<PAGE> 1
1933 Act Registration No. 33-70104
1940 Act Registration No. 811-8072
As filed with the Securities and Exchange Commission on April 28, 1995
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
Registration Statement Under the Securities Act of 1933 /x/
Pre-Effective Amendment No.___ / /
Post-Effective Amendment No. 4 /x/
and/or
Registration Statement Under The /x/
Investment Company Act of 1940 /x/
Amendment No. 7
(Check appropriate box or boxes)
PROVIDENT INSTITUTIONAL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
Bellevue Park Corporate Center
400 Bellevue Parkway, Suite 100
Wilmington, Delaware 19809
(Address of Principal Executive Offices) (Zip Code)
(302) 792-2555
(Registrant's Telephone Number, including Area Code)
Edward J. Roach
Bellevue Park Corporate Center
400 Bellevue Parkway, Suite 100
Wilmington, Delaware 19809
(Name and Address of Agent for Service)
------------------------------
Copy to:
W. BRUCE McCONNEL, III
Drinker Biddle & Reath
Philadelphia National Bank Building, 1345 Chestnut Street
Philadelphia, Pennsylvania 19107-3496
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE:
/x/ Immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / on (date) pursuant to paragraph (a)(i)
/ / 75 days after filing pursuant to paragraph (a)(ii)
/ / on (date) pursuant to paragraph (a)(ii) of Rule 485.
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
/ / this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
THE REGISTRANT HAS PREVIOUSLY FILED A DECLARATION OF INDEFINITE REGISTRATION OF
ITS SHARES OF ITS COMMON STOCK UNDER THE SECURITIES ACT OF 1933 PURSUANT TO
RULE 24F-2 UNDER THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED. THE NOTICE
REQUIRED BY SUCH RULE FOR THE REGISTRANT'S MOST RECENT FISCAL YEAR WAS FILED ON
FEBRUARY 27, 1995.
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PROVIDENT INSTITUTIONAL FUNDS INC.
REGISTRATION STATEMENT ON FORM N-1A
Cross Reference Sheet
Pursuant to Rule 481(a)
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<CAPTION>
N-1A Item No. Location
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<S> <C> <C>
1. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page (no caption)
2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction; Fees and Expenses
3. Condensed Financial Information . . . . . . . . . . . . . . . Financial Highlights
4. General Description of Registrant . . . . . . . . . . . . . . Investment Objectives and Policies; Special Investment
Methods; Risk Considerations
5. Management of the Fund . . . . . . . . . . . . . . . . . . . Management
5A. Management's Discussion of Fund Performance . . . . . . . . . Not applicable
6. Capital Stock and Other Securities . . . . . . . . . . . . . Purchase of Shares
7. Purchase of Securities Being Offered . . . . . . . . . . . . Fees and Expenses; Purchase of Shares; Valuation of Shares
8. Redemption or Repurchase . . . . . . . . . . . . . . . . . . Redemption of Shares
9. Pending Legal Proceedings . . . . . . . . . . . . . . . . . . Not Applicable
10. Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . Cover Page (no caption)
11. Table of Contents . . . . . . . . . . . . . . . . . . . . . . Table of Contents
12. General Information and History . . . . . . . . . . . . . . . The Company
13. Investment Objectives and Policies . . . . . . . . . . . . . Investment Objectives, Policies and Restrictions
14. Management of the Fund . . . . . . . . . . . . . . . . . . . Directors and Executive Officers
15. Control Persons and Principal Holders of
Securities . . . . . . . . . . . . . . . . . . . . . . . . . Capital Stock and Ownership of Shares
16. Investment Advisory and Other Services . . . . . . . . . . . Investment Advisory and Other Services
17. Brokerage Allocation and Other Practices . . . . . . . . . . Portfolio Transactions and Allocation of Brokerage
18. Capital Stock and Other Securities . . . . . . . . . . . . . Capital Stock and Ownership of Shares
19. Purchase, Redemption and Pricing of
Securities Being Offered . . . . . . . . . . . . . . . . . . Net Asset Value and Public Offering Price; Redemption
20. Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . Taxation
</TABLE>
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<TABLE>
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N-1A Item No. Location
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21. Underwriters . . . . . . . . . . . . . . . . . . . . . . . . Investment Advisory and Other Services; Portfolio
Transactions and Allocation of Brokerage
22. Calculations of Performance Data . . . . . . . . . . . . . . Calculation of Performance Data
23. Financial Statements . . . . . . . . . . . . . . . . . . . . Financial Statements
</TABLE>
Part C
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Post- Effective Amendment to
the Registration Statement.
<PAGE> 4
Provident Institutional Funds, Inc.
SHORT DURATION FUND
INTERMEDIATE DURATION FUND
<TABLE>
<S> <C>
Bellevue Park Corporate Center For purchase and redemption orders call:
400 Bellevue Parkway (800) 441-7450 (in Delaware: (302) 791-5350).
Wilmington, Delaware 19809 For other information call: (800) 821-7432.
</TABLE>
Provident Institutional Funds, Inc. (the "Company") is an open-end
management investment company the shares of which can be offered in separate
diversified and non-diversified series. The Company's shares are currently
offered in two diversified series: Short Duration Fund and Intermediate Duration
Fund (each, a "Fund" and, together, the "Funds"). The Funds' shares are no load;
that is, they are not subject to any sales charges or redemption fees.
The investment objective of each Fund is to seek as high a level of current
income as is consistent with preservation of principal and the average weighted
duration of its respective portfolio securities. Each Fund seeks to achieve its
objective by investing in U.S. Treasury bills, notes and bonds and other
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities and repurchase agreements fully secured by such obligations.
Short Duration Fund expects to maintain an average weighted portfolio duration
ranging from 18 months to three years, and Intermediate Duration Fund expects to
maintain an average weighted portfolio duration ranging from four to six years.
See "Investment Objectives and Policies--Duration." The Funds are designed to
qualify for investment by national banks.
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF OR GUARANTEED,
ENDORSED, OR OTHERWISE SUPPORTED BY PNC BANK CORP. OR ITS AFFILIATES
OR THE U.S. GOVERNMENT, AND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY. INVESTMENT IN THE FUNDS
INVOLVES INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
This Prospectus concisely describes the information about the Funds that
you should know before investing. Please read the Prospectus carefully before
investing and retain it for future reference. Additional Information about the
Funds, contained in a Statement of Additional Information currently dated April
28, 1995, has been filed with the Securities and Exchange Commission and is
available to investors without charge by calling 800-821-7432. The Statement of
Additional Information, as amended from time to time, is incorporated in its
entirety by reference into this Prospectus.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
------------------------
April 28, 1995
<PAGE> 5
INTRODUCTION
Provident Institutional Funds, Inc. (the "Company") is an open-end
management investment company, or mutual fund, organized under the laws of the
State of Maryland. The Company's common stock may be issued in separate
diversified and non-diversified series. The Company's shares are currently
offered in two diversified series: Short Duration Fund and Intermediate Duration
Fund (each a "Fund" and, collectively, the "Funds"). The Funds are designed to
qualify for investment by national banks.
THE INVESTMENT ADVISER
PNC Institutional Management Corporation (the "Adviser"), an indirect
wholly-owned subsidiary of PNC Bank, National Association ("PNC Bank"), provides
or oversees the provision of all investment advisory services for the Funds.
Each Fund pays the Adviser a fee for such advisory services. Advisory fees for
each Fund are payable at the annual rate of .40% of each Fund's average daily
net assets. The Adviser has agreed to limit advisory fees to .30% of each Fund's
average daily net assets until at least December 31, 1995. See
"Management--Investment Adviser" and "Management--Investment Subadviser."
THE INVESTMENT SUBADVISER
Each Fund's assets are managed on a day-to-day basis by a subadviser,
BlackRock Financial Management, Inc. (the "Subadviser"), a wholly-owned
subsidiary of PNC Asset Management Group, Inc., which is a wholly-owned
subsidiary of PNC Bank. The Subadviser is responsible for individual portfolio
securities selection for the Funds. No subadvisory fees are paid by the Funds to
the Subadviser; however, the Subadviser will receive compensation from the
Adviser. See "Management--Investment Subadviser."
THE ADMINISTRATOR, TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND REGISTRAR
The Funds are administered by PFPC Inc. ("PFPC"), an indirect wholly-owned
subsidiary of PNC Bank Corp. Each Fund pays PFPC a fee for various
administrative services performed by PFPC for the Fund such as maintenance of
books and records, preparation of government filings and shareholder reports and
computation of net asset values and daily dividends. The administration fees for
each Fund are paid at the annual rate of .15% of each Fund's average daily net
assets. PFPC also serves as the Funds' transfer agent, dividend disbursing agent
and registrar. See "Management--Administrator" and "--Transfer Agent, Dividend
Disbursing Agent and Custodian."
PURCHASE AND REDEMPTION OF SHARES
Provident Distributors, Inc. (the "Distributor") acts as the principal
distributor of the Funds' shares. A Fund's shares may be purchased directly from
the Fund by contacting PFPC at (800) 441-7450. Shares of each Fund are offered
to the public for purchase and redemption at their respective net asset values
per share next determined after receipt of an order in proper form by PFPC,
without imposition of any sales or redemption charge. See "Purchase of Shares"
and "Redemption of Shares." Each Fund reserves the right, upon 30 days' written
notice, to redeem an account if the net asset value of the shares in that
account falls below $500. See "Redemption of Shares--Involuntary Redemption."
2
<PAGE> 6
MINIMUM INITIAL AND SUBSEQUENT INVESTMENTS
The minimum initial investment in each Fund is $5,000. There is no minimum
subsequent investment. Each Fund reserves the right to accept smaller purchases
in its sole discretion. See "Purchase of Shares--Minimum Investments."
EXCHANGES
Shareholders of either Fund are entitled to exchange their Fund shares for
shares of the other Fund on the basis of each Fund's respective net asset value
at the time of the exchange. See "Purchase of Shares--Exchange Privilege."
RISK FACTORS TO CONSIDER
An investment in either of the Funds is subject to certain risks, as set
forth in detail under "Risk Considerations." As with other mutual funds, there
can be no assurance that either Fund will achieve its objective. To the extent
set forth under "Investment Objectives and Policies" and "Special Investment
Methods," the Funds may engage in the following investment practices which may
involve added risks: the purchase of mortgage-related securities, the use of
repurchase agreements and reverse repurchase agreements (the use of reverse
repurchase agreements involves the speculative technique known as leveraging)
and the purchase or sale of securities on a "when-issued" or "forward
commitment" basis. All of these transactions involve certain special risks, as
set forth under the "Investment Objectives and Policies," "Special Investment
Methods" and "Risk Considerations" sections found on pages 6, 10 and 13,
respectively.
SHAREHOLDER INQUIRIES
Any questions or communications regarding a shareholder account should be
directed to PFPC at (800) 441-7450 (in Delaware (302) 791-5350). General
inquiries regarding the Funds should be directed to the Funds at (800) 821-7432.
3
<PAGE> 7
FEES AND EXPENSES
The expense information set forth below has been restated to reflect
current fees through the end of each Fund's fiscal year ending December 31,
1995, on an annualized basis. As a result of a change in certain service
providers an expense structure different from that which is set forth below
applied prior to February 17, 1995.
<TABLE>
<CAPTION>
SHORT INTERMEDIATE
DURATION DURATION
FUND FUND
------------ ------------
<S> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases........................ None None
Maximum Sales Load Imposed on Reinvested Dividends............. None None
Deferred Sales Charges......................................... None None
Redemption Fees................................................ None None
Exchange Fees.................................................. None None
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees (After waiver)................................. .30% .30%
12b-1 Fees (shareholder service fees).......................... .10% .10%
Other Expenses............................................... .25% .25%
Administration Fees....................................... .15% .15%
Miscellaneous............................................. .10% .10%
----- ----- ----- -----
Total Fund Operating Expenses (After waiver)................... .65% .65%
==== ====
</TABLE>
EXAMPLE:
<TABLE>
<CAPTION>
SHORT INTERMEDIATE
DURATION DURATION
FUND FUND
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<S> <C> <C>
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time
period:
1 year $ 7 $ 7
3 years $ 21 $ 21
5 years $ 36 $ 36
10 years $ 81 $ 81
</TABLE>
The purpose of the above Fees and Expenses table is to assist the investor
in understanding the various costs and expenses that investors in the Funds will
bear directly or indirectly. The expense information in the table above has been
restated to reflect current fees. THE EXAMPLE SHOWN ABOVE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR PERFORMANCE. ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The percentages set forth for
each Fund which are included within the category "Other Expenses" are based on
estimated amounts through the end of each Fund's fiscal year ending December 31,
1995, on an annualized basis. The Adviser has agreed to waive a portion of the
management fee so that the management fee will be payable at the annual rate of
.30% of each Fund's average daily net assets through at least December 31, 1995.
Management fees and total operating expenses absent such waiver would be .40%
and .75%, respectively, of each Fund's average daily net assets on an annualized
4
<PAGE> 8
basis. For additional information, including a more complete explanation of
management, administration and service fees, see "Management--Investment
Adviser," "--Administrator," "--Shareholder Service Plan" and "--Expenses." The
foregoing table has not been audited by the Fund's independent auditors.
FINANCIAL HIGHLIGHTS
The financial highlights presented below have been audited by KPMG Peat
Marwick LLP, the Company's independent auditors, whose report is contained in
the Company's Annual Report to Shareholders dated December 31, 1994. Such
financial highlights should be read in conjunction with the Funds' financial
statements contained in the Statement of Additional Information. More
information about the performance of the Funds is also contained in the Annual
Report to Shareholders, which may be obtained without charge by calling
800-821-7432.
(For a Share Outstanding Throughout the Period)(1)
<TABLE>
<CAPTION>
SHORT INTERMEDIATE
DURATION DURATION
------------------ ------------------
PER SHARE DATA
FEBRUARY 14, 1994 FEBRUARY 14, 1994
THROUGH THROUGH
DECEMBER 31, 1994 DECEMBER 31, 1994
------------------ ------------------
<S> <C> <C>
Net asset value, beginning of period...................... $ 10.00 $ 10.00
------------------ ----------
Operations:
Investment income--net............................... .42 .46
Net realized and unrealized losses on investments.... (.53) (.83)
------------------ ----------
Total from operations........................... (.11) (.37)
------------------ ----------
Distributions to shareholders:
From investment income--net.......................... (.42) (.46)
------------------ ----------
Net asset value, end of period............................ $ 9.47 $ 9.17
=============== ===============
Total return(2)........................................... (1.11)% (3.64)%
Ratios/Supplemental Data
Net assets at end of period $(000)................... 101,904 35,390
Ratio of total expenses to average net assets(3),(4). .50% .55%
Ratio of net investment income to average net
assets(3).......................................... 4.96% 5.68%
Portfolio turnover rate (excluding short-term
securities)........................................ 90.60% 50.50%
</TABLE>
- ---------------
(1) Commencement of operations was February 14, 1994.
(2) Based on the change in net asset value of a common share during the period.
Assumes reinvestment of distributions at net asset value.
(3) Adjusted to an annual basis.
(4) Without the voluntary waiver of expenses, the annualized ratios of
expenses to average net assets would have been 1.03% and 1.23% for Short
Duration Fund and Intermediate Duration Fund, respectively, for the period
ended December 31, 1994. During the period ended June 30, 1994, the
advisory fees were payable at the rate of .60% of the average daily net
assets of each Fund, all of which was waived.
5
<PAGE> 9
INVESTMENT OBJECTIVES AND POLICIES
GENERAL
The Company is an open-end management investment company the shares of
which can be offered in separate diversified and non-diversified series. The
investment objective of each Fund is to seek as high a level of current income
as is consistent with preservation of principal and the average weighted
duration of its respective portfolio securities. Short Duration Fund expects to
maintain an average weighted portfolio duration ranging from 18 months to three
years, and Intermediate Duration Fund expects to maintain an average weighted
portfolio duration ranging from four to six years. Duration is an indicator of a
security's price "volatility" or "risk" associated with changes in interest
rates. See "Duration."
Each Fund's investment objective may not be changed without the approval of
its shareholders. In view of the risks inherent in all investments in
securities, there is no assurance that either Fund's investment objective will
be achieved. The investment policies and techniques employed in pursuit of the
Funds' objectives may be changed without shareholder approval, unless otherwise
noted.
INVESTMENT POLICIES AND TECHNIQUES
Each Fund seeks to achieve its objective by investing solely in U.S.
Treasury bills, notes and bonds and other securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities ("U.S. Government
Securities") and repurchase agreements fully secured by U.S. Government
Securities. The U.S. Government Securities in which either Fund may invest
include zero-coupon Treasury securities and fixed or adjustable rate
mortgage-related securities such as pass-through securities and collateralized
mortgage obligations, all of which are described below. Either Fund may purchase
or sell securities on a when-issued or forward commitment basis and may use the
other techniques described in the Prospectus.
U.S. Government Securities are backed in a variety of ways by the U.S.
Government or its agencies or instrumentalities. Some of these obligations, such
as mortgage-backed securities issued by the Government National Mortgage
Association, are backed by the full faith and credit of the U.S. Treasury.
Others, such as those issued by the Federal Home Loan Bank, are backed by the
right of the issuer to borrow from the U.S. Treasury. Still others, such as
those issued by the Federal National Mortgage Association, are backed by the
discretionary authority of the U.S. Government to purchase certain obligations
of the agency or instrumentality. Finally, obligations of other agencies or
instrumentalities, such as the Student Loan Marketing Association, are only
backed by the credit of the agency or instrumentality issuing the obligations.
The U.S. Government does not guarantee the value or yield of the
mortgage-related securities themselves or the net asset value of the shares of
the Funds.
Each Fund will invest in U.S. Government Securities that are deemed to be
"Type I Securities" by the Office of the Comptroller of the Currency (the "OCC")
under 12 C.F.R. 1.3 ("Type I Securities"), repurchase agreements fully secured
by Type I Securities and, with respect to no more than 10% of its total assets,
open-end investment companies that invest solely in Type I Securities and
repurchase agreements fully secured by Type I Securities. Type I Securities are
those securities which a national bank supervised by the OCC may deal in,
underwrite, purchase and sell for its own account without limitation as to
percentage of its assets.
6
<PAGE> 10
The Funds invest only in securities in which national banks supervised by
the OCC may invest under applicable federal law and the regulations and
supervisory policies of the OCC. However, each Fund will invest no more than 20%
of its total assets in mortgage-related or certain other securities such as
zero-coupon Treasury securities that are permissible for national banks but are
considered "high risk" under applicable OCC supervisory policies.
Notwithstanding the foregoing, neither Fund will invest any of its assets in the
following high risk securities: interest-only securities, principal-only
securities and inverse floating securities. Each Fund will comply with
applicable OCC supervisory policies which include policies on price volatility.
See the Statement of Additional Information for a description of applicable OCC
supervisory policies.
DURATION
Traditionally, a debt security's "term to maturity" has been used to
represent the sensitivity of the debt security's price to changes in interest
rates (which is the "interest rate risk" or "volatility" of the security).
However, "term to maturity" measures only the time until a debt security
provides its final payment, taking no account of the pattern of the security's
payments prior to maturity. Most debt securities provide interest ("coupon")
payments in addition to a final ("par") payment at maturity, although
mortgage-related securities return principal payments over the life of the
security. Some debt securities also have call provisions allowing the issuer to
repay the instrument in full before the stated maturity date. Depending on the
relative magnitude of these payments, the market values of debt securities
respond differently to changes in the level and structure of interest rates.
Duration is a measure of the expected change in value of a fixed income
security for a given change in interest rates that was developed as a more
precise alternative to the concept of "term to maturity." For example, if
interest rates changed by one percent, the value of a security having an
effective duration of two generally would vary by two percent. Duration takes
the length of the time intervals between the present time and the time that the
interest and principal payments are scheduled, or in the case of a callable
bond, expected to be received, and weighs them by the present values of the cash
to be received at each future point in time.
In some situations even the standard duration calculation does not properly
reflect the interest rate risk of a security. For example, floating and variable
rate debt securities often have final maturities of 10 or more years; however,
their interest rate risk corresponds to the frequency of the coupon reset.
Another example for which the interest rate risk is not properly captured by
duration is the case of mortgage pass-through securities. The stated final
maturity of such securities is generally 30 years, but current prepayment rates
are more critical in determining such securities' interest rate risk. In these
and other similar situations, the Adviser or Subadviser will use more
sophisticated analytical techniques, such as modeling monthly principal and
interest payments based upon historical experience or comparing the mortgage
rates underlying the security to prevailing market rates, to arrive at an
"effective duration" that incorporates the economic life of a security into the
determination of its interest rate risk. These techniques may involve the
Adviser's or Subadviser's estimates of future economic parameters which may vary
from actual future values. The duration is determined by the Subadviser.
MORTGAGE-RELATED SECURITIES
A mortgage-related security is an interest in a pool of mortgage loans.
Most mortgage-related securities are pass-through securities, which means that
investors receive payments consisting of a
7
<PAGE> 11
pro rata share of both principal and interest (less servicing and other fees),
as well as unscheduled prepayments, as mortgages in the underlying mortgages
pool are paid off by the borrowers. The current issuers or guarantors of
mortgage-related securities in which the Funds may invest are the Government
National Mortgage Association ("GNMA"), the Federal National Mortgage
Association ("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC").
GNMA creates pass-through securities from pools of government guaranteed or
insured (Federal Housing Authority or Veterans Administration) mortgages
originated by mortgage bankers, commercial banks, and savings associations. FNMA
and FHLMC issue pass-through securities from pools of conventional and federally
insured and/or guaranteed residential mortgages obtained from various entities,
including savings associations, savings banks, commercial banks, credit unions
and mortgage bankers.
The timely payment of principal and interest on GNMA pass-through
securities are guaranteed by GNMA and backed by the full faith and credit of the
U.S. Government. FNMA guarantees full and timely payment of all interest and
principal, while FHLMC guarantees timely payment of interest and ultimate
collection of principal, of its pass-through securities. Securities from FNMA
and FHLMC are not backed by the full faith and credit of the United States;
however, they are generally considered to offer minimal credit risks. The yields
provided by these mortgage-related securities historically have exceeded the
yields on other types of U.S. Government Securities with comparable maturities
in large measure due to the risks associated with prepayment. See "Risk
Considerations." The U.S. Government does not guarantee the value or yield of
the mortgage-related securities themselves or the net asset value of Fund
shares.
Adjustable rate mortgage securities ("ARMS") are a form of pass-through
security representing interests in pools of mortgage loans whose interest rates
are adjusted from time to time. The adjustments usually are determined in
accordance with a predetermined interest rate index and may be subject to
certain limits. While the values of ARMS, like other debt securities, generally
vary inversely with changes in market interest rates (increasing in value during
periods of declining interest rates and decreasing in value during periods of
increasing interest rates), the values of ARMS should generally be more
resistant to price swings than other debt securities because the interest rates
of ARMS move in relation to market interest rates. The adjustable rate feature
of ARMS will not, however, eliminate fluctuations in the prices of ARMS,
particularly during periods of extreme fluctuations in interest rates. Also,
since many adjustable rate mortgages only reset on an annual basis, it can be
expected that the prices of ARMS will fluctuate to the extent that changes in
prevailing interest rates are not immediately reflected in the interest rates
payable on the underlying adjustable rate mortgages.
The Funds may invest in collateralized mortgage obligations and multi-class
pass-through securities (collectively, "CMOs" unless the context otherwise
indicates) issued or backed by the U.S. Government or its agencies and
instrumentalities. CMOs are debt instruments collateralized by pools of mortgage
loans or GNMA, FNMA or FHLMC certificates ("Mortgage Assets"). Issuers of CMOs
frequently elect to be taxed as pass-through entities known as real estate
mortgage investment conduits ("REMICs"). In a CMO, a series of bonds or
certificates is issued in multiple classes or "tranches." Each class of a CMO is
issued at a specific fixed or floating coupon rate and has a stated maturity or
final distribution date. Principal prepayments on the Mortgage Assets may cause
the various classes of a CMO to be retired substantially earlier than their
stated maturities or final distribution dates. The principal of and interest on
the Mortgage Assets may be allocated among the several classes of a CMO in a
number of different ways. Certain classes of CMOs may
8
<PAGE> 12
have priority over others with respect to the receipt of payments and
prepayments on the mortgages. Generally, the purpose of the allocation of the
cash flow of a CMO to the various classes is to obtain a more predictable cash
flow to some of the individual tranches than exists with the underlying
collateral of the CMO. As a general rule, the more predictable the cash flow is
on a CMO tranche, the lower the anticipated yield will be on that tranche at the
time of issuance relative to prevailing market yields on mortgage-related
securities. As part of the process of creating more predictable cash flows on
most of the tranches of CMOs, one or more tranches generally must be created
that absorb most of the volatility in the cash flows on the underlying mortgage
loans. The yields on these tranches are generally higher than prevailing market
yields on mortgage-backed securities with similar maturities. As a result of the
uncertainty of the cash flows on these tranches, the market prices of and yield
on these tranches generally are more volatile. The Adviser (or Subadviser) will
allocate the Funds' investments among different types of tranches based on its
estimate of the relative value and duration of securities, which may take into
account interest rate movements, market conditions and prepayment assumptions.
Neither Fund will invest in CMO residual interests (i.e., claims on any excess
cash flows remaining after payments due to all other CMO classes and
administrative expenses have been met).
Neither Fund will invest more than 20% of its total assets in
mortgage-related or certain other securities such as zero coupon Treasury
securities that are considered "high risk" under applicable OCC supervisory
policies. However, neither Fund will invest in the following high risk
securities: interest-only securities, principal-only securities and inverse
floating securities. See the Statement of Additional Information for a more
complete description of securities deemed to be "high risk mortgage
securities" under applicable OCC supervisory policies.
ZERO COUPON TREASURY SECURITIES
The Funds may invest in "zero coupon" Treasury securities. A zero coupon
security pays no interest to its holder during its life. The Funds will invest
only in zero coupon Treasury securities which are direct obligations of the U.S.
Government and will not invest in any such securities that are "privately
issued" (i.e., sold by a bank or brokerage firm which itself separates the
principal portions from the coupon portions of the U.S. Treasury bonds and notes
and holds such instruments in a custodial or trust account).
Zero coupon Treasury securities do not entitle the holder to any periodic
payments of interest prior to maturity. Accordingly, those securities usually
trade at a deep discount from their face or par value and will be subject to
greater fluctuations of market value in response to changing interest rates than
debt obligations of comparable maturities which make current distributions of
interest. In certain circumstances such as a marked increase in interest rates,
a Fund could fail to recoup its initial investment in those securities,
particularly if it were required to sell the securities prior to maturity.
Current federal tax law requires that a holder of a zero coupon security accrue
a portion of the discount at which the security was purchased as income each
year even though such Fund receives no interest payment in cash on the security
during the year. In addition, as a registered investment company, a Fund will be
required to distribute this income to shareholders. See "Dividends,
Distributions and Tax Status." These distributions will be made from the Fund's
cash assets or, if necessary, from the proceeds of sales of portfolio
securities. A Fund will not be able to purchase additional income producing
securities with cash used to make such distributions, and the Fund's current
income ultimately may be reduced as a result.
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SPECIAL INVESTMENT METHODS
The Funds will engage in the following investment practices only to the
extent to which national banks may engage in such practices under applicable
Federal laws and the regulations and supervisory policies of the OCC.
REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements with respect to U.S.
Government Securities. A repurchase agreement involves the purchase by a Fund of
securities with the condition that after a stated period of time the original
seller (a member bank of the Federal Reserve System or a recognized securities
dealer) will buy back the same securities ("collateral") at a predetermined
price or yield. Repurchase agreements involve certain risks not associated with
direct investments in securities. While collateral will at all times be
maintained in an amount equal to the repurchase price under the agreement
(including accrued interest due thereunder), if a seller were to default on its
repurchase obligation, a Fund would suffer a loss to the extent proceeds from
the sale of collateral were less than the repurchase price. In the event of a
seller's bankruptcy, a Fund might be delayed in, or prevented from, selling the
collateral to the Fund's benefit. The Board of Directors has established
procedures, which are periodically reviewed by the Board, pursuant to which the
Adviser or Subadviser will monitor the creditworthiness of the banks and dealers
with which the Fund enters into repurchase agreement transactions. Repurchase
agreements are considered to be loans by the Funds under the Investment Company
Act of 1940, as amended (the "1940 Act"). Repurchase agreements maturing in more
than seven days are considered illiquid and subject to each Fund's restriction
on investing in illiquid securities. See "Illiquid Securities" below.
REVERSE REPURCHASE AGREEMENTS
Each Fund may engage in "reverse repurchase agreements" with banks and
securities dealers. Reverse repurchase agreements are ordinary repurchase
agreements in which the Fund is the seller of, rather than the investor in,
securities and agrees to repurchase them at an agreed upon time and price. Use
of a reverse repurchase agreement may be preferable to a regular sale and later
repurchase of the securities because it avoids certain market risks and
transactions costs. Because certain of the incidents of ownership of the
security are retained by the Fund, reverse repurchase agreements are considered
a form of borrowing by the Fund from the buyer, collateralized by the security.
At the time the Fund enters into a reverse repurchase agreement, cash or U.S.
Government Securities having a value sufficient to make payments for the
securities to be repurchased will be segregated, and will be maintained
throughout the period of the obligation. Reverse repurchase agreements may be
used as a means of borrowing for investment purposes. This speculative technique
is referred to as leveraging. Leveraging may exaggerate the effect on net asset
value of any increase or decrease in the market value of the Fund's portfolio.
Money borrowed for leveraging will be subject to interest costs which may or may
not be recovered by income from or appreciation of the securities purchased. No
more than one-third of the total assets of each Fund will be subject to reverse
repurchase agreements.
BORROWING
Each of the Funds may borrow money from banks for temporary or emergency
purposes in an amount up to one-third of the value of its total assets in order
to meet redemption requests without immediately selling any of its portfolio
securities. If, for any reason, the current value of
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either Fund's total assets falls below an amount equal to three times the amount
of its indebtedness from money borrowed, such Fund will, within three days,
reduce its indebtedness to the extent necessary. To do this, the Fund may have
to sell a portion of its investments at a time when it may be disadvantageous to
do so. Interest paid by a Fund on borrowed funds would decrease the net earnings
of that Fund. Neither of the Funds will purchase portfolio securities while
outstanding borrowings exceed 5% of the value of the Fund's total assets. Each
Fund may mortgage, pledge or hypothecate its assets to secure permitted
temporary or emergency borrowing. The policies set forth in this paragraph are
fundamental and may not be changed with respect to a Fund without the approval
of a majority of that Fund's shares. The Funds do not consider reverse
repurchase agreements to be borrowings for purposes of the investment policies
set forth in this paragraph.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES
Either Fund may purchase securities on a "when-issued" basis and may
purchase or sell securities on a "forward commitment" basis. When such
transactions are negotiated, the price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. Normally, the settlement date occurs
within two months after the transaction, but delayed settlements beyond two
months may be negotiated. During the period between a commitment and settlement,
no payment is made for the securities purchased by the purchaser and, thus, no
interest accrues to the purchaser from the transaction. If the Fund chooses to
dispose of the right to acquire a when-issued security prior to its acquisition
or dispose of its right to deliver or receive against a forward commitment, it
can incur a gain or loss. The use of when-issued transactions and forward
commitments enables the Fund to hedge against anticipated changes in interest
rates and prices. The Fund also enters into such transactions to generate
income. In such instances, the Fund agrees to resell its purchase commitment to
a third-party seller at the current market price on the date of sale and
concurrently enters into another purchase commitment for such securities at a
later date. In connection with its ability to purchase securities on a
when-issued or forward commitment basis, each Fund may enter into mortgage
"dollar rolls" in which the Fund sells securities for delivery in the current
month and simultaneously contracts with the same counterparty to repurchase
similar (same type, coupon and maturity) but not identical securities on a
specified future date. As an inducement for a Fund to "roll over" its purchase
commitment, the Fund receives a negotiated fee.
SHORT SALES AGAINST-THE-BOX
The Funds may make short sales "against-the-box" for the purpose of
deferring realization of gain or loss for federal income tax purposes and for
the purpose of hedging against an anticipated decline in the value of the
underlying securities. A short sale "against-the-box" is a short sale in which
the Fund owns or has the right to obtain without payment of additional
consideration an equal amount of the same type of securities sold short. If a
Fund engages in a short sale, the collateral for the short position will be
maintained by the Fund's custodian. While the short sale is open, the Fund will
maintain in a segregated account an amount of securities equal in kind and
amount to the securities sold short or securities convertible into or
exchangeable for such equivalent securities.
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ILLIQUID SECURITIES
Either Fund may invest up to 15% of its net assets in illiquid securities.
Illiquid securities may offer a higher yield than securities which are more
readily marketable, but they may not always be marketable on advantageous terms.
The sale of illiquid securities often requires more time and results in
higher brokerage charges or dealer discounts than does the sale of securities
eligible for trading on national securities exchanges or in the over-the-counter
markets. A Fund may be restricted in its ability to sell such securities at a
time when the Adviser or Subadviser deems it advisable to do so. In addition, in
order to meet redemption requests, a Fund may have to sell other assets, rather
than such illiquid securities, at a time which is not advantageous.
The Fund will treat certain securities that might otherwise be deemed to be
illiquid as liquid when they have been determined to be liquid by the Adviser
(or Subadviser), subject to the oversight of and pursuant to guidelines adopted
by the Board of Directors. Any such securities which are not so determined to be
liquid will be subject to the Fund's 15% limitation on investments in illiquid
securities. See "Investment Objectives, Policies and Restrictions--Illiquid
Securities" in the Statement of Additional Information.
CHANGES IN INVESTMENT OBJECTIVES AND POLICIES
The investment objective and fundamental policies of each Fund may not be
changed without approval of the holders of a majority of that Fund's outstanding
voting securities. As used in this Prospectus, a majority of a Fund's
outstanding voting securities means the lesser of (a) 67% of the shares of the
Fund present or represented at a shareholders' meeting at which the holders of
more than 50% of the shares are present or represented or (b) more than 50% of
the outstanding shares of the Fund. Unless otherwise noted, policies of the
Funds are not deemed to be fundamental. Investment policies that are not
identified as fundamental may be changed by the Board of Directors without
shareholder approval.
INVESTMENT RESTRICTIONS
Each of the Funds has adopted certain investment restrictions, which are
set forth in detail in the Statement of Additional Information. Certain of these
restrictions are fundamental and may not be changed without shareholder
approval.
Except with respect to each Fund's policy concerning borrowing, if a
percentage restriction set forth under "Investment Objectives and Policies" is
adhered to at the time of an investment, a later increase or decrease in
percentage resulting from changes in values of assets will not constitute a
violation of such restriction.
PORTFOLIO TURNOVER
Each Fund will use short-term trading to benefit from yield disparities
among different issues of securities or otherwise to achieve its investment
objective. The portfolio turnover rate for each Fund is not expected to exceed
400%. Portfolio turnover in excess of 100% is generally considered to be high.
Higher portfolio turnover involves correspondingly greater brokerage commissions
and other transaction costs, which are borne directly by the Fund, and may
increase short-term capital gains which are taxable as ordinary income when
distributed to shareholders. See "Financial Highlights" and "Taxes." The method
of calculating the portfolio turnover rate is set
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forth in the Statement of Additional Information under "Investment Objectives,
Policies and Restrictions--Portfolio Turnover."
RISK CONSIDERATIONS
Market prices of the securities in which the Funds invest (and thus the net
asset values of the Funds' shares) will fluctuate and will tend to vary
inversely with the changes in prevailing interest rates. If interest rates
increase from the time a security is purchased, such security, if sold, might be
sold at a price less than its purchase cost. Conversely, if interest rates
decline from the time a security is purchased, such security, if sold, might be
sold at a price greater than its purchase cost.
Prepayments of principal by mortgagors or mortgage foreclosures will affect
the average life of the mortgage-related securities in a Fund's portfolio.
Mortgage prepayments are affected by the level of interest rates and by factors
including general economic conditions, the underlying location and age of the
mortgage and other social and demographic conditions. In periods of rising
interest rates, the rate of prepayments tends to decrease, thereby lengthening
the average life of a pool of mortgage-related securities. Conversely, in
periods of falling interest rates the rate of prepayments tends to increase,
thereby shortening the average life of a pool. Reinvestment of prepayments may
occur at higher or lower interest rates than the original investment, thus
affecting the yield of the Fund. Because prepayments of principal generally
occur when interest rates are declining, it is likely that the Fund will have to
reinvest the proceeds of prepayments at lower interest rates than those at which
the assets were previously invested. If this occurs, the Fund's yield will
correspondingly decline. Thus, mortgage-related securities may have less
potential for capital appreciation in periods of falling interest rates than
other fixed income securities of comparable duration, although these securities
have a comparable risk of decline in market value in periods of rising interest
rates.
To the extent that mortgage-related securities are purchased at a premium
by a Fund, unscheduled prepayments may result in some loss of the Fund's
principal investment to the extent of the premium paid. On the other hand, if
mortgage-related securities are purchased at a discount, both a scheduled
payment of principal and an unscheduled prepayment of principal will increase
current and total returns.
Duration is one of the fundamental tools used by the Subadviser in managing
interest rate risks, including prepayment risks. For further discussion of
duration, see "Investment Objectives and Policies--Duration" on page 6.
Certain derivative securities in which the Funds may invest, such as zero
coupon Treasury securities, may exhibit considerably more price volatility than
ordinary Treasury securities and can expose a Fund to a greater risk of loss in
the market value of its portfolio. See "Investment Objectives and
Policies--Mortgage-Related Securities" (page 8) and "--Zero Coupon Treasury
Securities" (page 9) for a description of securities that may be referred to as
derivatives and certain risks associated with investing in them. In addition,
the use by either Fund of reverse repurchase agreements involves the speculative
technique referred to as leveraging. Leveraging may exaggerate the effect on net
asset value of any increase or decrease in the market value of a Fund's
portfolio.
The Subadviser has developed a very active management style emphasizing
portfolio duration management on a daily basis in order to closely track the
duration, and hence the interest rate sensitivity, of a specified securities
index or other benchmark. The Subadviser
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intends to manage the duration of each Fund to replicate that of a designated
benchmark. At the time, the Subadviser will seek to outperform a Fund's
designated benchmark by adjusting the Fund's sector weightings and selecting
individual securities in a manner that is consistent with the Fund's investment
objective and policies. As a result of the Subadviser's management style, each
Fund may experience a high portfolio turnover rate, which is not expected to
exceed 400%.
For further discussion of additional risk considerations, see "Investment
Objectives and Policies--Special Investment Methods."
MANAGEMENT
BOARD OF DIRECTORS
As in all corporations, the business and affairs of the Company are managed
under the direction of the Company's Board of Directors. The Statement of
Additional Information contains general background information about each
director and officer of the Company.
INVESTMENT ADVISER
PNC Institutional Management Corporation (the "Adviser"), a wholly owned
subsidiary of PNC Asset Management Group, Inc., which is in turn a wholly-owned
subsidiary of PNC Bank, National Association ("PNC Bank"), serves as the Funds'
investment adviser. The Adviser was organized in 1977 by PNC Bank to perform
advisory services for investment companies and has its principal offices at
Bellevue Park Corporate Center, 400 Bellevue Parkway, Wilmington, Delaware
19809. PNC Asset Management Group, Inc.'s principal business address is 1835
Market Street, Philadelphia, Pennsylvania 19103. PNC Bank is a wholly-owned,
indirect subsidiary of PNC Bank Corp., and its principal business address is
Broad and Chestnut Streets, Philadelphia, Pennsylvania 19102. PNC Bank Corp., a
multi-bank holding company headquartered in Pittsburgh, Pennsylvania, is the
eleventh largest bank holding company in the United States. Categorized as a
super regional bank holding company, PNC Bank Corp. operates over 500 branch
offices in six U.S. states.
PNC Bank traces its money management services to individuals and
institutions to the year 1847, and is the second largest bank manager of
investments for individuals in the U.S. with $80 billion in discretionary trust
assets under management. Their activities are characterized by an overriding
commitment to quality and performance. PNC Bank Corp. and its affiliates are
known for their leadership and innovation in developing institutional investment
products and services.
PNC Financial Services Group is PNC Bank Corp.'s mutual fund complex,
headquartered in Wilmington, Delaware. This group includes the Adviser, PFPC
Inc., and PNC Bank. The PNC Financial Services Group is one of the largest U.S.
bank managers of mutual funds with assets currently under management in excess
of $30 billion. This group, through PFPC Inc. and PFPC International Ltd. is
also a leading mutual fund service provider having contractual relationships
with approximately 400 mutual funds with 3.5 million shareholders and in excess
of $134 billion in assets. This group, through its PNC Institutional Investment
Service, provides investment research to over 250 financial institutions located
in the United States and abroad. PNC Bank provides custodial services for
approximately $217 billion in assets, including approximately $106 billion in
mutual fund assets.
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The Adviser provides or oversees the provision of all investment advisory
services for the Company. Under the Investment Advisory Agreement, the Adviser
receives a monthly advisory fee computed separately for each Fund. Such fees are
payable at an annual rate of .40% of the average daily net assets of each Fund.
The Adviser has, however, agreed to waive a portion of its advisory fee, so that
the fee payable to it will be payable at the effective annual rate of .30% of
each Fund's average daily net assets through at least December 31, 1995.
Through February 16, 1995, the Company's corporate predecessor (the
"Predecessor Company") was subject to a management fee at an annual rate of .60%
of the average daily net assets of each Fund pursuant to an investment advisory
and management agreement between the Predecessor Company and Piper Trust
Company, the former investment adviser (the "former adviser"). However, as a
result of certain voluntary fee waivers and limitations by the former adviser,
the management fee paid by the Predecessor Company to the former adviser for the
fiscal year ended December 31, 1994 was paid at the effective annual rate of
.19% of the average daily net assets of Short Duration Fund and .17% of the
average daily net assets of Intermediate Duration Fund.
INVESTMENT SUBADVISER
BlackRock Financial Management, Inc. (the "Subadviser"), a wholly-owned
subsidiary of PNC Asset Management Group, Inc., which is in turn a wholly-owned
subsidiary of PNC Bank, serves as subadviser for both of the Funds. The
Subadviser is responsible for the day-to-day management of the Funds, and
generally makes all purchase and sale decisions regarding the portfolio
investments made by the Funds. In general, the Subadviser provides asset
management services to its clients with respect to high quality fixed income
instruments including mortgage-backed securities, U.S. Treasury securities,
municipal obligations, corporate bonds and hedging products. It currently
advises individual and institutional fixed income investors in the United States
and overseas through several funds and separately managed accounts with combined
total assets in excess of $23 billion. The Subadviser's address is 345 Park
Avenue, New York, New York 10154.
The Adviser has entered into a Subadvisory Agreement with the Subadviser
with respect to each Fund, pursuant to which the Adviser pays the Subadviser
monthly compensation payable over the same time periods and calculated in the
same manner as the investment advisory fee received by the Adviser from such
Fund. The fees to be paid by the Adviser to the Subadviser will equal, on an
annual basis, .25% of the average daily net assets of each Fund. The Subadviser
will waive its subadvisory fee and reimburse expenses to the extent of one-half
of any fee waivers or expense reimbursements undertaken by the Adviser. The fee
paid by the Adviser to the Subadviser comes out of the Adviser's advisory fee
from the Funds, and is not an additional charge to the Funds. See "Fees and
Expenses."
Through February 16, 1995, Piper Capital Management Incorporated (the
"former subadviser"), an affiliate of the former adviser, performed subadvisory
services for both Funds, and PNC Bank performed subadvisory services for
Intermediate Duration Fund. The former adviser to the Predecessor Company
compensated the former subadviser at the effective annual rate of .05% of the
average daily net assets of Short Duration Fund and .04% of the average daily
net assets of Intermediate Duration Fund. PNC Bank was compensated by the former
adviser at the effective annual rate of .01% of the average daily net assets of
Intermediate Duration Fund.
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SHORT DURATION FUND AND INTERMEDIATE DURATION FUND PORTFOLIO
MANAGERS. Scott Amero and Keith Anderson will be primarily responsible for the
day-to-day management of the Short Duration Fund's and Intermediate Duration
Fund's portfolios, respectively. They have served in these respective capacities
since 1995. Both Mr. Anderson and Mr. Amero are managing directors of the
Subadviser. Mr. Anderson has been with the Subadviser since its founding in
1988; in addition to his primary responsibility for managing client portfolios,
he is also co-head of the firm's Portfolio Management Group and a member of its
Management Committee and Investment Strategy Committee. Mr. Amero has been with
the Subadviser since 1990; in addition to his primary responsibility for
managing client portfolios, he is also a member of the firm's Investment
Strategy Committee.
The Subadviser's investment management personnel include several
individuals with extensive experience in creating, evaluating and investing in a
broad range of fixed income securities including mortgage-backed securities,
U.S. Treasury securities, municipal obligations, corporate bonds, and hedging
products. Prior to co-founding the Subadviser, from July 1976 to March 1988,
Laurence D. Fink, the Chairman and Chief Executive Officer of the Subadviser,
was employed by The First Boston Corporation where he had been a Managing
Director since January 1979. At First Boston, he was a member of the Management
Committee and co-head of its Taxable Fixed Income Division. He also managed the
Financial Futures and Fixed Income Options Department and the Mortgage and Real
Estate Products Group. Ralph L. Schlosstein, President and a co-founder of the
Subadviser, was employed by Lehman Brothers from February 1981 to March 1988 and
became a Managing Director in August 1984. At Lehman Brothers, he was co-head of
the Mortgage and Savings Institutions Group. Messrs. Fink and Schlosstein, along
with other members of the Subadviser, were instrumental in many of the major
innovations in the securities markets, including the creation of the fixed and
floating rate collateralized mortgage obligation, asset-backed securities and
the senior-subordinated mortgage pass-through instrument.
SHAREHOLDER SERVICE PLAN
The Company has adopted Shareholder Service Plans for each of the Short
Duration Fund and Intermediate Duration Fund pursuant to which shareholder
servicing is provided to shareholders. The Shareholder Service Plans were
adopted pursuant to Rule 12b-1 under the 1940 Act. The Shareholder Service Plans
provide that each Fund pays Provident Distributors, Inc. (the "Distributor") a
shareholder servicing fee relating to the shares of the relevant Fund, accrued
daily and paid monthly, at the annual rate of .10% of the average daily net
assets of such Fund in order to compensate the Distributor for providing
shareholder servicing activities. Such shareholder servicing activities may
include, without limitation, responding to shareholder inquiries and providing
reports and other information.
DISTRIBUTOR
Provident Distributors, Inc., 259 Radnor-Chester Road, Suite 120, Radnor,
Pennsylvania 19807, acts as the principal distributor of the Funds' shares. The
Distributor, out of its own assets, may pay for certain expenses incurred in
connection with the distribution of shares of the Funds. In particular,
financial institutions that have entered into service agreements with the
Distributor may be paid an amount equal to .10% of the offering price of Fund
shares purchased by their clients. In addition, such financial institutions may
receive ongoing payments from the Distributor
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<PAGE> 20
for their servicing and/or maintenance of shareholder accounts in an amount up
to .10% of the average daily net assets of the Fund attributable to shares
serviced by them.
ADMINISTRATOR
PFPC Inc., Bellevue Park Corporate Center, 400 Bellevue Parkway,
Wilmington, Delaware 19809 ("PFPC"), performs various administrative services
for each Fund. These services include maintenance of books and records,
preparation of governmental filings and shareholder reports and computation of
net asset values and daily dividends. For its administrative services, PFPC
receives a fee, payable monthly, of .15% per annum of the average daily net
assets of each Fund, plus any out-of-pocket expenses.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND CUSTODIAN
PFPC serves as the Funds' transfer agent, dividend disbursing agent and
registrar. In its capacity as transfer agent, dividend disbursing agent and
registrar, PFPC performs bookkeeping, data processing and administrative
services incidental to the maintenance of shareholder accounts. PNC Bank, 200
Stevens Drive, Lester, Pennsylvania 19113, serves as custodian for the Funds'
portfolio securities and cash.
EXPENSES
The expenses of each Fund are deducted from total income before dividends
are paid. These expenses include, but are not limited to, organizational costs,
fees paid to the Adviser, the Distributor and PFPC, fees and expenses of
officers and directors, taxes, legal fees, transfer agent, dividend disbursing
agent and custodian fees, auditing fees, brokerage fees and commissions, fees
and expenses of registering and qualifying the Funds and their shares for
distribution under Federal and state securities laws, expenses of preparing
prospectuses and statements of additional information and of printing and
distributing prospectuses and statements of additional information annually to
existing shareholders, the expense of reports to shareholders, shareholders'
meetings and proxy solicitations and other expenses which are not expressly
assumed by the Adviser under the Investment Advisory Agreement. Any general
expenses of the Company that are not readily identifiable as belonging to a
particular Fund will be allocated between the Funds based upon the relative net
assets of the Funds at the time such expenses were accrued.
PORTFOLIO TRANSACTIONS
Portfolio transactions for the Funds are generally effected on a net basis
without payment of brokerage commissions. The Adviser and Subadviser may
consider a number of factors in determining which brokers to use for portfolio
transactions. The factors, which are more fully discussed in the Statement of
Additional Information, include, but are not limited to, research services,
favorableness of the net price and quality of services and execution. A broker's
sales of shares of any series of the Company may also be considered a factor if
the Adviser or Subadviser is satisfied that the Funds would receive from that
broker the most favorable price and execution then available for a transaction.
Portfolio transactions for the Funds will generally be with the issuer or with
dealers acting on a principal basis. For more information, see "Portfolio
Transactions and Allocation of Brokerage" in the Statement of Additional
Information.
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BANKING LAWS
Banking laws and regulations presently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from sponsoring, organizing, or controlling a
registered, open-end investment company engaged continuously in the issuance of
its shares and prohibit banks generally from issuing, underwriting, selling, or
distributing securities such as Fund shares. Such banking laws and regulations
do not prohibit such a holding company or affiliate or banks generally from
acting as investment adviser, transfer agent, or custodian to such an investment
company or from purchasing shares of such a company for and upon the order of
customers. PNC Bank, the Adviser and PFPC are subject to such banking laws and
regulations, but believe they may perform the services for the Fund contemplated
by their respective agreements, this Prospectus and the Statement of Additional
Information without violating applicable banking laws or regulations.
PURCHASE OF SHARES
The Funds' shares may be purchased by contacting PFPC by telephone at (800)
441-7450. The Funds reserve the right to reject any purchase order. To eliminate
the need for safekeeping, the Funds will not issue stock certificates unless
requested by a shareholder. All share purchases for which certificates are not
issued will be credited to the shareholder's account on the Funds' books
maintained by PFPC.
PUBLIC OFFERING PRICE
Fund shares are offered to the public without a sales charge at the net
asset value per share next determined after an order and payment are received in
proper form by PFPC, and the order has been accepted. It is the responsibility
of any authorized financial institution through which the Funds' shares may be
purchased to transmit orders received by it from investors to PFPC in a timely
manner. Net asset value is determined as set forth under "Valuation of Shares."
Institutional investors purchasing or holding Fund shares for their customer
accounts may charge customer fees for services provided in connection with their
accounts. An investor should, therefore, consider the terms of its account with
such an institutional investor before determining to purchase shares of a Fund.
ORDER AND PAYMENT PROCEDURES
Purchase orders are accepted on each Business Day before 12:00 noon, New
York City time. (As used in this Prospectus, the term "Business Day" means any
day on which the New York Stock Exchange and the Federal Reserve Bank of
Philadelphia are both open for business. Currently, one or both of these
entities is closed on the customary national business holidays of New Year's Day
(observed), Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial
Day (observed), Independence Day (observed), Labor Day, Columbus Day, Veteran's
Day, Thanksgiving Day and Christmas Day (observed)). Once PFPC has the necessary
and desirable information on file, purchase orders may be placed by contacting
PFPC by telephone at (800) 441-7450. Payment must be in the form of Federal
funds, and any payment by check or otherwise not made in Federal funds will be
returned promptly to the investor. Orders are effected as of 4:00 p.m., New York
City time, on the day the order is accepted and payment received, and will
receive the dividend declared the following day. Payment must be received by
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<PAGE> 22
the Funds' custodian by 4:00 p.m. on the day of the order or the order will be
canceled. Federal funds should be wired for the purchase of Fund shares in the
purchaser's name (please also include purchaser's account number) to PNC Bank,
Philadelphia, PA, ABA #0310 000 53, Mutual Funds Service/AC-85-2999-2181, and
the wire should specify the Fund in which shares are being purchased.
Any Federal funds received in respect of a canceled order will be returned
upon instructions from the sender without any liability of the Funds or their
service providers. If it is not possible to return such Federal funds the same
day, the sender will not have the use of such funds until the next day on which
it is possible to effect such return.
MINIMUM INVESTMENTS
The minimum initial investment in each Fund is $5,000. There is no minimum
subsequent investment. Each Fund reserves the right to accept smaller purchases
at its sole discretion.
EXCHANGE PRIVILEGE
Shares of either Fund may be exchanged for shares of the other Fund on the
basis of current net asset values of such shares next determined after PFPC's
receipt of a request for an exchange. For additional information, contact the
Funds. The Company reserves the right to change or discontinue the exchange
privilege, or any aspect of the privilege, upon 60 days' written notice.
REDEMPTION OF SHARES
GENERAL
Shares of each Fund, in any amount, may be redeemed at any time at their
current net asset value next determined after receipt of a redemption request.
Redemption requests may be made by contacting PFPC by telephone at (800)
441-7450.
TELEPHONE REDEMPTION
Shareholders are automatically provided with telephone redemption
privileges when opening an account. Shareholders holding share certificates are
not eligible to redeem shares by telephone because share certificates must
accompany all redemption requests.
All redemption requests received in proper order prior to 4:00 p.m., New
York City time, on a Business Day or other day redemptions are permitted, are
effected immediately after 4:00 p.m., New York City time, on the day they are
received. If the request is received before 12:00 noon, New York City time, on a
Business Day, the proceeds will normally be wired in Federal funds to the
shareholder's bank or other account shown on the Fund's records the next
Business Day, but in no case later than seven days. If the request is received
between 12:00 noon and 4:00 p.m., New York City time, on a Business Day or other
day redemptions are permitted, the proceeds will be sent the second following
Business Day.
The Company will employ reasonable procedures to confirm that the
instructions communicated by telephone are genuine, and if the Company does not
employ such procedures with respect to a Fund, it may be liable for any losses
due to unauthorized or fraudulent telephone instructions. The Funds will not be
liable for any loss, liability, cost or expense for
19
<PAGE> 23
following their telephone transaction procedures (described below) or for
following instructions communicated by telephone that they reasonably believe to
be genuine.
The Funds' telephone transaction procedures include the following measures:
(1) requiring the caller to provide the name of the account owner, the account
number and the name of the Fund, all of which must match the Fund's records; (2)
requiring the caller to know the password specified for the account; (3)
requiring that redemption proceeds be sent by wire only to the owners of record
at the bank account of record; (4) sending a written confirmation for each
telephone transaction to the owners of record at the address of record within
five business days of the call; and (5) maintaining tapes of telephone
transactions for six months, if the Fund elects to record shareholder telephone
transactions.
For accounts held of record by a broker-dealer or financial institution,
additional documentation or information regarding the scope of a caller's
authority is required. Finally, for telephone transactions in accounts held
jointly, additional information regarding other account holders is required.
A shareholder will receive dividends declared only through the day its
redemption is effected. Because proceeds to redeeming shareholders will not be
wired until the second Business Day following receipt by PFPC of redemption
requests between 12:00 noon and 4:00 p.m., the Company recommends that all
redemption requests be placed so as to be received by PFPC prior to 12:00 noon,
New York City time, on a Business Day to help to ensure the earliest possible
return of proceeds to the investor.
PAYMENT OF REDEMPTION PROCEEDS
Normally, the Funds will make payment for all shares as discussed above,
and in no event will payment be made more than seven days after receipt by PFPC
of a redemption request in proper order. However, payment may be postponed or
the right of redemption suspended for more than seven days under unusual
circumstances, such as when trading is not taking place on the New York Stock
Exchange.
INVOLUNTARY REDEMPTION
Each Fund reserves the right to redeem a shareholder's account at any time
the net asset value of the account falls below $500 as the result of a
redemption or transfer request. Shareholders will be notified in writing prior
to any such redemption and will be allowed 30 days to make additional
investments before the redemption is processed.
VALUATION OF SHARES
The Funds determine their net asset value on each Business Day, provided
that the net asset value need not be determined for a Fund on days on which
changes in the value of the Fund's portfolio securities will not materially
affect the current net asset value of the Fund's shares and days when no Fund
shares are tendered for redemption and no order for Fund shares is received. For
each Fund, the calculation is made as of the primary closing time of the New
York Stock Exchange (the "Exchange") (currently 4:00 p.m. New York time) after
the Funds have declared any applicable dividends.
20
<PAGE> 24
The net asset value per share for a Fund is determined by dividing the
value of the securities owned by the Fund plus any cash and other assets
(including interest accrued and dividends declared but not collected) less all
liabilities by the number of Fund shares outstanding. For the purpose of
determining the aggregate net assets of a Fund, cash and receivables will be
valued at their face amounts. Interest will be recorded as accrued.
The value of most fixed-income securities held by the Funds will be
provided by dealers or by an independent pricing service that has been approved
by the Company's Board of Directors that considers such factors as transactions
in such securities, quotations from dealers, market transactions in comparable
securities, various relationships between securities, and yield to maturity in
determining value. Short-term securities with remaining maturities of 60 days or
less are valued at amortized cost. In addition, any securities or other assets
of a Fund for which market prices or quotations are not readily available will
be valued at their fair value in accordance with procedures established in good
faith by the Company's Board of Directors.
DIVIDENDS, DISTRIBUTIONS AND TAX STATUS
DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income will be paid on a monthly basis by the
Funds. The Funds will distribute net realized capital gains, if any, on an
annual basis.
The net investment income of each Fund will be declared as dividends daily.
Dividends will be reinvested in additional Fund shares on a monthly basis unless
the shareholder requests cash payments as described below. Shares purchased on a
day on which the Funds calculate their net asset value begin accruing dividends
on the following day, and shares redeemed will earn dividends through the date
of redemption.
All net investment income dividends and net realized capital gains
distributions with respect to the shares of each Fund will be payable in
additional shares of such Fund at net asset value unless the shareholder
notifies PFPC in writing of an election to receive cash. Shareholders may elect
either to receive income dividends in cash and capital gains in additional
shares of the Fund at net asset value, or to receive both income dividends and
capital gains in cash. Any such request will become effective with respect to
dividends paid after its receipt by PFPC.
Any shareholder with an account in either of the Funds may direct that
income dividends and capital gains distributions from that Fund be invested in
the other Fund. Any such investment will be made at net asset value and will not
be subject to a minimum initial investment amount except that, in order to
invest dividends and distributions in another Fund, an investor must hold shares
in such Fund (including shares being acquired with such dividend or
distribution) with a value at least equal to such Fund's minimum initial
investment amount as of the date of the dividend or distribution.
A Fund may at times pay out less than the entire amount of net investment
income earned in any particular period in order to permit the Fund to maintain a
more stable level of distributions. Any such amount retained by a Fund would be
available to stabilize future distributions. As a result, the distributions paid
by a Fund for any particular period may be more or less than the amount of net
investment income earned by the Fund during such period.
21
<PAGE> 25
TAXES
Each Fund has qualified and intends to qualify in the future as a separate
regulated investment company under the Internal Revenue Code of 1986, as amended
(the "Code"). If so qualified, a Fund will not be liable for Federal income
taxes to the extent it distributes to shareholders an amount equal to at least
the sum of 90% of its investment company taxable income and 90% of its
tax-exempt interest income (if any) net of certain deductions for the applicable
taxable year.
Dividends from net investment income are generally taxable to shareholders
as ordinary income, whether received in cash or additional shares of the Fund
(or, at the option of the shareholder, shares of another Fund). Distributions of
net capital gains (designated as "capital gain dividends") are taxable to
shareholders as long-term capital gains, regardless of the length of time the
shareholder has held the shares of the Fund.
A taxable gain or loss may be realized by a shareholder upon the
redemption, transfer or exchange of Fund shares depending upon the tax basis of
such shares and their price at the time of redemption, transfer or exchange.
This capital gain or loss will be long-term if the shares have been held for
more than one year. Any capital loss recognized on the sale or exchange of Fund
shares held not longer than six months will be treated as long-term capital loss
to the extent of any capital gain dividends received with respect to such
shares.
In connection with a Fund distribution, the per share net asset value is
reduced by the per share amount of the distribution. If a shareholder buys
shares prior to the record date, he will pay the full price for the shares and
then receive a portion of the price back as a taxable distribution.
The foregoing relates to Federal tax laws in effect as of the date of this
Prospectus, and is only a general summary of important tax considerations
generally affecting the Funds and their shareholders. Accordingly, shareholders
should consult their own tax advisors with respect to their particular tax
situations and the applicability of state and local tax laws. See "Taxation" in
the Statement of Additional Information for more information.
PERFORMANCE COMPARISONS
Advertisements and other sales literature for a Fund may refer to the
Fund's "average annual total return" and "cumulative total return." In addition,
both of the Funds may provide yield calculations in advertisements and other
sales literature. All such yield and total return quotations are based upon
historical earnings and are not intended to indicate future performance.
Yield calculations for a Fund will be based upon a 30-day period stated in
the advertisement and will be calculated by dividing the net investment income
per share (as defined under SEC rules and regulations) earned during the
advertised period by the offering price per share on the last day of the period.
The result will then be "annualized" using a formula that provides for
semi-annual compounding of income. The "effective yield" is calculated similarly
but, when annualized, the income earned by an investment in the Fund is assumed
to be reinvested. The "effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment.
Average annual total return is the average annual compounded rate of return
on a hypothetical $1,000 investment made at the beginning of the advertised
period. Cumulative total return is calculated by subtracting a hypothetical
$1,000 payment to the Fund from the
22
<PAGE> 26
redeemable value of such payment at the end of the advertised period, dividing
such difference by $1,000 and multiplying the quotient by 100. In calculating
average annual and cumulative total return, all dividends and distributions are
assumed to be reinvested.
In addition to advertising total return and yield, comparative performance
information may be used from time to time in advertising the Funds' shares. The
performance of Short Duration Fund may be compared to the performance of the
Merrill Lynch 1-3 Year Government Index, the Lipper ARM Fund Average, the Lipper
Short-Intermediate Fund Average and the Lehman 1-3 Year Government Index and the
performance of Intermediate Duration Fund may be compared to the performance of
the Lehman Government Corporate Index.
For additional information regarding the calculation of yield, average
annual total return and cumulative total return, see "Calculation of Performance
Data" in the Statement of Additional Information.
Additional information about the Funds' performance is contained in the
Funds' annual report, which is available upon request without charge.
GENERAL INFORMATION
The Company is authorized to issue a total of 100 billion shares of common
stock, with a par value of $.001 per share. Two hundred million of these shares
have been authorized by the Board of Directors to be issued in two separate
series of common stock as follows: 100 million shares designated as Short
Duration Fund, and 100 million shares designated as Intermediate Duration Fund.
The Board of Directors is empowered under the Company's Articles of
Incorporation to issue other series of the Company's common stock without
shareholder approval. In addition, the Board of Directors may, without
shareholder approval, create and issue one or more additional classes of shares
within each Fund, as well as within any series of the Company created in the
future. All classes of shares in a Fund would be identical except that each
class of shares would be available through a different distribution channel and
certain classes might incur different expenses for the provision of distribution
services or the provision of shareholder services or administration assistance
by institutions. Shares of each class would share equally in the gross income of
a Fund, but any variation in expenses would be charged separately against the
income of the particular class incurring such expenses. This would result in
variations in net investment income accrued and dividends paid by and in the net
asset value of the different classes of a Fund. This ability to create multiple
classes of shares within each Fund will allow the Company in the future the
flexibility to better tailor its methods of marketing, administering and
distributing shares of the Funds to the needs of particular investors and to
allocate expenses related to such marketing, administration and distribution
methods to the particular classes of shareholders of the Fund incurring such
expenses.
All shares, when issued, will be fully paid and nonassessable and will be
redeemable. All shares have equal voting rights. They can be issued as full or
fractional shares. A fractional share has pro-rata the same kind of rights and
privileges as a full share. The shares possess no preemptive or conversion
rights.
Each share of a series has one vote (with proportionate voting for
fractional shares) irrespective of the relative net asset value of the series'
shares. On some issues, such as the election of directors, all shares of the
Company vote together as one series. Cumulative voting is
23
<PAGE> 27
not authorized. This means that the holders of more than 50% of the shares
voting for the election of directors can elect 100% of the directors if they
choose to do so, and, in such event, the holders of the remaining shares will be
unable to elect any directors.
On an issue affecting only a particular series, the shares of the affected
series vote separately. An example of such an issue would be a fundamental
investment restriction pertaining to only one series. In addition, in voting on
an investment advisory agreement, approval of the agreement by the shareholders
of a particular series would make the agreement effective as to that series
whether or not it had been approved by the shareholders of any other series.
The assets received by the Company for the issue or sale of shares of each
series, and all income, earnings, profits and proceeds thereof, subject only to
the rights of creditors, are allocated to such series, and constitute the
underlying assets of such series. The underlying assets of each series are
required to be segregated on the books of account, and are to be charged with
the expenses in respect to such series and with a share of the general expenses
of the Company. Any general expenses of the Company not readily identifiable as
belonging to a particular series shall be allocated among the series based upon
the relative net assets of the series at the time such expenses were accrued.
The By-Laws of the Company provide that annual shareholder meetings be held
only when required to be held by Maryland law or when called by the Board of
Directors or by an officer or officers authorized to take such action by the
Board of Directors. Maryland corporation law requires that a corporation
registered under the 1940 Act hold an annual meeting only when required by the
1940 Act to act upon the election of directors. In addition, the By-Laws provide
that shareholders may call a special meeting upon a vote of 10% or more of the
outstanding shares of the Company entitled to be cast with respect to any matter
to be voted upon. In addition, the 1940 Act requires a shareholder vote for all
amendments to fundamental investment policies and restrictions and for all
amendments to investment advisory contracts. The 1940 Act also provides that
directors of the Company may be removed by action of the record holders of
two-thirds or more of the outstanding shares of the Company. The directors are
required to call a meeting of shareholders for the purpose of voting upon the
question of removal of any director when so requested in writing by the record
holders of at least 10% of the Company's outstanding shares.
Each Fund periodically sends financial and other reports and communications
(including, but not limited to, annual and semi-annual financial statements) to
its shareholders. Unless otherwise required by law, each Fund intends to mail
one of each such report or communication to each individual mailing address,
which may be the address of one or multiple shareholders of record. However,
shareholders have the right to receive additional copies of each such report or
communication without charge upon written request to the applicable Fund(s).
24
<PAGE> 28
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED
TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS NOT
CONTAINED IN THIS PROSPECTUS
(AND/OR IN THE STATEMENT OF
ADDITIONAL INFORMATION
REFERRED TO ON THE COVER PAGE PROVIDENT
OF THIS PROSPECTUS), AND, INSTITUTIONAL
IF GIVEN OR MADE, SUCH FUNDS, INC.
INFORMATION OR
REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR
THE DISTRIBUTOR. THIS
PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OR
SOLICITATION BY THE COMPANY
OR BY THE DISTRIBUTOR IN ANY
JURISDICTION IN WHICH SUCH
OFFERING MAY NOT LAWFULLY BE
MADE.
----------------------
PROVIDENT INSTITUTIONAL
FUNDS, INC.
INVESTMENT ADVISER
PNC INSTITUTIONAL MANAGEMENT
CORPORATION
INVESTMENT SUBADVISER
BLACKROCK FINANCIAL
MANAGEMENT, INC.
ADMINISTRATOR AND
TRANSFER AGENT
PFPC INC.
SHORT DURATION FUND
CUSTODIAN INTERMEDIATE DURATION FUND
PNC BANK, NATIONAL
ASSOCIATION
DISTRIBUTOR
PROVIDENT DISTRIBUTORS, INC.
INDEPENDENT AUDITORS
KMPG PEAT MARWICK LLP
-----------------------
TABLE OF CONTENTS
PAGE
------
Introduction................... 2 [LOGO]
Fees and Expenses.............. 4
Financial Highlights........... 5
Investment Objectives and
Policies..................... 6
Special Investment Methods..... 10
Risk Considerations............ 13
Management..................... 14
Purchase of Shares............. 18
Redemption of Shares........... 19
Valuation of Shares............ 20
Dividends, Distributions and
Tax Status................... 21
Performance Comparisons........ 22
General Information............ 23
PIFI-P-001 Prospectus
April 28, 1995
<PAGE> 29
PROVIDENT INSTITUTIONAL FUNDS, INC.
SHORT DURATION FUND
INTERMEDIATE DURATION FUND
STATEMENT OF ADDITIONAL INFORMATION
April 28, 1995
This Statement of Additional Information is not a prospectus. This Statement
of Additional Information relates to the Prospectus dated April 28, 1995, and
should be read in conjunction therewith. A copy of the Prospectus may be
obtained from the Funds by calling (800) 441-7432.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS . . . . . . . . . . . . B-2
DIRECTORS AND EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . . B-9
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . . . B-15
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE . . . . . . . . . . B-19
CAPITAL STOCK AND OWNERSHIP OF SHARES . . . . . . . . . . . . . . . . B-20
NET ASSET VALUE AND PUBLIC OFFERING PRICE . . . . . . . . . . . . . . B-21
CALCULATION OF PERFORMANCE DATA . . . . . . . . . . . . . . . . . . . B-21
REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-23
TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-23
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . FS-1
</TABLE>
<PAGE> 30
THE COMPANY
Provident Institutional Funds, Inc. (the "Company") is an
open-end management investment company organized under the laws of the State of
Maryland. The Company is the successor by merger to Piper Trust Funds Inc., a
Minnesota corporation that merged with and into the Company effective February
17, 1995, with the Company surviving. The shares are currently offered in two
series: Short Duration Fund and Intermediate Duration Fund (sometimes referred
to herein individually as a "Fund" or, together, as the "Funds").
INVESTMENT OBJECTIVES, POLICIES AND RESTRICTIONS
The investment objectives and policies of the Funds are set
forth in the Prospectus. Certain additional investment information is set
forth below.
GOVERNMENT GUARANTEED MORTGAGE-RELATED SECURITIES
As set forth in the Prospectus, the Funds will invest in U.S.
Treasury bills, notes and bonds and other securities issued or guaranteed by
the U.S. Government or its agencies or instrumentalities ("U.S. Government
Securities") and repurchase agreements fully secured by U.S. Government
Securities. Included in the U.S. Government Securities the Funds may purchase
are pass-through securities and collateralized mortgage obligations ("CMOs").
Mortgages backing these securities purchased by the Funds include, among
others, conventional 30-year fixed rate mortgages, graduated payment mortgages,
15-year mortgages and adjustable rate mortgages. The current issuers and
guarantors of mortgage-related securities in which the Funds may invest are the
Government National Mortgage Association, the Federal National Mortgage
Association and the Federal Home Loan Mortgage Association. A description of
the mortgage-related securities in which the Funds may invest is contained in
the Prospectus. Additional information with respect to these mortgage-related
securities is set forth below.
GNMA Pass-Through Securities. The Government National
Mortgage Association ("GNMA") issues mortgage-backed securities ("GNMA
Certificates") which evidence an undivided interest in a pool or pools of
mortgages. GNMA Certificates that the Funds purchase are the "modified
pass-through" type, which entitle the holder to receive timely payment of all
interest and principal payments due on the mortgage pool, net of fees paid to
the "issuer" and GNMA, regardless of whether the mortgagor actually makes the
payment.
The National Housing Act authorizes GNMA to guarantee the
timely payment of principal and interest on securities backed by a pool of
mortgages insured by the Federal Housing Administration ("FHA") or guaranteed
by the Veterans Administration ("VA").
B-2
<PAGE> 31
The GNMA guarantee is backed by the full faith and credit of the United States.
GNMA is also empowered to borrow without limitation from the U.S. Treasury if
necessary to make any payments required under its guarantee.
The average life of a GNMA Certificate is likely to be
substantially shorter than the original maturity of the mortgages underlying
the securities. Prepayments of principal by mortgagors and mortgage
foreclosures will usually result in the return of the greater part of principal
investment long before the maturity of the mortgages in the pool. Foreclosures
impose no risk to principal investment because of the GNMA guarantee, except to
the extent that the Fund has purchased the certificates at a premium in the
secondary market.
FHLMC Pass-Through Securities. The Federal Home Loan Mortgage
Corporation ("FHLMC") was created in 1970 through enactment of Title III of the
Emergency Home Finance Act of 1970. Its purpose is to promote development of a
nationwide secondary market in conventional residential mortgages.
FHLMC issues two types of mortgage pass-through securities
("FHLMC Certificates"), mortgage participation certificates ("PCs") and
guaranteed mortgage certificates ("GMCs"). PCs resemble GNMA Certificates in
that each PC represents a pro rata share of all interest and principal payments
made and owed on the underlying pool. FHLMC guarantees timely monthly payment
of interest on PCs and the ultimate payment of principal.
GMCs also represent a pro rata interest in a pool of
mortgages. However, these instruments pay interest semiannually and return
principal once a year in guaranteed minimum payments. The expected average
life of these securities is approximately ten years. The FHLMC guarantee is
not backed by the full faith and credit of the United States.
FNMA Pass-Through Securities. The Federal National Mortgage
Association ("FNMA") was established in 1938 to create a secondary market in
mortgages insured by the FHA.
FNMA issues guaranteed mortgage pass-through certificates
("FNMA Certificates" ). FNMA Certificates resemble GNMA Certificates in that
each FNMA Certificate represents a pro rata share of all interest and principal
payments made and owed on the underlying pool. FNMA guarantees timely payment
of interest and principal on FNMA Certificates. The FNMA guarantee is not
backed by the full faith and credit of the United States.
B-3
<PAGE> 32
ADJUSTABLE RATE MORTGAGE SECURITIES
Adjustable Rate Mortgage Securities ("ARMS") are
mortgage-related securities that, unlike fixed-rate mortgage securities, have
periodic adjustments in the coupons on the underlying mortgages. The interest
rates on ARMS are reset at periodic intervals (generally one year or less) to
an increment over some predetermined interest rate index. There are two main
categories of indices: those based on U.S. Treasury securities and those
derived from a calculated measure such as a cost of funds index or a moving
average of mortgage rates. Commonly utilized indices include the one-year and
five-year constant maturity Treasury note rates, the three-month Treasury bill
rate, the 180-day Treasury bill rate, rates on longer-term Treasury securities,
the 11th District Federal Home Loan Bank Cost of Funds Index, the National
Median Cost of Funds, the one-month or three-month London Interbank Offered
Rate ("LIBOR"), the prime rate of a specific bank, or commercial paper rates.
Some indices, such as the one-year constant maturity Treasury note rate,
closely mirror changes in market interest rate levels. Others, such as the 11th
District Home Loan Bank Cost of Funds Index (often related to ARMS issued by
FNMA), tend to lag changes in market rate levels and tend to be somewhat less
volatile. The Subadviser (defined below) will seek to diversify Fund
investments in ARMS among a variety of indices and reset periods so that a Fund
is not at any one time unduly exposed to the risk of interest rate
fluctuations. In selecting a type of ARMS for investment, the Subadviser will
also consider the liquidity of the market for such ARMS.
The underlying adjustable rate mortgages which back ARMS in
which the Funds invest will frequently have caps and floors which limit the
maximum amount by which the loan rate to the residential borrower may change up
or down (1) per reset or adjustment interval and (2) over the life of the loan.
Some residential adjustable rate mortgage loans restrict periodic adjustments
by limiting changes in the borrower's monthly principal and interest payments
rather than limiting interest rate changes. These payment caps may result in
negative amortization; i.e., an increase in the balance of the mortgage loan.
ARMS, like other mortgage-related securities, differ from
conventional bonds in that principal is paid back over the life of the ARMS
rather than at maturity. As a result, the holder of the ARMS receives monthly
scheduled payments of principal and interest, and may receive unscheduled
principal payments representing prepayments on the underlying mortgages. When
the holder reinvests the payments and any unscheduled prepayments of principal
it receives, it may receive a rate of interest which is lower than the rate on
the existing ARMS. For this reason, ARMS are less effective than longer-term
debt securities as a means of "locking-in" long-term interest rates.
ARMS, while having less risk of price decline during periods
of rapidly rising rates than other investments of comparable maturities, will
have less potential for capital appreciation due to the likelihood of increased
prepayments of mortgages as interest rates decline. In addition, to the extent
ARMS are purchased at a premium, unscheduled principal
B-4
<PAGE> 33
prepayments will result in some loss of the holders' principal investment to
the extent of the premium paid. On the other hand, if ARMS are purchased at a
discount, both a scheduled payment of principal and an unscheduled prepayment
of principal will increase current and total returns and will accelerate the
recognition of income which, when distributed to shareholders, will be taxable
as ordinary income.
OTHER FLOATING RATE MORTGAGE-RELATED SECURITIES
As set forth in the Prospectus, the Funds may invest in collateralized
mortgage obligations and multi-class pass-through securities (collectively,
"CMOs") with floating interest rates. Like ARMS, the interest rates on such
CMOs are reset at periodic intervals to an increment over some predetermined
interest rate index. The commonly utilized indices are the same as those set
forth above under "--Adjustable Rate Mortgage Securities."
REPURCHASE AGREEMENTS
Each of the Funds may invest in repurchase agreements. The
Funds' custodian or sub-custodian will maintain the securities underlying any
repurchase agreement. The market value of the collateral underlying the
repurchase agreement will be determined on each business day. If at any time
the market value of the collateral falls below the repurchase price of the
repurchase agreement (including any accrued interest), the respective Fund will
promptly receive additional collateral (so the total collateral is an amount at
least equal to the repurchase price including accrued interest).
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES
Each of the Funds may purchase securities offered on a
"when-issued" basis and may purchase or sell securities on a "forward
commitment" basis. When a Fund purchases securities on a when-issued or
forward commitment basis, it will maintain in a segregated account with its
custodian cash or liquid high-grade debt obligations having an aggregate value
equal to the amount of such purchase commitments until payment is made; a Fund
will likewise segregate securities it sells on a forward commitment basis. The
purchase of securities on a when-issued or forward commitment basis may
increase the volatility of the Funds' net asset value to the extent the Funds
make such purchases while remaining substantially fully vested.
ILLIQUID SECURITIES
As set forth in the Prospectus, a Fund may invest in
securities that might otherwise be deemed to be illiquid and treat such
securities as liquid when they have been determined to be liquid by the Board
of Directors of the Company or by the Adviser (or Subadviser), subject to the
oversight of and pursuant to guidelines adopted by the Board of Directors.
Under these guidelines, a security may be deemed liquid if it can be disposed
of promptly in the ordinary course of business at a value reasonably close to
that used in the calculation of net asset value. Factors taken into account in
determining the liquidity of a security may include (a) the frequency of trades
and quotes for the security; (b) the number
B-5
<PAGE> 34
of dealers willing to purchase or sell the security and the number of other
potential purchasers; (c) dealer undertakings to make a market in the security;
and (d) the nature of the security and the nature of the marketplace trades
(e.g., the time needed to dispose of the security, the method of soliciting
offers and the mechanics of transfer).
HIGH RISK MORTGAGE SECURITIES
As stated in the Prospectus, each Fund will invest in U.S.
Government Securities that are deemed to be Type I Securities by the Office of
the Comptroller of the Currency (the "OCC") under 12 C.F.R. 1.3 ("Type I
Securities"), repurchase agreements fully secured by Type I Securities and,
with respect to no more than 10% of its total assets, open-end investment
companies that invest solely in Type I Securities and repurchase agreements
fully secured by Type I Securities. The Funds invest only in securities in
which national banks supervised by the OCC may invest under applicable Federal
law and the regulations and supervisory policies of the OCC. However, neither
Fund will invest more than 20% of its total assets in mortgage-related or
certain other securities that are considered "high risk" under applicable
supervisory policies of the OCC. Notwithstanding the foregoing, neither Fund
will invest in the following high risk securities: interest-only securities,
principal-only securities and inverse floating securities. According to
applicable OCC supervisory policies, in general any mortgage derivative product
that exhibits greater price volatility than a benchmark fixed rate thirty-year
mortgage-backed pass-through security will be deemed to be high risk.
Securities and other products having risk characteristics similar to high-risk
mortgage securities may be considered high risk securities. In OCC Banking
Circular 228 (Rev.) (January 10, 1992), the OCC defined "high-risk mortgage
security" as any mortgage derivative product that at the time of purchase, or
at a subsequent testing date, meets any of the following three tests:
(1) Average Life Test. The mortgage derivative product has an
expected weighted average life greater than 10.0 years.
(2) Average Life Sensitivity Test. The expected weighted average
life of the mortgage derivative product:
a. Extends by more than 4.0 years, assuming an immediate and
sustained parallel shift in the yield curve of plus 300 basis points,
or
b. Shortens by more than 6.0 years, assuming an immediate
and sustained parallel shift in the yield curve of minus 300 basis
points.
(3) Price Sensitivity Test. The estimated change in the price of
the mortgage derivative product is more than 17%, due to an immediate and
sustained parallel shift in the yield curve of plus or minus 300 basis points.
PORTFOLIO TURNOVER
Portfolio turnover is the ratio of the lesser of annual
purchases or sales of portfolio securities to the average monthly value of
portfolio securities, not including securities maturing in less than 12 months.
A 100% portfolio turnover rate would occur, for
B-6
<PAGE> 35
example, if the lesser of the value of purchases or sales of portfolio
securities for a particular year were equal to the average monthly value of the
portfolio securities owned during such year. For purposes of calculating
portfolio turnover, the maturity of investment purchases and sales related to
"rollover" transactions is considered to be less than 12 months. See "Special
Investment Methods--When-Issued Securities" in the Prospectus.
INVESTMENT RESTRICTIONS
In addition to the investment objectives and policies set
forth in the Prospectus, each of the Funds is subject to certain investment
restrictions, as set forth below, which may not be changed without the vote of
a majority of the Fund's outstanding shares. "Majority," as used in the
Prospectus and in this Statement of Additional Information, means the lesser of
(a) 67% of a Fund's outstanding shares present at a meeting of the holders if
more than 50% of the outstanding shares are present in person or by proxy or
(b) more than 50% of a Fund's outstanding shares.
Unless otherwise specified below, neither of the Funds will:
1. With respect to 75% of its total assets, invest more than 5%
of the value of its total assets in the securities of any one issuer or own
more than 10% of the outstanding voting securities of any one issuer, in each
case other than U.S. Government Securities.
2. Invest 25% or more of the value of its total assets in the
securities of issuers conducting their principal business activities in any one
industry, other than mortgage-related securities. This restriction does not
apply to U.S. Government Securities and repurchase agreements relating thereto.
3. Borrow money, except from banks for temporary or emergency
purposes. Each Fund may borrow money in an amount up to one-third of the value
of its total assets in order to meet redemption requests without immediately
selling any of its portfolio securities. If, for any reason, the current value
of the Fund's total assets falls below an amount equal to three times the
amount of its indebtedness from money borrowed, the Fund will, within three
days, reduce its indebtedness to the extent necessary. Neither Fund will
purchase portfolio securities while outstanding borrowings exceed 5% of the
value of the Fund's total assets. The Funds do not consider reverse repurchase
agreements to be borrowings for purposes of the investment policies set forth
in this paragraph.
4. Mortgage, pledge or hypothecate its assets except to secure
permitted indebtedness. For purposes of this policy, collateral arrangements
with respect to reverse repurchase agreements, margin deposits for futures
contracts and options, or collateral arrangements with respect to similar
investment techniques are not deemed to be a pledge or hypothecation of assets.
B-7
<PAGE> 36
5. Issue any senior securities (as defined in the Investment
Company Act of 1940, as amended), other than as set forth in restriction number
3 above and except to the extent that using futures contracts and options
thereon, purchasing or selling securities on a when-issued or forward
commitment basis or using similar investment strategies may be deemed to
constitute issuing a senior security.
6. Act as an underwriter of securities of other issuers, except
insofar as a Fund may be technically deemed an underwriter under the federal
securities laws in connection with the disposition of portfolio securities.
7. Purchase or sell real estate or real estate mortgage loans,
except that the Funds may invest in securities secured by real estate or
interests therein (including mortgage-related securities and similar
securities) as set forth in the Prospectus.
8. Purchase or sell commodities, except that the Funds may engage
in financial futures contracts and related options transactions.
9. Make loans of money or property to any person, except for
loans of portfolio securities and except through the use of repurchase
agreements or the purchase of debt obligations in which such Fund may invest
consistently with the Fund's investment objective and policies.
In addition, as non-fundamental investment restrictions that
may be changed at any time without shareholder approval, neither Fund will:
(a) Purchase or retain the securities of any issuer if, to
the Fund's knowledge, those officers or directors of the Company or its
affiliates or of its investment adviser who individually own beneficially more
than 0.5% of the outstanding securities of such issuer, together own more than
5% of such outstanding securities.
(b) Invest for the purpose of exercising control or
management.
(c) Purchase or sell oil, gas or mineral leases or interests
in oil, gas or other mineral exploration or development programs.
(d) Invest more than 10% of its total assets in the
securities of other investment companies or more than 5% of its total assets in
the securities of any one investment company, nor may it own more than 3% of
the outstanding voting securities of any investment company, except as part of
a merger, consolidation or acquisition of assets.
(e) Invest more than 15% of its net assets in illiquid
securities.
(f) Invest in real estate limited partnerships.
B-8
<PAGE> 37
(g) Invest in warrants.
(h) Purchase any securities on margin except to obtain such
short-term credits as may be necessary for the clearance of transactions.
(i) Write, purchase or sell puts, calls or combinations
thereof, other than options on futures contracts.
Any investment restriction or limitation referred to above or
in the Prospectus, except the borrowing policy, which involves a maximum
percentage of securities or assets, shall not be considered to be violated
unless an excess over the percentage occurs immediately after an acquisition of
securities or utilization of assets and results therefrom.
DIRECTORS AND EXECUTIVE OFFICERS
The names, addresses, ages and principal occupations during the past five years
of the directors and executive officers of the Company are given below.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE POSITION WITH FUND PAST FIVE YEARS
--------------------- ------------------ ---------------
<S> <C> <C>
Philip E. Coldwell(3,4) Director Economic Consultant; Chairman, Coldwell
Coldwell Financial Consultants Financial Consultants; Member of the Board
3330 Southwestern Blvd. of Governors of the Federal Reserve System
Dallas, TX 75225 from 1974 to 1980; Director, Maxus Energy
Age 72 Corporation (energy products) from 1989 to
1993; Director or Trustee of The PNC Fund,
Temporary Investment Fund, Inc., Trust for
Federal Securities, Municipal Fund for
Temporary Investment and Portfolios for
Diversified Investment.
</TABLE>
B-9
<PAGE> 38
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE POSITION WITH FUND PAST FIVE YEARS
--------------------- ------------------ ---------------
<S> <C> <C>
Robert R. Fortune(2,3,4) Director Financial Consultant; Chairman, President
2920 Ritter Lane and Chief Executive Officer, Associated
Allentown, PA 18104 Electric & Gas Insurance Services Limited
Age 78 from 1984 to 1993; Member of the Financial
Executives Institute and American Institute
of Certified Public Accountants; Director or
Trustee of The PNC Fund, Temporary
Investment Fund, Inc., Trust for Federal
Securities, Municipal Fund for Temporary
Investment, Portfolios for Diversified
Investment and Independence Square Income
Securities, Inc.; Managing General Partner,
Chestnut Street Exchange Fund; Director,
Prudential Utility Fund, Inc., Prudential
Structured Maturity Fund, Inc and Prudential
IncomeVertible Fund, Inc.
Rodney D. Johnson(4) Director President, Fairmount Capital Advisors, Inc.
Fairmount Capital Advisors, Inc. (financial advisers) since 1987; Treasurer,
1435 Walnut St. North Philadelphia Health System (formerly
Philadelphia, PA 19102 Girard Medical Center) from 1988 to 1992;
Age 53 Member, Board of Education, School District
of Philadelphia, 1983 to 1988; Chair, Fox Chase
Cancer Center Board of Advocates, 1993 - Present;
Director or Trustee of The PNC Fund,
Temporary Investment Fund, Inc., Trust for
Federal Securities, Municipal Fund for
Temporary Investment, Portfolios for
Diversified Investment, Municipal Fund for
California Investors, Inc., Municipal Fund
for New York Investors, Inc. and
International Dollar Reserve Fund.
</TABLE>
B-10
<PAGE> 39
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE POSITION WITH FUND PAST FIVE YEARS
--------------------- ------------------ ---------------
<S> <C> <C>
G. Willing Pepper(1,2) Chairman of the Retired; Chairman of the Board, Specialty
128 Springton Lake Road Board and President Composites Corporation until May 1984;
Media, PA 19063 Chairman of the Board, The Institute for
Age 87 Cancer Research until 1979; Director,
Philadelphia National Bank until 1978;
President, Scott Paper Company from 1971 to
1973; Director, Marmon Group, Inc. until
April 1986; Director or Trustee of The PNC
Fund, Temporary Investment Fund, Inc., Trust
for Federal Securities, Municipal Fund for
Temporary Investment, Portfolios for
Diversified Investment, Municipal Fund for
California Investors, Inc. and Independence
Square Income Securities, Inc.; Managing
General Partner, Chestnut Street Exchange
Fund.
Anthony M. Santomero Director Deputy Dean, December 1990 to June 1994,
310 Keithwood Road Richard K. Mellon Professor of Finance since
Wynnewood, PA 19096 April 1984, and Dean's Advisory Council
Age 48 Member since July 1984, The Wharton School,
University of Pennsylvania; Associate
Editor, Journal of Banking and Finance since
June 1978; Associate Editor, Journal of
Economics and Business since October 1979;
Associate Editor, Journal of Money, Credit
and Banking since January 1980; Research
Associate, New York University Center for
Japan-U.S. Business and Economic Studies
since July 1989; Editorial Advisory Board,
Open Economics Review since November 1990;
Director, The Zweig Fund and The Zweig Total
Return Fund; Director or Trustee of The PNC
Fund, Temporary Investment Fund, Inc., Trust
for Federal Securities, Municipal Fund for
Temporary Investment, Municipal Fund for
California Investors, Inc. and Portfolios
for Diversified Investment.
</TABLE>
B-11
<PAGE> 40
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING
NAME, ADDRESS AND AGE POSITION WITH FUND PAST FIVE YEARS
--------------------- ------------------ ---------------
<S> <C> <C>
David R. Wilmerding, Jr.(2,3) Vice-Chairman of the President and Chief Executive Officer,
One Aldwyn Center Board Gates, Wilmerding, Carper & Rawlings, Inc.
Villanova, PA 19085 (successor to Wilmerding & Co., Inc.)
Age 59 (investment advisers) since February 1989;
Director, Beaver Management Corporation;
Director or Trustee of The PNC Fund,
Temporary Investment Fund, Inc., Trust for
Federal Securities, Municipal Fund for
Temporary Investment, Portfolios for
Diversified Investment and Independence
Square Income Securities, Inc.; Managing
General Partner, Chestnut Street Exchange
Fund.
Edward J. Roach Treasurer and Vice- Certified Public Accountant; Partner of the
400 Bellevue Parkway President accounting firm of Main Hurdman until 1981;
Suite 100 Vice Chairman of the Board, Fox Chase Cancer
Wilmington, DE 19809 Center; Trustee Emeritus, Pennsylvania
Age 70 School for the Deaf; Trustee Emeritus,
Immaculata College; Treasurer, Chestnut
Street Exchange Fund; President and
Treasurer, The RBB Fund, Inc.; Vice
President and Treasurer, Independence Square
Income Securities, Inc., Municipal Fund for
New York Investors, Inc., Municipal Fund for
California Investors, Inc., The PNC Fund,
Temporary Investment Fund, Inc., Municipal
Fund for Temporary Investment, Trust for
Federal Securities and Portfolios for
Diversified Investment.
W. Bruce McConnell, III Secretary Partner in the law firm of Drinker Biddle &
1100 Philadelphia National Reath, Philadelphia, Pennsylvania.
Bank Building
Broad and Chestnut Streets
Philadelphia, PA 19107
Age 52
</TABLE>
- ----------------------------
(1) This director may be deemed an "interested person", as defined in the
1940 Act, by reason of his affiliation with the Adviser or an
affiliate thereof.
(2) Executive Committee member.
(3) Audit Committee member.
(4) Nominating Committee member.
B-12
<PAGE> 41
The Company pays directors who are not affiliated with PNC Institutional
Management Corporation (the "Adviser"), Provident Distributors, Inc. (the
"Distributor") or their affiliates an annual retainer fee of $5,000 ($8,000 for
the Chairman). Directors who are not employed by the Adviser, the Distributor
or their affiliates are compensated $500 for reasonable expenses incurred in
attending meetings of the Board or certain committees thereof. Each director
has agreed to waive all such compensation payable to him until further notice.
No officer, director or employee of the Adviser, PNC Bank, National
Association, PFPC Inc., or the Distributor currently receives any direct
compensation from the Company. As of March 31, 1995, the directors and
officers of the Company, as a group, owned less than 1% of the outstanding
shares of each Fund.
During intervals between meetings of the Board of Directors,
the Executive Committee may exercise the authority of the Board in the
management of the Company's business to the extent permitted by law.
The table below sets forth estimated payments to the directors
from the "fund complex" (defined below) of which the Company is a part for the
fiscal year ended December 31, 1995.
B-13
<PAGE> 42
<TABLE>
<CAPTION>
Pension or
Retirement Estimated
Benefits Total Compensation
Aggregate Accrued as Part Estimated from Company and
Name of Person, Compensation(1) from of Fund Annual Benefits Fund Complex(2) Paid
Position Company Expenses Upon Retirement to Directors(3)
--------------- -------------------- --------------- --------------- --------------------
<S> <C> <C> <C> <C>
Philip E. Coldwell, Director $0.00 $0.00 N/A (5)(4) $43,625.00
Robert R. Fortune, Director 0.00 0.00 N/A (7)(4) 59,625.00
Rodney D. Johnson, Director 0.00 0.00 N/A (7)(4) 54,375.00
G. Willing Pepper, Director and 0.00 0.00 N/A (8)(4) 97,875.00
Chairman
David R. Wilmerding, Jr., 0.00 0.00 N/A (7)(4) 60,625.00
Director
Anthony M. Santomero, Director 0.00 0.00 N/A (6)(4) 49,625.00
----- ----- -----------
$0.00 $0.00 $365,750.00
</TABLE>
- --------------------------------------
(1) Each director has agreed to waive all such compensation payable to him
by Provident Institutional Funds, Inc. until further notice.
(2) A "fund complex" means two or more investment companies that hold
themselves out to investors as related companies for purposes of
investment and investor services, or have a common investment
adviser or have an investment adviser that is an affiliated
person of the investment adviser of any of the other
investment companies.
(3) The information furnished represents estimated payments for the year
ended December 31, 1995.
(4) Total number of such other investment companies director serves on
within the fund complex.
B-14
<PAGE> 43
INVESTMENT ADVISORY AND OTHER SERVICES
GENERAL
The investment adviser for the Funds is PNC Institutional
Management Corporation (the "Adviser"). The Adviser acts as such pursuant to
a written agreement which is periodically approved by the directors or the
shareholders of the Funds. BlackRock Financial Management, Inc. (the
"Subadviser") currently serves as subadviser for each Fund, and is responsible
for the day-to-day management of each Fund's assets under an agreement between
the Adviser and the Subadviser. The Subadviser is an affiliate of the Adviser.
PNC Bank, National Association ("PNC Bank") serves as custodian for the Funds'
portfolio securities and cash, and PFPC Inc. serves as the Funds'
administrator.
Through February 16, 1995, Piper Trust Company (the "former
adviser") served as investment adviser to Piper Trust Funds Inc., the Company's
corporate predecessor by merger. Pursuant to an asset purchase agreement dated
December 29, 1994 between the former adviser and the Adviser (the "Purchase
Agreement"), the former adviser sold to the Adviser certain assets relating to
the operation of the Company and the Funds. As a condition to the Purchase
Agreement, the shareholders of each Fund, at a special meeting held on December
29, 1994 approved, among other things, a new investment advisory agreement
between the Company and the Adviser, and a new subadvisory agreement on behalf
of each of the Funds between the Adviser and the Subadviser.
CONTROL OF THE ADVISER AND THE SUBADVISER
The Adviser is a wholly-owned subsidiary of PNC Asset
Management Group, Inc., which is in turn a wholly-owned subsidiary of PNC Bank.
All of the capital stock of PNC Bank is owned by PNC Bancorp, Inc., which is in
turn a wholly-owned subsidiary of PNC Bank Corp., which is a publicly held bank
holding company. The Subadviser is a wholly-owned subsidiary of PNC Asset
Management Group, Inc., which is in turn a wholly-owned subsidiary of PNC Bank.
INVESTMENT ADVISORY AGREEMENT
The Adviser acts as the investment adviser of the Funds under
an Investment Advisory Agreement which has been approved by the Board of
Directors (including a majority of the directors who are not parties to the
agreement, or interested persons of any such party as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), other than as directors of
the Company) on November 9, 1994 and by shareholders of the Company on December
29, 1994.
The Investment Advisory Agreement will terminate automatically
in the event of its assignment. In addition, the agreement is terminable at
any time, without penalty, by the Board of Directors or by vote of a majority
of the Company's outstanding voting securities on not more than 60 days'
written notice to the Adviser, and by the Adviser on 60 days' written notice to
the Company. The Agreement may be terminated with respect to a particular Fund
at any time by a vote of the holders of a majority of the outstanding voting
securities of such Fund, upon 60 days' written notice to the Adviser.
B-15
<PAGE> 44
Unless sooner terminated, the Agreement shall continue in effect for more than
two years after its execution with respect to a particular Fund only so long as
such continuance is specifically approved at least annually by either the Board
of Directors or by a vote of a majority of the outstanding voting securities of
that Fund, provided that in either event such continuance is also approved by a
vote of a majority of the directors who are not parties to such Agreement, or
interested persons of such parties, cast in person at a meeting called for the
purpose of voting on such approval. If a majority of the outstanding voting
securities of either Fund approves the Agreement, the Agreement shall continue
in effect with respect to such Fund whether or not the shareholders of the
other Fund approve the Agreement.
Under the Investment Advisory Agreement, the Adviser is
entitled to receive a monthly management fee computed separately for each Fund.
Such fee is payable at an annual rate of .40% of the average daily net assets
of each Fund. Until at least December 31, 1995, a portion of the advisory fee
will be waived, so that the advisory fee payable to the Adviser will be payable
at the annual rate of .30% of each Fund's average daily net assets. The
Investment Advisory Agreement became effective on February 17, 1995. Through
February 16, 1995, the Company's corporate predecessor (the "Predecessor
Company") was subject to a management fee at an annual rate of .60% of the
average daily net assets of each Fund pursuant to an investment advisory and
management agreement with the former adviser (the "Predecessor Agreement").
However, as a result of certain voluntary fee waivers and limitations by the
former adviser, the investment advisory and management fee paid by the
Predecessor Company to the former adviser for the fiscal year ended December
31, 1994 was paid at the effective annual rate of .19% of the Short Duration
Fund's average daily net assets, and .17% of the Intermediate Duration Fund's
average daily net assets. During the fiscal period ended December 31, 1994,
Short Duration Fund paid $185,195 (net of waivers) and Intermediate Duration
Fund paid $55,143 (net of waivers) to the former adviser under the Predecessor
Agreement.
Each Fund is subject to the laws of states in which the Fund's
shares are qualified for offer and sale, which may require that if a mutual
fund's expenses (including advisory fees but excluding interest, taxes,
brokerage commissions and extraordinary expenses) exceed certain percentages of
average net assets, the Fund must be reimbursed for such excess expenses. The
Investment Advisory Agreement provides that the Adviser must make any expense
reimbursements to the Funds required under state law. The most restrictive of
these laws that may apply to the Funds provides that aggregate annual expenses
of a mutual fund shall not normally exceed 2-1/2% of the first $30 million of
the average net assets, 2% of the next $70 million of the average net assets
and 1-1/2% of the remaining average net assets.
The same security may be suitable for both of the Funds and/or
for other funds or private accounts managed by the Adviser, the Subadviser or
their affiliates. If and when two or more funds or accounts simultaneously
purchase or sell the same security, the transactions will be allocated as to
price and amount in accordance with arrangements equitable to each fund or
account. The simultaneous purchase or sale of the same securities by both
Funds or by either of the Funds and other funds or accounts managed by the
Adviser, the Subadviser or their affiliates may have a detrimental effect on a
Fund, as this may affect
B-16
<PAGE> 45
the price paid or received by that Fund or the size of the position obtainable
or able to be sold by that Fund.
SUBADVISORY AGREEMENT
The Adviser has entered into a Subadvisory Agreement with the
Subadviser on behalf of each Fund. Under the Subadvisory Agreements, the
Subadviser is responsible for the day-to-day management of the respective
Funds. With respect to each Fund, the Adviser pays the Subadviser monthly
compensation payable over the same time periods and calculated in the same
manner as the investment advisory fee received by the Adviser from such Fund.
The fees payable by the Adviser to the Subadviser will equal, on an annual
basis, .25% of the average daily net assets of each Fund. The Subadviser will
waive its subadvisory fee and reimburse expenses to the extent of one-half of
any fee waivers or expense reimbursements undertaken by the Adviser.
Each Subadvisory Agreement will terminate automatically in the
event of its assignment. In addition, such Agreement is terminable at any
time, without penalty, by the Board of Directors on not more than 60 days'
written notice to the Adviser and the Subadviser or by a vote of the holders of
a majority of the outstanding shares of the applicable Fund. Unless sooner
terminated, each Subadvisory Agreement shall continue in effect until two years
from the date of its execution and thereafter from year to year provided that
it is specifically approved at least annually by either the Board of Directors
or by a vote of a majority of the outstanding voting securities of the
applicable Fund, provided that in either event such continuance is also
approved by a vote of a majority of the directors who are not parties to such
agreement, or interested persons of such parties, cast in person at a meeting
called for the purpose of voting on such approval.
Each Subadvisory Agreement was approved by the Company's
directors, including a majority of the directors who are not parties to such
contract or interested persons of such parties as defined in the 1940 Act, on
November 9, 1994, and by the shareholders of the applicable Fund on December
29, 1994.
Through February 16, 1995, Piper Capital Management
Incorporated (the "former subadviser"), an affiliate of the former adviser,
performed subadvisory services for both Funds, and PNC Bank performed
subadvisory services for Intermediate Duration Fund. During the fiscal year
ended December 31, 1994, the former adviser paid the former subadviser a fee at
the annual rate of .05% of the Short Duration Fund's average daily net assets
and .04% of the Intermediate Duration Fund's average daily net assets. The
former adviser also paid PNC Bank a fee at the effective annual rate of .01% of
the average daily net assets of Intermediate Duration Fund.
DISTRIBUTION AGREEMENT
Pursuant to the Distribution Agreement, the Distributor has
agreed to act as the principal underwriter for the Funds in the sale and
distribution to the public of shares of the Funds, either through dealers or
otherwise. The Distributor has agreed to offer such shares for sale at all
times when such shares are available for sale and may lawfully be offered for
sale and sold. In addition, the Distributor may, out
B-17
<PAGE> 46
of its own assets, make payments to broker-dealers which have entered into
sales agreements with the Distributor in connection with their sales of shares
of either Fund. The Distributor will not be compensated for its services under
the Distribution Agreement.
SERVICE PLAN
Under the terms of separate Shareholder Service Plans (each a
"Plan") adopted by the Company on behalf of each Fund pursuant to Rule 12b-1
under the 1940 Act ("Rule 12b-1"), the Distributor provides services to the
Company relating to the servicing of shareholder accounts or contracts with
financial institutions for the provision of such services. Such services
include, without limitation, responding to shareholder inquiries and providing
reports and other information. For such services, the Distributor is
compensated at the annual rate of .10% of the average daily net assets of each
Fund. Each Plan was approved by the Board of Directors, including a majority
of the Directors who are not interested persons of the Company and who have no
direct or indirect interest in the operation of either Plan or in any agreement
related to either Plan (the "Rule 12b-1 Directors") at a meeting called for the
purpose of voting on each Plan on November 9, 1994. The Plans were approved by
shareholders of each Fund on December 29, 1994.
The Plans had not taken effect prior to 1995 and, as a result,
neither Fund made any payments for such services during its last fiscal year.
Each Plan continues in effect from year to year provided that
such continuance is approved at least annually by vote of the Board of
Directors, including a majority of the Rule 12b-1 Directors, cast in person at
a meeting for the purpose of voting on such continuance. The Plans may each be
terminated at any time, without penalty, by the vote of a majority of the Rule
12b-1 Directors or by the vote of the holders of a majority of the outstanding
shares of the applicable Fund on not more than 60 days' written notice to any
other party to the Plans. Neither Plan may be amended to increase materially
the amounts to be spent for the services described therein without approval by
the shareholders of the applicable Fund and all material amendments are
required to be approved by the Board of Directors in the manner described
above. Each Plan will automatically terminate in the event of its assignment.
The Company will not be contractually obligated to pay compensation under
either Plan if it is terminated or not continued.
Pursuant to each Plan, the Board of Directors will review at
least quarterly a written report of the expenses incurred on behalf of each
Fund by the Distributor under each Plan. The report will include an
itemization of the expenses and the purposes of such expenditures. In
addition, as long as the Plans remain in effect, the selection and nomination
of the Rule 12b-1 Directors shall be committed to the Rule 12b-1 Directors.
B-18
<PAGE> 47
ADMINISTRATION AGREEMENT
Pursuant to an Administration Agreement with each of the
Funds, PFPC Inc., Bellevue Park Corporate Center, 400 Bellevue Parkway,
Wilmington, Delaware 19809, telephone (800) 441-9800 ("PFPC"), performs various
administrative services for each Fund. These services include maintenance of
books and records, preparation of governmental filings and shareholder reports
and computation of net asset values and daily dividends. For its administrative
services, PFPC receives a fee from each Fund, payable monthly, equal on an
annual basis to .15% of such Fund's average daily net assets, plus any
out-of-pocket expenses. PFPC is an indirect wholly-owned subsidiary of PNC
Bank Corp., the parent company of the Adviser.
During the fiscal period ended December 31, 1994, under the
Administration Agreement Short Duration Fund paid $75,752 in administrative
fees and $76,254 in multi-manager fees (total $152,006), and Intermediate
Duration Fund paid $28,125 in administration fees and $21,253 in multi-manager
fees (total $49,378). Effective February 17, 1995, total fees under the
Administration Agreement are payable at the maximum annual rate of .15% of
each Fund's average daily net assets.
AUDITORS
KPMG Peat Marwick LLP, 1600 Market Street, Philadelphia,
Pennsylvania 19103, acts as the independent auditors for each Fund and in such
capacity examines each Fund's annual financial statements.
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE
Because each Fund's portfolio is composed exclusively of debt,
rather than equity securities, most of a Fund's portfolio transactions are
effected without the payment of brokerage commissions, but at net prices which
usually include a markup. Most of a Fund's transactions are with the issuer,
or with major dealers acting for their own account and not as brokers.
Subject to the general supervision of the Board of Directors
of the Company, the Adviser and the Subadviser are responsible for effecting
securities transactions for each Fund. In placing orders for securities
transactions, the primary criterion for the selection of a broker-dealer is the
ability of the broker-dealer, in the opinion of the Adviser or the Subadviser,
as applicable, to secure prompt execution of the transactions at the most
favorable net price, considering the state of the market at the time.
Frequently the Adviser or the Subadviser selects a broker dealer to effect a
particular transaction without contacting all broker-dealers who might be able
to effect such transaction, because of the volatility of the market and the
desire to accept a particular price for a security.
When consistent with the objectives of prompt execution and
favorable net price, business may be placed with broker-dealers who furnish
investment research or services to the Adviser or the Subadviser. Such
research or services include advice, both directly and in writing, as to the
value of securities; the advisability of investing in, purchasing or selling
securities; and the availability of securities, or purchasers or sellers of
securities; as well as analyses and reports concerning issues, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts. This allows the Adviser or the Subadviser to supplement its own
investment research activities and enables the Adviser or
B-19
<PAGE> 48
the Subadviser to obtain the views and information of individuals and research
staffs of many different securities firms prior to making investment decisions
for a Fund. To the extent portfolio transactions are effected with
broker-dealers who furnish research services to the Adviser or the Subadviser,
the Adviser or the Subadviser, as applicable, receives a benefit, not capable
of evaluation in dollar amounts, without providing any direct monetary benefit
to the Fund from these transactions. Research and statistical services
furnished by brokers through which a Fund effects securities transactions are
used by the Adviser or Subadviser in carrying out its investment management
responsibilities with respect to all its client accounts but not all such
services may be used by the Adviser or Subadviser in connection with the Fund.
Neither Fund will purchase at a higher price or sell at a lower price in
connection with transactions effected with a dealer, acting as principal, who
furnishes research services to such Fund than would be the case if no weight
were given by the Adviser or Subadviser to the dealer's furnishing of services.
In the event any transactions are executed on an agency basis,
the Adviser or the Subadviser will authorize a Fund to pay an amount of
commission for effecting a securities transaction in excess of the amount of
commission another broker-dealer would have charged only if the Adviser or the
Subadviser determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker-dealer to the Adviser or the Subadviser, viewed in
terms of either that particular transaction or the Adviser's or Subadviser's
overall responsibilities with respect to the accounts as to which it exercises
investment discretion. If the Fund executes any transactions on an agency
basis, it will generally pay higher than the lowest commission rates available.
During the fiscal year ended December 31, 1994, the Funds paid
no brokerage commissions.
CAPITAL STOCK AND OWNERSHIP OF SHARES
Each Fund's shares of common stock have a par value of $.001
per share, and have equal rights to share in dividends and assets. The shares
possess no preemptive or conversion rights. Cumulative voting is not
authorized. This means that the holders of more than 50% of the shares voting
for the election of directors can elect 100% of the directors if they choose to
do so, and in such event the holders of the remaining shares will be unable to
elect any directors.
As of December 31, 1994, PNC Bank, National Association, a
national banking association, "controlled" (within the meaning of the 1940 Act,
i.e., owned in excess of 25% of the shares of) Short Duration Fund and
Intermediate Duration Fund. PNC Bank, National Association is a wholly-owned
subsidiary of PNC Bancorp, Inc., which is in turn a wholly-owned subsidiary of
PNC Bank Corp., a publicly held bank holding company. An entity which
"controls" a particular Fund could have effective voting control over the
operations of that Fund.
The following chart identifies the numbers and percentages of
shares of the Funds owned by PNC Bank, National Association, and also
identifies those other shareholders holding of record or beneficially as of
March 31, 1995 5% or more of the shares of either Fund:
BENEFICIAL OWNER SHORT DURATION FUND INTERMEDIATE DURATION FUND
---------------- ------------------- --------------------------
PNC Bank, NA 8,000,000.00 shares 2,000,000.00 shares
One PNC Plaza 74.35% 51.78%
5th and Wood Street
Pittsburgh, PA 15265
First Midwest Bank 1,521,096.744 shares
Illinois NA 14.05%
c/o First Midwest
Bancorp
PO Box 3086
184 Shuman Blvd.
Naperville, IL 60566
Illini Bank 830,477.816 shares 213,016.108 shares
615 West Jefferson 7.71% 5.51%
Street
Springfield, IL 62702
NWA Federal Credit 1,536,557.807 shares
Union 39.78%
4 Apple Tree Square
Bloomington, MN 15265
B-20
<PAGE> 49
NUMBER PERCENT NUMBER PERCENT
------ ------- ------ -------
NET ASSET VALUE AND PUBLIC OFFERING PRICE
The method for determining the public offering price of Fund
shares is summarized in the Prospectus in the text following the headings
"Purchase of Shares--Public Offering Price" and "Valuation of Shares." The net
asset value of each Fund's shares is determined as of 4:00 p.m., New York City
time, on each Business Day, as defined in the Prospectus, provided that the net
asset value need not be determined on days on which changes in the value of the
Fund's portfolio securities will not materially affect the current net asset
value of the Fund's shares and days when no Fund shares are tendered for
redemption and no order for Fund shares is received.
On December 31, 1994, the net asset value per share of Short
Duration Fund was calculated as follows:
Net Assets ($101,904,245) = Net Asset Value per Share ($9.47)
----------------------------------
Shares Outstanding (10,756,869)
On December 31, 1994, the net asset value per share of
Intermediate Duration Fund was calculated as follows:
Net Assets ($35,389,944) = Net Asset Value per Share ($9.17)
---------------------------------
Shares Outstanding (3,860,091)
CALCULATION OF PERFORMANCE DATA
Advertisements and other sales literature for each Fund may
refer to "average annual total return" and "cumulative total return." Average
annual total return figures are computed by finding the average annual
compounded rates of return over the periods indicated in the advertisement that
would equate the initial amount invested to the ending redeemable value,
according to the following formula:
n
P(1+T) = ERV
Where: P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years; and
ERV = ending redeemable value at the end of the
period of a hypothetical $1,000 payment made
at the beginning of such period.
This calculation assumes all dividends and capital gains distributions are
reinvested at net asset value on the appropriate reinvestment dates as
described in the Prospectus, and includes all recurring fees, such as
investment advisory fees, charged to all shareholder accounts.
Cumulative total return is computed by finding the cumulative
compounded rate of return over the period indicated in the advertisement that
would equate the initial amount invested to the ending redeemable value,
according to the following formula:
B-21
<PAGE> 50
CTR = (ERV-P)
-------
P
Where: CTR = Cumulative total return;
ERV = ending redeemable value at the end of the
period of a hypothetical $1,000 payment made
at the beginning of such period; and
P = initial payment of $1,000.
This calculation assumes all dividends and capital gain distributions are
reinvested at net asset value on the appropriate reinvestment dates as
described in the Prospectus and includes all recurring fees, such as investment
advisory fees, charged to all shareholder accounts.
The aggregate total returns for the Short Duration and the
Intermediate Duration Funds for the period from commencement of operations
(February 14, 1994) through December 31, 1994 were (1.11)% and (3.64)%,
respectively.
Each Fund may also issue yield quotations. Yield is computed
by dividing the net investment income per share (as defined under Securities
and Exchange Commission rules and regulations) earned during the computation
period by the maximum offering price per share on the last day of the period
(based on a 30-day or one month period), according to the following formula:
6
YIELD = 2 [ (a-b +1) - 1]
---
cd
Where: a = dividends and interest earned during the
period;
b = expenses accrued for the period (net of
reimbursements);
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends; and
d = the maximum offering price per share on the
last day of the period.
When calculating the foregoing yield quotations, the
calculation of net change in account value will include the value of additional
shares purchased with dividends from the original share and dividends declared
on both the original share and any such additional shares, and all fees, other
than nonrecurring accounts or sales charges, that are charged to all
shareholder accounts in proportion to the length of the base period. Realized
gains and losses from the sale of securities and unrealized appreciation and
depreciation are excluded from the calculation of yield and effective yield.
B-22
<PAGE> 51
Based upon the foregoing calculation, the standard yields of
the Short Duration and the Intermediate Duration Funds for the 30-day period
ended December 31, 1994 were 5.93% and 7.07%, respectively.
REDEMPTION
Redemption of shares, or payment, may be suspended at times (a) when the New
York Stock Exchange is closed for other than customary weekend or holiday
closings, (b) when trading on said Exchange is restricted, (c) when an
emergency exists, as a result of which disposal by the Funds of securities
owned by them is not reasonably practicable, or it is not reasonably
practicable for the Funds fairly to determine the value of their net assets, or
(d) during any other period when the Securities and Exchange Commission, by
order, so permits, provided that applicable rules and regulations of the
Securities and Exchange Commission shall govern as to whether the conditions
prescribed in (b) or (c) exist.
TAXATION
Each Fund intends to continue to qualify and elect to be
treated each year as a "regulated investment company" under the Internal
Revenue Code of 1986, as amended (the "Code"). To qualify as a regulated
investment company a Fund must satisfy the distribution requirement described
in the Prospectus, receive at least 90% of its gross income each year from
dividends, interest, gains from the sale or other disposition of securities and
certain other types of income, comply with certain diversification requirements
and derive less than 30% of its gross income from the sale or other disposition
of securities held less than three months. If for any taxable year a Fund does
not qualify as a regulated investment company, all of its taxable income will
be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
Fund's shareholders as ordinary dividends to the extent of the Fund's current
or accumulated earnings and profits.
The Code imposes a non-deductible 4% excise tax on regulated
investment companies that fail to currently distribute an amount equal to
specified percentages of their ordinary taxable income and capital gain net
income (excess of capital gains over capital losses). Each Fund intends to
make sufficient distributions or deemed distributions of its ordinary taxable
income and capital gain net income each calendar year to avoid liability for
this excise tax.
Each Fund will be required in certain cases to withhold and
remit to the U.S. Treasury 31% of the dividends or gross proceeds realized upon
the sale paid to any shareholder (i) who has provided either an incorrect
Social Security or Taxpayer Identification Number or no number at all, (ii) who
is subject to withholding by the Internal Revenue Service for failure to
properly include on his return payments of interest or dividends, or (iii) who
has failed to certify to the Company, when required to do so, that he is not
subject to backup withholding or is an "exempt recipient."
B-23
<PAGE> 52
Independent Auditors' Report
To the Shareholders and Trustees
Piper Trust Funds Inc.:
We have audited the statements of net assets of Piper Trust Funds Inc.
(comprising, respectively, the Short Duration Fund and Intermediate Duration
Fund) as of December 31, 1994, and the related statements of operations,
statements of changes in net assets, and the financial highlights, for the
period February 14, 1994 (commencement of operations) to December 31, 1994.
These financial statements and financial highlights are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation by
correspondence with the custodians of securities owned as of December 31, 1994.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective funds constituting Piper Trust Funds Inc. as of December 31,
1994, the results of their operations, the changes in their net assets, and the
financial highlights, for the period February 14, 1994 to December 31, 1994, in
conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Philadelphia, PA
February 17, 1995
FS-1
<PAGE> 53
PIPER TRUST FUNDS INC.
SHORT DURATION FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1994
<TABLE>
<CAPTION>
Principal Value
Name of Issuer Amount (Note 2)
- -------------------------------------- --------- --------
(Percentages of each investment category relate to total net assets)
<S> <C> <C>
U.S. GOVERNMENT SECURITIES (20.8%):
U.S. Treasury Notes:
7.25%, 08/31/96 . . . . . . . . . . . . . . . . $ 2,200,000 $ 2,188,868
6.50%, 04/30/99 . . . . . . . . . . . . . . . . 20,000,000 19,015,798
----------
Total U.S. Government Securities
(cost: $22,221,964) . . . . . . . . . . . . . . 21,204,666
----------
MORTGAGE-BACKED SECURITIES (28.7%):
GNMA (1.6%):
6.38%, ARM, 09/20/21 . . . . . . . . . . . . . . 853,361 830,427
6.37%, ARM, 08/20/22 . . . . . . . . . . . . . . 849,413 826,054
----------
1,656,481
-----------
FNMA (13.1%):
6.76%, ARM, 09/01/18 . . . . . . . . . . . . . . 3,021,613 3,066,937
7.64%, ARM, 11/01/18 . . . . . . . . . . . . . . 3,162,673 3,221,973
6.46%, ARM, 12/01/20 . . . . . . . . . . . . . . 2,161,711 2,142,796
6.15%, ARM, 12/01/21 . . . . . . . . . . . . . . 2,295,990 2,297,425
6.62%, ARM, 09/01/22 . . . . . . . . . . . . . . 2,531,456 2,571,011
-----------
13,300,142
-----------
FHLMC (14.0%):
6.89%, ARM, 10/01/19 . . . . . . . . . . . . . . 2,319,148 2,340,890
6.79%, ARM, 05/01/20 . . . . . . . . . . . . . . 2,763,730 2,815,550
6.55%, ARM, 08/01/20 . . . . . . . . . . . . . . 3,764,192 3,768,897
6.46%, ARM, 02/02/21 . . . . . . . . . . . . . . 2,822,896 2,821,131
4.10%, ARM, 01/01/24 . . . . . . . . . . . . . . 2,531,168 2,491,618
-----------
14,238,086
-----------
Total Mortgage-Backed Securities
(cost: $29,879,508) . . . . . . . . . . . . . . . . 29,194,709
-----------
</TABLE>
FS-2
<PAGE> 54
PIPER TRUST FUNDS INC.
SHORT DURATION FUND
STATEMENT OF NET ASSETS-CONTINUED
DECEMBER 31, 1994
<TABLE>
<CAPTION>
Principal Value
Name of Issuer Amount (Note 2)
- -------------------------------------- -------- ----------
(Percentages of each investment category relate to total net assets)
<S> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS (31.4%):
FNMA (15.4%):
5.50%, Series 1993-71, Class PD, 12/25/03 . . . $ 2,000,000 $ 1,850,270
5.10%, Series 1994-50, Class PB, 04/25/10 . . . 2,000,000 1,845,880
5.50%, Series 1993-46, Class D, 01/25/13 . . . . 2,000,000 1,855,940
6.00%, Series 1994-31, Class AD, 03/25/15 . . . 1,863,791 1,718,733
5.50%, Series 1994-38, Class PD, 12/25/15 . . . 1,500,000 1,356,773
5.50%, Series 1993-156, Class A, 05/25/16 . . . 1,744,302 1,549,862
5.80%, Series X-225C, Class OE, 11/25/17 . . . . 2,000,000 1,784,989
5.85%, Series 1994-36, Class E, 03/25/18 . . . . 2,000,000 1,779,893
8.50%, Series 1991-11, Class Z, 10/25/20 . . . . 1,989,333 1,906,869
----------
15,649,209
----------
FHLMC (16.0%):
7.50%, Series 1295, Class G, 09/15/05 . . . . . 2,000,000 1,923,251
5.80%, Series 1697, Class PG, 04/15/06 . . . . 2,000,000 1,780,577
6.00%, Series 1708, Class A, 04/15/06 . . . . . 1,849,400 1,738,216
5.25%, Series 1706, Class C, 04/15/14 . . . . . 2,000,000 1,848,453
6.00%, Series 1360, Class PC, 06/15/16 . . . . 2,000,000 1,841,893
7.00%, Series 1593, Class A, 12/15/17 . . . . . 1,662,187 1,567,130
5.90%, Series 1694, Class PN, 03/15/19 . . . . 2,000,000 1,792,087
8.50%, Series 1141, Class F, 10/15/20 . . . . . 2,000,000 2,004,813
6.69%, Series 1611, Class G, 05/15/21 . . . . . 1,846,490 1,838,562
----------
16,334,982
----------
Total Collateralized Mortgage Obligations
(cost: $33,962,099) . . . . . . . . . . . . . . 31,984,191
----------
SHORT-TERM SECURITIES (18.8%):
Repurchase agreement with Goldman, Sachs & Co.,
5.80% acquired on 12/30/94 and due on 01/03/95
with accrued interest of $4,511 (collateralized
by U.S. government agency obligations) . . . . . . . 7,000,000 7,000,000
Repurchase agreement with Morgan Stanley & Co.,
5.50% acquired on 12/30/94 and due on 01/03/95
with accrued interest of $7,448 (collateralized by
U.S. government agency obligations) . . . . . . . . 12,188,000 12,188,000
----------
Total Short-Term Securities
(cost: $19,188,000) . . . . . . . . . . . . . . 19,188,000
----------
</TABLE>
FS-3
<PAGE> 55
PIPER TRUST FUNDS INC.
SHORT DURATION FUND
STATEMENT OF NET ASSETS-CONCLUDED
DECEMBER 31, 1994
<TABLE>
<CAPTION>
Value
(Note 2)
-----------
<S> <C>
Total Investments in Securities (99.7%)
(cost: $105,251,571) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $101,571,566
Other Assets in Excess of Liabilities (0.3%) . . . . . . . . . . . . . . . . . . . . . . . 332,679
-----------
Net Assets (Note 6) (100%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $101,904,245
===========
(Equivalent to $9.47 per share based on 10,756,869 shares
of beneficial interest outstanding.)
Net asset value, offering price and
redemption value per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9.47
====
</TABLE>
At December 31, 1994, the cost of investments for federal income tax purposes
was $105,289,391. The gross and net unrealized depreciation of investments in
securities based on this cost was $3,717,825.
See accompanying Notes to Financial Statements.
FS-4
<PAGE> 56
PIPER TRUST FUNDS INC.
INTERMEDIATE DURATION FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1994
<TABLE>
<CAPTION>
Principal Value
Name of Issuer Amount (Note 2)
- --------------------------------------------- -------- --------
(Percentages of each investment category relate to total net assets)
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY SECURITIES (56.6%):
FNMA (3.1 %):
6.38%, 06/25/03 . . . . . . . . . . . . . . . . $ 725,000 $ 640,226
7.52%, 04/23/04 . . . . . . . . . . . . . . . . 500,000 470,655
----------
1,110,881
----------
FHLB (1.3%):
4.60%, 03/01/99 . . . . . . . . . . . . . . . . 500,000 458,675
----------
FHLMC (1.3%):
7.05%, 03/24/04 . . . . . . . . . . . . . . . . 500,000 456,865
----------
U.S. Treasury Notes (37.8%):
5.13%, 11/15/95 . . . . . . . . . . . . . . . . 500,000 491,670
7.50%, 02/29/96 . . . . . . . . . . . . . . . . 2,800,000 2,803,836
7.88%, 07/31/96 . . . . . . . . . . . . . . . . 500,000 502,250
6.50%, 11/30/96 . . . . . . . . . . . . . . . . 750,000 735,007
6.75%, 02/28/97 . . . . . . . . . . . . . . . . 1,000,000 980,760
7.38%, 11/15/97 . . . . . . . . . . . . . . . . 500,000 494,815
5.63%, 01/31/98 . . . . . . . . . . . . . . . . 500,000 470,320
5.38%, 05/31/98 . . . . . . . . . . . . . . . . 500,000 463,825
7.13%, 10/15/98 . . . . . . . . . . . . . . . . 200,000 195,998
6.50%, 04/30/99 . . . . . . . . . . . . . . . . 4,000,000 3,803,160
7.75%, 11/30/99 . . . . . . . . . . . . . . . . 250,000 249,170
6.38%, 08/15/02 . . . . . . . . . . . . . . . . 500,000 458,255
5.75%, 08/15/03 . . . . . . . . . . . . . . . . 2,000,000 1,740,340
----------
13,389,406
----------
U.S. Treasury Bonds (13.1 %):
7.25%, 08/15/22 . . . . . . . . . . . . . . . . 5,000,000 4,620,650
----------
Total U.S. Government and Agency Securities
(cost: $21,266,670) . . . . . . . . . . . . . . 20,036,477
----------
</TABLE>
FS-5
<PAGE> 57
PIPER TRUST FUNDS INC.
INTERMEDIATE DURATION FUND
STATEMENT OF NET ASSETS-CONTINUED
DECEMBER 31, 1994
<TABLE>
<CAPTION>
Principal Value
Name of Issuer Amount (Note 2)
- --------------------------------------------- -------- --------
(Percentages of each investment category relate to total net assets)
<S> <C> <C>
MORTGAGE-BACKED SECURITIES (25.5%):
GNMA (10.1%):
7.00%, 07/15/08 . . . . . . . . . . . . . . . . $924,382 $ 866,897
7.00%, 07/15/08 . . . . . . . . . . . . . . . . 922,943 865,547
7.00%, 01/15/24 . . . . . . . . . . . . . . . . 968,283 870,850
7.00%, 01/15/24 . . . . . . . . . . . . . . . . 970,445 872,794
7.00%, 02/15/24 . . . . . . . . . . . . . . . . 81,760 73,533
----------
3,549,621
----------
FNMA (10.5%):
6.50%, 03/01/09 . . . . . . . . . . . . . . . . 974,823 893,791
7.00%, 08/01/22 . . . . . . . . . . . . . . . . 1,010,816 919,526
7.00%, 03/01/24 . . . . . . . . . . . . . . . . 998,440 908,268
11.00%, 08/01/24 . . . . . . . . . . . . . . . . 918,254 993,723
----------
3,715,308
----------
FHLMC (4.9%):
6.00%, 01/01/09 . . . . . . . . . . . . . . . . 980,362 882,326
6.50%, 02/01/24 . . . . . . . . . . . . . . . . 974,287 861,330
----------
1,743,656
----------
Total Mortgage-Backed Securities
(cost: $9,874,062) . . . . . . . . . . . . . . . . . 9,008,585
----------
COLLATERALIZED MORTGAGE OBLIGATIONS (3.6%):
FNMA (3.6%)
8.50%, Series 1991-11, Class Z 10/25/20 . . . . 1,326,222 1,271,246
----------
Total Collateralized Mortgage Obligations
(cost: $1,345,217) . . . . . . . . . . . . . . . 1,271,246
----------
SHORT-TERM SECURITIES (13.5%):
FHLB
5.60%, 01/03/95 . . . . . . . . . . . . . . . . 1,115,000 1,114,653
Repurchase agreement with Morgan Stanley,
5.50% acquired on 12/30/94 and due on
01/03/95 with accrued interest of
$2,247 (collateralized by U.S. government
agency obligations) . . . . . . . . . . . . . . . . 3,677,000 3,677,000
----------
Total Short-Term Securities
(cost: $4,791,653) 4,791,653
-----------
</TABLE>
FS-6
<PAGE> 58
PIPER TRUST FUNDS INC.
INTERMEDIATE DURATION FUND
STATEMENT OF NET ASSETS-CONCLUDED
DECEMBER 31, 1994
<TABLE>
<CAPTION>
Value
(Note 2)
-----------
<S> <C>
Total Investments in Securities (99.2%)
(cost: $37,277,602) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,107,961
Other Assets in Excess Of Liabilities (0.8%) . . . . . . . . . . . . . . . . . . . . . . . 281,983
----------
Net Assets (Note 6) (100%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $35,389,944
==========
(Equivalent to $9.17 per share based on 3,860,091 shares
of beneficial interest outstanding.)
Net asset value, offering price and
redemption value per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9.17
====
</TABLE>
At December 31, 1994, the cost of investments for federal income tax purposes
was $37,328,170. The gross and net unrealized depreciation of investments in
securities based on this cost was $2,220,209.
See accompanying Notes to Financial Statements.
FS-7
<PAGE> 59
PIPER TRUST FUNDS, INC.
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 1994 (1)
<TABLE>
<CAPTION>
Short Intermediate
Duration Duration
Fund Fund
---------- ------------
<S> <C> <C>
INCOME:
Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,240,825 $ 1,918,501
Fee Income (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . . 119,937 71,890
---------- ----------
Total investment income . . . . . . . . . . . . . . . . . . . . . 5,360,762 1,990,391
---------- ----------
EXPENSES (Note 5):
Investment advisory fee . . . . . . . . . . . . . . . . . . . . . . . 588,695 191,701
Administration, transfer agent and custodian fees . . . . . . . . . . 297,899 152,011
Registration fees . . . . . . . . . . . . . . . . . . . . . . . . . . 38,008 14,085
Reports to shareholders . . . . . . . . . . . . . . . . . . . . . . . 1,000 500
Amortization of organization costs . . . . . . . . . . . . . . . . . . 9,078 9,078
Directors' fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,100 7,100
Audit and legal fees . . . . . . . . . . . . . . . . . . . . . . . . . 41,436 13,040
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,974 6,324
---------- -----------
1,008,190 393,839
Less expenses waived . . . . . . . . . . . . . . . . . . . . . . . . . (516,668) (218,114)
---------- -----------
Total expenses - net . . . . . . . . . . . . . . . . . . . . . . . 491,522 175,725
---------- ----------
Investment income - net . . . . . . . . . . . . . . . . . . . . . . . 4,869,240 1,814,666
---------- -----------
REALIZED AND UNREALIZED LOSSES ON INVESTMENTS:
Net realized loss on investments (Note 3) . . . . . . . . . . . . . . (2,043,665) (681,420)
Net change in unrealized depreciation
on investments . . . . . . . . . . . . . . . . . . . . . . . . . . (3,680,005) (2,169,641)
--------- ---------
Net loss on investments . . . . . . . . . . . . . . . . . . . . . . . (5,723,670) (2,851,061)
--------- ---------
Net decrease in net assets resulting from
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (854,430) $ (1,036,395)
========== ===========
</TABLE>
(1) Commencement of operations was February 14, 1994.
See accompanying Notes to Financial Statements.
FS-8
<PAGE> 60
PIPER TRUST FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED DECEMBER 31, 1994 (1)
<TABLE>
<CAPTION>
Short Intermediate
Duration Duration
Fund Fund
---------- ------------
<S> <C> <C>
OPERATIONS:
Investment income - net . . . . . . . . . . . . . . . . . . . . . . . $ 4,869,240 $1,814,666
Net realized loss on investments . . . . . . . . . . . . . . . . . . . (2,043,665) (681,420)
Net change in unrealized
depreciation of investments . . . . . . . . . . . . . . . . . . . (3,680,005) (2,169,641)
----------- -----------
Net decrease in net assets resulting
from operations . . . . . . . . . . . . . . . . . . . . . . . . . (854,430) (1,036,395)
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Investment income - net . . . . . . . . . . . . . . . . . . . . . . . (4,869,240) (1,814,666)
----------- ----------
CAPITAL SHARE TRANSACTIONS (Note 4):
Proceeds from sales . . . . . . . . . . . . . . . . . . . . . . . . . 144,554,622 43,000,000
Shares issued for reinvestment of
distributions . . . . . . . . . . . . . . . . . . . . . . . . . . 251,578 245,627
Payments for shares redeemed . . . . . . . . . . . . . . . . . . . . . (37,228,285) (5,054,622)
------------ -----------
Increase in net assets from capital
share transactions . . . . . . . . . . . . . . . . . . . . . . . 107,577,915 38,191,005
----------- ----------
Total increase in net assets . . . . . . . . . . . . . . . . . . . 101,854,245 35,339,944
Net assets at beginning of period (Note 1) . . . . . . . . . . . . . . . . 50,000 50,000
----------- ----------
Net assets at end of period . . . . . . . . . . . . . . . . . . . . . . . . $101,904,245 $35,389,944
=========== ==========
</TABLE>
(1) Commencement of operations was February 14, 1994.
See accompanying Notes to Financial Statements.
FS-9
<PAGE> 61
PIPER TRUST FUNDS INC.
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED
DECEMBER 31, 1994 (1)
<TABLE>
<CAPTION>
Short Intermediate
Duration Duration
Fund Fund
---------- ------------
<S> <C> <C>
Per Share Data
Net asset value, beginning of period . . . . . . . . . . . . . . . . . . . $10.00 $10.00
----- -----
Operations:
Investment income - net . . . . . . . . . . . . . . . . . . . . . . . .42 .46
Net realized and unrealized losses
on investments . . . . . . . . . . . . . . . . . . . . . . . . . . (.53) (.83)
----- -----
Total from operations . . . . . . . . . . . . . . . . . . . . . . (.11) (.37)
----- -----
Distributions to shareholders:
From investment income - net . . . . . . . . . . . . . . . . . . . . . (.42) (.46)
----- -----
Net asset value, end of period . . . . . . . . . . . . . . . . . . . . . . $ 9.47 $ 9.17
===== =====
Total return (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1.11)% (3.64)%
Ratios/Supplemental Data
Net assets at end of period $(000) . . . . . . . . . . . . . . . . . . 101,904 35,390
Ratio of total expenses to average net assets (3)(4) . . . . . . . . . .50% .55%
Ratio of net investment income to
average net assets (3) . . . . . . . . . . . . . . . . . . . . . . 4.96% 5.68%
Portfolio turnover rate
(excluding short-term securities) . . . . . . . . . . . . . . . . 90.6% 50.5%
</TABLE>
(1) Commencement of operations was February 14, 1994.
(2) Based on the change in net asset value of a common share during the period.
Assumes reinvestment of distributions at net asset value.
(3) Adjusted to an annual basis.
(4) Without the voluntary waiver of expenses, the annualized ratios of expenses
to average net assets would have been 1.03% and 1.23% for Short Duration
and Intermediate Duration, respectively, for the period ended December 31,
1994.
See accompanying Notes to Financial Statements.
FS-10
<PAGE> 62
NOTES TO FINANCIAL STATEMENTS
(1) Organization Piper Trust Funds Inc. (the company), an
open-end management investment company, was
incorporated on October 7, 1993 and is
registered under the Investment Company Act
of 1940 (as amended) and currently includes
two diversified series: Short Duration Fund
and Intermediate Duration Fund (the funds).
The Company commenced operations on February
14, 1994, when its shares were first offered
to the public. The only transaction prior
to that date was the initial sale of 5,000
shares of each series to the adviser.
(2) Significant
Accounting INVESTMENTS IN SECURITIES
Policies Fixed income securities are valued at market
values as determined by pricing services.
When market values are not readily available,
securities are valued at fair value as
determined in good faith by the board of
directors. Short-term securities with
maturities of less than sixty
days are valued at amortized cost which
approximates market value.
Security transactions are accounted for on
the date the securities are purchased or
sold. Realized gains and losses are
calculated on the identified cost basis.
Interest income, including amortization of
bond discount and premium computed on a level
yield basis, is accrued daily.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS
Delivery and payment for securities that have
been purchased by the funds on a forward
commitment or when-issued basis can take
place a month or more after the transaction
date. During this period, such securities do
not earn interest, are subject to market
fluctuations, and may increase or decrease in
value prior to their delivery. The funds
maintain in a segregated account with their
custodian, securities with a market value
equal to the amount of their purchase
commitments. The purchase of securities on a
when-issued or forward commitment basis may
increase the volatility of the funds' net
asset value to the extent the funds make such
purchases while remaining substantially fully
invested. As of December 31, 1994, Short
Duration Fund and Intermediate Duration Fund
had no outstanding when-issued or forward
commitments.
In connection with its ability to purchase
securities on a when-issued or forward
commitment basis, each fund may enter into
mortgage "dollar rolls" in which the fund
sells securities for delivery in the current
month and simultaneously contracts with the
same counterparty to repurchase similar (same
type, coupon and maturity) but not identical
securities on a specified future date. As an
inducement to "roll over" its purchase
commitments, the fund receives negotiated
fees. For the period ended December 31,
1994, such fees earned by Short Duration Fund
and Intermediate Duration Fund amounted to
$119,937 and $71,890, respectively.
FEDERAL TAXES
Each fund within the company is treated as a
separate entity for federal income tax
purposes. Each fund's policy is to comply
with the requirements of the Internal Revenue
Code applicable to regulated investment
companies and to distribute all of its
taxable income to shareholders; therefore, no
income tax provision is required. In
addition, on a calendar-year basis, each fund
intends to distribute
FS-11
<PAGE> 63
substantially all of its net investment
income and realized gains, if any, and will,
therefore, not be subject to federal excise
taxes.
Net realized gains (losses) may differ for
financial statement and tax purposes
primarily due to the recognition of losses
deferred due to "wash sale" transactions.
The character of distributions made during
the year from net realized gains, if any, may
also differ from their ultimate
characterization for federal income tax
purposes. In addition, due to the timing of
dividend distributions, the fiscal year in
which amounts are distributed may differ from
the year that the realized gains (losses)
were recorded by the fund.
For federal income tax purposes, the funds
had capital loss carryovers of $2,005,845 for
the Short Duration Fund and $630,852 for the
Intermediate Duration Fund on December 31,
1994, which, if not offset by subsequent
capital gains, will expire in 2002. It is
unlikely the board of directors will
authorize a distribution of any net realized
capital gains until the available capital
loss carryovers have been offset or expire.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders from net
investment income are declared daily and paid
monthly in cash or reinvested in additional
shares. Distributions from net realized
capital gains, if any, will be made on an
annual basis.
ORGANIZATION COSTS
Organization costs were incurred in
connection with the start-up and initial
registration of the funds. These costs are
being amortized over 60 months on a
straight-line basis. If any or all of the
shares representing initial capital of each
fund are redeemed by any holder thereof prior
to the end of the amortization period, the
proceeds will be reduced by the unamortized
organization cost balance in the same
proportion as the number of shares redeemed
bears to the number of initial shares
outstanding immediately preceding the
redemption.
REPURCHASE AGREEMENTS
During the period ended December 31, 1994,
the funds have invested in repurchase
agreements. In accordance with the funds'
investment objectives and policies, the funds
may purchase money market instruments from
financial institutions, such as banks and
non-bank dealers, subject to the seller's
agreement to repurchase them at an agreed
upon date and price. The seller will be
required on a daily basis to maintain the
value of the collateral subject to the
agreement at not less than the repurchase
price (including accrued interest). The
agreements are conditioned upon the
collateral being deposited under the Federal
Reserve book-entry system or with the funds'
custodian or a third party sub-custodian. If
the seller defaults and the value of the
collateral declines or if bankruptcy
proceedings are commenced with respect to the
seller of the security, realization of the
collateral by the funds may be delayed or
limited.
FS-12
<PAGE> 64
(3) Investment Cost of purchases and proceeds from sales
Security of securities, other than temporary
Transactions investments in short-term securities, for
the period ended December 31, 1994, were as
follows:
<TABLE>
<CAPTION>
Short Duration Intermediate Duration
Fund Fund
---- ----
<S> <C> <C>
Purchases . . . . . . . . . . . . . . . . . . . . . . . . $174,033,718 $47,601,611
Sales Proceeds . . . . . . . . . . . . . . . . . . . . . $ 80,597,748 $14,341,719
</TABLE>
(4) Transactions in shares of each fund for the period ended December 31,
1994 were as follows:
<TABLE>
<CAPTION>
Short Intermediate
Duration Duration
Fund Fund
---- ----
<S> <C> <C> <C>
Capital Share Sold . . . . . . . . . . . . . . . . . . . . . . . 14,569,758 4,364,584
Transactions Issued for reinvested distributions . . . . . . . . 25,952 25,954
Redeemed . . . . . . . . . . . . . . . . . . . . . (3,843,841) (535,447)
---------- ---------
Increase . . . . . . . . . . . . . . . . . . . . 10,751,869 3,855,091
========== =========
</TABLE>
(5) Fees and Piper Trust Company (the "Adviser") was
Expenses retained under an Investment Advisory and
Management Agreement with the Company to act
as the investment adviser and distributor
for each of the funds. Under the Investment
Advisory and Management Agreement, the
Adviser received a monthly management fee
computed separately for each fund. Such
fees were payable at an annual rate of .60%
of the average daily net assets of each fund.
The Adviser waived payment of its management
fee for the first six months of the funds'
operations and thereafter voluntarily limited
its fee to .45% of each fund's average daily
net assets. For the period ended December
31, 1994, the Adviser voluntarily waived
fees of $403,500 for the Short Duration and
$136,558 for the Intermediate Duration Fund.
This voluntary limitation may be terminated
at any time after the funds' December 31,
1994 fiscal year end, at the Adviser's
discretion.
The Adviser selected Piper Capital Management
Incorporated ("Piper Capital") to act as
money manager for both of the funds and PNC
Bank, National Association ("PNC") to act as
a money manager for the Intermediate Duration
Fund. The Adviser entered into Sub-Advisory
Agreements with each of the money managers.
With respect to each fund, the Adviser paid
each money manager monthly compensation
payable over the same time periods and
calculated in the same manner as the
investment advisory fee received by the
Adviser from such fund. The fees paid by the
Adviser to each money manager equalled, on an
annual basis, .16% of that portion of the
average daily net assets of each fund under
management by such money manager. Each money
manager agreed to limit or waive its fee to
the same extent as the Adviser.
PFPC Inc., a subsidiary of PNC, serves as the
funds' administrator and transfer agent. PNC
serves as the funds' custodian. For the
period ended December 31, 1994, PFPC Inc. and
PNC have voluntarily waived fees of $113,168
for the Short Duration Fund and $81,556 for
the Intermediate Duration Fund for these
services.
FS-13
<PAGE> 65
(6) Net Assets At December 31, 1994, net assets for each
fund consisted of the following:
<TABLE>
<CAPTION>
Short Duration Intermediate Duration
Fund Fund
---- ----
<S> <C> <C>
Capital stock $107,627,915 $38,241,005
Undistributed net investment income -- --
Accumulated loss on investments (2,043,665) (681,420)
Unrealized depreciation of
investments (3,680,005) (2,169,641)
----------- -----------
Net assets $101,904,245 $ 35,389,944
============ ============
</TABLE>
(7) Subsequent Effective February 17, 1995, the Company
Event merged into a newly formed Maryland
corporation, Provident Institutional Funds,
Inc. Effective on that date, PNC
Institutional Management Corporation
("PIMC"), a wholly-owned subsidiary of PNC
became the Funds' investment adviser and
BlackRock Financial Management L.P.
("BlackRock") became the subadviser. In
connection with its services rendered to the
Funds, PIMC will receive a monthly management
fee payable at an initial rate of .40% of
the average daily net assets of each Fund.
Under the terms of the subadvisory agreement
no fees are paid by the Funds to the
subadviser; however, BlackRock will receive
monthly compensation from PIMC equal, on an
annual basis, to .25% of the average daily
net assets of each Fund. Provident
Distributors, Inc. became the Funds'
distributor and will receive fees computed
separately for each Fund. The Funds have
adopted a shareholder service plan (the
"Service Plan"), pursuant to Rule 12b-1 of
the Investment Company Act of 1940.
The Plan of Merger and new advisory and
subadvisory agreements were approved by the
Board of Directors at a meeting held on
November 9, 1994, and by the shareholders
of the Funds at a meeting held on December
29, 1994. The distribution agreement was
approved by the Board of Directors at the
meeting held on November 9, 1994, and the
Service Plan was approved by the shareholders
of the Funds at the meeting held on December
29, 1994.
FS-14
<PAGE> 66
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) The following financial statements for each Fund are set forth
in Parts A and B of the Registration Statement:
Contained in Part A, the Prospectus:
Financial Highlights for the period February 14, 1994
(commencement of operations) to December 31, 1994.
Contained in Part B, the Statement of Additional Information:
Independent Auditors' Report
Short Duration Fund Statement of Net Assets as of
December 31, 1994 Intermediate Duration Fund
Statement of Net Assets as of December 31, 1994
Statements of Operations for the period ended
December 31, 1994 Statements of Changes in Net Assets
for the period ended December 31, 1994 Financial
Highlights Notes to Financial Statements
(b) Exhibits:
(1) Articles of Incorporation of Provident Institutional
Funds, Inc. are incorporated herein by reference to
Exhibit (1)(b) of Post-Effective Amendment No. 2 to
Piper Trust Funds Inc.'s Registration Statement,
filed on December 30, 1994.
(2)(a) Bylaws of Provident Institutional Funds, Inc. are
incorporated herein by reference to Exhibit (2)(b) of
Post-Effective Amendment No. 2 to Piper Trust Funds
Inc.'s Registration Statement filed on December 30,
1994.
(2)(b) Amended and Restated Bylaws of Registrant dated
February 17, 1995.
(3) None.
<PAGE> 67
(4) None.
(5)(a) Investment Advisory Agreement dated February 17, 1995
between Registrant and PNC Institutional Management
Corporation.
(5)(b) Form of Sub-Advisory Agreement dated February 28, 1995
between PNC Institutional Management Corporation and
BlackRock Financial Management, Inc. with respect to
the Short Duration Fund.
(5)(c) Form of Sub-Advisory Agreement dated February 28, 1995
between PNC Institutional Management Corporation and
BlackRock Financial Management, Inc. with respect to
the Intermediate Duration Fund.
(6) Distribution Agreement dated February 17, 1995
between Registrant and Provident Distributors, Inc.
(7) None.
(8) Custody Agreement between Piper Trust Funds, Inc.
("Piper") (the predecessor company) and PNC Bank,
National Association is incorporated herein by
reference to Pre-Effective Amendment No. 3 to Piper's
Registration Statement filed on February 7, 1994.
(9)(a) Transfer Agency Services Agreement between Piper and
PFPC Inc. is incorporated herein by reference to Pre-
Effective Amendment No. 1 to Piper's Registration
Statement filed on December 13, 1993.
(9)(b) Administration and Accounting Services Agreement
dated February 17, 1995 between Registrant and PFPC
Inc.
(10)1 Opinion and Consent of counsel that shares are
validly issued, fully paid and non-assessable.
- --------------------------------
1. Filed under Rule 24f-2 as part of Piper Trust Funds Inc.'s Rule 24f-2
Notice.
C-2-
<PAGE> 68
(11)(a) Consent of KPMG Peat Marwick LLP.
(11)(b) Consent of Drinker Biddle & Reath.
(12) None.
(13) None.
(14) Fund Office Retirement Profit-Sharing Plan and
related Adoption Agreement dated March 28, 1995.
(15)(a) Shareholder Service Plan for Short Duration Fund
dated February 17, 1995.
(15)(b) Shareholder Service Plan for Intermediate Duration
Fund dated February 17, 1995.
(16)(a) Schedule for Computation of Performance Calculations
for the Short Duration Fund.
(16)(b) Schedule for Computation of Performance Calculations
for the Intermediate Duration Fund.
(17)(a) Financial Data Schedule as of December 31, 1994 for
the Short Duration Fund.
(17)(b) Financial Data Schedule as of December 31, 1994 for
the Intermediate Duration Fund.
Item 25. Persons Controlled by or Under Common Control with Registrant
Registrant is controlled by its Board of Directors. However, under
the Investment Company Act of 1940, as amended, PNC Bank, National
Association may be deemed a controlling person of the Registrant
because such entity possesses or shares investment or voting power
with respect to more than 25% of the outstanding shares of the
Registrant.
C-3-
<PAGE> 69
Item 26. Number of Holders of Securities
As of March 31, 1995:
<TABLE>
<CAPTION>
Number of
Fund Title of Class Record Holders
---- -------------- --------------
<S> <C> <C>
Short Duration Fund Common Shares 7
Intermediate Duration Fund Common Shares 5
</TABLE>
Item 27. Indemnification
Indemnification of Registrant's Principal Underwriter, Custodian, and
Transfer Agent against certain stated liabilities is provided for in
Section 6 of the Distribution Agreement, included herewith as Exhibit
6(b), and in Section 22 of the Custodian Agreement and in Section 17
of the Transfer Agency Agreement, incorporated herein by reference to
Exhibits 8 and 9(a), respectively. Registrant has obtained from a
major insurance carrier a directors' and officers' liability policy
covering certain types of errors and omissions. In addition, Article
VI of Registrant's Amended and Restated By- Laws, included herewith as
Exhibit 2(c), provides as follows:
ARTICLE VI
Indemnification
Each director of the Corporation shall be indemnified by the
Corporation for money damages to the full extent permitted under the
General Laws of the State of Maryland, and each officer of the
Corporation shall be indemnified to the same extent as its directors
and to such further extent as is consistent with law. The Corporation
shall indemnify its directors and officers who while serving as
directors or officers also serve at the request of the Corporation as
a director, officer, partner, trustee, employee, agent or fiduciary of
another corporation, partnership, joint venture, trust, other
enterprise or employee benefit plan to the same extent as its
directors and, in the case of officers, to such further extent as is
consistent with law. This Article shall not protect any such person
against any liability to the Corporation or any stockholder thereof to
which such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office. Absent a court
determination that an officer or director seeking indemnification was
not liable on the
C-4-
<PAGE> 70
merits or guilty of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his
office, the decision by the Corporation to indemnify such person must
be based upon the reasonable determination of independent legal
counsel or the vote of a majority of a quorum of the directors who are
neither "interested persons," as defined in Section 2(a)(19) of the
Investment Company Act of 1940, as amended, nor parties to the
proceeding ("non-party independent directors"), after review of the
facts, that such officer or director is not guilty of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
Each current or former officer or director of the Corporation claiming
indemnification within the scope of this Article VI shall be entitled
to advances from the Corporation for payment of the reasonable
expenses incurred by him in connection with proceedings to which he is
a party in the manner and to the full extent permitted under the
General Laws of the State of Maryland; provided, however, that the
person seeking indemnification shall provide to the Corporation a
written affirmation of his good faith belief that the standard of
conduct necessary for indemnification by the Corporation has been met
and a written undertaking to repay any such advance, if it should
ultimately be determined that the standard of conduct has not been
met, and provided further that at least one of the following
additional conditions is met: (a) the person seeking indemnification
shall provide a security in form and amount acceptable to the
Corporation for his undertaking; (b) the Corporation is insured
against losses arising by reason of the advance; (c) a majority of a
quorum of non-party independent directors, or independent legal
counsel in a written opinion, shall determine, based on a review of
facts readily available to the Corporation at the time the advance is
proposed to be made, that there is reason to believe that the person
seeking indemnification will ultimately be found to be entitled to
indemnification.
The Corporation may purchase insurance on behalf of an officer or
director protecting such person to the full extent permitted under the
General Laws of the State of Maryland, the Securities Act of 1933 and
the Investment Company Act of 1940 from liability arising from his
activities as officer or director of the Corporation. The
Corporation, however, may not purchase insurance on behalf of any
officer or director of the Corporation that protects or purports to
protect such person from liability to the Corporation or to its
stockholders to which such officer or director would otherwise be
subject by reason of willful
C-5-
<PAGE> 71
misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his office.
The Corporation may indemnify, make advances or purchase insurance to
the extent provided in this Article VI on behalf of an employee or
agent who is not an officer or director of the Corporation.
The indemnification provided by this Article shall not be deemed
exclusive of any other right, in respect of indemnification or
otherwise, to which those seeking such indemnification may be entitled
under any insurance or other agreement, vote of stockholders or
disinterested directors or otherwise, both as to action by a director
or officer of the Corporation in his official capacity and as to
action by such person in another capacity while holding such office or
position, and shall continue as to a person who has ceased to be a
director or officer and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling
persons of Registrant pursuant to the foregoing provisions, or
otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Registrant of expenses
incurred or paid by a director, officer or controlling person of
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, Registrant
will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
PNC Institutional Management Corporation ("PIMC") performs
investment advisory services for Registrant and certain other investment
companies.
(a) The information required by this Item 28 with respect to
each director, officer and partner of PIMC is incorporated by reference to
Schedule A of Form ADV and Schedules A and D filed by PIMC with the Securities
and Exchange Commission
C-6-
<PAGE> 72
pursuant to the Securities Exchange Act of 1934 (the "1934" Act) (SEC File No.
801-13304).
(b) The information required by this Item 28 with respect to
each director, officer and partner of BlackRock Financial Management, Inc.
("BlackRock") is incorporated by reference to Schedule A of Form ADV and
Schedules A and D filed by BlackRock with the Securities and Exchange
Commission pursuant to the 1934 Act (SEC File No. 801-48433).
Item 29. Principal Underwriters
(a) Provident Distributors, Inc. currently acts as distributor for, in
addition to the Company, Temporary Investment Fund, Inc., Trust for
Federal Securities, Municipal Fund for Temporary Investment,
Portfolios for Diversified Investment, Municipal Fund for California
Investors, Inc., Municipal Fund for New York Investors, Inc., and The
PNC(R) Fund.
(b) The information required by this Item 29 with respect to each
director, officer or partner of Provident Distributors, Inc. is
incorporated by reference to Schedule A of Form BD filed by Provident
Distributors, Inc. with the Securities and Exchange Commission
pursuant to the 1934 Act (SEC File No. 8-46564).
(c) Not Applicable.
Item 30. Location of Accounts and Records
(1) BlackRock Financial Management, Inc., 345 Park Avenue, New
York, New York 10154 (records relating to its functions as
sub-investment adviser).
(2) PNC Bank, National Association, 200 Stevens Drive, Suite 440,
Lester, Pennsylvania 19113 (records relating to its functions
as custodian).
(3) Provident Distributors, Inc. 259 Radnor-Chester Road, Suite
120, Radnor, Pennsylvania 19087 (records relating to its
functions as distributor).
(4) PNC Institutional Management Corporation, Bellevue Park
Corporate Center, 400 Bellevue Parkway, Bellevue Park
Corporate Center, Wilmington, Delaware 19809 (records relating
to its functions as investment adviser).
(5) PFPC Inc., P.O. Box 8950, Wilmington, Delaware 19885-9628
(records relating to its function as administrator).
C-7-
<PAGE> 73
(6) PFPC Inc., Bellevue Park Corporate Center, 400 Bellevue
Parkway, Wilmington, Delaware 19809 (records relating to its
functions as transfer agent, registrar and dividend disbursing
agent).
(7) Drinker Biddle & Reath, Philadelphia National Bank Building,
1345 Chestnut Street, Philadelphia, Pennsylvania 19107
(Registrant's Charter, By-Laws, and Minutes Books).
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Not applicable.
(b) Not applicable.
(c) The Registrant hereby undertakes to furnish each person to whom a
Prospectus is delivered with a copy of Registrant's latest annual report to
shareholders, upon request and without charge.
C-8-
<PAGE> 74
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for effectiveness of this Post-Effective Amendment No. 4 to
its Registration Statement pursuant to Rule 485(b) under the Securities Act of
1933 and has duly caused this Post-Effective Amendment No. 4 to its
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Wilmington, and State of Delaware, on April 28,
1995.
PROVIDENT INSTITUTIONAL FUNDS, INC.
/s/ Edward J. Roach, Vice President and Treasurer
-------------------------------------------------
(Signature and Title)
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment No. 4 to Registrant's Registration Statement has
been signed below by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
* Philip E. Coldwell Director April 28, 1995
- --------------------------
Philip E. Coldwell
* Robert R. Fortune Director April 28, 1995
- --------------------------
Robert R. Fortune
* Rodney D. Johnson Director April 28, 1995
- --------------------------
Rodney D. Johnson
* G. Willing Pepper Chairman of April 28, 1995
- --------------------------
G. Willing Pepper the Board and
President
* Anthony M. Santomero Director April 28, 1995
- --------------------------
Anthony M. Santomero
* David R. Wilmerding, Jr. Vice Chairman of April 28, 1995
- --------------------------
David R. Wilmerding, Jr. the Board
/s/ Edward J. Roach Vice President April 28, 1995
- --------------------------
Edward J. Roach and Treasurer
(Principal Financial
and Accounting
Officer)
*By:/s/ Edward J. Roach
--------------------
Edward J. Roach
Attorney-in-Fact
</TABLE>
<PAGE> 75
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
- ------- ----
<S> <C>
(1) Distribution Agreement dated February 17, 1995
between Registrant and Provident Distributors,
Inc.
(3)(ii) Amended and Restated By-Laws of Registrant
dated February 17, 1995.
(5) Opinion and Consent of counsel that shares
are validly issued, fully paid and non-
assessable.
(10)(a) Investment Advisory Agreement dated
February 17, 1995 between Registrant and
PNC Institutional Management Corporation.
(10)(b) Form of Sub-Advisory Agreement dated February 28,
1995 between PNC Institutional Management
Corporation and BlackRock Financial Management,
Inc. with respect to the Short Duration Fund.
(10)(c) Form of Sub-Advisory Agreement dated February 28,
1995 between PNC Institutional Management
Corporation and BlackRock Financial Management,
Inc. with respect to the Intermediate
Duration Fund.
(10)(d) Administration and Accounting Services
Agreement dated February 17, 1995 between
Registrant and PFPC, Inc.
(10)(e) Shareholder Service Plan for Short Duration
Fund dated February 17, 1995.
(10)(f) Shareholder Service Plan for Intermediate
Duration Fund dated February 17, 1995.
(11)(a) Schedule for Computation of Performance
Calculations for the Short Duration
Fund.
(11)(b) Schedule for Computation of Performance
Calculations for the Intermediate Duration Fund
(23)(a) Consent of KPMG Peat Marwick LLP.
(23)(b) Consent of Drinker Biddle & Reath.
(24) Powers of Attorney
(27)(a) Financial Data Schedule for the Short Duration
Fund as of December 31, 1994.
(27)(b) Financial Data Schedule for the Intermediate
Duration Fund as of December 31, 1994.
</TABLE>
<PAGE> 76
<TABLE>
<S> <C>
(99) Fund Office Retirement Profit-Sharing
Plan and related Adoption Agreement dated
March 28, 1995.
</TABLE>
<PAGE> 1
PROVIDENT INSTITUTIONAL FUNDS, INC.
DISTRIBUTION AGREEMENT
Agreement dated February 17, 1995 between PROVIDENT
INSTITUTIONAL FUNDS, INC. a Maryland corporation, (the "Company"), and
PROVIDENT DISTRIBUTORS, INC., a Delaware corporation (the "Distributor").
WHEREAS, the Company is an open-end, diversified management
investment company and is so registered under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Company desires to retain the Distributor as its
distributor to provide for the sale and distribution of each class, subclass
and series of shares ("shares") in each of the Company's investment portfolios
(individually, a "Fund," collectively, the "Funds") as listed on Appendix A (as
such Appendix may, from time to time, be supplemented (or amended)), and the
Distributor is willing to render such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants set forth and intending to be legally bound, the parties hereto agree
as follows:
1. APPOINTMENT OF DISTRIBUTOR. The Company hereby
appoints the Distributor as distributor of each class, subclass and series of
shares in each of the Company's Funds on the terms and for the period set forth
in this Agreement. The Distributor hereby accepts such appointment and agrees
to render the services and duties set forth in Section 3 below. In the event
that the Company establishes additional classes or series or investment
portfolios other than the Funds listed on Appendix A with respect to which it
desires to retain the Distributor to act as distributor hereunder, the Company
shall notify the Distributor, whereupon such Appendix A shall be supplemented
(or amended) and such portfolio shall become a Fund hereunder and shall be
subject to the provisions of this Agreement to the same extent as the Funds
(except to the extent that said provisions may be modified in writing by the
Company and Distributor at the time).
2. DELIVERY OF DOCUMENTS. The Company has furnished the
Distributor with copies, properly certified or authenticated, of each of the
following documents and will deliver to it all future amendments and
supplements, if any:
a. The Company's Articles of Incorporation,
filed with the Secretary of State of Maryland on November 7, 1994, as amended
and supplemented (the "Charter"),
<PAGE> 2
b. The Company's By-Laws, as amended and
restated ("By-Laws");
c. Resolutions of the Company's Board of
Directors authorizing the execution and delivery of this Agreement;
d. The Company's most recent amendment to its
Registration Statement under the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act on Form N-1A as filed with the Securities and Exchange
Commission (the "Commission") relating to its Funds (the Registration
Statement, as presently in effect and as amended or supplemented from time to
time, is herein called the "Registration Statement");
e. The Company's most recent Prospectuses and
Statements of Additional Information and all amendments and supplements thereto
(such Prospectuses and Statements of Additional Information and supplements
thereto, as presently in effect and as from time to time amended and
supplemented, are herein called the "Prospectuses").
3. SERVICES AND DUTIES. The Distributor enters into the
following covenants with respect to its services and duties:
a. The Distributor agrees to sell, as agent,
from time to time during the term of this Agreement, shares upon the terms and
at the current offering price as described in the Prospectuses. The
Distributor will act only in its own behalf as principal in making agreements
with selected dealers. No broker-dealer or other person which enters into a
selling or servicing agreement with the Distributor shall be authorized to act
as agent for the Company or its Funds in connection with the offering or sale
of shares to the public or otherwise. The Distributor shall use its best
efforts to sell shares of each class or subclass or series of each of the Funds
but shall not be obligated to sell any certain number of shares.
b. The Distributor shall prepare or review,
provide advice with respect to, and file with the federal and state agencies or
other organization as required by federal, state, or other applicable laws and
regulations, all sales literature (advertisements, brochures and shareholder
communications) for each of the Funds and any class or subclass or series
thereof.
c. In performing all of its services and duties
as Distributor, the Distributor will act in conformity with the Charter,
By-Laws, Prospectuses and resolutions and other instructions of the Company's
Board of Directors and will comply
-2-
<PAGE> 3
with the requirements of the 1933 Act, the Securities Exchange Act of 1934, the
1940 Act and all other applicable federal or state law.
d. The Distributor will bear the cost of (i)
printing and distributing any Prospectus (including any supplement thereto) to
persons who are not shareholders, and (ii) preparing, printing and distributing
any literature, advertisement or material which is primarily intended to result
in the sale of shares; provided, however, that the Distributor shall not be
obligated to bear the expenses incurred by the Company in connection with the
preparation and printing of any amendment to any Registration Statement or
Prospectus necessary for the continued effective registration of the shares
under the 1933 Act and state securities laws and the distribution of any such
document to existing shareholders of the Company's Funds.
e. The Company shall have the right to suspend
the sale of shares at any time in response to conditions in the securities
markets or otherwise, and to suspend the redemption of shares of any Fund at
any time permitted by the 1940 Act or the rules and regulations of the
Commission ("Rules").
f. The Company reserves the right to reject any
order for shares but will not do so arbitrarily or without reasonable cause.
4. LIMITATIONS OF LIABILITY. The Distributor shall not
be liable for any error of judgment or mistake of law or for any loss suffered
by the Company in connection with the matters to which this Agreement relates,
except a loss resulting from willful misfeasance, bad faith or gross negligence
on its part in the performance of its duties or from reckless disregard by it
of its obligations and duties under this Agreement.
5. PROPRIETARY AND CONFIDENTIAL INFORMATION. The
Distributor agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Company all records and
other information relative to the Company and its Funds and prior, present or
potential shareholders, and not to use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Company,
which approval shall not be unreasonably withheld and may not be withheld where
the Distributor may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Company.
-3-
<PAGE> 4
6. INDEMNIFICATION.
a. The Company represents and warrants to the
Distributor that the Registration Statement contains, and that the Prospectuses
at all times will contain, all statements required by the 1933 Act and the
Rules of the Commission, will in all material respects conform to the
applicable requirements of the 1933 Act and the Rules and will not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that no
representation or warranty in this Section 6 shall apply to statements or
omissions made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Distributor or the Company's
administrator expressly for use in the Registration Statement or Prospectuses.
b. The Company on behalf of each Fund agrees
that each Fund will indemnify, defend and hold harmless the Distributor, its
several officers, and directors, and any person who controls the Distributor
within the meaning of Section 15 of the 1933 Act, from and against any losses,
claims, damages or liabilities, joint or several, to which the Distributor, its
several officers, and directors, and any person who controls the Distributor
within the meaning of Section 15 of the 1933 Act, may become subject under the
1933 Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) arise out of, or are based upon
any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement, the Prospectuses or in any application or other
document executed by or on behalf of the Company with respect to such Fund or
are based upon information furnished by or on behalf of the Company with
respect to such Fund filed in any state in order to qualify the shares under
the securities or blue sky laws thereof ("Blue Sky application") or arise out
of, or are based upon, the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Distributor, its several
officers, and directors, and any person who controls the Distributor within the
meaning of Section 15 of the 1933 Act, for any legal or other expenses
reasonably incurred by the Distributor, its several officers, and directors,
and any person who controls the Distributor within the meaning of Section 15 of
the 1933 Act, in investigating, defending or preparing to defend any such
action, proceeding or claim; provided, however, that the Company shall not be
liable in any case to the extent that such loss, claim, damage or liability
arises out of, or is based upon, any untrue statement, alleged untrue
statement, or omission or alleged omission made in the Registration Statement,
the Prospectus or any Blue Sky
-4-
<PAGE> 5
application with respect to such Fund in reliance upon and in conformity with
written information furnished to the Company by or on behalf of the Distributor
or the Company's administrator specifically for inclusion therein or arising
out of the failure of the Distributor to deliver a current Prospectus.
c. The Company on behalf of each Fund shall not
indemnify any person pursuant to this Section 6 unless the court or other body
before which the proceeding was brought has rendered a final decision on the
merits that such person was not liable by reason of his or her willful
misfeasance, bad faith or gross negligence in the performance of his or her
duties, or his or her reckless disregard of any obligations and duties, under
this Agreement ("disabling conduct") or, in the absence of such a decision, a
reasonable determination (based upon a review of the facts) that such person
was not liable by reason of disabling conduct has been made by the vote of a
majority of a quorum of the directors of the Company who are neither
"interested parties" (as defined in the 1940 Act) nor parties to the
proceeding, or by independent legal counsel in a written opinion.
d. The Distributor will indemnify and hold
harmless the Company and each of its Funds and its several officers and
directors, and any person who controls the Company within the meaning of
Section 15 of the 1933 Act, from and against any losses, claims, damages or
liabilities, joint or several, to which any of them may become subject under
the 1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon, any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, the Prospectus or any Blue Sky
application, or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, which statement or
omission was made in reliance upon and in conformity with information furnished
in writing to the Company or any of its several officers and directors by or on
behalf of the Distributor or the Company's administrator specifically for
inclusion therein, and will reimburse the Company and its several officers,
directors and such controlling persons for any legal or other expenses
reasonably incurred by any of them in investigating, defending or preparing to
defend any such action, proceeding or claim.
e. The obligations of each Fund under this
Section 6 shall be the several (and not the joint or joint and several)
obligation of each Fund.
-5-
<PAGE> 6
7. DURATION AND TERMINATION. This Agreement shall
become effective upon its execution as of the date first written above and,
unless sooner terminated as provided herein, shall continue until March 31,
1996. Thereafter, if not terminated, this Agreement shall continue
automatically for successive terms of one year, provided that such continuance
is specifically approved at least annually (a) by a vote of a majority of those
members of the Company's Board of Directors who are not parties to this
Agreement or "interested persons" of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and (b) by the
Company's Board of Directors or by vote of a "majority of the outstanding
voting securities" of the Company; provided, however, that this Agreement may
be terminated by the Company at any time, without the payment of any penalty,
by vote of a majority of the entire Board of Directors or by a vote of a
"majority of the outstanding voting securities" of the Company on 60-days'
written notice to the Distributor, or by the Distributor at any time, without
the payment of any penalty, on 90-days' written notice to the Company. This
Agreement will automatically and immediately terminate in the event of its
"assignment." (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested person" and "assignment" shall have
the same meanings as such terms have in the 1940 Act.)
8. AMENDMENT OF THIS AGREEMENT. No provision of this
Agreement may be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party against which an enforcement of
the change, waiver, discharge or termination is sought.
9. NOTICES. Notices of any kind to be given to the
Company hereunder by the Distributor shall be in writing and shall be duly
given if mailed or delivered to the Company at Bellevue Park Corporate Center,
400 Bellevue Parkway, Wilmington, Delaware 19809, Attention: Mr. Edward J.
Roach, Treasurer, with a copy to Philadelphia National Bank Building, 1345
Chestnut Street, Philadelphia Pennsylvania 19107-3496, Attention: W. Bruce
McConnel, III, Secretary, or at such other address or to such individual as
shall be so specified by the Company to the Distributor. Notices of any kind
to be given to the Distributor hereunder by the Company shall be in writing and
shall be duly given if mailed or delivered to Provident Distributors, Inc., 259
Radnor-Chester Road, Suite 120, Radnor, Pennsylvania 19087, Attention: Monroe
J. Haegele or at such other address or to such other individual as shall be so
specified by the Distributor to the Company.
-6-
<PAGE> 7
10. MISCELLANEOUS. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors.
11. COUNTERPARTS. This Agreement may be executed in
counterparts, all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day and
year first above written.
PROVIDENT INSTITUTIONAL FUNDS, INC.
By /s/ Edward J. Roach
-------------------
Title: Vice President & Treasurer
PROVIDENT DISTRIBUTORS, INC.
By /s/ John P. Moran
-----------------
Title: Vice President
-7-
<PAGE> 8
APPENDIX A
to the
DISTRIBUTION AGREEMENT
between
Provident Institutional Funds, Inc.
and
Provident Distributors, Inc.
- --------------------------------------------------------------------------------
Short Duration Fund
Intermediate Duration Fund
<PAGE> 1
AMENDED AND RESTATED
BY-LAWS
OF
PROVIDENT INSTITUTIONAL FUNDS, INC.
ARTICLE I
Offices
Section 1. Principal Office. The principal office of the Corporation
shall be in the City of Baltimore, State of Maryland.
Section 2. Principal Executive Office. The principal executive
office of the Corporation shall be at Bellevue Park Corporate Center, 400
Bellevue Parkway, Wilmington, Delaware 19809.
Section 3. Other Offices. The Corporation may have such other
offices in such places as the Board of Directors may from time to time
determine.
ARTICLE II
Meetings of Stockholders
Section 1. Annual Meeting. So long as the Corporation is registered
as an investment company under the Investment Company Act of 1940 (such term to
include the rules and regulations promulgated under the Investment Company Act
of 1940 unless otherwise specified or the context otherwise requires), annual
meetings of the stockholders shall not be held, except where required to be
held by the Investment Company Act of 1940 or by the Maryland General
Corporation Law or when called by the Board of Directors or by an officer or
officers authorized to take such action by the Board of Directors. If in any
calendar year the Corporation is required or elects to hold an annual meeting,
the meeting shall be held on such day, not a Saturday, Sunday or legal holiday,
as the Board of Directors or the officer or officers calling the meeting may
prescribe. At each such annual meeting, the stockholders shall elect a Board
of Directors and transact such other business as may properly come before the
meeting. The provisions of these By-Laws which contemplate the holding of an
annual meeting of stockholders shall be suspended during any calendar year in
which no annual meeting of stockholders is held.
<PAGE> 2
Section 2. Special Meetings. Special meetings of the stockholders,
unless otherwise provided by law or by the Articles of Incorporation, may be
called for any purpose or purposes by a majority of the Board of Directors, the
President, or on the written request of at least 10% of the holders of the
outstanding shares of capital stock of the Corporation entitled to be cast at
such meeting to the extent permitted by Maryland law. Such request shall state
the purpose or purposes of the proposed meeting, provided however that unless
requested by stockholders entitled to cast a majority of all the votes entitled
to be cast at the meeting, a special meeting need not be called to consider any
matter which is substantially the same as a matter voted on at any special
meeting of the stockholders held during the preceding 12 months.
Section 3. Place of Meetings. The annual meeting and any special
meeting of the stockholders shall be held at such place within the United
States as the Board of Directors may from time to time determine.
Section 4. Notice of Meetings; Waiver of Notice. Notice of the
place, date and time of the holding of each annual and special meeting of the
stockholders and the purpose or purposes of each special meeting shall be given
personally or by mail, not less than ten nor more than ninety days before the
date of such meeting, to each stockholder entitled to vote at such meeting and
to each other stockholder entitled to notice of the meeting. Notice by mail
shall be deemed to be duly given when deposited in the United States mail
addressed to the stockholder at his address as it appears on the records of the
Corporation, with postage thereon prepaid. The notice of every meeting of
shareholders may be accompanied by a form of proxy approved by the Board of
Directors in favor of such actions or persons as the Board of Directors may
select.
Notice of any meeting of stockholders shall be deemed waived
by any stockholder who shall attend such meeting in person or by proxy, or who
shall, either before or after the meeting, submit a signed waiver of notice
which is filed with the records of the meeting. When a meeting is adjourned to
another time and place, unless the Board of Directors, after the adjournment,
shall fix a new record date for an adjourned meeting, or the adjournment is for
more than one hundred and twenty days after the original record date, notice of
such adjourned meeting need not be given if the time and place to which the
meeting shall be adjourned were announced at the meeting at which the
adjournment is taken.
Section 5. Quorum. At all meetings of the stockholders, the holders
of shares entitled to cast one-third of the votes entitled to be cast, present
in person or by proxy, shall constitute a quorum for the transaction of any
business, except as otherwise provided by statute or by the Articles of
Incorporation. In the absence of a quorum, no business may be transacted,
except that the holders of a majority of the shares of stock present in person
or by proxy and entitled to vote may adjourn the meeting from time to time,
without notice other than announcement thereat except as otherwise required by
these By-Laws, until the holders of the requisite amount of shares of stock
shall be so present. At any such adjourned meeting at which a quorum may be
present any business may be transacted which might have been transacted at the
meeting as originally called. The absence from any meeting, in person or by
proxy, of holders of the
2
<PAGE> 3
number of shares of stock of the Corporation in excess of a majority thereof
which may be required by the laws of the State of Maryland, the Investment
Company Act of 1940, as amended, or other applicable statute, the Articles of
Incorporation, or these By-Laws, for action upon any given matter shall not
prevent action at such meeting upon any other matter or matters which may
properly come before the meeting, if there shall be present thereat, in person
or by proxy, holders of the number of shares of stock of the Corporation
required for action in respect of such other matter or matters.
Section 6. Organization. At each meeting of the stockholders, the
Chairman of the Board (if one has been designated by the Board), or in his
absence or inability to act, the President, or in the absence or inability to
act of the Chairman of the Board and the President, a Vice President, shall act
as chairman of the meeting. The Secretary, or in his absence or inability to
act, any person appointed by the chairman of the meeting, shall act as
secretary of the meeting and keep the minutes thereof.
Section 7. Order of Business. The order of business at all meetings
of the stockholders shall be as determined by the chairman of the meeting.
Section 8. Voting. Except as otherwise provided by statute or the
Articles of Incorporation, each holder of record of shares of stock of the
Corporation having voting power shall be entitled at each meeting of the
stockholders to one vote for every share of such stock standing in his name on
the record of stockholders of the Corporation as of the record date determined
pursuant to Section 9 of this Article or if such record date shall not have
been so fixed, then at the later of (i) the close of business on the day on
which notice of the meeting is mailed or (ii) the thirtieth day before the
meeting.
Each stockholder entitled to vote at any meeting of
stockholders may authorize another person or persons to act for him by a proxy
signed by such stockholder or his attorney-in-fact. No proxy shall be valid
after the expiration of eleven months from the date thereof, unless otherwise
provided in the proxy. Every proxy shall be revocable at the pleasure of the
stockholder executing it, except in those cases where such proxy states that it
is irrevocable and where an irrevocable proxy is permitted by law. Except as
otherwise provided by statute, the Articles of Incorporation or these By-Laws,
any corporate action to be taken by vote of the stockholders shall be
authorized by a majority of the total votes cast at a meeting of stockholders
by the holders of shares present in person or represented by proxy and entitled
to vote on such action.
If a vote shall be taken on any question other than the
election of directors, which shall be by written ballot, then unless required
by statute or these By-Laws, or determined by the chairman of the meeting to be
advisable, any such vote need not be by ballot. On a vote by ballot, each
ballot shall be signed by the stockholder voting, or by his proxy, if there be
such proxy, and shall state the number of shares voted.
3
<PAGE> 4
Section 9. Fixing of Record Date. The Board of Directors may set a
record date for the purpose of determining stockholders entitled to vote at any
meeting of the stockholders. The record date, which may not be prior to the
close of business on the day the record date is fixed, shall be not more than
ninety nor less than ten days before the date of the meeting of the
stockholders. All persons who were holders of record of shares at such time,
and not others, shall be entitled to vote at such meeting and any adjournment
thereof.
Section 10. Inspectors. The Board may, in advance of any meeting of
stockholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If the inspectors shall not be so appointed or if any of
them shall fail to appear or act, the chairman of the meeting may, and on the
request of any stockholder entitled to vote thereat shall, appoint inspectors.
Each inspector, before entering upon the discharge of his duties, shall take
and sign an oath to execute faithfully the duties of inspector at such meeting
with strict impartiality and according to the best of his ability. The
inspectors shall determine the number of shares outstanding and the voting
powers of each, the number of shares represented at the meeting, the existence
of a quorum, the validity and effect of proxies, and shall receive votes,
ballots or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all stockholders. On request of the chairman
of the meeting or any stockholder entitled to vote thereat, the inspectors
shall make a report in writing of any challenge, request or matter determined
by them and shall execute a certificate of any fact found by them. No director
or candidate for the office of director shall act as inspector of an election
of directors. Inspectors need not be stockholders.
Section 11. Consent of Stockholders in Lieu of Meeting. Except as
otherwise provided by statute or the Articles of Incorporation, any action
required to be taken at any annual or special meeting of stockholders, or any
action which may be taken at any annual or special meeting of such
stockholders, may be taken without a meeting, without prior notice and without
a vote, if the following are filed with the records of stockholders meetings:
(i) a unanimous written consent which sets forth the action and is signed by
each stockholder entitled to vote on the matter and (ii) a written waiver of
any right to dissent signed by each stockholder entitled to notice of the
meeting but not entitled to vote thereat.
ARTICLE III
Board of Directors
Section 1. General Powers. Except as otherwise provided in the
Articles of Incorporation, the business and affairs of the Corporation shall be
managed under the direction of the Board of Directors. All powers of the
Corporation may be exercised by or under authority of the Board of Directors
except as conferred on or reserved to the stockholders by law or by the
Articles of Incorporation or these By-Laws.
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Section 2. Number of Directors. The number of directors shall be
fixed from time to time by resolution of the Board of Directors adopted by a
majority of the Directors then in office; provided, however, that the number of
directors shall in no event be less than three nor more than fifteen. Any
vacancy created by an increase in directors may be filled in accordance with
Section 6 of this Article III. No reduction in the number of directors shall
have the effect of removing any director from office prior to the expiration of
his term unless such director is specifically removed pursuant to Section 5 of
this Article III at the time of such decrease. Directors need not be
stockholders.
Section 3. Term of Directors. The term of office of each director
shall be from the time of his election and qualification until the annual
election of directors next succeeding his election and until his successor
shall have been elected and shall have qualified, or until his death, or until
he shall have resigned, or until he shall have been removed as hereinafter
provided in these By-Laws, or as otherwise provided by statute or the Articles
of Incorporation.
Section 4. Resignation. A director of the Corporation may resign at
any time by giving written notice of his resignation to the Board or the
Chairman of the Board or the President or the Secretary. Any such resignation
shall take effect at the time specified therein or, if the time when it shall
become effective shall not be specified therein, immediately upon its receipt;
and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
Section 5. Removal of Directors. Any director of the Corporation may
be removed with or without cause by the stockholders by the affirmative vote of
a majority of the outstanding shares of capital stock then entitled to be cast
in the election of directors. This Section 5 of Article III of the By-Laws is
not subject to alteration or repeal by the Board of Directors, subject to the
requirements of the Investment Company Act of 1940, as amended.
Section 6. Vacancies. Subject to the provisions of the Investment
Company Act of 1940, as amended, any vacancies in the Board, whether arising
from death, resignation, removal, an increase in the number of directors or any
other cause, shall be filled by a vote of the Board of Directors as provided by
statute. A Director elected by the Board of Directors to fill a vacancy serves
until the next annual meeting of shareholders and until his successor is
elected and qualifies. A director elected by Shareholders to fill a vacancy
which results from the removal of a Director serves for the balance of the term
of the removed Director.
Section 7. Place of Meetings. Meetings of the Board may be held at
such place as the Board may from time to time determine or as shall be
specified in the notice of such meeting.
Section 8. Regular Meeting. Regular meetings of the Board may be
held with notice at such time and place as may be determined by the Board of
Directors.
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Section 9. Special Meetings. Special meetings of the Board may be
held whenever called by the President, Vice President, Secretary, by two or
more directors or by a majority of the Executive Committee, either in writing
or by vote at a meeting.
Section 10. Telephone Meetings. Members of the Board of Directors or
of any committee thereof may participate in a meeting by means of a conference
telephone or similar communications equipment if all persons participating in
the meeting can hear each other at the same time. Subject to the provisions of
the Investment Company Act of 1940, as amended, participation in a meeting by
these means constitutes presence in person at the meeting.
Section 11. Notice of Special Meetings. Notice of each special and
regular meeting of the Board shall be given by the Secretary as hereinafter
provided, in which notice shall be stated the time and place of the meeting.
Notice of each such meeting shall be delivered to each director, either
personally or by telephone or any standard form of telecommunication, at least
twenty-four hours before the time at which such meeting is to be held, or by
first-class mail, postage prepaid, addressed to him at his residence or usual
place of business, at least three days before the day on which such meeting is
to be held.
Section 12. Waiver of Notice of Meetings. Notice of any special
meeting need not be given to any director who shall, either before or after the
meeting, sign a written waiver of notice which is filed with the records of the
meeting or who shall attend such meeting. Except as otherwise specifically
required by these By-Laws, a notice or waiver of notice of any meeting need not
state the purposes of such meeting.
Section 13. Quorum and Voting. One-third, but not less than two, of
the members of the entire Board shall be present in person at any meeting of
the Board in order to constitute a quorum for the transaction of business at
such meeting, and except as otherwise expressly required by statute, the
Articles of Incorporation, these By-Laws, the Investment Company Act of 1940,
as amended, or other applicable statute, the act of a majority of the directors
present at any meeting at which a quorum is present shall be the act of the
Board. In the absence of a quorum at any meeting of the Board, a majority of
the directors present thereat may adjourn such meeting to another time and
place until a quorum shall be present thereat. Notice of the time and place of
any such adjourned meeting shall be given to the directors who were not present
at the time of the adjournment and, unless such time and place were announced
at the meeting at which the adjournment was taken, to the other directors. At
any adjourned meeting at which a quorum is present, any business may be
transacted which might have been transacted at the meeting as originally
called.
Section 14. Organization. The Board may, by resolution adopted by a
majority of the entire Board, designate a Chairman of the Board, who shall
preside at each meeting of the Board. In the absence or inability of the
Chairman of the Board to preside at a meeting, the President or, in his absence
or inability to act, another director chosen by a majority of the directors
present, shall act as chairman of the meeting and preside thereat. The
Secretary (or,
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in his absence or inability to act, any person appointed by the Chairman) shall
act as secretary of the meeting and keep the minutes thereof.
Section 15. Written Consent of Directors in Lieu of a Meeting.
Subject to the provisions of the Investment Company Act of 1940, as amended,
any action required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a meeting if all
members of the Board or committee, as the case may be, consent thereto in
writing, and the writings or writing are filed with the minutes of the
proceedings of the Board or committee.
Section 16. Compensation. Any director, whether or not he is a
salaried officer or employee of the Corporation, may be compensated for his
services as director or as a member of a committee, or as Chairman of the Board
of Directors or chairman of a committee, and in addition may be reimbursed for
transportation and other expenses, all in such manner and amounts as the
director may from time to time determine.
Section 17. Investment Policies. It shall be the duty of the Board
of Directors to direct that the purchase, sale, retention and disposal of
portfolio securities and the other investment practices of the Corporation are
at all times consistent with the investment policies and restrictions with
respect to securities investments and otherwise of the Corporation, as recited
in the Prospectus of the Corporation included in the registration statement of
the Corporation relating to the public offering of its capital stock, as filed
with the Securities and Exchange Commission and as amended from time to time
(or as such investment policies and restrictions may be modified by the Board
of Directors, or, if required, by majority vote of the stockholders of the
Corporation in accordance with the Investment Company Act of 1940, as amended)
and as required by the Investment Company Act of 1940, as amended. The Board,
however, may delegate the duty of management of the assets and the
administration of its day to day operations to an individual or corporate
management company and/or investment adviser pursuant to a written contract or
contracts which have obtained the requisite approvals, including the requisite
approvals of renewals thereof, of the Board of Directors and/or the
stockholders of the Corporation in accordance with the provisions of the
Investment Company Act of 1940, as amended.
Section 18. Qualifications of Directors. No person over age 75
shall be eligible to serve as a director of the Corporation. Directors of the
Corporation (excluding those persons serving as a director of the Corporation
on February 17, 1995) shall retire as directors as of the Corporation's fiscal
year during which they first attain the age of 75.
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ARTICLE IV
Committees
Section 1. Executive Committee. The Board may, by resolution adopted
by a majority of the entire board, designate an Executive Committee consisting
of two or more of the directors of the Corporation, which committee shall have
and may exercise all the powers and authority of the Board with respect to all
matters other than:
(a) the recommendation or submission to stockholders of any action
requiring authorization of stockholders pursuant to statute or
the Articles of Incorporation;
(b) the filling of vacancies on the Board of Directors;
(c) the fixing of compensation of the directors for serving on the
Board or on any committee of the Board, including the
Executive Committee;
(d) the approval or termination of any contract with an investment
adviser or principal underwriter, as such terms are defined in
the Investment Company Act of 1940, as amended, or the taking
of any other action required to be taken by the Board of
Directors by the Investment Company Act of 1940, as amended;
(e) the amendment or repeal of these By-Laws or the adoption of
new By-Laws;
(f) the amendment or repeal of any resolution of the Board which
by its terms may be amended or repealed only by the Board;
(g) the declaration of dividends or distributions on capital stock
and the issuance of capital stock of the Corporation; and
(h) the approval of any merger or share exchange which does not
require stockholder approval.
The Executive Committee shall keep written minutes of its
proceedings and shall report such minutes to the Board. All such proceedings
shall be subject to revision or alteration by the Board; provided, however,
that third parties shall not be prejudiced by such revision or alteration.
Section 2. Other Committees of the Board. The Board of Directors may
from time to time, by resolution adopted by a majority of the whole Board,
designate one or more other committees of the Board, each such committee to
consist of two or more directors and to have such powers and duties as the
Board of Directors may, by resolution, prescribe.
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Section 3. General. One third, but not less than two, of the members
of any committee shall be present in person at any meeting of such committee in
order to constitute a quorum for the transaction of business at such meeting,
and the act of a majority present shall be the act of such committee. The
Board may designate a chairman of any committee and such chairman or any two
members of any committee may fix the time and place of its meetings unless the
Board shall otherwise provide. In the absence or disqualification of any
member of any committee, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member. The
Board shall have the power at any time to change the membership of any
committee, to fill all vacancies, to designate alternate members to replace any
absent or disqualified member, or to dissolve any such committee. Nothing
herein shall be deemed to prevent the Board from appointing one or more
committees consisting in whole or in part of persons who are not directors of
the Corporation; provided, however, that no such committee shall have or may
exercise any authority or power of the Board in the management of the business
or affairs of the Corporation.
ARTICLE V
Officers, Agents and Employees
Section 1. Number, Qualification, Election and Tenure. The officers
of the Corporation shall be a President, one or more Vice Presidents, one of
whom may be elected Vice President-Finance, a Secretary and a Treasurer, each
of whom shall be elected by the Board of Directors. The Board of Directors may
appoint such Assistant Secretaries, Assistant Treasurers and such other
officers, agents and employees as it may deem necessary or proper. Any two or
more offices may be held by the same person, except the offices of President
and Vice President, but no officer shall execute, acknowledge or verify any
instrument in more than one capacity. The President shall be chosen from among
the Directors. Such officers shall be elected annually at a regular or special
meeting of the Board of Directors, each to hold office until the meeting of the
stockholders and until his successor shall have been duly elected and shall
have qualified, or until his death, or until he shall have resigned, or have
been removed, as herein after provided in these By-Laws. The Board may from
time to time elect, or delegate to the President the power to appoint, such
officers (including one or more Assistant Vice Presidents, one or more
Assistant Treasurers and one or more Assistant Secretaries) and such agents, as
may be necessary or desirable for the business of the Corporation. Such
officers and agents shall have such duties and shall hold their offices for
such terms as may be prescribed by the Board or by the appointing authority.
Section 2. Resignations. Any officer of the Corporation may resign
at any time by giving written notice of resignation to the Board, the Chairman
of the Board, President or the Secretary. Any such resignation shall take
effect at the time specified therein or, if the time when it shall become
effective shall not be specified therein, immediately upon its receipt; and,
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unless otherwise specified therein, the acceptance of such resignation shall be
necessary to make it effective.
Section 3. Removal of Officer, Agent or Employee. Any officer, agent
or employee of the Corporation may be removed by the Board of Directors with or
without cause at any time, and the Board may delegate such power of removal as
to agents and employees not elected or appointed by the Board of Directors.
Such removal shall be without prejudice to such person's contract rights, if
any, but the appointment of any person as an officer, agent or employee of the
Corporation shall not of itself create contract rights.
Section 4. Vacancies. A vacancy in any office, whether arising from
death, resignation, removal or any other cause, may be filled for the unexpired
portion of the term of the office which shall be vacant, in the manner
prescribed in these By-Laws for the regular election or appointment to such
office.
Section 5. Compensation. The compensation of the officers of the
Corporation shall be fixed by the Board of Directors, but this power may be
delegated to any Committee or to any officer in respect of other officers under
his control. No officer shall be precluded from receiving such compensation by
reason of the fact that he is also a Director of the Corporation.
Section 6. Bonds or Other Security. If required by the Board, any
officer, agent or employee of the Corporation shall give a bond or other
security for the faithful performance of his duties, in such amount and with
such surety or sureties as the Board may require.
Section 7. President. The President shall be the chief executive and
administrative officer of the Corporation. In the absence of the Chairman of
the Board (or if there be none), the President shall preside at all meetings of
the stockholders and of the Board of Directors. He shall have, subject to the
control of the Board of Directors, general charge of the business and affairs
of the Corporation. He may employ and discharge employees and agents of the
Corporation, except such as shall be appointed by the Board, and he may
delegate these powers.
Section 8. Vice President. The Corporation shall have one or more
Vice Presidents, one of whom may be elected Vice President-Finance. The Vice
President-Finance shall serve as the principal assistant to the President in
the performance of the President's duties and exercise such of the powers of
the President as shall be delegated or assigned to the Vice President-Finance
by the President or by the Board of Directors. He shall, subject to the
control of the Board of Directors, perform the duties of the President in the
President's absence or inability to act and shall have general supervision over
the other Vice Presidents in the performance of their duties. Each other Vice
President shall perform such duties as may be assigned to him by the Board of
Directors, the President or the Vice President-Finance. Each Vice President
shall have such powers and perform such duties as the Board of Directors or the
President may from time to time prescribe.
Section 9. Treasurer. The Treasurer shall:
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(a) have charge and custody of, and be responsible for, all the
funds and securities of the Corporation, except those which
the Corporation has placed in the custody of a bank or trust
company or member of a national securities exchange (as that
term is defined in the Securities Exchange Act of 1934, as
amended) pursuant to a written agreement designating such bank
or trust company or member of a national securities exchange
as custodian of the property of the Corporation;
(b) keep full and accurate accounts of receipts and disbursements
in books belonging to the Corporation;
(c) cause all moneys and other valuables to be deposited to the
credit of the Corporation;
(d) receive, and give receipts for, moneys due and payable, to the
Corporation from any source whatsoever;
(e) disburse the funds of the Corporation and supervise the
investment of its funds as ordered or authorized by the Board,
taking proper vouchers therefor; and
(f) in general, perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be
assigned to him by the Board or the President.
Section 10. Secretary. The Secretary shall
(a) keep or cause to be kept in one or more books provided for the
purpose, the minutes of all meetings of the Board, the
committees of the Board and the stockholders;
(b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the Corporation
and affix and attest the seal to all stock certificates of the
Corporation (unless the seal of the Corporation on such
certificates shall be a facsimile, as hereinafter provided)
and affix and attest the seal to all other documents to be
executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and
other documents and records required by law to be kept and
filed are properly kept and filed; and
(e) in general, perform all the duties incident to the office of
Secretary and such other duties as from time to time may be
assigned to him by the Board or the President.
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Section 11. Delegation of Duties. In case of the absence of any
officer of the Corporation, or for any other reason that the Board of Directors
may deem sufficient, the Board may confer for the time being, the powers or
duties, or any of them, of such officer upon any other officer or upon any
director.
Section 12. Assistant Officers. The Board of Directors may elect one
or more Assistant Secretaries and one or more Assistant Treasurers. Each
Assistant Secretary, if any, and each Assistant Treasurer, if any, shall, at
the request of or in the absence of disability of the Secretary or the
Treasurer, as the case may be, perform the duties and exercise the powers of
the Secretary or the Treasurer, as the case may be. They shall perform such
other duties and have such other powers as the Board of Directors may from time
to time prescribe.
ARTICLE VI
Indemnification
Each director of the Corporation shall be indemnified by the
Corporation for money damages to the full extent permitted under the General
Laws of the State of Maryland, and each officer of the Corporation shall be
indemnified to the same extent as its directors and to such further extent as
is consistent with law. The Corporation shall indemnify its directors and
officers who while serving as directors or officers also serve at the request
of the Corporation as a director, officer, partner, trustee, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust, other
enterprise or employee benefit plan to the same extent as its directors and, in
the case of officers, to such further extent as is consistent with law. This
Article shall not protect any such person against any liability to the
Corporation or any stockholder thereof to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office. Absent
a court determination that an officer or director seeking indemnification was
not liable on the merits or guilty of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office, the decision by the Corporation to indemnify such person must be based
upon the reasonable determination of independent legal counsel or the vote of a
majority of a quorum of the directors who are neither "interested persons," as
defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended,
nor parties to the proceeding ("non-party independent directors"), after review
of the facts, that such officer or director is not guilty of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
Each current or former officer or director of the Corporation
claiming indemnification within the scope of this Article VI shall be entitled
to advances from the Corporation for payment of the reasonable expenses
incurred by him in connection with proceedings to which he is a party in the
manner and to the full extent permitted under the General Laws of the State of
Maryland; provided, however, that the person seeking indemnification shall
provide to the Corporation a written affirmation of his good faith belief that
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the standard of conduct necessary for indemnification by the Corporation has
been met and a written undertaking to repay any such advance, if it should
ultimately be determined that the standard of conduct has not been met, and
provided further that at least one of the following additional conditions is
met: (a) the person seeking indemnification shall provide a security in form
and amount acceptable to the Corporation for his undertaking; (b) the
Corporation is insured against losses arising by reason of the advance; (c) a
majority of a quorum of non-party independent directors, or independent legal
counsel in a written opinion, shall determine, based on a review of facts
readily available to the Corporation at the time the advance is proposed to be
made, that there is reason to believe that the person seeking indemnification
will ultimately be found to be entitled to indemnification.
The Corporation may purchase insurance on behalf of an officer
or director protecting such person to the full extent permitted under the
General Laws of the State of Maryland, the Securities Act of 1933 and the
Investment Company Act of 1940 from liability arising from his activities as
officer or director of the Corporation. The Corporation, however, may not
purchase insurance on behalf of any officer or director of the Corporation that
protects or purports to protect such person from liability to the Corporation
or to its stockholders to which such officer or director would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office.
The Corporation may indemnify, make advances or purchase
insurance to the extent provided in this Article VI on behalf of an employee or
agent who is not an officer or director of the Corporation.
The indemnification provided by this Article shall not be
deemed exclusive of any other right, in respect of indemnification or
otherwise, to which those seeking such indemnification may be entitled under
any insurance or other agreement, vote of stockholders or disinterested
directors or otherwise, both as to action by a director or officer of the
Corporation in his official capacity and as to action by such person in another
capacity while holding such office or position, and shall continue as to a
person who has ceased to be a director or officer and shall inure to the
benefit of the heirs, executors and administrators of such a person.
ARTICLE VII
Capital Stock
Section 1. Stock Certificates. Each holder of stock of the
Corporation shall be entitled upon request to have a certificate or
certificates, in such form as shall be approved by the Board of Directors,
representing the number of shares of stock of the Corporation owned by him,
provided, however that certificates for fractional shares will not be delivered
in any case. The certificates representing shares of stock shall be signed by
or in the name of the Corporation by the President or a Vice President or the
Chairman of the Board and by the Secretary or an
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Assistant Secretary or the Treasurer or an Assistant Treasurer and sealed with
the seal of the Corporation. Any or all of the signatures or the seal on the
certificate may be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate shall be issued, it may be issued by the Corporation
with the same effect as if such officer, transfer agent or registrar were still
in the office at the date of issue.
Section 2. Stock Ledgers. The Corporation shall not be required to
keep original or duplicate stock ledgers at its principal office in the City of
Baltimore, Maryland, but stock ledgers shall be kept at the respective offices
of the Transfer Agents of the Corporation's capital stock.
Section 3. Transfer of Shares. Transfer of shares of stock of the
Corporation shall be made on the stock records of the Corporation only by the
registered holder thereof, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary or with a transfer agent or
transfer clerk, and on surrender of the certificate or certificates, if issued,
for such shares properly endorsed or accompanied by a duly executed stock
transfer power and the payment of all taxes thereon. Except as otherwise
provided by law, the Corporation shall be entitled to recognize the exclusive
right of a person in whose name any share or shares stand on the record of
stockholders as the owner of such share or shares for all purposes, including,
without limitation, the rights to receive dividends or other distributions, and
to vote as such owner, and the Corporation shall not be bound to recognize any
equitable or legal claim to or interest in any such share or shares on the part
of any other person.
Section 4. Regulations. The Board may make such additional rules and
regulations, not inconsistent with these By-Laws, as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
stock of the Corporation. It may appoint, or authorize any officer or officers
to appoint, one or more transfer agents or one or more transfer clerks and one
or more registrars and may require all certificates for shares of stock to bear
the signature or signatures of any of them.
Section 5. Lost, Destroyed or Mutilated Certificates. The holder of
any certificates representing shares of stock of the Corporation shall
immediately notify the Corporation of any loss, destruction or mutilation of
such certificate, and the Corporation may issue a new certificate of stock in
the place of any certificate theretofore issued by it which the owner thereof
shall alleged to have been lost or destroyed or which shall have been
mutilated, and the Board of Directors may, in its discretion, require such
owner or his legal representatives to give to the Corporation a bond in such
sum, limited or unlimited, and in such form and with such surety or sureties,
as the Board in its absolute discretion shall determine, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss or destruction of any such certificate, or issuance of a new
certificate. Anything herein to the contrary notwithstanding, the Board of
Directors, in its absolute discretion, may refuse to issue any such new
certificate, except pursuant to legal proceedings under the laws of the State
of Maryland.
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Section 6. Fixing of a Record Date for Dividends and Distributions.
The Board may fix, in advance, a date not more than ninety days preceding the
date fixed for the payment of any dividend or the making of any distribution or
the allotment of rights to subscribe for securities of the Corporation, or for
the delivery of evidences of interests or evidences of interests arising out of
any changes, conversion or exchange of common stock or other securities, as the
record date for the determination of the stockholders entitled to receive any
such dividend, distribution, allotment, rights or interests, and in such case
only the stockholders of record at the time so fixed shall be entitled to
receive such dividend, distribution, allotment, rights or interests.
Section 7. Information to Stockholders and Others. Any stockholder,
holder of a voting trust certificate, or his agent may inspect and copy during
usual business hours the Corporation's By-Laws, minutes of the proceedings of
its stockholders, annual statements of its affairs, and voting trust agreements
on file at its principal office.
ARTICLE VIII
Seal
The Seal of the Corporation shall be circular in form and
shall bear, in addition to any other emblem or device approved by the Board of
Directors, the name of the Corporation, the year of its incorporation and the
words "State of Maryland". Said seal may be used by causing it or a facsimile
thereof to be impressed or affixed or in any other manner reproduced.
ARTICLE IX
Fiscal Year
The fiscal year of the Corporation shall be as determined by
the Board of Directors from time to time.
ARTICLE X
Depositories and Custodians
Section 1. Depositories. The funds of the Corporation shall be
deposited with such banks or other depositories as the Board of Directors of
the Corporation may from time to time determine.
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Section 2. Custodians. All securities and other investments shall be
deposited in the safe keeping of such banks or other companies as the Board of
Directors of the Corporation may from time to time determine. Every
arrangement entered into with any bank or other company for the safe keeping of
the securities and investments of the Corporation shall contain provisions
complying with the Investment Company Act of 1940, as amended, and the general
rules and regulations thereunder.
ARTICLE XI
Execution of Instruments
Section 1. Checks, Notes, Drafts, etc. Checks, notes, drafts,
acceptances, bills of exchange and other orders or obligations for the payment
of money shall be signed by such officer or officers or person or persons as
the Board of Directors by resolution shall from time to time designate.
Section 2. Sale or Transfer of Securities. Stock certificates,
bonds, money market instruments or other securities at any time owned by the
Corporation may be held on behalf of the Corporation or sold, transferred or
otherwise disposed of subject to any limits imposed by these By-Laws and
pursuant to authorization by the Board of Directors and, when so authorized to
be held on behalf of the Corporation or sold, transferred or otherwise disposed
of, may be transferred from the name of the Corporation by the signature of the
President or a Vice President or the Treasurer or pursuant to any procedure
approved by the Board of Directors, subject to applicable law.
ARTICLE XII
Independent Public Accountants
The firm of independent public accountants which shall sign or
certify the financial statements of the Corporation which are filed with the
Securities and Exchange Commission shall be selected annually by the Board of
Directors and ratified by the stockholders in accordance with the provisions of
the Investment Company Act of 1940, as amended.
ARTICLE XIII
Annual Statement
The books of account of the Corporation shall be examined by
an independent firm of public accountants at the close of each annual period of
the Corporation and at such other times as may be directed by the Board of
Directors. A report to the stockholders based
16
<PAGE> 17
upon each such examination shall be mailed to each stockholder of the
Corporation of record on such date with respect to each report as may be
determined by the Board of Directors, at his address as the same appears on the
books of the Corporation. Such annual statement shall also be available at the
annual meeting of stockholders and be placed on file at the Corporation's
principal office in the State of Maryland. Each such report shall show the
assets and liabilities of the Corporation as of the close of the annual or
semi-annual period covered by the report and the securities in which the funds
of the Corporation were then invested. Such report shall also show the
Corporation's income and expenses for the period from the end of the
Corporation's preceding fiscal year to the close of the annual or semi-annual
period covered by the report and any other information required by the
Investment Company Act of 1940, as amended, and shall set forth such other
matters as the Board of Directors or such firm of independent public
accountants shall determine.
ARTICLE XIV
Amendments
These By-Laws or any of them may be amended, altered or
repealed at any regular meeting of the stockholders or at any special meeting
of the stockholders by a favorable vote of the holders of not less than a
majority of all votes cast on the matter at such meeting, provided that notice
of the proposed amendment, alteration or repeal be contained in the notice of
such special meeting. These By-Laws may also be amended, altered or repealed
by the affirmative vote of a majority of the Board of Directors at any regular
or special meeting of the Board of Directors, except any particular By-Law
which is specified as not subject to alteration or repeal by the Board of
Directors, subject to the requirements of the Investment Company Act of 1940,
as amended.
17
<PAGE> 1
February 20, 1995
Piper Trust Funds Inc.
Piper Jaffray Tower
222 South Ninth Street
Minneapolis, Minnesota 55402
Re: Rule 24f-2 Notice for Piper Trust Funds Inc.
(File Nos. 33-70104 and 811-8072)
Dear Sir or Madam:
We have acted as general counsel to Piper Trust Funds Inc., a
Minnesota corporation (the "Funds"), in connection with the Funds' Registration
Statement on Form N-1A (File Nos. 33-70104 and 811-8072). This opinion is
addressed to you in connection with a filing by the Funds of a notice (the
"Notice") pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended. In that connection, we have examined such documents and have reviewed
such questions of law as we have considered necessary and appropriate for the
purpose of this opinion. Based thereon, we advise you that, in our opinion,
the 18,944,342 shares of common stock, $.01 par value per share, sold by the
Funds during the fiscal year ended December 31, 1994, as set forth in the
Notice, were legally issued, have been fully paid, and are nonassessable, if
issued and sold upon the terms and in the manner set forth in the Registration
Statement of the Funds referred to above.
Very truly yours,
/s/ Dorsey & Whitney P.L.L.P.
KLP
<PAGE> 1
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of February 17, 1995 between PROVIDENT INSTITUTIONAL
FUNDS, INC., a Maryland corporation (the "Fund"), and PNC INSTITUTIONAL
MANAGEMENT CORPORATION, a Delaware corporation (the "Advisor").
WHEREAS, the Fund is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Advisor is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Fund desires to retain Advisor to furnish investment
advisory services to certain existing investment portfolios of the Fund and may
retain the Advisor to serve in such capacity to certain additional investment
portfolios of the Fund, all as now or hereafter identified on Schedule A hereto
(such initial investment portfolios and any such additional investment
portfolios together called the "Portfolios") and the Advisor is willing to so
furnish such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment.
(a) The Fund hereby appoints Advisor to act as investment
advisor to the Portfolios for the period and on the terms set forth in this
Agreement. Advisor accepts such appointment and agrees to furnish the services
herein set forth for the compensation herein provided.
(b) In the event that the Fund establishes one or more
portfolios other than the Portfolios with respect to which it desires to retain
Advisor to act as investment adviser hereunder, the Fund shall notify the
Advisor in writing. If Advisor is willing to render such services under this
Agreement it shall notify the Fund in writing whereupon, subject to such
shareholder approval as may be required pursuant to Section 10 hereof, such
portfolio shall be listed on Schedule A as a covered Portfolio and shall be
subject to the provisions of this Agreement except to the extent that said
provisions are modified with respect to such Portfolio in writing by the Fund
and Advisor at the time.
2. Delivery of Documents. The Fund has furnished the Advisor
with copies, properly certified or authenticated, of each of the following:
(a) Resolutions of the Fund's Board of Directors
authorizing the appointment of Advisor as the
Portfolios' advisor and approving this Agreement;
<PAGE> 2
(b) The Fund's Articles of Incorporation;
(c) The Fund's Amended and Restated Bylaws;
(d) The Fund's Notification of Registration on Form N-8A
under the 1940 Act as filed with the Securities and
Exchange Commission ("SEC");
(e) The Fund's Registration Statement on Form N-1A (the
"Registration Statement") under the Securities Act of
1933 and 1940 Act, as filed with the SEC, and all
amendments thereto; and
(f) The Fund's most recent prospectuses for the
Portfolios (such prospectuses together with the
related statements of additional information, as
currently in effect and all amendments and
supplements thereto, are herein called
"Prospectuses").
The Fund will furnish Advisor from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
3. Services. The Advisor undertakes to provide the services
hereinafter set forth and to assume the following obligations:
a. Investment Management Services. Subject to the
supervision of the Fund's Board of Directors, Advisor will provide a continuous
investment program for each of the Portfolios, including investment research
and management with respect to all securities, investments, cash and cash
equivalents in the Portfolios. Advisor will determine from time to time what
securities and other investments will be purchased, retained or sold by the
Portfolios and will place the daily orders for the purchase or sale of
securities. Advisor will provide the services rendered by it under this
Agreement in accordance with each Portfolio's investment objective, policies
and restrictions as stated in such Portfolio's Prospectus (as currently in
effect and as it may be amended or supplemented from time to time) and the
resolutions of the Fund's Board of Directors.
b. Use of Sub-Advisors. In connection with the
foregoing services, it is understood that the Advisor may appoint one or more
persons or companies ("Sub-advisors"), and each Sub-advisor shall have full
investment discretion and shall make all determinations with respect to the
investment of all or such portion of the particular Portfolio's assets assigned
to that Sub-advisor and the purchase and sale of portfolio securities with
those assets, and take such steps as necessary to implement such appointments.
The Advisor shall evaluate the Sub-advisors and shall advise
the Board of Directors of the Sub-advisors which the Advisor believes are best
suited to invest the assets of each Portfolio; shall monitor and evaluate the
investment performance of each Sub-advisor employed by each Portfolio; shall
allocate the portion of each Portfolio's assets to be managed
-2-
<PAGE> 3
by each Sub-advisor; shall recommend changes of or additional Sub-advisors when
appropriate; and shall coordinate the investment activities of the
Sub-advisors. The Advisor shall render regular reports, at regular meetings of
the Directors, of, among other things, the decisions it has made with respect
to the allocation of assets among Sub-advisors. To assist the Advisor in
managing the various Sub-advisors, the Advisor may appoint an additional
sub-advisor to perform one or more of the services described in this paragraph
(a "Managing Sub-Advisor").
Any Sub-advisor (including any Managing Sub-advisor) shall be
employed pursuant to sub-advisory agreements agreeable to the Fund and approved
in accordance with the provisions of the 1940 Act. The Advisor shall be as
fully responsible to the Fund for the acts or omissions of any Sub-advisor as
it is for its own acts and omissions; provided that the Advisor shall not be
responsible or liable for the investment merits of any decision made by a
Sub-advisor to purchase, hold or sell a portfolio security for the Portfolio
for which it acts as Sub-advisor. The compensation of any Sub-Advisor shall be
paid by the Advisor.
c. Brokerage and other Matters.
Advisor further agrees that it:
i) will comply with all applicable rules and regulations
of the SEC and will in addition conduct its
activities under this Agreement in accordance with
other applicable law;
ii) will place orders either directly with the issuer or
with any broker or dealer. In connection with the
selection of such brokers or dealers and the placing
of such orders with respect to assets of the
Portfolios, the Advisor is directed at all times to
seek to obtain execution and prices within the policy
guidelines determined by the Fund's Board of
Directors and set forth in the Prospectuses. In no
instance, however, will a Portfolio's securities be
purchased from or sold to Advisor, a Sub-advisor, the
Fund's distributor or any affiliated person thereof,
except to the extent permitted by the SEC or by
applicable law;
iii) will maintain books and records with respect to each
Portfolio's securities transactions and will furnish
the Fund's Board of Directors such periodic and
special reports as the Board may request;
iv) will maintain a policy and practice of conducting its
investment advisory services hereunder independently
of the commercial banking operations of its
affiliates. When Advisor makes investment
recommendations for a Portfolio, its investment
advisory personnel will not inquire or take into
consideration whether the issuer of securities
proposed for purchase or sale for a Portfolio's
account are customers of the commercial departments
of its affiliates. In dealing with commercial
customers, Advisor and the
-3-
<PAGE> 4
Sub-advisors will not inquire or take into
consideration whether securities of those customers
are held by the Fund; and
v) will treat confidentially and as proprietary
information of the Fund all records and other
information relative to the Fund, any of the
Portfolios and the Fund's prior, current or potential
shareholders, and will not use such records and
information for any purpose other than performance of
its responsibilities and duties hereunder, except
after prior notification to and approval in writing
by the Fund, which approval shall not be unreasonably
withheld and may not be withheld where Advisor may be
exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such
information by duly constituted authorities, or when
so requested by the Fund.
4. Services Not Exclusive. Advisor's services hereunder are not
deemed to be exclusive, and Advisor shall be free to render similar services to
others so long as its services under this Agreement are not impaired thereby.
5. Books and Records. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, Advisor hereby agrees that all records which it
maintains for each Portfolio are the property of the Fund and further agrees to
surrender promptly to the Fund any of such records upon the Fund's request.
Advisor further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under
the 1940 Act.
6. Expenses. During the term of this Agreement, Advisor will pay
all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities, commodities and other investments
(including brokerage commissions and other transaction changes, if any)
purchased or sold for any of the Portfolios. All other expenses of the Fund
which are not assumed by the Advisor hereunder shall be paid by the Fund.
7. Compensation.
(a) For the services provided and the expenses assumed
pursuant to this Agreement the Fund will pay Advisor and Advisor will accept as
full compensation therefor a fee on behalf of each Portfolio, computed daily
and payable monthly, at the annual rates set forth on Schedule B. Such fee as
is attributable to each Portfolio shall be a separate charge to such Portfolio
and shall be the several (and not joint or joint and several) obligation of
such Portfolio.
(b) If in any fiscal year the aggregate expenses of one or
more Portfolios (as defined under the securities regulations of any state
having jurisdiction over the Fund) exceed the expense limitations of any such
state, Advisor will bear its share of the amount of such excess in proportion
to the aggregate fees otherwise payable to it hereunder and to the Fund's
-4-
<PAGE> 5
administrator under its administration agreement with the Fund. The obligation
of the Advisor to reimburse the Fund under this Paragraph 7(b) is limited in
any fiscal year to the amount of its fees otherwise payable hereunder
attributable to all Portfolios for such fiscal year, provided, however, that
notwithstanding the foregoing, Advisor shall reimburse the Fund for the full
amount of its share of any such excess expenses regardless of the amount of
fees otherwise payable to it during such fiscal year to the extent that the
securities regulations of any state having jurisdiction over the Fund so
require. Such expense reimbursement, if any, will be estimated, reconciled and
paid on a monthly basis.
8. Limitation of Liability. Advisor shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund or its
shareholders in connection with the performance of this Agreement, except a
loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations or duties under this Agreement.
9. Duration and Termination. This Agreement will become
effective as of the date hereof with respect to the current Portfolios and,
with respect to any additional Portfolio, on the date of receipt by the Fund of
notice from the Advisor in accordance with Section 1(b) hereof that the Advisor
is willing to serve as investment adviser with respect to such Portfolio,
provided that this Agreement (as supplemented by the terms specified in any
notice and agreement pursuant to Section 1(b) hereof) shall have been approved
by the shareholders of the Portfolios in accordance with the requirements of
the 1940 Act. Unless sooner terminated as provided herein, this Agreement
shall continue in effect with respect to each such Portfolio for two years from
the date the Agreement became effective with respect to such Portfolio.
Thereafter, if not terminated, this Agreement shall continue in effect with
respect to the particular Portfolio for successive annual periods, provided
such continuance is specifically approved at least annually (a) by vote of a
majority of those members of the Fund's Board of Directors who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Fund's Board
of Directors or by vote of a majority of the outstanding voting securities of
such Portfolio. Notwithstanding the foregoing, this Agreement may be
terminated with respect to a Portfolio at any time, without the payment of any
penalty, by the Fund (by vote of the Fund's Board of Directors or by vote of a
majority of the outstanding voting securities of such Portfolio), or by Advisor
on sixty days' written notice. This Agreement will immediately terminate in
the event of its assignment. (As used in this Agreement, the terms "majority
of the outstanding voting securities," "interested persons" and "assignment"
shall have the same meaning as such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. Any amendment of this
Agreement shall be subject to the 1940 Act.
-5-
<PAGE> 6
11. Miscellaneous. The captions in this Agreement are included
for convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding on, and shall inure to the
benefit of, the parties hereto and their respective successors and shall be
governed by Delaware law without regard to principles of conflict of law.
12. Counterparts. This Agreement may be executed in counterparts
by the parties hereto, each of which shall constitute an original counterpart,
and all of which, together, shall constitute one Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
PROVIDENT INSTITUTIONAL FUNDS, INC.
By: /s/ Edward J. Roach
-------------------
Title: Vice President & Treasurer
PNC INSTITUTIONAL
MANAGEMENT CORPORATION
By: /s/ Charles B. Landreth
-----------------------
Title: Executive Vice President
-6-
<PAGE> 7
Schedule A
Short Duration Fund
Intermediate Duration Fund
Dated: February 17, 1995
-7-
<PAGE> 8
Schedule B
<TABLE>
<CAPTION>
Portfolio Annual Advisory
--------- Fee as Percentage of
Average Daily Net Assets
------------------------
<S> <C>
Short Duration Fund .40%
Intermediate Duration Fund .40%
</TABLE>
-8-
<PAGE> 1
SUB-ADVISORY AGREEMENT
AGREEMENT dated as of February 28, 1995 between PNC INSTITUTIONAL
MANAGEMENT CORPORATION, a Delaware corporation (herein called the "Investment
Advisor") and BlackRock Financial Management, Inc., a Delaware limited
partnership (herein called the "Sub-Advisor").
WHEREAS, the Investment Advisor is the investment advisor to Provident
Institutional Funds, Inc., (herein called the "Company"), an open-end,
diversified, management investment company registered under the Investment
Company Act of 1940, as amended; and
WHEREAS, the Sub-Advisor is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Investment Advisor wishes to retain the Sub-Advisor to
assist the Advisor in providing investment advisory services in connection with
the Company's Short Duration Fund (the "Portfolio"); and
WHEREAS, the Sub-Advisor is willing to provide such services to the
Investment Advisor upon the conditions and for the compensation set forth
below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, it is agreed
between the parties hereto as follows:
1. Appointment. The Investment Advisor hereby appoints the
Sub-Advisor its sub-advisor with respect to the Portfolio as provided for in
the Investment Advisory Agreement between the Investment Advisor and the
Company dated as of February 17, 1995 (such Agreement or the most recent
successor advisory agreement between such parties is herein called the
"Advisory Agreement"). The Sub-Advisor accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Delivery of Documents. The Investment Advisor shall provide
to the Sub-Advisor copies of the Company's most recent prospectus and statement
of additional information (including all supplements thereto) which relate to
any class of shares representing interests in the Portfolio (each such
prospectus and statement of additional information as presently in effect, and
as they shall from time to be amended and supplemented, is herein respectively
called a "Prospectus" and a "Statement of Additional Information").
3. Sub-Advisory Services to the Portfolio. Subject to the
supervision of the Investment Advisor, the Sub-Advisor will supervise the
day-to-day operations of the Portfolio and perform
<PAGE> 2
the following services: (i) provide investment research and credit analysis
concerning the Portfolio's investments, (ii) conduct a continual program of
investment of the Portfolio's assets, (iii) place orders for all purchases and
sales of the investments made with respect to the Portfolio's assets, and (iv)
maintain the books and records required in connection with its duties
hereunder. In addition, the Sub-Advisor will keep the Investment Advisor
informed of developments materially affecting the Company. The Sub-Advisor
will communicate to the Investment Advisor on each day that a purchase or sale
of a security is effected for the Portfolio (i) the name of the issuer, (ii)
the amount of the purchase or sale, (iii) the name of the broker or dealer, if
any, through which the purchase or sale will be effected, (iv) the CUSIP number
of the security, if any, and (v) such other information as the Investment
Advisor may reasonably require for purposes of fulfilling its obligations to
the Company under the Advisory Agreement. The Sub-Advisor will render to the
Company's Board of Directors such periodic and special reports as the
Investment Advisor may reasonably request. The Sub-Advisor will provide the
services rendered by it hereunder in accordance with the Portfolio's investment
objectives, policies and restrictions as stated in its Prospectus and Statement
of Additional Information.
4. Brokerage. The Sub-Advisor may place orders pursuant to its
investment determinations for the Portfolio either directly with the issuer or
with any broker or dealer. In connection with the selection of such brokers or
dealers and the placing of such orders with respect to assets of the Portfolio,
the Sub-Advisor is directed at all times to seek to obtain execution and prices
within the policy guidelines determined by the Company's Board of Directors and
set forth in the Prospectus or Statement of Additional Information. In no
instance will portfolio securities be purchased from or sold to the
Sub-Advisor, the Investment Advisor, the Company's principal distributor, or
any affiliate thereof, except to the extent permitted by SEC exemptive order or
by applicable law.
5. Compliance with Laws: Confidentiality. The Sub-Advisor agrees
that it will comply with all applicable Rules and Regulations of all Federal
and State regulatory agencies having jurisdiction over the Sub-Advisor in
performance of its duties hereunder (herein called the "Rules"). The
Sub-Advisor will treat confidentially and as proprietary information of the
Company all records and information relative to the Company and prior, present
or potential shareholders, and will not use such records and information for
any purpose other than performance of its responsibilities and duties
hereunder, except after prior notification to and approval in writing by the
Company, which approval shall not be unreasonably withheld and may not be
withheld where the Sub-Advisor may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information
by duly constituted authorities, or when so requested
-2-
<PAGE> 3
by the Company.
6. Control by Company's Board of Directors. Any recommendations
concerning the Portfolio's investment program proposed by the Sub-Advisor to
the Portfolio and the Investment Advisor pursuant to this Agreement, as well as
any other activities undertaken by the Sub-Advisor on behalf of the Portfolio
pursuant thereto, shall at all times be subject to any applicable directives of
the Board of Directors of the Company.
7. Services Not Exclusive. The Sub-Advisor's services hereunder
are not deemed to be exclusive, and the Sub-Advisor shall be free to render
similar services to others so long as its services under this Agreement are not
impaired thereby.
8. Books and Records. In compliance with the requirements of
Rule 31a-3 of the Rules, the Sub-Advisor hereby agrees that all records which
it maintains for the Company are the property of the Company and further agrees
to surrender promptly to the Company any such records upon the Company's
request. The Sub-Advisor further agrees to preserve for the periods prescribed
by Rule 31a-2, the records required to be maintained by the Sub-Advisor
hereunder pursuant to Rule 31a-1 of the Rules.
9. Expenses. During the term of this Agreement, the Sub-Advisor
will bear all expenses in connection with the performance of its services under
this Agreement. The Sub-Advisor shall not bear certain other expenses related
to the operation of the Company including, but not limited to: taxes,
interest, brokerage fees and commissions and any extraordinary expense items.
10. Compensation. For the services which the Sub-Advisor will
render to the Investment Advisor under this Agreement, the Investment Advisor
will pay to the Sub-Advisor on the first day of each month, a fee for the
previous month calculated daily, at an annual rate of 0.25% of the Portfolio's
average daily net assets. Notwithstanding anything to the contrary herein, the
Sub-Advisor will waive its subadvisory fee and reimburse expenses to the
extent of one-half of any fee waiver or expense reimbursement undertaken by the
Investment Advisor with respect to the Portfolio.
11. Limitation on Liability. The Sub-Advisor will not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Investment Advisor or by the Company in connection with the matters to which
this Agreement relates, except that it shall be liable to the Investment
Advisor for a loss resulting from a breach of fiduciary duty with respect to
the receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
-3-
<PAGE> 4
12. Duration and Termination. This Agreement shall become
effective on the date set forth above, following approval of this Agreement by
vote of a majority of the outstanding voting securities of the Portfolio and,
unless sooner terminated as provided herein, shall continue in effect for two
years. Thereafter, if not terminated, this Agreement shall continue with
respect to the Portfolio for successive one-year periods, provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Board of Directors of the Company who are not
parties to this Agreement or interested persons of the Company or any such
party, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Board of Directors of the Company or by vote of a
majority of the outstanding voting securities of the Portfolio; provided
however, that this Agreement may be terminated (i) by the Company at any time,
without the payment of any penalty, by the Board of Directors of the Company,
(ii) by vote of a majority of the outstanding voting securities of the
Portfolio, (iii) by the Investment Advisor, or (iv) by the Sub-Advisor, in all
cases on 60 days' written notice to the Investment Advisor. This Agreement
will also immediately terminate in the event of its assignment. (As used in
this Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meaning as such terms
have in the Investment Company Act of 1940, as amended.)
13. Amendment of this Agreement. No provision of this Agreement
may be changed, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, discharge
or termination is sought, and no amendment of this Agreement affecting the
Portfolio shall be effective until approved by vote of the holders of a
majority of the outstanding voting securities of the Portfolio.
14. Miscellaneous. The captions in this Agreement are included
for convenience of reference only and in no way define or delimit any
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Delaware law, without regard to principles of conflict of law.
-4-
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day and
year first above written.
PNC INSTITUTIONAL
MANAGEMENT CORPORATION
By:
-----------------------
Title:
BLACKROCK FINANCIAL MANAGEMENT, INC.
By:
-----------------
Title:
-5-
<PAGE> 1
SUB-ADVISORY AGREEMENT
AGREEMENT dated as of February 28, 1995 between PNC INSTITUTIONAL
MANAGEMENT CORPORATION, a Delaware corporation (herein called the "Investment
Advisor") and BlackRock Financial Management, Inc., a Delaware limited
partnership (herein called the "Sub-Advisor").
WHEREAS, the Investment Advisor is the investment advisor to Provident
Institutional Funds, Inc., (herein called the "Company"), an open-end,
diversified, management investment company registered under the Investment
Company Act of 1940, as amended; and
WHEREAS, the Sub-Advisor is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Investment Advisor wishes to retain the Sub-Advisor to
assist the Advisor in providing investment advisory services in connection with
the Company's Intermediate Duration Fund (the "Portfolio"); and
WHEREAS, the Sub-Advisor is willing to provide such services to the
Investment Advisor upon the conditions and for the compensation set forth
below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, it is agreed
between the parties hereto as follows:
1. Appointment. The Investment Advisor hereby appoints the
Sub-Advisor its sub-advisor with respect to the Portfolio as provided for in
the Investment Advisory Agreement between the Investment Advisor and the
Company dated as of February 17, 1995 (such Agreement or the most recent
successor advisory agreement between such parties is herein called the
"Advisory Agreement"). The Sub-Advisor accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided.
2. Delivery of Documents. The Investment Advisor shall provide
to the Sub-Advisor copies of the Company's most recent prospectus and statement
of additional information (including all supplements thereto) which relate to
any class of shares representing interests in the Portfolio (each such
prospectus and statement of additional information as presently in effect, and
as they shall from time to be amended and supplemented, is herein respectively
called a "Prospectus" and a "Statement of Additional Information").
3. Sub-Advisory Services to the Portfolio. Subject to the
supervision of the Investment Advisor, the Sub-Advisor will supervise the
day-to-day operations of the Portfolio and perform
<PAGE> 2
the following services: (i) provide investment research and credit analysis
concerning the Portfolio's investments, (ii) conduct a continual program of
investment of the Portfolio's assets, (iii) place orders for all purchases and
sales of the investments made with respect to the Portfolio's assets, and (iv)
maintain the books and records required in connection with its duties
hereunder. In addition, the Sub-Advisor will keep the Investment Advisor
informed of developments materially affecting the Company. The Sub-Advisor
will communicate to the Investment Advisor on each day that a purchase or sale
of a security is effected for the Portfolio (i) the name of the issuer, (ii)
the amount of the purchase or sale, (iii) the name of the broker or dealer, if
any, through which the purchase or sale will be effected, (iv) the CUSIP number
of the security, if any, and (v) such other information as the Investment
Advisor may reasonably require for purposes of fulfilling its obligations to
the Company under the Advisory Agreement. The Sub-Advisor will render to the
Company's Board of Directors such periodic and special reports as the
Investment Advisor may reasonably request. The Sub-Advisor will provide the
services rendered by it hereunder in accordance with the Portfolio's investment
objectives, policies and restrictions as stated in its Prospectus and Statement
of Additional Information.
4. Brokerage. The Sub-Advisor may place orders pursuant to its
investment determinations for the Portfolio either directly with the issuer or
with any broker or dealer. In connection with the selection of such brokers or
dealers and the placing of such orders with respect to assets of the Portfolio,
the Sub-Advisor is directed at all times to seek to obtain execution and prices
within the policy guidelines determined by the Company's Board of Directors and
set forth in the Prospectus or Statement of Additional Information. In no
instance will portfolio securities be purchased from or sold to the
Sub-Advisor, the Investment Advisor, the Company's principal distributor, or
any affiliate thereof, except to the extent permitted by SEC exemptive order or
by applicable law.
5. Compliance with Laws: Confidentiality. The Sub-Advisor agrees
that it will comply with all applicable Rules and Regulations of all Federal
and State regulatory agencies having jurisdiction over the Sub-Advisor in
performance of its duties hereunder (herein called the "Rules"). The
Sub-Advisor will treat confidentially and as proprietary information of the
Company all records and information relative to the Company and prior, present
or potential shareholders, and will not use such records and information for
any purpose other than performance of its responsibilities and duties
hereunder, except after prior notification to and approval in writing by the
Company, which approval shall not be unreasonably withheld and may not be
withheld where the Sub-Advisor may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information
by duly constituted authorities, or when so requested
-2-
<PAGE> 3
by the Company.
6. Control by Company's Board of Directors. Any recommendations
concerning the Portfolio's investment program proposed by the Sub-Advisor to
the Portfolio and the Investment Advisor pursuant to this Agreement, as well as
any other activities undertaken by the Sub-Advisor on behalf of the Portfolio
pursuant thereto, shall at all times be subject to any applicable directives of
the Board of Directors of the Company.
7. Services Not Exclusive. The Sub-Advisor's services hereunder
are not deemed to be exclusive, and the Sub-Advisor shall be free to render
similar services to others so long as its services under this Agreement are not
impaired thereby.
8. Books and Records. In compliance with the requirements of
Rule 31a-3 of the Rules, the Sub-Advisor hereby agrees that all records which
it maintains for the Company are the property of the Company and further agrees
to surrender promptly to the Company any such records upon the Company's
request. The Sub-Advisor further agrees to preserve for the periods prescribed
by Rule 31a-2, the records required to be maintained by the Sub-Advisor
hereunder pursuant to Rule 31a-1 of the Rules.
9. Expenses. During the term of this Agreement, the Sub-Advisor
will bear all expenses in connection with the performance of its services under
this Agreement. The Sub-Advisor shall not bear certain other expenses related
to the operation of the Company including, but not limited to: taxes,
interest, brokerage fees and commissions and any extraordinary expense items.
10. Compensation. For the services which the Sub-Advisor will
render to the Investment Advisor under this Agreement, the Investment Advisor
will pay to the Sub-Advisor on the first day of each month, a fee for the
previous month calculated daily, at an annual rate of 0.25% of the Portfolio's
average daily net assets. Notwithstanding anything to the contrary herein, the
Sub- Advisor will waive its subadvisory fee and reimburse expenses to the
extent of one-half of any fee waiver or expense reimbursement undertaken by the
Investment Advisor with respect to the Portfolio.
11. Limitation on Liability. The Sub-Advisor will not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Investment Advisor or by the Company in connection with the matters to which
this Agreement relates, except that it shall be liable to the Investment
Advisor for a loss resulting from a breach of fiduciary duty with respect to
the receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or from reckless disregard by it of its obligations or duties under
this Agreement.
-3-
<PAGE> 4
12. Duration and Termination. This Agreement shall become
effective on the date set forth above, following approval of this Agreement by
vote of a majority of the outstanding voting securities of the Portfolio and,
unless sooner terminated as provided herein, shall continue in effect for two
years. Thereafter, if not terminated, this Agreement shall continue with
respect to the Portfolio for successive one-year periods, provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Board of Directors of the Company who are not
parties to this Agreement or interested persons of the Company or any such
party, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Board of Directors of the Company or by vote of a
majority of the outstanding voting securities of the Portfolio; provided
however, that this Agreement may be terminated (i) by the Company at any time,
without the payment of any penalty, by the Board of Directors of the Company,
(ii) by vote of a majority of the outstanding voting securities of the
Portfolio, (iii) by the Investment Advisor, or (iv) by the Sub-Advisor, in all
cases on 60 days' written notice to the Investment Advisor. This Agreement
will also immediately terminate in the event of its assignment. (As used in
this Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meaning as such terms
have in the Investment Company Act of 1940, as amended.)
13. Amendment of this Agreement. No provision of this Agreement
may be changed, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, discharge
or termination is sought, and no amendment of this Agreement affecting the
Portfolio shall be effective until approved by vote of the holders of a
majority of the outstanding voting securities of the Portfolio.
14. Miscellaneous. The captions in this Agreement are included
for convenience of reference only and in no way define or delimit any
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Delaware law, without regard to principles of conflict of law.
-4-
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day and
year first above written.
PNC INSTITUTIONAL
MANAGEMENT CORPORATION
By:
-----------------------
Title:
BLACKROCK FINANCIAL MANAGEMENT, INC.
By:
-----------------
Title:
-5-
<PAGE> 1
February 17, 1995
PROVIDENT INSTITUTIONAL FUNDS, INC.
Re: Administration and Accounting Services Fees
Dear Sir/Madam:
This letter constitutes our revised and restated agreement
with respect to compensation to be paid to PFPC Inc. ("PFPC") for services
provided under the terms of an Administration and Accounting Services Agreement
dated February 4, 1994 between you (the "Fund," formerly known as Piper Trust
Funds Inc.) and PFPC. Pursuant to paragraph 11 of that Agreement, and in
consideration of the services to be provided to you, you will pay PFPC an
annual administration and accounting fee, to be calculated daily and paid
monthly. You will also reimburse PFPC for its out-of-pocket expenses incurred
on behalf of the Fund, including, but not limited to: postage and mailing,
telephone, telex, federal express and outside independent pricing service
charges, and record retention/storage.
The annual administration and accounting fee shall be an asset
based fee of .15% of each portfolio's average daily net assets; exclusive of
out-of-pocket expenses.
The fee for the period from the day of the year this fee
letter is entered into until the end of that year shall be prorated according
to the proportion which such period bears to the full annual period.
<PAGE> 2
If the foregoing accurately sets forth our agreement and you
intend to be legally bound thereby, please execute a copy of this letter and
return it to us.
Very truly yours,
PFPC INC.
By: /s/ George W. Gainer
Accepted:
PROVIDENT INSTITUTIONAL FUNDS, INC.
By: /s/ Edward J. Roach
<PAGE> 1
SHAREHOLDER SERVICE PLAN
OF
PROVIDENT INSTITUTIONAL FUNDS, INC.
SHORT DURATION FUND
PURSUANT TO RULE 12b-1
SHAREHOLDER SERVICE PLAN made as of the 17th day of February, 1995, by
and between Provident Institutional Funds, Inc., a Maryland corporation (the
"Fund"), on behalf of its Short Duration Fund, and Provident Distributors,
Inc., a Delaware corporation (the "Distributor").
W I T N E S S E T H :
WHEREAS, the Fund is a diversified open-end investment company
registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act"); and
WHEREAS, the Distributor is a securities firm engaged in the business
of selling shares of investment companies either directly to purchasers or
through other securities dealers; and
WHEREAS, the Fund has entered into a Distribution Agreement with the
Distributor, pursuant to which the Distributor will act as the principal
underwriter and representative of the Short Duration Fund in the offer and sale
of shares of common stock of the Short Duration Fund, par value $0.001 per
share (the "Short Duration Fund shares"), to the public; and
WHEREAS, the Fund desires to adopt this Short Duration Fund
Shareholder Service Plan (the "Plan") pursuant to Rule 12b-1 under the
Investment Company Act, pursuant to which the Fund will pay a service fee to
the Distributor with respect to the Short Duration Fund shares; and
WHEREAS, the Directors of the Fund have determined that there is a
reasonable likelihood that adoption of the Plan will benefit the Fund and its
shareholders.
NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby
agrees to the terms of, the Plan in accordance with Rule 12b-1 under the
Investment Company Act on the following terms and conditions:
<PAGE> 2
1. The Fund shall pay the Distributor a service fee under the Plan at
the end of each month at the annual rate of 0.10% of average daily net assets
of the Short Duration Fund shares to compensate the Distributor for shareholder
servicing activities with respect to Short Duration Fund shareholders.
2. The Distributor shall provide the Fund for review by the Board of
Directors, and the Directors shall review, at least quarterly, a written report
complying with the requirements of Rule 12b-1 regarding the disbursement of the
service fee during such period.
3. This Plan shall not take effect until it has been approved by a
vote of at least a majority, as defined in the Investment Company Act, of the
outstanding voting securities of the Short Duration Fund.
4. This Plan shall not take effect until it has been approved by
votes of a majority of both (a) the Directors of the Fund and (b) those
Directors of the Fund who are not "interested persons" of the Fund, as defined
in the Investment Company Act, and have no direct or indirect financial
interest in the operation of this Plan or any agreements related to it (the
"Rule 12b-1 Directors"), cast in person at a meeting or meetings called for the
purpose of voting on the Plan.
5. The Plan shall continue in effect for so long as such continuance
is specifically approved at least annually in the manner provided for approval
of the Plan in Paragraph 4.
6. The Plan may be terminated at any time by vote of a majority of
the Rule 12b-1 Directors, or by vote of a majority of the outstanding voting
securities of the Short Duration Fund.
7. The Plan may not be amended to increase materially the rate of
payments provided for herein unless such amendment is approved by at least a
majority, as defined in the Investment Company Act, of the outstanding voting
securities of the Short Duration Fund, and by the Directors of the Fund in the
manner provided for in Paragraph 4 hereof, and no material amendment to the
Plan shall be made unless approved in the manner provided for approval and
annual renewal in Paragraph 4 hereof. Any amendment shall be subject to any
limitations set forth in the applicable regulations of the National Association
of Securities Dealers, Inc.
8. While the Plan is in effect, the selection and nomination of
Directors who are not interested persons, as defined in the Investment Company
Act, of the Fund shall be committed to the discretion of the Directors who are
not interested persons.
9. The Fund shall preserve copies of the Plan and any related
agreements and all reports made pursuant to Paragraph 2 hereof, for a period of
not less than six years from the date of the Plan, or the agreements or such
report, as the case may be, the first two years in an easily accessible place.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed this Shareholder
Service Plan as of the date first above written.
PROVIDENT INSTITUTIONAL FUNDS, INC.
By /s/ Edward J. Roach
-------------------
Title: Vice President & Treasurer
PROVIDENT DISTRIBUTORS, INC.
By /s/ John P. Moran
-----------------
Title: Vice President
3
<PAGE> 1
SHAREHOLDER SERVICE PLAN
OF
PROVIDENT INSTITUTIONAL FUNDS, INC.
INTERMEDIATE DURATION FUND
PURSUANT TO RULE 12b-1
SHAREHOLDER SERVICE PLAN made as of the 17th day of February, 1995, by
and between Provident Institutional Funds, Inc., a Maryland corporation (the
"Fund"), on behalf of its Intermediate Duration Fund, and Provident
Distributors, Inc., a Delaware corporation (the "Distributor").
W I T N E S S E T H :
WHEREAS, the Fund is a diversified open-end investment company
registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act"); and
WHEREAS, the Distributor is a securities firm engaged in the business
of selling shares of investment companies either directly to purchasers or
through other securities dealers; and
WHEREAS, the Fund has entered into a Distribution Agreement with the
Distributor, pursuant to which the Distributor will act as the principal
underwriter and representative of the Intermediate Duration Fund in the offer
and sale of shares of common stock of the Intermediate Duration Fund, par value
$0.001 per share (the "Intermediate Duration Fund shares"), to the public; and
WHEREAS, the Fund desires to adopt this Intermediate Duration Fund
Shareholder Service Plan (the "Plan") pursuant to Rule 12b-1 under the
Investment Company Act, pursuant to which the Fund will pay a service fee to
the Distributor with respect to the Intermediate Duration Fund shares; and
WHEREAS, the Directors of the Fund have determined that there is a
reasonable likelihood that adoption of the Plan will benefit the Fund and its
shareholders.
NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby
agrees to the terms of, the Plan in accordance with Rule 12b-1 under the
Investment Company Act on the following terms and conditions:
<PAGE> 2
1. The Fund shall pay the Distributor a service fee under the Plan at
the end of each month at the annual rate of 0.10% of average daily net assets
of the Intermediate Duration Fund shares to compensate the Distributor for
shareholder servicing activities with respect to Intermediate Duration Fund
shareholders.
2. The Distributor shall provide the Fund for review by the Board of
Directors, and the Directors shall review, at least quarterly, a written report
complying with the requirements of Rule 12b-1 regarding the disbursement of the
service fee during such period.
3. This Plan shall not take effect until it has been approved by a
vote of at least a majority, as defined in the Investment Company Act, of the
outstanding voting securities of the Intermediate Duration Fund.
4. This Plan shall not take effect until it has been approved by
votes of a majority of both (a) the Directors of the Fund and (b) those
Directors of the Fund who are not "interested persons" of the Fund, as defined
in the Investment Company Act, and have no direct or indirect financial
interest in the operation of this Plan or any agreements related to it (the
"Rule 12b-1 Directors"), cast in person at a meeting or meetings called for the
purpose of voting on the Plan.
5. The Plan shall continue in effect for so long as such continuance
is specifically approved at least annually in the manner provided for approval
of the Plan in Paragraph 4.
6. The Plan may be terminated at any time by vote of a majority of
the Rule 12b-1 Directors, or by vote of a majority of the outstanding voting
securities of the Intermediate Duration Fund.
7. The Plan may not be amended to increase materially the rate of
payments provided for herein unless such amendment is approved by at least a
majority, as defined in the Investment Company Act, of the outstanding voting
securities of the Intermediate Duration Fund, and by the Directors of the Fund
in the manner provided for in Paragraph 4 hereof, and no material amendment to
the Plan shall be made unless approved in the manner provided for approval and
annual renewal in Paragraph 4 hereof. Any amendment shall be subject to any
limitations set forth in the applicable regulations of the National Association
of Securities Dealers, Inc.
8. While the Plan is in effect, the selection and nomination of
Directors who are not interested persons, as defined in the Investment Company
Act, of the Fund shall be committed to the discretion of the Directors who are
not interested persons.
9. The Fund shall preserve copies of the Plan and any related
agreements and all reports made pursuant to Paragraph 2 hereof, for a period of
not less than six years from the date of the Plan, or the agreements or such
report, as the case may be, the first two years in an easily accessible place.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed this Shareholder
Service Plan as of the date first above written.
PROVIDENT INSTITUTIONAL FUNDS, INC.
By /s/ Edward J. Roach
-------------------
Title: Vice President & Treasurer
PROVIDENT DISTRIBUTORS, INC.
By /s/ John P. Moran
-----------------
Title: Vice President
3
<PAGE> 1
SHORT DURATION PORTFOLIO
TOTAL RETURN
Aggregate Total Return
With Sales Load of: 0.00%
T= (ERV/P) - 1
WHERE: T = Total Return
ERV = Ending redeemable value at the end
of the period of a hypothetical
$1,000 investment made at the
beginning of the period.
P = A hypothetical initial payment of $1,000.
EXAMPLE:
Since Inception: (2/14/94 to 12/31/94)
(988.93/1000) - 1= (1.11)%
<PAGE> 1
INTERMEDIATE DURATION PORTFOLIO
TOTAL RETURN
Aggregate Total Return
With Sales Load of: 0.00%
T = (ERV/P) - 1
WHERE: T = Total Return
ERV = Ending redeemable value at the end
of the period of a hypothetical
$1,000 investment made at the
beginning of the period.
P = A hypothetical initial payment of $1,000.
EXAMPLE:
Since Inception: (2/14/94 to 12/31/94)
(963.56/1000) - 1 = (3.64)%
<PAGE> 1
To the Directors
Provident Institutional Funds, Inc.:
We consent to the use of our report included herein and to the references to
our firm under the headings of "Financial Highlights" and "Auditors" in the
Registration Statement and Prospectus.
/s/ KPMG Peat Marwick LLP
Philadelphia, PA
April 26, 1995
<PAGE> 1
Exhibit (23)(b)
CONSENT OF COUNSEL
PROVIDENT INSTITUTIONAL FUNDS, INC.
(Short Duration Fund and Intermediate Duration Fund)
We hereby consent to the use of our name and to the references
to our firm under the caption "Directors and Executive Officers" in the
Statement of Additional Information included in Post-Effective Amendment No. 4
to the Registration Statement (No. 33-70104) on Form N-1A under the Securities
Act of 1933, as amended, of Provident Institutional Funds, Inc. (Short Duration
Fund and Intermediate Duration Fund). This consent does not constitute a
consent under Section 7 of the Securities Act of 1933, and in consenting to the
use of our name and the references to our Firm under such captions, we have not
certified any part of the Registration Statement and do not otherwise come
within the categories of persons whose consent is required under Section 7 or
the rules and regulations of the Securities and Exchange Commission thereunder.
/s/ Drinker Biddle & Reath
--------------------------
DRINKER BIDDLE & REATH
Philadelphia, Pennsylvania
April 28, 1995
<PAGE> 1
TEMPORARY INVESTMENT FUND, INC.
TRUST FOR FEDERAL SECURITIES
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
PORTFOLIOS FOR DIVERSIFIED INVESTMENT
PROVIDENT INSTITUTIONAL FUNDS, INC.
POWER OF ATTORNEY
G. Willing Pepper, whose signature appears below, hereby constitutes
and appoints Edward J. Roach his true and lawful attorney and agent, with power
of substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorney and agent may deem
necessary or advisable or which may be required to enable Temporary Investment
Fund, Inc., Trust for Federal Securities, Municipal Fund for Temporary
Investment, Portfolios for Diversified Investment and Provident Institutional
Funds, Inc. (each a "Company") to comply with the Investment Company Act of
1940 as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments (including post-effective amendments) to each Company's Registration
Statement(s) pursuant to said Acts, including specifically, but without
limiting the generality of the foregoing, the power and authority to sign in
the name and on behalf of the undersigned as director or trustee and/or officer
of the relevant Company any and all such amendments filed with the Securities
and Exchange Commission under said Acts, and any other instruments or documents
related thereto, and the undersigned does hereby ratify and confirm all that
said attorney and agent shall do or cause to be done by virtue hereof.
/s/ G. Willing Pepper
----------------------
Date: April 18, 1995
<PAGE> 2
TEMPORARY INVESTMENT FUND, INC.
TRUST FOR FEDERAL SECURITIES
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
PORTFOLIOS FOR DIVERSIFIED INVESTMENT
PROVIDENT INSTITUTIONAL FUNDS, INC.
POWER OF ATTORNEY
Anthony M. Santomero, whose signature appears below, hereby
constitutes and appoints G. Willing Pepper and Edward J. Roach, and either of
them, his true and lawful attorneys and agents, with power of substitution or
resubstitution, to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them, may deem
necessary or advisable or which may be required to enable Temporary Investment
Fund, Inc., Trust for Federal Securities, Municipal Fund for Temporary
Investment, Portfolios for Diversified Investment and Provident Institutional
Funds, Inc. (each a "Company") to comply with the Investment Company Act of
1940 as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments (including post-effective amendments) to each Company's Registration
Statement(s) pursuant to said Acts, including specifically, but without
limiting the generality of the foregoing, the power and authority to sign in
the name and on behalf of the undersigned as director or trustee and/or officer
of the relevant Company any and all such amendments filed with the Securities
and Exchange Commission under said Acts, and any other instruments or documents
related thereto, and the undersigned does hereby ratify and confirm all that
said attorneys and agents, or either of them, shall do or cause to be done by
virtue hereof.
/s/ Anthony M. Santomero
-------------------------
Date: April 18, 1995
<PAGE> 3
TEMPORARY INVESTMENT FUND, INC.
TRUST FOR FEDERAL SECURITIES
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
PORTFOLIOS FOR DIVERSIFIED INVESTMENT
PROVIDENT INSTITUTIONAL FUNDS, INC.
POWER OF ATTORNEY
Philip E. Coldwell, whose signature appears below, hereby constitutes
and appoints G. Willing Pepper and Edward J. Roach, and either of them, his
true and lawful attorneys and agents, with power of substitution or
resubstitution, to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them, may deem
necessary or advisable or which may be required to enable Temporary Investment
Fund, Inc., Trust for Federal Securities, Municipal Fund for Temporary
Investment, Portfolios for Diversified Investment and Provident Institutional
Funds, Inc. (each a "Company") to comply with the Investment Company Act of
1940 as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments (including post-effective amendments) to each Company's Registration
Statement(s) pursuant to said Acts, including specifically, but without
limiting the generality of the foregoing, the power and authority to sign in
the name and on behalf of the undersigned as director or trustee and/or officer
of the relevant Company any and all such amendments filed with the Securities
and Exchange Commission under said Acts, and any other instruments or documents
related thereto, and the undersigned does hereby ratify and confirm all that
said attorneys and agents, or either of them, shall do or cause to be done by
virtue hereof.
/s/ Philip E. Coldwell
-----------------------
Date: April 18, 1995
<PAGE> 4
TEMPORARY INVESTMENT FUND, INC.
TRUST FOR FEDERAL SECURITIES
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
PORTFOLIOS FOR DIVERSIFIED INVESTMENT
PROVIDENT INSTITUTIONAL FUNDS, INC.
POWER OF ATTORNEY
Rodney D. Johnson, whose signature appears below, hereby constitutes
and appoints G. Willing Pepper and Edward J. Roach, and either of them, his
true and lawful attorneys and agents, with power of substitution or
resubstitution, to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them, may deem
necessary or advisable or which may be required to enable Temporary Investment
Fund, Inc., Trust for Federal Securities, Municipal Fund for Temporary
Investment, Portfolios for Diversified Investment and Provident Institutional
Funds, Inc. (each a "Company") to comply with the Investment Company Act of
1940 as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments (including post-effective amendments) to each Company's Registration
Statement(s) pursuant to said Acts, including specifically, but without
limiting the generality of the foregoing, the power and authority to sign in
the name and on behalf of the undersigned as director or trustee and/or officer
of the relevant Company any and all such amendments filed with the Securities
and Exchange Commission under said Acts, and any other instruments or documents
related thereto, and the undersigned does hereby ratify and confirm all that
said attorneys and agents, or either of them, shall do or cause to be done by
virtue hereof.
/s/ Rodney D. Johnson
----------------------
Date: April 18, 1995
<PAGE> 5
TEMPORARY INVESTMENT FUND, INC.
TRUST FOR FEDERAL SECURITIES
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
PORTFOLIOS FOR DIVERSIFIED INVESTMENT
PROVIDENT INSTITUTIONAL FUNDS, INC.
POWER OF ATTORNEY
Robert R. Fortune, whose signature appears below, hereby constitutes
and appoints G. Willing Pepper and Edward J. Roach, and either of them, his
true and lawful attorneys and agents, with power of substitution or
resubstitution, to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them, may deem
necessary or advisable or which may be required to enable Temporary Investment
Fund, Inc., Trust for Federal Securities, Municipal Fund for Temporary
Investment, Portfolios for Diversified Investment and Provident Institutional
Funds, Inc. (each a "Company") to comply with the Investment Company Act of
1940 as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments (including post-effective amendments) to each Company's Registration
Statement(s) pursuant to said Acts, including specifically, but without
limiting the generality of the foregoing, the power and authority to sign in
the name and on behalf of the undersigned as director or trustee and/or officer
of the relevant Company any and all such amendments filed with the Securities
and Exchange Commission under said Acts, and any other instruments or documents
related thereto, and the undersigned does hereby ratify and confirm all that
said attorneys and agents, or either of them, shall do or cause to be done by
virtue hereof.
/s/ Robert R. Fortune
----------------------
Date: April 21, 1995
<PAGE> 6
TEMPORARY INVESTMENT FUND, INC.
TRUST FOR FEDERAL SECURITIES
MUNICIPAL FUND FOR TEMPORARY INVESTMENT
PORTFOLIOS FOR DIVERSIFIED INVESTMENT
PROVIDENT INSTITUTIONAL FUNDS, INC.
POWER OF ATTORNEY
David R. Wilmerding, Jr., whose signature appears below, hereby
constitutes and appoints G. Willing Pepper and Edward J. Roach, and either of
them, his true and lawful attorneys and agents, with power of substitution or
resubstitution, to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them, may deem
necessary or advisable or which may be required to enable Temporary Investment
Fund, Inc., Trust for Federal Securities, Municipal Fund for Temporary
Investment, Portfolios for Diversified Investment and Provident Institutional
Funds, Inc. (each a "Company") to comply with the Investment Company Act of
1940 as amended, and the Securities Act of 1933, as amended ("Acts"), and any
rules, regulations or requirements of the Securities and Exchange Commission in
respect thereof, in connection with the filing and effectiveness of any and all
amendments (including post-effective amendments) to each Company's Registration
Statement(s) pursuant to said Acts, including specifically, but without
limiting the generality of the foregoing, the power and authority to sign in
the name and on behalf of the undersigned as director or trustee and/or officer
of the relevant Company any and all such amendments filed with the Securities
and Exchange Commission under said Acts, and any other instruments or documents
related thereto, and the undersigned does hereby ratify and confirm all that
said attorneys and agents, or either of them, shall do or cause to be done by
virtue hereof.
/s/ David R. Wilmerding, Jr.
-----------------------------
Date: April 18, 1995
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000913363
<NAME> EX27.1 PIPER SHORT DURATION FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 105251571
<INVESTMENTS-AT-VALUE> 101571566
<RECEIVABLES> 895103
<ASSETS-OTHER> 44607
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 102511276
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 607031
<TOTAL-LIABILITIES> 607031
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 107617158
<SHARES-COMMON-STOCK> 10757
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2043665)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3680005)
<NET-ASSETS> 101904245
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5240825
<OTHER-INCOME> 119937
<EXPENSES-NET> 491522
<NET-INVESTMENT-INCOME> 4869240
<REALIZED-GAINS-CURRENT> (2043665)
<APPREC-INCREASE-CURRENT> (3680005)
<NET-CHANGE-FROM-OPS> (854430)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4869240
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14574758
<NUMBER-OF-SHARES-REDEEMED> 3843841
<SHARES-REINVESTED> 25952
<NET-CHANGE-IN-ASSETS> 101904245
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 588695
<INTEREST-EXPENSE> 943
<GROSS-EXPENSE> 1008190
<AVERAGE-NET-ASSETS> 102388718
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .42
<PER-SHARE-GAIN-APPREC> (.53)
<PER-SHARE-DIVIDEND> (.42)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.47
<EXPENSE-RATIO> .50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000913363
<NAME> EX27.2 PIPER INTERMEDIATE DURATION
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 37277602
<INVESTMENTS-AT-VALUE> 35107961
<RECEIVABLES> 473176
<ASSETS-OTHER> 46218
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 35627355
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 237411
<TOTAL-LIABILITIES> 237411
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38237145
<SHARES-COMMON-STOCK> 3860
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (681420)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (2169641)
<NET-ASSETS> 35389944
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1918501
<OTHER-INCOME> 71890
<EXPENSES-NET> 175725
<NET-INVESTMENT-INCOME> 1814666
<REALIZED-GAINS-CURRENT> (681420)
<APPREC-INCREASE-CURRENT> (2169641)
<NET-CHANGE-FROM-OPS> (1036395)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1814666
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4369584
<NUMBER-OF-SHARES-REDEEMED> 535447
<SHARES-REINVESTED> 25954
<NET-CHANGE-IN-ASSETS> 35389944
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 191701
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 393839
<AVERAGE-NET-ASSETS> 32648436
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .46
<PER-SHARE-GAIN-APPREC> (.83)
<PER-SHARE-DIVIDEND> (.46)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.17
<EXPENSE-RATIO> .55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE> 1
DRINKER BIDDLE & REATH
REGIONAL PROTOTYPE
DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT
SPONSORED
BY
DRINKER BIDDLE & REATH
PHILADELPHIA, PENNSYLVANIA
[ FUND OFFICE RETIREMENT PROFIT-SHARING PLAN ]
NAME OF PLAN OF ADOPTING EMPLOYER
[ MUNICIPAL FUND FOR TEMPORARY INVESTMENT ]
NAME OF ADOPTING EMPLOYER
(REV. 06/94)
(C)DRINKER BIDDLE & REATH 1995
<PAGE> 2
TABLE OF CONTENTS
PART I - PLAN
<TABLE>
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Article I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Accrual Computation Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accrued Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Adjustment Factor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4 Administrative Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5 Adoption Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.6 Affiliated Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.7 Appropriate Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.8 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.9 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.10 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.11 Computation Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.12 Controlled Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.13 Defined Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.14 Defined Contribution Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.15 Determination Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.16 Determination Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.17 Disability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.18 Early Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.19 Earned Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.20 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.21 Elective Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.22 Elective Deferral Account(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.23 Elective Deferral Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.24 Eligibility Computation Period(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.25 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.26 Employee Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.27 Employee Pension Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.28 Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.29 Employer Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.30 Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.31 Employer Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.32 Employment Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.33 Entry Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.34 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.35 Excess Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.36 Family Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.37 Fiduciary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.38 Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>
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<S> <C> <C>
1.39 Hour of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.40 Hourly Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.41 Inactive Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.42 Insurance Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.43 Insurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.44 Investment Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.45 Key Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.46 Leased Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
1.47 Limitation Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
1.48 Limitation Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.49 Matching Account(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.50 Matching Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.51 Non-Highly Compensated Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.52 Non-Resident Alien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.53 Normal Retirement Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.54 Normal Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.55 One-Year Break In Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.56 Owner-Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.57 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.58 Participant Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.59 Participant Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.60 Permissive Aggregation Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.61 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.62 Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.63 Plan Sponsor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
1.64 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.65 Prior Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.66 Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.67 QVEC Account(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.68 Qualified Domestic Relations Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.69 Qualified Matching Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.70 Qualified Nonelective Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.71 Qualified Voluntary Employee Contributions . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.72 Qualifying Employer Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.73 Reemployment Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1.74 Required Aggregation Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.75 Rollover Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.76 Rollover Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.77 Salaried Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.78 Self-Employed Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.79 Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.80 Sponsoring Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.81 Spouse or Surviving Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.82 Taxable Wage Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.83 Taxable Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
1.84 Top-Heavy Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
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1.85 Top-Heavy Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
1.86 Top-Heavy Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.87 Transfer Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.88 Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.89 Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.90 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.91 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.92 Union Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.93 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.94 Vested Accrued Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
1.95 Vesting Computation Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.96 Welfare Benefit Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.97 Year of Service for Benefit Accrual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
1.98 Year of Service for Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
1.99 Year of Service for Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Article II PARTICIPATION UNDER PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.1 Adoption of Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.2 Eligibility Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.3 Additional Rules Relating to Plan Participation. . . . . . . . . . . . . . . . . . . . . . . 23
2.4 Plans Covering Owner-Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Article III CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.1 Employer Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.2 Participant Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.3 Qualified Voluntary Employee Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.4 Elective Deferral Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.5 Matching Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
3.6 Contributions Held in Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.7 Return of Employer Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.8 Limitations on Allocations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
3.9 Rollover Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
3.10 Transfers of Accounts from and to Other
Qualified Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
3.11 Top-Heavy Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Article IV ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
4.1 Separate Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Article V ALLOCATION OF CONTRIBUTIONS, EARNINGS AND FORFEITURES . . . . . . . . . . . . . . . . . . . . 50
5.1 Allocations of Contributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.2 Advice to Trustee re Allocations of Contributions and Direct Transfers. . . . . . . . . . . . 51
5.3 Valuations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.4 Allocation of Increases and Decreases. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.5 Forfeitures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
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Article VI INVESTMENT OF ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.1 Investment of Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.2 Insurance Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.3 Voting and Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Article VII BENEFITS AND DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.1 Benefit Determination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.2 Designation of Beneficiary and Election with Respect to
Death Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.3 Normal Retirement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.4 Early Retirement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.5 Participation after Normal Retirement Date. . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.6 Separation from Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.7 Disability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.8 Death. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.9 Commencement of Payments; Deferral of Payments; Minimum
Distribution Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
7.10 Withdrawals during Employment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
7.11 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
7.12 QVEC Withdrawals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.13 Incidental Benefit Rule. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.14 Joint and Survivor Annuity Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.15 Waiver of 30-day Notice Requirements for Certain Distributions . . . . . . . . . . . . . . . 84
Article VIII NONALIENATION OF BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
8.1 Benefits Not Alienable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
8.2 Special Provision with Respect to Qualified Domestic Relations
Orders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Article IX THE ADMINISTRATIVE COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
9.1 Structure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
9.2 Administrative Committee Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
9.3 Responsibilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
9.4 Contracting for Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
9.5 Expenses of Administrative Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Article X CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
10.1 Claims for Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
10.2 Appeals Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Article XI THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.1 Acceptance of Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.2 Resignation of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.3 Removal of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.4 Appointment of Successor Trustee upon Occurrence of Certain Events . . . . . . . . . . . . . . 88
11.5 Successor Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
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11.6 Meetings and Actions of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.7 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.8 Trustee's Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.9 General Powers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.10 Payments to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.11 Investment of Trust Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
11.12 Accounts, Reports and Governmental Filings. . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.13 Information to Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.14 Benefit Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.15 Trust Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.16 Participants Exclusively to Benefit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.17 Employment of Counsel, Agents, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
11.18 Compromise of Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.19 Suits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.20 Execution of Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.21 No Discrimination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.22 Decision of Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
11.23 Funding Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Article XII THE INSURER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
12.1 Insurer's Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
12.2 Information to Insurer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
12.3 Benefit Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
12.4 Annuities Must be Nontransferable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
12.5 Conflicts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
12.6 Distribution of Insurance Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
12.7 Conflict with Insurance Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
12.8 Dividends or Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Article XIII THE INVESTMENT MANAGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
13.1 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
13.2 Responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
13.3 Act in Interest of Participants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
13.4 Directions from Investment Manager. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Article XIV FIDUCIARY RESPONSIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
14.1 Fiduciary Duties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
14.2 Allocation of Responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
14.3 Exclusive Responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
14.4 Transfer or Maintenance of Indicia of Ownership of Plan
Assets Outside United States Prohibited. . . . . . . . . . . . . . . . . . . . . . . . . . . 94
14.5 Liability of Fiduciary for Breach of Co-Fiduciary. . . . . . . . . . . . . . . . . . . . . . 94
14.6 Prohibited Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
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Article XV PLAN AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
15.1 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
15.2 Limitations upon Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
15.3 Rights of Trustee upon Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
15.4 Significant Reduction in Rate of Future Benefit Accruals. . . . . . . . . . . . . . . . . . . 98
Article XVI PLAN TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
16.1 Right to Discontinue Contributions and/or to Terminate Plan and Trust. . . . . . . . . . . . 99
16.2 Termination of Plan on Happening of Certain Events. . . . . . . . . . . . . . . . . . . . . . 99
16.3 Continuance of Trust after Complete Discontinuance of
Contributions to Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
16.4 Distribution of Trust Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
16.5 Distributees whose Whereabouts are Unknown. . . . . . . . . . . . . . . . . . . . . . . . . . 100
Article XVII SUCCESSOR EMPLOYER AND MERGER OR CONSOLIDATION OF PLAN . . . . . . . . . . . . . . . . . . . 100
17.1 Successor to Employer under Plan and Trust. . . . . . . . . . . . . . . . . . . . . . . . . . 100
17.2 Merger or Consolidation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
Article XVIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
18.1 No Right to Employment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
18.2 Gender and Number. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
18.3 Bonding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
18.4 Agent for Service of Legal Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
18.5 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
18.6 Unclaimed Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
18.7 Reports Furnished to Participants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
18.8 Reports Available to Participant and Beneficiaries. . . . . . . . . . . . . . . . . . . . . . 102
18.9 Reports upon Request. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
18.10 Controlled Group Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
18.11 Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
18.12 Insurance and Indemnification for Liability. . . . . . . . . . . . . . . . . . . . . . . . . 103
18.13 No Retention of Interest in Trust Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
18.14 Termination of Plan and Trust under Rule Against Perpetuities. . . . . . . . . . . . . . . . 103
18.15 Notice to Interested Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
18.16 Effective Date of Adoption of Plan and Trust Agreement. . . . . . . . . . . . . . . . . . . . 104
18.17 Restatement of Existing Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
18.18 Individual Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
18.19 Failure of Qualification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Article XIX ADOPTION OF PLAN BY AFFILIATED EMPLOYERS . . . . . . . . . . . . . . . . . . . . . . . . . . 104
19.1 Adoption of Plan and Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
19.2 Withdrawal from Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
19.3 Exclusive Purpose of Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
19.4 Application of Withdrawal Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
19.5 Single Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
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19.6 Adopting Employer Appointed Agent of Adopting Affiliated Employers . . . . . . . . . . . . . . 106
PART II - ADOPTION AGREEMENTS
PROFIT-SHARING (401(K)) PLAN (REGIONAL PROTOTYPE PLAN NUMBER 001)
ADOPTION AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
MONEY PURCHASE PLAN (REGIONAL PROTOTYPE PLAN NUMBER 002) ADOPTION
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
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PART I
DRINKER BIDDLE & REATH
REGIONAL PROTOTYPE
DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT
ARTICLE I
DEFINITIONS
The following words and phrases, as used in the Plan and
Adoption Agreement, shall have the following meanings unless the context
clearly indicates otherwise:
1.1 ACCRUAL COMPUTATION PERIOD. "ACCRUAL COMPUTATION PERIOD"
shall mean the Plan Year except as otherwise elected in the applicable Adoption
Agreement.
1.2 ACCRUED BENEFIT. "ACCRUED BENEFIT" shall mean the amounts
credited to a Participant's Employer, Elective Deferral, Matching, Participant,
Rollover, Transfer and QVEC Accounts and other accounts (e.g., Qualified
Matching Contribution and Qualified Nonelective Contribution accounts)
including the proceeds of Insurance Contracts, if any, on the life of the
Participant.
1.3 ADJUSTMENT FACTOR. "ADJUSTMENT FACTOR" shall mean the
cost-of-living adjustment factor prescribed by the Secretary of the Treasury
under section 415(d) of the Code for years beginning after December 31, 1987,
as applied to such items and in such manner as the Secretary shall provide.
1.4 ADMINISTRATIVE COMMITTEE. "ADMINISTRATIVE COMMITTEE" shall
mean the committee appointed by the Employer to administer the Plan. The
name(s) of the member(s) of the Administrative Committee and his (their)
address(es) shall be indicated in the Adoption Agreement.
1.5 ADOPTION AGREEMENT. "ADOPTION AGREEMENT" shall mean the
document executed by the Employer and the Trustee under which the Employer has
elected to establish or continue a qualified retirement plan and trust under
the terms of this Plan and Trust Agreement. If the Employer desires to
establish a profit-sharing or a profit-sharing 401(k) plan, the Employer shall
adopt the Profit-Sharing (401(k)) Plan Adoption Agreement. If the Employer
desires to establish a money purchase plan, the Employer shall adopt the Money
Purchase Plan Adoption Agreement.
1.6 AFFILIATED EMPLOYER. "AFFILIATED EMPLOYER" shall mean the
Employer and any corporation which is a member of a controlled group of
corporations (as defined in section 414(b) of the Code) which includes the
Employer; any trade or business (whether or not incorporated) which is under
common control (as defined in section 414(c) of the Code) with the Employer;
any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in section 414(m) of the Code) which
includes the Employer; and any other entity required to be aggregated with the
Employer pursuant to regulations under section 414(o) of the Code.
1.7 APPROPRIATE FORM. "APPROPRIATE FORM" shall mean the form
prescribed or provided by the Administrative Committee for the particular
purpose.
(C) DRINKER BIDDLE & REATH 1995
<PAGE> 10
1.8 BENEFICIARY. "BENEFICIARY" shall mean the Surviving Spouse of
a Participant, but if there is no Surviving Spouse, or, if the Surviving Spouse
previously consented in a manner conforming to a qualified election as provided
in Article VII, then such other person or persons or legal entity as may be
designated by the Participant to receive benefits payable under the Plan after
the Participant's death, or the personal or legal representative of a deceased
Participant. Prior to August 23, 1984, "Beneficiary" shall mean such person or
persons or legal entity as may be designated by the Participant to receive
benefits payable under the Plan after the Participant's death, or the personal
or legal representative of a deceased Participant.
1.9 CODE. "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
1.10 COMPENSATION. "COMPENSATION" shall mean Limitation
Compensation as that term is defined in Section 1.47. For any Self-Employed
Person covered under the Plan, Compensation shall mean Earned Income.
Compensation shall include only that compensation which is actually paid to the
Participant during the determination period. Except as provided elsewhere in
the Plan, the determination period is the Accrual Computation Period elected by
the Employer in the Adoption Agreement. If no election is made, the
determination period is the Plan Year.
Notwithstanding the above, if elected by the Employer in the Adoption
Agreement, Compensation shall include any amount which is contributed by the
Employer pursuant to a salary reduction agreement and which is not includible
in the gross income of the Employee under sections 125, 402(e)(3), 402(h)(1)(B)
or 403(b) of the Code.
(A) LIMITATION FOR PLAN YEARS BEGINNING BEFORE JANUARY 1,
1994. Effective for Plan Years beginning on or after January 1, 1989, and
before January 1, 1994, the annual compensation of each Participant taken
into account for determining all benefits provided under the Plan for any
plan year shall not exceed $200,000, as adjusted by the Adjustment Factor
except that the dollar increase in effect on January 1 of any calendar year
is effective for plan years beginning in such calendar year and the first
adjustment to the $200,000 limitation is effective on January 1, 1990. If
the period for determining compensation used in calculating an Employee's
allocation for a determination period is a short plan year (i.e., shorter
than 12 months) the annual compensation limit is an amount equal to the
otherwise applicable compensation limit multiplied by the fraction, the
numerator of which is the number of months in the short plan year, and the
denominator of which is 12.
If Compensation for any prior determination period is taken
into account in determining an Employee's allocations or benefits for the
current determination period, the compensation for such prior period is subject
to the applicable annual compensation limit in effect for that prior period.
For this purpose, for periods beginning before January 1, 1990, the applicable
annual compensation limit is $200,000.
(B) LIMITATION FOR PLAN YEARS BEGINNING ON OR AFTER
JANUARY 1, 1994. In addition to other applicable limitations set forth in
the Plan, and notwithstanding any other provisions of the Plan to the
contrary, for plan years beginning on or after January 1, 1994, the annual
compensation of each Participant taken into account for determining all
benefits provided under the Plan for any plan year shall not exceed
$150,000, as adjusted for increases in the cost-of-living in accordance with
section 401(a)(17)(B) of the Code. The cost-of-living adjustment in effect
for a calendar year applies to any determination period beginning in such
calendar year.
If a determination period consists of fewer than 12 months,
the annual compensation limit is an amount equal to the otherwise applicable
annual compensation limit multiplied by a fraction, the numerator of which is
the number of months in the short determination period, and the denominator of
which is 12.
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For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under section 401(a)(17) of the
Code shall mean the OBRA '93 annual compensation limit set forth in this
provision.
If compensation for any prior determination period is taken
into account in determining a Participant's allocations for the current Plan
Year, the compensation for such prior determination period is subject to
applicable annual compensation limit in effect for that prior determination
period. For this purpose, in determining allocations in plan years
beginning on or after January 1, 1989, the annual compensation limit in
effect for determination periods beginning before that date is $200,000. In
addition, in determining allocations in plan years beginning on or after
January 1, 1994, the annual compensation limit in effect for determination
periods beginning before that date is $150,000.
In determining the Compensation of a Participant for purposes of the
limitations of Section 1.10(A) and (B), the rules of section 414(q)(6) of the
Code shall apply, except in applying such rules, the term "family" shall
include only the spouse of the Participant and any lineal descendants of the
Participant who have not attained age 19 before the close of the year. If, as
a result of the application of such rules, the adjusted annual compensation
limitation is exceeded, then (except for purposes of determining the portion of
Compensation up to the integration level if this Plan provides for permitted
disparity), the limitation shall be prorated among the affected individuals in
proportion to each such individual's Compensation as determined under this
Section 1.10 prior to the application of this limitation.
1.11 COMPUTATION PERIOD. "COMPUTATION PERIOD" shall mean any 12
consecutive month period.
1.12 CONTROLLED GROUP. "CONTROLLED GROUP" shall mean a group of
employers, of which the Employer is a member and which group constitutes:
(A) A controlled group of corporations (as defined in
section 414(b) of the Code);
(B) Trades or businesses (whether or not incorporated)
which are under common control (as defined in section 414(c) of the Code);
(C) Trades or businesses (whether or not incorporated)
which constitute an affiliated service group (as defined in section 414(m)
of the Code); or
(D) Any other entity required to be aggregated with the
Employer pursuant to section 414(o) of the Code and the Treasury regulations
thereunder.
Solely for the purpose of applying Section 3.8, the phrase "more than
50 percent" shall be substituted for the phrase "at least 80 percent" each
place it appears in section 1563(a)(1) of the Code.
If the Employer adopting the Plan is a member of a Controlled Group,
the Employer shall so indicate in the Adoption Agreement.
1.13 DEFINED BENEFIT PLAN. "DEFINED BENEFIT PLAN" shall mean any
Employee Pension Benefit Plan which is not a Defined Contribution Plan.
1.14 DEFINED CONTRIBUTION PLAN. "DEFINED CONTRIBUTION PLAN" shall
mean any Employee Pension Benefit Plan which provides for an individual account
for each Participant and for benefits based solely upon
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<PAGE> 12
the amount contributed to the Participant's account and any income, expenses,
gains and losses, and any forfeitures of accounts of other Participants which
may be allocated to such Participant's account.
1.15 DETERMINATION DATE. "DETERMINATION DATE" shall mean, with
respect to any Employee Pension Benefit Plan, except as otherwise provided in
Treasury regulations, the last day of the preceding plan year or, in the case
of the first plan year of any plan, the last day of such plan year.
1.16 DETERMINATION PERIOD. "DETERMINATION PERIOD" shall mean the
Plan Year containing the Determination Date and the four preceding Plan Years.
1.17 DISABILITY. "DISABILITY" shall mean the inability to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or to be
of long continued or indefinite duration. The permanence and degree of such
impairment shall be supported by medical evidence satisfactory to the
Administrative Committee. If elected by the Employer in the Adoption
Agreement, nonforfeitable contributions shall be made to the Plan on behalf of
each disabled Participant who is a Non-Highly Compensated Employee.
1.18 EARLY RETIREMENT DATE. "EARLY RETIREMENT DATE" shall mean the
date, if any, specified in the Adoption Agreement.
1.19 EARNED INCOME. "EARNED INCOME" shall mean the net earnings of
a Self-Employed Person from self-employment in the trade or business with
respect to which the Plan is established, for which personal services of the
Self-Employed Person are a material income-producing factor. Net earnings will
be determined without regard to items not included in gross income and the
deductions allocable to such items. Net earnings shall be reduced by
contributions by the Employer to a qualified plan to the extent deductible
under section 404 of the Code.
Net earnings shall be determined with regard to the deduction allowed
to the taxpayer by section 164(f) of the Code for Taxable Years beginning after
December 31, 1989.
1.20 EFFECTIVE DATE. "EFFECTIVE DATE" shall mean the date on which
the Employer's Plan becomes effective, as indicated in the Adoption Agreement.
1.21 ELECTIVE DEFERRALS. "ELECTIVE DEFERRALS" shall mean
contributions made to the Plan during the Plan Year by the Employer, at the
election of the Participant, in lieu of cash compensation and shall include
contributions made pursuant to a salary reduction agreement or other deferral
mechanism. Moreover, with respect to any taxable year of a Participant, such
Participant's Elective Deferral is the sum of all employer contributions made
on behalf of such Participant pursuant to an election to defer under any
qualified cash or deferred arrangement as described in section 401(k) of the
Code, any simplified employee pension cash or deferred arrangement as described
in section 402(h)(l)(B) of the Code, any eligible deferred compensation plan
under section 457 of the Code, any plan as described under section 501(c)(18)
of the Code, and any employer contributions made on the behalf of a Participant
for the purchase of an annuity contract under section 403(b) of the Code
pursuant to a salary reduction agreement. Elective Deferrals shall not include
any deferrals properly distributed as excess annual additions.
1.22 ELECTIVE DEFERRAL ACCOUNT(S). "ELECTIVE DEFERRAL ACCOUNT(S)"
shall mean the account established by the Administrative Committee with the
Trustee for each Participant, which account shall be invested as provided in
Article VI on behalf of the Participant for whom such Elective Deferral Account
has
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<PAGE> 13
been established, and to which Elective Deferral Contributions on behalf of
such Participant, and the earnings and losses thereon, shall be allocated.
1.23 ELECTIVE DEFERRAL CONTRIBUTIONS. "ELECTIVE DEFERRAL
CONTRIBUTIONS" shall mean Employer contributions through salary reduction under
Section 3.4.
1.24 ELIGIBILITY COMPUTATION PERIOD(S). "ELIGIBILITY COMPUTATION
PERIOD(S)" shall mean the Computation Period(s) determined under (A) or (B)
below.
(A) NORMAL RULE. Unless the Adoption Agreement provides
otherwise, the Eligibility Computation Period(s) shall be the Computation
Period(s) commencing on an Employee's Employment Commencement Date and the
anniversaries of the Employee's Employment Commencement Date.
(B) ALTERNATE RULE. If the Adoption Agreement so
provides, the initial Eligibility Computation Period shall be the
Computation Period commencing on an Employee's Employment Commencement Date
and the succeeding Eligibility Computation Period(s) shall commence with the
first Plan Year which begins prior to the first anniversary of the
Employee's Employment Commencement Date regardless of whether the Employee
is entitled to be credited with the number of Hours of Service required by
the Adoption Agreement (not to exceed 1,000 Hours of Service) during the
initial Eligibility Computation Period. An Employee who is credited with
the number of Hours of Service required by the Adoption Agreement (not to
exceed 1,000 Hours of Service) in both the initial Eligibility Computation
Period and the first Plan Year which commences prior to the first
anniversary of the Employee's initial Eligibility Computation Period shall
be credited with two Years of Service for Eligibility for purposes of
participation in the Plan.
Years of Service for Eligibility and One-Year Breaks In Service for
eligibility shall be measured by the same Eligibility Computation Periods.
This provision is not applicable if the elapsed time method is selected in
Section A.2.2(B)(2) of the Adoption Agreement.
1.25 EMPLOYEE. "EMPLOYEE" shall mean any employee of the Employer
or of any other employer required to be aggregated with such Employer under
sections 414(b), (c), (m) or (o) of the Code and shall also include any Leased
Employee deemed to be an employee of any employer described in the preceding
clause as provided in sections 414(n) or (o) of the Code.
1.26 EMPLOYEE CONTRIBUTIONS. "EMPLOYEE CONTRIBUTIONS" shall mean
contributions to the Plan made by a Participant during the Plan Year.
1.27 EMPLOYEE PENSION BENEFIT PLAN. "EMPLOYEE PENSION BENEFIT
PLAN" shall mean any plan described in section 415(k)(1) of the Code.
1.28 EMPLOYER. "EMPLOYER" shall mean the adopting individual(s) or
business entity(ies). For purposes of applying the provisions of sections 401,
410, 411, 415 and 416 of the Code, all employees of a Controlled Group shall be
treated as employed by a single employer.
1.29 EMPLOYER ACCOUNT. "EMPLOYER ACCOUNT" shall mean the account
established by the Administrative Committee with the Trustee for each
Participant, which shall be invested as provided in Article VI on behalf of the
Participant for whom such Employer Account has been established, and to which
the Employer Contributions on behalf of such Participant and the earnings and
losses thereon shall be allocated.
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<PAGE> 14
1.30 EMPLOYER CONTRIBUTIONS. "EMPLOYER CONTRIBUTIONS" shall mean
Employer contributions under Section 3.1 of the Plan.
1.31 EMPLOYER SECURITY. "EMPLOYER SECURITY" shall mean an employer
security (as such term is defined in section 407(d)(1) of ERISA) issued by an
Employer or other Controlled Group member.
1.32 EMPLOYMENT COMMENCEMENT DATE. "EMPLOYMENT COMMENCEMENT DATE"
shall mean the date on which an Employee first performs an hour of service.
For purposes of this Section 1.32, hour of service shall mean each hour for
which an Employee is paid or is entitled to payment for the performance of
services for the Employer.
1.33 ENTRY DATE. "ENTRY DATE" shall mean the date designated in
the Adoption Agreement as the date on which an Employee shall become an active
Participant in the Plan.
1.34 ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time.
1.35 EXCESS COMPENSATION. "EXCESS COMPENSATION" shall mean
Compensation in excess of the lesser of:
(A) The Taxable Wage Base; or
(B) The dollar amount set forth in the Adoption Agreement.
1.36 FAMILY MEMBER. "FAMILY MEMBER" shall mean an individual
described in section 414(q)(6)(B) of the Code.
1.37 FIDUCIARY. "FIDUCIARY" shall mean any person who:
(A) Exercises any discretionary authority or
discretionary control respecting management of the Plan or exercises any
authority or control respecting management or disposition of its assets;
(B) Renders investment advice for a fee or other
compensation, direct or indirect, with respect to any moneys or other
property of the Plan or has authority or responsibility to do so; or
(C) Has any discretionary authority or discretionary
responsibility in administering the Plan.
1.38 HIGHLY COMPENSATED EMPLOYEE. "HIGHLY COMPENSATED EMPLOYEE"
shall mean highly compensated active Employees and highly compensated former
Employees.
(A) ACTIVE EMPLOYEES.
(1) A highly compensated active Employee includes
any Employee who performs services for the Employer during the
determination year and who, during the look-back year:
(a) Received Compensation from the
Employer in excess of $75,000 (as adjusted by the Adjustment
Factor);
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<PAGE> 15
(b) Received Compensation from the
Employer in excess of $50,000 (as adjusted by the Adjustment
Factor) and was a member of the top-paid group for such year;
or
(c) Was an officer of the Employer and
received Compensation during such year that is greater than 50
percent of the dollar limitation in effect under section
415(b)(l)(A) of the Code. If elected by the Employer in the
Adoption Agreement, Section 1.38(A)(1)(a) shall be modified by
substituting $50,000 for $75,000 and Section 1.38(A)(1)(b)
shall be disregarded. This simplified definition of Highly
Compensated Employee shall apply only to Employers that
maintain significant business activities (and employ
Employees) in at least two significantly separate geographic
areas.
(2) A highly compensated active Employee also
includes any Employee who would be described in Section 1.38(A)(1)(a),
(b) or (c), if the term "determination year" were substituted for the
term "look-back year" and the Employee was one of the 100 Employees
who received the most Compensation from the Employer during the
determination year.
(3) A highly compensated active Employee also
includes any Employee who is a five-percent owner at any time during
the look-back year or determination year.
If elected by the Employer in the Adoption Agreement, Section
1.38(A)(1)(a) and (b) shall be modified by substituting $50,000 for $75,000
in Section 1.38(A)(1)(a) and by disregarding Section 1.38(A)(1)(b). This
simplified definition of Highly Compensated Employee shall apply only to
employers that maintain significant business activities (and employ
employees) in at least two significantly separate geographic areas.
If no officer has satisfied the Compensation requirement of
Section 1.38(A)(1)(c) above during either a determination year or look-back
year, the highest paid officer for such year shall be treated as a highly
compensated Employee.
For purposes of this Section 1.38, the determination year
shall be the Plan Year and the look-back year shall be the 12-month period
immediately preceding the determination year. However, the Employer may
elect, in the applicable Adoption Agreement, to make the look-back year
calculation for a determination year on the basis of the calendar year
ending with or within the applicable determination year (or, in the case of
a determination year that is shorter than 12 months, the calendar year
ending with or within the 12-month period ending with the end of the
applicable determination year). In such case, the Employer must make the
determination year calculation for the determination year on the basis of
the period (if any) by which the applicable determination year extends
beyond such calendar year (i.e., the lag period). If the Employer elects to
make the calendar year calculation election with respect to one plan, entity
or arrangement, such election must apply to all plans, entities and
arrangements of the Employer and such election must be provided for in the
plan. This election and the calculation are subject to the requirements and
provisions of Treas. Reg. Section 1.414(q)-1T Q- and A-14, as modified by
Proposed Treas. Reg. Section 1.414(q)-1T.
(B) FORMER EMPLOYEES. A highly compensated former
Employee includes any Employee who separated from service (or was deemed to
have separated) prior to the determination year, performs no service for the
Employer during the determination year, and was a highly compensated active
Employee for either the separation year or any determination year ending on
or after the Employee's 55th birthday.
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<PAGE> 16
If an Employee is, during a determination year or look-back
year, a Family Member of either a five-percent owner who is an active or
former Employee or a highly compensated Employee who is one of the ten most
highly compensated Employees ranked on the basis of Compensation paid by the
Employer during such year, then the Family Member and the five-percent owner
or top-ten highly compensated Employee shall be aggregated. In such case,
the Family Member and five-percent owner or top-ten highly compensated
Employee shall be treated as a single Employee receiving Compensation and
Plan contributions or benefits equal to the sum of such Compensation and
contributions or benefits of the Family Member and five-percent owner or
top-ten highly compensated Employee.
The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of Employees in the
top-paid group, the top 100 Employees, the number of Employees treated as
officers and the Compensation that is considered, shall be made in
accordance with section 414(q) of the Code and the Treasury regulations
thereunder.
1.39 HOUR OF SERVICE. "HOUR OF SERVICE" shall mean an hour of
service determined as follows:
(A) An "Hour of Service" shall mean:
(1) Each hour for which an Employee is paid, or
entitled to payment, for the performance of duties for the Employer;
(2) Each hour for which an Employee is paid, or
entitled to payment, by the Employer on account of a period of time
during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), layoff, jury duty,
military duty or leave of absence; and
(3) Each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the Employer,
provided that the same Hours of Service shall not be credited under
Section 1.39(A)(1) or Section 1.39(A)(2) and under Section 1.39(A)(3).
(B) Effective for Plan Years beginning after December 31,
1984, solely for purposes of determining whether a One-Year Break In
Service, as defined in Section 1.55, for participation and vesting purposes
has occurred in a Computation Period, an Employee who is absent from work
for maternity or paternity reasons shall receive credit for the Hours of
Service which would otherwise have been credited to such Employee but for
such absence, or in any case in which such Hours of Service cannot be
determined, eight Hours of Service per day of such absence. For purposes of
this Section 1.39(B), an absence from work for maternity or paternity
reasons means an absence:
(1) By reason of the pregnancy of the Employee;
(2) By reason of the birth of a child of the
Employee;
(3) By reason of the placement of a child with
the Employee in connection with the adoption of such child by such
Employee; or
(4) For purposes of caring for such child for a
period beginning immediately following such birth or placement.
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<PAGE> 17
The Hours of Service credited under this Section 1.39(B) shall be credited
(i) in the Computation Period in which the absence begins if the crediting
is necessary to prevent a One-Year Break In Service in that Computation
Period, or (ii) in all other cases, in the following Computation Period.
(C) Notwithstanding Section 1.39(A)(2),
(1) No more than 501 Hours of Service shall be
credited under Section 1.39(A)(2) to an Employee on account of any
single continuous period during which the Employee performs no duties
(whether or not such period occurs in a single Computation Period);
(2) Hours of Service shall not be credited under
Section 1.39(A)(2) to an Employee for payments made or due under a
plan maintained solely for the purpose of complying with any
applicable workers' compensation, unemployment compensation or
disability insurance laws;
(3) Hours of Service shall not be credited under
Section 1.39(A)(2) to an Employee for any payment which solely
reimburses him for medical or medically related expenses he has
incurred; and
(4) Hours of Service shall not be credited under
Section 1.39(A)(2) to an Employee for any payments made or due to him
under this Plan or any other pension or profit-sharing plan maintained
by the Employer.
(D) In the case of a payment which is made, or due, on
account of a period during which an Employee performs no duties, and which
results in the crediting of Hours of Service under Section 1.39(A)(2), or in
the case of an award or agreement for back pay, to the extent that such
award or agreement is made with respect to a period described in Section
1.39(A)(2), the number of Hours of Service to be credited shall be
determined in accordance with 29 CFR Section 2530.200b-2(b).
(E) Hours of Service described in Section 1.39(A)(1)
shall be credited to the Employee for the Computation Period in which the
duties are performed. Hours of Service under Section 1.39(A)(2) shall be
calculated and credited to service Computation Periods in accordance with 29
CFR Section 2530.200b-2 which is incorporated herein by this reference.
Hours of Service under Section 1.39(A)(3) shall be credited to the Employee
for the Computation Period(s) to which the award or agreement pertains
rather than to the Computation Period in which the award, agreement or
payment is made.
(F) This Section 1.39 shall not be construed so as to
alter, amend, modify, invalidate, impair or supersede any law of the United
States or any rule or regulation issued under any such law. The nature and
extent of credit for Hours of Service recognized under this Section 1.39
shall be determined under such law.
(G) In the case of an Employee who is on leave of absence
for service on active duty in the Armed Forces of the United States, such
Employee shall receive upon return to the service of the Employer, in
addition to credit for Hours of Service to which such Employee is entitled
under this Section 1.39, such other credit as may be prescribed by Federal
laws relating to military service and veterans' reemployment rights.
(H) Hours of Service shall be credited for employment
with other members of an affiliated service group (under section 414(m) of
the Code) and of other members of a Controlled Group of which the
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<PAGE> 18
adopting Employer is a member. Hours of Service shall also be credited for
any individual required under section 414(n) of the Code to be considered an
Employee of any employer aggregated under sections 414(b), 414(c), or 414(m)
of the Code or section 414(o) of the Code and the Treasury regulations
thereunder.
(I) Except as otherwise provided in Section 1.39(B), the
number of Hours of Service to be credited to an Employee in a Computation
Period shall be determined in the following manner:
(1) In the case of an Employee for whom the
Employer maintains records of his hours worked and hours for which
payment is made or due, the number of Hours of Service to be credited
to such Employee in a Computation Period shall be determined from such
records.
(2) In the case of an Employee for whom the
Employer does not maintain records of his hours worked and hours for
which payment is made or due, the number of Hours of Service to be
credited to such Employee in a Computation Period shall be determined
on the basis of periods of employment which shall be the payroll
periods of the Employer applicable to such Employee. An Employee
shall be credited with a number of Hours of Service, determined in
accordance with the following table, for each of his payroll periods
in which he actually has at least one Hour of Service:
<TABLE>
<CAPTION>
PAYROLL PERIOD HOURS OF SERVICE CREDITED
-------------- -------------------------
<S> <C>
Daily 10
Weekly 45
Semi-monthly 95
Monthly 190
</TABLE>
1.40 HOURLY EMPLOYEE. "HOURLY EMPLOYEE" shall mean any Employee
who is compensated by the Employer on an hourly-rated basis.
1.41 INACTIVE PARTICIPANT. "INACTIVE PARTICIPANT" shall mean any
Employee or former Employee who has ceased to be a Participant and on whose
behalf an account is maintained under the Plan.
1.42 INSURANCE CONTRACTS. "INSURANCE CONTRACTS" shall mean fixed
or variable annuities, endowments and any other form or type of life insurance
contract or combination thereof issued by an Insurer. Each Insurance Contract
shall be held and owned by the Trustee in accordance with the terms of the
Plan.
1.43 INSURER. "INSURER" shall mean any life insurance company
which is licensed to do business in the State where the Employer's principal
office is located.
1.44 INVESTMENT MANAGER. "INVESTMENT MANAGER" shall mean the
investment manager, if any, appointed by the Employer to manage and invest all
or any portion of the assets of the Plan. Such Investment Manager shall:
(A) Have the power to manage, acquire or dispose of any
Plan assets committed to it;
(B) Be registered as an investment adviser under the
Investment Advisers Act of 1940; and
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<PAGE> 19
(C) Have acknowledged in writing that it is a Fiduciary
with respect to the Plan and that it is bonded as required by ERISA.
The name(s) and address(es) of any Investment Manager(s) shall
be indicated in the Adoption Agreement.
1.45 KEY EMPLOYEE. "KEY EMPLOYEE" shall mean any Employee or
former Employee of the Employer who, at any time during the Determination
Period, is:
(A) An officer of the Employer having an annual
compensation which exceeds 50 percent of the dollar limitation under section
415(b)(1)(A) of the Code;
(B) An owner (or considered an owner under section 318 of
the Code) of one of the ten largest interests in the Employer if such
individual's compensation from the Employer exceeds 100 percent of the
dollar limitation under section 415(c)(1)(A) of the Code;
(C) A five-percent owner of the Employer; or
(D) A one-percent owner of the Employer having annual
compensation from the Employer of more than $150,000.
For the purposes of this Section 1.45, Key Employees shall
also include their beneficiaries.
Compensation means compensation as defined in Section A.1.47
of the Adoption Agreement, but including amounts contributed by the Employer
pursuant to a salary reduction arrangement which are excludable from the
Employee's gross income under sections 125, 402(e)(3), 402(h)(1)(B) or
403(b) of the Code.
For purposes of Section 1.45(A), no more than 50 Employees
(or, if less, the greater of three or ten percent of the Employees) shall be
treated as officers.
For purposes of Section 1.45(B), if two Employees have the
same interest in the Employer, the Employee having the greater amount of
compensation from the Employer shall be treated as having the larger
interest.
The determination of who is a Key Employee shall be made in
accordance with section 416(i)(l) of the Code and the Treasury regulations
thereunder.
1.46 LEASED EMPLOYEE. "LEASED EMPLOYEE" shall mean any person
(other than an employee of the recipient) who pursuant to an agreement between
the recipient and any other person ("leasing organization") has performed
services for the recipient (or for the recipient and related persons determined
in accordance with section 414(n)(6) of the Code) on a substantially full-time
basis for a period of at least one year, provided such services are of a type
historically performed by employees in the business field of the recipient
employer. Contributions or benefits provided a Leased Employee by the leasing
organization which are attributable to services performed for the recipient
employer shall be treated as provided by the recipient employer.
A Leased Employee shall not be considered an employee of the recipient
if:
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<PAGE> 20
(A) Such employee is covered by a money purchase pension plan
providing: (1) a nonintegrated employer contribution rate of at least ten
percent of compensation, as defined in section 415(c)(3) of the Code, but
including amounts contributed pursuant to a salary reduction agreement which
are excludable from the employee's gross income under section 125, section
402(e)(3), section 402(h)(1)(B) or section 403(b) of the Code, (2) immediate
participation, and (3) full and immediate vesting; and
(B) Leased Employees do not constitute more than 20 percent
of the recipient's nonhighly compensated workforce.
1.47 LIMITATION COMPENSATION. "LIMITATION COMPENSATION" shall mean
one of the following, as elected by the Employer in the Adoption Agreement:
(A) INFORMATION REQUIRED TO BE REPORTED UNDER SECTIONS 6041,
6051, AND 6052 OF THE CODE (WAGES, TIPS AND OTHER COMPENSATION AS REPORTED
ON FORM W-2). Limitation Compensation shall mean wages within the meaning
of section 3401(a) of the Code and all other payments of compensation to an
Employee by the Employer (in the course of the Employer's trade or business)
for which the Employer is required to furnish the Employee a written
statement under sections 6041(d), 6051(a)(3), and 6052 of the Code.
Limitation Compensation must be determined without regard to any rules under
section 3401(a) of the Code that limit the remuneration included in wages
based on the nature or location of the employment or the services performed
(such as the exception for agricultural labor in section 3401(a)(2) of the
Code).
(B) SECTION 3401(A) WAGES. Limitation Compensation shall
mean wages as defined in section 3401(a) of the Code for the purposes of
income tax withholding at the source but determined without regard to any
rules that limit the remuneration included in wages based on the nature or
location of the employment or the services performed (such as the exception
for agricultural labor in section 3401(a)(2) of the Code).
(C) 415 SAFE-HARBOR COMPENSATION. Limitation Compensation
shall mean wages, salaries, fees for professional services and other
amounts received (without regard to whether or not an amount is paid in
cash) for personal services actually rendered in the course of employment
with the Employer maintaining the Plan (including, but not limited to,
commissions paid salesmen, compensation on the basis of a percentage of
profits, commissions on insurance premiums, tips, bonuses, fringe benefits
and reimbursements or other expense allowances under a nonaccountable plan
(as described in Treas. Reg. Section 1.62-2(c)) and excluding the
following:
(1) Employer contributions to a deferred
compensation plan which are not includible in the Employee's gross
income for the taxable year in which contributed or Employer
contributions made on behalf of the Employee to a simplified employee
pension plan to the extent such contributions are deductible by the
Employee or any distributions from a deferred compensation plan;
(2) Amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or property) held
by the Employee either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
(3) Amounts realized from the sale, exchange or
other disposition of stock acquired under a qualified stock option;
and
(4) Other amounts which receive special tax
benefits, or Employer contributions (whether or not under a salary
reduction agreement) toward the purchase of an annuity contract
described
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<PAGE> 21
in section 403(b) of the Code (whether or not the contributions are
actually excludable from the gross income of the Employee).
For any Self-Employed Person, individual compensation shall mean
Earned Income.
Notwithstanding the above, Limitation Compensation for a Participant
in a Defined Contribution Plan who is permanently and totally disabled (as
defined in section 22(e)(3) of the Code) is the Limitation Compensation such
Participant would have received for the Limitation Year if the Participant had
been paid at the rate of Limitation Compensation paid immediately before
becoming permanently and totally disabled; such imputed Limitation Compensation
for the disabled Participant may be taken into account only if the Participant
is not a Highly Compensated Employee and contributions made on behalf of such
Participant are nonforfeitable when made.
For purposes of this Section 1.47, Limitation Compensation shall only
include compensation actually paid or made available during the applicable
Limitation Year. Notwithstanding the preceding sentence, an Employer may
include in Limitation Compensation amounts earned but not paid in a Limitation
Year because of the timing of pay periods and pay days if these amounts are
paid during the first few weeks of the next Limitation Year, the amounts are
included on a uniform and consistent basis with respect to all similarly
situated Participants, and no compensation is included in more than one
limitation period.
1.48 LIMITATION YEAR. "LIMITATION YEAR" shall mean the calendar
year unless another Computation Period is designated pursuant to a written
resolution adopted by the Employer.
1.49 MATCHING ACCOUNT(S). "MATCHING ACCOUNT(S)" shall mean the
account established by the Administrative Committee with the Trustee for each
Participant, which account shall be invested as provided in Article VI on
behalf of the Participant for whom such Matching Account has been established
and to which Matching Contributions on behalf of such Participant and the
earnings and losses thereon shall be allocated.
1.50 MATCHING CONTRIBUTION. "MATCHING CONTRIBUTION" shall mean any
contribution to the Plan made by the Employer for the Plan Year and allocated
to a Participant's Matching Account by reason of the Participant's Participant
Contributions or other Employee Contributions and/or by reason of the
Participant's Elective Deferral Contributions.
1.51 NON-HIGHLY COMPENSATED EMPLOYEE. "NON-HIGHLY COMPENSATED
EMPLOYEE" shall mean an Employee of the Employer who is neither a Highly
Compensated Employee nor a Family Member.
1.52 NON-RESIDENT ALIEN. "NON-RESIDENT ALIEN" shall mean any
non-resident alien (within the meaning of section 7701(b)(1)(B) of the Code)
who receives no earned income (within the meaning of section 911(d)(2) of the
Code), which constitutes United States source income (within the meaning of
section 861(a)(3) of the Code).
1.53 NORMAL RETIREMENT AGE. "NORMAL RETIREMENT AGE" shall mean the
age (not less than age 62 nor more than age 65) and/or time specified in the
Adoption Agreement.
1.54 NORMAL RETIREMENT DATE. "NORMAL RETIREMENT DATE" shall mean
the Valuation Date coincident with, or immediately following, the date on which
a Participant attains his Normal Retirement Age.
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1.55 ONE-YEAR BREAK IN SERVICE. "ONE-YEAR BREAK IN SERVICE" shall
mean a one-year break in service computed under the regular method or the
elapsed time method, as defined below, based on the election made in the
Adoption Agreement.
(A) REGULAR METHOD. A One-Year Break In Service shall
mean a Computation Period during which the Employee has not completed more
than the number of Hours of Service (not to exceed 500 Hours of Service)
indicated in the Adoption Agreement.
(B) ELAPSED TIME METHOD. A One-Year Break In Service
shall mean a one-year period of severance in which an Employee does not have
one Hour of Service.
(1) GENERAL RULES. For purposes of determining
an Employee's initial or continued eligibility to participate in the
Plan or the nonforfeitable interest in the Participant's account
balance derived from Employer contributions (except for "Periods of
Service" (as defined in Section 1.97(B)(4)) which may be disregarded
on account of the "rule of parity" described in Section 2.3 and
Section A.7.6(B) of the Adoption Agreement), an Employee shall receive
credit for the aggregate of all time period(s) commencing with the
Employee's Employment or Reemployment Commencement Date and ending on
the date a break in service begins. An Employee shall also receive
credit for any "Period of Severance" (as defined in Section
1.97(B)(6)) of less than 12 consecutive months. Fractional periods of
a year shall be expressed in terms of days.
Each Employee shall share in Employer contributions
for the period beginning on the date the Employee commences
participation under the Plan and ending on the date on which such
Employee severs employment with the Employer or is no longer a member
of an eligible class of Employees.
If the Employer is a member of an affiliated service group
(under section 414(m) of the Code), a controlled group of corporations
(under section 414(b) of the Code), a group of trades or businesses
under common control (under section 414(c)of the Code), or any other
entity required to be aggregated with the Employer pursuant to section
414(o) of the Code, service shall be credited for any employment for
any period of time for any other member of such group. Service shall
also be credited for any individual required under section 414(n) of
the Code or section 414(o) of the Code to be considered an Employee of
any Employer aggregated under section 414(b), (c), or (m) of the Code.
For purposes of this Section 1.55(B), a One-Year
Break In Service occurs if:
(a) An Employee severs service and does
not return within 12 months from the date of severance (e.g.,
the date on which he quits, is discharged or retires); or
(b) An Employee is absent from service
(e.g., by reason of Disability (except as otherwise provided
in the Plan), vacation, or leave of absence) and severs
employment during such absence (e.g., he quits, is discharged
or retires) and does not return to service on or before the
first anniversary of the date on which the Employee was first
absent.
(2) EXCEPTION FOR MATERNITY OR PATERNITY LEAVE.
In the case of an individual who is absent from work for maternity or
paternity reasons, the 12-consecutive month period beginning on the
first anniversary of the first date of such absence shall not
constitute a One-Year Break In Service.
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For purposes of this Section 1.55(B)(2), an absence from work for
maternity or paternity reasons means an absence:
(a) By reason of the pregnancy of an
individual;
(b) By reason of the birth of a child of
the individual;
(c) By reason of the placement of a
child with the individual in connection with the adoption of
such child by such individual; or
(d) For purposes of caring for such
child for a period beginning immediately following such birth
or placement.
In the case of a leave of absence due to service in the Armed Forces
or the United States, the Employee must return to active employment with the
Employer within the period prescribed under the reemployment provisions of the
Title 38, Chapter 43 of the United States Code. Any leave of absence
authorized by the Employer shall be granted under uniform rules so that all
Participants under similar circumstances shall be treated alike.
1.56 OWNER-EMPLOYEE. "OWNER-EMPLOYEE" shall mean a Self-Employed
Person who is a sole proprietor, or who is a partner owning more than ten
percent of either the capital or profits interest of the partnership.
1.57 PARTICIPANT. "PARTICIPANT" shall mean any Employee who, on
the first applicable Entry Date, has met the requirements for participation in
the Plan as provided in Article II.
1.58 PARTICIPANT ACCOUNT. "PARTICIPANT ACCOUNT" shall mean the
account established by the Administrative Committee with the Trustee for each
Participant, which shall be invested as provided in Article VI on behalf of the
Participant for whom such Participant Account has been established, and to
which the Participant Contributions and the earnings or losses thereon shall be
allocated.
1.59 PARTICIPANT CONTRIBUTIONS. "PARTICIPANT CONTRIBUTIONS" shall
mean Participant contributions under Section 3.2.
1.60 PERMISSIVE AGGREGATION GROUP. "PERMISSIVE AGGREGATION GROUP"
shall mean the Required Aggregation Group of plans plus any other plan or plans
of the Employer which, when considered as a group with the Required Aggregation
Group, would continue to satisfy the requirements of sections 401(a)(4) and 410
of the Code.
1.61 PLAN. "PLAN" shall mean the Employer's Defined Contribution
Plan and Trust Agreement as set forth in this document and in the applicable
Adoption Agreement, and as it may be amended from time to time. As adopted by
the Employer, the Plan shall be a profit-sharing plan, a profit-sharing 401(k)
plan or a money purchase plan, as indicated in the applicable Adoption
Agreement.
1.62 PLAN ADMINISTRATOR. "PLAN ADMINISTRATOR" shall mean the
Administrative Committee.
1.63 PLAN SPONSOR. "PLAN SPONSOR" shall mean the sponsor of the
Plan as designated in the Adoption Agreement.
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1.64 PLAN YEAR. "PLAN YEAR" shall mean the Computation Period
indicated in the Adoption Agreement. Plan Year shall also include any such
period completed before the Effective Date of the Plan.
1.65 PRIOR PLAN. "PRIOR PLAN" shall mean a prior qualified plan of
the Employer which is amended and restated into the Plan under the Adoption
Agreement applicable to such Employer.
1.66 PROFITS. "PROFITS" shall mean, in the case of a for-profit
Employer, the earnings and profits of the Employer for the Taxable Year but
before provision for income taxes (Federal, State and local) and before
deduction of Employer contributions hereunder or under any other pension or
profit-sharing plan of the Employer and/or accumulated earnings and profits as
computed by the Employer in accordance with generally accepted accounting
principles. Profits shall mean, in the case of a not-for-profit Employer, the
excess of such Employer's receipts over expenditures, whether such excess
results from the performance of such Employer's functions for which it is
recognized as exempt from Federal income tax, or from investments or other
business activity.
1.67 QVEC ACCOUNT(S). "QVEC ACCOUNT(S)" shall mean the account(s)
established by the Administrative Committee with the Trustee for each
Participant who has made Qualified Voluntary Employee Contributions to the
Plan, which QVEC Account(s) shall be invested as provided in Article VI on
behalf of the Participant for whom such QVEC Account(s) has (have) been
established, and to which the Participant's Qualified Voluntary Employee
Contributions have been and the earnings or losses thereon shall be, allocated.
1.68 QUALIFIED DOMESTIC RELATIONS ORDER. "QUALIFIED DOMESTIC
RELATIONS ORDER" shall mean a qualified domestic relations order as described
in section 414(p) of the Code.
1.69 QUALIFIED MATCHING CONTRIBUTION. "QUALIFIED MATCHING
CONTRIBUTION" shall mean a Matching Contribution which is subject to the
distribution and nonforfeitability requirements of section 401(k) of the Code
when made. Any Qualified Matching Contribution to the Plan shall be credited
to a separate Qualified Matching Contribution account maintained for the
Participant on whose behalf such Qualified Matching Contribution is made.
1.70 QUALIFIED NONELECTIVE CONTRIBUTION. "QUALIFIED NONELECTIVE
CONTRIBUTION" shall mean a contribution (other than Matching Contributions or
Qualified Matching Contributions) made by the Employer and allocated to
Participants' accounts that the Participant may not elect to receive in cash
until distributed from the Plan; that are 100 percent vested and nonforfeitable
when made; and that are distributable only in accordance with the distribution
provisions that are applicable to Elective Deferrals and Qualified Matching
Contributions; Qualified Nonelective Contributions to the Plan shall be
credited to a separate Qualified Nonelective Contribution account maintained
for the Participant on whose behalf such Qualified Nonelective Contribution is
made.
1.71 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS. "QUALIFIED
VOLUNTARY EMPLOYEE CONTRIBUTIONS" shall mean qualified voluntary employee
contributions within the meaning of section 219(e)(2) of the Code.
1.72 QUALIFYING EMPLOYER SECURITY. "QUALIFYING EMPLOYER SECURITY"
shall mean an Employer Security which is stock or a marketable obligation as
provided in sections 407(d)(5) and 407(e) of ERISA. The classes of Employer
Securities which are to be considered Qualifying Employer Securities may be
limited in the Adoption Agreement.
1.73 REEMPLOYMENT COMMENCEMENT DATE. "REEMPLOYMENT COMMENCEMENT
DATE" shall mean
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the first day, following a separation from service, on which an Employee
performs an hour of service. For purposes of this Section 1.73, an hour of
service shall mean each hour for which an Employee is paid or is entitled to
payment for the performance of services for the Employer.
1.74 REQUIRED AGGREGATION GROUP. "REQUIRED AGGREGATION GROUP"
shall mean:
(A) Each qualified plan of the Employer in which at least
one Key Employee participates or participated at any time during the
Determination Period (regardless of whether the Plan has terminated);and
(B) Any other qualified plan of the Employer which
enables a plan described in Section 1.74(A) to meet the requirements of
sections 401(a)(4) or 410 of the Code.
1.75 ROLLOVER ACCOUNT. "ROLLOVER ACCOUNT" shall mean the account
established by the Administrative Committee with the Trustee for each
Participant or other Employee who has made a Rollover Contribution to the Plan,
which Rollover Account shall be invested as provided in Article VI on behalf of
the Participant or other Employee for whom such Rollover Account has been
established and to which the Participant's or other Employee's Rollover
Contributions and the earnings and losses thereon shall be allocated.
1.76 ROLLOVER CONTRIBUTIONS. "ROLLOVER CONTRIBUTIONS" shall mean,
on or before December 31, 1992, "rollover amounts" which are contributed to the
Trustee on or before the 60th day immediately following the day the
contributing Participant or other Employee receives such "rollover amount".
The term "rollover amount" means:
(A) The entire amount (including money and any other
property) in an Individual Retirement Account or Individual Retirement
Annuity (as defined in section 408 of the Code) maintained for the benefit
of the Participant or other Employee making the Rollover Contribution, which
amount has been distributed from such individual retirement account or
individual retirement annuity; or
(B) Part or all of the amount received by such
Participant or other Employee from an employee's trust described in section
401(a) of the Code which is exempt from tax under section 501(a) of the
Code.
Such amount shall, however, only constitute a "rollover
amount" if the amount described in Section 1.76(A) or 1.76(B) is solely
attributable to a plan termination distribution, as that term is described in
section 402(a)(5) of the Code, or to a lump-sum distribution, as defined in
section 402(e)(4)(A) of the Code, or to an accumulated deductible employee
contribution distribution, as described in section 402(a)(5) of the Code, from
either a trust described in section 401(a) of the Code or from an annuity plan
described in section 403(a) of the Code, plus the earnings thereon. For
purposes of rolling-over property other than money under this Section 1.76, the
transfer of an amount equal to any portion of the proceeds from the sale of
property received in the distribution, including any excess in fair market
value of property on sale over the fair market value on distribution, shall
constitute a "rollover amount".
Effective January 1, 1993, "Rollover Contributions" shall mean
eligible rollover distributions within the meaning of section 402(c)(4) or
section 402(f)(2) of the Code, as in effect on and after January 1, 1993,
provided such eligible rollover distributions are transferred to the Plan
within 60 days of the date received by the Participant or other Employee.
Effective January 1, 1993, "Rollover Contributions" shall also mean such
eligible rollover distributions within the meaning of section 402(f)(2)(A) and
which are made in the form of a
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direct trustee-to-trustee transfer described in section 401(a)(31) of the Code
as in effect on and after January 1, 1993.
1.77 SALARIED EMPLOYEE. "SALARIED EMPLOYEE" shall mean any
Employee who is not an Hourly Employee.
1.78 SELF-EMPLOYED PERSON. "SELF-EMPLOYED PERSON" shall mean an
individual who has earned income for the Taxable Year from the trade or
business for which the Plan is established or an individual who would have had
earned income but for the fact the trade or business had no Profits for the
Taxable Year.
1.79 SERVICE. "SERVICE" shall mean service with the Employer or
any related employer who adopts this Plan. If the Employer adopting the Plan
is maintaining the Plan of a predecessor employer, then service for such
predecessor shall be treated as Service for the Employer. Service for a
predecessor employer shall otherwise be treated as Service for the Employer
only to the extent provided in Section 2.2 and in the Adoption Agreement.
In the event the Plan is an amendment and restatement of a Prior Plan
in accordance with Section 18.17, if the Prior Plan credited service for
eligibility, and/or vesting on the basis of the elapsed time method (as
described in Treas. Reg. Section 1.410(a)-7), unless and to the extent the
Employer continues to use the elapsed time method under this Plan, a
Participant shall receive Service credit as of the effective date of the
amendment, for a number of Years of Service for Eligibility and/or Years of
Service for Vesting (as applicable) equal to the number of 1-year periods of
service credited to the Participant under the Prior Plan as of the effective
date of the amendment. In addition, if the effective date of the amendment is
a date other than the first day of a Computation Period, a Participant shall
receive credit, in the Computation Period, which includes the effective date of
the amendment, for a number of Hours of Service determined under one of the
equivalencies set forth in Section 1.39(I) (unless the Employer maintains
records for the Participant on an hourly basis, in which case actual hours
shall be credited) for the fractional part of a period of service credited to
the Participant under the elapsed time method as of the effective date of the
amendment. The equivalency to be used for this purpose shall be selected by
the Employer in the Adoption Agreement.
1.80 SPONSORING ORGANIZATION. "SPONSORING ORGANIZATION" shall mean
DRINKER BIDDLE & REATH, a law firm which has its principal office at
Philadelphia National Bank Building, 1345 Chestnut Street, Philadelphia, PA
19107-3496.
1.81 SPOUSE or SURVIVING SPOUSE. "SPOUSE" or "SURVIVING SPOUSE"
shall mean the spouse or surviving spouse of a Participant, provided that a
former spouse shall be treated as the spouse or surviving spouse and a current
spouse shall not be treated as the spouse or surviving spouse to the extent
provided under a Qualified Domestic Relations Order.
1.82 TAXABLE WAGE BASE. "TAXABLE WAGE BASE" shall mean, with
respect to any Plan Year, the maximum amount of earnings which on the first day
of such Plan Year may be considered wages for such Plan Year under section
3121(a)(1) of the Code.
1.83 TAXABLE YEAR. "TAXABLE YEAR" shall mean the fiscal period
adopted by the Employer for filing its Federal income tax returns.
1.84 TOP-HEAVY PLAN. "TOP-HEAVY PLAN" shall mean this Plan if, for
any Plan Year beginning after December 31, 1983, any of the following
conditions exists:
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(A) If the Top-Heavy Ratio for this Plan exceeds 60
percent and this Plan is not part of any Required Aggregation Group or
Permissive Aggregation Group;
(B) If this Plan is a part of a Required Aggregation
Group but not part of a Permissive Aggregation Group and the Top-Heavy Ratio
for the Required Aggregation Group exceeds 60 percent.
(C) If this Plan is a part of a Required Aggregation
Group and part of a Permissive Aggregation Group and the Top-Heavy Ratio for
the Permissive Aggregation Group exceeds 60 percent.
1.85 TOP-HEAVY RATIO. "TOP-HEAVY RATIO" shall mean a fraction
determined as follows:
(A) If the Employer maintains one or more Defined
Contribution Plans (including any simplified employee pension plan) and the
Employer has not maintained any Defined Benefit Plan which, during the
Determination Period, has or has had accrued benefits, the Top-Heavy Ratio
for this Plan alone or for the Required or Permissive Aggregation Group, as
appropriate, is a fraction, the numerator of which is the sum of the account
balances of all Key Employees as of the Determination Date(s) (including any
part of any account balance distributed in the Determination Period), and
the denominator of which is the sum of all account balances (including any
part of any account balance distributed in the Determination Period), both
computed in accordance with section 416 of the Code and the Treasury
regulations thereunder. Both the numerator and denominator of the Top-
Heavy Ratio are increased to reflect any contribution not actually made as
of the Determination Date, but which is required to be taken into account on
that date under section 416 of the Code and the Treasury regulations
thereunder.
(B) If the Employer maintains one or more Defined
Contribution Plans (including any simplified employee pension plan) and the
Employer maintains or has maintained one or more Defined Benefit Plans which
during the Determination Period has or has had any accrued benefits, the
Top-Heavy Ratio for any Required or Permissive Aggregation Group as
appropriate is a fraction, the numerator of which is the sum of account
balances under the aggregated Defined Contribution Plan or Plans for all Key
Employees, determined in accordance with Section 1.85(A) above, and the
present value of accrued benefits under the aggregated Defined Benefit Plan
or Plans for all Key Employees as of the Determination Date(s), and the
denominator of which is the sum of the account balances under the aggregated
Defined Contribution Plan or Plans for all Participants, determined in
accordance with Section 1.85(A) above, and the present value of accrued
benefits under the Defined Benefit Plan or Plans for all Participants as of
the Determination Date(s), all determined in accordance with section 416 of
the Code and the Treasury regulations thereunder. The accrued benefits
under a Defined Benefit Plan in both the numerator and denominator of the
Top-Heavy Ratio are increased for any distribution of an accrued benefit
made in the Determination Period.
For purposes of Section 1.85(A) and Section 1.85(B) above, the
value of account balances and the present value of accrued benefits shall be
determined as of the most recent Top-Heavy Valuation Date that falls within or
ends with the 12-month period ending on the Determination Date, except as
provided in section 416 of the Code and the Treasury regulations thereunder for
the first and second plan years of a Defined Benefit Plan. The account
balances and accrued benefits of a Participant (1) who is not a Key Employee
but who was a Key Employee in a prior year, or (2) who has not been credited
with at least one hour of service with any Employer maintaining the plan at any
time during the Determination Period shall be disregarded. The calculation of
the Top-Heavy Ratio, and the extent to which distributions, rollovers, and
transfers are taken into account shall be made in accordance with section 416
of the Code and the Treasury regulations thereunder. Deductible employee
contributions shall not be taken into account for purposes of computing the
Top-Heavy
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Ratio. When aggregating plans, the value of account balances and accrued
benefits shall be calculated with reference to the Determination Dates that
fall within the same calendar year.
The accrued benefit of a Participant other than a Key Employee
shall be determined under the method, if any, that uniformly applies for
accrual purposes under all Defined Benefit Plans maintained by the Employer, or
if there is no such method, as if such benefit accrued not more rapidly than
the slowest accrual rate permitted under the fractional rule of section
411(b)(1)(C) of the Code.
Present value shall be determined in accordance with the
mortality and interest assumptions set forth in the Adoption Agreement.
1.86 TOP-HEAVY VALUATION DATE. "TOP-HEAVY VALUATION DATE" shall
mean the date selected by the Employer in the Adoption Agreement as of which
account balances or accrued benefits are valued for purposes of calculating the
Top-Heavy Ratio.
1.87 TRANSFER ACCOUNT. "TRANSFER ACCOUNT" shall mean the account
established by the Administrative Committee with the Trustee for each
Participant who has had transferred to the Plan assets from another qualified
plan pursuant to Section 3.10, which Transfer Account shall be invested as
provided in Article VI on behalf of the Participant for whom such Transfer
Account was established and the assets and the earnings and losses thereon have
been allocated.
1.88 TRUST. "TRUST" shall mean the legal entity established by
this Plan and Trust Agreement and by the Adoption Agreement by which the Plan
contributions shall be received, held, invested and disbursed to, or for the
benefit of, Participants or Beneficiaries of Participants, or both.
1.89 TRUST AGREEMENT. "TRUST AGREEMENT" shall mean the Trust
Agreement as set forth in this document and as it may be amended from time to
time.
1.90 TRUST FUND. "TRUST FUND" shall mean all funds received by the
Trustee and the property in which said funds shall be invested, together with
all income, profits and increments thereon less any withdrawals and losses
incurred thereon.
1.91 TRUSTEE. "TRUSTEE" shall mean the individual trustee(s)
(subject to the requirements of any applicable Federal Securities laws) or
corporate trustee(s) designated by the Employer in the Adoption Agreement.
1.92 UNION EMPLOYEE. "UNION EMPLOYEE" shall mean any Employee who
is included in a unit of employees covered by an agreement which the Secretary
of Labor finds to be a collective bargaining agreement between the Employer and
a bargaining representative of such person, if there is evidence that
retirement benefits were the subject of good faith bargaining between such
bargaining representative and the Employer.
1.93 VALUATION DATE. "VALUATION DATE" shall mean the last day of
each Plan Year and such other date or dates as may be provided for in the
applicable Adoption Agreement.
1.94 VESTED ACCRUED BENEFIT. "VESTED ACCRUED BENEFIT" shall mean
that portion of a Participant's Accrued Benefit which has become nonforfeitable
under the Plan.
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1.95 VESTING COMPUTATION PERIOD. "VESTING COMPUTATION PERIOD"
shall mean the Computation Period measured by the Plan Year. Years of Service
for Vesting and One-Year Breaks In Service for vesting shall be measured by the
Vesting Computation Period.
1.96 WELFARE BENEFIT FUND. "WELFARE BENEFIT FUND"shall mean a
welfare benefit fund as defined in section 419(e) of the Code.
1.97 YEAR OF SERVICE FOR BENEFIT ACCRUAL. "YEAR OF SERVICE FOR
BENEFIT ACCRUAL" shall mean any Year of Service for Benefit Accrual computed
under the regular method or the elapsed time method, as defined below, based on
the election made in the Adoption Agreement.
(A) REGULAR METHOD. A Year of Service for Benefit
Accrual shall mean any Accrual Computation Period during which a Participant
has completed not less than the number of Hours of Service (not to exceed
1,000 Hours of Service) with the Employer indicated in the Adoption
Agreement. If the Participant has completed a Year of Service for Benefit
Accrual but is not in the service of the Employer at the end of the Accrual
Computation Period, a Year of Service for Benefit Accrual shall be credited
except to the extent otherwise provided in Section 2.3(G), Section 3.11 and
in the Adoption Agreement.
(B) ELAPSED TIME METHOD. A Year of Service for Benefit
Accrual shall mean a "Period of Service," as defined below, (which shall be
the equivalent of a Year of Service for Benefit Accrual under the regular
method) with the Employer based on a Participant's actual period of
employment with the Employer, irrespective of the number of hours actually
worked during such period and during which the Participant completes 12
"Months of Service" as defined below. All periods of employment with the
Employer, including "Periods of Severance," as defined below, of less than
12 consecutive months shall be aggregated unless there is a "One-Year Period
of Severance". A "Period of Service" shall be credited for each completed
12 months of service (365 days) with the Employer, which need not be
consecutive. A partial Year of Service for Benefit Accrual shall be
credited for any "Period of Service" with the Employer of less than 12
months calculated to the nearest 1/12th based on a fraction, where the
numerator shall be the actual "Months of Service" and the denominator shall
be 12 "Months of Service". For purposes of determining "Periods of Service"
under the elapsed time method, the following terms shall apply:
(1) "DATE OF SEVERANCE (TERMINATION)" shall mean
the earlier of:
(a) The actual date a Participant quits,
is discharged, dies or retires; or
(b) The first anniversary of the date a
Participant is absent from work with the Employer (with or
without pay) for any other reason.
(2) "ELAPSED TIME" shall mean the total "Period
of Service" which has elapsed between a Participant's Employment
Commencement Date or Reemployment Commencement Date with the Employer
and "Date of Severance (Termination)" by the Employer, including
"Periods of Severance" where a "One-Year Period of Severance" does not
occur.
(3) "HOUR OF SERVICE" shall mean each hour for
which an Employee is paid or entitled to payment for the performance
of duties for the Employer.
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(4) "PERIOD OF SERVICE" shall mean each completed
12 "Months of Service" (whether or not consecutive) during the total
"Elapsed Time" while a Participant is employed by the Employer,
regardless of the number of hours worked.
(5) "MONTH OF SERVICE" shall mean 30 days of
"Elapsed Time".
(6) "PERIOD OF SEVERANCE" shall mean the time
between the actual "Date of Severance (Termination)" by the Employer,
as defined above, and the subsequent date, if any, on which the
Participant performs an "Hour of Service", as defined above, with the
Employer.
(7) "ONE-YEAR PERIOD OF SEVERANCE" shall mean a
12-month period following a Participant's "Date of Severance
(Termination)", as defined above, in which a Participant does not have
one "Hour of Service" with the Employer.
1.98 YEAR OF SERVICE FOR ELIGIBILITY. "YEAR OF SERVICE FOR
ELIGIBILITY" shall mean any Eligibility Computation Period in which a
Participant has completed not less than the number of Hours of Service (not to
exceed 1,000 Hours of Service) indicated in the Adoption Agreement. For
purposes of this Section 1.98, Service with a Predecessor Employer shall be
included to the extent provided in Sections 1.79 and 2.2 and in the applicable
Adoption Agreement. If less than one Year of Service for Eligibility is
required for participation in the Plan, the eligibility period shall be
computed without regard to the number of Hours of Service completed. This
provision is not applicable if the elapsed time method is selected in Section
A.2.2(B)(2) of the Adoption Agreement.
1.99 YEAR OF SERVICE FOR VESTING. "YEAR OF SERVICE FOR VESTING"
shall mean any Year of Service for Vesting computed under the regular method or
the elapsed time method, as defined below, based on the election made in the
Adoption Agreement.
(A) REGULAR METHOD. A Year of Service for Vesting shall
mean any Vesting Computation Period indicated in the Adoption Agreement
during which an Employee has completed not less than the number of Hours of
Service (not to exceed 1,000 Hours of Service) with the Employer indicated
in the Adoption Agreement.
(B) ELAPSED TIME METHOD. A Year of Service for Vesting
shall mean a "Period of Service", as defined in Section 1.97(B)(4), (which
shall be the equivalent of a Year of Service for Vesting under the regular
method) with the Employer based on an Employee's actual period of employment
with the Employer, irrespective of the number of hours actually worked
during such period and during which the Employee has completed 12 "Months of
Service" as defined in Section 1.97(B)(5) with the Employer. All periods of
employment with the Employer, including "Periods of Severance", as defined
in Section 1.97(B)(6), of less than 12 consecutive months shall be
aggregated unless there is a "One-Year Period of Severance", as defined in
Section 1.97(B)(7). A "Period of Service" shall be credited for each
completed 12 "Months of Service" (365 days) with the Employer, which need
not be consecutive. A partial Year of Service for Vesting shall be credited
for any "Period of Service" with the Employer of less than 12 months
calculated to the nearest 1/12th based on a fraction, where the numerator
shall be the actual "Months of Service" and the denominator shall be 12
"Months of Service". For purposes of this Section 1.99, Service with a
predecessor employer shall be included to the extent provided in Sections
1.79 and 2.2 and in the Adoption Agreement.
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ARTICLE II
PARTICIPATION UNDER PLAN
2.1 ADOPTION OF PLAN. An Employer shall adopt the Plan by
executing the Adoption Agreement.
2.2 ELIGIBILITY REQUIREMENTS. To be eligible for participation in
the Plan, an Employee must satisfy both of the following eligibility
requirements:
(A) The Employee must be a member of an eligible class of
Employees as specified by the Employer in the Adoption Agreement; and
(B) The Employee must have completed the period of
Service and attained the age specified by the Employer in the Adoption
Agreement.
Upon satisfaction of the requirements of Sections 2.2(A) and 2.2(B) as
specified in the Adoption Agreement, an Employee shall become a Participant in
the Plan on the Entry Date specified in the Adoption Agreement, unless the
Employee separated from service with the Employer before the Entry Date. An
Employee who has met all the requirements for eligibility, as set forth in this
Article II and in the Adoption Agreement, but who separates from service with
the Employer before the Entry Date and has not been rehired before the Entry
Date, shall become a Participant in the Plan on his Reemployment Commencement
Date. In the case of any such eligible Employee who is rehired before the
Entry Date, such eligible Employee shall become a Participant on such Entry
Date. Employees who have completed such requirements prior to the Effective
Date shall become Participants as of the Effective Date. Except as otherwise
provided in Section 1.79, service with a predecessor employer shall be included
as Service with the Employer for purposes of eligibility to participate under
the Plan only to the extent provided in the Adoption Agreement and to the
extent required by the Secretary of the Treasury or his delegate.
2.3 ADDITIONAL RULES RELATING TO PLAN PARTICIPATION. The
following additional rules relating to the Plan Participation apply:
(A) EMPLOYEES REQUIRED TO COMPLETE MORE THAN ONE YEAR OF
SERVICE FOR ELIGIBILITY. If an Employee who is required to complete more
than one Year of Service for Eligibility as an eligibility requirement has a
One-Year Break In Service before satisfying such requirement, Service prior
to such Break shall be disregarded.
(B) REHIRED FORMER PARTICIPANTS WITH NONFORFEITABLE
RIGHTS. A former Participant shall become a Participant immediately upon
his return to the employ of the Employer, if such former Participant had a
nonforfeitable right to all or a portion of his Employer Account at the time
of his termination.
(C) REHIRED FORMER PARTICIPANTS WITHOUT NONFORFEITABLE
RIGHTS. A former Participant who did not have a nonforfeitable right to any
portion of his Employer Account at the time of his termination shall be
considered, upon his reemployment, a new Employee for eligibility purposes,
if the number of consecutive One-Year Breaks In Service equals or exceeds
the greater of (1) five or (2) the aggregate number of Years of Service for
Eligibility before such Breaks. If such former Participant's Years of
Service for Eligibility before his termination may not be disregarded
pursuant to the preceding sentence, such former Participant shall
participate immediately upon his reemployment.
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(D) PARTICIPANTS WHO BECOME INELIGIBLE EMPLOYEES. In the
event a Participant becomes ineligible to participate because he is no
longer a member of an eligible class of Employees, but has not incurred a
One-Year Break In Service, such Employee shall participate immediately upon
his return to an eligible class of Employees. If such Participant incurs a
One-Year Break In Service, his eligibility to participate shall be
determined pursuant to Section 2.3(B) or 2.3(C).
(E) INELIGIBLE EMPLOYEES WHO BECOME ELIGIBLE. In the
event an Employee who is not a member of the eligible class of Employees
becomes a member of the eligible class, such Employee shall participate
immediately, if such Employee has satisfied the minimum age and service
requirements and would have previously become a Participant had he been in
the eligible class.
(F) DURATION OF PARTICIPATION. After an Employee becomes
a Participant in the Plan, the Employee's active participation shall
continue until the earlier of the Participant's death, retirement,
Disability, or termination of employment with the Employer. However, except
as otherwise provided in Section 3.11 and in the Adoption Agreement, no
Participant shall share in Employer Contributions in any Plan Year in which
such Participant does not complete a Year of Service for Benefit Accrual and
meet the other eligibility requirements of Sections 2.2 and 2.3.
(G) PARTICIPANTS WHO SEPARATE BEFORE END OF PLAN YEAR.
Subject to Section 3.11, a Participant whose employment is terminated before
the end of a Plan Year but after he has completed the number of Hours of
Service required for a Year of Service for Benefit Accrual shall share in
Employer contributions for such Plan Year only if the Adoption Agreement so
provides.
(H) LEASED EMPLOYEES.
(1) GENERAL. If the Employer has Leased
Employees, such Leased Employees shall participate in the Plan only
if, and to the extent, provided in the Adoption Agreement of such
Employer.
(2) SAFE-HARBOR. Notwithstanding any other
provisions of the Plan, for purposes of determining the number or
identity of Highly Compensated Employees or for purposes of the
pension requirements of section 414(n)(3) of the Code, the Employees
of the Employer shall include individuals defined as Employees in
Section 1.25. This provision was effective December 31, 1986.
2.4 PLANS COVERING OWNER-EMPLOYEES. If this Plan, as adopted by
the applicable Adoption Agreement, provides contributions or benefits for one
or more Owner-Employees who control both the business for which this Plan, as
adopted by the applicable Adoption Agreement, is established and one or more
other trades or businesses, this Plan and the plan established for other trades
or businesses must, when looked at as a single plan, satisfy sections 401(a)
and (d) of the Code for the employees of this and all other trades or
businesses.
If the Plan, as adopted by the applicable Adoption Agreement, provides
contributions or benefits for one or more Owner-Employees who control one or
more other trades or businesses, the employees of the other trades or
businesses must be included in a plan which satisfies sections 401(a) and (d)
of the Code and which provides contributions and benefits not less favorable
than provided for Owner-Employees under this Plan.
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If an individual is covered as an Owner-Employee under the plans of two or more
trades or businesses which are not controlled and the individual controls a
trade or business, then the contributions or benefits of the employees under
the plan of the trades or businesses which are controlled must be as favorable
as those provided for him under the most favorable plan of the trade or
business which is not controlled.
For purposes of this Section 2.4, an Owner-Employee, or two or more
Owner-Employees, will be considered to control a trade or business if the
Owner-Employee, or two or more Owner-Employees together:
(A) Own the entire interest in an unincorporated trade or
business; or
(B) In the case of a partnership, own more than 50
percent of either the capital interest or the profits interest in the
partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or more
Owner-Employees shall be treated as owning any interest in a partnership which
is owned, directly or indirectly, by a partnership which such Owner-Employee,
or such two or more Owner-Employees, are considered to control within the
meaning of the preceding sentence.
ARTICLE III
CONTRIBUTIONS
3.1 EMPLOYER CONTRIBUTIONS. Employer Contributions shall be
determined as follows:
(A) MONEY PURCHASE PLAN. If the Plan is a money purchase
plan, this Section 3.1(A) applies and the Employer Contribution shall be
determined in accordance with the applicable Money Purchase Plan Adoption
Agreement.
(B) PROFIT-SHARING OR PROFIT-SHARING 401(K) PLAN. If the
Plan is a profit-sharing plan or a profit-sharing 401(k) plan, the
Profit-Sharing (401(k)) Adoption Agreement applies and contributions shall
be made in accordance with such Adoption Agreement and this Section 3.1(B).
(1) AMOUNT. Except as otherwise provided in
Section 3.11(G), for each Plan Year during the continuance of the
Plan, the Employer shall contribute to the Trustee such amount as
shall be authorized by the Employer, in its sole discretion, provided
that the amount of the Employer Contribution for any Plan Year shall
not exceed the lesser of:
(a) The amount allowable as a deduction,
if the Employer is a for-profit organization, for computing
Federal income tax under the applicable provisions of the Code
for the Taxable Year which ends with or within such Plan Year
or, if the Employer is a not-for-profit organization, an
amount not in excess of reasonable compensation for services
rendered by the Participants for the Employer for the Taxable
Year which ends with or within such Plan Year; or
(b) The limitations set forth in Section
3.8 below.
(2) PROFITS NOT REQUIRED. Unless the Adoption
Agreement provides otherwise, effective for Plan Years beginning after
December 31, 1985, the Employer shall, notwithstanding any
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other provision of the Plan, make all contributions to the Plan
without regard to current or accumulated Profits for the Taxable Year
or Years ending with or within such Plan Year. Notwithstanding the
foregoing, the Plan shall continue to be designed to qualify as a
profit-sharing plan for purposes of sections 401(a), 402, 412 and 417
of the Code.
(3) QUALIFIED NONELECTIVE CONTRIBUTIONS AND
QUALIFIED MATCHING CONTRIBUTIONS.
(a) ELECTION. If the Plan provides for
Elective Deferral Contributions, the Employer may elect to
make Qualified Nonelective Contributions and/or Qualified
Matching Contributions under the Plan on behalf of Employees
as provided in the Adoption Agreement.
In addition, in lieu of distributing "Excess
Contributions" as provided in Section 3.4(B)(4), or "Excess
Aggregate Contributions" as provided in Section 3.2(G), and to
the extent elected by the Employer in the Adoption Agreement,
the Employer may make Qualified Nonelective Contributions
and/or Qualified Matching Contributions on behalf of
Non-Highly Compensated Employees that are sufficient to
satisfy either the "Actual Deferral Percentage" (ADP) (as
defined in Section 3.4(B)) test or the "Average Contribution
Percentage" (ACP) (as defined in Section 3.2(F)) test, or
both, pursuant to Treasury regulations under the Code.
(b) VESTING AND ACCOUNTS. The
Participant's Accrued Benefit derived from Qualified
Nonelective Contributions and Qualified Matching Contributions
and the earnings thereon shall be nonforfeitable at all times.
Separate accounts for Qualified Nonelective Contributions and
Qualified Matching Contributions shall be maintained for each
Participant on whose behalf such contributions are made. Each
account shall be credited with the applicable contributions
and earnings or losses thereon.
(C) TIME AND TYPE OF CONTRIBUTIONS. Employer
Contributions, for any Plan Year, shall be paid to the Trustee if the
Employer's Plan is a profit-sharing or profit-sharing 401(k) plan, no later
than the due date (including extensions of time) for filing the Employer's
Federal income tax return for the Taxable Year which ends with or within
such Plan Year or if the Employer's Plan is a money purchase plan no later
than the time required by the rules of section 412(m) of the Code but in no
event later than the due date (including extensions of time) for filing the
Employer's Federal income tax return for the Taxable Year which ends with or
within such Plan Year.
3.2 PARTICIPANT CONTRIBUTIONS. Participant Contributions shall be
determined as follows:
(A) AMOUNT. Unless this Plan is a profit-sharing 401(k)
plan, this Plan shall not accept Employee Contributions and Matching
Contributions for Plan Years beginning after the Plan Year in which this
Plan is adopted by the Employer. Employee Contributions for Plan Years
beginning after December 31, 1986, together with any Matching Contributions
as defined in section 401(m) of the Code, shall be limited so as to meet the
nondiscrimination test of section 401(m) of the Code. Participant
Contributions on or after such date are only permitted or required if the
Plan is a profit-sharing 401(k) plan. In such case, Participants are not
required to make Participant Contributions under the Plan, unless the
Adoption Agreement provides otherwise. If, however, the Plan is a
profit-sharing 401(k) plan and the Employer has elected in the Adoption
Agreement to permit Participant Contributions, a Participant may, subject to
the limitations of Section 3.2 and Section 3.8, make cash contributions
under the Plan in any Plan Year in any amount up to ten percent of the
aggregate Compensation (as defined in Section 1.10 before any modifications
thereto in the Adoption
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Agreement) received by such Participant for all periods of participation in
the Plan reduced by any Participant Contributions made by such Participant
under this Plan during such period. This limitation applies in the
aggregate to voluntary contributions by any Participant to two or more
qualified plans maintained by the same Employer. Mandatory Participant
Contributions are subject to the requirements of the Adoption Agreement.
(B) PARTICIPANT CONTRIBUTIONS AND EARNINGS THEREON
NONFORFEITABLE. The interest of each Participant in his Participant
Contributions and the earnings thereon shall be nonforfeitable at all times.
(C) MANNER OF MAKING CONTRIBUTIONS. Participant
Contributions shall be made in cash and paid to the Employer. Participant
Contributions may be made by regular payroll deductions from his
Compensation, if the Adoption Agreement so provides, or in any other way
approved by the Employer. For a Participant Contribution to be deemed to be
credited to a Participant's Participant Account for any particular
Limitation Year, such Participant Contribution must be made to the Plan not
later than 30 days following the end of such Limitation Year. Participant
Contributions shall be paid to the Trustee by the Employer as soon as is
administratively possible after receipt by the Employer.
(D) CHANGE OF PARTICIPANT CONTRIBUTION RATE. If the
Adoption Agreement provides for Participant Contributions by regular payroll
deductions from the Participant's Compensation, a Participant, by 30 days'
written notice to the Administrative Committee, may elect to change his
Participant Contribution rate (but not retroactively) within the limits
specified herein, to discontinue making Participant Contributions, or to
resume Participant Contributions.
(E) RESPONSIBILITY OF TRUSTEE. The Trustee shall be
accountable for Participant Contributions received by it, but shall have no
duty to require any Participant Contributions to be delivered to it nor to
determine that the Participant Contributions received are of the correct
amount or are correctly attributed by the Administrative Committee to the
Participants who made them.
(F) LIMITATIONS ON EMPLOYEE CONTRIBUTIONS AND MATCHING
CONTRIBUTIONS - AVERAGE CONTRIBUTION PERCENTAGE TEST REQUIREMENT.
(1) TEST. The "Average Contribution Percentage"
(ACP) for Participants who are Highly Compensated Employees for each
Plan Year and the ACP for Participants who are Non-Highly Compensated
Employees for the same Plan Year must satisfy one of the following two
tests:
(a) The ACP for Participants who are
Highly Compensated Employees for the Plan Year shall not
exceed the ACP for Participants who are Non-Highly Compensated
Employees for the same Plan Year multiplied by 1.25; or
(b) The ACP for Participants who are
Highly Compensated Employees for the Plan Year shall not
exceed the ACP for Participants who are Non-Highly Compensated
Employees for the same Plan Year multiplied by two, provided
that the ACP for Participants who are Highly Compensated
Employees does not exceed the ACP for Participants who are
Non-Highly Compensated Employees by more than two percentage
points.
(2) SPECIAL RULES. The following special rules
apply:
(a) MULTIPLE USE. If one or more Highly
Compensated Employees participate in both a cash or deferred
arrangement (CODA) and a plan subject to the ACP test
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maintained by the Employer and the sum of the "Actual Deferral
Percentage" (ADP), as defined below in Section 3.4(B), and the
ACP of those Highly Compensated Employees subject to either or
both tests exceeds the "Aggregate Limit," then the
"Contribution Percentages" of those Highly Compensated
Employees who also participate in a CODA shall be reduced
(beginning with such Highly Compensated Employee whose
"Contribution Percentage" is the highest) so that the limit is
not exceeded. The amount by which each Highly Compensated
Employee's "Contribution Percentage Amount" is reduced shall
be treated as an "Excess Aggregate Contribution." The ADP and
ACP of the Highly Compensated Employees shall be determined
after any corrections required to meet the ADP and ACP tests.
Multiple use does not occur if both the ADP and ACP of the
Highly Compensated Employees do not exceed 1.25 multiplied by
the ADP and ACP of the Non-Highly Compensated Employees.
(b) MULTIPLE PLANS. For purposes of
this Section 3.2(F), the "Contribution Percentage" for any
Participant who is a Highly Compensated Employee and who is
eligible to have "Contribution Percentage Amounts" allocated
to his account under two or more plans described in section
401(a) of the Code, or CODAs that are maintained by the
Employer, shall be determined as if the total of such
"Contribution Percentage Amounts" were made under each plan.
If a Highly Compensated Employee participates in two or more
CODAs that have different plan years, all CODAs ending with or
within the same calendar year shall be treated as a single
arrangement. Notwithstanding the foregoing, certain plans
shall be treated as separate if mandatorily disaggregated
pursuant to Treasury regulations under section 401(m) of the
Code.
(c) AGGREGATION. In the event that this
Plan satisfies the requirements of sections 401(m), 401(a)(4)
or 410(b) of the Code only if aggregated with one or more
other plans, or if one or more other plans satisfy the
requirements of such sections of the Code only if aggregated
with this Plan, then this Section 3.2(F) shall be applied by
determining the ACP of Employees as if all such plans were a
single plan. For Plan Years beginning after December 31,
1989, plans may be aggregated in order to satisfy section
401(m) of the Code only if they have the same plan year.
(d) FAMILY AGGREGATION. For purposes of
determining the "Contribution Percentage" of a Participant who
is a five-percent owner or one of the ten most highly-paid
Highly Compensated Employees, the "Contribution Percentage
Amounts" and "Applicable Compensation" of such Participant
shall include the "Contribution Percentage Amounts" and
"Applicable Compensation" for the Plan Year of Family Members.
Family Members, with respect to Highly Compensated Employees,
shall be disregarded as separate Employees in determining the
ACP both for Participants who are Non-Highly Compensated
Employees and for Participants who are Highly Compensated
Employees.
(e) TIMING. For purposes of the ACP
test, "Employee Contributions" are considered to have been
made in the Plan Year in which contributed to the Trust.
Matching Contributions, Qualified Matching Contributions and
Qualified Nonelective Contributions shall be considered made
for a Plan Year if made no later than the end of the 12-month
period beginning on the day after the close of the Plan Year.
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(f) RECORDS. The Employer shall
maintain records sufficient to demonstrate satisfaction of the
ACP test and the amount of Qualified Nonelective Contributions
or Qualified Matching Contributions, or both, used in such
test.
(g) OTHER REQUIREMENTS. The
determination and treatment of the "Contribution Percentage"
of any Participant shall satisfy such other requirements as
may be prescribed by the Secretary of the Treasury.
(3) DEFINITIONS. The following definitions apply:
(a) "AGGREGATE LIMIT" shall mean the sum
of (i) 125 percent of the greater of (AA) the ADP of the
Non-Highly Compensated Employees eligible under the CODA for
the Plan Year or (BB) the ACP of Non-Highly Compensated
Employees eligible under the Plan subject to section 401(m) of
the Code for the Plan Year beginning with or within the Plan
Year of the CODA, and (ii) two plus the lesser of (AA) or (BB)
above, but in no event shall this amount exceed 200 percent of
the lesser of (AA) or (BB) above. However, the "Aggregate
Limit," for Plan Years beginning before the later of January
1, 1992, or the date that is 60 days after publication of
final Treasury regulations under section 401(m) of the Code,
shall be the greater of (aa) the "Aggregate Limit," as
calculated under the preceding sentence, or (bb) the sum of
(AAA) 125 percent of the lesser of (AAAA) the ADP of the Non-
Highly Compensated Employees eligible under the CODA for the
Plan Year, or (BBBB) the ACP of the Non-Highly Compensated
Employees eligible under the Plan subject to section 401(m) of
the Code for the Plan Year beginning with or within the Plan
Year of the CODA, and (BBB) two plus the greater of (AAAA) or
(BBBB) above, but in no event shall this amount exceed 200
percent of the greater of (AAAA) or (BBBB) above.
(b) "AVERAGE CONTRIBUTION PERCENTAGE
(ACP)" shall mean the average of the "Contribution
Percentages" of the "Eligible Participants" in a group.
(c) "CONTRIBUTION PERCENTAGE" shall mean
the ratio (expressed as a percentage) of the Participant's
"Contribution Percentage Amounts" to the Participant's
"Applicable Compensation" for the Plan Year (whether or not
the Employee was a Participant for the entire Plan Year).
(d) "CONTRIBUTION PERCENTAGE AMOUNTS"
shall mean the sum of the "Employee Contributions", Matching
Contributions and Qualified Matching Contributions (to the
extent not taken into account for purposes of the ADP test)
made under the Plan on behalf of the Participant for the Plan
Year. Such Contribution Percentage Amounts shall not include
Matching Contributions that are forfeited either to correct
"Excess Aggregate Contributions" as defined below, or because
the contributions to which they relate are "Excess Elective
Deferrals" under Section 3.4, "Excess Contributions" under
Section 3.4, or "Excess Aggregate Contributions" under this
Section 3.2. If so elected in the Adoption Agreement, the
Employer may include Qualified Nonelective Contributions in
the "Contribution Percentage Amounts." The Employer also may
elect to use Elective Deferrals in the "Contribution
Percentage Amounts" so long as the ADP test is met before the
Elective Deferrals are used in the ACP test and continues to
be met following the exclusion of those Elective Deferrals
that are used to meet the ACP test.
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(e) "ELIGIBLE PARTICIPANT" shall mean
any Employee who is eligible to make an "Employee
Contribution" or an Elective Deferral (if the Employer takes
such contributions into account in the calculation of the
"Contribution Percentage"), or to receive a Matching
Contribution (including forfeitures) or a Qualified Matching
Contribution. If an "Employee Contribution" is required as a
condition of participation in the Plan, any Employee who would
be a Participant in the Plan if such Employee made such an
"Employee Contribution" shall be treated as an "Eligible
Participant" on behalf of whom no "Employee Contributions" are
made.
(f) "EMPLOYEE CONTRIBUTION" shall mean
any contribution made to the Plan by or on behalf of a
Participant that is included in the Participant's gross income
in the Plan Year in which made and that is maintained under a
separate account to which earnings and losses are allocated.
(g) "APPLICABLE COMPENSATION" shall mean
compensation (i) within the meaning of section 414(s)(1) of
the Code for the Plan Year for which a determination under
this Section 3.2(F) is being made, plus (ii) any amount
contributed by the Employer for such Plan Year pursuant to a
salary reduction agreement and which is not includible in
gross income under section 125, 402(e)(3), 402(h)(1)(B) or
403(b) of the Code.
(G) DISTRIBUTION OF "EXCESS AGGREGATE CONTRIBUTIONS".
(1) IN GENERAL. Notwithstanding any other
provision of this Plan, "Excess Aggregate Contributions", plus any
income and minus any loss allocable thereto, shall be forfeited, if
forfeitable, or, if not forfeitable, distributed no later than the
last day of each Plan Year to Participants to whose accounts such
"Excess Aggregate Contributions" were allocated for the preceding Plan
Year. If such "Excess Aggregate Contributions" are distributed more
than two and one-half months after the last day of the Plan Year in
which such "Excess Aggregate Contributions" arose, a ten percent
excise tax will be imposed on the Employer maintaining the plan with
respect to such "Excess Aggregate Contributions". Such distributions
shall be made to Highly Compensated Employees on the basis of the
respective portions of the "Excess Aggregate Contributions"
attributable to each of such Employees. "Excess Aggregate
Contributions" of Participants who are subject to the Family Member
aggregation rules of section 414(q)(6) of the Code shall be allocated
among the Family Members in proportion to the "Employee Contributions"
and Matching Contributions (or amounts treated as Matching
Contributions) of each Family Member that is combined to determine the
combined ACP. "Excess Aggregate Contributions" shall be treated as
"Annual Additions" (within the meaning of Section 3.8(D)(1)) under the
Plan.
(2) DETERMINATION OF INCOME OR LOSS. "Excess
Aggregate Contributions" shall be adjusted for any income or loss.
The income or loss allocable to "Excess Aggregate Contributions" is
the income or loss allocable to the Participant's "Employee
Contribution" account, Matching Contribution account, Qualified
Matching Contribution account (if any, and if all amounts therein are
not used in the ADP test) and, if applicable, Qualified Nonelective
Contribution account and Elective Deferral account for the Plan Year
multiplied by a fraction, the numerator of which is such Participant's
"Excess Aggregate Contributions" for the Plan Year and the denominator
of which is the Participant's account balance(s) attributable to
"Contribution Percentage Amounts" without regard to any income or loss
occurring during such Plan Year. Income or loss allocable to the
period between the end of the Plan Year and the date of distribution
shall be disregarded in determining income or loss.
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(3) FORFEITURES OF "EXCESS AGGREGATE
CONTRIBUTIONS". Forfeitures of "Excess Aggregate Contributions" may
either be reallocated to the accounts of Non-Highly Compensated
Employees or applied to reduce Employer contributions, as elected by
the Employer in the Adoption Agreement with respect to Matching
Contributions.
(4) ACCOUNTING FOR "EXCESS AGGREGATE
CONTRIBUTIONS". "Excess Aggregate Contributions" shall be forfeited,
if forfeitable or distributed on a pro-rata basis from the
Participant's "Employee Contribution" account, Matching Contribution
account and Qualified Matching Contribution account (and, if
applicable, the Participant's Qualified Nonelective Contribution
account or Elective Deferral account, or both).
(5) DEFINITIONS. The following definitions apply:
(a) "EXCESS AGGREGATE CONTRIBUTIONS"
shall mean, with respect to any Plan Year, the excess of:
(i) The aggregate "Contribution
Percentage Amounts" actually taken into account in
computing the ACP of Highly Compensated Employees for
such Plan Year, over
(ii) The maximum "Contribution
Percentage Amounts" permitted by the ACP test
(determined by reducing contributions made on behalf
of Highly Compensated Employees in order of their
"Contribution Percentages" beginning with the highest
of such percentages).
Such determination shall be made after first
determining "Excess Elective Deferrals" under Section 3.4 and
then determining "Excess Contributions" under Section 3.4.
(6) VESTING AND ACCOUNTS. The Participant's
Accrued Benefit derived from Employee Contributions shall be
nonforfeitable at all times. Separate accounts for Employee
Contributions shall be maintained for each Participant. Each account
shall be credited with the applicable contributions and earnings
thereon.
3.3 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS. The rules
relating to Qualified Voluntary Employee Contributions are as follows:
(A) NOT PERMITTED AFTER DECEMBER 31, 1986. No Qualified
Voluntary Employee Contributions shall be permitted after December 31, 1986.
Contributions made prior to that date shall be maintained in separate
accounts. Such accounts shall share in gains or losses of the Trust in the
manner described in Article V. No part of such accounts shall be used to
purchase life insurance. Withdrawals from such accounts are provided for in
Sections 7.10(B) and 7.12.
(B) QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTION AND
EARNINGS THEREON VESTED AT ALL TIMES. The interest of each Participant in
any Qualified Voluntary Employee Contributions made on his behalf before
January 1, 1987, and the earnings thereon shall be nonforfeitable at all
times.
(C) RESPONSIBILITY OF TRUSTEE. The Trustee shall be
accountable for Qualified Voluntary Employee Contributions received by it,
but shall have no duty to determine that the Qualified Voluntary
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Employee Contributions received are of the correct amount or are correctly
allocated by the Employer to the Participants who made them.
3.4 ELECTIVE DEFERRAL CONTRIBUTIONS. The rules relating to
Elective Deferral Contributions are as follows:
(A) AMOUNT. If the Adoption Agreement provides for
Elective Deferral Contributions, the Employer shall make an Elective
Deferral Contribution to the Plan on behalf of each Participant who has
elected to defer a portion of the Compensation otherwise payable for the
Plan Year and have it contributed to the Plan. Such an election may only be
made pursuant to a written salary reduction agreement between the Employer
and the Participant. The agreement shall be on the Appropriate Form
prescribed by the Administrative Committee, and the agreement shall specify
the percentage or amount of Compensation that the Participant desires to
defer (but in no event may Elective Deferral Contributions exceed for any
Plan Year, after taking into account any Employer Contributions for such
Plan Year under this Plan and under any other qualified profit-sharing or
qualified stock-bonus plan the amount allowable under Section 3.1(B)(1) for
the Taxable Year which ends with or within such Plan Year, or the
limitations set forth in Section 3.8 below). A Participant shall not be
permitted to enter into more than one salary reduction agreement in the
periods specified in the Adoption Agreement, and the agreement for any such
period must be entered into before the first day of such period. The
Elective Deferral Contribution made for a Participant shall be in an amount
equal to the amount specified in the Participant's salary reduction
agreement; provided, however, that the Elective Deferral Contribution
otherwise to be made for a Participant shall be reduced if and to the extent
necessary to comply with the limitations of Section 3.4(B). An Elective
Deferral Contribution made for a Participant shall be allocated to his
Elective Deferral Account pursuant to Section 5.1(D). In the event the
requirements of Section 3.4(B) would not otherwise be met, but only if the
Adoption Agreement so provides, the Employer may make, on behalf of
Non-Highly Compensated Employees, for any Plan Year, such Qualified
Nonelective Contributions as are necessary to meet the requirements of
Section 3.4(B). Such Employer Qualified Nonelective Contributions must be
made by the Employer no later than 30 days after the end of the Plan Year.
Such Employer Qualified Nonelective Contributions shall be separately
accounted for and no portion of such Employer Qualified Nonelective
Contributions attributable to Plan Years beginning after December 31, 1988,
may be withdrawn upon hardship of the Participant. Moreover, such Employer
Qualified Nonelective Contributions must satisfy all other requirements
relating to Qualified Nonelective Contributions as set forth in Section
1.70. The CODA provisions may not be integrated with social security.
(B) ELECTIVE DEFERRALS.
(1) MAXIMUM AMOUNT OF ELECTIVE DEFERRALS.
Effective as of January 1, 1987, no Employee shall be permitted to
have Elective Deferrals made under this Plan during the taxable year
of such Employee in excess of $7,000 multiplied by the Adjustment
Factor as provided by the Secretary of the Treasury and as in effect
at the beginning of such taxable year of the Employee. The foregoing
limit shall not apply to Elective Deferrals of amounts attributable to
service performed in 1986 and described in section 1105(c)(5) of the
Tax Reform Act of 1986.
(2) "ACTUAL DEFERRAL PERCENTAGE" TEST
REQUIREMENT. The "Actual Deferral Percentage" (ADP) for Participants
who are Highly Compensated Employees for each Plan Year and the ADP
for Participants who are Non-Highly Compensated Employees for the same
Plan Year must satisfy one of the following tests:
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(a) The ADP for Participants who are
Highly Compensated Employees for the Plan Year shall not
exceed the ADP for Participants who are Non-Highly Compensated
Employees for the same Plan Year multiplied by 1.25; or
(b) The ADP for Participants who are
Highly Compensated Employees for the Plan Year shall not
exceed the ADP for Participants who are Non-Highly Compensated
Employees for the same Plan Year multiplied by 2.0, provided
that the ADP for Participants who are Highly Compensated
Employees does not exceed the ADP for Participants who are
Non-Highly Compensated Employees by more than two percentage
points.
(3) SPECIAL RULES. The following special rules
apply:
(a) The ADP for any Participant who is a
Highly Compensated Employee for the Plan Year and who is
eligible to have Elective Deferrals (and Qualified Nonelective
Contributions or Qualified Matching Contributions, or both, if
treated as Elective Deferrals for purposes of the ADP test)
allocated to his accounts under two or more cash or deferred
arrangements described in section 401(k) of the Code (CODAs),
that are maintained by the Employer, shall be determined as if
such Elective Deferrals (and, if applicable, such Qualified
Nonelective Contributions or Qualified Matching Contributions,
or both) were made under a single CODA. If a Highly
Compensated Employee participates in two or more CODAs that
have different Plan Years, all CODAs ending with or within the
same calendar year shall be treated as a single CODA.
Notwithstanding the foregoing, certain CODAs shall be treated
as separate CODAs if mandatorily disaggregated pursuant to
regulations under section 401(k) of the Code.
(b) In the event that this Plan
satisfies the requirements of section 401(k), 401(a)(4), or
410(b) of the Code only if aggregated with one or more other
plans, or if one or more other plans satisfy the requirements
of such sections of the Code only if aggregated with this
Plan, then this Section shall be applied by determining the
ADP of Employees as if all such plans were a single plan. For
Plan Years beginning after December 31, 1989, plans may be
aggregated in order to satisfy section 401(k) of the Code only
if they have the same Plan Year.
(c) For purposes of determining the ADP
of a Participant who is a five-percent owner or one of the ten
most highly-paid Highly Compensated Employees, the Elective
Deferrals (and Qualified Nonelective Contributions or
Qualified Matching Contributions, or both, if treated as
Elective Deferrals for purposes of the ADP test) and
"Applicable Compensation" of such a Participant shall include
the Elective Deferrals (and, if applicable, Qualified
Nonelective Contributions and Qualified Matching
Contributions, or both) and "Applicable Compensation" for the
Plan Year of Family Members of such Participant. Family
Members, with respect to such Highly Compensated Employees,
shall be disregarded as separate Employees in determining the
ADP both for Participants who are Non-Highly Compensated
Employees and for Participants who are Highly Compensated
Employees.
(d) For purposes of determining the ADP
test, Elective Deferrals, Qualified Nonelective Contributions
and Qualified Matching Contributions must be made before the
last day of the 12-month period immediately following the Plan
Year to which the contributions relate.
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(e) The Employer shall maintain records
sufficient to demonstrate satisfaction of the ADP test and the
amount of Qualified Nonelective Contributions or Qualified
Matching Contributions, or both, used in such test.
(f) The determination and treatment of
the ADP amounts of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
(4) DEFINITIONS. The following definitions apply:
(a) "ACTUAL DEFERRAL PERCENTAGE" shall
mean, for a specified group of Participants for a Plan Year,
the average of the ratios (calculated separately for each
Participant in such group) of (i) the amount of Employer
contributions actually paid over to the Trust on behalf of
such Participant for the Plan Year to (ii) the Participant's
"Applicable Compensation" for such Plan Year (whether or not
the Employee was a Participant for the entire Plan Year).
Employer contributions on behalf of any Participant shall
include any Elective Deferrals made pursuant to the
Participant's deferral election (including "Excess Elective
Deferrals" of Highly Compensated Employees), but excluding
"Excess Elective Deferrals of Non-Highly Compensated Employees
that arise solely from Elective Deferrals made under the plan
or plans of the Employer and excluding Elective Deferrals that
are taken into account in the "Contribution Percentage" test
(provided the ADP test is satisfied both with and without
exclusion of these Elective Deferrals) and, at the election of
the Employer, Qualified Nonelective Contributions and
Qualified Matching Contributions. For purposes of computing
"Actual Deferral Percentages", an Employee who would be a
Participant but for the failure to make Elective Deferrals
shall be treated as a Participant on whose behalf no Elective
Deferrals are made.
(b) "APPLICABLE COMPENSATION" shall have
the meaning set forth in Section 3.2(F)(3)(g).
(5) DISTRIBUTION OF "EXCESS ELECTIVE DEFERRALS".
(a) IN GENERAL. A Participant may
assign to this Plan any "Excess Elective Deferrals" made
during such Participant's taxable year by notifying the Plan
Administrator, in accordance with Section 3.4(B)(5)(c) of the
amount of the "Excess Elective Deferrals" to be assigned to
the Plan. A Participant is deemed to notify the Plan
Administrator of any "Excess Elective Deferrals" that arise by
taking into account only those Elective Deferrals made to this
Plan and any other plans of the Employer.
Notwithstanding any other provision of the
Plan, "Excess Elective Deferrals" plus any income and minus
any loss allocable thereto shall be distributed no later than
April 15 to any Participant to whose account "Excess Elective
Deferrals" were assigned for the preceding taxable year of
such Participant and who claims "Excess Elective Deferrals"
for such taxable year of the Participant.
(b) DEFINITION. For purposes of the
Plan, "EXCESS ELECTIVE DEFERRALS" shall mean those Elective
Deferrals that are includible in a Participant's gross income
under section 402(g) of the Code to the extent such
Participant's Elective Deferrals for a taxable year exceed the
dollar limitation under such Code section. "Excess Elective
Deferrals" shall be
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treated as "Annual Additions" (within the meaning of Section
3.8(D)(1)) under the Plan, unless such amounts are distributed
no later than the first April 15 following the close of the
Participant's taxable year.
(c) CLAIMS. The Participant's claim
shall be in writing; shall be submitted to the Plan
Administrator no later than March 1; shall specify the
Participant's "Excess Elective Deferral" for the preceding
taxable year of such Participant (which shall not exceed the
amount of the Participant's Elective Deferral under this Plan
for such taxable year); and shall be accompanied by the
Participant's written statement that if such amounts are not
distributed, such "Excess Elective Deferral", when added to
other Elective Deferrals exceeds the limit imposed on the
Participant by section 402(g) of the Code for the taxable year
of the Participant in which the Elective Deferral occurred.
(d) DETERMINATION OF INCOME OR LOSS.
"Excess Elective Deferrals" shall be adjusted for income or
loss. The income or loss allocable to "Excess Elective
Deferrals" is the income or loss allocable to the
Participant's Elective Deferrals for the year multiplied by a
fraction, the numerator of which is such Participant's "Excess
Elective Deferrals" for the year and the denominator of which
is the Participant's account balance attributable to Elective
Deferrals without regard to any income or loss occurring
during such taxable year. Income or loss allocable to the
period between the end of the taxable year of the Participant
and the date of the distribution shall be disregarded in
determining income or loss.
(6) DISTRIBUTION OF "EXCESS CONTRIBUTIONS".
(a) IN GENERAL. Notwithstanding any other
provision of the Plan, "Excess Contributions", plus any income
and minus any loss allocable thereto, shall be distributed no
later than the last day of each Plan Year beginning after
December 31, 1987, to Participants to whose accounts such
"Excess Contributions" were allocated for the preceding Plan
Year. If such "Excess Contributions" are distributed more
than two and one-half months after the last day of the Plan
Year in which such "Excess Contributions" arose, a ten percent
excise tax will be imposed on the Employer maintaining the
plan with respect to such "Excess Contributions". Such
distributions shall be made to Highly Compensated Employees on
the basis of the respective portions of the "Excess
Contributions" attributable to each of such Employees.
"Excess Contributions" of Participants who are subject to the
Family Member aggregation rules of section 414(q)(6) of the
Code shall be allocated among the Family Members in proportion
to the Elective Deferrals (and amounts treated as Elective
Deferrals) of each Family Member that is combined to determine
the combined ADP. "Excess Contributions" shall be treated as
"Annual Additions" (within the meaning of Section 3.8(D)(1))
under the Plan.
(b) DETERMINATION OF INCOME OR LOSS. "Excess
Contributions" shall be adjusted for any income or loss. The
income or loss allocable to "Excess Contributions" is the
income or loss allocable to the Participant's Elective
Deferral account (and, if applicable, the Qualified
Nonelective Contribution account or the Qualified Matching
Contributions account or both) for the Plan Year multiplied by
a fraction, the numerator of which is such Participant's
"Excess Contributions" for the Plan Year and the denominator
of which is the Participant's account balance attributable to
Elective Deferrals (and Qualified Nonelective Contributions or
Qualified Matching Contributions, or both, if any of such
contributions are included in the ADP test) without regard to
any income or loss occurring during such Plan Year. Income or
loss
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allocable to the period between the end of the Plan Year and
the date of the distribution shall be disregarded in
determining income or loss.
(c) ACCOUNTING FOR "EXCESS CONTRIBUTIONS".
"Excess Contributions" shall be distributed from the
Participant's Elective Deferral account and Qualified Matching
Contribution account (if applicable) in proportion to the
Participant's Elective Deferrals and Qualified Matching
Contributions (to the extent used in the ADP test) for the
Plan Year. "Excess Contributions" shall be distributed from
the Participant's Qualified Nonelective Contribution account
only to the extent that such "Excess Contributions" exceed the
balance in the Participant's Elective Deferral account and
Qualified Matching Contribution account.
(d) DEFINITION. "EXCESS CONTRIBUTION" shall
mean, with respect to any Plan Year, the excess of:
(i) The aggregate amount of
Employer contributions actually taken into account in
computing the ADP of Highly Compensated Employees for
such Plan Year, over
(ii) The maximum amount of such
contributions permitted by the ADP test (determined
by reducing contributions made on behalf of Highly
Compensated Employees in order of the ratios used in
determining the ADP of Highly Compensated Employees,
beginning with the highest of such ratios).
(e) REDUCTION FOR "EXCESS ELECTIVE
DEFERRALS" DISTRIBUTED. The "Excess Contributions" which
would otherwise be distributed to the Participant shall be
reduced, in accordance with regulations, by the amount of
"Excess Elective Deferrals" distributed to the Participant.
(C) VESTING AND ACCOUNTS. The interest of each
Participant in his Accrued Benefit derived from such Participant's Elective
Deferral Contributions and the earnings thereon shall be nonforfeitable at
all times. Separate accounts for Elective Deferral Contributions shall be
maintained for each Participant. Each account shall be credited with the
applicable contributions and earnings thereon.
(D) MANNER OF MAKING ELECTIVE DEFERRAL CONTRIBUTION. The
Employer shall contribute the Elective Deferral Contributions to the Plan
within the earlier of (1) 30 days following the pay period to which such
Elective Deferral Contributions relate, or (2) 30 days following the end of
the Plan Year for which such Elective Deferral Contributions are being made.
(E) RESPONSIBILITY OF TRUSTEE. The Trustee shall be
accountable for Elective Deferral Contributions received by it, but shall
have no duty to determine that the Elective Deferral Contributions received
are of the correct amount or are correctly allocated by the Administrative
Committee to the Participant on whose behalf such Elective Deferral
Contributions were made.
3.5 MATCHING CONTRIBUTIONS. The rules relating to Matching
Contributions are as follows:
(A) AMOUNT. If the Adoption Agreement provides for
Matching Contributions, the Employer shall make a Matching Contribution on
behalf of each Participant who has elected to make Elective Deferral
Contributions or Participant Contributions to the Plan in the amounts set
forth in the Adoption
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Agreement. The amount of the Matching Contribution shall be the amount
selected by the Employer in the Adoption Agreement to match such Elective
Deferral Contributions and/or Participant Contributions. A Matching
Contribution for a Participant shall be allocated to his Matching Account
pursuant to Section 5.1(E). The Employer may also make Qualified Matching
Contributions to the extent permitted by the applicable Adoption Agreement.
(B) TIME. Matching Contributions, for any Plan year,
shall be paid to the Trustee no later than the due date (including
extensions of time) for filing the Employer's Federal income tax return for
the Taxable Year which ends with or within such Plan Year.
(C) RESPONSIBILITY OF TRUSTEE. The Trustee shall be
accountable for Matching Contributions received by it, but shall have no
duty to determine that the Matching Contributions are of the correct amount
or are correctly allocated by the Administrative Committee to the
Participant on whose behalf such Matching Contributions were made.
(D) LIMITATIONS. All Matching Contributions are subject
to the requirements of Sections 3.2(F) and 3.2(G).
(E) VESTING AND ACCOUNTS. Matching Contributions shall
be vested in accordance with Section A.3.5(F) of the Adoption Agreement. In
any event, Matching Contributions shall be fully vested at Normal Retirement
Age, upon the complete or partial termination of the Plan, or upon the
complete discontinuance of Employer contributions. Qualified Matching
Contributions shall be vested when made.
Forfeitures of Matching Contributions, other than "Excess
Aggregate Contributions" (within the meaning of Section 3.2(G)) shall be
made in accordance with Sections 5.5 and 7.6(C) and Section A.7.6(C) of the
Adoption Agreement.
Separate accounts for Matching Contributions shall be
maintained for each Participant. Each account shall be credited with the
applicable contributions and earnings thereon.
Notwithstanding the foregoing, Matching Contributions
(including Qualified Matching Contributions) shall be forfeited if the
contributions to which they relate are "Excess Deferrals", "Excess
Contributions", or "Excess Aggregate Contributions". [SEE TREAS. REG. Section
1.401(A)(4)-11(G)(6) EXAMPLE 8]
3.6 CONTRIBUTIONS HELD IN TRUST. The Trustee covenants and agrees
that it holds, and will hold, all sums (including any Employer Contributions,
any Elective Deferral Contributions, any Matching Contributions, any
Participant Contributions, any Qualified Matching Contributions, any Qualified
Nonelective Contributions and, if applicable, prior Qualified Voluntary
Employee Contributions) which, from time to time, have been, or may be, paid to
it as Trustee hereunder, in trust, subject to the provisions of the Plan, for
the purposes and upon the terms, conditions and powers set forth in this Plan
and Trust Agreement.
3.7 RETURN OF EMPLOYER CONTRIBUTIONS. The rules relating to the
return of Employer Contributions are as follows:
(A) EXCLUSIVE BENEFIT RULE AND EXCEPTIONS THERETO. The
Trust Fund shall be held by the Trustee for the exclusive purpose of
providing benefits to Participants in the Plan and their Beneficiaries and
defraying reasonable expenses of administering the Plan. No part of the
Trust Fund shall at any time inure to the benefit of the Employer; provided,
however, that Employer Contributions and/or Elective Deferral
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Contributions and/or Matching Contributions to the Trust Fund shall be
refunded to the Employer, to the extent such refunds do not, in themselves,
deprive the Plan of its qualified status, under the following circumstances
and subject to the following limitations:
(1) MISTAKE OF FACT. In the case of Employer
Contributions and/or Elective Deferral Contributions and/or Matching
Contributions which are made, in whole or in part, by reason of a
mistake of fact (as for example, incorrect information as to the
eligibility or Compensation of a Participant, or a mathematical
error), so much of such Employer Contributions and/or Elective
Deferral Contributions and/or Matching Contributions as is
attributable to the mistake of fact shall be returned to the Employer
on demand, upon presentation to the Trustee of evidence of the mistake
of fact and calculations as to the impact of such mistake. Demand and
repayment must be effected within one year after the date of payment
of the Employer Contributions and/or Elective Deferral Contributions
and/or Matching Contributions to which the mistake applies.
(2) DISALLOWANCE OF DEDUCTION. In the event the
deduction of the contribution made by the Employer is disallowed under
section 404 of the Code, such contribution (to the extent disallowed)
shall be returned to the Employer within one year of the disallowance
of the deduction.
(3) INITIAL DISQUALIFICATION. If any Employer
and/or Elective Deferral Contributions and/or Matching Contributions
to the Plan are conditioned on initial qualification of the Plan under
section 401 of the Code and if the Plan receives an adverse
determination with respect to its initial qualification, any such
Employer Contributions and/or Elective Deferral Contributions and/or
Matching Contributions shall be returned to such Employer within one
year after such adverse determination but only if the application for
determination is made by the time prescribed by law for filing the
Employer's Federal income tax return for the Taxable Year in which
such Plan was adopted or such later date as the Secretary of the
Treasury shall provide.
(B) REFUND TO BE DEDUCTED AS INVESTMENT LOSS WITH CERTAIN
EXCEPTIONS. In the event that any refund is paid to the Employer hereunder,
such refund shall be made without interest and shall be deducted from the
Employer Accounts and/or Elective Deferral Accounts and/or Matching Accounts
of the Participants as an investment loss except to the extent that the
amount of the refund can be attributed to one or more specific Participants
(as in the case of certain mistakes of fact and disallowances of
Compensation resulting in reduction of deductible Employer Contributions) in
which case the amount of the refund attributable to each such Participant's
Employer Account and/or Elective Deferral Account and/or Matching Account
shall be deducted directly from such Employer Account and/or Elective
Deferral Account and/or Matching Account.
(C) LIMITATIONS ON REFUNDS. Notwithstanding any other
provisions of this Section 3.7, no refund shall be made to the Employer:
(1) To the extent such refund is specifically
chargeable to the Employer Account(s) and/or Elective Deferral
Account(s) and/or Matching Account(s) of any Participant(s) in excess
of 100 percent of the amount in such Account(s);
(2) If the amount otherwise subject to refund
hereunder has been distributed to Participants and/or their
Beneficiaries (in which case the Employer shall have a claim directly
against the distributees to the extent of the refund to which it is
entitled);
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(3) To the extent the amount is not in excess of
the amount which would have been contributed had no mistake of fact or
mistake in determining the deduction occurred (in which case the
amount subject to refund shall be limited to the excess of (a) the
amount of the Employer Contribution and/or Elective Deferral
Contribution and/or Matching Contribution over (b) the amount that the
Employer would have contributed, had there not occurred a mistake of
fact or a mistake in determining the amount of the deduction);
(4) Of earnings attributable to the excess
Employer Contribution and/or Elective Deferral Contribution and/or
Matching Contribution;
(5) To the extent there are losses attributable
to the amount subject to refund (in which case the losses shall reduce
the amount to be returned); and
(6) To the extent the amount subject to refund
would cause the balance of the Employer Account and/or Elective
Deferral Account and/or Matching Account of any Participant to be
reduced to less than the balance which would have been in such
Employer Account and/or Elective Deferral Account and/or Matching
Account had the amount subject to refund not been contributed (in
which case the amount to be refunded to the Employer shall be limited
so as to avoid such reduction).
(D) FURTHER LIMITATIONS ON REFUNDS. All refunds under
this Section 3.7 shall be limited in amount, circumstance and timing to the
provisions of section 403(c) of ERISA, and no such refund shall be made if,
solely on account of such refund, the Plan would cease to be a qualified
plan under section 401(a) of the Code or to meet the requirements of section
401(k) of the Code.
3.8 LIMITATIONS ON ALLOCATIONS. The limitations relating to
allocations under the Plan are as follows:
(A) LIMITATION APPLICABLE WHERE NO OTHER EMPLOYEE PENSION
BENEFIT PLAN OR WELFARE BENEFIT FUND OR INDIVIDUAL MEDICAL BENEFIT ACCOUNT
MAINTAINED.
(1) BASIC LIMITATION. If the Participant does
not participate in, and has never participated in, any other Employee
Pension Benefit Plan maintained by the "Employer" (as defined in
Section 3.8(D)(5)) or Welfare Benefit Fund maintained by the
"Employer" or individual medical benefit account (as defined in
section 415(l)(2) of the Code) maintained by the "Employer" and which
provides an "Annual Addition" (as defined in Section 3.8(D)(1)) by the
"Employer", the amount of the "Annual Additions" which may be
allocated under this Plan to such Participant's accounts during any
Limitation Year shall not exceed the lesser of the "Maximum
Permissible Amount" (as defined in Section 3.8(D)(8)) or any other
limitation contained in the Plan. If the Employer contribution that
would otherwise be contributed or allocated to the Participant's
account would cause the "Annual Additions" for the Limitation Year to
exceed the "Maximum Permissible Amount", the amount contributed or
allocated shall be reduced so that the "Annual Additions" for the
Limitation Year will equal the "Maximum Permissible Amount".
(2) ESTIMATION OF LIMITATION COMPENSATION. Prior to
determining the Participant's actual Limitation Compensation for the
Limitation Year, the Employer may determine the "Maximum Permissible
Amount" for a Participant on the basis of a reasonable estimation of
the Participant's Limitation Compensation for the Limitation Year,
uniformly determined for Participants similarly situated.
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<PAGE> 48
(3) DETERMINATION OF ACTUAL LIMITATION COMPENSATION.
As soon as is administratively feasible after the end of the
Limitation Year, the "Maximum Permissible Amount" for the Limitation
Year shall be determined on the basis of the Participant's actual
Limitation Compensation for the Limitation Year.
(4) DISPOSITION OF "EXCESS AMOUNTS". If,
pursuant to Section 3.8(A)(3), or as a result of the allocation of
forfeitures or under other limited facts and circumstances
satisfactory to the Commissioner of Internal Revenue there is an
"Excess Amount" (as defined in Section 3.8(D)(6)) with respect to a
Participant for a Limitation Year, such "Excess Amount" shall be
disposed of as follows:
(a) First, any Participant
Contributions, to the extent their return would reduce the
"Excess Amount", shall be paid to the Participant as soon as
is administratively feasible. The Administrative Committee
shall certify to the Trustee the amount of any such reduction
to be returned to any Participant and the name and address of
the Participant.
(b) Second, if, after the application of
Section 3.8(A)(4)(a), an "Excess Amount" still exists, and the
Participant is covered by the Plan at the end of a Limitation
Year, the "Excess Amount"in the Participant's account shall be
used to reduce Employer contributions (including any
allocation of forfeitures), for such Participant in the next
Limitation Year (and for each succeeding Limitation Year as
necessary).
(c) If, after the application of Section
3.8(A)(4)(a) an "Excess Amount" still exists, and the
Participant is not covered by the Plan at the end of a
Limitation Year, the "Excess Amount" shall be held unallocated
in a suspense account. The suspense account shall be applied
in the next Limitation Year (and succeeding Limitation Years,
as necessary) to reduce Employer contributions for all
remaining Participants.
(d) If a suspense account is in existence at
any time during a Limitation Year pursuant to this Section
3.8(A)(4), it shall not participate in the allocation of the
Trust's investment gains and losses. If a suspense account is
in existence at any time during a particular Limitation Year,
all amounts in the suspense account must be allocated and
reallocated to Participants' accounts before any "Employer"
contributions or any Employee contributions may be made to the
Plan for that Limitation Year. "Excess Amounts" may not be
distributed to Participants or former Participants. In the
event the Plan of an adopting "Employer" is terminated and any
portion of the "Excess Amount" cannot be allocated to
Participants under this Section 3.8(A)(4), such portion of
such "Excess Amount" shall revert to such adopting "Employer".
(B) MULTI-PLAN LIMITATIONS FOR ADDITIONAL REGIONAL
PROTOTYPE DEFINED CONTRIBUTION PLANS AND/OR WELFARE BENEFIT FUNDS AND/OR
INDIVIDUAL MEDICAL BENEFIT ACCOUNTS.
(1) LIMITATION. This Section 3.8(B) applies, if,
in addition to this Plan, the Participant is covered under another
qualified "Regional Prototype Plan" which is a Defined Contribution
Plan maintained by the "Employer" and/or a Welfare Benefit Fund
maintained by the "Employer" and/or an individual medical benefit
account (as defined in section 415(l)(2) of the Code) maintained by
the "Employer" which provides an "Annual Addition", during any
Limitation Year. The "Annual Additions" which may be credited under
this Plan to a Participant's account for any such Limitation Year
shall not exceed the lesser of:
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(a) The "Maximum Permissible Amount"
reduced by the sum of any "Annual Additions" credited to such
Participant's accounts under such other Defined Contribution
Plan or Plans and under such other Welfare Benefit Fund or
Funds and under such individual medical benefit account or
accounts for the same Limitation Year; or
(b) Any other limitation contained in
this Plan.
If the "Annual Additions" with respect to the
Participant under other Defined Contribution Plans and Welfare Benefit
Funds maintained by the Employer are less than the "Maximum
Permissible Amount" and the Employer contribution that would otherwise
be contributed or allocated to the Participant's account under this
Plan would cause the "Annual Additions" for the Limitation year to
exceed this limitation, the amount contributed or allocated shall be
reduced so that the "Annual Additions" under all such plans and funds
for the Limitation Year will equal the "Maximum Permissible Amount".
If the "Annual Additions" with respect to the Participant under such
other Defined Contribution Plans and Welfare Benefit Funds in the
aggregate are equal to or greater than the "Maximum Permissible
Amount", no amount shall be contributed or allocated to the
Participant's account under this Plan for the Limitation Year.
(2) ESTIMATION OF LIMITATION COMPENSATION. Prior
to determining the Participant's actual Limitation Compensation for
the Limitation Year, the Employer may determine the "Maximum
Permissible Amount" for a Participant in the manner described in
Section 3.8(A)(2).
(3) DETERMINATION OF ACTUAL LIMITATION
COMPENSATION. As soon as is administratively feasible after the end
of the Limitation Year, the "Maximum Permissible Amount" for the
Limitation Year shall be determined on the basis of the Participant's
actual Limitation Compensation for the Limitation Year.
(4) ORDER OF DETERMINING "EXCESS AMOUNTS". If
pursuant to Section 3.8(B)(3) or as a result of the allocation of
forfeitures, a Participant's "Annual Additions" under this Plan and
such other plans would result in an "Excess Amount" for a Limitation
Year, the "Excess Amount" shall be deemed to consist of the "Annual
Additions" last allocated, except that "Annual Additions" attributable
to a Welfare Benefit Fund or to an individual medical benefit account
shall be deemed to have been allocated first regardless of the actual
allocation date.
(5) SIMULTANEOUS ALLOCATION OF "EXCESS AMOUNTS".
If an "Excess Amount" was allocated to a Participant on an allocation
date of this Plan which coincides with an allocation date of another
plan, the "Excess Amount" attributed to this Plan shall be the product
of:
(a) The total "Excess Amount" allocated
as of such date; times
(b) The ratio of (i) the "Annual
Additions" allocated to the Participant for the Limitation
Year as of such date under this Plan, to (ii) the total
"Annual Additions" allocated to the Participant for the
Limitation Year as of such date under this and all the other
qualified "Regional Prototype Plans" maintained by the
"Employer" which are Defined Contribution Plans.
(6) DISPOSITION OF "EXCESS AMOUNTS". Any "Excess
Amounts" attributed to this Plan shall be disposed of in accordance
with Section 3.8(A)(4).
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(7) LIMITATION WHERE PARTICIPANT COVERED BY
NON-REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN. If the Participant
is covered under another qualified Defined Contribution Plan
maintained by the "Employer" which is not a "Regional Prototype Plan"
(as defined in Section 3.8(D)(10)), "Annual Additions" which may be
credited to the Participant's account under this Plan for any
Limitation Year shall be limited in accordance with Sections 3.8(B)(1)
through 3.8(B)(6) as though the other plan were a "Regional Prototype
Plan" unless the "Employer" provides other limitations in Section
A.3.8.(B) of the Adoption Agreement.
(C) MULTI-PLAN LIMITATIONS FOR ADDITIONAL PLAN WHICH IS A
DEFINED BENEFIT PLAN.
(1) LIMITATION. If, in addition to this Plan,
the "Employer" maintains or has maintained another plan which is a
Defined Benefit Plan covering any Participant in this Plan, the sum
of the Participant's "Defined Benefit Plan Fraction" and "Defined
Contribution Plan Fraction" shall not exceed 1.0 in any Limitation
Year. The "Annual Additions" which may be credited to the
Participant's accounts under this Plan for any Limitation Year shall
be limited as elected in Section A.3.8(C) of the Adoption Agreement.
(2) ELECTION OF PLAN LIMITATION. If Section
A.3.8(C)(1) of the Adoption Agreement is checked, the "Annual
Additions" which may be credited to a Participant's accounts shall be
reduced to the extent necessary so that they shall not exceed the
limitations in Sections 3.8(A) and 3.8(B) and, in addition, shall be
reduced to the extent necessary to prevent the decimal equivalent of
the sum of the "Defined Benefit Plan Fraction" (as defined in Section
3.8(D)(2)) and of the "Defined Contribution Plan Fraction" (as defined
in Section 3.8(D)(4)) for any Limitation Year beginning after December
31, 1982, with respect to such Participant, from exceeding 1.0.
(3) ORDER OF "ANNUAL ADDITIONS" REDUCTIONS. If,
as a result of Section 3.8(C)(2), the amount of the "Annual
Additions" which may be allocated to the accounts of any Participant
under this Plan is reduced for any Limitation Year, such reduction
shall be made as follows:
(a) The Participant Contribution portion
of such "Annual Additions" of such Participant for such
Limitation Year shall be reduced; and
(b) If the "Annual Additions" allocable
to such Participant Contributions are required to be reduced
to zero, then any Matching Contributions and Employer
Contributions (in that order) on behalf of such Participant
for such Limitation Year shall be reduced; and
(c) If the "Annual Additions" allocable
to Participant Contributions, Matching Contributions and
Employer Contributions are required to be reduced to zero,
then the Elective Deferral Contributions on behalf of such
Participant for such Limitation Year shall be reduced.
(4) TREATMENT OF "ANNUAL ADDITIONS" REDUCTIONS.
If as a result of Section 3.8(C)(2), the amount of the "Annual
Additions" which may be allocated under this Plan to any Participant's
accounts for any Limitation Year is reduced, such reduction shall be
treated as follows:
(a) The amount of such reduction
consisting of Participant Contributions shall be paid to the
Participant as soon as is administratively feasible; and
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(b) The amount of such reduction
consisting of Employer Contributions, Matching Contributions
and Elective Deferral Contributions shall be treated as an
"Excess Amount" and disposed of in accordance with Section
3.8(A)(4).
(D) DEFINITIONS. For purposes of this Article III, the
following terms shall be defined as follows:
(1) "ANNUAL ADDITIONS" shall mean, with respect
to any Participant, the amounts allocated to such Participant's
accounts during the Limitation Year that constitute:
(a) "Employer" contributions;
(b) Employee contributions;
(c) Forfeitures;
(d) Amounts allocated, after March 31,
1984, to an individual medical benefit account, as defined in
section 415(l)(2) of the Code, which is part of a pension or
annuity plan maintained by the "Employer";
(e) Amounts derived from contributions
paid or accrued after December 31, 1985, in taxable years
ending after such date, which are attributable to
post-retirement medical benefits, allocated to the separate
account of a key employee, as defined in section 419A(d)(3) of
the Code, under a Welfare Benefit Fund, maintained by the
"Employer"; and
(f) Any "Excess Amount" applied under
Sections 3.8(A) or 3.8(B) or 3.8(C) (if applicable), in the
Limitation Year to reduce "Employer" contributions for such
Limitation Year.
(2) "DEFINED BENEFIT PLAN FRACTION" shall mean a
fraction, the numerator of which is the sum of the Participant's
"Projected Annual Benefits" (as defined in Section 3.8(D)(9)) under
all the Defined Benefit Plans (whether or not terminated) maintained
by the "Employer", and the denominator of which is the lesser of 125
percent of the dollar limitation determined for the Limitation Year
under sections 415(b) and (d) of the Code or 140 percent of the
Participant's "Highest Average Compensation" (as defined in Section
3.8(D)(7)), including any adjustments under section 415(b) of the
Code.
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first Limitation Year beginning
after December 31, 1986, in one or more Defined Benefit Plans
maintained by the "Employer" which were in existence on May 6, 1986,
the denominator of this fraction shall not be less than 125 percent of
the sum of the annual benefits under such Plans which the Participant
had accrued as of the close of the last Limitation Year beginning
before January 1, 1987, disregarding any changes in the terms and
conditions of the Defined Benefit Plan after May 5, 1986. The
preceding sentence applies only if the Defined Benefit Plans
individually and in the aggregate satisfied the requirements of
section 415 of the Code for all Limitation Years beginning before
January 1, 1987.
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(3) "DEFINED CONTRIBUTION DOLLAR LIMITATION"
shall mean $30,000 or, if greater, one-fourth of the defined benefit
dollar limitation set forth in section 415(b)(1) of the Code as in
effect for the Limitation Year.
(4) "DEFINED CONTRIBUTION PLAN FRACTION" shall
mean a fraction, the numerator of which is the sum of the "Annual
Additions" to the Participant's account under all the Defined
Contribution Plans (whether or not terminated) maintained by the
"Employer" for the current and all prior Limitation Years (including
the "Annual Additions" attributable to the Participant's nondeductible
employee contributions to all Defined Benefit Plans, whether or not
terminated, maintained by the "Employer", and the "Annual Additions"
attributable to all Welfare Benefit Funds, and individual medical
benefit accounts (as defined in section 415(l)(2) of the Code)
maintained by the "Employer"), and the denominator of which is the sum
of the maximum aggregate amounts for the current and all prior
Limitation Years of service with the "Employer" (regardless of whether
a Defined Contribution Plan was maintained by the "Employer"). The
maximum aggregate amount in any Limitation Year is the lesser of 125
percent of the dollar limitation determined under sections 415(b) and
415(d) of the Code in effect under section 415(c)(1)(A) of the Code or
35 percent of the Participant's Limitation Compensation for such
Limitation Year.
If the Employee was a Participant as of the end of the first day of
the first Limitation Year beginning after December 31, 1986, in one or
more Defined Contribution Plans maintained by the "Employer" which
were in existence on May 6, 1986, the numerator of this fraction shall
be adjusted if the sum of this fraction and the "Defined Benefit Plan
Fraction" (as defined in Section 3.8(D)(2)) would otherwise exceed 1.0
under the terms of this Plan. Under the adjustment, an amount equal
to the product of (a) the excess of the sum of the fractions over 1.0
times (b) the denominator of this fraction, shall be permanently
subtracted from the numerator of this fraction. The adjustment is
calculated using the fractions as they would be computed as of the end
of the last Limitation Year beginning before January 1, 1987, and
disregarding any changes in the terms and conditions of the Plan made
after May 5, 1986, but using the section 415 limitation applicable to
the first Limitation Year beginning on or after January 1, 1987.
The "Annual Addition" for any Limitation Year
beginning before January 1, 1987, shall not be recomputed to treat all
Employee contributions as "Annual Additions".
(5) "EMPLOYER" shall mean the Employer that
adopts the Plan, and all members of a controlled group of corporations
(as defined in section 414(b) of the Code as modified by section
415(h) of the Code), all commonly controlled trades or businesses (as
defined in section 414(c) of the Code as modified by section 415(h) of
the Code) or affiliated service groups (as defined in section 414(m)
of the Code) of which the adopting Employer is a part, and any other
entity required to be aggregated with the Employer pursuant to
Treasury regulations under section 414(o) of the Code.
(6) "EXCESS AMOUNT" shall mean the excess of the
Participant's "Annual Additions" for the Limitation Year over the
"Maximum Permissible Amount", less loading and other administrative
charges allocable to such excess.
(7) "HIGHEST AVERAGE COMPENSATION" shall mean the
average compensation for the three consecutive Accrual Computation
Periods with the "Employer" that produces the highest average.
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(8) "MAXIMUM PERMISSIBLE AMOUNT" shall mean the
maximum "Annual Addition" that may be contributed or allocated to a
Participant's account under the Plan for any Limitation Year which
maximum is the lesser of:
(a) The "Defined Contribution Dollar
Limitation" (as defined in Section 3.8(D)(3)); or
(b) 25 percent of the Participant's
Limitation Compensation for the Limitation Year.
If a short Limitation Year is created because of an
amendment changing the Limitation Year to a different Computation
Period, the "Maximum Permissible Amount" shall not exceed the "Defined
Contribution Dollar Limitation" multiplied by the following fraction:
NUMBER OF MONTHS IN THE SHORT LIMITATION YEAR
---------------------------------------------
12
(9) "PROJECTED ANNUAL BENEFIT" shall mean the
annual retirement benefit (adjusted to an actuarially equivalent
straight life annuity if such benefit is expressed in a form other
than a straight life annuity or qualified joint and survivor annuity)
to which the Participant would be entitled under the terms of the plan
assuming:
(a) The Participant will continue
employment until normal retirement age under the plan (or
current age, if later), and
(b) The Participant's compensation for
the current Limitation Year and all other relevant factors
used to determine benefits under the plan will remain constant
for all future Limitation Years.
(10) "REGIONAL PROTOTYPE PLAN" shall mean a plan
the form of which is the subject of a favorable notification letter
from the Internal Revenue Service.
(E) SPECIAL RULE. The compensation limitation referred
to in Section 3.8(D)(8)(b) shall not apply to any contribution for medical
benefits (within the meaning of section 401(h) or section 419A(f)(2) of the
Code) which is otherwise treated as an "Annual Addition" under section
415(l)(1) or section 419A(d)(2) of the Code.
3.9 ROLLOVER CONTRIBUTIONS. The rules relating to Rollover
Contributions are as follows:
(A) GENERAL. If permitted by the Adoption Agreement, any
Participant may, with the approval of the Administrative Committee, make a
Rollover Contribution. The Trustee shall credit the amount of any Rollover
Contribution to the Participant's Rollover Account as of the date the
Rollover Contribution is made. A Rollover Contribution shall be fully
vested on the date of contribution. The limitations of Section 3.8 shall
not apply to Rollover Contributions. All Rollover Contributions shall be in
cash and/or other property acceptable to the Trustee. If permitted by the
Adoption Agreement, Employees other than Participants may be permitted to
make Rollover Contributions to the Plan.
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(B) TRUSTEE-TO-TRUSTEE TRANSFERS OF ROLLOVER CONTRIBUTIONS TO
PLAN. Effective January 1, 1993, if the Adoption Agreement provides for
Rollover Contributions and, if the Participant or other Employee eligible to
make a Rollover Contribution to the Plan (1) elects to have such Rollover
Contribution paid directly to the Plan, and (2) specifies the Plan as the
plan to which such Rollover Contribution is to be paid (in such form and at
such time as the Administrative Committee may prescribe), such Rollover
Contribution shall be made in the form of a direct trustee-to-trustee
transfer as described in section 401(a)(31) of the Code, as in effect on and
after January 1, 1993.
(C) ELIGIBLE ROLLOVER DISTRIBUTIONS FROM PLAN. This
Section 3.9(C) applies to distributions made on or after January 1, 1993.
(1) ELECTION OF DIRECT ROLLOVER. Notwithstanding
any provision of the Plan to the contrary that would otherwise limit a
"Distributee's" election under this Section 3.9(C), a "Distributee"
may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an "Eligible Rollover
Distribution" that is equal to at least $500 paid directly to an
"Eligible Retirement Plan" specified by the "Distributee" in a "Direct
Rollover".
(2) DEFINITIONS.
(a) "ELIGIBLE ROLLOVER DISTRIBUTION".
An "Eligible Rollover Distribution" is any distribution of all
or any portion of the balance to the credit of the
"Distributee", except that an "Eligible Rollover Distribution"
does not include: any distribution that is one of a series of
substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the
"Distributee" or the joint lives (or joint life expectancies)
of the "Distributee" and the "Distributee's" designated
beneficiary, or for a specified period of ten years or more;
any distribution to the extent such distribution is required
under section 401(a)(9) of the Code; the portion of any
distribution that is not includible in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities); and any
other distribution(s) that is reasonably expected to total
less than $200 during a year.
(b) "ELIGIBLE RETIREMENT PLAN". An
"Eligible Retirement Plan" is an individual retirement account
described in section 408(a) of the Code, an individual
retirement annuity described in section 408(b) of the Code, an
annuity plan described in section 403(a) of the Code, or a
qualified plan described in section 401(a) of the Code, that
accepts the "Distributee's" "Eligible Rollover Distribution".
However, in the case of an "Eligible Rollover Distribution" to
the surviving spouse, an "Eligible Retirement Plan" is an
individual retirement account or individual retirement
annuity.
(c) "DISTRIBUTEE". A "Distributee"
includes an employee or former employee. In addition, the
employee's or former employee's surviving spouse and the
employee's or former employee's spouse or former spouse who is
the alternate payee under a Qualified Domestic Relations
Order, as defined in section 414(p) of the Code, are
"Distributees" with regard to the interest of the spouse or
former spouse.
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(d) "DIRECT ROLLOVER". A "Direct
Rollover" is a payment by the Plan to the "Eligible Retirement
Plan" specified by the "Distributee".
3.10 TRANSFERS OF ACCOUNTS FROM AND TO OTHER QUALIFIED PLANS. The
rules relating to transfers of accounts are as follows:
(A) TRANSFER OF ACCOUNTS FROM OTHER QUALIFIED PLANS.
(1) GENERAL RULES. If permitted by the Adoption
Agreement, Participants may have the assets in their accounts in other
plans transferred to this Plan provided:
(a) The other plan is a plan which
formerly covered the Participant and is qualified under
section 401(a) of the Code but is not a Defined Benefit Plan
or a money purchase pension plan (including a target benefit
plan) or a plan which provided for distribution or should have
provided for distribution in the form of qualified joint and
survivor annuities or a direct or indirect transferee from any
such plan unless the Plan adopted hereunder by the Employer is
a money purchase plan;
(b) The Administrative Committee
approves such transfer;
(c) The Trustee accepts such transfer;
and
(d) The transferred assets consist
solely of cash and/or other property acceptable to the
Trustee.
The Trustee shall credit the fair market value of such transferred
assets to the Transfer Account of the Participant on whose behalf such
assets were transferred as of the date of the transfer. The interest
of a Participant in his Transfer Account shall be fully vested on the
date of the transfer. The limitations of Section 3.8 shall not apply
to such transfers. If permitted by the Adoption Agreement, Employees
other than Participants may be permitted to make direct transfers to
the Plan.
(2) LIMITATIONS APPLICABLE TO TRANSFERS FROM
PLANS COVERING CERTAIN KEY EMPLOYEES AND FIVE-PERCENT OWNERS. In the
event assets are transferred from a qualified plan covering Key
Employees in a Top-Heavy Plan, or five-percent owners (within the
meaning of section 416(i)(1) of the Code) of their former employer,
the following restrictions apply:
(a) Separate Transfer Accounts must be
maintained for the assets transferred by each of the former
Key Employees or five-percent owners;
(b) The former five-percent owners or
the former Key Employees (if they were five-percent owners of
their former employer) may, subject to the terms of the Plan,
receive benefits from such separate Transfer Accounts before
they attain age 59 1/2 or become disabled, but subject to any
penalties provided by the Code for such distributions; and
(c) The former five-percent owners or
the former Key Employees (if they were five-percent owners of
their former employer) must commence receiving benefits from
such separate Transfer Accounts not later than the April 1 of
the calendar year following the calendar year in which they
attain age 70 1/2.
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(B) TRANSFERS OF ACCOUNTS TO OTHER QUALIFIED PLANS. Upon
the request of a Participant who has terminated his services with the
Employer or whose coverage under this Plan has terminated, but only with the
approval of the Administrative Committee, the Trustee shall transfer all
amounts held in the Plan for the account of such Participant to another plan
or plans (including another qualified plan of the Employer) provided such
other plan or plans meet the requirements of section 401(a) of the Code and
such other plan or plans are maintained by the employer of such Participant
(or the Employer) and any required governmental notifications have been made
and further provided that any request is accompanied by an acceptance letter
from the trustee of the transferee plan or plans. Neither the Trustee nor
the Administrative Committee shall have any further liability under this
Plan with respect to amounts so transferred.
3.11 TOP-HEAVY PROVISIONS. If the Plan is or becomes top-heavy in
any Plan Year beginning after December 31, 1983, the provisions of this Section
3.11 shall supersede any conflicting provisions in the Plan or in the Adoption
Agreement. The following provisions shall be effective with respect to any
adopting Employer in any Plan Year in which the Plan, with respect to such
adopting Employer, is determined to be a Top-Heavy Plan.
(A) MINIMUM ALLOCATION.
(1) GENERAL. Except as otherwise provided in
Section 3.11(A)(4), the Employer contributions and forfeitures
allocated for any Plan Year in which the Plan is a Top-Heavy Plan on
behalf of any Participant who is not a Key Employee shall not be less
than the lesser of three percent of such Participant's "Compensation"
(as defined in Section 3.11(A)(3)) for such Plan Year or, in the case
where the Employer has no Defined Benefit Plan which designates this
Plan to satisfy section 401 of the Code, the largest percentage of
Employer contributions and forfeitures, as a percentage of the Key
Employee's "Compensation", as limited by section 401(a)(17) of the
Code, allocated on behalf of any Key Employee for that Plan Year. The
minimum allocation shall be determined without regard to any Social
Security contribution. This minimum allocation shall be made even
though, under other Plan provisions, the Participant would not
otherwise be entitled to receive an allocation, or would have received
a lesser allocation in the Plan Year because:
(a) The Participant failed to complete 1,000
Hours of Service (or any equivalent provided in the Plan);
(b) The Participant failed to make mandatory
employee contributions to the Plan; or
(c) The Participant's "Compensation" was less
than a stated amount.
(2) NONFORFEITABILITY OF MINIMUM ALLOCATION. The
minimum allocation required (to the extent required to be
nonforfeitable under section 416(b) of the Code) may not be forfeited
under section 411(a)(3)(B) or 411(a)(3)(D) of the Code.
(3) DEFINITION OF "COMPENSATION". For purposes
of computing the minimum allocation, "Compensation" shall mean
Limitation Compensation, as defined in Section A.1.47 of the Adoption
Agreement as limited by section 401(a)(17) of the Code.
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(4) EXCEPTIONS.
(a) LAST DAY OF PLAN YEAR RULE. The
provisions in Section 3.11(A)(1) shall not apply to any Participant who
was not employed by the Employer on the last day of the Plan Year.
(b) MINIMUM ALLOCATION OR BENEFIT
PROVIDED UNDER OTHER PLAN. The provisions in Section
3.11(A)(1) shall not apply to any Participant to the extent
the Participant is covered under any other Employee Pension
Benefit Plan(s) of the Employer and the Employer has provided
in Section A.3.11(A)(2) of the Adoption Agreement that the
minimum allocation or benefit requirements applicable to
Top-Heavy Plans shall be met in the other Employee Pension
Benefit Plan(s). [NOTE: THIS PROVISION MAY CAUSE THE PLAN TO
FAIL TO SATISFY THE UNIFORMITY REQUIREMENT OF TREAS. REG.
Section 1.401(A)(4)-2(B)(2)(II) FOR PLANS USING A
DESIGN-BASED SAFE HARBOR, EVEN THOUGH ALL OTHER REQUIREMENTS
OF THE SAFE HARBOR ARE MET.]
(5) ELECTIVE DEFERRALS AND MATCHING
CONTRIBUTIONS. Neither Elective Deferrals nor Matching Contributions
may be taken into account for the purpose of satisfying the minimum
top-heavy contribution requirement under Section 3.11(A)(1).
(B) VESTING. For any Plan Year in which this Plan is a
Top-Heavy Plan, one of the minimum vesting schedules as elected by the
Employer in the Adoption Agreement shall automatically apply to the Plan.
The minimum vesting schedule applies to all benefits within the meaning of
section 411(a)(7) of the Code except those attributable to Employee
contributions, including benefits accrued before the effective date of
section 416 of the Code and benefits accrued before the Plan became a
Top-Heavy Plan. Further, no decrease in a Participant's nonforfeitable
percentage may occur in the event the Plan's status as a Top-Heavy Plan
changes for any Plan Year. However, this Section 3.11(B) does not apply to
the account balances of any Employee who does not have an Hour of Service
after the Plan has initially become a Top-Heavy Plan and such Employee's
account balance attributable to Employer contributions and forfeitures shall
be determined without regard to this Section 3.11(B).
Notwithstanding the above, in the event the vesting schedule
selected under Section 7.6 provides for more rapid vesting than the vesting
schedule selected under this Section 3.11(B), the vesting schedule selected
under this Section 3.11(B) shall be superseded by the vesting schedule under
Section 7.6 but only to the extent more rapid vesting is provided in such
schedule.
The Participant shall at all times have a nonforfeitable right
to all of his Accrued Benefit under the Plan attributable to Elective
Deferral Contributions, Participant Contributions and Qualified Voluntary
Employee Contributions.
ARTICLE IV
ACCOUNTS
4.1 SEPARATE ACCOUNTS. The Administrative Committee shall
maintain or cause to be maintained, for each Participant, in accordance with
the provisions of this Section 4.1, a separate Employer Account and, if
Matching Contributions are permitted in accordance with Section 3.5, a separate
Matching Account, and if
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Elective Deferral Contributions are permitted in accordance with Section 3.4, a
separate Elective Deferral Account, and if Participant Contributions are
permitted in accordance with Section 3.2, a separate Participant Account, and,
if Rollover Contributions are made on behalf of a Participant, a separate
Rollover Account, and, if direct transfers are made to the Plan on behalf of a
Participant pursuant to Section 3.10, a separate Transfer Account, and, if
Qualified Voluntary Employee Contributions have been permitted in accordance
with Section 3.3, a separate QVEC Account, to which Employer, Matching,
Elective Deferral, Participant and Rollover Contributions and direct transfers
and Qualified Voluntary Employee Contributions, respectively, shall be
credited. The Administrative Committee shall also maintain or cause to be
maintained, for each such Participant, in accordance with the provisions of
this Section 4.1, a record of the value of the Participant's Employer,
Matching, Elective Deferral, Participant, Rollover, Transfer and QVEC Accounts,
which shall represent the interest of such Participant in the assets of the
accounts maintained by the Trustee for his benefit. Separate accounts shall
also be maintained, in accordance with Section 3.1(B)(3)(b) for any Qualified
Matching Contributions and/or Qualified Nonelective Contributions made to the
Plan on behalf of any Participant.
ARTICLE V
ALLOCATION OF CONTRIBUTIONS, EARNINGS AND FORFEITURES
5.1 ALLOCATIONS OF CONTRIBUTIONS. The rules relating to
allocations of contributions are as follows:
(A) EMPLOYER CONTRIBUTIONS. The Administrative Committee
shall allocate the Employer Contribution for each Plan Year for which an
Employer Contribution is made among the Employer Accounts of each
Participant entitled to receive an allocation, in accordance with the terms
of the Adoption Agreement. Each such allocation shall be effective as of
the last day of the Plan Year, except as otherwise specified in the Plan or
Adoption Agreement.
(B) PARTICIPANT CONTRIBUTIONS. The Trustee, upon
instructions from the Administrative Committee, shall, as of the date
received from the Employer, allocate any amounts contributed by a
Participant, in accordance with Section 3.2, to the Participant Account of
such Participant.
(C) QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS. No
Qualified Voluntary Employee Contributions are permitted after December 31,
1986.
(D) ELECTIVE DEFERRAL CONTRIBUTIONS. The Trustee, upon
instructions from the Administrative Committee, shall, as of the date
received from the Employer, allocate any Elective Deferral Contributions
made on behalf of any Participant in accordance with Section 3.4, to the
Elective Deferral Account of such Participant.
(E) MATCHING CONTRIBUTIONS. The Trustee, upon
instructions from the Administrative Committee, shall, as of the date
received from the Employer, allocate any Matching Contributions made on
behalf of any Participant, in accordance with Section 3.5 and the Adoption
Agreement, to the Matching Account of such Participant.
(F) ROLLOVER CONTRIBUTIONS. The Trustee, upon
instructions from the Administrative Committee, shall as of the date
received from the Employer or as of the date received in a
trustee-to-trustee transfer under Section 3.9(B), allocate any amounts
contributed by a Participant or transferred to the Trustee
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on his behalf under Section 3.9(B), in accordance with Section 3.9, to the
Rollover Account of such Participant.
(G) DIRECT TRANSFERS. The Trustee shall, as of the date
received from another qualified plan, pursuant to instructions of the
Administrative Committee, allocate any amounts transferred on behalf of a
Participant pursuant to Section 3.10, to the Transfer Account of such
Participant.
(H) QUALIFIED MATCHING AND QUALIFIED NONELECTIVE
CONTRIBUTIONS. The Trustee, upon instructions from the Administrative
Committee, shall, as of the date received from the Employer, allocate any
Qualified Matching and/or Qualified Nonelective Contribution made on behalf
of any Participant, to the separate account or accounts of such Participant
in accordance with Section 3.1(B)(3)(b).
5.2 ADVICE TO TRUSTEE RE ALLOCATIONS OF CONTRIBUTIONS AND DIRECT
TRANSFERS. The Administrative Committee shall, at the time contributions or
direct transfers are transmitted to the Trustee, deliver to the Trustee a
schedule showing the amounts allocated to the Employer, the Matching, the
Elective Deferral, the Participant, the Rollover, the Transfer and the QVEC
Accounts and the Qualified Matching Contribution account and the Qualified
Nonelective Contribution account of each Participant and, if Section 6.1(B) is
applicable to this Plan, indicating the manner in which the Participant has
directed that such contributions or direct transfers be invested.
5.3 VALUATIONS. The Trustee, as of each Valuation Date, shall
cause a valuation to be made of the assets of the Trust Fund and of each
Employer, Matching, Elective Deferral, Participant, Rollover, Transfer and QVEC
Account and of each Qualified Matching Contribution account and Qualified
Nonelective Contribution account in such Fund at their current fair market
value. In each such valuation, the Trustee shall credit all income and profits
realized since the preceding Valuation Date in accordance with Section 5.4 and
shall deduct all losses, costs, charges and expenses of administering the Trust
Fund since the preceding Valuation Date.
The Trustee shall furnish the Administrative Committee with a report
of each such valuation of the Trust Fund.
5.4 ALLOCATION OF INCREASES AND DECREASES. As of each Valuation
Date, in determining the valuation of each Employer, Matching, Elective
Deferral, Participant, Rollover, Transfer and QVEC Account and of each
Qualified Matching Contribution account and Qualified Nonelective Contribution
account under Section 5.3, upon receipt of the Trustee's report, the
Administrative Committee shall allocate the increase or decrease in the fair
market value of the assets of the Trust Fund, after reduction for any
forfeitures under Section 7.6, and any interim Employer, Matching, Elective
Deferral, Participant, Rollover and Qualified Voluntary Employee Contributions
and direct transfers and Qualified Matching and Qualified Nonelective
Contributions to the Employer, Matching, Elective Deferral, Participant,
Rollover and QVEC Accounts and Transfer Account and Qualified Matching
Contribution and Qualified Nonelective Contribution accounts of each
Participant in the proportion that the amount in the Employer, Matching,
Elective Deferral, Participant, Rollover and QVEC Accounts and Transfer Account
and Qualified Matching Contribution and Qualified Nonelective Contribution
accounts of each Participant bears respectively to the total amount in the
Employer, Matching, Elective Deferral, Participant, Rollover and QVEC Accounts
and Transfer Accounts and Qualified Matching Contribution and Qualified
Nonelective Contribution accounts of all Participants, all as determined on the
first day or last day (as specified in the Adoption Agreement) of the period in
which the Valuation Date occurs (except that the last day of the period shall
be used for the initial allocation for any Employer). At the discretion of the
Administrative Committee, in allocating increases and decreases, the
Administrative Committee may take into account on a uniform and
nondiscriminatory basis contributions and forfeitures allocated during the
period in which the Valuation Date occurs. For purposes of this Section 5.4,
in the event the Adoption Agreement provides for
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Participant directed investments pursuant to Section 6.1(B), each Account (and
each other account) subject to such Participant directed investments shall be
treated as a separate Trust Fund.
5.5 FORFEITURES. All amounts forfeited by separated Participants
of an adopting Employer in accordance with Section 7.6 shall be debited to the
Employer and/or Matching Accounts of the respective Participants employed by
such adopting Employer who are subject to such forfeitures. Subject to Section
3.8 and, except as otherwise provided in the Adoption Agreement, forfeitures
shall be aggregated with Employer, and/or Matching Contributions for the Plan
Year and shall be allocated to the Accounts of the remaining Participants
employed by such adopting Employer in the same manner as is provided for the
allocation of Employer, and/or Matching Contributions under Section 5.1. Such
allocation shall be effected as of the date specified in the Adoption
Agreement. Notwithstanding the foregoing, the forfeited amounts may first be
used to restore a rehired Participant's non-vested account that was forfeited,
as provided in Section 7.6(C).
ARTICLE VI
INVESTMENT OF ACCOUNTS
6.1 INVESTMENT OF ACCOUNTS. The Employer shall indicate in the
Adoption Agreement whether the Trustee, the Participant (or Beneficiary, if
applicable) and/or an Investment Manager shall have the power to direct
investment of Employer, Matching, Elective Deferral, Participant, Rollover,
Transfer and/or QVEC Accounts and/or of any other account (e.g., Qualified
Matching Contribution account and Qualified Nonelective Contribution account)
under the Plan. To the extent the Participant (or Beneficiary, if applicable)
does not have the power to direct the investment of his accounts under the
Plan, such Participant (or Beneficiary, if applicable) shall have a ratable
interest in all assets of the Trust.
(A) INVESTMENT BY TRUSTEE AND/OR INVESTMENT MANAGER. If
the Trustee or an Investment Manager is selected to direct investment of
Employer and/or Matching and/or Elective Deferral and/or Participant and/or
Rollover and/or Transfer and/or QVEC Accounts and/or Qualified Matching
Contribution account and/or Qualified Nonelective Contribution account
and/or other accounts, the Trustee, subject to the requirements set forth in
Article X, or, if an Investment Manager has been selected to direct
investments, the Trustee, subject to the directions of the Investment
Manager and subject to the requirements set forth in Articles X and XII,
shall have full discretion and authority to invest and reinvest the
principal and income of that portion of the Trust Fund committed to it for
investment in any form of property not prohibited by law (without
restriction to investments authorized by State law for fiduciaries).
Consistent with this authority, but not by way of limitation, the Trustee is
hereby specifically empowered with respect to that portion of the Trust Fund
committed to it:
(1) To invest any part or all of the assets in
any common stocks, bonds, insurance contracts, mortgages, notes or
other property of any kind, real or personal. All such investments
shall be diversified as provided by law, unless it is clearly prudent
not to do so;
(2) To invest any part or all of the assets in
any common, collective, pooled or group trust fund meeting the
requirements of Rev. Rul. 81-100, 1981-1 CB 326 and operated by a bank
or similar financial institution (even if such bank or other
institution serves as Trustee) supervised by the United States or any
State, provided such investments are available only to pension and
profit-sharing trusts which meet the requirements of section 401(a)
and related Code sections. So long as any portion
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of the Trust Fund is so invested, the instrument establishing such
common, collective, pooled or group trust fund shall constitute an
integral part of this Plan and Trust Agreement;
(3) To invest all or part of the assets in
deposits which bear a reasonable interest rate, including certificates
of deposit, in any bank, savings or similar financial institution
(even if such bank or other institution serves as Trustee) supervised
by the United States or any State;
(4) To hold cash uninvested for a reasonable
period of time and to deposit such sums in an account of any banking,
savings, or similar financial institution (even if such bank or other
institution serves as Trustee) supervised by the United States or any
State;
(5) To manage, purchase, grant options to
purchase, dispose of, abandon, improve, repair, insure, lease for any
future or present term or otherwise deal with all property, real or
personal, on such terms and conditions as the Trustee shall decide,
without liability on the purchasers to see to the application of the
purchase money or to the propriety of any such disposition;
(6) To borrow money or assume indebtedness, for
the purposes of the Plan, upon such terms as the Trustee deems
advisable. All or part of the assets may be pledged as security for
such loans or mortgages and no person lending to the Trustee need see
to the application of money lent or the propriety of borrowing.
Notwithstanding anything in this Section 6.1(A)(6) to the contrary, in
the event the Trustee borrows against the loan values of Insurance
Contracts purchased under the terms of the Plan, the amounts so
borrowed must be borrowed on a pro rata basis under each Insurance
Contract held by the Trustee;
(7) To extend mortgages or to invest in loans to
a Participant in accordance with, and as provided by, Section 7.11;
(8) To join in or oppose the reorganization,
recapitalization, consolidation, sale or merger of corporations or
properties, including those in which it is interested as Trustee, upon
such terms as deemed appropriate;
(9) To hold investments in nominee or bearer
form, provided the requirements of section 403(a) of ERISA are not
violated by so registering and so holding such investments;
(10) To give proxies;
(11) To provide benefits by annuity contracts
issued by an Insurer, if so instructed by the Administrative
Committee;
(12) To deduct from and charge against the Trust
Fund any taxes paid by it, which may be imposed upon the Trust Fund or
the income thereof, or which the Trustee is required to pay with
respect to the interest of any person therein;
(13) To receive and withdraw from the Trust Fund
reasonable compensation for the Trustee's services (unless the Trustee
is a full-time employee of the Employer in which case no additional
compensation shall be paid to the Trustee) and expenses hereunder,
including the compensation of an Investment Manager and legal fees,
and charge the Trust Fund, upon approval by the Administrative
Committee, for the compensation and expenses of any independent
accountant or actuary who may be
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employed from time to time by the Trustee, Employer or Administrative
Committee in connection with this Plan and Trust Agreement;
(14) To invest Trust assets allocable to Employer
contributions in Qualifying Employer Securities but only to the extent
the Plan and Adoption Agreement so provide and only if such Employer
contributions are not subject to Participant directed investment and,
if the Plan, as adopted by the Employer, is a money purchase plan,
only if immediately after the acquisition of such Qualifying Employer
Securities, the aggregate fair market value of such Qualifying
Employer Securities does not exceed ten percent of the fair market
value of Plan assets. In no event shall Trust assets be invested in
employer real property. In no event shall Employer contributions
subject to Participant directed investment or Participant, Matching,
Qualified Matching, Elective Deferral, Rollover or Qualified Voluntary
Employee Contributions or direct transfers be invested in Qualifying
Employer Securities unless such investment is in compliance with
applicable Federal and state securities laws and, if the Plan, as
adopted by the Employer, is a money purchase plan, is in compliance
with the ten percent limit described above;
(15) If the Trustee is a bank, to invest any part
or all of the assets in a common trust fund of said Trustee bank
provided such common trust fund is described in section 584 of the
Code; and
(16) If a bank, to accept employment and
thereafter act as agent for the Employer or Administrative Committee
to perform multiple or ancillary services for the Plan, its
Participants and Beneficiaries and to receive and withdraw from the
Trust Fund reasonable compensation therefor. Nothing done by the
Trustee as agent shall enlarge or increase in any manner the
responsibilities or liabilities of the Trustee hereunder which shall
be governed solely by the terms of the Plan and by applicable law.
(B) INVESTMENT BY PARTICIPANT OR BENEFICIARY. If the
Participant or Beneficiary (if applicable) is selected to direct investment
of his Employer and/or Matching and/or Elective Deferral and/or Participant
and/or Rollover and/or Transfer and/or QVEC Accounts and/or Qualified
Matching Contribution accounts and/or Qualified Nonelective Contribution
accounts and/or other accounts, the investment of all sums in the Employer
and/or Matching and/or Elective Deferral and/or Participant and/or Rollover
and/or Transfer and/or QVEC Accounts and/or Qualified Matching Contribution
accounts and/or Qualified Nonelective Contribution accounts and/or other
accounts of any Participant or Beneficiary (if applicable) shall be
directed, subject to any limitations on investments indicated in the
Adoption Agreement, by such Plan Participant or Beneficiary (if applicable),
as provided in Section 6.1(B)(1) below:
(1) Participant or Beneficiary investment
instructions shall be made in writing on the Appropriate Form or
otherwise as determined by the Administrative Committee. Such
instructions, whether in writing or as otherwise determined by the
Administrative Committee, shall be given to the Administrative
Committee or its agent who, in turn, shall notify the Trustee of the
instructions contained therein. The Trustee may, in his or its
discretion, require written confirmation of such instructions from the
Administrative Committee. In any case, the Participant or Beneficiary
shall be given the opportunity to obtain written confirmation from the
Administrative Committee or its agent of the Participant's or
Beneficiary's investment instructions.
(2) No Fiduciary, including, but not limited to,
the Administrative Committee and the Trustee, shall be liable for any
loss or by reason of any breach which results from the Participant's
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or Beneficiary's exercise of control as provided in this Section
6.1(B). It is the intent that any Plan subject to this Section 6.1(B)
shall constitute a plan described in section 404(c) of ERISA and 29
CFR Section 2550.404c-1.
(3) Any sums for which no adequate Participant or
Beneficiary investment instructions have been received by the Trustee,
in accordance with this Section 6.1(B), shall be deposited in an
interest bearing passbook account of any banking, savings, or similar
financial institution supervised by the United States or any State
until such Participant or Beneficiary investment instructions have
been received.
(4) Notwithstanding any other provision in the
Plan to the contrary, the Participant or Beneficiary may not direct
the investment of his Employer and/or Matching and/or Elective
Deferral and/or Participant and/or Rollover and/or Transfer and/or
QVEC Accounts and/or Qualified Matching Contribution and/or Qualified
Nonelective Contribution accounts and/or other accounts in:
(a) Qualifying Employer Securities
unless such investment is in compliance with applicable
Federal and state securities laws and, if the Plan, as adopted
by the Employer, is a money purchase plan, is in compliance
with the ten percent limit described above;
(b) "Collectibles"; "collectibles" include
any work of art, rug, antique, gem, stamp, coin, alcoholic
beverage, or any other item of tangible personal property
specified by the Secretary of the Treasury pursuant to section
408(m) of the Code;
(c) Any investment which would result in
a prohibited transaction described in section 406 of ERISA or
section 4975 of the Code; or
(d) Any investment which would generate
income that would be taxable to the Plan.
6.2 INSURANCE CONTRACTS. The rules relating to Insurance
Contracts are as follows:
(A) INVESTMENT IN INSURANCE CONTRACTS. The Trustee or
the Investment Manager, if appropriate, if the Trustee or an Investment
Manager has been selected to direct investment of Employer and/or Matching
Accounts and/or Participant Accounts and/or Elective Deferral Accounts
and/or Rollover Accounts and/or Qualified Matching Contribution accounts
and/or Qualified Nonelective Contribution accounts under the Adoption
Agreement, may direct that Employer and/or Participant and/or Elective
Deferral and/or Rollover and/or Matching Contributions and/or Qualified
Matching Contributions and/or Qualified Nonelective Contributions made on
behalf of Participants be used to pay premiums on Insurance Contracts. If
the Participant or Beneficiary has been selected to direct investment of his
Employer and/or Matching Accounts and/or Participant Accounts and/or
Elective Deferral Accounts and/or Rollover Accounts and/or Qualified
Matching Contribution accounts and/or Qualified Nonelective Contribution
accounts under the Adoption Agreement, the Participant or Beneficiary (if
applicable) may direct, on the Appropriate Form furnished by, and returned
to, the Administrative Committee, that Employer and/or Matching and/or
Participant and/or Elective Deferral and/or Rollover Contributions and/or
Qualified Matching Contributions and/or Qualified Nonelective Contributions
made on his behalf be used to pay premiums on Insurance Contracts. Any
death benefit payable under any non-transferable annuity or endowment
policies thereunder shall not exceed 100 times the anticipated monthly
annuity to be provided thereby. Moreover, the portion of any Employer,
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Elective Deferral and/or Matching and/or Qualified Matching and/or Qualified
Nonelective Contributions, if used to purchase:
(1) Ordinary life insurance, shall not exceed
one-half of such Employer, Elective Deferral, Matching, Qualified
Matching and Qualified Nonelective Contributions;
(2) Term or universal life insurance, shall not
exceed one-quarter of such Employer, Elective Deferral, Matching,
Qualified Matching and Qualified Nonelective Contributions; or
(3) Both ordinary life and term or universal life
insurance, shall not exceed, after adding the term insurance premium
to one-half of the ordinary life insurance premium, one-quarter of
such Employer, Elective Deferral, Matching, Qualified Matching and
Qualified Nonelective Contributions.
The Trustee shall purchase only such Insurance Contracts from
an Insurer as shall conform with the requirements of the Plan. In the event
of any conflict between the provisions of the Plan and the terms of any
Insurance Contract issued thereunder, the Plan provisions shall control.
All Insurance Contracts other than annuity policies shall
provide settlement options for conversion into annuity policies, either
directly or through conversion into cash and thereupon purchase of annuity
policies, in accordance with the terms of the Plan. When benefits become
payable, the Trustee shall direct the Insurer to convert such policies to
cash or distribute them, in accordance with the provisions of the Plan, to a
Participant. All Employer, Participant, Elective Deferral, Rollover,
Matching, Qualified Matching and Qualified Nonelective Contributions applied
to purchase Insurance Contracts shall be credited to the Participant's
Employer, Participant, Elective Deferral, Rollover, Matching, Qualified
Matching Contribution and Qualified Nonelective Contribution accounts and
shall be held by the Trustee until distributed in accordance with the terms
of the Plan. No direct transfers may be used to purchase any type of life
insurance.
(B) INSURANCE CONTRACTS TO BE HELD AND OWNED BY TRUSTEE.
The Trustee shall apply for, hold and own each Insurance Contract purchased
pursuant to the Plan. The Trustee shall exercise any right contained in the
Insurance Contract. The Insurance Contracts shall provide that the proceeds
shall be payable to the Trustee. The Trustee, however, shall be required to
pay over all proceeds of the Insurance Contract(s) to the Participant's
designated Beneficiary in accordance with the distribution provisions of the
Plan. A Participant's Spouse shall be the designated Beneficiary of the
proceeds in all circumstances unless a qualified election has been made in
accordance with Section 7.2(B). Under no circumstances shall the Trust
retain any part of the proceeds. If, upon the Disability, retirement or
termination of employment of the Participant, or upon the termination of the
Plan, if earlier, the Insurance Contract is not converted into cash, it
shall, subject to the terms of the Plan, be delivered to the Participant
covered thereunder.
6.3 VOTING AND OTHER ACTIONS. The rules pertaining to voting of
securities and other related rules are as follows:
(A) TRUSTEE AND/OR INVESTMENT MANAGER DIRECTED
INVESTMENTS. If the Trustee and/or an Investment Manager is selected to
direct investment of Employer and/or Matching and/or Elective Deferral
and/or Participant and/or Rollover and/or Transfer and/or QVEC Accounts
and/or Qualified Matching Contribution and/or Qualified Nonelective
Contribution accounts and/or other accounts under the Adoption Agreement,
the Trustee shall have, with respect to the accounts committed to it for
investment, all of the rights of an individual owner, including the power to
vote stock held in such accounts, to give proxies, to participate
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in any voting trusts, mergers, consolidations or liquidations and to receive
or sell stock subscriptions or conversion rights. Moreover, the Trustee may
hold any securities in its or its nominee's name, or in another form as is
deemed appropriate. This may be done with or without disclosing the trust
relationship.
(B) PARTICIPANT OR BENEFICIARY DIRECTED INVESTMENTS. If
the Participant or Beneficiary is selected to direct investment of his
Employer and/or Matching and/or Elective Deferral and/or Participant and/or
Rollover and/or Transfer and/or QVEC Accounts and/or Qualified Matching
Contribution and/or Qualified Nonelective Contribution accounts and/or other
accounts under the Adoption Agreement, the Participant or Beneficiary shall
be accorded all rights and powers described in Section 6.3(A) above with
respect to such accounts.
ARTICLE VII
BENEFITS AND DISTRIBUTIONS
7.1 BENEFIT DETERMINATION. The rules pertaining to benefit
determinations and certain other related matters are as follows:
(A) AMOUNT OF BENEFITS. The amount of any benefits
payable under this Article VII shall be determined as of the Valuation Date
coincident with, or if the Valuation Date does not coincide with the benefit
commencement date, the Valuation Date immediately preceding the benefit
commencement date. Except as otherwise provided in Section 7.9, all amounts
then credited to such Participant's Employer, Matching, Elective Deferral,
Participant, Rollover and/or QVEC Accounts and/or Transfer Account and/or
Qualified Matching Contribution and/or Qualified Nonelective Contribution
accounts and/or other account, including any Employer, Matching, Elective
Deferral, Participant, Rollover, QVEC, Qualified Matching Contribution and
Qualified Nonelective Contribution and other Employer contribution and
direct transfer not yet paid by the Employer to the Trustee but due the
Participant, shall be paid to the Participant in accordance with the
provisions of this Article VII.
(B) MANNER OF DISTRIBUTION.
(1) PROFIT-SHARING OR PROFIT-SHARING 401(K) PLAN.
Except as otherwise provided in this Article VII, if the Plan, as
adopted by the Employer, is a profit-sharing or profit-sharing 401(k)
plan, benefits shall be paid in one lump sum to the Participant unless
the Participant elects, no later than 30 days prior to the Valuation
Date immediately preceding the benefit commencement date, to receive
his benefits in equal or substantially equal monthly, quarterly, semi-
annual or annual installment payments over a period certain specified
by the Participant in such election, but in no event may such period
(a) extend beyond the life expectancy of the Participant or the joint
life expectancies of the Participant and his Beneficiary, provided
such Beneficiary is an individual or (b) violate the requirements of
Section 7.13. If a Participant's Accrued Benefit is to be paid in
installments, the Administrative Committee, in its sole discretion,
may direct the Trustee to segregate such Accrued Benefit from other
Trust assets and place it in a separate account. Such separate
account shall, until final payment to the Participant is made, be
invested in one or more accounts in one or more Federally insured
banks or saving institutions or a similar interest bearing account
allowing periodic withdrawals without penalty, as determined by the
Trustee, with all interest earned on such investment(s) credited to
such separate account and all disbursements charged thereto. Interest
earned during any period shall be paid with the next scheduled
installment payment. The installment election shall not be available
to any Participant whose Accrued
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Benefit is not more than $3,500. In such case the Participant shall
only be entitled to receive a lump sum payment of his Accrued Benefit.
(2) MONEY PURCHASE PLAN. Except as otherwise
provided in this Article VII, if the Plan, as adopted by the Employer
is a money purchase plan, benefits shall be paid in accordance with
the provisions of Section 7.14.
(C) ELECTIONS. An election under Section 7.1(B)(1) shall
be made on the Appropriate Form which the Administrative Committee shall
furnish to the Participant before the Valuation Date immediately preceding
the benefit commencement date. Any such election may, subject to the
approval of the Administrative Committee, be revoked and a new election made
at any time prior to the benefit commencement date. Any election under
Section 7.1(B)(2) shall be made in accordance with Section 7.14.
7.2 DESIGNATION OF BENEFICIARY AND ELECTION WITH RESPECT TO DEATH
BENEFIT. This Section 7.2 shall apply if the Plan, as adopted by the Employer
is a profit-sharing or profit-sharing 401(k) Plan. This Section 7.2 shall
apply if the Plan, as adopted by the Employer, is a money purchase plan only to
the extent not otherwise provided in Section 7.14.
(A) DESIGNATION OF BENEFICIARY. Effective August 23,
1984, in the event a Participant has a Surviving Spouse at his death, such
Surviving Spouse shall be the Participant's Beneficiary, unless the
Participant's Spouse has previously consented during the election period
provided in Section 7.2(C), in a manner conforming to a qualified election,
as described in Section 7.2(B), to the payment of the Participant's Accrued
Benefit (reduced by any security interest held by the Plan by reason of any
loans outstanding to such Participant) to a Participant-designated
Beneficiary other than the Surviving Spouse, except as otherwise provided in
the next succeeding sentence. In the event the Participant has no Surviving
Spouse at his death (or in the case of the Participant's death prior to
August 23, 1984, even if the Participant had a Surviving Spouse), the
Beneficiary shall be the Beneficiary designated by the Participant or, in
the event no Beneficiary has been designated or survives the Participant,
the Beneficiary shall be determined in accordance with Section 7.8(B). Such
Beneficiary (other than a Surviving Spouse, effective August 23, 1984) must
be designated on the Appropriate Form furnished by the Administrative
Committee, executed by the Participant and returned to the Administrative
Committee. Any such designation of Beneficiary may include contingent or
successive Beneficiaries, and need not designate individuals. Except as
otherwise provided with respect to a Surviving Spouse, a Participant may, at
any time, change his designation of Beneficiary by completing a new
designation form, but a designation of Beneficiary shall remain in effect
until such new form is received by the Administrative Committee.
(B) QUALIFIED ELECTION. For the consent by a Spouse to
payment of a Participant's Accrued Benefit (reduced by any security interest
held by the Plan by reason of any loans outstanding to such Participant) to
a Beneficiary other than the Spouse upon the Participant's death to be
valid, such consent must be made in writing on the Appropriate Form filed
with the Administrative Committee during the election period provided in
Section 7.2(C) and must be witnessed by a member of the Administrative
Committee as Plan representative or a notary public. Notwithstanding this
consent requirement, if the Participant establishes to the satisfaction of
such Plan representative that such written consent may not be obtained
because there is no Spouse or the Spouse cannot be located, the Spouse will
be deemed to have consented to the payment of the Participant's Accrued
Benefit (reduced by any security interest held by the Plan by reason of any
loans outstanding to such Participant) to a Beneficiary other than the
Spouse. Any consent necessary under this provision shall be valid only with
respect to the Spouse who signs the consent, or in the event of a deemed
consent, with respect to the Spouse who is deemed to have so consented. Any
spousal consent must
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acknowledge the specific non-spouse Beneficiary or contingent Beneficiary,
including any class of Beneficiaries or contingent Beneficiaries and if a
Beneficiary, contingent Beneficiary, or class of Beneficiaries or contingent
Beneficiaries is changed, the Spouse must consent to such change in the
manner provided above. Additionally, a revocation of a prior consent may be
made by a Participant without the consent of the Spouse at any time before
the commencement of benefits. The number of revocations or consents shall
not be limited. This Section 7.2(B) is effective August 23, 1984.
(C) ELECTION PERIOD. The election period for purposes of
the consent of the Spouse provided for in Section 7.2(B) shall be the period
which begins on the first day of the Plan Year in which the Participant
commences to participate in the Plan and ends on the date of the
Participant's death. This Section 7.2(C) is effective August 23, 1984.
7.3 NORMAL RETIREMENT. A Participant shall be fully vested in his
Accrued Benefit when he reaches his Normal Retirement Age. A Participant may
retire when he reaches his Normal Retirement Date. If he then retires, payment
of his Accrued Benefit shall be made or shall commence, unless otherwise
elected pursuant to Section 7.9(B), within 60 days following the Valuation Date
coincident with, or if the Valuation Date does not coincide with the date he
retires, the Valuation Date next succeeding, the date he retires. Payment
shall be made in one lump sum if the value of such Participant's Accrued
Benefit does not exceed (and, at the time of any prior distribution did not
exceed) $3,500 and otherwise in any of the methods described in Section 7.1(B)
except as otherwise provided in Section 7.14.
7.4 EARLY RETIREMENT. A Participant shall be fully vested in his
Accrued Benefit on his Early Retirement Date, if the Adoption Agreement
provides for an Early Retirement Date. A Participant may retire on his Early
Retirement Date, if the Adoption Agreement provides for an Early Retirement
Date. If he then retires, payment of his Accrued Benefit shall be made or
shall commence, within 60 days following the Valuation Date coincident with, or
if the Valuation Date does not coincide with the date he retires, the Valuation
Date next succeeding, the date he retires, if the value of the Participant's
Vested Accrued Benefit does not exceed (and, at the time of any prior
distribution did not exceed) $3,500, but otherwise only if the Participant so
requests in writing and if Section 7.14 applies, the Participant's spouse
consents thereto in accordance with Section 7.14 on the Appropriate Form. If
payment of a Participant's Accrued Benefit does not commence under the
preceding sentence, payment of such Participant's Accrued Benefit shall
commence within sixty days following the date the Participant would have
attained his Normal Retirement Date had he remained in the employ of the
Employer, unless the Participant requests earlier distribution, in writing on
the Appropriate Form, and if Section 7.14 applies, the Participant's spouse
consents thereto in accordance with Section 7.14, or unless otherwise elected
pursuant to Section 7.9(B). Any requests for payment under this Section 7.4
shall be made within the 90-day period preceding the date payment is to
commence. Payment shall be made in one lump sum if the value of such
Participant's Vested Accrued Benefit does not exceed (and, at the time of any
prior distributions did not exceed) $3,500 and otherwise in any of the methods
described in Section 7.1(B) except as otherwise provided in Section 7.14.
7.5 PARTICIPATION AFTER NORMAL RETIREMENT DATE. If a Participant
does not retire when he reaches his Normal Retirement Date, but continues
thereafter in the service of the Employer, he shall continue to participate in
the Plan until he actually retires. The Accrued Benefit of a Participant who
retires on, or after, his Normal Retirement Date shall continue to be fully
vested and shall be made or shall commence, unless otherwise elected pursuant
to Section 7.9(B), within 60 days following the Valuation Date coincident with,
or if the Valuation Date does not coincide with the date he retires, the
Valuation Date next succeeding, the date he actually retires. Payment shall be
made in one lump sum if the value of such Participant's Vested Accrued Benefit
does not exceed (and at the time of any prior distribution did not exceed)
$3,500 and otherwise in any
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of the methods described in Section 7.1(B) except as otherwise provided in
Section 7.14. In no event, however, shall payment commence later than the date
specified in Section 7.9(C). In the event such date is earlier than the
Valuation Date specified in the third preceding sentence, the amount to be
distributed shall be determined as of the Valuation Date immediately preceding
the date of the required distribution.
7.6 SEPARATION FROM SERVICE. The rules pertaining to benefit
determinations and certain other related matters upon separation from service
for any reason other than death, Disability or retirement are as follows:
(A) PAYMENT OF VESTED ACCRUED BENEFIT. If a Participant
separates from service for any reason other than death, Disability or
retirement on his Early Retirement Date (if the Adoption Agreement provides
for an Early Retirement Date) before he reaches his Normal Retirement Date,
his Vested Accrued Benefit shall be paid to him at such time as the Adoption
Agreement provides. When distribution is made, payment shall be made in one
lump sum if the value of such Participant's Vested Accrued Benefit does not
exceed (and at the time of any prior distribution did not exceed)$3,500 and
otherwise in any of the methods described in Section 7.1(B) except as
otherwise provided in Section 7.14.
(B) DETERMINATION OF VESTED ACCRUED BENEFIT.
(1) ELECTIVE DEFERRAL, PARTICIPANT, ROLLOVER,
TRANSFER AND QVEC ACCOUNTS. The portion of such Participant's Accrued
Benefit consisting of his interest in his Elective Deferral,
Participant, Rollover, Transfer, Qualified Matching Contribution,
Qualified Nonelective Contribution and QVEC Accounts shall at all
times be fully vested.
(2) EMPLOYER AND MATCHING ACCOUNTS. The portion
of such Participant's Accrued Benefit consisting of his interest in
his Employer and Matching Accounts shall vest in accordance with the
vesting schedule selected by the Employer in the Adoption Agreement.
(C) FORFEITURES.
(1) TIME OF FORFEITURES.
(a) NORMAL RULE.
(i) Unless the Adoption Agreement
provides otherwise, any portion of the Participant's
Employer and/or Matching Account which is not vested
in accordance with Section 7.6(B)(2) at the time of
his separation from service with the Employer shall
be forfeited and reallocated to the Employer and/or
Matching Accounts of the remaining Participants in
accordance with Section 5.5 as of the last day of the
Plan Year coinciding with, or if the last day of the
Plan Year does not so coincide, the last day of the
Plan Year next following, the date the Participant
incurs five consecutive One-Year Breaks In Service.
(ii) If a distribution is made to
a Participant at a time when such Participant has a
nonforfeitable right to less than 100 percent of his
Employer and/or Matching Account and, at the time of
such distribution, the Participant has not incurred
five consecutive One-Year Breaks In Service, the
Trustee shall retain the nonvested portion of the
Participant's Employer and/or Matching Account in his
Employer and/or
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Matching Account. Such Employer and/or Matching
Account may be invested in a Federally insured
savings account or invested as otherwise provided by
the Plan, as determined by the Administrative
Committee. In such case, the Participant's vested
interest in the Employer and/or Matching Account at
any relevant time shall not be less than an amount
("X") determined by the formula: X = P(AB + (RxD)) -
(RxD), where "P" is the vested percentage at the
relevant time; "AB" is the account balance (i.e., the
amount in the Employer and/or Matching Account) at
the relevant time; "D" is the amount of the payment;
"R" is the ratio of the account balance at the
relevant time to the account balance after payment;
and the relevant time is the time at which, under the
Plan, the Participant's vested interest in the amount
in the Employer and/or Matching Account cannot
increase.
(iii) If the Participant returns
to the service of the Employer before incurring five
consecutive One-Year Breaks In Service, the
Participant shall continue to vest in the amount in
his Employer and/or Matching Account in accordance
with the provisions set forth above.
(iv) If the Participant incurs
five consecutive One-Year Breaks In Service, the
amount in the Participant's Employer and/or Matching
Account, as determined under Section
7.6(C)(1)(a)(ii), shall be forfeited under Section
7.6(C)(1)(a) and shall be reallocated to the Employer
and/or Matching Accounts of the remaining
Participants in accordance with Section 5.5. Such
reallocation shall be effected on the last day of the
Plan Year coincident with, or if the last day of the
Plan Year does not so coincide, the last day of the
Plan Year next following, the date the Participant
incurs five consecutive One-Year Breaks In Service.
(b) SPECIAL RULE.
(i) PROFIT-SHARING OR
PROFIT-SHARING 401(K) PLAN. This Section
7.6(C)(1)(b)(i) applies to the Plan if the Plan, as
adopted by the Employer, is a profit-sharing or
profit-sharing 401(k) plan. If the Adoption
Agreement so provides, if a Participant separates
from the service of the Employer, and the value of
the Participant's Vested Accrued Benefit derived from
Employer and Employee contributions does not exceed
(or at the time of any prior distribution did not
exceed) $3,500 and Section A.7.6(A)(2) of the
Adoption Agreement is checked, the Participant shall
receive a distribution of the value of his entire
Vested Accrued Benefit (and if his entire Vested
Accrued Benefit is $-0-, he shall be deemed to have
received, as a cash-out of his Vested Accrued Benefit
under the Plan, such $0) at the time provided in the
Adoption Agreement and the nonvested portion of his
Accrued Benefit shall be forfeited at the time of
such distribution; if the value of the Participant's
Vested Accrued Benefit derived from Employer
contributions exceeds (or at the time of any prior
distribution exceeded) $3,500 and if Section
A.7.6(A)(1)(b) of the Adoption Agreement is checked
and if the Participant separates from the service of
the Employer, and elects to receive no less than the
entire value of the Participant's Vested Accrued
Benefit derived from Employer contributions,
distribution shall be made at the time provided in
the Adoption Agreement and the nonvested portion
shall be treated as a forfeiture at the time of
distribution to the Participant of his Vested Accrued
Benefit; if the Participant elects to have
distributed less than his entire Vested Accrued
Benefit derived from Employer
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contributions, the part of the nonvested portion that
will be treated as a forfeiture is the total
nonvested portion multiplied by a fraction, the
numerator of which is the amount of the distribution
attributable to Employer contributions and the
denominator of which is the total value of his Vested
Accrued Benefit derived from Employer contributions.
To the extent the nonvested portion is not or cannot
be forfeited at the time of a Participant's
separation from service because of the rules set
forth in this Section 7.6(C)(1)(b)(i), the rules of
Section 7.6(C) (1)(a) shall apply. If a Participant
receives a distribution pursuant to this Section
7.6(C)(1)(b)(i) (except as otherwise provided in the
immediately preceding sentence) and resumes
employment covered under the Plan, the Participant's
Accrued Benefit derived from Employer contributions
shall be restored to the amount on the date of
distribution if the Participant repays to the Plan
the full amount of the distribution attributable to
Employer contributions on or before the earlier of
the fifth anniversary of the Participant's resumption
of covered employment or the date the Participant
incurs five consecutive One-Year Breaks In Service.
If an Employee is deemed to receive a distribution
pursuant to this Section, and the Employee resumes
employment covered under this Plan before the earlier
of the fifth anniversary of the Participant's
resumption of covered employment or the date the
Participant incurs five consecutive One-Year Breaks
In Service, upon the reemployment of such Employee,
the Employer-derived account balance of the Employee
shall be restored to the amount on the date of such
deemed distribution. Forfeitures under this Section
7.6(C)(1)(b)(i) shall be reallocated to the Employer
contribution accounts of the remaining Participants
in accordance with Section 5.5 or, if the Adoption
Agreement so provides, used to reduce Employer
contributions. Such reallocation (or, if applicable,
reduction in Employer contributions) shall be
effected no earlier that the first Valuation Date
coincident with or next following the date of the
forfeiture and no later than the last day of the Plan
Year, in which occurred the date of the forfeiture
under this Section 7.6(C)(1)(b) (i). A Participant's
Vested Accrued Benefit shall not, for purposes of the
cash out provisions, include accumulated deductible
employee contributions within the meaning of section
72(o)(5)(B) of the Code for Plan Years beginning
prior to January 1, 1989.
(ii) MONEY PURCHASE PLAN. This
Section 7.6(C)(1)(b)(ii) applies to the Plan if the
Plan, as adopted by the Employer, is a money purchase
plan. If the Adoption Agreement so provides, if a
Participant separates from the service of the
Employer, and the value of the Participant's Vested
Accrued Benefit derived from Employer and Employee
contributions does not exceed (or at the time of any
prior distribution did not exceed) $3,500 and Section
A.7.6(A)(2) of the Adoption Agreement is checked, the
Participant shall receive a distribution of the value
of the entire Vested Accrued Benefit (and if his
entire Vested Accrued Benefit is $-0-, he shall be
deemed to have received, as a cash-out of his Vested
Accrued Benefit under the Plan, such $0) at the time
provided in the Adoption Agreement and the nonvested
portion of his Accrued Benefit shall be forfeited at
the time of such distribution. If the value of a
Participant's Vested Accrued Benefit derived from
Employer and Employee contributions exceeds (or at
the time of any prior distribution exceeded) $3,500,
and the Vested Accrued Benefit is immediately
distributable, the Participant and the Participant's
Spouse (or where either the Participant or the Spouse
has died, the survivor) must consent to any
distribution of such Vested Accrued Benefit. The
consent of the Participant and the Participant's
Spouse shall be obtained in writing
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within the 90-day period ending on the annuity
starting date. The annuity starting date is the
first day of the first period for which an amount is
paid as an annuity or any other form. The Plan
Administrator shall notify the Participant and the
Participant's Spouse of the right to defer any
distribution until the Participant's Vested Accrued
Benefit is no longer immediately distributable. Such
notification shall include a general description of
the material features, and an explanation of the
relative values of, the optional forms of benefit
available under the Plan in a manner that would
satisfy the notice requirements of section 417(a)(3)
of the Code and shall be provided no less than 30
days and no more than 90 days prior to the annuity
starting date.
Notwithstanding the foregoing, only the
Participant need consent to the commencement of a
distribution in the form of a "Qualified Joint and
Survivor Annuity" (within the meaning of Section
7.14(D)(4)) while the account balance is immediately
distributable. (Furthermore, if payment in the form
of a "Qualified Joint and Survivor Annuity" is not
required with respect to the Participant pursuant to
Section 7.14, only the Participant need consent to
the distribution of an account balance that is
immediately distributable.) Neither the consent of
the Participant nor the Participant's Spouse shall be
required to the extent that a distribution is
required to satisfy section 401(a)(9) of the Code or
section 415 of the Code.
An Accrued Benefit is immediately
distributable if any part of the Accrued Benefit
could be distributed to the Participant (or surviving
Spouse) before the Participant attains or would have
attained if not deceased) the later of Normal
Retirement Age or age 62.
For purposes of determining the
applicability of the foregoing consent requirements
to distributions made before the first day of the
first Plan Year beginning after December 31, 1988,
the Participant's Vested Accrued Benefit shall not
include amounts attributable to accumulated
deductible employee contributions within the meaning
of section 72(o)(5)(B) of the Code. If the value of
the Participant's Vested Accrued Benefit derived from
Employer and Employee contributions exceeds (or at
the time of any prior distribution exceeded) $3,500
and if Section A.7.6(A)(1)(b) of the Adoption
Agreement is checked and if the Participant separates
from the service of the Employer and elects, with the
consent of his Spouse as provided above, to receive
no less than the entire value of the Participant's
Vested Accrued Benefit derived from Employer and
Employee contributions, distribution shall be made at
the time provided in the Adoption Agreement and the
nonvested portion shall be treated as a forfeiture at
the time of distribution to the Participant of his
Vested Accrued Benefit; if the Participant elects,
with the consent of his Spouse as provided above, to
have distributed less than his entire Vested Accrued
Benefit derived from Employer contributions, the part
of the nonvested portion that will be treated as a
forfeiture is the total nonvested portion multiplied
by a fraction, the numerator of which is the amount
of the distribution attributable to Employer
contributions and the denominator of which is the
total value of his Vested Accrued Benefit derived
from Employer contributions. To the extent the
nonvested portion is not or cannot be forfeited at
the time of a Participant's termination of service
because of the rules set forth in this Section
7.6(C)(1)(b)(ii), the rules of Section 7.6(C)(1)(a)
shall apply. If a Participant receives a
distribution pursuant to this Section 7.6(C)(1)
(b)(ii) (except as otherwise provided in the
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immediately preceding sentence) and resumes
employment covered under the Plan, the Participant's
Accrued Benefit derived from Employer contributions
shall be restored to the amount on the date of
distribution if the Participant repays to the Plan
the full amount of the distribution attributable to
Employer contributions on or before the earlier of
the fifth anniversary of the Participant's resumption
of covered employment or the date the Participant
incurs five consecutive One-Year Breaks In Service.
If an Employee is deemed to receive a distribution
pursuant to this Section, and the Employee resumes
employment covered under this Plan before the earlier
of the fifth anniversary of the Participant's
resumption of covered employment or the date the
Employee incurs five consecutive One-Year Breaks In
Service, upon the reemployment of such Employee, the
Employer-derived account balance of the Employee
shall be restored to the amount on the date of such
deemed distribution. Forfeitures under this Section
7.6(C)(1) (b)(ii) shall be reallocated to the
Employer contribution accounts of the remaining
Participants in accordance with Section 5.5 or, if
the Adoption Agreement so provides, used to reduce
Employer contributions. Such reallocation (or, if
applicable, reduction in Employer contributions)
shall be effected no earlier that the first Valuation
Date coincident with or next following the date of
the forfeiture and no later than the last day of the
Plan Year , in which occurred the date of the
forfeiture under this Section 7.6(C)(1)(b)(ii).
(D) TERMINATION OF PLAN. If, upon termination of this
Plan, the Plan does not offer an annuity option (purchased from a
commercial provider), and if the Employer or any entity within the same
controlled group as the Employer does not maintain another Defined
Contribution Plan (other than an employee stock ownership plan described in
section 4975(e)(7) of the Code), the Participant's Vested Accrued Benefit
shall, without the Participant's consent, be distributed to the Participant.
However, if any entity within the same controlled group as the Employer
maintains another Defined Contribution Plan (other than an employee stock
ownership plan as defined in section 4975(e)(7) of the Code) then the
Participant's Vested Accrued Benefit shall be transferred, without the
Participant's consent, to the other plan if the Participant does not consent
to an immediate distribution.
(E) NO DIVESTMENT FOR CAUSE. There shall be no divestment of
a Participant's Vested Accrued Benefit under the Plan for cause.
7.7 DISABILITY. If, before reaching his Normal Retirement Date, a
Participant in the service of the Employer becomes subject to Disability as
established by competent medical proof satisfactory to the Administrative
Committee, such Participant shall then retire, and his Accrued Benefit shall be
fully vested and shall be paid to him, within 60 days following the Valuation
Date coincident with, or if the Valuation Date does not coincide with the date
of determination of Disability, the Valuation Date next succeeding, the date of
determination of Disability, by the Administrative Committee of his Disability,
if the value of such Accrued Benefit does not exceed (and at the time of any
prior distribution did not exceed) $3,500, but otherwise only if the
Participant so requests, and if Section 7.14 is applicable, with the consent of
the Participant's Spouse as provided in Section 7.14 in writing on the
Appropriate Form. If payment of a Participant's Accrued Benefit does not
commence under the preceding sentence, payment of such Participant's Accrued
Benefit shall commence within sixty days following the date the Participant
would have attained his Normal Retirement Date had he remained in the employ of
the Employer, unless the Participant requests, in writing on the Appropriate
Form, earlier distribution or unless otherwise elected pursuant to Section
7.9(B). Any requests for payment under this Section 7.7 shall be made within
the 90-day period preceding the date payment is to commence. Payment shall be
made in one lump sum if the value of such Participant's Accrued Benefit does
not exceed (and
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at the time of any prior distribution did not exceed) $3,500 and otherwise in
any of the methods described in Section 7.1(B), except as otherwise provided in
Section 7.14.
7.8 DEATH. This Section shall only apply to the extent Section
7.14 does not provide otherwise.
(A) AMOUNT AND DISTRIBUTION OF BENEFIT. If a Participant
dies while in the service of the Employer, his Accrued Benefit (reduced by
any security interest held by the Plan by reason of any loans outstanding to
such Participant) shall be fully vested and distribution thereof to the
Beneficiary or Beneficiaries provided under Section 7.2(A) shall be made or
commence no later than 60 days following the Valuation Date coincident with,
or if the Valuation Date does not coincide with the date of Death, the
Valuation Date immediately following, the date of death. If a Participant
dies before complete distribution to him of the Vested Accrued Benefit to
which he is entitled under Sections 7.3, 7.4, 7.5, 7.6 or 7.7, the
distribution of the remainder of such Vested Accrued Benefit (reduced by any
security interest held by the Plan by reason of any loans outstanding to
such Participant) to the Beneficiary or Beneficiaries provided under Section
7.2(A) shall be made or commence no later than 60 days following the
Valuation Date coincident with, or if the Valuation Date does not coincide
with the date of death, the Valuation Date immediately following, the date
of death.
(B) RECIPIENT OF BENEFIT WHERE NO BENEFICIARY DESIGNATED.
In the case of a Participant who is married on the date of his death and who
has not designated a Beneficiary, such Vested Accrued Benefit (reduced by
any security interest held by the Plan by reason of any loans outstanding to
such Participant) shall be distributed to such Participant's Surviving
Spouse. If no Beneficiary is designated or survives the Participant and if
the Participant has no Surviving Spouse, then such Vested Accrued Benefit
(reduced by any security interest held by the Plan by reason of any loans
outstanding to such Participant) shall be distributed to the Participant's
estate.
(C) MANNER OF DISTRIBUTION. Subject to Section 7.9(C),
any distributions under this Section 7.8 shall be made in a lump sum or in
installments as elected by the Participant in accordance with the terms of
Sections 7.1 and 7.2. In the absence of such a Participant election,
distributions shall be made in a lump sum to the Participant's Beneficiary,
as provided in Section 7.2(A).
7.9 COMMENCEMENT OF PAYMENTS; DEFERRAL OF PAYMENTS; MINIMUM
DISTRIBUTION REQUIREMENTS. The rules relating to commencement of payments,
deferral of payments and minimum distribution requirements are as follows:
(A) DATE PAYMENT TO COMMENCE. Payment under this Plan shall
commence no later than 60 days after the close of the Plan Year in which
occurs the latest of the following:
(1) The Participant's attainment of Normal
Retirement Age;
(2) The tenth anniversary of the date the
Participant commenced participation in the Plan; or
(3) The Participant's separation from service
with the Employer.
Notwithstanding the immediately preceding paragraph, if the
amount of payment required to otherwise commence on a date determined under
this Section 7.9(A) or under any other Section of the Plan cannot be
ascertained by such date or if the Administrative Committee is unable to
locate the Participant or Beneficiary after making reasonable efforts to do
so, a payment retroactive to such date may be made no later
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than 60 days after the later of (a) the earliest date on which the amount of
such payment can be ascertained under the Plan or (b) the earliest date on
which the Participant or Beneficiary is located.
Notwithstanding the foregoing, the failure of a Participant
and, if spousal consent is required, his Spouse to consent to a distribution
while a benefit is immediately distributable, shall be deemed to be an
election to defer commencement of payment of any benefit sufficient to
satisfy this Section.
(B) DEFERRAL OF PAYMENTS. If the Adoption Agreement so
provides, a Participant may irrevocably elect, subject to Section 7.9(C),
the deferral of the payment of benefits under Sections 7.3, 7.4, 7.5, and
7.7, by filing with the Administrative Committee, the Appropriate Form
signed by such Participant, describing the benefit and the date on which
payment of such benefit shall commence. Such Appropriate Form shall be
filed with the Administrative Committee no later than 30 days prior to such
Participant's separation from service with the Employer under Sections 7.3,
7.4, 7.5 or 7.7. No such election may be made if the exercise of such
election will cause the violation of the requirements of Section 7.13 or
Section 7.14. Moreover, no such election may defer payment of benefits
beyond the date specified in Section 7.9(C).
(C) MINIMUM DISTRIBUTION REQUIREMENTS.
(1) GENERAL RULES.
(a) Subject to Section 7.14 relating to
joint and survivor annuity requirements, the requirements of
this Section 7.9(C) shall apply to any distribution of a
Participant's interest and shall take precedence over any
inconsistent provisions of this Plan. Unless otherwise
specified, the provisions of this Section 7.9(C) apply to
calendar years beginning after December 31, 1984.
(b) All distributions required under
this Section 7.9(C) shall be determined and made in accordance
with the proposed Treasury regulations under section 401(a)(9)
of the Code, including the minimum distribution incidental
benefit requirement of Prop. Treas. Reg. Section
1.401(a)(9)-2.
(2) REQUIRED BEGINNING DATE. The entire interest
of a Participant must be distributed or begin to be distributed no
later than the Participant's "Required Beginning Date".
(3) LIMITS ON DISTRIBUTION PERIODS. As of the
first "Distribution Calendar Year", distributions, if not made in a
single sum, may only be made over one of the following periods (or a
combination thereof):
(a) The life of the Participant,
(b) The life of the Participant and a
"Designated Beneficiary",
(c) A period certain not extending
beyond the "Life Expectancy" of the Participant, or
(d) A period certain not extending
beyond the "Joint and Last Survivor Expectancy" of the
Participant and a "Designated Beneficiary".
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(4) DETERMINATION OF AMOUNT TO BE DISTRIBUTED
EACH YEAR. If the Participant's interest is to be distributed in
other than a single sum, the following minimum distribution rules
shall apply on or after the "Required Beginning Date":
(a) INDIVIDUAL ACCOUNT.
(i) If a "Participant's Benefit" is
to be distributed over (AA) a period not extending
beyond the "Life Expectancy" of the Participant or
the "Joint Life and Last Survivor Expectancy" of the
Participant and the Participant's "Designated
Beneficiary" or (BB) a period not extending beyond
the "Life Expectancy" of the "Designated
Beneficiary", the amount required to be distributed
for each calendar year, beginning with distributions
for the first "Distribution Calendar Year", must at
least equal the quotient obtained by dividing the
"Participant's Benefit" by the "Applicable Life
Expectancy".
(ii) For calendar years beginning
before January 1, 1989, if the Participant's Spouse
is not the "Designated Beneficiary", the method of
distribution selected must assure that at least 50
percent of the present value of the amount available
for distribution is paid within the "Life Expectancy"
of the Participant.
(iii) For calendar years beginning
after December 31, 1988, the amount to be distributed
each year, beginning with distributions for the first
"Distribution Calendar Year" shall not be less than
the quotient obtained by dividing the "Participant's
Benefit" by the lesser of (AA) the "Applicable Life
Expectancy" or (BB) if the Participant's Spouse is
not the "Designated Beneficiary", the applicable
divisor determined from the table set forth in Q&A-4
of Prop. Treas. Reg. Section 1.401(a)(9)-2.
Distributions after the death of the Participant
shall be distributed using the "Applicable Life
Expectancy" in Section 7.9(C)(4)(a)(i) above as the
relevant divisor without regard to Prop. Treas. Reg.
Section 1.401(a)(9)-2.
(iv) The minimum distribution
required for the Participant's first "Distribution
Calendar Year" must be made on or before the
Participant's "Required Beginning Date". The minimum
distribution for other calendar years, including the
minimum distribution for the "Distribution Calendar
Year" in which the Employee's "Required Beginning
Date" occurs, must be made on or before December 31
of that "Distribution Calendar Year".
(b) OTHER FORMS.
(i) If the "Participant's Benefit"
is distributed in the form of an annuity purchased
from an Insurer, distributions thereunder shall be
made in accordance with the requirements of section
401(a)(9) of the Code and the proposed Treasury
regulations thereunder.
(5) DEATH DISTRIBUTION PROVISIONS.
(a) DISTRIBUTION BEGINNING BEFORE DEATH.
If the Participant dies after distribution of his interest has
begun, the remaining portion of such interest shall continue
to be
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distributed at least as rapidly as under the method of
distribution being used prior to the Participant's death.
(b) DISTRIBUTION BEGINNING AFTER DEATH.
If the Participant dies before distribution of his interest
begins, distribution of the Participant's entire interest
shall be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death
except to the extent that an election is made to receive
distributions in accordance with (i) or (ii) below:
(i) If any portion of the
Participant's interest is payable to a "Designated
Beneficiary", distributions may be made over the life
or over a period certain not greater than the "Life
Expectancy" of the "Designated Beneficiary"
commencing on or before December 31 of the calendar
year immediately following the calendar year in which
the Participant died;
(ii) If the "Designated
Beneficiary" is the Participant's Surviving Spouse,
the date distributions are required to begin in
accordance with (i) above shall not be earlier than
the later of (AA) December 31 of the calendar year
immediately following the calendar year in which the
Participant died and (BB) December 31 of the calendar
year in which the Participant would have attained age
70 1/2.
If the Participant has not made an election pursuant to this
Section 7.9(C)(5)(b) by the time of his death, the
Participant's "Designated Beneficiary" must elect the method
of distribution no later than the earlier of (AA) December 31
of the calendar year in which distributions would be required
to begin under this Section, or (BB) December 31 of the
calendar year which contains the fifth anniversary of the date
of death of the Participant. If the Participant has no
"Designated Beneficiary", or if the "Designated Beneficiary"
does not elect a method of distribution, distribution of the
Participant's entire interest must be completed by December 31
of the calendar year containing the fifth anniversary of the
Participant's death.
(c) DEATH OF SURVIVING SPOUSE PRIOR TO
BENEFIT COMMENCEMENT. For purposes of Section 7.9(C)(5)(b)
above, if the Surviving Spouse dies after the Participant, but
before payments to such Spouse begin, the provisions of
Section 7.9(C)(5)(b), with the exception of Section
7.9(C)(5)(b)(ii), shall be applied as if the Surviving Spouse
were the Participant.
(d) TREATMENT OF AMOUNTS PAID TO
CHILDREN. For purposes of this Section 7.9(C)(5), any amount
paid to a child of the Participant will be treated as if it
had been paid to the Surviving Spouse if the amount becomes
payable when the child reaches the age of majority.
(e) DEEMED BENEFIT COMMENCEMENT. For
the purposes of this Section 7.9(C)(5), distribution of a
Participant's interest is considered to begin on the
Participant's "Required Beginning Date" (or, if Section
7.9(C)(5)(c) above is applicable, the date distribution is
required to begin to the Surviving Spouse pursuant to Section
7.9(C)(5)(b) above). If distribution in the form of an
annuity irrevocably commences to the Participant before the
"Required Beginning Date", the date distribution is considered
to begin is the date distribution actually commences.
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(6) DEFINITIONS. For purposes of this Section
7.9(C), the following definitions apply:
(a) "APPLICABLE LIFE EXPECTANCY" shall
mean the "Life Expectancy" (or "Joint and Last Survivor
Expectancy") calculated using the attained age of the
Participant (or "Designated Beneficiary") as of the
Participant's (or "Designated Beneficiary's") birthday in the
applicable calendar year reduced by one for each calendar year
which has elapsed since the date "Life Expectancy" was first
calculated. If "Life Expectancy" is being recalculated, the
"Applicable Life Expectancy" shall be the "Life Expectancy" as
so recalculated. The applicable calendar year shall be the
first "Distribution Calendar Year", and if "Life Expectancy"
is being recalculated, such succeeding calendar year.
(b) "DESIGNATED BENEFICIARY" shall mean
the individual who is designated as the Beneficiary under the
Plan in accordance with section 401(a)(9) of the Code and the
Treasury regulations thereunder.
(c) "DISTRIBUTION CALENDAR YEAR" shall
mean a calendar year for which a minimum distribution is
required. For distributions beginning before the
Participant's death, the first "Distribution Calendar Year" is
the calendar year immediately preceding the calendar year
which contains the Participant's "Required Beginning Date".
For distributions beginning after the Participant's death, the
first "Distribution Calendar Year" is the calendar year in
which distributions are required to begin pursuant to Section
7.9(C)(5) above.
(d) "LIFE EXPECTANCY" shall mean the
life expectancy and "Joint and Last Survivor Expectancy" as
computed by use of the expected return multiples in Tables V
and VI of Treas. Reg. Section 1.72-9. Unless otherwise
elected by the Participant (or Spouse, in the case of
distributions described in Section 7.9(C)(5)(b)(ii) above) by
the time distributions are required to begin, "Life
Expectancies" shall be recalculated annually. Such election
shall be irrevocable as to the Participant (or Spouse) and
shall apply to all subsequent years. The "Life Expectancy" of
a nonspouse Beneficiary may not be recalculated.
(e) "PARTICIPANT'S BENEFIT" shall mean
the account balance as of the last Valuation Date in the
calendar year immediately preceding the "Distribution Calendar
Year" ("Valuation Calendar Year") increased by the amount of
any contributions or forfeitures allocated to the account
balance as of dates in the "Valuation Calendar Year" after the
Valuation Date and decreased by distributions made in the
"Valuation Calendar Year" after the Valuation Date. For
purposes of this Section 7.9(C)(6)(e), if any portion of the
minimum distribution for the first "Distribution Calendar
Year" is made in the second "Distribution Calendar Year" on or
before the "Required Beginning Date", the amount of the
minimum distribution made in the second "Distribution Calendar
Year" shall be treated as if it had been made in the
immediately preceding "Distribution Calendar Year".
(f) "REQUIRED BEGINNING DATE" shall
mean, with respect to any Participant, except as provided
below, the first day of April of the calendar year following
the calendar year in which the Participant attains age 70 1/2.
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Notwithstanding the foregoing the "Required
Beginning Date" of a Participant who attains age 70 1/2 before
January 1, 1988, shall be determined in accordance with (i) or
(ii) below:
(i) NON-FIVE-PERCENT OWNERS. The
"Required Beginning Date" of a Participant who is not
a five-percent owner is the first day of April of the
calendar year following the calendar year in which
the later of retirement or attainment of age 70 1/2
occurs.
(ii) FIVE-PERCENT OWNERS. The
"Required Beginning Date" of a Participant who is a
five-percent owner during any year beginning after
December 31, 1979, is the first day of April
following the later of:
(AA) The calendar year in which the
Participant attains age 70 1/2, or
(BB) The earlier of the calendar year
with or within which ends the Plan Year in
which the Participant becomes a five-percent
owner, or the calendar year in which the
Participant retires.
The "Required Beginning Date" of a Participant who is
not a five-percent owner who attains age 70 1/2
during 1988 and who has not retired as of January 1,
1989, is April 1, 1990.
A Participant is treated as a
five-percent owner for purposes of this Section if
such Participant is a five-percent owner as defined
in section 416(i) of the Code (determined in
accordance with section 416 but without regard to
whether the Plan is a Top-Heavy Plan) at any time
during the Plan Year ending with or within the
calendar year in which such owner attains age 66 1/2
or any subsequent Plan Year.
Once distributions have begun to a
five-percent owner under this Section, they must
continue to be distributed, even if the Participant
ceases to be a five-percent owner in a subsequent
year.
(7) TRANSITIONAL RULE.
(a) Notwithstanding the other
requirements of this Section 7.9(C) and subject to the
requirements of Section 7.14 relating to joint and survivor
annuity requirements, distribution on behalf of any Employee,
including a five-percent owner, may be made in accordance with
all of the following requirements (regardless of when such
distribution commences):
(i) The distribution by the Plan is
one which would not have disqualified such Plan under
section 401(a)(9) of the Code as in effect prior to
amendment by the Deficit Reduction Act of 1984.
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(ii) The distribution is in
accordance with a method of distribution designated
by the Employee whose interest in the Plan is being
distributed or, if the Employee is deceased, by a
Beneficiary of such Employee.
(iii) Such designation was in
writing, was signed by the Employee or the
Beneficiary, and was made before January 1, 1984.
(iv) The Employee had accrued a
benefit under the Plan as of December 31, 1983.
(v) The method of distribution
designated by the Employee or the Beneficiary
specifies the time at which distribution will
commence, the period over which distributions will be
made, and in the case of any distribution upon the
Employee's death, the Beneficiaries of the Employee
listed in order of priority.
(b) A distribution upon death will not
be covered by this transitional rule unless the information in
the designation contains the required information described
above with respect to the distributions to be made upon the
death of the Employee.
(c) For any distribution which commences
before January 1, 1984, but continues after December 31, 1983,
the Employee, or the Beneficiary, to whom such distribution is
being made, will be presumed to have designated the method of
distribution under which the distribution is being made if the
method of distribution was specified in writing and the
distribution satisfies the requirements in Sections
7.9(C)(7)(a)(i) and (v).
(d) If a designation is revoked, any
subsequent distribution must satisfy the requirements of
section 401(a)(9) of the Code and the proposed Treasury
regulations thereunder. If a designation is revoked
subsequent to the date distributions are required to begin,
the Trust must distribute, by the end of the calendar year
following the calendar year in which the revocation occurs,
the total amount not yet distributed which would have been
required to have been distributed to satisfy section 401(a)(9)
of the Code and the proposed Treasury regulations thereunder,
but for the election under section 242(b)(2) of the Tax Equity
and Fiscal Responsibility Act of 1982. For calendar years
beginning after December 31, 1988, such distributions must
meet the minimum distribution incidental benefit requirements
in Prop. Treas. Reg. Section 1.401(a)(9)-2. Any changes in
the designation will be considered to be a revocation of the
designation. However, the mere substitution or addition of
another Beneficiary (one not named in the designation) under
the designation will not be considered to be a revocation of
the designation, so long as such substitution or addition does
not alter the period over which distributions are to be made
under the designation, directly or indirectly (for example, by
altering the relevant measuring life). In the case in which
an amount is transferred or rolled over from one plan to
another plan, the rules in Q&A J-2 and Q&A J-3 of Prop. Treas.
Reg. Section 1.401(a)(9)-1 shall apply.
7.10 WITHDRAWALS DURING EMPLOYMENT. This Section 7.10, other than
Section 7.10(B), shall apply to the Plan only if the Plan, as adopted by the
Employer, is a profit-sharing or profit-sharing 401(k) plan. Moreover,
withdrawals by a Participant of his Vested Accrued Benefit while such
Participant is employed by the Employer shall be permitted only if the
applicable Adoption Agreement so provides and then only in accordance with the
following rules:
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(A) PARTICIPANT ACCOUNTS. A Participant may elect to
withdraw, as of any Valuation Date in the Plan Year, but not more frequently
than once each Plan Year, any portion or all of the amount then credited to
the Participant's Participant Account (other than the portion attributable
to required Participant Contributions and to Participant Contributions which
are matched by the Employer). Such withdrawal election shall be made at
least 30 days prior to the effective date of the withdrawal on the
Appropriate Form furnished by the Administrative Committee for such purpose.
(B) QVEC ACCOUNTS. Subject to the joint and survivor
annuity requirements of Section 7.14 (if applicable), a Participant may
elect, subject to Section 7.12, to withdraw, as of any Valuation Date in the
Plan Year, but not more frequently than once each Plan Year, any portion or
all of the amount then credited to the Participant's QVEC Account. Such
withdrawal election shall be made at least 30 days prior to the effective
date of the withdrawal on the Appropriate Form furnished by the
Administrative Committee for such purposes.
(C) ROLLOVER ACCOUNTS. A Participant may elect to
withdraw, as of any Valuation Date in the Plan Year, but not more frequently
than once each Plan Year, any portion or all of the amount then credited to
the Participant's Rollover Account. Such withdrawal election shall be made
at least 30 days prior to the effective date of the withdrawal on the
Appropriate Form furnished by the Administrative Committee for such purpose.
(D) OTHER ACCOUNTS.
(1) AFTER ATTAINMENT OF AGE 59 1/2. A
Participant who is age 59 1/2 or older may elect to withdraw, as of
any Valuation Date in the Plan Year, but not more frequently than once
each Plan Year, any portion or all of such Participant's Vested
Accrued Benefit. Such withdrawal election shall be made at least 30
days prior to the effective date of the withdrawal on the Appropriate
Form furnished by the Administrative Committee for such purpose.
(2) BEFORE ATTAINMENT OF AGE 59 1/2. Except as
provided in Section 7.10(D)(3), Section 7.10(D)(4) or Section
7.10(D)(5), no withdrawals of such Participant's Accrued Benefit shall
be permitted while such Participant is employed by the Employer if the
Participant has not attained age 59 1/2.
(3) HARDSHIP WITHDRAWALS. A Participant who
incurs a hardship may elect to withdraw, as of any Valuation Date in
the Plan Year, but not more frequently than once each Plan Year, any
portion or all of the amount then credited to the Participant's
Elective Deferral Account which is attributable to Elective Deferral
Contributions (and of income allocable thereto credited to such
Elective Deferral Account as of the end of the last Plan Year ending
before July 1, 1989), any portion or all of the vested amount then
credited to the Participant's Employer Account, any portion or all of
the vested amount then credited to the Participant's Matching Account
and any portion or all of the Participant's Participant, Rollover and
Transfer Accounts, but a Participant may not elect to withdraw by
reason of hardship, any amount attributable to Qualified Nonelective
Contributions or Qualified Matching Contributions. For purposes of
this Section 7.10(D)(3), the Administrative Committee shall determine
that a hardship has occurred only if the distribution both is made on
account of an immediate and heavy financial need of the Participant
and is necessary to satisfy such financial need in accordance with the
following standards:
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(i) IMMEDIATE AND HEAVY FINANCIAL NEED.
(AA) IN GENERAL. The determination of
whether a Participant has an immediate and heavy
financial need is to be made on the basis of all
relevant facts and circumstances. A determination of
an immediate and heavy financial need will generally
be made by the Administrative Committee if the
inability to satisfy the financial need would have a
severe adverse effect upon the health, livelihood or
well-being of a Participant or of a member of the
Participant's immediate family. A financial need
shall not fail to qualify as immediate and heavy
merely because such need was reasonably foreseeable
or voluntarily incurred by the Participant.
(BB) DEEMED IMMEDIATE AND HEAVY
FINANCIAL NEED. A distribution will be deemed to be
made on account of an immediate and heavy financial
need of the Participant if the distribution is on
account of:
(AAA) Expenses incurred or necessary
for medical care described in section 213(d)
of the Code of the Participant, the
Participant's Spouse, or any dependents of
the Participant (as defined in section 152 of
the Code);
(BBB) Purchase (excluding mortgage
payments) of a principal residence for the
Participant;
(CCC) Payment of tuition and related
educational fees for the next 12 months of
post-secondary education for the Participant,
his Spouse, children, or dependents; or
(DDD) The need to prevent the eviction
of the Participant from his principal
residence or foreclosure on the mortgage of
the Participant's principal residence.
(ii) DISTRIBUTION NECESSARY TO SATISFY
FINANCIAL NEED.
(AA) IN GENERAL. A distribution will
be considered as necessary to satisfy an immediate
and heavy financial need of a Participant only if:
(AAA) The Participant has obtained all
distributions, other than hardship
distributions, and all nontaxable loans under
all plans maintained by the Employer;
(BBB) All plans (within the meaning of
Treas. Reg. Section 1.401(k)-
1(d)(2)(iv)(B)(4)) maintained by the Employer
provide that the Participant's Elective
Deferrals (and Employee Contributions) will
be suspended for 12 months after the receipt
of the hardship distribution;
(CCC) The distribution is not in
excess of the amount of an immediate and
heavy financial need (including amounts
necessary to pay any
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federal, state or local income taxes or
penalties reasonably anticipated to result
from the distribution); and
(DDD) All plans maintained by the
Employer provide that the Participant may not
make Elective Deferrals for the Participant's
taxable year immediately following the
taxable year of the hardship distribution in
excess of the applicable limit under section
402(g) of the Code for such taxable year less
the amount of such Participant's Elective
Deferrals for the taxable year of the
hardship distribution.
Such withdrawal election shall be made at least 30 days prior to the
effective date of the withdrawal on the Appropriate Form furnished by
the Administrative Committee for such purpose.
(4) OTHER LIMITATIONS ON DISTRIBUTIONS.
(i) GENERAL RULES. Notwithstanding any
other provision in the Plan, no Elective Deferral, Qualified
Nonelective Contribution or Qualified Matching Contribution
and income allocated to each shall be distributable earlier
than upon one of the following events:
(AA) The Participant's retirement,
death, disability or separation from service;
(BB) The termination of the Plan
without the maintenance or establishment of another
Defined Contribution Plan (other than an employee
stock ownership plan as defined in section 4975(e) of
the Code or section 409 of the Code) or a simplified
employee pension plan as defined in section 408(k) of
the Code;
(CC) The date of the sale or other
disposition by a corporate Employer to an unrelated
corporation of substantially all of the assets
(within the meaning of section 409(d)(2) of the Code)
used by such Employer in a trade or business of such
Employer with respect to a Participant who continues
employment with the corporation acquiring such
assets. The sale of 85 percent of the assets used in
a trade or business will be deemed a sale of
"substantially all" the assets used in such trade or
business;
(DD) The date of the sale or other
disposition by a corporate Employer of such
Employer's interest in a subsidiary (within the
meaning of section 409(d)(3) of the Code) to an
unrelated entity. This Section 7.10(D)(4)(i)(DD)
applies only to a Participant who continues
employment with such subsidiary;
(EE) The Participant's attainment of
age 59 1/2; or
(FF) In the case of distributions of
Elective Deferrals (and of income allocable thereto
credited to a Participant's account as of December
31, 1988) but not of amounts treated as Elective
Deferrals (and of income allocable thereto), the
Participant's hardship.
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(ii) OTHER RULES.
(AA) ESTABLISHMENT OF PLANS. For
purposes of Section 7.10(D)(4)(i)(BB), the
establishment of a plan means the existence at the
time the plan (including this Plan) with the cash or
deferred arrangement is terminated or the
establishment within the period ending 12 months
after distribution of all assets from the arrangement
of any other Defined Contribution Plan (other than an
employee stock ownership plan as defined in section
4975(e)(7) of the Code) maintained by the Employer.
A plan maintained by an unrelated employer (i.e., an
employer other than the employer maintaining the
terminating plan and other than an employer related
at the time of plan termination to the employer
maintaining the terminating plan within the meaning
of section 414(b), (c), (m), and (o) of the Code)
will be treated as the establishment of a plan only
if, as of the date of termination, the Employer knows
or has reason to know that such unrelated employer
will become related to the Employer.
(BB) LIMITATIONS APPLY AFTER TRANSFER.
The limitations of Section 7.10(D)(4) continue to
apply to amounts attributable to Elective Deferrals,
Qualified Nonelective Contributions and Qualified
Matching Contributions and income allocated to each
even if such amounts are transferred to another
qualified plan of any employer.
(CC) OTHER BENEFITS NOT CONTINGENT
UPON ELECTIVE DEFERRALS. For Plan Years beginning
after December 31, 1988, no other Employer benefit
may be conditioned (other than Matching or Qualified
Matching Contributions) (directly or indirectly)
within the meaning of section 401(k) of the Code and
the Treasury regulations issued thereunder upon the
Employee's electing to make or not to make Elective
Deferrals under the arrangement.
(DD) LUMP SUM DISTRIBUTION REQUIRED.
An event shall not be treated as described in Section
7.10((D)(4)(i)(BB), (CC) or (DD) with respect to any
Participant unless, with respect to distributions
after March 31, 1988, the Participant receives a lump
sum distribution within the meaning of section
401(k)(10)(B)(ii) of the Code by reason of the event.
(EE) TRANSFEROR CORPORATION MUST
MAINTAIN PLAN. An event shall not be treated as
described in Section 7.10(D)(4)(i)(CC) or (DD) unless
the transferor corporation continues to maintain the
plan after the disposition.
(FF) SUSPENSION OF ELECTIVE DEFERRALS
AND EMPLOYEE CONTRIBUTIONS. A Participant's Elective
Deferrals and Employee Contributions shall be
suspended for a period of 12 months following the
receipt of a hardship distribution. Moreover, the
Participant shall not make Elective Deferrals for his
taxable year immediately following the taxable year
of the distribution in excess of the applicable limit
under section 402(g) of the Code for such taxable
year less the amount of such Participant's Elective
Deferrals for the taxable year of the distribution.
(GG) CONSENT REQUIREMENTS. All
distributions that may be made pursuant to one or
more of the foregoing distributable events in Section
7.10(D)(4)(i)
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are subject to the spousal and Participant consent
requirements (if applicable) contained in sections
401(a)(11) and 417 of the Code.
(5) OTHER IN-SERVICE WITHDRAWALS BEFORE AGE 59-1/2.
If the Adoption Agreement so provides, a Participant may withdraw
during employment, prior to attaining age 59 1/2, his Vested Accrued
Benefit attributable to Employer Contributions, Participant
Contributions and Matching Contributions but not to Qualified
Nonelective Contributions or Qualified Matching Contributions or the
income allocable thereto after such Participant completes five or more
Years of Service for Benefit Accrual.
(6) DETERMINATION OF VESTED INTEREST IN CASE OF
CERTAIN WITHDRAWALS. No forfeitures shall occur solely as a result of
an Employee's withdrawal of Employee Contributions. In the event a
Participant makes a withdrawal under the Plan and his interest in the
Plan is not fully vested, such Participant's vested interest in the
portion of his Accrued Benefit remaining in the Plan shall be
determined in accordance with the rules of Section 7.6(C)(1)(a)(ii).
(7) DISTRIBUTIONS UPON PLAN TERMINATION. Subject to
Section 7.10(D)(4), the balances of Participants' Accounts shall be
distributed to Participants or their Beneficiaries as soon as
administratively feasible after the termination of the Plan.
(8) DISTRIBUTIONS UPON SALE OF ASSETS. Subject to
Section 7.10(D)(4), the balances of Participants' Accounts shall be
distributed to Participants as soon as administratively feasible after
the disposition, to an entity that is not a related entity, of
substantially all of the assets (within the meaning of section
409(d)(2) of the Code) used by the Employer in the trade or business
in which the Participant is employed, but only if the Participant
continues employment with the corporation acquiring such assets.
(9) DISTRIBUTION UPON SALE OF SUBSIDIARY. Subject
to Section 7.10(D)(4), the balances of Participants' Accounts shall be
distributed as soon as administratively feasible after the
disposition, to an entity that is not a related entity, of an
incorporated Employer's interest in a subsidiary (within the meaning
of section 409(d)(3) of the Code) to Participants who continue
employment with such subsidiary.
7.11 LOANS. The rules relating to loans are as follows:
(A) LIMITATIONS. If the Adoption Agreement so provides,
upon the filing of an application with the Administrative Committee by a
Participant or Beneficiary but only if the Beneficiary is a "party in
interest" with respect to the Plan (within the meaning of section 3(14) of
ERISA) on the Appropriate Form, the Administrative Committee shall, within
90 days from the date of receipt of such application, direct the Trustee to
make a loan or loans to such Participant or Beneficiary, provided such loan
or loans:
(1) Are available to all such Participants and
Beneficiaries on a reasonably equivalent basis;
(2) Are not made available to Highly Compensated
Employees and their Beneficiaries, in an amount greater than the
amount made available to other Employees and their Beneficiaries;
(3) Bear a reasonable rate of interest within the
meaning of 29 CFR Section 2550.408b-1;
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(4) Are adequately secured within the meaning to
29 CFR Section 2550.408b-1;
(5) Do not exceed (when added to the outstanding
balance of all other loans to the Participant or Beneficiary) the
lesser of:
(a) $50,000 (reduced by the excess (if any)
of (i) the highest outstanding balance of loans from the Plan
during the one-year period ending on the day before the date
on which such loan was made, over (ii) the outstanding balance
of loans from the Plan on the date on which such loan was
made), or
(b) One-half of the present value of the
Participant's Vested Accrued Benefit under the Plan (but, if
the Adoption Agreement so provides, not less than the lesser
of (i) $10,000 or (ii) the Participant's Vested Accrued
Benefit);
(6) Are repayable, except as otherwise provided
in Section 7.11(D), by their terms within five years from the date of
the loans;
(7) Shall not be made to any Owner-Employee or
shareholder-employee (for purposes of this requirement, a
shareholder-employee means an employee or officer of an electing small
business (Subchapter S) corporation who owns (or is considered as
owning within the meaning of section 318(a)(1) of the Code) on any day
during the taxable year of that corporation more than five percent of
the outstanding stock of the corporation);
(8) Require amortization (of both principal and
interest) in level payments made not less frequently than quarterly
over the term of the loan;
(9) If Section 7.14 is applicable and if the
Participant's Vested Accrued Benefit is to be used as security for
part or all of the loan and only in such cases, shall not be made
unless the Participant obtains the consent of his Spouse, if any, to
the use of the Participant's Vested Accrued Benefit as security for
the loan; such spousal consent shall be obtained no earlier than the
beginning of the 90-day period that ends on the date on which the loan
is to be so secured; such consent must be in writing, must acknowledge
the effect of the loan, and must be witnessed by a Plan representative
or notary public; such consent shall thereafter be binding with
respect to the consenting Spouse or any subsequent Spouse with respect
to that loan; a new consent shall be required if the Vested Accrued
Benefit is used for renegotiation, extension, renewal, or other
revision of the loan; and
(10) Comply with any other limitations on loans
specified in the Adoption Agreement.
In the event of default, if the security for the loan
is the Participant's Vested Accrued Benefit, foreclosure on the note and
attachment of security shall not occur until a distributable event occurs in
the Plan.
For purposes of this Section 7.11, the rules of section 414(b), (c),
(m) and (o) of the Code shall apply and all plans of the Employer (determined
after the application of section 414(b), (c), (m) and (o) of the Code) shall be
treated as one plan.
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An assignment or pledge of any portion of the Participant's interest
in the Plan and a loan, pledge, or assignment with respect to any Insurance
Contract purchased by the Plan, shall be treated as a loan under this Section
7.11.
If a valid spousal consent is required and has been obtained in
accordance with Section 7.11(A)(9) then, notwithstanding any other provision of
this Plan, the portion of the Participant's Vested Accrued Benefit used as a
security interest held by the Plan by reason of a loan outstanding to the
Participant shall be taken into account for purposes of determining the amount
of the Accrued Benefit payable at the time of death or distribution, but only
if the reduction is used as repayment of the loan. If less than 100 percent of
the Participant's Vested Accrued Benefit (determined without regard to the
preceding sentence) is payable to the Surviving Spouse, then the Accrued
Benefit shall be adjusted by first reducing the Vested Accrued Benefit by the
amount of the security used as repayment of the loan, and then determining the
benefit payable to the Surviving Spouse.
The Administrative Committee, provided the above requirements are met,
shall grant such request within 90 days following such request. In such event
the Administrative Committee shall be responsible for complying with any legal
requirements affecting said loan, such as Federal Reserve regulations.
(B) INTEREST. All such loans shall bear a reasonable
rate of interest, which shall, in accordance with 29 CFR Section
2550.408b-1, provide the Plan with a return commensurate with the interest
rates charged by persons engaged in the business of lending money for loans
which would be made in similar circumstances. Such rate of interest shall
be determined in accordance with the provisions of the Adoption Agreement.
Every loan applicant shall receive a clear statement of the charges involved
in each loan transaction. This statement shall include the dollar amount
and the annual interest rate of the finance charge.
(C) REPAYMENT-COLLECTION. Any such loan or loans shall
be repaid by the Participant or Beneficiary within the period certain
requested by the Participant or Beneficiary but not to exceed, except in the
case of loans subject to Section 7.11(D), a period of five years from the
date the loan or loans are made and such loan or loans shall by their terms
require repayment within such period. The loan or loans shall be evidenced
by a promissory note, shall be secured by payroll deduction if the
Participant is in the active service of the Employer and by such collateral
as shall be specified in the Adoption Agreement. If the Participant's
Vested Accrued Benefit is specified in the Adoption Agreement as collateral
for a loan, no more than 50 percent of the present value of such Vested
Accrued Benefit may be so used. In the event the Participant or Beneficiary
does not repay the loan within the period certain, the Trustee shall,
subject to the spousal consent requirements of Section 7.11(A)(9) (if
applicable), deduct the total amount of such loan or loans or any portion
thereof, if the collateral for the loan is the Participant's Vested Accrued
Benefit, from that portion (if any) of the Vested Accrued Benefit which
serves as collateral for the loan but only when a distributable event occurs
under the Plan and, if collateral other than the Participant's Vested
Accrued Benefit secures such loan, from such other collateral at the time of
the default. In the event the amount of any such payment, distribution or
collateral is insufficient to repay the remaining balance on the loan or
loans including interest, the Participant or Beneficiary shall be liable
for, and continue to make, payments on any balance still due from such
Participant or Beneficiary. Subject to the terms of the Plan, the
Participant or Beneficiary shall repay the loan or loans by payroll
deduction or in installments in such manner as shall comply with Section
7.11(A).
(D) EXCEPTION FOR HOME LOANS. Section 7.11(A)(6) shall
not apply to any loan used to acquire any dwelling unit which within a
reasonable time is to be used (determined at the time the loan is made) as
the principal residence of the Participant.
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(E) LOANS - INDIVIDUAL INVESTMENTS. Except as provided
in this paragraph, loans shall be treated as general investments of the
Trust Fund. However, if the Adoption Agreement provides for Participant
directed investments pursuant to Section 6.1(B) or if the Adoption Agreement
provides that loans are to be treated as investments of the Participant's or
Beneficiary's accounts only, until a loan to a Participant or Beneficiary is
repaid, the outstanding balance of the loan shall be treated as an
investment by such Participant or Beneficiary for his accounts only and the
interest paid by such Participant or Beneficiary shall be credited to the
accounts, as applicable, of such Participant or Beneficiary. Such
Participant's or Beneficiary's accounts shall not share in any other
earnings of the Plan with respect to the amount of the loan. The amount of
each repayment shall be invested in accordance with the regular investment
provisions selected by the Employer in the Adoption Agreement applicable to
such Employer.
7.12 QVEC WITHDRAWALS. Except in the case of the Participant's
death or disability (as defined in section 72(m)(7) of the Code) or attainment
of age 59 1/2, before distributing an amount from a Participant's QVEC Account,
the Employer shall receive from such Participant a declaration of the
Participant's intention as to the disposition of the amount distributed. The
Participant shall execute such forms as the Employer may require with respect
to the Participant's liability for Federal income tax which may result from the
distribution of amounts from such Participant's QVEC Account.
7.13 INCIDENTAL BENEFIT RULE. This provision is contained in
Section 7.9(C)(1)(b).
7.14 JOINT AND SURVIVOR ANNUITY REQUIREMENTS. This Section 7.14
shall apply only if the Plan, as adopted by the Employer, is a money purchase
plan.
(A) APPLICATION. The provisions of this Section 7.14
shall apply to any Participant in the Plan if the Plan, as adopted by the
Employer, is a money purchase plan and the Participant is one who is
credited with at least one Hour of Service with the Employer on or after
August 23, 1984, and such other Participants as provided in Section 7.14(G).
(B) QUALIFIED JOINT AND SURVIVOR ANNUITY. Unless an
optional form of benefit under Section 7.14(H) is selected pursuant to a
"Qualified Election" within the 90-day period ending on the "Annuity
Starting Date", a married Participant's "Vested Account Balance" shall be
paid in the form of a "Qualified Joint and Survivor Annuity" and an
unmarried Participant's "Vested Account Balance" will be paid in the form of
a life annuity. The Participant may elect to have such annuity distributed
upon attainment of the "Earliest Retirement Age" under the Plan.
(C) QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. Unless an
optional form of benefit under Section 7.14(H) has been selected within the
"Election Period" pursuant to a "Qualified Election", if a Participant dies
before the "Annuity Starting Date" then the Participant's "Vested Account
Balance" shall be applied toward the purchase of an annuity for the life of
the Surviving Spouse. The Surviving Spouse may elect to have such annuity
distributed within a reasonable period after the Participant's death.
(D) DEFINITIONS.
(1) "ELECTION PERIOD" shall mean the period which
begins on the first day of the Plan Year in which the Participant
attains age 35 and ends on the date of the Participant's death. If a
Participant separates from service prior to the first day of the Plan
Year in which age 35 is attained, with respect to the account balance
as of the date of separation, the "Election Period" shall begin on the
date of separation.
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A Participant who will not yet attain age 35 as of
the end of any current Plan Year may make a special qualified election
("Pre-age 35 Waiver") to waive the qualified preretirement survivor
annuity for the period beginning on the date of such election and
ending on the first day of the Plan Year in which the Participant will
attain age 35. Such election shall not be valid unless the
Participant receives a written explanation of the qualified
preretirement survivor annuity in such terms as are comparable to the
explanation required under Section 7.14(E)(1). Qualified
preretirement survivor annuity coverage will be automatically
reinstated as of the first day of the Plan Year in which the
Participant attains age 35. Any new waiver on or after such date
shall be subject to the full requirements of this Section.
(2) "EARLIEST RETIREMENT AGE" shall mean the
earliest date on which, under the plan, the Participant could elect to
receive retirement benefits.
(3) "QUALIFIED ELECTION" shall mean a waiver of a
"Qualified Joint and Survivor Annuity" or a qualified preretirement
survivor annuity. Any waiver of a "Qualified Joint and Survivor
Annuity" or a qualified preretirement survivor annuity shall not be
effective unless: (a) the Participant's Spouse consents in writing to
the election; (b) the election designates a specific Beneficiary,
including any class of Beneficiaries or any contingent Beneficiaries,
which may not be changed without spousal consent (or the Spouse
expressly permits designations by the Participant without any further
spousal consent); (c) the Spouses's consent acknowledges the effect of
the election; and (d) the Spouse's consent is witnessed by a Plan
representative or notary public. Additionally, a Participant's waiver
of the "Qualified Joint and Survivor Annuity" shall not be effective
unless the election designates a form of benefit payment which may not
be changed without spousal consent (or the Spouse expressly permits
designations by the Participant without any further spousal consent).
If it is established to the satisfaction of a Plan representative that
there is no Spouse or that the Spouse cannot be located, a waiver will
be deemed a "Qualified Election".
Any consent by a Spouse obtained under this provision (or
establishment that the consent of a Spouse may not be obtained) shall
be effective only with respect to such Spouse. A consent that permits
designations by the Participant without any requirement of further
consent by such Spouse must acknowledge that the Spouse has the right
to limit consent to a specific Beneficiary, and a specific form of
benefit where applicable, and that the Spouse voluntarily elects to
relinquish either or both of such rights. A revocation of a prior
waiver may be made by a Participant without the consent of the Spouse
at any time before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under this
provision shall be valid unless the Participant has received notice as
provided in Section 7.14(E) below.
(4) "QUALIFIED JOINT AND SURVIVOR ANNUITY" shall
mean an immediate annuity for the life of the Participant with a
survivor annuity for the life of the Spouse which is not less than 50
percent and not more than 100 percent of the amount of the annuity
which is payable during the joint lives of the Participant and the
Spouse and which is the amount of benefit which can be purchased with
the Participant's "Vested Account Balance". The percentage of the
survivor annuity under the Plan shall be 50 percent.
(5) "ANNUITY STARTING DATE" shall mean the first
day of the first period for which an amount is paid as an annuity or
any other form.
(6) "VESTED ACCOUNT BALANCE" shall mean the
aggregate value of the Participant's vested account balances derived
from Employer and Employee contributions (including rollovers and
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direct transfers), whether vested before or upon death, including the
proceeds of insurance contracts, if any, on the Participant's life.
The provisions of this Section 7.14 shall apply to a Participant who
is vested in amounts attributable to Employer contributions, Employee
contributions (or both) at the time of death or distribution.
(E) NOTICE REQUIREMENTS.
(1) In the case of a "Qualified Joint and
Survivor Annuity", the Plan Administrator shall no less than 30 days
and no more than 90 days prior to the "Annuity Starting Date" provide
to each Participant a written explanation of: (a) the terms and
conditions of a "Qualified Joint and Survivor Annuity"; (b) the
Participant's right to make and the effect of an election to waive the
"Qualified Joint and Survivor Annuity" form of benefit; (c) the rights
of a Participant's Spouse; and (d) the right to make, and the effect
of, a revocation of a previous election to waive the "Qualified Joint
and Survivor Annuity".
(2) In the case of a qualified preretirement
survivor annuity as described in Section 7.14(C), the Plan
Administrator shall provide each Participant within the applicable
period for such Participant a written explanation of the qualified
preretirement survivor annuity in such terms and in such manner as
would be comparable to the explanation provided for meeting the
requirements of Section 7.14(E)(1) applicable to a "Qualified Joint
and Survivor Annuity".
The applicable period for a Participant is whichever of the following
periods ends last: (a) the period beginning with the first day of the
Plan Year in which the Participant attains age 32 and ending with the
close of the Plan Year preceding the Plan Year in which the
Participant attains age 35; (b) a reasonable period ending after the
individual becomes a Participant; (c) a reasonable period ending after
Section 7.14(C) ceases to apply to the Participant; (d) a reasonable
period ending after this Section 7.14 first applies to the
Participant. Notwithstanding the foregoing, notice must be provided
within a reasonable period ending after separation from service in the
case of a Participant who separates from service before attaining age
35.
For purposes of applying the preceding paragraph, a reasonable period
ending after the enumerated events described in (b), (c) and (d) is
the end of the two-year period beginning one year prior to the date
the applicable event occurs, and ending one year after that date. In
the case of a Participant who separates from service before the Plan
Year in which age 35 is attained, notice shall be provided within the
two-year period beginning one year prior to separation and ending one
year after separation. If such a Participant thereafter returns to
employment with the Employer, the applicable period for such
Participant shall be redetermined.
(3) Notwithstanding the other requirements of
this Section 7.14(E), the respective notices prescribed by this
Section need not be given to a Participant if (a) the plan "fully
subsidizes" the costs of a "Qualified Joint and Survivor Annuity" or
qualified preretirement survivor annuity, and (b) the plan does not
allow the Participant to waive the "Qualified Joint and Survivor
Annuity" or qualified preretirement survivor annuity and does not
allow a married Participant to designate a nonspouse Beneficiary. For
purposes of this Section 7.14(E)(3), a plan fully subsidizes the costs
of a benefit if no increase in cost, or decrease in benefits to the
Participant may result from the Participant's failure to elect another
benefit.
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(F) SAFE HARBOR RULES.
(1) This Section 7.14(F) shall apply to a
Participant in a profit-sharing plan, and to any distribution made on
or after the first day of the first Plan Year beginning after December
31, 1988, from or under a separate account attributable solely to
accumulated deductible employee contributions, as defined in section
72(o)(5)(B) of the Code, and maintained on behalf of a participant in
a money purchase pension plan (including a target benefit plan), if
the following conditions are satisfied:
(a) The Participant does not or cannot
elect payments in the form of a life annuity; and
(b) On the death of a Participant, the
Participant's "Vested Account Balance" will be paid to the
Participant's Surviving Spouse, but if there is no Surviving
Spouse, or if the Surviving Spouse has consented in a manner
conforming to a "Qualified Election", then to the
Participant's "Designated Beneficiary". The Surviving Spouse
may elect to have distribution of the "Vested Account Balance"
commence within the 90-day period following the date of the
Participant's death. The "Vested Account Balance" shall be
adjusted for gains or losses occurring after the Participant's
death in accordance with the provisions of the Plan governing
the adjustment of account balances for other types of
distributions. This Section 7.14(F) shall not be operative
with respect to a Participant in a profit-sharing plan if the
plan is a direct or indirect transferee of a Defined Benefit
Plan, money purchase plan, a target benefit plan, stock bonus,
or profit-sharing plan which is subject to the survivor
annuity requirements of section 401(a)(11) and section 417 of
the Code (other than, effective January 1, 1993,
trustee-to-trustee transfers described in Section 3.9(B)). If
this Section 7.14(F) is operative, then the provisions of this
Section 7.14, other than Section 7.14(G), shall be
inoperative.
(2) The Participant may waive the spousal death
benefit described in this Section 7.14(F) at any time provided that no
such waiver shall be effective unless it satisfies the conditions of
Section 7.14(D)(3) (other than the notification requirement referred
to therein) that would apply to the Participant's waiver of the
qualified preretirement survivor annuity.
(3) For purposes of this Section 7.14(F), "Vested
Account Balance" shall mean, in the case of a money purchase pension
plan or a target benefit plan, the Participant's separate account
balance attributable solely to accumulated deductible employee
contributions within the meaning of section 72(o)(5)(B) of the Code.
In the case of a profit-sharing plan, "Vested Account Balance" shall
have the same meaning as provided in Section 7.14(D)(6).
(G) TRANSITIONAL RULES.
(1) Any living Participant not receiving benefits
on August 23, 1984, who would otherwise not receive the benefits
prescribed by the previous provisions of this Section 7.14 must be
given the opportunity to elect to have the prior provisions of this
Section 7.14 apply if such Participant is credited with at least one
Hour of Service under this Plan or a predecessor plan in a Plan Year
beginning on or after January 1, 1976, and such Participant had at
least ten Years of Service for Vesting when he separated from service.
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(2) Any living Participant not receiving benefits
on August 23, 1984, who was credited with at least one Hour of Service
under this Plan or a predecessor plan on or after September 2, 1974,
and who is not otherwise credited with any service in a Plan Year
beginning on or after January 1, 1976, must be given the opportunity
to have his or her benefits paid in accordance with Section
7.14(G)(4).
(3) The respective opportunities to elect (as
described in Sections 7.14(G)(1) and (2) above) must be afforded to
the appropriate Participants during the period commencing on August
23, 1984, and ending on the date benefits would otherwise commence to
said Participants.
(4) Any Participant who has elected pursuant to
Section 7.14(G)(2) and any Participant who does not elect under
Section 7.14(G)(1) or who meets the requirements of Section 7.14(G)(1)
except that such Participant does not have at least ten Years of
Service for Vesting when he separates from service, shall have his
benefits distributed in accordance with all of the following
requirements if benefits would have been payable in the form of a life
annuity:
(a) AUTOMATIC JOINT AND SURVIVOR
ANNUITY. If benefits in the form of a life annuity become
payable to a married Participant who:
(1) Begins to receive payments
under the Plan on or after Normal Retirement Age; or
(2) Dies on or after Normal
Retirement Age while still working for the Employer;
or
(3) Begins to receive payments on
or after the "Qualified Early Retirement Age"; or
(4) Separates from service on or
after attaining Normal Retirement Age (or the
"Qualified Early Retirement Age") and after
satisfying the eligibility requirements for the
payment of benefits under the plan and thereafter
dies before beginning to receive such benefits;
then such benefits shall be received under this Plan in the
form of a "Qualified Joint and Survivor Annuity", unless the
Participant has elected otherwise during the election period.
The election period must begin at least six months before the
Participant attains "Qualified Early Retirement Age" and end
not more than 90 days before the commencement of benefits.
Any election hereunder shall be in writing and may be changed
by the Participant at any time.
(b) ELECTION OF EARLY SURVIVOR ANNUITY.
A Participant who is employed after attaining the "Qualified
Early Retirement Age" shall be given the opportunity to elect,
during the election period, to have a survivor annuity payable
on death. If the Participant elects the survivor annuity,
payments under such annuity must not be less than the payments
which would have been made to the Spouse under the "Qualified
Joint and Survivor Annuity" if the Participant had retired on
the day before his death. Any election under this provision
shall be in writing and may be changed by the Participant at
any time. The election period begins on the later of (1) the
90th day before the Participant attains the "Qualified Early
Retirement Age",
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or (2) the date on which participation begins, and ends on the
date the Participant terminates employment.
(c) DEFINITIONS. For purposes of this
Section 7.14(G)(4):
(1) "QUALIFIED EARLY RETIREMENT
AGE" is the latest of:
(i) The earliest date,
under the Plan, on which the Participant may
elect to receive retirement benefits,
(ii) The first day of the
120th month beginning before the Participant
reaches Normal Retirement Age, or
(iii) The date the
Participant begins participation.
(2) "QUALIFIED JOINT AND SURVIVOR
ANNUITY" is an annuity for the life of the
Participant with a survivor annuity for the life of
the Spouse as described in Section 7.14(D)(4).
(H) OPTIONAL FORMS OF BENEFIT. The only optional forms
of benefit under the Plan are the forms of benefit provided under Section
7.1(B).
7.15 WAIVER OF 30-DAY NOTICE REQUIREMENTS FOR CERTAIN
DISTRIBUTIONS. If a distribution is one to which sections 401(a)(11) and 417
of the Code do not apply, such distribution may commence less than 30 days
after the notice required under Treas. Reg. Section 1.411(a)-11(c) is given,
provided that:
(A) The Plan Administrator clearly informs the
Participant that the Participant has a right to a period of at least 30 days
after receiving the notice to consider the decision of whether or not to
elect a distribution (and, if applicable, a particular distribution option);
and
(B) The Participant, after receiving the notice,
affirmatively elects a distribution.
ARTICLE VIII
NONALIENATION OF BENEFITS
8.1 BENEFITS NOT ALIENABLE. The right of any Participant or
Beneficiary to any benefit payment under the Plan shall not be subject to
attachment, execution, garnishment, any voluntary or involuntary alienation or
assignment or to any other legal or equitable process. The preceding sentence
shall also apply to the creation, assignment, or recognition of a right to any
benefit payable with respect to a Participant pursuant to a domestic relations
order, unless such order is determined to be a Qualified Domestic Relations
Order or any domestic relations order entered before January 1, 1985.
8.2 SPECIAL PROVISION WITH RESPECT TO QUALIFIED DOMESTIC RELATIONS
ORDERS. If the Adoption Agreement so provides and if the Qualified Domestic
Relations Order so provides:
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(A) Plan assets allocated to an alternate payee shall be
placed in a separate account established for such alternate payee and such
alternate payee shall be entitled, with respect to such separate account, to
all the rights including but not limited to, the investment direction
rights, if any, of a Participant under the Plan; and
(B) Distribution of the vested amount in such separate
account shall be made to such alternate payee at such time as the Qualified
Domestic Relations Order provides, even if such date precedes the date on
which a Participant is entitled to payment under the Plan, but such
distribution shall only be made in one lump sum payment if made prior to the
date the Participant would otherwise be first entitled to receive payment.
ARTICLE IX
THE ADMINISTRATIVE COMMITTEE
9.1 STRUCTURE. The Employer shall appoint an Administrative
Committee consisting of one or more persons to administer the Plan. The member
or the members of the Administrative Committee, if in the full-time employ of
the Employer, shall serve without additional compensation and at the pleasure
of the Employer. The Employer may, in its sole discretion, discharge or remove
any member from the Administrative Committee at any time. Any member may
resign by delivering his written resignation to the Employer and such
resignation shall become effective at delivery or at any later date specified
therein. In the event of the death, discharge, resignation or removal of any
member of the Administrative Committee, the Employer may appoint a successor.
The Employer shall notify the Trustee of the appointment of the member or
members of the Administrative Committee and of any successor member or members
thereto.
9.2 ADMINISTRATIVE COMMITTEE ACTION. On all matters within the
jurisdiction of the Administrative Committee the decision of a majority of the
members of the Administrative Committee shall govern and control. The
Administrative Committee may take action either at a meeting or in writing
without a meeting, provided that in the latter instance all members of the
Administrative Committee shall have been advised of the action contemplated and
that the written instrument evidencing the action shall be signed by a majority
of the members. If there is more than one member, the Employer shall appoint a
chairman. If there is more than one member, the Administrative Committee may
appoint, either from among its members or otherwise, a secretary who shall keep
a record of all meetings and actions taken by the Administrative Committee.
Either the Chairman or any member of the Administrative Committee designated by
the Chairman shall execute any certificate, instrument or other written
direction on behalf of the Administrative Committee.
9.3 RESPONSIBILITIES. The Administrative Committee shall have
sole responsibility and discretion for administration of the Plan, and shall
supervise and control the operation of the Plan in accordance with its terms.
The Administrative Committee shall have the responsibility, the discretion, the
power and the authority to do all things necessary to accomplish that purpose,
including, but not limited to, the responsibility, discretion, power and
authority to do the following:
(A) To construe and interpret the terms and provisions of
the Plan including, but not limited to, disputed or doubtful terms;
(B) To adopt such rules and regulations under the Plan as
it may consider desirable for the administration of the Plan;
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(C) To determine all questions of eligibility for
participation under the Plan;
(D) To determine all questions concerning the amount,
time and manner of payment of benefits under the Plan;
(E) To prescribe procedures to be followed by Employees,
Participants, and Beneficiaries under the Plan;
(F) To prepare and distribute appropriate information
concerning the Plan;
(G) To issue directions to the Trustee concerning all
benefits which are to be paid from the Trust pursuant to the Plan;
(H) To bring suit in a court of competent jurisdiction,
or to take any other action necessary to ascertain the proper actions to be
taken in the event that a reasonable interpretation of applicable law
precludes the Administrative Committee from satisfying its requirements
under this Plan or the Trust;
(I) To establish a funding policy and method to carry out
the Plan objectives in light of the short- and long-run financial needs of
the Plan and to communicate such policy and method to the Trustee;
(J) To keep such records, make such reports (including,
but not limited to, reports to Participants and the Internal Revenue Service
concerning Qualified Voluntary Employee Contributions, as may be required by
Treasury regulations) and do such other acts as it deems appropriate in
order to comply with ERISA and government regulations thereunder; and
(K) To do such other acts as may be necessary and/or
desirable in order to administer the Plan.
To the maximum extent permitted by law, the Administrative Committee's
determinations on all such matters shall be final and binding upon the
Employer, Participants, other employees, Beneficiaries and all other
parties.
9.4 CONTRACTING FOR SERVICE. The Administrative Committee may
contract for legal, accounting, clerical and other services necessary to carry
out its responsibilities under the Plan.
9.5 EXPENSES OF ADMINISTRATIVE COMMITTEE. Unless paid by the
Employer, any expenses incurred in administering the Plan, including but not
limited to, expenses incurred by the Administrative Committee and Trustee's
fees, shall be deducted from the Accounts to which such expenses relate or
proportionately from all Accounts, if such expenses do not relate to any
specific Accounts.
ARTICLE X
CLAIMS PROCEDURE
10.1 CLAIMS FOR BENEFITS. All claims for benefits under the Plan
shall be made in writing and shall be signed by the applicant. Claims shall be
submitted to a representative designated by the Administrative Committee and
hereinafter referred to as the "Claims Coordinator".
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Each claim hereunder shall be acted on and approved or
disapproved by the Claims Coordinator within 60 days following the receipt by
the Claims Coordinator of the information necessary to process the claim.
In the event the Claims Coordinator denies a claim for
benefits, in whole or in part, the Claims Coordinator shall notify the
applicant in writing of the denial of the claim and notify such applicant of
his right to a review of the Claims Coordinator's decision by the
Administrative Committee. Such notice by the Claims Coordinator shall also set
forth, in a manner calculated to be understood by the applicant, the specific
reason for such denial, the specific Plan provisions on which the denial is
based, a description of any additional material or information necessary to
perfect the claim, with an explanation of why such material or information is
necessary, and an explanation of the Plan's claim review procedure as set forth
in this Article X.
If no action is taken by the Claims Coordinator on an
applicant's claim within 60 days after receipt by the Claim Coordinator, such
application shall be deemed to be denied for purposes of the following appeals
procedure.
10.2 APPEALS PROCEDURE. Any applicant whose claim for benefits is
denied in whole or in part (such applicant being hereinafter referred to as the
"Claimant") may appeal from such denial to the Administrative Committee for a
review of the decision by the entire Administrative Committee. Such appeal
must be made within six months after the Claimant has received written notice
of the denial as provided above in Section 10.1. An appeal must be submitted
in writing within such period and must:
(A) Request a review by the entire Administrative
Committee of the claim for benefits under the Plan;
(B) Set forth all of the grounds upon which the
Claimant's request for review is based and any facts in support thereof; and
(C) Set forth any issues or comments which the Claimant
deems pertinent to the appeal.
The Administrative Committee shall regularly review appeals by
Claimants. The Administrative Committee shall act upon each appeal within 60
days after receipt thereof unless special circumstances require an extension of
the time for processing the Claimant's request for review. If such an
extension of time for processing is required, written notice of the extension
shall be forwarded to the Claimant prior to the commencement of the extension.
In no event shall such extension exceed a period of 120 days after the request
for review is received by the Administrative Committee.
The Administrative Committee shall make a full and fair review
of each appeal and any written materials submitted by the Claimant and/or the
Employer in connection therewith. The Administrative Committee may require the
Claimant and/or the Employer to submit such additional facts, documents or
other evidence as the Administrative Committee in its discretion deems
necessary or advisable in making its review. The Claimant shall be given the
opportunity to review pertinent documents or materials upon submission of a
written request to the Administrative Committee, provided the Administrative
Committee finds the requested documents or materials are pertinent to the
appeal.
On the basis of its review, the Administrative Committee shall
make an independent determination of the Claimant's eligibility for benefits
under the Plan. The decision of the Administrative Committee on any claim for
benefits shall be final and conclusive upon all parties thereto.
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In the event the Administrative Committee denies an appeal, in
whole or in part, the Administrative Committee shall give written notice of the
decision to the Claimant, which notice shall set forth, in a manner calculated
to be understood by the Claimant, the specific reasons for such denial and
which shall make specific reference to the pertinent Plan provisions on which
the Administrative Committee's decision was based.
It is intended that the claims procedure of this Plan be
administered in accordance with the claims procedure regulations of the
Department of Labor set forth in 29 CFR Section 2560.503-1.
ARTICLE XI
THE TRUSTEE
11.1 ACCEPTANCE OF TRUST. The Trustee hereby accepts the Trust
herein expressed, and agrees to carry out the provisions hereof on its part to
be performed.
11.2 RESIGNATION OF TRUSTEE. Any Trustee may resign his duties
hereunder by delivering a written resignation to the Employer. Such
resignation shall take effect on the date provided therein, but not before the
sixtieth day after delivery thereof unless, prior to such sixtieth day, a
successor Trustee shall have been appointed and shall have accepted such
appointment, or unless the Employer shall otherwise consent to such earlier
resignation. If, within 60 days after notice of resignation shall have been
given under the provisions of this Section 11.2, a successor Trustee shall not
have been appointed by the Employer, the resigning Trustee or the Employer, as
appropriate, may apply to any court of competent jurisdiction for the
appointment of a successor Trustee.
11.3 REMOVAL OF TRUSTEE. Any Trustee may be removed by the
Employer at any time, upon notice to the Trustee. Such removal shall be
effected by delivering to the Trustee a notice from the Employer removing the
Trustee, and may include notification to the Trustee of the appointment of a
successor Trustee in the manner hereinafter set forth in Section 11.5. Such
notice of removal shall be effective on the date specified therein, but not
before the actual date of such notice.
11.4 APPOINTMENT OF SUCCESSOR TRUSTEE UPON OCCURRENCE OF CERTAIN
EVENTS. In the event of the death or resignation of a Trustee or the inability
of a Trustee to serve as such after the Employer or any successor thereto shall
have gone out of business or ceased to exist, or been dissolved, a successor
Trustee shall be appointed by election of a majority of the Participants under
the Plan who were Employees of the Employer at the time the Employer or
successor thereto went out of business or ceased to exist, or was dissolved, as
the case may be. Such successor Trustee shall have the same powers as are
granted to successor Trustees under Section 11.5.
11.5 SUCCESSOR TRUSTEE. In the event of the death, resignation or
removal of a Trustee or Trustees hereunder, one or more successor Trustees
shall be appointed by the Employer, and such successor Trustee, upon accepting
such appointment by an instrument in writing delivered to the Employer, shall
become vested with the same powers, duties, privileges and immunities as if it
had originally been named in this Plan as Trustee.
11.6 MEETINGS AND ACTIONS OF TRUSTEE. In the event there is more
than one Trustee, the Trustee shall hold meetings upon such notice (which may
be waived), at such place or places and at such times as it may from
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time to time determine and shall act by majority vote of all the Trustees. Any
one or more Trustees designated by a majority vote of all the Trustees may
execute any certificate, instrument or other written document on behalf of all
the Trustees.
11.7 COMPENSATION. No fee or compensation shall be paid to the
Trustee for its services as such if such Trustee is an Employee of, or is
otherwise compensated by, the Employer and, if not, such Trustee shall receive
such reasonable compensation as may be agreed to by the Employer and such
Trustee.
11.8 TRUSTEE'S LIABILITY. In the exercise of its powers and the
performance of its duties as Trustee under the Plan, the Trustee shall act
solely in the interest of the Participants and their Beneficiaries and in
accordance with the provisions of Article XIV. The Trustee, however, shall not
be liable for any mistake in judgment or other action taken in good faith, or
for loss unless resulting from a breach of any of the responsibilities,
obligations or duties imposed upon the Trustee by the Plan or by Title I of
ERISA.
11.9 GENERAL POWERS. Subject to the provisions and limitations
herein expressly set forth, the Trustee shall have the duty and authority to do
and perform any and all acts and things which, in its judgment, shall be
necessary and/or reasonable to carry out the purposes of the Plan and Trust.
No enumeration of specific powers herein made shall be construed as a
limitation upon the foregoing general powers.
11.10 PAYMENTS TO TRUSTEE. All Participant, Matching, Elective
Deferral, Employer, Rollover, Qualified Matching, Qualified Nonelective, and
Qualified Voluntary Employee Contributions and direct transfers shall be paid
to the Trustee as provided in Article III. The Trustee shall be responsible
only for such funds as shall be accepted and received by it from the Employer.
The Trustee shall not be responsible for the collection of any contributions to
the Plan, or for the acceptance of any contribution in property other than cash
except as otherwise provided under Sections 3.9 and 3.10.
11.11 INVESTMENT OF TRUST FUND. Except to the extent that any Trust
assets have been committed by the Employer to the management of an Investment
Manager and subject to the Participant's right to direct the investment of his
Employer and/or Matching and/or Elective Deferral and/or Participant and/or
Rollover and/or Transfer and/or QVEC Accounts and/or Qualified Matching
Contribution and/or Qualified Nonelective Contribution accounts and subject to
the requirements of Article XIV, the Trustee shall invest and reinvest the
principal and income of the Employer, Matching, Elective Deferral, Participant,
Rollover, Transfer, and QVEC Accounts and Qualified Matching Contribution and
Qualified Nonelective Contribution accounts as provided in Article VI. No part
of the Trust Fund shall be invested in Employer real property. Except to the
extent provided in the Adoption Agreement, no part of the Trust Fund shall be
invested in Employer Securities. Notwithstanding the preceding sentence, no
portion of Participant, Matching, Elective Deferral, Rollover, Qualified
Matching, Qualified Nonelective, or Qualified Voluntary Employee Contributions
or direct transfers shall be invested in Employer Securities (unless in
compliance with applicable Federal and state securities laws); moreover, no
portion of Employer Contributions shall be invested in Employer Securities if
such Employer Contributions are subject to the investment direction of the
Participants (unless in compliance with Federal and state securities laws). In
any event, investment in Employer Securities shall be limited to investment in
Qualifying Employer Securities. Notwithstanding the above, in no event may the
Plan, if it is a money purchase plan with respect to the adopting Employer,
invest in Qualifying Employer Securities in excess of the ten percent limit
described in Section 6.1(A)(14) above.
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11.12 ACCOUNTS, REPORTS AND GOVERNMENTAL FILINGS. Rules relating to
certain accounting and reporting requirements are as follows:
(A) ACCOUNTS AND REPORTS. The Trustee shall keep
accounts and detailed records of all receipts, investments, disbursements
and other transactions required to be performed hereunder. The Trustee
shall prepare a written report reflecting the receipts, disbursements and
other transactions effected by it during the Plan Year (or period ending
with its resignation or removal) and the fair market value of the assets in
each Participant's Employer, Matching, Elective Deferral, Participant,
Rollover, Transfer, and QVEC Accounts and Qualified Matching Contribution
and Qualified Nonelective Contribution accounts as of the Valuation Date in
accordance with Section 5.3. Such report shall be filed with the
Administrative Committee within 60 days following such Valuation Date (or
following the Trustee's resignation or removal pursuant to Section 11.2 or
11.3). The Trustee shall not be obligated to take any action on any
individual account except upon the written instructions forwarded by the
Administrative Committee and shall have no obligation to inquire into the
propriety of any such written instructions and shall be fully protected in
acting in accordance with such written instructions.
(B) GOVERNMENTAL FILINGS BY TRUSTEE. The Trustee shall
keep such records, make such reports and file such returns and other
information as may be required of the Trustee with respect to the Trust
under the Code, ERISA and the regulations issued or forms adopted
thereunder. The Trustee shall make such of its records as may pertain
solely to a particular Participant available to such Participant, upon
request, for examination by such Participant.
(C) GOVERNMENTAL FILINGS BY ADMINISTRATIVE COMMITTEE.
The Administrative Committee shall be solely responsible for the filing of
any reports or information required, with respect to the Plan, under the
Code, ERISA or any other Federal or State law and regulations issued or
forms adopted thereunder.
11.13 INFORMATION TO TRUSTEE. The Administrative Committee shall
furnish to the Trustee any information required by the Plan. The Trustee shall
be fully protected in relying upon such information.
11.14 BENEFIT PAYMENTS. The Trustee shall make or, in the case of
Insurance Contracts, cause to be made all benefit payments under the Plan upon
written instructions of the Administrative Committee. The Trustee shall not be
liable for following proper Administrative Committee directions which are in
accordance with the terms of the Plan.
11.15 TRUST ASSETS. The Trust Fund shall consist of all amounts
contributed by, or on behalf of, Participants under the Plan, and the earnings
and appreciation thereon, less depreciation and payments made by the Trustee
under the Plan.
11.16 PARTICIPANTS EXCLUSIVELY TO BENEFIT. Except as provided in
Section 3.7, Trust Fund assets shall be held by the Trustee for the exclusive
purpose of providing benefits to Participants under the Plan and their
Beneficiaries and defraying reasonable expenses of administering the Plan.
11.17 EMPLOYMENT OF COUNSEL, AGENTS, ETC. The Trustee, upon notice
to the Administrative Committee, may employ such counsel, accountants and
agents and such clerical and other help as it may deem necessary in carrying
out the Trust, and pay the fees, charges and cost of the same from the Trust
Fund as an expense of the Plan, unless the Employer shall pay the same.
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11.18 COMPROMISE OF CLAIMS. The Trustee, upon notice to the
Administrative Committee, may compromise, arbitrate, or settle any suit or
legal proceeding, claim, debt, damage or undertaking due or owing from, or to,
the Trust Fund.
11.19 SUITS. The Trustee is authorized, upon notice to the
Administrative Committee, to sue or to defend any suit or legal proceedings by
or against the Trust. In the case of any suit or proceeding regarding this
Plan and Trust Agreement, to which the Trustee may be a party, said Trustee
shall have a lien upon the Trust Fund for any and all costs, attorneys' fees
(whether such attorneys shall be regularly retained or specifically employed by
the said Trustee), and for other expenses which it may incur or become liable
for on account thereof, or on account of any other legal expense incurred in
the administration of this Trust, and it shall be entitled to reimburse itself
for any of said expenses out of the Trust Fund.
11.20 EXECUTION OF DOCUMENTS. The Trustee shall have the power to
make, execute, acknowledge and deliver any and all documents, agreements,
insurance policies, annuity contracts and, without limitation by the foregoing,
any and all other instruments that may be necessary or appropriate to carry out
the powers herein granted.
11.21 NO DISCRIMINATION. The Trustee shall not take any action
which would result in benefiting one Participant or group of Participants at
the expense of another, or in discrimination as between Participants similarly
situated, or by the application of different rules to substantially similar
sets of facts.
11.22 DECISION OF TRUSTEE. The decision of the Trustee in matters
within its jurisdiction shall be final, binding and conclusive upon the
Administrative Committee and upon each Employee, Participant, Beneficiary and
every other person or party interested or concerned.
11.23 FUNDING POLICY. From time to time the Administrative
Committee shall communicate to the Trustee in writing the current funding
policy and methods that have been established, pursuant to Section 9.3(I) by
the Administrative Committee to carry out the objectives of the Plan.
ARTICLE XII
THE INSURER
12.1 INSURER'S LIABILITY. The Insurer shall not be deemed to be a
party to this Plan, nor shall it be responsible for the validity of this Plan,
or for the completion and/or submission of any returns or reports required to
be filed by the Trustee, the Employer or the Administrative Committee under the
provisions of the Code or ERISA. The Insurer shall, however, furnish to the
Trustee, upon request of the Trustee, such information as it may require with
respect to the Insurance Contracts to enable the Trustee to complete the annual
or more frequent valuation of Plan assets required by Section 5.3 and to file
such reports as may be required by ERISA and the Code.
12.2 INFORMATION TO INSURER. The Trustee shall furnish to the
Insurer such information as may be required by the Insurer to maintain
Insurance Contracts hereunder. The Insurer shall be fully protected in relying
upon such information.
12.3 BENEFIT PAYMENTS. The Insurer shall make all benefit payments
by it under the Plan only upon written instructions of the Trustee. The
Insurer shall not be liable for following such written instructions.
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12.4 ANNUITIES MUST BE NONTRANSFERABLE. Any annuity contract
distributed herefrom must be nontransferable.
12.5 CONFLICTS. The terms of any annuity contract purchased and
distributed by the Plan to a Participant or Spouse shall comply with the
requirements of this Plan.
12.6 DISTRIBUTION OF INSURANCE CONTRACTS. Subject to Section 7.14,
relating to joint and survivor annuity requirements, the Insurance Contracts on
a Participant's life shall be converted to cash or an annuity or distributed to
the Participant upon commencement of benefits.
12.7 CONFLICT WITH INSURANCE CONTRACTS. The Trustee shall apply
for and shall be the owner of any Insurance Contract purchased under the terms
of this Plan. The Insurance Contract(s) must provide that proceeds will be
payable to the Trustee; however, the Trustee shall be required to pay over all
proceeds of the Insurance Contract(s) to the Participant's designated
Beneficiary in accordance with the distribution provisions of this Plan. The
Spouse of a married Participant and otherwise the Participant's Beneficiary
shall be the designated Beneficiary of the proceeds in all circumstances unless
the Plan, as adopted by the Employer, is a money purchase plan and a qualified
election has been made in accordance with Section 7.14 relating to joint and
survivor annuity requirements, if applicable. Under no circumstances shall the
Trust retain any part of the proceeds. In the event of any conflict between
the terms of this Plan and the terms of any Insurance Contract purchased
hereunder, the Plan provisions shall control.
12.8 DIVIDENDS OR CREDITS. Any dividends or credits earned on
Insurance Contracts shall be allocated to the Participant's account derived
from Employer contributions for whose benefit the Insurance Contract is held.
ARTICLE XIII
THE INVESTMENT MANAGER
13.1 APPOINTMENT. The Employer may appoint one or more Investment
Managers, which shall serve at the pleasure of the Employer, to manage, control
and invest any or all of the assets held by the Trustee in the Trust. Any
Investment Manager, so appointed, shall signify in writing to the Employer that
it accepts the appointment and acknowledges its status as a Fiduciary.
13.2 RESPONSIBILITY. Subject only to the funding procedures
established by the Administrative Committee, such Investment Manager shall have
full responsibility, power and authority to manage and invest the assets held
by the Trustee in the Trust committed to it.
13.3 ACT IN INTEREST OF PARTICIPANTS. In carrying out its
responsibilities, the Investment Manager shall act solely in the interest of
the Participants and their Beneficiaries and in accordance with the provisions
of Article XIV.
13.4 DIRECTIONS FROM INVESTMENT MANAGER. Whenever the Trustee must
or may act upon the direction or approval of the Investment Manager, the
Trustee may act upon a written communication or oral communication followed by
a written communication signed by the representative of the Investment Manager,
as previously agreed upon in writing by the Trustee and the Investment Manager.
Until otherwise notified in
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writing by the proper officers of the Investment Manager, the Trustee shall be
fully protected in relying upon the last such direction or directions received
by it from the Investment Manager.
ARTICLE XIV
FIDUCIARY RESPONSIBILITY
14.1 FIDUCIARY DUTIES. A Fiduciary, as defined in Section 1.37,
shall discharge its duties with respect to the Plan and Trust in the interest
of the Participants and their Beneficiaries:
(A) For the exclusive purpose of:
(1) Providing benefits to Participants and their
Beneficiaries; and
(2) Defraying reasonable expenses of
administering the Plan and Trust;
(B) With the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent man acting in like capacity
and familiar with such matters would use in the conduct of an enterprise of
a like character and with like aims;
(C) Except for any Trust assets committed to investment
by a Participant, by diversifying the investments of the Plan and Trust so
as to minimize the risk of large losses, unless under the circumstances it
is clearly prudent not to do so; and
(D) In accordance with the documents and instruments
governing the Plan and Trust insofar as they are consistent with the
provisions of ERISA.
14.2 ALLOCATION OF RESPONSIBILITY. Authority and responsibility
for management of the Plan and Trust shall be allocated among the following
persons:
(A) The Employer shall have sole responsibility for the
appointment and removal of the Administrative Committee described in Article
IX, of the Trustee described in Article XI and of any Investment Manager
described in Article XIII. To the extent that it is carrying out this
responsibility, the Employer shall be a "named Fiduciary" of the Plan;
(B) The Administrative Committee shall have sole
responsibility for the administration of the Plan, as set forth in Article
IX. To the extent that it is carrying out this responsibility, the
Administrative Committee shall be a "named Fiduciary" of the Plan;
(C) The Trustee shall have sole responsibility for the
management and control of the Trust assets, except to the extent such assets
have been committed to investment by a Participant or by any Investment
Manager. To the extent it is carrying out this responsibility, the Trustee
shall be a "named Fiduciary" of the Plan;
(D) Any Investment Manager appointed under Article XIII
to manage and invest Trust assets shall have sole responsibility for the
investment and management of Trust assets held by the Trustee in the Trust
which have been committed to such Investment Manager, subject only to the
funding procedures
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established by the Administrative Committee. To the extent it is carrying
out this responsibility, an Investment Manager shall be a Fiduciary of the
Plan; and
(E) The Participants shall have sole responsibility for
the investment of the assets in their Employer, Matching, Elective Deferral,
Participant, Rollover, Transfer and/or QVEC Accounts and/or Qualified
Matching Contribution and/or Qualified Nonelective Contribution accounts in
the event the Employer indicates in the Adoption Agreement applicable to
such Employer that the Participants have the power to direct investment of
Employer, Matching, Elective Deferral, Participant, Rollover, Transfer
and/or QVEC Accounts and/or Qualified Matching Contribution and/or Qualified
Nonelective Contribution accounts.
14.3 EXCLUSIVE RESPONSIBILITY. It is the purpose of this Plan and
Trust Agreement to allocate to each of the Fiduciaries identified in Section
14.2 exclusive responsibility for prudent execution of the functions assigned
to him (or to the entity of which he is a member) and no responsibility for
execution of functions assigned to others. Whenever one such Fiduciary is
required by the Plan and Trust Agreement to follow the directions of another
such Fiduciary, the two Fiduciaries shall not be deemed to have been assigned a
shared responsibility, but the Fiduciary giving the directions shall have sole
responsibility for the functions assigned to him, including issuing such
directions, and the Fiduciary receiving the directions shall have sole
responsibility for the functions assigned to him, including following such
directions insofar as they are, on their face, proper under this Plan and Trust
Agreement and under applicable law.
14.4 TRANSFER OR MAINTENANCE OF INDICIA OF OWNERSHIP OF PLAN ASSETS
OUTSIDE UNITED STATES PROHIBITED. Except as authorized by the Secretary of
Labor by regulation, no Fiduciary shall maintain the indicia of ownership of
any assets of the Plan or Trust outside the jurisdiction of the district courts
of the United States.
14.5 LIABILITY OF FIDUCIARY FOR BREACH OF CO-FIDUCIARY. A
Fiduciary with respect to the Plan or Trust shall not be liable for a breach of
Fiduciary responsibility of another Fiduciary with respect to the Plan or Trust
except under the following circumstances:
(A) He or it participates knowingly in, or knowingly
undertakes to conceal, an act or omission of such other Fiduciary, knowing
such act or omission is a breach;
(B) By his or its failure to properly discharge his or
its own Fiduciary responsibilities, he or it has enabled such other
Fiduciary to commit a breach; or
(C) He or it has knowledge of a breach by such other
Fiduciary, unless he or it makes reasonable efforts under the circumstances
to remedy the breach.
14.6 PROHIBITED TRANSACTIONS. The rules relating to prohibited
transactions are as follows:
(A) Unless otherwise exempted by the Secretary of Labor,
a Fiduciary with respect to the Plan or Trust shall not cause the Plan or
Trust to engage in a transaction if he or it knows, or should know, that
such transaction constitutes a direct or indirect:
(1) Sale or exchange, or leasing, of any property
between the Plan or Trust and a party in interest or a disqualified
person;
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(2) Lending of money or other extension of credit
between the Plan or Trust and a party in interest or a disqualified
person;
(3) Furnishing of goods, services, or facilities
between the Plan or Trust and a party in interest or a disqualified
person; or
(4) Transfer to, or use by or for the benefit of,
a party in interest or a disqualified person, of any assets of the
Plan or Trust.
(B) Unless otherwise exempted by the Secretary of Labor,
a Fiduciary with respect to the Plan or Trust shall not:
(1) Deal with the assets of the Plan or Trust in
his or its own interest or for his or its own account;
(2) In his or its individual or any other
capacity, act in any transaction involving the Plan or Trust on behalf
of a party (or represent a party) whose interests are adverse to the
interests of the Plan or Trust or the interests of the Participants or
their Beneficiaries; or
(3) Receive any consideration for his or its own
personal account from any party dealing with the Plan or Trust in
connection with a transaction involving the assets of the Plan or
Trust.
(C) Notwithstanding anything to the contrary set forth in
this Section 14.6, a Fiduciary shall be entitled to:
(1) Receive any benefit to which the Fiduciary
may be entitled as a Participant or Beneficiary in the Plan or Trust,
so long as the benefit is computed and paid on a basis which is
consistent with the terms of the Plan and Trust as applied to all
Participants and their Beneficiaries;
(2) Receive any reasonable compensation for
services rendered, except that no person so serving who already
receives full-time pay from the Employer and/or Controlled Group
member, from an employee organization whose employees are Participants
in the Plan, or from an association of employers whose employees are
Participants in the Plan, shall receive compensation from the Plan or
Trust, except for reimbursement of expenses properly and actually
incurred;
(3) Receive reimbursement of expenses properly
and actually incurred in the performance of his or its duties with the
Plan and Trust;
(4) Serve as a Fiduciary in addition to being an
officer, employee, agent, or other representative of a party in
interest or disqualified person;
(5) Make loans to a party in interest or a
disqualified person who is a Participant or Beneficiary of the Plan
under Section 7.11, provided such loans are made in accordance with
the specific provisions of Section 7.11; and
(6) To the extent the Plan and applicable
Adoption Agreement so provide, acquire or sell Qualifying Employer
Securities if:
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(a) Such acquisition or sale is for
adequate consideration (as such term is defined in section
3(18) of ERISA); and
(b) No commission is charged with
respect to such acquisition or sale.
(D) For purposes of this Article XIV, the words "party in
interest" or "disqualified person" mean:
(1) Any Fiduciary, counsel or employee of the
Plan or Trust;
(2) A person providing services to the Plan or
Trust;
(3) The Employer;
(4) An employee organization any of whose members
are covered by the Plan;
(5) An owner, direct or indirect, of 50 percent
or more of:
(a) The combined voting power of all
classes of stock entitled to vote or the total value of shares
of all classes of stock of a corporation,
(b) The capital interest or the profits
interest of a partnership, or
(c) The beneficial interest of a trust
or unincorporated enterprise,
which is an employer or employee organization described in Section
14.6(D)(3) or (4);
(6) A spouse, ancestor, lineal descendant, or
spouse of a lineal descendant of any individual described in Section
14.6(D)(1), (2), (3) or (5);
(7) A corporation, partnership, or trust or
estate of which (or in which) 50 percent or more of:
(a) The combined voting power of all
classes of stock entitled to vote or the total value of shares
of all classes of stock of such corporation,
(b) The capital interest or profits
interest of such partnership, or
(c) The beneficial interest of such
trust or estate,
is owned directly or indirectly, or held by, persons described in
Section 14.6(D)(1), (2), (3), (4) or (5);
(8) An employee, officer, director (or an
individual having powers or responsibilities similar to those of
officers or directors), or a ten percent or more shareholder, directly
or indirectly, of a person described in Section 14.6(D)(2), (3), (4),
(5) or (7), or of the Plan or Trust; or
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(9) A ten percent or more (directly or indirectly
in capital or profits) partner or joint venturer of a person described
in Section 14.6(D)(2), (3), (4), (5) or (7).
ARTICLE XV
PLAN AMENDMENT
15.1 AMENDMENT. The rules relating to the amendment of the Plan
and Trust Agreement are as follows:
(A) SPONSORING ORGANIZATION'S POWER TO AMEND. The
Sponsoring Organization may amend any part of the Plan at any time with
respect to all Adopting Employers. Such amendment shall be applicable to
all Employers that have adopted the Plan and each such Employer shall be
deemed to have adopted such amendment as of the date of the notification
letter from the Internal Revenue Service which relates to such amendment.
This provision shall be interpreted in accordance with section 6.01(1) of
Rev. Proc. 89-13. The Sponsoring Organization shall notify each Adopting
Employer of any such amendment.
(B) AMENDMENT BY ADOPTING EMPLOYER. The Employer may (1)
change the choice of options in the Adoption Agreement, (2) add overriding
language in the Adoption Agreement when such language is necessary to
satisfy section 415 or section 416 of the Code because of the required
aggregation of multiple plans, and (3) add certain model amendments
published by the Internal Revenue Service which specifically provide that
their adoption will not cause the Plan to be treated as individually
designed. An Employer that amends the Plan for any other reason, including
a waiver of the minimum funding requirement under section 412(d) of the
Code, will no longer participate in the DRINKER BIDDLE & REATH REGIONAL
PROTOTYPE DEFINED CONTRIBUTION PLAN and will be considered to have an
individually designed plan.
(C) REV. PROC. 92-41 - DEEMED AMENDMENT OF ADOPTING
EMPLOYERS' PLANS. The changes made by this amendment and restatement of the
Plan and Trust Agreement, pursuant to Rev. Proc. 92-41, shall be deemed
adopted by each Adopting Employer on the date the notification letter is
issued by the District Office of the Internal Revenue Service with respect
to this amendment and restatement without further action on the part of the
Adopting Employer. However, each such Adopting Employer must send a notice
not earlier that six days, if by mail (nine days if by posting or in person)
and not more than 20 days, if by mail (23 days if by posting or in person)
from the date of the Internal Revenue Service notification letter to all
interested parties in accordance with Part II of Rev. Proc. 92-6 informing
such interested parties that the Plan and Trust Agreement have been amended.
The Adopting Employer may also change its Adoption Agreement with respect to
the amendments described in section 5.05 of Rev. Proc. 92-41 without
resubmission of such Adopting Employer's Plan to the Internal Revenue
Service. Any other changes made by the Adopting Employer will require
resubmission of such Adopting Employer's Plan to the Internal Revenue
Service for a determination as to the continuing qualification under section
401(a) of the Code of the Adopting Employer's Plan as thus amended.
15.2 LIMITATIONS UPON AMENDMENT. Notwithstanding the above, no
amendment shall be made which shall cause or permit:
(A) Any part of the assets of the Trust under the Plan to
be diverted to purposes other than for the exclusive benefit of Participants
or their Beneficiaries;
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(B) Any part of such assets to revert to, or become the
property of, the Employer;
(C) Any Participant or his Beneficiary to be deprived of
any benefit to which he was entitled under the Plan by reason of
contributions made by the Employer or Participant prior to such amendment,
unless such amendment is necessary either to conform the Plan to, or satisfy
the conditions of, any law, governmental regulation or ruling, or to permit
the Plan to meet the requirements of the Code, or ERISA;
(D) The account balance of a Participant to be decreased
or, effective for Plan amendments made after July 30, 1984, an optional form
of distribution to be restricted or eliminated with respect to any benefits
accrued prior to such amendment; notwithstanding the preceding clause, a
Participant's account balance may be reduced to the extent permitted under
section 412(c)(8) of the Code; for purposes of this provision, a Plan
amendment which has the effect of decreasing a Participant's account balance
or eliminating an optional form of benefit, with respect to benefits
attributable to service before the amendment, shall be treated as reducing
an accrued benefit;
(E) Any responsibilities of the Trustee under this Plan
and Trust Agreement to be increased without its prior written consent;
(F) In the event the vesting schedule of the Plan is
amended in the case of an Employee who is a Participant on (1) the date the
amendment is adopted, or (2) the date the amendment is effective, if later,
the nonforfeitable percentage (determined as of the date specified in (1) or
(2)) of such Employee's right to his Accrued Benefit derived from Employer
contributions to be less than his percentage computed under the Plan without
regard to such amendment; or
(G) The computation of a Participant's nonforfeitable
right to his Accrued Benefit derived from Employer contributions to be
affected by the amendment of the Plan's vesting schedule or to be directly
or indirectly affected by any other Plan amendment or by a deemed amendment
resulting from an automatic change to or from a top-heavy vesting schedule
unless a Participant with three or more Years of Service for Vesting is
permitted to elect, within 60 days after the latest of (1) the date the
amendment is adopted, (2) the date the amendment becomes effective, or (3)
the date written notification of such amendment is issued to the Participant
by an Employer or by the Administrative Committee, to have his
nonforfeitable percentage computed under the Plan without regard to such
amendment, provided, however, that no election shall be given to any
Participant whose nonforfeitable percentage under the Plan as amended cannot
at any time be less than such percentage determined without regard to such
amendment. For Participants who do not have at least one Hour of Service in
any Plan Year beginning after December 31, 1988, the preceding sentence
shall be applied by substituting "five Years of Service for Vesting" for
"three Years of Service for Vesting" where such language appears.
15.3 RIGHTS OF TRUSTEE UPON AMENDMENT. No amendment may be made to
the Plan and Trust Agreement which affects the rights, duties or
responsibilities of the Trustee without its prior written consent. A certified
copy of any amendment shall be delivered to the Trustee by the Employer.
15.4 SIGNIFICANT REDUCTION IN RATE OF FUTURE BENEFIT ACCRUALS.
This Section 15.4 shall only apply if the Plan, as adopted by the Employer, is
a money purchase plan. In such event the Plan may not be amended so as to
provide for a significant reduction in the rate of future benefit accruals,
unless, after adoption of the Plan amendment and not less than 15 days before
the effective date of the Plan amendment, the Administrative Committee, as Plan
administrator, provides a written notice, setting forth the Plan amendment and
its effective date, to:
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(A) Each Participant in the Plan;
(B) Each Beneficiary who is an alternate payee (within
the meaning of section 206(d)(3)(K) of ERISA) under an applicable Qualified
Domestic Relations Order; and
(C) Each employee organization representing Participants
in the Plan, except that such notice shall instead be provided to a person
designated in writing to receive such notice on behalf of any person
referred to in Section 15.4(A), (B) or (C).
This Section 15.4 is to be administered in accordance with the provisions of
section 204(h) of ERISA. This provision also applies upon termination of the
Plan.
ARTICLE XVI
PLAN TERMINATION
16.1 RIGHT TO DISCONTINUE CONTRIBUTIONS AND/OR TO TERMINATE PLAN
AND TRUST. The Employer has established the Plan with the intention and
expectation that from year to year it will be able to make its contributions as
herein provided. However, the Employer realizes that circumstances not now
foreseen or circumstances beyond its control may make it either impossible or
inadvisable to continue to make its contributions as herein provided. In such
event, the Employer shall have the power, subject to Section 15.4 in the case
the Plan is a money purchase plan, to discontinue contributions to the Plan and
Trust or to terminate the Plan and/or Trust by an appropriate resolution or, in
the case of non-corporate Employers, by other action, which shall specify the
date of termination. A certified copy of such resolution or other action shall
be delivered to the Administrative Committee and the Trustee.
16.2 TERMINATION OF PLAN ON HAPPENING OF CERTAIN EVENTS. The Plan
herein shall automatically terminate upon the happening of any of the following
events:
(A) Discontinuance or liquidation of the Employer's
business; or
(B) The merger or consolidation of the Employer with any
other corporation or business organization, or the sale or transfer by the
Employer of substantially all of its assets to any corporation or business
organization, if the successor corporation or business organization shall
fail to adopt this Plan within 90 days from the effective date of such
consolidation, merger or sale or transfer of assets. If such successor
corporation or business organization shall adopt this Plan, within 90 days
from the effective date of such consolidation, merger or sale or transfer of
assets, such successor corporation or business organization shall be deemed
to succeed to the position of the Employer under this Plan.
16.3 CONTINUANCE OF TRUST AFTER COMPLETE DISCONTINUANCE OF
CONTRIBUTIONS TO PLAN. Upon complete discontinuance of contributions to the
Plan, the rights of affected Employees under the Plan and Trust shall become
fully vested and nonforfeitable, notwithstanding any other provisions of the
Plan, but in all other respects the Plan and Trust shall continue in effect,
and be administered in accordance with the provisions of the Plan and Trust
Agreement.
16.4 DISTRIBUTION OF TRUST ASSETS. Upon termination or partial
termination of the Plan, notwithstanding any other provisions of the Plan, the
rights under the Plan and Trust of the affected Employees
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or, in the case of a partial termination, of the affected Employees in the
terminated portion of the Plan, shall become vested and nonforfeitable. The
Trustee, at the direction of the Administrative Committee, shall make payment
of such amounts in accordance with Section 7.1, no later than the time
prescribed for the commencement of such payments provided in Section 7.9. Upon
final termination of the Trust, at such time as shall be determined by the
Employer after notification to the Administrative Committee, the Administrative
Committee shall direct the Trustee to liquidate the assets held in Employer,
Matching, Elective Deferral, Participant, Rollover, Transfer and QVEC Accounts
and Qualified Matching Contribution and Qualified Nonelective Contribution
accounts and, after payment of all expenses and proportional adjustment of each
Employer, Matching, Elective Deferral, Participant, Rollover, Transfer and QVEC
Account and Qualified Matching Contribution and Qualified Nonelective
Contribution account to reflect income or losses to the date of termination, to
distribute, subject to the requirements of Section 7.14, if applicable, the
balance of each Participant's Accrued Benefit to each Participant, retired
Participant, or, if appropriate, to the Participant's Beneficiary.
16.5 DISTRIBUTEES WHOSE WHEREABOUTS ARE UNKNOWN. In the case of
any distributee described herein at the time of distribution upon termination
of the Plan or Trust whose whereabouts are unknown, the Administrative
Committee shall notify such individual at the last known address by certified
mail with return receipt requested advising such individual of the right to
such a benefit. If the distributee cannot be located in this manner, the
Trustee shall establish a custodial account for such individual's benefit in a
Federally insured bank, savings and loan association or credit union in which
the individual's account balance shall be deposited. Upon the distribution of
all Plan assets, the Trustee shall be discharged from all obligations under the
Plan and Trust and no Participant or Beneficiary shall have any further rights
or claims thereunder.
ARTICLE XVII
SUCCESSOR EMPLOYER AND MERGER
OR CONSOLIDATION OF PLAN
17.1 SUCCESSOR TO EMPLOYER UNDER PLAN AND TRUST. Subject to the
limitations described in Section 17.2, this Plan and Trust may be adopted by
any successor corporation or other business organization upon the merger or
consolidation of the Employer with such corporation or other business
organization, or upon the sale by the Employer of substantially all its assets
to such corporation or business organization, if such successor corporation or
other business organization:
(A) Adopts this Plan and Trust effective upon the date of
such merger, consolidation or sale of assets, and
(B) Agrees to continue and maintain this Plan and Trust.
Upon the adoption of the Plan and Trust Agreement by the
successor, such successor shall have all the powers, duties and
responsibilities of the Employer under the Plan and Trust Agreement.
17.2 MERGER OR CONSOLIDATION. In the event of any merger or
consolidation of the Plan with, or transfer, in whole or in part, of the assets
and liabilities of the Trust to another trust held under any other plan of
deferred compensation maintained or to be established for the benefit of all or
some of the Participants of this Plan, the assets of the Trust applicable to
such Participants shall be transferred to the other trust only if:
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(A) Each Participant would (if either this Plan or the
other plan then terminated) receive a benefit immediately after the merger,
consolidation or transfer which is equal to, or greater than, the benefit he
would have been entitled to receive immediately before the merger,
consolidation or transfer (if this Plan had then terminated); and
(B) Resolutions of the Board of Directors or other
governing entity of the Employer under this Plan, and of any new or
successor employer of the affected Participants, shall authorize such
transfer of assets; and, in the case of the new or successor employer of the
affected Participants, its resolutions shall include an assumption of
liabilities with respect to such Participant's inclusion in the new
employer's plan; and
(C) Such other plan and trust are qualified under
sections 401(a) and 501(a) of the Code.
ARTICLE XVIII
MISCELLANEOUS
18.1 NO RIGHT TO EMPLOYMENT. Participation in the Plan shall not
be deemed to be consideration for, or an inducement to, or a condition of the
employment of any Employee. Nothing contained in this Plan shall be deemed to
give any Participant the right to be retained in the employment of the
Employer, nor shall any Participant, retired Participant, deceased Participant,
disabled Participant, or terminated Participant have any right to any payment,
except as such payment may be provided under the terms of the Plan and then
only to the extent that assets are available under the Plan.
18.2 GENDER AND NUMBER. Whenever any words are used herein in any
specific gender, they shall be construed as though they were also used in any
other applicable gender. The singular form, whenever used herein, shall mean
or include the plural form where applicable.
18.3 BONDING. Except as provided in section 412 of ERISA with
respect to certain banks and other financial institutions, every Fiduciary of
the Plan and every person who handles funds or other property of the Plan shall
be bonded as provided in such section 412. The amount of such bond shall be
fixed at the beginning of each Plan Year and shall not be less than ten percent
of the amount of funds handled. In no case shall the bond be less than $l,000
nor more than $500,000, except as otherwise prescribed by the Secretary of
Labor, after due notice and opportunity for hearing to all interested parties.
18.4 AGENT FOR SERVICE OF LEGAL PROCESS. The name and address of
the person designated for the service of legal process with respect to the Plan
shall be indicated in the Adoption Agreement.
18.5 HEADINGS. The headings are for reference only. In the event
of a conflict between a heading and the content of an Article or Section, the
content of the Article or Section shall control.
18.6 UNCLAIMED BENEFITS. Except as otherwise provided in Section
16.5, any benefits payable to a Participant or Beneficiary which are not
claimed for a period of five years from the date of entitlement as determined
by the Administrative Committee and following a diligent effort to locate such
Participant or Beneficiary and with the approval of the Administrative
Committee, shall be forfeited and applied in accordance with the terms of
Section 5.5; provided, however, that such forfeited benefits shall be
reinstated if a claim for such forfeited benefits is made by the Participant or
Beneficiary.
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18.7 REPORTS FURNISHED TO PARTICIPANTS. The Administrative
Committee shall furnish to each Participant, and to each Beneficiary receiving
benefits under the Plan, within the time limits specified in the Code and
ERISA, each of the following:
(A) A Summary Plan Description and periodic revisions;
(B) Notification of amendments to the Plan;
(C) A Summary Annual Report which summarizes the Annual
Report filed with the Department of Labor;
(D) An annual status report of his Plan Accounts;
(E) A notice regarding a qualifying rollover
distribution, as prescribed in section 402(f) of the Code; and
(F) Any other reports, documents or information required
by the Code, ERISA or the regulations thereunder.
18.8 REPORTS AVAILABLE TO PARTICIPANT AND BENEFICIARIES. The
Administrative Committee shall make copies of the following documents available
at the principal office of the Employer and at such other locations as may be
required by ERISA for examination by any Participant or Beneficiary:
(A) The Plan and Trust Agreement;
(B) The Summary Plan Description;
(C) The latest Annual Report; and
(D) Any other documents required by the Code, ERISA or
the regulations thereunder.
18.9 REPORTS UPON REQUEST. The Administrative Committee shall
furnish to any Participant or Beneficiary who so requests in writing, once
during any twelve-month period, a statement indicating, on the basis of the
latest available information:
(A) The total benefits accrued; and
(B) The nonforfeitable benefits, if any, which have
accrued, or the earliest date on which benefits will become nonforfeitable.
The Administrative Committee shall also furnish to any Participant or
Beneficiary who so requests in writing, at a reasonable charge as prescribed by
regulation of the Secretary of Labor, any document referred to in Section 18.8.
18.10 CONTROLLED GROUP EMPLOYEES. Except as otherwise provided in
Section 3.8(F), all employees of all corporations, trades or businesses which
are members of a Controlled Group shall be treated as employed by a single
employer.
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18.11 CONSTRUCTION. Construction and administration of this Plan
and Trust Agreement shall be governed by ERISA and other applicable Federal law
and, to the extent not governed by Federal law, by the law of the State in
which the Trustee, if a corporate Trustee, maintains its principal place of
business or, if there is no corporate Trustee, by the law of the State in which
the Employer maintains its principal place of business.
18.12 INSURANCE AND INDEMNIFICATION FOR LIABILITY. The rules
relating to the insurance and indemnification for liability are as follows:
(A) INSURANCE. The Employer may, in its discretion,
obtain, pay for, and keep current a policy or policies of insurance,
insuring members of the Administrative Committee, the Trustee (if an
employee) and other employees to whom any Fiduciary responsibility with
respect to administration of the Plan and/or investment of Plan assets has
been delegated against any and all liabilities, costs and expenses incurred
by such persons as a result of any act, or omission to act, in connection
with the performance of their duties, responsibilities and obligations under
the Plan and any applicable Federal or state law.
(B) INDEMNITY. If the Employer does not obtain, pay for,
and keep current the type of insurance policy or policies referred to in
Section 18.12(A) above, or if such insurance is provided but any of the
members of the Administrative Committee, the Trustee (if an employee) or
other employees referred to in Section 18.12(A) above incur any costs or
expenses which are not covered under such policies, then, in either event,
the Employer shall, to the extent permitted by law, indemnify and hold
harmless such parties against any and all costs, expenses and liabilities
incurred by such parties in performing their duties and responsibilities
under this Plan, provided such party or parties were acting in good faith
within what was reasonably believed to have been in the best interests of
the Plan and its Participants.
18.13 NO RETENTION OF INTEREST IN TRUST FUND. Neither the Employer
nor the Trustee guarantees the Trust Fund from losses or from decline in value.
Except as provided in Section 3.7, the Employer does not retain any beneficial
or reversionary interest in any contributions to the Trust Fund or in any of
the assets, profits, earnings or increment thereof, and all Employer
obligations in any respect, except the supplying of information to the Trustee,
as herein provided, shall cease upon the payment of contributions to the
Trustee. The Employer shall not be in any way responsible for the acts of the
Trustee.
18.14 TERMINATION OF PLAN AND TRUST UNDER RULE AGAINST PERPETUITIES.
Except as may be limited by the law of the State governing the administration
of the Trust Fund, in no event shall the Plan and Trust hereby created continue
beyond the last to survive of those persons born before the Effective Date of
this Plan and Trust who shall die while Participants or Former Participants
hereunder, and 21 years thereafter. This Plan and the Trust hereby created
shall be deemed to have been terminated on the day before the lapse of this
ultimate term determined under this Section 18.14.
Notwithstanding the above, this Section 18.14 shall be inapplicable if
ERISA requires otherwise or if, under the law of the State governing the
administration of the Trust Fund, the Rule against Perpetuities is not
applicable to said Trust Fund.
18.15 NOTICE TO INTERESTED PARTIES. Prior to submitting this Plan
to the Internal Revenue Service for a determination that it qualifies under
section 401 of the Code, the Employer shall provide written notice to all
interested parties, in accordance with section 7476 of the Code, and the
regulations thereunder, that such a submission will be made.
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18.16 EFFECTIVE DATE OF ADOPTION OF PLAN AND TRUST AGREEMENT. The
effective date of adoption of the Plan and Trust Agreement by an adopting
Employer shall be indicated in Section A.1.20 of the Adoption Agreement
applicable to such Employer.
18.17 RESTATEMENT OF EXISTING PLAN. If the adoption of the Plan and
Trust Agreement is as a restatement of an Employer's Prior Plan and trust
agreement, the Employer shall so indicate in the Adoption Agreement applicable
to such Employer. If the Prior Plan provided for participation and/or vesting
standards which were different from those provided in this Plan, as adopted by
the Employer, and the standards, as adopted by the Employer, in this Plan are
to be given prospective application only, the Employer shall so indicate in the
Adoption Agreement applicable to such Employer. If the Prior Plan contained
terms which the adopting Employer desires to make applicable to this Plan, the
provisions of the Prior Plan shall be inserted in the Adoption Agreement
applicable to such adopting Employer. Moreover, any necessary and/or desirable
transitional rules shall be inserted in the Adoption Agreement applicable to
such adopting Employer.
18.18 INDIVIDUAL PROVISIONS. Any provisions applicable to the
adopting Employer only and not otherwise provided for in the Plan and Adoption
Agreement shall be inserted in the Adoption Agreement applicable to such
adopting Employer.
18.19 FAILURE OF QUALIFICATION. If the Plan, as adopted by the
Employer, fails to attain or retain qualification, such Plan shall no longer
participate in the DRINKER BIDDLE & REATH REGIONAL PROTOTYPE DEFINED
CONTRIBUTION PLAN and shall be considered an individually designed plan.
18.20 WAIVER OF MINIMUM FUNDING STANDARDS. Any Employer adopting
this Plan as a money purchase plan that amends this Plan because of a waiver of
the minimum funding standards under section 412(d) of the Code shall be
considered to have an individually designed plan and such plan may no longer
participate in the DRINKER BIDDLE & REATH REGIONAL PROTOTYPE DEFINED
CONTRIBUTION PLAN.
ARTICLE XIX
ADOPTION OF PLAN BY AFFILIATED EMPLOYERS
19.1 ADOPTION OF PLAN AND TRUST. If the Adoption Agreement so
provides, the terms of this Plan, as adopted by the adopting Employer indicated
in the applicable Adoption Agreement, may be adopted by any Affiliated
Employer of the adopting Employer provided:
(A) The Board of Directors or other governing entity of
the adopting Employer consents to such adoption;
(B) The Board of Directors or other governing entity of
the adopting Affiliated Employer adopts this Plan by appropriate action;
(C) The adopting Affiliated Employer executes the
Adoption Agreement; and
(D) The adopting Affiliated Employer executes such other
documents as may be required to make such adopting Affiliated Employer a
party to the Plan and Trust as an Employer (except as provided below).
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An adopting Affiliated Employer that adopts the Plan and Trust
Agreement is thereafter an Employer with respect to its employees for purposes
of the Plan and Trust Agreement except that such adopting Affiliated Employer
delegates to the adopting Employer the power to amend, after the adopting
Affiliated Employer's initial adoption of the Adoption Agreement, the Adoption
Agreement with respect to such adopting Affiliated Employer and the power to
terminate the Plan and Trust Agreement as set forth in Section 19.6.
19.2 WITHDRAWAL FROM PLAN. Subject to the requirements of Article
XVII, any adopting Affiliated Employer may, at any time, withdraw from the Plan
upon giving the Board of Directors or other governing entity of the adopting
Employer, the Administrative Committee and the Trustee at least 30 days notice
in writing of its intention to withdraw. Upon the withdrawal of an adopting
Affiliated Employer pursuant to this Section 19.2, the Trustee shall segregate
a portion of the assets in the Trust as set forth below, the value of which
shall equal the total amount credited to the accounts of Participants employed
by the withdrawing adopting Affiliated Employer. Subject to the requirements
of Article XVII, the determination of which assets are to be so segregated
shall be made by the Trustee in its sole discretion as set forth below.
The Administrative Committee may, at any time, direct the Trustee to
segregate from the Trust such part thereof as the Administrative Committee
shall determine to be held for the benefit of the employees of an adopting
Affiliated Employer, and shall give a copy of such directions to the adopting
Employer and each adopting Affiliated Employer. Such directions shall specify
the assets of the Trust to be segregated. Unless the adopting Employer or any
adopting Affiliated Employer files with the Trustee a written protest within 30
days after delivery of such directions to the Trustee, such directions shall
conclusively establish that the assets specified therein represent the part of
the Trust held for the benefit of the Employees of the adopting Employer and of
each adopting Affiliated Employer.
After the expiration of such 30 day period, and after settlement of
any such protest, the Trustee shall follow the Administrative Committee's
directions, including any modification thereof adopted in settlement of any
protest. Any part of the Trust segregated pursuant to such directions shall
thereafter be held in a separate trust identical in terms to the Trust hereby
established or maintained, except that, with respect to such separate trust,
this Plan and Trust Agreement shall be construed as if such adopting Affiliated
Employer were the adopting Employer and all powers and authority conferred
upon the adopting Employer or its Board or other governing entity and the
Administrative Committee shall devolve upon such adopting Affiliated Employer
or its Board of Directors or other governing entity. At any time thereafter,
such adopting Affiliated Employer and the Trustee may (but they shall not be
required to) enter into a separate agreement stating the terms of such separate
plan and trust agreement which may be the DRINKER BIDDLE & REATH REGIONAL
PROTOTYPE DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT. If the DRINKER BIDDLE
& REATH REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT is not
so adopted, the plan and trust agreement with respect to the withdrawing
adopting Affiliated Employer shall be considered an individually designed plan.
19.3 EXCLUSIVE PURPOSE OF TRUST. Neither the segregation and
transfer of the Trust assets upon the withdrawal of an adopting Affiliated
Employer nor the execution of a new plan and trust agreement by such
withdrawing adopting Affiliated Employer shall operate to permit any part of
the Trust to be used for, or diverted to, purposes other than for the
exclusive benefit of the Participants or their Beneficiaries.
19.4 APPLICATION OF WITHDRAWAL PROVISIONS. The withdrawal
provisions contained in Section 19.2 and Section 19.3 shall be applicable only
if the withdrawing adopting Affiliated Employer continues to cover its
Participants and eligible Employees in another plan and trust qualified under
sections 401 and 501 of the Code. Otherwise, the termination provisions of the
Plan and Trust Agreement shall apply.
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19.5 SINGLE PLAN. Notwithstanding any other provision set forth
herein, the Plan, as adopted pursuant to this Article XIX by the adopting
Employer and each adopting Affiliated Employer, shall constitute a single plan,
as such term is defined in Treas. Reg. Section 1.414(1)-1(b)(1), as to the
adopting Employer and each adopting Affiliated Employer.
19.6 ADOPTING EMPLOYER APPOINTED AGENT OF ADOPTING AFFILIATED
EMPLOYERS. Each adopting Affiliated Employer appoints the Board of Directors or
other governing entity of the adopting Employer as its agent to exercise on
its behalf all of the power and authority conferred upon the adopting Employer
by this Plan and Trust Agreement, including, without limitation, the power to
amend this Plan and Trust Agreement as set forth in Article XV and the power to
terminate this Plan and/or the Trust Agreement as set forth in Article XVI.
The authority of the Board of Directors or other governing entity of the
adopting Employer to act as agent of any adopting Affiliated Employer shall
terminate only if the part of the Plan's assets held for the benefit of the
employees of such adopting Affiliated Employer shall be segregated in a
separate trust as provided in Section 19.2 and such adopting Affiliated
Employer thereupon withdraws from the Plan in accordance with Section 19.2.
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PART II
[ MUNICIPAL FUND FOR TEMPORARY INVESTMENT]
----------------------------------------
NAME OF ADOPTING EMPLOYER
DEFINED CONTRIBUTION PLAN
(PROFIT-SHARING OR PROFIT-SHARING 401(K))
REGIONAL PROTOTYPE PLAN NUMBER 001
ADOPTION AGREEMENT
DRINKER BIDDLE & REATH
REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT
[ FUND OFFICE RETIREMENT PROFIT-SHARING PLAN ]
--------------------------------------------
NAME OF PLAN
(REV. 06/94)
(C) DRINKER BIDDLE & REATH 1995
<PAGE> 116
<TABLE>
<S> <C>
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
DISTRICT DIRECTOR
31 HOPKINS PLAZA
BALTIMORE, MD 21201-0000
Employer Identification Number:
Date: JAN 04, 1993 23-1423089
File Folder Number:
DRINKER BIDDLE & REATH 521006125
PHILADELPHIA NATIONAL BANK BLDG Person to Contact:
C/O HOMER L ELLIOTT ESQUIRE G.N. Wallace
DRINKER BIDDLE & REATH Contact Telephone Number:
1345 CHESTNUT STREET PH NAT BK BLDG (410) 962-2973
PHILADELPHIA, PA 19107-3496 Plan Name:
REGIONAL PROTOTYPE
DEFINED CONTRIBUTION PLAN
Plan Number: 001
Letter Serial Number:
D8520005
</TABLE>
Dear Applicant:
The amendment to the form of the plan identified above is acceptable
under section 401(a) or 403(a) of the Internal Revenue Code. This letter
relates only to the amendment to the form of the plan. It is not a
determination of any other amendment or of the form of the plan as a whole, or
on the effect of other federal or local statutes.
You must furnish a copy of this letter and the enclosed publication to
each employer who adopts this plan. You must also send a copy of this letter,
a copy of the approved form of the plan, and any approved amendments and
related documents to each key District Director of the Internal Revenue Service
in whose jurisdiction there are adopting employers.
The acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). To adopt the form of the plan, the employer should apply for a
determination letter by filing an application with the key District Director of
the Internal Revenue Service on Form 5307, Application for Determination for
Adopters of Master or Prototype, Regional Prototype or Volume Submitter Plans.
For purposes of sections 15.02 and 15.03 of Rev. Proc. 89-13, 1989-1
C.B. 801, your application was received before March 31, 1991.
Please advise those adopting the plan to contact you if they have any
questions about the operation of the plan.
We have sent a copy of this letter to your representative as indicated
in your Power of Attorney.
If you have any questions on our processing of this case, please call
the above telephone number. If you write, please provide your telephone number
and the most convenient time for us to call in case we need more information.
Whether you call or write, please refer to the Letter Serial Number and File
Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record.
Sincerely yours,
/s/ H.J. Hightower
District Director
Enclosure(s)
Publication 1488 Letter 2026/DO/CG)
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<PAGE> 117
Department of the Treasury Internal Revenue Service
PUBLICATION 1488
(Rev. February 1991)
FAVORABLE NOTIFICATION LETTER
INTRODUCTION
This publication is issued in conjunction with a favorable notification letter.
It explains the significance of your letter, points out some features that may
affect the qualified status of the plan, and provides information on the
reporting requirements for the plan.
An employee retirement plan qualified under Internal Revenue Code
section 401(a) or 403(a) (qualified plan) is entitled to favorable tax
treatment. For example, contributions made in accordance with the plan
document are generally currently deductible. Participants will not include
these contributions into income until the time they receive a distribution from
the plan, at which time special income averaging rates for lump sum
distributions may serve to reduce the tax liability. In some cases, taxation
may be further deferred by rollover to another qualified plan or individual
retirement arrangement. See Publication 575, Pension and Annuity Income
(Including Simplified General Rule), for further details. Finally, plan
earnings may accumulate free of tax.
Employee retirement plans that fail to satisfy the requirements under
section 401(a) or 403(a) are not entitled to this favorable tax treatment.
Therefore, many employers desire advance assurance that the terms of their
plans satisfy the qualification requirements. The Service provides such
advance assurance for regional prototype plans by issuing favorable
notification letters. However, in some cases, a determination letter is also
required for reliance.
SIGNIFICANCE OF A FAVORABLE NOTIFICATION LETTER
Notification letters are issued by the Service to sponsors of regional
prototype plans. Plan sponsors then make the plan available to employers who
may adopt the plans for the benefit of their employees.
The significance of a favorable notification letter differs for
standardized plans and nonstandardized plans. A standardized plan can be
identified by the number 2, 5, or 7 appearing in the second position of the
letter serial number (the number following the alpha character which appears in
the upper right portion of the letter). A nonstandardized plan may be
identified by the number 3, 6, or 8 appearing in the second position.
STANDARDIZED PLANS. A standardized plan is designed to be automatically
acceptable under any fact pattern, except as indicated below. Therefore, there
is no need to request a determination letter for such plans, provided the
employer does not amend the plan and chooses only those options in the adoption
agreement that were approved by the Service. Although a determination letter
is not requested, the employer must still inform interested parties of the
establishment or amendment of the plan. However, a determination letter is
required for advance assurance that the provisions of the plan satisfy the
qualification requirements if the employer maintains or has maintained another
qualified plan. The Employer is not considered to have maintained another plan
merely because the plan was previously not a standardized plan. Under certain
circumstances, employers who have adopted standardized defined benefit plans
may wish to request a determination letter that their plans prior benefit
structure satisfies the requirements of Internal Revenue Code section
401(a)(26).
Paired plans are standardized plans that are designed to work
together. A paired plan may be recognized by the phrase "other than a
specified paired plan" appearing in the fifth or sixth paragraph of the
notification letter. If the employer maintains and has maintained only paired
plans, a determination letter is not needed.
NONSTANDARDIZED PLANS. It is possible that the unique fact patterns applicable
to a specific employer may cause a nonstandardized plan to fail qualification.
Therefore, to obtain advance assurance that the plan is qualified, the plan
must be submitted for a determination letter. A determination letter is
similar to an insurance policy that will, in many cases, protect the employer
and plan beneficiaries from adverse tax consequences if the plan is later found
to be nonqualified in the absence of a change in law, provided the plan is
being operated in good faith in accordance with plan provisions. This advance
assurance is a service provided by the Internal Revenue Service, and is not
required for qualification. Form 5307, Application for Determination for
Adopters of Master or Prototype Regional Prototype or Volume Submitter Plans,
is used to request a determination letter, along with Form 5302, Employee
Census, Form 8717 (explained later), a copy of the adoption agreement, a copy
of the notification letter, a certification from the plan sponsor that the plan
has not been withdrawn and is still in effect, and a copy of any separate trust
or custodial account document.
USER FEE. There is a charge for requesting a determination letter, but the
charge is significantly reduced for regional prototype plans. Please complete
and attach Form 8717, User Fee for Employee Plan Determination Letter Request,
to Form 5307 when requesting a determination letter.
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<PAGE> 118
LAW CHANGES AFFECTING THE PLAN. Plans must be amended to retain their
qualified status if any plan provision fails qualification requirements because
of changes in the law becoming effective subsequent to the issuance of the
notification letter. If the plan is not amended, the plan will become
nonqualified without specific notice from the Service. This will occur even if
the employer has received a favorable determination letter in addition to the
notification letter. The employer and plan participants may be subject to
adverse tax consequences if the plan is nonqualified.
The first character of the serial number assigned to the plan
indicates the latest law change for which the plan had been amended. For
example, the letter "D" indicates the plan was amended for the Tax Reform Act
of 1986, which generally became effective for plan years after the 1988 plan
year.
A notification letter will not be applicable after a change in
qualification requirements unless the plan sponsor requests a new notification
letter within 12 months after the change. The plan sponsor must provide those
employers for whom the employer is continuing to sponsor the plan with a copy
of the amendments and the new notification letter within 60 days of the receipt
of the new letter. If a change requires modification of the adoption
agreement, employers must execute the new agreement by the later of 6 months
after issuance of the new notification letter, or the end of the period
specified in Internal Revenue Code section 401(b).
If the application for a notification letter was submitted to the
Service within certain time frames, the plan generally need not be amended
again unless required to do so by legislation. The application was submitted
to the Service within these time frames, if the following paragraph appears in
the notification letter: "For purposes of sections 15.02 and 15.03 of Rev.
Proc. 89-13, 1989-1 C.B. 801, your application was received timely".
REQUIRED NOTIFICATIONS TO ADOPTING EMPLOYERS. The plan sponsor must provide
adopting employers with annual notifications indicating whether the sponsor
intends to continue to sponsor the plan, and whether amendments have been made
to the plan. The plan sponsor must also notify employers within 60 days if the
plan sponsor discontinues its sponsoring of the plan.
REQUIRED NOTIFICATIONS TO THE INTERNAL REVENUE SERVICE. On each anniversary of
the date of issuance of the notification letter, the plan sponsor must advise
the Service whether the sponsor has made any changes to the plan, and whether
the plan is still being made available for adoption by employers. The plan
sponsor must also provide a listing of adopting employers, and a statement that
the plan sponsor has provided employers with the notification described in the
above paragraph.
REPORTING REQUIREMENTS. Most plan administrators or employers who maintain an
employee benefit plan must file an annual return/report with the Internal
Revenue Service. The following forms should be used for this purpose:
FORM 5500EZ - generally for a "One-Participant Plan," which is a plan that
covers only: (1) an individual, or an individual or his or her spouse who
wholly owns a business, whether incorporated or not, or (2) partner(s) in a
partnership or the partner(s) and their spouse(s). If Form 5500EZ cannot be
used, the one-participant plan should use 5500-C or 5500-R, whichever applies.
NOTE: Keogh (H.R. 10) plans are required to file an annual return even if the
only participants are owner-employees. The term "owner-employee" includes a
partner who owns more than 10% interest in either the capital or the profits of
the partnership. This applies to both defined contribution and defined benefit
plans.
FILING EXCEPTION FOR PLANS THAT HAVE NO MORE THAN $100,000 IN ASSETS. An
annual return is not required to be filed for one participant plans having less
than $100,000 in assets that otherwise qualify for filing Form 5500EZ.
FORM 5500 - for a pension benefit plan with 100 or more participants at the
beginning of the plan year.
FORM 5500-C - for a pension benefit plan with more than one but fewer than 100
participants at the beginning of the plan year.
FORM 5500-R - for a pension benefit plan with more than one but fewer than 100
participants at the start of the plan year for which 5500-C is not filed.
NOTE: For 1989 and subsequent years Form 5500-R is part of the Form 5500C/R
package. Filing only the first two pages of the Form 5500C/R package
constitutes the filing of a Form 5500-R.
WHEN TO FILE. Forms 5500 and 5500EZ must be filed annually. Form 5500-C must
be filed for (i) the initial plan year, (ii) the year a final return/report
would be filed, and (iii) at three-year intervals. Form 5500-R must be filed
in the years when Form 5500-C is not filed (See Note above). However, 5500-C
will be accepted in place of 5500-R.
DISCLOSURE. The Internal Revenue Service will process the returns and provide
the Department of Labor and the Pension Benefit Guarantee Corporation with the
necessary information and copies of the returns on microfilm for disclosure
purposes.
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PART II
[MUNICIPAL FUND FOR TEMPORARY INVESTMENT]
DEFINED CONTRIBUTION PLAN
(PROFIT-SHARING OR PROFIT-SHARING 401(K))
REGIONAL PROTOTYPE PLAN NUMBER 001
ADOPTION AGREEMENT
DRINKER BIDDLE & REATH
REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN AND TRUST AGREEMENT
NOTES TO ADOPTING EMPLOYERS AND TO ADOPTING AFFILIATED EMPLOYERS:
THIS ADOPTION AGREEMENT MAY ONLY BE USED WITH THE DRINKER BIDDLE & REATH
REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN.
FAILURE TO PROPERLY FILL OUT THIS ADOPTION AGREEMENT MAY RESULT IN THE
DISQUALIFICATION OF THE PLAN AS ADOPTED BY THE EMPLOYER.
A CASH OR DEFERRED ARRANGEMENT MAY NOT BE ADOPTED BY A TAX EXEMPT OR
GOVERNMENTAL ORGANIZATION WITH THE EXCEPTION OF CERTAIN PRE-EXISTING PLANS.
DRINKER BIDDLE & REATH, THE SPONSORING ORGANIZATION OF THIS PLAN, WILL INFORM
THE ADOPTING EMPLOYER AND/OR ADOPTING AFFILIATED EMPLOYER OF ANY AMENDMENTS
MADE TO THE PLAN OR OF THE DISCONTINUANCE OR ABANDONMENT OF THE PLAN.
DRINKER BIDDLE & REATH IS THE SPONSORING ORGANIZATION OF THIS PLAN. ITS
ADDRESS IS PHILADELPHIA NATIONAL BANK BUILDING, 1345 CHESTNUT STREET,
PHILADELPHIA, PA 19107-3496 AND ITS TELEPHONE NUMBER IS (215) 988-2855.
(FILL IN BLANKS AND INDICATE SELECTION WHERE REQUIRED)
The undersigned Employer hereby (check applicable box)
[ ] adopts
[ X ] adopts, as an amendment to a predecessor
plan and trust agreement of the Employer,
the DRINKER BIDDLE & REATH REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN AND
TRUST AGREEMENT, consisting of Part I, the Plan and Trust Agreement, and Part
II, this Adoption Agreement. The Plan and Trust Agreement, as so adopted,
shall be known as the [FUND OFFICE RETIREMENT PROFIT-SHARING PLAN AND TRUST
AGREEMENT] (the "Plan"), a DEFINED CONTRIBUTION PLAN (PROFIT-SHARING OR PROFIT-
SHARING 401(K)) AND TRUST AGREEMENT. The Employer and Trustee, by signing this
Adoption Agreement, mutually agree and consent to the terms of the Plan and
Trust, consisting of Part I, the Plan and Trust Agreement, and Part II, this
Adoption Agreement.
(C) DRINKER BIDDLE & REATH 1995
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NAME OF ADOPTING EMPLOYER: [MUNICIPAL FUND FOR TEMPORARY INVESTMENT]
ADDRESS OF ADOPTING EMPLOYER:[BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809 ]
ADOPTING EMPLOYER'S EMPLOYER IDENTIFICATION NUMBER: [ 6742 ]
ADOPTING EMPLOYER'S BUSINESS CODE NUMBER: [ 51-0241021 ]
TYPE OF ENTITY (check one): [ ] Corporation [ ] S Corporation
[ ] Sole Proprietor [ ] Partnership [ ] Church
[ ] Tax Exempt Organization [ ] Governmental Organization
[ ] Professional Corporation
[ X ] Other (Specify): [ BUSINESS TRUST ]
PLACE OF INCORPORATION OR OTHER ORGANIZATION (SPECIFY): [
PENNSYLVANIA ]
DATE OF INCORPORATION OR DATE BUSINESS BEGAN: [ 1979 ]
ADMINISTRATIVE COMMITTEE EMPLOYER IDENTIFICATION NUMBER: [23-2118138]
PLAN NAME: [ FUND OFFICE RETIREMENT PROFIT-SHARING PLAN ]
PLAN IDENTIFICATION NUMBER: [ 001 (333 FOR FORM 5500C/R) ]
TRUST NAME: [ FUND OFFICE RETIREMENT PROFIT-SHARING PLAN TRUST ]
TRUST EMPLOYER IDENTIFICATION NUMBER (IF ANY): [ 23-2487197 ]
REGIONAL PROTOTYPE (PROFIT-SHARING (401(K)) PLAN NOTIFICATION
LETTER NUMBER: D8520005 (PN:001 JANUARY 4, 1993)
FROZEN PLAN: If the Employer has discontinued all further contributions
to the Plan, check here [ ]. The Employer and the Trustee shall,
however, continue to maintain the Plan and Trust in accordance with the
requirements of the Internal Revenue Code and the Treasury regulations
thereunder.
TYPE PLAN: The Plan, as adopted under this Adoption Agreement, is a
(check one):
[ X ] (A) Profit-Sharing Plan.
[ ] (B) Profit-Sharing 401(k) Plan.
A.1.1 ACCRUAL COMPUTATION PERIOD. The Accrual Computation Period is the
(check one):
[ X ] (A) Plan Year
[ ] (B) (A consecutive 12-month period ending with or within the
Plan Year.) Enter the day and the month this period begins:
[ ](day) [ ](month). For Employees whose
date of hire is less than 12 months before the end of the
12-month period designated, Compensation will be determined
over the Plan Year.
A.1.4 ADMINISTRATIVE COMMITTEE. The name(s) and address(es) of the
member(s) of the Administrative Committee are:
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<PAGE> 121
[(A) EDWARD H. ROACH
----------------------------------------------------------------------
BELLEVUE PARK CORPORATE CENTER
----------------------------------------------------------------------
400 BELLEVUE PARKWAY, SUITE 100
----------------------------------------------------------------------
WILMINGTON, DE 19809
----------------------------------------------------------------------
(B)
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
(C)
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
]
A.1.10 COMPENSATION. Compensation shall be determined over the Accrual
Computation Period elected in Section A.1.1.
(A) Compensation shall (check one):
[ X ] (1) Include [ ] (2) Not include
Employer contributions made pursuant to a salary reduction agreement which
are not includible in the gross income of the Employee under sections 125,
402(e)(3), 402(h)(1)(B) or 403(b) of the Code.
(B) Compensation shall exclude (specify): [
N/A .]
(Note that this exclusion applies only to the manner of determining
contributions to the Plan and for no other purpose; if not applicable,
insert letters N/A in blanks).
A.1.12 CONTROLLED GROUP.
(A) Is the adopting Employer a member of a Controlled Group
(check one)?
[ ] (1) Yes [ X ] (2) No
(B) If Section A.1.12(A)(1) is checked, is the adopting Employer
a member of an affiliated service group (check one)?
[ ] (1) Yes [ ] (2) No [ X ] (3) N/A
If Section A.1.12(A)(1) is checked, list the name and address of each
member in the following blanks (and if Section A.1.12(B)(1) is also
checked, indicate whether the member is an affiliated service group
member): [ N/A
]
(If Section A.1.12(A)(2) is checked, the letters N/A should be inserted in
these blanks)
A.1.17 CONTRIBUTIONS ON BEHALF OF DISABLED PARTICIPANTS. The Employer
(check one):
[ ] (A) Will [ X ] (B) Will not
make contributions on behalf of disabled Participants on the basis of the
compensation each such Participant would have received for the Limitation
Year if the Participant had been paid at the rate of compensation paid
immediately before becoming permanently and totally disabled.
Such imputed compensation for the disabled Participant may be taken into
account only if the Participant is not a Highly Compensated Employee, and
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contributions made on behalf of such Participant shall be nonforfeitable when
made.
A.1.18 EARLY RETIREMENT DATE.
(A) Shall the Plan provide for an Early Retirement Date (check
one)?
[ ] (1) Yes [ X ] (2) No
If Section A.1.18(A)(1) is checked, complete the following:
(B) Early Retirement Date shall mean the (check one):
[ ] (1) Last day of the Plan Year
[ ] (2) Last day of the month (must coincide with a Valuation
Date)
[ ] (3) [ ] (fill in date) (must coincide with a
Valuation Date)
in which the Participant attains age [ ] (not later than age 64) and
completes [ ] Years of Service for Benefit Accrual with the Employer.
A.1.19 EARNED INCOME. This Section shall apply only if the Plan, as
adopted by the adopting Employer, covers Self-Employed Persons.
A.1.20 EFFECTIVE DATE. If the adoption of this Plan and Trust Agreement
constitutes the adoption of a new plan and trust agreement, check (A) and fill
in blank. If the adoption of this Plan and Trust Agreement constitutes the
restatement of an existing plan and trust agreement (including a prior version
of this Plan and Trust Agreement), check (B) and fill in blanks.
[ ] (A) NEW PLAN. The Effective Date of the Plan and Trust
Agreement is [ ].
[ X ] (B) RESTATED PLAN. The original effective date of the
predecessor plan and trust agreement was [SEPTEMBER 18, 1981].
Except as otherwise specifically provided herein, the Effective
Date of the Plan and Trust Agreement, as restated herein, is
[DECEMBER 1, 1989].
A.1.24 ELIGIBILITY COMPUTATION PERIOD. If Section A.1.33(A)(4) is
checked or if the elapsed time method is checked under Section A.2.2(B)(2),
check here [ ] and do NOT complete the remainder of this Section A.1.24.
Otherwise, the Eligibility Computation Period shall be calculated as follows:
(A) COMPUTATION PERIOD. The Eligibility Computation Period
shall be calculated pursuant to (check (1) or (2)):
[ X ] (1) NORMAL RULE. The Eligibility Computation Period(s)
shall be determined under Section 1.24(A) of the Plan.
[ ] (2) ALTERNATE RULE. The Eligibility Computation Period(s)
shall be determined under Section 1.24(B) of the Plan.
(B) HOURS OF SERVICE REQUIRED. The number of Hours of Service
which must be completed in order to meet the Eligibility Computation Period
requirements of the Plan is [ 1 ] (fill in blank but not to exceed 1,000
Hours of Service).
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<PAGE> 123
A.1.27 EMPLOYEE PENSION BENEFIT PLAN. Does the Employer or any member
of its Controlled Group maintain or has the Employer or any member of its
Controlled Group maintained any other Employee Pension Benefit Plan (check
one)?
[ X ] (A) Yes [ ] (B) No
If Section A.1.27(A) is checked, list such Employee Pension Benefit Plan(s)
in the following lines: [CHESTNUT STREET EXCHANGE FUND RETIREMENT
PROFIT-SHARING PLAN; INDEPENDENCE SQUARE INCOME SECURITIES, INC. RETIREMENT
PROFIT-SHARING PLAN; TEMPORARY INVESTMENT FUND, INC. RETIREMENT
PROFIT-SHARING PLAN; AND TRUST FOR SHORT TERM FEDERAL SECURITIES RETIREMENT
PROFIT-SHARING PLAN. ALL OF THE FOREGOING PLANS WERE MERGED INTO THIS PLAN
EFFECTIVE DECEMBER 1, 1987. ]
(If Section A.1.27(B) is checked, the letters N/A should be inserted in these
blanks).
A.1.33 ENTRY DATE. Entry Date shall mean (check (A) or (B)):
[ X ] (A) REGULAR METHOD.
[ ] (1) The first day of the Plan Year (this option cannot be
used unless the maximum age and service requirements are
reduced by 1/2 year (i.e., age 20 1/2 or less must be
selected in Section A.2.2(B)(1)(a)(ii) and the service
requirement in Section A.2.2(B)(1)(a) (i) must be reduced
by 1/2 year), coincident with, or, if the first day of the
Plan Year does not so coincide, the first day of the Plan
Year next following, the date on which an Employee meets
the eligibility requirements of Article II of the Plan.
[ ] (2) The first day of the Plan Year or the date six months
after the first day of the Plan Year (whichever date is
earlier), coincident with, or if such dates do not so
coincide, the first day of the Plan Year or the date six
months after the first day of the Plan Year (whichever date
is earlier) next following, the date on which an Employee
meets the eligibility requirements of Article II of the
Plan.
[ ] (3) The first day of the month coincident with, or if the
first day of the month does not so coincide, the first day
of the month next following, the date on which an Employee
meets the eligibility requirements of Article II of the
Plan.
[ ] (4) The Employee's date of hire.
[ X ] (5) The date on which the eligibility requirements of
Article II of the Plan are met.
[ ] (6) The first day of the quarter (in the Plan Year)
coincident with, or if the first day of the quarter does
not so coincide, the first day of the quarter (in the Plan
Year) next following, the date on which an Employee meets
the eligibility requirements of Article II of the Plan.
[ ] (7) The first day of the Plan Year in which an Employee
meets the eligibility requirements of Article II of the
Plan.
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<PAGE> 124
[ ] (B) ELAPSED TIME METHOD. The Employee's first day of
employment or reemployment in accordance with the rules of
Section 1.55(B) of the Plan.
A.1.35 EXCESS COMPENSATION. Excess Compensation shall mean Compensation
in excess of (check applicable block):
[ ] (A) Taxable Wage Base.
[ ] (B) [$ ] (if (B) is checked, insert dollar amount not to
exceed the Taxable Wage Base).
[ X ] (C) N/A (The Plan is not integrated with Social Security).
A.1.38 HIGHLY COMPENSATED EMPLOYEE.
(A) CALENDAR YEAR ELECTION. Does the Employer desire to make the
calendar year election provided in Section 1.38 of the Plan for purposes of
determining the look-back year calculation (check one)?
[ ] (1) Yes [ X ] (2) No
IF THIS ELECTION IS MADE, SUCH ELECTION MUST APPLY TO ALL PLANS, ENTITIES AND
ARRANGEMENTS OF THE EMPLOYER.
(B) SIMPLIFIED DEFINITION. If the Employer maintains significant
business activities (and employs Employees) in at least two significantly
separate geographic areas, the Employer may elect the simplified definition
of Highly Compensated Employee in Section 1.38 of the Plan. Does the
Employer desire to make this election (check one):
[ ] (1) Yes [ X ] (2) No [ ] (3) N/A
A.1.44 INVESTMENT MANAGER. The name and address of the Investment
Manager are: [ N/A
]
(If no Investment Manager has been appointed by the Employer, the letters N/A
should be inserted in these blanks).
A.1.46 LEASED EMPLOYEES. Does the Employer have any Leased Employees
(check one)?
[ ] (A) Yes [ X ] (B) No
If Section A.1.46(A) is checked, complete Section A.2.3(H) below.
A.1.47 LIMITATION COMPENSATION. Limitation Compensation shall mean all
of each Participant's (check one):
[ X ] (A) Wages, Tips and Other Compensation as Reported on Form
W-2.
[ ] (B) Code Section 3401(a) Wages.
[ ] (C) Code Section 415 Safe-Harbor Compensation.
A.1.48 LIMITATION YEAR. The Limitation Year is the (check applicable
block):
[ ] (A) Calendar year.
[ X ] (B) Twelve-consecutive month period ending (insert month and
day) [ NOVEMBER 30 ].
A-10
<PAGE> 125
A.1.53 NORMAL RETIREMENT AGE. Normal Retirement Age shall mean (check
one):
[ X ] (A) Age [ 65 ] (fill in blank but not earlier than age 62 and
not later than age 65).
[ ] (B) The later of age [ ] fill in blank but not earlier than
age 62 and not later than age 65) or the [ ] (fill in blank
but not to exceed 5th) anniversary of the first day of the
first Plan Year in which the Participant commenced
participation in the Plan.
A.1.55 ONE-YEAR BREAK IN SERVICE. A One-Year Break In Service shall be
determined by the following method (check one):
[ X ] (A) REGULAR METHOD. If this method is selected, a One-Year
Break In Service shall occur in any Computation Period in which
the Employee completes not more than [ 100] (fill in blank, but
not to exceed 500) Hours of Service.
[ ] (B) ELAPSED TIME METHOD.
A.1.56 OWNER-EMPLOYEES OR SHAREHOLDER-EMPLOYEES.
(A) Does the Plan cover any Owner-Employees, as defined in
Section 1.56 of the Plan (check one)?
[ ] (1) Yes [ ] (2) No
[ X ] (3) N/A (This Plan does not cover any Self-Employed
Persons)
If Section A.1.56(A)(1) is checked, see Section 2.4 of the Plan.
(B) Does the Plan cover any shareholder-employees, as defined in
Section 7.11(A)(7) of the Plan (check one)?
[ ] (1) Yes [ ] (2) No
[ X ] (3) N/A (The Employer is not an electing S corporation)
If Section A.1.56(B)(1) is checked, see Section 7.11(A)(7) of the Plan.
A.1.63 PLAN SPONSOR. The name(s) and address(es) of the Plan Sponsor(s)
are: [ MUNICIPAL FUND FOR TEMPORARY INVESTMENT
BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809 ]
A.1.64 PLAN YEAR. The Plan Year shall be the Computation Period ending
(insert month and day) [ NOVEMBER 30 ].
A.1.72 QUALIFYING EMPLOYER SECURITIES. If this Adoption Agreement
provides for investments in Qualifying Employer Securities, the Employer may
restrict the types of Employer Securities so qualifying by indicating the
restrictions in the following blanks: [ NO RESTRICTIONS
]
(If investment in Qualifying Employer Securities is not restricted to type,
insert in the blanks the words "No Restrictions"; if investment in Qualifying
Employer Securities is not permitted, insert the letters N/A in the blanks).
A-11
<PAGE> 126
A.1.78 SELF-EMPLOYED PERSONS. Does the Plan cover Self-Employed Persons
(check one)?
[ ] (A) Yes [ X ] (B) No
A.1.79 SERVICE.
(A) If not otherwise required by the Plan, shall service with
predecessor employer(s) (to the extent specified in Section A.1.79 (B) and
(C)) be treated as Service with the Employer (check one)?
[ ] (1) Yes [ ] (2) No
[ X ] (3) N/A (No predecessor employer)
(B) If Section A.1.79(A)(1) is checked, service with the
predecessor employer(s) specified in Section A.1.79 (C) shall be treated as
Service with the Employer for purposes of (check applicable blank(s)):
[ ] (1) Eligibility for Participation
[ ] (2) Vesting
[ X ] (3) N/A
(C) If Section A.1.79(A)(1) is checked, indicate the name of the
predecessor employer(s) in the following blanks: [ N/A ]
(If Section A.1.79(A)(2) or (3) is checked, insert the letters N/A in the
blanks).
(D) If Section A.18.17(A) is checked, and the Prior Plan
credited service under the elapsed time method, indicate the equivalency
(if any) which is to be used to credit service in the Computation Period in
which the amendment is effective, if the effective date of the amendment is
other than the first day of the Computation Period (check one):
[ ] Daily [ ] Monthly
[ ] Weekly [ X ] N/A
[ ] Semi-Monthly
A.1.83 TAXABLE YEAR. The Employer's Taxable Year is the year ending
(insert month and day) [ NOVEMBER 30 ].
A.1.85 TOP-HEAVY RATIO. For purposes of establishing present value to
compute the Top-Heavy Ratios of Section 1.85 of the Plan, any benefit shall be
discounted only for mortality and interest based on the following:
(A) INTEREST RATE (check one):
[ X ] (1) APPLICABLE INTEREST RATE (For purposes of this Section
A.1.85, "Applicable Interest Rate" shall mean the interest
rate or rates which would be used, as of the date
distribution commences under a Defined Benefit Plan, by the
Pension Benefit Guaranty Corporation for purposes of
determining the present value of a participant's benefits
under such Defined Benefit Plan if such Defined Benefit
Plan had terminated on the date distribution commences with
insufficient assets to provide benefits guaranteed by the
Pension Benefit Guaranty Corporation on that date. For
purposes of this
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provision, the "date distribution commences" shall mean the
Top-Heavy Valuation Date).
[ ] (2) OTHER (specify) [ ]%
(B) MORTALITY TABLE: [ 1984 UNISEX MORTALITY TABLE]
A.1.86 TOP-HEAVY VALUATION DATE. The Top-Heavy Valuation Date, for
purposes of calculating the Top-Heavy Ratios shall be (fill in blank) [ THE
LAST DAY ] of each Plan Year.
A.1.91 TRUSTEE(S). The name(s) and address(es) of the Trustee(s) are:
[(A) ROBERT R. FORTUNE
----------------------------------------------------------------------
BELLEVUE PARK CORPORATE CENTER
----------------------------------------------------------------------
400 BELLEVUE PARKWAY, SUITE 100
----------------------------------------------------------------------
WILMINGTON, DE 19809
----------------------------------------------------------------------
(B) EDWARD J. ROACH
----------------------------------------------------------------------
BELLEVUE PARK CORPORATE CENTER
----------------------------------------------------------------------
400 BELLEVUE PARKWAY, SUITE 100
----------------------------------------------------------------------
WILMINGTON, DE 19809
----------------------------------------------------------------------
(C)
----------------------------------------------------------------------
----------------------------------------------------------------------
----------------------------------------------------------------------
]
----------------------------------------------------------------------
A.1.93 VALUATION DATE. Valuation Date shall mean:
(A) For purposes of determining a Participant's Accrued Benefit
which is distributable in accordance with Article VII of the Plan (check
one):
[ ] (1) Last day of Plan Year.
[ X ] (2) Last day of Plan Year and [ THE LAST DAY OF EVERY
OTHER CALENDAR MONTH DURING THE PLAN YEAR
] (insert date(s)).
(B) For purposes of determining the fair market value of assets
in the Trust Fund and allocating the increase or decrease in the assets in
accordance with Sections 5.3 and 5.4 of the Plan (check one):
[ X ] (1) The date(s) specified in Section A.1.93(A).
[ ] (2) Last day of Plan Year and [
] (insert date(s)).
A.1.97 YEAR OF SERVICE FOR BENEFIT ACCRUAL.
(A) GENERAL. A Year of Service for Benefit Accrual shall be
determined by the following method (check one):
[ X ] (1) REGULAR METHOD. (This method must be selected if
Section A.1.55(A) is checked). In order for a Participant
to have a Year of Service for Benefit Accrual for any Plan
Year, the Participant must complete the number of Hours of
Service indicated (check either (a) and fill in blank or
(b)):
[ X ] (a) The number of Hours of Service which must be
completed with the Employer in order for a Participant
to have a Year of Service for Benefit Accrual is [ 200
] (fill in blank but not to exceed 1,000 Hours of
Service).
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<PAGE> 128
[ ] (b) The number of Hours of Service which must be
completed with the Employer in order for a Participant
to have a Year of Service for Benefit Accrual for a
Plan Year is 501 if the Participant is not an active
Employee on the last day of the Plan Year; if the
Participant is an active Employee on the last day of
the Plan Year, only one Hour of Service with the
Employer must be completed in order for the Participant
to have a Year of Service for Benefit Accrual for such
Plan Year.
NOTE: UNDER PROPOSED TREAS. REG. Sections 1.410(B) AND
1.401(A)(26), IT MAY BE NECESSARY TO PROVIDE THAT NO MORE THAN 501
HOURS OF SERVICE ARE REQUIRED FOR A YEAR OF SERVICE FOR BENEFIT
ACCRUAL FOR ANY PARTICIPANT WHO HAS TERMINATED EMPLOYMENT AND IS
NOT AN ACTIVE EMPLOYEE ON THE LAST DAY OF THE PLAN YEAR AND THAT NO
MORE THAN ONE HOUR OF SERVICE IS REQUIRED FOR A YEAR OF SERVICE FOR
BENEFIT ACCRUAL FOR ANY PARTICIPANT WHO IS AN ACTIVE EMPLOYEE ON
THE LAST DAY OF THE PLAN YEAR. (PROPOSED TREAS. REG. Section
Section 1.410(B)-3(C) AND 1.401(A)(26)-3(B)(8)).
[ ] (2) ELAPSED TIME METHOD. (This method must be selected if
Section A.1.55(B) is checked).
(B) ELECTIVE DEFERRAL CONTRIBUTIONS. If Elective Deferral
Contributions are provided for under Section A.3.4 of the Adoption
Agreement, the number of Hours of Service which a Participant must complete
in a Year of Service for Benefit Accrual is [ N/A] (fill in blank but not
to exceed 1,000 Hours of Service unless Section A.1.97(A)(2) is checked, in
which case insert letters "ET" and the elapsed time rules apply; if there
are no Elective Deferral Contributions, insert letters "N/A") in order for
the Participant to have Elective Deferral Contributions made on his behalf
under the Plan.
(C) MATCHING CONTRIBUTIONS. If Matching Contributions by the
Employer are provided for under Section A.3.5 of the Adoption Agreement,
the number of Hours of Service which a Participant must complete in a Year
of Service for Benefit Accrual is [ N/A ] (fill in blank (if there are
no Matching Contributions, insert letters "N/A") but not to exceed 1,000
Hours of Service unless Section A.1.97(A)(2) is checked, in which case
insert letters "ET" and the elapsed time rules apply) in order for the
Employer to match Participant Contributions or Elective Deferral
Contributions of such Participant under Section A.3.5 of the Adoption
Agreement.
Except as provided in Sections A.1.97(B) and A.1.97(C), a Year of Service
for Benefit Accrual shall be determined under Section A.1.97(A).
A.1.98 YEAR OF SERVICE FOR ELIGIBILITY. The number of Hours of Service
which must be completed in order for an Employee to have a Year of Service for
Eligibility is [ 1 ] (fill in blank, but not to exceed 1,000 Hours of
Service; insert letters N/A if Section A.1.33(A)(4) is checked or if the
elapsed time method is selected under Section A.2.2.(B)(2).
A.1.99 YEAR OF SERVICE FOR VESTING. A Year of Service for Vesting shall
be determined by the following method (check one):
[ X ] (A) REGULAR METHOD. (This method must be selected if Section
A.1.55(A) is checked). The number of Hours of Service which
must be completed in order for a Participant to have a Year of
Service for Vesting is [ 200 ] (fill in blank but not to
exceed 1,000 Hours of Service).
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[ ] (B) ELAPSED TIME METHOD. (This method must be selected if
Section A.1.55(B) is checked).
[ ] (C) N/A (Plan provides 100% immediate vesting).
A.2.2 ELIGIBILITY REQUIREMENTS.
(A) ELIGIBLE CLASSES OF EMPLOYEES:
(1) Except as provided in (2) below, the following Employees
are or shall be eligible to participate in the Plan (check
one):
[ X ] (a) All Employees
[ ] (b) Salaried Employees only (as defined in Section
1.77 of the Plan)
[ ] (c) Hourly Employees only (as defined in Section 1.40
of the Plan)
[ ] (d) All Employees except (specify class or classes of
Employees to be excluded): [
]
(2) The following Employees shall not be eligible to
participate in the Plan (check block(s) if such Employees are
to be excluded):
[ X ] (a) Union Employees (as defined in Section 1.92 of the
Plan)
[ X ] (b) Non-Resident Aliens (as defined in Section 1.52 of
the Plan)
(B) LENGTH OF SERVICE; MINIMUM AGE: Participation in the Plan
shall be determined under either the regular method or the elapsed time
method (check (1) or (2)):
[ X ] (1) REGULAR METHOD. If the regular method is selected,
check (a) or (b):
[ ] (a) SERVICE AND AGE REQUIREMENT. In order to
participate in the Plan, an Employee shall meet the
following requirements (complete blanks):
(i) SERVICE.
(AA) ELECTIVE DEFERRAL CONTRIBUTIONS. An Employee
shall have completed [ ] Year of Service for
Eligibility (not more than one Year of Service for
Eligibility) to be eligible to make Elective Deferral
Contributions.
(BB) MATCHING CONTRIBUTIONS. An Employee shall have
completed [ ] Year(s) of Service for Eligibility
(not more than two Years of Service for Eligibility)
to be eligible for Matching Contributions.
(CC) EMPLOYER CONTRIBUTIONS AND ALL OTHER PURPOSES.
An Employee shall have completed [ ] Year(s) of
Service
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for Eligibility (not more than two Years of Service
for Eligibility) for Employer Contributions and for
all other purposes of the Plan.
Note that in Section A.2.2(B)(1)(a)(i)(BB) and (CC) not
more than one Year of Service for Eligibility may be
selected, if the option under Section A.7.6(B)(1)(a) is
not elected nor more than two Years of Service for
Eligibility if the option under Section A.7.6(B)(1)(a) is
elected. For purposes of this Section A.2.2(B)(1)(a)(i),
Service includes service with a predecessor employer if
the Employer adopting the Plan is maintaining the plan of
a predecessor employer. Such Service also includes
predecessor service to the extent required by the
Secretary of the Treasury or his delegate.
Service for purposes of eligibility also includes service
with a predecessor employer if such service is not
otherwise required to be included under Sections 1.79 and
2.2 of the Plan to the extent provided in Section A.1.79.
(ii) AGE. An Employee shall have attained [ ]
years of age (not more than age 21).
[ X ] (b) NO SERVICE OR AGE REQUIREMENT. The Plan shall
cover Employees in eligible classes effective on the
first Entry Date coinciding with, or next following,
their date of hire.
[ ] (2) ELAPSED TIME METHOD. The Employee shall be eligible
to participate in the Plan on his first day of employment
or reemployment in accordance with the rules of Section
1.55(B) of the Plan.
A.2.3 ADDITIONAL RULES.
(A)-(F) RESERVED.
(G) ALLOCATIONS TO PARTICIPANTS. Except as otherwise provided
below, a Participant shall share in Employer contributions in any Plan Year
if the Participant completes a Year of Service for Benefit Accrual during
such Plan Year. Notwithstanding any other provision of the Plan or this
Adoption Agreement, any Participant making Elective Deferral or Participant
Contributions to the Plan for any Plan Year shall be entitled to such
Elective Deferral or Participant Contributions.
(1) EMPLOYER CONTRIBUTIONS. This provision shall only apply
if Section A.1.97(A)(1) is checked and then only to the
extent permitted by Section 3.11 of the Plan.
(a) SEPARATION FROM SERVICE FOR REASONS OTHER THAN
DISABILITY, DEATH OR RETIREMENT.
(i) Shall Participants who separate from the service
of the Employer (for reasons other than Disability,
death or retirement) before the end of the Plan Year
even if they have completed a Year of Service for
Benefit Accrual share in Employer
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contributions for such Plan Year (check one)?
[ X ] (AA) Yes [ ] (BB) No
[ ] (CC) N/A (Section A.1.97(A)(2) checked)
NOTE THAT SECTION A.2.3(G)(1)(A)(I)(AA) MUST BE CHECKED IF SECTION
A.1.97(A)(1)(B) IS CHECKED.
(ii) If Section A.2.3(G)(1)(a)(i)(AA) is checked,
shall such Participant share in Employer contributions
for such Plan Year if such Participant has not
completed a Year of Service for Benefit Accrual (check
one)?
[ X ] (AA) Yes [ ] (BB) No
[ ] (CC) N/A (Section A.2.3 (G)(1) (a)(i)(AA) not
checked)
(b) DISABILITY, DEATH OR RETIREMENT.
(i) Shall Participants who separate from the service
of the Employer because of Disability, death or
retirement before the end of the Plan Year even if they
have completed a Year of Service for Benefit Accrual
share in Employer contributions for such Plan Year
(check one)?
[ X ] (AA) Yes [ ] (BB) No
[ ] (CC) N/A (Section A.1.97(A)(2) checked)
NOTE THAT SECTION A.2.3(G)(1)(B)(I)(AA) MUST BE CHECKED IF SECTION
A.1.97(A)(1)(B) IS CHECKED.
(ii) If Section A.2.3(G)(1)(b)(i)(AA) is checked,
shall such Participant share in Employer contributions
for such Plan Year if such Participant has not
completed a Year of Service for Benefit Accrual (check
one)?
[ X ] (AA) Yes [ ] (BB) No
[ ] (CC) N/A (Section A.2.3(G)(1)(b) (i)(AA) not
checked)
(2) MATCHING CONTRIBUTIONS. This provision shall only apply
if Section A.1.97(A)(1) is checked.
(a) SEPARATION FROM SERVICE FOR REASONS OTHER THAN
DISABILITY, DEATH OR RETIREMENT.
(i) Shall Participants who separate from the service of
the Employer (for reasons other than Disability, death
or retirement) before the end of the (check one) [ ]
(aa) month [ ] (bb) quarter [ ] (cc) Plan Year for
which the Matching Contribution is being made even if
they have completed a Year of Service for
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Benefit Accrual share in Matching Contributions for
such period (check one)?
[ ] (AA) Yes [ ] (BB) No
[ X ] (CC) N/A (No Matching Contributions or Section
A.1.97(A)(2) checked)
NOTE THAT SECTION A.2.3(G)(2)(A)(I)(AA) MUST BE CHECKED IF SECTION
A.1.97 (A)(1)(B) IS CHECKED.
(ii) If Section A.2.3(G)(2)(a)(i) (AA) is checked,
shall such Participant share in Matching Contributions
for such (check one) [ ] (aa) month [ ] (bb)
quarter [ ] (cc) Plan Year if such Participant has
not completed a Year of Service for Benefit Accrual
(check one)?
[ ] (AA) Yes [ ] (BB) No
[ X ] (CC) N/A (Section A.2.3(G)(2)(a)(i) (AA) not
checked)
(b) DISABILITY, DEATH OR RETIREMENT.
(i) Shall Participants who separate from the service
of the Employer because of Disability, death or
retirement before the end of the (check one) [ ] (aa)
month [ ] (bb) quarter [ ] (cc) Plan Year for which
the Matching Contribution is being made even if they
have completed a Year of Service for Benefit Accrual
share in Matching Contributions for such period (check
one)?
[ ] (AA) Yes [ ] (BB) No
[ X ] (CC) N/A (no Matching Contributions or Section
A.1.97(A)(2) checked)
NOTE THAT SECTION A.2.3(G)(2)(B)(I)(AA) MUST BE CHECKED IF SECTION
A.1.97(A)(1)(B) IS CHECKED.
(ii) If Section A.2.3(G)(2)(b) (i)(AA) is checked,
shall such Participant share in Matching Contributions
for such (check one) [ ] (aa) month [ ] (bb)
quarter [ ] (cc) Plan Year if such Participant has
not completed a Year of Service for Benefit Accrual
(check one):
[ ] (AA) Yes [ ] (BB) No
[ X ] (CC) N/A (Section A.2.3(G)(2)(b)(i)(AA) not
checked.
(H) LEASED EMPLOYEES. Shall Leased Employees be eligible to
participate in the Plan (check applicable block)?
[ ] (1) Yes [ ] (2) No [ X ] (3) N/A
If Section A.2.3(H)(1) is checked, describe Leased Employees to be covered by
the Plan and conditions and other limitations on such coverage in the
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following lines: [ N/A ]
(If not applicable, insert letters N/A in these blanks)
A.2.4 PLANS COVERING OWNER-EMPLOYEES. Section 2.4 of the Plan does not
apply unless Section A.1.56(A) is checked.
A.3.1 EMPLOYER CONTRIBUTIONS.
(A) EMPLOYER CONTRIBUTIONS.
(1) GENERAL. Shall the Employer, in its sole discretion, be
permitted to make Employer Contributions to the Plan (check
one)?
[ X ] (a) Yes [ ] (b) No
If Section A.3.1(A)(1)(a) is checked, such Employer
Contributions shall be allocated under Section A.5.1(A).
(2) PROFIT REQUIREMENTS. Shall Profits be required for
Employer Contributions to the Plan (check one)?
[ ] (a) Yes [ X ] (b) No
(B) QUALIFIED NONELECTIVE CONTRIBUTIONS.
(1) ELECTION. May the Employer be permitted to make, in its
sole discretion, Qualified Nonelective Contributions to the
Plan (check one)?
[ ] (a) Yes [ ] (b) No
[ X ] (c) N/A (No Elective Deferral or Participant
Contributions)
(2) AMOUNT. If the Employer does make such contributions to
the Plan, then the amount of such contributions for each Plan
Year shall be (check one):
[ ] (a) [ ] percent (not to exceed 15 percent) of the
Compensation of all Participants eligible to share in
the allocation.
[ ] (b) [ ] percent of the Profits, but in no event more
than [$ ] for any Plan Year.
[ ] (c) An amount determined by the Employer.
[ X ] (d) N/A (Qualified Nonelective contributions not
permitted).
(3) PARTICIPANTS ELIGIBLE FOR ALLOCATION. Allocation of
Qualified Nonelective Contributions shall be made to the
accounts of (check one):
[ ] (a) All Participants
[ ] (b) Only Participants who are Non-Highly Compensated
Employees
[ ] (c) Only Participants who are Non-Highly Compensated
Employees and who are (specify group to which
allocations are to be made) [
A-19
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]
[ X ] (d) N/A (Qualified Nonelective Contributions not
permitted)
(4) MANNER OF ALLOCATION. Allocation of Qualified
Nonelective Contributions shall be made (check one):
[ ] (a) In the ratio which each affected Participant's
Compensation for the Plan Year bears to the total
Compensation of all affected Participants for such Plan
Year.
[ ] (b) In the ratio which each affected Participant's
Compensation not in excess of [$ ] for the Plan
Year bears to the total Compensation of all affected
Participants not in excess of [$ ] for such Plan
Year.
[ X ] (c) N/A (Qualified Nonelective Contributions not
permitted).
(C) QUALIFIED MATCHING CONTRIBUTIONS.
(1) ELECTION. May the Employer be permitted to make
Qualified Matching Contributions to the Plan?
[ ] (a) Yes [ ] (b) No
[ X ] (c) N/A (No Elective Deferrals or Participant
Contributions)
(2) ALLOCATION. The Employer shall, in its sole discretion,
make Qualified Matching Contributions to the Plan on behalf
of (check one):
[ ] (a) All Participants
[ ] (b) All Participants who are Non-Highly Compensated
Employees
[ ] (c) All Participants who are Non-Highly Compensated
Employees and who are (specify group to which
allocations are to be made)
[
]
[ X ] (d) N/A (No Qualified Matching Contributions)
If Section A.3.1(C)(2)(a), (b) or (c) is checked, the
allocation shall be made to applicable Participants who make
(check (i) and/or (ii) or (iii)):
[ ] (i) Elective Deferral Contributions
[ ] (ii) Participant Contributions
[ X ] (iii) N/A (No Qualified Matching Contributions)
(3) AMOUNT. The Employer shall contribute and allocate to
each Participant's Qualified Matching
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Contribution account an amount determined as follows (check
applicable block(s)):
[ ] (a) ELECTIVE DEFERRAL CONTRIBUTIONS. The Employer
shall contribute an amount equal to (check one):
[ ] (i) [ ] percent of the Participant's Elective
Deferral Contributions; or
[ ] (ii) that percent of the Participant's Elective
Deferral Contributions, as determined by the
Employer, in its sole discretion, for the Plan
Year.
[ ] (b) PARTICIPANT CONTRIBUTIONS. The Employer shall
contribute an amount equal to (check one):
[ ] (i) [ ] percent of the Participant's
Participant Contributions; or
[ ] (ii) that percent of the Participant's
Participant Contributions, as determined by the
Employer, in its sole discretion, for the Plan
Year.
[ X ] (c) N/A (No Qualified Matching Contributions).
The Employer shall not match amounts provided above in excess of [$ N/A],
or in excess of [N/A] percent of the Participant's Compensation (if
there are no limitations or if this provision is not otherwise
applicable, insert letters N/A in blank(s)).
A.3.2 PARTICIPANT CONTRIBUTIONS.
(A) PERMISSIBILITY. Participant Contributions shall (check (1),
(2) or (3)):
[ X ] (1) Not be permitted under the Plan (NOTE: THIS BLOCK
MUST BE CHECKED UNLESS THE PLAN HAS A CODA AS INDICATED BY
CHECKING SECTION A.3.4(A)(2)).
[ ] (2) Be permitted (but not required) in the amounts
provided by Section 3.2 of the Plan but subject to the
limitations of Section 3.8 of the Plan.
[ ] (3) Be required in order for an Employee to participate in
the Plan. Such Participant Contributions shall be made by
payroll deduction and shall equal no less than [ ]
percent but shall not exceed [ ] percent (not to exceed 6
percent) of the Participant's Compensation for the Plan
Year. The Employee shall enter into an agreement with the
Employer providing for Participant Contributions in any
amount from [ ] percent to [ ] percent (not to exceed 6
percent) of the Participant's Compensation for the Plan
Year. In addition, the Employee may, but is not required
to, make voluntary Participant Contributions in the amounts
provided
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for in Section 3.2 of the Plan subject to the limitations
of Section 3.8 of the Plan.
(B) PAYROLL DEDUCTION. Participant Contributions by payroll
deduction (check (1), (2) or (3)):
[ ] (1) Shall not be permitted.
[ ] (2) Shall be permitted.
[ X ] (3) Are N/A (No Participant Contributions).
A.3.4 ELECTIVE DEFERRAL CONTRIBUTIONS.
(A) ELECTION. Elective Deferral Contributions shall (check (1)
or (2)):
[ X ] (1) Not be permitted under the Plan.
[ ] (2) Be permitted in accordance with the provisions of
Section 3.4 of the Plan.
If Section A.3.4(A)(2) is checked, a salary reduction agreement must be
completed and filed by the Participant with the Administrative Committee
prior to the date the Elective Deferral Contributions are made.
(B) ELECTION CHANGES. If Section A.3.4(A)(2) is checked, the
Participant shall be permitted to enter into a new salary reduction agreement
(check one):
[ ] (1) Monthly [ ] (2) Quarterly
[ ] (3) Semi-Annually [ ] (4) Annually
[ ] (5) Other (Specify): [ ]
[ X ] (6) N/A
A salary reduction agreement shall remain in effect until revoked or changed.
(C) REVOCATION OF ELECTION. A Participant shall be permitted to
revoke his salary reduction agreement (check one):
[ ] (1) Only as permitted under Section A.3.4(B).
[ ] (2) Upon 15 days' written notice to the Administrative
Committee on the Appropriate Form.
[ X ] (3) N/A.
(D) INCLUSION OF QUALIFIED MATCHING AND QUALIFIED NONELECTIVE
CONTRIBUTIONS. Qualified Matching Contributions and Qualified Nonelective
Contributions may be taken into account as Elective Deferral Contributions
for purposes of calculating the "Actual Deferral Percentages." In
determining Elective Deferral Contributions for the purpose of the ADP test,
the Employer shall include, under the Plan or any other plan of the Employer
as provided by Treasury regulations under the Code, (check one):
[ ] (1) Qualified Matching Contributions.
[ ] (2) Qualified Nonelective Contributions.
[ X ] (3) N/A (Elective Deferral Contributions are not permitted
or Employer does not desire to make this election or no
Qualified Matching or Qualified Nonelective Contributions
are permitted).
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<PAGE> 137
(E) QUALIFIED MATCHING CONTRIBUTIONS - AMOUNT. The amount of
Qualified Matching Contributions made under Sections 3.1 of the Plan and
A.3.1 of this Adoption Agreement and taken into account as Elective Deferral
Contributions for purposes of calculating the "Actual Deferral Percentages,"
subject to such other requirements as may be prescribed by the Secretary of
the Treasury, shall be (check one):
[ ] (1) All such Qualified Matching Contributions.
[ ] (2) Such Qualified Matching Contributions that are needed
to meet the "Actual Deferral Percentage" test stated in
Section 3.4(B)(2) of the Plan.
[ X ] (3) N/A (Elective Deferral Contributions not permitted
and/or Qualified Matching Contributions not permitted).
(F) QUALIFIED NONELECTIVE CONTRIBUTIONS - AMOUNT. The amount of
Qualified Nonelective Contributions made under Sections 3.1 of the Plan and
A.3.1 of this Adoption Agreement and taken into account as Elective Deferral
Contributions for purposes of calculating the "Actual Deferral Percentages,"
subject to such other requirements as may be prescribed by the Secretary of
the Treasury, shall be (check one):
[ ] (1) All such Qualified Nonelective Contributions.
[ ] (2) Such Qualified Nonelective Contributions that are
needed to meet the Actual Deferral Percentage test stated
in Section 3.4(B)(2) of the Plan.
[ X ] (3) N/A (Elective Deferral Contributions and/or Qualified
Nonelective Contributions not permitted).
A.3.5 MATCHING CONTRIBUTIONS.
(A) ELECTION. Matching Contributions by the Employer (check
(1), (2) or (3)):
[ ] (1) Shall not be permitted under the Plan.
[ ] (2) Shall be permitted in accordance with the provisions
of Section 3.5 of the Plan and Section A.3.5(B) of the
Adoption Agreement.
[ X ] (3) Are N/A (No Elective Deferral or Participant
Contributions).
If Section A.3.5(A)(2) is checked, the Employer may, in its sole
discretion, match, in accordance with Section A.3.5(B), the Elective
Deferral Contributions of a Participant made pursuant to Section A.3.4 or
Participant Contributions made pursuant to Section A.3.2.
(B) ALLOCATION OF MATCHING CONTRIBUTIONS.
(1) AMOUNT. If Section A.3.5(A)(2) is checked, Matching
Contributions for the Plan Year shall be allocated to the
Matching Account of each Participant, on whose behalf
Elective Deferral Contributions for the Plan Year are being
made, in an amount equal to (check one):
[ ] (a) [ ] (insert percentage) percent of the (check
applicable block): (i) [ ] Elective Deferral
Contribution; (ii)[ ]
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Participant Contribution made on behalf of each
Participant for such Plan Year; or
[ ] (b) that percent of the (check applicable block): (i)
[ ] Elective Deferral Contribution; (ii) [ ]
Participant Contribution made on behalf of each
Participant for such Plan Year as determined by the
Employer, in its sole discretion, for such Plan Year.
[ X ] (c) N/A (No Matching Contributions).
In no event shall such Matching Contribution exceed the
lesser of (aaa) (insert percentage) [ ] percent of such
Participant's Compensation for such Plan Year or (bbb)
(insert amount, if any, of dollar limitation)
[$ ].
(2) ALLOCATION DATE. Shall Matching Contributions be
allocated effective as of a date or dates other than the last
day of the Plan Year (check one)?
[ ] (a) Yes [ ] (b) No [ X ](c) N/A
(aaa) If Section A.3.5(B)(2)(a) is checked, list the
date(s) (month and day) in each Plan Year as of which
Matching Contributions shall be allocated:
[
].
(bbb) If Section A.3.5(B)(2)(a) is checked, a
Participant who is employed as of a date specified for
the allocation of Matching Contributions and on whose
behalf Elective Deferral Contributions or Participant
Contributions are being made shall receive an
allocation of Matching Contributions as of such date
regardless of the number of Hours of Service credited
to the Participant for purposes of a Year of Service
for Benefit Accrual as of such date, notwithstanding
anything in the Plan to the contrary.
(C) VESTING. Matching Contributions shall be vested in
accordance with the following schedule (check one):
[ ] (1) Nonforfeitable when made.
[ ] (2) The Plan's general vesting schedule, other than that
for Elective Deferral Contributions.
[ ] (3) [The sponsor may add elections for one or more of the
vesting schedules that comply with section 411(a)(2) of the
Code:
[
].
[ X ] (4) N/A (No Matching Contributions).
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(D) "AVERAGE CONTRIBUTION PERCENTAGE" COMPUTATIONS.
(1) In computing the "Average Contribution Percentage" with
respect to Participant Contributions and Matching
Contributions, the Employer shall take into account, under
this Plan or any other plan of the Employer, as provided by
Treasury regulations, and include as "Contribution Percentage
Amounts" (check applicable block or blocks):
[ ] (a) Elective Deferral Contributions.
[ ] (b) Qualified Nonelective Contributions.
[ X ] (c) N/A (There are no Participant or Matching
Contributions, or Employer does not desire to make this
election).
(2) The amount of Qualified Nonelective Contributions that
are made under Section 3.1 of the Plan and Section A.3.1 and
taken into account as "Contribution Percentage Amounts" for
purposes of calculating the "Average Contribution
Percentage," subject to such other requirements as may be
prescribed by the Secretary of the Treasury, shall be (check
one):
[ ] (a) All such Qualified Nonelective Contributions.
[ ] (b) Such Qualified Nonelective Contributions that are
needed to meet the "Average Contribution Percentage"
test stated in Section 3.2 of the Plan.
[ X ] (c) N/A (No Participant or Matching Contributions or
Employer does not desire to make this election).
(3) The amount of Elective Deferral Contributions made under
Section 3.4 of the Plan and Section A.3.4 and taken into
account as "Contribution Percentage Amounts" for purposes of
calculating the "Average Contribution Percentage", subject to
such other requirements as may be prescribed by the Secretary
of the Treasury, shall be:
[ ] (a) All such Elective Deferral Contributions.
[ ] (b) Such Elective Deferral Contributions that are
needed to meet the "Average Contribution Percentage"
test stated in Section 3.2 of the Plan.
[ X ] (c) N/A (There are no Elective Deferral Contributions
under the Plan or Employer did not make election under
Section A.3.5(D)(1)).
(4) To the extent forfeitable, forfeitures of "Excess
Aggregate Contributions" shall be:
[ ] (a) Applied to reduce Employer contributions.
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[ ] (b) Allocated, after all other forfeitures under the
Plan, to each Participant's Matching Account in the
ratio which each Participant's Compensation for the
Plan Year bears to the total Compensation of all
Participants for such Plan Year. Such forfeitures
shall not be allocated to the account of any Highly
Compensated Employee.
[ X ] (c) N/A (No Matching Contributions).
A.3.8 LIMITATIONS ON ALLOCATIONS.
(A) GENERAL RULES. If the Employer maintains or ever maintained
another qualified plan (other than a paired defined contribution regional
prototype plan) in which any Participant in this Plan is (or was) a
participant or could become a participant, the Employer must complete this
Section A.3.8. The Employer must also complete this Section A.3.8 if it
maintains a Welfare Benefit Fund or an individual medical benefit account, as
defined in section 415(l)(2) of the Code, under which amounts are treated as
"Annual Additions" with respect to any Participant in this Plan. Does the
Employer maintain or has the Employer maintained any such plan(s) (check
one):
[ ] (1) Yes [ X ] (2) No
If Section A.3.8(A)(1) is checked, complete Section A.3.8(B) and/or (C).
(B) MAINTENANCE OF OTHER DEFINED CONTRIBUTION PLAN. If the
Participant is covered under another qualified Defined Contribution Plan
maintained by the Employer, other than a regional prototype plan (check
applicable provisions as necessary):
[ ] (1) The provisions of Section 3.8(B) of the Plan shall
apply as if the other plan were a regional prototype
plan.
[ X ] (2) Provide the method under which the plans will limit
the total "Annual Additions" to the "Maximum Permissible
Amount", and will properly reduce any "Excess Amounts",
in a manner that precludes Employer discretion: [CERTAIN
OF THE PARTICIPATING EMPLOYERS HAVE MAINTAINED OTHER
QUALIFIED DEFINED CONTRIBUTION PLANS. ALL SUCH PLANS
WERE MERGED INTO THIS PLAN EFFECTIVE DECEMBER 1, 1987.
TO THE EXTENT REQUIRED, ALL ADJUSTMENTS SHALL BE MADE
UNDER THIS PLAN.].
[ ] (3) N/A (No other qualified Defined Contribution Plan
(other than a regional prototype plan), Defined Benefit
Plan, Welfare Benefit Fund or individual medical benefit
account maintained).
(C) MAINTENANCE OF A DEFINED BENEFIT PLAN. If a Participant is or
has ever been a participant in a Defined Benefit Plan maintained by the
Employer, check either (1) or (2) and complete as necessary:
[ ] (1) The limitations set forth in Section 3.8(C)(2) through
(4) of the Plan shall apply.
[ ] (2) Provide the method under which the Plan will satisfy
the 1.0 limitation of section 415(e) of the Code (such
language must preclude employer discretion; see Treas. Reg.
Section 1.415-1 for guidance) in the following blanks:
[
A-26
<PAGE> 141
].
IF ADDITIONAL SPACE IS REQUIRED THE EMPLOYER IS TO INSERT APPLICABLE
LIMITATIONS IN AN ATTACHMENT TO THIS ADOPTION AGREEMENT. SUCH
ATTACHMENT SHALL BE ADDED TO, AND MADE A PART OF, THIS ADOPTION
AGREEMENT.
A.3.9 ROLLOVERS.
(A) PARTICIPANT ROLLOVERS. May Participants be permitted to make
Rollover Contributions to the Plan (check one)?
[ X ] (1) Yes [ ] (2) No
(B) NON-PARTICIPANT ROLLOVERS. May Employees other than
Participants be permitted to make Rollover Contributions to the Plan (check
one)?
[ ] (1) Yes [ X ] (2) No
A.3.10 TRANSFERS.
(A) PARTICIPANT DIRECT TRANSFERS. May Participants be permitted
to have direct transfers made on their behalf to the Plan (check one)?
[ X ] (1) Yes [ ] (2) No
(B) NON-PARTICIPANT DIRECT TRANSFERS. May Employees other than
Participants be permitted to have direct transfers made on their behalf to
the Plan (check one)?
[ ] (1) Yes [ X ] (2) No
(C) TRANSFERS OF ACCOUNTS. Are assets being transferred to this
Plan from a qualified plan covering Key Employees in a Top-Heavy Plan or
five-percent owners (within the meaning of section 416(i)(1) of the Code)
(check one)?
[ ] (1) Yes [ X ] (2) No
If such assets are transferred, the restrictions of Section 3.10(B) of the
Plan apply.
A.3.11 TOP-HEAVY PROVISIONS.
(A) APPLICATION OF PROVISIONS AND ADJUSTMENTS.
(1) APPLICATION. Is the Plan a Top-Heavy Plan on the
Effective Date (check one):
[ ] (a) Yes [ X ] (b) No
[ ] (c) Uncertain (Note that if this box is checked and the
Plan is a Top-Heavy Plan, the Top-Heavy Plan provisions
as set forth herein shall apply)
(2) ADJUSTMENTS. If the Employer maintains more than one
plan in a Permissive or Required Aggregation Group, set forth
here any adjustments to be made for Employer contributions or
benefits attributable to Employer contributions under such
other plan(s) in determining the amount of contributions to
be made under the Top-Heavy
A-27
<PAGE> 142
provisions of this Plan (if not applicable, insert letters
N/A)): [ N/A
]
(B) VESTING. The nonforfeitable interest of each Employee in
his account balance attributable to Employer contributions shall be
determined on the basis of the following (check either (1) or (2) and fill in
blank(s):
[ ] (1) 100% vesting after [ ] (not to exceed 3) Years of
Service for Vesting;
[ X ] (2) [ 10 ]% (no minimum) vesting after 1 Year of Service
for Vesting;
[ 25 ]% (not less than 20) vesting after 2 Years of
Service for Vesting;
[ 50 ]% (not less than 40) vesting after 3 Years of
Service for Vesting;
[ 75 ]% (not less than 60) vesting after 4 Years of
Service for Vesting;
[ 100 ]% (not less than 80) vesting after 5 Years of
Service for Vesting;
100% vesting after 6 Years of Service for Vesting.
If the vesting schedule under the Plan shifts in or out of the above
schedule for any Plan Year because of the Plan's top-heavy status, such
shift is an amendment to the vesting schedule and the election in Section
15.2(G) of the Plan applies.
A.5.1 ALLOCATIONS. If Section A.3.1(A)(1)(a) is checked, complete the
following:
(A) ALLOCATION OF EMPLOYER CONTRIBUTIONS.
(1) METHOD. Shall Employer Contributions (if any) to the
Employer Accounts of Participants be integrated with Social
Security contributions, subject to the overall permitted
disparity limits set forth below (check (a) if integrated,
(b) if not integrated)?
[ ] (a) Yes
The annual Employer Contribution shall not exceed the
limitations set forth in Section A.5.1(A)(2). In any Plan
Year in which there are Employer Contributions, such Employer
Contributions shall, subject to the Top-Heavy Plan
provisions, be allocated to each Participant's Employer
Account as follows:
(i) ALLOCATION OF EMPLOYER CONTRIBUTIONS FOR PLAN
YEARS IN WHICH PLAN IS A TOP-HEAVY PLAN. If the Plan
is a Top-Heavy Plan for the Plan Year, the Employer
Contribution for such Plan Year shall be allocated to
each Participant's Employer Account as follows:
A-28
<PAGE> 143
(aa) "BASE CONTRIBUTION PERCENTAGE". First, (check
either (aaa) or (bbb))(percent in either (aaa) or
(bbb) must not be less than the "Minimum Top-Heavy
Rate"):
[ ] (aaa) [ ] (insert percent), or
[ ] (bbb) that percent determined by the
Employer for the Plan Year
of the Participant's "Base Compensation" for such
Plan Year shall be allocated to the Employer Account
of such Participant;
(bb) "EXCESS CONTRIBUTION PERCENTAGE". Second,
(check either (aaa) or (bbb))(percent in either
(aaa) or (bbb) must not be less than the "Minimum
Top-Heavy Rate" and must not exceed the "Maximum
Excess Allowance"):
[ ] (aaa)[ ] (insert percent) percent, or
[ ] (bbb) that percent determined by the
Employer for the Plan Year
of the Participant's Excess Compensation for such
Plan Year shall be allocated to the Employer Account
of such Participant (for purposes of this allocation,
forfeitures allocated to a Participant in the Plan
Year shall be treated as Employer Contributions);
however, in the case of any Participant who has
exceeded the cumulative permitted disparity limit
described below, the Employer shall contribute for
such Participant an amount equal to the "Excess
Contribution Percentage" multiplied by the
Participant's total Compensation for the Plan Year;
and
(cc) "ADDITIONAL CONTRIBUTION PERCENTAGE". Lastly,
any excess over (aa) and (bb) shall be allocated to
each Participant's Employer Account in the same ratio
as his Compensation for such Plan Year bears to the
Compensation of all Participants for such Plan Year.
(ii) ALLOCATION OF EMPLOYER CONTRIBUTIONS FOR PLAN
YEARS IN WHICH PLAN IS NOT A TOP-HEAVY PLAN. The
Employer Contribution for the Plan Year, if the Plan is
not a Top-Heavy Plan for the Plan Year, shall be
allocated as follows:
(aa) "BASE CONTRIBUTION PERCENTAGE". First, (check
either (aaa) or (bbb)):
A-29
<PAGE> 144
[ ] (aaa)[ ] (insert percent) percent, or
[ ] (bbb) that percent determined by the
Employer for the Plan Year
of the Participant's "Base Compensation" for such
Plan Year shall be allocated to the Employer Account
of such Participant;
(bb) "EXCESS CONTRIBUTION PERCENTAGE". Second,
(check either (aaa) or (bbb))(percent in either (aaa)
or (bbb) must not exceed the "Maximum Excess
Allowance"):
[ ] (aaa)[ ] (insert percent) percent, or
[ ] (bbb) that percent determined by the
Employer for the Plan Year
of the Participant's Excess Compensation for such
Plan Year shall be allocated to the Employer Account
of such Participant (for purposes of this allocation,
forfeitures allocated to a Participant in the Plan
Year shall be treated as Employer Contributions);
however, in the case of any Participant who has
exceeded the cumulative permitted disparity limit
described below, the Employer shall contribute for
such Participant an amount equal to the "Excess
Contribution Percentage" multiplied by the
Participant's total Compensation for the Plan Year;
and
(cc) "ADDITIONAL CONTRIBUTION PERCENTAGE". Lastly,
any excess over (aa) and (bb) shall be allocated to
each Participant's Employer Account in the same ratio
as his Compensation for such Plan Year bears to the
Compensation of all Participants for such Plan Year.
With respect to any Employee who is a Participant in the Plan for
only a portion of the Plan Year for which the Employer Contribution
is made, the allocation to such Employee of the Employer
Contribution (other than the Top-Heavy portion, if the Plan is a
Top-Heavy Plan), shall be (check one):
[ ] (AA) Based only upon the amount of "Base
Compensation", Excess Compensation and/or
Compensation earned by such Employee and all
other Employees during the portion of the Plan
Year in which they are or were Plan Participants.
[ ] (BB) Based upon the amount of "Base
Compensation", Excess Compensation and/or
Compensation earned by such Employee and all
other Employees during the entire Plan Year.
A-30
<PAGE> 145
NOTE THAT THIS PLAN MAY NOT PROVIDE FOR PERMITTED DISPARITY IF THE EMPLOYER
MAINTAINS ANY OTHER PLAN THAT PROVIDES FOR PERMITTED DISPARITY AND BENEFITS
ANY OF THE SAME PARTICIPANTS.
[ X ] (b) No
The annual Employer Contributions (if any) shall be determined by
the Employer for each Plan Year but shall not exceed the
limitations of Section A.5.1(A)(2). In any Plan Year in which
there are Employer Contributions, such Employer Contributions
shall, subject to the Top-Heavy Plan provisions, be allocated to
such Participant's Employer Account as follows:
(i) ALLOCATION OF EMPLOYER CONTRIBUTIONS FOR PLAN
YEARS IN WHICH PLAN IS A TOP-HEAVY PLAN. If the Plan
is a Top-Heavy Plan for the Plan Year, the Employer
Contribution for such Plan Year shall be first
allocated to each Participant's Employer Account in the
same ratio as his Compensation for such Plan Year bears
to the Compensation of all Participants for such Plan
Year, in an amount which is not less than the "Minimum
Top-Heavy Rate". The balance of the Employer
Contribution for such Plan Year shall be allocated to
each Participant's Employer Account as follows (check
one):
[ ] (aa) In the same ratio as his Compensation for
such Plan Year bears to the Compensation of all
Participants for such Plan Year.
[ X ] (bb) In the same ratio as his Compensation for
the portion of the Plan Year in which he was a
Participant bears to the Compensation of all
Participants for the portion of the Plan Year
in which they were Participants.
(ii) ALLOCATION OF EMPLOYER CONTRIBUTIONS FOR PLAN
YEARS IN WHICH PLAN IS NOT A TOP-HEAVY PLAN. The
Employer Contribution for the Plan Year, if the Plan is
not a Top-Heavy Plan for the Plan Year, shall be
allocated to each Participant's Employer Account as
follows (check one):
[ ] (aa) In the same ratio as his Compensation for
such Plan Year bears to the Compensation of all
Participants for such Plan Year.
[ X ] (bb) In the same ratio as his Compensation for
the portion of the Plan Year in which he was a
Participant bears to the Compensation of all
Participants for the portion of the Plan Year
in which they were Participants.
[ ] (c) N/A (Section A.3.1(A)(1)(b) checked)
A-31
<PAGE> 146
(2) LIMITATIONS ON EMPLOYER CONTRIBUTIONS. The following
limitations on Employer Contributions apply:
(a) DEDUCTION LIMITATIONS. The annual Employer,
Matching, and Elective Deferral Contributions and any
other Employer contribution shall, in the aggregate, not
exceed the greater of:
(i) the Employer's "Primary Limitation" (as defined
below) for the Taxable Year which ends with or within
the Plan Year for which the Employer, Matching, and/or
Elective Deferral Contribution and/or other Employer
contribution is being made: or
(ii) the Employer's "Secondary Limitation" (as defined
below) for the Taxable Year which ends with or within
the Plan Year for which the Employer, Matching, and/or
Elective Deferral Contribution and/or other Employer
contribution is being made.
(b) CODE SECTION 415 LIMITATION. The allocation of the
Employer contributions for the Plan Year shall be further
limited by Section 3.8 of the Plan (Limitations on
Allocations).
(c) OVERALL PERMITTED DISPARITY LIMITS.
(i) ANNUAL OVERALL PERMITTED DISPARITY LIMIT.
Notwithstanding the preceding paragraphs, for any Plan
Year this Plan "Benefits" any Participant who
"Benefits" under another qualified plan or simplified
employee pension, as defined in section 408(k) of the
Code, maintained by the Employer that provides for
permitted disparity (or imputes disparity), Employer
contributions and forfeitures shall be allocated to the
account of every Participant otherwise eligible to
receive an allocation in the ratio that such
Participant's total Compensation bears to the total
Compensation of all Participants.
(ii) CUMULATIVE PERMITTED DISPARITY LIMIT. Effective
for Plan Years beginning on or after January 1, 1995,
the cumulative permitted disparity limit for a
Participant is 35 total cumulative permitted disparity
years. Total cumulative permitted years means the
number of years credited to the Participant for
allocation or accrual purposes under this Plan, any
other qualified plan or simplified employee pension
plan (whether or not terminated) ever maintained by the
Employer. For purposes of determining the
Participant's cumulative permitted disparity limit, all
years ending in the same calendar year are treated as
the same year. If the Participant has not "Benefitted"
under a defined benefit or target benefit plan for
A-32
<PAGE> 147
any year beginning on or after January 1, 1994, the
Participant has no cumulative disparity limit.
(3) DEFINITIONS. For purposes of this Section A.5.1(A), the
following definitions apply:
(a) "BASE CONTRIBUTION PERCENTAGE" means, for any Plan
Year, the percentage of Compensation contributed under
the Plan with respect to that portion of each
Participant's Compensation up to the "Integration Level"
(i.e., with respect to such Participant's "Base
Compensation") specified in the Plan for such Plan Year.
(b) "BASE COMPENSATION" means, for any Plan Year,
Compensation up to the "Integration Level" for such Plan
Year.
(c) "BENEFIT" OR" BENEFITING" means, with respect to a
Participant, that such Participant is treated as
benefiting under the Plan for any Plan Year during which
the Participant received or is deemed to receive an
allocation in accordance with Treas. Reg. Section
1.410(b)-3(a).
(d) "EXCESS CONTRIBUTION PERCENTAGE" means, for any Plan
Year, the percentage of Compensation which is contributed
under the Plan with respect to that portion of each
Participant's Compensation in excess of the "Integration
Level" (i.e., with respect to such Participant's Excess
Compensation) specified in the Plan for such Plan Year.
(e) "INTEGRATION LEVEL" means the amount of Compensation
specified in the Plan at or below which the rate of
contributions (expressed as a percentage of such
Compensation) provided under the Plan is less than the
rate of contributions (expressed as a percentage of
Compensation) provided under the Plan with respect to
Compensation above such level. The "Integration Level"
for any Plan Year may in no event exceed the Taxable Wage
Base as in effect on the first day of such Plan Year.
(f) "MAXIMUM EXCESS ALLOWANCE" means, for any Plan Year
beginning before January 1, 1989, the "Base Contribution
Percentage" plus 5.7% and for any Plan Year beginning
after December 31, 1988, the percentage determined under
either (i) or (ii):
(i) If the "Integration Level" for such Plan Year is
equal to the Taxable Wage Base, in effect on the first
day of such Plan Year, or if the "Integration Level" is
a uniform dollar amount for all Participants which is
no greater than the greater of $10,000 or 1/5 of the
Taxable Wage Base in effect on the first day of such
Plan Year, then the "Maximum Excess
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<PAGE> 148
Allowance" for such Plan Year is the lesser of:
(aa) The "Base Contribution Percentage", or
(bb) The greater of (AA) 5.7% or (BB) the
percentage equal to the rate of tax under section
3111(a) of the Code (in effect on the first day of
the Plan Year) which is attributable to the old age
insurance portion of the Old Age, Survivors and
Disability Insurance provisions of the Social
Security Act.
(ii) If the "Integration Level" for such Plan Year is
greater than the greater of $10,000 or 1/5 of the
Taxable Wage Base in effect on the first day of such
Plan Year but less than the Taxable Wage Base in effect
on the first day of such Plan Year then the "Maximum
Excess Allowance" shall be determined as follows:
<TABLE>
<CAPTION>
IF THE "INTEGRATION LEVEL" THE "MAXIMUM EXCESS
----------------------------------
IS MORE THAN BUT NOT MORE THAN ALLOWANCE" IS
---------------------------------- ----------------------
<S> <C>
(1) X* 80% OF TAXABLE
WAGE BASE 4.3%
(2) 80% OF Y**
TAXABLE
WAGE BASE 5.4%
</TABLE>
* x=The greater of $10,000 or 1/5 of Taxable Wage Base
**y=Any amount more than 80% of Taxable Wage Base but
less than 100% of Taxable Wage Base.
(g) "MINIMUM TOP-HEAVY RATE" means a rate of at least
three percent (unless the total Employer contribution to
the Plan is less than three percent), or, in certain cases
where a Defined Benefit Plan is maintained, five percent
or seven and one-half percent (whichever is applicable)
of each Participant's Compensation for such Plan Year; if
the Plan is integrated with Social Security, the
"Base Contribution Percentage" plus the "Excess
Contribution Percentage" plus the "Additional Contribution
Percentage" (if any) must be no less than the "Minimum
Top-Heavy Rate" as set forth in the preceding clause.
(h) "PRIMARY LIMITATION" means 15 percent of the
Compensation otherwise paid or accrued by the Employer
during such Taxable Year to, or for, the Participants in
the Plan.
A-34
<PAGE> 149
(i) "SECONDARY LIMITATION" means the lesser of:
(i) 25 percent of the Participants' Compensation for
the Taxable Year which ends with or within the Plan
Year for which the Employer, Matching, and/or Elective
Deferral Contribution or other Employer contribution is
being made, or
(ii) Any excess of (aa) the aggregate of the "Primary
Limitations" for all Taxable Years beginning before
January 1, 1987, over (bb) the aggregate of the
deductions allowed or allowable (for Employer, Matching,
and Elective Deferral Contributions or other Employer
contributions paid or deemed paid to the Plan) under
section 404(a)(3)(A) of the Code for all Taxable Years
beginning before January 1, 1987, which excess is
available as a carryforward to the current Taxable Year
from such prior Taxable Year(s) under said section
404(a)(3)(A).
(B) OTHER ALLOCATIONS. Other contributions shall be allocated
in accordance with the Plan document.
A.5.4 ALLOCATION OF INCREASES AND DECREASES. Allocation of
increases or decreases in the fair market value of assets described in Section
5.4 of the Plan shall be made on the basis of the amounts in the Accounts under
the Plan (as adjusted under Section 5.4 of the Plan) as determined on (check
either (A) or (B)):
[ X ] (A) First day of the period in which the
Valuation Date occurs (except that the last day
of the period shall be used for the initial
allocation).
[ ] (B) Last day of the period in which the Valuation
Date occurs.
A.5.5 ALLOCATION OF FORFEITURES.
(A) Shall forfeitures be allocated in accordance
with Section 5.5 of the Plan (check one)?
[ X ] (1) Yes [ ] (2) No
[ ] (3) N/A (No forfeitures)
If Section A.5.5(A)(1) is checked, such allocation shall be effected as of
the last day of the (check one): [ ] (a) month [ ] (b) quarter [ X ]
(c) Plan Year in which the forfeiture occurs under Section 7.6(c) of the
Plan, in proportion to the Employer and/or Matching Contributions (as
applicable) allocated to the remaining Participants for the period for
which the allocation is effected.
(B) If Section A.5.5(A)(2) is checked,
forfeitures shall be allocated as follows (check applicable block):
[ ] (1) Matching Account forfeitures shall
be used to reduce Matching Contributions
for the Plan Year in which such
forfeitures occur but otherwise the
provisions of Section 5.5 of the Plan
shall apply.
A-35
<PAGE> 150
[ ] (2) All Matching and Employer Account
forfeitures shall be used to reduce
Matching and Employer Contributions for
the Plan Year in which such forfeitures
occur.
[ X ] (3) N/A (Forfeitures shall be allocated
under Section 5.5 of Plan or no
forfeitures).
A.6.1 INVESTMENT OF ACCOUNTS.
(A) INVESTMENT POWER. Investment of Trust
assets shall be directed as follows (check (1), (2) or (3)):
[ X ] (1) Subject to the terms of the Plan,
the Trustee shall, subject to any
limitations indicated below, have the
sole power and authority to direct
investment of Trust assets.
[ ] (2) Subject to the terms of the Plan,
the Investment Manager shall, subject to
any limitations indicated below, have the
sole power and authority to direct
investment of Trust assets held in (check
applicable block(s)):
[ ] Employer Accounts [ ] Matching
Accounts
[ ] Participant Accounts [ ] Elective
Deferral
Accounts
[ ] QVEC Accounts [ ] Rollover
Accounts
[ ] Transfer Accounts [ ] Other
Accounts
Subject to the terms of the Plan, the Trustee shall have
the sole power and authority to direct investment of Trust
assets not committed to the direction of the Investment
Manager.
[ ] (3) Subject to the terms of the Plan,
each Plan Participant or Beneficiary
shall, subject to any limitations
indicated below, have the sole power and
authority to direct investment of the
Trust assets held in (check applicable
block(s)):
[ ] Employer Accounts [ ] Matching
Accounts
[ ] Participant Accounts [ ] Elective
Deferral
Accounts
[ ] QVEC Accounts [ ] Rollover
Accounts
[ ] Transfer Accounts [ ] Other
Accounts
The investments which the Participant or Beneficiary may
select are any one or more of the following (specify
investment selections available):
[
]
Investment instructions shall be given by the Participant
or Beneficiary on the Appropriate Form to the
Administrative Committee not later than (fill in blank)
[ ] days before the Valuation Date preceding the
effective date of the investment direction. The
Administrative Committee shall deliver such instructions
to the Trustee. Such investment instructions shall be
effected by the Trustee not later than (fill in blank)
[ ] days following the Valuation Date coincident with or
next
A-36
<PAGE> 151
following the date on which the investment instructions
are delivered to the Administrative Committee.
Subject to the terms of the Plan, the Trustee shall have
the sole power and authority to direct investment of Trust
assets not committed to the direction of the Participant
or Beneficiary.
(B) LIMITATIONS. List any limitations on types
of investments and transitional investment rules (if none, write "none"): [
NONE
]
(C) QUALIFYING EMPLOYER SECURITIES. May Plan
assets be invested in Qualifying Employer Securities (check one)?
[ X ] (1) Yes [ ] (2) No
In no event may Employer, Participant, Elective Deferral, Matching,
Rollover or Qualified Voluntary Employee Contributions or other Employer
contributions or direct transfers or Employer, Participant, Elective
Deferral, Matching, Rollover, Transfer or QVEC Accounts or other accounts
be invested in Qualifying Employer Securities unless such investment is in
compliance with applicable Federal and state securities laws (including any
necessary filings under such Federal and state securities laws) and the
requirements of the Plan.
If such investment is in compliance with such laws (including any required
filings) and Plan requirements, the prohibition on investment of Plan
assets in Qualifying Employer Securities does not apply and up to [ 100 ]
(insert percentage; if not applicable, insert letters N/A in blank) percent
of Plan assets may be so invested.
If any such required filings have not been made, only Employer
Contributions and Employer Accounts not subject to Participant or
Beneficiary directed investment may be invested in Qualifying Employer
Securities. In such case, indicate the percentage of Employer
Contributions and Employer Accounts which may be invested in Qualifying
Employer Securities in the following blank: [ 100 ] percent (insert
percentage; if not applicable, insert letters N/A in blank).
A.7.6 SEPARATION FROM SERVICE.
(A) DISTRIBUTION OF ACCRUED BENEFITS UPON
SEPARATION FROM SERVICE.
(1) NORMAL RULES. Upon separation of a
Participant from the service of his
Employer under Section 7.6(A) of the
Plan, distribution of such Participant's
Vested Accrued Benefit shall be made
(check only one block (i.e., (a), (b) or
(c)):
[ ] (a) Upon the request of the
Participant in writing on the
Appropriate Form, within 60 days
following the last day of the
Plan Year in which such
Participant incurs five
consecutive One-Year Breaks In
Service but if distribution is
not so requested by the
Participant, distribution shall
be made on the date the
Participant would have attained
his Normal Retirement Age had he
remained in the employ of the
Employer;
[ X ] (b) Upon the request of the
Participant in writing on the
Appropriate Form, at any time
A-37
<PAGE> 152
following the first Valuation
Date coincident with or next
following the date such
Participant separates from the
service of the Employer;
however, if distribution is not
so requested by the Participant
earlier, distribution shall be
made no later than 60 days
following the date the
Participant would have attained
his Normal Retirement Age had he
remained in the employ of the
Employer; or
[ ] (c) Within 60 days following
the date the Participant would
have attained his Normal
Retirement Age had he remained
in the employ of the Employer.
Notwithstanding any other provision in the Plan or Adoption
Agreement, if the Plan provides for distribution on an Early
Retirement Date and if a separated Participant met the service but
not the age requirement for such Early Retirement Date on the date
of his separation from the service of his Employer, upon meeting
such age requirement after separation, such Participant, if he so
requests in writing on the Appropriate Form, shall commence
receiving his deferred Vested Accrued Benefit no later than the
date which would have been his Early Retirement Date had he
continued in the service of the Employer. If no such request is
made, distribution shall be made in accordance with Section
A.7.6(A)(1)(a), (b) or (c), as elected by the Employer in this
Adoption Agreement. All requests for payment under this Section
A.7.6(A) shall be made within the 90-day period preceding the date
payment is to commence.
(2) EXCEPTION. If a Participant
separates from the service of the
Employer and the value of the
Participant's Vested Accrued Benefit does
not exceed and at the time of any prior
distribution did not exceed $3,500, the
Participant shall automatically, whether
or not he requests distribution, receive,
in one lump sum, a distribution of his
entire Vested Accrued Benefit (and if the
Vested Accrued Benefit is $-0-, he shall
be deemed to have received such Vested
Accrued Benefit) within 60 days following
the first Valuation Date coincident with
or next following the date such
Participant separates from the service of
the Employer.
This provision shall only apply if this block is checked [ X ].
If the above block is not checked or if the value of the
Participant's Vested Accrued Benefit exceeds or at the time of a
prior distribution exceeded $3,500, the election made under
Section A.7.6(A)(1) shall apply to the distribution of the
Participant's Vested Accrued Benefit under the Plan.
(B) VESTING UPON SEPARATION FROM SERVICE.
(1) Except as otherwise provided in the
Plan and in Sections A.3.5 and A.3.11,
the interest of each Participant in his
Employer Account and Matching Account
shall vest as follows (check one and
complete applicable blanks):
[ ] (a) 100 percent vesting
immediately. (This alternative
must be chosen if a period of
more than one year has been
designated in Section
A.2.2(B)(1)(a)(i)).
A-38
<PAGE> 153
[ ] (b) [ ] percent for each
Year of Service for Vesting (not
less than 20 percent for each
Year of Service for Vesting, but
not more than 100 percent).
[ ] (c) Nothing for the first five
Years of Service for Vesting and
100 percent thereafter.
[ ] (d) Nothing for the first
[ ] Years of Service for
Vesting, then [ ] percent
for each Year of Service for
Vesting thereafter, but not more
than 100 percent. (Full vesting
must occur after five Years of
Service for Vesting).
[ ] (e) In accordance with the
following table:
<TABLE>
<CAPTION>
IF YEARS OF SERVICE
FOR VESTING THEN THE VESTED
EQUAL OR EXCEED - PERCENTAGE IS
<S> <C>
3..................................20
4..................................40
5..................................60
6..................................80
7 or more.........................100
</TABLE>
[ X ] (f) [Other. (This alternative,
if chosen, must provide a
percentage of vesting which is
not less than the percentage
that would be provided under
options (c) or (e) used
consistently) - Specify:
<TABLE>
<CAPTION>
[IF YEARS OF SERVICE
-------------------
FOR VESTING THEN THE VESTED
----------- -------------------
EQUAL OR EXCEED - PERCENTAGE IS
--------------- --- ---------------
<S> <C>
1..................................10
-------------------------------------
2..................................25
-------------------------------------
3..................................50
-------------------------------------
4..................................75
-------------------------------------
5 OR MORE.........................100
-------------------------------------
</TABLE>
(2) For purposes of Section A.7.6(B)(1)
above and for purposes of Section A.3.5
and Section 3.11(B) of the Plan, Years of
Service for Vesting attributable to the
following shall be disregarded (check
applicable blocks):
[ ] (a) Service prior to the
attainment of age 18, exclusive
of the year within which the
Employee attained age 18.
[ ] (b) Service during any period
for which the Employer did not
maintain this Plan or a
predecessor trust or plan.
[ ] (c) Service before January 1,
1971, unless the Employee has
had at least three years of
credited service after December
31, 1970, determined without
application of paragraphs (a),
(b), (d) and (e) hereof if
selected by the Employer.
A-39
<PAGE> 154
[ X ] (d) If an Employee is reemployed by the
Employer following a One-Year Break In
Service, service before such One-Year
Break In Service, if the Employee has not
completed a Year of Service for Vesting
after such One-Year Break In Service, for
the purpose of determining the vested
percentage in his Employer-derived Accrued
Benefit which accrues after such One-Year
Break In Service.
[ X ] (e) If an Employee is reemployed by the
Employer following five consecutive
One-Year Breaks In Service (check only (i)
or (ii) whichever is to apply):
[ ] (i) Service after such five
consecutive One-Year Breaks
In Service, for the purpose
of determining the vested
percentage in his
Employer-derived Accrued
Benefit which accrued before
such five consecutive
One-Year Breaks In Service
but both pre-Break and
post-Break service will count
for purposes of determining
the vested percentage in his
Employer-derived Accrued
Benefit which accrued after
such Break.
[ X ] (ii) Service after such five
consecutive One-Year Breaks
In Service, for the purpose
of determining the vested
percentage in his
Employer-derived Accrued
Benefit which accrued before
such five consecutive
One-Year Breaks In Service
and, if the Employee had no
vested interest in his
Employer-derived Accrued
Benefit prior to such
Break(s) and the number of
consecutive One-Year Breaks
In Service equals or exceeds
the aggregate Years of
Service for Vesting, service
before such five consecutive
One-Year Breaks In Service
for the purpose of
determining the vested
percentage in his
Employer-derived Accrued
Benefit which accrues after
such five consecutive
One-Year Breaks In Service.
To the extent required by the Plan, separate accounts
shall be maintained for the Participant's pre-Break and
post-Break Employer-derived account balances.
(3) Except as otherwise provided in Section 7.6(C)
of the Plan relating to benefits accruing before a
separation from service, if a Participant separates
from service and thereafter returns to employment
with the Employer without incurring five
consecutive One-Year Breaks In Service, he shall
continue to vest in his Accrued Benefit.
(4) In the event that an Employee who is not a
member of the eligible class of Employees becomes a
A-40
<PAGE> 155
member of the eligible class, such
Employee shall, subject to any applicable
limitation set forth in this Section
A.7.6, receive credit, for vesting
purposes, for Service with the Employer
while such Employee was not a member of
the eligible class.
(5) Service, for purposes of Section
A.7.6(B)(1), includes service with a
predecessor employer if the Employer
adopting the Plan is maintaining the Plan
as a plan of a predecessor employer.
Service, for purposes of Section A.7.6(B)(1), also includes
service with a predecessor employer whose plan is not being
continued by the Employer to the extent provided in Section
A.1.79.
(C) FORFEITURES. If the provisions of Section
7.6(C)(1)(b) of the Plan are to apply, check this block [ X ];
otherwise the provisions of Section 7.6(C)(1)(a) of the Plan shall apply.
A.7.9 COMMENCEMENT OF PAYMENTS; DEFERRAL OF PAYMENTS; MINIMUM
DISTRIBUTION REQUIREMENTS.
(A) DATE PAYMENTS TO COMMENCE. This provision
is contained in the Plan.
(B) DEFERRAL OF PAYMENTS. Shall a Participant,
to the extent permitted by the Plan, be permitted to defer payment of
benefits under Sections 7.3, 7.4, 7.5 and 7.7 of the Plan (check one)?
[ X ] (1) Yes [ ] (2) No
(C) MINIMUM DISTRIBUTION REQUIREMENTS. This
provision is contained in the Plan.
A.7.10 WITHDRAWALS DURING EMPLOYMENT.
(A) WITHDRAWALS FROM PARTICIPANT ACCOUNTS.
Shall withdrawals of Participant Accounts (other than the portion of such
Participant Accounts attributable to required Participant Contributions and
to Participant Contributions which are matched by the Employer) be
permitted (check one)?
[ ] (1) Yes [ ] (2) No [ X ] (3) N/A
(B) WITHDRAWALS FROM QVEC ACCOUNTS. Shall
withdrawals of QVEC Accounts be permitted (check one)?
[ ] (1) Yes [ ] (2) No [ X ] (3) N/A
(C) WITHDRAWALS FROM ROLLOVER ACCOUNTS. Shall
withdrawals of Rollover Accounts be permitted (check one)?
[ ] (1) Yes [ X ] (2) No [ ] (3) N/A
(D) HARDSHIP AND POST - 59 1/2 WITHDRAWALS FROM
ELECTIVE DEFERRAL ACCOUNTS. Shall withdrawals of Elective Deferral
Accounts be permitted (if such withdrawals are to be permitted, check
either (1) or (2) or both) [ ] (1) on account of hardship [ ] (2) after
reaching age 59-1/2 (check one)?
[ ] (a) Yes [ ] (b) No [ X ] (c) N/A
(E) HARDSHIP AND POST - 59 1/2 WITHDRAWALS FROM
EMPLOYER, PARTICIPANT, ROLLOVER AND TRANSFER ACCOUNTS. Shall withdrawals
of Employer, Participant, Rollover and Transfer Accounts be permitted (if
such withdrawals
A-41
<PAGE> 156
are to be permitted, check either (1) or (2) or both) [ ] (1) on account
of hardship [ ] (2) after reaching age 59-1/2 (check one)?
[ ] (a) Yes [ X ] (b) No
(F) HARDSHIP AND POST - 59 1/2 WITHDRAWALS FROM
MATCHING ACCOUNTS. Shall hardship and post - age 59 1/2 withdrawals of
Matching Accounts be permitted (if such withdrawals are to be permitted,
check either (1) or (2) or both) [ ] (1) on account of hardship [ ] (2)
after reaching age 59-1/2 (check one)?
[ ] (a) Yes [ ] (b) No [ X ] (c) N/A
(G) OTHER PRE-59-1/2 IN-SERVICE WITHDRAWALS.
Shall withdrawals of a Participant's Vested Accrued Benefit attributable to
Participant Contributions, Employer Contributions, and Matching
Contributions after such Participant completes five Years of Service for
Benefit Accrual but before he attains age 59 1/2 be permitted (check one)?
[ ] (1) Yes [ X ] (2) No
WITHDRAWALS SHALL ONLY BE MADE IN ACCORDANCE WITH THE PROVISIONS OF SECTION
7.10 OF THE PLAN.
A.7.11 LOANS.
(A) Shall loans to Participants and
Beneficiaries if such Beneficiaries are parties-in-interest (as defined in
the Plan) be permitted (check one)?
[ X ] (1) Yes [ ] (2) No
NOTE: NO LOANS MAY BE MADE TO OWNER-EMPLOYEES OR TO
SHAREHOLDER EMPLOYEES (AS DEFINED IN SECTION 7.11(A)(7) OF THE PLAN).
(B) The interest rate shall be determined as
follows: [ THE INTEREST RATE SHALL EQUAL ONE PERCENTAGE POINT ABOVE THE PRIME
INTEREST RATE AS PUBLISHED IN THE WALL STREET JOURNAL ON THE FIRST BUSINESS DAY
OF THE WEEK IN WHICH THE LOAN IS MADE.
]
(C) Shall the exception to the 50% of Vested
Accrued Benefit limitation on loans not in excess of $10,000 apply?
[ ] (1) Yes [ X ] (2) No
[ ] (3) N/A (No loans permitted)
If the exception is to apply, note that only 50% of the Vested Accrued
Benefit may be used as security for the loan. Additional security
must be provided by the Participant or Beneficiary. Specify the type
of additional collateral which will be used to secure the remainder of
the loan: [ N/A
]
(D) Specify the types of collateral to be used
to secure loans under the Plan: [ ONE HALF OF THE PRESENT VALUE OF THE
PARTICIPANT'S OR BENEFICIARY'S VESTED ACCRUED BENEFIT UNDER THE PLAN.
]
(E) If Section A.7.11(A)(1) is checked, indicate
any additional limitations to be placed on loans (if none, so state; if not
applicable, insert letters N/A):[ LOANS FROM THE PLAN WILL BE PERMITTED
ONLY IN THE EVENT OF A PERSONAL EMERGENCY OR FINANCIAL HARDSHIP IN
ACCORDANCE WITH THE GUIDELINES SET FORTH IN SECTION 7.10(C)(3) OF THE PLAN.
]
A-42
<PAGE> 157
(F) Shall loans to a Participant be treated as
an investment by such Participant for his Accounts only (check one)?
[ X ] (1) Yes [ ] (2) No
[ ] (3) N/A (No loans permitted)
A.7.14 JOINT AND SURVIVOR ANNUITY. The provisions of Section
7.14 of the Plan shall not apply to the Plan, as adopted under this Adoption
Agreement.
A.8.2 SPECIAL PROVISION WITH RESPECT TO QUALIFIED DOMESTIC
RELATIONS ORDERS. Shall the special provision of Section 8.2 of the Plan with
respect to Qualified Domestic Relations Orders apply to the Plan as adopted by
the Employer (check one)?
[ X ] (A) Yes [ ] (B) No
A.15.1 AMENDMENT. THE CHANGES MADE BY THIS AMENDMENT AND
RESTATEMENT SHALL BE DEEMED ADOPTED BY EACH ADOPTING EMPLOYER ON THE DATE THE
NOTIFICATION LETTER IS ISSUED BY THE DISTRICT OFFICE OF THE INTERNAL REVENUE
SERVICE WITHOUT FURTHER ACTION ON THE PART OF THE ADOPTING EMPLOYER EXCEPT THAT
SUCH ADOPTING EMPLOYER MUST SEND A NOTICE TO INTERESTED PARTIES INFORMING SUCH
INTERESTED PARTIES THAT THE PLAN HAS BEEN AMENDED. SUCH NOTICE MUST BE GIVEN
IN ACCORDANCE WITH THE RULES OF SECTION 15.1(C) OF THE PLAN. SEE SECTION
15.1(C) OF THE PLAN FOR FURTHER INFORMATION.
A.18.4 AGENT FOR SERVICE OF LEGAL PROCESS. The name(s) and
address(es) of the agent(s) for service of legal process under the Plan are:
[ ADMINISTRATIVE COMMITTEE, FUND OFFICE RETIREMENT PROFIT-SHARING PLAN
C/O MUNICIPAL FUND FOR TEMPORARY INVESTMENT
BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
A.18.17 RESTATEMENT.
(A) RESTATEMENT OF EXISTING PLAN. The Employer
may adopt the Plan as an amendment and restatement of any Prior Plan
(including a prior version of this Plan and Trust Agreement). Adoption
shall not require termination of the Prior Plan, except that amendment and
restatement of an existing Defined Benefit Plan into the Plan shall be
deemed to be a termination of such Prior Plan for the purposes of Title IV
of ERISA. Upon adoption of this Plan, the assets of the Prior Plan shall
be invested in accordance with the provisions of this Plan. Check if
applicable:
[ X ] This is an amendment and restatement of the [ FUND
OFFICE RETIREMENT PROFIT-SHARING ] PLAN, an existing
qualified [ PROFIT-SHARING ] plan, which was adopted effective
as of [ SEPTEMBER 18, 1981].
(B) LIMITATIONS APPLICABLE TO PLAN PROVISIONS.
Except as otherwise provided in Section 3.11 of the Plan, the participation
and/or vesting provisions of the Plan, as adopted by the Employer, shall
apply as follows (check applicable block or blocks; to the extent not
checked, the Plan shall apply in accordance with the terms set forth
herein):
[ ] (1) The participation provisions of this
Plan, as adopted by the Employer, shall
apply only to Employees hired on or after
the date the Plan is adopted by the
Employer. The participation provisions
of the Prior Plan shall otherwise apply.
[ ] (2) The vesting provisions of this Plan,
as adopted by the Employer, shall apply
only to Employees hired on or after the
date the Plan is adopted by the
A-43
<PAGE> 158
Employer. The vesting provisions of the
Prior Plan shall otherwise apply.
[ X ] (3) N/A.
(C) INCORPORATION OF APPLICABLE PRIOR PLAN
PROVISIONS AND TRANSITIONAL RULES. If the Employer checked A.18.17(A),
such Employer shall insert here any Prior Plan provisions and any
transitional rules which such Employer desires or is required to make
applicable to this Plan (if none, write the word "none"):
[ (1) MERGER OF PLANS. EFFECTIVE DECEMBER 1, 1987, THE CHESTNUT STREET
EXCHANGE FUND RETIREMENT PROFIT-SHARING PLAN, THE INDEPENDENCE SQUARE INCOME
SECURITIES, INC. RETIREMENT PROFIT-SHARING PLAN, THE TEMPORARY INVESTMENT FUND,
INC. RETIREMENT PROFIT-SHARING PLAN, AND THE TRUST FOR SHORT-TERM FEDERAL
SECURITIES RETIREMENT PROFIT-SHARING PLAN WERE MERGED INTO, AND THEIR ASSETS
TRANSFERRED INTO, THE PLAN.
(2) CHANGE IN ACCRUAL COMPUTATION PERIODS, LIMITATION YEARS, PLAN
YEARS AND VESTING COMPUTATION PERIODS. AS A RESULT OF THE MERGER AND TRANSFER
OF ASSETS, THE ACCRUAL COMPUTATION PERIODS, LIMITATION YEARS, PLAN YEARS AND
VESTING COMPUTATION PERIODS FOR THE CHESTNUT STREET EXCHANGE FUND, INDEPENDENCE
SQUARE INCOME SECURITIES, INC., TEMPORARY INVESTMENT FUND, INC., AND TRUST FOR
FEDERAL SECURITIES RETIREMENT PROFIT-SHARING PLANS HAVE BEEN CHANGED AS
FOLLOWS:
<TABLE>
<CAPTION>
PLAN OLD (UNDER OLD PLAN) NEW (UNDER THIS PLAN)
- --------------------------------------------------------------------------
<S> <C> <C>
CHESTNUT STREET EX-
- -------------------------------------------------------------------------
CHANGE FUND 1/1 TO 12/31 12/1 TO 11/30
- -------------------------------------------------------------------------
INDEPENDENCE SQUARE
- -------------------------------------------------------------------------
INCOME SECURITIES,
- -------------------------------------------------------------------------
INC. 1/1 TO 12/31 12/1 TO 11/30
- -------------------------------------------------------------------------
TEMPORARY INVESTMENT
- -------------------------------------------------------------------------
FUND, INC. 10/1 TO 9/30 12/1 TO 11/30
- -------------------------------------------------------------------------
TRUST FOR FEDERAL
- -------------------------------------------------------------------------
SECURITIES 11/1 TO 10/31 12/1 TO 11/30
- -------------------------------------------------------------------------
</TABLE>
THIS RESULTED IN THE FOLLOWING SHORT ACCRUAL COMPUTATION PERIODS,
LIMITATION YEARS, PLAN YEARS AND VESTING COMPUTATION PERIODS:
<TABLE>
<CAPTION>
PLAN SHORT PERIOD/YEAR
- -------------------------------------------------------------------------
<S> <C>
CHESTNUT STREET 1/1/87 TO 11/30/87
- -------------------------------------------------------------------------
INDEPENDENCE SQUARE INCOME SECURITIES, INC. 1/1/87 TO 11/30/87
- -------------------------------------------------------------------------
TEMPORARY INVESTMENT FUND, INC. 10/1/87 TO 11/30/87
- -------------------------------------------------------------------------
TRUST FOR FEDERAL SECURITIES 11/1/87 TO 11/30/87
- -------------------------------------------------------------------------
</TABLE>
(A) CHANGE IN VESTING COMPUTATION PERIODS. EACH PARTICIPANT IN THE
ABOVE LISTED PLANS RECEIVED VESTING CREDIT FOR TWO YEARS OF
SERVICE FOR VESTING PROVIDED SUCH PARTICIPANT COMPLETED 200 OR
MORE HOURS OF SERVICE IN BOTH THE OLD VESTING COMPUTATION PERIOD
AND THE NEW VESTING COMPUTATION PERIOD AS SET FORTH ABOVE.
(B) CHANGE IN ACCRUAL COMPUTATION PERIODS. ANY PARTICIPANT IN THE
ABOVE LISTED PLANS WHO COMPLETED 200 HOURS OF SERVICE MULTIPLIED
BY THE NUMBER OF MONTHS IN THE SHORT ACCRUAL COMPUTATION PERIOD
DIVIDED BY TWELVE RECEIVED HIS PROPORTIONATE SHARE OF EMPLOYER
CONTRIBUTIONS DURING THE SHORT ACCRUAL COMPUTATION PERIOD SET
FORTH ABOVE.
(C) CHANGE IN LIMITATION YEARS. FOR THE SHORT LIMITATION YEARS, THE
DOLLAR LIMITATIONS UNDER SECTION 415(C)(1)(A) OF THE CODE WERE
ADJUSTED AS PROVIDED UNDER TREAS. REG. Section 1.415-2(B)(4).
THE ABOVE CHANGES WERE MADE PURSUANT TO THE AUTOMATIC APPROVAL
PROVISIONS OF REV. PROC. 87-27, 1987-25 I.R.B. 41. ]
A-44
<PAGE> 159
A.18.18 INDIVIDUAL PROVISIONS. Any provisions applicable to the
adopting Employer only should be inserted here (if none, write the word
"none"):
[ (A) EMPLOYER AMENDMENT OF PLAN AND/OR TRUST. ANY EMPLOYER AMENDMENT OF
THE PLAN AND/OR TRUST PERMITTED BY SECTION 15.1 OF THE PLAN AND TRUST AGREEMENT
SHALL BE EFFECTED BY RESOLUTION OF THE EMPLOYER'S BOARD OF DIRECTORS ADOPTED AT
A DULY HELD MEETING OF SAID BOARD OR BY UNANIMOUS WRITTEN CONSENT OF SAID
BOARD, IF THE EMPLOYER IS INCORPORATED AND OTHERWISE BY APPROPRIATE WRITTEN
ACTION OF EMPLOYER'S OWNER OR OTHER GOVERNING ENTITY UNDER STATE LAW. A
CERTIFIED COPY OF SUCH RESOLUTIONS OR OTHER WRITTEN ACTION SHALL BE DELIVERED
TO THE ADMINISTRATIVE COMMITTEE AND THE TRUSTEE.
(B) TERMINATION OR PARTIAL TERMINATION OF PLAN AND/OR TRUST. TERMINATION
OR PARTIAL TERMINATION OF THE PLAN AND/OR TRUST UNDER ARTICLE XVI OF THE PLAN
AND TRUST AGREEMENT SHALL BE EFFECTED BY RESOLUTION OF THE EMPLOYER'S BOARD OF
DIRECTORS ADOPTED AT A DULY HELD MEETING OF SAID BOARD OR BY UNANIMOUS WRITTEN
CONSENT OF SAID BOARD, IF SUCH EMPLOYER IS INCORPORATED AND OTHERWISE BY
APPROPRIATE WRITTEN ACTION OF EMPLOYER'S OWNER OR OTHER GOVERNING ENTITY UNDER
STATE LAW. A CERTIFIED COPY OF SUCH RESOLUTIONS OR OTHER WRITTEN ACTION SHALL
BE DELIVERED TO THE ADMINISTRATIVE COMMITTEE AND THE TRUSTEE.
(C) ADOPTION OF PLAN BY OTHER EMPLOYERS.
(1) EFFECTIVE DATE. THIS SECTION A.18.18(C) SHALL BE EFFECTIVE AS OF
DECEMBER 1, 1989.
(2) ADOPTION OF PLAN AND TRUST. ANY OTHER EMPLOYER MAY ADOPT THE
TERMS OF THIS PLAN AS ADOPTED BY THE ADOPTING EMPLOYER, AND THEREBY BECOME
A "PARTICIPATING EMPLOYER," PROVIDED:
(A) THE BOARD OF DIRECTORS OR OTHER GOVERNING ENTITY OF THE
ADOPTING EMPLOYER CONSENTS TO SUCH ADOPTION;
(B) THE BOARD OF DIRECTORS OR OTHER GOVERNING ENTITY OF THE
ADOPTING PARTICIPATING EMPLOYER ADOPTS THIS PLAN BY APPROPRIATE
ACTION;
(C) THE ADOPTING PARTICIPATING EMPLOYER EXECUTES THE ADOPTION
AGREEMENT; AND
(D) THE ADOPTING PARTICIPATING EMPLOYER EXECUTES SUCH OTHER
DOCUMENTS AS MAY BE REQUIRED TO MAKE SUCH ADOPTING PARTICIPATING
EMPLOYER A PARTY TO THE PLAN AND TRUST AS A PARTICIPATING EMPLOYER
(EXCEPT AS PROVIDED BELOW).
A PARTICIPATING EMPLOYER WHICH ADOPTS THE PLAN AND TRUST AGREEMENT IS
THEREAFTER AN EMPLOYER WITH RESPECT TO ITS EMPLOYEES FOR PURPOSES OF THE
PLAN, THE TRUST AGREEMENT AND THIS ADOPTION AGREEMENT EXCEPT THAT SUCH
PARTICIPATING EMPLOYER DELEGATES TO THE ADOPTING EMPLOYER THE POWER TO
AMEND THE ADOPTION AGREEMENT ON ITS BEHALF AND ON BEHALF OF THE ADOPTING
EMPLOYER AND EACH OTHER PARTICIPATING EMPLOYER, PROVIDED SUCH AMENDMENT
DOES NOT MATERIALLY AFFECT THE SUBSTANCE OF THE PLAN WITH RESPECT TO THE
ADOPTING EMPLOYER OR ANY PARTICIPATING EMPLOYER OR MATERIALLY AFFECT THE
COSTS OF THE ADOPTING EMPLOYER OR ANY PARTICIPATING EMPLOYER. A
PARTICIPATING EMPLOYER RESERVES THE POWER TO WITHDRAW FROM THE PLAN, AS
PROVIDED IN SECTION A.18.18(C)(3), AND TO TERMINATE THE PLAN AND TRUST
AGREEMENT WITH RESPECT TO SUCH PARTICIPATING EMPLOYER, AS PROVIDED IN
SECTION A.18.18(5).
(3) WITHDRAWAL FROM PLAN. SUBJECT TO THE REQUIREMENTS OF ARTICLE
XVII, ANY PARTICIPATING EMPLOYER MAY, AT ANY TIME, WITHDRAW FROM THE PLAN
UPON GIVING THE BOARD OF DIRECTORS OR OTHER GOVERNING ENTITY OF THE
ADOPTING EMPLOYER, THE ADMINISTRATIVE COMMITTEE AND THE TRUSTEE AT LEAST 30
DAYS NOTICE IN WRITING OF ITS INTENTION TO WITHDRAW. UPON THE WITHDRAWAL
OF A PARTICIPATING EMPLOYER PURSUANT TO THIS SECTION A.18.18(C)(3), THE
TRUSTEE SHALL SEGREGATE A PORTION OF THE ASSETS IN THE TRUST AS SET FORTH
BELOW, THE VALUE OF WHICH SHALL EQUAL THE TOTAL AMOUNT CREDITED TO THE
ACCOUNTS OF PARTICIPANTS EMPLOYED BY THE WITHDRAWING PARTICIPATING
EMPLOYER. SUBJECT TO THE REQUIREMENTS OF ARTICLE XVII, THE DETERMINATION
OF WHICH ASSETS ARE TO BE
A-45
<PAGE> 160
SO SEGREGATED SHALL BE MADE BY THE TRUSTEE IN ITS SOLE DISCRETION AS SET
FORTH BELOW.
THE ADMINISTRATIVE COMMITTEE MAY, AT ANY TIME, DIRECT THE TRUSTEE TO
SEGREGATE FROM THE TRUST SUCH PART THEREOF AS THE ADMINISTRATIVE COMMITTEE
SHALL DETERMINE TO BE HELD FOR THE BENEFIT OF THE EMPLOYEES OF A
PARTICIPATING EMPLOYER, AND SHALL GIVE A COPY OF SUCH DIRECTIONS TO THE
ADOPTING EMPLOYER AND EACH PARTICIPATING EMPLOYER. SUCH DIRECTIONS SHALL
SPECIFY THE ASSETS OF THE TRUST TO BE SEGREGATED. UNLESS THE ADOPTING
EMPLOYER OR ANY PARTICIPATING EMPLOYER FILES WITH THE TRUSTEE A WRITTEN
PROTEST WITHIN 30 DAYS AFTER DELIVERY OF SUCH DIRECTIONS TO THE TRUSTEE,
SUCH DIRECTIONS SHALL CONCLUSIVELY ESTABLISH THAT THE ASSETS SPECIFIED
THEREIN REPRESENT THE PART OF THE TRUST HELD FOR THE BENEFIT OF THE
EMPLOYEES OF THE ADOPTING EMPLOYER AND OF EACH PARTICIPATING EMPLOYER.
AFTER THE EXPIRATION OF SUCH 30 DAY PERIOD, AND AFTER SETTLEMENT OF
ANY SUCH PROTEST, THE TRUSTEE SHALL FOLLOW THE ADMINISTRATIVE COMMITTEE'S
DIRECTIONS, INCLUDING ANY MODIFICATION THEREOF ADOPTED IN SETTLEMENT OF ANY
PROTEST. ANY PART OF THE TRUST SEGREGATED PURSUANT TO SUCH DIRECTIONS
SHALL THEREAFTER BE HELD IN A SEPARATE TRUST IDENTICAL IN TERMS TO THE
TRUST HEREBY ESTABLISHED OR MAINTAINED, EXCEPT THAT, WITH RESPECT TO SUCH
SEPARATE TRUST, THIS PLAN AND TRUST AGREEMENT SHALL BE CONSTRUED AS IF SUCH
PARTICIPATING EMPLOYER WERE THE ADOPTING EMPLOYER AND ALL POWERS AND
AUTHORITY CONFERRED UPON THE ADOPTING EMPLOYER OR ITS BOARD OR OTHER
GOVERNING ENTITY AND THE ADMINISTRATIVE COMMITTEE SHALL DEVOLVE UPON SUCH
PARTICIPATING EMPLOYER OR ITS BOARD OF DIRECTORS OR OTHER GOVERNING ENTITY.
AT ANY TIME THEREAFTER, SUCH PARTICIPATING EMPLOYER AND THE TRUSTEE MAY
(BUT THEY SHALL NOT BE REQUIRED TO) ENTER INTO A SEPARATE AGREEMENT STATING
THE TERMS OF SUCH SEPARATE PLAN AND TRUST AGREEMENT WHICH MAY BE THE
DRINKER BIDDLE & REATH REGIONAL PROTOTYPE DEFINED CONTRIBUTION PLAN AND
TRUST AGREEMENT. IF THE DRINKER BIDDLE & REATH REGIONAL PROTOTYPE DEFINED
CONTRIBUTION PLAN AND TRUST AGREEMENT IS NOT SO ADOPTED, THE PLAN AND TRUST
AGREEMENT WITH RESPECT TO THE WITHDRAWING PARTICIPATING EMPLOYER SHALL BE
CONSIDERED AN INDIVIDUALLY DESIGNED PLAN.
(4) EXCLUSIVE PURPOSE OF TRUST. NEITHER THE SEGREGATION AND TRANSFER
OF THE TRUST ASSETS UPON THE WITHDRAWAL OF A PARTICIPATING EMPLOYER NOR THE
EXECUTION OF A NEW PLAN AND TRUST AGREEMENT BY SUCH WITHDRAWING
PARTICIPATING EMPLOYER SHALL OPERATE TO PERMIT ANY PART OF THE TRUST TO BE
USED FOR, OR DIVERTED TO, PURPOSES OTHER THAN FOR THE EXCLUSIVE BENEFIT OF
THE PARTICIPANTS OR THEIR BENEFICIARIES.
(5) APPLICATION OF WITHDRAWAL PROVISIONS. THE WITHDRAWAL PROVISIONS
CONTAINED IN SECTION A.18.18(C)(3) AND (4) SHALL BE APPLICABLE ONLY IF THE
WITHDRAWING PARTICIPATING EMPLOYER CONTINUES TO COVER ITS PARTICIPANTS AND
ELIGIBLE EMPLOYEES IN ANOTHER PLAN AND TRUST QUALIFIED UNDER SECTIONS 401
AND 501 OF THE CODE. OTHERWISE, THE TERMINATION PROVISIONS OF THE PLAN AND
TRUST AGREEMENT SHALL APPLY WITH RESPECT TO THE WITHDRAWING PARTICIPATING
EMPLOYER.
(6) SINGLE PLAN. NOTWITHSTANDING ANY OTHER PROVISION SET FORTH
HEREIN, THE PLAN, AS ADOPTED PURSUANT TO THIS SECTION A.18.18(C) BY THE
ADOPTING EMPLOYER AND EACH PARTICIPATING EMPLOYER, SHALL CONSTITUTE A
SINGLE PLAN, AS SUCH TERM IS DEFINED IN TREAS. REG. Section
1.414(1)-1(B)(1), AS TO THE ADOPTING EMPLOYER AND EACH PARTICIPATING
EMPLOYER.
(7) QUALIFYING EMPLOYER SECURITIES. FOR PURPOSES OF SECTIONS A.1.72
AND A.6.1(B), AND FOR ALL OTHER PURPOSES OF THE PLAN AND TRUST AGREEMENT,
THE STOCK OF ANY ADOPTING EMPLOYER AND ANY PARTICIPATING EMPLOYER SHALL BE
TREATED AS QUALIFYING EMPLOYER SECURITIES.
(8) ADOPTING EMPLOYER APPOINTED AGENT OF PARTICIPATING EMPLOYERS.
EACH PARTICIPATING EMPLOYER APPOINTS THE BOARD OF DIRECTORS OR OTHER
GOVERNING ENTITY OF THE ADOPTING EMPLOYER AS ITS AGENT TO EXERCISE ON ITS
BEHALF ALL OF THE ADMINISTRATIVE POWER AND AUTHORITY CONFERRED UPON THE
ADOPTING EMPLOYER BY THIS PLAN AND TRUST AGREEMENT, INCLUDING THE POWER TO
AMEND THE ADOPTION AGREEMENT ON ITS BEHALF AND ON BEHALF OF THE ADOPTING
EMPLOYER AND
A-46
<PAGE> 161
EACH OTHER PARTICIPATING EMPLOYER AS SET FORTH IN ARTICLE XV, PROVIDED SUCH
AMENDMENT DOES NOT MATERIALLY AFFECT THE SUBSTANCE OF THE PLAN WITH RESPECT
TO THE ADOPTING EMPLOYER OR ANY PARTICIPATING EMPLOYER OR MATERIALLY AFFECT
THE COST OF THE ADOPTING EMPLOYER OR ANY PARTICIPATING EMPLOYER. THE
AUTHORITY OF THE BOARD OF DIRECTORS OR OTHER GOVERNING ENTITY OF THE
ADOPTING EMPLOYER TO ACT AS AGENT OF ANY PARTICIPATING EMPLOYER, IN
ACCORDANCE WITH SECTIONS A.18.18(C)(2) AND A.18.18(C)(8), SHALL TERMINATE
ONLY IF THE PART OF THE PLAN'S ASSETS HELD FOR THE BENEFIT OF THE EMPLOYEES
OF SUCH PARTICIPATING EMPLOYER SHALL BE SEGREGATED IN A SEPARATE TRUST AS
PROVIDED IN SECTION A.18.18(C)(3) AND SUCH PARTICIPATING EMPLOYER THEREUPON
WITHDRAWS FROM THE PLAN IN ACCORDANCE WITH SECTION A.18.18(C)(3). ANY
MATERIAL AMENDMENT (I.E., ANY AMENDMENT MATERIALLY AFFECTING THE SUBSTANCE
OF THE PLAN WITH RESPECT TO THE ADOPTING EMPLOYER OR ANY PARTICIPATING
EMPLOYER OR MATERIALLY AFFECTING THE COSTS OF THE ADOPTING EMPLOYER OR ANY
PARTICIPATING EMPLOYER CAN ONLY BE ADOPTED BY THE ADOPTING EMPLOYER AND ALL
PARTICIPATING EMPLOYERS. EACH PARTICIPATING EMPLOYER EXCLUSIVELY RESERVES
THE POWER TO TERMINATE THIS PLAN AND/OR THE TRUST AGREEMENT AS SET FORTH IN
ARTICLE XVI WITH RESPECT TO SUCH PARTICIPATING EMPLOYER. THE COMPLETE
TERMINATION OF THE PLAN CAN ONLY BE EFFECTED BY ACTION OF THE ADOPTING
EMPLOYER AND ALL PARTICIPATING EMPLOYERS.
(9) NAME OF ADOPTING EMPLOYER. THE MUNICIPAL FUND FOR TEMPORARY
INVESTMENT IS THE ADOPTING EMPLOYER.
(10) PARTICIPATING EMPLOYERS. THE NAMES AND PERTINENT DATA FOR THE
PARTICIPATING EMPLOYERS ARE AS FOLLOWS:
(A) CHESTNUT STREET EXCHANGE FUND:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:51-0199471
TAXABLE YEAR: JANUARY 1 - DECEMBER 31
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: PARTNERSHIP
PLACE OF ORGANIZATION: CALIFORNIA
(B) INDEPENDENCE SQUARE INCOME SECURITIES, INC.:
ADDRESS: ONE ALDWYN CENTER
VILLANOVA, PA 19085
EMPLOYER IDENTIFICATION NUMBER:23-1861553
TAXABLE YEAR: JANUARY 1 - DECEMBER 31
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: CORPORATION
PLACE OF ORGANIZATION: MARYLAND
(C) TEMPORARY INVESTMENT FUND, INC.:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:52-0983343
A-47
<PAGE> 162
TAXABLE YEAR: OCTOBER 1 - SEPTEMBER 30
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: CORPORATION
PLACE OF ORGANIZATION: MARYLAND
(D) TRUST FOR FEDERAL SECURITIES:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:52-1036683
TAXABLE YEAR: NOVEMBER 1 - OCTOBER 31
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: BUSINESS TRUST
PLACE OF ORGANIZATION: PENNSYLVANIA
(E) MUNICIPAL FUND FOR CALIFORNIA INVESTORS, INC.:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:51-0266273
TAXABLE YEAR: FEBRUARY 1 - JANUARY 31
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: CORPORATION
PLACE OF ORGANIZATION: MARYLAND
(F) MUNICIPAL FUND FOR NEW YORK INVESTORS, INC.:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:51-0270312
TAXABLE YEAR: AUGUST 1 - JULY 31
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: CORPORATION
PLACE OF ORGANIZATION: MARYLAND
(G) PORTFOLIOS FOR DIVERSIFIED INVESTMENT:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:51-0300345
TAXABLE YEAR: JULY 1 - JUNE 30
A-48
<PAGE> 163
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: BUSINESS TRUST
PLACE OF ORGANIZATION: MASSACHUSETTS
(H) THE PNC(R) FUND:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:51-0318674
TAXABLE YEAR: OCTOBER 1 - SEPTEMBER 30
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: BUSINESS TRUST
PLACE OF ORGANIZATION: MASSACHUSETTS
(I) THE RBB FUND, INC.:
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:51-0312196
TAXABLE YEAR: SEPTEMBER 1 - AUGUST 31
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: CORPORATION
PLACE OF ORGANIZATION: MARYLAND
(J) PROVIDENT INSTITUTIONAL FUNDS, INC. (EFFECTIVE FEBRUARY
16, 1995):
ADDRESS: BELLEVUE PARK CORPORATE CENTER
400 BELLEVUE PARKWAY, SUITE 100
WILMINGTON, DE 19809
EMPLOYER IDENTIFICATION NUMBER:41-1769812
TAXABLE YEAR: JANUARY 1 - DECEMBER 31
BUSINESS CODE NUMBER: 6742
TYPE OF ENTITY: CORPORATION
PLACE OF ORGANIZATION: MARYLAND ]
A.19.1 ADOPTION OF PLAN AND TRUST BY AFFILIATED EMPLOYERS. Shall
Article XIX of the Plan apply (check one)?
[ ] (A) Yes [ ] (B) No
[ X ] (C) N/A (No Affiliated Employers adopting Plan)
A-49
<PAGE> 164
If Section A.19.1(A) is checked, fill in the following blanks:
Name of Adopting Employer: [ ]
Name(s), Address(es), Type of Entity and Tax Identification
Number(s) of Adopting Affiliated Employer(s):[
]
The adopting Employer and each adopting Affiliated Employer must adopt the Plan
and execute the Adoption Agreement upon the initial adoption by an adopting
Affiliated Employer of the Plan. Thereafter the adopting Affiliated Employer,
pursuant to Article XIX of the Plan, authorizes the adopting Employer to take
all further action including, but not limited to, the amendment and/or
termination of the Plan, on behalf of the adopting Affiliated Employer under
the Plan (unless such adopting Affiliated Employer withdraws from the Plan
pursuant to Article XIX of the Plan) and such adopting Affiliated Employer need
not be a party to this Adoption Agreement with respect to any such subsequent
action relating to the Plan and Trust Agreement and/or Adoption Agreement.
THE ADOPTING EMPLOYER OR ADOPTING AFFILIATED EMPLOYER MAY NOT RELY ON THE
NOTIFICATION LETTER ISSUED BY THE NATIONAL OR DISTRICT DIRECTOR OF THE INTERNAL
REVENUE SERVICE AS EVIDENCE THAT THE PLAN IS QUALIFIED UNDER SECTION 401 OF THE
INTERNAL REVENUE CODE. IN ORDER TO OBTAIN RELIANCE WITH RESPECT TO PLAN
QUALIFICATION, THE ADOPTING EMPLOYER AND/OR ADOPTING AFFILIATED EMPLOYER MUST
APPLY TO THE APPROPRIATE KEY DISTRICT OFFICE FOR A DETERMINATION LETTER.
Executed at [WILMINGTON ], [ DELAWARE ], on this the [ 28th ]
day of [ March ], 19[95].
<TABLE>
<S> <C>
ADOPTING EMPLOYER:
ATTEST: MUNICIPAL FUND FOR TEMPORARY
INVESTMENT
---------------------------------
[SEAL] NAME OF ADOPTING EMPLOYER
/s/ MORGAN R. JONES By: /s/ G. WILLING PEPPER
- ----------------------------------- ------------------------------
Morgan R. Jones, Secretary G. Willing Pepper, President
PARTICIPATING EMPLOYERS:
ATTEST: CHESTNUT STREET EXCHANGE FUND
---------------------------------
Name of Participating Employer
[SEAL]
/s/ MORGAN R. JONES By: /s/ ROBERT R. FORTUNE
- ----------------------------------- ---------------------------------
Morgan R. Jones, Secretary Robert R. Fortune, President
ATTEST: INDEPENDENCE SQUARE INCOME
SECURITIES, INC.
---------------------------------
[SEAL] Name of Participating Employer
/s/ GARY M. GARDNER By: /s/ ROBERT R. FORTUNE
- ----------------------------------- ---------------------------------
Gary M. Gardner, Secretary Robert R. Fortune, President
ATTEST: TEMPORARY INVESTMENT FUND, INC.
---------------------------------
Name of Participating Employer
[SEAL]
/s/ W. BRUCE McCONNEL By: /s/ G. WILLING PEPPER
- ---------------------------------- ---------------------------------
W. Bruce McConnel, III, Secretary G. Willing Pepper, President
</TABLE>
A-50
<PAGE> 165
<TABLE>
<S> <C>
ATTEST: TRUST FOR FEDERAL SECURITIES
---------------------------------
Name of Participating Employer
[SEAL]
/s/ W. BRUCE McCONNEL By: /s/ G. WILLING PEPPER
- ---------------------------------- ---------------------------------
W. Bruce McConnel, III, Secretary G. Willing Pepper, President
ATTEST: MUNICIPAL FUND FOR CALIFORNIA
INVESTORS, INC.
---------------------------------
[SEAL] Name of Participating Employer
/s/ MORGAN R. JONES By: /s/ G. WILLING PEPPER
- ---------------------------------- ----------------------------------
Morgan R. Jones, Secretary G. Willing Pepper, President
ATTEST: MUNICIPAL FUND FOR NEW YORK
INVESTORS, INC.
---------------------------------
[SEAL] Name of Participating Employer
/s/ MORGAN R. JONES By: /s/ EDWARD J. ROACH
- ---------------------------------- ---------------------------------
Morgan R. Jones, Secretary Edward J. Roach, Vice President
ATTEST: PORTFOLIOS FOR DIVERSIFIED
INVESTMENT
---------------------------------
[SEAL] Name of Participating Employer
/s/ W. BRUCE McCONNEL By: /s/ G. WILLING PEPPER
- --------------------------------- ---------------------------------
W. Bruce McConnel, III, Secretary G. Willing Pepper, President
ATTEST: THE PNC(R) FUND
-----------------------------------
Name of Participating Employer
[SEAL]
/s/ MORGAN R. JONES By: /s/ G. WILLING PEPPER
- --------------------------------- ---------------------------------
Morgan R. Jones, Secretary G. Willing Pepper, President
ATTEST: THE RBB FUND, INC.
---------------------------------
Name of Participating Employer
[SEAL]
/s/ MORGAN R. JONES By: /s/ EDWARD J. ROACH
- --------------------------------- ---------------------------------
Morgan R. Jones, Secretary Edward J. Roach, President
ATTEST: PROVIDENT INSTITUTIONAL FUNDS, INC.
-----------------------------------
[SEAL] Name of Participating Employer
/s/ W. BRUCE McCONNEL By: /s/ G. WILLING PEPPER
- --------------------------------- ---------------------------------
W. Bruce McConnel, III, Secretary G. Willing Pepper, President
</TABLE>
The undersigned hereby agree(s) to serve as the Trustee(s) under the Plan and
Trust Agreement.
<TABLE>
<S> <C>
EDWARD J. ROACH ROBERT R. FORTUNE
- --------------------------------- ---------------------------------
Name of Trustee Name of Trustee
/s/ ANTHONY M. SANTOMERO /s/ ROBERT R. FORTUNE
- --------------------------------- -----------------------------
Witness Signature
/s/ LINDA G. HAGAN /s/ EDWARD J. ROACH
- --------------------------------- -----------------------------
Witness Signature
</TABLE>
A-51
