Highly Compensated Group does not exceed
the average ADP for the Nonhighly Compensated Group by more than
two percentage points (or the lesser percentage permitted by the multiple
use limitation in Section 14.10) and the average ADP for the Highly
Compensated Group is not more than twice the average ADP for the
Non-highly Compensated Group.
(A) Calculation of ADP. The average ADP for a group is the average
of the separate ADPs calculated for each Eligible Employee who is a member
of that group. An Eligible Employee's ADP for a Plan Year is the ratio of the
Eligible Employee's deferral contributions for the Plan Year to the Employee's
Compensation for the Plan Year. For aggregated family members treated as a
single Highly Compensated Employee, the ADP of the family unit is the greater
of: (i) the ADP determined by combining the deferral contributions and
Compensation of the family members who are Highly Compensated Employees without
family aggregation; or (ii) the ADP determined by combining the deferral
contributions and Compensation of all aggregated family members. A Nonhighly
Compensated Employee's ADP doesn't include elective deferrals made to this Plan
or to any other Plan maintained by the Employer to the extent such elective
deferrals exceed the 402(g) limitation described in Section 14.07(A).
The Advisory Committee may determine (in a manner consistent with Treasury
regulations) the ADPs of the Eligible Employees by taking into account qualified
nonelective contributions or qualified matching contributions, or both, made to
this Plan or to any other qualified Plan maintained by the employer. The
Advisory Committee may not include qualified nonelective contributions in the
ADP test unless the allocation of nonelective contributions is nondiscriminatory
when the Advisory Committee takes into account all nonelective contributions
(including the qualified nonelective contributions) and also when the Advisory
Committee takes into account only the nonelective contributions not used in
either the ADP test described in this Section 14.09. For Plan Years beginning
after December 31, 1989, the Advisory Committee may not include in the ADP test
any qualified nonelective contributions or qualified matching contributions
under another qualified plan unless that plan has the same plan year as this
Plan. The Advisory Committee must maintain records to demonstrate compliance
with the ADP test, including the extent to which the Plan used qualified
nonelective contributions or qualified matching contributions to satisfy the
test.
(B) Special aggregation rule for Highly Compensated Employees.
To determine the ADP of any Highly Compensated Employee, the deferral
contributions taken into account must include any elective deferrals made by the
Highly Compensated Employee under any other Code ss.401(k) arrangement
<PAGE>
maintained by the Employer, unless the elective deferrals are to an ESOP.
If the plans containing the Code ss.401(k) arrangements have different plan
years, the Advisory Committee will determine the combined deferral contributions
on the basis of the plan years ending in the same calendar year.
(C) Aggregation of certain Code ss.401(k) arrangements. If the
Employer treats two plans as a unit for coverage or nondiscrimination
purposes, the Employer must combine the Code ss.401(k) arrangements under such
plans to determine whether either plan satisfies the ADP test. This aggregation
rule applies to the ADP determination for all Eligible Employees, irrespective
of whether an Eligible Employee is a Highly Compensated Employee or a nonhighly
Compensated Employee. The Advisory Committee also may elect to aggregate the
Code ss.401(k) arrangements under plans which the Employer does not treat as a
unit for coverage or nondiscrimination purposes. For Plan Years beginning after
December 31, 1989, an aggregation of Code ss.401(k) arrangements under this
paragraph does not apply to plans which have different plan years and, for Plan
Years beginning after December 31, 1988, the Advisory Committee may not
aggregate an ESOP )(or the ESOP portion of a plan) with a non-ESOP plan (or
non-ESOP portion of a plan).
(D) Characterization of excess contributions. If, pursuant to this
Section 14.08, the Advisory Committee has elected to include qualified
matching contributions in the average ADP, the Advisory Committee will treat
excess contributions as attributable proportionately to deferral contributions
and to qualified matching contributions allocated on the basis of those deferral
contributions. If the total amount of a Highly Compensated Employee's excess
contributions for the Plan Year exceeds his deferral contributions or qualified
matching contributions for the Plan Year, the Advisory Committee will treat the
remaining portion of his excess contributions as attributable to qualified
nonelective contributions. The Advisory Committee will reduce the amount of
excess contributions for a Plan Year distributable to a Highly Compensated
Employee by the amount of excess deferrals (as determined in Section 14.07), if
any, previously distributed to that Employee for the Employee's taxable year
ending in that Plan Year.
(E) Distribution of excess contributions. If the Advisory
Committee determines the Plan fails to satisfy the ADO test for a plan
Year, it must distribute the excess contributions, as adjusted for allocable
income, during the next Plan Year. However, the Employer will incur an excise
tax equal to 10% of the amount of excess contributions for a Plan Year not
distributed tot he appropriate Highly Compensated Employees during the first 2
1/2 months of that next Plan Year. The excess contributions are the amount of
deferral contributions made by the Highly compensated Employees with causes the
<PAGE>
Plan to fail to satisfy the ADP test. The Advisory Committee will
distribute to each Highly Compensated Employee his respective share of the
excess contributions. The Advisory Committee will determine the respective
shares of excess contributions by starting with the Highly Compensated
Employee(s) who has the greatest ADP of the Highly Compensated Employee(s) whose
ADP the Advisory Committee already has reduced), and continuing in this manner
until the average ADP for the Highly Compensated Group satisfies the ADP test.
If the Highly Compensated Employee si part of an aggregated family group, the
Advisory Committee, in accordance with the applicable Treasury regulations, will
determine each aggregated family member's allocable share of the excess
contributions assigned to the family unit.
(F) Allocable income. To determine the amount of the
corrective distribution required under this Section 14.08, the Advisory
Committee must calculate the allocable income for the Plan Year in which the
excess contributions arose and for the "gap period" measured from the beginning
of the next Plan Year to the date of the distribution. "Allocable income" means
net income or net loss. To calculate allocable income for the Plan Year, the
Advisory Committee: (1) first will determine the net income or net loss for the
Plan Year on the Highly Compensated Employee's Accrued Benefit attributable to
deferral contributions; and (2) then will multiply this net income or net loss
by the following fraction:
Amount of the Highly Compensated
Employee's excess contributions
--------------------------------------------------------
Accrued Benefit attributable to deferral contributions
The Accrued Benefit attributable to deferral contributions includes the
Accrued Benefit attributable to qualified matching contributions and qualified
nonelective contributions taken into account in the ADP test for the Plan Year
or for any prior Plan Year. For purposes of the denominator of the fraction, the
Advisory Committee will calculate the Accrued Benefit attributable to deferral
contributions as of the last day of the Plan Year (without regard to the net
income or net loss for the Plan Year on that Accrued Benefit).
To calculate allocable income for the "gap period," the Advisory Committee
will perform the same calculation as described in the preceding paragraph,
except in clause (1) the Advisory Committee will determine, as of the last day
of the month preceding the date of distribution, the net income or net loss for
the "gap period" and in clause (2) will calculate the Accrued Benefit
attributable to deferral contributions as of the day before the distribution. If
the Plan does not perform a valuation on the last day of the month preceding the
date of distribution, the Advisory Committee, in lieu of the calculation
described in this paragraph, will calculate allocable income for each month in
<PAGE>
the "gap period" as equal to 10% of the allocable income for the Plan Year.
Under this alternate calculation, the Advisory Committee will disregard the
month in which the distribution occurs, if the Plan makes the distribution no
later than the 15th day of that month.
14.09 NONDISCRIMINATION RULES FOR EMPLOYER MATCHING
CONTRIBUTIONS/PARTICIPANT NON-DEDUCTIBLE CONTRIBUTIONS. For Plan Years beginning
after December 31, 1986, the Advisory Committee must determine whether the
annual Employer matching contributions (other than qualified matching
contributions used in the ADP under Section 14.08), if any, and the Employee
contributions, if any, satisfy either of the following average contribution
percentage ("ACP") tests:
(i) The ACP for the Highly Compensated Group doe snot
exceed 1.25 times the ACP of the Nonhighly Compensated Group;
or
(ii) The ACP for the Highly Compensated Group does not exceed the ACP
for the Nonhighly Compensated Group by more than two percentage points
(or the lesser percentage permitted by the multiple use limitation
in Section 14.10) and the ACP for the Highly Compensated Group is not more
than twice the ACP for the Nonhighly Compensated Group.
(A) Calculation of ACP. The average contribution percentage for a
group is the average of the separate contribution percentages calculated
for each Eligible Employee who is a member of that group. An Eligible Employee's
contribution percentage for a Plan Year is the ratio of the Eligible Employee's
aggregate contributions for the Plan Year to the Employee's Compensation for the
Plan Year. "Aggregate contributions" are Employer matching contributions (other
than qualified matching contributions used in the ADP test under Section 14.08)
and employee contributions (as defined in Section 14.03). For aggregated family
members treated as a single Highly Compensated Employee, the contribution
percentage of the family unit is the greater of: (i) the contribution percentage
determined by combining the aggregate contributions and Compensation of the
family members who are Highly Compensated Employees without family aggregation;
or (ii) the contribution percentage determined by combining the aggregate
contributions and Compensation of all aggregated family members.
The Advisory Committee, in a manner consistent with Treasury regulations,
may determine the contribution percentages of the Eligible Employees by taking
into account qualified nonelective contributions (other than qualified
nonelective contributions used in the ADP test under Section 14.08) or elective
deferrals, or both, made to this Plan or to any other qualified Plan maintained
by the Employer. The Advisory Committee may not include qualified nonelective
<PAGE>
contributions in the ACP test unless the allocation of nonelective
contributions is nondiscriminatory when the Advisory Committee takes into
account all nonelective contributions (including the qualified nonelective
contributions) and also when the advisory Committee takes into account only the
nonelective contributions not used in either the ADP test described in Section
14.08 or the ACP test described in this Section 14.09. The Advisory Committee
may not include elective deferrals in the ACP test, unless the Plan which
includes the elective deferrals satisfies the ADP test both with and without the
elective deferrals included in this ACP test. For Plan Years beginning after
December 31, 1989, the Advisory Committee may not include in the ACP test any
qualified nonelective contributions or elective deferrals under another
qualified plan unless that plan has the same plan year as this Plan. The
Advisory Committee must maintain records to demonstrate compliance with the ACP
test, including the extent to which the Plan used qualified nonelective
contributions or elective deferrals to satisfy the test.
(B) Special aggregation rule for Highly Compensated Employees.
To determine the contribution percentage of any Highly Compensated
Employee, the aggregate contributions taken into account must include any
matching contributions (other than qualified matching contributions used in the
ADP test) and any Employee contributions made on his behalf to any other plan
maintained by the Employer, unless the other plan is an ESOP. If the plans have
different plan years, the Advisory Committee will determine the combined
aggregate contributions on the basis of the plan years ending in the same
calendar year.
(C) Aggregation of certain plans. If the Employer treats two plans
as a unit for coverage or nondiscrimination purposes, the Employer must
combine the plans to determine whether either plan satisfies the ACP test. This
aggregation rule applies to the contribution percentage determination for all
Eligible Employees, irrespective of whether an Eligible Employee is a Highly
Compensated Employee or a Nonhighly Compensated Employee. The Advisory Committee
also may elect to aggregate plans which the employer does not treat as a unit
for coverage or nondiscrimination purposes. For Plan Years beginning after
December 31, 1989, in aggregation of plans under this paragraph does not apply
to plans which have different plan years and, for Plan Years beginning after
December 31, 1988, the Advisory Committee may not aggregate an ESOP (or the ESOP
portion of a plan) with a non-ESOP plan (or non-ESOP portion of a plan).
(D) Distribution of excess aggregate contributions. The Advisory
Committee will determine excess aggregate contributions after determining
excess deferrals under Section 14.07 and excess contributions under Section
14.08. If the advisory Committee determines the Plan fails to satisfy the ACP
test for a plan Year, it must distribute the excess aggregate contributions, as
<PAGE>
adjusted for allocable income, during the next Plan Year. However, the
Employer will incur an excise tax equal to 10% of the amount of excess aggregate
contributions for a Plan Year not distributed to the appropriate Highly
Compensated Employees during the first 2 1/2 months of that next Plan Year. The
excess aggregate contributions are the amount of aggregate contributions
allocated on behalf of the Highly Compensated Employees which causes the Plan to
fail to satisfy the ACP test. The Advisory Committee will distribute to each
Highly Compensated Employee his respective share of the excess aggregate
contributions. The Advisory Committee will determine the respective shares of
excess aggregate contributions by starting with the Highly Compensated
Employee(s) who has the greatest contribution percentage, reducing his
contribution percentage to the next highest contribution percentage, then, if
necessary, reducing the contribution percentage of the Highly Compensated
Employee(s) at the next highest contribution percentage level (including the
contribution percentage of the Highly Compensated Employee(s) whose contribution
percentage the Advisory Committee already has reduced), and continuing in this
manner until the ACP for the Highly Compensated Group satisfies the ACP test. if
the Highly Compensated Employee is part of an aggregated family group, the
Advisory Committee, in accordance with the applicable Treasury regulations, will
determine each aggregated family member's allocable share of the excess
aggregate contributions assigned to the family unit.
(E) Allocable income. To determine the amount of the
corrective distribution required under this Section 14.09, the Advisory
Committee must calculate the allocable income for the Plan Year in which the
excess aggregate contributions arose and for the "gap period" measured from the
beginning of the next Plan Year to the date of the distribution. "Allocable
income" means net income or net loss. The Advisory Committee will determine
allocable income in the same manner as described in Section 14.08(F) for excess
contributions, except the numerator of the allocation fraction will be the
Highly Compensated Employee's excess aggregate contributions and the denominator
of the allocation fraction will be the Employee's Accrued Benefit attributable
to aggregate contributions and, if applicable, to qualified nonelective
contributions and elective deferrals included in the ACP test for the Plan Year
or for any prior Plan Year.
(F) Characterization of excess aggregate contributions. The
Advisory Committee will treat a Highly Compensated Employee's allocable
share of excess aggregate contributions in the following priority: (1) first as
attributable to his Employee contributions which are voluntary contributions, if
any; (2) then as matching contributions allocable with respect to excess
contributions determined under the ADP test described in Section 14.08; (3) then
on a pro rata basis to matching contributions and to the deferral contributions
<PAGE>
relating to those matching contributions which the Advisory Committee has
included in the ACP test; (4) then on a pro rata basis to Employee contributions
which are mandatory contributions, if any and to the matching contributions
allocated on the basis of those mandatory contributions; and (5) last to
qualified nonelective contributions used int he ACP test. To the extent the
Highly Compensated Employee's excess aggregate contributions are attributable to
matching contributions, and he is not 100% vested in his Accrued Benefit
attributable to matching contributions, the Advisory Committee will distribute
only the vested portion and forfeit the nonvested portion. The vested portion of
the Highly Compensated Employee's excess aggregate contributions attributable to
Employer matching contributions is the total amount of such excess aggregate
contributions (as adjusted for allocable income) multiplied by his vested
percentage (determined as of the last day of the Plan Year for which the
Employer made the matching contribution). The Employer will specify in Adoption
Agreement Section 3.05 the manner in which the Plan will allocate forfeited
excess aggregate contributions.
14.10 MULTIPLE USE LIMITATION. For Plan Years beginning after
December 31, 1988, if at least one Highly Compensated Employee is
includible in the ADP test under Section 14.08 and in the ACP test under Section
14.09, the sum of the Highly Compensated Group's ADP and ACP may not exceed the
multiple use limitation.
The multiple use limitation is the sum of (i) and (ii):
(i) 125% of the greater of: (a) the ADP of the Nonhighly Compensated
Group under the Code ss.401(k) arrangement; or (b) the ACP of the
Nonhighly Compensated Group for the Plan Year beginning with or within the
Plan Year of the Code ss.401(k) arrangement.
(ii) 2% plus the lesser of (i)(a) or (i)(b), but no more
than twice the lesser of (i)(a) or (i)(b).
For Plan Years beginning prior to the later of January 1, 1992, or 60 days
after the Treasury issues final regulations under Code ss.401(m), the Advisory
Committee, in lieu of determining the multiple use limitation as the sum of (i)
and (ii), may elect to determine the multiple use limitation as the sum of (iii)
and (iv):
(iii) 125% of the lesser of: (a) the ADP of the Nonhighly
Compensated Group under the Code ss.401(k) arrangement; or (b) the
ACP of the Nonhighly Compensated Group for the Plan Year beginning with or
within the Plan Year of the Code ss.401(k) arrangement.
(iv) 2% plus the greater of (iii)(a) or (iii)(b), but no
more than twice the greater of (iii)(a) or (iii)(b).
<PAGE>
The Advisory Committee will determine whether the Plan satisfies the
multiple use limitation after applying the ADP test under Section 14.08 and the
ACP test under Section 14.09 and after making any corrective distributions
required by those Sections. If, after applying this Section 14.10, the Advisory
Committee determines the Plan has failed to satisfy the multiple use limitation,
the Advisory Committee will correct the failure by treating the excess amount as
excess aggregate contributions under Section 14.09. This Section 14.10 does not
apply unless, prior to application of the multiple use limitation, the ADP and
the ACP of the Highly Compensated Group each exceeds 125% of the respective
percentages for the Nonhighly Compensated Group.
14.11 DISTRIBUTION RESTRICTIONS. The Employer must elect in Section
6.03 of the Adoption Agreement the distribution events permitted under the
Plan. The distribution events applicable to the Participant's Deferral
Contributions Account, Qualified Nonelective Contributions Account and Qualified
Matching Contributions Account must satisfy the distribution restrictions
described in paragraph (m) of Section 14.03.
(A) Hardship distributions from Deferral Contributions Account.
The Employer must elect in Adoption Agreement Section 6.03 whether a
Participant may receive hardship distributions from his Deferral Contributions
Account prior to the Participant's Separation from Service. Hardship
distributions from the Deferral Contributions Account must satisfy the
requirements of this Section 14.11. A hardship distribution option may not apply
to the Participant's Qualified Nonelective Contributions Account or Qualified
Matching Contributions Account.
(l) Definition of hardship. A hardship distribution under this
Section 14.11 must be on account of one or more of the following immediate
and heavy financial needs: (1) medical expenses described in Code ss.213(d)
incurred by the Participant, by the Participant's spouse, or by any of the
Participant's dependents; (2) the purchase (excluding mortgage payments) of a
principal residence for the Participant; (3) the payment of post-secondary
education tuition, for the next semester or for the next quarter, for the
Participant, for the Participant's spouse, or for any of the Participant's
dependents; or (4) to prevent the eviction of the Participant from his principal
residence or the foreclosure on the mortgage of the Participant's principal
residence.
(2) Restrictions. The following restrictions apply to a
Participant who receives a hardship distribution: (a) the Participant may
not make elective deferrals or employee contributions to the Plan for the
12-month period following the date of his hardship distribution; (b) the
distribution is not in excess of the amount of the immediate and heavy financial
need; (c) the Participant must have obtained all distributions, other than
<PAGE>
hardship distributions, and all nontaxable loans currently available under this
Plan and all other qualified plans maintained by the Employer; and (d) the
Participant agrees to limit elective deferrals under this Plan and under any
other qualified Plan maintained by the Employer, for the Participant's taxable
year immediately following the taxable year of the hardship distribution, to the
402(g) limitation (as described in Section 14.07), reduced by the amount of the
Participant's elective deferrals made in the taxable year of the hardship
distribution. The suspension of elective deferrals and employee contributions
described in clause (a) also must apply to all other qualified plans and to all
nonqualified plans of deferred compensation maintained by the Employer, other
than any mandatory employee contribution portion of a defined benefit plan,
including stock option, stock purchase and other similar plans, but not
including health or welfare benefit plans (other than the cash or deferred
arrangement portion of a cafeteria plan).
(3) Earnings. For Plan Years beginning after December 31, 1988, a
hardship distribution under this Section 14.11 may not include earnings on
an Employee's elective deferrals credited after December 31, 1988, and may not
include qualified matching contributions and qualified nonelective
contributions, nor any earnings on such contributions, irrespective of when
credited.
(B) Distributions after Separation from Service. Following the
Participant's Separation from Service, the distribution events applicable to the
Participant apply equally to all of the Participant's Accounts, except as
elected in Section 6.03 of the Employer's Adoption Agreement.
14.12 SPECIAL ALLOCATION RULES. If the Code ss.401(k) arrangement
provides for salary reduction contributions, if the Plan accepts Employee
contributions, pursuant to Adoption Agreement Section 4.01, or if the Plan
allocates matching contributions as of any date other than the last day of the
Plan Year, the Employer must elect in Adoption Agreement 9.11 whether any
special allocation provisions will apply under Section 9.11 of the Plan. For
purposes of the elections:
(a) A "segregated Account" direction means the Advisory Committee
will establish a segregated Account for the applicable contributions
made on the Participant's behalf during the Plan Year. The Trustee must
invest the segregated Account in Federally insured interest
bearing savings account(s) or time deposits, or a combination of
both, or in any other fixed income investments, unless otherwise
specified in the Employer's Adoption Agreement. As of the last day of
<PAGE>
each Plan Year (or, if earlier, an allocation date coinciding with a
valuation date described in Section 9.11), the Advisory Committee will
reallocate the segregate Account to the Participant's appropriate
Account in accordance with Section 3.04 or Section 4.06, whichever
applies to the contributions.
(b) A "weighted average allocation" method will treat a weighted
portion of the applicable contributions as if includible in the
Participant's Account as of the beginning of the valuation period. The
weighted portion is a fraction, the numerator of which is the number
of months in the valuation period, excluding each month in the valuation
period which begins prior to the contribution date of the applicable
contributions, and the denominator of which is the number of months in
the valuation period. The Employer may elect in its Adoption
Agreement to substitute a weighting period other than months for
purposes of this weighted average allocation.
Call toll-free:
800-525-8085
303/779-1233 in metro Denver
Ask for Retirement Services
The Financial Funds
Post Office Box 2040
Denver, Colorado 80201
adop-agr\mp&ta.01
[ARTICLE] 6
[CIK] 0000906334
[NAME] INVESCO INTERNATIONAL FUNDS INC.
[SERIES]
[NUMBER] 2
[NAME] INVESCO EUROPEAN FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] OCT-31-1997
[PERIOD-END] OCT-31-1997
[INVESTMENTS-AT-COST] 242994200
[INVESTMENTS-AT-VALUE] 296171470
[RECEIVABLES] 70067486
[ASSETS-OTHER] 90232
[OTHER-ITEMS-ASSETS] 7743288
[TOTAL-ASSETS] 374072476
[PAYABLE-FOR-SECURITIES] 9263262
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 39989904
[TOTAL-LIABILITIES] 49253166
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 212249369
[SHARES-COMMON-STOCK] 18729780
[SHARES-COMMON-PRIOR] 18969832
[ACCUMULATED-NII-CURRENT] 543861
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 58883886
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 53142194
[NET-ASSETS] 324819310
[DIVIDEND-INCOME] 5860880
[INTEREST-INCOME] 499363
[OTHER-INCOME] (842962)
[EXPENSES-NET] 4326879
[NET-INVESTMENT-INCOME] 1190402
[REALIZED-GAINS-CURRENT] 60622016
[APPREC-INCREASE-CURRENT] 1427595
[NET-CHANGE-FROM-OPS] 62049611
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 1288400
[DISTRIBUTIONS-OF-GAINS] 20402793
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 66508158
[NUMBER-OF-SHARES-REDEEMED] 68118819
[SHARES-REINVESTED] 1370609
[NET-CHANGE-IN-ASSETS] 24231082
[ACCUMULATED-NII-PRIOR] 113293
[ACCUMULATED-GAINS-PRIOR] 19194448
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 2679462
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 4480562
[AVERAGE-NET-ASSETS] 354832618
[PER-SHARE-NAV-BEGIN] 15.85
[PER-SHARE-NII] 0.07
[PER-SHARE-GAIN-APPREC] 2.63
[PER-SHARE-DIVIDEND] 0.07
[PER-SHARE-DISTRIBUTIONS] 1.14
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 17.34
[EXPENSE-RATIO] 1
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
[ARTICLE] 6
[CIK] 0000906334
[NAME] INVESCO INTERNATIONAL FUNDS INC.
[SERIES]
[NUMBER] 1
[NAME] INVESCO PACIFIC BASIN FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] OCT-31-1997
[PERIOD-END] OCT-31-1997
[INVESTMENTS-AT-COST] 81784765
[INVESTMENTS-AT-VALUE] 69384434
[RECEIVABLES] 5689956
[ASSETS-OTHER] 108624
[OTHER-ITEMS-ASSETS] 32650
[TOTAL-ASSETS] 75215664
[PAYABLE-FOR-SECURITIES] 9013506
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 2259131
[TOTAL-LIABILITIES] 11272637
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 74964442
[SHARES-COMMON-STOCK] 6565265
[SHARES-COMMON-PRIOR] 10619681
[ACCUMULATED-NII-CURRENT] 523439
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 856554
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (12401408)
[NET-ASSETS] 63943027
[DIVIDEND-INCOME] 1552416
[INTEREST-INCOME] 153741
[OTHER-INCOME] (169488)
[EXPENSES-NET] 2092729
[NET-INVESTMENT-INCOME] (556060)
[REALIZED-GAINS-CURRENT] 2050539
[APPREC-INCREASE-CURRENT] (20975739)
[NET-CHANGE-FROM-OPS] (18925200)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 52110
[DISTRIBUTIONS-OF-GAINS] 8942331
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 46222901
[NUMBER-OF-SHARES-REDEEMED] 50934920
[SHARES-REINVESTED] 657603
[NET-CHANGE-IN-ASSETS] (85926892)
[ACCUMULATED-NII-PRIOR] 39834
[ACCUMULATED-GAINS-PRIOR] 8840121
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 939420
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 2151817
[AVERAGE-NET-ASSETS] 126960318
[PER-SHARE-NAV-BEGIN] 14.11
[PER-SHARE-NII] (0.09)
[PER-SHARE-GAIN-APPREC] (3.45)
[PER-SHARE-DIVIDEND] 0.00
[PER-SHARE-DISTRIBUTIONS] 0.83
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 9.74
[EXPENSE-RATIO] 2
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
[ARTICLE] 6
[CIK] 0000906334
[NAME] INVESCO INTERNATIONAL FUNDS INC.
[SERIES]
[NUMBER] 3
[NAME] INVESCO INTERNATIONAL GROWTH FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] 12-MOS
[FISCAL-YEAR-END] OCT-31-1997
[PERIOD-END] OCT-31-1997
[INVESTMENTS-AT-COST] 65019019
[INVESTMENTS-AT-VALUE] 73917571
[RECEIVABLES] 11362271
[ASSETS-OTHER] 63148
[OTHER-ITEMS-ASSETS] 34556
[TOTAL-ASSETS] 85377546
[PAYABLE-FOR-SECURITIES] 486878
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 111413
[TOTAL-LIABILITIES] 598291
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 68781401
[SHARES-COMMON-STOCK] 5149447
[SHARES-COMMON-PRIOR] 5594587
[ACCUMULATED-NII-CURRENT] 675691
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 6420735
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 8901428
[NET-ASSETS] 84779255
[DIVIDEND-INCOME] 1722522
[INTEREST-INCOME] 388090
[OTHER-INCOME] (206607)
[EXPENSES-NET] 1643438
[NET-INVESTMENT-INCOME] 260567
[REALIZED-GAINS-CURRENT] 7485092
[APPREC-INCREASE-CURRENT] (891853)
[NET-CHANGE-FROM-OPS] 6593239
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 395239
[DISTRIBUTIONS-OF-GAINS] 4053525
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 27110962
[NUMBER-OF-SHARES-REDEEMED] 27828343
[SHARES-REINVESTED] 272241
[NET-CHANGE-IN-ASSETS] (9807141)
[ACCUMULATED-NII-PRIOR] 131783
[ACCUMULATED-GAINS-PRIOR] 3783899
[OVERDISTRIB-NII-PRIOR] 394151
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 987897
[INTEREST-EXPENSE] 3336
[GROSS-EXPENSE] 1693018
[AVERAGE-NET-ASSETS] 98210466
[PER-SHARE-NAV-BEGIN] 16.91
[PER-SHARE-NII] 0.06
[PER-SHARE-GAIN-APPREC] 0.37
[PER-SHARE-DIVIDEND] 0.08
[PER-SHARE-DISTRIBUTIONS] 0.80
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 16.46
[EXPENSE-RATIO] 2
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
