<PAGE>
File No. 811-7217
File No. 33-55753
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. __1_
Post-Effective Amendment No. ____
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 X
Amendment No. _1_
UNITED ASSET STRATEGY FUND, INC.
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(Exact Name as Specified in Charter)
6300 Lamar Avenue, Shawnee Mission, Kansas 66202-4200
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(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code (913) 236-2000
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Sharon K. Pappas, P. O. Box 29217, Shawnee Mission, Kansas 66201-9217
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(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering
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As soon as practical after effective date of Registration Statement
===========================================================================
DECLARATION REQUIRED BY RULE 24f-2 (a) (1)
The issuer has registered an indefinite amount of its securities under the
Securities Act of 1933 pursuant to Rule 24f-2(a)(1). It is anticipated that the
Notice for the Registrant's fiscal year ending September 30, 1995 will be filed
on or about November 14, 1995.
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, action pursuant to said Section 8(a),
may determine.
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UNITED ASSET STRATEGY FUND, INC.
================================
Cross Reference Sheet
=====================
Part A of
Form N-1A
Item No. Prospectus Caption
- --------- ------------------
1 ........................ Cover Page
2(a) ..................... Expenses
(b) ..................... An Overview of the Fund
(c) ..................... An Overview of the Fund
3(a) ..................... *
(b) ..................... *
(c) ..................... Performance
(d)...................... *
4(a) ..................... About the Fund
(b) ..................... About the Fund
(c) ..................... About the Fund
5(a) ..................... About the Fund
(b)...................... About the Fund; Inside Back Cover
(c) ..................... About the Fund
(d) ..................... About the Fund; Inside Back Cover
(e) ..................... About the Fund; Inside Back Cover
(f) ..................... About the Fund
(g)(i)................... *
(g)(ii).................. About the Fund
5A........................ *
6(a) ..................... About the Fund
(b) ..................... About the Fund
(c) ..................... *
(d) ..................... *
(e) ..................... About Your Account
(f)...................... About Your Account
(g) ..................... About Your Account
7(a) ..................... About the Fund; Inside Back Cover
(b) ..................... About Your Account
(c) ..................... About Your Account
(d) ..................... About Your Account
(e) ..................... *
(f) ..................... About the Fund
8(a) ..................... About Your Account
(b) ..................... *
(c) ..................... About Your Account
(d) ..................... About Your Account
9 ........................ *
Part B of
Form N-1A
Item No. SAI Caption
- --------- -----------
10(a) ..................... Cover Page
(b) ..................... *
11 ........................ Cover Page
12 ........................ *
13(a) ..................... Investment Policies and Limitations
(b) ..................... Investment Policies and Limitations
(c) ..................... Investment Policies and Limitations
(d) ..................... Investment Policies and Limitations
14(a) ..................... Directors and Officers
(b) ..................... Directors and Officers
(c) ..................... *
15(a) ..................... Organization of the Fund
(b) ..................... Organization of the Fund
(c) ..................... Directors and Officers
16(a)(i) .................. Investment Management and Other Services
(a)(ii) ................. Directors and Officers; Investment Management and
Other Services
(a)(iii) ................ Investment Management and Other Services
(b) ..................... Investment Management and Other Services
(c) ..................... Investment Management and Other Services
(d) ..................... *
(e) ..................... *
(f) ..................... Investment Management and Other Services
(g) ..................... *
(h) ..................... Investment Management and Other Services
(i) ..................... Investment Management and Other Services
17(a) ..................... Portfolio Transactions and Brokerage
(b) ..................... *
(c) ..................... Portfolio Transactions and Brokerage
(d) ..................... Portfolio Transactions and Brokerage
(e) ..................... *
18(a) ..................... Organization of the Fund
(b) ..................... *
19(a) ..................... Purchase, Redemption and Pricing of Shares
(b) ..................... Purchase, Redemption and Pricing of Shares
(c) ..................... Purchase, Redemption and Pricing of Shares
20 ........................ Taxes
21(a) ..................... Investment Management and Other Services
(b) ..................... *
(c) ..................... *
22(a) ..................... *
(b)(i) .................. Performance Information
(b)(ii) ................. Performance Information
(b)(iii) ................ *
(b)(iv) ................. Performance Information
23 ........................ *
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*Not Applicable or Negative Answer
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SUBJECT TO COMPLETION -- Information contained herein is subject to completion
or amendment. A registration statement relating to these securities has been
filed with the Securities and Exchange Commission but has not yet become
effective. These securities may not be sold nor may offers to buy be accepted
before the time the registration statement becomes effective. This prospectus
shall not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any state in which such offer,
solicitation or sale would be unlawful before registration or qualification
under the securities law of any such state.
Please read this prospectus before investing, and keep it on file for future
reference. It sets forth concisely the information about the fund that you
ought to know before investing.
Additional information has been filed with the Securities and Exchange
Commission and is contained in a Statement of Additional Information dated
_______________, 199_. The Statement of Additional Information is available
free upon request to the fund or Waddell & Reed, Inc., its underwriter, at the
address or telephone number below. The Statement of Additional Information is
incorporated by reference into this Prospectus and you will not be aware of
important facts unless you read both this Prospectus and the Statement of
Additional Information.
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.
United Asset Strategy Fund, Inc.
This asset allocation fund seeks high total return with reduced risk over the
long term through investments in stocks, bonds, and short-term instruments.
Prospectus
_______________, 199_
UNITED ASSET STRATEGY FUND, INC.
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, Kansas 66201-9217
913-236-2000
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Table of Contents
An Overview of the Fund ................ 3
Expenses ............................... 5
Performance ............................ 6
Explanation of Terms .............. 6
About Waddell & Reed ................... 8
About Your Account ..................... 9
Buying Shares ..................... 11
Minimum Investments ............... 13
Adding to Your Account ............ 14
Selling Shares .................... 14
Shareholder Services .............. 17
Personal Service ............. 17
Reports ...................... 17
Exchanges .................... 18
Automatic Transactions ....... 18
Dividends, Distributions, and Taxes 19
Distributions ................ 19
Taxes ........................ 19
About the Fund ......................... 22
WRIMCO and Its Affiliates ......... 23
Breakdown of Expenses ............. 24
Management Fee ............... 24
Other Expenses ............... 25
Investment Principles ............. 26
Securities and Investment
Practices .................... 28
Fundamental Investment Policies
and Restrictions ............. 32
<PAGE>
An Overview of the Fund
Goal: United Asset Strategy Fund, Inc. seeks high total return with reduced
risk over the long term. As with any mutual fund, there is no assurance that
the fund will achieve its goal.
Strategy: The fund diversifies among stocks, bonds, and short-term
instruments, both in the United States and abroad, to pursue its specific goal.
The fund designates a mix which represents the way the fund's investments will
generally be allocated over the long term. This mix will vary over short-term
periods as fund management adjusts the fund's holdings - within defined ranges -
based on the current outlook for the different markets.
Mix
_ Stocks 40% _ Bonds 40%
(can range (can range
from from 10-60%) 20-60%)
_ Short-term 20%
(can range from
0-70%)
Management: Waddell & Reed Investment Management Company (WRIMCO) provides
investment advice to the fund and manages the fund's investments. WRIMCO is a
wholly owned subsidiary of Waddell & Reed, Inc. WRIMCO, Waddell & Reed, Inc.
and its predecessors have provided investment management services to registered
investment companies since 1940.
Purchases: You may buy shares of the fund through Waddell & Reed, Inc. and its
sales representatives. The price to buy a share of the fund is the net asset
value of a share plus a sales charge. See "About Your Account" for information
on how to purchase shares.
Redemptions: You may redeem your shares at net asset value. When you sell your
shares, they may be worth more or less than what you paid for them. See "About
Your Account" for a description of redemption and reinvestment procedures.
Who May Want to Invest:
Asset allocation funds are designed for investors who want to diversify among
stocks, bonds, and short-term instruments, in one fund. If you are looking for
an investment that uses this technique in pursuit of high total return with
reduced risk, this fund may be appropriate for you.
Because the fund owns different types of investments, its performance will be
affected by a variety of factors. The value of the fund's investments and the
income it generates will vary from day to day, generally reflecting changes in
interest rates, market conditions, and other company and economic news.
Performance will also depend on WRIMCO's skill in allocating assets.
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Expenses
Shareholder transaction expenses are charges you pay when you buy or sell shares
of a fund.
Maximum sales load
on purchases 5.75%
Maximum sales load
on reinvested
dividends None
Deferred
sales load None
Redemption feesNone
Exchange fee None
Annual fund operating expenses.
Management fees1%
12b-1 fees2 .25%
Other expenses3 %
Total fund
operating expenses %
Example: 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 $
3 years $
The purpose of the table is to assist you in understanding the various costs
and expenses that a shareholder of the fund will bear directly or indirectly.
The expenses are pro forma and estimated for the first year of operations
because the fund has not yet commenced operations. The example should not be
considered a representation of past or future expenses; actual expenses may be
greater or lesser than those shown. For a more complete discussion of certain
expenses and fees, see "Breakdown of Expenses".
1 The Management fee for the fund is higher than that of most funds.
2Expense information reflects the maximum 12b-1 service fee. See "Breakdown of
Expenses" for further information about the 12b-1 service fee.
3Estimated expenses for the first fiscal year of operation. Actual expenses may
be greater or lesser than those shown.
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Performance
Mutual fund performance is commonly measured as total return. The fund may also
advertise its performance by showing yield and performance rankings.
Explanation of Terms
Total Return is the overall change in value of an investment in the fund over a
given period, assuming reinvestment of any dividends and distributions. A
cumulative total return reflects actual performance over a stated period of
time. An average annual total return is a hypothetical rate of return that, if
achieved annually, would have produced the same cumulative total return if
performance had been constant over the entire period. Average annual total
returns smooth out variations in performance; they are not the same as actual
year-by-year results. Standardized total return figures reflect payment of the
maximum sales charge. The fund may also provide non-standardized performance
information which does not reflect deduction of the sales charge or which is for
periods other than those required to be presented or which differs otherwise
from standardized performance information.
Yield refers to the income generated by an investment in the fund over a given
period of time, expressed as an annual percentage rate. A fund's yield is based
on a 30-day period ending on a specific date and is computed by dividing the
fund's net investment income per share earned during the period by the fund's
maximum offering price per share on the last day of the period.
Performance Rankings are comparisons of the fund's performance to the
performance of other selected mutual funds, selected recognized market
indicators such as the Standard & Poor's 500 Stock Index and the Dow Jones
Industrial Average, or non-market indices or averages of mutual fund industry
groups. The fund may quote its performance rankings and/or other information as
published by recognized independent mutual fund statistical services or by
publications of general interest. In connection with a ranking, the fund may
provide additional information, such as the particular category to which it
relates, the number of funds in the category, the criteria upon which the
ranking is based, and the effect of sales charges, fee waivers and/or expense
reimbursements.
All performance information that the fund advertises or includes in information
provided to present or prospective shareholders is historical in nature and is
not intended to represent or guarantee future results. The value of the fund's
shares when redeemed may be more or less than their original cost.
The fund's recent performance and holdings will be detailed twice a year in the
fund's annual and semiannual reports, which are sent to all shareholders.
<PAGE>
About Waddell & Reed
Since 1937, Waddell & Reed has been helping people make the most of their
financial future by helping them take advantage of various financial services.
Today, Waddell & Reed has over 2500 sales representatives located throughout the
United States. Your primary contact in your dealings with Waddell & Reed will
be your local sales representative. However, the Waddell & Reed shareholder
services department which is part of the Waddell & Reed headquarters operations
in Overland Park, Kansas is available to assist you and your Waddell & Reed
sales representative. You may speak with a customer service representative by
calling 913-236-2000.
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About Your Account
The different ways to set up (register) your account are listed below.
Ways to Set Up Your Account
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Individual or Joint Tenants
For your general investment needs
Individual accounts are owned by one person. Joint accounts can have two or
more owners (tenants).
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Business or Organization
For investment needs of corporations, associations, partnerships, institutions,
or other groups
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Retirement
To shelter your retirement savings from taxes
Retirement plans allow individuals to shelter investment income and capital
gains from current taxes. In addition, contributions to these accounts may be
tax deductible.
_ Individual Retirement Accounts (IRAs) allow anyone of legal age and under 70/
with earned income to invest up to $2,000 per tax year. The maximum is $2,250
if the investor's spouse has less than $250 of earned income in the taxable
year.
_ Rollover IRAs retain special tax advantages for certain distributions from
employer-sponsored retirement plans.
_ Simplified Employee Pension Plans (SEP - IRAs) provide small business owners
or those with self-employed income (and their eligible employees) with many of
the same advantages as a Keogh, but with fewer administrative requirements.
_ Keogh Plans allow self-employed individuals to make tax-deductible
contributions for themselves up to 25% of their annual earned income, with a
maximum of $30,000 per year.
_ 401(k) Programs allow employees of corporations of all sizes to contribute a
percentage of their wages on a tax-deferred basis. These accounts need to be
established by the administrator or trustee of the plan.
_ 403(b) Custodial Accounts are available to employees of public school systems
or certain types of charitable organizations.
_ 457 Accounts allow employees of state and local governments and certain
charitable organizations to contribute a portion of their compensation on a
tax-deferred basis.
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Gifts or transfers to a Minor (UGMA, UTMA)
To invest for a child's education or other future needs
These custodial accounts provide a way to give money to a child and obtain tax
benefits. An individual can give up to $10,000 a year per child without paying
federal gift tax. Depending on state laws, you can set up a custodial account
under the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors
Act (UTMA).
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Trust
For money being invested by a trust
The trust must be established before an account can be opened, or you may use a
trust form made available by Waddell & Reed. Contact your Waddell & Reed sales
representative for the form.
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<PAGE>
Buying Shares
You may buy shares of the fund through Waddell & Reed, Inc. and its sales
representatives. To open your account you must complete and sign an
application. Your Waddell & Reed sales representative can help you with any
questions you might have.
The price to buy a share of the fund, called the offering price, is calculated
every business day.
The offering price (price to buy one share) is the fund's net asset value (NAV)
plus the sales charge shown in the table to the right.
Sales
Sales Charge
Charge as
as Approx.
Percent Percent
of of
Size of Offering Amount
Purchase Price Invested
- -------- -------- --------
Under
$100,000 5.75% 6.10%
$100,000
to less
than
$200,000 4.75 4.99
$200,000
to less
than
$300,000 3.50 3.63
$300,000
to less
than
$500,000 2.50 2.56
$500,000
to less
than
$1,000,000 1.50 1.52
$1,000,000
to less
than
$2,000,000 1.00 1.01
$2,000,000
and over 0.00 0.00
The fund's NAV is the value of a single share. The NAV is computed by adding up
the value of the fund's investments, cash, and other assets, subtracting its
liabilities, and then dividing the result by the number of shares outstanding.
The fund's portfolio securities listed or traded on an exchange are valued
primarily using market quotations or, if market quotations are not available, at
their fair value in a manner determined in good faith by the Board of Directors.
Bonds are generally valued using a pricing system provided by a major dealer in
bonds. Debt securities with remaining maturities of sixty days or less are
valued at amortized cost, which approximates market value. Other assets are
valued at their fair value.
The fund is open for business each day the New York Stock Exchange (NYSE) is
open. The fund normally calculates its net asset value as of the latter of the
close of business of the NYSE, normally 4 p.m. Eastern time, or the close of the
regular session of any other securities or commodities exchange on which an
option or future held by the fund is traded.
When you place an order to buy shares, your order will be processed at the next
offering price calculated after your order is received and accepted. Note the
following:
Orders are accepted only at the home office of Waddell & Reed, Inc.
All of your purchases must be made in U.S. dollars.
If you buy shares by check, and then sell those shares by any method other
than by exchange to another fund in the United Group, the payment may be
delayed for up to ten days to ensure that your previous investment has
cleared.
The fund does not issue certificates representing shares of the fund.
When you sign your account application, you will be asked to certify that your
Social Security or taxpayer identification number is correct and that you are
not subject to backup withholding for failing to report income to the IRS.
Waddell & Reed, Inc. reserves the right to reject any purchase orders, including
purchases by exchange, and it and the fund reserve the right to discontinue
offering fund shares for purchase.
Lower sales charges are available by combining additional purchases of any of
the funds in the United Group, to the extent otherwise permitted, except United
Municipal Bond Fund, Inc., United Cash Management, Inc., United Government
Securities Fund, Inc. and United Municipal High Income Fund, Inc., with the net
asset value of shares already held ("rights of accumulation") and by grouping
all purchases made during a thirteen-month period ("Statement of Intention").
Shares of another fund purchased through a "contractual plan" may not be
included unless the plan has been completed. Purchases by certain related
persons may be grouped. Additional information and applicable forms are
available from Waddell & Reed sales representatives.
Fund shares may be purchased at net asset value by the Directors and officers of
the fund, employees of Waddell & Reed, Inc., employees of their affiliates,
sales representatives of Waddell & Reed, Inc. and the spouse, children, parents,
children's spouses and spouse's parents of each such Director, officer, employee
and sales representative. Purchases in certain retirement plans and certain
trusts for these persons may also be made at net asset value. Purchases in a
401(k) plan having 100 or more eligible employees and purchases in a 457 plan
having 100 or more eligible employees may be made at net asset value. Shares
may also be issued at net asset value in a merger, acquisition or exchange offer
made pursuant to a plan of reorganization to which the fund is a party.
Minimum Investments
To Open an Account $500
For certain
exchanges $100
For certain
retirement
accounts and
accounts opened
through Automatic
Investment Service $50
For certain
retirement
accounts and
accounts opened
through payroll
deductions for or
by employees of
WRIMCO, Waddell &
Reed, Inc. and
their affiliates$25
To Add to an Account
For certain
exchanges $100
For Automatic
Investment
Service $25
<PAGE>
Adding to Your Account
Subject to the minimums described under "Minimum Investments," you can make
additional investments of any amount at any time.
To add to your account, make your check payable to Waddell & Reed, Inc. Mail
the check along with:
the detachable form that accompanies the confirmation of a prior purchase by
you or your year-to-date statement, or
a letter showing your account number, the account registration, and stating
that you wish to purchase shares of United Asset Strategy Fund, Inc.
Mail to Waddell & Reed, Inc. at the address printed on your confirmation or
year-to-date statement.
Selling Shares
You can arrange to take money out of your fund account at any time by selling
(redeeming) some or all of your shares.
The redemption price (price to sell one share) is the fund's NAV.
To sell shares, your request must be made in writing.
Complete an Account Service Request form, available from your Waddell & Reed
sales representative, or write a "letter of instruction" with:
the name on the account registration,
the fund's name,
the fund account number,
the dollar amount or number of shares to be redeemed, and
any other applicable requirements listed in the table on the next page.
Deliver the form or your letter to your Waddell & Reed sales representative, or
mail it to:
Waddell & Reed, Inc.
P.O. Box 29217
Shawnee Mission, Kansas 66201-9217
Unless otherwise instructed, Waddell & Reed will send a check to the address on
the account.
<PAGE>
Account Type Special Requirements
- --------------- --------------------------
Individual or The written instructions
Joint Tenant must be signed by all
persons required to sign
for transactions, exactly
as their names appear on
the account.
Sole The written instructions
Proprietorship must be signed by the
individual owner of the
business.
UGMA, UTMA The custodian must sign
the written instructions
indicating capacity as
custodian.
Retirement The written instructions
account must be signed by a
properly authorized
person.
Trust The trustee must sign the
written instructions
indicating capacity as
trustee. If the trustee's
name is not in the account
registration, provide a
currently certified copy
of the trust document.
Business or At least one person
Organization authorized by corporate
resolution to act on the
account must sign the
written instructions.
Conservator, The written instructions
Guardian or must be signed by the
other fiduciary person properly authorized
by court order to act in
the particular fiduciary
capacity.
When you place an order to sell shares, your shares will be sold at the next NAV
calculated after your request is received and accepted. Note the following:
Written requests for redemption must be in good order, which requires that if
more than one person owns the shares, each owner must sign the written
request.
If you recently purchased the shares by check, the fund may delay payment of
redemption proceeds. You may arrange for the bank upon which the purchase
check was drawn to provide to the fund telephone or written assurance,
satisfactory to the fund, that the check has cleared and been honored. If no
such assurance is given, payment of the redemption proceeds on these shares
will be delayed until the earlier of 10 days or the date the fund is able to
verify that your purchase check has cleared and been honored.
Redemptions may be suspended or payment dates postponed on days when the NYSE
is closed (other than weekends or holidays), when trading on the NYSE is
restricted, or as permitted by the Securities and Exchange Commission.
Payment is normally made in cash, although under extraordinary conditions
redemptions may be made in portfolio securities.
The fund reserves the right to require a signature guarantee on certain
redemption requests. This requirement is designed to protect you and Waddell &
Reed from fraud. The fund may require a signature guarantee in certain
situations such as:
the request for redemption is made by a corporation, partnership or
fiduciary,
the request for redemption is made by someone other than the owner of record,
or
the check is being made payable to someone other than the owner of record.
The fund will accept a signature guarantee from a national bank, a federally
chartered savings and loan or a member firm of a national stock exchange or
other eligible guarantor in accordance with procedures of the fund's transfer
agent. A notary public cannot provide a signature guarantee.
The fund reserves the right to redeem at NAV all shares of the fund owned or
held by you having an aggregate NAV of less than $500. The fund will give you
notice of its intention to redeem your shares and a 60-day opportunity to
purchase a sufficient number of additional shares to bring the aggregate NAV of
your shares to $500.
You may reinvest in the fund without charge all or part of the amount you
redeemed by sending to the fund the amount you want to reinvest. The reinvested
amounts must be received by the fund within thirty days after the date of your
redemption. You may do this only once as to shares of the fund.
Under the terms of the 401(k) prototype plan which Waddell & Reed, Inc. has
available, the plan may have the right to make a loan to a plan participant by
redeeming fund shares held by the plan. Principal and interest payments on the
loan made in accordance with the terms of the plan may be reinvested by the
plan, without payment of a sales charge, in shares of any of the funds in the
United Group in which the plan may invest.
<PAGE>
Shareholder Services
Waddell & Reed provides a variety of services to help you manage your account.
Personal Service
Your local Waddell & Reed sales representative is available to provide personal
service. Additionally, the Waddell & Reed Customer Services staff is available
to respond promptly to your inquiries and requests.
Reports
Statements and reports sent to you include the following:
confirmation statements (after every purchase, exchange, transfer or
redemption)
year-to-date statements (quarterly)
annual and semiannual reports (every six months)
To reduce expenses, only one copy of most annual and semiannual reports will be
mailed to your household, even if you have more than one account with the fund.
Call 913-236-2000 if you need copies of annual or semiannual reports or
historical account information.
Exchanges
You may sell your fund shares and buy shares of other funds in the United Group
without payment of an additional sales charge. Subject to certain conditions,
exchanges of shares of certain other funds in the United Group and automatic
monthly exchanges of shares of United Cash Management, Inc. may be made into the
fund.
Note that exchanges out of the fund may have tax consequences for you. Before
exchanging into a fund, read its prospectus.
The fund reserves the right to terminate or modify these exchange privileges at
any time, upon notice in certain instances.
Automatic Transactions
Flexible withdrawal service lets you set up monthly, quarterly, semiannual or
annual redemptions from your account.
Regular Investment Plans
allow you to transfer money into your fund account, or between fund accounts,
automatically. While regular investment plans do not guarantee a profit and
will not protect you against loss in a declining market, they can be an
excellent way to invest for retirement, a home, educational expenses, and other
long-term financial goals.
Certain restrictions and fees imposed by the plan custodian may also apply
for retirement accounts. Speak with your Waddell & Reed sales representative
for more information.
Regular Investment Plans
Automatic Investment Service
To move money from your bank account to an
existing account with the United Group
Minimum Frequency
$25 Monthly
Funds Plus Service
To move money from United Cash Management, Inc.
to another fund in the United Group, whether in
the same or a different account
Minimum Frequency
$100 Monthly
<PAGE>
Dividends, Distributions, and Taxes
Distributions
The fund distributes substantially all of its net income and capital gains to
shareholders each year. Ordinarily, dividends are distributed in March, June,
September and December from the fund's net investment income, which includes
accrued interest, earned discount, dividends and other income earned on
portfolio assets less expenses. Capital gains (and any net realized gains from
foreign currency transactions) ordinarily are distributed in December. The fund
may make additional distributions if necessary to avoid federal income or excise
taxes on its undistributed income and capital gains.
Distribution Options.
When you open an account, specify on your application how you want to receive
your distributions. The fund offers three options:
1. Share Payment Option. Your dividend and capital gains distributions will be
automatically paid in additional shares of the fund. If you do not indicate a
choice on your application, you will be assigned this option.
2. Income-Earned Option. Your capital gains distributions will be
automatically paid in shares, but you will be sent a check for each dividend
distribution.
3. Cash Option. You will be sent a check for your dividends and capital gains
distributions.
For retirement accounts, all distributions are automatically paid in shares.
Taxes
The fund intends to qualify for treatment as a regulated investment company
under the Internal Revenue Code of 1986 so that it will be relieved of Federal
income tax on that part of its investment company taxable income (consisting
generally of net investment income, net short-term capital gains and net gains
from certain foreign currency transactions) and net capital gains (the excess of
net long-term capital gain over net short term capital loss) that are
distributed to its shareholders.
There are tax requirements that all funds must follow in order to avoid federal
taxation. In its effort to adhere to these requirements, the fund may have to
limit its investment activity in some types of instruments.
As with any investment, you should consider how your investment in the fund will
be taxed. If your account is not a tax-deferred retirement account, you should
be aware of the following tax implications:
Taxes on distributions. Dividends from the fund's investment company taxable
income are taxable to you as ordinary income whether received in cash or paid in
additional fund shares. Distributions of the fund's realized net capital gains,
when designated as such, are taxable to you as long-term capital gains, whether
received in cash or reinvested in additional fund shares and regardless of the
length of time you have owned your shares. The fund notifies you after each
calendar year-end as to the amounts of dividends and distributions paid (or
deemed paid) to you for that year.
A portion of the dividends paid by the fund, whether received in cash or paid in
additional fund shares, may be eligible for the dividends-received deduction
allowed to corporations. The eligible portion may not exceed the aggregate
dividends received by the fund from U.S. corporations. However, dividends
received by a corporate shareholder and deducted by it pursuant to the
dividends-received deduction are subject indirectly to the alternative minimum
tax.
Withholding. The fund is required to withhold 31% of all dividends,
distributions and redemption proceeds payable to individuals and certain other
noncorporate shareholders who do not furnish the fund with a correct taxpayer
identification number. Withholding at that rate from dividends and
distributions also is required for such shareholders who otherwise are subject
to backup withholding.
Taxes on transactions. Your redemption of fund shares will result in taxable
gain or loss to you, depending on whether the redemption proceeds are more or
less than your adjusted basis for the redeemed shares (which normally includes
any sales charge paid). An exchange of fund shares for shares of any other fund
in the United Group generally will have similar tax consequences. However,
special rules apply when you dispose of fund shares through a redemption or
exchange within ninety days after your purchase thereof and subsequently
reacquire fund shares or acquire shares of another fund in the United Group
without paying a sales charge due to the thirty-day reinvestment privilege or
exchange privilege. See "About Your Account." In these cases, any gain on the
disposition of the fund shares would be increased, or loss decreased, by the
amount of the sales charge you paid when those shares were acquired, and that
amount will increase the adjusted basis of the shares subsequently acquired. In
addition, if you purchase fund shares within thirty days before or after
redeeming other fund shares at a loss, part or all of that loss will not be
deductible and will increase the basis of the newly purchased shares.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting the fund and its shareholders. There may be
other federal, state or local tax considerations applicable to a particular
investor. You are urged to consult your own tax adviser.
<PAGE>
About the Fund
United Asset Strategy Fund, Inc. is a mutual fund: an investment that pools
shareholders' money and invests it toward a specified goal. In technical terms,
the fund is an open-end diversified management investment company organized as a
corporation under Maryland law on August 25, 1994.
The fund is governed by a Board of Directors, which has overall responsibility
for the management of the fund's affairs. The majority of directors are not
affiliated with Waddell & Reed, Inc.
The fund does not hold annual meetings of shareholders; however, certain
significant corporate matters, such as the approval of a new investment advisory
agreement or a change in a fundamental investment policy, which require
shareholder approval will be presented to shareholders at a meeting called by
the Board of Directors for such purpose.
Special meetings of shareholders may be called for any purpose upon receipt by
the fund of a request in writing signed by shareholders holding not less than
25% of all shares entitled to vote at such meeting, provided certain conditions
stated in the Bylaws of the fund are met. There will normally be no meeting of
the shareholders for the purpose of electing directors until such time as less
than a majority of directors holding office have been elected by shareholders,
at which time the directors then in office will call a shareholders' meeting for
the election of directors. To the extent that Section 16(c) of the Investment
Company Act of 1940, as amended, ("1940 Act") applies to the fund, the directors
are required to call a meeting of shareholders for the purpose of voting upon
the question of removal of any director when requested in writing to do so by
the shareholders of record of not less than 10% of the fund's outstanding
shares.
The fund only has one class of shares. Each share has the same rights to
dividends and to vote. Shares are fully paid and nonassessable when bought.
As of ____________, 199_, _____________ owned of record and beneficially ____ of
the fund's outstanding shares.
WRIMCO and Its Affiliates
The fund is managed by WRIMCO, subject to the authority of the fund's Board of
Directors. WRIMCO provides investment advice to the fund and supervises the
fund's investments. Waddell & Reed, Inc. and its predecessors served as
investment manager to each of the registered investment companies in the United
Group of Mutual Funds since 1940 or the inception of the company, whichever was
later, and to TMK/United Funds, Inc. since that fund's inception, until January
8, 1992, when it assigned its duties as investment manager and assigned its
professional staff for investment management services to WRIMCO. WRIMCO has
also served as investment manager for Waddell & Reed Funds, Inc. since its
inception in September 1992 and Torchmark Government Securities Fund, Inc. and
Torchmark Insured Tax-Free Fund, Inc. since each commenced operations in
February 1993.
James D. Wineland is primarily responsible for the day-to-day management of
the portfolio of the fund. Mr. Wineland has held his fund responsibilities
since the inception of the fund. He is Vice President of WRIMCO, Vice President
of the fund and Vice President of other investment companies for which WRIMCO
serves as investment manager. Mr. Wineland has served as the portfolio manager
of investment companies managed by Waddell & Reed, Inc. and WRIMCO since January
1988. He has been an employee of WRIMCO since January 8, 1992 and, prior to
that, was an employee of Waddell & Reed, Inc. since November 19, 1984. Other
members of WRIMCO's investment management department provide input on market
outlook, economic conditions, investment research and other considerations
relating to the fund's investments.
Waddell & Reed, Inc. serves as the fund's underwriter and as underwriter for
each of the other funds in the United Group of Mutual Funds, Waddell & Reed
Funds, Inc., and TMK/United Funds, Inc. Waddell & Reed Services Company acts as
transfer agent ("Shareholder Servicing Agent") for the fund and processes the
payments of dividends. Waddell & Reed Services Company also acts as agent
("Accounting Services Agent") in providing bookkeeping and accounting services
and assistance to the fund and pricing daily the value of shares of the fund.
WRIMCO and Waddell & Reed Services Company are subsidiaries of Waddell & Reed,
Inc. Waddell & Reed, Inc. is a direct subsidiary of Waddell & Reed Financial
Services, Inc., a holding company and an indirect subsidiary of United Investors
Management Company, a holding company, and Torchmark Corporation, a holding
company.
WRIMCO places transactions for the fund's portfolio and in doing so may consider
sales of shares of the fund and other funds it manages as a factor in the
selection of brokers to execute portfolio transactions.
<PAGE>
Breakdown of Expenses
Like all mutual funds, the fund pays fees related to its daily operations.
Expenses paid out of the fund's assets are reflected in its share price or
dividends; they are neither billed directly to shareholders nor deducted from
shareholder accounts.
The fund pays a management fee to WRIMCO for providing investment advice and
supervising its investments. The fund also pays other expenses, which are
explained on the next page.
Management Fee
The management fee is accrued and paid to WRIMCO daily. The fee is calculated
by adding a group fee to a specific fee.
The specific fee is computed on the fund's net assets as of the close of
business each day at the annual rate of .30 of 1% of net assets. The group fee
is a pro rata participation based on the relative net asset size of the fund in
the group. The fee is computed each day on the combined net asset values of all
the funds in the United Group at the annual rates shown in the following table.
Growth in assets of the United Group assures a lower group fee rate. When the
group net asset level is $750,000,000 or less, the management fee for the fund
is higher than that of most funds.
Group Fee Rate
Annual
Group Net Group
Asset Level Fee Rate
(all dollars For Each
in millions) Level
- ------------ ---------
From $0
to $750 .51 of 1%
From $750
to $1,500 .49 of 1%
From $1,500
to $2,250 .47 of 1%
From $2,250
to $3,000 .45 of 1%
From $3,000
to $3,750 .43 of 1%
From $3,750
to $7,500 .40 of 1%
From $7,500
to $12,000 .38 of 1%
Over $12,000 .36 of 1%
Other Expenses
While the management fee is a significant component of the fund's annual
operating costs, the fund has other expenses as well.
The fund pays the Accounting Services Agent a monthly fee based on the average
net assets of the fund for accounting services. The fund pays the Shareholder
Servicing Agent a monthly fee for each account that was in existence at any time
during the month and a fee for each account on which a dividend or distribution
had a record date during the month.
The fund also pays other expenses, such as fees and expenses of certain
directors, audit and outside legal fees, costs of materials sent to
shareholders, taxes, brokerage commissions, interest, insurance premiums,
custodian fees, fees payable by the fund under Federal or other securities laws
and to the Investment Company Institute, and extraordinary expenses including
litigation and indemnification relative to litigation.
The fund has adopted a Service Plan pursuant to Rule 12b-1 of the 1940 Act. The
Plan became effective as of the date of this prospectus. Under the Plan, the
fund may pay monthly a fee to Waddell & Reed, Inc. in an amount not to exceed
.25% of the fund's average annual net assets. The fee is to be paid to
reimburse Waddell & Reed, Inc. for amounts it expends in connection with the
provision of personal services to fund shareholders and/or maintenance of
shareholder accounts. In particular, the Service Plan and a related Service
Agreement between the fund and Waddell & Reed, Inc. contemplate that these
expenditures may include costs and expenses incurred by Waddell & Reed, Inc. and
its affiliates in compensating, training and supporting registered sales
representatives, sales managers and/or other appropriate personnel in providing
personal services to fund shareholders and/or maintaining shareholder accounts;
increasing services provided to fund shareholders by office personnel located at
field sales offices; engaging in other activities useful in providing personal
services to fund shareholders and/or the maintenance of shareholder accounts;
and in compensating broker-dealers who may regularly sell fund shares, and other
third parties, for providing shareholder services and/or maintaining shareholder
accounts.
The fund cannot precisely predict what its portfolio turnover rate will be, but
it is anticipated that the annual turnover rate for the common stock portion of
its portfolio will not exceed 200% and that the annual turnover rate for the
other potion of its portfolio will not exceed 200%. A higher turnover will
increase transaction and commission costs and could generate taxable income or
loss.
Investment Principles
The fund seeks high total return with reduced risk over the long term by
allocating its assets among stocks, bonds, and short-term instruments.
Allocating assets among different types of investments allows the fund to take
advantage of opportunities wherever they may occur, but also subjects the fund
to the risks of a given investment type. Stock values generally fluctuate in
response to the activities of individual companies and general market and
economic conditions. The value of bonds and short-term instruments generally
fluctuates based on changes in interest rates and in the credit quality of the
issuer.
WRIMCO regularly reviews the fund's allocation of assets and makes changes to
favor investments that it believes provide the most favorable outlook for
achieving the fund's goal. Although WRIMCO uses its expertise and resources in
choosing investments and in allocating assets, WRIMCO's decisions may not always
be advantageous to the fund. When you sell your shares, they may be worth more
or less than what you paid for them.
The fund allocates its assets among the following classes, or types, of
investments. The stock class includes equity securities of all types. The bond
class includes all varieties of fixed-income instruments with maturities of more
than three years (including adjustable rate preferred stocks). The short-term
class includes all types of short-term instruments with remaining maturities of
three years or less. Within each of these classes, the fund may aggressively
invest in both domestic and foreign securities.
WRIMCO has the ability to allocate the fund's assets within specified ranges.
The fund's mix indicates the benchmark for its combination of investments in
each class over time. WRIMCO may change the mix within the specified ranges
from time to time. The range and approximate percentage of the mix for each
asset class are shown below. Some types of investments, such as indexed
securities, can fall into more than one asset class. The fund may also make
other investments that do not fall within these classes if WRIMCO believes that
doing so will help the fund achieve its goal.
Mix Range
- --------- ------
Stock
class 10-60%
40%
Bond
class 20-60%
40%
Short-term
class 0-70%
20%
The fund's approach spreads the fund's assets among all three classes,
attempting to moderate both the risk and return potential of stocks, bonds, and
short-term instruments.
In pursuit of the fund's goal, WRIMCO will not try to pinpoint the precise
moment when a major reallocation should be made. Asset shifts among classes may
be made gradually over time. Under normal circumstances, a single reallocation
will not involve more than 10% of the fund's total assets.
In addition to allocating the fund's assets among the three classes, WRIMCO
seeks to maximize total return within each class. WRIMCO seeks to maximize
total return within the stock class by actively allocating assets to industry
sectors expected to benefit from major trends, and to individual stocks that
WRIMCO believes to have superior growth potential. WRIMCO seeks to maximize
total return within the bond class by adjusting the fund's investments in
securities with different credit qualities, maturities, and coupon or dividend
rates, and by seeking to take advantage of yield differentials between
securities. WRIMCO seeks to maximize total return within the short-term asset
class by taking advantage of yield differentials between different instruments,
issuers, and currencies. WRIMCO intends to take advantage of yield
differentials by considering the purchase or sale of instruments when
differentials on spreads between various grades and maturities of such
instruments approach extreme levels relative to long-term norms.
WRIMCO normally invests the fund's assets according to its investment strategy;
however, as a temporary defensive measure at times when WRIMCO believes that
stocks, bonds and certain short-term instruments do not offer a good investment
opportunity, it may temporarily invest up to all of the fund's assets in money
market instruments rated A-1 by Standard & Poor's Ratings Group ("S&P") or Prime
1 by Moody's Investor's Service ("MIS"), or unrated securities judged by WRIMCO
to be of equivalent quality.
The fund diversifies across investment types more than most mutual funds. No
one mutual fund, however, can provide an appropriate balanced investment plan
for all investors.
Securities and Investment Practices
The following pages contain more detailed information about types of instruments
in which the fund may invest, and strategies WRIMCO may employ in pursuit of the
fund's investment goal. A summary of risks and restrictions associated with
these instrument types and investment practices is included as well. Policies
and limitations are typically considered at the time of purchase; the sale of
instruments is usually not required in the event of a subsequent change in
circumstances.
WRIMCO might not buy all of these instruments or use all of these techniques to
the full extent permitted unless it believes that doing so will help the fund
achieve its goal. As a shareholder, you will receive annual and semiannual
reports detailing the fund's holdings.
Equity Securities. Equity securities represent an ownership interest in an
issuer. This ownership interest often gives the fund the right to vote on
measures affecting the issuer's organization and operations. Although common
stocks and other equity securities have a history of long-term growth in value,
their prices tend to fluctuate in the short term, particularly those of smaller
companies.
Restrictions: With respect to 75% of total assets, the fund may not own more
than 10% of the outstanding voting securities of a single issuer.
Debt Securities. Bonds and other debt instruments are used by issuers to borrow
money from investors. The issuer pays the investor a fixed or variable rate of
interest, and must repay the amount borrowed at maturity. Some debt securities,
such as zero coupon bonds, do not pay current interest, but are purchased at a
discount from their face values.
Debt securities have varying degrees of quality and varying levels of
sensitivity to changes in interest rates. Longer-term bonds are generally more
sensitive to interest rate changes than shorter-term bonds. Debt securities
rated AAA, AA, A and BBB by S&P or Aaa, Aa, A and Baa by MIS, or unrated
securities which are, in WRIMCO's opinion, of equivalent quality to rated
securities in these categories, are considered to be of investment grade
quality. Debt securities rated in the lowest investment grade category (BBB by
S&P or Baa by MIS), or comparable unrated securities, may have speculative
characteristics. Debt securities rated in the lower rating categories of the
established rating services (BB or lower by S&P or Ba or lower by MIS), or
comparable unrated securities, have speculative characteristics with respect to
capacity to pay interest and repay principal in accordance with the terms of the
obligation. The fund may invest in debt securities rated in any rating category
of the established rating services, as described in Appendix A to the SAI, and
unrated securities judged by WRIMCO to be of equivalent quality. Debt
securities rated D by S&P or C by MIS are in payment default or are regarded as
having extremely poor prospects of ever attaining any real investment standing.
Credit ratings for individual securities may change from time to time, and the
fund may retain a portfolio security whose rating has been changed.
U.S. government securities are high-quality instruments issued or guaranteed as
to principal or interest by the U.S. Treasury or by an agency or instrumentality
of the U.S. government. Not all U.S. government securities are backed by the
full faith and credit of the United States. Some are supported only by the
credit of the agency that issued them.
Zero coupon bonds do not make interest payments; instead, they are sold at a
deep discount from their face value and are redeemed at face value when they
mature. Because zero coupon bonds do not pay current income, their prices can
be very volatile when interest rates change. In calculating its dividends, the
fund takes into account as income a portion of the difference between a zero
coupon bond's purchase price and its face value.
Lower-quality debt securities (commonly called "junk bonds") are often
considered to be speculative and involve greater risk of default or price
changes due to changes in the issuer's creditworthiness. The market prices of
these securities may fluctuate more than high-quality securities and may decline
significantly in periods of general economic difficulty. While the market for
high yield, high-risk corporate debt securities has been in existence for many
years and has weathered previous economic downturns, the 1980s has brought a
dramatic increase in the use of such securities to fund highly leveraged
corporate acquisitions and restructurings. Past experience may not provide an
accurate indication of the future performance of the high-yield, high-risk bond
market, especially during periods of economic recession. In fact, from 1989 to
1991, the percentage of lower-rated debt securities that defaulted rose
significantly above prior levels, although the default rate decreased in 1992.
The market for lower-rated debt securities may be thinner and less active than
that for higher-rated debt securities, which can adversely affect the prices at
which the former are sold. Adverse publicity and changing investor perceptions
may decrease the values and liquidity of lower-rated debt securities, especially
in a thinly-traded market. Valuation becomes more difficult and judgment plays
a greater role in valuing lower-rated debt securities than with respect to
securities for which more external sources of quotations and last sale
information are available. Since the risk of default is higher for lower-rated
debt securities, WRIMCO's research and credit analysis are an especially
important part of managing securities of this type held by the fund. WRIMCO
continuously monitors the issuers of lower-rated debt securities in its
portfolio in an attempt to determine if the issuers will have sufficient cash
flow and profits to meet required principal and interest payments. The fund may
choose, at its expense or in conjunction with others, to pursue litigation or
otherwise to exercise its rights as a security holder to seek to protect the
interests of security holders if it determines this to be in the best interest
of the fund's shareholders.
Restrictions: The fund may not invest more than 35% of its assets in lower-
quality debt securities (those rated below Baa by MIS or BBB by S&P and unrated
securities judged by WRIMCO to be of equivalent quality). However, the fund
does not currently intend to invest more than 20% of its total assets in
securities rated below investment-grade or judged by WRIMCO to be of equivalent
quality.
Money Market Instruments are high-quality instruments that present minimal
credit risk. They may include U.S. government obligations, commercial paper and
other short-term corporate obligations, and certificates of deposit, bankers'
acceptances, bank deposits, and other financial institution obligations. These
instruments may carry fixed or variable interest rates. The fund does not
currently intend to invest in money-market instruments rated below A-1 by S&P or
Prime 1 by MIS, or judged by WRIMCO to be of equivalent quality.
Foreign Securities and foreign currencies can involve significant risks in
addition to the risks inherent in U.S. investments. The value of securities
denominated in or indexed to foreign currencies, and of dividends and interest
from such securities, can change significantly when foreign currencies
strengthen or weaken relative to the U.S. dollar. Foreign securities markets
generally have less trading volume and less liquidity than U.S. markets, and
prices on some foreign markets can be highly volatile. Many foreign countries
lack uniform accounting and disclosure standards comparable to those applicable
to U.S. companies, and it may be more difficult to obtain reliable information
regarding an issuer's financial condition and operations. In addition, the
costs of foreign investing, including withholding taxes, brokerage commissions,
and custodial costs, are generally higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign security trading practices, including those
involving the release of assets in advance of payment, may involve increased
risks in the event of a failed trade or the insolvency of a broker-dealer, and
may involve substantial delays. It may also be difficult to enforce legal
rights in foreign countries.
Investing abroad also involves different political and economic risks. Foreign
investments may be affected by actions of foreign governments adverse to the
interests of U.S. investors, including the possibility of expropriation or
nationalization of assets, confiscatory taxation, restrictions on U.S.
investment or on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. There may be a greater possibility
of default by foreign governments or foreign government-sponsored enterprises.
Investments in foreign countries also involve a risk of local political,
economic, or social instability, military action or unrest, or adverse
diplomatic developments. There is no assurance that WRIMCO will be able to
anticipate or counter these potential events or counter their effects.
The considerations noted above generally are intensified for investments in
developing countries. Developing countries may have relatively unstable
governments, economies based on only a few industries, and securities markets
that trade a small number of securities.
The fund may invest in foreign securities that impose restrictions on transfer
within the U.S. or to U.S. persons. Although securities subject to transfer
restrictions may be marketable abroad, they may be less liquid than foreign
securities of the same class that are not subject to such restrictions.
Restrictions: Under normal conditions, the fund intends to limit its
investments in foreign securities to no more than 50% of total assets. The fund
currently intends to limit its investments in obligations of any single foreign
government to less than 25% of its total assets.
Adjusting Investment Exposure. The fund can use various techniques to increase
or decrease its exposure to changing security prices, interest rates, currency
exchange rates, commodity prices, or other factors that affect security values.
These techniques may involve derivative transactions such as buying and selling
options and futures contracts, entering into currency exchange contracts or swap
agreements, and purchasing indexed securities.
Options offer large amounts of leverage, which will result in the fund's net
asset value being more sensitive to changes in the value of the related
investment. There is no assurance that a liquid secondary market will exist for
exchange-listed options. The market for options which are not listed on an
exchange may be less active than the market for exchange-listed options. The
fund will be able to close a position in an option it has written only if there
is a market for the put or call. If the fund is not able to enter into a
closing transaction on an option it has written, it will be required to maintain
the securities, or cash in the case of an option on a stock index, subject to
the call or the collateral underlying the put until a closing purchase
transaction can be entered into or the option expires. Because stock index
options are settled in cash, the fund cannot provide in advance for its
potential settlement obligations on a call it has written on a stock index by
holding the underlying securities. The fund bears the risk that the value of
the securities it holds will vary from the value of the index. Option
transactions may increase the fund's portfolio turnover rate creating greater
commission expenses, transaction costs and tax consequences.
Since futures contracts and options thereon can replicate movements in the cash
markets for the securities in which the fund invests without the large cash
investments required for dealing in such markets, they may subject the fund to
greater and more volatile risks than might otherwise be the case. The principal
risks related to the use of such instruments are: imperfect correlation between
movements in the market price of the portfolio investments (held or intended)
and in the price of the futures contract or option; possible lack of a liquid
secondary market for closing out futures or options positions; the need for
additional portfolio management skills and techniques; and losses due to
unanticipated market price movements. The ordinary spreads between prices in
the cash and futures markets, due to the differences in the natures of those
markets, are subject to distortion. Due to the possibility of distortion, a
correct forecast of general interest or stock market trends by WRIMCO may still
not result in a successful transaction. WRIMCO may be incorrect in its
expectations as to the extent of various interest rate movements or stock market
movements or the time span within which the movements take place.
Gains and losses on investments in options and futures contracts depends on
WRIMCO's ability to predict correctly the direction of stock prices, interest
rates and other economic factors. See the SAI for further information about
these instruments and their risks.
Currencies may be exchanged on a spot (i.e., cash) basis, or by entering into
forward contracts to purchase or sell foreign currencies at a future date, at a
price set when the contract is entered into. Currency conversion involves
dealer spreads and other costs, although commissions usually are not charged.
Successful use of forward currency contracts will depend on WRIMCO's skill in
analyzing and predicting currency values. Forward contracts may substantially
change the fund's investment exposure to changes in currency exchange rates, and
could result in losses to the fund if currencies do not perform as WRIMCO
anticipates. There is no assurance that WRIMCO's use of forward currency
contracts will be advantageous to the fund or that it will hedge at an
appropriate time.
Depending on how they are used, swap agreements may increase or decrease the
overall volatility of the fund's investments and its share price and yield. The
most significant factor in the performance of swap agreements is the change in
the specific interest rate, currency, or other factors that determine the
amounts of payments due to and from the fund. If a swap agreement calls for
payments by the fund, the fund must be prepared to make such payments when due.
In addition, if the counterparty's creditworthiness declined, the value of a
swap agreement would be likely to decline, potentially resulting in losses. The
fund expects to be able to limit its exposure under swap agreements either by
assignment or other disposition, or by entering into an offsetting swap
agreement with the same party or a similarly creditworthy party.
WRIMCO can use each of the practices described above to adjust the risk and
return characteristics of the fund's portfolio of investments. If WRIMCO judges
market conditions incorrectly or employs a strategy that does not correlate well
with the fund's investments, these techniques could result in a loss, regardless
of whether the intent was to reduce risk or increase return. These techniques
may increase the volatility of the fund and may involve a small investment of
cash relative to the magnitude of the risk assumed. In addition, these
techniques could result in a loss if the counterparty to the transaction does
not perform as promised or if there is not a liquid secondary market to close
out a position that the fund has entered into.
Restrictions: WRIMCO does not intend to invest more than 50% of its total
assets in a combination of forward currency contracts, swap agreements,
mortgage-backed securities, asset-backed securities, stripped securities, zero-
coupon securities and when-issued and delayed-delivery transactions.
Mortgage-Backed and Asset-Backed Securities may include pools of consumer loans
or mortgages, such as collateralized mortgage obligations and stripped mortgage-
backed securities. The value of these securities may be significantly affected
by changes in interest rates, the market's perception of the issuers, and the
creditworthiness of the parties involved. These securities may also be subject
to prepayment risk.
Restrictions: The fund does not currently intend to invest in any non-
mortgage asset-backed securities.
Stripped Securities are the separate income or principal components of a debt
instrument. These involve risks that are similar to those of other debt
securities, although they may be more volatile. The prices of stripped
mortgage-backed securities may be particularly affected by changes in interest
rates.
Direct Debt. Loans and other direct debt instruments are interests in amounts
owed to another party by a company, government, or other borrower. They have
additional risks beyond conventional debt securities because they may entail
less legal protection for the fund, or there may be a requirement that the fund
supply additional cash to a borrower on demand.
When-Issued and Delayed-Delivery Transactions are trading practices in which
payment and delivery for the securities take place at a future date. The market
value of a security could change during this period, which could affect the
fund's yield.
When purchasing securities on a delayed-delivery basis, the fund assumes the
rights and risks of ownership, including the risk of price and yield
fluctuations. Because the fund is not required to pay for securities until the
delivery date, these risks are in addition to the risks associated with the
fund's other investments. If the fund remains substantially fully invested at a
time when delayed-delivery purchases are outstanding, the delayed-delivery
purchases may result in a form of leverage. When delayed-delivery purchases are
outstanding, the fund will set aside appropriate liquid assets in a segregated
custodial account to cover its purchase obligations. When the fund has sold a
security on a delayed-delivery basis, the fund does not participate in further
gains or losses with respect to the security. If the other party to a delayed-
delivery transaction fails to deliver or pay for the securities, the fund could
miss a favorable price or yield opportunity, or could suffer a loss. The fund
may renegotiate delayed-delivery transactions after they are entered into, and
may sell underlying securities before they are delivered, which may result in
capital gains or losses.
Repurchase Agreements. In a repurchase agreement, the fund buys a security at
one price and simultaneously agrees to sell it back at a higher price. Delays
or losses could result if the other party to the agreement defaults or becomes
insolvent.
Restricted and Illiquid Securities. The fund may invest in restricted
securities, which are securities that are subject to legal or contractual
restrictions on resale. The fund may also invest in illiquid investments.
Illiquid investments may be difficult to sell promptly at an acceptable price.
Difficulty in selling securities may result in a loss or may be costly to the
fund.
Restrictions: The fund may not purchase a security if, as a result, more than
15% of its assets would be invested in illiquid investments.
Other Instruments may include convertible bonds, depositary receipts, preferred
stocks, rights, securities of closed-end investment companies, and warrants.
Diversification. Diversifying a fund's investment portfolio can reduce the
risks of investing. This may include limiting the amount of money invested in
any one issuer or, on a broader scale, in any one industry.
Restrictions: With respect to 75% of total assets, the fund may not invest more
than 5% of its total assets in any one issuer. The fund also may not invest
more than 25% of its total assets in any one industry. These limitations do not
apply to U.S. government securities.
Borrowing. The fund may borrow from banks. If the fund borrows money, its
share price may be subject to greater fluctuation until the borrowing is paid
off. If the fund makes additional investments while borrowings are outstanding,
this may be considered a form of leverage.
Restrictions: The fund may borrow only for temporary or emergency purposes, but
not in an amount exceeding 33 1/3% of its total assets.
Lending. The fund may lend securities to broker-dealers and institutions for
the purpose of increasing income on a short-term or long-term basis. This
practice could result in a loss or a delay in recovering the fund's
securities.
Restrictions: Securities loans, in the aggregate, may not exceed 10% of the
fund's total assets.
Fundamental Investment Policies and Restrictions
Some of the policies and restrictions discussed on the preceding pages are
fundamental, that is, subject to change only by shareholder approval. The
following paragraph restates all those that are fundamental. All policies
stated throughout this prospectus, other than those identified in the following
paragraph, can be changed by the fund's Board of Directors without shareholder
approval.
The fund seeks high total return with reduced risk over the long term by
allocating its assets among stocks, bonds, and short-term instruments. With
respect to 75% of total assets, the fund may not invest more than 5% of its
total assets in any one issuer and may not own more than 10% of the outstanding
voting securities of a single issuer. The fund may not invest more that 25% of
its total assets in any one industry. The fund may borrow only for temporary or
emergency purposes, but not in an amount exceeding 33 1/3% of its total assets.
Securities loans, in the aggregate, will be limited to 10% of total assets.
<PAGE>
United Asset Strategy Fund, Inc.
Custodian Underwriter
United Missouri Bank, n.a. Waddell & Reed, Inc.
Kansas City, Missouri 6300 Lamar Avenue
P.O. Box 29217
Legal Counsel Shawnee Mission, Kansas
Kirkpatrick & Lockhart 66201-9217
1800 M Street, N.W. (913) 236-2000
Washington, D.C.
Shareholder Servicing
Independent Accountants Agent
Price Waterhouse LLP Waddell & Reed
Kansas City, Missouri Services Company
6300 Lamar Avenue
Investment Manager P.O. Box 29217
Waddell & Reed Investment Shawnee Mission, Kansas
Management Company 66201-9217
6300 Lamar Avenue (913)236-2000
Shawnee Mission, Kansas
66201-9217 Accounting Services
(913) 236-2000 Agent Waddell & Reed
Services Company
6300 Lamar Avenue
P.O. Box 29217
Shawnee Mission, Kansas 66201-9217
(913) 236-2000
<PAGE>
United Asset Strategy Fund, Inc.
PROSPECTUS
____________, 199_
The United Group of Mutual Funds
United Asset Strategy Fund, Inc.
United Cash Management, Inc.
United Continental Income Fund, Inc.
United Funds, Inc.
United Bond Fund
United Income Fund
United Accumulative Fund
United Science and Technology Fund
United Gold & Government Fund, Inc.
United Government Securities Fund, Inc.
United High Income Fund, Inc.
United High Income Fund II, Inc.
United International Growth Fund, Inc.
United Municipal Bond Fund, Inc.
United Municipal High Income Fund, Inc.
United New Concepts Fund, Inc.
United Retirement Shares, Inc.
United Vanguard Fund, Inc.
printed on recycled paper
<PAGE>
UNITED ASSET STRATEGY FUND, INC.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
(913) 236-2000
_______, 1994
STATEMENT OF ADDITIONAL INFORMATION
SUBJECT TO COMPLETION
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor any
offers to buy be accepted prior to the time the registration statement becomes
effective.
This Statement of Additional Information (the "SAI") is not a prospectus.
Investors should read this SAI in conjunction with the prospectus (the
"Prospectus") of United Asset Strategy Fund, Inc. (the "fund") dated ______,
1994, which may be obtained from the fund or its underwriter, Waddell & Reed,
Inc., at the address or telephone number shown above.
TABLE OF CONTENTS
Investment Policies and Limitations ................ _
Portfolio Transactions and Brokerage ............... _
Purchase, Redemption and Pricing of Shares ......... __
Performance Information ............................ _
Payments to Shareholders ........................... __
Taxes .............................................. __
Investment Management and Other Services ........... __
Directors and Officers ............................. __
Organization of the Fund ........................... __
Appendix A ......................................... __
<PAGE>
INVESTMENT POLICIES AND LIMITATIONS
The following policies and limitations supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or limitation
states a maximum percentage of the fund's assets that may be invested in any
security or other asset, or sets forth a policy regarding quality standards,
such standard or percentage limitation will be determined immediately after and
as a result of the fund's acquisition of such security or other asset.
Accordingly, any subsequent change in values, net assets, or other circumstances
will not be considered when determining whether the investment complies with the
fund's investment policies and limitations.
The fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting securities"
(as defined in the Investment Company Act of 1940) of the fund. However, except
for the fundamental investment limitations set forth below, the investment
policies and limitations of the fund are not fundamental and may be changed by
the Board of Directors without shareholder approval.
The following are the fund's fundamental investment limitations set forth
in their entirety. The fund may not:
(1) with respect to 75% of the fund's total assets, purchase the
securities of any issuer (other than obligations issued or guaranteed by the
United States government, or any of its agencies or instrumentalities) if, as a
result thereof, (a) more than 5% of the fund's total assets would be invested in
the securities of such issuer, or (b) the fund would hold more than 10% of the
outstanding voting securities of such issuer;
(2) issue bonds or any other class of securities preferred over shares of
the fund in respect of the fund's assets or earnings, provided that the fund may
issue additional series and classes of shares in accordance with its Articles of
Incorporation;
(3) purchase securities on margin, except that the fund may obtain such
short-term credits as are necessary for the clearance of transactions, and
provided that the fund may make initial and variation margin payments in
connection with transactions in futures contracts, options and other financial
instruments;
(4) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not exceeding
33 1/3% of the value of its total assets (less liabilities other than
borrowings). Any borrowings that come to exceed 33 1/3% of the value of the
fund's total assets by reason of a decline in net assets will be reduced within
three days to the extent necessary to comply with the 33 1/3% limitation. For
purposes of this limitation, "three days" means three days, exclusive of Sundays
and holidays;
(5) underwrite securities issued by others, except to the extent that the
fund may be deemed to be an underwriter within the meaning of the Securities Act
of 1933 in the disposition of restricted securities;
(6) purchase the securities of any issuer (other than obligations issued
or guaranteed by the United States government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total assets
(taken at current value) would be invested in the securities of issuers having
their principal business activities in the same industry;
(7) purchase or sell real estate unless acquired as a result of ownership
of securities (but this shall not prevent the fund from purchasing and selling
securities issued by companies or other entities or investment vehicles that
deal in real estate or interests therein, nor shall this prevent the fund from
purchasing interests in pools of real estate mortgage loans);
(8) purchase or sell physical commodities unless acquired as a result of
ownership of securities (but this shall not prevent the fund from purchasing and
selling futures contracts, options, forward currency contracts or other
financial instruments); or
(9) make loans, except (a) by lending portfolio securities provided that
no securities loan will be made if, as a result thereof, more than 10% of the
fund's total assets (taken at current value) would be lent to another party; (b)
through the purchase of a portion of an issue of debt securities in accordance
with its investment objective, policies, and limitations; and (c) by engaging in
repurchase agreements with respect to portfolio securities.
The following investment limitations are not fundamental and may be changed
by the Board of Directors without shareholder approval.
(i) The fund may borrow money only from a bank. The fund will not
purchase any security while borrowings representing more than 5% of its total
assets are outstanding.
(ii) The fund does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in illiquid assets.
(iii) The fund does not currently intend to lend assets other than
securities to other parties, except by acquiring loans, loan participations, or
other forms of direct debt instruments. (This limitation does not apply to
purchases of debt securities or to repurchase agreements.)
(iv) The fund does not currently intend to (a) purchase securities of
other investment companies, except in the open market where no commission except
the ordinary broker's commission is paid and if, as a result of such purchase,
the fund does not have more than 10% of its total assets invested in such
securities, or (b) purchase or retain securities issued by other open-end
investment companies. Limitations (a) and (b) do not apply to securities
received as dividends, through offers of exchange, or as a result of a
reorganization, consolidation, or merger. As a shareholder in an investment
company, the fund would bear its pro rata share of that investment company's
expenses, which could result in duplication of certain fees, including
management and administrative fees.
(v) The fund does not currently intend to purchase the securities of any
issuer (other than securities issued or guaranteed by domestic or foreign
governments or political subdivision thereof) if, as a result, more than 5% of
its total assets would be invested in the securities of business enterprises
that, including predecessors, have a record of less than three years of
continuous operation.
(vi) The fund does not currently intend to purchase warrants, valued at
the lower of cost or market, in excess of 5% of the fund's net assets. Included
in that amount, but not to exceed 2% of the fund's net assets, may be warrants
that are not listed on the New York Stock Exchange or the American Stock
Exchange. Warrants acquired by the fund in units or attached to securities are
not subject to these restrictions.
(vii) The fund does not currently intend to invest in oil, gas, or other
mineral exploration or development programs or leases.
For the fund's limitations on futures and options transactions, see the
section entitled "Limitations on Futures and Options Transactions."
Asset Allocation. The short-term class includes all types of domestic and
foreign securities and money market instruments with remaining maturities of
three years or less. Short-term instruments may include corporate debt
securities, such as commercial paper and notes; government securities issued by
U.S. or foreign governments or their agencies or instrumentalities; bank
deposits and other financial institution obligations; repurchase agreements
involving any type of security; and other similar short-term instruments. These
instruments may be denominated in U.S. dollars or foreign currency.
The bond class includes all varieties of domestic and foreign fixed-income
securities with maturities greater than three years. Securities in this class
may include bonds, notes, adjustable-rate preferred stocks, convertible bonds,
mortgage-related and asset-backed securities, domestic and foreign government
and government agency securities, zero coupon bonds, and other intermediate and
long-term securities. As with the short-term class, these securities may be
denominated in U.S. dollars or foreign currency. The fund may also invest in
lower quality, high-yielding debt securities (commonly referred to as "junk
bonds"). The fund currently intends to limit its investments in these
securities to 20% of its assets.
The stock class includes domestic and foreign equity securities of all
types (other than adjustable rate preferred stocks which are included in the
bond class). Securities in the stock class may include common stocks, fixed-
rate preferred stocks (including convertible preferred stocks), warrants,
rights, depositary receipts, securities of closed-end investment companies, and
other equity securities issued by companies of any size, located anywhere in the
world.
In making asset allocation decisions, Waddell & Reed Investment Management
Company, the fund' investment manager, ("WRIMCO") typically evaluates
projections of risk, market conditions, economic conditions, volatility, yields,
and returns.
Illiquid Investments are investments that cannot be sold or disposed of in
the ordinary course of business within seven days at approximately the prices at
which they are valued. Investments currently considered by the fund to be
illiquid include repurchase agreements not entitling the holder to payment of
principal and interest within seven days, over-the-counter options, non-
government stripped fixed-rate mortgage-backed securities, restricted securities
and swap agreements. However, certain restricted securities, such as securities
eligible for resale under Rule 144A of the Securities Act of 1933 and commercial
paper which is exempt from registration under Section 4(2) of the Securities Act
of 1933, will not be considered by the fund to be illiquid if WRIMCO has made a
determination of liquidity pursuant to procedures adopted by the fund's Board of
Directors. With respect to over-the-counter options the fund writes, all or a
portion of the value of the underlying instrument may be illiquid depending on
the assets held to cover the option and the nature and terms of any agreement
the fund may have to close out the option before expiration. In the absence of
market quotations, illiquid investments are priced at fair value as determined
in good faith by a committee appointed by the Board of Directors. If through a
change in values, net assets, or other circumstances, the fund were in a
position where more than 15% of its net assets were invested in illiquid
securities, it would seek to take appropriate steps to protect liquidity.
Restricted Securities generally can be sold in privately negotiated
transactions, pursuant to an exemption from registration under the Securities
Act of 1933, or in a registered public offering. Where registration is
required, the fund may be obligated to pay all or part of the registration
expense and a considerable period may elapse between the time it decides to seek
registration and the time the fund may be permitted to sell a security under an
effective registration statement. If, during such a period, adverse market
conditions were to develop, the fund might obtain a less favorable price than
prevailed when it decided to seek registration of the security.
Securities Lending. The fund may lend securities to creditworthy parties
such as broker-dealers or institutional investors.
Securities lending allows the fund to retain ownership of the securities
loaned and, at the same time, to earn additional income. Since there may be
delays in the recovery of loaned securities, or even a loss of rights in
collateral supplied should the borrower fail financially, loans will be made
only to parties deemed by WRIMCO to be creditworthy. Furthermore, securities
loans will only be made if, in WRIMCO's judgment, the consideration to be earned
from such loans would justify the risk.
WRIMCO understands that it is the current view of the Securities and
Exchange Commission ("SEC") Staff that the fund may engage in loan transactions
only under the following conditions: (1) the fund must receive 100% collateral
in the form of cash or cash equivalents (e.g., U.S. Treasury bills or notes)
from the borrower; (2) the borrower must increase the collateral whenever the
market value of the securities loaned (determined on a daily basis) rises above
the value of the collateral; (3) after giving notice, the fund must be able to
terminate the loan at any time; (4) the fund must receive reasonable interest on
the loan or a flat fee from the borrower, as well as amounts equivalent to any
dividends, interest, or other distributions on the securities loaned and to any
increase in market value; (5) the fund may pay only reasonable custodian fees in
connection with the loan; and (6) the Board of Directors must be able to vote
proxies on the securities loaned, either by terminating the loan or by entering
into an alternative arrangement with the borrower.
Cash received through loan transactions may be invested in any security in
which the fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).
Repurchase Agreements. In a repurchase agreement, the fund purchases a
security and simultaneously commits to resell that security to the seller at an
agreed upon price on an agreed upon date. The resale price reflects the
purchase price plus an agreed upon incremental amount which is unrelated to the
coupon rate or maturity of the purchased security. A repurchase agreement
involves the obligation of the seller to pay the agreed upon price, which
obligation is in effect secured by the value (at least equal to the amount of
the agreed upon resale price and marked to market daily) of the underlying
security. The fund may engage in a repurchase agreement with respect to any
security in which it is authorized to invest. While it does not presently
appear possible to eliminate all risks from these transactions (particularly the
possibility of a decline in the market value of the underlying securities, as
well as delays and costs to the fund in connection with bankruptcy proceedings),
it is the fund's current policy to limit repurchase agreement transactions to
those parties whose creditworthiness has been reviewed and found satisfactory by
WRIMCO on the basis of criteria established by the Board of Directors.
Variable or Floating Rate Instruments (including notes purchased directly
from issuers) bear variable or floating interest rates and carry rights that
permit holders to demand payment of the unpaid principal balance plus accrued
interest from the issuers or certain financial intermediaries. Floating rate
securities have interest rates that change whenever there is a change in a
designated base rate while variable rate instruments provide for a specified
periodic adjustment in the interest rate. These formulas are designed to result
in a market value for the instrument that approximates its par value.
Delayed-Delivery Transactions. The fund may buy and sell securities on a
delayed-delivery or when-issued basis. These transactions involve a commitment
by the fund to purchase or sell specific securities at a predetermined price or
yield, with payment and delivery taking place after the customary settlement
period for that type of security (and more than seven days in the future).
Typically, no interest accrues to the purchaser until the security is delivered.
The fund may receive fees for entering into delayed-delivery transactions.
Warrants. Warrants basically are options to purchase equity securities at
specific prices valid for a specific period of time. The prices do not
necessarily move parallel to the prices of the underlying securities. Warrants
have no voting rights, receive no dividends and have no rights with respect to
the assets of the issuer.
Mortgage-Backed Securities. The fund may purchase mortgage-backed
securities issued by government and non-government entities such as banks,
mortgage lenders, or other financial institutions. A mortgage-backed security
may be an obligation of the issuer backed by a mortgage or pool of mortgages or
a direct interest in an underlying pool of mortgages. Some mortgage-backed
securities, such as collateralized mortgage obligations ("CMOs"), make payments
of both principal and interest at a variety of intervals; others make semiannual
interest payments at a predetermined rate and repay principal at maturity (like
a typical bond). Mortgage-backed securities are based on different types of
mortgages including those on commercial real estate or residential properties.
Other types of mortgage-backed securities will likely be developed in the
future, and the fund may invest in them if WRIMCO determines they are consistent
with the fund's investment objective and policies.
The value of mortgage-backed securities may change due to shifts in the
market's perception of issuers. In addition, regulatory or tax changes may
adversely affect the mortgage securities market as a whole. Non-government
mortgage-backed securities may offer higher yields than those issued by
government entities, but also may be subject to greater price changes than
government issues. Mortgage-backed securities are subject to prepayment risk.
Prepayment, which occurs when unscheduled or early payments are made on the
underlying mortgages, may shorten the effective maturities of these securities
and may lower their total returns.
Stripped Mortgage-Backed Securities are created when a U.S. government
agency or a financial institution separates the interest and principal
components of a mortgage-backed security and sells them as individual
securities. The holder of the "principal-only" security (PO) receives the
principal payments made by the underlying mortgage-backed security, while the
holder of the "interest-only" security (IO) receives interest payments from the
same underlying security.
The prices of stripped mortgage-backed securities may be particularly
affected by changes in interest rates. As interest rates fall, prepayment rates
tend to increase, which tends to reduce prices of IOs and increase prices of
POs. Rising interest rates can have the opposite effect.
Asset-Backed Securities. Asset-backed securities represent interest in
pools of consumer loans (generally unrelated to mortgage loans) and most often
are structured as pass-through securities. Interest and principal payments
ultimately depend upon payment of the underlying loans by individuals, although
the securities may be supported by letters of credit or other credit
enhancements. The value of asset-backed securities may also depend on the
creditworthiness of the servicing agent for the loan pool, the originator of the
loans, or the financial institution providing the credit enhancement.
Zero Coupon Bonds. A broker-dealer creates a derivative zero by separating
the interest and principal components of a U.S. Treasury security and selling
them as two individual securities. CATS (Certificates of Accrual on Treasury
Securities), TIGRs (Treasury Investment Growth Receipts), and TRs (Treasury
Receipts) are examples of derivative zeros.
The Federal Reserve Bank creates STRIPS (Separate Trading of Registered
Interest and Principal of Securities) by separating the interest and principal
components of an outstanding U.S. Treasury bond and selling them as individual
securities. Bonds issued by the Resolution Funding Corporation (REFCORP) and
the Financing Corporation (FICO) can also be separated in this fashion.
Original issue zeros are zero coupon securities originally issued by the U.S.
government, a government agency, or a corporation in zero coupon form.
Swap Agreements. Swap agreements can be individually negotiated and
structured to include exposure to a variety of different types of investments or
market factors. Depending on their structure, swap agreements may increase or
decrease the fund's exposure to long- or short-term interest rates (in the U.S.
or abroad), foreign currency values, mortgage-backed security values, corporate
borrowing rates, or other factors such as security prices or inflation rates.
Swap agreements can take many different forms and are known by a variety of
names. The fund is not limited to any particular form of swap agreement if
WRIMCO determines it is consistent with the fund's investment objective and
policies.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by the
other party. For example, the buyer of an interest rate cap obtains the right
to receive payments to the extent that a specified interest rate exceeds an
agreed-upon level, while the seller of an interest rate floor is obligated to
make payments to the extent that a specified interest rate falls below an
agreed-upon level. An interest rate collar combines elements of buying a cap
and selling a floor.
Swap agreements will tend to shift the fund's investment exposure from one
type of investment to another. For example, if the fund agrees to exchange
payments in dollars for payments in foreign currency, the swap agreement would
tend to decrease the fund's exposure to U.S. interest rates and increase its
exposure to foreign currency and interest rates. Caps and floors have an effect
similar to buying or writing options.
The creditworthiness of firms with which the fund enters into interest rate
swaps, caps or floors will be monitored by WRIMCO in accordance with procedures
adopted by the fund's Board of Directors. If a default occurs by the other
party to such transaction, the fund will have contractual remedies pursuant to
the agreements related to the transaction.
The fund will maintain appropriate liquid assets in a segregated custodial
account to cover its current obligations under swap agreements. If the fund
enters into a swap agreement on a net basis, it will segregate assets with a
daily value at least equal to the excess, if any, of the fund's accrued
obligations under the swap agreement over the accrued amount the fund is
entitled to receive under the agreement. If the fund enters into a swap
agreement on other than a net basis, it will segregate assets with a value equal
to the full amount of the fund's accrued obligations under the agreement.
Indexed Securities. The fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, currencies,
precious metals or other commodities, or other financial indicators. Indexed
securities typically, but not always, are debt securities or deposits whose
value at maturity or coupon rate is determined by reference to a specific
instrument or statistic. Gold-indexed securities, for example, typically
provide for a maturity value that depends on the price of gold, resulting in a
security whose price tends to rise and fall together with gold prices.
Currency-indexed securities typically are short-term to intermediate-term debt
securities whose maturity values or interest rates are determined by reference
to the values of one or more specified foreign currencies, and may offer higher
yields than U.S. dollar-denominated securities of equivalent issuers. Currency-
indexed securities may be positively or negatively indexed; that is, their
maturity value may increase when the specified currency value increases,
resulting in a security that performs similarly to a foreign-denominated
instrument, or their maturity value may decline when foreign currencies
increase, resulting in a security whose price characteristics are similar to a
put on the underlying currency. Currency-indexed securities may also have
prices that depend on the values of a number of different foreign currencies
relative to each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they are
indexed, and may also be influenced by interest rate changes in the U.S. and
abroad. At the same time, indexed securities are subject to the credit risks
associated with the issuer of the security, and their values may decline
substantially if the issuer's creditworthiness deteriorates. Recent issuers of
indexed securities have included banks, corporations, and certain U.S.
government agencies. WRIMCO will use its judgment in determining whether
indexed securities should be treated as short-term instruments, bonds, stocks,
or as a separate asset class for purposes of the fund's investment allocations,
depending on the individual characteristics of the securities. Indexed
securities may be more volatile than the underlying instruments. Certain
indexed securities which are not traded on an established market may be deemed
illiquid.
Loans and Other Direct Debt Instruments. Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other borrower to
lenders or lending syndicates (loans and loan participations), to suppliers of
goods or services (trade claims or other receivables), or to other parties.
Direct debt instruments are subject to the fund's policies regarding the quality
of debt securities.
Purchasers of loans and other forms of direct indebtedness depend primarily
upon the creditworthiness of the borrower for payment of principal and interest.
Direct debt instruments may not be rated by any nationally recognized rating
service. If the fund does not receive scheduled interest or principal payments
on such indebtedness, the fund's share price and yield could be adversely
affected. Loans that are fully secured offer the fund more protections than an
unsecured loan in the event of non-payment of scheduled interest or principal.
However, there is no assurance that the liquidation of collateral from a secured
loan would satisfy the borrower's obligation, or that the collateral could be
liquidated. Indebtedness of borrowers whose creditworthiness is poor involves
substantially greater risks, and may be highly speculative. Borrowers that are
in bankruptcy or restructuring may never pay off their indebtedness, or may pay
only a small fraction of the amount owed. Direct indebtedness of developing
countries also involves a risk that the governmental entities responsible for
the repayment of the debt may be unable, or unwilling, to pay interest and
principal when due.
Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks to the fund. For
example, if a loan is foreclosed, the fund could become part owner of any
collateral, and would bear the costs and liabilities associated with owning and
disposing of the collateral. In addition, it is conceivable that under emerging
legal theories of lender liability, the fund could be held liable as a co-
lender. Direct debt instruments may also involve a risk of insolvency of the
lending bank or other intermediary. Direct debt instruments that are not in the
form of securities may offer less legal protection to the fund in the event of
fraud or misrepresentation. In the absence of definitive regulatory guidance,
the fund relies on WRIMCO's research in an attempt to avoid situations where
fraud or misrepresentation could adversely affect the fund.
A loan is often administered by a bank or other financial institution that
acts as agent for all holders. The agent administers the terms of the loan, as
specified in the loan agreement. Unless, under the terms of the loan or other
indebtedness, the fund has direct recourse against the borrower, it may have to
rely on the agent to apply appropriate credit remedies against a borrower. If
assets held by the agent for the benefit of the fund were determined to be
subject to the claims of the agent's general creditors, the fund might incur
certain costs and delays in realizing payment on the loan or loan participation
and could suffer a loss of principal or interest.
Direct indebtedness purchased by the fund may include letters of credit,
revolving credit facilities, or other standby financing commitments obligating
the fund to pay additional cash on demand. These commitments may have the
effect of requiring the fund to increase its investment in a borrower at a time
when it would not otherwise have done so, even if the borrower's condition makes
it unlikely that the amount will ever be repaid. The fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
potential obligations under standby financing commitments.
The fund limits the amount of total assets that it will invest in any one
issuer or in issuers within the same industry (see limitations (1) and (6)).
For purposes of these limitations, the fund generally will treat the borrower as
the "issuer" of indebtedness held by the fund. In the case of loan
participations where a bank or other lending institution serves as financial
intermediary between the fund and the borrower, if the participation does not
shift to the fund the direct debtor-creditor relationship with the borrower, SEC
interpretations require the fund, in appropriate circumstances, to treat both
the lending bank or other lending institution and the borrower as "issuers" for
these purposes. Treating a financial intermediary as an issuer of indebtedness
may restrict the fund's ability to invest in indebtedness related to a single
financial intermediary, or a group of intermediaries engaged in the same
industry, even if the underlying borrowers represent many different companies
and industries.
Foreign Investments. American Depositary Receipts and European
Depositary Receipts (ADRs and EDRs) are certificates evidencing ownership of
shares of a foreign-based issuer held in trust by a bank or similar financial
institution. Designed for use in U.S. and European securities markets,
respectively, ADRs and EDRs are alternatives to the purchase of the underlying
securities in their national markets and currencies and are not subject to the
currency risk as in the case of foreign denominated securities.
Foreign Currency Transactions. The fund may hold foreign currency deposits
from time to time, and may convert dollars and foreign currencies in the foreign
exchange markets. Currencies may be exchanged on a spot (i.e., cash) basis, or
by entering into forward contracts to purchase or sell foreign currencies at a
future date, at a price set when the contract is entered into. Forward
contracts generally are traded in an interbank market conducted directly between
currency traders (usually large commercial banks) and their customers. The
parties to a forward contract may agree to offset or terminate the contract
before its maturity, or may hold the contract to maturity and complete the
contemplated currency exchange.
The fund may use forward currency contracts to manage currency risks and to
facilitate transactions in foreign securities. The following discussion
summarizes the principal currency management strategies involving forward
contracts that could be used by the fund.
In connection with purchases and sales of securities denominated in foreign
currencies, the fund may enter into forward currency contracts to fix a definite
price for the purchase or sale in advance of the trade's settlement date. This
technique is sometimes referred to as a "settlement hedge" or "transaction
hedge." WRIMCO expects to enter into settlement hedges in the normal course of
managing the fund's foreign investments. The fund could also enter into forward
contracts to hedge an anticipated dividend or interest payment denominated in a
foreign currency or in anticipation of future purchases or sales of securities
denominated in foreign currency, even if the specific investments have not yet
been selected by WRIMCO.
The fund may also use forward contracts to hedge against a decline in the
value of existing investments denominated in foreign currency. For example, if
the fund owned securities denominated in pounds sterling, it could enter into a
forward contract to sell pounds sterling in return for U.S. dollars to hedge
against possible declines in the pound's value. Such a hedge, sometimes
referred to as a "position hedge," would tend to offset both positive and
negative currency fluctuations, but would not offset changes in security values
caused by other factors. The fund could also hedge the position by selling
another currency expected to perform similarly to the pound sterling, for
example, by entering into a forward contract to sell Deutschemarks or European
Currency Units in return for U.S. dollars. This type of hedge, sometimes
referred to as a "proxy hedge," could offer advantages in terms of cost, yield,
or efficiency, but generally would not hedge currency exposure as effectively as
a simple hedge into U.S. dollars. Proxy hedges may result in losses if the
currency used to hedge does not perform similarly to the currency in which the
hedged securities are denominated.
At the maturity of a forward contract that the fund has sold, the fund may
either sell the portfolio security and make delivery of the foreign currency, or
it may retain the security and terminate the obligation to deliver the foreign
currency by purchasing an "offsetting" forward contract with the same currency
trader obligating the fund to purchase, on the same maturity date, the same
amount of the foreign currency. However, the currency trader is not obligated
to enter into such an offsetting forward contract. It is impossible to forecast
with absolute precision the market value of portfolio securities at the
expiration of the forward contract. Accordingly, if the fund determines to sell
the portfolio security and make delivery of the underlying foreign currency, it
may be necessary for the fund to purchase additional foreign currency on the
spot market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency that the fund is obligated
to deliver.
If the fund retains the portfolio security and engages in an offsetting
transaction, it will incur a gain or loss to the extent that there has been
movement in forward contract prices. Should forward prices decline during the
period between the fund's entering into a forward contract for the sale of a
foreign currency and the date it enters into the offsetting forward contract,
the fund will realize a gain to the extent the price at which it has agreed to
sell the foreign currency exceeds the price at which it has agreed to purchase
the foreign currency. Should forward prices increase, it will suffer a loss to
the extent the price at which it has agreed to purchase the foreign currency
exceeds the price at which it has agreed to sell the foreign currency. The
policies described in this section are non-fundamental policies of the fund.
Limitations of Futures and Options Transactions. The fund must operate
within certain restrictions as to positions in futures contracts, options on
futures contracts and options on a foreign currency traded on an exchange
regulated by the Commodity Futures Trading Commission ("CFTC") under a rule
("CFTC Rule") adopted by the CFTC under the Commodity Exchange Act ("CEA") to be
eligible for the exclusion provided by the CFTC Rule from regulation by the fund
with the CFTC as a "commodity pool operator" (as defined under the CEA), and
must represent to the CFTC that it will operate within such restrictions. Under
these restrictions, to the extent that the fund enters into futures contracts,
options on futures contracts and options on foreign currencies traded on a CFTC-
regulated exchange, in each case that are not for bona fide hedging purposes (as
defined by the CFTC), the aggregate initial margin and premiums required to
establish these positions (excluding the amount by which options are "in-the-
money") may not exceed 5% of the liquidation value of the fund's portfolio. (In
general, a call option on a futures contract is "in-the-money" if the value of
the underlying futures contract exceeds the strike, i.e., exercise, price of the
call; a put option on a futures contract is "in-the-money" if the value of the
underlying futures contract is exceeded by the strike price of the put.)
In addition, the fund will not: (a) sell futures contracts, purchase put
options, or write call options if, as a result, more than 50% of the fund's
total assets would be hedged with futures and options under normal conditions;
(b) purchase futures contracts or write put options if, as a result, the fund's
total obligations upon settlement or exercise of purchased futures contracts and
written put options would exceed 25% of its total assets; or (c) purchase call
options if, as a result, the current value of option premiums for call options
purchased by the fund would exceed 5% of the fund's total assets. These
limitations do not apply to options attached to or acquired or traded together
with their underlying securities, and do not apply to securities that
incorporate features similar to options.
The above limitations on the fund's investments in futures contracts and
options, and the fund's policies regarding futures contracts and options
discussed elsewhere in this Statement of Additional Information, may be changed
as regulatory agencies permit.
Futures Contracts. When the fund purchases a futures contract, it agrees
to purchase a specified underlying instrument or commodity at a specified future
date. When the fund sells a futures contract, it agrees to sell the underlying
instrument or commodity at a specified future date. The price at which the
purchase and sale will take place is fixed when the fund enters into the
contract. Some currently available futures contracts are based on specific
securities, such as U.S. Treasury bonds or notes, and some are based on indices
of securities prices, such as the Standard & Poor's 500 Composite Stock Price
Index (S&P 500). Futures contracts are also traded on commodities, such as
precious metals, foreign currencies, and other financial instruments. Futures
can be held until their delivery dates, or can be closed out before then if a
liquid secondary market is available.
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument or commodity. Therefore, purchasing
futures contracts will tend to increase the fund's exposure to positive and
negative price fluctuations in the underlying instrument or commodity, much as
if it had purchased the underlying instrument or commodity directly. When the
fund sells a futures contract, in contrast, the value of its futures position
will tend to move in a direction contrary to the market. Selling futures
contracts, therefore, will tend to offset both positive and negative market
price changes, much as if the underlying instrument or commodity had been sold.
Purchasing Put and Call Options. By purchasing a put option, the fund
obtains the right (but not the obligation) to sell the underlying instrument at
a fixed strike price. In return for this right, the fund pays the current
market price for the option (known as the option premium). Options have various
types of underlying instruments, including specific securities, indices of
securities prices, currencies, and futures contracts. The fund may terminate
its position in a put option it has purchased by allowing it to expire or by
exercising the option. If the option is allowed to expire, the fund will lose
the entire premium it paid. If the fund exercises the option, it completes the
sale of the underlying instrument at the strike price. The fund may also
terminate a put option position by closing it out in the secondary market at its
current price, if a liquid secondary market exists.
The buyer of a typical put option can expect to realize a gain if the
underlying instrument's price falls substantially. However, if the underlying
instrument's price does not fall enough to offset the cost of purchasing the
option, a put buyer can expect to suffer a loss (limited to the amount of the
premium paid, plus related transaction costs).
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's strike
price. A call buyer typically attempts to participate in a potential price
increase in the underlying instrument with risk limited to the cost of the
option if the instrument's price falls. At the same time, the buyer can expect
to suffer a loss if the instrument's price does not rise sufficiently to offset
the cost of the option.
Writing Put and Call Options. When the fund writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In return for
receipt of the premium, the fund assumes the obligation to pay the strike price
for the option's underlying instrument if the other party to the option chooses
to exercise it. The fund may seek to terminate its position in a put option it
writes before exercise by closing out the option in the secondary market at its
current price. If the secondary market is not liquid, however, the fund must
continue to be prepared to pay the strike price while the option is outstanding,
regardless of price changes, and must continue to set aside assets to cover its
position.
If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it received. If
security prices remain the same over time, it is likely that the writer will
also profit, because it should be able to close out the option at a lower price.
If security prices fall, the put writer would expect to suffer a loss. This
loss should be less than the loss from purchasing the underlying instrument
directly, however, because the premium received for writing the option should
mitigate the effects of the decline.
Writing a call option obligates the fund to sell or deliver the option's
underlying instrument, in return for the strike price, upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the same
time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is greater,
a call writer gives up some ability to participate in security price increases.
Options on Indices. Puts and calls on indices are similar to puts and
calls on securities or futures contracts except that all settlements are in cash
and gain or loss depends on changes in the index in question rather than on
price movements in individual securities or futures contracts. When the fund
writes a call on an index, it receives a premium and agrees that, prior to the
expiration date, the purchaser of the call, upon exercise of the call, will
receive from the fund an amount of cash if the closing level of the index upon
which the call is based is greater than the exercise price of the call. The
amount of cash is equal to the difference between the closing price of the index
and the exercise price of the call times a specified multiple ("multiplier"),
which determines the total dollar value for each point of such difference. When
the fund buys a call on an index, it pays a premium and has the same rights as
to such call as are indicated above. When the fund buys a put on an index, it
pays a premium and has the right, prior to the expiration date, to require the
seller of the put, upon the fund's exercise of the put, to deliver to the fund
an amount of cash if the closing level of the index upon which the put is based
is less than the exercise price of the put, which amount of cash is determined
by the multiplier, as described above for calls. When the fund writes a put on
an index, it receives a premium and the purchaser has the right, prior to the
expiration date, to require the fund to deliver to it an amount of cash equal to
the difference between the closing level of the index and the exercise price
times the multiplier if the closing level is less than the exercise price.
The risks of investment in options on indices may be greater than options
on securities. Because index options are settled in cash, when the fund writes
a call on an index it cannot provide in advance for its potential settlement
obligations by acquiring and holding the underlying securities. The fund can
offset some of the risk of writing a call index option by holding a diversified
portfolio of securities similar to those on which the underlying index is based.
However, the fund cannot, as a practical matter, acquire and hold a portfolio
containing exactly the same securities as underlie the index and, as a result,
bears a risk that the value of the securities held will vary from the value of
the index.
Even if the fund could assemble a portfolio that exactly reproduced the
composition of the underlying index, it still would not be fully covered from a
risk standpoint because of the "timing risk" inherent in writing index options.
When an index option is exercised, the amount of cash that the holder is
entitled to receive is determined by the difference between the exercise price
and the closing index level on the date when the option is exercised. As with
other kinds of options, the fund as the call writer will not learn that it has
been assigned until the next business day at the earliest. The time lag between
exercise and notice of assignment poses no risk for the writer of a covered call
on a specific underlying security, such as common stock, because there the
writer's obligation is to deliver the underlying security, not to pay its value
as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligations by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising holder. In contrast, even if the writer of an
index call holds securities that exactly match the composition of the underlying
index, it will not be able to satisfy its assignment obligations by delivering
those securities against payment of the exercise price. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date. By the time it learns that it has been assigned, the index may
have declined, with a corresponding decline in the value of its portfolio. This
"timing risk" is an inherent limitation on the ability of index call writers to
cover their risk exposure by holding securities positions.
If the fund has purchased an index option and exercises it before the
closing index value for that day is available, it runs the risk that the level
of the underlying index may subsequently change. If such a change causes the
exercised option to fall out-of-the-money, the fund will be required to pay the
difference between the closing index value and the exercise price of the option
(times the applicable multiplier) to the assigned writer.
Options on Futures Contracts. When the fund writes an option on a futures
contract, it becomes obligated, in return for the premium paid, to assume a
position in the futures contract at a specified exercise price at any time
during the term of the option. If the fund has written a call, it becomes
obligated to assume a "short" position in the futures contract, which means that
it is required to deliver the underlying securities. If it has written a put,
it becomes obligated to assume a "long" position in the futures contract, which
means that it is required to take delivery of the underlying securities. When
the fund purchases an option on a futures contract, it acquires the right, in
return for the premium it paid, to assume a position in the futures contract, a
"long" position if the option is a call and a "short" position if the option is
a put.
Combined Positions. The fund may purchase and write options in combination
with each other, or in combination with futures or forward contracts, to adjust
the risk and return characteristics of the overall position. For example, the
fund may purchase a put option and write a call option on the same underlying
instrument, in order to construct a combined position whose risk and return
characteristics are similar to selling a futures contract. Another possible
combined position would involve writing a call option at one strike price and
buying a call option at a lower price, in order to reduce the risk of the
written call option in the event of a substantial price increase. Because
combined options positions involve multiple trades, they result in higher
transaction costs and may be more difficult to open and close out.
Correlation of Price Changes. Because there are limited number of types of
exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match the fund's current or
anticipated investments exactly. The fund may invest in options and futures
contracts based on securities with different issuers, maturities, or other
characteristics from the securities in which it typically invests, which
involves a risk that the options or futures position will not track the
performance of the fund's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the fund's
investments well. Options and futures prices are affected by such factors as
current and anticipated short-term interest rates, changes in volatility of the
underlying instrument, and the time remaining until expiration of the contract,
which may not affect security prices the same way. Imperfect correlation may
also result from differing levels of demand in the options and futures markets
and the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of daily price fluctuation
limits or trading halts. The fund may purchase or sell options and futures
contracts with a greater or lesser value than the securities it wishes to hedge
or intends to purchase in order to attempt to compensate for differences in
volatility between the contract and the securities, although this may not be
successful in all cases. If price changes in the fund's options or futures
positions are poorly correlated with its other investments, the positions may
fail to produce anticipated gains or result in losses that are not offset by
gains in other investments.
The risk of imperfect correlation between movements in the price of an
index future and movements in the price of the securities that are the subject
of the hedge increases as the composition of the fund's portfolio diverges from
the securities included in the applicable index. The price of the index futures
may move more than or less than the price of the securities being hedged. If
the price of the index future moves less than the price of the securities that
are the subject of the hedge, the hedge will not be fully effective but, if the
price of the securities being hedged has moved in an unfavorable direction, the
fund would be in a better position than if it had not hedged at all. If the
price of the securities being hedged has moved in a favorable direction, this
advantage will be partially offset by the futures contract. If the price of the
futures contract moves more than the price of the security, the fund will
experience either a loss or a gain on the futures contract that will not be
completely offset by movements in the price of the securities that are the
subject of the hedge. To compensate for the imperfect correlation of movements
in the price of the securities being hedged and movements in the price of the
index futures, the fund may buy or sell index futures in a greater dollar amount
than the dollar amount of the securities being hedged if the historical
volatility of the prices of such securities being hedged is more than the
historical volatility of the prices of the securities included in the index. It
is also possible that, where the fund has sold futures contracts to hedge its
portfolio against decline in the market, the market may advance and the value of
the securities held in the portfolio may decline. If this occurred, the fund
would lose money on the futures contract and also experience a decline in value
of its portfolio securities. However, while this could occur for a very brief
period or to a very small degree, over time the value of a diversified portfolio
of securities will tend to move in the same direction as the market indices on
which the futures contracts are based.
Where index futures are purchased to hedge against a possible increase in
the price of securities before the fund is able to invest in them in an orderly
fashion, it is possible that the market may decline instead. If the fund then
concludes not to invest in them at that time because of concern as to possible
further market decline or for other reasons, it will realize a loss on the
futures contract that is not offset by a reduction in the price of the
securities it had anticipated purchasing.
Margin Requirements and Daily Limits. Unlike when the fund purchases or
sells securities, no price is paid or received by it when it purchases or sells
a futures contract. Initially, the fund will be required to deposit an amount
of cash or U.S. Treasury Bills equal to a varying specified percentage of the
contract amount. This amount is known as initial margin. Cash held in the
margin account is not income producing. Subsequent payments, called variation
margin, to and from the futures commission merchant ("FCM") will be made on a
daily basis as the price of the underlying instrument fluctuates making the
futures contract more or less valuable, a process known as "marking-to-market."
If the fund writes an option on a futures contract, it will be required to
deposit initial and variation margin pursuant to the requirements similar to
those applicable to futures contracts. Premiums received from the writing of an
option on a futures contract are included in the initial margin deposit.
Changes in variation margin are recorded by the fund as unrealized gains or
losses. If required by the SEC, initial margin payments will be deposited with
the fund's custodian bank in an account registered in the FCM's name; access to
the assets in that account may be made by the FCM only under specified
conditions. At any time prior to expiration of a futures contract or option
thereon, the fund may elect to close the position by taking an opposite
position, which will operate to terminate its position in the futures contract
or option. A final determination of variation margin is then made, additional
cash is required to be paid by or released to the fund and the fund realizes a
loss or a gain. Although futures contracts by their terms call for the actual
delivery or acquisition of the underlying obligation, in most cases the
contractual obligation is fulfilled without having to make or take delivery.
The fund does not generally intend to make or take delivery of the underlying
obligation. All transactions in futures contracts and options thereon are made,
offset or fulfilled through a clearing house associated with the exchange on
which the contracts are traded. Although the fund intends to buy and sell
futures contracts and options thereon only on exchanges where there appears to
be an active secondary market, there is no assurance that a liquid secondary
market will exist for any particular futures contract or option thereon at any
particular time. In such event, it may not be possible to close a futures
contract or options position.
Liquidity of Options and Futures Contracts. There is no assurance a liquid
secondary market will exist for any particular options or futures contract at
any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying instrument's
current price. Under certain circumstances, futures exchanges may establish
daily limits on the amount that the price of a futures contract or option
thereon can vary from the previous day's settlement price; once that limit is
reached, no trades may be made that day at a price beyond the limit. Daily
price limits do not limit potential losses because prices could move to the
daily limit for several consecutive days with little or no trading, thereby
preventing the liquidation of unfavorable positions.
If the fund were unable to liquidate a futures contract or option thereon
due to the imposition of price limits, it could incur substantial losses. The
fund would continue to be subject to market risk with respect to the position.
In addition, the fund would be required to make daily variation margin payments
and might be required to maintain the position being hedged by the futures
contract or option or to maintain cash or securities in a segregated account.
OTC Options. Unlike exchange-traded options, which are standardized with
respect to the underlying instrument, expiration date, contract size, and strike
price, the terms of over-the-counter ("OTC") options (options not traded on
exchanges) generally are established through negotiation with the other party to
the option contract. While this type of arrangement allows the fund great
flexibility to tailor an option to its needs, OTC options generally involve
greater credit risk than exchange-traded options, which are guaranteed by the
clearing organization of the exchanges where they are traded.
Options and Futures Relating to Foreign Currencies. Currency futures
contracts are similar to forward currency exchange contracts, except that they
are traded on exchanges (and have margin requirements) and are standardized as
to contract size and delivery date. Most currency futures contracts call for
payment or delivery in U.S. dollars. The underlying instrument of a currency
option may be a foreign currency, which generally is purchased or delivered in
exchange for U.S. dollars, or may be a futures contract. The purchaser of a
currency call obtains the right to purchase the underlying currency, and the
purchaser of a currency put obtains the right to sell the underlying currency.
The uses and risks of currency options and futures are similar to options
and futures relating to securities or indices, as discussed above. The fund may
purchase and sell currency futures and may purchase and write currency options
to increase or decrease its exposure to different foreign currencies. The fund
may also purchase and write currency options in conjunction with each other or
with currency futures or forward contracts. Currency futures and options values
can be expected to correlate with exchange rates, but may not reflect other
factors that affect the value of the fund's investments. A currency hedge, for
example, should protect a Yen-denominated security from a decline in the Yen,
but will not protect the fund against a price decline resulting from
deterioration in the issuer's creditworthiness. Because the value of the fund's
foreign-denominated investments changes in response to many factors other than
exchange rates, it may not be possible to match the amount of currency options
and futures to the value of the fund's investments exactly over time.
Turnover. The fund's options and futures activities may affect its
turnover rate and brokerage commission payments. The exercise of calls or puts
written by the fund, and the sale or purchase of futures contracts, may cause it
to sell or purchase related investments, thus increasing its turnover rate.
Once the fund has received an exercise notice on an option it has written, it
cannot effect a closing transaction in order to terminate its obligation under
the option and must deliver or receive the underlying securities at the exercise
price. The exercise of puts purchased by the fund may also cause the sale of
related investments, also increasing turnover; although such exercise is within
the fund's control, holding a protective put might cause it to sell the related
investments for reasons that would not exist in the absence of the put. The
fund will pay a brokerage commission each time it buys or sells a put or call or
purchases or sells a futures contract. Such commissions may be higher than
those that would apply to direct purchases or sales.
Asset Coverage for Forward Contract, Futures and Options Positions.
Transactions using forward contracts, futures contracts and options (other than
options that the fund has purchased) expose the fund to an obligation to another
party. The fund will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies, or other
options, futures contracts or forward contracts, or (2) cash, receivables and
short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. The fund will
comply with SEC guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash, U.S. Government Securities or other
liquid, high-grade debt securities in a segregated account with its custodian in
the prescribed amount.
Assets used as cover or held in a segregated account cannot be sold while
the position in the corresponding forward contract, futures contract or option
is open, unless they are replaced with similar assets. As a result, the
commitment of a large portion of the fund's assets to cover or segregated
accounts could impede portfolio management or the fund's ability to meet
redemption requests or other current obligations.
Portfolio Turnover
A portfolio turnover rate is, in general, the percentage computed by taking
the lesser of purchases or sales of portfolio securities for a year and dividing
it by the monthly average of the market value of such securities during the
year, excluding certain short-term securities. The fund's turnover rate may
vary greatly from year to year as well as within a particular year and may be
affected by cash requirements for the redemption of its shares.
The fund cannot precisely predict what its portfolio turnover rate will be,
but it is anticipated that its annual turnover rate for the common stock portion
of its portfolio will not exceed 200% and that the annual turnover rate for the
other portion of its portfolio will not exceed 200%. A high turnover rate will
increase transaction costs and commission costs that will be borne by the fund
and could generate taxable income or loss.
PORTFOLIO TRANSACTIONS AND BROKERAGE
One of the duties undertaken by WRIMCO pursuant to the Investment
Management Agreement between the fund and WRIMCO is to arrange the purchase and
sale of securities for the portfolio of the fund. Transactions in securities
other than those for which an exchange is the primary market are generally done
with dealers acting as principals or market makers. Brokerage commissions are
paid primarily for effecting transactions in securities traded on an exchange
and otherwise only if it appears likely that a better price or execution can be
obtained. The individual who manages the fund may manage other funds or
advisory accounts with similar investment objectives. It can be anticipated
that the manager will frequently place concurrent orders for all or most
accounts for which the manager has responsibility. Transactions effected
pursuant to such combined orders are averaged as to price and allocated in
accordance with the purchase or sale orders actually placed for each fund or
advisory account.
To effect the portfolio transactions of the fund, WRIMCO is authorized to
engage broker-dealers ("brokers") which, in its best judgment based on all
relevant factors, will implement the policy of the fund to achieve "best
execution" (prompt and reliable execution at the best price obtainable) for
reasonable and competitive commissions. WRIMCO need not seek competitive
commission bidding but is expected to minimize the commissions paid to the
extent consistent with the interests and policies of the fund. Subject to
review by the Board of Directors, such policies include the selection of brokers
which provide execution and/or research services and other services, including
pricing or quotation services directly or through others ("brokerage services")
considered by WRIMCO to be useful or desirable for its investment management of
the fund and/or the other funds and accounts over which WRIMCO or its affiliates
have investment discretion.
Brokerage services are, in general, defined by reference to Section 28(e)
of the Securities Exchange Act of 1934 as including (i) advice, either directly
or through publications or writings, as to the value of securities, the
advisability of investing in, purchasing or selling securities and the
availability of securities and purchasers or sellers; (ii) furnishing analyses
and reports; or (iii) effecting securities transactions and performing functions
incidental thereto (such as clearance, settlement and custody). "Investment
discretion" is, in general, defined as having authorization to determine what
securities shall be purchased or sold for an account, or making those decisions
even though someone else has responsibility.
The commissions paid to brokers that provide such brokerage services may be
higher than another qualified broker would charge for effecting comparable
transactions if a good faith determination is made by WRIMCO that the commission
is reasonable in relation to the brokerage services provided. Subject to the
foregoing considerations WRIMCO may also consider the willingness of particular
brokers and dealers to sell shares of the fund and other funds managed by WRIMCO
and its affiliates as a factor in their selection. No allocation of brokerage
or principal business is made to provide any other benefits to WRIMCO or its
affiliates.
The investment research provided by a particular broker may be useful only
to one or more of the other advisory accounts of WRIMCO and its affiliates and
investment research received for the commissions of those other accounts may be
useful both to the fund and one or more of such other accounts. To the extent
that electronic or other products provided by such brokers to assist WRIMCO in
making investment management decisions are used for administration or other non-
research purposes, a reasonable allocation of the cost of the product
attributable to its non-research use is made by WRIMCO.
Such investment research (which may be supplied by a third party at the
instance of a broker) includes information on particular companies and
industries as well as market, economic or institutional activity areas. It
serves to broaden the scope and supplement the research activities of WRIMCO;
serves to make available additional views for consideration and comparisons; and
enables WRIMCO to obtain market information on the price of securities held in
the fund's portfolio or being considered for purchase.
In placing transactions for the fund's portfolio, WRIMCO may consider sales
of shares of the fund and other funds managed by WRIMCO and its affiliates as a
factor in the selection of brokers to execute portfolio transactions. WRIMCO
intends to allocate brokerage on the basis of this factor only if the sale is $2
million or more and there is no sales charge. This results in the consideration
only of sales which by their nature would not ordinarily be made by Waddell &
Reed, Inc.'s direct sales force and is done in order to prevent the direct sales
force from being disadvantaged by the fact that it cannot participate in fund
brokerage.
The fund, WRIMCO and Waddell & Reed, Inc. have adopted a Code of Ethics
which imposes restrictions on the personal investment activities of their
employees, officers and interested directors.
Buying and Selling with Other Funds
The fund and one or more of the other funds in the United Group, Waddell &
Reed Funds, Inc., TMK/United Funds, Inc., Torchmark Government Securities Fund,
Inc. and Torchmark Insured Tax-Free Fund, Inc. or accounts over which Waddell &
Reed Asset Management Company exercises investment discretion frequently buy or
sell the same securities at the same time. If this happens, the amount of each
purchase or sale is divided. This is done on the basis of the amount each fund
or account wanted to buy or sell. Sharing in large transactions could affect
the price the fund pays or receives or the amount it buys or sells. However,
sometimes a better negotiated commission is available.
PURCHASE, REDEMPTION AND PRICING OF SHARES
Determination of Offering Price
The net asset value of each of the shares of the fund is the value of the
fund's assets, less what it owes, divided by the total number of shares
outstanding. For example, if on a particular day the fund owned securities
worth $100 and had cash of $15, the total value of the assets would be $115. If
it owed $5, the net asset value would be $110 ($115 minus $5). If it had 11
shares outstanding, the net asset value of one share would be $10 ($110 divided
by 11).
The offering price of a share is its net asset value next determined
following acceptance of a purchase order plus the sales charge described in the
Prospectus.
The number of shares you receive for your purchase depends on the next
offering price after Waddell & Reed, Inc., the fund's underwriter, receives and
accepts your order at its principal business office at the address shown on the
cover of this SAI. You will be sent a confirmation after your purchase which
will indicate how many shares you have purchased.
Waddell & Reed, Inc. need not accept any purchase order, and it or the fund
may determine to discontinue offering fund shares for purchase.
The net asset value and offering price per share are ordinarily computed
daily on each day that The New York Stock Exchange, Inc. (the "Exchange") is
open for trading as of the close of the regular session of the Exchange or the
close of the regular session of any other securities or commodities exchange on
which an option or future held by the fund is traded. The Exchange annually
announces the days on which it will not be open for trading. The most recent
announcement indicates that it will not be open on the following days: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. However, it is possible that the
Exchange may close on other days. The net asset value will change every
business day, since the value of the fund's assets and the number of shares
outstanding changes every day.
The fund's portfolio securities, except as otherwise noted, listed or
traded on a stock exchange, are valued on the basis of the last sale on that day
or, lacking any sales, at a price which is the mean between the closing bid and
asked prices. In cases where securities or other instruments are traded on more
than one exchange, such securities or other instruments generally are valued on
the exchange designated by WRIMCO (under procedures established by and under the
general supervision and responsibility of the fund's Board of Directors) as the
primary market. Securities traded in the OTC market and listed on the National
Association of Securities Dealers Automated Quotation System ("Nasdaq") are
valued at the last available sale price on Nasdaq prior to the time of
valuation; other OTC securities and instruments are valued at the mean of the
closing bid and asked prices. Bonds, other than convertible bonds, are valued
using a pricing system provided by a major dealer in bonds. Convertible bonds
are valued using this pricing system only on days when there is no sale
reported. Debt securities with remaining maturities of 60 days or less are
valued at amortized cost, which approximates market. When market quotations for
options and futures positions held by the fund are readily available, those
positions will be valued based upon such quotations. Market quotations
generally will not be available for options traded in the OTC market. When
market quotations are not readily available, securities, options, futures and
other assets are valued at fair value as determined in good faith under
procedures established by and under the general supervision and responsibility
of the fund's Board of Directors.
When the fund writes a put or call, an amount equal to the premium received
is included in the fund's Statement of Assets and Liabilities as an asset, and
an equivalent deferred credit is included in the liability section. The
deferred credit is marked-to-market to reflect the current market value of the
put or call. If a call the fund wrote is exercised, the proceeds received on
the sale of the related investment are increased by the amount of the premium
the fund received. If the fund exercised a call it purchased, the amount paid
to purchase the related investment is increased by the amount of the premium
paid. If a put written by the fund is exercised, the amount that the fund pays
to purchase the related investment is decreased by the amount of the premium it
received. If the fund exercises a put it purchased, the amount the fund
receives from the sale of the related investment is reduced by the amount of the
premium it paid. If a put or call written by the fund expires, it has a gain in
the amount of the premium; if it enters into a closing purchase transaction, it
will have a gain or loss depending on whether the premium was more or less than
the cost of the closing transaction.
All securities and other assets quoted in foreign currency and forward
contracts are valued weekly in U.S. dollars on the basis of the foreign currency
exchange rate prevailing at the time such valuation is determined by the fund's
custodian. Foreign currency exchange rates are generally determined prior to the
close of the Exchange. Occasionally, events affecting the value of foreign
securities and such exchange rates occur between the time at which they are
determined and the close of the Exchange, which events will not be reflected in
a computation of the fund's net asset value. If events materially affecting the
value of such securities or assets or currency exchange rates occurred during
such time period, the securities or assets would be valued at their fair value
as determined in good faith under procedures established by and under the
general supervision and responsibility of the Board of Directors. The foreign
currency exchange transactions of the fund conducted on a spot basis are valued
at the spot rate for purchasing or selling currency prevailing on the foreign
exchange market. Under normal market conditions this rate differs from the
prevailing exchange rate by an amount generally less than one-tenth of one
percent due to the costs of converting from one currency to another.
Optional delivery standby commitments are valued at fair value under the
general supervision and responsibility of the fund's Board of Directors. They
are accounted for in the same manner as exchange-listed puts.
Minimum Initial and Subsequent Investments
Initial investments must be at least $500 with the exceptions described in
this paragraph. A $100 minimum initial investment pertains to certain exchanges
of shares from another fund in the United Group. A $50 minimum initial
investment pertains to sales to certain retirement plan accounts and to accounts
for which an investor has arranged, at the time of initial investment, to make
subsequent purchases for the account by having regular monthly withdrawals of
$25 or more made from a bank account. A minimum initial investment of $25 is
applicable to purchases made through payroll deduction for or by employees of
WRIMCO, Waddell & Reed, Inc., their affiliates, or certain retirement plan
accounts. Except with respect to certain exchanges and automatic withdrawals
from a bank account, a shareholder may make subsequent investments of any
amount. See "Exchanges for Shares of Other Funds in the United Group."
Reduced Sales Charges
Account Grouping
For the purpose of taking advantage of the lower sales charges available
for large purchases, a purchase in any of categories 1 through 7 listed below
made by an individual or deemed to be made by an individual may be grouped with
purchases in any other of these categories.
1. Purchases by an individual for his or her own account (includes purchases
under the United Funds Revocable Trust Form);
2. Purchases by that individual's spouse purchasing for his or her own account
(includes purchases under the United Funds Revocable Trust Form of spouse);
3. Purchases by that individual or his or her spouse in their joint account;
4. Purchases by that individual or his or her spouse for the account of their
child under age 21;
5. Purchases by any custodian for the child of that individual or spouse in a
Uniform Gift to Minors Act ("UGMA") or Uniform Transfers to Minors Act
account;
6. Purchases by that individual or his or her spouse for his or her Individual
Retirement Account ("IRA"), Section 457 of the Code salary reduction plan
account provided that such purchases are subject to a sales charge (see
"Net Asset Value Purchases"), tax sheltered annuity account ("TSA") or
Keogh plan account, provided that the individual and spouse are the only
participants in the Keogh plan; and
7. Purchases by a trustee under a trust where that individual or his or her
spouse is the settlor (the person who establishes the trust).
All purchases made for a participant in a multi-participant Keogh plan may
be grouped only with other purchases made under the same plan; a multi-
participant Keogh plan is defined as a plan in which there is more than one
participant where one or more of the participants is other than the spouse of
the owner/employer.
All purchases made under a "qualified" employee benefit plan of an
incorporated business will be grouped. A "qualified" employee benefit plan is
established pursuant to Section 401 of the Code. All qualified employee benefit
plans of any one employer or affiliated employers will also be grouped. An
affiliate is defined as an employer that directly, or indirectly, controls or is
controlled by or is under control with another employer.
All purchases made under a simplified employee pension plan ("SEP"),
payroll deduction plan or similar arrangement adopted by an employer or
affiliated employers (as defined above) may be grouped provided that the
employer elects to have all such purchases grouped at the time the plan is set
up. If the employer does not make such an election, the purchases made by
individual employees under the plan may be grouped with the other accounts of
the individual employees described above.
Account grouping as described above is available under the following
circumstances.
One-time Purchases
A one-time purchase in accounts eligible for grouping may be combined for
purposes of determining the availability of a reduced sales charge. In order
for an eligible purchase to be grouped, the investor must advise Waddell & Reed,
Inc. at the time the purchase is made that it is eligible for grouping and
identify the accounts with which it may be grouped.
Rights of Accumulation
If shares are held in any account and an additional purchase is made in
that account or in any account eligible for grouping with that account, the
additional purchase is combined with the net asset value of the existing account
as of the date the new purchase is accepted by Waddell & Reed, Inc. for the
purpose of determining the availability of a reduced sales charge.
In order to be entitled to rights of accumulation, the purchaser must
inform Waddell & Reed, Inc. that the purchaser is entitled to a reduced charge
and provide Waddell & Reed, Inc. with the name and number of the existing
account with which the purchase may be combined.
If a purchaser holds shares which have been purchased under an investment
program ("contractual plan") the shares held under the plan may be combined with
the additional purchase only if the contractual plan has been completed.
Statement of Intention
The benefit of a reduced sales charge for larger purchases is also
available under a Statement of Intention. By signing a Statement of Intention
form, which is available from Waddell & Reed, Inc., the purchaser indicates an
intention to invest, over a 13-month period, a dollar amount which is sufficient
to qualify for a reduced sales charge. The 13-month period begins on the date
the first purchase made under the Statement is accepted by Waddell & Reed, Inc.
Each purchase made from time to time under the Statement is treated as if the
purchaser were buying at one time the total amount which he or she intends to
invest. The sales charge applicable to all purchases made under the terms of
the Statement will be the sales charge in effect on the beginning date of the
13-month period.
In determining the amount which the purchaser must invest in order to
qualify for a reduced sales charge under a Statement of Intention, the
investor's rights of accumulation (see above) will be taken into account; that
is, shares already held in the same account in which the purchase is being made
or in any account eligible for grouping with that account, as described above,
will be included.
A copy of the Statement of Intention signed by a purchaser will be returned
to the purchaser after it is accepted by Waddell & Reed, Inc. and will set forth
the dollar amount which must be purchased within the 13-month period in order to
qualify for the reduced sales charge.
If a purchaser holds shares which have been purchased under a contractual
plan, the shares held under the plan will be taken into account in determining
the amount which must be invested under the Statement only if the contractual
plan has been completed.
The minimum initial investment under a Statement of Intention is 5% of the
dollar amount which must be invested under the Statement. An amount equal to 5%
of the purchase required under the Statement will be held "in escrow." If a
purchaser does not, during the period covered by the Statement, invest the
amount required to qualify for the reduced sales charge under the terms of the
Statement, he or she will be responsible for payment of the sales charge
applicable to the amount actually invested. The additional sales charge owed on
purchases made under a Statement which is not completed will be collected by
redeeming part of the shares purchased under the Statement and held "in escrow"
unless the purchaser makes payment of this amount to Waddell & Reed, Inc. within
20 days of Waddell & Reed, Inc.'s request for payment.
If the actual amount invested is higher than the amount an investor intends
to invest, and is large enough to qualify for a sales charge lower than that
available under the Statement of Intention, the lower sales charge will apply.
A Statement of Intention does not bind the purchaser to buy, or Waddell &
Reed, Inc. to sell, the shares covered by the Statement.
With respect to Statements of Intention for $2,000,000 or purchases
otherwise qualifying for no sales charge under the terms of the Statement of
Intention, the initial investment must be at least $200,000, and the value of
any shares redeemed during the 13-month period which were acquired under the
Statement will be deducted in computing the aggregate purchases under the
Statement.
Statements of Intention are not available for purchases made under a SEP
where the employer has elected to have all purchases under the SEP grouped.
Other Funds in the United Group
Reduced sales charges for larger purchases apply to purchases of any of the
funds in the United Group which are subject to a sales charge. A purchase of,
or shares held, in any of the funds in the United Group which are subject to the
same sales charge as the fund will be treated as an investment in the fund for
the purpose of determining the applicable sales charge. The following funds in
the United Group are subject to a maximum 5.75% ("full") sales charge as
described in the prospectus of each fund: United Funds, Inc., United
International Growth Fund, Inc., United Continental Income Fund, Inc., United
Vanguard Fund, Inc., United Retirement Shares, Inc., United High Income Fund,
Inc., United New Concepts Fund, Inc., United Gold & Government Fund, Inc.,
United High Income Fund II, Inc., and United Asset Strategy Fund, Inc. The
following funds in the United Group are subject to a "reduced" sales charge as
described in the prospectus of each fund: United Municipal Bond Fund, Inc.,
United Government Securities Fund, Inc. and United Municipal High Income Fund,
Inc. For the purposes of obtaining the lower sales charge which applies to
large purchases, purchases in a fund in the United Group which is subject to a
full sales charge may not be grouped with purchases in a fund in the United
Group which is subject to a reduced sales charge; conversely, purchases made in
a fund with a reduced sales charge may not be grouped or combined with purchases
of a fund which is subject to a full sales charge.
United Cash Management, Inc. is not subject to a sales charge. Purchases
in that fund are not eligible for grouping with purchases in any other fund.
Net Asset Value Purchases
As stated in the Prospectus, fund shares may be purchased at net asset
value by the Directors and officers of the fund, employees of Waddell & Reed,
Inc., employees of their affiliates, sales representatives of Waddell & Reed,
Inc. and the spouse, children, parents, children's spouses and spouse's parents
of each such Director, officer, employee and sales representative. "Child"
includes stepchild; "parent" includes stepparent. Purchases in an IRA sponsored
by Waddell & Reed, Inc. established for any of these eligible purchasers may
also be at net asset value. Purchases in any tax qualified retirement plan
under which the eligible purchaser is the sole participant may also be made at
net asset value. Trusts under which the grantor and the trustee or a co-trustee
are each an eligible purchaser are also eligible for net asset value purchases.
"Employees" includes retired employees. A retired employee is an individual
separated from service from Waddell & Reed, Inc. or affiliated companies with a
vested interest in any Employee Benefit Plan sponsored by Waddell & Reed, Inc.
or its affiliated companies. "Sales representatives" includes retired sales
representatives. A "retired sales representative" is any sales representative
who was, at the time of separation from service from Waddell & Reed, Inc., a
Senior Account Representative. A custodian under the Uniform Gifts (or
Transfers) to Minors Act purchasing for the child or grandchild of any employee
or sales representative may purchase at net asset value whether or not the
custodian himself is an eligible purchaser.
Purchases in a 401(k) plan having 100 or more eligible employees and
purchases in a 457 plan having 100 or more eligible employees may be made at net
asset value.
Reinvestment Privilege
The fund offers a one-time reinvestment privilege that allows you to
reinvest without charge all or part of any amount you redeem from the fund by
sending to the fund the amount you wish to reinvest. The amount you return will
be reinvested at the net asset value next determined after the fund receives the
returned amount. Your written request to reinvest and the amount to be
reinvested must be received within 30 days after your redemption request was
received and the fund must be offering shares of the fund at the time your
reinvestment request is received. You can do this only once as to shares of the
fund; however, you do not use up this privilege by redeeming shares to invest
the proceeds at net asset value in a Keogh plan or an IRA.
Reasons for Differences in Public Offering Price
As described herein and in the Prospectus, there are a number of instances
in which the fund's shares are sold or issued on a basis other than the maximum
public offering price, that is, the net asset value plus the highest sales
charge. Some of these relate to lower or eliminated sales charges for larger
purchases, whether made at one time or over a period of time as under a
Statement of Intention or right of accumulation. See the table of sales charges
in the Prospectus. The reasons for these quantity discounts are, in general,
that (i) they are traditional and have long been permitted in the industry and
are therefore necessary to meet competition as to sales of shares of other funds
having such discounts; (ii) certain quantity discounts are required by rules of
the National Association of Securities Dealers, Inc. (as are elimination of
sales charges on the reinvestment of dividends and distributions); and (iii)
they are designed to avoid an unduly large dollar amount of sales charge on
substantial purchases in view of reduced selling expenses. Quantity discounts
are made available to certain related persons for reasons of family unity and to
provide a benefit to tax exempt plans and organizations.
The reasons for the other instances in which there are reduced or
eliminated sales charges are as follows. Exchanges at net asset value are
permitted because a sales charge has already been paid on the shares exchanged.
Sales without sales charge are permitted to Directors, officers and certain
others due to reduced or eliminated selling expenses and since such sales may
aid in the development of a sound employee organization, encourage incentive,
responsibility and interest in the United Group and an identification with its
aims and policies. Limited reinvestments of redemptions at no sales charge are
permitted to attempt to protect against mistaken or not fully informed
redemption decisions. Shares may be issued at no sales charge in plans of
reorganization due to reduced or eliminated sales expenses and since, in some
cases, such issuance is exempted by the Investment Company Act of 1940 from the
otherwise applicable restrictions as to what sales charge must be imposed. In
no case in which there is a reduced or eliminated sales charge are the interests
of existing shareholders adversely affected since, in each case, the fund
receives the net asset value per share of all shares sold or issued.
Retirement Plans
As described in the prospectus, your account may be set up as a funding
vehicle for a retirement plan. For individual taxpayers meeting certain
requirements, Waddell & Reed, Inc. offers prototype documents for the following
retirement plans. All of these plans involve investment in shares of the fund
(or shares of certain other funds in the United Group).
Individual Retirement Accounts (IRAs). Investors having earned income may
set up a plan that is commonly called an IRA. Under an IRA, an investor can
contribute each year up to 100% of his or her earned income, up to an annual
maximum of $2,000. The annual maximum is $2,250 if an investor's spouse has
earned income of $250 or less in a taxable year. If an investor's spouse has at
least $2,000 of earned income in a taxable year, the annual maximum is $4,000
($2,000 for each spouse). The contributions are deductible unless the investor
(or, if married, either spouse) is an active participant in a qualified
retirement plan or if, notwithstanding that the investor or one or both spouses
so participate, their adjusted gross income does not exceed certain levels.
An investor may also use an IRA to receive a rollover contribution which is
either (a) a direct rollover from an employer's plan or (b) a rollover of an
eligible distribution paid to the investor from an employer's plan or another
IRA. To the extent a rollover contribution is made to an IRA, the distribution
will not be subject to Federal income tax until distributed from the IRA. A
direct rollover generally applies to any distribution from an employer's plan
(including a custodial account under Section 403(b)(7) of the Code, but not an
IRA) other than certain periodic payments, required minimum distributions and
other specified distributions. In a direct rollover, the eligible rollover
distribution is paid directly to the IRA, not to the investor. If, instead, an
investor receives payment of an eligible rollover distribution, all or a portion
of that distribution generally may be rolled over to an IRA within 60 days after
receipt of the distribution. Because mandatory Federal income tax withholding
applies to any eligible rollover distribution which is not paid in a direct
rollover, investors should consult their tax advisers or pension consultants as
to the applicable tax rules. If you already have an IRA, you may have the
assets in that IRA transferred directly to an IRA offered by Waddell & Reed,
Inc.
Simplified Employee Pension (SEP) plans and Salary Reduction SEP (SARSEP)
plans. Employers can make contributions to SEP-IRAs established for employees.
An employer may contribute up to 15% of compensation, not to exceed $22,500, per
year for each employee.
Keogh Plans. Keogh plans, which are available to self-employed
individuals, are defined contribution plans that may be either a money purchase
plan or a profit sharing plan. As a general rule, an investor under a defined
contribution Keogh plan can contribute each year up to 25% of his or her annual
earned income, with an annual maximum of $22,500.
457 Plans. If an investor is an employee of a state or local government or
of certain types of charitable organizations, he or she may be able to enter
into a deferred compensation arrangement in accordance with Section 457 of the
Code.
TSAs - Custodial Accounts and Title I Plans. If an investor is an employee
of a public school system or of certain types of charitable organizations, he or
she may be able to enter into a deferred compensation arrangement through a
custodian account under Section 403(b) of the Code. Some organizations have
adopted Title I plans, which are funded by employer contributions in addition to
employee deferrals.
401(k) Plans. With a 401(k) plan, employees can make tax-deferred
contributions into a plan to which the employer may also contribute, usually on
a matching basis. An employee may defer each year up to 25% of compensation,
subject to certain annual maximums, which may be increased each year based on
cost-of-living adjustments.
More detailed information about these arrangements and applicable forms are
available from Waddell & Reed, Inc. These plans may involve complex tax
questions as to premature distributions and other matters. Investors should
consult their tax adviser or pension consultant.
Exchanges for Shares of Other Funds in the United Group
You may exchange shares of a fund in the United Group and any shares
acquired through payment of dividends or distributions from those shares for
shares of another fund in the United Group. The shares you exchange must be
worth at least $100 or you must already own shares of the fund in the United
Group into which you want to exchange.
You may exchange shares you own in another fund in the United Group for
shares of the fund without charge if (i) the shares of the fund you are
exchanging from are subject to a full sales charge and a sales charge was paid
on these shares, or (ii) the shares were received in exchange for shares of a
fund that are subject to a full sales charge and for which a sales charge was
paid, or (iii) the shares were acquired from payment of dividends and
distributions. The shares you are exchanging may have been involved one or more
such exchanges so long as a sales charge was paid on the shares originally
purchased. Also, shares acquired without a sales charge because the purchase
was $2 million or more will be treated the same as shares on which a sales
charge was paid.
Shares of funds subject to a reduced sales charge (United Municipal Bond
Fund, Inc., United Government Securities Fund, Inc. and United Municipal High
Income Fund, Inc.) may be exchanged for shares of the fund only if (i) you have
received those shares as a result of one or more exchanges of shares on which a
sales charge was originally paid, or (ii) the shares have been held from the
date of the original purchase for at least six months.
Subject to the above rules regarding sales charges, you may have a specific
dollar amount of shares of United Cash Management, Inc. automatically exchanged
each month into the fund or any other fund in the United Group. The shares of
United Cash Management, Inc. which you designate for automatic exchange must be
worth at least $100 or you must own shares of the fund in the United Group into
which you want to exchange. The minimum value of shares which you may designate
for automatic exchange is $100, which may be allocated among different funds in
the United Group so long as each fund receives a value of at least $25. Minimum
initial investment and minimum balance requirements apply to such automatic
exchange service.
When you exchange shares, the total shares you receive will have the same
aggregate net asset value as the total shares you exchange. The relative values
are those next figured after your written exchange request is received in good
order.
These exchange rights and other exchange rights concerning the other
funds in the United Group can in most instances be eliminated or modified at any
time, upon notice in certain circumstances, and any such exchange may not be
accepted.
Redemptions
Redemption payments are made within seven days, unless delayed because of
emergency conditions determined by the SEC, when the New York Stock Exchange is
closed (other than on weekends and holidays) or when trading on the Exchange is
restricted. Payment is made in cash, although under extraordinary conditions,
redemptions may be made in portfolio securities. Redemptions may be made in
portfolio securities if the fund's Board of Directors decides that conditions
exist making cash payments undesirable. The securities would be valued at the
value used in determining net asset value. There would be brokerage costs to
the redeeming shareholder in selling such securities. The fund, however, has
elected to be governed by Rule 18f-1 under the Investment Company Act, pursuant
to which it is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of its net asset value during any 90-day period for any one
shareholder.
Flexible Withdrawal Service
If you qualify, you may arrange to receive through the Flexible Withdrawal
Service (the "Service") regular monthly, quarterly, semiannual or annual
payments by redeeming on a regular basis shares that you own of the fund or any
of the funds in the United Group. It would be a disadvantage to an investor to
make additional purchases of shares while a withdrawal program is in effect
because it would result in duplication of sales charges. Applicable forms are
available from Waddell & Reed, Inc.
To qualify for the Service, you must have invested at least $10,000 in
shares which you still own of any of the funds in the United Group; or, you must
own shares having a value of at least $10,000. The value for this purpose is
the value at the offering price.
You can choose to have your shares redeemed to receive:
(1) a monthly, quarterly, semiannual or annual payment of $50 or more;
(2) a monthly payment, which will change each month, equal to one-twelfth
of a percentage of the value of the shares in the Account (you select the
percentage); or
(3) a monthly or quarterly payment, which will change each month or
quarter, by redeeming a fixed number of shares (at least five shares).
Shares are redeemed on the 20th day of the month in which the payment is to
be made, or on the prior business day if the 20th is not a business day.
Payments are made within five days of the redemption.
Retirement Plan Accounts may be subject to a fee imposed by the Plan
Custodian for use of their service.
The dividends and distributions on shares you have made available for the
Service are paid in additional shares. All payments under the Service are made
by redeeming shares, which may involve a gain or loss for tax purposes. To the
extent that payments exceed dividends and distributions, the number of shares
you own will decrease. When all of the shares in your account are redeemed, you
will not receive any more payments. Thus, the payments are not an annuity or an
income or return on your investment.
You may at any time change the manner in which you have chosen to have
shares redeemed to any of the other choices originally available to you. You
can at any time redeem part or all of the shares in your account; if you redeem
all of the shares, the Service is terminated. The fund can also terminate the
Service by notifying you in writing.
After the end of each calendar year, information on shares redeemed will be
sent to you to assist you in completing your Federal income tax return.
Mandatory Redemption of Certain Small Accounts
The fund has the right to compel the redemption of shares held under any
account or any plan if the aggregate net asset value of such shares (taken at
cost or value as the Board of Directors may determine) is less than $500. The
Board has no intent to compel redemptions in the foreseeable future. If it
should elect to compel redemptions, shareholders who are affected will receive
prior written notice and will be permitted 60 days to bring their accounts up to
the minimum before the redemption is processed.
PERFORMANCE INFORMATION
Waddell & Reed, Inc., the fund's underwriter, or the fund may from time to
time publish the fund's total return, yield and/or performance information in
advertisements and sales materials.
Total Return
The fund's average annual total return quotation is computed according to a
standardized method prescribed by SEC rules. The average annual total return
for the fund for a specific period is found by taking a hypothetical $1,000
investment in fund shares on the first day of the period and computing the
"redeemable value" of that investment at the end of the period. The redeemable
value is then divided by the initial investment, and this quotient is taken to
the Nth root (N representing the number of years in the period) and 1 is
subtracted from the result, which is then expressed as a percentage. The
calculation assumes that all income and capital gains distributions have been
reinvested at net asset value on the reinvestment dates during the period.
Calculation of cumulative total return is not subject to a prescribed
formula. The fund's cumulative total return for a specific period is calculated
by first taking a hypothetical initial investment in fund shares on the first
day of the period and computing the "redeemable value" of that investment at the
end of the period. The cumulative total return percentage is then determined by
subtracting the initial investment from the redeemable value and dividing the
remainder by the initial investment and expressing the result as a percentage.
The calculation assumes that all income and capital gains distributions of the
fund have been reinvested at net asset value on the reinvestment dates during
the period. Cumulative total return may also be shown as the increased dollar
value of the hypothetical investment over the period.
Yield
The fund's yield is computed according to a standardized method prescribed
by SEC rules. The fund's yield is computed by dividing the net investment
income per share earned during the period for which the yield is shown by the
maximum offering price per share on the last day of that period according to the
following formula:
6
Yield = 2((((a - b)/cd)+1) -1)
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.
d = the maximum offering price per share on the last day of the period.
In computing its yield, the fund follows certain standardized accounting
practices specified by SEC rules. These practices are not necessarily
consistent with those that the fund uses to prepare its annual and interim
financial statements in conformity with generally accepted accounting
principles. Thus the fund's yield may not equal the income paid to shareholders
or the income reported in the fund's financial statements.
Changes in yields primarily reflect different interest rates received by
the fund as its portfolio securities change. Yield is also affected by
portfolio quality, portfolio maturity, type of securities held and operating
expenses.
Performance Rankings
Waddell & Reed, Inc. or the fund also may from time to time publish in
advertisements or sales material performance rankings as published by recognized
independent mutual fund statistical services such as Lipper Analytical Services,
Inc., or by publications of general interest such as Forbes, Money, The Wall
Street Journal, Business Week, Barron's, Fortune or Morningstar Mutual Fund
Values. The fund may also compare its performance to that of other selected
mutual funds or selected recognized market indicators such as the Standard &
Poor's 500 Stock Index and the Dow Jones Industrial Average. Performance
information may be quoted numerically or presented in a table, graph or other
illustration.
All performance information which the fund advertises or includes in sales
material is historical in nature and is not intended to represent or guarantee
future results. The value of the fund's shares when redeemed may be more or
less than their original cost.
PAYMENTS TO SHAREHOLDERS
General
There are three sources for the payments the fund makes to you as a
shareholder, other than payments when you redeem your shares. The first source
is the fund's net investment income, which is derived from the dividends,
interest and earned discount on the securities it holds, less its expenses. The
second source is realized capital gains, which are derived from the proceeds
received from the sale of securities at a price higher than the fund's tax basis
(usually cost) in such securities; these gains can be either long-term or short-
term, depending on how long the Fund has owned the securities before it sells
them. The third source is net realized gains from foreign currency
transactions. The payments made to shareholders from net investment income, net
short-term capital gains, and net realized gains from certain foreign currency
transactions are called dividends. Payments, if any, from long-term capital
gains are called distributions.
The fund pays distributions only if it has net capital gain (the excess of
net long-term capital gains over net short-term capital losses). It may or may
not have such gains, depending on whether securities are sold and at what price.
If the fund has net capital gains, it will pay distributions once each year, in
the latter part of the fourth calendar quarter. Even if it has net capital
gains for a year, the fund does not pay out the gains if it has applicable prior
year losses to offset the gains.
Choices you Have on your Dividends and Distributions
In your application form, you can give instructions that (i) you want cash
for your dividends and distributions, (ii) you want your dividends and
distributions paid in fund shares or (iii) you want cash for your dividends and
want your distributions paid in fund shares. You can change your instructions
at any time. If you give no instructions, your dividends and distributions will
be paid in fund shares. All payments in fund shares are at net asset value
without any sales charge. The net asset value used for this purpose is that
computed as of the record date for the dividend or distribution, although this
could be changed by the Board of Directors.
Even if you get dividends and distributions in cash, you can thereafter
reinvest them (or distributions only) in fund shares at net asset value next
determined after receipt by Waddell & Reed, Inc. of the amount clearly
identified as a reinvestment. The reinvestment must be within 45 days after the
payment.
TAXES
General
In order to continue to qualify for treatment as a regulated investment
company ("RIC") under the Internal Revenue Code of 1986 (the "Code"), the fund
must distribute to its shareholders for each taxable year at least 90% of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gains and net gains from certain foreign currency
transactions) and must meet several additional requirements. These requirements
include the following: (1) the Fund must derive at least 90% of its gross income
each taxable year from dividends, interest, payments with respect to securities
loans and gains from the sale or other disposition of securities or foreign
currencies, or other income (including gains from options, futures or forward
contracts) derived with respect to its business of investing in securities or
those currencies ("Income Requirement"); (2) the fund must derive less than 30%
of its gross income each taxable year from the sale or other disposition of
securities, or any of the following, that were held for less than three months -
- - (i) options, futures contracts, or forward contracts or (ii) foreign
currencies (or options, futures contracts or forward contracts thereon) that are
not directly related to the fund's principal business of investing in securities
(or options and futures contracts with respect to securities) ("Short-Short
Limitation"); (3) at the close of each quarter of the fund's taxable year, at
least 50% of the value of its total assets must be represented by cash and cash
items, U.S. Government Securities, securities of other RICs and other securities
that are limited, in respect of any one issuer, to an amount that does not
exceed 5% of the value of the fund's total assets and that does not represent
more than 10% of the outstanding voting securities of the issuer; and (4) at the
close of each quarter of the fund's taxable year, not more than 25% of the value
of its total assets may be invested in securities (other than U.S. Government
securities or the securities of other RICs) of any one issuer.
Dividends and distributions declared by the fund in October, November or
December of any year and payable to shareholders of record on a date in one of
those months are deemed to have been paid by the fund and received by the
shareholders on December 31 of that year if they are paid by the fund during the
following January. Accordingly, those dividends and distributions will be taxed
to shareholders for the year in which that December 31 falls.
If fund shares are sold at a loss after being held for six months or less,
the loss will be treated as long-term, instead of short-term, capital loss to
the extent of any distributions received on those shares. Investors also should
be aware that if shares are purchased shortly before the record date for a
dividend or distribution, the purchaser will receive some portion of the
purchase price back as a taxable dividend or distribution.
The fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to
the extent it fails to distribute by the end of any calendar year substantially
all of its ordinary income for that year and capital gains net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
It is the fund's policy to make sufficient distributions each year to avoid
imposition of the Excise Tax. The Code permits the fund to defer into the next
calendar year net capital losses incurred between each November 1 and the end of
the current calendar year.
Income from Foreign Securities
Dividends and interest received by the fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors.
Foreign Currency Gains and Losses
Gains or losses (1) from the disposition of foreign currencies, (2) from
the disposition of debt securities denominated in foreign currency that are
attributable to fluctuations in the value of the foreign currency between the
date of acquisition of each security and the date of disposition, and (3) that
are attributable to fluctuations in exchange rates that occur between the time
the fund accrues interest, dividends or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time the Fund
actually collects the receivables or pays the liabilities, generally are treated
as ordinary income or loss. These gains or losses, referred to under the Code
as "section 988" gains or losses, may increase or decrease the amount of the
Fund's investment company taxable income to be distributed to its shareholders.
Income from Options, Futures Contracts and Currencies
The use of hedging strategies, such as writing (selling) and purchasing
options and futures contracts and entering into forward contracts, involves
complex rules that will determine for income tax purposes the character and
timing of recognition of the gains and losses the fund realizes in connection
therewith. Income from foreign currencies (except certain gains therefrom that
may be excluded by future regulations), and income from transactions in options,
futures contracts and forward contracts derived by the fund with respect to its
business of investing in securities will qualify as permissible income under the
Income Requirement. However, income from the disposition of options and futures
will be subject to the Short-Short Limitation if they are held for less than
three months. Income from the disposition of foreign currencies and forward
contracts thereon that are not directly related to the fund's principal business
of investing in securities (or options and futures with respect to securities)
also will be subject to the Short-Short Limitation if they are held for less
than three months.
If the fund satisfies certain requirements, any increase in value of a
position that is part of a "designated hedge" will be offset by any decrease in
value (whether realized or not) of the offsetting hedging position during the
period of the hedge for purposes of determining whether the fund satisfies the
Short-Short Limitation. Thus, only the net gains (if any) from the designated
hedge will be included in gross income for purposes of that limitation. The
fund intends that, when it engages in hedging transactions, they will qualify
for this treatment, but at the present time it is not clear whether this
treatment will be available for all of the fund's hedging transactions. To the
extent this treatment is not available, the fund may be forced to defer the
closing out of options, futures and certain forward contracts beyond the time
when it otherwise would be advantageous to do so, in order for the fund to
continue to qualify as a RIC.
Any income the fund earns from writing options is taxed as short-term
capital gains. If the fund enters into a closing purchase transaction, it will
have a short-term capital gain or loss based on the difference between the
premium it receives for the option it wrote and the premium it pays for the
option it buys. If an option written by the fund expires without being
exercised, the premium it receives also will be a short-term gain. If such an
option is exercised and thus the fund sells the securities subject to the
option, the premium the fund receives will be added to the exercise price to
determine the gains or losses on the sale. The fund will not write so many
options that it could fail to continue to qualify as a RIC.
Certain options and futures in which the fund may invest will be "section
1256 contracts." Section 1256 contracts held by the fund at the end of each
taxable year, other than section 1256 contracts that are part of a "mixed
straddle" with respect to which the fund has made an election not to have the
following rules apply, are "marked-to-market" (that is, treated as sold for
their fair market value) for federal income tax purposes, with the result that
unrealized gains or losses are treated as though they were realized. Sixty
percent of any net gains or losses recognized on these deemed sales, and 60% of
any net realized gains or losses from any actual sales of section 1256
contracts, are treated as long-term capital gains or losses, and the balance is
treated as short-term capital gains or losses. Section 1256 contracts also may
be marked-to-market for purposes of the Excise Tax and for other purposes.
Code section 1092 (dealing with straddles) may also affect the taxation of
options and futures contracts in which the fund may invest. Section 1092
defines a "straddle" as offsetting positions with respect to personal property;
for these purposes, options and futures contracts are personal property.
Section 1092 generally provides that any loss from the disposition of a position
in a straddle may be deducted only to the extent the loss exceeds the unrealized
gain on the offsetting position(s) of the straddle. Section 1092 also provides
certain "wash sale" rules, which apply to transactions where a position is sold
at a loss and a new offsetting position is acquired within a prescribed period,
and "short sale" rules applicable to straddles. If the fund makes certain
elections, the amount, character and timing of the recognition of gains and
losses from the affected straddle positions will be determined under rules that
vary according to the elections made. Because only a few of the regulations
implementing the straddle rules have been promulgated, the tax consequences of
straddle transactions to the fund are not entirely clear.
Zero Coupon and Payment-in-Kind Securities
The fund may acquire zero coupon or other securities issued with original
issue discount. As the holder of those securities, the fund must include in its
income the original issue discount that accrues on the securities during the
taxable year, even if the fund receives no corresponding payment on the
securities during the year. Similarly, the fund must include in its gross
income securities it receives as "interest" on payment-in-kind securities.
Because the fund annually must distribute substantially all of its investment
company taxable income, including any original issue discount and other non-cash
income, in order to satisfy the distribution requirement described above and to
avoid imposition of the Excise Tax, it may be required in a particular year to
distribute as a dividend an amount that is greater than the total amount of cash
it actually receives. Those distributions will be made from the fund's cash
assets or from the proceeds of sales of portfolio securities, if necessary. The
fund may realize capital gains or losses from those sales, which would increase
or decrease its investment company taxable income and/or net capital gains. In
addition, any such gains may be realized on the disposition of securities held
for less than three months. Because of the Short-Short Limitation, any such
gains would reduce the fund's ability to sell other securities, or options or
futures, held for less than three months that it might wish to sell in the
ordinary course of its portfolio management.
INVESTMENT MANAGEMENT AND OTHER SERVICES
The Management Agreement
The fund has an Investment Management Agreement (the "Management
Agreement") with WRIMCO. Under the Management Agreement, WRIMCO is employed to
supervise the investments of the fund and provide investment advice to the fund.
The address of WRIMCO is 6300 Lamar Avenue, P.O. Box 29217, Shawnee Mission,
Kansas 66201-9217.
WRIMCO is a wholly-owned subsidiary of Waddell & Reed, Inc. Waddell &
Reed, Inc. is a wholly-owned subsidiary of Waddell & Reed Financial Services,
Inc., a holding company. Waddell & Reed Financial Services, Inc. is a wholly-
owned subsidiary of United Investors Management Company. United Investors
Management Company is a wholly-owned subsidiary of Torchmark Corporation.
Torchmark Corporation is a publicly held company. The address of Torchmark
Corporation and United Investors Management Company is 2001 Third Avenue South,
Birmingham, Alabama 35233.
Waddell & Reed, Inc. and its predecessors served as investment manager to
each of the registered investment companies in the United Group of Mutual Funds
since 1940 or the company's inception date, whichever was later, and to
TMK/United Funds, Inc. since that fund's inception, until January 8, 1992 when
it assigned the Management Agreement for these funds and all related investment
management duties (and the related professional staff) to WRIMCO, subject to the
authority of the fund's Board of Directors. WRIMCO has also served as
investment manager for Waddell & Reed Funds, Inc. since its inception in
September 1992 and Torchmark Government Securities Fund, Inc. and Torchmark
Insured Tax-Free Fund, Inc. since they each commenced operations in February
1993. Waddell & Reed, Inc. serves as principal underwriter for the fund and the
investment companies in the United Group of Mutual Funds, TMK/United Funds, Inc.
and Waddell & Reed Funds, Inc.
The Management Agreement permits WRIMCO or an affiliate of WRIMCO to enter
into a separate agreement for transfer agency services ("Shareholder Servicing
Agreement") and a separate agreement for accounting services ("Accounting
Services Agreement") with the fund. The Management Agreement contains detailed
provisions as to the matters to be considered by the fund's Directors prior to
approving any Shareholder Servicing Agreement or Accounting Services Agreement.
Shareholder Services
Under the Shareholder Servicing Agreement entered into between the fund and
Waddell & Reed Services Company (the "Agent"), a subsidiary of Waddell & Reed,
Inc., the Agent performs shareholder servicing functions, including the
maintenance of shareholder accounts, the issuance, transfer and redemption of
shares, distribution of dividends and payment of redemptions, the furnishing of
related information to the fund and handling of shareholder inquiries. A new
Shareholder Servicing Agreement, or amendments to the existing one, may be
approved by the fund's Directors without shareholder approval.
Accounting Services
Under the Accounting Services Agreement entered into between the fund and
the Agent, the Agent provides the fund with bookkeeping and accounting services
and assistance, including maintenance of the fund's records, pricing of the
fund's shares, and preparation of prospectuses for existing shareholders, proxy
statements and certain reports. A new Accounting Services Agreement, or
amendments to an existing one, may be approved by the fund's Directors without
shareholder approval.
Payments by the Fund for Management, Accounting and Shareholder Services
Under the Management Agreement, as compensation for WRIMCO's management
services, the fund pays WRIMCO a fee as described in the Prospectus. The fund
accrues and pays this fee daily. For purposes of calculating the daily fee the
fund does not include money owed to it by Waddell & Reed, Inc. for shares which
it has sold but not yet paid to the fund.
Under the Shareholder Servicing Agreement, the fund pays the Agent a
monthly fee of $1.0208 for each shareholder account which was in existence at
any time during the prior month, plus $0.30 for each account on which a dividend
or distribution, of cash or shares, had a record date in that month. The fund
also pays certain out-of-pocket expenses of the Agent, including long distance
telephone communication costs; microfilm and storage costs for certain
documents; forms, printing and mailing costs; and legal and special services not
provided by Waddell & Reed, Inc., WRIMCO or the Agent.
Under the Accounting Services Agreement, the fund pays the Agent a monthly
fee of one-twelfth of the annual fee shown in the following table.
Accounting Services Fee
Average
Net Asset Level Annual Fee
(all dollars in millions) Rate for Each Level
- ------------------------- --------------------
From $ 0 to $ 10 $ 0
From $ 10 to $ 25 $ 10,000
From $ 25 to $ 50 $ 20,000
From $ 50 to $ 100 $ 30,000
From $ 100 to $ 200 $ 40,000
From $ 200 to $ 350 $ 50,000
From $ 350 to $ 550 $ 60,000
From $ 550 to $ 750 $ 70,000
From $ 750 to $ 1,000 $ 85,000
$1,000 and Over $100,000
The State of California imposes limits on the amount of certain expenses
the fund can pay by requiring WRIMCO to reduce its fee to the extent any
included expenses exceed 2.5% of the Fund's first $30 million of average net
assets, 2% of the next $70 million of average net assets and 1.5% of any
remaining average net assets during a fiscal year. The limit does not include
interest, taxes, brokerage commissions and extraordinary expenses, such as
litigation, that usually do not arise in the normal operations of a mutual fund.
The fund's other expenses, including its management fee, are included. The fund
will notify shareholders of any change in the limitation.
Since the fund pays a management fee for investment supervision and an
accounting services fee for the accounting services as discussed above, WRIMCO
and the Agent, respectively, pay all of their own expenses in providing these
services. Amounts paid by the fund under the Shareholder Servicing Agreement
are described above. Waddell & Reed, Inc. and its affiliates pay the fund's
Directors and officers who are affiliated with WRIMCO and its affiliates. The
fund pays the fees and expenses of the fund's other Directors.
Waddell & Reed, Inc., under an Underwriting Agreement separate from the
Management Agreement, Shareholder Servicing Agreement and Accounting Services
Agreement, acts as the fund's underwriter. Waddell & Reed, Inc. offers and
sells the fund's shares on a continuous basis. It is not required to sell any
particular number of shares and thus sells shares only for purchase orders
received. Under this Underwriting Agreement, Waddell & Reed, Inc. pays the
costs of sales literature, including the costs of shareholder reports used as
sales literature, and the costs of printing the prospectuses furnished to it by
the fund.
A major portion of the sales charge is paid to sales representatives and
managers of Waddell & Reed, Inc. Waddell & Reed, Inc. may compensate its sales
representatives as to purchases for which there is no sales charge.
The fund pays all of its other expenses. These include the costs of
materials sent to shareholders, audit and outside legal fees, taxes, brokerage
commissions, interest, insurance premiums, custodian fees, fees payable by the
Fund under Federal or other securities laws and to the Investment Company
Institute and nonrecurring and extraordinary expenses, including litigation and
indemnification relating to litigation.
Under a Service Plan (the "Plan") adopted by the fund pursuant to Rule 12b-
1 under the Investment Company Act of 1940, the fund may pay Waddell & Reed,
Inc., a fee not to exceed .25% of the fund's average annual net assets, paid
monthly, to reimburse Waddell & Reed, Inc. for its costs and expenses in
connection with the provision of personal services to fund shareholders and/or
maintenance of shareholder accounts.
The Plan and a related Service Agreement between the fund and Waddell &
Reed, Inc. contemplate that Waddell & Reed, Inc. may be reimbursed for amounts
it expends in compensating, training and supporting registered sales
representatives, sales managers and/or other appropriate personnel in providing
personal services to fund shareholders and/or maintaining shareholder accounts;
increasing services provided to fund shareholders by office personnel located at
field sales offices; engaging in other activities useful in providing personal
service to fund shareholders and/or maintenance of shareholder accounts; and in
compensating broker-dealers who may regularly sell fund shares, and other third
parties, for providing shareholder services and/or maintaining shareholder
accounts.
The Plan and the Service Agreement were approved by the fund's Board of
Directors, including the Directors who are not interested persons of the Fund
and who have no direct or indirect financial interest in the operations of the
Plan or any agreement referred to in the Plan (hereafter, the "Plan Directors").
The Plan was also approved by __________________ as the sole shareholder of the
shares of the fund at the time.
Among other things, the Plan provides that (i) Waddell & Reed, Inc. will
provide to the Directors of the fund at least quarterly, and the Directors will
review, a report of amounts expended under the Plan and the purposes for which
such expenditures were made, (ii) the Plan will continue in effect only so long
as it is approved at least annually, and any material amendments thereto will be
effective only if approved, by the Directors including the Plan Directors acting
in person at a meeting called for that purpose, (iii) amounts to be paid by the
fund under the Plan may not be materially increased without the vote of the
holders of a majority of the outstanding shares of the fund, and (iv) while the
Plan remains in effect, the selection and nomination of the Directors who are
Plan Directors will be committed to the discretion of the Plan Directors.
Custodial and Auditing Services
The custodian for the fund is United Missouri Bank, n.a., Kansas City,
Missouri. In general, the custodian is responsible for holding the fund's cash
and securities. If fund assets are held in foreign countries, the fund will
comply with Rule 17f-5 under the Investment Company Act of 1940. Price
Waterhouse, Kansas City, Missouri, the fund's independent accountants, audits
the fund's financial statements.
DIRECTORS AND OFFICERS
The day-to-day affairs of the fund are handled by outside organizations
selected by the Board of Directors. The Board has responsibility for
establishing broad corporate policies for the fund and for overseeing overall
performance of those organizations. The Board has the benefit of advice and
reports from independent counsel and independent auditors.
Each of the fund's Directors is also a Director of each of the other funds
in the United Group, TMK/United Funds, Inc., Waddell & Reed Funds, Inc.,
Torchmark Government Securities Fund, Inc. and Torchmark Insured Tax-Free Fund,
Inc. and each of its officers is also an officer of one or more of these funds.
The principal occupation of each Director and officer during at least the past
five years is given below. Each of the persons listed through and including Mr.
Wright is a member of the fund's Board of Directors. The other persons are
officers but not Board members.
RONALD K. RICHEY*
2001 Third Avenue South
Birmingham, Alabama 35233
Chairman of the Board of Directors of the fund; Chairman of the Board of
Directors of Waddell & Reed Financial Services, Inc., United Investors
Management Company and United Investors Life Insurance Company; Chairman of the
Board of Directors and Chief Executive Officer of Torchmark Corporation;
Chairman of the Board of Vesta Insurance Group, Inc.; formerly, Chairman of the
Board of Directors of Waddell & Reed, Inc.
KEITH A. TUCKER*
President of the fund; President, Chief Executive Officer and Director
of Waddell & Reed Financial Services, Inc.; Chairman of the Board of Directors
of WRIMCO, Waddell & Reed, Inc., Waddell & Reed Services Company, Waddell & Reed
Asset Management Company and Torchmark Distributors, Inc., an affiliate of
Waddell & Reed, Inc.; Vice Chairman of the Board of Directors, Chief Executive
Officer and President of United Investors Management Company; Vice Chairman of
the Board of Directors of Torchmark Corporation; Director of Southwestern Life
Corporation; formerly, partner in Trivest, a private investment concern;
formerly, Director of Atlantis Group, Inc., a diversified company.
HENRY L. BELLMON
Route 1
Red Rock, Oklahoma 74651
Rancher; Professor, Oklahoma State University; formerly, Governor of
Oklahoma; prior to his current service as Director of the funds in the United
Group, TMK/United Funds, Inc., Waddell & Reed Funds, Inc., Torchmark Government
Securities Fund, Inc. and Torchmark Insured Tax-Free Fund, Inc., he served in
such capacity for the funds in the United Group and TMK/United Funds, Inc.
DODDS I. BUCHANAN
University of Colorado
Campus Box 419
Boulder, Colorado 80309
Advisory Director, The Hand Companies; President, Buchanan Ranch Corp.;
formerly, Senior Vice President and Director of Marketing Services, The Meyer
Group of Management Consultants; formerly, Chairman, Department of Marketing,
Transportation and Tourism, University of Colorado; formerly, Professor of
Marketing, College of Business, University of Colorado.
JAY B. DILLINGHAM
926 Livestock Exchange Building
Kansas City, Missouri 64102
Formerly, President and Director of Kansas City Stock Yards Company;
formerly, Partner in Dillingham Farms, a farming operation.
JOHN F. HAYES*
335 N. Washington
P. O. Box 2977
Hutchinson, Kansas 67504-2977
Director of Central Bank and Trust; Director of Central Financial
Corporation; formerly, President of Gilliland & Hayes, P.A., a law firm.
GLENDON E. JOHNSON
7300 Corporate Center Drive
Miami, Florida 33126-1208
Director and Chief Executive Officer of John Alden Financial Corporation
and related subsidiaries.
WILLIAM T. MORGAN*
1799 Westridge Road
Los Angeles, California 90049
Retired; formerly, Chairman of the Board of Directors and President of each
fund in the United Group, TMK/United Funds, Inc., Waddell & Reed Funds, Inc.,
Torchmark Government Securities Fund, Inc. and Torchmark Insured Tax-Free Fund,
Inc. (Mr. Morgan retired as Chairman of the Board of Directors and President of
these funds on April 30, 1993); formerly, President, Director and Chief
Executive Officer of WRIMCO and Waddell & Reed, Inc.; formerly, Chairman of the
Board of Directors of Waddell & Reed Services Company; formerly, Director of
Waddell & Reed Asset Management Company, United Investors Management Company and
United Investors Life Insurance Company, affiliates of Waddell & Reed, Inc.
DOYLE PATTERSON
1030 West 56th Street
Kansas City, Missouri 64113
Associated with Republic Real Estate, engaged in real estate management and
investment; formerly, Director of The Vendo Company, a manufacturer and
distributor of vending machines.
FREDERICK VOGEL, III
1805 West Bradley Road
Milwaukee, Wisconsin 53217
Retired.
PAUL S. WISE
P. O. Box 5248
8648 Silver Saddle Drive
Carefree, Arizona 85377
Director of Potash Corporation of Saskatchewan.
LESLIE S. WRIGHT
Samford University
800 Lakeshore Drive
Birmingham, Alabama 35209
Chancellor of Samford University; formerly, Director of City Federal
Savings and Loan Association; formerly, President of Samford University.
Robert L. Hechler
Vice President and Principal Financial Officer of the fund; Vice
President, Chief Operations Officer, Director and Treasurer of Waddell & Reed
Financial Services, Inc.; Executive Vice President, Principal Financial Officer,
Director and Treasurer of WRIMCO; President, Chief Executive Officer, Principal
Financial Officer, Director and Treasurer of Waddell & Reed, Inc.; Director and
Treasurer of Waddell & Reed Asset Management Company; President, Director and
Treasurer of Waddell & Reed Services Company; Vice President, Treasurer and
Director of Torchmark Distributors, Inc.
Henry J. Herrmann
Vice President of the fund; Vice President, Chief Investment Officer and
Director of Waddell & Reed Financial Services, Inc.; Director of Waddell & Reed,
Inc.; President, Chief Executive Officer, Chief Investment Officer and Director
of WRIMCO and Waddell & Reed Asset Management Company; Senior Vice President and
Chief Investment Officer of United Investors Management Company.
Theodore W. Howard
Vice President, Treasurer and Principal Accounting Officer of the fund;
Vice President of Waddell & Reed Services Company.
Sharon K. Pappas
Vice President, Secretary and General Counsel of the fund; Vice
President, Secretary and General Counsel of Waddell & Reed Financial Services,
Inc.; Senior Vice President, Secretary and General Counsel of the Manager and
Waddell & Reed, Inc.; Director, Senior Vice President, Secretary and General
Counsel of Waddell & Reed Services Company; Director, Secretary and General
Counsel of Waddell & Reed Asset Management Company; Vice President, Secretary
and General Counsel of Torchmark Distributors, Inc.; formerly Assistant General
Counsel of Waddell & Reed, Inc., the Manager, Waddell & Reed Financial Services,
Inc., Waddell & Reed Asset Management Company and Waddell & Reed Services
Company.
The address of each person is 6300 Lamar Avenue, P.O. Box 29217, Shawnee
Mission, Kansas 66201-9217 unless a different address is given.
As of the date of this SAI, four of the fund's Directors may be deemed to
be "interested persons" as defined in the Investment Company Act of 1940 of its
underwriter, Waddell & Reed, Inc. or of its manager, WRIMCO. The Directors who
may be deemed to be "interested persons" are indicated as such by an asterisk.
The Board has created an honorary position of Director Emeritus, which
position a director may elect after resignation from the Board provided the
director has attained the age of 75 and has served as a director of the funds in
the United Group for a total of at least five years. A Director Emeritus
receives fees in recognition of his past services whether or not services are
rendered in his capacity as Director Emeritus, but has no authority or
responsibility with respect to management of the Fund. Currently, no person
serves as a Director Emeritus.
The fund will pay annual fees to each Director, other than Directors who
are affiliates of Waddell & Reed, Inc., and to each Director Emeritus in an
amount to be determined by the Board of Directors after the public sale of
shares of the fund commences. No fees are currently paid to Directors or
Directors Emeritus. The Director's fees will be allocated among the funds in
the United Group, Waddell & Reed Funds, Inc. and TMK/United Funds, Inc. based on
their relative size. The officers will be paid by Waddell & Reed, Inc. or its
affiliates.
Shareholdings
As of ______________, 199_, all of the fund's Directors and officers as a
group owned less than 1% of the outstanding shares of the fund. As of such
date, ________ owned of record and beneficially 100% of the fund's outstanding
shares. See "Organization of the Fund."
ORGANIZATION OF THE FUND
The fund was organized on August 25, 1994, and has no prior history.
The Shares of the Fund
The fund presently has only one class of shares. Each full and fractional
share has the same rights to dividends, to vote and to receive assets if the
fund liquidates (winds up). Shares are fully paid and nonassessable when
bought.
Those shares held by ___________ (as described below) will be voted in
proportion to the voting instructions which are received on any matter. Voting
instructions to abstain on any item to be voted upon will be applied to reduce
the votes eligible to be cast by ______________.
Initial Investment and Organizational Expenses
On ____________, __________ purchased for investment _____ shares of the
fund at a net asset value of $____ per share. As of the date of this SAI, it
was the sole shareholder of the fund.
The fund's organizational expenses in the amount of $ _____ have been
advanced by ____________ and are an obligation to be paid by the fund. These
expenses are being amortized over the 60-month period following the date of the
initial public offering of the fund's shares. In the event that all or part of
_______'s initial investment in the fund's shares is redeemed prior to the full
reimbursement of the organizational expenses, the fund's obligation to make
reimbursement will cease.
<PAGE>
APPENDIX A
The following are descriptions of some of the ratings of securities
which the fund may use. The fund may also use ratings provided by other
nationally recognized statistical rating organizations in determining the
securities eligible for investment.
DESCRIPTION OF BOND RATINGS
Standard & Poor's Ratings Group. A Standard & Poor's corporate bond rating
is a current assessment of the creditworthiness of an obligor with respect to a
specific obligation. This assessment of creditworthiness may take into
consideration obligors such as guarantors, insurers or lessees.
The debt rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or suitability for
a particular investor.
The ratings are based on current information furnished to Standard & Poor's
by the issuer or obtained by Standard & Poor's from other sources it considers
reliable. Standard & Poor's does not perform an audit in connection with any
rating and may, on occasion, rely on unaudited financial information. The
ratings may be changed, suspended or withdrawn as a result of changes in, or
unavailability of, such information, or based on other circumstances.
The ratings are based, in varying degrees, on the following considerations:
1. Likelihood of default -- capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in
accordance with the terms of the obligation;
2. Nature of and provisions of the obligation;
3. Protection afforded by, and relative position of, the obligation in
the event of bankruptcy, reorganization or other arrangement under the
laws of bankruptcy and other laws affecting creditors' rights.
AAA -- Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA -- Debt rated AA also qualifies as high quality debt. Capacity to pay
interest and repay principal is very strong, and debt rated AA differs from AAA
issues only in small degree.
A -- Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB -- Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC, C - Debt rated BB, B, CCC, CC and C is regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and C the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major exposures
to adverse conditions.
BB -- Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B -- Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
BB or BB- rating.
CCC -- Debt rated CCC has a currently indefinable vulnerability to default,
and is dependent upon favorable business, financial and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
CC -- The rating CC is typically applied to debt subordinated to senior
debt that is assigned an actual or implied CCC rating.
C -- The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.
CI -- The rating CI is reserved for income bonds on which no interest is
being paid.
D -- Debt rated D is in payment default. It is used when interest payments
or principal payments are not made on a due date even if the applicable grace
period has not expired, unless Standard & Poor's believes that such payments
will be made during such grace periods. The D rating will also be used upon a
filing of a bankruptcy petition if debt service payments are jeopardized.
Plus (+) or Minus (-) -- To provide more detailed indications of credit
quality, the ratings from AA to CCC may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.
NR -- Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that S&P does not rate a
particular type of obligation as a matter of policy.
Debt Obligations of issuers outside the United States and its territories
are rated on the same basis as domestic corporate and municipal issues. The
ratings measure the creditworthiness of the obligor but do not take into account
currency exchange and related uncertainties.
Bond Investment Quality Standards: Under present commercial bank
regulations issued by the Comptroller of the Currency, bonds rated in the top
four categories (AAA, AA, A, BBB, commonly known as "investment grade" ratings)
are generally regarded as eligible for bank investment. In addition, the laws
of various states governing legal investments may impose certain rating or other
standards for obligations eligible for investment by savings banks, trust
companies, insurance companies and fiduciaries generally.
Moody's Investors Service. A brief description of the applicable Moody's
Investors Service rating symbols and their meanings follows:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Some bonds lack outstanding
investment characteristics and in fact have speculative characteristics as well.
NOTE: Bonds within the above categories which possess the strongest investment
attributes are designated by the symbol "1" following the rating.
Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa -- Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.
Ca -- Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C -- Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Dollar-Weighted Average Maturity is derived by multiplying the value of
each investment by the number of days remaining to its maturity, adding these
calculations, and then dividing the total by the value of the fund's portfolio.
An obligation's maturity is typically determined on a stated final maturity
basis, although there are some exceptions to this rule.
For example, if it is probable that the issuer of an instrument will take
advantage of a maturity-shortening device, such as a call, refunding, or
redemption provision, the date on which the instrument will probably be called,
refunded, or redeemed may be considered to be its maturity date. Also, the
maturities of mortgage-backed securities and some asset-backed securities, such
as collateralized mortgage obligations, are determined on a weighted average
life basis, which is the average time for principal to be repaid. For a
mortgage security, this average time is calculated by assuming a constant
prepayment rate for the life of the mortgage. The weighted average life of
these securities is likely to be substantially shorter than their stated final
maturity.
DESCRIPTION OF NOTE RATINGS
A Standard & Poor's note rating reflects the liquidity factors and market
access risks unique to notes. Notes maturing in 3 years or less will likely
receive a note rating. Notes maturing beyond 3 years will most likely receive a
long-term debt rating. The following criteria will be used in making that
assessment.
--Amortization schedule (the larger the final maturity relative to other
maturities, the more likely the issue is to be treated as a note).
--Source of Payment (the more the issue depends on the market for its
refinancing, the more likely it is to be treated as a note.)
The note rating symbols and definitions are as follows:
SP-1 Strong capacity to pay principal and interest. Issues determined to
possess very strong characteristics are given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term
of the notes.
SP-3 Speculative capacity to pay principal and interest.
Moody's Short-Term Loan Ratings -- Moody's ratings for state and municipal
short-term obligations will be designated Moody's Investment Grade (MIG). This
distinction is in recognition of the differences between short-term credit risk
and long-term risk. Factors affecting the liquidity of the borrower are
uppermost in importance in short-term borrowing, while various factors of major
importance in bond risk are of lesser importance over the short run. Rating
symbols and their meanings follow:
MIG 1 -- This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.
MIG 2 -- This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.
MIG 3 -- This designation denotes favorable quality. All security elements
are accounted for but this is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.
MIG 4 -- This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although not
distinctly or predominantly speculative, there is specific risk.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Standard & Poor's Ratings Group commercial paper rating is a current
assessment of the likelihood of timely payment of debt considered short-term in
the relevant market. Ratings are graded into several categories, ranging from
"A-1" for the highest quality obligations to D for the lowest. Issuers rated A
are further referred to by use of numbers 1, 2 and 3 to indicate the relative
degree of safety. Issues assigned an A rating (the highest rating) are regarded
as having the greatest capacity for timely payment. An A-1 designation
indicates that the degree of safety regarding timely payment is strong. Those
issues determined to possess extremely strong safety characteristics are denoted
with a plus sign (+) designation. An A-2 rating indicates that capacity for
timely payment is satisfactory; however, the relative degree of safety is not as
high as for issues designated A-1. Issues rated A-3 have adequate capacity for
timely payment; however, they are more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.
Issues rated B are regarded as having only speculative capacity for timely
payment. A C rating is assigned to short-term debt obligations with a doubtful
capacity for payment. Debt rated D is in payment default, which occurs when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless Standard & Poor's believes
that such payments will be made during such grace period.
Moody's Investors Service, Inc. commercial paper ratings are opinions of
the ability of issuers to repay punctually promissory obligations not having an
original maturity in excess of nine months. Moody's employs the designations of
Prime 1, Prime 2 and Prime 3, all judged to be investment grade, to indicate the
relative repayment capacity of rated issuers. Issuers rated Prime 1 have a
superior capacity for repayment of short-term promissory obligations and
repayment capacity will normally be evidenced by (1) lending market positions in
well established industries; (2) high rates of return on funds employed; (3)
conservative capitalization structures with moderate reliance on debt and ample
asset protection; (4) broad margins in earnings coverage of fixed financial
charges and high internal cash generation; and (5) well established access to a
range of financial markets and assured sources of alternate liquidity. Issuers
rated Prime 2 also have a strong capacity for repayment of short-term promissory
obligations as will normally be evidenced by many of the characteristics
described above for Prime 1 issuers, but to a lesser degree. Earnings trends
and coverage ratios, while sound, will be more subject to variation;
capitalization characteristics, while still appropriate, may be more affected by
external conditions; and ample alternate liquidity is maintained. Issuers rated
Prime 3 have an acceptable capacity for repayment of short-term promissory
obligations, as will normally be evidenced by many of the characteristics above
for Prime 1 issuers, but to a lesser degree. The effect of industry
characteristics and market composition may be more pronounced; variability in
earnings and profitability may result in changes in the level of debt protection
measurements and requirement for relatively high financial leverage; and
adequate alternate liquidity is maintained.
<PAGE>
REGISTRATION STATEMENT
PART C
OTHER INFORMATION
24. Financial Statements and Exhibits
---------------------------------
Included in Part C:
-------------------
Shareholder Servicing Agreement attached hereto as EX-99.B9-ASSSA
Fund Application-EX-99.B9-ASAPP
Opinion and Consent of Counsel attached hereto as EX-99.B10-ASOPIN
Qualified Retirement Plan and Trust-Defined Contribution Basic Plan
Document attached hereto as EX-99.B14-1-03bpd
Qualified Retirement Plan-Summary Plan Description attached hereto as EX-
99.B14-2-03spd
Employer Contribution 403(b)-Adoption Agreement-EX-99.B14-3-403baa
IRC Section 457 Deferred Compensation Plan-Adoption Agreement attached
hereto as EX-99.B14-4-457aa
IRC Section 457-Deferred Compensation Specimen Plan Document attached
hereto as EX-99.B14-5-457bpd
National Non standardized 401(k)Profit Sharing Plan-Adoption Agreement
attached hereto as EX-99.B14-6-ns401aa
401(k) Non standardized Profit Sharing Plan-Summary Plan Description
attached hereto as EX-99.B14-7-ns401gs
National Non standardized Money Purchase Pension Plan-Adoption Agreement
attached hereto as EX-99.B14-8-nsmppaa
National Non standardized Profit Sharing Plan-Adoption Agreement attached
hereto as EX-99.B14-9nspspaa
Standardized 401(k) Profit Sharing Plan-Adoption Agreement attached hereto
as EX-99.B14-10-s401aa
401(k) Standardized Profit Sharing Plan-Summary Plan Description attached
hereto as EX-99.B14-11-s401gis
Universal Simplified Employee Pension Plan-Adoption Agreement-EX-99.B14-12-
sepaa
Universal Simplified Employee Pension Plan-Basic Plan Document-EX-99.B14-
13-sepbpd
National Standardized Money Purchase Pension Plan-Adoption Agreement
attached hereto as EX-99.B14-14-smppaa
Standardized Money Purchase Pension Plan-Summary Plan Description attached
hereto as EX-99.B14-15-smppgis
Standardized Profit Sharing Plan-Adoption Agreement attached hereto as EX-
99.B14-16-spspaa
Standardized Profit Sharing Plan-Summary Plan Description attached hereto
as EX-99.B14-17-spspgis
403(b)(7) Tax-sheltered Custodial Account Agreement attached hereto as EX-
99.B14-18-tsa
Title I 403(b) Plan Document attached hereto as EX-99.B14-19-ttl1pbd
Other schedules prescribed by Regulation S-X are not filed because the
required matter is not present or is insignificant.
<PAGE>
(b) Exhibits:
(1) Articles of Incorporation filed October 3, 1994 as EX-99.B1-ASArticles
to the initial Registration Statement on Form N-1A*
(2) Bylaws filed October 3, 1994 as EX-99.B2-ASBylaws to the initial
Registration Statement on Form N-1A*
(3) Not applicable
(4) Article FIFTH, Article SEVENTH and Article TENTH of the Articles of
Incorporation of the Registrant, filed October 3, 1994 as EX-99.B1-
ASArticles to the initial Registration Statement on Form N-1A*;
Article II, Article VIII and Article XI of the Bylaws of the
Registrant, filed October 3, 1994 as EX-99.B2-Bylaws to the initial
Registration Statement on Form N-1A*
(5) Investment Management Agreement filed October 3, 1994 as EX-99.B5-
ASIMA to the initial Registration Statement on Form N-1A*
(6) Underwriting Agreement filed October 3, 1994 as EX-99.B6-ASUA to the
initial Registration Statement on Form N-1A*
(7) Not applicable
(8) Custodian Agreement including Schedule of Remuneration filed October
3, 1994 as EX-99.B8-ASCA to the initial Registration Statement on Form
N-1A*
(9) Shareholder Servicing Agreement
Accounting Services Agreement filed October 3, 1994 as EX-99.B9-ASASA
to the initial Registration Statement on Form N-1A*
Service Agreement filed October 3, 1994 as EX-99.B9-ASSA to the
initial Registration Statement on Form N-1A*
Fund application
(10) Opinion and Consent of Counsel
(11) Not applicable
(12) Not applicable
(13) Agreement with initial shareholder, Waddell & Reed, Inc., to be filed
with the next amendment to the initial Registration Statement
(14) 1. Qualified Retirement Plan and Trust-Defined Contribution Basic
Plan Document
2. Qualified Retirement Plan-Summary Plan Description
3. Employer Contribution 403(b)-Adoption Agreement
4. IRC Section 457 Deferred Compensation Plan-Adoption Agreement
5. IRC Section 457-Deferred Compensation Specimen Plan Document
6. National Nonstandardized 401(k)Profit Sharing Plan-Adoption
Agreement
7. 401(k) Nonstandardized Profit Sharing Plan-Summary Plan
Description
8. National Nonstandardized Money Purchase Pension Plan-Adoption
Agreement
9. National Nonstandardized Profit Sharing Plan-Adoption Agreement
10. Standardized 401(k) Profit sharing Plan-Adoption Agreement
11. 401(k) Standardized Profit Sharing Plan-Summary Plan Description
12. Universal Simplified Employee Pension Plan-Adoption Agreement
13. Universal Simplified Employee Pension Plan-Basic Plan Document
14. National Standardized Money Purchase Pension Plan-Adoption
Agreement
15. Standardized Money Purchase pension Plan-Summary Plan Description
16. Standardized Profit Sharing Plan-Adoption Agreement
17. Standardized Profit Sharing Plan-summary Plan Description
18. 403(b)(7) Tax-sheltered Custodial Account Agreement
19. Title I 403(b) Plan Document
(15) Service Plan filed October 3, 1994 as EX-99.B15-ASSP to the initial
Registration Statement on Form N-1A*
(16) Not applicable
(17) Not applicable
25. Persons Controlled by or under common control with Registrant
------------------------------------------------------------
None
26. Number of Holders of Securities
-------------------------------
To be disclosed with the next amendment to the initial Registration
Statement
27. Indemnification
---------------
Reference is made to Article X of the Articles of Incorporation of
Registrant filed October 3, 1994 as EX-99.B1-ASArticles to the initial
Registration Statement on Form N-1A*, Article IX of the By-Laws filed
October 3, 1994 as EX-99.B2-ASBylaws to the initial Registration Statement
on Form N-1A*; and to Article II of the Underwriting Agreement filed
October 3, 1994 as EX-99.B6-ASUA to the initial Registration Statement on
Form N-1A*, each of which provides indemnification. Also refer to Section
2-418 of the Maryland General Corporation Law regarding indemnification of
directors, officers, employees and agents.
28. Business and Other Connections of Investment Manager
----------------------------------------------------
Waddell & Reed Investment Management Company is the Investment Manager of
the Registrant under the terms of an Investment Management Agreement
whereby it provides investment management services to the Registrant.
Waddell & Reed Investment Management Company is not engaged in any business
other than the provision of investment management services to those
registered investment companies as described in Part A and Part B of this
Registration Statement.
As to each director and officer of Waddell & Reed Investment Management
Company, reference is made to Part A and Part B of this Registration
Statement.
29. Principal Underwriter
---------------------
(a) Waddell & Reed, Inc. is the principal underwriter of the Registrant.
It is also the principal underwriter to the following investment
companies:
United Funds, Inc.
United International Growth Fund, Inc.
United Continental Income Fund, Inc.
United Vanguard Fund, Inc.
United Municipal Bond Fund, Inc.
United High Income Fund, Inc.
United Cash Management, Inc.
United Government Securities Fund, Inc.
United New Concepts Fund, Inc.
United Gold & Government Fund, Inc.
United Municipal High Income Fund, Inc.
United High Income Fund II, Inc.
United Retirement Shares, Inc.
TMK/United Funds, Inc.
Waddell & Reed Funds, Inc.
and is depositor of the following unit investment trusts:
United Periodic Investment Plans to acquire shares of United Science
and Technology Fund
United Periodic Investment Plans to acquire shares of United
Accumulative Fund
United Income Investment Programs
United International Growth Investment Programs
United Continental Income Investment Programs
United Vanguard Investment Programs
(b) The information contained in the underwriter's application on form BD,
under the Securities Exchange Act of 1934, is herein incorporated by
reference.
(c) No compensation was paid by the Registrant to any principal
underwriter who is not an affiliated person of the Registrant or any
affiliated person of such affiliated person.
30. Location of Accounts and Records
--------------------------------
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act and
rules promulgated thereunder are under the possession of Mr. Robert L.
Hechler and Ms. Sharon K. Pappas, as officers of the Registrant, each of
whose business address is Post Office Box 29217, Shawnee Mission, Kansas
66201-9217.
31. Management Services
-------------------
There are no service contracts other than as discussed in Part A and B of
this Registration Statement and listed in response to Items (b)(9) and
(b)(15) hereof.
32. Undertakings
------------
(a) Not applicable
(b) Registrant undertakes to file a post-effective amendment, using
financial statements which may or may not be certified, within four to
six months of the effective date of Registrant's Registration
Statement under the Securities Act of 1933.
(c) The Fund agrees to furnish to each person to whom a prospectus is
delivered a copy of the Fund's latest annual report to shareholders
upon request and without charge.
(d) To the extent that Section 16(c) of the Investment Company Act of
1940, as amended, applies to the Fund, the Fund agrees, if requested
in writing by the shareholders of record of not less than 10% of the
Fund's outstanding shares, to call a meeting of the shareholders of
the Fund for the purpose of voting upon the question of removal of any
director and to assist in communications with other shareholders as
required by Section 16(c).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and/or the
Investment Company Act of 1940, the Registrant has duly caused this Pre-
Effective Amendment to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Overland Park, and State of Kansas, on the 16th
day of December, 1994.
UNITED ASSET STRATEGY FUND, INC.
(Registrant)
By /s/ Keith A. Tucker
------------------------------
Keith A. Tucker, President
Pursuant to the requirements of the Securities Act of 1933, and/or the
Investment Company Act of 1940, this Registration Statement has been signed
below by the following persons in the capacities and on the date indicated.
Signatures Title
/s/Ronald K. Richey* Chairman of the Board December 16, 1994
- ---------------------- --------------------
Ronald K. Richey
/s/Keith A. Tucker* President and Director December 16, 1994
- ---------------------- (Principal Executive -------------------
Keith A. Tucker Officer)
/s/Theodore W. Howard* Vice President, Treasurer December 16 ,1994
- ---------------------- and Principal Accounting --------------------
Theodore W. Howard Officer
/s/Robert L. Hechler* Vice President and December 16, 1994
- ---------------------- Principal Financial --------------------
Robert L. Hechler Officer
/s/ Henry L. Bellmon* Director December 16, 1994
- ---------------------- --------------------
Henry L. Bellmon
/s/Dodds I. Buchanan* Director December 16, 1994
- --------------------- --------------------
Dodds I. Buchanan
/s/Jay B. Dillingham* Director December 16, 1994
- -------------------- --------------------
Jay B. Dillingham
/s/John F. Hayes* Director December 16, 1994
- ------------------- --------------------
John F. Hayes
/s/Glendon E. Johnson* Director December 16, 1994
- ------------------- --------------------
Glendon E. Johnson
/s/William T. Morgan* Director December 16, 1994
- ------------------- --------------------
William T. Morgan
/s/Doyle Patterson* Director December 16, 1994
- ------------------- --------------------
Doyle Patterson
/s/Frederick Vogel, III* Director December 16, 1994
- ------------------- --------------------
Frederick Vogel, III
/s/Paul S. Wise* Director December 16, 1994
- ------------------- --------------------
Paul S. Wise
/s/Leslie S. Wright* Director December 16, 1994
- ------------------- --------------------
Leslie S. Wright
*By
/s/Sharon K. Pappas
- --------------------
Sharon K. Pappas
Attorney-in-Fact
ATTEST:
/s/Amy D. Eisenbeis
- --------------------
Amy D. Eisenbeis
Assistant Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, That each of the undersigned, UNITED FUNDS,
INC., UNITED INTERNATIONAL GROWTH FUND, INC., UNITED MUNICIPAL BOND FUND, INC.,
UNITED VANGUARD FUND, INC., UNITED HIGH INCOME FUND, INC., UNITED CASH
MANAGEMENT, INC., UNITED NEW CONCEPTS FUND, INC., UNITED GOVERNMENT SECURITIES
FUND, INC., UNITED MUNICIPAL HIGH INCOME FUND, INC., UNITED GOLD & GOVERNMENT
FUND, INC., UNITED HIGH INCOME FUND II, INC., UNITED CONTINENTAL INCOME FUND,
INC., UNITED RETIREMENT SHARES, INC., UNITED ASSET STRATEGY FUND, INC.,
TMK/UNITED FUNDS, INC., WADDELL & REED FUNDS, INC., TORCHMARK INSURED TAX-FREE
FUND, INC. AND TORCHMARK GOVERNMENT SECURITIES FUND, INC. (each hereinafter
called the "Corporation"), and certain directors and officers for the
Corporation, do hereby constitute and appoint KEITH A. TUCKER, ROBERT L.
HECHLER, and SHARON K. PAPPAS, and each of them individually, their true and
lawful attorneys and agents to take any and all action and execute any and all
instruments which said attorneys and agents may deem necessary or advisable to
enable each Corporation to comply with the Securities Act of 1933 and/or the
Investment Company Act of 1940, as amended, and any rules, regulations, orders
or other requirements of the United States Securities and Exchange Commission
thereunder, in connection with the registration under the Securities Act of 1933
and/or the Investment Company Act of 1940, as amended, including specifically,
but without limitation of the foregoing, power and authority to sign the names
of each of such directors and officers in his behalf as such director or officer
has indicated below opposite his signature hereto, to any amendment or
supplement to the Registration Statement filed with the Securities and Exchange
Commission under the Securities Act of 1933 and/or the Investment Company Act of
1940, as amended, and to any instruments or documents filed or to be filed as a
part of or in connection with such Registration Statement; and each of the
undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.
Date: September 1, 1994 /s/Keith A. Tucker*
---------------------
Keith A. Tucker, President
/s/Ronald K. Richey* Chairman of the Board September 1, 1994
- -------------------- ------------------
Ronald K. Richey
/s/Keith A. Tucker* President and Director September 1, 1994
- -------------------- (Principal Executive Officer) ------------------
Keith A. Tucker
/s/Theodore W. Howard* Vice President, Treasurer September 1, 1994
- -------------------- and Principal Accounting ------------------
Theodore W. Howard Officer
/s/Robert L. Hechler* Vice President and September 1, 1994
- -------------------- Principal Financial ------------------
Robert L. Hechler Officer
/s/Henry L. Bellmon* Director September 1, 1994
- -------------------- ------------------
Henry L. Bellmon
/s/Dodds I. Buchanan* Director September 1, 1994
- -------------------- ------------------
Dodds I. Buchanan
/s/Jay B. Dillingham* Director September 1, 1994
- -------------------- ------------------
Jay B. Dillingham
/s/John F. Hayes* Director September 1, 1994
- -------------------- ------------------
John F. Hayes
/s/Glendon E. Johnson* Director September 1, 1994
- -------------------- ------------------
Glendon E. Johnson
/s/William T. Morgan* Director September 1, 1994
- -------------------- ------------------
William T. Morgan
/s/Doyle Patterson* Director September 1, 1994
- -------------------- ------------------
Doyle Patterson
/s/Frederick Vogel, III* Director September 1, 1994
- -------------------- ------------------
Frederick Vogel, III
/s/Paul S. Wise* Director September 1, 1994
- -------------------- ------------------
Paul S. Wise
/s/Leslie S. Wright* Director September 1, 1994
- -------------------- ------------------
Leslie S. Wright
Attest:
/s/Sharon K. Pappas
- --------------------------------
Sharon K. Pappas, Vice President
and Secretary
EX-99.B9-ASSSA
SHAREHOLDER SERVICING AGREEMENT
THIS AGREEMENT, made as of the ____ day of ____________, 1994 by and
between UNITED ASSET STRATEGY FUND, INC. (the "Fund") and Waddell & Reed
Services Company (the "Agent"),
W I T N E S S E T H :
WHEREAS, The Fund wishes to appoint the Agent to be its shareholder
servicing agent upon, and subject to the terms and provisions of this Agreement;
NOW THEREFORE, in consideration of the mutual covenants contained in this
Agreement, the parties agree as follows:
1. Appointment of Agent as Shareholder Servicing Agent for the Fund;
Acceptance.
(1) The Fund hereby appoints the Agent to act as Shareholder
Servicing Agent for the Fund upon and subject to the terms and provisions of
this Agreement.
(2) The Agent hereby accepts the appointment as Shareholder Servicing
Agent for the Fund and agrees to act as such upon, and subject to, the terms and
provisions of this Agreement.
2. Definitions.
(1) In this Agreement -
(a) the term the "Act" means the Investment Company Act of 1940
as amended from time to time;
(b) the term "account" means the shares of the Fund registered
on the books of the Fund in the name of a shareholder and includes shares
subject to instructions by the shareholder with respect to periodic redemptions
and/or reinvestment in additional shares of any dividends payable on said
shares.
(c) the term "affiliate" of a person shall mean a person
controlling, controlled by, or under common control with that person;
(d) the term "officers' instruction" means an instruction given
on behalf of the Fund to the Agent and signed on behalf of the Fund by any one
or more persons authorized to do so by the Fund's board of directors;
(e) the term "prospectus" means the prospectus and Statement of
Additional Information of the Fund from time to time in effect;
(f) the term "shares" means shares including fractional shares
of capital stock of the Fund, whether or not such shares are evidenced by an
outstanding stock certificate issued by the Fund;
(g) the term "shareholder" shall mean the owner of record of
shares of the Fund;
(h) the term "stock certificate" means a certificate
representing shares, in the form then currently in use by the Fund, it being
understood, however, that the Fund may under applicable law elect not to issue
stock certificates.
3. Duties of the Agent.
The Agent shall perform such duties as shall be set forth in this
paragraph 3 and in accordance with the practice stated in Exhibit A of this
Agreement or any amendment thereof.
(1) Transfers.
Subject to the provisions of this Agreement the Agent hereby
agrees to perform the following functions as transfer agent for the Fund:
(a) recording the ownership, transfer, exchange and cancellation
of ownership of shares of the Fund on the books of the Fund;
(b) causing the issuance, transfer, exchange and cancellation of
stock certificates;
(c) establishing and maintaining records of accounts;
(d) computing and causing to be prepared and mailed or otherwise
delivered to shareholders payment checks and notices of reinvestment in
additional shares of dividends, stock dividends or stock splits declared by the
Fund on shares and of redemption proceeds due by the Fund on redemption of
shares;
(e) furnishing to shareholders such information as may be
reasonably required by the Fund, including appropriate income tax information;
(f) addressing and mailing to shareholders prospectuses, annual
and semiannual reports and proxy materials for shareholder meetings prepared by
or on behalf of the Fund;
(g) in the event the Fund elects to issue stock certificates,
replacing allegedly lost, stolen or destroyed stock certificates in accordance
with and subject to procedures and conditions agreed upon and set out in
officer's instructions;
(h) maintaining such books and records relating to transactions
effected by the Agent pursuant to this Agreement as are required by the Act, or
by rules or regulations thereunder, or by any other applicable provisions of
law, to be maintained by the Fund or its transfer agent with respect to such
transactions; preserving, or causing to be preserved, any such books and records
for such periods as may be required by any such law, rule or regulation;
furnishing the Fund such information as to such transactions and at such time as
may be reasonably required by it to comply with applicable laws and regulations.
(i) providing such services and carrying out such
responsibilities on behalf of the Fund, or imposed on the Agent as the Fund's
transfer agent, not otherwise expressly provided for in this Paragraph 3, as may
be required by or be reasonably necessary to comply with any statute, act,
governmental rule, regulation or directive or court order, including, without
limitation, the requirements imposed by the Internal Revenue Code relating to
the withholding of tax from distributions to shareholders.
(2) Correspondence
The Agent agrees to deal with and answer all correspondence from
or on behalf of shareholders relating to its functions under this Agreement.
4. Compensation of the Agent.
The Fund agrees to pay the Agent for its services under this Agreement
an amount payable on the first day of each month of $1.0208 for each account of
the Fund which was in existence during any portion of the immediately preceding
month and, in addition, to pay to the Agent the sum of $0.30 for each account
for which, during such month, a record date was established for payment of a
dividend, in cash or otherwise (which term includes a distribution),
irrespective of whether such dividend was payable in that month or later or was
payable directly or was to be reinvested. In addition, the Fund agrees to
reimburse the Agent for the following "out-of-pocket" expenses of the Agent
within five days after receipt of an itemized statement of such expenses, to the
extent that payment of such expenses has not been or is not to be made directly
by the Fund: (i) costs of stationery, appropriate forms, envelopes, checks,
postage, printing (except cost of printing prospectuses, annual and semiannual
reports and proxy materials) and mailing charges, including returned mail and
proxies, incurred by the Agent with respect to materials and communications sent
to shareholders in carrying out its duties to the Fund under this Agreement;
(ii) long distance telephone costs incurred by the Agent for telephone
communications and microfilm and storage costs for transfer agency records and
documents; (iii) costs of all ancillary and supporting services and related
expenses (other than insurance premiums) reasonably required by and provided to
the Agent, other than by its employees or employees of an affiliate, with
respect to functions of the Fund being performed by it in its capacity as Agent
hereunder, including legal advice and representation in litigation to the extent
that such payments are permitted under Paragraph 7 of this Agreement; (iv) costs
for special reports or information furnished on request pursuant to this
Agreement and not specifically required by the Agent by Paragraph 3 of this
Agreement; and (v) reasonable costs and expenses incurred by the Agent in
connection with the duties of the Agent described in Paragraph (3)(1)(i). In
addition, the Fund agrees to promptly pay over to the Agent any fees or payment
of charges it may receive from a shareholder for services furnished to the
shareholder by the Agent.
Services and operations incident to the sale and distribution of the
Fund's shares, including sales communications, confirmations of investments (not
including reinvestment of dividends) and the clearing or collection of payments
will not be for the account or at the expense of the Fund under this Agreement,
nor shall any activity of the Agent called for under a Services Agreement which
the Fund and the Agent are parties, be all the expenses of the Fund under this
Agreement.
5. Right of Fund to Inspect Records, etc.
The Fund will have the right under this Agreement to perform on site
inspection of records and accounts and to perform audits directly pertaining to
the Fund shareholder accounts serviced by the Agent hereunder at the Agent's
facilities in accordance with reasonable procedures at the frequency necessary
to assure proper administration of the Agreement. The Agent will cooperate with
the Funds' auditors or representatives of appropriate regulatory agencies and
furnish all reasonably requested records and data.
6. Insurance.
The Agent now has the insurance coverage described in Exhibit B,
attached hereto, and the Agent will not take any action to eliminate or decrease
such coverage during the term of this Agreement without receiving the approval
of the Fund in advance of any change, except the Agent, after giving reasonable
notice to the Fund, may eliminate or decrease any coverage if the premiums for
such coverage are substantially increased.
7. Standard of Care; Indemnification.
The Agent will at all times exercise due diligence and good faith in
performing its duties hereunder. The Agent will make every reasonable effort
and take all reasonably available measures to assure the adequacy of its
personnel and facilities as well as the accurate performance of all services to
be performed by it hereunder within, at a minimum, the time requirements of any
applicable statutes, rules or regulations or as set forth in the prospectus.
The Agent shall not be responsible for, and the Fund agrees to
indemnify the Agent for any losses, damages or expenses (including reasonable
counsel fees and expenses) (i) resulting from any claim, demand, action or suit
not resulting from the Agent's failure to exercise good faith or due diligence
and arising out of or in connection with the Agent's duties on behalf of the
Fund hereunder; (ii) for any delay, error or omission by reason of circumstances
beyond its control, including acts of civil or military authority, national
emergencies, labor difficulties (except with respect to the Agent's employees),
fire, mechanical breakdown beyond its control, flood or catastrophe, acts of
God, insurrection, war, riots, or failure beyond its control of transportation,
communication or power supply; or (iii) for any action taken or omitted to be
taken by the Agent in good faith in reliance on (a) the authenticity of any
instrument or communication reasonably believed by it to be genuine and to have
been properly made and signed or endorsed by an appropriate person, (b) the
accuracy of any records or information provided to it by the Fund, (c) any
authorization or instruction contained in any officers' instruction, or (d) with
respect to the functions performed for the Fund listed under Paragraph 3(1) of
this Agreement, any advice of counsel approved by the Fund who may be internally
employed counsel or outside counsel, in either case for the Fund and/or the
Agent.
In order for the rights to indemnification to apply, it is understood
that if in any case the Fund may be asked to indemnify or hold the Agent
harmless, the Fund shall be advised of all pertinent facts concerning the
situation in question, and it is further understood that the Agent will use
reasonable care to identify and notify the Fund promptly concerning any
situation which presents or appears likely to present a claim for
indemnification against the Fund. The Fund shall have the option to defend the
Agent against any claim which may be the subject of this indemnification and, in
the event that the Fund so elects, it will so notify the Agent and thereupon the
Fund shall take over complete defense of the claim and the Agent shall sustain
no further legal or other expenses in such situation for which the Agent shall
seek indemnification under this paragraph. The Agent will in no case confess
any claim or make any compromise in any case in which the Fund will be asked to
indemnify the Agent except with the Fund's prior written consent.
8. Term of the Agreement; Taking Effect; Amendments.
This Agreement shall become effective at the start of business on the
date hereof and shall continue, unless terminated as hereinafter provided, for a
period of one year and from year to year thereafter, provided that such
continuance shall be specifically approved as provided below.
This Agreement shall go into effect, or may be continued, or may be
amended or a new agreement covering the same topics between the Fund and the
Agent may be entered into only if the terms of this Agreement, such continuance,
the terms of such amendment or the terms of such new agreement have been
approved by the board of directors of the Fund, including the vote of a majority
of the directors who are not "interested persons," as defined in the Act, of
either party to this Agreement or of Waddell & Reed Investment Management
Company, the agreement to be continued, amendment or new agreement cast in
person at a meeting called for the purpose of voting on such approval. Such a
vote is hereinafter referred to as a "disinterested director vote."
Any disinterested director vote shall include a determination that (i)
the Agreement, amendment, new agreement or continuance in question is in the
best interests of the Fund and its shareholders; (ii) the services to be
performed under the Agreement, the Agreement as amended, new agreement or
agreement to be continued, are services required for the operation of the Fund;
(iii) the Agent can provide services the nature and quality of which are at
least equal to those provided by others offering the same or similar services;
and (iv) the fees for such services are fair and reasonable in the light of the
usual and customary charges made by others for services of the same nature and
quality.
9. Termination.
(1) This Agreement may be terminated by the Agent at any time without
penalty upon giving the Fund 120 days' written notice (which notice may be
waived by the Fund) and may be terminated by the Fund at any time without
penalty upon giving the Agent sixty (60) days' written notice (which notice may
be waived by the Agent), provided that such termination by the Fund shall be
directed or approved by the vote of a majority of the board of directors of the
Fund in office at the time or by the vote of the holders of a majority (as
defined in or under the Act) of the outstanding shares of the Fund.
(2) On termination, the Agent will deliver to the Fund or its
designee all files, documents and records of the Fund used, kept or maintained
by the Agent in the performance of its services hereunder, including such of the
Fund's records in machine readable form as may be maintained by the Agent, as
well as such summary and/or control data relating thereto used by or available
to the Agent.
(3) In the event of any termination which involves the appointment of
a new shareholder servicing agent, including the Fund's acting as such on its
own behalf, the Fund shall have the non-exclusive right to the use of the data
processing programs used by the Agent in connection with the performance of its
duties under this Agreement without charge.
(4) In addition, on such termination or in preparation therefore, at
the request of the Fund and at the Fund's expense the Agent shall provide to the
extent that its capabilities then permit such documentation, personnel and
equipment as may be reasonably necessary in order for a new agent or the Fund to
fully assume and commence to perform the agency functions described in this
Agreement with a minimum disruption to the Fund's activities.
10. Construction; Governing Law.
The headings used in this Agreement are for convenience only and shall
not be deemed to constitute a part hereof. Whenever the context requires, words
denoting singular shall be read to include the plural. This Agreement and the
rights and obligations of the parties hereunder, shall be construed and
interpreted in accordance with the laws of the State of Kansas, except to the
extent that the laws of the State of Maryland apply with respect to share
transactions.
11. Representations and Warranties of Agent.
Agent represents and warrants that it is a corporation duly organized
and existing and in good standing under the laws of the State of Missouri, that
it is duly qualified to carry on its business in the State of Kansas and
wherever its duties require, that it has the power and authority under laws and
by its Articles of Incorporation and Bylaws to enter into this Shareholder
Servicing Agreement and to perform the services contemplated by this Agreement.
12. Entire Agreement.
This Agreement and the Exhibits annexed hereto constitutes the entire
and complete agreement between the parties hereto relating to the subject matter
hereof, supersedes and merges all prior discussions between the parties hereto,
and may not be modified or amended orally.
IN WITNESS WHEREOF, the parties have hereto caused this Agreement to
be duly executed on the day and year first above written.
UNITED ASSET STRATEGY FUND, INC.
By:
--------------------------------
Sharon K. Pappas, Vice President
ATTEST:
By:
----------------------
Amy D. Eisenbies
Assistant Secretary
WADDELL & REED SERVICES COMPANY
By:
----------------------------
Robert L. Hechler, President
ATTEST:
By:
-----------------------------
Sharon K. Pappas, Secretary
<PAGE>
EXHIBIT A
A. DUTIES IN SHARE TRANSFERS AND REGISTRATION
1. The Agent in carrying out its duties shall follow general commercial
practices and the Rules of the Stock Transfer Association, Inc. except as they
may conflict or be inconsistent with the specific provisions of the Fund's
Articles of Incorporation and Bylaws, prospectus, applicable Federal and state
laws and regulations and this Agreement.
2. The Agent shall not require that the signature of the appropriate
person be guaranteed, witnessed or verified in order to effect a redemption,
transfer, exchange or change of address except as may from time to time be
directed by the Fund as set forth in an officers' instruction. In the event a
signature guarantee is required by the Fund, the Agent shall not inquire as to
the genuineness of the guarantee.
3. The Agent shall not replace a lost, stolen or misplaced stock
certificate without requiring and being furnished with an open penalty surety
bond protecting the Fund and the Agent against loss.
B. The practices, procedures and requirements specified in A above may be
modified, altered, varied or supplemented as from time to time may be mutually
agreed upon by the Fund and the Agent and evidenced on behalf of the Fund by an
officers' instruction. Any such change shall not be deemed to be an amendment
to the Agreement within the meaning of Paragraph 8 of the Agreement.
EXHIBIT B
Bond or
Name of Bond Policy No. Insurer
Investment Company 87015194B ICI Mutual
Blanket Bond Form Insurance
Company
Fidelity $25,000,000
Audit Expense 500,000
On Premises 25,000,000
In Transit 25,000,000
Forgery or Alterations 25,000,000
Securities 25,000,000
Counterfeit Currency 25,000,000
Uncollectible Items of
Deposit 25,000
Total Limit 25,000,000
Directors and Officers/ 87015194D ICI Mutual
Errors and Omissions Liability Insurance
Insurance Form Company
Total Limit $ 5,000,000
Blanket Lost Instrument Bond 30S100639551 Aetna Life
& Casualty
<PAGE>
EX-99.B9-ASAPP
Waddell & Reed, Inc.
P.O. Box 29217 United Group of Funds Division Office Stamp
Shawnee Mission, KS 66201-9217 APPLICATION
I (We) make application for an account to be established as follows:
- -------------------------------------------------------------------------------
REGISTRATION TYPE (one only) Trans Code: ________
Date Tramsmitted: _____
- -------------------------------------------------------------------------------
NON RETIREMENT PLAN
[ ] Single Name [ ] Joint Tenants W/ROS [ ] Declaration of Trust Revocable
(Attach CUF0022)
[ ] Uniform Gifts (Transfers) To Minors [ ] Other:___________________________
Use this section for
Retirement Plans with
Custodians other than
Fidciary Trust Co.
- -------------------------------------------------------------------------------
RETIREMENT PLAN (Fiduciary Trust Co -- Cust., except for 457 Plans) See
Retirement Plan and Custody Agreement for annual custodian fees
[ ] Individual IRA
[ ] Spousal IRA [ ] Keogh Participant (Profit Sharing Plan)
[ ] Rollover (Qual. plan lump [ ] Keogh Participant (Money Purchase Plan)
sum distr.) (For a new Plan, tear out page 2 of
[ ] Simplified Pension Plan (SEP/SPP) Adoption Agreement in MRP1182)
(For a new Plan tear out
page 1 of Adoption Agreement
in MRP1166)
[ ] TSA or [ ] 457 __________________________________________________
(If billing is required, Employer's Name (Do not Abbreviate)
attach form #CUF1417) _________________________________________________
Street City State Zip
[ ] If Tri-Vest, enter Partnership name _________________________ Amt $________
(Attach Subscription Agreement and
Confidential Questionnaire CRP1186)
United Fund to receive partnership distributions: _________________________
Fund Name
Note: If Partnership not available W&R is authorized to place investments
in United Cash Management (a Fund of The United Group of Funds) until
next partnership is available.
- --------------------------------------------------------------------------------
REGISTRATION [ ] NEW ACCOUNT or [ ] NEW FUND FOR EXISTING ACCOUNT:
(Must have same ownership) [][][][][][][]-[]
_______________________________________________________________________________
Individual Name (exactly as desired) If spousal IRA, name of working spouse
Date of Birth
_________________________
Month Day Year
________________________________________________________________________________
Joint Name (if any, exactly as desired) If spousal IRA, name of non-working
spouse
Date of Birth
_________________________ _____________
Month Day Year Relationship (For grouping purposes)
_______________________________________________________________________________
Mailing Address
____________________________ ______________ ________ ____/_______-__________
City State Zip Telephone
Social Security #:[][][]-[][]-[][][][] or Taxpayer Identification #:
[][]-[][][][][][][]
- --------------------------------------------------------------------------------
INVESTMENTS Make check payable to Waddell & Reed
Code Code
621-Income 626-Gold & Government
622-Science and Technology 627-Continental Income
623-Accumulative 628-High Income
624-Bond 629-Vanguard
625-International Growth 630-New Concepts
Code Code
634-High Income II 760-Municipal Bond (not available
680-Retirement Shares for Ret. Plans)
684-Asset Strategy 762-Municipal High Income (not
750-Cash Management available for Ret. Plan)
- --------------------------------------------------------------------------------
OPEN ACCOUNT
If Retirement Plan
Fund Amount Trade Yr. Deductible or
(enter code) Enclosed Number of Contr. Non-Deductible
[][][] $_________ _________ 19_____ ______
[][][] $_________ _________ 19_____ ______
[][][] $_________ _________ 19_____ ______
[][][] $_________ _________ 19_____ ______
[][][] $_________ _________ 19_____ ______
Total $_________
Monthly DIV/C.G. Distr** Certificate
TOP From AIS* (Assumes RR) Desired
Another Carrier (if any) RR CC CR (Specify)
[] $_________ [] [] [] __________
[] $_________ [] [] [] __________
[] $_________ [] [] [] __________
[] $_________ [] [] [] __________
[] $_________ [] [] [] __________
$_________
- --------------------------------------------------------------------------------
*Attach AIS Authorization Form #CUF0714 **RR=Reinvest Div/Cap Gain CC=Cash
Div/Cash Cap Gain CR=Cash Div/Reinvest Cap Gain
INVESTMENT PROGRAM
Fund Completion Amount If IRA, Yr.
(enter code) Amount Enclosed of Contribution
[][][] $__________ $__________ 19_____
(621,625,629)
Deductible or Monthly AIS*
Non-Deductible (If any)
______ $_________
_______________________________________________________________________________
OPEN ACCOUNTS ONLY
This Purchase entitled to a reduced sales load charge for the following reason:
[ ] Statement of Intention to Invest $____________ [ ] (600 products)
[ ] New SOI (Attach CUF0671) [ ] Existing SOI [ ] (700 products)
[ ] Rights of Accumulation With Accounts ___,___,___ or Group [][][][][][][]
[ ] Identify Other Accounts Being Established at This Time: ________________
<PAGE>
- --------------------------------------------------------------------------------
CHECK SERVICE Send information to establish redemption checking account for:
[ ] United Government Securities [ ] United Cash Management
- --------------------------------------------------------------------------------
EXPEDITED REDEMPTION: For United Cash Management Only.
Complete items below:
_______________________________________________
Name & Address of Bank/Broker/Savings & Loan
_______________________________________________
Street
_______________________________________________
City State Zip
_______________________________________________
Account Number
If Account is with a Broker or Savings and Loan, provide
_______________________________________________
Name of Its Commercial Bank
_______________________________________________
Street
_______________________________________________
City State Zip
_______________________________________________
Its Account # with Its Commercial Bank
On United Cash Management Accounts where expedited redemption is requested,
Waddell & Reed, Inc. is authorized to honor telephonic, telegraphic or written
requests from anyone for redemption of all or any fund shares so long as the
proceeds are transmitted to the identified account. All wires must be
transmitted exactly as registered on the United Cash Management Fund Account.
- --------------------------------------------------------------------------------
BENEFICIARY: For Retirement Plan Accounts Only.
Full Name of Beneficiary Tax Identification Number Relationship Percent
________________________ _________________________ ____________ ______%
________________________ _________________________ ____________ ______%
________________________ _________________________ ____________ ______%
- --------------------------------------------------------------------------------
CONFIDENTIAL DATA (Must be completed on New Accounts/New Products)
1. Gross Family Income: $___ 2. Taxable Income $___ 3. Number of Dependents ___
4. Occupation: _________________________ 5. Employer Name: _____________________
6. Employer Address: ___________________________________________________________
7. Savings and Liquid Assets: $___ 11. Investment Objectives (mark all that
apply):
8. Other Assets (excluding home, furnishings, cars): $___ [] Retirement Savings
[] Reserves
9. Net Worth (Assets minus liabilities): $___ [] Children's College []Income
10. Are you associated with an NASD Member? Yes ___ No ___ [] Other needs/goals
(specify in Special
Remarks)
12. Special Remarks/Considerations: ____________________________________________
____________________________________________________________________________
13. Residence Address: _________________________________________________________
(if different from Street City State Zip
Mailing Address on
reverse side)
- -------------------------------------------------------------------------------
ACKNOWLEDGEMENT
* I (we) have received a copy of the current prospectus of the Funds selected.
* If purchasing an IRA, I (we) certify that I (we) have read the Retirement Plan
and Custody Agreement and agree to the terms and conditions set forth therein,
and do hereby establish the Individual Retirement Plan.
* Under penalities of perjury, I certify that the social security number or
other taxpayer identification number shown on reverse side is correct and
(strike the following if not true) that I am not subject to tax withholding
because I have not been notified by the IRS that I am subject to withholding
as a result of a failure to report all interest and dividends or I was subject
to withholding and the IRS has notified me that I am no longer subject to
withholding.
* Since a major portion of the sales charge for Variable Investment Programs is
deducted from payments made in the first year, I understand that a loss will
undoubtedly result if I withdraw or discontinue payments during the early
years of the program.
Signature(s) of Purchaser (all joint purchasers must sign). Sign exactly as
name(s) appear in registration.
___________________ _________________________ ___________________________
(Signature) (Printed Name) (Title, if any)
___________________ _________________________ ___________________________
(Signature) (Printed Name) (Title, if any)
___________________ _________________________ ___________________________
(Signature) (Printed Name) (Title, if any)
_________________________ ______________________________
Date Representative Signature
[OSJ: (H.O.USE) ] [][][][][]
Representative Number
Fiduciary Trust Company of New Hampshire accepts
appointment as Custodian in accordance with the
Custody Agreement:
By:____________________________________________
Fiduciary Trust Company Authorized Signature
Check Any Items Enclosed With Application
[] Declaration Trust Revocable (CUF0022)
[] Partnership Subscription Agreement
[] Parntership Confidential Questionnaire (CRP1186)
[] Statement of Intention (CUF0671)
[] AIS Authorization (CUF0714)
[] Funds Plus (CUF1444)
[] Additional Applications _______________________________________
[] Check enclosed # _________________________________
[] Other: ___________________________________________
CAPP0001(11/94)
EX-99.B10-ASopin
UNITED ASSET STRATEGY FUND, INC.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
October 3, 1994
United Asset Strategy Fund, Inc.
6300 Lamar Avenue
P. O. Box 29217
Shawnee Mission, Kansas 66201-9217
Dear Sir:
In connection with the public offering of shares of Capital Stock, par value
$.01 per share, of United Asset Strategy Fund, Inc. (the "Fund"), I have
examined such corporate records and documents and have made such further
investigation and examination as I deemed necessary for the purpose of this
opinion.
It is my opinion that the indefinite number of shares of such Capital Stock
covered by the Fund's Registration Statement on Form N-1A, when issued and paid
for in accordance with the terms of the offering, as set forth in the Prospectus
and Statement of Additional Information forming a part of the Registration
Statement, will be, when such Registration shall have become effective, legally
issued, fully paid and non-assessable by the Fund.
I hereby consent to the filing of this opinion as an Exhibit to the said
Registration Statement and to the reference to me in such Statement of
Additional Information.
Yours truly,
Sharon K. Pappas
General Counsel
SKP/jb
EX-99.B14-1-03bpd
QUALIFIED RETIREMENT PLAN AND
TRUST
Defined Contribution Basic Plan
Document 03
________________________________
Qualified Retirement Plan and Trust ________________________________
_______________________________ ________________________________
____________
DEFINED CONTRIBUTION
BASIC PLAN SECTION ONE DEFINITIONS
DOCUMENT 03 The following words
and phrases when
used in the Plan
with initial
capital letters
shall, for the
purpose of this
Plan, have the
meanings set forth
below unless the
context indicates
that other meanings
are intended:
1.01 ADOPTION AGREEMENT
Means the document
executed by the
Employer through
which it adopts the
Plan and Trust and
thereby agrees to
be bound by all
terms and
conditions of the Plan and Trust.
1.02 BASIC PLAN DOCUMENT
Means this prototype Plan and Trust document.
1.03 BREAK IN ELIGIBILITY SERVICE
Means a 12 consecutive month period which coincides with an
Eligibility Computation Period during which an Employee fails to
complete more than 500 Hours of Service (or such lesser number of
Hours of Service specified in the Adoption Agreement for this
purpose).
1.04 BREAK IN VESTING SERVICE
Means a Plan Year during which an Employee fails to complete more
than 500 Hours of Service (or such lesser number of Hours of
Service specified in the Adoption Agreement for this purpose).
1.05 CODE
Means the Internal Revenue Code of 1986 as amended from time-to-
time.
1.06 COMPENSATION
For Plan Years beginning on or after January 1, 1989, the following
definition of Compensation shall apply:
Compensation will mean Compensation as that term is defined in
Section 3.05(E)(2) of the Plan. For any Self-Employed Individual
covered under the Plan, Compensation will mean Earned Income.
Compensation shall include only that Compensation which is actually
paid to the Participant during the applicable period. Except as
provided elsewhere in this Plan, the applicable period shall be the
Plan Year unless the Employer has selected another period in the
Adoption Agreement.
Unless otherwise indicated in the Adoption Agreement, Compensation
shall include any amount which is contributed by the Employer
pursuant to a salary reduction agreement and which is not
includible in the gross income of the Employee under Sections 125,
402(a)(8), 402(h) or 403(b) of the Code.
For years beginning after December 31, 1988, the annual
Compensation of each Participant taken into account under the Plan
for any year shall not exceed $200,000. This limitation shall be
adjusted by the Secretary at the same time and in the same manner
as under Section 415(d) of the Code, except that the dollar
increase in effect on January 1 of any calendar year is effective
for years beginning in such calendar year and the first adjustment
to the $200,000 limitation is effected on January 1, 1990. If a
Plan determines Compensation on a period of time that contains
fewer than 12 calendar months, then the annual Compensation limit
is an amount equal to the annual Compensation limit for the
calendar year in which the compensation period begins multiplied by
the ratio obtained by dividing the number of full months in the
period by 12.
In determining the Compensation of a Participant for purposes of
this limitation, the rules of Section 414(q)(6) of the Code shall
apply, except in applying such rules, the term "family" shall
include only the spouse of the Participant and any lineal
descendants of the Participant who have not attained age 19 before
the close of the year.
If, as a result of the application of such rules the adjusted
$200,000 limitation is exceeded, then (except for purposes of
determining the portion of Compensation up to the integration level
if this Plan provides for permitted disparity), the limitation
shall be prorated among the affected individuals in proportion to
each such individual's Compensation as determined under this
Section prior to the application of this limitation.
If Compensation for any prior Plan Year is taken into account in
determining an Employee's contributions or benefits for the current
year, the Compensation for such prior year is subject to the
applicable annual Compensation limit in effect for that prior year.
For this purpose, for years beginning before January 1, 1990, the
applicable annual Compensation limit is $200,000.
Unless otherwise indicated in the Adoption Agreement, where an
Employee enters the Plan (and thus becomes a Participant) on an
Entry Date other than the Entry Date in a Plan Year, his
Compensation will include any such earnings paid to him during the
whole of such Plan Year.
Where this Plan is being adopted as an amendment and restatement to
bring a Prior Plan into compliance with the Tax Reform Act of 1986,
such Prior Plan's definition of Compensation shall apply for Plan
Years beginning before January 1, 1989.
In addition to other applicable limitations set forth in the Plan,
and notwithstanding any other provision of the Plan to the
contrary, for Plan Years beginning on or after January 1, 1994, the
annual Compensation of each Employee taken into account under the
Plan shall not exceed the OBRA '93 annual Compensation limit. The
OBRA '93 annual Compensation limit is $150,000, as adjusted by the
Commissioner for increases in the cost of living in accordance with
Section 401(a)(17)(B) of the Internal Revenue Code. The cost-of-
living adjustment in effect for a calendar year applies to any
period, not exceeding 12 months, over which Compensation is
determined (determination period) beginning in such calendar year.
If a determination period consists of fewer than 12 months, the
OBRA '93 annual Compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
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 an Employee's benefits accruing in the
current Plan Year, the Compensation for that prior determination
period is subject to the OBRA '93 annual Compensation limit in
effect for that prior determination period. For this purpose, for
determination periods beginning before the first day of the first
Plan Year beginning on or after January 1, 1994 the OBRA '93 annual
Compensation limit is $150,000.
1.07 CUSTODIAN
Means an entity specified in the Adoption Agreement as Custodian or
any duly appointed successor as provided in Section 5.09.
1.08 DISABILITY
Means the inability to engage in any substantial, gainful activity
by reason of any medically determinable physical or mental
impairment that can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not
less than 12 months. The permanence and degree of such impairment
shall be supported by medical evidence.
1.09 EARNED INCOME
Means the net earnings from self-employment in the trade or
business with respect to which the Plan is established, for which
personal services of the individual are a material income-producing
factor. Net earnings will be determined without regard to items
not included in gross income and the deductions allocable to such
items. Net earnings are reduced by contributions by the Employer
to a qualified plan to the extent deductible under Section 404 of
the Code.
1.09 EARNED INCOME
Means the net earnings from self-employment in the trade or
business with respect to which the Plan is established, for which
personal services of the individual are a material income-producing
factor. Net earnings will be determined without regard to items
not included in gross income and the deductions allocable to such
items. Net earnings are reduced by contributions by the Employer
to a qualified plan to the extent deductible under Section 404 of
the Code.
Net earnings shall be determined with regard to the deduction
allowed to the Employer by Section 164(f) of the Code for taxable
years beginning after December 31, 1989.
1.10 EFFECTIVE DATE
Means the date the Plan becomes effective as indicated in the
Adoption Agreement. However, where a separate date is stated in the
Plan as of which a particular Plan provision becomes effective, such
date will control with respect to that provision.
1.11 ELIGIBILITY COMPUTATION PERIOD
An Employee's initial Eligibility Computation Period shall be the
12 consecutive month period commencing with the date such Employee
first performs an Hour of Service (employment commencement date).
His subsequent Eligibility Computation Periods shall be the 12
consecutive month periods commencing on the anniversaries of his
employment commencement date; provided, however, if pursuant to the
Adoption Agreement, an Employee is required to complete one or less
Years of Eligibility Service to become a Participant, then his
subsequent Eligibility Computation Periods shall be the Plan Years
commencing with the Plan Year beginning during his initial
Eligibility Computation Period.
1.12 EMPLOYEE
Means any person employed by an Employer maintaining the Plan or of
any other employer required to be aggregated with such Employer
under Sections 414(b), (c), (m) or (o) or the Code.
The term Employee shall also include any Leased Employee deemed to
be an Employee of any Employer described in the previous paragraph
as provided in Section 414(n) or (o) of the Code.
1.13 EMPLOYER
Means any corporation, partnership, sole-proprietorship or other
entity named in the Adoption Agreement and any successor who by
merger, consolidation, purchase or otherwise assumes the
obligations of the Plan. A partnership is considered to be the
Employer of each of the partners and a sole-proprietorship is
considered to be the Employer of a sole proprietor.
1.14 EMPLOYER CONTRIBUTION
Means the amount contributed by the Employer each year as
determined under this Plan.
1.15 ENTRY DATES
Means the first day of the Plan Year and the first day of the
seventh month of the Plan Year, unless the Employer has specified
more frequent dates in the Adoption Agreement.
1.16 ERISA
Means the Employee Retirement Income Security Act of 1974 as
amended from time-to-time.
1.17 FORFEITURE
Means that portion of a Participant's Individual Account as derived
from Employer Contributions which he or she is not entitled to
receive (i.e., the nonvested portion).
1.18 FUND
Means the Plan assets held by the Trustee for the Participants'
exclusive benefit.
1.19 HIGHLY COMPENSATED EMPLOYEE
The term Highly Compensated Employee includes highly compensated
active employees and highly compensated former employees.
A highly compensated active employee includes any Employee who
performs service for the Employer during the determination year and
who, during the look-back year: (a) received Compensation from the
Employer in excess of $75,000 (as adjusted pursuant to Section
415(d) of the Code); (b) received Compensation from the Employer in
excess of $50,000 (as adjusted pursuant to Section 415(d) of the
Code) and was a member of the top-paid group for such year; or (c)
was an officer of the Employer and received Compensation during
such year that is greater than 50% of the dollar limitation in
effect under Section 415(b)(1)(A) of the Code. The term Highly
Compensated Employee also includes: (a) Employees who are both
described in the preceding sentence if the term "determination
year" is substituted for the term "look-back year" and the Employee
is one of the 100 Employees who received the most Compensation from
the Employer during the determination year; and (b) Employees who
are 5% owners at any time during the look-back year or
determination year.
If no officer has satisfied the Compensation requirement of (c)
above during either a determination year or look-back year, the
highest paid officer for such year shall be treated as a Highly
Compensated Employee.
For this purpose, the determination year shall be the Plan Year.
The look-back year shall be the 12 month period immediately
preceding the determination year.
A highly compensated former employee includes any Employee who
separated from service (or was deemed to have separated) prior to
the determination year, performs no service for the Employer during
the determination year, and was a highly compensated active
employee for either the separation year or any determination year
ending on or after the Employee's 55th birthday.
If an Employee is, during a determination year or look-back year, a
family member of either a 5% owner who is an active or former
Employee or a Highly Compensated Employee who is one of the 10 most
Highly Compensated Employees ranked on the basis of Compensation
paid by the Employer during such year, then the family member and
the 5% owner or top 10 Highly Compensated Employee shall be
aggregated. In such case, the family member and 5% owner or top 10
Highly Compensated Employee shall be treated as a single Employee
receiving Compensation and Plan contributions or benefits equal to
the sum of such Compensation and contributions or benefits of the
family member and 5% owner or top 10 Highly Compensated Employee.
For purposes of this Section, family member includes the spouse,
lineal ascendants and descendants of the Employee or former
Employee and the spouses of such lineal ascendants and descendants.
The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of
Employees in the top-paid group, the top 100 Employees, the number
of Employees treated as officers and the Compensation that is
considered, will be made in accordance with Section 414(q) of the
Code and the regulations thereunder.
1.20 HOURS OF SERVICE - Means
A. Each hour for which an Employee is paid, or entitled to payment,
for the performance of duties for the Employer. These hours
will be credited to the Employee for the computation period in
which the duties are performed; and
B. Each hour for which an Employee is paid, or entitled to payment,
by the Employer on account of a period of time during which no
duties are performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday, illness,
incapacity (including disability), layoff, jury duty, military
duty or leave of absence. No more than 501 Hours of Service
will be credited under this paragraph for any single continuous
period (whether or not such period occurs in a single
computation period). Hours under this paragraph shall be
calculated and credited pursuant to Section 2530.200b-2 of the
Department of Labor Regulations which is incorporated herein by
this reference; and
C. Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The
same Hours of Service will not be credited both under paragraph
(A) or paragraph (B), as the case may be, and under this
paragraph (C). These hours will be credited to the Employee for
the computation period or periods to which the award or
agreement pertains rather than the computation period in which
the award, agreement, or payment is made.
D. Solely for purposes of determining whether a Break in
Eligibility Service or a Break in Vesting Service has occurred
in a computation period (the computation period for purposes of
determining whether a Break in Vesting Service has occurred is
the Plan Year), an individual who is absent from work for
maternity or paternity reasons shall receive credit for the
Hours of Service which would otherwise have been credited to
such individual but for such absence, or in any case in which
such hours cannot be determined, 8 Hours of Service per day of
such absence. For purposes of this paragraph, an absence from
work for maternity or paternity reasons means an absence (1) by
reason of the pregnancy of the individual, (2) by reason of a
birth of a child of the individual, (3) by reason of the
placement of a child with the individual in connection with the
adoption of such child by such individual, or (4) for purposes
of caring for such child for a period beginning immediately
following such birth or placement. The Hours of Service
credited under this paragraph shall be credited (1) in the
Eligibility Computation Period or Plan Year in which the absence
begins if the crediting is necessary to prevent a Break in
Eligibility Service or a Break in Vesting Service in the
applicable period, or (2) in all other cases, in the following
Eligibility Computation Period or Plan Year.
E. Hours of Service will be credited for employment with other
members of an affiliated service group (under Section 414(m) of
the Code), a controlled group of corporations (under Section
414(b) of the Code), or a group of trades or businesses under
common control (under Section 414(c) of the Code) of which the
adopting Employer is a member, and any other entity required to
be aggregated with the Employer pursuant to Section 414(o) of
the Code and the regulations thereunder.
Hours of Service will also be credited for any individual
considered an Employee for purposes of this Plan under Code
Sections 414(n) or 414(o) and the regulations thereunder.
F. Where the Employer maintains the plan of a predecessor employer,
service for such predecessor employer shall be treated as
service for the Employer.
G. The above method for determining Hours of Service may be altered
as specified in the Adoption Agreement.
1.21 INDIVIDUAL ACCOUNT
Means the account established and maintained under this Plan for
each Participant in accordance with Section 4.01.
1.22 INVESTMENT FUND
Means a subdivision of the Fund established pursuant to Section
5.05.
1.23 KEY EMPLOYEE
Means any person who is determined to be a Key Employee under
Section 10.08.
1.24 LEASED EMPLOYEE
Means any person (other than an Employee of the recipient) who
pursuant to an agreement between the recipient and any other person
("leasing organization") has performed services for the recipient
(or for the recipient and related persons determined in accordance
with Section 414(n)(6) of the Code) on a substantially full time
basis for a period of at least one year, and such services are of a
type historically performed by Employees in the business field of
the recipient Employer. Contributions or benefits provided a
Leased Employee by the leasing organization which are attributable
to services performed for the recipient Employer shall be treated
as provided by the recipient Employer.
A Leased Employee shall not be considered an Employee of the
recipient if: (1) such employee is covered by a money purchase
pension plan providing: (a) a nonintegrated employer contribution
rate of at least 10% of compensation, as defined in Section
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(a)(8),
Section 402(h) or Section 403(b) of the Code, (b) immediate
participation, and (c) full and immediate vesting; and (2) Leased
Employees do not constitute more than 20% of the recipient's
nonhighly compensated work force.
1.25 NORMAL RETIREMENT AGE
Means the age specified in the Adoption Agreement. However, if the
Employer enforces a mandatory retirement age which is less than the
Normal Retirement Age, such mandatory age is deemed to be the
Normal Retirement Age. If no age is specified in the Adoption
Agreement, the Normal Retirement Age shall be age 59 1/2.
1.26 OWNER - EMPLOYEE
Means an individual who is a sole proprietor, or who is a partner
owning more than 10% of either the capital or profits interest of
the partnership.
1.27 PARTICIPANT
Means any Employee or former Employee of the Employer who has met
the Plan's eligibility requirements, has entered the Plan and who
is or may become eligible to receive a benefit of any type from
this Plan or whose Beneficiary may be eligible to receive any such
benefit.
1.28 PLAN
Means the prototype defined contribution plan adopted by the
Employer. The Plan consists of this Basic Plan Document plus the
corresponding Adoption Agreement as completed and signed by the
Employer.
1.29 PLAN ADMINISTRATOR
Means the person or persons determined to be the Plan Administrator
in accordance with Section 8.01.
1.30 PLAN YEAR
Means the 12 consecutive month period which coincides with the
Employer's tax year or such other 12 consecutive month period as is
designated in the Adoption Agreement.
1.31 PRIOR PLAN
Means a plan which was amended or replaced by adoption of this Plan
document as indicated in the Adoption Agreement.
1.32 PROTOTYPE SPONSOR
Means the entity specified in the Adoption Agreement. Such entity
must meet the definition of a sponsoring organization set forth in
Section 3.07 of Revenue Procedure 89-13.
1.33 SELF-EMPLOYED INDIVIDUAL
Means an individual who has Earned Income for the taxable year from
the trade or business for which the Plan is established; also, an
individual who would have had Earned Income but for the fact that
the trade or business had no net profits for the taxable year.
1.34 SEPARATE FUND
Means a subdivision of the Fund held in the name of a particular
Participant representing certain assets held for that Participant.
The assets which comprise a Participant's Separate Fund are those
assets earmarked for him and those assets subject to the
Participant's individual direction pursuant to Section 5.14.
1.35 TAXABLE WAGE BASE
Means, with respect to any taxable year, the maximum amount of
earnings which may be considered wages for such year under Section
3121(a)(1) of the Code.
1.36 TERMINATION OF EMPLOYMENT
A Termination of Employment of an Employee of an Employer shall
occur whenever his status as an Employee of such Employer ceases
for any reason other than his death. An Employee who does not
return to work for the Employer on or before the expiration of an
authorized leave of absence from such Employer shall be deemed to
have incurred a Termination of Employment when such leave ends.
1.37 TOP-HEAVY PLAN
This Plan is a Top-Heavy Plan for any Plan Year if it is determined
to be such pursuant to Section 10.08.
1.38 TRUSTEE
Means an individual, individuals or corporation specified in the
Adoption Agreement as Trustee or any duly appointed successor as
provided in Section 5.09. Trustee shall mean Custodian in the
event the financial organization named as Trustee does not have
full trust powers.
1.39 VALUATION DATE
Means the last day of the Plan Year and each other date designated
by the Plan Administrator which is selected in a uniform and
nondiscriminatory manner when the assets of the Fund are valued at
their then fair market value.
1.40 VESTED
Means nonforfeitable, that is, a claim which is unconditional and
legally enforceable against the Plan obtained by a Participant or
his Beneficiary to that part of an immediate or deferred benefit
under the Plan which arises from a Participant's Years of Vesting
Service.
1.41 YEAR OF ELIGIBILITY SERVICE
Means a 12 consecutive month period which coincides with an
Eligibility Computation period during which an Employee completes
at least 1,000 Hours of Service (or such lesser number of Hours of
Service specified in the Adoption Agreement for this purpose).
1.42 YEAR OF VESTING SERVICE
Means a Plan Year during which an Employee completes at least 1,000
Hours of Service (or such lesser number of Hours of Service
specified in the Adoption Agreement for this purpose).
In the case of a Participant who has 5 or more consecutive Breaks
in Vesting Service, all Years of Vesting Service after such Breaks
in Vesting Service will be disregarded for the purpose of
determining the Vested portion of his Individual Account derived
from Employer Contributions that accrued before such breaks. Such
Participant's prebreak service will count in vesting the postbreak
Individual Account derived from Employer Contributions only if
either:
(A)such Participant had any Vested right to any portion of his
Individual Account derived from Employer Contributions at the
time of his Termination of Employment; or
(B)upon returning to service, the number of consecutive Breaks in
Vesting Service is less than his number of Years of Vesting
Service before such breaks.
Separate subaccounts will be maintained for the Participant's
prebreak and postbreak portions of his Individual Account derived
from Employer Contributions. Both subaccounts will share in the
gains and losses of the Fund.
Years of Vesting Service shall not include any period of time
excluded from Years of Vesting Service in the Adoption Agreement.
In the event the Plan Year is changed to a new 12-month period,
Employees shall receive credit for Years of Vesting Service, in
accordance with the preceding provisions of this definition, for
each of the Plan Years (the old and new Plan Years) which overlap
as a result of such change.
SECTION TWO ELIGIBILITY AND PARTICIPATION
2.01 ELIGIBILITY TO PARTICIPATE
Each Employee of the Employer, except those Employees who belong to
a class of Employees which is excluded from participation as
indicated in the Adoption Agreement, shall be eligible to
participate in this Plan upon the satisfaction of the age and Years
of Eligibility Service requirements specified in the Adoption
Agreement.
2.02 PLAN ENTRY
A. If this Plan is a replacement of a Prior Plan by amendment or
restatement, each Employee of the Employer who was a Participant
in said Prior Plan before the Effective Date shall continue to
be a Participant in this Plan.
B. An Employee will become a Participant in the Plan as of the
Effective Date if he has met the eligibility requirements of
Section 2.01 as of such date. After the Effective Date, each
Employee shall become a Participant on the first Entry Date
following the date the Employee satisfies the eligibility
requirements of Section 2.01.
C. The Plan Administrator shall notify each Employee who becomes
eligible to be a Participant under this Plan and shall furnish
him with the application form, enrollment forms or other
documents which are required of Participants. The eligible
Employee shall execute such forms or documents and make
available such information as may be required in the
administration of the Plan.
2.03 TRANSFER TO OR FROM INELIGIBLE CLASS
If an Employee who had been a Participant becomes ineligible to
participate because he is no longer a member of an eligible class
of Employees, but has not incurred a Break in Eligibility Service,
such Employee shall participate immediately upon his return to an
eligible class of Employees. If such Employee incurs a Break in
Eligibility Service, his eligibility to participate shall be
determined by Section 2.04.
An Employee who is not a member of the eligible class of Employees
will become a Participant immediately upon becoming a member of the
eligible class provided such Employee has satisfied the age and
Years of Eligibility Service requirements. If such Employee has
not satisfied the age and Years of Eligibility Service requirements
as of the date he becomes a member of the eligible class, he shall
become a Participant on the first Entry Date following the date he
satisfies said requirements.
2.04 RETURN AS A PARTICIPANT AFTER BREAK IN ELIGIBILITY SERVICE
A. Employee Not Participant Before Break - If an Employee incurs a
Break in Eligibility Service before satisfying the Plan's
eligibility requirements, such Employee's Years of Eligibility
Service before such Break in Eligibility Service will not be
taken into account.
B. Nonvested Participants - In the case of a Participant who does
not have a Vested interest in his Individual Account derived
from Employer Contributions, Years of Eligibility Service before
a period of consecutive Breaks in Eligibility Service will not
be taken into account for eligibility purposes if the number of
consecutive Breaks in Eligibility Service in such period equals
or exceeds the greater of 5 or the aggregate number of Years of
Eligibility Service before such break. Such aggregate number of
Years of Eligibility Service will not include any Years of
Eligibility Service disregarded under the preceding sentence by
reason of prior breaks.
If a Participant's Years of Eligibility Service are disregarded
pursuant to the preceding paragraph, such Participant will be
treated as a new Employee for eligibility purposes. If a
Participant's Years of Eligibility Service may not be
disregarded pursuant to the preceding paragraph, such
Participant shall continue to participate in the Plan, or, if
terminated, shall participate immediately upon reemployment.
C. Vested Participants - A Participant who has sustained a Break
in Eligibility Service and who had a Vested interest in all or a
portion of his Individual Account derived from Employer
Contributions shall continue to participate in the Plan, or, if
terminated, shall participate immediately upon reemployment.
2.05 DETERMINATIONS UNDER THIS SECTION
The Plan Administrator shall determine the eligibility of each
Employee to be a Participant. This determination shall be
conclusive and binding upon all persons except as otherwise
provided herein or by law.
2.06 TERMS OF EMPLOYMENT
Neither the fact of the establishment of the Plan nor the fact that
a common law Employee has become a Participant shall give to that
common law Employee any right to continued employment; nor shall
either fact limit the right of the Employer to discharge or to deal
otherwise with a common law Employee without regard to the effect
such treatment may have upon the Employee's rights under the Plan.
SECTION THREE CONTRIBUTIONS
3.01 EMPLOYER CONTRIBUTIONS
A. Obligation to Contribute - The Employer shall make contributions
to the Plan in accordance with the contribution formula
specified in the Adoption Agreement. If this Plan is a profit
sharing plan, the Employer shall, in its sole discretion, make
contributions without regard to current or accumulated earnings
or profits.
B. Allocation Formula and the Right to Share in the Employer Profit
Sharing Contribution -
1. General - The Employer Contribution for any Plan Year will be
allocated or contributed to the Individual Accounts of
qualifying Participants in accordance with the allocation or
contribution formula specified in the Adoption Agreement.
The Employer Contribution for any Plan Year will be allocated
to each Participant's Individual Account as of the last day
of that Plan Year.
Any Employer Contribution for a Plan Year must satisfy
Section 401(a)(4) and the regulations thereunder for such
Plan Year.
2. Qualifying Participants - A Participant is a qualifying
Participant and is entitled to share in the Employer
Contribution for any Plan Year if (1) he was a Participant on
at least one day during the Plan Year, (2) if this Plan is a
nonstandardized plan, he completes a Year of Vesting Service
during the Plan Year and (3) where the Employer has selected
the "last day requirement" in the Adoption Agreement, he is
an Employee of the Employer on the last day of Plan Year
(except that this last requirement (3) shall not apply if the
Participant has died during the Plan Year or incurred a
Termination of Employment during the Plan Year after having
reached his Normal Retirement Age or having incurred a
Disability). Notwithstanding anything in this paragraph to
the contrary, a Participant will not be a qualifying
Participant for a Plan Year if he incurs a Termination of
Employment during such Plan Year with not more than 500 Hours
of Service if he is not an Employee on the last day of the
Plan Year. The determination of whether a Participant is
entitled to share in the Employer Contribution shall be made
as of the last day of each Plan Year.
3. Special Rules for Integrated Plans - If the Employer has
selected the integrated contribution or allocation formula in
the Adoption Agreement, then the maximum disparity rate shall
be determined in accordance with the following table.
MAXIMUM DISPARITY RATE
Top-Heavy Nonstandardized and
Integration Money Profit Nontop-Heavy
Level Purchase Sharing Profit Sharing
________________________________________________________________________________
Taxable Wage Base (TWB) 5.7% 2.7% 5.7%
More than $0 but not more
than X* 5.7% 2.7% 5.7%
More than X* of TWB but
not more than 80% of TWB 4.3% 1.3% 4.3%
More than 80% of TWB but
not more than TWB 5.4% 2.4% 5.4%
C. Allocation of Forfeitures - Forfeitures for a Plan Year which
arise as a result of the application of Section 6.01(D) shall be
allocated as follows:
1. Profit Sharing Plan - If this is a profit sharing plan,
Forfeitures shall be allocated in the manner provided in
Section 3.01(B) (for Employer Contributions) to the
Individual Accounts of Participants who are entitled to share
in the Employer Contribution for such Plan Year.
2. Money Purchase Pension and Target Benefit Plan - If this Plan
is a money purchase plan or a target benefit plan,
Forfeitures shall be applied towards the reduction of
Employer Contributions to the Plan. However, if the Employer
has indicated in the Adoption Agreement that Forfeitures
shall be allocated to the Individual Accounts of
Participants, then Forfeitures shall be allocated in the
manner provided in Section 3.01(B) (for Employer
Contributions) to the Individual Accounts of Participants who
are entitled to share in the Employer Contributions for such
Plan Year.
D. Timing of Employer Profit Sharing Contribution - The Employer
Contribution for each Plan Year shall be delivered to the
Trustee (or Custodian, if applicable) not later than the due
date for filing the Employer's income tax return for its fiscal
year in which the Plan Year ends, including extensions thereof.
E. Minimum Allocation for Top-Heavy Plans - The contribution and
allocation provisions of this Section 3.01(E) shall apply for
any Plan Year with respect to which this Plan is a Top-Heavy
Plan.
1. Except as otherwise provided in (3) and (4) below, the
Employer Contributions and Forfeitures allocated on behalf of
any Participant who is not a Key Employee shall not be less
than the lesser of 3% of such Participant's Compensation or
(in the case where the Employer has no defined benefit plan
which designates this Plan to satisfy Section 401 of the
Code) the largest percentage of Employer Contributions and
Forfeitures, as a percentage of the first $200,000 (increased
by any cost of living adjustment made by the Secretary of
Treasury or his delegate) of the Key Employee's Compensation,
allocated on behalf of any Key Employee for that year. The
minimum allocation is determined without regard to any Social
Security contribution. This minimum allocation shall be made
even though under other Plan provisions, the Participant
would not otherwise be entitled to receive an allocation, or
would have received a lesser allocation for the year because
of (a) the Participant's failure to complete 1,000 Hours of
Service (or any equivalent provided in the Plan), or (b) the
Participant's failure to make mandatory Employee
Contributions to the Plan, or (c) Compensation less than a
stated amount.
2. For purposes of computing the minimum allocation,
Compensation shall mean Compensation as defined in Section
1.06 of the Plan.
3. The provision in (1) above shall not apply to any Participant
who was not employed by the Employer on the last day of the
Plan Year.
4. The provision in (1) above shall not apply to any Participant
to the extent the Participant is covered under any other plan
or plans of the Employer and the Employer has provided in the
adoption agreement that the minimum allocation or benefit
requirement applicable to Top-Heavy Plans will be met in the
other plan or plans.
5. The minimum allocation required under this Section 3.01(E)
and Section 3.01(F)(1) (to the extent required to be
nonforfeitable under Code Section 416(b)) may not be
forfeited under Code Section 411(a)(3)(B) or 411(a)(3)(D).
F. Special Requirements for Paired Plans - The Employer maintains
paired plans if the Employer has adopted both a standardized
profit sharing plan and a standardized money purchase pension
plan using this Basic Plan Document.
1. Minimum Allocation - The mandatory minimum allocation
provision of Section 3.01(E) shall not apply to any
Participant if the Employer maintains paired plans. Rather,
for each Plan Year, the Employer will provide a minimum
contribution equal to 3% of Compensation for each non-Key
Employee who is entitled to a minimum contribution. Such
minimum contribution will only be made to one of the Plans.
If an Employee is a Participant in only one of the Plans, the
minimum contribution shall be made to that Plan. If the
Employee is a Participant in both Plans, the minimum
contribution shall be made to the money purchase plan.
2. Only One Plan Can Be Integrated - If the Employer maintains
paired plans, only one of the Plans may provide for the
disparity in contributions which is permitted under Section
401(l) of the Code. In the event that both Adoption
Agreements provide for such integration, only the money
purchase pension plan shall be deemed to be integrated.
G. Return of the Employer Contribution to the Employer Under
Special Circumstances - Any contribution made by the Employer
because of a mistake of fact must be returned to the Employer
within one year of the contribution.
In the event that the Commissioner of Internal Revenue
determines that the Plan is not initially qualified under the
Code, any contributions made incident to that initial
qualification by the Employer must be returned to the Employer
within one year after the date the initial qualification is
denied., but only if the application for qualification is made
by the time prescribed by law for filing the Employer's return
for the taxable year in which the Plan is adopted, or such later
date as the Secretary of the Treasury may prescribe.
In the event that a contribution made by the Employer under this
Plan is conditioned on deductibility and is not deductible under
Code Section 404, the contribution, to the extent of the amount
disallowed, must be returned to the Employer within one year
after the deduction is disallowed.
H. Omission of Participant
1. If the Plan is a money purchase plan or a target benefit plan
and, if in any Plan Year, any Employee who should be included
as a Participant is erroneously omitted and discovery of such
omission is not made until after a contribution by the
Employer for the year has been made and allocated, the
Employer shall make a subsequent contribution with respect to
the omitted Employee in the amount which the Employer would
have contributed with respect to that Employee had he not
been omitted.
2. If the Plan is a profit sharing plan, and if in any Plan
Year, any Employee who should be included as a Participant is
erroneously omitted and discovery of such omission is not
made until after the Employer Contribution has been made and
allocated, then the Plan Administrator must re-do the
allocation (if a correction can be made) and inform the
Employee. Alternatively, the Employer may choose to
contribute for the omitted Employee the amount which the
Employer would have contributed for him.
3.02 EMPLOYEE CONTRIBUTIONS
This Plan will not accept nondeductible employee contributions and
matching contributions for Plan Years beginning after the Plan Year
in which this Plan is adopted by the Employer. Employee
contributions for Plan Years, beginning after December 31, 1986,
together with any matching contributions as defined in Section
401(m) of the Code, will be limited so as to meet the
nondiscrimination test of Section 401(m) of the Code.
A separate account will be maintained by the Plan Administrator for
the nondeductible employee contributions of each Participant.
A Participant may, upon a written request submitted to the Plan
Administrator withdraw the lesser of the portion of his Individual
Account attributable to his nondeductible employee contributions or
the amount he contributed as nondeductible employee contributions.
Employee contributions and earnings thereon will be nonforfeitable
at all times. No Forfeiture will occur solely as a result of an
Employee's withdrawal of employee contributions.
The Plan Administrator will not accept deductible employee
contributions which are made for a taxable year beginning after
December 31, 1986. Contributions made prior to that date will be
maintained in a separate account which will be nonforfeitable at
all times. The account will share in the gains and losses of the
Fund in the same manner as described in Section 4.03 of the Plan.
No part of the deductible employee contribution account will be
used to purchase life insurance. Subject to Section 6.05, joint
and survivor annuity requirements (if applicable), the Participant
may withdraw any part of the deductible employee contribution
account by making a written application to the Plan Administrator.
3.03 ROLLOVER CONTRIBUTIONS
If the Plan Administrator so permits in a uniform and
nondiscriminatory manner, an Employee may contribute a rollover
contribution to the Plan; provided that such Employee submits a
written certification, satisfactory to the Trustee (or Custodian),
that the contribution qualifies as a rollover contribution.
A separate account shall be maintained by the Plan Administrator
for each Employee's rollover contributions which will be
nonforfeitable at all times. Such account will share in the income
and gains and losses of the Fund in the manner described in Section
4.03 and shall be subject to the Plan's provisions governing
distributions.
For purposes of this Section 3.03, "rollover contribution" means a
contribution described in Sections 402(a)(5), 403(a)(4) or
408(d)(3) of the Code or in any other provision which may be added
to the Code which may authorize rollovers to the Plan.
3.04 TRANSFER CONTRIBUTIONS
If the Plan Administrator so permits in a uniform and
nondiscriminatory manner, the Trustee (or Custodian, if applicable)
may receive any amounts transferred to it from the trustee or
custodian of another plan qualified under Code Section 401(a).
A separate account shall be maintained by the Plan Administrator
for each Employee's transfer contributions which will be
nonforfeitable at all times. Such account will share in the income
and gains and losses of the Fund in the manner described in Section
4.03 and shall be subject to the Plan's provisions governing
distributions.
3.05 LIMITATION ON ALLOCATIONS
A. If the Participant does not participate in, and has never
participated in another qualified plan maintained by the
Employer or a welfare benefit fund, as defined in Section 419(e)
of the Code maintained by the Employer, or an individual medical
account, as defined in Section 415(l)(2) of the Code, maintained
by the Employer, which provides an annual addition as defined in
Section 3.08(E)(1), the following rules shall apply:
1. The amount of annual additions which may be credited to the
Participant's Individual Account for any limitation year will
not exceed the lesser of the maximum permissible amount or
any other limitation contained in this Plan. If the Employer
Contribution that would otherwise be contributed or allocated
to the Participant's Individual Account would cause the
annual additions for the limitation year to exceed the
maximum permissible amount, the amount contributed or
allocated will be reduced so that the annual additions for
the limitation year will equal the maximum permissible
amount.
2. Prior to determining the Participant's actual compensation
for the limitation year, the Employer may determine the
maximum permissible amount for a Participant on the basis of
a reasonable estimation of the Participant's Compensation for
the limitation year, uniformly determined for all
participants similarly situated.
3. As soon as is administratively feasible after the end of the
limitation year, the maximum permissible amount for the
limitation year will be determined on the basis of the
Participant's actual compensation for the limitation year.
4. If pursuant to Section 3.08(A)(3) or as a result of the
allocation of Forfeitures there is an excess amount, the
excess will be disposed of as follows:
a.Any nondeductible voluntary employee contributions, to the
extent they would reduce the excess amount, will be
returned to the Participant;
b.If after the application of paragraph (a) an excess amount
still exists, and the Participant is covered by the Plan at
the end of the limitation year, the excess amount in the
Participant's Individual Account will be used to reduce
Employer Contributions (including any allocation of
Forfeitures) for such Participant in the next limitation
year, and each succeeding limitation year if necessary.
c.If after the application of paragraph (b) an excess amount
still exists, and the Participant is not covered by the
Plan at the end of a limitation year, the excess amount
will be held unallocated in a suspense account. The
suspense account will be applied to reduce future Employer
Contributions (including allocation of any Forfeitures) for
all remaining Participants in the next limitation year, and
each succeeding limitation year if necessary;
d.If a suspense account is in existence at any time during a
limitation year pursuant to this Section, it will not
participate in the allocation of the Fund's investment
gains and losses. If a suspense account is in existence at
any time during a particular limitation year, all amounts
in the suspense account must be allocated and reallocated
to Participants' Individual Accounts before any Employer
Contributions or any Employee contributions may be made to
the Plan for that limitation year. Excess amounts may not
be distributed to Participants or former Participants.
B. If, in addition to this Plan, the Participant is covered under
another qualified master or prototype defined contribution plan
maintained by the Employer, a welfare benefit fund, as defined
in Section 419(e) of the Code maintained by the Employer, or an
individual medical account, as defined in Section 415(l)(2) of
the Code, maintained by the Employer, which provides an annual
addition as defined in Section 3.05(E)(1), during any limitation
year, the following rules apply:
1. The annual additions which may be credited to a Participant's
Individual Account under this Plan for any such limitation
year will not exceed the maximum permissible amount reduced
by the annual additions credited to a Participant's
Individual Account under the other plans and welfare benefit
funds for the same limitation year. 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 Individual Account under
this Plan would cause the annual additions for the limitation
year to exceed this limitation, the amount contributed or
allocated will be reduced so that the annual additions under
all such plans and funds for the limitation year will equal
the maximum permissible amount. If the annual additions with
respect to the Participant under such other defined
contribution plans and welfare benefit funds in the aggregate
are equal to or greater than the maximum permissible amount,
no amount will be contributed or allocated to the
Participant's Individual Account under this Plan for the
limitation year.
2. Prior to determining the Participant's actual compensation
for the limitation year, the Employer may determine the
maximum permissible amount for a Participant in the manner
described in Section 3.05(A)(2).
3. As soon as is administratively feasible after the end of the
limitation year, the maximum permissible amount for the
limitation year will be determined on the basis of the
Participant's actual compensation for the limitation year.
4. If, pursuant to Section 3.05(B)(3) or as a result of the
allocation of Forfeitures a Participant's annual additions
under this Plan and such other plans would result in an
excess amount for a limitation year, the excess amount will
be deemed to consist of the annual additions last allocated,
except that annual additions attributable to a welfare
benefit fund or individual medical account will be deemed to
have been allocated first regardless of the actual allocation
date.
5. If an excess amount was allocated to a Participant on an
allocation date of this Plan which coincides with an
allocation date of another plan, the excess amount attributed
to this Plan will be the product of,
a.the total excess amount allocated as of such date, times
b.the ration of (i) the annual additions allocated to the
Participant for the limitation year as of such date under
this Plan to (ii) the total annual additions allocated to
the Participant for the limitation year as of such date
under this and all the other qualified prototype defined
contribution plans.
6. Any excess amount attributed to this Plan will be disposed in
the manner described in Section 3.05(A)(4).
C. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer which is not a
master or prototype plan, annual additions which may be credited
to the Participant's Individual Account under this Plan for any
limitation year will be limited in accordance with Sections
3.05(B)(1) through 3.08(B)(6) as though the other plan were a
master or prototype plan unless the Employer provides other
limitations in the Section of the Adoption Agreement titled
"Limitation on Allocation - More Than One Plan."
D. If the Employer maintains, or at any time maintained, a
qualified defined benefit plan covering any Participant in this
Plan, the sum of the Participant's defined benefit plan fraction
and defined contribution plan fraction will not exceed 1.0 in
any limitation year. The annual additions which may be credited
to the Participant's Individual Account under this Plan for any
limitation year will be limited in accordance with the Section
of the Adoption Agreement titled "Limitation on Allocation -
More Than One Plan."
E. The following terms shall have the following meanings when used
in this Section 3.05:
1. Annual additions: The sum of the following amounts credited
to a Participant's Individual Account for the limitation
year:
a.Employer Contributions,
b.Employee contributions,
c.Forfeitures, and
d.amounts allocated, after March 31, 1984, to an individual
medical account, as defined in Section 415(l)(2) of the
Code, which is part of a pension or annuity plan maintained
by the Employer are treated as annual additions to a
defined contribution plan. Also amounts derived from
contributions paid or accrued after December 31, 1985, in
taxable years ending after such date, which are
attributable to post-retirement medical benefits, allocated
to the separate account of a key employee, as defined in
Section 419A(d)(3) of the Code, under a welfare benefit
fund, as defined in Section 419(e) of the Code, maintained
by the Employer are treated as annual additions to a
defined contribution plan.
For this purpose, any excess amount applied under Section
3.05(A)(4) or 3.05(B)(6) in the limitation year to reduce
Employer Contributions will be considered annual additions
for such limitation year.
2. Compensation: As elected by the Employer in the Adoption
Agreement (and if no election is made, Section 3401(a) wages
will be deemed to have been selected), Compensation shall
mean all of a Participant's:
a.Section 3121 wages. Wages as defined in Section 3121(a) of
the Code, for purposes of calculating Social Security
taxes, but determined without regard to the wage base
limitation in Section 3121(a)(1), the special rules in
Section 3121(v), any rules that limit covered employment
based on the type or location of an Employee's Employer,
and any rules that limit the remuneration included in wages
based on familial relationship or based on the nature or
location of the employment or the services performed (such
as the exceptions to the definition of employment in
Section 3121(b)(1) through (2)).
b.Section 3401(a) wages. 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)).
c.415 safe-harbor compensation. Wages, salaries, and fees
for professional services and other amounts received
(without regard to whether or not an amount is paid in
cash) for personal services actually rendered in the course
of employment with the Employer maintaining the Plan to the
extent that the amounts are includable in gross income
(including, but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of
profits, commissions on insurance premiums, tips, bonuses,
fringe benefits, reimbursements, and expense allowances),
and excluding the following:
1. Employer contributions to a plan of deferred
compensation which are not includible in the Employee's
gross income for the taxable year in which contributed,
or employer contributions under a simplified employee
pension plan to the extent such contributions are
deductible by the Employee, or any distributions from a
plan of deferred compensation;
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 received special tax benefits, or
contributions made by the Employer (whether or not under
a salary reduction agreement) towards the purchase of an
annuity described in Section 403(b) of the Code (whether
or not the amounts are actually excludable from the
gross income of the Employee).
For any Self-Employed Individual, Compensation will mean
Earned Income. For limitation years beginning after
December 31, 1991, for purposes of applying the
limitations of this Section 3.05, compensation for a
limitation year is the compensation actually paid or
includible in gross income during such limitation year.
Notwithstanding the preceding sentence, compensation for
a Participant in a defined contribution plan who is
permanently and totally disabled (as defined in Section
22(e)(3) of the Code) is the compensation such
Participant would have received for the limitation year
if the Participant had been paid at the rate of
compensation paid immediately before becoming
permanently and totally disabled; such imputed
compensation for the disabled participant may be taken
into account only if the Participant is not a Highly
Compensated Employee (as defined in Section 414(q) of
the Code) and contributions made on behalf of such
Participant are nonforfeitable when made.
3. Defined benefit fraction: A fraction, the numerator of which
is the sum of the Participant's projected annual benefits
under all the defined benefit plans (whether or not
terminated) maintained by the Employer, and the denominator
of which is the lesser of 125% of the dollar limitation
determined for the limitation year under Section 415(b) and
(d) of the Code or 140% of the highest average compensation,
including any adjustments under Section 415(b) of the Code.
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first limitation year
beginning after December 31, 1986, in one or more defined
benefit plans maintained by the employer which were in
existence on May 6, 1986, the denominator of this fraction
will not be less than 125% of the sum of the annual benefits
under such plans which the participant had accrued as of the
close of the last limitation year beginning before January 1,
1987, disregarding any changes in the terms and conditions of
the plan after May 5, 1986. The preceding sentence applies
only if the defined benefit plans individually and in the
aggregate satisfied the requirements of Section 415 of the
Code for all limitation years beginning before January 1,
1987.
4. Defined contribution dollar limitation: $30,000 or if
greater, one-fourth of the defined benefit dollar limitation
set forth in Section 415(b)(1) of the Code as in effect for
the limitation year.
5. Defined contribution fraction: A fraction, the numerator of
which is the sum of the annual additions to the Participant's
account under all the defined contribution plans (whether or
not terminated) maintained by the Employer for the current
and all prior limitation years (including the annual
additions attributable to the Participant's nondeductible
employee contributions to all defined benefit plans, whether
or not terminated, maintained by the Employer, and the annual
additions attributable to all welfare benefit funds, as
defined in Section 419(e) of the Code, and individual medical
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% of the dollar
limitation determined under Section 415(b) and (d) of the
Code in effect under Section 415(c)(1)(A) of the Code or 35%
of the Participant's compensation for such year.
If the Employee was a participant as of the end of the first
day of the first limitation year beginning after December 31,
1986, in one or more defined contribution plans maintained by
the Employer which were in existence on May 6, 1986, the
numerator of this fraction will be adjusted if the sum of
this fraction and the defined benefit fraction would
otherwise exceed 1.0 under the terms of this Plan. Under the
adjustment, an amount equal to the product of (1) the excess
of the sum of the fractions over 1.0 times (2) the
denominator of this fraction, will be permanently subtracted
from the numerator of this fraction. The adjustment is
calculated using the fractions as they would be computed as
of the end of the last limitation year beginning before
January 1, 1987, and disregarding any changes in the terms
and conditions of the Plan made after May 5, 1986, but using
the Section 415 limitation applicable to the first limitation
year beginning on or after January 1, 1987.
The annual addition for any limitation year beginning before
January 1, 1987, shall not be recomputed to treat all
employee contributions as annual additions.
6. Employer: For purposes of this Section 3.05, Employer shall
mean the Employer that adopts this Plan, and all members of a
controlled group of corporations (as defined in Section
414(b) of the Code as modified by Section 415(h)), all
commonly controlled trades or businesses (as defined in
Section 414(c) as modified by Section 415(h)) or affiliated
service groups (as defined in Section 414(m)) of which the
adopting Employer is a part, and any other entity required to
be aggregated with the Employer pursuant to regulations under
Section 414(o) of the Code.
7. Excess amount: The excess of the Participant's annual
additions for the limitation year over the maximum
permissible amount.
8. Highest average compensation: The average compensation for
the three consecutive years of service with the Employer that
produces the highest average.
9. Limitation year: A calendar year, or the 12-consecutive
month period elected by the Employer in the Section of the
Adoption Agreement titled "Limitation on Allocation - More
Than One Plan." All qualified plans maintained by the
Employer must use the same limitation year. If the
limitation year is amended to a different 12-consecutive
month period, the new limitation year must begin on a date
within the limitation year in which the amendment is made.
10. Master or prototype plan: A plan the form of which is the
subject of a favorable notification letter from the Internal
Revenue Service.
11. Maximum permissible amount: The maximum annual addition
that may be contributed or allocated to a Participant's
Individual Account under the Plan for any limitation year
shall not exceed the lesser of:
a.the defined contribution dollar limitation, or
b.25% of the Participant's compensation for the limitation
year.
The compensation limitation referred to in (b) shall not
apply to any contribution for medical benefits (within the
meaning of Section 401(h) or Section 419A(f)(2) of the Code)
which is otherwise treated as an annual addition under
Section 415(l)(1) or 419A(d)(2) of the Code.
If a short limitation year is created because of an amendment
changing the limitation year to a different 12-consecutive
month period, the maximum permissible amount will not exceed
the defined contribution dollar limitation multiplied by the
following fraction:
Number of months in the short limitation year
12
12. Projected annual benefit: The annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity
if such benefit is expressed in a form other than a straight
life annuity or qualified joint and survivor annuity) to
which the Participant would be entitled under the terms of
the Plan assuming:
a.the Participant will continue employment until normal
retirement age under the Plan (or current age, if later),
and
b.the Participant's compensation for the current limitation
year and all other relevant factors used to determine
benefits under the Plan will remain constant for all future
limitation years.
SECTION FOURINDIVIDUAL ACCOUNTS OF PARTICIPANTS AND VALUATION
4.01 INDIVIDUAL ACCOUNTS
A. The Plan Administrator shall establish and maintain an
Individual Account in the name of each Participant to reflect
the total value of his interest in the Fund. Each Individual
Account established hereunder shall consist of such subaccounts
as may be needed for each Participant including:
1. a subaccount to reflect Employer Contributions and
Forfeitures allocated on behalf of a Participant;
2. a subaccount to reflect a Participant's rollover
contributions;
3. a subaccount to reflect a Participant's transfer
contributions;
4. a subaccount to reflect a Participant's nondeductible
employee contributions; and
5. a subaccount to reflect a Participant's deductible employee
contributions.
B. The Plan Administrator may establish additional accounts as it
may deem necessary for the proper administration of the Plan,
including, but not limited to, a suspense account for
Forfeitures as required pursuant to Section 6.01(D).
4.02 VALUATION OF FUND
The Fund will be valued each Valuation Date at fair market value.
4.03 VALUATION OF INDIVIDUAL ACCOUNTS
A. Where all or a portion of the assets of a Participant's
Individual Account are invested in a Separate Fund for the
Participant, then the value of that portion of such
Participant's Individual Account at any relevant time equals the
sum of the fair market values of the assets in such Separate
Fund, less any applicable charges or penalties.
B. The fair market value of the remainder of each Individual
Account is determined in the following manner:
1. First, the portion of the Individual Account invested in each
Investment Fund as of the previous Valuation Date is
determined. Each such portion is reduced by any withdrawal
made from the applicable Investment Fund to or for the
benefit of a Participant or his Beneficiary, further reduced
by any amounts forfeited by the Participant pursuant to
Section 6.01(D) and further reduced by any transfer to
another Investment Fun since the previous Valuation Date and
is increased by any amount transferred from another
Investment Fund since the previous Valuation Date. The
resulting amounts are the net Individual Account portions
invested in the Investment Funds.
2. Secondly, the net Individual Account portions invested in
each Investment Fund are adjusted upwards or downwards, pro
rata (i.e., ratio of each net Individual Account portion to
the sum of all net Individual Account portions) so that the
sum of all the net Individual Account portions invested in an
Investment Fund will equal the then fair market value of the
Investment Fund. Notwithstanding the previous sentence, for
the first Plan Year only, the net Individual Account portions
shall be the sum of all contributions made to each
Participant's Individual Account during the first Plan Year.
3. Thirdly, any contributions to the Plan and Forfeitures are
allocated in accordance with the appropriate allocation
provisions of Section 3. For purposes of Section 4,
contributions made by the Employer for any Plan Year but
after that Plan Year will be considered to have been made on
the last day of that Plan Year regardless of when paid to the
Trustee (or Custodian, if applicable).
Amounts contributed between Valuation Dates will not be
credited with investment gains or losses until the next
following Valuation Date.
4. Finally, the portions of the Individual Account invested in
each Investment Fund (determined in accordance with (1), (2)
and (3) above) are added together.
4.04 SEGREGATION OF ASSETS
If a Participant elects a mode of distribution other than a lump
sum, the Plan Administrator may place that Participant's account
balance into a segregated Investment Fund for the purpose of
maintaining the necessary liquidity to provide benefit installments
on a periodic basis.
4.05 STATEMENT OF INDIVIDUAL ACCOUNTS
No later than 270 days after the close of each Plan Year, the Plan
Administrator shall furnish a statement to each Participant
indicating the Individual Account balances of such Participant as
of the last Valuation Date in such Plan Year.
4.06 MODIFICATION OF METHOD FOR VALUING INDIVIDUAL ACCOUNTS
If necessary or appropriate, the Plan Administrator may establish
different or additional procedures (which shall be uniform and
nondiscriminatory) for determining the fair market value of the
Individual Accounts.
SECTION FIVE TRUSTEE OR CUSTODIAN
5.01 CREATION OF FUND
By adopting this Plan, the Employer establishes the Fund which
shall consist of the assets of the Plan held by the Trustee (or
Custodian, if applicable) pursuant to this Section 5. Assets
within the Fund may be pooled on behalf of all Participants,
earmarked on behalf of each Participant or be a combination of
pooled and earmarked. To the extent that assets are earmarked for
a particular Participant, they will be held in a Separate Fund for
that Participant.
No part of the corpus or income of the Fund may be used for, or
diverted to, purposes other than for the exclusive benefit of
Participants or their Beneficiaries.
5.02 INVESTMENT AUTHORITY
Except as provided in Section 5.14 (relating to individual
direction of investments by Participants), the Employer, not the
Trustee (or Custodian, if applicable), shall have exclusive
management and control over the investment of the Fund into any
permitted investment. Notwithstanding the preceding sentence, a
Trustee with full trust powers (under applicable law) may make an
agreement with the Employer whereby the Trustee will manage the
investment of all or a portion of the Fund. Any such agreement
shall be in writing and set forth such matters as the Trustee deems
necessary or desirable.
5.03 FINANCIAL ORGANIZATION CUSTODIAN OR TRUSTEE WITHOUT FULL TRUST
POWERS
This Section 5.03 applies where a financial organization has
indicated in the Adoption Agreement that it will serve, with
respect to this Plan, as Custodian or as Trustee without full trust
powers (under applicable law). Hereinafter, a financial
organization Trustee without full trust powers (under applicable
law) shall be referred to as a Custodian.
A. Permissible Investments - The assets of the Plan shall be
invested only in those investments which are available through
the Custodian in the ordinary course of business which the
Custodian may legally hold in a qualified plan and which the
Custodian chooses to make available to Employers for qualified
plan investments.
B. Responsibilities of the Custodian - The responsibilities of the
Custodian shall be limited to the following:
1. To receive Plan contributions and to hold, invest and
reinvest the Fund without distinction between principal and
interest; provided, however, that nothing in this Plan shall
require the Custodian to maintain physical custody of stock
certificates (or other indicia of ownership of any type of
asset) representing assets within the Fund;
2. To maintain accurate records of contributions, earnings,
withdrawals and other information the Custodian deems
relevant with respect to the Plan;
3. To make disbursements from the Fund to Participants or
Beneficiaries upon the proper authorization of the Plan
Administrator; and
4. To furnish to the Plan Administrator a statement which
reflects the value of the investments in the hands of the
Custodian as of the end of each Plan Year.
C. Powers of the Custodian - Except as otherwise provided in this
Plan, the Custodian shall have the power to take any action with
respect to the Fund which it deems necessary or advisable to
discharge its responsibilities under this Plan including, but
not limited to, the following powers:
1. To invest all or a portion of the Fund (including idle cash
balances) in time deposits, savings accounts, money market
accounts or similar investments bearing a reasonable rate of
interest in the Custodian's own savings department or the
savings department of another financial organization;
2. To vote upon any stocks, bonds, or other securities; to give
general or special proxies or powers of attorney with or
without power of substitution; to exercise any conversion
privileges or subscription rights and to make any payments
incidental thereto; to oppose, or to consent to, or otherwise
participate in, corporate reorganizations or other changes
affecting corporate securities, and to pay any assessment or
charges in connection therewith; and generally to exercise
any of the powers of an owner with respect to stocks, bonds,
securities or other property;
3. To hold securities or other property of the Fund in its own
name, in the name of its nominee or in bearer form; and
4. To make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all other
instruments that may be necessary or appropriate to carry out
the powers herein granted.
5.04 FINANCIAL ORGANIZATION TRUSTEE WITH FULL TRUST POWERS AND
INDIVIDUAL TRUSTEE
This Section 5.04 applies where a financial organization has
indicated in the Adoption Agreement that it will serve as Trustee
with full trust powers. This Section also applies where one or
more individuals are named in the Adoption Agreement to serve as
Trustee(s).
A. Permissible Investments - The Trustee may invest the assets of
the Plan in property of any character, real or personal,
including, but not limited to the following: stocks, including
shares of open-end investment companies (mutual funds); bonds;
notes; debentures; options; limited partnership interests;
mortgages; real estate or any interests therein; unit investment
trusts; Treasury Bills, and other U.S. Government obligations;
common trust funds, combined investment trusts, collective trust
funds or commingled funds maintained by a bank or similar
financial organization (whether or not the Trustee hereunder);
savings accounts, time deposits or money market accounts of a
bank or similar financial organization (whether or not the
Trustee hereunder); annuity contracts; life insurance policies;
or in such other investments as is deemed proper without regard
to investments authorized by statute or rule of law governing
the investment of trust funds but with regard to ERISA and this
Plan.
Notwithstanding the preceding sentence, the Prototype Sponsor
may, as a condition of making the Plan available to the Employer
for adoption, limit the types of property in which the Trustee
(other than a financial organization Trustee with full trust
powers), is permitted to invest.
B. Responsibilities of the Trustee - The responsibilities of the
Trustee shall be limited to the following:
1. To receive Plan contributions and to hold, invest and
reinvest the Fund without distinction between physical and
interest; provided, however, that nothing in this Plan shall
require the Trustee to maintain physical custody of stock
certificates (or other indicia of ownership) representing
assets within the Fund;
2. To maintain accurate records of contributions, earnings,
withdrawals and other information the Trustee deems relevant
with respect to the Plan;
3. To make disbursements from the Fund to Participants or
Beneficiaries upon the proper authorization of the Plan
Administrator; and
4. To furnish to the Plan Administrator a statement which
reflects the value of the investments in the hands of the
Trustee as of the end of each Plan Year.
C. Powers of the Trustee - Except as otherwise provided in this
Plan, the Trustee shall have the power to take any action with
respect to the Fund which it deems necessary or advisable to
discharge its responsibilities under this Plan including, but
not limited to, the following powers:
1. To hold any securities or other property of the Fund in its
own name, in the name of its nominee or in bearer form;
2. To purchase or subscribe for securities issued, or real
property owned, by the Employer or any trade or business
under common control with the Employer but only if the
prudent investment and diversification requirements of ERISA
are satisfied;
3. To sell, exchange, convey, transfer or otherwise dispose of
any securities or other property held by the Trustee, by
private contract or at public auction. No person dealing
with the Trustee shall be bound to see to the application of
the purchase money or to inquire into the validity,
expediency, or propriety of any such sale or other
disposition, with or without advertisement;
4. To vote upon any stocks, bonds, or other securities; to give
general or special proxies or powers of attorney with or
without power of substitution; to exercise any conversion
privileges or subscription rights and to make any payments
incidental thereto; to oppose, or to consent to, or otherwise
participate in, corporate reorganizations or other changes
affecting corporate securities, and to delegate discretionary
powers, and to pay any assessments or charges in connection
therewith; and generally to exercise any of the powers of an
owner with respect to stocks, bonds, securities or other
property;
5. To invest any part or all of the Fund (including idle cash
balances) in certificates of deposit, demand or time
deposits, savings accounts, money market accounts or similar
investments of the Trustee (if the Trustee is a bank or
similar financial organization), the Prototype Sponsor or any
affiliate of such Trustee or Prototype Sponsor, which bear a
reasonable rate of interest;
6. To provide sweep services without the receipt by the Trustee
of additional compensation or other consideration (other than
reimbursement of direct expenses properly and actually
incurred in the performance of such services);
7. To hold in the form of cash for distribution or investment
such portion of the Fund as, at any time and from time-to-
time, the Trustee shall deem prudent and deposit such cash in
interest bearing or noninterest bearing accounts.;
8. To make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all other
instruments that may be necessary or appropriate to carry out
the powers herein granted;
9. To settle, compromise, or submit to arbitration any claims,
debts, or damages due or owing to or from the Plan, to
commence or defend suits or legal or administrative
proceedings, and to represent the Plan in all suits and legal
and administrative proceedings;
10. To employ suitable agents and counsel, to contract with
agents to perform administrative and recordkeeping duties and
to pay their reasonable expenses, fees and compensation, and
such agent or counsel may or may not be agent or counsel for
the Employer;
11. To cause any part or all of the Fund, without limitation as
to amount, to be commingled with the funds of other trusts
(including trusts for qualified employee benefit plans) by
causing such money to be invested as a part of any pooled,
common, collective or commingled trust fund heretofore or
hereafter created by any trustee (if the Trustee is a bank),
by the Prototype Sponsor, by any affiliate bank of such a
Trustee or by such a Trustee or the Prototype Sponsor, or by
such an affiliate in participation with others; the
instrument or instruments establishing such trust fund or
funds, as amended, being made part of this Plan and trust so
long as any portion of the Fund shall be invested through the
medium thereof.
12. Generally to do all such acts, execute all such
instruments, initiate such proceedings, and exercise all such
rights and privileges with relation to property constituting
the Fund as if the Trustee were the absolute owner thereof.
5.05 DIVISION OF FUND INTO INVESTMENT FUNDS
The Employer may direct the Trustee (or Custodian) from time-to-
time to divide and redivide the Fund into one or more Investment
Funds. Such Investment Funds may include, but not be limited to,
Investment Funds representing the assets under the control of an
investment manager pursuant to Section 5.12 and Investment Funds
representing investment options available for individual direction
by Participants pursuant to Section 5.14. Upon each division or
redivision, the Employer may specify the part of the Fund to be
allocated to each such Investment Fund and the terms and
conditions, if any, under which the assets in such Investment Fund
shall be invested.
5.06 COMPENSATION AND EXPENSES
The Trustee (or Custodian, if applicable) shall receive such
reasonable compensation as may be agreed upon by the Trustee (or
Custodian) and the Employer. The Trustee (or Custodian) shall be
entitled to reimbursement by the Employer for all proper expenses
incurred in carrying out his duties under this Plan, including
reasonable legal, accounting and actuarial expenses. If not paid
by the Employer, such compensation and expenses may be charged
against the Fund.
All taxes of any kind that may be levied or assessed under existing
or future laws upon, or in respect of, the Fund or the income
thereof shall be paid from the Fund.
5.07 NOT OBLIGATED TO QUESTION DATA
The Employer shall furnish the Trustee (or Custodian, if
applicable) and Plan Administrator the information which each party
deems necessary for the administration of the Plan including, but
not limited to, changes in a Participant's status, eligibility,
mailing addresses and other such data as may be required. The
Trustee (or Custodian) and Plan Administrator shall be entitled to
act on such information as is supplied them and shall have no duty
or responsibility to further verify or question such information.
5.08 LIABILITY FOR WITHHOLDING ON DISTRIBUTIONS
The Plan Administrator shall be responsible for withholding federal
income taxes from distributions from the Plan, unless the
Participant (or Beneficiary, where applicable) elects not to have
such taxes withheld. However, the Trustee (or Custodian) shall act
as agent for the Plan Administrator to withhold such taxes and to
make the appropriate distribution reports, subject to the Plan
Administrator's obligation to furnish all the necessary information
to so withhold to the Trustee (or Custodian).
5.09 RESIGNATION OR REMOVAL OF TRUSTEE (OR CUSTODIAN)
The Trustee (or Custodian, if applicable) may resign at any time by
giving 30 days advance written notice to the Employer. The
resignation shall become effective 30 days after receipt of such
notice unless a shorter period is agreed upon.
The Employer may remove any Trustee (or Custodian) at any time by
giving written notice to such Trustee (or Custodian) and such
removal shall be effective 30 days after receipt of such notice
unless a shorter period is agreed upon. The Employer shall have
the power to appoint a successor Trustee (or Custodian).
Upon such resignation or removal, if the resigning or removed
Trustee (or Custodian) is the sole Trustee (or Custodian), he shall
transfer all of the assets of the Fund then held by him as
expeditiously as possible to the successor Trustee (or Custodian)
after paying or reserving such reasonable amount as he shall deem
necessary to provide for the expense in the settlement of the
accounts and the amount of any compensation due him and any sums
chargeable against the Fund for which he may be liable. If the
Funds as reserved are not sufficient for such purpose, then he
shall be entitled to reimbursement from the successor Trustee (or
Custodian) out of the assets in the successor Trustee's (or
Custodian's) hands under this Plan. If the amount reserved shall
be in excess of the amount actually needed, the former Trustee (or
Custodian) shall return such excess to the successor Trustee (or
Custodian).
Upon receipt of such assets, the successor Trustee (or Custodian)
shall thereupon succeed to all of the powers and responsibilities
given to the Trustee (or Custodian) by this Plan.
The resigning or removed Trustee (or Custodian) shall render an
accounting to the Employer and unless objected to by the Employer
within 30 days of its receipt, the accounting shall be deemed to
have been approved and the resigning or removed Trustee (or
Custodian) shall be released and discharged as to all matters set
forth in the accounting. Where a financial organization is serving
as Trustee (or Custodian) and it is merged with or bought by
another organization (or comes under the control of any federal or
state agency), that organization shall serve as the successor
Trustee (or Custodian) of this Plan, but only if it is the type of
organization that can so serve under applicable law.
Where the Trustee or Custodian is serving as a nonbank trustee or
custodian pursuant to Section 1.401-12(n) of the Income Tax
Regulations, the Employer will appoint a successor Trustee (or
Custodian) upon notification by the Commissioner of Internal
Revenue that such substitution is required because the Trustee (or
Custodian) has failed to comply with the requirements of Section
1.401-12(n) or is not keeping such records or making such returns
or rendering such statements as are required by forms or
regulations.
5.10 DEGREE OF CARE
Limitations of Liability - The Trustee (or Custodian) shall not be
liable for any losses incurred by the Fund by any lawful direction
to invest communicated by the Employer, Plan Administrator or any
Participant or Beneficiary. The Trustee (or Custodian) shall be
under no liability for distributions made or other action taken or
not taken at the written direction of the Plan Administrator. It
is specifically understood that the Trustee (or Custodian) shall
have no duty or responsibility with respect to the determination of
matters pertaining to the eligibility of any Employee to become a
Participant or remain a Participant hereunder, the amount of
benefit to which a Participant or Beneficiary shall be entitled to
receive hereunder, whether a distribution to Participant or
Beneficiary is appropriate under the terms of the Plan or the size
and type of any policy to be purchased from any insurer for any
Participant hereunder or similar matters; it being understood that
all such responsibilities under the Plan are vested in the Plan
Administrator.
5.11 INDEMNIFICATION OF PROTOTYPE SPONSOR AND TRUSTEE (OR CUSTODIAN)
Notwithstanding any other provision herein, and except as may be
otherwise provided by ERISA, the Employer shall indemnify and hold
harmless the Trustee (or Custodian, if applicable) and the
Prototype Sponsor, their officers, directors, employees, agents,
their heirs, executors, successors and assigns, from and against
any and all liabilities, damages, judgments, settlements, losses,
costs, charges, or expenses (including legal expenses) at any time
arising out of or incurred in connection with any action taken by
such parties in the performance of their duties with respect to
this Plan, unless there has been a final adjudication of gross
negligence or willful misconduct in the performance of such duties.
Further, except as may be otherwise provided by ERISA, the Employer
will indemnify the Trustee (or custodian) and Prototype Sponsor
from any liability, claim or expense (including legal expense)
which the Trustee (or Custodian) and Prototype Sponsor shall incur
by reason of or which results, in whole or in part, from the
Trustee's (or Custodian's) or Prototype Sponsor's reliance on the
facts and other directions and elections the Employer communicates
or fails to communicate.
5.12 INVESTMENT MANAGERS
A. Definition of Investment Manager - The Employer may appoint one
or more investment managers to make investment decisions with
respect to all or a portion of the Fund. The investment manager
shall be any firm or individual registered as an investment
adviser under the Investment Advisers Act of 1940, a bank as
defined in said Act or an insurance company qualified under the
laws of more than one state to perform services consisting of
the management, acquisition or disposition of any assets of the
Plan.
B. Investment Manager's Authority - A separate Investment Fund
shall be established representing the assets of the Fund
invested at the direction of the investment manager. The
investment manager so appointed shall direct the Trustee (or
Custodian, if applicable ) with respect to the investment of
such Investment Fund. The investments which may be acquired at
the direction of the investment manager are those described in
Section 5.03(A) (for Custodians) or Section 5.04(A) (for
Trustees).
C. Written Agreement - The appointment of any investment manager
shall be by written agreement between the Employer and the
investment manager and a copy of such agreement (and any
modification or termination thereof) must be given to the
Trustee (or Custodian).
The agreement shall set forth, among other matters, the
effective date of the investment manager's appointment and an
acknowledgement by the investment manager that it is a fiduciary
of the Plan under ERISA.
D. Concerning the Trustee (or Custodian) - Written notice of each
appointment of an investment manager shall be given to the
Trustee (or Custodian) in advance of the effective date of such
appointment. Such notice shall specify which portion of the
Fund will constitute the Investment Fund subject to the
investment manager's direction. The Trustee (or Custodian)
shall comply with the investment direction given to it by the
investment manager and will not be liable for any loss which may
result by reason of any action (or inaction) it takes at the
direction of the investment manager.
5.11 MATTERS RELATING TO INSURANCE
A. If a life insurance policy is to be purchased for a Participant,
the aggregate premium for certain life insurance for each
Participant must be less than a certain percentage of the
aggregate Employer Contributions and Forfeitures allocated to a
Participant's Individual Account at any particular time as
follows:
1. Ordinary Life Insurance - For purposes of these incidental
insurance provisions, ordinary life insurance contracts are
contracts with both nondecreasing death benefits and
nonincreasing premiums. If such contracts are purchased,
less than 50% of the aggregate Employer Contributions and
Forfeitures allocated to any Participant's Individual Account
will be used to pay the premiums attributable to them.
2. Term and Universal Life Insurance - No more than 25% of the
aggregate Employer Contributions and Forfeitures allocated to
any Participant's Individual Account will be used to pay the
premiums on term life insurance contracts, universal life
insurance contracts, and all other life insurance contracts
which are not ordinary life.
3. Combination - The sum of 50% of the ordinary life insurance
premiums and all other life insurance premiums will not
exceed 25% of the aggregate Employer Contributions and
Forfeitures allocated to any Participant's Individual
Account.
B. Any dividends or credits earned on insurance contracts for a
Participant shall be allocated to such Participant's Individual
Account.
C. Subject to Section 6.05, the contracts on a Participant's life
will be converted to cash or an annuity or distributed to the
Participant upon commencement of benefits.
D. The Trustee (or Custodian, if applicable) shall apply for and
will be the owner of any insurance contract(s) purchased under
the terms of this Plan. The insurance contract(s) must provide
that proceeds will be payable to the Trustee (or Custodian),
however, the Trustee (or Custodian) shall be required to pay
over all proceeds of the contract(s) to the Participant's
designated Beneficiary in accordance with the distribution
provisions of this Plan. A Participant's spouse will be the
designated Beneficiary of the proceeds in all circumstances
unless a qualified election has been made in accordance with
Section 6.05. Under no circumstances shall the Fund retain any
part of the proceeds. In the event of any conflict between the
terms of this Plan and the terms of any insurance contract
purchased hereunder, the Plan provisions shall control.
E. The Plan Administrator may direct the Trustee (or Custodian) to
sell and distribute insurance or annuity contracts to a
Participant (or other party as may be permitted) in accordance
with applicable law or regulations.
5.14 DIRECTION OF INVESTMENTS BY PARTICIPANT
If so indicated in the Adoption Agreement, each Participant may
individually direct the Trustee (or Custodian, if applicable)
regarding the investment of part or all of his Individual Account.
To the extent so directed, the Employer, Plan Administrator,
Trustee (or Custodian) and all other fiduciaries are relieved of
their fiduciary responsibility under Section 404 of ERISA.
The Plan Administrator shall direct that a Separate Fund be
established in the name of each Participant who directs the
investment of part or all of his Individual Account. Each Separate
Fund shall be charged or credited (as appropriate) with the
earnings, gains, losses or expenses attributable to such Separate
Fund. No fiduciary shall be liable for any loss which results from
a Participant's individual direction. The assets subject to
individual direction shall not be invested in collectibles as that
term is defined in Section 408(m) of the Code.
The Plan Administrator shall establish such uniform and
nondiscriminatory rules relating to individual direction as it
deems necessary or advisable including, but not limited to, rules
describing (1) which portions of Participant's Individual Account
can be individually directed; (2) the frequency of investment
changes; (3) the forms and procedures for making investment
changes; and (4) the effect of a Participant's failure to make a
valid direction.
Subject to the approval of the Prototype Sponsor, the Plan
Administrator may, in a uniform and nondiscriminatory manner, limit
the available investments for Participants' individual direction to
certain specified investment options (including, but not limited
to, certain mutual funds, investment contracts, deposit accounts
and group trusts). The Plan Administrator may permit, in a uniform
and nondiscriminatory manner, a Beneficiary of a deceased
Participant to individually direct in accordance with this Section.
SECTION SIX VESTING AND DISTRIBUTION
6.01 DISTRIBUTION TO PARTICIPANT
A. When Distributable
1. Entitlement to Distribution - The Vested portion of a
Participant's Individual Account shall be distributable to
the Participant upon the occurrence of any of the following
events:
a.the Participant's Termination of Employment;
b.the Participant's attainment of Normal Retirement Age;
c.the Participant's Disability;
d.the termination of the Plan;
2. Written Request: When Distributed - A Participant entitled
to distribution who wishes to receive a distribution must
submit a written request to the Plan Administrator. Such
request shall be made upon a form provided by the Plan
Administrator. Upon a valid request, the Plan Administrator
shall direct the Trustee (or Custodian, if applicable) to
commence distribution no later than 90 days following the
later of:
a.the close of the Plan Year within which the event occurs
which entitles the Participant to distribution; or
b.the close of the Plan Year in which the request is
received.
3. Special Rules for Withdrawals During Service - If this is a
profit sharing plan and the Adoption Agreement so provides, a
Participant who is not otherwise entitled to a distribution
under Section 6.01(A)(1) may elect to receive a distribution
of all or part of the Vested portion of his Individual
Account, subject to the requirements of Section 6.05 and
further subject to the following limits:
a.Participant for 5 or more years. An Employee who has been
a Participant in the Plan for 5 or more years may withdraw
up to his entire Vested portion of his Individual Account.
b.Participant for less than 5 years. An Employee who has
been a Participant in the Plan for less than 5 years may
withdraw only the amount which has been in his Vested
Individual Account attributable to Employer Contributions
for at least 2 full Plan Years.
However, if the distribution is on account of hardship, the
Participant may withdraw up to his entire Vested portion of
his Individual Account. For purposes of the preceding
sentence, hardship is defined as an immediate and heavy
financial need of the Participant where such Participant
lacks other available resources. The following are the
only financial needs considered immediate and heavy:
expenses incurred or necessary for medical care, described
in Section 213(d) of the Code, of the Employee, the
Employee's spouse or dependents; the purchase (excluding
mortgage payments) of a principal residence for the
Employee; payment of tuition and related educational fees
for the next 12 months of post-secondary education for the
Employee, the Employee's spouse, children or dependents; or
the need to prevent the eviction of the Employee from, or a
foreclosure on the mortgage of, the Employee's principal
residence.
A distribution will be considered as necessary to satisfy an
immediate and heavy financial need of the Employee only if:
1) The employee has obtained all distributions, other than
hardship distributions, and all nontaxable loans under all
plan maintained by the Employer;
2) The distribution is not in excess of the amount of an
immediate and heavy financial need (including amounts
necessary to pay any federal, state or local income taxes
or penalties reasonably anticipated to result from the
distribution)
4. Commencement of Benefits - Notwithstanding any other
provision, unless the Participant elects otherwise,
distribution of benefits will begin no later than the 60th
day after the latest of the close of the Plan Year in which:
a.the Participant attains Normal Retirement Age;
b.occurs the 10th anniversary of the year in which the
Participant commenced participation in the Plan; or
c.the Participant incurs a Termination of Employment.
B. Determining the Vested Portion - In determining the Vested
portion of a Participant's Individual Account, the following
rules apply:
1. Employer Contributions and Forfeitures - The Vested portion
of a Participant's Individual Account derived from Employer
Contributions and Forfeitures is determined by applying the
vesting schedule selected in the Adoption Agreement (or the
vesting schedule described in Section 6.01(C) if the Plan is
a Top-Heavy Plan).
2. Rollover and Transfer Contributions - A Participant is fully
Vested in his rollover contributions and transfer
contributions.
3. Fully Vested Under Certain Circumstances - A Participant is
fully Vested in his Individual Account if any of the
following occurs:
a.the Participant reaches Normal Retirement Age;
b.the Participant incurs a Disability;
c.the Participant dies;
d.the Plan is terminated or partially terminated; or
e.there exists a complete discontinuance of contributions
under the Plan.
4. Participants in a Prior Plan - If a Participant was a
participant in a Prior Plan on the Effective Date, his Vested
percentage shall not be less than it would have been under
such Prior Plan as computed on the Effective Date.
C. Minimum Vesting Schedule for Top-Heavy Plans - The following
vesting provisions apply for any Plan Year in which this Plan is
a Top-Heavy Plan.
Notwithstanding the other provisions of this Section 6.01 or the
vesting schedule selected in the Adoption Agreement (unless
those provisions or that schedule provide for more rapid
vesting), a Participant's Vested portion of his Individual
Account attributable to Employer Contributions and Forfeitures
shall be determined in accordance with the following minimum
vesting schedule:
Years of Vesting Service Vested Percentage
1 0
2 20
3 40
4 60
5 80
6 100
This 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 Vested percentage may
occur in the event the Plan's status as a Top-Heavy Plan changes
for any Plan Year. However, this Section 6.01(C) does not apply
to the Individual Account of any Employee who does not have an
Hour of Service after the Plan has initially become a Top-Heavy
Plan and such Employee's Individual Account attributable to
Employer Contributions and Forfeitures will be determined
without regard to this Section.
If this Plan ceases to be a Top-Heavy Plan, then in accordance
with the above restrictions, the vesting schedule as selected in
the Adoption Agreement will govern. If the vesting schedule
under the Plan shifts in or out of top-heavy status, such shift
is an amendment to the vesting schedule and the election in
Section 9.04 applies.
D. Break in Vesting Service and Forfeitures - If a Participant
incurs a Termination of Employment, any portion of his
Individual Account which is not Vested shall be held in a
suspense account. Such suspense account shall share in any
increase or decrease in the fair market value of the assets of
the Fund in accordance with Section 4 of the Plan. The
disposition of such suspense account shall be as follows:
1. No Breaks in Vesting Service - If a Participant neither
receives nor is deemed to receive a distribution pursuant to
Section 6.01(D)(2) or (3) and the Participant returns to the
service of the Employer before incurring 5 consecutive Breaks
in Vesting Service, there shall be no Forfeiture and the
amount in such suspense account shall be recredited to such
Participant's Individual Account.
2. Cash-out of Certain Participants - If the value of the Vested
portion of such Participant's Individual Account derived from
Employee and Employer Contributions does not exceed $3,500,
the Participant shall receive a distribution of the entire
Vested portion of such Individual Account and the portion
which is not Vested shall be treated as a Forfeiture and
allocated in the year of the cashout. For purposes of this
Section, if the value of the Vested portion of a
Participant's Individual Account is zero, the Participant
shall be deemed to have received a distribution of such
Vested Individual Account. A Participant's Vested Individual
Account balance shall not include accumulated deductible
employee contributions within the meaning of Section
72(o)(5)(B) of the Code for Plan Years beginning prior to
January 1, 1989.
3. Participants Who Elect to Receive Distributions - If such
Participant elects to receive a distribution, in accordance
with Section 6.02(B), of the value of the Vested portion of
his Individual Account derived from Employee and Employer
Contributions, the portion which is not Vested shall be
treated as a Forfeiture.
4. Re-employed Participants - If a Participant receives or is
deemed to receive a distribution pursuant to Section
6.01(D)(2) or (3) above and the Participant resumes
employment covered under this Plan, the Participant's
Employer-derived Individual Account balance will be restored
to the amount on the date of distribution if the Participant
repays to the Plan the full amount of the distribution
attributable to Employer Contributions before the earlier of
5 years after the first date on which the Participant is
subsequently re-employed by the Employer, or the date the
Participant incurs 5 consecutive Breaks in Vesting Service
following the date of the distribution.
Amounts forfeited under Section 6.01(D) shall be allocated in
accordance with Section 3.01(C) as of the last day of the
Plan Year during which the Forfeiture arises. Any
restoration of a Participant's Individual Account pursuant to
Section 6.01(D)(4) shall be made from other Forfeitures,
income or gain to the Fund or contributions made by the
Employer.
E. Distribution Prior to Full Vesting - If a distribution is made
to a Participant who was not then fully Vested in his Individual
Account derived from Employer Contributions and the Participant
may increase his Vested percentage in his Individual Account,
then the following rules shall apply:
1. a separate account will be established for the Participant's
interest in the Plan as of the time of the distribution, and
2. at any relevant time the Participant's Vested portion of the
separate account will be equal to an amount ("X") determined
by the formula: X=P (AB + (R x D)) - (R x D) where "P" is
the Vested percentage at the relevant time, "AB" is the
separate account balance at the relevant time; "D" is the
amount of the distribution; and "R" is the ratio of the
separate account balance at the relevant time to the separate
account balance after distribution.
6.02 FORM OF DISTRIBUTION TO A PARTICIPANT
A. Value of Individual Account Does Not Exceed $3,500 - If the
value of the Vested portion of a Participant's Individual
Account derived from Employee and Employer Contributions does
not exceed $3,500, distribution from the Plan shall be made to
the Participant in a single lump sum in lieu of all other forms
of distribution from the Plan.
B. Value of Individual Account Exceeds $3,500
1. If the value of the Vested portion of a Participant's
Individual Account derived from Employee and Employer
Contributions exceeds (or at the time of any prior
distribution exceeded) $3,500, and the Individual Account is
immediately distributable, the Participant and the
Participants spouse (or where either the Participant or the
spouse died, the survivor) must consent to any distribution
of such Individual Account. The consent of the Participant
and the Participant's spouse shall be obtained in writing
within the 90-day period ending on the annuity starting date.
The annuity starting date is the first day of the first
period for which an amount is paid as an annuity or any other
form. The Plan Administrator shall notify the Participant
and the Participant's spouse of the right to defer any
distribution until the Participant's Individual Account is no
longer immediately distributable. Such notification shall
include a general description of the material features, and
an explanation of the relative values of, the optional forms
of benefit available under the Plan in a manner that would
satisfy the notice requirements of Section 417(a)(3) of the
Code, and shall be provided no less than 30 days and no more
than 90 days prior to the annuity starting date. If a
distribution is one to which Sections 401(a)(11) and 417 of
the Internal Revenue Code do not apply, such distribution may
commence less than 30 days after the notice required under
Section 1.411(a)-11(c) of the Income Tax Regulations is
given, provided that:
a.the Plan Administrator clearly informs the Participant that
the Participant has a right to a period of at least 30 days
after receiving the notice to consider the decision of
whether or not to elect a distribution (and, if applicable,
a particular distribution option), and
b.the Participant, after receiving the notice, affirmatively
elects a distribution.
Notwithstanding the foregoing, only the Participant need
consent to the commencement of a distribution in the form of
a qualified joint and survivor annuity while the Individual
Account is immediately distributable. Neither the consent of
the Participant nor the Participant's spouse shall be
required to the extent that a distribution is required to
satisfy Section 401(a)(9) or Section 415 of he Code. In
addition, upon termination of this Plan if the Plan does not
offer an annuity option (purchased from a commercial
provider), the Participant's Individual Account may, without
the Participant's consent, be distributed to the Participant
or transferred to another defined contribution plan (other
than an employee stock ownership plan as defined in Section
4975(e)(7) of the Code) within the same controlled group.
An Individual Account is immediately distributable if any
part of the Individual Account could be distributed to the
Participant (or surviving spouse) before the Participant
attains or would have attained (if not deceased) the later of
Normal Retirement Age or age 62.
2. For purposes of determining the applicability of the
foregoing consent requirements to distributions made before
the first day of the first Plan year beginning after December
31, 1988, the Vested portion of a Participant's Individual
Account shall not include amounts attributable to accumulated
deductible employee contributions within the meaning of
Section 72(o)(5)(B) o the Code.
C. Other Forms of Distribution to Participant - If the value of the
Vested portion of a Participant's Individual Account exceeds
$3,500 and the Participant has properly waived the joint and
survivor annuity, as described in Section 6.05, the Participant
may request in writing that the Vested portion of his Individual
Account be paid to him in one or more of the following forms of
payment: 91) in a lump sum; (2) in installment payments over a
period not to exceed the life expectancy of the Participant or
the joint and last survivor life expectancy of the Participant
and his designated Beneficiary; or (3) applied to the purchase
of an annuity contract.
Notwithstanding anything in this Section 6.02 to the contrary, a
Participant cannot elect payments in the form of an annuity if
the safe harbor rules of Section 6.05(F) apply.
6.03 DISTRIBUTIONS UPON THE DEATH OF A PARTICIPANT
A. Designation of Beneficiary - Spousal Consent - Each Participant
may designate, upon a form provided by and delivered to the Plan
Administrator, one or more primary and contingent Beneficiaries
to receive all or a specified portion of his Individual Account
in the event of his death. A Participant may change or revoke
such Beneficiary designation from time to time by completing and
delivering the proper form to the Plan Administrator.
In the event that a Participant wishes to designate a primary
Beneficiary who is not his spouse, his spouse must consent in
writing to such designation, and the spouse's consent must
acknowledge the effect of such designation and be witnessed by a
notary public. Notwithstanding this consent requirement, if the
Participant establishes to the satisfaction of the Plan
Administrator that such written consent may not be obtained
because there is no spouse or the spouse cannot be located, no
consent shall be required. Any change of Beneficiary will
require a new spousal consent.
B. Payment to Beneficiary - If a Participant dies before his entire
Individual Account has been paid to him, such deceased
Participant's Individual Account shall be payable to any
surviving Beneficiary designated by the Participant, or, if no
Beneficiary survives the Participant, to the Participant's
estate.
C. Written Request: When Distributed - A Beneficiary of a deceased
Participant entitled to a distribution who wishes to receive a
distribution must submit a written request to the Plan
Administrator. Such request shall be made upon a form provided
by the Plan Administrator. Upon a valid request, the Plan
Administrator shall direct the Trustee (or Custodian) to
commence distribution no later than 90 days following the later
of:
1. the close of the Plan Year within which the Participant dies;
or
2. the close of the Plan Year in which the request is received.
D. Location of Participant or Beneficiary Unknown - In the event
that all, or any portion, of the distribution payable to a
Participant or his Beneficiary hereunder shall, at the
expiration of 5 years after it becomes payable, remain unpaid
solely by reason of the inability of the Plan Administrator,
after sending a registered letter, return receipt requested, to
the last known address, and after further diligent effort, to
ascertain the whereabouts of such Participant or his
Beneficiary, the amount so distributable shall be forfeited and
allocated in accordance with the terms of the Plan. In the
event a Participant or Beneficiary is located subsequent to his
benefit being forfeited, such benefit shall be restored;
provided, however, if all or a portion of such amount has been
lost by reason of escheat under state law, the Participant or
Beneficiary shall cease to be entitled to the portion so lost.
6.04 FORM OF DISTRIBUTION TO BENEFICIARY
A. Value of Individual Account Does Not Exceed $3,500 - If the
value of the Participant's Individual Account derived from
Employee and Employer Contributions does not exceed $3,500, the
Plan Administrator shall direct the Trustee (or Custodian, if
applicable) to make a distribution to the Beneficiary in a
single lump sum in lieu of all other forms of distribution from
the Plan.
B. Value of Individual Account Exceeds $3,500 - If the value of a
Participant's Individual Account derived from Employee and
Employer Contributions exceeds $3,500 the preretirement survivor
annuity requirements of Section 6.05 shall apply unless waived
in accordance with that Section or unless the safe harbor rules
of Section 6.05(F) apply.
C. Other Forms of Distribution to Beneficiary - If the value of a
Participant's Individual Account exceeds $3,500 and the
Participant has properly waived the preretirement survivor
annuity, as described in Section 6.05 (if applicable), the
Beneficiary may, subject to the requirements of Section 6.06,
request in writing that the Participant's Individual Account be
paid to him as follows: (1) in a lump sum; or (2) in
installment payments over a period not to exceed the life
expectancy of such Beneficiary.
6.05 JOINT AND SURVIVOR ANNUITY REQUIREMENTS
A. The provisions of this Section shall apply to any Participant
who is credited with at least one Hour of Eligibility Service
with the Employer on or after August 23, 1984, and such other
participants as provided in Section 6.05(G).
B. Qualified Joint and Survivor Annuity - Unless an optional form
of benefit is selected pursuant to a qualified election within
the 90-day period ending on the annuity starting date, a married
Participant's Vested account balance will be paid in the form of
a qualified joint and survivor annuity and an unmarried
Participant's Vested account balance will be paid in the form of
a life annuity. The Participant may elect to have such annuity
distributed upon attainment of the earliest retirement age under
the Plan.
C. Qualified Preretirement Survivor Annuity - Unless an option form
of benefit has been selected within the election period pursuant
to a qualified election, if a Participant dies before the
annuity starting date then the Participant's Vested account
balance shall be applied toward the purchase of an annuity for
the life of the surviving spouse. The surviving spouse may
elect to have such annuity distributed within a reasonable
period after the Participant's death.
D. Definitions
1. Election Period - The period which begins on the first day of
the Plan Year in which the Participant attains age 35 and
ends on the date of the Participant's death. If a
Participant separates from service prior to the first day of
the Plan Year in which age 35 is attained, with respect to
the account balance as of the date of separation, the
election period shall begin on the date of separation.
Pre-age 35 waiver - A Participant who will not yet attain age
35 as of the end of any current Plan Year may make special
qualified election to waive the qualified preretirement
survivor annuity for the period beginning on the date of such
election and ending on the first day of the Plan Year in
which the Participant will attain age 35. Such election
shall not be valid unless the Participant receives a written
explanation of the qualified preretirement survivor annuity
in such terms as are comparable to the explanation required
under Section 6.05(E)(1). Qualified preretirement survivor
annuity coverage will be automatically reinstated as of the
first day of the Plan Year in which the Participant attains
age 35. Any new waiver on or after such date shall be
subject to the full requirements of this Section 6.05.
2. Earliest Retirement Age - The earliest date on which, under
the Plan, the Participant could elect to receive retirement
benefits.
3. Qualified Election - A waiver of a qualified joint and
survivor annuity or a qualified preretirement survivor
annuity. Any waiver of a qualified joint and survivor
annuity or a qualified preretirement survivor annuity shall
not be effective unless: (a) the Participant's spouse
consents in writing to the election, (b) the election
designates a specific Beneficiary, including any class of
beneficiaries or any contingent beneficiaries, which may not
be changed without spousal consent (or the spouse expressly
permits designations by the Participant without any further
spousal consent); (c) the spouse's consent acknowledges the
effect of the election; and (d) the spouse's consent is
witnessed by a plan representative or notary public.
Additionally, a Participant's waiver of the qualified joint
and survivor annuity shall not be effective unless the
election designates a form of benefit payment which may not
be changed without spousal consent (or the spouse expressly
permits designations by the Participant without any further
spousal consent). If it is established to the satisfaction
of a plan representative that there is no spouse or that the
spouse cannot be located, a waiver will be deemed a qualified
election.
Any consent by a spouse obtained under this provision (or
establishment that the consent of a spouse may not be
obtained) shall be effective only with respect to such
spouse. A consent that permits designations by the
Participant without any requirement of further consent by
such spouse must acknowledge that the spouse has the right to
limit consent to a specific Beneficiary, and a specific form
of benefit where applicable, and that the spouse voluntarily
elects to relinquish either or both of such rights. A
revocation of a prior waiver may be made by a Participant
without the consent of the spouse at any time before the
commencement of benefits. The number of revocations shall
not be limited. No consent obtained under this provision
shall be valid unless the Participant has received notice as
provided in Section 6.05(E) below.
4. Qualified Joint and Survivor Annuity - An immediate annuity
for the life of the Participant with a survivor annuity for
the life of the spouse which is not less than 50% and not
more than 100% of the amount of the annuity which is payable
during the joint lives of the Participant and the spouse and
which is the amount of beneficiary which can be purchased
with the Participant's vested account balance. The
percentage of the survivor annuity under the Plan shall be
50% (unless a different percentage is elected by the Employer
in the Adoption Agreement).
5. Spouse (surviving spouse) - The spouse or surviving spouse of
the Participant, provided that a former spouse will be
treated as the spouse or surviving spouse and a current
spouse will not be treated as the spouse or surviving spouse
to the extent provided under a qualified domestic relations
order as described in Section 414(p) of the Code.
6. Annuity Starting Date - The first day of the first period for
which an amount is paid as an annuity or any other form.
7. Vested Account Balance - The aggregate value of the
Participant's Vested account balances derived from Employer
and Employee contributions (including rollovers), whether
Vested before or upon death, including the proceeds of
insurance contracts, if any, on the Participant's life. The
provisions of this Section 6.05 shall apply to a Participant
who is Vested in amounts attributable to Employer
Contributions, Employee contributions (or both) at the time
of death or distribution.
E. Notice Requirements
1. In the case of a qualified joint and survivor annuity, the
Plan Administrator shall no less than 30 days and not more
than 90 days prior to the annuity starting date provide each
Participant a written explanation of: (a) the terms and
conditions of a qualified joint and survivor annuity; (b) the
Participant's right to make and the effect of an election to
waive the qualified joint and survivor annuity form of
benefit; (c) the rights of a Participant's spouse; and (d)
the right to make, and the effect of, a revocation of a
previous election to waive the qualified joint and survivor
annuity.
2. In the case of a qualified preretirement annuity as described
in Section 6.05(C), the Plan Administrator shall provide each
Participant within the applicable period for such Participant
a written explanation of the qualified preretirement survivor
annuity in such terms and in such manner as would be
comparable to the explanation provided for meeting the
requirements of Section 6.05(E)(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 6.05(E)(3) ceases to apply to the Participant; (d) a
reasonable period ending after this Section 6.05 first
applies to the Participant. Notwithstanding the foregoing,
notice must be provided within a reasonable period ending
after separation from service in the case of a Participant
who separates from service before attaining age 35.
For purposes of applying the preceding paragraph, a
reasonable period ending after the enumerated events
described in (b), (c) and (d) is the end of the two-year
period beginning one year prior to the date the applicable
event occurs, and ending one year after that date. In the
case of a Participant who separates from service before the
Plan Year in which age 35 is attained, notice shall be
provided within the two-year period beginning one year prior
to separation and ending one year after separation. If such
a Participant thereafter returns to employment with the
Employer, the applicable period for such Participant shall be
redetermined.
3. Notwithstanding the other requirements of this Section
6.05(E), the respective notices prescribed by this Section
6.05(E), need not be given to a Participant if (a) the Plan
"fully subsidizes" the costs of a qualified joint and
survivor annuity or qualified preretirement survivor annuity,
and (b) the Plan does not allow the Participant to waive the
qualified joint and survivor annuity or qualified
preretirement survivor annuity and does not allow a married
Participant to designate a nonspouse beneficiary. For
purposes of this Section 6.05(E)(3), a plan fully subsidizes
the costs of a benefit if no increase in cost, or decrease in
benefits to the Participant may result from the Participants
failure to elect another benefit.
F. Safe Harbor Rules
1. If the Employer so indicates in the Adoption Agreement, this
Section 6.05(F) shall apply to a Participant in a profit
sharing plan, and shall always apply to any distribution,
made on or after the first day of the first Plan Year
beginning after December 31, 1988, from or under a separate
account attributable solely to accumulated deductible
employee contributions, as defined in Section 72(o)(5)(B) of
the Code, and maintained on behalf of a Participant in a
money purchase pension plan, (including a target benefit
plan) if the following conditions are satisfied:
a.the Participant does not or cannot elect payments in the
form of a life annuity; and
b.on the death of a participant, the Participant's Vested
account balance will be paid to the Participant's surviving
spouse, but if there is no surviving spouse, or if the
surviving spouse has consented in a manner conforming to a
qualified election, then to the Participant's designated
beneficiary. The surviving spouse may elect to have
distribution of the Vested account balance commence within
the 90-day period following the date of the Participant's
death. The account balance shall be adjusted for gains or
losses occurring after the Participant's death in
accordance with the provisions of the Plan governing the
adjustment of account balances for other types of
distributions. This Section 6.05(F) shall not be operative
with respect to a Participant in a profit sharing plan if
the plan is a direct or indirect transferee of a defined
benefit plan, money purchase plan, a target benefit plan,
stock bonus, or profit sharing plan which is subject to the
survivor annuity requirements of Section 401(a)(11) and
Section 417 of the code. If this Section 6.05(F) is
operative, then the provisions of this Section 6.05 other
than Section 6.05(G) shall be inoperative.
2. The Participant may waive the spousal death benefit described
in this Section 6.05(F) at any time provided that no such
waiver shall be effective unless it satisfies the conditions
of Section 6.05(D)(3) (other than the notification
requirement referred to therein) that would apply to the
Participant's waiver of the qualified preretirement survivor
annuity.
3. For purposes of this Section 6.05(F), Vested account balance
shall mean, in the case of a money purchase pension plan or a
target benefit plan, the Participant's separate account
balance attributable solely to accumulated deductible
employee contributions within the meaning of Section
72(o)(5)(B) of the Code. In the case of a profit sharing
plan, Vested account balance shall have the same meaning as
provided in Section 6.05(D)(7).
G. Transitional Rules
1. Any living Participant not receiving benefits on August 23,
1984, who would otherwise not receive the benefits prescribed
by the previous subsections of this Section 6.05 must be
given the opportunity to elect to have the prior subsections
of this Section apply if such Participant is credited with at
least one Hour of Service under this Plan or a predecessor
plan in a Plan Year beginning on or after January 1, 1976,
and such Participant had at least 10 Years of Vesting Service
when he or she separated from service.
2. Any living Participant not receiving benefits on August 23,
1984, who was credited with at least one Hour of Service
under this Plan or a predecessor plan on or after September
2, 1974, and who is not otherwise credited with any service
in a Plan Year beginning on or after January 1, 1976, must be
given the opportunity to have his or her benefits paid in
accordance with Section 6.05(G)(4).
3. The respective opportunities to elect (as described in
Section 6.05(G)(1) and (2) above) must be afforded to the
appropriate Participants during the period commencing on
August 23, 1984, and ending on the date benefits would
otherwise commence to said Participants.
4. Any Participant who has elected pursuant to Section
6.05(G)(2) and any Participant who does not elect under
Section 6.05(G)(1) or who meets the requirements of Section
6.05(G)(1) except that such Participant does not have at
least 10 Years of Vesting Service when he or she separates
from service, shall have his or her benefits distributed in
accordance with all of the following requirements if benefits
would have been payable in the form of a life annuity:
a.Automatic Joint and Survivor Annuity - If benefits in the
form of a life annuity become payable to a married
Participant who:
1. begins to receive payments under the Plan on or after
Normal Retirement Age; or
2. dies on or after Normal Retirement Age while still
working for the Employer; or
3. begins to receive payments on or after the qualified
early retirement age; or
4. separates from service on or after attaining Normal
Retirement Age (or the qualified early retirement age)
and after satisfying the eligibility requirements for
the payment of benefits under the Plan and thereafter
dies before beginning to receive such benefits;
then such benefits will be received under this Plan in the
form of a qualified joint and survivor annuity, unless the
Participant has elected otherwise during the election
period. The election period must begin at least 6 months
before the Participant attains qualified early retirement
age and ends not more than 90 days before the commencement
of benefits. Any election hereunder will be in writing and
may be changed by the Participant at any time.
b.Election of Early Survivor Annuity - A Participant who is
employed after attaining the qualified early retirement age
will be given the opportunity to elect, during the election
period, to have a survivor annuity payable on death. If
the Participant elects the survivor annuity, payments under
such annuity must not be less than the payments which would
have been made to the spouse under the qualified joint and
survivor annuity if the Participant had retirement on the
day before his or her death. Any election under this
provision will be in writing and may be changed by the
Participant at any time. The election period begins on the
later of (1) the 90th day before the Participant attains
the qualified early retirement age, or 92) the date on
which participation begins, and ends on the date the
Participant terminates employment.
c.For purposes of Section 6.05(G)(4):
1. Qualified early retirement age is the latest of:
a.the earliest date, under the Plan, on which the
Participant may elect to receive retirement benefits,
b.the first day of the 120th month beginning before the
Participant reaches Normal Retirement Age, or
c.the date the Participant begins participation.
2. Qualified joint and survivor annuity is an annuity for
the life of the Participant with a survivor annuity for
the life of the spouse as described in Section
6.05(D)(4) of this Plan.
6.06 DISTRIBUTION REQUIREMENTS
A. General Rules
1. Subject to Section 6.05 Joint and Survivor Annuity
Requirements, the requirements of this Section shall apply to
any distribution of a Participant's interest and will take
precedence over any inconsistent provisions of this Plan.
Unless otherwise specified, the provisions of this Section
6.06 apply to calendar years beginning after December 31,
1984.
2. All distributions required under this Section 6.06 shall be
determined and made in accordance with the Income Tax
Regulations under Section 401(a)(9), including the minimum
distribution incidental benefit requirement of Section
1.401(a)(9)-2 of the regulations.
B. Required Beginning Date - The entire interest of a Participant
must be distributed or begin to be distributed no later than the
Participant's required beginning date.
C. Limits on Distribution Periods - As of the first distribution
calendar year, distributions, if not made in a single sum, may
only be made over one of the following periods (or a combination
thereof):
1. the life of the Participant,
2. the life of the Participant and a designated Beneficiary,
3. a period certain not extending beyond the life expectancy of
the Participant, or
4. a period certain not extending beyond the joint and last
survivor expectancy of the Participant and a designated
Beneficiary.
D. Determination of Amount to be Distributed Each Year - If the
Participant's interest is to be distributed in other than a
single sum, the following minimum distribution rules shall apply
on or after the required beginning date:
1. Individual Account
a.If a Participant's benefit is to be distributed over (1) a
period not extending beyond the life expectancy of the
Participant or the joint life and last survivor expectancy
of the Participant and the Participant's designated
Beneficiary or (2) a period not extending beyond the 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.
b.For calendar years beginning before January 1, 1989, if the
Participant's spouse is not the designated Beneficiary, the
method of distribution selected must assure that at least
50% of the present value of the amount available for
distribution is paid within the life expectancy of the
Participant.
c.For calendar years beginning after December 31, 1988, the
amount to be distributed each year, beginning with
distributions for the first distribution calendar year
shall not be less than the quotient obtained by dividing
the Participant's benefit by the lesser of (1) the
applicable life expectancy or (2) if the Participant's
spouse is not the designated Beneficiary, the applicable
divisor determined from the table set forth in Q&A-4 of
Section 1.401(a)(9)-2 of the Income Tax Regulations.
Distributions after the death of the Participant shall be
distributed using the applicable life expectancy in Section
6.05(D)(1)(a) above as the relevant divisor without regard
to regulations 1.401(a)(9)-2.
d.The minimum distribution required for the Participant's
first distribution calendar year must be made on or before
the Participant's required beginning date. The minimum
distribution for other calendar years, including the
minimum distribution for the distribution calendar year in
which the Employee's required beginning date occurs, must
be made on or before December 31 of that distribution
calendar year.
2. Other Forms - If the Participant's benefit is distributed in
the form of an annuity purchased from an insurance company,
distributions thereunder shall be made in accordance with the
requirements of Section 401(a)(9) of the Code and the
regulations thereunder.
E. Death Distribution Provisions
1. Distribution Beginning Before Death - If the Participant dies
after distribution of his or her interest has begun, the
remaining portion of such interest will continue to be
distributed at least as rapidly as under the method of
distribution being used prior to the Participant's death.
2. Distribution Beginning After Death - If the Participant dies
before distribution of his or her interest begins,
distribution of the Participant's entire interest shall be
completed by December 31 of the calendar year containing the
fifth anniversary of the Participant's death except to the
extent that an election is made to receive distributions in
accordance with (a) or (b) below:
a.if any portion of the Participant's interest is payable to
a designated Beneficiary, distributions may be made over
the life or over a period certain not greater than the life
expectancy of the designated Beneficiary commencing on or
before December 31 of the calendar year immediately
following the calendar year in which the Participant died;
b.if the designated Beneficiary is the Participant's
surviving spouse, the date distributions are required to
begin in accordance with (a) above shall not be earlier
than the later of (1) December 31 of the calendar year
immediately following the calendar year in which the
Participant dies or (2) December 31 of the calendar year in
which the Participant would have attained age 70 1/2.
If the Participant has not made an election pursuant to
this Section 6.05(E)(2) by the time of his or her death,
the Participant's designated Beneficiary must elect the
method of distribution no later than the earlier of (1)
December 31 of the calendar year in which distributions
would be required to begin under this Section 6.05(E)(2),
or (2) December 31 of the calendar year which contains the
fifth anniversary of the date of death of the Participant.
If the Participant has no designated Beneficiary, or if the
designated Beneficiary does not elect a method of
distribution, distribution of the Participant's entire
interest must be completed by December 31 of the calendar
year containing the fifth anniversary of the Participant's
death.
3. For purposes of Section 6.06(E)(2) above, if the surviving
spouse dies after the Participant, but before payments to
such spouse begin, the provisions of Section 6.06(E)(2), with
the exception of paragraph (b) therein, shall be applied as
if the surviving spouse were the Participant.
4. For purposes of this Section 6.06(E), any amount paid to a
child of the Participant will be treated as if it had been
paid to the surviving spouse if the amount becomes payable to
the surviving spouse when the child reaches the age of
majority.
5. For purposes of this Section 6.06(E), distribution of a
Participant's interest is considered to begin on the
Participant's required beginning date (or, if Section
6.06(E)(3) above is applicable, the date distribution is
required to begin to the surviving spouse pursuant to Section
6.06(E)(2) above). If distribution in the form of an annuity
irrevocably commences to the Participant before the required
beginning date, the date distribution is considered to begin
is the date distribution actually commences.
F. Definitions
1. Applicable Life Expectancy - The life expectancy (or joint
and last survivor expectancy) calculated using the attained
age of the Participant (or designated Beneficiary) as of the
Participant's (or designated Beneficiary's) birthday in the
applicable calendar year reduced by one for each calendar
year which has elapsed since the date life expectancy was
first calculated. If life expectancy is being recalculated,
the applicable life expectancy shall be the life expectancy
as so recalculated. The applicable calendar year shall be
the first distribution calendar year, and if life expectancy
is being recalculated such succeeding calendar year.
2. Designated Beneficiary - The individual who is designated as
the Beneficiary under the Plan in accordance with Section
401(a)(9) of the Code and the regulations thereunder.
3. Distribution Calendar Year - A calendar year for which a
minimum distribution is required. For distributions
beginning before the Participant's death, the first
distribution calendar year is the calendar year immediately
preceding the calendar year which contains the Participant's
required beginning date. For distributions beginning after
the Participant's death, the first distribution calendar year
is the calendar year in which distributions are required to
begin pursuant to Section 6.05(E) above.
4. Life Expectancy - Life expectancy and joint and last survivor
expectancy are computed by use of the expected return
multiples in Tables V and VI of Section 1.72-9 of the Income
Tax Regulations.
Unless otherwise elected by the Participant (or spouse, in
the case of distributions described in Section 6.05(E)(2)(b)
above) by the time distributions are required to begin, life
expectancies shall be recalculated annually. Such election
shall be irrevocable as to the Participant (or spouse) and
shall apply to all subsequent years. The life expectancy of
a nonspouse Beneficiary may not be recalculated.
5. Participant's Benefit
a.The account balance as of the last valuation date in the
valuation calendar year (the calendar year immediately
preceding the distribution calendar year) increased by the
amount of any Contributions or Forfeitures allocated to the
account balance as of dates in the valuation calendar year
after the valuation date and decreased by distributions
made in the valuation calendar year after the valuation
date.
b.Exception for second distribution calendar year. For
purposes of paragraph (a) above, if any portion of the
minimum distribution for the first distribution calendar
year is made in the second distribution calendar year on or
before the required beginning date, the amount of the
minimum distribution made in the second distribution
calendar year shall be treated as if it had been made in
the immediately preceding distribution calendar year.
6. Required Beginning Date
a.General Rule - The required beginning date of a Participant
is the first day of April of the calendar year following
the calendar year in which the Participant attains age 70
1/2.
b.Transitional Rules - The required beginning date of a
Participant who attains age 70 1/2 before January 1, 1988,
shall be determined in accordance with (1) or (2) below:
(1) Non 5% Owners - The required beginning date of a
Participant who is not a 5% owner is the first day of
April of the calendar year following the calendar year
in which the later of retirement or attainment of age 70
1/2 occurs.
(2) 5% Owners - The required beginning date of a
Participant who is a 5% owner during any year beginning
after December 31, 1979, is the first day of April
following the later of:
(a)the calendar year in which the Participant attains
age 70 1/2, or
(b)the earlier of the calendar year with or within which
ends the Plan Year in which the Participant becomes a
5% owner, or the calendar year in which the
Participant retires.
The required beginning date of a Participant who is
not a 5% owner who attains age 70 1/2 during 1988 and
who has not retired as of January 1, 1989, is April 1,
1990.
(c)5% Owner - A Participant is treated as a 5% owner
for purposes of this Section 6.06(F)(6) if such
Participant is a 5% owner as defined in Section 416(i)
of the Code (determined in accordance with Section 416
but without regard to whether the Plan is top-heavy)
at any time during the Plan Year ending with or within
the calendar year in which such owner attains age 66
1/2 or any subsequent Plan Year.
(d)Once distributions have begun to a 5% owner under
this Section 6.06(F)(6) they must continue to be
distributed, even if the Participant ceases to be a 5%
owner in a subsequent year.
G. Transitional Rule
1. Notwithstanding the other requirements of this Section 6.06
and subject to the requirements of Section 6.05, Joint and
Survivor Annuity Requirements, distribution on behalf of any
Employee, including a 5% owner, may be made in accordance
with all of the following requirements (regardless of when
such distribution commences):
a.The distribution by the Fund is one which would not have
disqualified such Fund under Section 401(a)(9) of the Code
as in effect prior to amendment by the Deficit Reduction
Act of 1984.
b.The distribution is in accordance with a method of
distribution designated by the Employee whose interest in
the Fund is being distributed or, if the Employee is
deceased, by a Beneficiary of such Employee.
c.Such designation was in writing, was signed by the Employee
or the Beneficiary, and was made before January 1, 1984.
d.The Employee had accrued a benefit under the Plan as of
December 31, 1983.
e.The method of distribution designated by the Employee or
the Beneficiary specifies the time at which distribution
will commence, the period over which distributions will be
made, and in the case of any distribution upon the
Employee's death, the Beneficiaries of the Employee listed
in order of priority.
2. A distribution upon death will not be covered by this
transitional rule unless the information in the designation
contains the required information described above with
respect to the distributions to be made upon the death of the
Employee.
3. For any distribution which commences before January 1, 1984,
but continues after December 31, 1983, the Employee, or the
Beneficiary, to whom such distribution is being made, will be
presumed to have designated the method of distribution under
which the distribution is being made if the method of
distribution was specified in writing and the distribution
satisfies the requirements in Sections 6.06(G)(1)(a) and (e).
4. If a designation is revoked, any subsequent distribution must
satisfy the requirements of Section 401(a)(9) of the Code and
the regulations thereunder. If a designation is revoked
subsequent to the date distributions are required to begin,
the Plan must distribute by the end of the calendar year
following the calendar year in which the revocation occurs
the total amount not yet distributed which would have been
required to have been distributed to satisfy Section
401(a)(9) of the Code and the regulations thereunder, but for
the Section 242(b)(2) election. For calendar years beginning
after December 31, 1988, such distributions must meet the
minimum distribution incidental benefit requirements in
Section 1.401(a)(9)-2 of the Income Tax Regulations. Any
changes in the designation will be considered to be a
revocation of the designation. However, the mere
substitution or addition of another Beneficiary (one not
named in the designation) under the designation will not be
considered to be a revocation of the designation, so long as
such substitution or addition does not alter the period over
which distributions are to be made under the designation,
directly or indirectly (for example, by altering the relevant
measuring life). In the case in which an amount is
transferred or rolled over from one plan to another plan, the
rules in Q&A J-2 and Q&A J-3 shall apply.
6.07 ANNUITY CONTRACTS
Any annuity contract distributed under the Plan (if permitted or
required by this Section 6) must be nontransferable. The terms of
any annuity contract purchased and distributed by the Plan to a
Participant or spouse shall comply with the requirements of the
Plan.
6.08 LOANS TO PARTICIPANTS
If the Adoption Agreement so indicates, a Participant may receive a
loan from the Fund, subject to the following rules:
A. Loans shall be made available to all Participants on a
reasonably equivalent basis.
B. Loans shall not be made available to Highly Compensated
Employees (as defined in Section 414(q) of the Code) in an
amount greater than the amount made available to other
Employees.
C. Loans must be adequately secured and bear a reasonable interest
rate.
D. No Participant loan shall exceed the present value of the Vested
portion of a Participant's Individual Account.
E. A Participant must obtain the consent of his or her spouse, if
any, to the use of the Individual Account as security for the
loan. Spousal consent shall be obtained no earlier than the
beginning of the 90 day period that ends on the date on which
the loan is to be so secured. The consent must be in writing,
must acknowledge the effect of the loan, and must be witnessed
by a plan representative or notary public. Such consent shall
thereafter be binding with respect to the consenting spouse or
any subsequent spouse with respect to that loan. A new consent
shall be required if the account balance is used for
renegotiation, extension, renewal, or other revision of the
loan.
F. In the event of default, foreclosure on the note and attachment
of security will not occur until a distributable event occurs in
the Plan.
G. No loans will be made to any shareholder-employee or Owner-
Employee. For purposes of this requirement, a shareholder-
employee means an employee or officer of an electing small
business (Subchapter S) corporation who owns (or is considered
as owning within the meaning of Section 318(a)(1) of the Code),
on any day during the taxable year of such corporation, more
than 5% of the outstanding stock of the corporation.
If a valid spousal consent has been obtained in accordance with
6.08(E), then, notwithstanding any other provisions of this Plan,
the portion of the Participant's Vested Individual Account used as
a security interest held by the Plan by reason of a loan
outstanding to the Participant shall be taken into account for
purposes of determining the amount of the account balance payable
at the time of death or distribution, but only if the reduction is
used as repayment of the loan. If less than 100% of the
Participant's Vested Individual Account (determined without regard
to the preceding sentence) is payable to the surviving spouse, then
the account balance shall be adjusted by first reducing the Vested
Individual Account by the amount of the security used as repayment
of the loan, and then determining the benefit payable to the
surviving spouse.
No loan to any Participant can be made to the extent that such loan
when added to the outstanding balance of all other loans to the
Participant would exceed the lesser of (a) $50,000 reduced by the
excess (if any) of the highest outstanding balance of loans during
the one year period ending on the day before the loan is made, over
the outstanding balance of loans from the Plan on the date the loan
is made, or (b) 50% of the present value of the nonforfeitable
Individual Account of the Participant or, if greater, the total
Individual Account up to $10,000. For the purpose of the above
limitation, all loans from all plans of the Employer and other
members of a group of employers described in Sections 414(b),
414(c), and 414(m) of the Code are aggregated. Furthermore, any
loan shall by its terms require that repayment (principal and
interest) be amortized in level payments, not less frequently than
quarterly, over a period not extending beyond 5 years from the date
of the loan, unless such loan is used to acquire a dwelling unit
which within a reasonable time (determined at the time the loan is
made) will be used as the principal residence of the Participant.
An assignment or pledge of any portion of the Participant's
interest in the Plan and a loan, pledge, or assignment with respect
to any insurance contract purchased under the Plan, will be treated
as a loan under this paragraph.
The Plan Administrator shall administer the loan program in
accordance with a written document. Such written document shall
include, at a minimum, the following: (i) the identity of the
person or positions authorized to administer the Participant loan
program; (ii) the procedure for applying for loans; (iii) the basis
on which loans will be approved or denied; (iv) limitations (if
any) on the types and amounts of loans offered; (v) the procedure
under the program for determining a reasonable rate of interest;
(vi) the types of collateral which may secure a Participant loan;
and (vii) the events constituting default and the steps that will
be taken to preserve Plan assets in the event of such default.
6.09 DISTRIBUTION IN KIND
The Plan Administrator may cause any distribution under this Plan
to be made either in a form actually held in the Fund, or in cash
by converting assets other than cash into cash, or in any
combination of the two foregoing ways.
6.10 DIRECT ROLLOVERS OF ELIGIBLE ROLLOVER DISTRIBUTIONS
A. Direct Rollover Option
This Section applies to distributions made on or after January
1, 1993. Notwithstanding any provision of the Plan to the
contrary that would otherwise limit a distributee's election
under this Section, a distributee may elect, at the time and in
the manner prescribed by the Plan Administrator, to have any
portion of an eligible rollover distribution paid directly to an
eligible retirement plan specified by the distributee in a
direct rollover.
B. Definitions
1. Eligible rollover distribution - An eligible rollover
distribution is any distribution of all or any portion of the
balance to the credit of the distributee, except that an
eligible rollover distribution does not include:
a.any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually)
made for the life (or life expectancy) of the distributee
or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated beneficiary,
or for a specified period of ten years or more;
b.any distribution to the extent such distribution is
required under Section 401(a)(9) of the Code; and
c.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).
2. Eligible retirement plan - An eligible retirement plan is an
individual retirement account described in Section 408(a) of
the Code, an individual retirement annuity described in
Section 408(b) of the Code, an annuity plan described in
Section 403(a) of the Code, or a qualified trust described in
Section 401(a) of the Code, that accepts the distributee's
eligible rollover distribution. However, in the case of an
eligible rollover distribution to the surviving spouse, an
eligible retirement plan is an individual retirement account
or individual retirement annuity.
3. Distributee - A 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.
4. Direct rollover - A direct rollover is a payment by the Plan
to the eligible retirement plan specified by the distributee.
SECTION SEVEN CLAIMS PROCEDURE
7.01 FILING A CLAIM FOR PLAN DISTRIBUTIONS
A Participant or Beneficiary who desires to make a claim for the
Vested portion of the Participant's Individual Account shall file a
written request with the Plan Administrator on a form to be
furnished to him by the Plan Administrator for such purpose. The
request shall set forth the basis of the claim. The Plan
Administrator is authorized to conduct such examinations as may be
necessary to facilitate the payment of any benefits to which the
Participant or Beneficiary may be entitled under the terms of the
Plan.
7.02 DENIAL OF CLAIM
Whenever a claim for a Plan distribution by any Participant or
Beneficiary has been wholly or partially denied, the Plan
Administrator must furnish such Participant or Beneficiary written
notice of the denial within 60 days of the date the original claim
was filed. This notice shall set forth the specific reasons for
the denial, specific reference to pertinent Plan provisions on
which the denial is based, a description of any additional
information or material needed to perfect the claim, an explanation
of why such additional information or material is necessary and an
explanation of the procedures for appeal.
7.03 REMEDIES AVAILABLE
The Participant or Beneficiary shall have 60 days from receipt of
the denial notice in which to make written application for review
by the Plan Administrator. The Participant or Beneficiary may
request that the review be in the nature of a hearing. The
Participant or Beneficiary shall have the right to representation,
to review pertinent documents and to submit comments in writing.
The Plan Administrator shall issue a decision on such review within
60 days after receipt of an application for review as provided for
in Section 7.02. Upon a decision unfavorable to the Participant or
Beneficiary, such Participant or Beneficiary shall be entitled to
bring such actions in law or equity as may be necessary or
appropriate to protect or clarify his right to benefits under this
Plan.
SECTION EIGHT PLAN ADMINISTRATOR
8.01 EMPLOYER IS PLAN ADMINISTRATOR
A. The Employer shall be the Plan Administrator unless the managing
body of the Employer designates a person or persons other than
the Employer as the Plan Administrator and so notifies the
Prototype Sponsor and the Trustee (or Custodian, if applicable).
The Employer shall also be the Plan Administrator if the person
or persons so designated cease to be the Plan Administrator.
B. If the managing body of the Employer designates a person or
persons other than the Employer as Plan Administrator, such
person or persons shall serve at the pleasure of the Employer
and shall serve pursuant to such procedures as such managing
body may provide. Each such person shall be bonded as may be
required by law.
8.02 POWERS AND DUTIES OF THE PLAN ADMINISTRATOR
A. The Plan Administrator may, by appointment, allocate the duties
of the Plan Administrator among several individuals or entities.
Such appointments shall not be effective until the party
designated accepts such appointment in writing.
B. The Plan Administrator shall have the authority to control and
manage the operation and administration of the Plan. The Plan
Administrator shall administer the Plan for the exclusive
benefit of the Participants and their Beneficiaries in
accordance with the specific terms of the Plan.
C. The Plan Administrator shall be charged with the duties of the
general administration of the Plan, including, but not limited
to, the following:
1. To determine all questions of interpretation or policy in a
manner consistent with the Plan's documents and the Plan
Administrator's construction or determination in good faith
shall be conclusive and binding on all persons except as
otherwise provided herein or by law. Any interpretation or
construction shall be done in a nondiscriminatory manner and
shall be consistent with the intent that the Plan shall
continue to be deemed a qualified plan under the terms of
Section 401(a) of the Code, as amended from time-to-time, and
shall comply with the terms of ERISA, as amended from time-
to-time;
2. To determine all questions relating to the eligibility of
Employees to become or remain Participants hereunder;
3. To compute the amounts necessary or desirable to be
contributed to the Plan;
4. To compute the amount and kind of benefits to which a
Participant or Beneficiary shall be entitled under the Plan
and to direct the Trustee (or Custodian, if applicable) with
respect to all disbursements under the Plan, and, when
requested by the Trustee (or Custodian), to furnish the
Trustee (or Custodian) with instructions, in writing, on
matters pertaining to the Plan and the Trustee (or Custodian)
may rely and act thereon;
5. To maintain all records necessary for the administration of
the Plan;
6. To be responsible for preparing and filing such disclosure
and tax forms as may be required from time-to-time by the
Secretary of Labor or the Secretary of the Treasury; and
7. To furnish each Employee, Participant or Beneficiary such
notices, information and reports under such circumstances as
may be required by law.
D. The Plan Administrator shall have all of the powers necessary or
appropriate to accomplish his duties under the Plan, including,
but not limited to, the following:
1. To appoint and retain such persons as may be necessary to
carry out the functions of the Plan Administrator;
2. To appoint and retain counsel, specialists or other persons
as the Plan Administrator deems necessary or advisable in the
administration of the Plan;
3. To resolve all questions of administration of the Plan;
4. To establish such uniform and nondiscriminatory rules which
it deems necessary to carry out the terms of the Plan;
5. To make any adjustments in a uniform and nondiscriminatory
manner which it deems necessary to correct any arithmetical
or accounting errors which may have been made for any Plan
Year; and
6. To correct any defect, supply any omission or reconcile any
inconsistency in such manner and to such extent as shall be
deemed necessary or advisable to carry out the purpose of the
Plan.
8.03 EXPENSES AND COMPENSATION
All reasonable expenses of administration including, but not
limited to, those involved in retaining necessary professional
assistance may be paid from the assets of the Fund. Alternatively,
the Employer may, in its discretion, pay such expenses. The
Employer shall furnish the Plan Administrator with such clerical
and other assistance as the Plan Administrator may need in the
performance of his duties.
8.04 INFORMATION FROM EMPLOYER
To enable the Plan Administrator to perform his duties, the
Employer shall supply full and timely information to the Plan
Administrator (or his designated agents) on all matters relating to
the Compensation of all Participants, their regular employment,
retirement, death, Disability or Termination of Employment, and
such other pertinent facts as the Plan Administrator (or his
agents) may require. The Plan Administrator shall advise the
Trustee (or Custodian, if applicable) of such of the foregoing
facts as may be pertinent to the Trustee's (or Custodian's) duties
under the Plan. The Plan Administrator (or his agents) is entitled
to rely on such information as is supplied by the Employer and
shall have no duty or responsibility to verify such information.
SECTION NINE AMENDMENT AND TERMINATION
9.01 RIGHT OF PROTOTYPE SPONSOR TO AMEND THE PLAN
A. The Employer, by adopting the Plan, expressly delegates to the
Prototype Sponsor the power, but no the duty, to amend the Plan
without any further action or consent of the Employer as the
Prototype Sponsor deems necessary for the purpose of adjusting
the Plan to comply with all laws and regulations governing
pension or profit sharing plans. Specifically, it is understood
that the amendments may be made unilaterally by the Prototype
Sponsor. However, it shall be understood that the Prototype
Sponsor shall be under no obligation to amend the Plan documents
and the Employer expressly waives any rights or claims against
the Prototype Sponsor for not exercising this power to amend.
For purposes of Prototype Sponsor amendments, the mass submitter
shall be recognized as the agent of the Prototype Sponsor. If
the Prototype Sponsor does not adopt the amendments made by the
mass submitter, it will no longer be identical to or a minor
modifier of the mass submitter plan.
B. An amendment by the Prototype Sponsor shall be accomplished by
giving written notice to the Employer of the amendment to be
made. The notice shall set forth the text of such amendment and
the date such amendment is to be effective. Such amendment
shall take effect unless within the 30 day period after such
notice is provided, or within such shorter period as the notice
may specify, the Employer gives the Prototype Sponsor written
notice of refusal to consent to the amendment. Such written
notice of refusal shall have the effect of withdrawing the Plan
as a prototype plan and shall cause the Plan to be considered an
individually designed plan. The right of the Prototype Sponsor
to cause the Plan to be amended shall terminate should the Plan
cease to conform as a prototype plan as provided in this or any
other section.
9.02 RIGHT OF EMPLOYER TO AMEND THE PLAN
The Employer may (1) change the choice of options in the Adoption
Agreement, (2) add overriding language in the Adoption Agreement
when such language is necessary to satisfy Section 415 or Section
416 of the Code because of the required aggregation of multiple
plans, and (3) add certain model amendments published by the
Internal Revenue Service which specifically provide that their
adoption will not cause the Plan to be treated as individually
designed. An Employer that amends the Plan for any other reason,
including a waiver of the minimum funding requirement under Section
412(d) of the Code, will no longer participate in this prototype
plan and will be considered to have an individually designed plan.
An Employer who wishes to amend the Plan to change the options it
has chosen in the Adoption Agreement must complete and deliver a
new Adoption Agreement to the Prototype Sponsor and Trustee (or
Custodian, if applicable). Such amendment shall become effective
upon execution by the Employer and Trustee (or Custodian).
The Employer further reserves the right to replace the Plan in its
entirety by adopting another retirement plan which the Employer
designates as a replacement plan.
9.03 LIMITATION ON POWER TO AMEND
No amendment to the Plan shall be effective to the extent that it
has the effect of decreasing a Participant's accrued benefit.
Notwithstanding the preceding sentence, a Participant's Individual
Account may be reduced to the extent permitted under Section
412(c)(8) of the Code. For purposes of this paragraph, a plan
amendment which has the effect of decreasing a Participant's
Individual Account or eliminating an optional form of benefit with
respect to benefits attributable to service before the amendment
shall be treated as reducing an accrued benefit. Furthermore, if
the vesting schedule of a Plan is amended, in the case of an
Employee who is a Participant as of the later of the date such
amendment is adopted or the date it becomes effective, the Vested
percentage (determined as of such date) of such Employee's
Individual Account derived from Employer Contributions will not be
less than the percentage computed under the Plan without regard to
such amendment.
9.04 AMENDMENT OF VESTING SCHEDULE
If the Plan's vesting schedule is amended, or the Plan is amended
in any way that directly or indirectly affects the computation of
the Participant's Vested percentage, or if the Plan is deemed
amended by an automatic change to or from a top-heavy vesting
schedule, each Participant with at least 3 Years of Vesting Service
with the Employer may elect, within the time set forth below, to
have the Vested percentage computed under the Plan without regard
to such amendment.
For Participants who do not have at least 1 Hour of Service in any
Plan Year beginning after December 31, 1988, the preceding sentence
shall be applied by substituting "5 Years of Vesting Service" for
"3 Years of Vesting Service" where such language appears.
The Period during which the election may be made shall commence
with the date the amendment is adopted or deemed to be made and
shall end the later of:
A. 60 days after the amendment is adopted;
B. 60 days after the amendment becomes effective; or
C. 60 days after the Participant is issued written notice of the
amendment by the Employer or Plan Administrator.
9.05 PERMANENCY
The Employer expects to continue this Plan and make the necessary
contributions thereto indefinitely, but such continuance and
payment is not assumed as a contractual obligation. Neither the
Adoption Agreement nor the Plan nor any amendment or modification
thereof nor the making of contributions hereunder shall be
construed as giving any Participant or any person whomsoever any
legal or equitable right against the Employer, the Trustee (or
Custodian, if applicable) the Plan Administrator or the Prototype
Sponsor except as specifically provided herein, or as provided by
law.
9.06 METHOD AND PROCEDURE FOR TERMINATION
The Plan may be terminated by the Employer at any time by
appropriate action of its managing body. Such termination shall be
effective on the date specified by the Employer. The Plan shall
terminate if the Employer shall be dissolved, terminated, or
declared bankrupt. Written notice of the termination and effective
date thereof shall be given to the Trustee (or Custodian), Plan
Administrator, Prototype Sponsor, Participants and Beneficiaries of
deceased Participants, and the required filings (such as the Form
5500 series and others) must be made with the Internal Revenue
Service and any other regulatory body as required by current laws
and regulations. Until all of the assets have been distributed
from the Fund, the Employer must keep the Plan in compliance with
current laws and regulations by (a) making appropriate amendments
to the Plan and (b) taking such other measures as may be required.
9.07 CONTINUANCE OF PLAN BY SUCCESSOR EMPLOYER
Notwithstanding the preceding Section 9.06, a successor of the
Employer may continue the Plan and be substituted in the place of
the present Employer. The successor and the present Employer (or,
if deceased, the executor of the estate of a deceased Self-Employed
Individual who was the Employer) must execute a written instrument
authorizing such substitution and the successor must complete and
sign a new plan document.
9.08 FAILURE OF PLAN QUALIFICATION
If the Plan fails to retain its qualified status, the Plan will no
longer be considered to be part of a prototype plan, and such
Employer can no longer participate under this prototype. In such
event, the Plan will be considered an individually designed plan.
SECTION TEN MISCELLANEOUS
10.01 STATE COMMUNITY PROPERTY LAWS
The terms and conditions of this Plan shall be applicable
without regard to the community property laws of any state.
10.02 HEADINGS
The headings of the Plan have been inserted for convenience of
reference only and are to be ignored in any construction of the
provisions hereof.
10.03 GENDER AND NUMBER
Whenever any words are used herein in the masculine gender they
shall be construed as though they were also used in the feminine
gender in all cases where they would so apply, and whenever any
words are used herein in the singular form they shall be construed
as though they were also used in the plural form in all cases where
they would so apply.
10.04 PLAN MERGER OR CONSOLIDATION
In the case of any merger or consolidation of the Plan with, or
transfer of assets or liabilities of such Plan to, any other plan,
each Participant shall be entitled to receive benefits immediately
after the merger, consolidation, or transfer (if the Plan had then
terminated) which are equal to or greater than the benefits he
would have been entitled to receive immediately before the merger,
consolidation, or transfer (if the Plan had then terminated). The
Trustee (or Custodian) has the authority to enter into merger
agreements or agreements to directly transfer the assets of this
Plan but only if such agreements are made with trustees or
custodians of other retirement plans described in Section 401(a) of
the Code.
10.05 STANDARD OF FIDUCIARY CONDUCT
The Employer, Plan Administrator, Trustee and any other fiduciary
under this Plan shall discharge their duties with respect to this
Plan solely in the interests of Participants and their
Beneficiaries and with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent man acting
in like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims.
No fiduciary shall cause the Plan to engage in any transaction
known as a "prohibited transaction" under ERISA.
10.06 GENERAL UNDERTAKING OF ALL PARTIES
All parties to this Plan and all persons claiming any interest
whatsoever hereunder agree to perform any and all acts and execute
any and all documents and papers which may be necessary or
desirable for the carrying out of this Plan and any of its
provisions.
10.07 AGREEMENT BINDS HEIRS, ETC.
This Plan shall be binding upon the heirs, executors,
administrators, successors and assigns, as those terms shall apply
to any and all parties hereto, present and future.
10.08 DETERMINATION OF TOP-HEAVY STATUS
A. For any Plan Year beginning after December 31, 1983, this Plan
is a Top-Heavy Plan if any of the following conditions exist:
1. If the top-heavy ratio for this Plan exceeds 60% and this
Plan is not part of any required aggregation group or
permissive aggregation group of plans.
2. If this Plan is part of a required aggregation group of plans
but not part of a permissive aggregation group and the top-
heavy ratio for the group of plans exceeds 60%.
3. If this Plan is a part of a required aggregation group and
part of a permissive aggregation group of plans and the top-
heavy ratio for the permissive aggregation group exceeds 60%.
For purposes of this Section 10.08, the following terms shall
have the meanings indicated below:
B. Key Employee - Any Employee or former Employee (and the
beneficiaries of such Employee) who at any time during the
determination period was an officer of the Employer if such
individual's annual compensation exceeds 50% of the dollar
limitation under Section 415(b)(1)(A) of the Code, an owner (or
considered an owner under Section 318 of the Code) of one of the
10 largest interests in the Employer if such individual's
compensation exceeds 100% of the dollar limitation under Section
415(c)(1)(A) of the Code, a 5% owner of the Employer, or a 1%
owner of the Employer who has an annual compensation of more
than $150,000. Annual compensation means compensation as
defined in Section 415(c)(3) of the Code, but including amounts
contributed by the Employer pursuant to a salary reduction
agreement which are excludable from the Employee's gross income
under Section 125, Section 402(a)(8), Section 402(h) or Section
403(b) of the Code. The determination period is the Plan Year
containing the determination date and the 4 preceding Plan
Years.
The determination of who is a Key Employee will be made in
accordance with Section 416(i)(1) of the Code and the
regulations thereunder.
C. Top-heavy ratio
1. If the Employer maintains one or more defined contribution
plans (including any simplified employee pension plan) and
the Employer has not maintained any defined benefit plan
which during the 5-year period ending on the determination
date(s) has or has had accrued benefits, the top-heavy ratio
for this Plan alone or for the required or permissive
aggregation group as appropriate is a fraction, the numerator
of which is the sum of the account balances of all Key
Employees as of the determination date(s) (including any part
of any account balance distributed in the 5-year period
ending on the determination date(s)), and the denominator of
which is the sum of all account balances (including any part
of any account balance distributed in the 5-year period
ending on the determination date(s)), both computed in
accordance with Section 416 of the Code and the regulations
thereunder. Both the numerator and the denominator of the
top-heavy ratio are increased to reflect any contribution not
actually made as of the determination date, but which is
required to be taken into account on that date under Section
416 of the Code and the regulations thereunder.
2. If the Employer maintains one or more defined contribution
plans (including any simplified employee pension plan) and
the Employer maintains or has maintained one or more defined
benefit plans which during the 5-year period ending on the
determination date(s) has or has had any accrued benefits,
the top-heavy ratio for any required or permissive
aggregation group as appropriate is a fraction, the numerator
of which is the sum of account balances under the aggregated
defined contribution plan or plans for all Key Employees,
determined in accordance with (1) above, and the present
value of accrued benefits under the aggregated defined
benefit plan or plans for all Key Employees as of the
determination date(s), and the denominator of which is the
sum of the account balances under the aggregated defined
contribution plan or plans for all Participants, determined
in accordance with (1) above, and the present value of
accrued benefits under the defined benefit plan or plans for
all Participants as of the determination date(s), all
determined in accordance with Section 416 of the Code and the
regulations thereunder. The accrued benefits under a defined
benefit plan in both the numerator and denominator of the
top-heavy ratio are increased for any distribution of an
accrued benefit made in the 5-year period ending on the
determination date.
3. For purposes of (1) and (2) above, the value of account
balances and the present value of accrued benefits will be
determined as of the most recent valuation date that falls
within or ends with the 12-month period ending on the
determination date, except as provided in Section 416 of the
Code and the regulations thereunder for the first and second
plan years of a defined benefit plan. The account balances
and accrued benefits of a Participant (a) who is not a Key
Employee but who was a Key Employee in a Prior Year, or (b)
who has not been credited with at least one Hour of Service
with any employer maintaining the plan at any time during the
5-year period ending on the determination date will be
disregarded. The calculation of the top-heavy ratio, and the
extent to which distributions, rollovers, and transfers are
taken into account will be made in accordance with Section
416 of the Code and the regulations thereunder. Deductible
employee contributions will not be taken into account for
purposes of computing the top-heavy ratio. When aggregating
plans the value of account balances and accrued benefits will
be calculated with reference to the determination dates that
fall within the same calendar year.
The accrued benefit of a Participant other than a Key
Employee shall be determined under (a) the method, if any,
that uniformly applies for accrual purposes under all defined
benefit plans maintained by the Employer, or (b) if there is
no such method, as if such benefit accrued not more rapidly
than the slowest accrual rate permitted under the fractional
rule of Section 411(b)(1)(C) of the Code.
4. Permissive aggregation group: The required aggregation group
of plans plus any other plan or plans of the Employer which,
when considered as a group with the required aggregation
group, would continue to satisfy the requirements of Sections
401(a)(4) and 410 of the Code.
5. Required aggregation group: (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 (a) to meet the requirements of Sections
401(a)(4) or 410 of the Code.
6. Determination date: For any Plan Year subsequent to the
first Plan Year, the last day of the preceding Plan Year. For
the first Plan Year of the Plan, the last day of that year.
7. Valuation date: For purposes of calculating the top-heavy
ratio, the valuation date shall be the last day of each Plan
Year.
8. Present value: For purposes of establishing the "present
value" of benefits under a defined benefit plan to compute
the top-heavy ratio, any benefit shall be discounted only for
mortality and interest based on the interest rate and
mortality table specified for this purpose in the defined
benefit plan.
10.09 SPECIAL LIMITATIONS FOR OWNER-EMPLOYEES
If this Plan provides contributions or benefits for one or more
Owner-Employees who control both the business for which this Plan
is established and one or more other trades or businesses, this
Plan and the plan established for other trades or businesses must,
when looked at as a single plan, satisfy Sections 401(a) and (d) of
the Code for the employees of those trades or businesses.
If the Plan provides contributions or benefits for one or more
Owner-Employees who control one or more other trades or businesses,
the employees of the other trades or businesses must be included in
a plan which satisfies Sections 401(a) and (d) of the Code and
which provides contributions and benefits not less favorable than
provided for Owner-Employees under this Plan.
If an individual is covered as an Owner-Employee under the plans of
two or more trades or businesses which are not controlled and the
individual controls a trade or business, then the contributions or
benefits of the employees under the plan of the trade or business
which is controlled must be as favorable as those provided for him
under the most favorable plan of the trade or business which is not
controlled.
For purposes of the preceding paragraphs, an Owner-Employee, or two
or more Owner-Employees, will be considered to control a trade or
business if the Owner-Employee, or two or more Owner-Employees,
together:
A. own the entire interest in a unincorporated trade or business,
or
B. in the case of a partnership, own more than 50% of either the
capital interest or the profit interest in the partnership.
For purposes of the preceding sentence, an Owner-Employee, or two
or more Owner-Employees, shall be treated as owning any interest in
a partnership which is owned, directly or indirectly, by a
partnership which such Owner-Employee, or such two or more Owner-
Employees, are considered to control within the meaning of the
preceding sentence.
10.10 INALIENABILITY OF BENEFITS
No benefit or interest available hereunder will be subject to
assignment or alienation, either voluntarily or involuntarily. The
preceding sentence shall also apply to the creation, assignment, or
recognition of a right to any benefit payable with respect to a
Participant pursuant to a domestic relations order, unless such
order is determined to be a qualified domestic relations order, as
defined in Section 414(p) of the Code.
Generally, a domestic relations order cannot be a qualified
domestic relations order until January 1, 1985. However, in the
case of a domestic relations order entered before such date, the
Plan Administrator:
(1)shall treat such order as a qualified domestic relations order
if such Plan Administrator is paying benefits pursuant to such
order on such date, and
(2)may treat any other such order entered before such date as a
qualified domestic relations order even if such order does not
meet the requirements of Section 414(p) of the Code.
SECTION ELEVEN 401(k) PROVISIONS
In addition to Sections 1 through 10, the provisions of this
Section 11 shall apply if the Employer has established a 401(k)
cash or deferred arrangement (CODA) by completing and signing the
appropriate Adoption Agreement.
11.101 DEFINITIONS
The following words and phrases when used in the Plan with initial
capital letters shall, for the purposes of this Plan, have the
meanings set forth below unless the context indicates that other
meanings are intended.
11.101 ACTUAL DEFERRAL PERCENTAGE (ADP)
Means, for a specified group of Participants for a Plan Year, the
average of the ratios (calculated separately for each Participant
in such group) of (1) the amount of Employer Contributions actually
paid over to the Fund on behalf of such Participant for the Plan
Year to (2) the Participant's Compensation for such Plan Year
(taking into account only that Compensation paid to the Employee
during the portion of the Plan Year he was an eligible Participant)
and excluding bonuses and commissions. For purposes of calculating
the ADP, Employer Contributions on behalf of any Participant shall
include: (1) any Elective Deferrals made pursuant to the
Participant's deferral election, including Excess Elective
Deferrals but excluding Elective Deferrals that are taken into
account in the Average Contribution Percentage test (provided the
ADP test is satisfied both with and without exclusion of these
Elective Deferrals); (2) any Qualified Nonelective Contributions
but excluding Qualified Nonelective Contributions that are taken
into account in the Average Contribution Percentage test; and (3)
at the election of the Employer, Qualified Matching Contributions.
For purposes of computing Actual Deferral Percentages, an Employee
who would be a Participant but for the failure to make Elective
Deferrals shall be treated as a Participant on whose behalf no
Elective Deferrals are made.
11.102 AGGREGATE LIMIT
Means the sum of (1) 125% of the greater of the ADP of the
Participants who are not Highly Compensated Employees for the Plan
Year or the ACP of the Participants who are not Highly Compensated
Employees under the Plan subject to the Code Section 401(m) for the
Plan Year beginning with or within the Plan Year of the CODA and
(2) the lesser of 200% or two plus the lesser of such ADP or ACP.
11.103 AVERAGE CONTRIBUTION PERCENTAGE (ACP)
Means the average of the Contribution Percentages of the Eligible
Participants in a group.
11.104 CONTRIBUTING PARTICIPANT
Means a Participant who has enrolled as a Contributing Participant
pursuant to Section 2.03 and on whose behalf the Employer is
contributing Elective Deferrals to the Plan.
11.105 CONTRIBUTION PERCENTAGE
Means the ratio (expressed as a percentage) of the Participant's
Contribution Percentage Amounts to the Participant's Compensation
for the Plan Year (whether or not the Employee was a Participant
for the entire Plan Year).
11.106 CONTRIBUTION PERCENTAGE AMOUNTS
Means the sum of the Employee Contributions, Matching
Contributions, and Qualified Matching Contributions made under the
Plan on behalf of the Participant for the Plan Year. Such
Contribution Percentage Amounts shall not include Matching
Contributions that are forfeited either to correct Excess Aggregate
Contributions or because the contributions to which they relate are
Excess Deferrals, Excess Contributions, or Excess Aggregate
Contributions. 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.
11.107 ELECTIVE DEFERRALS
Means any Employer Contributions made to the Plan at the election
of the Participant, in lieu of cash compensation, and shall include
contributions made pursuant to a salary reduction agreement or
other deferral mechanism. With respect to any taxable year, a
Participant's Elective Deferral is the sum of all Employer
contributions made on behalf of such Participant pursuant to an
election to defer under any qualified CODA as described in Section
401(k) of the Code, any simplified employee pension cash or
deferred arrangement as described in Section 402(h)(1)(B), any
eligible deferred compensation plan under Section 457, any plan as
described under Section 501(c)(18), and any Employer contributions
made on the behalf of a Participant for the purchase of an annuity
contract under Section 403(b) pursuant to a salary reduction
agreement. Elective Deferrals shall not include any deferrals
properly distributed as excess annual additions.
No Participant shall be permitted to have Elective Deferrals made
under this Plan, or any other qualified plan maintained by the
Employer, during any taxable year, in excess of the dollar
limitation contained in Section 402(g) of the Code in effect at the
beginning of such taxable year.
Elective Deferrals may not be taken into account for purposes of
satisfying the minimum allocation requirement applicable to Top-
Heavy Plans described in Section 3.01(E).
11.108 ELIGIBLE PARTICIPANT
Means any Employee who is eligible to make an Elective Deferral (if
the Employer takes such contributions into account in the
calculation of the Contribution Percentage), or to receive a
Matching Contribution (including Forfeitures thereof) or a
Qualified Matching Contribution.
11.109 EMPLOYEE CONTRIBUTION
Means any contribution made to the Plan by or on behalf of a
Participant that is included in the Participant's gross income in
the year in which made and that is maintained under a separate
account to which earnings and losses are allocated.
11.110 EXCESS AGGREGATE CONTRIBUTIONS
Means, with respect to any Plan Year, the excess of:
A. The aggregate Contribution Percentage Amounts taken into account
in computing the numerator of the Contribution Percentage
actually made on behalf of Highly Compensated Employees for such
Plan Year, over
B. The maximum Contribution Percentage Amounts permitted by the ACP
test (determined by reducing contributions made on behalf of
Highly Compensated Employees in order of their Contribution
Percentages beginning with the highest of such percentages).
Such determination shall be made after first determining Excess
Elective Deferrals pursuant to Section 11.112 and then
determining Excess Contributions pursuant to Section 11.111.
11.111 EXCESS CONTRIBUTIONS
Means, with respect to any Plan Year, the excess of:
A. The aggregate amount of Employer Contributions actually taken
into account in computing the ADP of Highly Compensated
Employees for such Plan Year, over
B. The maximum amount of such contributions permitted by the ADP
test (determined by reducing contributions made on behalf of
Highly Compensated Employees in order of the ADPs, beginning
with the highest of such percentages).
11.112 EXCESS ELECTIVE DEFERRALS
Means those Elective Deferrals that are includible in a
Participant's gross income under Section 402(g) of the Code to the
extent such Participant's Elective Deferrals for a taxable year
exceed the dollar limitation under such Code section. Excess
Elective Deferrals shall be treated as annual additions under the
Plan, unless such amounts are distributed no later than the first
April 15 following the close of the Participant's taxable year.
11.113 MATCHING CONTRIBUTION
Means an Employer contribution made to this or any other defined
contribution plan on behalf of a Participant on account of an
Elective Deferral made by such Participant under a plan maintained
by the Employer.
Matching Contributions may not be taken into account for purposes
of satisfying the minimum allocation requirement applicable to Top-
Heavy Plans described in Section 3.01(E).
11.114 QUALIFIED NONELECTIVE CONTRIBUTIONS
Means contributions (other than Matching Contributions or Qualified
Matching Contributions) made by the Employer and allocated to
Participants' Individual Accounts that the Participants may not
elect to receive in cash until distributed from the Plan; that are
nonforfeitable when made; and that are distributable only in
accordance with the distribution provisions that are applicable to
Elective Deferrals and Qualified Matching Contributions.
11.115 QUALIFIED MATCHING CONTRIBUTIONS
Means Matching Contributions which are subject to the distribution
and nonforfeitability requirements under Section 401(k) of the Code
when made.
11.200 CONTRIBUTING PARTICIPANT
11.201 REQUIREMENTS TO ENROLL AS A CONTRIBUTING PARTICIPANT
A. Each Employee who becomes a Participant may enroll as a
Contributing Participant. A Participant shall be eligible to
enroll as a Contributing Participant on the Entry Date as of
which he enters the Plan. If a Participant does not enroll at
that time, he may enroll on the first day of any subsequent Plan
Year, or, if the Plan Administrator shall permit in a uniform
and nondiscriminatory manner, on any subsequent Entry Date. A
Participant who wishes to enroll as a Contributing Participant
must complete, sign and file a salary reduction agreement with
the Plan Administrator.
B. Notwithstanding the times set forth in Section 11.201(A) as of
which a Participant may enroll as a Contributing Participant,
the Plan Administrator shall have the authority to designate, in
a nondiscriminatory manner, additional enrollment times during
the 12 month period beginning on the Effective Date in order
that an ordinary first enrollment might be completed. In
addition, if the Employer has indicated in the Adoption
Agreement that Elective Deferrals may be based on cash bonuses,
then Participants shall be afforded a reasonable period of time
prior to the issuance of such cash bonuses to elect to defer
them into the Plan.
11.202 MODIFICATION OF SALARY REDUCTION AGREEMENT BY A CONTRIBUTING
PARTICIPANT
A Contributing Participant may modify his salary reduction
agreement to increase or decrease (within the limits placed on
Elective Deferrals in the Adoption Agreement) the amount of his
Compensation deferred into the Plan. Such modification may only be
made as of the first day of a Plan Year, or as of any other more
frequent date(s) if the Plan Administrator permits in a uniform and
nondiscriminatory manner. A Contributing Participant who desires
to make such a modification shall complete, sign and file a new
salary reduction agreement with the Plan Administrator at least
thirty days before the modification is to become effective.
11.203 WITHDRAWAL AS A CONTRIBUTING PARTICIPANT
A Participant may withdraw as a Contributing Participant as of the
last day preceding any Entry Date (or as of any other date if the
Plan Administrator so permits in a uniform and nondiscriminatory
manner) by revoking his authorization to the Employer to make
Elective Deferrals on his behalf. A Participant who desires to
withdraw as a Contributing Participant shall give written notice of
withdrawal to the Plan Administrator at least thirty days (or such
lesser period of days as the Plan Administrator shall permit in a
uniform and nondiscriminatory manner) before the effective date of
withdrawal. A Participant shall cease to be a Contributing
Participant upon his Termination of Employment, or an account of
termination of the Plan.
11.204 RETURN AS A CONTRIBUTING PARTICIPANT AFTER WITHDRAWAL
A Participant who has withdrawn as a Contributing Participant under
Section 11.203 may not again become a Contributing Participant
until the first day of the first Plan Year following the effective
date of his withdrawal as a Contributing Participant.
11.300 CONTRIBUTIONS
11.301 CONTRIBUTIONS BY EMPLOYER
The Employer shall make contributions to the Plan in accordance
with the contribution formulas specified in the Adoption Agreement.
11.302 QUALIFIED NONELECTIVE CONTRIBUTIONS
The Employer may elect to make Qualified Nonelective Contributions
under the Plan on behalf of Participants as provided in the
Adoption Agreement.
In addition, lieu of distributing Excess Contributions as provided
in Section 11.505 of the Plan, or Excess Aggregate Contributions as
provided in Section 11.506 of the Plan, and to the extent elected
by the Employer in the Adoption Agreement, the Employer may make
Qualified Nonelective Contributions on behalf of Participants who
are not Highly Compensated Employees that are sufficient to satisfy
either the Actual Deferral Percentage test or the Average
Contribution Percentage test, or both, pursuant to regulations
under the Code.
11.303 QUALIFIED MATCHING CONTRIBUTIONS
The Employer may elect to make Qualified Matching Contributions
under the Plan on behalf of Participants as provided in the
Adoption Agreement.
11.304 EMPLOYEE CONTRIBUTIONS
Notwithstanding Section 3.02, if the Employer so allows in the
Adoption Agreement, a Participant may contribute an Employee
Contribution to the Plan.
A separate account will be maintained by the Plan Administrator for
the Employee Contributions for each Participant.
A Participant may, upon a written request submitted to the Plan
Administrator, withdraw the lesser of the portion of his Individual
Account attributable to his Employee Contributions or the amount he
contributed as Employee Contributions.
Employee Contributions and earnings thereon will be nonforfeitable
at all times. No Forfeiture will occur solely as a result of an
Employee's withdrawal of Employee Contributions.
11.400 NONDISCRIMINATION TESTING
11.401 ACTUAL DEFERRAL PERCENTAGE TEST (ADP)
A. Limits on Highly Compensated Employees - The Actual Deferral
Percentage (hereinafter "ADP") for Participants who are Highly
Compensated Employees for each Plan Year and the ADP for
Participants who are not Highly Compensated Employees for the
same Plan Year must satisfy one of the following tests:
1. The ADP for Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the ADP for Participants
who are not Highly Compensated Employees for the same Plan
Year multiplied by 1.25; or
2. The ADP for Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the ADP for Participants
who are not Highly Compensated Employees for the same Plan
Year multiplied by 2.0 provided that the ADP for Participants
who are Highly Compensated Employees does not exceed the ADP
for Participants who are not Highly Compensated Employees by
more than 2 percentage points.
B. Special Rules
1. The ADP for any Participant who is a Highly Compensated
Employee for the Plan Year and who is eligible to have
Elective Deferrals (and Qualified Nonelective Contributions
or Qualified Matching Contributions, or both, if treated as
Elective Deferrals for purposes of the ADP test) allocated to
his or her Individual Accounts under two or more arrangements
described in Section 401(k) of the Code, that are maintained
by the Employer, shall be determined as if such Elective
Deferrals (and, if applicable, such Qualified Nonelective
Contributions or Qualified Matching Contributions, or both)
were made under a single arrangement. If a Highly
Compensated Employee participates in two or more cash or
deferred arrangements that have different Plan Years, all
cash or deferred arrangements ending with or within the same
calendar year shall be treated as a single arrangement.
2. In the event that this Plan satisfies the requirements of
Sections 401(k), 401(a)(4), or 410(b) of the Code only if
aggregated with one or more other plans, or if one or more
other plans satisfy the requirements of such sections of the
Code only if aggregated with this Plan, then this Section 11
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.
3. For purposes of determining the ADP of a Participant who is a
5% owner or one of the 10 most highly paid Highly Compensated
Employees, the Elective Deferrals (and Qualified Nonelective
Contributions or Qualified Matching Contributions, or both,
if treated as Elective Deferrals for purposes of the ADP
test) and Compensation of such Participant shall include the
Elective Deferrals (and, if applicable, Qualified Nonelective
Contributions and Qualified Matching Contributions, or both)
and Compensation for the Plan Year of family members (as
defined in Section 414(q)(6) of the Code). Family members,
with respect to such Highly Compensated Employees, shall be
disregarded as separate Employees in determining the ADP both
for Participants who are not Highly Compensated Employees and
for Participants who are Highly Compensated Employees.
4. For purposes of determining the ADP test, Elective Deferrals,
Qualified Nonelective Contributions and Qualified Matching
Contributions must be made before the last day of the 12
month period immediately following the Plan Year to which
contributions relate.
5. The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP test and the amount of Qualified
Nonelective Contributions or Qualified Matching
Contributions, or both, used in such test.
6. The determination and treatment of the ADP amounts of any
Participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
7. If the Employer elects to take Qualified Matching
Contributions into account as Elective Deferrals for purposes
of the ADP test, then (subject to such other requirements as
may be prescribed by the Secretary of the Treasury) only the
amount of such Qualified Matching Contributions that are
needed to meet the ADP test shall be taken into account.
8. In the event that the Plan Administrator determines that it
is not likely that the ADP test will be satisfied for a
particular Plan Year unless certain steps are taken prior to
the end of such Plan Year, the Plan Administrator may require
Contributing Participants who are Highly Compensated
Employees to reduce their Elective Deferrals for such Plan
Year in order to satisfy that requirement. Said reduction
shall also be required by the Plan Administrator in the event
that the Plan Administrator anticipates that the Employer
will not be able to deduct all Employer Contributions from
its income for Federal income tax purposes.
11.402 LIMITS ON EMPLOYEE CONTRIBUTIONS AND MATCHING CONTRIBUTIONS
A. Limits on Highly Compensated Employees - The Average
Contribution Percentage (hereinafter "ACP") for Participants who
are Highly Compensated Employees for each Plan Year and the ACP
for Participants who are not Highly Compensated Employees for
the same Plan Year must satisfy one of the following tests:
1. The ACP for Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the ACP for Participants
who are not Highly Compensated Employees for the same Plan
Year multiplied by 1.25; or
2. The ACP for Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the ACP for Participants
who are not Highly Compensated Employees for the same Plan
Year multiplied by 2, provided that the ACP for the
Participants who are Highly Compensated Employees does not
exceed the ACP for Participants who are not Highly
Compensated Employees by more than 2 percentage points.
B. Special Rules
1. Multiple Use - If one or more Highly Compensated Employees
participate in both a CODA and a plan subject to the ACP test
maintained by the Employer and the sum of the ADP and ACP of
those Highly Compensated Employees subject to either or both
tests exceeds the Aggregate Limit, then the ACP of those
Highly Compensated Employees who also participate in a CODA
will be reduced (beginning with such Highly Compensated
Employee whose ACP is the highest) so that the limit is not
exceeded. The amount by which each Highly Compensated
Employee's Contribution Percentage Amounts is reduced shall
be treated as an Excess Aggregate Contribution. The ADP and
ACP of the Highly Compensated Employees are determined after
any corrections required to meet the ADP and ACP tests.
Multiple use does not occur if the ADP and ACP of the Highly
Compensated Employees does not exceed 1.25 multiplied by the
ADP and ACP of the Participants who are not Highly
Compensated Employees.
2. For purposes of this Section 11, the Contribution Percentage
for any Participant who is a Highly Compensated Employee and
who is eligible to have Contribution Percentage Amounts
allocated to his or her Individual Account under two or more
plans described in Section 401(a) of the Code, or
arrangements described in Section 401(k) of the Code that are
maintained by the Employer, shall be determined as if the
total of such Contribution Percentage Amounts was made under
each plan. If a Highly Compensated Employee participates in
two or more cash or deferred arrangements that have different
plan years, all cash or deferred arrangements ending with or
within the same calendar year shall be treated as a single
arrangement.
3. In the event that this Plan satisfies the requirements of
Sections 401(m), 401(a)(4) or 410(b) of the Code only if
aggregated with one or more other plans, or if one or more
other plans satisfy the requirements of such Sections of the
Code only if aggregated with this Plan, then this Section
shall be applied by determining the Contribution Percentage
of Employees as if all such plans were a single plan. For
Plan Years beginning after December 31, 1989, plans may be
aggregated in order to satisfy Section 401(m) of the Code
only if they have the same Plan Year.
4. For purposes of determining the Contribution Percentage of a
Participant who is a 5% owner or one of the 10 most highly
paid Highly Compensated Employees, the Contribution
Percentage Amounts and Compensation of such Participant shall
include the Contribution Percentage Amounts and Compensation
for the Plan Year of family members, (as defined in Section
414(q)(6) of the Code). Family members, with respect to
Highly Compensated Employees, shall be disregarded as
separate Employees in determining the Contribution Percentage
both for Participants who are not Highly Compensated
Employees and for Participants who are Highly Compensated
Employees.
5. For purposes of determining the Contribution Percentage test,
Employee Contributions are considered to have been made in
the Plan Year in which contributed to the Fund. Matching
Contributions and Qualified Nonelective Contributions will be
considered made for a Plan Year if made no later than the end
of the 12 month period beginning on the day after the close
of the Plan Year.
6. The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of Qualified
Nonelective Contributions or Qualified Matching
Contributions, or both, used in such test.
7. The determination and treatment of the Contribution
Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the
Treasury.
8. If the Employer elects to take Qualified Nonelective
Contributions into account as Contribution Percentage Amounts
for purposes of the ACP test, then (subject to such other
requirements as may be prescribed by the Secretary of the
Treasury) only the amount of such Qualified Nonelective
Contributions that are needed to meet the ACP test shall be
taken into account.
9. If the Employer elects to take Elective Deferrals into
account as Contribution Percentage Amounts for purposes of
the ACP test, then (subject to such other requirements as may
be prescribed by the Secretary of the Treasury) only the
amount of such Elective Deferrals that are needed to meet the
ACP test shall be taken into account.
11.500 DISTRIBUTION PROVISIONS
11.501 GENERAL RULE
Distributions from the Plan are subject to the provisions of
Section 6 and the provisions of this Section 11. In the event of a
conflict between the provisions of Section 6 and Section 11, the
provisions of Section 11 shall control.
11.502 DISTRIBUTION REQUIREMENTS
Elective Deferrals, Qualified Nonelective Contributions, and
Qualified Matching Contributions, and income allocable to each are
not distributable to a Participant or his or her Beneficiary or
Beneficiaries, in accordance with such Participant's or Beneficiary
or Beneficiaries' election, earlier than upon separation from
service, death or disability.
Such amounts may also be distributed upon:
A. Termination of the Plan without the establishment of another
defined contribution plan.
B. The disposition by a corporation to an unrelated corporation of
substantially all of the assets (within the meaning of Section
409(d)(2) of the Code used in a trade or business of such
corporation if such corporation continues to maintain this Plan
after the disposition, but only with respect to Employees who
continue employment with the corporation acquiring such assets.
C. The disposition by a corporation to an unrelated entity of such
corporation's interest in a subsidiary (within the meaning of
Section 409(d)(3) of the Code) if such corporation continues to
maintain this Plan, but only with respect to Employees who
continue employment with such subsidiary.
D. The attainment of age 59 1/2 in the case of a profit sharing
plan.
E. If the Employer has so elected in the Adoption Agreement, the
hardship of the Participant as described in Section 11.503.
All distributions that may be made pursuant to one or more of
the foregoing distributable events are subject to the spousal
and Participant consent requirements (if applicable) contained
in Section 401(a)(11) and 417 of the Code.
11.503 HARDSHIP DISTRIBUTION
A. General - If the Employer has so elected in the Adoption
Agreement, distribution of Elective Deferrals (and any earnings
credited to a Participant's account as of the end f the last
Plan Year, ending before July 1, 1989) may be made to a
Participant in the event of hardship. For the purposes of this
Section, hardship is defined as an immediate and heavy financial
need of the Employee where such Employee lacks other available
resources. Hardship distributions are subject to the spousal
consent requirements contained in Sections 401(a)(11) and 417 of
the Code.
B. Special Rules
1. The following are the only financial needs considered
immediate and heavy: expenses incurred or necessary for
medical care, described in Section 213(d) of the code, of the
employee, the Employee's spouse or dependents; the purchase
(excluding mortgage payments) of a principal residence for
the Employee; payment of tuition and related educational fees
for the next 12 months of post-secondary education for the
Employee, the Employee's spouse, children or dependents; or
the need to prevent the eviction of the Employee from, or a
foreclosure on the mortgage of, the Employee's principal
residence.
2. A distribution will be considered as necessary to satisfy an
immediate and heavy financial need of the Employee only if:
a. The Employee has obtained all distributions, other than
hardship distributions, and all nontaxable loans under all
plans maintained by the Employer;
b. All plans maintained by the Employer provide that the
Employee's Elective Deferrals (and Employee Contributions)
will be suspended for 12 months after the receipt of the
hardship distribution;
c. The distribution is not in excess of the amount of an
immediate and heavy financial need (including amounts
necessary to pay any federal, state or local income taxes
or penalties reasonably anticipated to result from the
distribution); and
d. All plans maintained by the Employer provide that the
Employee may not make Elective Deferrals for the
Employee's taxable year immediately following the taxable
year of the hardship distribution in excess of the
applicable limit under Section 402(g) of the Code for such
taxable year less the amount of such Employee's Elective
Deferrals for the taxable year of the hardship
distribution
11.504 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS
A. General Rule - A Participant may assign to this Plan any Excess
Elective Deferrals made during a taxable year of the Participant
by notifying the Plan Administrator on or before the date
specified in the Adoption Agreement of the amount of the Excess
Elective Deferrals to be assigned to the Plan. A Participant is
deemed to notify the Plan Administrator of any Excess Elective
Deferrals that arise by taking into account only those Elective
Deferrals made to this Plan and any other plans of the Employer.
Notwithstanding any other provision of the Plan, Excess Elective
Deferrals, plus any income and minus any loss allocable thereto,
shall be distributed no later than April 15 to any Participant
to whose Individual Account Excess Elective Deferrals were
assigned for the preceding year and who claims Excess Elective
Deferrals for such taxable year.
B. Determination of Income of Loss - Excess Elective Deferrals
shall be adjusted for any income or loss up to the date of
distribution. The income of loss allocable to Excess Elective
Deferrals is the sum of : (1) income or loss allocable to the
Participant's Elective Deferral account for the taxable year
multiplied by a fraction, the numerator of which is such
Participant's Elective Deferrals for the year and the
denominator is the Participant's Individual Account balance
attributable to Elective Deferrals without regard to any income
or loss occurring during such taxable year; and (2) 10% of the
amount determined under (1) multiplied by the number of whole
calendar months between the end of the Participant's taxable
year and the date of distribution, counting the month of
distribution if distribution occurs after the 15th of such
month. Notwithstanding the preceding sentence, the Plan
Administrator may compute the income or loss allocable to Excess
Elective Deferrals in the manner described in Section 4 (i.e.,
the usual manner used by the Plan for allocating income or loss
to Participants' Individual Accounts), provided such method is
used consistently for all Participants and for all corrective
distributions under the Plan for the Plan Year.
11.505 DISTRIBUTION OF EXCESS CONTRIBUTIONS
A. General Rule - Notwithstanding any other provision of this Plan,
Excess Contributions, plus any income and minus any loss
allocable thereto, shall be distributed no later than the last
day of each Plan Year to Participants to whose Individual
Accounts such Excess Contributions were allocated for the
preceding Plan Year. If such excess amounts are distributed
more than 2 1/2 months after the last day of the Plan Year in
which such excess amounts arose, a 10% excise tax will be
imposed on the Employer maintaining the Plan with respect to
such amounts. Such distributions shall be made to Highly
Compensated Employees on the basis of the respective portions of
the Excess Contributions attributable to each of such Employees.
Excess Contributions of Participants who are subject to the
family member aggregation rules shall be allocated among the
family members in proportion to the Elective Deferrals (and
amounts treated as Elective Deferrals) of each family member
that is combined to determine the combined ADP.
Excess Contributions (including the amounts recharacterized)
shall be treated as annual additions under the Plan.
B. Determination of Income or Loss - Excess Contributions shall be
adjusted for any income or loss up to the date of distribution.
The income or loss allocable to Excess Contributions is the sum
of: (1) income or loss allocable to Participant's Elective
Deferral account (and, if applicable, the Qualified Nonelective
Contribution account or the Qualified Matching Contributions
account or both) for the Plan Year multiplied by a fraction, the
numerator of which is such Participant's Excess Contributions
for the year and the denominator is the Participant's Individual
Account balance attributable to Elective Deferrals (and
Qualified Nonelective Contributions or Qualified Matching
Contributions, or both, if any of such contributions are
included in the ADP test) without regard to any income or loss
occurring during such Plan Year; and (2) 10% of the amount
determined under (1) multiplied by the number of whole calendar
months between the end of the Plan Year and the date of
distribution, counting the month of distribution if distribution
occurs after the 15th of such month. Notwithstanding the
preceding sentence, the Plan Administrator may compute the
income or loss allocable to Excess Contributions in the manner
described in Section 4 (i.e., the usual manner used by the Plan
for allocating income or loss to Participants' Individual
Accounts), provided such method is used consistently for all
Participants and for all corrective distributions under the Plan
for the Plan Year.
C. Accounting for Excess Contributions - Excess Contributions shall
be distributed from the Participant's Elective Deferral account
and Qualified Matching Contribution account (if applicable) in
proportion to the Participant's Elective Deferrals and Qualified
Matching Contributions (to the extent used in the ADP test) for
the Plan Year. Excess Contributions shall be distributed from
the Participant's Qualified Nonelective Contribution account
only to the extent that such Excess Contributions exceed the
balance in the Participant's Elective Deferral account and
Qualified Matching Contribution account.
11.506 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS
A. General Rule - Notwithstanding any other provision of this Plan,
Excess Aggregate Contributions, plus any income and minus any
loss allocable thereto, shall be forfeited, if forfeitable, or
if not forfeitable, distributed no later than the last day of
each Plan Year to Participants to whose accounts such Excess
Aggregate Contributions were allocated for the preceding Plan
Year. Excess Aggregate Contributions of Participants who are
subject to the family member aggregation rules shall be
allocated among the family members in proportion to the Employee
and Matching Contributions (or amounts treated as Matching
Contributions) of each family member that is combined to
determine the combined ACP. If such Excess Aggregate
Contributions are distributed more than 2 1/2 months after the
last day of the Plan Year in which such excess amounts arose, a
10% excise tax will be imposed on the Employer maintaining the
Plan with respect to those amounts.
Excess Aggregate Contributions shall be treated as annual
additions under the Plan.
B. Determination of Income or Loss - Excess Aggregate Contributions
shall be adjusted for any income of loss up to the date of
distribution. The income or loss allocable to Excess Aggregate
Contributions is the sum of: (1) income or loss allocable to
the Participant's Employee Contribution account, Matching
Contribution account (if any, and if all amounts therein are not
used in the ADP test) and, if applicable, Qualified Nonelective
Contribution account and Elective Deferral account for the Plan
Year multiplied by a fraction, the numerator of which is such
Participant's Excess Aggregate Contributions for the year and
the denominator is the Participant's Individual Account
balance(s) attributable to Contribution Percentage Amounts
without regard to any income or loss occurring during such Plan
Year; and (2) 10% of the amount determined under (1) multiplied
by the number of whole calendar months between the end of the
Plan Year and the date of distribution, counting the month of
distribution if distribution occurs after the 15th of such
month. Notwithstanding the preceding sentence, the Plan
Administrator may compute the income or loss allocable to Excess
Aggregate Contributions in the manner described in Section 4
(i.e., the usual manner used by the Plan for allocating income
or loss to Participants' Individual Accounts), provided such
method is used consistently for all Participants and for all
corrective distributions under the Plan for the Plan Year.
C. Forfeitures of Excess Aggregate Contributions - Forfeitures of
Excess Aggregate Contributions may either be reallocated to the
accounts of Contributing Participants who are not Highly
Compensated Employees or applied to reduce Employer
Contributions, as elected by the Employer in Section 5 of the
Adoption Agreement.
D. Accounting for Excess Aggregate Contributions - Excess Aggregate
Contributions shall be forfeited, if forfeitable or distributed
on a pro rata basis from the Participant's Employee Contribution
account, Matching Contribution account, and Qualified Matching
Contribution account (and, if applicable, the Participant's
Qualified Nonelective Contribution account or Elective Deferral
account, or both).
11.507 RECHARACTERIZATION
A Participant may treat his or her Excess Contributions as an
amount distributed to the Participant and then contributed by the
Participant to the Plan . Recharacterized amounts will remain
nonforfeitable and subject to the same distribution requirements as
Elective Deferrals. Amounts may not be recharacterized by a Highly
Compensated Employee to the extent that such amount in combination
with other Employee Contributions made by that Employee would
exceed any stated limit under the Plan on Employee Contributions.
11.508 DISTRIBUTION OF ELECTIVE DEFERRALS IF EXCESS ANNUAL ADDITIONS
Notwithstanding any other provision of the Plan, a Participant's
Elective Deferrals shall be distributed to him to the extent that
the distribution will reduce an excess annual addition (as that
term is described in Section 3.05 of the Plan).
11.600 VESTING
11.601 100% VESTING ON CERTAIN CONTRIBUTIONS
The Participant's accrued benefit derived from Elective Deferrals,
Qualified Nonelective Contributions, Employee Contributions , and
Qualified Matching Contributions is nonforfeitable. Separate
accounts for Elective Deferrals, Qualified Nonelective
Contributions, Employee Contributions, Matching Contributions, and
Qualified Matching Contributions will be maintained for each
Participant. Each account will be credited with the applicable
contributions and earnings thereon.
11.602 FORFEITURES AND VESTING OF MATCHING CONTRIBUTIONS
Matching Contributions shall be Vested in accordance with the
vesting schedule for Matching Contributions in the Adoption
Agreement. In any event, Matching Contributions shall be fully
Vested at Normal Retirement Age, upon the complete or partial
termination of the profit sharing plan, or upon the complete
discontinuance of Employer Contributions. Notwithstanding any
other provisions of the Plan, Matching Contributions or Qualified
Matching Contributions may be forfeited if the contributions to
which they relate are Excess Elective Deferrals, Excess
Contributions or Excess Aggregate Contributions.
Any forfeitures of Matching Contributions which (as indicated in
the Adoption Agreement) are allocated to Participants' Accounts
shall be made in accordance with Section 6.01(D).
#709 (1/94) c1994 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
EX-99.B14-2-03spd
QUALIFIED RETIREMENT PLAN
SUMMARY PLAN DESCRIPTION
<PAGE>
Introduction
Your employer has adopted a type of employee benefit plan designed to help you
meet your financial needs during your retirement years. To become a Participant
in the Plan, you must meet the Plan's eligibility requirements. Once you become
a Participant, you will begin to build up benefits within the plan. This build-
up is known as benefit accrual. When you retire you may (based on how long you
worked for the employer) receive a retirement benefit in one of several forms.
The percentage of your benefit which you will be entitled to keep when you
terminate employment depends on the Plan's vesting schedule. These features are
explained further in the following pages.
The actual Plan is a complex legal document which has been written in the manner
required by the Internal Revenue Service (IRS). This document is called the
Summary Plan Description (or SPD). It is designed to explain and summarize the
important features of the Plan. The SPD consists of this SPD Booklet along with
a General Information Sheet. The General Information Sheet contains information
unique to the Plan which your Employer has adopted. As you read the SPD Booklet,
you will need to refer to the General Information Sheet to understand how your
Plan works. You should consult the Plan document for technical and detailed Plan
provisions. The legal operation of the Plan is controlled by the Plan document
and not this SPD.
If at any time you have specific questions about the Plan as it applies to you,
please bring them to the attention of the Plan Administrator whose address and
telephone number appear on the General Information Sheet. You may also examine
the Plan itself at a reasonable time by making arrangements with the Plan
Administrator.
<PAGE>
Contents of the Summary Plan Description
SECTION 1 DEFINITIONS 1
SECTION 2 ELIGIBILITY AND PARTICIPATION 1
Information in this section includes:
The Eligibility Requirements
When You can Participate in the Plan
How Hours of Service Are Counted
SECTION 3 CONTRIBUTIONS TO THE PLAN 2
Information in this section includes:
The Employer Contribution
How to Share in Contributions
How Contributions Are Allocated
SECTION 4 DISTRIBUTION OF BENEFITS AND VESTING 3
Information in this section includes:
Benefit Eligibility
Distribution of Benefits
How Your Vested Amount is Determined
Restrictions or Penalties on Distributions
Payouts to Your Beneficiaries
SECTION 5 CLAIMS PROCEDURE 7
Information in this section includes:
What to do to Receive Benefits
How to File a Claim
SECTION 6 MISCELLANEOUS 8
Information in this section includes:
Self-Directing of Investments
Borrowing From the Plan
Break in Service Situations
Plan Termination
SECTION 7 RIGHTS UNDER ERISA 9
Information in this section includes:
The Rights and Protections a Plan
Participant is Entitled to Under
the Employee Retirement Income Security Act
<PAGE>
SECTION ONE DEFINITIONS
The following definitions are used in the text of this SPD. These words and
phrases are capitalized throughout the SPD for ease of reference.
Compensation - means the earnings reported to you on Form W-2. However, in some
plans, certain types of earnings (for example, bonuses or overtime pay) may be
excluded from Compensation for purposes of the Plan. Refer to the General
Information Sheet.
Employee - means any person employed by the Employer.
Employer - means the sole-proprietorship, partnership, or corporation
maintaining this Plan.
Employer Contribution - means the amount contributed to the Plan by the
Employer.
General Information Sheet - means the completed form which outlines the
provisions of the Plan as selected by the Employer. You should have received a
copy of the General Information Sheet along with this SPD Booklet.
Participant - means an Employee who has met the eligibility requirements, has
entered the Plan, and has become eligible to receive a contribution to his or
her Individual Account.
Plan - means the specific retirement plan your Employer has set up. The Plan
is governed by a legal document containing various technical and detailed
provisions. The Plan Administrator has a copy of the Plan document.
Plan Administrator - means the Employer unless otherwise designated in the
General Information Sheet. The Plan Administrator is responsible for directly
administering the Plan.
Plan Year - means the 12 consecutive month period upon which the Plan is
maintained. Refer to the General Information Sheet.
SECTION TWO ELIGIBILITY AND PARTICIPATION
Part 1. What are the eligibility requirements of the Plan?
Employees Eligible to Participate
Generally, all Employees, including Employees who own part of the
business, will be eligible to participate in the Plan. However, the
Plan permits the Employer to exclude certain classifications of
Employees from participation. Refer to the General Information Sheet
to see if any Employee classifications have been excluded.
Age and Service Requirements
To be eligible to participate in the Plan, you must reach a certain
age and complete a certain number of years of service. The minimum age
and service requirements are shown on the General Information Sheet.
Replacement Plan
If this is an amendment and restatement of a prior Plan in which you
were a Participant, you will automatically participate.
Part 2. After I meet the eligibility requirements, when do I actually become a
Participant in the Plan?
During each Plan Year there are at least two entry dates upon which
you can begin participation. The Plan entry dates for this Plan are
shown on your General Information Sheet. After you have met the
eligibility requirements, you will enter the Plan - and thus become a
Participant - on the next entry date.
Part 3. Once I am a Plan Participant, what must I do to continue to
participate in the Plan?
You will continue to participate in the Plan as long as you do not
incur a break in service. A break in service is a consecutive 12 month
period beginning on your date of hire and each anniversary of your
date of hire during which you do not work more than the minimum number
of hours of service specified on the General Information Sheet.
However, no break in service will occur if the reason you did not work
more than the required number of hours was because of certain absences
due to birth, pregnancy or adoption of children, or military service
or other service during a national emergency during which your re-
employment under a federal or state law is protected and you do, in
fact, return to your employment within the time required to give you
such right.
Part 4. How are hours of service counted?
Hours of service are counted on the basis of actual number of hours
you work, or are entitled to Compensation, unless a different method
of counting hours of service is indicated on the General Information
Sheet. Refer to the General Information Sheet to identify the minimum
number of hours of service you must accrue in a Plan Year to be given
credit for a year of service.
SECTION THREE CONTRIBUTIONS TO THE PLAN
Part 1. How will the Employer Contribution be Determined?
Each year, the Employer may contribute a certain percentage of your
Compensation to the Plan. If this is a profit sharing plan as shown
on the General Information Sheet, the managing body of the Employer
will decide the amount to contribute to the Plan each year. The
amount can vary from 0% to 15% of the Participants' payroll each year.
If this is a money purchase pension plan, the Employer will contribute
the percentage stated in the General Information Sheet each year.
Part 2. What must I do to share in the Employer Contribution?
Unless the General Information Sheet provides otherwise, you will
qualify to share in this contribution if you were a Participant on at
least one day of the Plan Year and completed a year of service during
the Plan Year. (If your Plan is standardized Plan as indicated on the
General Information Sheet, the requirement that you complete one year
of service does not apply. Rather, if you are a Participant, you will
qualify to share in the Employer Contribution unless you are not
working for the Employer on the last day of the Plan Year because you
terminate employment and had 500 or fewer hours of service during the
Plan Year.)
If the Plan is top-heavy and a contribution is made, you may be
eligible to receive a portion of the contribution even if you fail to
work at least the required number of hours of service as long as you
are a Participant and you are employed on the last day of the Plan
Year.
Part 3. What portion of the Employer Contribution will be allocated to my
account?
How the Employer Contribution is allocated to your Individual Account
varies depending on whether your Plan is or is not integrated with
Social Security. Refer to the General Information Sheet to see if
your Plan is integrated.
Nonintegrated Plans (Also referred to as Pro Rata)
If your Plan is not integrated and a contribution is made, you will
receive a pro rata portion of the contribution equal to the ratio of
your Compensation to the Compensation of all Participants.
EXAMPLE: Assume that you are one of 10 participants in the Plan and
that your Compensation is $10,000. Assume also that the Compensation
of all Participants when added together equals $100,000. The ratio of
your Compensation ($10,000) to that of all Participants ($100,000) is
1/10. Therefore, 1/10 of the contribution which your Employer makes
to the Plan will be allocated to your account.
Integrated Plans
If your Plan is integrated, the contribution your Employer makes will
consist of two parts - base contribution and an excess contribution.
The base contribution will be a percentage of your total Compensation.
The excess contribution will be a percentage of your Compensation
above an amount called the integration level. The integration level
is the taxable wage base for the year unless otherwise specified in
the General Information Sheet.
Part 4. What is meant by my Compensation?
In general, the amount of your Compensation taken into account under
the Plan is all of the earnings reported to you on Form W-2 (unless
the General Information Sheet indicates that certain types of your
earnings are not counted for purposes of the Plan). However, if your
compensation exceeds $200,000, only the first $200,000 will be counted
as Compensation under the Plan. This $200,000 compensation cap will
be adjusted annually by the Internal Revenue Service for increases in
the cost of living. Generally, Compensation will include all your
earnings for the entire Plan Year, even if you enter the Plan during
the middle of the year (unless otherwise selected by the Employer on
the General Information Sheet).
Part 5. Where does the contribution made on my behalf go?
The Employer makes the contribution to a trust fund where all dollars
are held for the benefit of the Participants. Your Employer will
establish and maintain an Individual Account for each Participant.
The Individual Account is used to track each Participant's share in
the total fund.
SECTION FOUR DISTRIBUTION OF BENEFITS AND VESTING
Part 1. When may I withdraw money from the Plan?
Certain events must occur before you can withdraw money from the Plan.
You may withdraw benefits if any of the following occur:
A. You reach Normal Retirement Age - Normal Retirement Age
under the Plan is shown on the General Information Sheet.
B. You become disabled - Generally, you are disabled when
you cannot work because of a physical or mental condition which
is expected to last at least a year or result in your death.
C. Your Employer terminates the Plan.
In addition, if you die, the persons you named as beneficiaries will
receive benefits from the Plan.
Part 2. May I take a payout from the Plan under any other circumstances?
Refer to your General Information Sheet to determine if in-service
withdrawals are permitted under your Plan. If so, under certain
circumstances, you may take a payout of all or a portion of your
vested benefits. The amount which you may withdraw will depend upon
the length of time which you have participated in the Plan and the
reason for the withdrawal. See your Plan Administrator for further
information on in-service withdrawals.
Part 3. How will my benefits be paid to me?
A. Payments from the Plan that are eligible rollover distributions
can be taken in two ways. You may have all or any portion of
your eligible rollover distribution either (1) paid in a direct
rollover to an IRA or another employer plan or (2) paid to you.
If you choose to have your Plan benefits paid to you, you will
receive only 80% of the payment, because the Plan Administrator
is required to withhold 20% of the payment and send it to the IRS
as income tax withholding to be credited against your taxes.
Your Plan Administrator will give you more information about your
options around the time you request your payout from the Plan.
That information will, among other things, define what an
eligible rollover distribution is.
B. If your vested Individual Account (i.e., the amount of money in
the Plan you are entitled to) is no more than $3,500, your
benefits will be paid, either directly to you or as a direct
rollover to an IRA or another plan, in a single lump sum payment.
C. If your Plan is subject to the Retirement Equity Act (REA) safe
harbor provisions, payouts of your benefits under the Plan will
be made in a form other than an annuity. Refer to the General
Information Sheet to determine if your Plan is subject to the REA
safe harbor provisions.
D. If your Plan is not subject to the REA safe harbor provisions and
your vested Individual Account balance is more than $3,500, your
payouts will be in the form of an annuity, unless the annuity
option is waived. An annuity will provide you with a series of
periodic payments, usually monthly. The annuity must be
purchased from an insurance company. The size of the payments
you receive from the annuity will depend on many factors
including the value of your vested Individual Account balance.
i. If you are married, the annuity will provide monthly
payments for as long as you or your spouse live. This type
of annuity is called a joint and survivor annuity. If you
die before your spouse, the monthly payments to your spouse
will be a percentage of the payments you had been receiving
before your death. Refer to the General Information Sheet
to find the survivor annuity percentage.
ii. If you are not married, the type of annuity you will
receive will provide you with monthly payments for as long
as you live.
iii. If you do not want an annuity payout, you may choose
other types of payments. To waive the annuity option, you
must fill out and sign a waiver form. If you are married,
your spouse must consent to and sign the waiver form in the
presence of a Notary Public. You and your spouse may sign
the waiver form anytime within 90 days of the start of your
payments.
EXAMPLE: Bill wants to start receiving money on March 31, 1991.
He and his spouse can sign the waiver form any time from January
1 through March 31, 1991. Bill can now take his money in another
form, such as a single lump sum payment.
E. Contributions made to the Plan by you or on your behalf may be
used to purchase units in various investment funds. The value of
these funds can change daily.
Because the value of your units can change daily, the value shown
on your statement(s) may be different than the actual amount you
receive for a payout.
Part 4. Once I become eligible to receive benefits, when will they be
distributed to me?
If the value of your Individual Account is no more than $3,500, the
Plan Administrator may direct that your benefits be paid within 90
days after the end of the Plan Year in which you become eligible to
receive them.
If the value of your Individual Account is more than $3,500, your
benefit will not be paid until you submit a written request to the
Plan Administrator for payment. The Plan Administrator can provide
you with the proper request forms. Once you have returned the
completed request to the Plan Administrator, payment will be made no
later than 90 days after the close of the Plan Year in which the Plan
Administrator received your request.
Part 5. Even if I am eligible to receive benefits, must I have my benefit
distributed from the Plan?
If the value of your Individual Account exceeds $3,500, your benefit
will not be distributed until you request payment from the Plan
Administrator. Your benefit could be left in the Plan. However, you
must begin taking required minimum distributions at age 70 1/2, as
explained in the next part.
Part 6. What are required minimum distributions?
The tax laws and regulations require you to start taking minimum
distributions from the Plan by April 1 of the year after the year in
which you turn 70 1/2. Minimum distributions must continue every year
thereafter and must be taken by December 31. In general, the amount
of the annual minimum distribution is determined by dividing the
balance in your Individual Account by your life expectancy or the
joint life expectancy of you and your beneficiary.
Part 7. When I become eligible to receive benefits, will I receive the full
value of my Individual Account?
It depends on the reason you are receiving the distribution and your
vested percentage. Your distribution will be the full value of your
Individual Account (that is, you will be 100% vested) when you retire
at normal retirement age or become disabled or if the Employer
terminates the Plan. Also, your beneficiaries will receive the full
value of your Individual Account at your death.
However, if you terminate employment and therefore become eligible for
a distribution from the Plan, your distribution will be only the
vested amount in your Individual Account.
Part 8. How is my vested amount determined?
Your vested amount is determined by multiplying a percentage from a
vesting schedule by the total value of your Individual Account. The
vesting schedule determines how fast your Individual Account becomes
nonforfeitable, based upon your years of service.
EXAMPLE: Suppose you have $10,000 in your Individual Account and you
quit when you are 40% vested. Your vested amount would be $4,000,
that is, 40% of $10,000. Therefore, you would receive $4,000.
Part 9. Which vesting schedule will be used to determine my vested benefit?
You will become vested according to the vesting schedule checked on
the General Information Sheet.
Vesting Schedule for Top-Heavy Plans
A top-heavy plan is one where more than 60% of the value of the plan
is credited to the accounts of certain officers, shareholders and
highly paid Participants. These individuals are called key employees.
The following vesting schedule will be used for periods during which
the Plan is top-heavy:
YEARS OF SERVICE VESTED PERCENTAGE
1 0%
2 20%
3 40%
4 60%
5 80%
6 100%
However, this top-heavy vesting schedule will not apply if the vesting
schedule selected by the Employer provides for faster vesting. For
example, if the Employer has selected the 100% vesting schedule (where
all Participants are 100% vested at all times) and the Plan becomes
top-heavy, that vesting schedule selected by your Employer will remain
in effect because it provides for more rapid vesting.
Part 10. What years of service are counted for vesting purposes?
All of your years of service are counted for the purpose of figuring
your vested percentage unless otherwise provided on the General
Information Sheet.
Part 11. If I am not 100% vested and I receive a distribution, what happens to
the dollars I leave in the Plan?
Dollars that are left in the Plan after a Participant receives vested
benefits are called forfeitures. In a profit sharing plan,
forfeitures are allocated to the Individual Accounts of the
Participants still in the Plan. In a money purchase pension plan,
forfeitures are either allocated to the remaining Participants or are
used as future Employer Contributions. Forfeitures are allocated (or
used as Employer Contributions) after the Participant who took his or
her vested benefit incurs a break in service.
Part 12. What happens if I return to work after receiving my vested benefit?
A former Participant who returns to work for the Employer before
incurring 5 consecutive one year breaks in service may recapture the
forfeited benefit. To recapture the forfeited benefit the Participant
may be required to pay back to the Plan the amount of the distribution
the Participant received from the Plan.
Part 13. Are there any restrictions or penalties on distributions?
Yes. Any person who receives a distribution before reaching age 59
1/2 must pay an additional 10% penalty tax on dollars included in
income. There are exceptions to the 10% early distribution penalty.
Your tax advisor can assist you in determining if one of the
exceptions applies to your distribution.
Part 14. What happens to my benefits if I die?
A. Your beneficiary will receive the value of your Individual
Account. If you are married, your spouse will automatically be
your beneficiary. To choose another beneficiary, you must sign a
written form listing a nonspouse beneficiary. Your spouse must
give written consent to this in the presence of a Notary Public.
NOTE: Contact your Plan Administrator if you wish to choose a
nonspouse beneficiary.
B. If the value of your Individual Account is no more than $3,500,
your beneficiary will receive a lump sum payment of the entire
amount.
C. If you Plan is subject to the Retirement Equity Act (REA) safe
harbor provisions and the value of your Individual Account is
greater than $3,500, your beneficiary will receive a payout(s) in
a form other than an annuity.
D. If the value of your Individual Account is greater than $3,500
your beneficiary will get the money in periodic payments, called
an annuity, from an insurance company unless special forms are
signed. These periodic payments will usually be made on a
monthly basis for as long as your beneficiary lives.
If you want to give your beneficiary a choice as to how he or she
wants to receive the money, you must sign a special form. This
form must also be signed by your spouse in the presence of a
Notary Public. If you are under age 35 when you sign this form,
you must sign a new form once you reach age 35.
EXAMPLE: Clarence, age 38, signs the waiver form. Mildred, his
wife, signs the waiver form in the presence of a Notary Public.
Clarence dies two years later. Mildred now has a choice of
payments. For example, she can take all the money in a single
lump sum and put it into her IRA.
NOTE: Contact your Plan Administrator if you wish to choose a
payout in a form other than an annuity.
Part 15. Are there any circumstances under which I may lose, be denied, or have
expected benefits reduced under the Plan?
Loss, denial or reduction of expected benefits may occur if you
terminate employment before becoming fully vested, or if all or a
portion of your benefit is set aside for an alternate payee under a
Qualified Domestic Relations Order (QDRO). You may also lose your
benefit if you cannot be located when a benefit becomes payable to
you.
SECTION FIVE CLAIMS PROCEDURE
Part 1. Do I or my beneficiary have to do anything to start getting benefits
when I retire or die?
Yes. You or your beneficiary must file a written request with the
Plan Administrator.
Part 2. What should be done if I or my beneficiary think a benefit should be
paid and none is paid?
A claim should be filed with the Plan Administrator.
Part 3. How can a claim be filed?
You may claim a benefit to which you think you are eligible by filing
a written request wit the Plan Administrator. The claim must set
forth the reasons you believe you are eligible to receive benefits and
authorize the Plan Administrator to conduct such examinations and take
such steps as may be necessary.
Part 4. What if my claim is turned down?
If you claim is turned down, the Plan Administrator may provide you
and your beneficiary with a written notice of the denial within 60
days of the date your claim was filed. This notice will give you the
specific reasons for the denial, the specific provisions of the Plan
upon which the denial is based, and an explanation of the procedures
for appeal.
Part 5. Can the decision of the Plan Administrator be appealed?
Yes. You or your beneficiary will have 60 days from receipt of the
notice or denial in which to make written application for review by
the Plan Administrator. You may request that the review be in the
nature of a hearing. You may be represented by an attorney if you so
desire. The Plan Administrator will issue a written decision on this
review within 60 days after receipt of the application for review.
SECTION SIX MISCELLANEOUS
Part 1. Can I direct the investment of the assets in my Individual Account?
Refer to the General Information Sheet to determine if this Plan
allows you to direct the investment of your Individual Account. If
this Plan permits participant self-direction, the Plan Administrator
will establish the rules and procedures which apply. You will be
responsible for any expenses and losses incurred through your choice
of investments.
Part 2. May I borrow money from the Plan?
Refer to the General Information Sheet to determine if the Plan
permits loans to participants. If so, under certain circumstances you
are eligible to borrow a portion of your vested Individual Account .
If loans are available and you wish to learn more about them, check
with the Plan Administrator.
Part 3. What happens if I quit my job and incur a break in service and then
return? When do I participate again? What happens to my accumulated
vested service?
The answer to these questions depends on whether or not you had a
vested interest in the Plan at the time you quit and incurred a break
in service.
If you had a vested interest -
1. You will participate again upon your return to employment.
2. Your vesting years of service accumulated prior to the time
you quit and incurred a break in service will be counted in
figuring your vested interest.
If you did not have a vested interest -
1. Any eligibility years of service occurring before the break
in service will be taken into account and you will begin to
participate again upon your return to service unless the number
of consecutive one year breaks in service equals or exceeds the
greater of 5 years, or the aggregate number of eligibility years
of service preceding the breaks in service. If you period of
consecutive breaks in service exceeds your period of prior
service, you will be treated as a new Employee and will
participate again when you satisfy the Plan's eligibility
requirements.
2. Any vesting years of service occurring before the break in
service will be taken into account in computing your vested
interest under the Plan unless the number of consecutive one year
breaks in service equals or exceeds the greater of 5 years, or
the aggregate number of vesting years of service preceding the
breaks in service. For example, if you work for two years, quit
without being vested, and then return to employment after a break
of two years or more, the Plan will give you vesting credit for
the initial two year period.
Part 4. What happens if the Plan is terminated?
The Employer expects to continue the Plan indefinitely. However, in
the unlikely event the Employer must terminate the Plan, you will
become 100% vested in your Individual Account regardless of whether
your vesting years of service are sufficient to make you 100% vested
under the vesting schedule.
If the Plan terminates, benefits are not insured by the Pension
Benefit Guaranty Corporation (PBGC). Under the law, PBGC insurance
does not cover the type of plans called "defined contribution" plans.
This Plan is a defined contribution plan and, therefore, is not
covered.
SECTION SEVEN RIGHTS UNDER ERISA
As a Participant in this Plan, you are entitled to certain rights and
protections under the Employee Retirement Income Security Act of 1974
(ERISA). ERISA provides that all Plan Participants shall be entitled
to do the following:
1. Examine, without charge, at the Plan Administrator's office
and at other specified locations, such as work sites and union
halls, all Plan documents, including insurance contracts,
collective bargaining agreements and copies of all documents
filed by the Plan Administrator with the U.S. Department of
Labor, such as detailed annual reports and Plan descriptions.
2. Obtain copies of all Plan documents and other Plan
information upon written request to the Plan Administrator. The
Plan Administrator may make a reasonable charge for the copies.
3. Receive a summary of the Plan's annual financial report.
The Plan Administrator is required by law to furnish each
participant with a copy of this summary annual report.
4. Obtain, once a year, a statement of the total pension
benefits accrued and the nonforfeitable (vested) pension benefits
(if any) or the earliest date on which benefits will become
nonforfeitable (vested). The Plan may require a written request
for this statement, but it must provide the statement free of
charge.
In addition to creating rights for Plan Participants, ERISA imposes
duties upon the people who are responsible for the operation of the
employee benefit plan. The people who operate your Plan, called
"fiduciaries" of the Plan, have a duty to do so prudently and in the
interest of you and other Plan Participants and beneficiaries. No
one, including your Employer, your union, or any other person, may
fire you or otherwise discriminate against you in any way to prevent
you from obtaining a pension benefit or exercising your rights under
ERISA.
If your claim for a benefit is denied in whole or in part, you must
receive a written explanation of the reason for the denial. You have
the right to have the Plan Administrator review and reconsider your
claim. Under ERISA, there are steps you can take to enforce the above
rights. For instance, if you request materials from the Plan
Administrator and do not receive them within 30 days, you may file
suit in a federal court. In such a case, the court may require the
Plan Administrator to provide the materials and pay you up to $100 a
day until you receive the materials, unless the materials were not
sent because of reasons beyond the control of the Administrator. If
you have a claim for benefits which is denied, or ignored, in whole or
in part, you may file suit in a state or federal court. If it should
happen that Plan fiduciaries misuse the Plan's money, or if you are
discriminated against for asserting your rights, you may seek
assistance from the U.S. Department of Labor, or you may file suit in
a federal court. The court will decide who should pay court costs and
legal fees. If you are successful, the court may order the person
you have sued to pay these costs and fees. For example, if it finds
your claim is frivolous, fees may be assessed against you.
If you have any questions about your Plan, you should consider the
Plan Administrator. If you have any questions about this statement or
about your rights under ERISA, you should contact the nearest area
office of the U.S. Labor-Management Services Administration,
Department of Labor.
Further, if this Plan is maintained by more than one employer, you can
obtain a complete list of all such employers by making a written
request to the Plan Administrator.
#711(1/94) c1994 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
EX-99.B14-3-403baa
EMPLOYER CONTRIBUTION 403(b) ADOPTION AGREEMENT
________________________________________________________________________________
SECTION 1. EMPLOYER INFORMATION
Name of
Employer________________________________________________________________________
Address_________________________________________________________________________
City_________________________________________State__________________Zip_________
Telephone_____________________Federal Tax Identification Number________________
Fiscal Year End__________________________________________
(month) (day)
Plan Year End___________________________________________
(month) (day)
SECTION 2. EFFECTIVE DATES
Part A. Initial Adoption or Amendment of Plan (Check and complete Option
1 or 2):
Option 1. [ ] This is the initial adoption of a 403(b) plan by
the Employer.
The Effective Date of this Plan is __________, 19____.
NOTE: The effective date is usually the first day of the
Plan Year in which this Adoption Agreement is signed.
Option 2. [ ] This is an amendment and restatement of an
existing 403(b) plan (a Prior Plan).
The Prior Plan was initially effective on __________,
19____.
The Effective Date of this amendment and restatement is
__________, 19____.
NOTE: The effective date is usually the first day of the
Plan Year in which this Adoption Agreement is signed.
Part B. Commencement of Elective Deferrals
Elective Deferrals may commence on ____________________
SECTION 3. ELIGIBILITY REQUIREMENTS Complete Parts A, B, C, D and E
Part A. Year of Eligibility Requirement:
An Employee will be eligible to make Elective Deferrals as of their
date of hire unless they are not a member of an eligible class of
employees.
An Employee will be eligible to become a Participant in the Plan for
purposes of any Employer Contributions after completing _____ (enter
0, 1 or 2) Year(s) of Eligibility Service.
An Employee will be eligible to receive Matching Contributions after
completing ____ (enter 0, 1 or 2) year(s) of eligibility service.
NOTE: If left blank, the Year of Eligibility Service required will be
deemed to be 0.
#1206(8094) c1994 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 2
Part B. Age Requirement:
An Employee will be eligible to become a Participant in the Plan for
purposes of any Employer Contributions after attaining age _____ (no
more than age 21, except for educational institutions which may
require up to age 26).
An Employee will be eligible to receive Matching Contributions after
attaining age ____ (no more than 21).
NOTE: If left blank, it will be deemed there is no age requirement
for eligibility.
Part C. All Employees employed as of the Effective Date of this Plan who
have not otherwise met the requirements of Part A or Part B above [ ]
will [ ] will not be considered to have met those requirements as of
the Effective Date.
Part D. Class of Employees Eligible to Participate:
All Employees shall be eligible to become a Participant in the Plan,
except those checked below:
[ ] Those Employees included in a unit of Employees covered by the
terms of a collective bargaining agreement between Employee
representatives (the term "Employee representatives" does not
include any organization more than half of whose members are
Employees who are owners, officers of executives of the Employer)
and the Employer under which retirement benefits were the subject
of good faith bargaining unless the agreement provides that such
Employees are to be included in the Plan.
[ ] Those Employees who are non-resident aliens pursuant to Section
410(b)(3)(C) of the Code and who received no earned income from
the Employer which constitutes income from sources within the
United States.
[ ] Other
(Define)_________________________________________________________
Part E. Entry Dates
The Entry Dates for participation shall be (choose only one Option):
Option 1. [ ] The first day of the Plan Year and the first day
of the seventh month of the Plan Year.
Option 2. [ ] Other (Specify) ______________________________
SECTION 4. ELECTIVE DEFERRALS
The amount of Elective Deferrals for any year shall not exceed the
applicable limitations under Section 402(g) of the Code (in effect as
of the beginning of the plan year), and Section 403(b)(2) of the Code
(as modified by applicable law or regulation).
The Employer reserves the right to limit Elective Deferrals to prevent
annual additions from exceeding the applicable limits under Section
415(c) and (e) of the Code.
The Participant shall notify the Employer of any excess deferrals no
later than March 1 following the Plan Year the excess contribution
occurred.
SECTION 5. EMPLOYER CONTRIBUTION Complete Part A or B
Part A. [ ] Employer Discretionary Contribution
The Employer may, in its sole discretion, contribute to the Plan
an amount to be determined from year to year. Such contribution
shall be allocated to the Individual Accounts of qualifying
Participants in the ratio that each qualifying Participant's
Compensation for the Plan Year bears to the total Compensation of
all qualifying Participants for the Plan Year.
Part B. [ ] Employer Mandatory Contribution
For each Plan Year the Employer will contribute for each
qualifying Participant an amount equal to ________% (not to
exceed 25%) of the qualifying Participants Compensation for the
Plan Year.
#1206(8094) c1994 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 3
SECTION 6. MATCHING CONTRIBUTIONS
Part A. Will the Employer make Matching Contributions to the Plan on
behalf of Contributing participants?
Option 1. [ ] Yes.
Option 2. [ ] No.
Part B. Matching Contribution Formula. If the Employer will make
Matching Contributions, then the amount of such Matching Contributions made on
behalf of a Contributing Participant each Plan Year shall be: (Choose one)
Option 1. [ ] An amount equal to % of such Contributing
participant's elective Elective Deferral;
Option 2. [ ] An amount equal to the sum of % of
the portion of such Contribution Participant's Elective Deferral which
does not exceed % of the Contributing Participant's
Compensation plus % of the Contributing Participant's
Compensation.
The Employer may make matching contributions and the amount of the
matching contribution (if any) shall be determined annually by the
Employer.
Option 3. [ ] Other Formula (specify)
.
(NOTE: If Option 3 is selected, only Matching Contributions can be
made with respect to a Contributing Participant's Elective Deferrals.)
Part C. Limit on Matching Contributions. Notwithstanding the Matching
Contribution specified above, the Employer will not match a Contributing
Participant's Elective Deferrals in excess of $ or % of
such Contributing Participant's Compensation.
SECTION 7. COMPENSATION Complete Parts A, B, C and D if applicable
Part A. Compensation will mean all of each Participant's (Choose one):
Option 1. [ ] W-2 earnings.
Option 2. [ ] Compensation as that term is defined in Section
415(c)(3) of the Code.
Part B. Measuring Period for Compensation:
Compensation shall be determined over the following applicable period
(Choose one):
Option 1: [ ] The Plan Year.
Option 2: [ ] The calendar year ending with or within the Plan
Year.
Option 3: [ ] Other (Specify)___________________________________
NOTE: If no Option is selected, Option 1 will be deemed to be
selected.
Part C. Compensation [ ] shall [ ] shall 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(a)(8), 402(h) and 403(b) of the Code.
Part D. Compensation shall not include the following (e.g., bonuses, overtime,
etc.). (Complete if applicable)
________________________________________________________________________________
#1206(8094) c1994 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 4
SECTION 8. VESTING Complete Parts A, B, C and D
Part A. A Participant shall become Vested in his or her Individual
Account derived from Employer Contributions made pursuant to Section 5
of the Adoption Agreement as follows (Choose one):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
YEARS OF VESTED PERCENTAGE
VESTING SERVICE Option 1 [ ] Option 2 [ ] Option 3 [ ] Option 4 [ ] Option 5 [ ] (Complete if Chosen)
- -----------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
1 0% 0% 100% 0% ____%
2 0% 20% 100% 0% ____%
3 0% 40% 100% 20% ____% (not less than 20%)
4 0% 60% 100% 40% ____% (not less than 40%)
5 100% 80% 100% 60% ____% (not less than 60%)
6 100% 100% 100% 80% ____% (not less than 80%)
7 100% 100% 100% 100% ____% (not less than 100%)
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Part B. A Participant shall become Vested in his or her Individual
Account derived from Matching Contributions made pursuant to Section 6
of this Adoption Agreement as follows (Choose one if Matching
Contributions may be made):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
YEARS OF VESTED PERCENTAGE
VESTING SERVICE Option 1 [ ] Option 2 [ ] Option 3 [ ] Option 4 [ ] Option 5 [ ] (Complete if Chosen)
- -----------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
1 0% 0% 100% 0% ____%
2 0% 20% 100% 0% ____%
3 0% 40% 100% 20% ____% (not less than 20%)
4 0% 60% 100% 40% ____% (not less than 40%)
5 100% 80% 100% 60% ____% (not less than 60%)
6 100% 100% 100% 80% ____% (not less than 80%)
7 100% 100% 100% 100% ____% (not less than 100%)
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: If no selection is made, Option 3 100% vesting will be deemed
to be selected.
Part C. All of an Employee's Years of Vesting Service with the Employer are
counted to determine the vesting percentage in the Participant's
Individual Account except:
[ ] Years of Vesting Service before the Employee reaches age 18.
[ ] Years of Vesting Service before the Employer maintained this Plan
or a predecessor plan.
Part D. Allocation of Forfeitures:
Forfeitures shall be (Choose one):
Option 1: [ ] Allocated as Employer contributions as described in
Section 6.
Option 2: [ ] Applied to reduce Employer Contributions.
Option 3: [ ] Applied first to reduce administrative expenses and
any excess used to reduce Employer Contributions.
SECTION 9. NORMAL RETIREMENT AGE
The Normal Retirement Age under the Plan is age ____(not to exceed
65). NOTE: If left blank, the Normal Retirement Age will be deemed
to be age 59 1/2.
#1206(8094) c1994 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 5
SECTION 10. HOURS REQUIRED Complete Parts A and B
Part A.____ Hours of Service (no more than 1,000) shall be required
to constitute a Year of Vesting Service or a Year of
Eligibility Service.
Part B.____ Hours of Service (no more than 500) must be exceeded to
avoid a Break in Vesting Service or a Break in Eligibility
Service.
NOTE: The number of hours in Part A must be greater than the number
of hours in Part B.
SECTION 11. METHOD OF DETERMINING SERVICE
Service will be determined on the basis of the method selected below.
Only one method may be selected. The method selected will be applied
to all Employees covered under the Plan. Check option A, B, C or D
Option A. [ ] On the basis of actual hours for which an Employee is
paid or entitled to payment.
Option B. [ ] On the basis of days worked. An Employee will be
credited with 10 Hours of Service if under 1.19 of the
Plan such Employee would be credited with at least 1 Hour
or Service during the day.
Option C. [ ] On the basis of weeks worked. An Employee will be
credited with 45 Hours of Service if under Section 1.19 of
the Plan such Employee would be credited with at least 1
Hour of Service during the week.
Option D. [ ] On the basis of months worked. An Employee will be
credited with 190 Hours of Service if under Section 1.19
of the Plan such Employee would be credited with at least
1 Hour of Service during the month. NOTE: If left blank,
Option A will be deemed to be selected.
SECTION 12. OTHER OPTIONS Answer "Yes" or "No" to each of the following
questions by checking the appropriate box. If a box is not checked
for a question, the answer will be deemed to be "No".
A. Loans: Will loans to Participants pursuant to Section 6.07 of
the Plan be permitted? [ ] Yes [ ] No
B. Last Day Requirement: Must a Participant be an Employee of the
Employer on the last day of the Plan Year in order to qualify for
Employer Discretionary or Mandatory Contributions?
[ ] Yes [ ] No
C. Last Day Requirement Matching: Must a participant be employed on
the last day of the plan year in order to qualify for any Matching
Contributions? [ ] Yes [ ] No
D. May the Plan purchase Life Insurance for Participants pursuant to
Section 5.09 of the Plan? [ ] Yes [ ] No
E. Hardship Withdrawals: Will Participants be permitted to withdraw
Elective Deferrals and Employer Cotnributions on account of hardship
pursuant to Section 6.01(E) of the Plan?
[ ] Yes [ ] No
SECTION 13: EMPLOYER SIGNATURE Important: Please read before signing.
I am an authorized representative of the Employer named above and I
state the following:
1.I acknowledge that I have relied upon my own advisors regarding the
completion of this Adoption Agreement and the legal and tax
implications of adopting this Plan.
2.I understand that my failure to properly complete this Adoption
Agreement may result in disqualification of the Plan.
Signature of Employer_______Date Signed____________________
Type Name__________________________________________________
#1206(8094) c1994 Universal Pensions, Inc., Brainerd, MN 56401
EX-99.B14-4-457aa
IRC SECTION 457 DEFERRED COMPENSATION PLAN ADOPTION AGREEMENT
_____________________________________________________________
SECTION 1. EMPLOYER INFORMATION
Name of Employer
Address
City___________________________________State__________________Zip
Telephone_______________________Federal Tax Identification Number
Plan Year End
(month) (day)
Type of Entity (Check only one)
[ ] State Governmental Unit
[ ] Political Subdivision of a State
[ ] Agency of State or Political Subdivision of State
[ ] Instrumentality of State or Political Subdivision of
State
[ ] Tax Exempt Organization Operating as a (Select One)
[ ] Corporation
[ ] Association
[ ] Trust
NOTE: A Section 457 Deferred Compensation Plan sponsored by Tax
Exempt Organization must limit participation to a select group of
management or highly compensated employees within the meaning of
Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.
SECTION 2. EFFECTIVE DATE
Part A. Initial Adoption or Amendment of Plan (Check and complete Option 1 or
2):
Option 1. [ ] This is the initial adoption of a Section 457 Deferred
Compensation Plan by the Employer.
The Effective Date of this Plan is ______________________,
19__.
NOTE: The effective date is usually the first day of the
Plan Year in which this Adoption Agreement is signed.
Option 2. [ ] This is an amendment and restatement of an existing
Section 457 Deferred Compensation Plan.
The Prior Plan was initially effective on
__________________, 19__.
Part B. Commencement of Elective Deferrals
Elective Deferrals may commence on ___________________ .
NOTE: Complete this part only if Option 1 above was selected. This
date may be no earlier than the date this Adoption Agreement is signed
because Elective Deferrals cannot be made retroactively.
SECTION 3. ELIGIBILITY REQUIREMENTS
Part A.For purposes of this Plan, Employees eligible to make Deferrals
(Eligible Employees) include (check one or both items):
[ ] All Employees.
[ ] All independent contractors who perform services for the
Employer from time to time.
Part B. Entry Dates
The Entry Dates for participation shall be (Choose only one Option)
Option 1: [ ] The first day of the Plan Year and the first day of
the seventh month of the Plan Year.
Option 2: [ ] Other
(Specify)_____________________________________________
SECTION 4. ELECTIVE DEFERRALS OF COMPENSATION
NOTE: Compensation may not be deferred until a Participation Election
form is completed by a Participant in a form acceptable to the
Employer.
Part A. Each Participant may elect to have his or her Compensation reduced by
an amount as described below (Choose one):
Option 1: [ ] An amount equal to the maximum percentage allowable
under the limits of Section 457 of the Code.
Option 2: [ ] An amount equal to a percentage of the Participant's
Compensation from ______% to ______% in increments of
_______%.
Option 3: [ ] An amount of the Participant's Compensation not less
than $________ and not more than $________ in increments of
$________.
The amount of such reduction shall be contributed to the Plan by the
Employer on behalf of the Participant.
For any taxable year, a Participant's Deferrals shall not exceed the
limit prescribed under Section 457 of the Code, including the limited
catch-up rule.
Notwithstanding the foregoing, any Participant electing to make
Deferrals under this Plan must defer a minimum of ______% of
Compensation or $________ per _______________ (Specify time period,
i.e., pay period, month, plan year, etc.).
NOTE: Participants are exclusively responsible for monitoring total
Deferrals to this and aggregated plans.
SECTION 5. NORMAL RETIREMENT AGE
The Normal Retirement Age under the Plan is age ______ (not to exceed
70 1/2).
NOTE: If left blank, the Normal Retirement Age will be deemed to be
age 70 1/2.
SECTION 6. OTHER OPTIONS Answer "Yes" or "No" to each of the following
questions by checking the appropriate box. If no box is checked for a
question, the answer will be deemed to be "No."
A. Participant Direction of Investments: Will Participants be
permitted to direct the investment of their Individual Accounts
pursuant to Section 5.10 of the Plan? [ ] Yes [ ] No
B. Will transfers from other eligible deferred compensation plans be
permitted? [ ] Yes [ ] No
C. Will distributions be allowed for unforeseeable emergencies as
described under Section 457(d)(1)(A) of the Code and the regulations
thereunder? [ ] Yes [ ] No
SECTION 7. EMPLOYER SIGNATURE Important: Please read before signing.
I am an authorized representative of the Employer named above and I
state the following:
1. I acknowledge that I have relied upon my own advisors regarding the
completion of this Adoption Agreement and the legal and tax
implications of adopting this 457 Deferred Compensation Plan.
2. I have received a copy of this Adoption Agreement and the
corresponding Basic Plan Document.
Signature of Employer______________________________Date:___________
Type Name__________________________________________________________
SPONSOR (Complete only if Employer is not Sponsor)
Name of Sponsor
Address
Telephone Number
c1994 Universal Pensions, Inc., Brainerd, MN 56401
EX-99.B14-5-457bpd
IRC SECTION 457 Deferred Compensation Specimen Plan Document
________________________________________________________________________________
SECTION ONE: DEFINITIONS
The following words and phrases when used in the Plan with initial capital
letters shall, for the purpose of this Plan, have the meanings set forth below
unless the context indicates that other meanings are intended:
1.01 ADOPTION AGREEMENT
Means the document executed by the Employer through which it adopts this
IRC Section 457 Deferred Compensation Plan and thereby agrees to be bound
by all terms and conditions of the Plan.
1.02 BASIC PLAN DOCUMENT
Means this specimen Internal Revenue Code Section 457 Deferred Compensation
Plan Document.
1.03 BENEFICIARY
Means any person(s) or entity(ies) designated by the Participant to receive
the Participant's benefits from the Plan in the event the Participant dies
before receiving a distribution of all of his or her Plan benefits.
1.04 CODE
Means the Internal Revenue Code of 1986 as amended from time-to-time.
1.05 COMPENSATION
Means a Participant's Compensation for a taxable year including only
Compensation from the Employer that is attributable to services performed
for the Employer and that is included in the Participant's gross income for
the taxable year. A Participant's Compensation for a taxable year does not
include an amount payable by the Employer that is excludable from the
Employee's gross income under Section 457(a) of the Code and Treas. Reg.
Section 1.457-1 or under Sections 403(b), 105(d) or 911 of the Code.
A Participant's Compensation for a taxable year is determined without
regard to any community property laws. Compensation deferred under this
Plan shall be taken into account at its value in the Plan Year in which it
is deferred. Notwithstanding the foregoing, if the Compensation deferred
is subject to a substantial risk of forfeiture as defined at Section
457(e)(3)of the Code, such Compensation shall be taken into account at its
value in the Plan Year in which such Compensation is no longer subject to a
substantial risk of forfeiture.
1.06 DEFERRAL
Means the amount of Compensation which a Participant defers pursuant to a
Participation Election Form.
1.07 EFFECTIVE DATE
Means the date this Plan becomes effective as indicated in the Adoption
Agreement. However, where a separate date is stated in the Plan as of
which a particular Plan provision becomes effective, such date will control
with respect to said provision.
1.08 ELIGIBLE EMPLOYEE
Means those Employees identified as Eligible Employees in the Adoption
Agreement.
1.09 EMPLOYEE
Means any person who is employed by the Employer or performs service for
the Employer, irrespective of whether the status of such Employee's service
for the Employer is characterized as that of a common law employee or
independent contractor.
1.10 EMPLOYER
Means the person or persons determined to be the Employer in accordance
with Section 8.01 Means any state, political subdivision of a state, any
agency or instrumentality of a state or political subdivision of a state or
any other organization exempt from tax under the provisions of the Code
which evidences its sponsorship of this Plan by executing an Adoption
Agreement.
1.11 ENTRY DATES
Means the first day of the Plan Year and the first day of the seventh month
of the Plan Year, unless the Employer has specified more frequent dates in
the Adoption Agreement.
1.12 FUND
Means the assets of the Plan.
1.13 INDIVIDUAL ACCOUNT
Means the separate account established and maintained under this Plan for
each Participant with respect to such Participant's interest in the Plan.
1.14 INVESTMENT FUND
Means a subdivision of the Fund established pursuant to Section 5.03.
1.15 NORMAL RETIREMENT AGE
Means the age specified in the Adoption Agreement. However, if the
Employer enforces a mandatory retirement age which is less than the Normal
Retirement Age, such mandatory age is deemed to be the Normal Retirement
Age. If no age is specified in the Adoption Agreement, the Normal
Retirement Age shall be age 70 1/2.
1.16 PARTICIPANT
Means an Eligible Employee who executes a Participation Election Form to
make Deferrals into the Plan.
1.17 PARTICIPATION ELECTION FORM
Means the agreement between a Participant and the Employer in a form
acceptable to the Employer whereby the Participant elects to defer receipt
of Compensation not yet earned.
1.18 PLAN
Means this Code Section 457 Deferred Compensation Plan adopted by the
Employer. The Plan consists of this Basic Plan Document plus the
corresponding Adoption Agreement as completed and signed by the Employer.
1.19 PLAN YEAR
Means the 12 consecutive month period which coincides with the Employer's
fiscal year or such other 12 consecutive month period as is designated in
the Adoption Agreement.
1.20 SEPARATE FUND
Means a subdivision of the Fund held in the name of a particular
Participant representing certain assets held for that Participant. The
assets which comprise a Participant's Separate Fund are those assets
earmarked for him and those assets subject to the Participant's individual
direction pursuant to Section 5.10.
1.21 SEPARATION FROM SERVICE
Means the following:
A. Common Law Employees - A common law employee shall incur a Separation
from Service if (1) there is a separation from service within the
meaning of Section 402(e)(4)(A)(iii) of the Code, relating to lump sum
distributions; (2) the Participant dies; or (3) the Participant
retires.
B. Independent Contractors - An independent contractor shall incur a
Separation from Service from the Employer upon expiration of the
contract (or in the case of multiple contracts, all contracts) under
which services are performed for the Employer provided the expiration
constitutes a good-faith and complete termination of the contractual
relationship. An expiration will not constitute a good faith and
complete termination of the contractual relationship if the Employer
anticipates a renewal of the contractual relationship or the
independent contractor changing status to a common law employee. For
this purpose, the Employer is considered to anticipate a renewal of the
contractual relationship with an independent contractor if the Employer
intends to contract again for the services provided under the expired
contract and neither the Employer nor the independent contractor have
eliminated the independent contractor as a potential service provider
under any such new contract. Further, the Employer is considered to
intend to contract again for services provided under an expired
contract if the Employer's so acting is conditioned only upon the
Employer's incurring a need for the services, the availability of
funding to purchase such services, or both.
Notwithstanding the foregoing, the following shall apply to any amounts
payable to a Participant who is an independent contractor:
i. No amount shall be paid to the Participant before a date at least
12 months following the day upon which the contract expires or
under which services are performed for the Employer (or in the
case of multiple contracts, on the day all such contracts
expire), and
ii. No amount payable to the Participant on such date as specified in
(i) above shall be paid to the Participant if subsequent to
expiration of the contract(s) and prior to such time, the
Participant performs services for the Employer as an independent
contractor or common law employee.
1.22 SPONSOR
The plan sponsor is Waddell & Reed, Inc.
1.23 UNFORESEEABLE EMERGENCY
Means severe financial hardship to the Participant resulting from a sudden
and unexpected illness or accident of the Participant or of a dependent of
the Participant as defined in Section 152(a) of the Code, the loss of the
Participant's property due to casualty or other similar or extraordinary
and unforeseeable circumstances arising as a result of events beyond the
control of the Participant. The circumstances that will constitute an
Unforeseeable Emergency depend upon the facts and circumstances of each
situation. The Employer shall have sole discretion to determine the
existence of an unforeseeable emergency. Purchase of a home by a
Participant or payment of post-secondary education fees by a Participant on
behalf of a dependent of a Participant shall not be deemed to constitute an
Unforeseeable Emergency for these purposes. Withdrawals on account of an
Unforeseeable Emergency shall be limited to the amount reasonably needed to
satisfy the emergency need.
1.24 VALUATION DATE
Means the last day of the Plan Year and each other date designated by the
Employer which is selected in a uniform and nondiscriminatory manner when
the assets of the Fund are valued at their then fair market value.
SECTION TWO: ELIGIBILITY AND PARTICIPATION
2.01 ELIGIBILITY REQUIREMENT AND PLAN ENTRY
An Eligible Employee who completes a Participation Election Form is
eligible to participate in the Plan effective the first Entry Date
following the completion of such form and acceptance by the Employer.
The Employer's acceptance of a Participation Election Form may be evidenced
by actual deferral of Compensation by the Employer pursuant to and in
accordance with the terms of the Participation Election Form.
2.02 DETERMINATIONS UNDER THIS SECTION
The Employer shall determine the eligibility of each Employee to be a
Participant. This determination shall be conclusive and binding upon all
persons except as otherwise provided herein or by law.
2.03 TERMS OF EMPLOYMENT
Neither the fact of the establishment of the Plan nor the fact that a
common law Employee has become a Participant shall give to that common law
Employee any right to continued employment; nor shall either fact limit the
right of the Employer to discharge or to deal otherwise with a common law
Employee without regard to the effect such treatment may have upon the
Employee's rights under the Plan.
SECTION THREE: CONTRIBUTIONS
3.01 REQUIREMENTS TO ENROLL AS A PARTICIPANT
A. Each Eligible Employee may enroll as a Participant by completing and
returning a Participation Election Form in a form acceptable to the
Employer on or before such Participant's Entry Date into the Plan.If an
Eligible Employee does not enroll as a Participant on or before such
Participant's Entry Date, such Participant may enroll on any subsequent
Entry Date.
B. Notwithstanding the timing set forth in Section 3.01(A) pertaining to
when an Eligible Employee may enroll as a Participant, the Employer
shall have the authority to designate, in a nondiscriminatory manner,
additional enrollment times during the initial 12 month period
commencing with the Effective Date to insure an orderly first
enrollment.
3.02 DESIGNATION OF DEFERRAL AMOUNT AND MODIFICATION OF PARTICIPATION ELECTION
FORM
A. A Participant shall designate the amount or percentage of such
Participant's Compensation which is to be deferred in the Participation
Election Form. Such amount or percentage shall be effective until
otherwise modified in writing by the Participant.
B. A Participant may modify or revoke his or her Participation Election
Form by completing and delivering to the Employer an amended
Participation Election Form in a form acceptable to the Employer. Such
modification or revocation shall not be effective for a period of at
least 30 days following acceptance by the Employer.
3.03 LIMITATIONS ON THE AMOUNT OF COMPENSATION TO BE DEFERRED
A. The maximum amount that may be deferred under the Plan for any taxable
year of a Participant shall be as follows:
(i)General Rule. Generally, the maximum amount that may be deferred
for any taxable year of a Participant shall not exceed the lesser
of:
a) $7,500, or
b) 33 1/3% of such Participant's Compensation.
(ii) Limited Catch-up Rule. Notwithstanding the general rule of
Section 3.03(A)(i), the maximum that may be deferred for one or more
of a Participant's last three taxable years ending immediately
before he or she attains Normal Retirement Age shall be the lesser
of:
a) $15,000, reduced by any amount excludable from the Participant's
gross income for the taxable year under Section 403(b) of the
Code on account of contributions made by the Employer; or
b) The sum of
(1)the plan limitation established under Section 3.03(A)(i) for
the taxable year, and
(2)the Plan limitation established under Section 3.03(A)(i) for
any prior taxable year(s), minus the amount of Compensation
deferred under the Plan for such prior taxable year(s).
A prior taxable year shall be taken into account only if it begins
after December 31, 1978; the Participant was eligible to participate
in the Plan during all or any portion of such taxable year; and
Compensation deferred under the Plan during such year was subject to
a limitation established under Section 3.03(A)(i). A Participant
will be considered to be eligible to participate in the Plan for a
taxable year if he or she was a Participant for any part of the
particular taxable year.
(iii) Restriction on Limited Catch-up Rule. A Participant shall have
the right to use the limited catch-up rule only once. This rule
applies only once notwithstanding whether the limited catch-up rule
is used for less than all the three taxable years ending immediately
prior to attainment of Normal Retirement Age by the Participant and
notwithstanding whether the Participant or former Participant
rejoins the Plan or participates in another eligible plan after
retiring from the services of the Employer.
B. The minimum monthly amount which may be deferred by a Participant is
such amount or percentage of Compensation as may be specified by the
Employer in the Adoption Agreement in a uniform and nondiscriminatory
basis.
3.04 PARTICIPATION IN A CODE SECTION 403(b) TAX SHELTERED ARRANGEMENT OR
ADDITIONAL CODE SECTION 457 PLAN(S)
Amounts excludable from a Participant's gross income under Section 403(b)
of the Code or another Code Section 457 plan shall be taken into account in
applying the limitations of Section 3.03(A)(i) and (ii). It shall be the
sole responsibility of a Participant who is participating in such other
Code Sections 403(b) and/or 457 arrangement(s) or plan(s) to monitor
compliance with the limitations imposed under Sections 3.03(A)(i) and (ii)
and all other applicable provisions of the Code.
3.05 UNDISTRIBUTED FUNDS REMAIN PROPERTY OF EMPLOYER
All amounts deferred pursuant to this Plan, all property and rights to
property (including rights as a Beneficiary of a contract providing for
life insurance protection) purchased with such amounts, and all income
attributable to such amounts, property or rights shall remain solely the
property and rights of the Employer (without being restricted to the
provision of benefits under the Plan) subject to the claims of the
Employer's general creditors only, until paid or otherwise made available
to the Participant or his or her Beneficiary under the Plan.
Participants shall have no claims for amounts deferred either against their
Individual Accounts or the Investment Fund. Nothing herein shall prevent a
Participant from directing the investment of his or her Individual Account
under the Plan pursuant to Section 5.10 of the Plan.
3.06 TRANSFER CONTRIBUTIONS
If the Employer so elects in the Adoption Agreement, the Employer may
receive any amounts transferred to it from another eligible deferred
compensation plan.
SECTION FOUR: INDIVIDUAL ACCOUNTS OF PARTICIPANTS AND VALUATION
4.01 INDIVIDUAL ACCOUNTS
A. The Employer may establish and maintain an Individual Account in the
name of each Participant to reflect the total value of his interest in
the Fund. Each Individual Account established hereunder shall consist
of such subaccounts as may be necessary for such Participant including
a subaccount to reflect a Participant's transfer contributions. Such
Individual Accounts and subaccounts are primarily for accounting
purposes and do not necessarily require a segregation of Plan assets.
B. The Employer may establish additional accounts as it may deem necessary
for the proper administration of the Plan.
4.02 VALUATION OF FUND
The Fund will be valued each Valuation Date at fair market value.
4.03 VALUATION OF INDIVIDUAL ACCOUNTS
Where all or a portion of the assets of a Participant's Individual Account
are invested in a Separate Fund for the Participant, the value of that
portion of such Participant's Individual Account at any relevant time
equals the sum of the fair market value of the assets in such Separate
Fund, less any applicable charges or penalties.
4.04 SEGREGATION OF ASSETS
If a Participant elects a mode of distribution other than a lump sum, the
Employer may place that Participant's account balance into a segregated
Investment Fund for the purpose of maintaining the necessary liquidity to
provide benefit installments on a periodic basis.
4.05 STATEMENT OF INDIVIDUAL ACCOUNTS
As administratively feasible, the Employer shall furnish a statement to
each Participant indicating the Individual Account balances of such
Participant as of the most recent Valuation Date.
4.06 MODIFICATION OF METHOD FOR VALUING INDIVIDUAL ACCOUNTS
If necessary or appropriate, the Employer may establish different or
additional procedures which shall be uniform and nondiscriminatory for
determining the fair market value of Individual Accounts.
SECTION FIVE: FUND AND SPONSOR
5.01 CREATION OF FUND
By adopting this Plan, the Employer establishes the Fund which shall
consist of the assets of the Plan held pursuant to this Section Five.
Assets within the Fund may be pooled on behalf of all Participants,
earmarked on behalf of each Participant or be a combination of pooled and
earmarked.
All assets of the Fund are subject to the claims of the Employer's general
creditors until paid or otherwise made available to Participants or
Beneficiaries under the Plan.
5.02 INVESTMENT AUTHORITY
Except as provided in Section 5.10 (relating to individual direction of
investments by Participants), the Employer shall have exclusive management
and control over the investment of the Fund into any permitted investment.
Notwithstanding the foregoing, an Employer may enter into a written
agreement whereby the duties of managing the Fund (all or a portion) may be
delegated to any person or entity authorized under law to so manage and
direct investment of the Fund. Such written agreement shall specify in
detail the respective responsibilities and obligations of the parties.
The Sponsor may, as a condition of making the Plan available to the
Employer for adoption, limit the types of property in which the Employer is
permitted to invest the Plan's assets.
5.03 DIVISION OF FUND INTO INVESTMENT FUNDS
The Employer may direct from time-to-time that the Fund be divided into one
or more Investment Funds. Such Investment Funds may include, but not be
limited to, Investment Funds representing the assets under control of an
investment manager pursuant to Section 5.09 and Investment Funds
representing investment options available for individual direction by
Participants pursuant to Section 5.10. Upon each division, or redivision,
the Employer may specify the part of the Fund to be allocated to each such
Investment Fund and the terms and conditions, if any, under which the
assets in such Investment Fund shall be invested.
5.04 COMPENSATION AND EXPENSES
The Sponsor of this Plan, and any other person or entity acting as the
agent of the Employer for purposes of administering the provisions of this
Plan, shall receive such reasonable compensation as may be agreed upon by
the parties and the Employer. The Sponsor or any other agent contemplated
herein shall be entitled to reimbursement by the Employer for all proper
expenses incurred in carrying out its duties under this Plan, including
reasonable legal, accounting and actuarial expenses. If not paid by the
Employer, such compensation and expenses may be charged against the Fund.
All taxes of any kind that may be levied or assessed under existing or
future laws upon, or in respect of, the Fund or the income thereof shall be
paid from the Fund.
5.05 NOT OBLIGATED TO QUESTION DATA
The Employer shall furnish the Sponsor and Employer, if different, the
information which each party deems necessary for the administration of the
Plan including, but not limited to, changes in a Participant's status,
eligibility, mailing addresses and other such data as may be required. The
Sponsor and Employer shall be entitled to act on such information as is
supplied them and shall have no duty or responsibility to further verify or
question such information.
5.06 LIABILITY FOR WITHHOLDING ON DISTRIBUTIONS
The Employer shall be responsible for withholding federal income taxes from
distributions from the Plan.
5.07 DEGREE OF CARE
Limitation of Liability - The Sponsor shall not be liable for any losses
incurred by the Fund by any lawful direction to invest communicated by the
Employer, Employer or any Participant or Beneficiary. The Sponsor shall be
under no liability for distributions made or other action taken or not
taken at the written distribution of the Employer. It is specifically
understood that the Sponsor shall have no duty or responsibility with
respect to the determination of matters pertaining to the eligibility of
any Employee to become a Participant or remain a Participant hereunder, the
amount of benefit to which a Participant or Beneficiary shall be entitled
to receive hereunder, whether a distribution to Participant or Beneficiary
is appropriate under the terms of the Plan or the size and type of any
policy to be purchased from any insurer for any Participant hereunder or
similar matters; it being understood that all such responsibilities under
the Plan are vested in the Employer.
5.08 INDEMNIFICATION OF SPONSOR
Notwithstanding any other provision herein, the Employer shall indemnify
and hold harmless the Sponsor, its officers, directors, employees, agents,
its heirs, executors, successors and assigns, from and against any and all
liabilities, damages, judgments, settlements, losses, costs, charges or
expense (including legal expenses) at any time arising out of or incurred
in connection with any action taken by such parties in the performance of
their duties with respect to this Plan, unless there has been a final
adjudication of gross negligence or willful misconduct in the performance
of such duties.
Further, the Employer will indemnify the Sponsor from any liability, claim
or expense (including legal expense) which the Sponsor and shall incur by
reason of or which results, in whole or in part, from the Sponsor's
reliance on the facts and other directions and elections the Employer
communicates of fails to communicate.
5.09 INVESTMENT MANAGERS
A. Definition of Investment Manager - The Employer may appoint one or more
investment managers to make investment decisions with respect to all or
a portion of the Fund. The investment manager shall be any firm or
individual registered as an investment adviser under the Investment
Advisors Act of 1940, a bank as defined in said Act or an insurance
company qualified under the laws of more than one state to perform
services consisting of the management acquisition or disposition of any
assets of the Plan.
B. Investment Manager's Authority - A separate Investment Fund shall be
established representing the assets of the Fund invested at the
direction of the Investment Manager. The Investment Manager so
appointed shall direct the Employer with respect to the investment of
such Investment Fund. The investments which may be acquired at the
direction of the Investment Manager are limited to those as may be
prescribed by law.
C. Written Agreement - The appointment of any Investment Manager shall be
by written agreement between the Employer and the Investment Manager.
The agreement shall set forth, among other matters, the effective date
of the Investment Manager's appointment.
D. Concerning the Sponsor - Written notice of each appointment of an
Investment Manager shall be given to the Sponsor (if different than the
Investment Manager and Employer) in advance of the effective date of
such appointment. Such notice shall specify which portion of the Fund
will constitute the Investment Fund subject to the investment manager's
direction. The Sponsor shall comply with the investment direction
given to it by the investment manager and will not be liable for any
loss which may result by reason of any action (or inaction) it takes at
the direction of the investment manager.
5.10 DIRECTION OF INVESTMENTS BY PARTICIPANT
If so indicated in the Adoption Agreement, each Participant may
individually direct the Employer regarding the investment of part or all of
his Individual Account. The Employer shall direct that a Separate Fund be
established in the name of each Participant who directs the investment of
part or all of his Individual Account. Each Separate Fund shall be charged
or credited (as appropriate) with the earnings, gains, losses or expenses
attributable to such Separate Fund. The Employer shall not be liable for
any loss which results from a Participant's individual direction.
The Employer shall establish such uniform and nondiscriminatory rules
relating to individual direction as it deems necessary or advisable
including, but not limited to; rules describing: (1) which portions of
Participant's Individual Account can be individually directed; (2) the
frequency of investment changes; 3) the forms and procedures for making
investment changes; and (4) the effect of a Participant's failure to make a
direction.
The Employer may limit the available investments for Participants'
individual direction to certain specified investment options including but
not limited to, certain mutual funds, investment contracts, deposit
accounts and group trusts. The Employer may permit, in a uniform and
nondiscriminatory manner, a Beneficiary of a deceased Participant to
individually direct in accordance with this Section.
SECTION SIX: DISTRIBUTION OF PLAN BENEFITS
6.01 DISTRIBUTION TO PARTICIPANTS
A. When Distributable
1. Entitlement to Distribution - A Participant's Individual Account
shall not be distributable to the Participant before the occurrence
of any of the following events:
a. the Participant's Separation from Service from the Employer;
b. the calendar year in which the Participant attains age 70 1/2;
or
c. the Participant incurs an Unforeseeable Emergency if permitted
through an election in the Adoption Agreement.
2. Written Request: When Distributed - A Participant entitled to
distribution who wishes to receive a distribution must submit a
written request to the Employer. Such request shall be made upon a
form provided by the Employer. Upon a valid request, the Employer
shall commence payment of deferred amounts not later than the later
of:
a. 60 days following close of the Plan Year in which the
Participant or former Participant attains, or would have
attained, Normal Retirement Age, or
b. 60 days following close of the Plan Year in which the
Participant separates from service.
B. Unforeseeable Emergency. In the case of an Unforeseeable
Emergency, a distribution payment to a Participant shall not exceed the
amount reasonably necessary to satisfy the emergency need. Payment
shall not be made to the extent any financial hardship occasioned by
the Unforeseeable Emergency is or may be relieved:
(i) through reimbursement or compensation by insurance or otherwise;
(ii) by liquidation of the Participant's assets, to the extent the
liquidation of such assets would not itself cause severe financial
hardship;
(iii) by cessation of deferrals under the Plan; or
(iv) by the Participant's revocation of his or her deferral election
through completion and return of an amended Participation Election
Form to the Employer.
The Employer, in its discretion, shall determine if an Unforeseeable
Emergency incurred by a Participant may be relieved through means other
than a distribution from the Plan.
C. Special Rule Benefit Does Not Exceed $3,500
Where the total amount payable to a Participant under the Plan does not
exceed $3,500, such Participant may elect to receive a lump sum
distribution from the Plan upon the Participant's Separation from
Service, notwithstanding any other provision of the Plan. Such payment
must be made to the Participant within 60 days of the Participant's
election. No additional amounts may be deferred under the Plan with
respect to any Participant who makes the election described in this
Section 6.01(C).
6.02 FORM OF DISTRIBUTION TO A PARTICIPANT
A. Value of Individual Account Does Not Exceed $3,500 - If the value of a
Participant's Individual Account does not exceed $3,500, distribution
from the Plan shall be made to the Participant in a single lump sum in
lieu of all other forms of distribution from the Plan.
B. Value of Individual Account Exceeds $3,500 - If the value of a
Participant's Individual Account exceeds $3,500, the Participant may
request in writing that his Individual Account be paid to him in one or
more of the following forms of payments: (1) in a lump sum; (2) in
installment payments over a period not to exceed the life expectancy of
the Participant or the joint and last survivor life expectancy of the
Participant and his designated Beneficiary; or (3) applied to the
purchase of an annuity contract.
6.03 DISTRIBUTIONS UPON THE DEATH OF A PARTICIPANT
A. Designation of Beneficiary - Each Participant may designate, upon a
form provided by and delivered to the Employer, one or more primary and
contingent Beneficiaries to receive all or a specified portion of his
Individual Account in the event of his death. A Participant may change
or revoke such Beneficiary designation from time to time by completing
and delivering the proper form to the Employer.
B. Payment to Beneficiary - If a Participant dies before his entire
Individual Account has been paid to him, such deceased Participant's
Individual Account shall be payable to any surviving Beneficiary
designated by the Participant, or, if no Beneficiary survives the
Participant, to the Participant's estate.
C. Written Request: When Distributed - A Beneficiary of a deceased
Participant entitled to a distribution who wishes to receive a
distribution must submit a written request to the Employer. Such
request shall be made upon a form provided by the Employer. Upon a
valid request, the Employer shall commence distribution no later than
60 days following the close of the Plan Year in which Participant dies.
However, distributions must commence no later than the later of:
1. 60 days following close of the Plan Year in which the Participant
would have attained Normal Retirement Age, or
2. 60 days following close of the Plan Year in which the Participant
separated from service.
D. Location of Participant or Beneficiary Unknown - In the event that all,
or any portion, of the distribution payable to a Participant or his
Beneficiary hereunder shall, at the expiration of 5 years after it
becomes payable, remain unpaid solely by reason of the inability of the
Employer, after sending a registered letter, return receipt requested,
to the last known address, and after further diligent effort, to
ascertain the whereabouts of such Participant or his Beneficiary, the
amount so distributable shall be forfeited and allocated in accordance
with the terms of the Plan. In the event a Participant or Beneficiary
is located subsequent to this benefit being forfeited, such benefit
shall be restored; provided, however, if all or a portion of such
amount has been lost by reason of escheat under state law, the
Participant or Beneficiary shall cease to be entitled to the portion so
lost.
6.04 FORM OF DISTRIBUTION TO BENEFICIARY
A. Value of Individual Account Does Not Exceed $3,500 - If the value of
the Participant's Individual Account does not exceed $3,500, the
Employer shall direct the Sponsor to make a distribution to the
Beneficiary in a single lump sum in lieu of all other forms of
distribution from the Plan.
B. Value of Individual Account Exceeds $3,500 - If the value of a
Participant's Individual Account exceeds $3,500, the Beneficiary may,
subject to the requirements of Section 6.05 request in writing that the
Participant's Individual Account be paid to him as follows: (1) in a
lump sum; or (2) in installment payments over a period not to exceed 15
years, or if the Beneficiary is the surviving spouse of the Participant
the life expectancy of such Beneficiary.
6.05 DISTRIBUTION REQUIREMENTS
A. General Rules
1. The requirements of this Section shall apply to any distribution of
a Participant's interest and will take precedence over any
inconsistent provisions of this Plan. Unless otherwise specified,
the provisions of this Section 6.05 apply to calendar years
beginning after December 31, 1988.
2. All distributions required under this Section 6.05 shall be
determined and made in accordance with the Income Tax Regulations
under Section 401(a)(9), including the minimum distribution
incidental benefit requirement of Section 1.401(a)(9)-2 of the
regulations.
B. Required Beginning Date - The entire interest of a Participant must be
distributed or begin to be distributed no later than the Participant's
required beginning date.
C. Limits on Distribution Periods - As of the first distribution calendar
year, distributions, if not made in a single sum, may only be made over
one of the following periods (or a combination thereof):
1. the life of the Participant,
2. the life of the Participant and a designated Beneficiary,
3. a period certain not extending beyond the life expectancy of the
Participant, or
4. a period certain not extending beyond the joint and last survivor
expectancy of the Participant and a designated Beneficiary.
D. Determination of Amount to be Distributed Each Year - If the
Participant's interest is to be distributed in other than a single sum,
the following minimum distribution rules shall apply on or after the
required beginning date:
1. Individual Account
a. If a Participant's benefit is to be distributed over (1) a
period not extending beyond the life expectancy of the
Participant or the joint life and last survivor expectancy of
the Participant and the Participant's designated Beneficiary or
(2) a period not extending beyond the life expectancy of the
designated Beneficiary, the amount required to be distribution
for each calendar year, beginning with distributions for the
first distribution calendar year, must at least equal the
quotient obtained by dividing the Participant's benefit by the
applicable life expectancy.
b. The amount to be distributed each year, beginning with
distributions for the first distribution calendar year shall not
be less than the quotient obtained by dividing the Participant's
benefit by the lesser of (1) the applicable life expectancy or
(2) if the Participant's spouse is not the designated
Beneficiary, the applicable divisor determined from the table
set forth in Q&A-4 of Section 1.401(a)(9)-2 of the Income Tax
Regulations. Distributions after the death of the Participant
shall be distributed using the applicable life expectancy in
Section 6.05(D)(1)(a) above as the relevant divisor without
regard to regulations 1.401(a)(9)-2.
c. The minimum distribution required for the Participant's first
distribution calendar year must be made on or before the
Participant's required beginning date. The minimum distribution
for other calendar years, including the minimum distribution for
the distribution calendar year in which the Employee's required
beginning date occurs, must be made on or before December 31 of
that distribution calendar year.
2. Other Forms - If the Participant's benefit is distributed in the
form of an annuity purchased from an insurance company,
distributions thereunder shall be made in accordance with the
requirements of Section 401(a)(9) of the Code and the regulations
thereunder.
E. Death Distribution Provisions
1. Distribution Beginning Before Death - If the Participant dies after
distribution of his or her interest has begun, the remaining
portion of such interest will continue to be distributed at least
as rapidly as under the method of distribution being used prior to
the Participant's death.
2. Distribution Beginning After Death - If the Participant dies before
distribution of his or her interest begins, distribution of the
Participant's entire interest shall be completed by December 31 of
the calendar year containing the fifth anniversary of the
Participant's death except to the extent that an election is made
to receive distributions in accordance with (a) or (b) below:
a. if any portion of the Participant's interest is payable to a
designated Beneficiary, distributions may be made over a period
not greater than the lesser of 15 years or the life or life
expectancy of the designated Beneficiary and such distributions
shall commence on or before December 31 of the calendar year
immediately following the calendar year in which the Participant
died;
b. if the designated Beneficiary is the Participant's surviving
spouse, the date distributions are required to begin in
accordance with (a) above shall not be earlier than the later of
(1) December 31 of the calendar year immediately following the
calendar year in which the Participant dies or (2) December 31
of the calendar year in which the Participant would have
attained age 70 1/2.
If the Participant has not made an election pursuant to this
Section 6.05(E)(2) by the time of his or her death, the
Participant's designated Beneficiary must elect the method of
distribution no later than the earlier of (1) December 31 of the
calendar year in which distributions would be required to begin
under this Section 6.05(E)(2), or (2) December 31 of the calendar
year which contains the fifteenth 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 fifteenth anniversary of the Participant's death.
3. For purposes of Section 6.05(E)(2) above, if the surviving spouse
dies before the Participant, but before payments to such spouse
begin, the provisions of Section 6.05(E)(2), with the exception of
paragraph (b) therein, shall be applied as if the surviving spouse
were the Participant.
4. For purposes of this Section 6.05(E), any amount paid to a child of
the Participant will be treated as if it had been paid to the
surviving spouse if the amount becomes payable to the surviving
spouse when the child reaches the age of majority.
5. For purposes of this Section 6.05(E), distribution of a
Participant's interest is considered to begin on the Participant's
required beginning date (or, if Section 6.05(E)(3) above is
applicable, the date distribution is required to begin to the
surviving spouse pursuant to Section 6.05(E)(2) above). If
distribution in the form of an annuity irrevocably commences to the
Participant before the required beginning date, the date
distribution is considered to begin is the date distribution
actually commences.
F. Additional Distribution Requirements
1. In the case of a distribution beginning before the death of a
Participant, such distribution shall be made in a form under which
a. the amounts payable with respect to the Participant will be paid
at times not later than the time set forth under Section
401(a)(9)(G) of the Code (relating to incidental death
benefits);
b. any amount not distributed to the Participant during his life
will be distributed after the death of the Participant at least
as rapidly as under the method of distributions being used under
subparagraph 6.05(F)(1)(a) as of the date of his death.
2. In the case of a distribution which does not begin before the death
of the Participant, the entire amount payable with respect to the
Participant will be paid during a period not to exceed 15 years or
the life expectancy of the surviving spouse if such spouse is the
Beneficiary.
3. Distribution Calendar Year - A calendar year for which a minimum
distribution is required. For distributions beginning before the
Participant's death, the first distribution calendar year is the
calendar year immediately preceding the calendar year which
contains the Participant's required beginning date. For
distributions beginning after the Participant's death, the first
distribution calendar year is the calendar year in which
distributions are required to begin pursuant to Section 6.05(E)
above.
4. Life Expectancy - Life expectancy and joint and last survivor
expectancy are computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations.
Unless otherwise elected by the Participant (or spouse, in the case
of distributions described in Section 6.05(E)(2)(b) above) by the
time distributions are required to begin, life expectancies shall
be recalculated annually. Such election shall be irrevocable as to
the Participant (or spouse) and shall apply to all subsequent
years. The life expectancy of a nonspouse Beneficiary may not be
recalculated.
5. Participant's Benefit
a. The account balance as of the last valuation date in the
valuation calendar year (the calendar year immediately preceding
the distribution calendar year) increased by the amount of any
Contributions 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.
b. Exception for second distribution calendar year. For purposes
of paragraph (a) above, if any portion of the minimum
distribution for the first distribution calendar year is made in
the second distribution calendar year on or before the required
beginning date, the amount of the minimum distribution made in
the second distribution calendar year shall be treated as if it
had been made in the immediately preceding distribution calendar
year.
6. Required Beginning Date - The required beginning date of a
Participant is the first day of April of the calendar year
following the calendar year in which the Participant attains age 70
1/2.
7. Nonincreasing Benefits - In the case of any distribution payable
over a period of more than 1 year, distributions can only be made
in substantially nonincreasing amounts (paid not less frequently
than annually).
6.06 DISTRIBUTION IN KIND
The Employer may cause any distribution under this Plan to be made either
in a form actually held in the Fund, or in cash by converting assets other
than cash into cash, or in any combination of the two foregoing ways.
SECTION SEVEN: CLAIMS PROCEDURE
7.01 FILING A CLAIM FOR PLAN DISTRIBUTIONS
A Participant or Beneficiary who desires to make a claim for the
Participant's Individual Account shall file a written request with the
Employer on a form to be furnished to him by the Employer for such purpose.
The request shall set forth the basis of the claim. The Employer is
authorized to conduct such examinations as may be necessary to facilitate
the payment of any benefits to which the Participant or Beneficiary may be
entitled under the terms of the Plan.
SECTION EIGHT: ADMINISTRATION OF THE PLAN
8.01 EMPLOYER IS ADMINISTRATOR
A. The Employer shall be the administrator unless the managing body of the
Employer designates a person or persons other than the Employer as the
administrator. The Employer shall also be the administrator if the
person or persons so designated cease to be the administrator.
B. If the managing body of the Employer designates a person or persons
other than the Employer as administrator, such person or persons shall
serve at the pleasure of the Employer and shall serve pursuant to such
procedures as such managing body may provide. Each such person shall
be bonded as may be required by law.
8.02 POWERS AND DUTIES OF THE EMPLOYER
A. The administrator may, by appointment, allocate the duties of the
Employer among several individuals or entities. Such appointments
shall not be effective until the party designated accepts such
appointment in writing.
B. The administrator shall have the authority to control and manage the
operation and administration of the Plan. The administrator shall
administer the Plan for the benefit of the Participants and their
Beneficiaries in accordance with the specific terms of the Plan.
C. The administrator shall be charged with the duties of the general
administration of the Plan, including, but not limited to, the
following:
1. To determine all questions of interpretation or policy in a manner
consistent with the Plan's documents and the administrator's
construction or determination in good faith shall be conclusive and
binding on all persons except as otherwise provided herein or by
law.
2. To determine all questions relating to the eligibility of Employees
to become or remain Participant's hereunder.
3. To compute the amounts necessary or desirable to be contributed to
the Plan.
4. To compute the amount and kind of benefits to which a Participant
or Beneficiary shall be entitled under the Plan and to direct all
disbursements under the Plan.
5. To maintain all records necessary for the administration of the
Plan.
6. To be responsible for preparing and filing such disclosure and tax
forms as may be required from time-to-time.
7. To furnish each Employee, Participant or Beneficiary such notices,
information and reports under such circumstances as may be required
by law.
D. The administrator shall have all of the powers necessary or appropriate
to accomplish his duties under the Plan, including, but not limited to,
the following:
1. To appoint and retain such persons as may be necessary to carry out
the functions of the administrator;
2. To appoint and retain counsel, specialists or other persons as the
administrator deems necessary or advisable in the administration of
the Plan;
3. To resolve all questions of administration of the Plan;
4. To establish such uniform and nondiscriminatory rules which it
deems necessary to carry out the terms of the Plan;
5. To make any adjustments in a uniform and nondiscriminatory manner
which it deems necessary to correct any arithmetical or accounting
errors which may have been made for any Plan Year; and
6. To correct any defect, supply any omission or reconcile any
inconsistency in such manner and to such extent as shall be deemed
necessary or advisable to carry out the purpose of the Plan.
8.03 EXPENSES AND COMPENSATION
All reasonable expenses of administration including, but not limited to,
those involved in retaining necessary professional assistance shall be paid
by the Employer
SECTION NINE: AMENDMENT AND TERMINATION
9.01 RIGHT OF EMPLOYER TO AMEND THE PLAN
A. The Employer shall have the right at any time and from time to time to
amend this Plan in any manner it deems necessary or advisable in order
to conform or maintain conformity of this Plan and the Individual
Accounts established under it to the requirements of Section 457 of the
Code or other applicable law or regulation, as amended from time to
time.
B. No amendment shall cause or permit any portion of Compensation deferred
pursuant to the Plan to revert or become the property of the
Participant except as permitted by Section 457 of the Code or other
applicable law or regulation. All amendments shall be in writing and
each amendment shall state its effective date.
9.02 TERMINATION OR SUSPENSION
The Employer shall have the right at any time to terminate or suspend the
Plan effective as of a date specified by written notice to Participants not
less than 30 days prior to the anticipated date of termination or
suspension. No termination or suspension shall affect the funds already
deferred under the Plan. The balances of the Individual Accounts
maintained under the Plan shall continue to be invested until distributed.
SECTION TEN: MISCELLANEOUS
10.01 STATE COMMUNITY PROPERTY LAWS
The terms and conditions of this Plan shall be applicable without regard to
the community property laws of any state.
10.02 HEADINGS
The headings of the Plan have been inserted for convenience of reference
only and are to be ignored in any construction of the provisions hereof.
10.03 GENDER AND NUMBER
Whenever any words are used herein in the masculine gender they shall be
construed as through they were also used in the feminine gender in all
cases where they would so apply, and whenever any words are used herein in
the singular form they shall be construed as through they were also used in
the plural form in all cases where they would so apply.
10.04 GENERAL UNDERTAKING OF ALL PARTIES
All parties to this Plan and all persons claiming any interest whatsoever
hereunder agree to perform any and all acts and execute any and all
documents and papers which may be necessary or desirable for the carrying
out of this Plan and any of its provisions.
10.05 AGREEMENT BINDS HEIRS, ETC.
This Plan shall be binding upon the heirs, executors, administrators,
successors and assigns, as those terms shall apply to any and all parties
hereto, present and future.
c1994 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
National Nonstandardized 401(k) Profit Sharing Plan EX-99.B14-6-ns401aa
ADOPTION AGREEMENT
_________________________________________________________________________
SECTION 1. EMPLOYER INFORMATION
Name of Employer _______________________________________________________________
Address ______________________________________________________________________
City ______________________ State ___________________________ Zip_____________
Telephone _______________ Federal Tax Identification Number ___________________
Income Tax Year End ______________________ Plan Year End_______________________
Type of Business (Check only one)
[ ] Sole Proprietorship [ ] Partnership [ ] Corporation
[ ] Other
(Specify)______________________________________________________________________
Nature of Business
(Describe)_______________________________________________________________
Plan Sequence No. ___________ (Enter 001 if this is the first qualified plan the
Employer has ever maintained, enter 002 if it is the second, etc.)
SECTION 2. EFFECTIVE DATES Check and complete Option A or B
Part A. Initial Adoption or Amendment of Plan (Check and complete Option
1 or 2):
Option A: [ ] This is the initial adoption of a profit sharing plan
by the Employer.
The Effective Date of this Plan is _____________________,
19_______.
NOTE: The effective date is usually the first day of the
Plan Year in which this Adoption Agreement is signed.
Option B: [ ] This is an amendment and restatement of an existing
profit sharing plan (a Prior Plan).
The Prior Plan was initially effective on
______________________, 19________.
The Effective Date of this amendment and restatement is
_________________, 19_______.
NOTE: The effective date is usually the first day of the
Plan Year in which this Adoption Agreement is signed.
Part B. Commencement of Elective Deferrals
Elective Deferrals may commence on _________________________
NOTE: Complete this part only if Option 1 above was selected. This
date may be no earlier than the date this Adoption Agreement is signed
because Elective Deferrals cannot be made retroactively.
SECTION 3. ELIGIBILITY REQUIREMENTS Complete Parts A, B, C, D and E
Part A. Years of Eligibility Service Requirement:
1. An Employee will be eligible to become a Contributing Participant
in the Plan (and thus be eligible to make Elective Deferrals)
after completing ______ (enter 0 or 1) Years of Eligibility
Service.
2. An Employee will be eligible to become a Participant in the Plan
for purposes of receiving an allocation of any Employer Profit
Sharing Contribution made pursuant to Section 8 of the Adoption
Agreement after completing ____ (enter 0, 1 or 2) Years of
Eligibility Service.
NOTE: If more than 1 year is selected, the immediate 100%
vesting schedule of Section 10, Part A, Option 3 will
automatically apply. If left blank, the Years of Eligibility
Service required will be deemed to be 0.
Part B. Age Requirement:
An Employee will be eligible to become a Participant in the Plan after
attaining age _____ (no more than 21). NOTE: If left blank, it will
be deemed there is no age requirement for eligibility.
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<PAGE>
Page 2
Part C. All Employees employed as of the Effective Date of this Plan who
have not otherwise met the requirements of Part A or Part B above
[ ] will [ ] will not be considered to have met those
requirements as of the Effective Date.
Part D. Class of Employees Eligible to Participate:
All Employees shall be eligible to become a Participant in the Plan,
except those checked below:
[ ] Those Employees included in a unit of Employees covered by
the terms of a collective bargaining agreement between Employee
representatives (the term "Employee representatives" does not
include any organization more than half of whose members are
Employees who are owners, officers or executives of the Employer)
and the Employer under which retirement benefits were the subject
of good faith bargaining unless the agreement provides that such
Employees are to be included in the Plan.
[ ] Those Employees who are non-resident aliens pursuant to
Section 410(b)(3)(C) of the Code and who received no earned
income from the Employer which constitutes income from sources
within the United States.
[ ] Other
(Define)______________________________________________________________________
Part E. Entry Dates
The Entry Dates for participation shall be (Choose only one Option)
Option 1: [ ] The first day of the Plan Year and the first day
of the seventh month of the Plan Year.
Option 2: [ ] Other
(Specify)_________________________________________________
_________
NOTE: If Option 2 is selected, the Entry Dates specified must be more
frequent than those described in Option 1.
SECTION 4. ELECTIVE DEFERRALS
Part A. Will Elective Deferrals be permitted under this Plan (Choose one)?
Option 1. [ ] Yes
Option 2. [ ] No
NOTE: If no option is selected, Option 2 will automatically apply.
Complete the remainder of Section 4 only if Option 1 is selected.
Part B. If Elective Deferrals are permitted under the Plan, a Contributing
Participant may elect under a salary reduction agreement to have his
Compensation reduced by an amount each pay period as described below
(Choose one):
Option 1. [ ] An amount equal to a percentage of the
Contributing Participant's Compensation from ____% to
____% in increments of 1%.
Option 2. [ ] An amount of the Contributing Participant's
Compensation not less than $________ and not more than
$________. The amount of such reduction shall be
contributed to the Plan by the Employer on behalf of the
Contributing Participant. For any taxable year, a
Contributing Participant's Elective Deferrals shall not
exceed the limit contained in Section 402(g) of the Code
in effect at the beginning of such taxable year.
Part C. Participants who claim Excess Elective Deferrals for the preceding
calendar year must submit their claims in writing to the Plan
Administrator by
____________________________________________________________.
NOTE: This date should be a date prior to the Participant's tax
return due date. If no date is selected, March 1 will be deemed to be
selected.
SECTION 5. MATCHING CONTRIBUTIONS
Part A. Will the Employer make Matching Contributions to the Plan on behalf of
Contributing Participants (Choose one)?
Option 1: [ ] Yes
Option 2: [ ] No
NOTE: If no option is selected, Option 2 will automatically apply.
Complete the remainder of Section 5 only if Option 1 is selected.
#733 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 3
Part B. Matching Contribution Formula. If the employer will make Matching
Contributions, then the amount of such Matching Contributions made on
behalf of a Contributing Participant each Plan Year shall be (Choose
one):
Option 1: [ ] An amount equal to ____% of such Contributing
Participant's Elective Deferral.
Option 2: [ ] An amount equal to the sum of ____% of the portion
of such Contributing Participant's Elective Deferral which
does not exceed ____% of the Contributing Participant's
Compensation plus ____% of the portion of such
Contributing Participant's Elective Deferral which exceeds
____% of the Contributing Participant's Compensation.
Option 3: [ ] Other Formula.
(Specify)_________________________________________________
NOTE: If Option 3 is selected, the formula specified can only allow
Matching Contributions to be made with respect to a Contributing
Participant's Elective Deferrals.
Part C. Limit on Matching Contributions. Notwithstanding the matching
contribution formula specified above, the Employer will not match a
Contributing Participant's Elective Deferrals in excess of $________
or ____% of such Contributing Participant's Compensation.
Part D. Forfeitures. Complete Part D only if Matching Contributions are not
100% vested.
1. Forfeitures of Matching Contributions shall be (Choose one):
Option 1: [ ] Allocated, after all other Forfeitures under the
Plan, to each Participant's Individual Account in the
ratio which each Participant's Compensation for the Plan
Year bears to the total Compensation of all Participants
for such Plan Year.
Option 2: [ ] Applied to reduce Employer Contributions.
NOTE: If no option is selected, Option 2 will be deemed to be
selected.
2. Forfeitures of Excess Aggregate Contributions shall be (Choose
one):
Option 1: [ ] Allocated, after all other Forfeitures under the
Plan, to each Contributing Participant's Matching
Contribution account in the ratio which each Contributing
Participant's Compensation for the Plan Year bears to the
total Compensation of all Contributing Participants for
such Plan Year. Such Forfeitures will not be allocated to
the account of any Highly Compensated Employee.
Option 2: [ ] Applied to reduce Employer Contributions.
NOTE: If no option is selected, Option 2 will be deemed to be
selected.
SECTION 6. QUALIFIED NONELECTIVE CONTRIBUTIONS
Part A. Will the Employer make Qualified Nonelective Contributions to the Plan
(Choose one)?
Option 1: [ ] Yes
Option 2: [ ] No
If the Employer will make Qualified Nonelective Contributions, then
the amount of such contribution to the Plan for each Plan Year shall
be an amount determined by the Employer.
NOTE: If no option is selected, Option 2 will automatically apply.
Complete the remainder of Section 6 only if Option 1 is selected.
Part B. Participants Entitled to Qualified Nonelective Contributions.
Allocation of Qualified Non-Elective Contributions shall be made to
the Individual Accounts of (Choose one):
Option 1: [ ] All Participants.
Option 2: [ ] Only Participants who are not Highly Compensated
Employees.
Part C. Allocation of Qualified Non-Elective Contributions.
Allocation of Qualified Non-Elective Contributions to Participants
entitled thereto shall be made (Choose one):
Option 1: [ ] In the ratio which each Participant's Compensation
for the Plan Year bears to the total Compensation of all
Participants for such Plan Year.
Option 2: [ ] In the ratio which each Participant's Compensation
not in excess of $________ for the Plan Year bears to the
total Compensation of all Participants not in excess of
$________ for such Plan Year.
#733 c1993 Universal Pensions, Inc., Brainerd, MN 56401
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Page 4
Part D. Contributions Taken into Account for the Average Contribution
Percentage Test
In computing the Average Contribution Percentage, the Employer shall
take into account, and include as Contribution Percentage Amounts any
of the following contributions, if checked, under this Plan or any
other plan of the Employer, as provided by regulations (Check if
desired):
[ ] Elective Deferrals
[ ] Qualified Nonelective Contributions
SECTION 7. QUALIFIED MATCHING CONTRIBUTIONS
Part A. Will the Employer make Qualified Matching Contributions to the Plan
(Choose one)?
Option 1: [ ] Yes
Option 2: [ ] No
NOTE: If no option is selected, Option 2 will automatically apply.
Complete the remainder of Section 7 only if Option 1 is selected.
Part B. Participants Entitled to Qualified Matching Contributions.
Qualified Matching Contributions, if made to the Plan, will be made on
behalf of (Choose one)?
Option 1: [ ] All Contributing Participants who make Elective
Deferrals.
Option 2: [ ] Only Contributing Participants who make Elective
Deferrals who are not Highly Compensated Employees.
Part C. Qualified Matching Contribution Formula.
If the Employer will make Qualified Matching Contributions, then the
amount of such Qualified Matching Contributions made on behalf of a
Contributing Participant each Plan Year shall be (Choose one):
Option 1: [ ] An amount equal to ____% such Contributing
Participant's Elective Deferral
Option 2: [ ] An amount equal to the sum of ____% of the portion
of such Contributing Participant's Elective Deferral which
does not exceed ____% of the Contributing Participant's
Compensation plus ____% of the portion of such
Contributing Participant's Elective Deferral which exceeds
____% of the Contributing Participant's Compensation.
Option 3: [ ] Other Formula.
(Specify)_________________________________________________
Part D. Limit on Qualified Matching Contributions. Notwithstanding the
Qualified Matching Contribution formula specified above, the Employer
will not match a Contributing Participant's Elective Deferrals in
excess of $________ or ____% of such Contributing Participant's
compensation.
Part E. Actual Deferral Percentage Test and Qualified Matching Contributions
Qualified Matching Contributions under this Plan (or any other plan of
the Employer, as provided by regulations) [ ] will [ ] will
not be taken into account as Elective Deferrals for purposes of
calculating the Actual Deferral Percentages. NOTE: If no option is
selected, Qualified Matching Contributions will not be used for
calculating the Actual Deferral Percentage test.
SECTION 8. EMPLOYER PROFIT SHARING CONTRIBUTION AND ALLOCATION FORMULA
Part A. Contribution Formula:
For each Plan Year the Employer will contribute an Amount to be
determined from year to year.
Part B. Allocation Formula: Check and complete Option 1 or 2
Option 1: [ ] Pro Rata Formula. Employer Contributions and
Forfeitures shall be allocated to the Individual Accounts
of qualifying Participants in the ratio that each
qualifying Participant's Compensation for the Plan Year
bears to the total Compensation of all qualifying
Participants for the Plan Year.
Option 2: [ ] Integrated Formula. Employer Contributions and
Forfeitures shall be allocated as follows
(Start with Step 3 if this Plan is not a Top-Heavy Plan):
Step 1. Employer Contributions and Forfeitures shall
first be allocated pro rata to qualifying
Participants in the manner described in Section 8,
Part B, Option 1. The percent so allocated shall
not exceed 3% of each qualifying Participant's
Compensation.
#733 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 5
Step 2. Any Employer Contributions and Forfeitures
remaining after the allocation in Step 1 shall be
allocated to each qualifying Participant's
Individual Account in the ratio that each qualifying
Participant's Compensation for the Plan Year in
excess of the integration level bears to all
qualifying Participants' Compensation in excess of
the integration level, but not in excess of 3%.
Step 3. Any Employer Contributions and Forfeitures
remaining after the allocation in Step 2 shall be
allocated to each qualifying Participant's
Individual Account in the ratio that the sum of each
qualifying Participant's total Compensation and
Compensation in excess of the integration level
bears to the sum of all qualifying Participants'
total Compensation and Compensation in excess of the
integration level, but not in excess of the profit
sharing maximum disparity rate as described in
Section 3.01(B)(3) of the Plan.
Step 4. Any Employer Contributions and Forfeitures
remaining after the allocation in Step 3 shall be
allocated pro rata to qualifying Participants in the
manner described in Section 8, Part B, Option 1.
The integration level shall be (Choose one):
Option 1: The Taxable Wage Base [ ]
Option 2: $________ [ ] (a
dollar amount less than the Taxable Wage Base)
Option 3: ______% of the Taxable Wage Base [ ]
NOTE: If no box is checked, the integration level shall be the Taxable Wage
Base.
SECTION 9. COMPENSATION Complete Parts A, B, C and D
Part A. Compensation shall be determined over the following applicable period
(Choose one):
Option 1: the Plan Year [ ]
Option 2: the calendar year ending with or within the plan [ ]
year
Part B. Compensation [ ] shall [ ] shall 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(a)(8), 402(h) and 403(b) of the Code.
Part C. Compensation [ ] does [ ] does not include any earnings
paid prior to the date the Employee became a Participant in the Plan.
Part D. Compensation shall not include the following (e.g., bonuses, overtime,
etc.) (Complete if applicable)
________________________________________________________________________________
SECTION 10. VESTING Complete Parts A, B and C
Part A. A Participant shall become Vested in his or her Individual Account
derived from Employer Contributions made pursuant to Section 8 of the
Adoption Agreement (and Forfeitures thereof) as follows (Choose one):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
YEARS OF VESTED PERCENTAGE
VESTING SERVICE Option 1 [ ] Option 2 [ ] Option 3 [ ] Option 4 [ ] Option 5 [ ] (Complete if Chosen)
- --------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
1 0% 0% 100% 0% ____%
2 0% 20% 100% 0% ____%
3 0% 40% 100% 20% ____% (not less than 20%)
4 0% 60% 100% 40% ____% (not less than 40%)
5 100% 80% 100% 60% ____% (not less than 60%)
6 100% 100% 100% 80% ____% (not less than 80%)
7 100% 100% 100% 100% ____% (not less than 100%)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: If no selection is made, Option 3 100% vesting will be deemed to be
selected.
#733 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 6
Part B. A Participant shall become Vested in his or her Individual Account
derived from Matching Contributions made pursuant to Section 5 of this
Adoption Agreement as follows (Choose one if Matching Contributions
will be made):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
YEARS OF VESTED PERCENTAGE
VESTING SERVICE Option 1 [ ] Option 2 [ ] Option 3 [ ] Option 4 [ ] Option 5 [ ] (Complete if Chosen)
- --------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
1 0% 0% 100% 0% ____%
2 0% 20% 100% 0% ____%
3 0% 40% 100% 20% ____% (not less than 20%)
4 0% 60% 100% 40% ____% (not less than 40%)
5 100% 80% 100% 60% ____% (not less than 60%)
6 100% 100% 100% 80% ____% (not less than 80%)
7 100% 100% 100% 100% ____% (not less than 100%)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: If no selection is made, Option 3 100% vesting will be deemed to be
selected.
Part C. All of an Employee's Years of Vesting Service with the Employer are
counted to determine the vesting percentage in the Participant's
Individual Account except:
[ ] Years of Vesting Service before the Employee reaches age 18.
[ ] Years of Vesting Service before the Employer maintained this
Plan or a predecessor plan.
SECTION 11. NORMAL RETIREMENT AGE
The Normal Retirement Age under the Plan is age ______ (not to exceed
65).
NOTE: If left blank, the Normal Retirement Age will be deemed to be
age 59 1/2.
SECTION 12. HOURS REQUIRED Complete Parts A and B
Part A. ________ Hours of Service (no more than 1,000) shall be required to
constitute a Year of Vesting Service or a Year of Eligibility Service.
Part B. ________ Hours of Service (no more than 500) must be exceeded to avoid
a Break in Vesting Service or a Break in Eligibility Service.
NOTE: The number of hours in Part A must be greater than the number of hours in
Part B.
SECTION 13. METHOD OF DETERMINING SERVICE
Service will be determined on the basis of the method selected below.
Only one method may be selected. The method selected will be applied
to all Employees covered under the Plan. (Check Option A, B, C or
D):
Option A. [ ] On the basis of actual hours for which an
Employee is paid or entitled to payment.
Option B. [ ] On the basis of days worked. An Employee
will be credited with 10 Hours of Service if under Section
1.20 of the Plan such Employee would be credited with at
least 1 Hour of Service during the day.
Option C. [ ] On the basis of weeks worked. An Employee
will be credited with 45 Hours of Service if under Section
1.20 of the Plan such Employee would be credited with at
least 1 Hour of Service during the week.
Option D. [ ] On the basis of months worked. An Employee
will be credited with 190 Hours of Service if under
Section 1.20 of the Plan such Employee would be credited
with at least 1 Hour of Service during the month.
NOTE: If left blank, Option A will be deemed selected.
#733 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 7
SECTION 14. OTHER OPTIONS Answer "Yes" or "No" to each of the following
questions by checking the appropriate box. If a box is not checked
for a question, the answer will be deemed to be "No."
A. Loans: Will loans to Participants pursuant to Section 6.08 of
the Plan be permitted? [ ] Yes [ ] No
B. Participant Direction of Investments: Will Participants be
permitted to direct the investment of their Individual Accounts
pursuant to Section 5.14 of the Plan? [ ] Yes [ ] No
C. In-Service Withdrawals: Will Participants be permitted to make
withdrawals during service pursuant to Section 6.01(A)(3) of the
Plan? [ ] Yes [ ] No
NOTE: If the Plan is being adopted to amend and replace a Prior
Plan which permitted in-service withdrawals you must answer
"Yes."
Check here if such withdrawals will be permitted only on account
of hardship [ ]
D. Last Day Requirement for Profit Sharing Contribution: Must a
Participant be an Employee of the Employer on the last day of the
Plan Year in order to qualify for an Employer Contribution made
pursuant to Section 8 of the Adoption Agreement (i.e., profit
sharing contributions)? [ ] Yes [ ] No
E. Last Day Requirement for Matching Contributions: Must a
Participant be an Employee of the Employer on the last day of the
Plan Year in order to qualify for a Matching Contribution made
pursuant to Section 5 of the Adoption Agreement?
[ ] Yes [ ] No
F. Nondeductible Employee Contributions: Will Participants be
permitted to make Nondeductible Employee Contributions pursuant
to Section 11.304 of the Plan? [ ] Yes [ ] No
G. Hardship Withdrawals: Will Participants be permitted to withdraw
Elective Deferrals on account of hardship pursuant to Section
11.503 of the Plan? [ ] Yes [ ] No
SECTION 15. JOINT AND SURVIVOR ANNUITY
Part A. Retirement Equity Act Safe Harbor:
Will the safe harbor provisions of Section 6.05(F) of the Plan apply
(Choose only one Option)?
Option 1: [ ] Yes
Option 2: [ ] No
NOTE: You must select "No" if you are adopting this Plan as an
amendment and restatement of a Prior Plan that was subject to the
joint and survivor annuity requirements.
Part B. Survivor Annuity Percentage: (Complete only if your answer in Section
15, Part A is a "No.")
The survivor annuity portion of the Joint and Survivor Annuity shall
be a percentage equal to ____% (at least 50% but no more than 100%) of
the amount paid to the Participant prior to his or her death.
#733 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 8
SECTION 16. RELIANCE
The Employer may not rely on an opinion letter issued by the National
Office 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 Employer must
apply to the appropriate Key District office for a determination
letter.
This Adoption Agreement may be used only in conjunction with Basic
Plan Document No. 03.
SECTION 17. EMPLOYER SIGNATURE Important: Please read before signing
I am an authorized representative of the Employer named above and I
state the following:
1. I acknowledge that I have relied upon my own advisors regarding
the completion of this Adoption Agreement and the legal and tax
implications of adopting this Plan.
2. I understand that my failure to properly complete this Adoption
Agreement may result in disqualification of the Plan.
3. I understand that the Prototype Sponsor will inform me of any
amendments made to the Plan and will notify me should it
discontinue or abandon the Plan.
4. I have received a copy of this Adoption Agreement and the
corresponding Basic Plan Document.
Signature for Employer______________________Date Signed______________
Type Name_____________________________________________________________
SECTION 18. TRUSTEE OR CUSTODIAN Check and complete only one option
Option A. [ ] Financial Organization as Trustee or
Custodian
Check One: [ ] Custodian, [ ] Trustee without full trust
powers, or [ ] Trustee with full trust powers
NOTE: Custodian will be deemed selected if no box is checked.
Financial Organization_______________________________________________
Signature___________________________Type Name________________________
Option B. [ ] Individual Trustee(s)
Signature______________________Signature_____________________________
Type Name______________________Type Name_____________________________
SECTION 19. PROTOTYPE SPONSOR
Name of Prototype Sponsor________________________________________
Address________________________________________________________
Telephone Number_____________________________________________________
SECTION 20. LIMITATION ON ALLOCATIONS - More Than One Plan
If you maintain or ever maintained another qualified plan in which any
Participant in this Plan is (or was) a Participant or could become a
Participant, you must complete this section. You must also complete
this section if you maintain a welfare benefit fund, as defined in
Section 419(e) of the Code, or an individual medical account, as
defined in Section 415(l)(2) of the Code, under which amounts are
treated as annual additions with respect to any Participant in this
Plan.
#733 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 9
Part A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a master or
prototype plan:
1. [ ] The provisions of Section 3.05(B)(1) through 3.05(B)(6)
of the Plan will apply as if the other plan were a master or
prototype plan.
2. [ ] Other method. (Provide the method under which the plans
will limit total annual additions to the maximum permissible
amount, and will properly reduce any excess amounts, in a
manner that precludes Employer discretion.)__________________
_______________________________________________________
Part B. If the Participant is or has ever been a participant in a defined
benefit plan maintained by the Employer, the Employer will provide
below the language which will satisfy the 1.0 limitation of Section
415(e) of the Code. Such language must preclude Employer discretion.
(Complete)___________________________________________________________
Part C. Compensation will mean all of each Participant's (Choose one):
Option 1: [ ] Section 3121(a) wages
Option 2: [ ] Section 3401(a) wages
Option 3: [ ] 415 safe-harbor compensation
NOTE: If no box is checked, Option 2 will be deemed to be selected.
Part D. The limitation year is the following 12-consecutive month
period:_______________________________________
SECTION 21. ELECTIVE DEFERRALS BASED EXCLUSIVELY ON BONUSES
May a Contributing Participant base Elective Deferrals on cash bonuses
that, at the Contributing Participant's election, may be contributed
to the Plan or received by the Contributing Participant in cash
(Choose one)?
Option 1: [ ] Yes
Option 2: [ ] No
NOTE: Answer "Yes" only if Elective Deferrals will be based
exclusively on cash bonuses rather than payroll deductions. If no
option is selected, Option 2 will automatically apply.
#733 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
401(k) Nonstandardized Profit Sharing Plan EX-99.B14-7-ns401gs
SUMMARY PLAN DESCRIPTION
___________________________________________________________________________
GENERAL INFORMATION SHEET
PLAN INFORMATION Your Employer has adopted a Nonstandardized 401(k) Profit
Sharing Plan for the benefit of you and your co-workers. This
Plan is designed to help you meet your financial needs during
your retirement years.
Your Employer must follow certain rules and requirements to
maintain this Plan. This General Information Sheet provides
you with some of the details of the Plan. Use this information
in conjunction with the Summary Plan Description (SPD) Booklet
which accompanies this General Information Sheet.
Plan Name______________________________________
Plan Number____________________________________
Plan Year End___________________________________
EFFECTIVE DATES The effective date of this Plan is ___________.
If this is an amendment and restatement of a prior Plan, the
effective date of the prior Plan is___________________.
You may begin making Employee 401(k) Contributions on
_______________.
SERVICE AND AGE See Section 3, Part 1, of the SPD Booklet.
REQUIREMENTS You will become eligible to participate in
the Plan after you satisfy the age and service requirements
for the respective contributions.
The Years of Service required for you to make 401(k) Employee
Contributions are __________.
The Years of Service required for you to receive Employer
Contributions, if any, are _________.
The age required for you to become a Participant is
__________.
Will all employees who are employed as of the Effective Date
be considered as having met the eligibility requirements?
[ ] Yes [ ] No
ELIGIBLE EMPLOYEES See Section 3, Part 1, of the SPD Booklet.
All Employees shall become eligible to participate in the
Plan, except the following (if checked):
[ ] Those Employees covered by the terms of a
collective bargaining agreement (e.g., union agreement)
unless the collective bargaining agreement specifies that
the Employees covered thereby will participate;
[ ] Those Employees who are nonresident aliens and
receive no earned income from the Employer within the
United States; and/or
[ ] Other (Specify) _________________________________.
ENTRY DATES See Section 3, Part 2, of the SPD Booklet.
The Entry Dates upon which you can begin plan participation
are __________________________.
HOURS OF SERVICE See Section 3, Parts 3 and 4, of the SPD Booklet.
AND BREAK IN
SERVICE The number of Hours of Service you must be employed to
complete a Year of Service is ________.
The number of Hours of Service you must be employed to
avoid a Break in Service is _________.
#747 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 2
METHOD OF See Section 3, Part 4, of the SPD Booklet.
DETERMINING Service will be determined on the basis of:
SERVICE
[ ] Actual hours worked.
[ ] Days worked. You will receive credit for 10 hours
of service for each day you are credited with at least one
hour of service.
[ ] Weeks worked. You will receive credit for 45
hours of service for each week you are credited with at
least one hour of service.
[ ] Months worked. You will receive credit for 190
hours of service for each month you are credited with at
least one hour of service.
EMPLOYEE 401(k) See Section 4, Part 1, of the SPD Booklet.
CONTRIBUTIONS Employee 401(k) Contributions are allowed under this Plan.
To begin making Employee 401(k) Contributions on the next Plan
Entry Date, you must complete and sign a Payroll Deduction
Form. Once you become eligible to participate in the Plan,
your Employer will provide you with a Payroll Deduction Form
to be completed before the next Plan Entry Date.
To change the amount of your Employee 401(k) Contributions,
you must complete and sign a revised Payroll Deduction Form.
Your Employer allows you to change your Payroll Deduction Form
on a _______________________________________________(state
frequency) basis.
You may discontinue making Employee 401(k) Contributions
__________________________(state frequency) by indicating so
on a Payroll Deduction Form, signing it and giving it to the
Plan Administrator.
By completing a Payroll Deduction Form, you agree to make
Employee 401(k) Contributions to this Plan. Your compensation
will be reduced each pay period by an amount based upon the
formula selected below:
[ ] An amount equal to a percentage of your
Compensation from _____% to _____% in increments of 1%; or
[ ] An amount of your Compensation not less than
$__________ nor more than $__________.
Instead of making Employee 401(k) Contributions each pay
period through payroll deduction, Employee 401(k)
Contributions may be based exclusively upon cash bonuses.
[ ] Yes [ ] No
If you make an excess Employee 401(k) Contribution to the
Plan, you must submit in writing for the return of the excess
to the Plan Administrator no later than _________________
(specify) following termination of the Plan Year in which you
made the excess deferral.
MATCHING See Section 4, Part 2, of the SPD Booklet.
CONTRIBUTIONS Your Employer will make Matching Contributions on behalf of
Employees making Employee 401(k) Contributions. [ ] Yes
[ ] No
If Matching Contributions will be made under this Plan, your
Employer will make contributions on behalf of the Employees
making Employee 401(k) Contributions based upon the formula
selected below:
[ ] An amount equal to _______% of your Employee
401(k) Contribution;
[ ] An amount equal to the sum of ______% of the
portion of your Employee 401(k) Contributions which do not
exceed ________% of your Compensation plus _______% of the
portion of your Employee 401(k) Contributions which exceed
________% of your Compensation.
#747 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 3
[ ] Other Formula: (Specify) ________________________
Limits apply to Matching Contributions. Matching Contributions
will not be made on your Employee 401(k) Contributions in
excess of $__________ or _______% of your Compensation.
For any Plan Year that a Matching Contribution is made, you
will be entitled to share in that contribution if you satisfy
the following conditions:
1. You are a Participant; and
2. You are employed on the last day of the Plan Year.
[ ] Yes [ ] No
Forfeitures of Matching Contributions will be:
[ ] Allocated to the Individual Accounts of
Participants.
[ ] Used to reduce future Employer Contributions.
EMPLOYER See Section 4, Part 3, of the SPD Booklet.
CONTRIBUTIONS Each Plan Year the Employer will contribute to the Plan an
amount from 0 to 15% of the total Compensation of all eligible
Participants. The amount of the Contribution will be
determined from year to year by the managing body of the
Employer.
The Employer Contribution will be allocated to each
Participant's Individual Account under the formula checked
below:
[ ] Pro Rata Formula. Under this formula, each
qualifying Participant's Individual Account will receive a
pro rata allocation. This pro rata allocation is based on
the qualifying Participant's Compensation in relation to
the total Compensation of all qualifying Participants.
[ ] Integrated Formula. Under this formula, each
qualifying Participant's Individual Account will receive a
base contribution. In addition, qualifying Participants
will receive an additional allocation (called an excess
contribution) based on their Compensation above the
Integration Level. The Integration Level will
be_________________________.
For any Plan Year that an Employer Contribution is made, you
will be entitled to share in that contribution (and, thus, be
a qualifying Participant) if you satisfy the following
conditions:
1. You are a Participant;
2. You worked at least _____________ (specify) Hours of
Service during the Plan Year; and
3. You are employed on the last day of the Plan Year.
[ ] Yes [ ] No
COMPENSATION See Section 4, Part 1, of the SPD Booklet.
Compensation for each Participant will be determined over the
following period:
[ ] the Plan Year.
[ ] the calendar year ending with or within the Plan
Year.
Compensation will mean: (Select one):
[ ] All of a Participant's Compensation.
[ ] Only Compensation paid to the Employee after
becoming a Participant.
Compensation does not include the following (e.g., bonuses,
overtime, etc.):_________________.
Compensation [ ] will [ ] will not include Employee
401(k) Contributions made according to a Payroll Deduction
Form.
VESTING See Section 5, Parts 8, 9 and 10, of the SPD Booklet.
You will always be fully vested in all contributions derived
from Employee 401(k) Contributions, Qualified Nonelective
Contributions (if any), Qualified Matching Contributions (if
any) and Nondeductible Employee Contributions (if allowed).
#747 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 4
You will be vested in your Individual Account derived from
Profit Sharing Contributions and forfeitures thereof according
to the schedule selected below:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
YEARS OF VESTED PERCENTAGE
VESTING SERVICE Option 1 [ ] Option 2 [ ] Option 3 [ ] Option 4 [ ] Option 5 [ ] (Complete if Chosen)
- --------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
1 0% 0% 100% 0% ____%
2 0% 20% 100% 0% ____%
3 0% 40% 100% 20% ____% (not less than 20%)
4 0% 60% 100% 40% ____% (not less than 40%)
5 100% 80% 100% 60% ____% (not less than 60%)
6 100% 100% 100% 80% ____% (not less than 80%)
7 100% 100% 100% 100% ____% (not less than 100%)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: If no selection is made, Option 3 100% vesting will be deemed to be
selected.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
YEARS OF VESTED PERCENTAGE
VESTING SERVICE Option 1 [ ] Option 2 [ ] Option 3 [ ] Option 4 [ ] Option 5 [ ] (Complete if Chosen)
- --------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
1 0% 0% 100% 0% ____%
2 0% 20% 100% 0% ____%
3 0% 40% 100% 20% ____% (not less than 20%)
4 0% 60% 100% 40% ____% (not less than 40%)
5 100% 80% 100% 60% ____% (not less than 60%)
6 100% 100% 100% 80% ____% (not less than 80%)
7 100% 100% 100% 100% ____% (not less than 100%)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
All of your years of service will be counted for vesting
except the following (if checked):
[ ] Years of Service before you turn age 18.
[ ] Years of Service before the Employer maintained this
Plan or a predecessor plan.
NORMAL See Section 5, Part 1, of SPD Booklet.
RETIREMENT AGE Normal Retirement Age under the Plan is________.
OTHER OPTIONS See Section 4, 5 and 7 of the SPD Booklet.
Can you receive loans from the Plan? If "yes," see attached
Loan Disclosure. [ ] Yes [ ] No
Can you direct the investment of your Individual
Account? [ ] Yes [ ] No
Can you direct the investment of your contributions other than
Employee 401(k) Contributions? [ ] Yes [ ] No
Can you take withdrawals of contributions other than Employee
401(k) Contributions during service?
[ ] Yes, but withdrawals are limited to hardship
circumstances. [ ] Yes [ ] No
Can you make Nondeductible Employee Contributions?
[ ]Yes [ ] No
Can you withdraw Employee 401(k) Contributions on account of
hardship? [ ] Yes [ ] No
#747 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 5
REA SAFE HARBOR/ See Section 5, Part 3, of the SPD Booklet.
JOINT AND SURVIVOR Do the REA Safe Harbor provisions of the Plan apply?
ANNUITY [ ]Yes [ ] No
If the REA Safe Harbor provisions do not apply, the survivor
annuity portion of the Joint and Survivor Annuity will be a
percentage equal to ______% of the amount paid to the
Participant prior to his or her death.
EMPLOYER Name ______________________________________________
INFORMATION Address ____________________________________________
Business Telephone___________________________________
Employer Identification Number________________________
Employer's Income Tax Year End_______________________
PLAN ADMINISTRATOR The Employer is usually the Plan Administrator. This
section will be completed only if the Employer will not be the
Plan Administrator.
Name (if not the Employer) _____________________________
Address______________________________________________
Business Telephone____________________________________
AGENT FOR SERVICE Name________________________________________________
OF LEGAL PROCESS Address______________________________________________
NOTE: The Agent for Service of Legal Process is the person
upon whom any legal papers can be served. Service of legal
process may be made upon a Plan Trustee or the Employer/Plan
Administrator.
TRUSTEE(S) Name______________________________________________
Title______________________________________________
Business Address____________________________________
Name______________________________________________
Title_______________________________________________
Business Address_____________________________________
Name______________________________________________
Title_______________________________________________
Business Address_____________________________________
#747 c1993 Universal Pensions, Inc., Brainerd, MN 56401
National Nonstandardized Money Purchase Pension Plan EX-99.B14-8-nsmppaa
ADOPTION AGREEMENT
- -------------------------------------------------------------------------------
SECTION 1. EMPLOYER INFORMATION
Name of Employer: ______________
Address: ________________
City: ______________________ State: __ Zip: 14031-1490
Telephone ____________ Federal Tax Identification Number _______
Income Tax Year End September 30 Plan Year End June 30
Type of Business (Check only one) [ ] Sole Proprietorship
[ ] Partnership [ X ] Corporation
[ ] Other (Specify)________________________________________________
Nature of Business (Describe)_________________________________________
Plan Sequence No. 001 (Enter 001 if this is the first
qualified plan the Employer has ever maintained, enter 002 if it is
the second, etc.)
SECTION 2. EFFECTIVE DATES Check and complete Option A or B
Option A: [ ] This is the initial adoption of a money purchase
pension plan by the Employer.
The Effective Date of this Plan is , 19__.
NOTE: The effective date is usually the first day of the
Plan Year in which this Adoption Agreement is signed.
Option B: [ X] This is an amendment and restatement of an
existing money purchase pension plan (a Prior Plan).
The Prior Plan was initially effective on June 15 ,
19 74 .
The Effective Date of this amendment and restatement is
July 1 , 19 92 .
NOTE: The effective date is usually the first day of the
Plan Year in which this Adoption Agreement is signed.
SECTION 3. ELIGIBILITY REQUIREMENTS Complete Parts A, B and C
Part A. Years of Eligibility Service Requirement:
An Employee will be eligible to become a Participant in the Plan after
completing 1 (one) (enter 0, 1 or 2) Years of Eligibility Service.
NOTE: If more than 1 year is selected, the immediate 100% vesting
schedule of Section 6, Part A, Option 3 will automatically apply. If
left blank, the Years of Eligibility Service required will be deemed
to be 0.
Part B. Age Requirement:
An Employee will be eligible to become a Participant in the Plan after
attaining age 21 (no more than 21). NOTE: If left blank, it will
be deemed there is no age requirement for eligibility.
Part C. All Employees employed as of the Effective Date of this Plan who
have not otherwise met the requirements of Part A or Part B above
[ ] will [ X] will not be considered to have met those
requirements as of the Effective Date.
Part D. Class of Employees Eligible to Participate:
All Employees shall be eligible to become a Participant in the Plan,
except those checked below:
[ ] Those Employees included in a unit of Employees covered by
the terms of a collective bargaining agreement between Employee
representatives (the term "Employee representatives" does not
include any organization more than half of whose members are
Employees who are owners, officers or executives of the Employer)
and the Employer under which retirement benefits were the subject
of good faith bargaining unless the agreement provides that such
Employees are to be included in the Plan.
[ ] Those Employees are non-resident aliens pursuant to Section
410(b)(3)(C) of the Code and who received no earned income from
the Employer which constitutes income from sources within the
United States.
[ ] Other (Define)___________________________________________
_________________________________________________________________
Part E. Entry Dates
The Entry Dates for participation shall be (Choose only one Option)
Option 1: [X] The first day of the Plan Year and the first day
of the seventh month of the Plan Year.
Option 2: [ ] Other (Specify)___________________________________
NOTE: If Option 2 is selected, the Entry Dates specified must
be more frequent than those described in Option 1.
SECTION 4. EMPLOYER CONTRIBUTION FORMULA Check and complete either Option A
or B
Part A. Option 1: [X] Nonintegrated Formula: For each Plan Year the
Employer will contribute for each qualifying Particiant an
amount equal to 4 (four) % (not to exceed 25%) of the
qualifying Participant's Compensation for the Plan Year.
Option 2: [ ] Integrated Formula: For each Plan Year, the
Employer will contribute for each qualifying Participant
an amount equal to the sum of the amounts determined in
Step 1 and Step 2:
Step 1. An amount equal to ______% (the base contribution
percentage) of the Participant's Compensation for
the Plan Year up to the integration level; plus
Step 2. An amount equal to ______% (not to exceed the base
contribution percentage by more than the lesser
of: (1) the base contribution percentage, or (2)
the money purchase maximum disparity rate as
described in Section 3.01(B)(3) of the Plan) of
such Participant's Compensation for the Plan Year
in excess of the integration level.
The integration level shall be (Choose one):
Option 1: [ ] The Taxable Wage Base
Option 2: [ ] $________ (a dollar amount less than the Taxable
Wage Base)
Option 3: [ ] ______% of the Taxable Wage Base
NOTE: If no box is checked, the integration level shall
be the Taxable Wage Base.
SECTION 5. COMPENSATION Complete Parts A, B, C and D
Part A. Compensation shall be determined over the following applicable
period (Choose one):
Option 1: [X] the Plan Year
Option 2: [ ] the calendar year ending with or within the plan
year
Part B. Compensation [X] shall include [ ] shall not include
Employer Contributions made pursuant to a salary reduction agreement
which are not includible in the gross income of the Employee under
Section 125, 402(a)(8), 402(h) and 403(b) of the Code.
Part C. Compensation [ ] does [X] does not include any earnings
paid prior to the date the Employee became a Participant in the Plan.
Part D. Compensation shall not include the following (e.g., bonuses,
overtime, etc.). (Complete if applicable)
______________________________________________________________________
SECTION 6. VESTING Complete Parts A and B
Part A. A Participant shall become Vested in his or her Individual
Account as follows (Choose one):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
YEARS OF VESTED PERCENTAGE
VESTING SERVICE Option 1 [ ] Option 2 [ ] Option 3 [ ] Option 4 [ ] Option 5 [ ] (Complete if Chosen)
- --------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
1 0% 0% 100% 0% ____%
2 0% 20% 100% 0% ____%
3 0% 40% 100% 20% ____% (not less than 20%)
4 0% 60% 100% 40% ____% (not less than 40%)
5 100% 80% 100% 60% ____% (not less than 60%)
6 100% 100% 100% 80% ____% (not less than 80%)
7 100% 100% 100% 100% ____% (not less than 100%)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Part B. All of an Employee's Years of Vesting Service with the Employer are
counted to determine the vesting percentage in the Participant's
Individual Account except:
[ ] Years of Vesting Service before the Employee reaches age 18.
[ ] Years of Vesting Service before the Employer maintained this
Plan or a predecessor plan.
SECTION 7. NORMAL RETIREMENT AGE
The Normal Retirement Age under the Plan is age (not to exceed 65).
NOTE: If left blank, the Normal Retirement Age will be deemed to be age 59 1/2.
SECTION 8. HOURS REQUIRED Complete Parts A and B
Part A. Hours of Service (no more than 1,000) shall be required to
constitute a Year of Vesting Service or a Year of Eligibility Service.
Part B. Hours of Service (no more than 500) must be exceeded to
avoid a Break in Vesting Service or a Break in Eligibility Service.
NOTE: The number of hours in Part A must be greater than the number
of hours in Part B.
SECTION 9. METHOD OF DETERMINING SERVICE
Service will be determined on the basis of the method selected below.
Only one method may be selected. The method selected will be applied
to all Employees covered under the Plan. (Check Option A, B C or D):
Option A. [ ] On the basis of actual hours for which an
Employee is paid or entitled to payment.
Option B. [ ] On the basis of days worked. An Employee
will be credited with 10 Hours of Service if under Section
1.20 of the Plan such Employee would be credited with at
least 1 Hour of Service during the day.
Option C. [ ] On the basis of weeks worked. An Employee
will be credited with 45 Hours of Service if under Section
1.20 of the Plan such Employee would be credited with at
least 1 Hour of Service during the week.
Option D. [ ] On the basis of months worked. An Employee
will be credited with 190 Hours of Service if under
Section 1.20 of the Plan such Employee would be credited
with at least 1 Hour of Service during the month.
NOTE: If left blank, Option A will be deemed selected.
SECTION 10. OTHER OPTIONS Answer "Yes" or "No" to each of the following
questions by checking the appropriate box. If a box is not checked
for a question, the answer will be deemed to be "No."
A. Loans: Will loans to Participants pursuant to Section 6.08 of
the Plan be permitted? [ ] Yes [ ] No
B. Participant Direction of Investments: Will Participants be
permitted to direct the investment of their Individual Accounts
pursuant to Section 5.14 of the Plan?
[ ] Yes [ ] No
C. Last Day Requirement: Must a Participant be an Employee of the
Employer on the last day of the Plan Year in order to qualify for
an Employer Contribution?
[ ] Yes [ ] No
SECTION 11. JOINT AND SURVIVOR ANNUITY
The survivor annuity portion of the Joint and Survivor Annuity shall
be a percentage equal to ______% (at least 50% but no more than 100%)
of the amount paid to the Participant prior to his or her death.
SECTION 12. ALLOCATION OF FORFEITURES Choose Option A or B
Option A. [ ] Forfeitures shall be used to reduce future
Employer Contributions.
Option B. [ ] Forfeitures shall be allocated to the Individual
Accounts of qualifying Participants pursuant to Section
3.01(C)(2) of the Plan.
NOTE: If no option is selected, Option A will automatically apply.
SECTION 13. RELIANCE
The Employer may not rely on an opinion letter issued by the National
Office 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 Employer must
apply to the appropriate Key District office for a determination
letter.
This Adoption Agreement may be used only in conjunction with Basic
Plan Document No. 03.
SECTION 14. EMPLOYER SIGNATURE Important: Please read before signing
I am an authorized representative of the Employer named above and I
state the following:
1. I acknowledge that I have relied upon my own advisors regarding
the completion of this Adoption Agreement and the legal and tax
implications of adopting this Plan.
2. I understand that my failure to properly complete this Adoption
Agreement may result in disqualification of the Plan.
3. I understand that the Prototype Sponsor will inform me of any
amendments made to the Plan and will notify me should it
discontinue or abandon the Plan.
4. I have received a copy of this Adoption Agreement and the
corresponding Basic Plan Document.
Signature for Employer__________________Date Signed______________
Type Name_______________________________________________________
SECTION 15. TRUSTEE OR CUSTODIAN Check and complete only one option
Option A. [ ] Financial Organization as Trustee or Custodian
Check One: [ ] Custodian, [ ] Trustee without full trust
powers, or [ ] Trustee with full trust powers
Financial Organization_______________________________________
Signature______________________________________________________
Type Name______________________________________________________
Option B [ ] Individual Trustee(s)
Signature ___________________ Signature__________________________
Type Name____________________ Type Name_________________________
SECTION 16. PROTOTYPE SPONSOR
Name of Prototype Sponsor_______________________________________
Address__________________________________________________________
Telephone Number_________________________________________________
SECTION 17. LIMITATION ON ALLOCATIONS - More Than One Plan
If you maintain or ever maintained another qualified plan in which any
Participant in this Plan is (or was) a Participant or could become a
Participant, you must complete this section. You must also complete
this section if you maintain a welfare benefit fund, as defined in
Section 419(e) of the Code, or an individual medical account, as
defined in Section 415(l)(2) of the Code, under which amounts are
treated as annual additions with respect to any Participant in this
Plan.
Part A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a master or
prototype plan:
1. [ ] The provisions of Section 3.05(B)(1) through
3.05(B)(6) of the Plan will apply as if the other plan were a
master or prototype plan.
2. [ ] Other method. (Provide the method under which the
plans will limit total annual additions to the maximum
permissible amount, and will properly reduce any excess
amounts, in a manner that precludes Employer
discretion.)__________________________________________________
Part B. If the Participant is or has ever been a participant in a defined
benefit plan maintained by the Employer, the Employer will provide
below the language which will satisfy the 1.0 limitation of Section
415(e) of the Code. Such language must preclude Employer discretion.
(Complete)________________________________________________
Part C. Compensation will mean all of each Participant's (Choose one):
Option 1: [ ] Section 3121(a) wages
Option 2: [ ] Section 3401(a) wages
Option 3: 415 safe-harbor compensation
NOTE: If no box is checked, Option 2 will be deemed to be selected.
Part D. The limitation year is the following 12-consecutive month
period:______________________________________
<PAGE>
National Nonstandardized Profit Sharing Plan EX-99.B14-9-nspspaa
ADOPTION AGREEMENT
______________________________________________________________________
SECTION 1. EMPLOYER INFORMATION
Name of Employer:
____________________________________________________________
Address: _______________________________________________________
City: _________________________ State:_______ Zip: ________________
Telephone ________________ Federal Tax Identification Number ________
Income Tax Year End Plan Year End
Type of Business (Check only one) [ ] Sole Proprietorship [
] Partnership [ ] Corporation [ ] Other
(Specify)____________________________________________________________
Nature of Business (Describe)_________________________________________
Plan Sequence No. (Enter 001 if this is the first
qualified plan the Employer has ever maintained, enter 002 if it is
the second, etc.)
SECTION 2. EFFECTIVE DATES Check and complete Option A or B
Option A: [ ] This is the initial adoption of a profit sharing
plan by the Employer.
The Effective Date of this Plan is , 19
.
NOTE: The effective date is usually the first day of the Plan Year in
which this Adoption Agreement is signed.
Option B: [ ] This is an amendment and restatement of an
existing profit sharing plan (a Prior Plan).
The Prior Plan was initially effective on
______________________, 19________.
The Effective Date of this amendment and restatement is
_________________, 19_______.
NOTE: The effective date is usually the first day of the Plan Year in
which this Adoption Agreement is signed.
SECTION 3. ELIGIBILITY REQUIREMENTS Complete Parts A, B and C
Part A. Years of Eligibility Service Requirement:
An Employee will be eligible to become a Participant in the Plan after
completing (enter 0, 1 or 2) Years of Eligibility Service.
NOTE: If more than 1 year is selected, the immediate 100% vesting
schedule of Section 6, Part A, Option 3 will automatically apply. If
left blank, the Years of Eligibility Service required will be deemed
to be 0.
Part B. Age Requirement:
An Employee will be eligible to become a Participant in the Plan after
attaining age (no more than 21). NOTE: If left blank, it
will be deemed there is no age requirement for eligibility.
Part C. All Employees employed as of the Effective Date of this Plan who
have not otherwise met the requirements of Part A or Part B above
[ ] will [ ] will not be considered to have met those
requirements as of the Effective Date.
#706 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 2
Part D. Class of Employees Eligible to Participate:
All Employees shall be eligible to become a Participant in the Plan,
except those checked below:
[ ] Those Employees included in a unit of Employees covered by
the terms of a collective bargaining agreement between Employee
representatives (the term "Employee representatives" does not
include any organization more than half of whose members are
Employees who are owners, officers or executives of the Employer)
and the Employer under which retirement benefits were the subject
of good faith bargaining unless the agreement provides that such
Employees are to be included in the Plan.
[ ] Those Employees are non-resident aliens pursuant to Section
410(b)(3)(C) of the Code and who received no earned income from
the Employer which constitutes income from sources within the
United States.
[ ] Other (Define)______________________________________________
________________________________________________________________
Part E. Entry Dates
The Entry Dates for participation shall be (Choose only one Option)
Option 1: [ ] The first day of the Plan Year and the first day
of the seventh month of the Plan Year.
Option 2: [ ] Other (Specify)___________________________________
NOTE: If Option 2 is selected, the Entry Dates specified must be more
frequent than those described in Option 1.
SECTION 4. EMPLOYER CONTRIBUTION AND ALLOCATION FORMULA
Part A. Contribution Formula
For each Plan Year the Employer will contribute an amount to be
determined from year to year.
Part B. Allocation Formula: (Check Option 1 or 2)
Option 1: [ ] Pro Rata Formula. Employer Contributions and
Forfeitures shall be allocated to the Individual Accounts
of qualifying Participants in the ratio that each
qualifying Participant's Compensation for the Plan Year
bears to the total Compensation of all qualifying
Participants for the Plan Year.
Option 2: [ ] Integrated Formula: Employer Contributions and
Forfeitures shall be allocated as follows (Start with Step
3 if this Plan is not a Top-Heavy Plan):
Step 1. Employer Contributions and Forfeitures shall first
be allocated pro rata to qualifying Participants
in the manner described in Section 4, Part B,
Option 1. The percent so allocated shall not
exceed 3% of each qualifying Participant's
Compensation.
Step 2. Any Employer Contributions and Forfeitures
remaining after the allocation in Step 1 shall be
allocated to each qualifying Participant's
Individual Account in the ratio that each
qualifying Participant's Compensation for the Plan
Year in excess of the integration level bears to
all qualifying Participants' Compensation in
excess of the integration level, but not in excess
of 3%.
Step 3. Any Employer Contributions and Forfeitures
remaining after the allocation in Step 2 shall be
allocated to each qualifying Participant's
Individual Account in the ratio that the sum of
each qualifying Participant's total Compensation
and Compensation in excess of the integration
level bears to the sum of all qualifying
Participants' total Compensation and Compensation
in excess of the integration level, but not in
excess of the profit sharing maximum disparity
rate as described in Section 3.01(B)(3) of the
Plan.
Step 4. Any Employer Contributions and Forfeitures
remaining after the allocation in Step 3 shall be
allocated pro rata to qualifying Participants in
the manner described in Section 4, Part B, Option
1.
#706 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 3
The integration level shall be (Choose one):
Option 1: [ ] The Taxable Wage Base
Option 2: [ ] (a dollar amount less than the Taxable Wage Base)
$______
Option 3: [ ] ______% of the Taxable Wage Base
NOTE: If no box is checked, the integration level shall be the Taxable Wage
Base.
SECTION 5. COMPENSATION Complete Parts A, B, C and D
Part A. Compensation shall be determined over the following applicable
(Choose one) period :
Option 1: [ ] the Plan Year
Option 2: [ ] the calendar year ending with or within the plan
year
Part B. Compensation [ ] shall include [ ] shall not include
Employer Contributions made pursuant to a salary reduction agreement
which are not includible in the gross income of the Employee under
Section 125, 402(a)(8), 402(h) and 403(b) of the Code.
Part C. Compensation [ ] does [ ] does not include any earnings
paid prior to the date the Employee became a Participant in the Plan.
Part D. Compensation shall not include the following (e.g., bonuses,
overtime, etc.). (Complete if applicable)
_____________________________________________________________________
SECTION 6. VESTING Complete Parts A and B
Part A. A Participant shall become Vested in his or her Individual
Account as follows (Choose one):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
YEARS OF VESTED PERCENTAGE
VESTING SERVICE Option 1 [ ] Option 2 [ ] Option 3 [ ] Option 4 [ ] Option 5 [ ] (Complete if Chosen)
- --------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
1 0% 0% 100% 0% ____%
2 0% 20% 100% 0% ____%
3 0% 40% 100% 20% ____% (not less than 20%)
4 0% 60% 100% 40% ____% (not less than 40%)
5 100% 80% 100% 60% ____% (not less than 60%)
6 100% 100% 100% 80% ____% (not less than 80%)
7 100% 100% 100% 100% ____% (not less than 100%)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Part B. All of an Employee's Years of Vesting Service with the Employer are
counted to determine the vesting percentage in the Participant's
Individual Account except:
[ ] Years of Vesting Service before the Employee reaches age 18.
[ ] Years of Vesting Service before the Employer maintained this
Plan or a predecessor plan.
SECTION 7. NORMAL RETIREMENT AGE
The Normal Retirement Age under the Plan is age (not to exceed
65).
NOTE: If left blank, the Normal Retirement Age will be deemed to be
age 59 1/2.
SECTION 8. HOURS REQUIRED Complete Parts A and B
Part A. Hours of Service (no more than 1,000) shall be required to
constitute a Year of Vesting Service or a Year of Eligibility Service.
Part B. Hours of Service (no more than 500) must be exceeded to
avoid a Break in Vesting Service or a Break in Eligibility Service.
NOTE: The number of hours in Part A must be greater than the number of hours
in Part B.
#706 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 4
SECTION 9. METHOD OF DETERMINING SERVICE
Service will be determined on the basis of the method selected below.
Only one method may be selected. The method selected will be applied
to all Employees covered under the Plan. (Check Option A, B C or D):
Option A. [ ] On the basis of actual hours for which an
Employee is paid or entitled to payment.
Option B. [ ] On the basis of days worked. An Employee
will be credited with 10 Hours of Service if under Section
1.20 of the Plan such Employee would be credited with at
least 1 Hour of Service during the day.
Option C. [ ] On the basis of weeks worked. An Employee
will be credited with 45 Hours of Service if under Section
1.20 of the Plan such Employee would be credited with at
least 1 Hour of Service during the week.
Option D. [ ] On the basis of months worked. An Employee
will be credited with 190 Hours of Service if under
Section 1.20 of the Plan such Employee would be credited
with at least 1 Hour of Service during the month.
NOTE: If left blank, Option A will be deemed selected.
SECTION 10. OTHER OPTIONS Answer "Yes" or "No" to each of the following
questions by checking the appropriate box. If a box is not checked
for a question, the answer will be deemed to be "No."
A. Loans: Will loans to Participants pursuant to Section 6.08 of
the Plan be permitted? [ ] Yes [ ] No
B. Participant Direction of Investments: Will Participants be
permitted to direct the investment of their Individual Accounts
pursuant to Section 5.14 of the Plan? [ ] Yes [ ] No
C. In-Service Withdrawals: Will Participants be permitted to make
withdrawals during service pursuant to Section 6.01(A)(3) of the
Plan? [ ] Yes [ ] No NOTE: If the Plan is being
adopted to amend and replace a Prior Plan which permitted in-
service withdrawals you must answer "Yes."
[ ] Check here if such withdrawals will be permitted only on
account of hardship.
D. Last Day Requirement: Must a Participant be an Employee of the
Employer on the last day of the Plan Year in order to qualify for
an Employer Contribution? [ ] Yes [ ] No
SECTION 11. JOINT AND SURVIVOR ANNUITY
Part A. Retirement Equity Act Safe Harbor:
Will the safe harbor provisions of Section 6.05(F) of the Plan apply
(Choose only one Option)?
Option 1: [ ] Yes
Option 2: [ ] No
NOTE: You must select "No" if you are adopting this Plan as an
amendment and restatement of a Prior Plan that was subject to the
joint and survivor annuity requirements.
Part B. Survivor Annuity Percentage: (Complete only if your answer in
Section 11, Part A is "No.")
The survivor annuity portion of the Joint and Survivor Annuity shall
be a percentage equal to ____% (at least 50% but no more than 100%) of
the amount paid to the Participant prior to his or her death.
#706 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 5
SECTION 12. RELIANCE
The Employer may not rely on an opinion letter issued by the National
Office 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 Employer must
apply to the appropriate Key District office for a determination
letter.
This Adoption Agreement may be used only in conjunction with Basic
Plan Document No. 03.
SECTION 13. EMPLOYER SIGNATURE Important: Please read before signing
I am an authorized representative of the Employer named above and I
state the following:
1. I acknowledge that I have relied upon my own advisors regarding
the completion of this Adoption Agreement and the legal tax
implications of adopting this Plan.
2. I understand that my failure to properly complete this Adoption
Agreement may result in disqualification of the Plan.
3. I understand that the Prototype Sponsor will inform me of any
amendments made to the Plan and will notify me should it
discontinue or abandon the Plan.
4. I have received a copy of this Adoption Agreement and the
corresponding Basic Plan Document.
Signature for Employer_______________________Date Signed_________
Type Name_______________________________________________________
SECTION 14. TRUSTEE OR CUSTODIAN Check and complete only one option
Option A. [ ] Financial Organization as Trustee or Custodian
Check One: [ ] Custodian, [ ] Trustee without full trust
powers, or [ ] Trustee with full trust powers
NOTE: Custodian will be deemed selected if no box is checked.
Financial Organization_________________________________________
Signature________________________________________________________
Type Name_______________________________________________________
Option B. [ ] Individual Trustee(s)
Signature ___________________ Signature_______________
Type Name____________________ Type Name__________________
SECTION 15. PROTOTYPE SPONSOR
Name of Prototype Sponsor____________________________________
Address________________________________________________________
Telephone Number_________________________________________________
SECTION 16. LIMITATION ON ALLOCATIONS - More Than One Plan
If you maintain or ever maintained another qualified plan in which any
Participant in this Plan is (or was) a Participant or could become a
Participant, you must complete this section. You must also complete
this section if you maintain a welfare benefit fund, as defined in
Section 419(e) of the Code, or an individual medical account, as
defined in Section 415(l)(2) of the Code, under which amounts are
treated as annual additions with respect to any Participant in this
Plan.
#706 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 6
Part A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a master or
prototype plan:
1. [ ] The provisions of Section 3.05(B)(1) through
3.05(B)(6) of the Plan will apply as if the other plan were a
master or prototype plan.
2. [ ] Other method. (Provide the method under which the
plans will limit total annual additions to the maximum
permissible amount, and will properly reduce any excess
amounts, in a manner that precludes Employer
discretion.)__________________________________________________
Part B. If the Participant is or has ever been a participant in a defined
benefit plan maintained by the Employer, the Employer will provide
below the language which will satisfy the 1.0 limitation of Section
415(e) of the Code. Such language must preclude Employer discretion.
(Complete)_______________________
Part C. Compensation will mean all of each Participant's (Choose one):
Option 1: [ ] Section 3121(a) wages
Option 2: [ ] Section 3401(a) wages
Option 3: 415 safe-harbor compensation
NOTE: If no box is checked, Option 2 will be deemed to be selected.
Part D. The limitation year is the following 12-consecutive month
period:_______________________________________
#706 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Standardized 401(k) Profit Sharing Plan EX-99.B14-10-s401aa
ADOPTION AGREEMENT
______________________________________________________________________________
SECTION 1. EMPLOYER INFORMATION
Name of Employer _____________________________________________
Address _____________________________________________________________
City ____________________State __________________ Zip_________________
Telephone _______________ Federal Tax Identification Number _________
Income Tax Year End _________________ Plan Year End___________________
Type of Business (Check only one) [ ] Sole Proprietorship
[ ] Partnership [ ] Corporation
[ ] Other (Specify)________________________________________________
Nature of Business (Describe)______________________
Plan Sequence No. ___________ (Enter 001 if this is the first
qualified plan the Employer has ever maintained, enter 002 if it is
the second, etc.)
SECTION 2. EFFECTIVE DATES Check and complete Option 1 or 2:
Part A. Initial Adoption or Amendment of Plan (Check and complete Option
1 or 2):
Option 1: [ ] This is the initial adoption of a profit sharing
plan by the Employer.
The Effective Date of this Plan is _____________________,
19_______.
NOTE: The effective date is usually the first day of the Plan Year in
which this Adoption Agreement is signed.
Option 2: [ ] This is an amendment and restatement of an
existing profit sharing plan (a Prior Plan).
The Prior Plan was initially effective on
______________________, 19________.
The Effective Date of this amendment and restatement is
_________________, 19_______.
NOTE: The effective date is usually the first day of the Plan Year in
which this Adoption Agreement is signed.
Part B. Commencement of Elective Deferrals
Elective Deferrals may commence on ______________
NOTE: Complete this part only if Option 1 above is selected. This
date may be no earlier than the date this Adoption Agreement is signed
because Elective Deferrals cannot be made retroactively.
SECTION 3. ELIGIBILITY REQUIREMENTS Complete Parts A, B, C, and D
Part A. Years of Eligibility Service Requirement:
An Employee will be eligible to become a Participant in the Plan after
completing _____ (enter 0, 1 or 2) Years of Eligibility Service.
NOTE: If left blank, the Years of Eligibility Service required will be
deemed to be 0.
Part B. Age Requirement:
An Employee will be eligible to become a Participant in the Plan after
attaining age _____ (no more than 21). NOTE: If left blank, it will
be deemed there is no age requirement for eligibility.
#731 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 2
Part C. Class of Employees Eligible to Participate:
All Employees shall be eligible to become a Participant in the Plan,
except those checked below:
[ ] Those Employees included in a unit of Employees covered by
the terms of a collective bargaining agreement between Employee
representatives (the term "Employee representatives" does not
include any organization more than half of whose members are
Employees who are owners, officers or executives of the Employer)
and the Employer under which retirement benefits were the subject
of good faith bargaining unless the agreement provides that such
Employees are to be included in the Plan.
[ ] Those Employees who are non-resident aliens pursuant to
Section 410(b)(3)(C) of the Code and who received no earned
income from the Employer which constitutes income from sources
within the United States.
Part D. Entry Dates
The Entry Dates for participation shall be (Choose only one Option)
Option 1: [ ] The first day of the Plan Year and the first day
of the seventh month of the Plan Year.
Option 2: [ ] Other (Specify)___________________________________
NOTE: If Option 2 is selected, the Entry Dates specified must be more
frequent than those described in Option 1.
SECTION 4. ELECTIVE DEFERRALS
Part A. Will Elective Deferrals be permitted under this Plan (Choose one)?
Option 1. [ ] Yes
Option 2. [ ] No
NOTE: If no option is selected, Option 2 will automatically apply.
Complete the remainder of Section 4 only if Option 1 is selected.
Part B. If Elective Deferrals are permitted under the Plan, a Contributing
Participant may elect under a salary reduction agreement to have his
Compensation reduced by an amount each pay period as described below
(Choose one):
Option 1. [ ] An amount equal to a percentage of the
Contributing Participant's Compensation from ____% to
____% in increments of 1%.
Option 2. [ ] An amount of the Contributing Participant's
Compensation not less than $________ and not more than
$________. The amount of such reduction shall be
contributed to the Plan by the Employer on behalf of the
Contributing Participant. For any taxable year, a
Contributing Participant's Elective Deferrals shall not
exceed the limit contained in Section 402(g) of the Code
in effect at the beginning of such taxable year.
Part C. Participants who claim Excess Elective Deferrals for the preceding
calendar year must submit their claims in writing to the Plan
Administrator by ___________________________________________________.
NOTE: This date should be a date prior to the Participant's tax
return due date. If no date is selected, March 1 will be deemed to be
selected.
SECTION 5. MATCHING CONTRIBUTIONS
Part A. Will the Employer make Matching Contributions to the Plan on behalf of
Contributing Participants (Choose one)?
Option 1: [ ] Yes
Option 2: [ ] No
NOTE: If no option is selected, Option 2 will automatically apply.
Complete the remainder of Section 5 only if Option 1 is selected.
Part B. Matching Contribution Formula. If the employer will make Matching
Contributions, then the amount of such Matching Contributions made on
behalf of a Contributing Participant each Plan Year shall be (Choose
one):
Option 1: [ ] An amount equal to ____% of such Contributing
Participant's Elective Deferral.
Option 2: [ ] An amount equal to the sum of ____% of the portion
of such Contributing Participant's Elective Deferral which
does not exceed ____% of the Contributing Participant's
Compensation plus ____% of the portion of such
Contributing Participant's Elective Deferral which exceeds
____% of the Contributing Participant's Compensation.
Option 3: [ ] Other Formula. (Specify)________________________
NOTE: If Option 3 is selected, the formula specified can only allow
Matching Contributions to be made with respect to a Contributing
Participant's Elective Deferrals.
#731 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 3
Part C. Limit on Matching Contributions. Notwithstanding the matching
contribution formula specified above, the Employer will not match a
Contributing Participant's Elective Deferrals in excess of $________
or ____% of such Contributing Participant's Compensation.
Part D. Forfeitures. Complete Part D only if Matching Contributions are not
100% vested.
1. Forfeitures of Matching Contributions shall be (Choose one):
Option 1: [ ] Allocated, after all other Forfeitures
under the Plan, to each Participant's Individual
Account in the ratio which each Participant's
Compensation for the Plan Year bears to the total
Compensation of all Participants for such Plan Year.
Option 2: [ ] Applied to reduce Employer
Contributions.
NOTE: If no option is selected, Option 2 will be deemed to be
selected.
2. Forfeitures of Excess Aggregate Contributions shall be (Choose
one):
Option 1: [ ] Allocated, after all other Forfeitures
under the Plan, to each Contributing Participant's
Matching Contribution account in the ratio which each
Contributing Participant's Compensation for the Plan
Year bears to the total Compensation of all
Contributing Participants for such Plan Year. Such
Forfeitures will not be allocated to the account of any
Highly Compensated Employee.
Option 2: [ ] Applied to reduce Employer
Contributions.
NOTE: If no option is selected, Option 2 will be deemed to be selected.
SECTION 6. QUALIFIED NONELECTIVE CONTRIBUTIONS
Part A. Will the Employer make Qualified Nonelective Contributions to the Plan
(Choose one)?
Option 1: [ ] Yes
Option 2: [ ] No
If the Employer will make Qualified Nonelective Contributions, then
the amount of such contribution to the Plan for each Plan Year shall
be an amount determined by the Employer.
NOTE: If no option is selected, Option 2 will automatically apply.
Complete the remainder of Section 6 only if Option 1 is selected.
Part B. Participants Entitled to Qualified Nonelective Contributions.
Allocation of Qualified Non-Elective Contributions shall be made to
the Individual Accounts of (Choose one):
Option 1: [ ] All Participants.
Option 2: [ ] Only Participants who are not Highly
Compensated Employees.
Part C. Allocation of Qualified Non-Elective Contributions.
Allocation of Qualified Non-Elective Contributions to Participants
entitled thereto shall be made (Choose one):
Option 1: [ ] In the ratio which each Participant's
Compensation for the Plan Year bears to the total
Compensation of all Participants for such Plan Year.
Option 2: [ ] In the ratio which each Participant's
Compensation not in excess of $________ for the Plan Year
bears to the total Compensation of all Participants not in
excess of $________ for such Plan Year.
SECTION 7. EMPLOYER PROFIT SHARING CONTRIBUTION AND ALLOCATION FORMULA
Part A. Contribution Formula:
For each Plan Year the Employer will contribute an Amount to be
determined from year to year.
Part B. Allocation Formula: Check and complete Option 1 or 2
Option 1: [ ] Pro Rata Formula. Employer
Contributions and Forfeitures shall be allocated to the
Individual Accounts of qualifying Participants in the
ratio that each qualifying Participant's Compensation for
the Plan Year bears to the total Compensation of all
qualifying Participants for the Plan Year.
#731 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 4
Option 2: [ ] Integrated Formula. Employer
Contributions and Forfeitures shall be allocated as
follows
(Start with Step 3 if this Plan is not a Top-Heavy Plan):
Step 1. Employer Contributions and Forfeitures shall
first be allocated pro rata to qualifying
Participants in the manner described in Section 7,
Part B, Option 1. The percent so allocated shall
not exceed 3% of each qualifying Participant's
Compensation.
Step 2. Any Employer Contributions and Forfeitures
remaining after the allocation in Step 1 shall be
allocated to each qualifying Participant's
Individual Account in the ratio that each qualifying
Participant's Compensation for the Plan Year in
excess of the integration level bears to all
qualifying Participants' Compensation in excess of
the integration level, but not in excess of 3%.
Step 3. Any Employer Contributions and Forfeitures
remaining after the allocation in Step 2 shall be
allocated to each qualifying Participant's
Individual Account in the ratio that the sum of each
qualifying Participant's total Compensation and
Compensation in excess of the integration level
bears to the sum of all qualifying Participants'
Total Compensation and Compensation in excess of the
integration level, but not in excess of the profit
sharing maximum disparity rate as described in
Section 3.01(B)(3) of the Plan.
Step 4. Any Employer Contributions and Forfeitures
remaining after the allocation in Step 3 shall be
allocated pro rata to qualifying Participants in the
manner described in Section 7, Part B, Option 1.
The integration level shall be (Choose one):
Option 1: [ ] The Taxable Wage Base
Option 2: [ ] $________ (a dollar amount less than the Taxable
Wage Base)
Option 3: [ ] ______% of the Taxable Wage Base
NOTE: If no box is checked, the integration level shall be the
Taxable Wage Base.
SECTION 8. VESTING Complete Parts A and B
Part A. Vesting Schedules. A Participant shall become Vested in his or her
Individual Account derived from Employer Contributions made pursuant
to Section 7 of the Adoption Agreement (and Forfeitures thereof) as
follows (Choose one):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
YEARS OF VESTED PERCENTAGE
VESTING SERVICE Option 1 [ ] Option 2 [ ] Option 3 [ ] Option 4 [ ] (Complete if Chosen)
- -----------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
1 0% 0% 100% ____%
2 0% 20% 100% ____%
3 100% 40% 100% ____% (not less than 20%)
4 100% 60% 100% ____% (not less than 40%)
5 100% 80% 100% ____% (not less than 60%)
6 100% 100% 100% ____% (not less than 100%)
- -----------------------------------------------------------------------------------------------
NOTE: If no selection is made, Option 3, 100% vesting will be deemed to be
selected.
Part B. Vesting of Matching Contributions. A Participant shall become Vested
in his or her Individual Account derived from Matching Contributions
made pursuant to Section 5 of this Adoption Agreement as follows
(Choose one if Matching Contributions will be made):
Option 1: [ ] 100% Vested at all times.
Option 2: [ ] Vested in accordance with the vesting schedule
selected in Section 8, Part A above.
NOTE: If no selection is made, the selection shall be deemed to be
Option 1.
#731 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 5
SECTION 9. NORMAL RETIREMENT AGE
The Normal Retirement Age under the Plan is age ______ (not to exceed 65).
NOTE: If left blank, the Normal Retirement Age will be deemed to be
age 59 1/2.
SECTION 10. HOURS REQUIRED Complete Parts A and B
Part A. ______ Hours of Service (no more than 1,000) shall be required to
constitute a Year of Vesting Service or a Year of Eligibility Service.
Part B. ______ Hours of Service (no more than 500) must be exceeded to avoid a
Break in Vesting Service or a Break in Eligibility Service.
NOTE: The number of hours in Part A must be greater than the number
of hours in Part B.
SECTION 11. OTHER OPTIONS Answer "Yes" or "No" to each of the following
questions by checking the appropriate box. If a box is not checked
for a question, the answer will be deemed to be "No."
A.Loans: Will loans to Participants pursuant to Section 6.08 of the
Plan be permitted? [ ] Yes [ ] No
B.Participant Direction of Investments: Will Participants be
permitted to direct the investment of their Individual Accounts
pursuant to Section 5.14 of the Plan?[ ] Yes [ ] No
C.In-Service Withdrawals: Will Participants be permitted to make
withdrawals during service pursuant to Section 6.01(A)(3) of the
Plan? NOTE: If the Plan is being adopted to amend and replace a
Prior Plan which permitted in-service withdrawals you must answer
"Yes." [ ] Yes [ ] No
Check here if such withdrawals will be permitted only on account of
hardship [ ].
D.Nondeductible Employee Contributions: Will Participants be
permitted to make Nondeductible Employee Contributions pursuant to
Section 11.304 of the Plan? [ ] Yes [ ] No
E.Hardship Withdrawals: Will Participants be permitted to withdraw
Elective Deferrals on account of hardship pursuant to Section
11.503 of the Plan? [ ] Yes [ ] No
SECTION 12. JOINT AND SURVIVOR ANNUITY
Part A. Retirement Equity Act Safe Harbor:
Will the safe harbor provisions of Section 6.05(F) of the Plan apply
(Choose only one Option)?
Option 1: [ ] Yes
Option 2: [ ] No
NOTE: You must select "No" if you are adopting this Plan as an
amendment and restatement of a Prior Plan that was subject to the
joint and survivor annuity requirements.
Part B. Survivor Annuity Percentage: (Complete only if your answer in Section
12, Part A is "No.")
The survivor annuity portion of the Joint and Survivor Annuity shall
be a percentage equal to ____% (at least 50% but no more than 100%) of
the amount paid to the Participant prior to his or her death.
#731 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 6
SECTION 13. RELIANCE
An Employer who has ever maintained or who later adopts any plan
(including a welfare benefit fund, as defined in Section 419(e) of the
Code, which provides post-retirement medical benefits allocated to
separate accounts for key employees as defined in Section 419A(d)(3)
of the Code or an individual medical account, as defined in Section
415(1)(2) of the Code) in addition to this Plan (other than a paired
standardized money purchase pension plan using Basic Plan Document No
03) may not rely on the opinion letter issued by the National Office
of the Internal Revenue Service as evidence that this plan is
qualified under Section 401 of the code. If the Employer who adopts
or maintains multiple plans wishes to obtain reliance that the
Employer's plan(s) are qualified, application for a determination
letter should be made to the appropriate Key District Director of the
Internal Revenue Service.
This Adoption Agreement may be used in conjunction with Basic Plan
Document No. 03.
SECTION 14. EMPLOYER SIGNATURE Important: Please read before signing
I am an authorized representative of the Employer named above and I
state the following:
1.I acknowledge that I have relied upon my own advisors regarding the
completion of this Adoption Agreement and the legal and tax
implications of adopting this Plan.
2.I understand that my failure to properly complete this Adoption
Agreement may result in disqualification of the Plan.
3.I understand that the Prototype Sponsor will inform me of any
amendments made to the Plan and will notify me should it
discontinue or abandon the Plan.
4.I have received a copy of this Adoption Agreement and the
corresponding Basic Plan Document.
Signature for Employer________________Date Signed____________________
Type Name_____________________________________________________________
SECTION 15. TRUSTEE OR CUSTODIAN Check and complete only one option
Option A. [ ] Financial Organization as Trustee or Custodian
Check One: [ ] Custodian, [ ] Trustee without full trust
powers, or [ ] Trustee with full trust powers
NOTE: Custodian will be deemed selected if no box is checked.
Financial Organization________________________________________________
Signature____________________________________________________________
Type Name_____________________________________________________________
Option B. [ ] Individual Trustee(s)
Signature___________________________Signature_________________________
Type Name_________________________Type Name________________________
SECTION 16. PROTOTYPE SPONSOR
Name of Prototype Sponsor_____________________________________________
Address_____________________________________________________________
Telephone Number____________________________________________________
#731 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 7
SECTION 17. LIMITATION ON ALLOCATIONS - More Than One Plan
If you maintain or ever maintained another qualified plan (other than
a paired standardized money purchase pension plan using Basic Plan
Document No. 03) in which any Participant in this Plan is (or was) a
Participant or could become a Participant, you must complete this
section. You must also complete this section if you maintain a
welfare benefit fund, as defined in Section 419(e) of the Code, or an
individual medical account, as defined in Section 415(l)(2) of the
Code, under which amounts are treated as annual additions with respect
to any Participant in this Plan.
Part A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a regional
prototype plan:
1. [ ] The provisions of Section 3.05(B)(1) through 3.05(B)(6)
of the Plan will apply as if the other plan were a master or
prototype plan.
2. [ ] Other method. (Provide the method under which the plans
will limit total annual additions to the maximum permissible
amount, and will properly reduce any excess amounts, in a
manner that precludes Employer
discretion.)____________________________________________
________________________________________________________
Part B. If the Participant is or has ever been a participant in a defined
benefit plan maintained by the Employer, the Employer will provide
below the language which will satisfy the 1.0 limitation of Section
415(e) of the Code. Such language must preclude Employer discretion.
(Complete)____________________________________________________________
_____________________
Part C. Compensation will mean all of each Participant's (Choose one):
Option 1: [ ] Section 3121(a) wages
Option 2: [ ] Section 3401(a) wages
Option 3: [ ] 415 safe-harbor compensation
NOTE: If no box is checked, Option 2 will be deemed to be selected.
Part D. The limitation year is the following 12-consecutive month
period:_______________________________________
SECTION 18. ELECTIVE DEFERRALS BASED EXCLUSIVELY ON BONUSES
May a Contributing Participant base Elective Deferrals on cash bonuses
that, at the Contributing Participant's election, may be contributed
to the Plan or received by the Contributing Participant in cash
(Choose one)?
Option 1: [ ] Yes
Option 2: [ ] No
NOTE: Answer "yes" only if Elective Deferrals will be based
exclusively on cash bonuses rather than payroll deductions. If no
option is selected, Option 2 will automatically apply.
#731 c1993 Universal Pensions, Inc., Brainerd, MN 56401
</TABLE>
<PAGE>
401(k) Standardized Profit Sharing Plan EX-99.B14-11-s401gis
SUMMARY PLAN DESCRIPTION
___________________________________________________________________________
GENERAL INFORMATION SHEET
PLAN INFORMATION Your Employer has adopted a Standardized 401(k) Profit
Sharing Plan for the benefit of you and your co-workers. This
Plan is designed to help you meet your financial needs during
your retirement years.
Your Employer must follow certain rules and requirements to
maintain this Plan. This General Information Sheet provides
you with some of the details of the Plan. Use this
information in conjunction with the Summary Plan Description
(SPD) Booklet which accompanies this General Information
Sheet.
Plan Name_________________________________________
Plan Number_______________________________________
Plan Year End_____________________________________
EFFECTIVE DATES The effective date of this Plan is ___________________.
If this is an amendment and restatement of a prior Plan, the
effective date of the prior Plan was ____________________.
You may begin making Employee 401(k) Contributions on
________________________.
SERVICE AND AGE See Section 3, Part 1, of the SPD Booklet.
REQUIREMENTS You will become eligible to participate in the Plan after you
satisfy the age and service requirements for the respective
contributions.
The Years of Service required for you to become a Participant
in the Plan are _______________________.
The age required for you to become a Participant in the Plan
is ____________.
ELIGIBLE See Section 3, Part 1, of the SPD Booklet.
EMPLOYEES All Employees shall become eligible to participate in the
Plan, except the following (if checked):
[ ] Those Employees covered by the terms of a
collective bargaining agreement (e.g., union agreement)
unless the collective bargaining agreement specifies that
the Employees covered thereby will participate.
[ ] Those Employees who are nonresident aliens and
receive no earned income from the Employer within the
United States.
ENTRY DATES See Section 3, Part 2, of the SPD Booklet.
The Entry Dates upon which you can begin plan participation
are _______________________.
HOURS OF SERVICE See Section 3, Parts 3 and 4, of the SPD Booklet.
AND BREAK IN The number of Hours of Service you must be employed to
complete a Year of SERVICE
Service is _________.
The number of Hours of Service you must be employed to avoid
a Break in Service is ________.
EMPLOYEE 401(k) See Section 4, Part 1, of the SPD Booklet.
CONTRIBUTIONS Employee 401(k) Contributions are allowed under this Plan.
To begin making Employee 401(k) Contributions on the next
Plan Entry Date, you must complete and sign a Payroll
Deduction Form. Once you become eligible to participate in
the Plan, your Employer will provide you with a Payroll
Deduction Form to be completed before the next Plan Entry
Date.
#746 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 2
To change the amount of your Employee 401(k) Contributions,
you must complete and sign a revised Payroll Deduction Form.
Your Employer allows you to change your Payroll Deduction
Form on a _______________________________(state frequency)
basis.
You may discontinue making Employee 401(k) Contributions
_________________________ ____________________________(state
frequency) by indicating so on a Payroll Deduction Form,
signing it and giving it to the Plan Administrator.
By completing a Payroll Deduction Form, you agree to make
Employee 401(k) Contributions to this Plan. Your
compensation will be reduced each pay period by an amount
based upon the formula selected below:
[ ] An amount equal to a percentage of your
Compensation from _______% to _______% in increments of 1%;
or
[ ] An amount of your Compensation not less than
$_______ nor more than $_______ .
Instead of making Employee 401(k) Contributions each pay
period through payroll deduction, Employee 401(k)
Contributions may be based exclusively upon cash bonuses.
[ ] Yes [ ] No
If you make an excess Employee 401(k) Contribution to the
Plan, you must submit a claim in writing for return of the
excess to the Plan Administrator no later
than____________________ (specify) following termination of
the Plan Year in which you made the excess deferral.
MATCHING See Section 4, Part 2, of the SPD Booklet.
CONTRIBUTIONS Your Employer will make Matching Contributions on behalf of
Employees making Employee 401(k) Contributions. [ ]
Yes [ ] No
If Matching Contributions will be made under this Plan, your
Employer will make contributions on behalf of the Employees
making Employee 401(k) Contributions based upon the formula
selected below:
[ ] An amount equal to _______% of your Employee
401(k) Contribution;
[ ] An amount equal to the sum of ______% of the
portion of your Employee 401(k) Contributions which does
not exceed ________% of your Compensation plus _______% of
the portion of your Employee 401(k) Contributions which
exceeds ________% of your Compensation.
[ ] Other Formula: (Specify) ________________________
Limits apply to Matching Contributions. Matching
Contributions will not be made on your Employee 401(k)
Contributions in excess of $__________ or __________% of your
Compensation.
Forfeitures of Matching Contributions will be:
[ ] Allocated to the Individual Accounts of
Participants.
[ ] Used to reduce future Employer Contributions.
EMPLOYER See Section 4, Part 1, of the SPD Booklet.
CONTRIBUTIONS Each Plan Year the Employer will contribute to the Plan an
amount from 0 to 15% of the total Compensation of all
eligible Participants. The amount of the Contribution will
be determined from year to year by the managing body of the
Employer.
The Employer Contribution will be allocated to each
Participant's Individual Account under the formula checked
below:
[ ] Pro Rata Formula. Under this formula, each
qualifying Participant's Individual Account will receive a
pro rata allocation. This pro rata allocation is based on
the qualifying Participant's Compensation in relation to
the total Compensation of all qualifying Participants.
#746 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 3
[ ] Integrated Formula. Under this formula, each
qualifying Participant's Individual Account will receive a
base contribution. In addition, qualifying Participants
will receive an additional allocation (called an excess
contribution) based on their Compensation above the
Integration Level. The Integration Level will
be____________________________________________.
VESTING See Section 5, Parts 8 and 9, of the SPD Booklet.
You will always be fully vested in all contributions derived
from Employee 401(k) Contributions, Qualified Nonelective
Contributions (if any) and Nondeductible Employee
Contributions (if allowed).
You will be vested in your Individual Account derived from
profit sharing Profit Sharing Contributions and forfeitures
thereof according to the schedule selected below:
Years of Option 1 [ ] Option 2 [ ] Option 3 [ ] Option 4 [ ]
1 0% 0% 100% ____%
2 0% 20% 100% ____%
3 100% 40% 100% ____%
4 100% 60% 100% ____%
5 100% 80% 100% ____%
6 100% 100% 100% ____%
If you receive Matching Contributions, you will become vested
according to the following formula:
[ ] 100% vested at all times; or
[ ] Vested in accordance with the
vesting schedule for your Profit Sharing Contributions.
NORMAL See Section 5, Part 1, of SPD Booklet.
RETIREMENT AGE Normal Retirement Age under the Plan is __________.
OTHER OPTIONS See Section 4, 5 and 7, of the SPD Booklet.
Can you receive loans from the Plan? If "yes," see attached
Loan Disclosure. [ ] Yes [ ] No
Can you direct the investment of your Individual Account?
[ ] Yes [ ] No
Can you direct the investment of your contributions other
than Employee 401(k)
Contributions? (Specify)____________________________.
[ ] Yes [ ] No
Can you take withdrawals of contributions other than Employee
401(k) Contributions during service?
[ ] Yes [ ] No [ ]
Yes, but withdrawals are limited to hardship circumstances.
[ ]
Can you make Nondeductible Employee Contributions?
[ ] Yes [ ] No
Can you withdraw Employee 401(k) Contributions on account of
hardship? [ ] Yes [ ] No
REA SAFE HARBOR/ See Section 5, Part 3, of the SPD Booklet.
JOINT AND SURVIVOR Do the REA Safe Harbor provisions of the Plan apply? [ ]
Yes [ ] No
ANNUITY
If the REA Safe Harbor provisions do not apply, the survivor
annuity portion of the Joint and Survivor Annuity will be a
percentage equal to ______% of the amount paid to the
Participant prior to his or her death.
EMPLOYER Name __________________________________________________
INFORMATION Address _______________________________________________
Business
Telephone______________________________________________
Employer Identification Number_________________________
Employer's Income Tax Year End__________________________
#746 c1993 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 4
PLAN ADMINISTRATORThe Employer is usually the Plan Administrator. This section
will be completed only if the Employer will not be the Plan
Administrator.
Name (if not the Employer) _____________________________
Address_________________________________________________
________________________________________________________
Business Telephone_____________________________________
AGENT FOR SERVICE Name _________________________________________________
OF LEGAL PROCESS Address____________________________________________
__________________________________________________
NOTE: The Agent for Service of Legal Process is the person
upon whom any legal papers can be served. Service of legal
process may be made upon a Plan Trustee or the Employer/Plan
Administrator.
TRUSTEE(S) Name________________________________________________
Title_______________________________________________
Business Address____________________________________
Name_______________________________________________
Title_______________________________________________
Business Address____________________________________
Name________________________________________________
Title_______________________________________________
Business Address____________________________________
#746 c1993 Universal Pensions, Inc., Brainerd, MN 56401
EX-99.B14-12-sepaa
Universal Simplified Employee Pension Plan
ADOPTION AGREEMENT
_______________________________________________________________________________
SECTION 1. EMPLOYER INFORMATION
Name of Employer ______________________________________________
Address_______________________________________________________________
City_________________________ State _________________ Zip____________
Telephone________________ Federal Tax Identification Number __________
Income Tax Year End________________ Plan Year End__________________
SECTION 2. EFFECTIVE DATES Check and complete Option A or B
Option A: [ ] This is the initial adoption of a Simplified Employee
Pension plan by the Employer.
The Effective Date of this Plan is _____________________,
19_______.
NOTE: The effective date is usually the first day of the Plan Year in
which this Adoption Agreement is signed.
Option B: [ ] This is an amendment and restatement of an
existing Simplified Employee Pension plan (a Prior Plan).
The Prior Plan was initially effective on
________________________, 19________.
The Effective Date of this amendment and restatement is
_____________________, 19_______.
NOTE: The effective date is usually the first day of the Plan Year in
which this Adoption Agreement is signed.
SECTION 3. ELIGIBILITY REQUIREMENTS Complete Parts A, B and C
Part A. Service Requirement: An Employee will be eligible to become a
Participant in the Plan after having performed Service for the
Employer during at least _____ (enter 0, 1, 2 or 3) of the
immediately preceding 5 Plan Years.
NOTE: If left blank, the Service Requirement will be deemed to be 0.
Part B. Age Requirement: An Employee will be eligible to become a Participant
in the Plan after attaining age _____ (no more than 21).
NOTE: If left blank, it will be deemed there is no age requirement
for eligibility.
Part C. Class of Employees Eligible to Participate: All Employees shall be
eligible to become a Participant in the Plan, except the following (if
checked):
[ ] Employees covered by a collective bargaining agreement and
nonresident aliens, as described in Section 3.02 of the Plan.
[ ] Those Employees who have received less than $300 (indexed for
cost of living increases in accordance with Section 408(k)(8) of
the Code) of Compensation from the Employer during the Plan Year.
SECTION 4. EMPLOYER CONTRIBUTION AND ALLOCATION FORMULA
Part A. Contribution Formula:
For each Plan Year the Employer will contribute an amount to be
determined from year to year.
Part B. Allocation Formula: Check Option 1, 2 or 3
Option 1: [ ] Pro Rata Formula. The Employer Contribution for
each Plan Year shall be allocated in the manner described
in Section 4.01(A) of the Plan.
Option 2: [ ] Flat Dollar Formula. The Employer Contribution
for each Plan Year allocated to the IRAs of Participants
shall be the same dollar amount for each Participant.
Option 3: [ ] Integrated Formula. Employer Contributions shall
be allocated in the manner described in Section 4.01(B) of
the Plan. For purposes of the integrated formula, the
integration level shall be (Choose one):
Option 1: [ ] The Taxable Wage Base (TWB) NOTE: If
no box is checked,
Option 2: [ ] _______% of the TWB the integration
level shall be the Taxable Wage Base.
Part C. Retirement Savings Contributions: Check here [ ] and complete this
Part C only if a salary deferral arrangement is desired.
Option 1: [ ] Payroll Deduction Option. A Contributing Participant
may elect under a Retirement Savings Agreement to have his
or her Compensation reduced each pay period by an amount
not in excess of $________ or ________% of Compensation.
Option 2: [ ] Cash Bonus Option. A Contributing Participant may
base Retirement Savings Contributions on bonuses that, at
the Contributing Participant's election, may be contributed
to an IRA under the Plan or received by the Contributing
Participant in cash.
SECTION 5. EMPLOYER SIGNATURE
Signature for Employer ___________________ Date Signed_______________
(Type Name)_____________________________________________________
Name of Prototype Sponsor_________________ Phone______________________
Address_______________________________________________________________
Note to Employer: Before signing this Adoption Agreement, you
should obtain the advice of a qualified attorney and tax advisor
regarding its completion and the legal and tax implications of
adopting this Plan.
EX-99.B14-13-sepbpd
UNIVERSAL SIMPLIFIED EMPLOYEE PENSION PLAN
Basic Plan Document
_______________________________________________________________________________
SECTION ONE ESTABLISHMENT AND PURPOSE OF PLAN
1.01 PURPOSE: The purpose of this Plan is to provide, in accordance
with its provisions, a Simplified Employee Pension Plan providing
benefits upon retirement for the individuals who are eligible to
participate hereunder.
1.02 INTENT TO QUALIFY: It is the intent of the Employer that this
Plan shall be for the exclusive benefit of its Employees and shall
qualify for approval under Section 408(k) of the Internal Revenue
Code, as amended from time to time (or corresponding provisions of
any subsequent Federal law at that time in effect). In case of
any ambiguity, it shall be interpreted to accomplish such result.
It is further intended that it comply with the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA) as amended
from time to time.
1.03 WHO MAY ADOPT An employer who has ever maintained a defined
benefit plan which is now terminated may not participate in this
prototype Simplified Employee Pension Plan. If, subsequent to
adopting this Plan, any defined benefit plan of the Employer
terminates, the employer will no longer participate in this
prototype plan and will be considered to have an individually
designed plan.
1.04 USE WITH IRA This prototype Simplified Employee Pension Plan must
be used with an Internal Revenue Service model IRA (Form 5305 or
Form 5305-A) or an Internal Revenue Service approved master or
prototype IRA.
1.05 FOR MORE INFORMATION To obtain more information concerning the
rules governing this Plan, contact the Prototype Sponsor listed
in Section 5 of the Adoption Agreement.
SECTION TWO DEFINITIONS
2.01 ADOPTION AGREEMENT Means the document executed by the Employer
through which it adopts the Plan and thereby agrees to be bound by
all terms and conditions of the Plan.
2.02 CODE Means the Internal Revenue Code of 1986 as amended.
2.03 COMPENSATION Compensation for the purposes of the $300 limit of
Section 408(k)(2)(C) of the Code shall be defined as Section
414(q)(7) Compensation.
For all other purposes, Compensation shall mean all of a
Participant's wages as defined in Section 3401(a) of the Code for
the purposes of income tax withholding at the source (that is, W-2
wages) 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).
For any Self-Employed Individual covered under the Plan,
Compensation will mean Earned Income.
Compensation shall include only that Compensation which is
actually paid to the Participant during the Plan Year.
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(a)(8), 402(h) or 403(b) of the Code.
The annual Compensation of each Participant taken into account
under the Plan for any year shall not exceed $200,000. This
limitation shall be adjusted by the Secretary at the same time and
in the same manner as under Section 415(d) of the Code, except the
dollar increase in effect on January 1 of any calendar year is
effective for years beginning in such calendar year and the first
adjustment to the $200,000 limitation is effected on January 1,
1990. If a Plan determines Compensation on a period of time that
contains fewer than 12 calendar months, then the annual
Compensation limit is an amount equal to the annual Compensation
limit for the calendar year in which the compensation period
begins multiplied by the ratio obtained by dividing the number of
full months in the period by 12.
In determining the Compensation of a Participant the rules of
Section 414(q)(6) of the Code shall apply, except in applying such
rules, the term "family" shall include only the spouse of the
Participant and any lineal descendants of the Participant who have
not attained age 19 before the close of the year. If, as a result
of the application of such rules the adjusted $200,000 limitation
is exceeded, then (except for purposes of determining the portion
of Compensation up to the integration level if this Plan provides
for permitted disparity), the limitation shall be prorated among
the affected individuals in proportion to each such individual's
Compensation as determined under this section prior to the
application of this limitation.
In addition to other applicable limitations set forth in the Plan,
and notwithstanding any other provision of the Plan to the
contrary, for Plan Years beginning on or after January 1, 1994,
the annual Compensation of each Employee taken into account under
the Plan shall not exceed the OBRA '93 annual Compensation limit.
The OBRA '93 annual Compensation limit is $150,000, as adjusted by
the Commissioner for increases in the cost of living in accordance
with Section 401(a)(17)(B) of the Internal Revenue Code. The
cost-of-living adjustment in effect for a calendar year applies to
any period, not exceeding 12 months, over which Compensation is
determined (determination period) beginning in such calendar year.
If a determination period consists of fewer than 12 months, the
OBRA '93 annual Compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the
determination period, and the denominator of which is 12.
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.
2.04 EARNED INCOME Means the net earnings from self-employment in the
trade or business with respect to which the Plan is established,
for which personal services of the individual are a material
income-producing factor. Net earnings will be determined without
regard to items not included in gross income and the deductions
allocable to such items. Net earnings are reduced by
contributions by the Employer to a qualified plan or to a
Simplified Employee Pension Plan to the extent deductible under
Section 404 of the Code.
Net earnings shall be determined with regard to the deduction
allowed to the Employer by Section 164(f) of the Code for taxable
years beginning after December 31, 1989.
2.05 EFFECTIVE DATE Means the date the Plan becomes effective as
indicated in the Adoption Agreement.
2.06 EMPLOYEE Means any person who is a natural person employed by the
Employer as a common law employee and if the Employer is a sole
proprietorship or partnership, any Self-Employed Individual who
performs services with respect to the trade or business of the
Employer. Further, any employee of any other employer required to
be aggregated under Section 414(b), (c), (m), or (o) of the Code
and any leased employee required to be treated as an employee of
the Employer under Section 414(n) of the Code shall also be
considered an Employee.
2.07 EMPLOYER Means any corporation, partnership or sole
proprietorship named in the Adoption Agreement and any successor
who by merger, consolidation, purchase or otherwise assumes the
obligations of the Plan. A partnership is considered to be the
Employer of each of the partners and a sole proprietorship is
considered to be the Employer of the sole proprietor.
2.08 EMPLOYER CONTRIBUTION Means the amount contributed by the
Employer to this Plan.
2.09 IRA Means the designated Individual Retirement Account or
Individual Retirement Annuity, which satisfies the requirements of
Section 408 of the Code, and which is maintained by a Participant
with the Prototype Sponsor (unless the Prototype Sponsor allows
Participants to maintain their IRAs with other organizations).
2.10 PARTICIPANT Means any Employee who has met the participation
requirements of Section 3.01 and who is or may become eligible to
receive an Employer Contribution.
2.11 PLAN Means this plan document plus the corresponding Adoption
Agreement as completed and signed by the Employer.
2.12 PLAN YEAR Means the calendar year or the 12 consecutive month
period which coincides with the Employer's taxable year.
2.13 PRIOR PLAN Means a plan which was amended or replaced by adoption
of this plan document, as indicated in the Adoption Agreement.
2.14 PROTOTYPE SPONSOR Means the entity specified in the Adoption
Agreement which sponsors this prototype Plan.
2.15 SELF-EMPLOYED INDIVIDUAL Means an individual who has Earned
Income for a Plan Year from the trade or business for which the
Plan is established; also, an individual who would have had Earned
Income but for the fact that the trade or business had no net
profits for the Plan Year.
2.16 SERVICE Means the performance of duties by an Employee for the
Employer, for any period of time, however short, for which the
Employee is paid or entitled to payment. When the Employer
maintains the Plan of a predecessor employer, an Employee's
Service will include his or her service for such predecessor
employer.
2.17 TAXABLE WAGE BASE Means the maximum amount of earnings which may
be considered wages for a year under Section 3121(a)(1) of the
Code in effect as of the beginning of the Plan Year.
SECTION THREE ELIGIBILITY AND PARTICIPATION
3.01 ELIGIBILITY REQUIREMENTS Except for those Employees excluded
pursuant to Section 3.02, each Employee of the Employer who
fulfills the eligibility requirements specified in the Adoption
Agreement shall, as a condition for further employment, become a
Participant. Each Participant must establish an IRA with the
Prototype Sponsor to which Employer Contributions under this Plan
will be made.
3.02 EXCLUSION OF CERTAIN EMPLOYEES If the Employer has so indicated
in the Adoption Agreement, the following Employees shall not be
eligible to become a participant in the Plan: (a) Those Employees
included in a unit of Employees covered by the terms of a
collective bargaining agreement, provided retirement benefits were
the subject of good faith bargaining; and (b) those Employees who
are nonresident aliens, who have received no earned income from
the Employer which constitutes earned income from sources within
the United States.
3.03 ADMITTANCE AS A PARTICIPANT
A. Prior Plan - If this Plan is an amendment or continuation of a
Prior Plan, each Employee of the Employer who immediately
before the Effective Date was a participant in said Prior Plan
shall be a Participant in this Plan as of said date.
B. Notification of Eligibility - The Employer shall notify each
Employee who becomes a Participant of his or her status as a
Participant in the Plan and of his or her duty to establish an
IRA with the Prototype Sponsor to which Employer Contributions
may be made.
C. Establishment of an IRA - If a Participant fails to establish
an IRA for whatever reason, the Employer may execute any
necessary documents to establish an IRA on behalf of the
Participant.
3.04 DETERMINATIONS UNDER THIS SECTION The Employer shall determine
the eligibility of each Employee to be a Participant. This
determination shall be conclusive and binding upon all persons
except as otherwise provided herein or by law.
3.05 LIMITATION RESPECTING EMPLOYMENT Neither the fact of the
est-ablishment of the Plan nor the fact that a common-law employee
has become a Participant shall give to that common-law employee
any right to continued employment; nor shall either fact limit the
right of the Employer to discharge or to deal otherwise with a
common-law employee without regard to the effect such treatment
may have upon the Employee's rights under the Plan.
SECTION FOUR CONTRIBUTIONS AND ALLOCATIONS
4.01 EMPLOYER CONTRIBUTIONS
A. Allocation Formula - Employer Contributions shall be allocated
in accordance with the allocation formula selected in the
Adoption Agreement. Each Employee who has satisfied the
eligibility requirements pursuant to Section 3.01 (thereby
becoming a Participant) will share in such allocation.
If the Employer has selected the pro rata allocation formula
in the Adoption Agreement, then Employer Contributions for
each Plan Year shall be allocated to the IRA of each
Participant in the same proportion as such Participant's
Compensation (not in excess of $200,000, indexed for cost of
living increases in accordance with Section 408(k)(8) of the
Code) for the Plan Year bears to the total Compensation of all
Participants for such year.
Employer Contributions made for a Plan Year on behalf of any
Participant shall not exceed the lesser of 15% of Compensation
or the limitation in effect under Code Section 415(c)(1)(A)
(indexed for cost of living increases in accordance with Code
Section 415(d)).
B. Integrated Allocation Formula - If the Employer has selected
the integrated allocation formula in the Adoption Agreement,
then Employer Contributions for the Plan Year will be
allocated to Participants' IRA as follows:
Step 1Employer Contributions will be allocated to each
Participant's IRA in the ratio that each Participant's
total Compensation bears to all Participants' total
Compensation, but not in excess of 3% of each
Participant's Compensation.
Step 2Any Employer Contributions remaining after the
allocation in Step 1 will be allocated to each
Participant's IRA in the ratio that each Participant's
Compensation for the Plan Year in excess of the
integration level bears to the Compensation of all
Participants in excess of the integration level, but not
in excess of 3%.
Step 3Any Employer Contributions remaining after the
allocation in Step 2 will be allocated to each
Participant's IRA in the ratio that the sum of each
Participant's total Compensation and Compensation in
excess of the integration level bears to the sum of all
Participants' total Compensation and Compensation in
excess of the integration level, but not in excess of
the maximum disparity rate described in the table below.
Step 4Any Employer Contributions remaining after the
allocation in Step 3 will be allocated to each
Participant's IRA in the ratio that each Participant's
total Compensation for the Plan Year bears to all
Participants' total Compensation for that Plan Year.
The integration level shall be equal to the Taxable Wage Base
or such lesser amount elected by the Employer in the Adoption
Agreement.
Integration Level Maximum Disparity Rate
Taxable Wage Base (TWB) 2.7%
More than $0 but not more than X* 2.7%
More than X* of TWB but not more than 80% of TWB 1.3%
More than 80% of TWB but not more than TWB 2.4%
*X mean the greater of $10,000 or 20% of TWB.
C. Timing of Employer Contribution - Employer Contributions, if
any, made on behalf of Participants for a Plan Year shall be
allocated and deposited to the IRA of each Participant no
later than the due date for filing the Employer's tax return
(including extensions).
4.02 DEDUCTIBILITY OF CONTRIBUTIONS Contributions to the Plan are
deductible by the Employer for the taxable year with or within
which the Plan Year of the Plan ends. Contributions made for a
particular taxable year and contributed by the due date of the
Employer's income tax return, including extensions, are deemed
made in that taxable year.
4.03 VESTING, WITHDRAWAL RIGHTS TO CONTRIBUTIONS All Employer
Contributions made under the Plan on behalf of Employees shall be
fully vested and nonforfeitable at all times. Each Employee shall
have an unrestricted right to withdraw at any time all or a
portion of the Employer Contributions made on his or her behalf.
However, withdrawals taken are subject to the same taxation and
penalty provisions of the Code which are applicable to IRA
distributions.
4.04 SIMPLIFIED EMPLOYER REPORTS The Employer shall furnish reports,
relating to contributions made under the Plan, in the time and
manner and containing the information prescribed by the Secretary
of the Treasury, to Participants. Such reports shall be furnished
at least annually and shall disclose the amount of the
contribution made under the Plan to the Participant's IRA.
SECTION FIVE AMENDMENT OR TERMINATION OF PLAN
5.01 AMENDMENT BY EMPLOYER The Employer reserves the right to amend
the elections made or not made on the Adoption Agreement by
executing a new Adoption Agreement and delivering a copy of the
same to the Prototype Sponsor. The Employer shall not have the
right to amend any nonelective provision of the Adoption Agreement
nor the right to amend provisions of this plan document. If the
Employer adopts an amendment to the Adoption Agreement or plan
document in violation of the preceding sentence, the Plan will be
deemed to be an individually designed plan and may no longer
participate in this prototype Plan.
5.02 AMENDMENT BY PROTOTYPE SPONSOR By adopting this Plan, the
Employer delegates to the Prototype Sponsor the power to amend or
replace the Adoption Agreement of the Plan to conform them to the
provisions of any law, regulations or administrative rulings
pertaining to Simplified Employee Pensions and to make such other
changes to the Plan, which, in the judgement of the Prototype
Sponsor, are necessary or appropriate. The Employer shall be
deemed to have consented to all such amendments; provided however,
that no changes may be made without the consent of the Employer if
the effect would be to substantially change the costs or benefits
under the Plan. The Prototype Sponsor shall not have the
obligation to exercise or not to exercise the power delegated to
it nor shall the Prototype Sponsor incur liability of any nature
for any act done or failed to be done by the Prototype Sponsor in
good faith in the exercise or nonexercise of the power delegated
hereunder. The Prototype Sponsor shall notify the Employer should
it discontinue sponsorship of the Plan.
5.03 LIMITATIONS ON POWER TO AMEND No amendment by either the Employer
or the Prototype Sponsor shall reduce or otherwise adversely
affect any benefits of a Participant or Beneficiary acquired prior
to such amendment unless it is required to maintain compliance
with any law, regulation or administrative ruling pertaining to
Simplified Employee Pensions.
5.04 TERMINATION While the Employer expects to continue the Plan
indefinitely, the Employer shall not be under any obligation or
liability to continue contributions or to maintain the Plan for
any given length of time. The Employer may terminate this Plan at
any time by appropriate action of its managing body. This Plan
shall terminate on the occurrence of any of the following events:
A. Delivery to the Prototype Sponsor of a notice of termination
executed by the Employer specifying the effective date of the
Plan's termination.
B. Adjudication of the Employer as bankrupt or the liquidation or
dissolution of the Employer.
5.05 NOTICE OF AMENDMENT, TERMINATION Any amendment or termination
shall be communicated by the Employer to all appropriate parties
as required by law. Amendments made by the Prototype Sponsor
shall be furnished to the Employer and communicated by the
Employer to all appropriate parties as required by law. Any
filings required by the Internal Revenue Service or any other
regulatory body relating to the amendment or termination of the
Plan shall be made by the Employer.
5.06 CONTINUANCE OF PLAN BY SUCCESSOR EMPLOYER A successor of the
Employer may continue the Plan and be substituted in the place of
the present Employer. The successor and present Employer (or if
deceased, the executor of the estate of a deceased Self-Employed
Individual who was the Employer) must execute a written instrument
authorizing such substitution and the successor must complete and
sign a new Adoption Agreement.
SECTION SIX SALARY DEFERRAL SEP PROVISIONS
In addition to Sections 1 through 5, the provisions of this
Section 6 shall apply if the Employer is an Eligible Employer and
has adopted a salary deferral Simplified Employee Pension Plan by
indicating in the Adoption Agreement that Retirement Savings
Contributions are permitted.
If the Employer has so indicated in the Adoption Agreement, the
Employer agrees to permit Retirement Savings Contributions to be
made which will be contributed by the Employer to the IRA
established by or on behalf of each Contributing Participant.
This arrangement is intended to qualify as a salary reduction
simplified employee pension ("SARSEP") under Section 408(k)(6) of
the Code and the regulations thereunder.
The SARSEP portion of this Plan shall be effective upon adoption.
No Retirement Savings Contributions may be based on Compensation
an Employee could have received before adoption of the SARSEP and
execution by the Employee of a Retirement Savings Agreement.
6.100 DEFINITIONS
6.101 COMPENSATION Means Compensation as defined in Section 2.03 of the
Plan and shall include any amount which is contributed by the
Employer as a Retirement Savings Contribution pursuant to a
Retirement Savings Agreement which is not includible in the gross
income of the Employee under Section 402(h) of the Code.
6.102 CONTRIBUTING PARTICIPANT Means a person who has met the
participation requirements and who has enrolled as a Contributing
Participant pursuant to Section 6.201 and on whose behalf the
Employer is contributing Retirement Savings Contributions.
6.103 ELIGIBLE EMPLOYER Means an Employer which: (a) has no more than
25 Employees who are eligible to participate in the Plan (or would
have been eligible to participate if this Plan had been
maintained) at any time during the preceding Plan Year; (b) has no
leased employees within the meaning of Section 414(n)(2) of the
Code; (c) is not a state or local government or political
subdivision thereof, or any agency or instrumentality thereof, or
an organization exempt from tax under Subtitle A of the Code; and
(d) does not currently maintain or has not maintained a defined
benefit plan, even if now terminated.
6.104 ENROLLMENT DATE Means the first day of any Plan Year, the first
day of the seventh month of any Plan Year and any more frequent
dates as the Employer may designate in a uniform and
nondiscriminatory manner.
6.105 EXCESS CONTRIBUTION Means the amount of each Highly Compensated
Employee's Retirement Savings Contributions that exceeds the
actual deferral percentage test limits described in Section
6.303(B) of the Plan for a Plan Year.
6.106 HIGHLY COMPENSATED EMPLOYEE Means a Participant described in
Section 414(q) of the Code who during the current or preceding
year: (a) was a 5% owner of the Employer as defined in Section
416(i)(1)(B)(i) of the Code; (b) received Compensation in excess
of $50,000, as adjusted pursuant to Section 415(d), and was in the
top-paid group (the top 20% of Employees, by Compensation); (c)
received Compensation in excess of $75,000, as adjusted pursuant
to section 415(d); or (d) was an officer and received Compensation
in excess of 50% of the dollar limit under Section 415 of the Code
for defined benefit plans.
6.107 KEY EMPLOYEE Means any Employee or former Employee or
beneficiaries of these Employees who at any time during the Plan
Year or the four preceding Plan Years is or was: (a) an officer
of the Employer (if the Employee's annual Compensation exceeds 50%
of the dollar limitation under Section 415(b)(1)(A) of the Code);
(b) an owner of one of the 10 largest interests in the Employer
(if the Employee's annual Compensation exceeds 100% of the dollar
limitation under Section 415(c)(1)(A) of the Code); (c) a 5% owner
of the Employer as defined in Section 416(i)(1)(B)(i) of the Code;
or (d) a 1% owner of Employer (if the Employee has annual
Compensation in excess of $150,000).
6.108 RETIREMENT SAVINGS AGREEMENT Means an agreement, on a form
provided by the Employer, pursuant to which a Contributing
Participant may elect to have his or her Compensation reduced and
paid as a Retirement Savings Contribution to his or her IRA by the
Employer.
6.109 RETIREMENT SAVINGS CONTRIBUTIONS Means contributions made by the
Employer on behalf of a Contributing Participant pursuant to
Section 6.301. Retirement Savings Contributions shall be deemed
to be Employer Contributions for purposes of (a) the contribution
limits described in Section 4.01(A) of the Plan; (b) the vesting
and withdrawal rights described in Section 4.03 of the Plan; and
(c) determining whether this Plan is a Top-Heavy Plan.
6.110 TOP-HEAVY PLAN This Plan is a Top-Heavy Plan for any Plan Year
if, as of the last day of the previous Plan Year (or current Plan
Year if this is the first year of the Plan) the total of the
Employer Contributions made on behalf of Key Employees for all the
years this Plan has been in existence exceeds 60% of such
contributions for all Employees. If the Employer maintains (or
maintained within the prior five years) any other SEP or defined
contribution plan in which a Key Employee participates (or
participated), the contributions or account balances, whichever is
applicable, must be aggregated with the contributions made to the
Plan. The contributions (and account balances, if applicable) of
an Employee who ceases to be a Key Employee or of an individual
who has not been in the employ of the Employer for the previous
five years shall be disregarded. The identification of Key
Employees and the top-heavy calculation shall be determined in
accordance with Section 416 of the Code and the regulations
thereunder.
6.200 CONTRIBUTING PARTICIPANT
6.201 REQUIREMENTS TO ENROLL AS A CONTRIBUTING PARTICIPANT
A. Enrollment - Each Employee who becomes a Participant may
enroll as a Contributing Participant. A Participant shall be
eligible to enroll as a Contributing Participant on any
Enrollment Date.
B. Initial Enrollment - Notwithstanding the time set forth in
Section 6.201(A) as of which a Participant may enroll as a
Contributing Participant, the Employer shall have the
authority to designate, in a uniform and nondiscriminatory
manner, additional Enrollment Dates during the twelve month
period beginning on the Effective Date in order that an
orderly first enrollment might be completed.
6.202 MODIFICATION OF RETIREMENT SAVINGS AGREEMENT A Contributing
Participant may modify his or her Retirement Savings Agreement to
increase or decrease (within the limits placed on Retirement
Savings Contributions in the Adoption Agreement) the amount of his
or her Compensation deferred into his or her IRA under the Plan.
Such modification may only be prospectively made effective as of
an Enrollment Date, or as of any other more frequent date(s) if
the Employer so permits in a uniform and nondiscriminatory manner.
A Contributing Participant who desires to make such a modification
shall complete, sign and file a new Retirement Savings Agreement
with the Employer at least 30 days (or such lesser period of days
as the Employer shall permit in a uniform and nondiscriminatory
manner) before the modification is to become effective.
6.203 WITHDRAWAL AS A CONTRIBUTING PARTICIPANT A Participant may
withdraw as a Contributing Participant as of the last date
preceding any Enrollment Date (or as of any other date if the
Employer so permits in a uniform and nondiscriminatory manner) by
revoking his or her authorization to the Employer to make
Retirement Savings Contributions on his or her behalf. A
Participant who desires to withdraw as a Contributing Participant
shall give written notice of withdrawal to the Employer at least
30 days (or such lesser period of days as the Employer shall
permit in a uniform and nondiscriminatory manner) before the
effective date of withdrawal. A Participant shall cease to be a
Contributing Participant upon his or her termination of
employment, or on account of termination of the Plan.
6.204 RETURN AS CONTRIBUTING PARTICIPANT AFTER WITHDRAWAL
A Participant who has withdrawn as a Contributing Participant
under Section 6.203 may not again become a Contributing
Participant until the first day of the first Plan Year following
the effective date of his or her withdrawal as Contributing
Participant.
6.300 RETIREMENT SAVINGS CONTRIBUTIONS
6.301 SALARY DEFERRAL ARRANGEMENT The Employer shall contribute
Retirement Savings Contributions on behalf of all Contributing
Participants for each Plan Year that the following requirements
are satisfied:
A. The Employer is an Eligible Employer; and
B. Not less than 50% of the Employees eligible to participate
elect to have Retirement Savings Contributions contributed to
the Plan on their behalf.
Subject to the limits described in Section 6.303, the amount of
Retirement Savings Contributions so contributed shall be the
amount required by the Retirement Savings Agreements of
Contributing Participants.
No Retirement Savings Contribution may be based on Compensation a
Participant received, or had a right to receive, before execution
of a Retirement Savings Agreement by the Participant.
6.302 FAILURE TO SATISFY 50% PARTICIPATION REQUIREMENT If the 50%
participation requirement described in Section 6.301(B)is not
satisfied as of the end of any Plan Year, all the Retirement
Savings Contributions made by Employees for the Plan Year shall be
considered "Disallowed Deferrals", i.e., IRA contributions that
are not SEP-IRA contributions. The Employer shall notify each
affected Employee, within 2 1/2 months after the end of the Plan
Year to which the Disallowed Deferrals relate, that the deferrals
are no longer considered SEP-IRA contributions. Such notification
shall specify the amount of the Disallowed Deferrals and the
calendar year of the Employee in which they are includible in
income and must provide an explanation of applicable penalties if
the Disallowed Deferrals are not withdrawn in a timely fashion.
The notice to each affected Employee must state specifically: (a)
the amount of the Disallowed Deferrals; (b) that the Disallowed
Deferrals are includible in the Employee's gross income for the
calendar year or years in which the amounts deferred would have
been received by the Employee in cash had he or she not made an
election to defer and that the income allocable to such Disallowed
Deferrals is includible in the year withdrawn from the IRA; and
(c) that the Employee must withdraw the Disallowed Deferrals (and
allocable income) from the SEP-IRA by April 15 following the
calendar year of notification by the Employer. Those Disallowed
Deferrals not withdrawn by April 15 following the year of
notification will be subject to the IRA contribution limitations
of Sections 219 and 408 of the Code and thus may be considered an
excess contribution to the Employee's IRA. Disallowed Deferrals
may be subject to the 6% tax on excess contributions under Section
4973 of the Code. If income allocable to a Disallowed Deferral is
not withdrawn by April 15 following the year of notification by
the Employer, the income may be subject to the 10% tax on early
distributions under Section 72(t) of the Code when withdrawn.
Disallowed Deferrals are reported in the same manner as are Excess
Contributions.
6.303 LIMITS ON RETIREMENT SAVINGS CONTRIBUTIONS
A. Maximum Amount - No Contributing Participant shall be
permitted to have Retirement Savings Contributions made under
this Plan during any calendar year in excess of $7,000 (as
indexed pursuant to Code Section 402(g)(5)). The $7,000
(indexed) limit applies to the total elective deferrals the
Contributing Participant makes for the calendar year under
this Plan and under any cash or deferred arrangement described
in Section 401(k) of the Code and any salary reduction
arrangement described in Section 403(b) of the Code. The
limit may be increased to $9,500 if the Contributing
Participant makes elective deferrals to a salary reduction
arrangement under Section 403(b) of the Code.
Under no circumstances may an Employee s Retirement Savings
Contributions in any calendar year exceed the lesser of: (1)
the limitation under Section 402(g) of the Code based on all
of the plans of the Employer; or (2) 15% of his or her
Compensation (less any amount contributed by the Employer as a
Retirement Savings Contribution). Compute the amount of this
15% limit by using the following formula:
Compensation (before subtracting Retirement Savings
Contributions) x 13.0435%.
If an Employer maintains any other SEP plan to which
non-elective SEP Employer Contributions are made for a Plan
Year, or any qualified plan to which contributions are made
for such Plan Year, then an Employee's Retirement Savings
Contribution may be limited to the extent necessary to satisfy
the maximum contribution limitation under Section 415(c)(1)(A)
of the Code.
In addition to the dollar limitation of Section 415(c)(1)(A),
which is $30,000 in 1991, Employer Contributions to this Plan,
when aggregated with contributions to all other SEP plans and
qualified plans of the Employer, generally may not exceed 15%
of Compensation (less any amount contributed by the Employer
as a Retirement Savings Contribution) for any Employee. If
these limits are exceeded on behalf of any Employee for a
particular Plan Year, that Employee's Retirement Savings
Contributions for that year must be reduced to the extent of
the excess.
B. Actual Deferral Percentage (ADP) Test Limits - Retirement
Savings Contributions by a Highly Compensated Employee must
satisfy the actual deferral percentage (hereinafter "ADP")
limitation under Section 408(k)(6) of the Code. Amounts in
excess of the ADP limitation will be deemed Excess
Contributions on behalf of the affected Highly Compensated
Employee or Employees. The ADP of any Highly Compensated
Employee who is eligible to be a Contributing Participant
shall not be more than the product obtained by multiplying the
average of the ADPs of all non-Highly Compensated Employees
who are eligible to be Contributing Participants by 1.25. For
purposes of this Section 6.303, an Employee's ADP is the ratio
(expressed as a percentage) of his or her Retirement Savings
Contributions for the Plan Year to his or her Compensation for
the Plan Year. The ADP of an Employee who is eligible to be a
Contributing Participant, but who does not make Retirement
Savings Contributions during the Plan Year is zero. The
determination of the ADP for any Employee is to be made in
accordance with Section 408(k)(6) of the Code and should
satisfy such other requirements as may be provided by the
Secretary of the Treasury.
C. Special Rule for Family Members - For purposes of determining
the ADP of a Highly Compensated Employee, the Retirement
Savings Contributions and Compensation of the Employee will
also include the Retirement Savings Contributions and
Compensation of any family member. This special rule applies
only if the Highly Compensated Employee is in one of the
following groups: (a) a more than 5% owner of the Employer;
or (b) one of a group of the 10 most Highly Compensated
Employees.
The Retirement Savings Contributions and Compensation of
family members used in this special rule do not count in
computing the average of the ADPs of non-Highly Compensated
Employees.
For purposes of this special rule, a family member is an
individual who is related to a Highly Compensated Employee as
a spouse, or as a lineal ascendent or descendent or the
spouses of such lineal ascendents or descendents in accordance
with Section 414(q) of the Code and the regulations
thereunder.
6.304 DISTRIBUTION OF EXCESS RETIREMENT SAVINGS CONTRIBUTIONS To the
extent that a Contributing Participant's Retirement Savings
Contributions for a calendar year exceed the limit described in
Section 6.303(A) (i.e., the $7,000 (indexed) limit), the
Contributing Participant must withdraw the excess Retirement
Savings Contributions (and any income allocable to such amount) by
April 15 following the year of the deferral.
6.305 DISTRIBUTION OF EXCESS CONTRIBUTIONS The Employer shall notify
each Employee, no later than 2 1/2 months following the close of
the Plan Year of the amount, if any, of any Excess Contribution to
that Employee's IRA for such Plan Year. If the Employer does not
so notify Employees by such date, the Employer must pay a tax
equal to 10% of the Excess Contributions for the Plan Year
pursuant to Section 4979 of the Code. If the Employer fails to
notify Employees by the end of the Plan Year following the Plan
Year of the Excess Contributions, the SEP no longer will be
considered to meet the requirements of Section 408(k)(6) of the
Code. This means that the earnings on the SEP are subject to tax
immediately, that no more Retirement Savings Contributions may be
made under the SEP, and that Retirement Savings Contributions of
all Employees with uncorrected Excess Contributions must be
included in their income in that year. If the SEP no longer meets
the requirements of Section 408(k)(6), then any contribution to an
Employee's IRA will be subject to the IRA contribution limitations
of Section 219 and 408 of the Code and thus may be considered an
excess contribution to the Employee's IRA.
The Employer's notification to each affected Employee of the
Excess Contributions must specifically state in a manner
calculated to be understood by the average Plan Participant: (a)
the amount of the Excess Contributions attributable to that
Employee's Retirement Savings Contributions; (b) the Plan Year for
which the Excess Contributions were made; (c) that the Excess
Contributions are includible in the affected Employee's gross
income for the calendar year in which such Excess Contributions
were made; and (d) that the Employee must withdraw the Excess
Contributions (and allocable income) from the IRA by April 15
following the year of notification by the Employer. Those Excess
Contributions not withdrawn by April 15 following the year of
notification will be subject to the IRA contribution limitations
of Sections 219 and 408 of the Code for the preceding calendar
year and thus may be considered an excess contribution to the
Employee's IRA. Such excess contributions may be subject to the
6% tax on excess contributions under Section 4973 of the Code. If
income allocable to an Excess Contribution is not withdrawn by
April 15 following the year of notification by the Employer, the
income may be subject to the 10% tax on early distributions under
Section 72(t) of the Code when withdrawn. However, if the Excess
Contributions (not including allocable income) total less than
$100, then the Excess Contributions are includible in the
Employee's gross income in the year of notification. Income
allocable to the Excess Contributions is includible in the year of
withdrawal from the IRA.
6.306 DETERMINATION OF INCOME For purposes of Sections 6.302, 6.304 and
6.305, the income allocable to Disallowed Deferrals, excess
Retirement Savings Contributions or Excess Contributions for a
year shall be determined by multiplying the income earned on the
IRA for the period which begins on the first day of such year and
ends on the date of distribution from the IRA by a fraction, the
numerator of which is the Disallowed Deferral, excess Retirement
Savings Contribution or Excess Contribution for such year and the
denominator of which is the sum of the account balance of the IRA
as of the beginning of such year and the total contributions made
to the IRA for such year.
6.307 RESTRICTION ON TRANSFERS AND WITHDRAWALS The Employer shall
notify each Contributing Participant that, until the earlier of 2
1/2 months after the end of a particular Plan Year or the date the
Employer notifies its employees that the actual deferral
percentage limitations have been calculated, any transfer or
distribution from the Contributing Participant's IRA of Retirement
Savings Contributions (or income on these contributions)
attributable to Retirement Savings Contributions made during that
Plan Year will be includible in income for purposes of Sections
72(t) and 408(d)(1) of the Code.
6.308 ALLOCATION OF RETIREMENT SAVINGS CONTRIBUTIONS Retirement Savings
Contributions made on behalf of Contributing Participants for a
Plan Year shall be allocated and deposited to the IRA of each
Contributing Participant by the Employer as soon as is
administratively feasible.
6.400 SPECIAL RULES FOR TOP-HEAVY PLANS
6.401 MINIMUM ALLOCATION The following mandatory minimum allocation
applies when this Plan is a Top-Heavy Plan:
Unless another plan of the Employer is designated in the space
below to satisfy the top-heavy requirements of Section 416 of the
Code, each year this Plan is a Top-Heavy Plan, the Employer will
make a minimum contribution to the IRA of each Participant who is
not a Key Employee, which, in combination with other non-elective
contributions, if any, is equal to the lesser of 3% of such
Participant's Compensation or a percentage of Compensation equal
to the percentage of Compensation at which elective and
non-elective contributions are made under the Plan for the Plan
Year for the Key Employee for whom such percentage is the largest.
The top-heavy minimum will be met in the following
plan:______________________________
__________________________________________________________
____________________________________________________________
(If applicable, name the plan other than this Plan in which the
minimum top-heavy contribution will be made.)
6.402 RETIREMENT SAVINGS CONTRIBUTIONS CANNOT BE USED FOR MINIMUM
ALLOCATION For purposes of satisfying the minimum allocation
requirement of Section 416 of the Code, Retirement Savings
Contributions contributed for the benefit of Employees who are not
Key Employees may not be used to satisfy the minimum allocation
requirement.
<PAGE>
National Standardized Money Purchase Pension Plan EX-99.B14-14-smppaa
ADOPTION AGREEMENT
________________________________________________________________________________
SECTION 1. EMPLOYER INFORMATION
Name of Employer: ______________________________________________
Address: _______________________________________________________
City: ________________________ State:___________ Zip: __________
Telephone ____________ Federal Tax Identification Number ________
Income Tax Year End
Type of Business (Check only one) [ ] Sole Proprietorship
[ ] Partnership [ ] Corporation
[ ] Other (Specify)________________________________________________
Nature of Business (Describe)____________________________________
Plan Sequence No. (Enter 001 if this is the first
qualified plan the Employer has ever maintained, enter 002 if it is
the second, etc.)
For a plan which covers only the owner of the business, please provide
the following information about the owner:
Social Security No._________________Date Business Established_________
Date of Birth_______________Marital Status___________________________
Home Address__________________________________________________________
SECTION 2. EFFECTIVE DATES Check and complete Option A or B
Option A: [ ] This is the initial adoption of a money purchase
pension plan by the Employer.
The Effective Date of this Plan is , 19
.
NOTE: The effective date is usually the first day of the
Plan Year in which this Adoption Agreement is signed.
Option B: [ ] This is an amendment and restatement of an
existing money purchase pension plan (a Prior Plan).
The Prior Plan was initially effective on
______________________, 19________.
The Effective Date of this amendment and restatement is
_________________, 19_______.
NOTE: The effective date is usually the first day of the
Plan Year in which this Adoption Agreement is signed.
SECTION 3. ELIGIBILITY REQUIREMENTS Complete Parts A, B and C
Part A. Years of Eligibility Service Requirement:
An Employee will be eligible to become a Participant in the Plan after
completing (enter 0, 1 or 2) Years of Eligibility Service.
NOTE: If more than 1 year is selected, the immediate 100% vesting
schedule of Section 5, Option C will automatically apply. If left
blank, the Years of Eligibility Service required will be deemed to be
0.
#713(12/90)L90 c1990 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 2
Part B. Age Requirement:
An Employee will be eligible to become a Participant in the Plan after
attaining age (no more than 21). NOTE: If left blank, it
will be deemed there is no age requirement for eligibility.
Part C. Class of Employees Eligible to Participate:
All Employees shall be eligible to become a Participant in the Plan,
except those checked below:
[ ] Those Employees included in a unit of Employees covered by
the terms of a collective bargaining agreement between Employee
representatives (the term "Employee representatives" does not
include any organization more than half of whose members are
Employees who are owners, officers or executives of the Employer)
and the Employer under which retirement benefits were the subject
of good faith bargaining unless the agreement provides that such
Employees are to be included in the Plan, and except those
Employees who are non-resident aliens pursuant to Section
410(b0(3)(C) of the Code and who received no earned income from
the Employer which constitutes income from sources within the
United States.
SECTION 4. EMPLOYER CONTRIBUTION FORMULA Check and Complete either
Option A or B
Option A: [ ] Nonintegrated Formula: For each Plan Year the
Employer will contribute for each qualifying Participant
an amount equal to % (not to exceed 25%) of the
qualifying Participant's Compensation for the Plan Year.
Option B: [ ] Integrated Formula: For each Plan Year, the
Employer will contribute for each qualifying Participant
an amount equal to the sum of the amounts determined in
Step 1 and Step 2:
Step 1. An amount equal to ______% (the base
contribution percentage) of the Participant's
Compensation for the Plan Year up to the integration
level, plus
Step 2. An amount equal to ______% (not to exceed the
base contribution percentage by more than the lesser
of: (1) the base contribution percentage, or (2) the
money purchase maximum disparity rate as described
in Section 3.01(b)(3) of the Plan) of such
Participant's Compensation for the Plan Year in
excess of the integration level.
The integration level shall be (Choose one):
Option 1: [ ] The Taxable Wage Base
Option 2: [ ] $________ (a dollar amount less than the Taxable
Wage Base)
Option 3: [ ] ______% of the Taxable Wage Base
NOTE: If no box is checked, the integration level shall be the
Taxable Wage Base.
SECTION 5. VESTING Complete Parts A and B
A Participant shall become Vested in his or her Individual Account
attributable to Employer Contributions and Forfeitures as follows
(Choose one):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
YEARS OF VESTED PERCENTAGE
VESTING SERVICE Option A [ ] Option B [ ] Option C [ ] Option D [ ] (Complete if Chosen)
- ------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
1 0% 0% 100% ____%
2 0% 20% 100% ____%
3 100% 40% 100% ____% (not less than 20%)
4 100% 60% 100% ____% (not less than 40%)
5 100% 80% 100% ____% (not less than 60%)
6 100% 100% 100% ____% (not less than 80%)
- --------------------------------------------------------------------------------- ---------
</TABLE>
NOTE: If left blank, Option C, 100% vesting, will be deemed to be selected.
#713(12/90)L90 c1990 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 3
SECTION 6. NORMAL RETIREMENT AGE
The Normal Retirement Age under the Plan is age (not to exceed 65).
NOTE: If left blank, the Normal Retirement Age will be deemed to be age
59 1/2.
SECTION 7. HOURS REQUIRED Complete Parts A and B
Part A. Hours of Service (no more than 1,000) shall be required
to constitute a Year of Vesting Service or a Year of Eligibility
Service.
Part B. Hours of Service (no more than 500) must be exceeded to
avoid a Break in Vesting Service or a Break in Eligibility Service.
NOTE: The number of hours in Part A must be greater than the number
of hours in Part B.
SECTION 8. OTHER OPTIONS Answer "Yes" or "No" to each of the following
questions by checking the appropriate box. If a box is not checked
for a question, the answer will be deemed to be "No."
A. Loans: Will loans to Participants pursuant to Section 6.08 of
the Plan be permitted? [ ] Yes [ ] No
B. Participant Direction of Investments: Will Participants be
permitted to direct the investment of their Individual Accounts
pursuant to Section 5.14 of the Plan?
[ ] Yes [ ] No
SECTION 9. JOINT AND SURVIVOR ANNUITY
The survivor annuity portion of the Joint and Survivor Annuity shall
be a percentage equal to % (at least 50% but no more than
100%) of the amount paid to the Participant prior to his or her death.
SECTION 10. ADDITIONAL PLANS
An Employer who has ever maintained or who later adopts any plan
(including a welfare benefit fund, as defined in Section 419(e) of the
Code, which provides post-retirement medical benefits allocated to
separate accounts for key employees as defined in Section 419A(d)(3)
of the Code or an individual medical account, as defined in Section
415(1)(2) of the Code) in addition to this Plan (other than a paired
standardized profit sharing plan using Basic Plan Document No. 03) may
not rely on the opinion letter issued by the National Office of the
Internal Revenue Service as evidence that this Plan is qualified under
Section 401 of the Code. If the Employer who adopts or maintains
multiple plans wishes to obtain reliance that the Employer's plan(s)
are qualified, application for a determination letter should be made
to the appropriate Key District Director of Internal Revenue.
This Adoption Agreement may be used only in conjunction with Basic
Plan Document No. 03.
SECTION 11. EMPLOYER SIGNATURE Important: Please read before signing
I am an authorized representative of the Employer named above and I
state the following:
1. I acknowledge that I have relied upon my own advisors regarding
the completion of this Adoption Agreement and the legal and tax
implications of adopting this Plan.
2. I understand that my failure to properly complete this Adoption
Agreement may result in disqualification of the Plan.
3. I understand that the Prototype Sponsor will inform me of any
amendments made to the Plan and will notify me should it
discontinue or abandon the Plan.
4. I have received a copy of this Adoption Agreement and the
corresponding Basic Plan Document.
Signature for Employer___________________Date Signed_____________
Type Name__________________________________________________
SECTION 12. TRUSTEE OR CUSTODIAN Check and complete only one option
Option A. [ ] Financial Organization as Trustee or Custodian
Check One: [ ] Custodian, [ ] Trustee without full trust
powers, or [ ] Trustee with full trust powers
NOTE: Custodian will be deemed selected if no box is checked.
Financial Organization________________________________________
Signature__________________________________________________
Type Name_________________________________________________
#713(12/90)L90 c1990 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 4
Option B. [ ] Individual Trustee(s)
Signature ______________________ Signature_____________________
Type Name________________________ Type Name_____________________
SECTION 13. PROTOTYPE SPONSOR
Name of Prototype Sponsor______________________________________
Address_____________________________________________________________
Telephone
Number______________________________________________________________
SECTION 14. LIMITATION ON ALLOCATIONS - More Than One Plan
If you maintain or ever maintained another qualified plan (other than
a paired standardized profit sharing plan using Basic Plan Document
No. 03) in which any Participant in this Plan is (or was) a
Participant or could become a Participant, you must complete this
section. You must also complete this section if you maintain a
welfare benefit fund, as defined in Section 419(e) of the Code, or an
individual medical account, as defined in Section 415(l)(2) of the
Code, under which amounts are treated as annual additions with respect
to any Participant in this Plan.
Part A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a regional
prototype plan:
1. [ ] The provisions of Section 3.05(B)(1) through
3.05(B)(6) of the Plan will apply as if the other plan were a
master or prototype plan.
2. [ ] Other method. (Provide the method under which the
plans will limit total annual additions to the maximum
permissible amount, and will properly reduce any excess
amounts, in a manner that precludes Employer
discretion.)______________________________________
__________________________________________________
Part B. If the Participant is or has ever been a participant in a defined
benefit plan maintained by the Employer, the Employer will provide
below the language which will satisfy the 1.0 limitation of Section
415(e) of the Code. Such language must preclude Employer discretion.
(Complete)____________________
Part C. Compensation will mean all of each Participant's (Choose one):
Option 1: [ ] Section 3121(a) wages
Option 2: [ ] Section 3401(a) wages
Option 3: 415 safe-harbor compensation
NOTE: If no box is checked, Option 2 will be deemed to be selected.
Part D. The limitation year is the following 12-consecutive month
period:_______________________________________
#713(12/90)L90 c1990 Universal Pensions, Inc., Brainerd, MN 56401
Standardized Money Purchase Pension Plan EX-99.B1-15-smppgis
SUMMARY PLAN DESCRIPTION
_____________________________________________________________________________
GENERAL INFORMATION SHEET
PLAN Your Employer has adopted a Standardized Money Purchase
INFORMATION Pension Plan for the benefit of you and your coworkers. This
Plan is designed to help you meet your financial needs
during your retirement years.
The Employer must follow certain rules and requirements in
order to maintain this Plan. This General Information Sheet
will give you some of the details of your Plan. Refer to the
Summary Plan Description (SPD) Booklet for more information
on each topic.
Plan Name ___________________________________________
Plan Number _________________________________________
Plan Year End _______________________________________
EFFECTIVE DATES The effective date of this Plan is ____________. If this is
an amendment and restatement of a prior Plan, the effective
date of the prior Plan was _______.
SERVICE AND AGE See Section 2, Part 1, of the SPD Booklet.
REQUIREMENTS Employees shall become eligible to participate in the Plan
after satisfying the age and service requirements.
The Years of Service required for you to become a
Participant are_____________________.
The age required for you to become a Participant is
_________________________________.
ELIGIBLE See Section 2, Part 1, of the SPD Booklet.
EMPLOYEES All Employees shall become eligible to participate in the
Plan, except the following (if checked):
[ ] Those Employees covered by the terms of a collective
bargaining agreement (e.g., union agreement) unless the
collective bargaining agreement specifies that those
Employees will participate, and those Employees who are
nonresident aliens and receive no earned income from
the Employer within the United States.
ENTRY DATES See Section 2, Part 2, of the SPD Booklet.
The Entry Dates upon which you can begin plan participation
are ____________________________.
HOURS OF SERVICE See Section 2, Parts 3 and 4, of the SPD Booklet.
AND BREAK IN The number of Hours of Service you must be employed to
SERVICE complete a Year of Service is_________.
The number of Hours of Service you must be employed to avoid
a Break in Service is____________.
EMPLOYER See Section 3, Parts 1, 2 and 3 of the SPD Booklet.
CONTRIBUTIONS [ ] Nonintegrated Formula. Each Plan Year, the
Employer will contribute to the Plan _____% of each
qualifying Participant compensation.
[ ] Integrated Formula. Each Plan Year, the Employer
will contribute to the Plan _____% of each qualifying
Participant's compensation plus _____% of the qualifying
Participant's compensation which exceeds the Integration
Level. The Integration Level will be____________________
#741(1/91) c1991 Universal Pensions, Inc., Brainerd, MN 56401
VESTING See Section 4, Parts 8 and 9, of the SPD Booklet.
You will be vested in your Individual Accounts derived from
Employer Contributions and forfeitures thereof according to
the schedule selected below:
_______________________________________________________________________
Years Of VESTED PERCENTAGE
Service Option A [ ] Option B [ ] Option C [ ] Option D [ ]
_______________________________________________________________________
1 0% 0% 100% ____%
2 0% 20% 100% ____%
3 100% 40% 100% ____%
4 100% 60% 100% ____%
5 100% 80% 100% ____%
6 100% 100% 100% ____%
_______________________________________________________________________
NORMAL See Section 4, Part 1, of the SPD Booklet.
RETIREMENT AGE Normal Retirement Age under the Plan is__________________.
OTHER OPTIONS See Section 6 of the SPD Booklet.
Are loans to Participants permitted? If "yes," see attached
Loan Disclosure [ ] Yes [ ] No
Are Participants allowed to direct the investment of their
Individual Accounts? [ ] Yes [ ] No
JOINT AND See Section 4, Part 3, of the SPD Booklet.
SURVIVOR ANNUITY The survivor annuity portion of the Joint and Survivor
Annuity will be a percentage equal to _____% of the amount
paid to the Participant prior to his or her death.
EMPLOYER
INFORMATION Name_________________________________________
Address______________________________________
Business Telephone________________________________
Employer Identification Number____________________
Employer Income Tax Year End______________________
PLAN The Employer is usually the Plan Administrator. This section
ADMINISTRATOR will be completed only if the Employer will not be the Plan
Administrator.
Name (if not the Employer)_______________________________
Address__________________________________________________
Business Telephone_______________________________________
AGENT FOR SERVICE Name_____________________________________________________
OF LEGAL PROCESS Address__________________________________________________
NOTE: The Agent for Service of Legal Process is the person
upon whom any legal papers can be served. Service of legal
process may be made upon a Plan Trustee or the Employer/Plan
Administrator.
TRUSTEE(S) Name________________________________________________________
Title_______________________________________________________
Business Address____________________________________________
Name________________________________________________________
Title_______________________________________________________
Business Address____________________________________________
#741(1/91) c1991 Universal Pensions, Inc., Brainerd, MN 56401
Standardized Profit Sharing Plan EX-99.B14-16-spspaa
ADOPTION AGREEMENT
_______________________________________________________________________________
SECTION 1. EMPLOYER INFORMATION
Name of Employer: __________________________________________________
Address: _____________________________________________________
City: ___________________________ State:____Zip: ________________
Telephone ______________ Federal Tax Identification Number ________
Income Tax Year End
Type of Business (Check only one) [ ] Sole Proprietorship
[ ] Partnership [ ] Corporation
[ ] Other (Specify)________________________________________________
Nature of Business (Describe)_________________________________________
Plan Sequence No. (Enter 001 if this is the first
qualified plan the Employer has ever maintained, enter 002 if it is
the second, etc.)
For a plan which covers only the owner of the business, please provide
the following information about the owner:
Social Security No._____________Date Business Established_____________
Date of Birth______________Marital Status___________________________
Home Address___________________________________________________
SECTION 2. EFFECTIVE DATES Check and complete Option A or B
Option A: [ ] This is the initial adoption of a profit sharing
plan by the Employer.
The Effective Date of this Plan is , 19
.
NOTE: The effective date is usually the first day of the
Plan Year in which this Adoption Agreement is signed.
Option B: [ ] This is an amendment and restatement of an
existing profit sharing plan (a Prior Plan).
The Prior Plan was initially effective on
______________________, 19________.
The Effective Date of this amendment and restatement is
_________________, 19_______.
NOTE: The effective date is usually the first day of the
Plan Year in which this Adoption Agreement is signed.
SECTION 3. ELIGIBILITY REQUIREMENTS Complete Parts A, B and C
Part A. Years of Eligibility Service Requirement:
An Employee will be eligible to become a Participant in the Plan after
completing (enter 0, 1 or 2) Years of Eligibility Service.
NOTE: If more than 1 year is selected, the immediate 100% vesting
schedule of Section 5, Option C will automatically apply. If left
blank, the Years of Eligibility Service required will be deemed to be
0.
Part B. Age Requirement:
An Employee will be eligible to become a Participant in the Plan after
attaining age (no more than 21). NOTE: If left blank, it
will be deemed there is no age requirement for eligibility.
#705(12/90)L90 c1990 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 2
Part C. Class of Employees Eligible to Participate:
All Employees shall be eligible to become a Participant in the Plan,
except the following (if checked):
[ ] Those Employees included in a unit of Employees covered by
the terms of a collective bargaining agreement between Employee
representatives (the term "Employee representatives" does not
include any organization more than half of whose members are
Employees who are owners, officers or executives of the Employer)
and the Employer under which retirement benefits were the subject
of good faith bargaining unless the agreement provides that such
Employees are to be included in the Plan, and except those
Employees who are non-resident aliens pursuant to Section
410(b)(3)(C) of the Code and who received no earned income from
the Employer which constitutes income from sources within the
United States.
SECTION 4. EMPLOYER CONTRIBUTION AND ALLOCATION FORMULA
Part A. Contribution Formula
For each Plan Year the Employer will contribute an amount to be
determined from year to year.
Part B. Allocation Formula: (Check Option 1 or 2)
Option 1: [ ] Pro Rata Formula. Employer
Contributions and Forfeitures shall be allocated to the
Individual Accounts of qualifying Participants in the
ratio that each qualifying Participant's Compensation for
the Plan Year bears to the total Compensation of all
qualifying Participants for the Plan Year.
Option 2: [ ] Integrated Formula: Employer Contributions and
Forfeitures shall be allocated as follows (Start with Step
3 if this Plan is not a Top-Heavy Plan):
Step 1. Employer Contributions and Forfeitures shall first
be allocated pro rata to qualifying Participants
in the manner described in Section 4, Part B,
Option 1. The percent so allocated shall not
exceed 3% of each qualifying Participant's
Compensation.
Step 2. Any Employer Contributions and Forfeitures
remaining after the allocation in Step 1 shall be
allocated to each qualifying Participant's
Individual Account in the ratio that each
qualifying Participant's Compensation for the Plan
Year in excess of the integration level bears to
all qualifying Participants' Compensation in
excess of the integration level, but not in excess
of 3%.
Step 3. Any Employer Contributions and Forfeitures
remaining after the allocation in Step 2 shall be
allocated to each qualifying Participant's
Individual Account in the ratio that the sum of
each qualifying Participant's total Compensation
and Compensation in excess of the integration
level bears to the sum of all qualifying
Participants' total Compensation and Compensation
in excess of the integration level, but not in
excess of the profit sharing maximum disparity
rate as described in Section 3.01(B)(3) of the
Plan.
Step 4. Any Employer Contributions and Forfeitures
remaining after the allocation in Step 3 shall be
allocated pro rata to qualifying Participants in
the manner described in Section 4, Part B, Option
1.
The integration level shall be (Choose one):
Option 1: [ ] The Taxable Wage Base
Option 2: [ ] $________ (a dollar amount less than the Taxable
Wage Base)
Option 3: [ ] ______% of the Taxable Wage Base
NOTE: If no box is checked, the integration level shall be the
Taxable Wage Base.
#705(12/90)L90 c1990 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 3
SECTION 5. VESTING
A Participant shall become Vested in his or her Individual Account
attributable to Employer Contributions and Forfeitures as follows
(Choose one):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
YEARS OF VESTED PERCENTAGE
VESTING SERVICE Option A [ ] Option B [ ] Option C [ ] Option D [ ] (Complete if Chosen)
- -------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
1 0% 0% 100% ____%
2 0% 20% 100% ____%
3 100% 40% 100% ____% (not less than 20%)
4 100% 60% 100% ____% (not less than 40%)
5 100% 80% 100% ____% (not less than 60%)
6 100% 100% 100% ____% (not less than 80%)
- -------------------------------------------------------------------------------------------
</TABLE>
NOTE: If left blank, Option C, 100% vesting, will be deemed to be selected.
SECTION 6. NORMAL RETIREMENT AGE
The Normal Retirement Age under the Plan is age (not to exceed
65).
NOTE: If left blank, the Normal Retirement Age will be deemed to be
age 59 1/2.
SECTION 7. HOURS REQUIRED Complete Parts A and B
Part A. Hours of Service (no more than 1,000) shall be required
to constitute a Year of Vesting Service or a Year of Eligibility
Service.
Part B. Hours of Service (no more than 500) must be exceeded to
avoid a Break in Vesting Service or a Break in Eligibility Service.
NOTE: The number of hours in Part A must be greater than the number
of hours in Part B.
SECTION 8. OTHER OPTIONS Answer "Yes" or "No" to each of the following
questions by checking the appropriate box. If a box is not checked
for a question, the answer will be deemed to be "No."
A. Loans: Will loans to Participants pursuant to Section 6.08 of
the Plan be permitted? [ ] Yes [ ] No
B. Participant Direction of Investments: Will Participants be
permitted to direct the Investment of their Individual Accounts
pursuant to Section 5.14 of the Plan?
[ ] Yes [ ] No
C. In-Service Withdrawals: Will Participants be permitted to make
withdrawals during service pursuant to Section 6.01(A)(3) of
the Plan? NOTE: If the Plan is being adopted to amend and
replace a Prior Plan which permitted in-service withdrawals you
must answer "Yes."
[ ] Yes [ ] No
Check here if such withdrawals will be permitted only on account
of hardship. [ ]
SECTION 9. JOINT AND SURVIVOR ANNUITY
Part A. Retirement Equity Act Safe Harbor:
Will the safe harbor provisions of Section 6.05(F) of the Plan apply
(Choose only one Option)?
Option 1: [ ] Yes
Option 2: [ ] No
NOTE: You must select "No" if you are adopting this Plan as an
amendment and restatement of a Prior Plan that was subject to the
joint and survivor annuity requirements.
Part B. Survivor Annuity Percentage: (Complete only if your answer in
Section 9, Part A is "No.")
The survivor annuity portion of the Joint and Survivor Annuity shall
be a percentage equal to ____% (at least 50% but no more than 100%) of
the amount paid to the Participant prior to his or her death.
#705(12/90)L90 c1990 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 4
SECTION 10. ADDITIONAL PLANS
An Employer who has ever maintained or who later adopts any plan
(including a welfare benefit fund, as defined in Section 419(e) of the
Code, which provides post-retirement medical benefits allocated to
separate accounts for key employees as defined in Section 419A(d)(3)
of the Code or an individual medical account, as defined in Section
415(1)(2) of the Code) in addition to this Plan (other than a paired
standardized profit sharing plan using Basic Plan Document No. 03) may
not rely on the opinion letter issued by the National Office of the
Internal Revenue Service as evidence that this Plan is qualified under
Section 401 of the Code. If the Employer who adopts or maintains
multiple plans wishes to obtain reliance that the Employer's plan(s)
are qualified, application for a determination letter should be made
to the appropriate Key District Director of Internal Revenue.
This Adoption Agreement may be used only in conjunction with Basic
Plan Document No. 03.
SECTION 11. EMPLOYER SIGNATURE Important: Please read before signing
I am an authorized representative of the Employer named above and I
state the following:
1. I acknowledge that I have relied upon my own advisors regarding
the completion of this Adoption Agreement and the legal and tax
implications of adopting this Plan.
2. I understand that my failure to properly complete this Adoption
Agreement may result in disqualification of the Plan.
3. I understand that the Prototype Sponsor will inform me of any
amendments made to the Plan and will notify me should it
discontinue or abandon the Plan.
4. I have received a copy of this Adoption Agreement and the
corresponding Basic Plan Document.
Signature for Employer___________________Date Signed_____________
Type Name__________________________________________________
SECTION 12. TRUSTEE OR CUSTODIAN Check and complete only one option
Option A. [ ] Financial Organization as Trustee or Custodian
Check One: [ ] Custodian, [ ] Trustee without full trust
powers, or [ ] Trustee with full trust powers
NOTE: Custodian will be deemed selected if no box is checked.
Financial Organization_____________________________________
Signature___________________________________________________
Type Name__________________________________________________
Option B. [ ] Individual Trustee(s)
Signature _____________________ Signature_____________________
Type Name________________________ Type Name_____________________
SECTION 13. PROTOTYPE SPONSOR
Name of Prototype Sponsor____________________________________
Address_________________________________________________________
Telephone Number________________________________________________
SECTION 14. LIMITATION ON ALLOCATIONS - More Than One Plan
If you maintain or ever maintained another qualified plan (other than
a paired standardized money purchase pension plan using Basic Plan
Document No. 03) in which any Participant in this Plan is (or was) a
Participant or could become a Participant, you must complete this
section. You must also complete this section if you maintain a
welfare benefit fund, as defined in Section 419(e) of the Code, or an
individual medical account, as defined in Section 415(l)(2) of the
Code, under which amounts are treated as annual additions with respect
to any Participant in this Plan.
#705(12/90)L90 c1990 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Page 5
Part A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a master or
prototype plan:
1. [ ] The provisions of Section 3.05(B)(1) through
3.05(B)(6) of the Plan will apply as if the other plan were a
master or prototype plan.
2. [ ] Other method. (Provide the method under which the
plans will limit total annual additions to the maximum
permissible amount, and will properly reduce any excess
amounts, in a manner that precludes Employer
discretion.)____________________________________________
___________________________________________________
Part B. If the Participant is or has ever been a participant in a defined
benefit plan maintained by the Employer, the Employer will provide
below the language which will satisfy the 1.0 limitation of Section
415(e) of the Code. Such language must preclude Employer discretion.
(Complete)__________________
Part C. Compensation will mean all of each Participant's (Choose one):
Option 1: [ ] Section 3121(a) wages
Option 2: [ ] Section 3401(a) wages
Option 3: 415 safe-harbor compensation
NOTE: If no box is checked, Option 2 will be deemed to be selected.
Part D. The limitation year is the following 12-consecutive month
period:_______________________________________
#705(12/90)L90 c1990 Universal Pensions, Inc., Brainerd, MN 56401
<PAGE>
Standardized Profit Sharing Plan EX-99.B14-17-spspgis
SUMMARY PLAN DESCRIPTION
________________________________________________________________________________
GENERAL INFORMATION SHEET
PLAN INFORMATION Your Employer has adopted a Standardized Profit Sharing Plan
for the benefit of you and your co-workers. This Plan is designed
to help you meet your financial needs during your retirement
years. The Employer must follow certain rules and requirements
in order to maintain this Plan. This General Information
Sheetwill give you some of the details of your Plan. Refer to the
Summary Plan Description (SPD) Booklet for more information on
each topic.
Plan
Name_____________________________________________________________
PlanNumber_______________________________________________________
Plan Year End___________________________________________________
EFFECTIVE DATES The effective date of this Plan is. If this is an amendment
and restatement of a prior Plan, the effective date of the prior
Plan was _____________________.
SERVICE AND AGE See Section 2, Part 1, of the SPD Booklet.
REQUIREMENTS Employees shall become eligible to participate in the Plan after
satisfying the age and service requirements. The Years of Service
required for you to become a Participant are ______________.
The age required for you to become a Participant
is__________________________.
ELIGIBLE EMPLOYEES See Section 2, Part 1, of the SPD Booklet.
All Employees shall become eligible to participate in the Plan,
except the following (if checked):
Those Employees covered by the terms of a collective bargaining
agreement (e.g., union agreement) unless the collective
bargaining agreement specifies that those Employees will
participate, and those Employees who are nonresident aliens and
receive no earned income from the Employer in the United States.
ENTRY DATES See Section 2, Part 2, of the SPD Booklet.
The Entry Dates upon which you can begin plan participation are
_____________________________.
HOURS OF SERVICE AND See Section 2, Parts 3 and 4 of the SPD Booklet.
BREAK IN SERVICE The number of Hours of Service you must be employed to
complete a Year of Service is ____________. The number of Hours
of Service you must be employed to avoid a Break in Service is
_______________.
EMPLOYER CONTRIBUTIONS See Section 3, Parts 1, 2 and 3 of the SPD Booklet.
Each Plan Year the Employer will contribute to the Plan an amount
from 0 to 15% of the total Compensation of all eligible
Participants. The amount of the cntribution will be determined
from year to year by the managing body of the Employer.
The Employer Contribution will be allocated to each Participant
Individual Account under the formula checked below:
Pro Rata Formula. Under this formula, each qualifying
Participantndividual Account will receive a pro rata allocation.
This pro rata allocation is based on the qualifying Participant's
compensation in relation to the total Compensation of all
qualifying Participants.
Integrated Formula. Under this formula, each qualifying
Participantndividual Account will receive a base contribution. In addition,
qualifying Participants will receive an additional allocation (called an excess
contribution) based on their Compensation above the Integration Level. The
Integration Level will be
_________________________________________________________________
VESTING See Section 4, Parts 8 and 9, of the SPD Booklet.
You will be vested in your Individual Account derived from
Employer Contributions and forfeitures thereof according to the
schedule selected below:
- --------------------------------------------------------------------------------
Years Of VESTED PERCENTAGE
Service Option A [ ] Option B [ ] Option C [ ] Option D [ ]
- --------------------------------------------------------------------------------
1 0% 0% 100% ____%
2 0% 20% 100% ____%
3 100% 40% 100% ____%
4 100% 60% 100% ____%
5 100% 80% 100% ____%
6 100% 100% 100% ____%
- -------------------------------------------------------------------------------
NORMAL RETIREMENT
AGE See Section 4, Part 1, of the SPD Booklet.
Normal Retirement Age under the Plan is
_______________________________.
OTHER OPTIONS See Section 4, Part 2 and Section 6 of the SPD Booklet.
Are loans to Participants permitted? If "yes," see attached Loan
Disclosure.[ ] Yes [ ] No
Are participants allowed to direct the investment of their
Individual Accounts?[ ] Yes [ ] No
Can Participants take withdrawals during service?
[ ] Yes, but withdrawals are limited to hardship
circumstances.[ ] Yes [ ] No
REA SAFE HARBOR/
JOINT See Section 4, Part 3, of the SPD Booklet.
AND SURVIVOR ANNUITY Do the REA Safe Harbor Provisions of the Plan apply?
[ ] Yes [ ] No
If the REA Safe Harbor provisions do not apply, the survivor
annuity portion of the Joint and Survivor Annuity will be a
percentage equal to _____% of the amount paid to the Participant
prior to his or her death.
EMPLOYERName________________________________________________________
INFORMATION
Address:________________________________________________________________________
Business
Telephone_______________________________________
Employer Identification
Number___________________________________________________________
Employer's Income Tax Year
End__________________________________________________
PLAN ADMINISTRATORThe Employer is usually the Plan Administrator.
This section will be completed only if the Employer will
not be the Plan Administrator.
Name (if not the
Employer)_______________________________________________________________
Address____________________________________________________________________
Business
Telephone__________________________________________________________________
AGENT FOR SERVICE Name _______________________________________________________
OF LEGAL PROCESS
Address_________________________________________________________________________
NOTE: The Agent for Service of Legal Process is the person
upon whom any legal papers can be served. Service of
legal process may be made upon a Plan Trustee or the
Employer/Plan Administrator.
TRUSTEE(S) Name________________________________________________________
Title_______________________________________________________________________
Business Address
_______________________________________________________________________
Name
________________________________________________________________________________
Title_________________________________________________________________________
Business
Address_______________________________________________________________________
#740 (1/91)L90) c1991 Universal Pensions, Inc., Brainerd, MN 56401
403(b)(7) Tax-Sheltered Custodial Account Agreement EX-99.B14-18-tsa
This Agreement allows you to establish a tax-sheltered custodial account
authorized under Section 403(b)(7) of the Internal Revenue Code. By electing to
reduce your Compensation and have your Employer contribute into your
tax-sheltered custodial Account, you will not be taxed on the amounts
contributed or earnings attributable to such amounts until the funds are
withdrawn from your Account.
SECTION ONE DEFINITIONS
The following words and phrases when used in this Agreement with initial capital
letters shall have the meanings set forth below.
1.01 Account
Means the tax-sheltered custodial Account established pursuant to this
Agreement for the benefit of the Participant and when the context so
implies refers to the assets, if any, then held by the Custodian hereunder.
1.02 Agreement
Means this 403(b)(7) Tax-Sheltered Custodial Account Agreement.
1.03 Beneficiary
Means the person or persons designated by the Participant in accordance
with Section 4.04 to receive any distributions from the Account upon the
Participant's death.
1.04 Code
Means the Internal Revenue Code of 1986, as amended from time to time.
1.05 Custodian
Means Fiduciary Trust Company of New Hampshire or any successor thereto
which qualifies to serve as Custodian in the manner prescribed by Section
401(f)(2) of the Code.
1.06 Employer
Means the entity so designated on this Agreement. The Employer must be an
entity described in Section 501(c)(3) of the Code which is exempt from tax
under Section 501(a) of the Code, an educational organization described in
Section 170(b)(1)(A)(ii) of the Code or any other entity eligible under
Section 403(b) of the Code to make contributions to tax-sheltered custodial
accounts.
1.07 Investments
Investment of assets may be selected only from Waddell & Reed approved
products.
1.08 Participant
Means any person who is regularly employed by the Employer who elects to
participate in this Agreement by completing and signing a Salary Deferral
Agreement or such other form as may be acceptable to the Employer.
1.09 Salary Deferral Agreement
Means the Salary Reduction Agreement signed by the Employee and delivered
to the Employer whereby the Employee authorizes a reduction of salary to be
contributed by the Employer to the Employee's Account established
hereunder.
1.10 Sponsor
Means Waddell & Reed, Inc.
SECTION TWO CONTRIBUTIONS
2.01 Salary Deferral Agreement
The Custodian may accept contributions from the Employer on behalf of a
Participant made pursuant to a Salary Deferral Agreement. A Participant
shall designate the amount or percentage of such Participant's compensation
which is to be deferred in the Salary Deferral Agreement. Such amount or
percentage shall be effective until otherwise modified in writing by the
Participant. A Participant may amend or terminate his or her Salary
Deferral Agreement at such times as may be permitted by the Employer,
however the Participant may not change his or her election more than once
per tax year.
2.02 Maximum Contribution Limits
In no event shall the contributions to the Account for a tax year on behalf
of a Participant exceed the maximum allowable deferrals permitted under
current law or regulation.
a. The maximum salary deferral made during a tax year on behalf of a
Participant, when aggregated with other salary deferral amounts made
through the Employer (or controlled group of Employers under IRC
414(b), (c), (m) or (o)), shall not exceed the lesser of the maximum
permitted amount for a Participant under Sections 403(b)(2) and 415(c)
of the Code for that year.
b. The maximum of all salary deferrals made during the plan year by the
Participant shall not exceed the limitations set forth in Section
402(g) of the Code.
c. The maximum salary deferrals may be based on a valid election by the
Participant to use available special increase options.
2.03 Transfer to Custodial Account
The Participant may transfer (or arrange for the transfer of) assets from
another annuity contract or custodial account described in Section 403(b)
of the Code to this Account. The transfer shall be accepted by the
Custodian if the Participant certifies the transaction satisfies all
current requirements for such a transaction. The Custodian may request the
Participant to provide such information it deems necessary prior to
accepting the transfer. The Custodian shall not be responsible for
determining whether any transfer is proper.
SECTION THREE INVESTMENT OF CONTRIBUTIONS
3.01 Shares of Regulated Investment Companies
All Contributions by a Participant to his or her Account shall be invested
by the Custodian pursuant to written instructions concerning investment
delivered by the Participant to the Custodian prior to or at the time a
contribution is made to the Account. The Custodian shall, within a
reasonable time following receipt of written instructions from the
Participant, invest such contributions in full or fractional shares of
certain regulated investment companies.
For the purposes of this Agreement, regulated investment companies means
any regulated investment company or companies within the meaning of Section
851(a) of the Code or any series issued by such company which has an
investment advisory agreement and/or a distribution agreement with the
company, or any of its affiliated or associated companies and which has
agreed to offer shares for use as funding vehicles for the Account.
If the investment instructions provided by the Participant to the Custodian
are not received by the Custodian or are, in the opinion of the Custodian,
ambiguous, the Custodian may hold or return all or a portion of the
contribution uninvested without liability for loss of income or
appreciation, without liability for interest, dividends or any other gain
whatsoever, pending receipt of proper instructions or clarification. The
Custodian shall advise the Participant of the form and manner in which
investment instructions must be given.
3.02 Participant Change of Investment
Subject to rules and procedures adopted by the Custodian, a Participant
may, at his or her election, direct the Custodian to redeem any or all
regulated investment company shares held by the Custodian pursuant to this
Agreement and to reinvest the proceeds in such other regulated investment
company shares as directed. Transactions of this character must conform
with the provisions of the current prospectus for the regulated investment
company shares subject to purchase.
3.03 Dividends and Distributions
Dividends and other distributions received by the Custodian on shares of
any regulated investment company held in the Account shall be reinvested in
additional shares of the regulated investment company from which the
dividend or other distribution originates, unless the Participant directs
the Custodian to act otherwise. Should a Participant have the choice of
receiving a distribution of shares from a regulated investment company in
additional shares, cash or other property, the Custodian shall nonetheless
elect to receive such distribution in additional shares.
3.04 Registered Owner, Voting Rights
All regulated investment company shares acquired by the Custodian pursuant
to this Agreement shall be registered in the name of the Custodian or its
nominee. The Custodian shall deliver or cause to be executed and delivered
to the Participant all notices, prospectuses, financial statements, proxies
and related proxy information. The Custodian shall vote the shares in
accordance with instructions from the Participant.
3.05 Sales Charges
All sales charges associated with the purchase of regulated investment
company shares shall be charged to the Account of the Participant.
SECTION FOUR DISTRIBUTIONS
4.01 Limitations on Distributions
Subject to the limitations described in this Agreement, a Participant may
request a distribution from the Account. A Participant's Account may not
be distributed prior to the Participant's
(a) attainment of age 59 1/2,
(b) incurring a disability within the meaning of Section 72(m)(7) of
the Code,
(c) death,
(d) encountering a financial hardship, or
(e) separation from service.
No distribution shall be made to a Participant (or Beneficiary, if
applicable) until he or she completes such written forms and provides such
additional information and documentation as the Custodian, in its sole
discretion, may deem necessary.
If the value of the Account immediately preceding the 1989 Plan Year is
ascertainable, such pre-1989 amounts are not subject to the limitations of
Section 4.01.
4.02 Financial Hardship
For purposes of this Agreement, "financial hardship" shall include a
financial need incurred by the Participant due to illness, temporary
disability, purchase of a home, or educational expenses of the Participant
or any member of his or her immediate family, or any other immediate and
heavy financial need of the Participant; provided, however, no financial
hardship shall exceed or otherwise not conform to the requirements of
Section 403(b)(7) of the Code. No distributions on account of financial
hardship shall exceed the amount determined to be required to meet the
immediate financial need created by the hardship which cannot be otherwise
reasonably accommodated from other resources of the Participant. Any
distribution made on account of a Participant's financial hardship shall be
made to such Participant in a single sum payment in cash pursuant to
written instructions in a form acceptable to the Custodian, and delivered
to the Custodian as may be provided in Section 403(b)(7) of the Code.
Hardship distributions may consist only of the amounts contributed pursuant
to a Participant's Salary Deferral Agreement.
4.03 Form of Distribution
Distributions for other than a financial hardship shall be made in any one
or more or any combination of the following forms:
(a) single lump sum payment;
(b) monthly, quarterly, semiannual or annual payments over a period
elected by the Participant not to extend beyond the Participant's life
expectancy; or
(c) in monthly, quarterly, semiannual or annual payments over a period
selected by the Participant not to exceed the joint life and last
survivor expectancy of the Participant and his or her Beneficiary.
At any time prior to commencement of distribution, the Participant may make
or change the foregoing distribution forms by delivering a written notice
to the Custodian.
Notwithstanding any other provision to the contrary, the Custodian may make
an immediate single sum distribution to the Participant or Beneficiary (if
applicable) if the value of the Account does not exceed $3,500.
At the discretion of the Custodian, other forms of distribution, if allowed
under applicable provisions of the Code, may be allowed.
In the event a Participant does not elect any of the methods of
distribution described above on or before such Participant's 70 1/2
birthday, the Participant shall be deemed to have elected distribution made
on his or her 70 1/2 birthday in the form of periodic payments over the
single life expectancy of the participant using the declining years method
of determining the Participant's life expectancy multiple; provided,
however, the Custodian shall have no liability to the Participant for any
tax penalty or other damages which may result from any inadvertent failure
by the Custodian to make such a distribution.
Notwithstanding anything in this Agreement to the contrary distributions
shall conform to the minimum distribution requirements of Section 401(a)(9)
of the Code and the regulations thereunder, including Treasury Regulations
Sections 1.401(a)(9)-2 and 1.403(b)-2.
If the value of the Account prior to 1987 is determinable, the pre-1987
amount need not be subject to a required minimum distribution until the
calendar year the Participant attains age 75, or such later date as may be
allowed by law or regulation.
4.04 Designation of Beneficiary
Each Participant may designate, upon a form provided by the Custodian, any
person or persons (including an entity other than a natural person) as
primary or contingent Beneficiary to receive all or a specified portion of
the Participant's Account in the event of the Participant's death. A
Participant may change or revoke such Beneficiary designation from time to
time by completing and delivering the proper form to the Custodian.
4.05 Distribution Upon Death of Participant
If a Participant dies before his or her entire interest in the Account is
distributed to him or her, or if distribution has commenced to the
Participant and his or her surviving spouse and such surviving spouse dies
before the entire interest is distributed to such spouse, the entire
interest or remaining undistributed balance of such interest shall be
distributed in the form of a single sum cash payment, or other form of
payment as permitted under current applicable code or regulations, to the
Beneficiary or Beneficiaries, if any, designated by the Participant or his
or her spouse as the case may be. In the event no such Beneficiary has
been designated, the Participant's estate shall receive the balance of the
Account.
4.06 Distribution of Excess Amounts
The Custodian may make distribution of any excess to the Participant.
4.07 Eligible Rollover Distributions
At the election of a Participant (or the surviving spouse Beneficiary of a
deceased Participant) the Custodian shall pay any eligible rollover
distribution to an individual retirement plan described in Section 408 of
the Code or another annuity contract or custodial account described in
Section 403(b) of the Code in a direct rollover for that Participant (or
beneficiary). The term "eligible rollover distribution" shall have the
meaning set forth in Sections 402(c)(2) and (4) of the Code and Q&A-3
through Q&A-8 of Treasury Regulations Section 1.402(c)-2T.
The Participant (or surviving spouse beneficiary) who desires a direct
rollover must specify the individual retirement plan or 403(b) plan to
which the eligible rollover distribution is to be paid and satisfy such
other reasonable requirements as the Custodian may impose.
SECTION FIVE ADMINISTRATION
5.01 Duties of the Custodian
The Custodian shall have the following obligations and responsibilities:
(a) To hold contributions to the Account it receives, invest such
contributions pursuant to the Participant's instructions and
distribute Account assets pursuant to this Agreement;
(b) To register any property held by the Custodian in its own name, or in
nominal bearer form, that will pass delivery;
(c) To maintain records of all relevant information as may be necessary
for the proper administration of the Account;
(d) To allocate earnings, if any, realized from such contributions and
such other data information as may be necessary;
(e) To file such returns, reports and other information with the Internal
Revenue Service and other government agencies as may be required of
the Custodian under applicable laws and regulations.
5.02 Reports
As soon as practicable after December 31st of each calendar year, and
whenever required by regulations under the Code, the Custodian shall
deliver to the Participant a written report of the Custodian's transactions
relating to the Account during the period from the last previous accounting
and shall file such other reports as may be required under the Code.
On receipt of the Custodian's report referenced in the preceding paragraph
a Participant shall have a period of 60 days following receipt to deliver a
written objection to the Custodian concerning information provided in the
report. In the event the Participant neglects to file such written
objection, the report shall be deemed approved and in such case, the
Custodian shall be forever released and discharged with respect to all
matters and things included herein.
5.03 Custodian Not Responsible for Certain Actions
Notwithstanding the foregoing, the Custodian shall have no responsibility
for determining the amount of or collecting contributions to the Account
made pursuant to this Agreement; determining the amount, character or
timing of any distribution to a Participant under this Agreement;
determining a Participant's maximum contribution amount; maintaining or
defending any legal action in connection with this Agreement, unless agreed
upon by the Custodian, Employer and Participant.
5.04 Indemnification of Custodian
The Employer and Participant shall, to the extent permitted under law,
indemnify and hold the Custodian harmless from and against any liability
which may occur in the administration of the Account unless arising from
the Custodian's breach of its responsibilities under this Agreement. By
execution of this Agreement, it is the specific intention of the parties
that no fiduciary duties be conferred upon the Custodian nor shall any be
implied from this Agreement or the acts of this Custodian.
5.05 Custodian's Fees and Expenses
The Custodian may charge fees in connection with the Account. In addition,
the Custodian has the right to be reimbursed for any taxes or expenses
incurred by or on behalf of the Account. All such fees, taxes or expenses
may be charged against the Account or, at the option of the Custodian, may
be paid directly by the Participant or Employer. The Custodian reserves
the right to change its fee schedule, or add new fees, at any time upon 30
days prior written notice to the Participant.
SECTION SIX AMENDMENT AND TERMINATION
6.01 Amendment of Agreement
This Agreement may be amended by an agreement in writing between the
Employee and Custodian. In addition, by execution of this Agreement, the
Employer and the Participant delegate to the Custodian all authority to
amend this Agreement by written notification from the Custodian to the
Participant as to any term hereof, at any time (including retroactively)
except that no amendment shall be made which may operate to disqualify the
Account under Section 403(b)(7) of the Code. The effective date of any
amendment hereto shall be the date specified in said amendment or 30 days
subsequent to the time notification of amendment is delivered by the
Custodian to the Participant.
6.02 Termination by Participant
The Participant reserves the right to terminate further contributions to
his or her Account pursuant to this Agreement by executing and delivering
to the Custodian an executed copy of an agreement terminating said
contributions. The Participant further reserves the right to terminate his
or her adoption of this Agreement in the event that he or she shall be
unable to secure a favorable ruling from the Internal Revenue Service with
respect to the Agreement. In the event of such termination, the Custodian
shall distribute the Account to the Participant.
6.03 Resignation or Removal of Custodian
The Custodian may resign as Custodian of any Participant's Account upon 30
days written notice to the Participant. The Participant may remove a
Custodian upon 30 days prior written notice. Upon such resignation or
removal, a successor Custodian shall be named. Upon designation of a
successor Custodian, the Custodian shall transfer the assets held pursuant
to the terms of this Agreement to the successor Custodian. The Custodian
may retain a portion of the assets to the extent necessary to cover
reasonable administrative fees and expenses.
Where the Custodian is serving as a nonbank custodian pursuant to Section
1.401-12(n) of the Treasury Regulations, the Participant will appoint a
successor custodian upon notification by the Commissioner of Internal
Revenue that such substitution is required because the Custodian has failed
to comply with the requirements of Section 1.401-12(n) or is not keeping
such records or making such returns or rendering such statements as are
required by forms or regulations.
SECTION SEVEN MISCELLANEOUS
7.01 Applicable Law
This Agreement is established with the intention that it qualify as a
tax-sheltered custodial account under Section 403(b)(7) of the Code and
that contributions to the same be treated accordingly. To the extent not
governed by Federal law, this Agreement shall be construed, administered
and enforced in accordance with the laws of the Custodian's state of
incorporation.
If any provision of this Agreement shall for any reason be deemed invalid
or unenforceable, the remaining provisions shall, nevertheless, continue in
full force in effect and shall not be invalidated.
7.02 Nonalienation
The assets of a Participant in his or her Account shall be nonforfeitable
at all times and shall not be subject to alienation, assignment, trustee
process, garnishment, attachment, execution or levy of any kind, nor shall
such assets be subject to the claims of the Participant's creditors.
7.03 Terms of Employment
Neither the fact of the implementation of this Agreement nor the fact that
a common law employee has become a Participant, shall give to such employee
any right to continued employment; nor shall either fact limit the right of
the Employer to discharge or to deal otherwise with an employee without
regard to the effect such treatment may have upon the employee's rights as
a Participant under this Agreement.
7.04 Notices
Any notice or other communication which the Custodian may give to a
Participant shall be deemed given when sent by first class mail to the
Participant's last known address on the Custodian's records. Any notice or
other communication to the Custodian shall not become effective until the
Custodian actually receives it.
7.05 Loans
If so permitted by the Custodian, the Participant may borrow a portion of
his or her Account pursuant to the applicable rules under the Code. The
Custodian may charge against the Account, any fees and expenses incurred in
connection with loan processing and/or recordkeeping.
The Participant acknowledges that failure to repay a loan in the prescribed
manner may result in the immediate taxability of the loan amount.
7.06 Employer Contributions
The Employer may make contributions to the Account on behalf of the
Participant. The Custodian is not obligated to operate the Account in
accordance with any plan executed by the Employer unless the Custodian so
agrees and the Employer notifies the Custodian and provides to the
Custodian a copy of the Plan Document.
7.07 Matters Relating to Divorce
Upon receipt of a domestic relations order, the Custodian may retain an
independent third party to determine whether the order is a Qualified
Domestic Relations Order pursuant to Section 414(p) of the Code. The
Custodian may charge to the Account any and all expenses associated with
the determination.
7.08 Concerning the Custodian
The Custodian shall not be responsible in any way for determining the
permissible amount of contributions, the collection of contributions under
this Agreement, the purpose or propriety of any distribution made pursuant
to Section 6 hereof, or any other action or non-action taken at the
Employee's request. The Employee shall at all times fully indemnify and
save harmless the Custodian, its successors and assigns, from any liability
arising from distributions so made or actions so taken, and from any and
all other liability whatsoever which may arise in connection with this
Agreement, except liability arising from the negligence or willful
misconduct of the Custodian.
The Custodian shall be under no duty to take any action other than as
herein specified with respect to the Custodial Account unless the Employee
shall furnish the Custodian with instructions in proper form and such
instructions shall have been specifically agreed to by the Custodian in
writing; or to defend or engage in any suit with respect to the Custodial
Account unless the Custodian shall first have agreed in writing to do so
and shall have been fully indemnified to the satisfaction of the Custodian.
The Custodian may conclusively rely upon and shall be protected in acting
upon any written order from the Employee or any other notice, request,
consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed, and so long as it acts in good
faith, in taking or omitting to take any other action. No amendment to
this Agreement shall place any greater burden on the Custodian without its
written consent.
7.09 Reports of the Custodian
The Custodian shall keep accurate and detailed records of all receipts,
investments, disbursements and other transactions hereunder. Not later
than sixty days after the close of each Plan Year (or after the Custodian's
resignation or removal pursuant to section 7.14 hereof), the Custodian
shall file with the Employee a written report or reports reflecting the
receipts, disbursements and other transactions effected by it during such
year (or period ending with such resignation or removal) and the assets and
liabilities of the Custodial Account at its close. Upon the expiration of
a sixty-day period, commencing immediately following the date of which such
report is filed with the Employee, the Custodian shall be forever released
and discharged from all liability and accountability to anyone with respect
to its acts, transactions, duties, obligations or responsibilities as shown
in or reflected by such report, except with respect to any such acts or
transactions as to which the Employee shall have filed written objections
with the Custodian within such sixty-day period.
The Employee, and the Custodian shall furnish to one another such
information relevant to the Custodial Account as may be required under the
Code and any regulations issued or forms adopted by the Treasury Department
thereunder.
The Custodian shall keep such records, make such identifications, and file
with the Internal Revenue Service such returns and other information
concerning the Custodial Account as may be required of it under the Code
and any regulations issued or forms adopted by the Treasury Department
thereunder.
7.10 Voting and Other Action
The Custodian shall deliver, or cause to be delivered to the Employee, all
notices, prospectuses, financial statements, proxies and proxy soliciting
materials relating to the Shares held in the Account. The Custodian shall
not vote any Shares held hereunder except in accordance with the written
instructions of the Employee.
7.11 Custodian's Fees and Expenses of the Account
Any income taxes or other taxes of any kind whatsoever that may be levied
or assessed upon, or in respect of, the Custodial Account shall be paid
from the assets of the Account. Any transfer taxes incurred in connection
with the investment and reinvestment of the assets of the Custodial
Account, all other administrative expenses incurred by the Custodian, and
such compensation to the Custodian as may be established by the Custodian
shall be paid by the Employee, and until paid shall constitute a charge
upon the assets of the Custodial Account.
As soon as practicable after the end of the calendar year, the Custodian
shall reimburse itself from the assets of the Account for any charges to
the Employee which were not paid by the Employee during that year. Unless
prior payment is received from the Employee, charges connected with a
distribution or withdrawal from the Employee's Account shall be liquidated
from such Account at the time each distribution or withdrawal occurs.
The Custodian may change the published fee schedule with respect to Plan
Years beginning at least forty-five (45) days after the Custodian gives the
Employee written notice of such change.
7.12 Amendment
This Plan and Custody Agreement may at any time and from time to time be
modified or amended in whole or in part (including retroactive amendments)
by delivering to the Employee a written copy of such modification,
amendment or termination signed by the Sponsor; provided, however, the
sponsor shall not have the right to modify or amend the Agreement
retroactively in such a manner as to deprive any Employee of any benefit to
which he was entitled under the Agreement by reason of contributions made
prior to the modification or amendment, unless such modification or
amendment is necessary to conform the Agreement to, or satisfy the
conditions of, any law, governmental regulation overruling, and to permit
the Agreement and the Custodial Account to meet the requirements of Code
Section 403(b) or any similar statute enacted in lieu thereof.
7.13 Termination of Account
The Custodian may elect to terminate the Account if, within thirty (30)
days after its resignation or removal pursuant to section 7.14, the Sponsor
has not appointed a successor custodian which has accepted such
appointment.
If the Custodian or Sponsor receives written notice that the Internal
Revenue Service has determined that the Account fails to qualify under Code
Sections 401 or 403(b)(7), as they existed at the time the Account was
established, by reason of some inadequacy in the original Account or in
this Agreement not removed by a retroactive amendment pursuant to Code
Section 401(b), the Custodian shall terminate the Account by distributing
the assets thereof to the Employee.
The Employee may terminate his Account at any time by delivering to the
Custodian written notice of termination. The termination shall be effected
by distributing all assets in cash or Shares as directed by the Employee,
as soon as practicable, subject to the Custodian's right to reserve funds
as provided in section 7.14.
Upon termination of the Account in any manner provided for in this section,
this Agreement shall be considered to be rescinded and of no force and
effect, and the custodian shall be relieved from all further liability with
respect to this Agreement, the Account and all assets thereof so
distributed, and any determinations by the Custodian of the mode of
distributing the assets of the Account.
7.14 Resignation or Removal of Custodian
The Custodian may resign at any time upon thirty (30) days' notice in
writing to the Employee and to the Sponsor; and the Custodian may be
removed by the Sponsor at any time upon thirty (30) days' notice in writing
to the Custodian. Upon such resignation or removal, the Sponsor shall
appoint a successor custodian, which successor shall be a "bank" as defined
in Code Section 401(d)(1).
Upon receipt by the Custodian of written acceptance of such appointment by
the successor custodian, the Custodian shall transfer and pay over to such
successor the assets of the Account and all records pertaining thereto,
provided that any successor custodian shall agree not to dispose of any
such records without the Custodian's consent. The Custodian is authorized,
however, to reserve such sum of money or shares as it may deem advisable
for payment of all its fees, compensation, costs and expenses or for
payment of any liabilities constituting a charge on or against the assets
of the Account or on or against the Custodian, with any balance of such
reserve remaining after the payment of all such items to be paid over to
the successor custodian. The successor custodian shall hold the assets
paid over to it under terms similar to those of this Agreement that qualify
under Code Section 401(f).
If within thirty (30) days after the Custodian's resignation or removal,
the Sponsor has not appointed a successor custodian which has accepted such
appointment, the Custodian may appoint such successor itself. The
Custodian shall not be liable for the acts or omissions of such successor,
whether or not it makes such appointment itself.
7.15 Miscellaneous
A. Prohibited Diversion - At no time shall it be possible for any part of
the assets of the Account to be used for, or diverted to, purposes
other than for the exclusive benefit of the employee except as
specifically provided in this Agreement.
B. Inalienability of Benefits - The assets of the Account shall be
nontransferable and shall not be subject to alienation, assignment,
trustee process, garnishment, attachment, execution or levy of any
kind except by the Custodian for its fees and for the expenses of the
Account; and no attempt to cause such assets to be so subjected shall
be recognized except to such extent as may be required by law or
provided for herein.
C. Taxes - The tax treatment of any contributions to the Account, and of
any earnings of the account, depends, among other things, upon the
nature of the Employer, the relationship of the Employee to the
Employer, and the amount of contributions made in any year to the
Account (and to other plans, accounts or contracts with the benefit of
special tax treatment) for the benefit of the Employee. The Custodian
and the Sponsor assume no responsibility with respect to such matters,
nor shall any term or provision of this Agreement be construed so as
to place any such responsibility upon any one of them.
D. Condition of Plan and Custody Agreement - It is a condition of this
Plan and Custody Agreement, and the Employee by participating herein
expressly agrees, that he shall look solely to the assets of the
Custodial Account for the payment of any benefit to which he is
entitled under the Plan.
E. Necessity of Qualifications - The Plan is established with the intent
that it shall qualify under Code Section 403(b) as that Section exists
at the time the Plan is established. Notwithstanding any other
provision contained in this Plan, if the Internal Revenue Service
determines that because of some inadequacy in the provisions of this
original Plan, the Plan initially fails to so qualify, all of the
assets of the Custodial Account shall be distributed to the Employee,
and the Plan shall be considered to be rescinded and of no force and
effect, unless such inadequacy is removed by a retroactive amendment.
The Sponsor forthwith shall notify the Custodian in writing of any
determination made with respect to the qualified status of the Plan.
F. Notices by the Custodian - Any notice from the Custodian to the
Employee provided for in this Agreement shall be effective if sent by
first-class mail to him at his last address on the Custodian's
records.
G. Construction - Wherever used in the Plan, the masculine gender shall
include the feminine gender, and singular shall include the plural,
unless the content indicates otherwise.
H. Governing Laws - This Agreement shall be construed and administered in
accordance with the laws of the State of Kansas.
TAX SHELTERED ACCOUNT
Additional Information
SALARY REDUCTION AGREEMENT CSF 1417
Enter the date of the Agreement and the Employer's full name, as well as
the First Name, Middle Initial, and Last Name of the Employee.
Indicate the dollar amount or the percentage of the Salary Reduction (must
result in at least $25 per contribution) and the Salary Frequency (weekly,
semi-monthly, or monthly) must be checked. It is recommended that the
Employer hold amounts received to make only one contribution each month.
Obtain the signature of the authorizing officer of the Employer, and
indicate his title in the "Authorization" section, along with the
Employee's signature.
BILLING STATEMENTS
Billing Statements should be mailed whenever a Salary Reduction Agreement
(Form CSF 1417 or the Employer's own Form) is submitted with an Application
by completing the "Billing Information" portion of the Agreement. If a
plan is an addition to an existing billing, please indicate the Employer's
billing account number.
TRANSFER AUTHORIZATION FORM CRP-0644
Assets held in existing TSA plan(s) may be transferred to the Waddell &
Reed, Inc. TSA Plan by completing all items except the Custodian Approval
section of a Transfer of Proceeds Form and mailing all four copies to the
Home Office with the Application (Form CAP1 and/or WRF3000).
Caution: If the Waddell & Reed, Inc. TSA Plan is to be also used for
continuing contributions, a Salary Reduction Agreement should be executed
before the existing plan is terminated.
TITLE I 403(b) PLAN DOCUMENT EX-99.B14-19-ttl1pbd
Table of Contents
SECTION ONE PREAMBLE AND DEFINITIONS 01
1.01 Adoption Agreement 01
1.02 Break in Eligibility Service 01
1.03 Break in Vesting Service 01
1.04 Code 01
1.05 Compensation 01
1.06 Custodian 01
1.07 Disability 02
1.08 Effective Date 02
1.09 Eligibility Computation Period 02
1.10 Elective Deferrals 02
1.11 Employee 02
1.12 Employer 02
1.13 Employer Contribution 02
1.14 Entry Dates 02
1.15 ERISA 02
1.16 Forfeiture 02
1.17 Fund 02
1.18 Highly Compensated Employee 02
1.19 Hours of Service 03
1.20 Individual Account 04
1.21 Investments 04
1.22 Leased Employee 04
1.23 Normal Retirement Age 04
1.24 Participant 04
1.25 Plan 04
1.26 Plan Administrator 04
1.27 Plan Document 04
1.28 Plan Year 04
1.29 Prior Plan 04
1.30 Termination of Employment 04
1.31 Valuation Date 04
1.32 Vested 04
1.33 Year of Eligibility Service 04
1.34 Year of Vesting Service 04
SECTION TWO ELIGIBILITY TO PARTICIPATE 05
2.01 Eligibility to Participate 05
2.02 Plan Entry 05
2.03 Transfer to or from Ineligible Class 05
2.04 Return as a Participant After Break in
Eligibility Service 05
2.05 Determinations Under This Section 06
2.06 Terms of Employment 06
SECTION THREE CONTRIBUTIONS 06
3.01 Employer Contributions 06
3.02 Rollover Contributions 07
3.03 Transfer Contributions 07
3.04 Limitation on Allocations 07
SECTION FOUR INDIVIDUAL ACCOUNTS OF PARTICIPANTS AND VALUATION 10
4.01 Individual Accounts 10
4.02 Valuation of Fund 10
4.03 Modification of Method for Valuing Individual
Accounts 10
SECTION FIVE INVESTMENT ISSUES 10
5.01 Creation of Fund 10
5.02 Investment Authority 11
5.03 Custodian and Issuer 11
5.04 Compensation and Expenses 11
5.05 Not Obligated to Question Data 11
5.06 Liability for Withholding on Distributions 11
5.07 Resignation or Removal of Issuer or Custodian 12
5.08 Degree of Care Limitations of Liability 12
5.09 [Intentionally Omitted] 12
5.10 Direction of Investments by Participant 12
SECTION SIX VESTING AND DISTRIBUTION 12
6.01 Distribution to Participant 12
6.02 Form of Distribution to a Participant 14
6.03 Distributions Upon the Death of a Participant 14
6.04 Form of Distribution to Beneficiary 15
6.05 Distribution Requirements 15
6.06 Annuity Contracts 18
6.07 Loans to Participants 18
6.08 Joint and Survivor Annuity Requirements 19
SECTION SEVEN CLAIMS PROCEDURE 21
7.01 Filing a Claim for Plan Distributions 21
7.02 Denial of Claim 21
7.03 Remedies Available 21
SECTION EIGHT PLAN ADMINISTRATOR 22
8.01 Employer is Plan Administrator 22
8.02 Powers and Duties of the Plan Administrator 22
8.03 Expenses and Compensation 22
8.04 Information from Employer 23
SECTION NINE AMENDMENT AND TERMINATION 23
9.01 Right of Employer to Amend the Plan 23
9.02 Limitation on Power to Amend 23
9.03 Amendment of Vesting Schedule 23
9.04 Permanency 23
9.05 Method and Procedure for Termination 23
9.06 Continuance of Plan by Successor Employer 24
SECTION TEN MISCELLANEOUS 24
10.01 State Community Property Laws 24
10.02 Headings 24
10.03 Gender and Number 24
10.04 Plan Merger or Consolidation 24
10.05 Standard of Fiduciary Conduct 24
10.06 General Undertaking of All Parties 24
10.07 Agreement Binds Heirs, Etc. 24
SECTION ELEVEN DEFINITIONS 24
11.00 Definitions 24
11.01 Average Contribution Percentage (ACP) 24
11.02 Contributing Participant 24
11.03 Contribution Percentage 24
11.04 Eligible Participant 24
11.05 Excess Aggregate Contributions 25
11.06 Excess Contributions 25
11.07 Matching Contribution 25
11.08 Contributing Participant 25
11.09 Contributions by Employer 25
11.10 Nondiscrimination Testing 25
11.11 Distribution Provisions 26
11.12 Vesting 27
TITLE I 403(b) PLAN DOCUMENT
SECTION ONE PREAMBLE AND DEFINITIONS
The plan is intended to satisfy the requirements for providing Employer
Contributions under Section 403(b) of the Code. The Plan assets may be invested
in mutual funds pursuant to Section 403(b)(7) of the Code. The accounts shall
conform to all applicable requirements for such investments and in the event of
a conflict between the plan and the account Plan language shall control. The
following words and phrases when used in the Plan with initial capital letters
shall, for the purpose of this Plan, have the meanings set forth below unless
the context indicates that other meanings are intended:
1.01 ADOPTION AGREEMENT
Means the document executed by the Employer through which it adopts the
Plan and thereby agrees to be bound by all terms and conditions of the
Plan.
1.02 BREAK IN ELIGIBILITY SERVICE
Means a 12 consecutive month period which coincides with an Eligibility
Computation Period during which an Employee fails to complete more than 500
Hours of Service (or such lesser number of Hours of Service specified in
the Adoption Agreement for this purpose).
1.03 BREAK IN VESTING SERVICE
Means a Plan Year during which an Employee fails to complete more than 500
Hours of Service (or such lesser number of Hours of Service specified in
the Adoption Agreement for this purpose).
1.04 CODE
Means the Internal Revenue Code of 1986 as amended from time-to-time.
1.05 COMPENSATION
The following definition of Compensation shall apply:
Unless another definition of Compensation is selected in the Adoption
Agreement, Compensation will mean all of each Participant's W-2 earnings.
Compensation shall include only that Compensation which is actually paid to
the Participant during the applicable period. Except as provided elsewhere
in this Plan, the applicable period shall be the Plan Year unless the
Employer has selected another period in the Adoption Agreement.
Unless otherwise indicated in the Adoption Agreement, Compensation shall
include any amount which is contributed by the Employer pursuant to a
salary reduction agreement and which is not includible in the gross income
of the Employee under Sections 125, 402(a)(8), 402(h) or 403(b) of the
Code.
The annual Compensation of each Employee taken into account under the Plan
shall not exceed the OBRA '93 annual Compensation limit. The OBRA '93
annual Compensation limit is $150,000, as adjusted by the Commissioner for
increases in the cost of living in accordance with Section 401(a)(17)(B) of
the Internal Revenue Code. The cost-of-living adjustment in effect for a
calendar year applies to any period, not exceeding 12 months, over which
Compensation is determined (determination period) beginning in such
calendar year. If a determination period consists of fewer than 12 months,
the OBRA '93 annual Compensation limit will be multiplied by a fraction,
the numerator of which is the number of months in the determination period,
and the denominator of which is 12.
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.
Unless otherwise indicated in the Adoption Agreement, where an Employee
enters the Plan (and thus becomes a Participant) on an Entry Date other
than the first Entry Date in a Plan Year, his Compensation will include any
such earnings paid to him during the whole of such Plan Year.
Where this Plan is being adopted as an amendment and restatement to bring a
Prior Plan into compliance with the Tax Reform Act of 1986, such Prior
Plan's definition of Compensation shall apply for Plan Years beginning
before January 1, 1989.
1.06 CUSTODIAN
Means an entity holding any mutual fund assets as Custodian or any duly
appointed successor as provided in Section Five.
1.07 DISABILITY
Means the inability to engage in any substantial, gainful activity by
reason of any medically determinable physical or mental impairment that can
be expected to result in death or which has lasted or can be expected to
last for a continuous period of not less than 12 months. The permanence and
degree of such impairment shall be supported by medical evidence.
1.08 EFFECTIVE DATE
Means the date the Plan becomes effective as indicated in the Adoption
Agreement. However, where a separate date is stated in the Plan as of
which a particular Plan provision becomes effective, such date will control
with respect to that provision.
1.09 ELIGIBILITY COMPUTATION PERIOD
An Employee's initial Eligibility Computation Period shall be the 12
consecutive month period commencing with the date such Employee first
performs an Hour of Service (employment commencement date). His subsequent
Eligibility Computation Periods shall be the 12 consecutive month periods
commencing on the anniversaries of his employment commencement date;
provided, however, if pursuant to the Adoption Agreement, an Employee is
required to complete one or less Years of Eligibility Service to become a
Participant, then his subsequent Eligibility Computation Periods shall be
the Plan Years commencing with the Plan Year beginning during his initial
Eligibility Computation Period.
1.10 ELECTIVE DEFERRALS
Means any contribution made to the Plan by the Employer at the election of
the Participant in lieu of cash compensation. A participants Elective
Deferrals are the sum of all deferrals made on the Participants behalf to a
plan described in Section 401(k), 402(h)(1)(B), 457, 501(c)(18) or 403(b)
of the Code. The maximum allowable Elective Deferral shall be determined
based upon current law and regulation and taking into account any special
election made by the Participant.
1.11 EMPLOYEE
Means any person employed by the Employer maintaining the Plan or of any
other employer required to be aggregated with such Employer under Sections
414(b), (c), (m) or (o) of the Code. The term Employee shall also include
any Leased Employee deemed to be an Employee of any Employer described in
the previous paragraph as provided in Sections 414(n) or (o) of the Code.
1.12 EMPLOYER
Shall mean an Employer described in Section 501(c)(3) of the Code which is
exempt from tax under Section 501(a) of the Code, an educational
organization described in Section 170(b)(1)(A)(ii) of the Code, a church or
church controlled organization as described in Section 3121(w)(3)(A) of the
Code, a state, a political subdivision of a state, or an agency or
instrumentality of a state named in the Adoption Agreement and any
successor who by merger, consolidation, purchase or otherwise assumes the
obligations of the Plan.
1.13 EMPLOYER CONTRIBUTION
Means the amount contributed by the Employer each year as determined under
this Plan.
1.14 ENTRY DATES
Means the first day of the Plan Year and the first day of the seventh month
of the Plan Year, unless the Employer has specified other dates in the
Adoption Agreement. For purposes of Elective Deferrals an Employees date
of hire shall be deemed an Entry Date.
1.15 ERISA
Means the Employee Retirement Income Security Act of 1974 as amended from
time-to-time.
1.16 FORFEITURE
Means that portion of a Participant s Individual Account as derived from
Employer Contributions which he or she is not entitled to receive (i.e.,
the nonvested portion).
1.17 FUND
Means the Plan assets held by the Custodian for the Participants' exclusive
benefit.
1.18 HIGHLY COMPENSATED EMPLOYEE
The term Highly Compensated Employee includes highly compensated active
employees and highly compensated former employees.
A highly compensated active employee includes any Employee who performs
service for the Employer during the determination year and who, during the
look-back year: (a) received Compensation from the Employer in excess of
$75,000 (as adjusted pursuant to Section 415(d) of the Code); (b) received
Compensation from the Employer in excess of $50,000 (as adjusted pursuant
to Section 415(d) of the Code) and was a member of the top-paid group for
such year; or (c) was an officer of the Employer and received Compensation
during such year that is greater than 50% of the dollar limitation in
effect under Section 415(b)(1)(A) of the Code. The term Highly Compensated
Employee also includes: (a) Employees who are both described in the
preceding sentence if the term "determination year" is substituted for the
term "look-back year" and the Employee is one of the 100 Employees who
received the most Compensation from the Employer during the determination
year; and (b) Employees who are 5% owners at any time during the look-back
year or determination year.
If no officer has satisfied the Compensation requirement of (c) above
during either a determination year or look-back year, the highest paid
officer for such year shall be treated as a Highly Compensated Employee.
For this purpose, the determination year shall be the Plan Year. The
look-back year shall be the 12 month period immediately preceding the
determination year.
A highly compensated former employee includes any Employee who separated
from service (or was deemed to have separated) prior to the determination
year, performs no service for the Employer during the determination year,
and was a highly compensated active employee for either the separation year
or any determination year ending on or after the Employee's 55th birthday.
If an Employee is, during a determination year or look-back year, a family
member of either a 5% owner who is an active or former Employee or a Highly
Compensated Employee who is one of the 10 most Highly Compensated Employees
ranked on the basis of Compensation paid by the Employer during such year,
then the family member and the 5% owner or top 10 Highly Compensated
Employee shall be aggregated. In such case, the family member and 5% owner
or top 10 Highly Compensated Employee shall be treated as a single Employee
receiving Compensation and Plan contributions or benefits equal to the sum
of such Compensation and contributions or benefits of the family member and
5% owner or top 10 Highly Compensated Employee. For purposes of this
Section, family member includes the spouse, lineal ascendants and
descendants of the Employee or former Employee and the spouses of such
lineal ascendants and descendants. The determination of who is a Highly
Compensated Employee, including the determinations of the number and
identity of Employees in the top-paid group, the top 100 Employees, the
number of Employees treated as officers and the Compensation that is
considered, will be made in accordance with Section 414(q) of the Code and
the regulations thereunder.
1.19 HOURS OF SERVICE
Means:
A. Each hour for which an Employee is paid, or entitled to payment, for
the performance of duties for the Employer. These hours will be
credited to the Employee for the computation period in which the
duties are performed; and
B. Each hour for which an Employee is paid, or entitled to payment, by
the Employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of absence. No
more than 501 Hours of Service will be credited under this paragraph
for any single continuous period (whether or not such period occurs in
a single computation period). Hours under this paragraph shall be
calculated and credited pursuant to Section 2530.200b-2 of the
Department of Labor Regulations which is incorporated herein by this
reference; and
C. Each hour for which back pay, irrespective of mitigation of damages,
is either awarded or agreed to by the Employer. The same Hours of
Service will not be credited both under paragraph (A) or paragraph
(B), as the case may be, and under this paragraph (C). These hours
will be credited to the Employee for the computation period or periods
to which the award or agreement pertains rather than the computation
period in which the award, agreement, or payment is made.
D. Solely for purposes of determining whether a Break in Eligibility
Service or a Break in Vesting Service has occurred in a computation
period (the computation period for purposes of determining whether a
Break in Vesting Service has occurred is the Plan Year), an individual
who is absent from work for maternity or paternity reasons shall
receive credit for the Hours of Service which would otherwise have
been credited to such individual but for such absence, or in any case
in which such hours cannot be determined, 8 Hours of Service per day
of such absence. For purposes of this paragraph, an absence from work
for maternity or paternity reasons means an absence (1) by reason of
the pregnancy of the individual, (2) by reason of a birth of a child
of the individual, (3) by reason of the placement of a child with the
individual in connection with the adoption of such child by such
individual, or (4) for purposes of caring for such child for a period
beginning immediately following such birth or placement. The Hours of
Service credited under this paragraph shall be credited (1) in the
Eligibility Computation Period or Plan Year in which the absence
begins if the crediting is necessary to prevent a Break in Eligibility
Service or a Break in Vesting Service in the applicable period, or (2)
in all other cases, in the following Eligibility Computation Period or
Plan Year.
E. Hours of Service will be credited for employment with other members of
an affiliated service group (under Section 414(m) of the Code), a
controlled group of corporations (under Section 414(b) of the Code),
or a group of trades or businesses under common control (under Section
414(c) of the Code) of which the adopting Employer is a member, and
any other entity required to be aggregated with the Employer pursuant
to Section 414(o) of the Code and the regulations thereunder. Hours
of Service will also be credited for any individual considered an
Employee for purposes of this Plan under Code Sections 414(n) or
414(o) and the regulations thereunder.
F. Where the Employer maintains the plan of a predecessor employer,
service for such predecessor employer shall be treated as service for
the Employer.
G. The above method for determining Hours of Service may be altered as
specified in the Adoption Agreement.
1.20 INDIVIDUAL ACCOUNT
Means the account established and maintained under this Plan for each
Participant in accordance with Section 4.01.
1.21 INVESTMENTS
Investment of assets may be selected only from Waddell & Reed approved
products.
1.22 LEASED EMPLOYEE
Means any person (other than an Employee of the recipient) who pursuant to
an agreement between the recipient and any other person ("leasing
organization") has performed services for the recipient (or for the
recipient and related persons determined in accordance with Section
414(n)(6) of the Code) on a substantially full time basis for a period of
at least one year, and such services are of a type historically performed
by Employees in the business field of the recipient Employer.
Contributions or benefits provided a Leased Employee by the leasing
organization which are attributable to services performed for the recipient
Employer shall be treated as provided by the recipient Employer.
A Leased Employee shall not be considered an Employee of the recipient if:
(1) such employee is covered by a money purchase pension plan providing:
(a) a non-integrated employer contribution rate of at least 10% 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(a)(8), Section 402(h) or Section 403(b) of the Code, (b) immediate
participation, and (c) full and immediate vesting; and (2) Leased Employees
do not constitute more than 20% of the recipient's non-highly compensated
workforce.
1.23 NORMAL RETIREMENT AGE
Means the age specified in the Adoption Agreement. However, if the
Employer enforces a mandatory retirement age which is less than the Normal
Retirement Age, such mandatory age is deemed to be the Normal Retirement
Age. If no age is specified in the Adoption Agreement, the Normal
Retirement Age shall be age 59 1/2.
1.24 PARTICIPANT
Means any Employee or former Employee of the Employer who has met the
Plan's eligibility requirements, has entered the Plan and who is or may
become eligible to receive a benefit of any type from this Plan or whose
Beneficiary may be eligible to receive any such benefit.
1.25 PLAN
Means the Title I 403(b) plan adopted by the Employer. The Plan consists of
this Plan Document plus the corresponding Adoption Agreement as completed
and signed by the Employer.
1.26 PLAN ADMINISTRATOR
Means the person or persons determined to be the Plan Administrator(s) in
accordance with Section 8.01.
1.27 PLAN DOCUMENT
Means this 403(b) Plan Document.
1.28 PLAN YEAR
Means the 12 consecutive month period which coincides with the Employer's
tax year or such other 12 consecutive month period as is designated in the
Adoption Agreement.
1.29 PRIOR PLAN
Means a plan which was amended or replaced by adoption of this Plan
document, as indicated in the Adoption Agreement.
1.30 TERMINATION OF EMPLOYMENT
A Termination of Employment of an Employee of an Employer shall occur
whenever his status as an Employee of such Employer ceases for any reason
other than his death. An Employee who does not return to work for the
Employer on or before the expiration of an authorized leave of absence from
such Employer shall be deemed to have incurred a Termination of Employment
when such leave ends.
1.31 VALUATION DATE
Means the last day of the Plan Year and each other date designated by the
Plan Administrator which is selected in a uniform and nondiscriminatory
manner when the assets of the Fund are valued at their then fair market
value.
1.32 VESTED
Means nonforfeitable, that is, a claim which is unconditional and legally
enforceable against the Plan obtained by a Participant or his Beneficiary
to that part of an immediate or deferred benefit under the Plan which
arises from a Participant's Years of Vesting Service.
1.33 YEAR OF ELIGIBILITY SERVICE
Means a 12 consecutive month period which coincides with an Eligibility
Computation period during which an Employee completes at least 1,000 Hours
of Service (or such lesser number of Hours of Service specified in the
Adoption Agreement for this purpose).
1.34 YEAR OF VESTING SERVICE
Means a Plan Year during which an Employee completes at least 1,000 Hours
of Service (or such lesser number of Hours of Service specified in the
Adoption Agreement for this purpose).
In the case of a Participant who has 5 or more consecutive Breaks in
Vesting Service, all Years of Vesting Service after such Breaks in Vesting
Service will be disregarded for the purpose of determining the Vested
portion of his Individual Account derived from Employer Contributions that
accrued before such breaks. Such Participant's pre-break service will
count in vesting the post-break Individual Account derived from Employer
Contributions only if either:
(A) such Participant had any Vested right to any portion of his Individual
Account derived from Employer Contributions at the time of his
Termination of Employment; or
(B) upon returning to service, the number of consecutive Breaks in Vesting
Service is less than his number of Years of Vesting Service before
such breaks.
Separate subaccounts will be maintained for the Participant's pre-break and
post-break portions of his Individual Account derived from Employer
Contributions. Both subaccounts will share in the gains and losses of the
Fund.
Years of Vesting Service shall not include any period of time excluded from
Years of Vesting Service in the Adoption Agreement.
In the event the Plan Year is changed to a new 12-month period, Employees
shall receive credit for Years of Vesting Service, in accordance with the
preceding provisions of this definition, for each of the Plan Years (the
old and new Plan Years) which overlap as a result of such change.
SECTION TWO ELIGIBILITY AND PARTICIPATION
2.01 ELIGIBILITY TO PARTICIPATE
Each Employee of the Employer, except those Employees who belong to a class
of Employees which is excluded from participation as indicated in the
Adoption Agreement, shall be eligible to participate in this Plan upon the
satisfaction of the age and Years of Eligibility Service requirements
specified in the Adoption Agreement.
For purposes of making Elective Deferrals all Employees of the Employer
shall be eligible as of their date of hire except Employees who customarily
work less than 20 hours per week, or contribute less than $200, or who
participate in a 457 arrangement shall be excluded.
2.02 PLAN ENTRY
A. If this Plan is a replacement of a Prior Plan by amendment or
restatement, each Employee of the Employer who was a Participant in
said Prior Plan before the Effective Date shall continue to be a
Participant in this Plan.
B. An Employee will become a Participant in the Plan as of the Effective
Date if he has met the eligibility requirements of Section 2.01 as of
such date. After the Effective Date, each Employee shall become a
Participant on the first Entry Date following the date the Employee
satisfies the eligibility requirements of Section 2.01.
For purposes of Elective Deferrals an Employee's Date of Hire shall be
an Entry Date.
C. The Plan Administrator shall notify each Employee who becomes eligible
to be a Participant under this Plan and shall furnish him with the
application form, enrollment forms or other documents which are
required of Participants. The eligible Employee shall execute such
forms or documents and make available such information as may be
required in the administration of the Plan.
2.03 TRANSFER TO OR FROM INELIGIBLE CLASS
If an Employee who had been a Participant becomes ineligible to participate
because he is no longer a member of an eligible class of Employees, but has
not incurred a Break in Eligibility Service, such Employee shall
participate immediately upon his return to an eligible class of Employees.
If such Employee incurs a Break in Eligibility Service, his eligibility to
participate shall be determined by Section 2.04.
An Employee who is not a member of the eligible class of Employees will
become a Participant immediately upon becoming a member of the eligible
class provided such Employee has satisfied the age and Years of Eligibility
Service requirements. If such Employee has not satisfied the age and Years
of Eligibility Service requirements as of the date he becomes a member of
the eligible class, he shall become a Participant on the first Entry Date
following the date he satisfies said requirements.
2.04 RETURN AS A PARTICIPANT AFTER BREAK IN ELIGIBILITY SERVICE
A. Employee Not Participant Before Break. If an Employee incurs a Break
in Eligibility Service before satisfying the Plan's eligibility
requirements, such Employee's Years of Eligibility Service before such
Break in Eligibility Service will not be taken into account.
B. Nonvested Participants. In the case of a Participant who does not
have a Vested interest in his Individual Account derived from Employer
Contributions, Years of Eligibility Service before a period of
consecutive Breaks in Eligibility Service will not be taken into
account for eligibility purposes if the number of consecutive Breaks
in Eligibility Service in such period equals or exceeds the greater of
5 or the aggregate number of Years of Eligibility Service before such
break. Such aggregate number of Years of Eligibility Service will not
include any Years of Eligibility Service disregarded under the
preceding sentence by reason of prior breaks.
If a Participant's Years of Eligibility Service are disregarded
pursuant to the preceding paragraph, such Participant will be treated
as a new Employee for eligibility purposes. If a Participant's Years
of Eligibility Service may not be disregarded pursuant to the
preceding paragraph, such Participant shall continue to participate in
the Plan, or, if terminated, shall participate immediately upon
reemployment.
C. Vested Participants . A Participant who has sustained a Break in
Eligibility Service and who had a Vested interest in all or a portion
of his Individual Account derived from Employer Contributions shall
continue to participate in the Plan, or, if terminated, shall
participate immediately upon reemployment.
2.05 DETERMINATIONS UNDER THIS SECTION
The Plan Administrator shall determine the eligibility of each
Employee to be a Participant. This determination shall be conclusive
and binding upon all persons except as otherwise provided herein or by
law.
2.06 TERMS OF EMPLOYMENT
Neither the fact of the establishment of the Plan nor the fact that a
common law Employee has become a Participant shall give to that common
law Employee any right to continued employment; nor shall either fact
limit the right of the Employer to discharge or to deal otherwise with
a common law Employee without regard to the effect such treatment may
have upon the Employee's rights under the Plan.
SECTION THREE CONTRIBUTIONS
3.01 EMPLOYER CONTRIBUTIONS
A. Obligation to Contribute. The Employer shall make contributions to the
Plan in accordance with the contribution formula specified in the
Adoption Agreement. The Employer may, in its sole discretion, make
contributions without regard to current or accumulated surplus revenue
over expenses.
B. Allocation Formula and the Right to Share in the Employer
Contribution.
1. General. The Employer Contribution for a Plan Year will be
allocated or contributed to the Individual Accounts of qualifying
Participants in accordance with the allocation or contribution
formula specified in the Adoption Agreement. The Employer
Contribution for any Plan Year will be allocated to each
Participant's Individual Account as of the last day of that Plan
Year.
2. Qualifying Participants. A Participant is a qualifying
Participant and is entitled to share in the Employer Contribution
for any Plan Year if (1) he was a Participant on at least one day
during the Plan Year, (2) he completes a Year of Vesting Service
during the Plan Year and (3) where the Employer has selected the
"last day requirement" in the Adoption Agreement, he is an
Employee of the Employer on the last day of the Plan Year (except
that this last requirement (3) shall not apply if the Participant
has died during the Plan Year or incurred a Termination of
Employment during the Plan year after having reached his Normal
Retirement Age or having incurred a Disability).
C. Allocation of Forfeitures for a Plan Year which arise as a result of
the application of Section 6.01(D) shall be allocated as follows:
1. Discretionary Contribution Elected. Forfeitures shall be
allocated in the manner provided in Section 3.01(B) (for Employer
Contributions) to the Individual Accounts of Participants who are
entitled to share in the Employer Contribution for such Plan
Year.
2. Mandatory Contribution Elected. Forfeitures shall be applied
towards the reduction of Employer Contributions to the Plan.
D. Timing of Employer Contribution. The Employer Contribution for each
Plan Year shall be delivered to the Custodian not later than the due
date for filing the Employers income tax return for its fiscal year in
which the Plan Year ends, including extensions thereof.
E. Return of the Employer Contribution to the Employer Under Special
Circumstances. Any contribution made by the Employer because of a
mistake of fact must be returned to the Employer within one year of
the contribution. In the event that the Commissioner of Internal
Revenue determines that the Plan is not initially qualified under the
Code, any contributions made incident to that initial qualification by
the Employer must be returned to the Employer within one year after
the date the initial qualification is denied, but only if the
application for qualification is made by the time prescribed by law
for filing the Employer's return for the taxable year in which the
Plan is adopted, or such later date as the Secretary of the Treasury
may prescribe.
F. Omission of Participant. Any Employee who should be included as a
Participant is erroneously omitted and discovery of such omission is
not made until after a contribution by the Employer for the year has
been made and allocated, the Employer shall make a subsequent
contribution with respect to the omitted Employee in the amount which
the Employer would have contributed with respect to that Employee had
he not been omitted.
3.02 ROLLOVER CONTRIBUTIONS
If the Plan Administrator so permits in a uniform and nondiscriminatory
manner, an Employee may contribute a rollover contribution to the Plan;
provided that such Employee submits a written certification, satisfactory
to the Custodian or Issuer, that the contribution qualifies as a rollover
contribution.
A separate account shall be maintained by the Plan Administrator for each
Employee's rollover contributions which will be nonforfeitable at all
times. Such account will share in the income and gains and losses of the
Fund in the manner described in Section 4.03 and shall be subject to the
Plan's provisions governing distributions.
For purposes of this Section 3.02, "rollover contribution" means a
contribution described in Sections 403(b) or 408(b) of the Code or in any
other provision which may be added to the Code which may authorize
rollovers to the Plan.
3.03 TRANSFER CONTRIBUTIONS
If the Plan Administrator so permits in a uniform and nondiscriminatory
manner, the Custodian may receive any amounts transferred to it from the
Custodian of another plan qualified under Code Section 403(b).
The Plan Administrator shall not accept a transfer from any plan which is
subject to the survivor annuity requirements of Section 401(a)(11) and
Section 417 of the Code.
A separate account shall be maintained by the Plan Administrator for each
Employee's transfer contributions which will be nonforfeitable at all
times. Such account will share in the income and gains and losses of the
Fund in the manner described in Section 4.03 and shall be subject to the
Plan's provisions governing distributions.
3.04 LIMITATION ON ALLOCATIONS
A. If the Participant does not participate in, and has never participated
in another 403(b) arrangement or qualified plan maintained by the
Employer or a welfare benefit fund, as defined in Section 419(e) of
the Code maintained by the Employer, or an individual medical account,
as defined in Section 415(l)(2) of the Code, maintained by the
Employer, which provides an annual addition as defined in Section
3.04(D)(1), the following rules shall apply:
1. The amount of annual additions which may be credited to the
Participant's Individual Account for any limitation year will not
exceed the lesser of the maximum permissible amount or any other
limitation contained in this Plan. If the Employer Contribution
that would otherwise be contributed or allocated to the
Participant's Individual Account would cause the annual additions
for the limitation year to exceed the maximum permissible amount,
the amount contributed or allocated will be reduced so that the
annual additions for the limitation year will equal the maximum
permissible amount.
2. Prior to determining the Participant's actual compensation for
the limitation year, the Employer may determine the maximum
permissible amount for a Participant on the basis of a reasonable
estimation of the Participant's Compensation for the limitation
year, uniformly determined for all participants similarly
situated.
3. As soon as is administratively feasible after the end of the
limitation year, the maximum permissible amount for the
limitation year will be determined on the basis of the
Participant's actual compensation for the limitation year.
4. If pursuant to Section 3.04(A)(4) or as a result of the
allocation of Forfeitures there is an excess amount, the excess
will be disposed of as follows:
a. The Participant is covered by the Plan at the end of the
limitation year, the excess amount in the Participant's
Individual Account will be used to reduce Employer
Contributions (including any allocation of Forfeitures) for
such Participant in the next limitation year, and each
succeeding limitation year if necessary.
b. If after the application of paragraph (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 will be
held unallocated in a suspense account. The suspense
account will be applied to reduce future Employer
Contributions (including allocation of any Forfeitures) for
all remaining Participants in the next limitation year, and
each succeeding limitation year if necessary;
c. If a suspense account is in existence at any time during a
limitation year pursuant to this Section, it will not
participate in the allocation of the Fund's investment gains
and losses. If a suspense account is in existence at any
time during a particular limitation year, all amounts in the
suspense account must be allocated and reallocated to
Participants' Individual Accounts before any Employer
Contributions or any Employee contributions may be made to
the Plan for that limitation year. Excess amounts may not
be distributed to Participants or former Participants.
B. If, in addition to this Plan, the Participant is covered under another
403(b) arrangement or qualified defined contribution plan maintained
by the Employer, a welfare benefit fund, as defined in Section 419(e)
of the Code maintained by the Employer, or an individual medical
account, as defined in Section 415(l)(2) of the Code, maintained by
the Employer, which provides an annual addition as defined in Section
3.04(D)(1), during any limitation year, the following rules apply:
1. The annual additions which may be credited to a Participant's
Individual Account under this Plan for any such limitation year
will not exceed the maximum permissible amount reduced by the
annual additions credited to a Participant's Individual Account
under the other plans and welfare benefit funds for the same
limitation year. 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
Individual Account under this Plan would cause the annual
additions for the limitation year to exceed this limitation, the
amount contributed or allocated will be reduced so that the
annual additions under all such plans and funds for the
limitation year will equal the maximum permissible amount. If the
annual additions with respect to the Participant under such other
defined contribution plans and welfare benefit funds in the
aggregate are equal to or greater than the maximum permissible
amount, no amount will be contributed or allocated to the
Participant's Individual Account under this Plan for the
limitation year.
2. Prior to determining the Participant's actual compensation for
the limitation year, the Employer may determine the maximum
permissible amount for a Participant in the manner described in
Section 3.04(A)(2).
3. As soon as is administratively feasible after the end of the
limitation year, the maximum permissible amount for the
limitation year will be determined on the basis of the
Participant's actual compensation for the limitation year.
4. If, pursuant to Section 3.04(B)(3) or as a result of the
allocation of Forfeitures, a Participant's annual additions under
this Plan and such other plans would result in an excess amount
for a limitation year, the excess amount will be deemed to
consist of the annual additions last allocated, except that
annual additions attributable to a welfare benefit fund or
individual medical account will be deemed to have been allocated
first regardless of the actual allocation date.
5. If an excess amount was allocated to a Participant on an
allocation date of this Plan which coincides with an allocation
date of another plan, the excess amount attributed to this Plan
will be the product of,
a. the total excess amount allocated as of such date, times
b. the ratio of (i) the annual additions allocated to the
Participant for the limitation year as of such date under
this Plan to (ii) the total annual additions allocated to
the Participant for the limitation year as of such date
under this and all the other qualified defined contribution
plans.
6. Any excess amount attributed to this Plan will be disposed in the
manner described in Section 3.04(A)(4).
C. If the Employer maintains, or at any time maintained, a qualified
defined benefit plan covering any Participant in this Plan, the sum of
the Participant's defined benefit plan fraction and defined
contribution plan fraction will not exceed 1.0 in any limitation year.
The annual additions which may be credited to the Participant's
Individual Account under this Plan for any limitation year will be
limited so the sum of the defined benefit fraction and defined
contribution fraction will not exceed the applicable limit.
D. The following terms shall have the following meanings when used in
this Section 3.04:
1. Annual additions: The sum of the following amounts credited to a
Participant's Individual Account for the limitation year:
a. Employer Contributions (including Elective Deferrals when
required by statute or regulation to be included in the 415
test)
b. Employee contributions,
c. Forfeitures, and
d. amounts allocated, after March 31, 1984, to an individual
medical account, as defined in Section 415(l)(2) of the
Code, which is part of a pension or annuity plan maintained
by the Employer are treated as annual additions to a defined
contribution plan. Also amounts derived from contributions
paid or accrued after December 31, 1985, in taxable years
ending after such date, which are attributable to
post-retirement medical benefits, allocated to the separate
account of a key employee, as defined in Section 419A(d)(3)
of the Code, under a welfare benefit fund, as defined in
Section 419(e) of the Code, maintained by the Employer are
treated as annual additions to a defined contribution plan.
For this purpose, any excess amount applied under Section
3.04(A)(4) or 3.04(B)(6) in the limitation year to reduce
Employer Contributions will be considered annual additions
for such limitation year.
2. Compensation: A Participant's earned income, wages, salaries,
and fees for professional services and other amounts received for
personal services actually rendered in the course of employment
with the Employer maintaining the Plan (including, but not
limited to, commissions paid salesmen, compensation for services
on the basis of a percentage of profits, commissions on insurance
premiums, tips and bonuses), and excluding the following:
a. Employer contributions to a plan of deferred compensation
which are not includible in the Employee's gross income for
the taxable year in which contributed, or employer
contributions under a simplified employee pension plan to
the extent such contributions are deductible by the
Employee, or any distributions from a plan of deferred
compensation;
b. Amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or property) held by the
Employee either becomes freely transferable or is no longer
subject to a substantial risk of forfeiture;
c. Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock
option; and
d. Other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under a
salary reduction agreement) towards the purchase of an
annuity described in Section 403(b) of the Code (whether or
not the amounts are actually excludable from the gross
income of the Employee).
For purposes of applying the limitations of this Section
3.04, compensation for a limitation year is the compensation
actually paid or includible in gross income during such
limitation year.
Notwithstanding the preceding sentence, compensation for a
Participant in a defined contribution plan who is
permanently and totally disabled (as defined in Section
22(e)(3) of the Code) is the compensation such Participant
would have received for the limitation year if the
Participant had been paid at the rate of compensation paid
immediately before becoming permanently and totally
disabled; such imputed compensation for the disabled
participant may be taken into account only if the
Participant is not a Highly Compensated Employee (as defined
in Section 414(q) of the Code) and contributions made on
behalf of such Participant are nonforfeitable when made.
3. Defined benefit fraction: A fraction, the numerator of
which is the sum of the Participant's projected annual
benefits under all the defined benefit plans (whether or not
terminated) maintained by the Employer, and the denominator
of which is the lesser of 125% of the dollar limitation
determined for the limitation year under Section 415(b) and
(d) of the Code or 140% of the highest average compensation,
including any adjustments under Section 415(b) of the Code.
Notwithstanding the above, if the Participant was a
Participant as of the first day of the first limitation year
beginning after December 31, 1986, in one or more defined
benefit plans maintained by the employer which were in
existence on May 6, 1986, the denominator of this fraction
will not be less than 125% of the sum of the annual benefits
under such plans which the participant had accrued as of the
close of the last limitation year beginning before January
1, 1987, disregarding any changes in the terms and
conditions of the plan after May 5, 1986. The preceding
sentence applies only if the defined benefit plans
individually and in the aggregate satisfied the requirements
of Section 415 of the Code for all limitation years
beginning before January 1, 1987.
4. Defined contribution dollar limitation: $30,000 or if
greater, one-fourth of the defined benefit dollar limitation
set forth in Section 415(b)(1) of the Code as in effect for
the limitation year.
5. Defined contribution fraction: A fraction, the numerator of
which is the sum of the annual additions to the
Participant's account under all the defined contribution
plans (whether or not terminated) maintained by the Employer
for the current and all prior limitation years (including
the annual additions attributable to the Participant's
nondeductible employee contributions to all defined benefit
plans, whether or not terminated, maintained by the
Employer, and the annual additions attributable to all
welfare benefit funds, as defined in Section 419(e) of the
Code, and individual medical 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% of the dollar limitation determined under
Section 415(b) and (d) of the Code in effect under Section
415(c)(1)(A) of the Code or 35% of the Participant's
compensation for such year.
If the Employee was a participant as of the end of the first
day of the first limitation year beginning after December
31, 1986, in one or more defined contribution plans
maintained by the Employer which were in existence on May 6,
1986, the numerator of this fraction will be adjusted if the
sum of this fraction and the defined benefit fraction would
otherwise exceed 1.0 under the terms of this Plan. Under
the adjustment, an amount equal to the product of (1) the
excess of the sum of the fractions over 1.0 times (2) the
denominator of this fraction, will be permanently subtracted
from the numerator of this fraction. The adjustment is
calculated using the fractions as they would be computed as
of the end of the last limitation year beginning before
January 1, 1987, and disregarding any changes in the terms
and conditions of the Plan made after May 5, 1986, but using
the Section 415 limitation applicable to the first
limitation year beginning on or after January 1, 1987.
The annual addition for any limitation year beginning before
January 1, 1987, shall not be recomputed to treat all
employee contributions as annual additions.
6. Employer: For purposes of this Section 3.04, Employer shall
mean the Employer that adopts this Plan, and all members of
a controlled group of corporations (as defined in Section
414(b) of the Code as modified by Section 415(h)), all
commonly controlled trades or businesses (as defined in
Section 414(c) as modified by Section 415(h)) or affiliated
service groups (as defined in Section 414(m)) of which the
adopting Employer is a part, and any other entity required
to be aggregated with the Employer pursuant to regulations
under Section 414(o) of the Code.
7. Excess amount: The excess of the Participant's annual
additions for the limitation year over the maximum
permissible amount.
8. Highest average compensation: The average compensation for
the three consecutive years of service with the Employer
that produces the highest average.
9. Limitation year: The Plan Year as elected by the Employer
in the Adoption Agreement.
10. Maximum permissible amount: The maximum annual addition
that may be contributed or allocated to a Participant's
Individual Account under the Plan for any limitation year
shall not exceed the lesser of:
a. the defined contribution dollar limitation, or
b. 25% of the Participant's Compensation for the limitation
year (as modified by any applicable elections made by the
Participant).
The compensation limitation referred to in (b) shall not apply to
any contribution for medical benefits (within the meaning of
Section 401(h) or Section 419A(f)(2) of the Code) which is
otherwise treated as an annual addition under Section 415(l)(1)
or 419A(d)(2) of the Code.
If a short limitation year is created because of an amendment
changing the limitation year to a different 12-consecutive month
period, the maximum permissible amount will not exceed the
defined contribution dollar limitation multiplied by the
following fraction:
Number of months in the short limitation year
12
Projected annual benefit: The annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if
such benefit is expressed in a form other than a straight life
annuity or qualified joint and survivor annuity) to which the
Participant would be entitled under the terms of the Plan
assuming:
a. the Participant will continue employment until normal retirement
age under the Plan (or current age, if later), and
b. the Participant's compensation for the current limitation year
and all other relevant factors used to determine benefits under
the Plan will remain constant for all future limitation years.
SECTION FOUR INDIVIDUAL ACCOUNTS OF PARTICIPANTS AND VALUATION
4.01 INDIVIDUAL ACCOUNTS
The Plan Administrator shall establish and maintain an Individual Account
in the name of each Participant to reflect the total value of his interest
in the Plan. Each Individual Account established hereunder shall consist
of such subaccounts as may be needed for each Participant.
4.02 VALUATION OF FUND
The Individual Accounts will be valued each Valuation Date at fair market
value.
4.03 MODIFICATION OF METHOD FOR VALUING INDIVIDUAL ACCOUNTS
If necessary or appropriate, the Plan Administrator may establish different
or additional procedures (which shall be uniform and nondiscriminatory) for
determining the fair market value of the Individual Accounts.
SECTION FIVE INVESTMENT ISSUES
5.01 CREATION OF FUND
By adopting this Plan, the Employer establishes the Fund which shall
consist of the assets of the Plan held by the Custodian pursuant to this
Section 5. Assets within the Fund will be pooled on behalf of all
Participants.
No part of the corpus or income of the Fund may be used for, or diverted
to, purposes other than for the exclusive benefit of Participants or their
Beneficiaries.
5.02 INVESTMENT AUTHORITY
Subject to uniform and non-discriminatory rules as set forth by the
Employer, the Employee shall have management and control over the
investment of the Fund into any permitted investment.
5.03 CUSTODIAN
This Section 5.03 applies where a financial organization has agreed that it
will serve, with respect to this Plan, as Custodian.
A. Permissible Investments. The assets of the Plan shall be invested
only in those investments which are available through the Custodian
and are permissible investments for a 403(b) plan under current law or
regulation.
B. Responsibilities of the Custodian. The responsibilities of the
Custodian shall be limited to the following:
1. To receive Plan contributions and to hold, invest and
reinvest the Fund without distinction between principal and
interest;
2. To maintain accurate records of contributions, earnings,
withdrawals and other information the Custodian deems
relevant with respect to the Plan;
3. To make disbursements from the Fund to Participants or
Beneficiaries upon the proper authorization of the Plan
Administrator; and
4. To furnish to the Plan Administrator a statement which
reflects the value of the investments in the hands of the
Custodian as of the end of each Plan Year.
C. Powers of the Custodian. Except as otherwise provided in this Plan,
the Custodian shall have the power to take any action with respect to
the Plan Assets which it deems necessary or advisable to discharge its
responsibilities under this Plan.
5.04 COMPENSATION AND EXPENSES
The Custodian shall receive such reasonable compensation as may be agreed
upon by the Custodian and the Employer. The Custodian shall be entitled to
reimbursement by the Employer for all proper expenses incurred in carrying
out his duties under this Plan, including reasonable legal, accounting and
actuarial expenses. If not paid by the Employer, such compensation and
expenses may be charged against the Plan. All taxes of any kind that may
be levied or assessed under existing or future laws upon, or in respect of,
the Fund or the income thereof shall be paid from the Fund.
5.05 NOT OBLIGATED TO QUESTION DATA
The Employer shall furnish the Custodian and Plan Administrator the
information which each party deems necessary for the administration of the
Plan including, but not limited to, changes in a Participant's status,
eligibility, mailing addresses and other such data as may be required. The
Custodian and Plan Administrator shall be entitled to act on such
information as is supplied them and shall have no duty or responsibility to
further verify or question such information.
5.06 LIABILITY FOR WITHHOLDING ON DISTRIBUTIONS
The Plan Administrator shall be responsible for withholding federal income
taxes from distributions from the Plan, unless the Participant (or
Beneficiary, where applicable) elects not to have such taxes withheld.
However, the Custodian shall act as agent for the Plan Administrator to
withhold such taxes and to make the appropriate distribution reports,
subject to the Plan Administrator's obligation to furnish all the necessary
information to so withhold to the Custodian.
5.07 RESIGNATION OR REMOVAL OF CUSTODIAN
The Custodian may resign at any time by giving 30 days advance written
notice to the Employer. The resignation shall become effective 30 days
after receipt of such notice unless a shorter period is agreed upon.
The Employer may remove any Custodian at any time by giving written notice
to such Custodian and such removal shall be effective 30 days after receipt
of such notice unless a shorter period is agreed upon. The Employer shall
have the power to appoint a successor Custodian.
Upon such resignation or removal, if the resigning or removed Custodian is
the sole Custodian, he shall transfer all of the assets of the Fund then
held by him as expeditiously as possible to the successor Custodian after
paying or reserving such reasonable amount as he shall deem necessary to
provide for the expense in the settlement of the accounts and the amount of
any compensation due him and any sums chargeable against the Fund for which
he may be liable. If the Funds as reserved are not sufficient for such
purpose, then he shall be entitled to reimbursement from the successor
Custodian out of the assets in the successor Custodian's hands under this
Plan. If the amount reserved shall be in excess of the amount actually
needed, the former Custodian shall return such excess to the successor
Custodian.
Upon receipt of such assets, the successor Custodian shall thereupon
succeed to all of the powers and responsibilities given to the Custodian by
this Plan.
The resigning or removed Custodian shall render an accounting to the
Employer and unless objected to by the Employer within 30 days of its
receipt, the accounting shall be deemed to have been approved and the
resigning or removed Custodian shall be released and discharged as to all
matters set forth in the accounting. Where a financial organization is
serving as Custodian and it is merged with or bought by another
organization (or comes under the control of any federal or state agency),
that organization shall serve as the successor Custodian of this Plan, but
only if it is the type of organization that can so serve under applicable
law.
Where the Custodian is serving as a nonbank Custodian pursuant to Section
1.401-12(n) of the Income Tax Regulations, the Employer will appoint a
successor Custodian upon notification by the Commissioner of Internal
Revenue that such substitution is required because the Custodian has failed
to comply with the requirements of Section 1.401-12(n) or is not keeping
such records or making such returns or rendering such statements as are
required by forms or regulations.
5.08 DEGREE OF CARE LIMITATIONS OF LIABILITY
The Custodian shall not be liable for any losses incurred by the Plan by
any lawful direction to invest communicated by the Employer, Plan
Administrator or any Participant or Beneficiary. The Custodian shall be
under no liability for distributions made or other action taken or not
taken at the written direction of the Plan Administrator. It is
specifically understood that the Custodian shall have no duty or
responsibility with respect to the determination of matters pertaining to
the eligibility of any Employee to become a Participant or remain a
Participant hereunder, the amount of benefit to which a Participant or
Beneficiary shall be entitled to receive hereunder, whether a distribution
to Participant or Beneficiary is appropriate under the terms of the Plan or
the size and type of any policy to be purchased from any insurer for any
Participant hereunder or similar matters; it being understood that all such
responsibilities under the Plan are vested in the Plan Administrator.
5.09 [INTENTIONALLY OMITTED]
5.10 DIRECTION OF INVESTMENTS BY PARTICIPANT
If so permitted by the Employer in a uniform and nondiscriminatory manner
each Participant may individually direct the Custodian regarding the
investment of part or all of his Individual Account. To the extent so
directed, the Employer, Plan Administrator, Custodian and all other
fiduciaries are relieved of their fiduciary responsibility under Section
404 of ERISA.
The Plan Administrator shall direct that a separate fund be established in
the name of each Participant who directs the investment of part or all of
his Individual Account. Each separate fund shall be charged or credited
(as appropriate) with the earnings, gains, losses or expenses attributable
to such Separate Fund. No fiduciary shall be liable for any loss which
results from a Participant's individual direction. The assets subject to
individual direction shall not be invested in collectibles as that term is
defined in Section 408(m) of the Code.
The Plan Administrator shall establish such uniform and nondiscriminatory
rules relating to individual direction as it deems necessary or advisable
including, but not limited to, rules describing (1) which portions of
Participant's Individual Account can be individually directed; (2) the
frequency of investment changes; (3) the forms and procedures for making
investment changes; and (4) the effect of a Participant's failure to make
a valid direction.
SECTION SIX VESTING AND DISTRIBUTION
6.01 DISTRIBUTION TO PARTICIPANT
A. When Distributable
1. Entitlement to Distribution. The vested portion of a Participant
s Individual Account shall be distributable to the Participant
upon the occurrence of any of the following events:
a.the Participant's Termination of Employment;
b.the Participant's attainment of Normal Retirement Age;
c.the Participant's Disability; or
d.the Participant incurs a financial hardship.
2. Written Request: When Distributed. A Participant entitled to
distribution who wishes to receive a distribution must submit a
written request to the Plan Administrator. Such request shall be
made upon a form provided by the Plan Administrator. Upon a
valid request, the Plan Administrator shall direct the Custodian
to commence distribution no later than 90 days following the
later of
a. the close of the Plan Year within which the event occurs
which entitles the Participant to distribution; or
b. the close of the Plan Year in which the request is received.
3. Commencement of Benefits. Notwithstanding any other provision,
unless the Participant elects otherwise, distribution of benefits
will begin no later than the 60th day after the latest of the
close of the Plan Year in which:
a. the Participant attains Normal Retirement Age;
b. occurs the 10th anniversary of the year in which the
Participant commenced participation in the Plan; or
c. the Participant incurs a Termination of Employment.
Notwithstanding the foregoing, the failure of a Participant and
spouse to consent to a distribution while a benefit is
immediately distributable, shall be deemed to be an election to
defer commencement of payment of any benefit.
B. Determining the Vested Portion - In determining the Vested portion of
a Participant's Individual Account, the following rules apply:
1. Employer Contributions and Forfeitures. The Vested portion of a
Participant's Individual Account derived from Employer
Contributions and Forfeitures is determined by applying the
vesting schedule selected in the Adoption Agreement.
2. Rollover and Transfer Contributions. A Participant is fully
Vested in his rollover contributions and transfer contributions.
3. Fully Vested Under Certain Circumstances. A Participant is fully
Vested in his Individual Account if any of the following occurs:
a. the Participant reaches Normal Retirement Age;
b. the Participant incurs a Disability;
c. the Participant dies;
d. the Plan is terminated or partially terminated; or
e. there exists a complete discontinuance of contributions under the
Plan (if this Plan calls for discretionary contributions).
4. Participants in a Prior Plan. If a Participant was a participant
in a Prior Plan on the Effective Date, his Vested percentage
shall not be less than it would have been under such Prior Plan
as computed on the Effective Date.
C. Break in Vesting Service and Forfeitures - If a Participant incurs a
Termination of Employment, any portion of his Individual Account which
is not Vested shall be held in a suspense account. Such suspense
account shall share in any increase or decrease in the fair market
value of the assets of the Fund in accordance with Section 4 of the
Plan. The disposition of such suspense account shall be as follows:
1. No Breaks in Vesting Service - If a Participant neither
receives nor is deemed to receive a distribution pursuant to
Section 6.01(D) and the Participant returns to the service
of the Employer before incurring 5 consecutive Breaks in
Vesting Service, there shall be no Forfeiture and the amount
in such suspense account shall be recredited to such
Participant's Individual Account.
2. Cash-out of Certain Participants - If the value of the
Vested portion of such Participant's Individual Account
derived from Employee and Employer Contributions does not
exceed $3,500, the Participant shall receive a distribution
of the entire Vested portion of such Individual Account and
the portion which is not Vested shall be treated as a
Forfeiture. For purposes of this Section, if the value of
the Vested portion of a Participant's Individual Account is
zero, the Participant shall be deemed to have received a
distribution of such Vested Individual Account. A
Participant's Vested Individual Account balance shall not
include accumulated deductible employee contributions within
the meaning of Section 72(o)(5)(B) of the Code for Plan
Years beginning prior to January 1, 1989.
3. Participants Who Elect to Receive Distributions - If such
Participant elects to receive a distribution, in accordance
with Section 6.02(B), of the value of the Vested portion of
his Individual Account derived from Employee and Employer
Contributions, the portion which is not Vested shall be
treated as a Forfeiture.
4. Re-employed Participants - If a Participant receives or is
deemed to receive a distribution pursuant to Section 6.01(D)
above and the Participant resumes employment covered under
this Plan, the Participant's Employer-derived Individual
Account balance will be restored to the amount on the date
of distribution if the Participant repays to the Plan the
full amount of the distribution attributable to Employer
Contributions before the earlier of 5 years after the first
date on which the Participant is subsequently re-employed by
the Employer, or the date the Participant incurs 5
consecutive Breaks in Vesting Service following the date of
the distribution. Amounts forfeited shall be allocated in
accordance with Section 3.01(C) as of the last day of the
Plan Year during which the Forfeiture arises. Any
restoration of a Participant's Individual Account pursuant
to this Section shall be made from other Forfeitures, income
or gain to the Fund or contributions made by the Employer.
D. Distribution Prior to Full Vesting - If a distribution is made to a
Participant who was not then fully Vested in his Individual Account
derived from Employer Contributions and the Participant may increase
his Vested percentage in his Individual Account, then the following
rules shall apply:
1. a separate account will be established for the Participant's
interest in the Plan as of the time of the distribution, and
2. at any relevant time the Participant's Vested portion of the
separate account will be equal to an amount ("X") determined by
the formula: X=P (AB + (R x D)) - (R x D) where "P" is the
Vested percentage at the relevant time, "AB" is the separate
account balance at the relevant time; "D" is the amount of the
distribution; and "R" is the ratio of the separate account
balance at the relevant time to the separate account balance
after distribution.
E. If so permitted by the Employer in a uniform and nondiscriminatory
manner, distributions may be made due to a financial hardship. For
purposes of this Plan, "financial hardship" shall include a financial
need incurred by the Participant due to illness, temporary disability,
purchase of a home, or educational expenses of the Participant or any
member of his or her immediate family, or any other immediate and
heavy financial need of the Participant; provided, however, no
financial hardship shall exceed or otherwise not conform to the
requirements of Section 403(b) of the Code. No distributions on
account of financial hardship shall exceed the amount determined to be
required to meet the immediate financial need created by the hardship
which cannot be otherwise reasonably accommodated from other resources
of the Participant. Any distribution made on account of a
Participant's financial hardship shall be made to such Participant in
a single sum payment in cash pursuant to written instructions in a
form acceptable to the Custodian and delivered to the Custodian as may
be provided in Section 403(b) of the Code.
6.02 FORM OF DISTRIBUTION TO A PARTICIPANT
A. Value of Individual Account Does Not Exceed $3,500 - If the value of
the Vested portion of a Participant's Individual Account derived from
Employee and Employer Contributions does not exceed $3,500,
distribution from the Plan shall be made to the Participant in a
single lump sum in lieu of all other forms of distribution from the
Plan.
B.Value of Individual Account Exceeds $3,500 - No Mandatory
Contributions
If the value of the Vested portion of a Participant's Individual
Account exceeds $3,500, and the Employer has not elected the mandatory
contribution option in Section 5 of the Adoption Agreement, the
Participant may request in writing that the Vested portion of his
Individual Account be paid to him in one or more of the following
forms of payment:
1. in a lump sum;
2. in installment payments over a period not to exceed the life
expectancy of the Participant or the joint and last survivor life
expectancy of the Participant and his designated Beneficiary.
C. Value of Individual Account Exceeds $3,500 - Mandatory Contributions
If the Employer has elected the mandatory contribution option in
Section 5 of the Adoption Agreement the form of distribution to the
participant shall be made in accordance with Section 6.08, unless the
proper waivers are executed.
6.03 DISTRIBUTIONS UPON THE DEATH OF A PARTICIPANT
A. Designation of Beneficiary - Spousal Consent - Each Participant may
designate, upon a form provided by and delivered to the Plan
Administrator, one or more primary and contingent Beneficiaries to
receive all or a specified portion of his Individual Account in the
event of his death. A Participant may change or revoke such
Beneficiary designation from time to time by completing and delivering
the proper form to the Plan Administrator. In the event that a
Participant wishes to designate a primary Beneficiary who is not his
spouse, his spouse must consent in writing to such designation, and
the spouse's consent must acknowledge the effect of such designation
and be witnessed by a notary public. Notwithstanding this consent
requirement, if the Participant establishes to the satisfaction of the
Plan Administrator that such written consent may not be obtained
because there is no spouse or the spouse cannot be located, no consent
shall be required. Any change of Beneficiary will require a new
spousal consent.
B. Payment to Beneficiary - If a Participant dies before his entire
Individual Account has been paid to him, such deceased Participant's
Individual Account shall be payable to any surviving Beneficiary
designated by the Participant, or, if no Beneficiary survives the
Participant, to the Participant's estate.
C. Written Request: When Distributed - A Beneficiary of a deceased
Participant entitled to a distribution who wishes to receive a
distribution must submit a written request to the Plan Administrator.
Such request shall be made upon a form provided by the Plan
Administrator. Upon a valid request, the Plan Administrator shall
direct the Custodian to commence distribution no later than 90 days
following the later of:
1.the close of the Plan Year within which the Participant dies; or
2.the close of the Plan Year in which the request is received.
D. Location of Participant or Beneficiary Unknown - In the event that
all, or any portion, of the distribution payable to a Participant or
his Beneficiary hereunder shall, at the expiration of 5 years after it
becomes payable, remain unpaid solely by reason of the inability of
the Plan Administrator, after sending a registered letter, return
receipt requested, to the last known address, and after further
diligent effort, to ascertain the whereabouts of such Participant or
his Beneficiary, the amount so distributable shall be forfeited and
allocated in accordance with the terms of the Plan. In the event a
Participant or Beneficiary is located subsequent to his benefit being
forfeited, such benefit shall be restored; provided, however, if all
or a portion of such amount has been lost by reason of escheat under
state law, the Participant or Beneficiary shall cease to be entitled
to the portion so lost.
6.04 FORM OF DISTRIBUTION TO BENEFICIARY
A. Value of Individual Account Does Not Exceed $3,500 - If the value of
the Participant's Individual Account derived from Employee and
Employer Contributions does not exceed $3,500, the Plan Administrator
shall direct the Custodian to make a distribution to the Beneficiary
in a single lump sum in lieu of all other forms of distribution from
the Plan.
B. Value of Individual Account Exceeds $3,500 - Discretionary
Contributions Elected - If the value of a Participant's Individual
Account exceeds $3,500, and the Employer has elected the discretionary
contribution option in Section 5 of the Adoption Agreement the
Beneficiary may, subject to the requirements of Section 6.05, request
in writing that the Participant's Individual Account be paid to him as
follows: (1) in a lump sum; or (2) in installment payments over a
period not to exceed the life expectancy of such Beneficiary.
C. Value of Individual Account Exceeds $3,500 - Mandatory Contributions
Elected - If the value of a Participant's Individual Account exceeds
$3,500 and the Employer has elected the mandatory contribution option
in Section 5 of the Adoption Agreement, the pre-retirement survivor
annuity requirements of Section 6.08 shall apply unless waived in
accordance with that Section.
6.05 DISTRIBUTION REQUIREMENTS
A. General Rules
All distributions required under this Section 6.05 shall be determined
and made in accordance with the Income Tax Regulations under Section
401(a)(9), including the minimum distribution incidental benefit
requirement of Section 1.401(a)(9)-2 and 1.403(b)-2 of the
regulations.
B. Required Beginning Date - The entire interest of a Participant must be
distributed or begin to be distributed no later than the Participant's
required beginning date. However, the portion of a Participants
individual account attributable to the period before 1987 shall not be
subject to required minimum distributions. If, in any year, a
Participant withdraws an amount greater than the required minimum,
such additional amounts are considered to be distributed to the
pre-1987 balance.
C. Limits on Distribution Periods - As of the first distribution
calendar year, distributions, if not made in a single sum, may only be
made over one of the following periods (or a combination thereof):
1.the life of the Participant,
2.the life of the Participant and a designated Beneficiary,
3.A period certain notextending beyond the life expectancy of the
Participant, or
4.a period certain not extending beyond the joint and last survivor
expectancy of the Participant and a designated Beneficiary.
D. Determination of Amount to be Distributed Each Year - If the
Participant's interest is to be distributed in other than a
single sum, the following minimum distribution rules shall apply
on or after the required beginning date:
1. Individual Account
a. If a Participant's benefit is to be distributed over (1) a
period not extending beyond the life expectancy of the
Participant or the joint life and last survivor expectancy
of the Participant and the Participant's designated
Beneficiary or (2) a period not extending beyond the 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.
b. For calendar years beginning before January 1, 1989, if the
Participant's spouse is not the designated Beneficiary, the
method of distribution selected must assure that at least
50% of the present value of the amount available for
distribution is paid within the life expectancy of the
Participant.
c. For calendar years beginning after December 31, 1988, the
amount to be distributed each year, beginning with
distributions for the first distribution calendar year shall
not be less than the quotient obtained by dividing the
Participant's benefit by the lesser of (1) the applicable
life expectancy or (2) if the Participant's spouse is not
the designated Beneficiary, the applicable divisor
determined from the table set forth in Q&A-4 of Section
1.401(a)(9)-2 of the Income Tax Regulations. Distributions
after the death of the Participant shall be distributed
using the applicable life expectancy in Section
6.05(D)(1)(a) above as the relevant divisor without regard
to regulations 1.401(a)(9)-2.
d. The minimum distribution required for the Participant's
first distribution calendar year must be made on or before
the Participant's required beginning date. The minimum
distribution for other calendar years, including the minimum
distribution for the distribution calendar year in which the
Employee's required beginning date occurs, must be made on
or before December 31 of that distribution calendar year.
2. Other Forms - If the Participant's benefit is distributed in
the form of an annuity purchased from an insurance company,
distributions thereunder shall be made in accordance with
the requirements of Section 401(a)(9) of the Code and the
regulations thereunder.
E. Death Distribution Provisions
1. Distribution Beginning Before Death - If the Participant dies
after distribution of his or her interest has begun, the
remaining portion of such interest will continue to be
distributed at least as rapidly as under the method of
distribution being used prior to the Participant's death.
2. Distribution Beginning After death - If a participant dies before
distribution of his or her interested begins, distribution of the
Participant's entire interest shall be completed by December 31
of the calendar year containing the fifth anniversary of the
Participant's death except to the extent that an election is made
to receive distributions in accordance with (a) or (b) below:
a. if any portion of the Participant's interest is payable to a
designated Beneficiary, distributions may be made over the life
or over a period certain not greater than the life expectancy of
the designated Beneficiary commencing on or before December 31 of
the calendar year immediately following the calendar year in
which the Participant died;
b. if the designated Beneficiary is the Participant's surviving
spouse, the date distributions are required to begin in
accordance with (a) above shall not be earlier than the later of
(1) December 31 of the calendar year immediately following the
calendar year in which the Participant dies or (2) December 31 of
the calendar year in which the Participant would have attained
age 70 1/2.
If the Participant has not made an election pursuant to this
Section 6.05(E)(2) by the time of his or her death, the
Participant's designated Beneficiary must elect the method of
distribution no later than the earlier of (1) December 31 of the
calendar year in which distributions would be required to begin
under this Section 6.05(E)(2), or (2) December 31 of the calendar
year which contains the fifth anniversary of the date of death of
the Participant. If the Participant has no designated
Beneficiary, or if the designated Beneficiary does not elect a
method of distribution, distribution of the Participant's entire
interest must be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death.
3. For purposes of Section 6.05(E)(2) above, if the surviving spouse
dies after the Participant, but before payments to such spouse
begin, the provisions of Section 6.05(E)(2), with the exception
of paragraph (b) therein, shall be applied as if the surviving
spouse were the Participant.
4. For purposes of this Section 6.05(E), any amount paid to a child
of the Participant will be treated as if it had been paid to the
surviving spouse if the amount becomes payable to the surviving
spouse when the child reaches the age of majority.
5. For purposes of this Section 6.05(E), distribution of a
Participant's interest is considered to begin on the
Participant's required beginning date (or, if Section 6.05(E)(3)
above is applicable, the date distribution is required to begin
to the surviving spouse pursuant to Section 6.05(E)(2) above).
If distribution in the form of an annuity irrevocably commences
to the Participant before the required beginning date, the date
distribution is considered to begin is the date distribution
actually commences.
F. Definitions
1. Applicable Life Expectancy - The life expectancy (or joint and
last survivor expectancy) calculated using the attained age of
the Participant (or designated Beneficiary) as of the
Participant's (or designated Beneficiary's) birthday in the
applicable calendar year reduced by one for each calendar year
which has elapsed since the date life expectancy was first
calculated. If life expectancy is being recalculated, the
applicable life expectancy shall be the life expectancy as so
recalculated. The applicable calendar year shall be the first
distribution calendar year, and if life expectancy is being
recalculated such succeeding calendar year.
2. Designated Beneficiary - The individual who is designated as the
Beneficiary under the Plan in accordance with Section 401(a)(9)
of the Code and the regulations thereunder.
3. Distribution Calendar Year - A calendar year for which a minimum
distribution is required. For distributions beginning before the
Participant's death, the first distribution calendar year is the
calendar year immediately preceding the calendar year which
contains the Participant's required beginning date. For
distributions beginning after the Participant's death, the first
distribution calendar year is the calendar year in which
distributions are required to begin pursuant to Section 6.05(E)
above.
4. Life Expectancy - Life expectancy and joint and last survivor
expectancy are computed by use of the expected return multiples
in Tables V and VI of Section 1.72-9 of the Income Tax
Regulations.
Unless otherwise elected by the Participant (or spouse, in the
case of distributions described in Section 6.05(E)(2)(b) above)
by the time distributions are required to begin, life
expectancies shall be recalculated annually. Such election shall
be irrevocable as to the Participant (or spouse) and shall apply
to all subsequent years. The life expectancy of a nonspouse
Beneficiary may not be recalculated.
5. Participant's Benefit
a. The account balance as of the last valuation date in the
valuation calendar year (the calendar year immediately preceding
the distribution calendar year) increased by the amount of any
Contributions or Forfeitures allocated to the account balance as
of dates in the valuation calendar year after the valuation date
and decreased by distributions made in the valuation calendar
year after the valuation date.
b. Exception for second distribution calendar year. For purposes of
paragraph (a) above, if any portion of the minimum distribution
for the first distribution calendar year is made in the second
distribution calendar year on or before the required beginning
date, the amount of the minimum distribution made in the second
distribution calendar year shall be treated as if it had been
made in the immediately preceding distribution calendar year.
c. For purposes of determining the value of a Participant's
Individual Account, the portion of the Individual Account equal
to value of Participant's Individual Account as of 12/31/86
(pre-87 balance) may be excluded for purposes of the required
minimum distribution calculation.
If, for any year, the Participant receives a distribution greater
than the amount required to satisfy the current years required
minimum distribution, such excess amount shall be deemed
distributed from the pre-1987 balance.
6. Required Beginning Date
a. General Rule - The required beginning date of a Participant is
the first day of April of the calendar year following the
calendar year in which the Participant attains age 70 1/2.
b. Transitional Rules - The required beginning date of a Participant
who attains age 70 1/2 before January 1, 1988, shall be
determined in accordance with (1) or (2) below:
7. Non 5% Owners - The required beginning date of a Participant who
is not a 5% owner is the first day of April of the calendar year
following the calendar year in which the later of retirement or
attainment of age 70 1/2 occurs.
5% Owners - The required beginning date of a Participant who is a
5% owner during any year beginning after December 31, 1979, is
the first day of April following the later of:
a. the calendar year in which the Participant attains age 70 1/2, or
b. the earlier of the calendar year with or within which ends the
Plan Year in which the Participant becomes a 5% owner, or the
calendar year in which the Participant retires.
The required beginning date of a Participant who is not a 5%
owner who attains age 70 1/2 during 1988 and who has not retired
as of January 1, 1989, is April 1, 1990.
c. 5% Owner - A Participant is treated as a 5% owner for purposes
of this Section 6.05(F)(6) if such Participant is a 5% owner as
defined in Section 416(i) of the Code (determined in accordance
with Section 416 but without regard to whether the Plan is
top-heavy) at any time during the Plan Year ending with or within
the calendar year in which such owner attains age 66 1/2 or any
subsequent Plan Year.
d. Once distributions have begun to a 5% owner under Section
6.05(F)(6) they must continue to be distributed, even if the
Participant ceases to be a 5% owner in a subsequent year.
G. Direct Rollovers of Eligible Rollover Distributions
1. Direct Rollover Option
Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under this
Section, a distributee may elect, at the time and in the manner
prescribed by the Plan Administrator, to have any portion of an
eligible rollover distribution 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:
(1) 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;
(2) any distribution to the extent such distribution is required
under Section 401(a)(9) of the Code; and
(3) the portion of any distribution that is not includible in gross
income .
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 or Plan described in Section 403(b) of the
Code, that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement plan
is an individual retirement account or individual retirement
annuity.
3. Distributee - A 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.
4. Direct rollover - A direct rollover is a payment by the Plan to
the eligible retirement plan specified by the distributee.
6.06 ANNUITY CONTRACTS
Any annuity contract distributed under the Plan (if permitted or required
by this Section 6) must be nontransferable. The terms of any annuity
contract purchased and distributed by the Plan to a Participant or spouse
shall comply with the requirements of the Plan.
6.07 LOANS TO PARTICIPANTS
If the Adoption Agreement so indicates, a Participant may receive a loan
from the Plan, subject to the following rules:
A. Loans shall be made available to all Participants on a reasonably
equivalent basis.
B. Loans shall not be made available to Highly Compensated Employees (as
defined in Section 414(q) of the Code) in an amount greater than the
amount made available to other Employees.
C. Loans must be adequately secured and bear a reasonable interest rate.
D. No Participant loan shall exceed the present value of the Vested
portion of a Participant's Individual Account.
E. A Participant must obtain the consent of his or her spouse, if any, to
the use of the Individual Account as security for the loan. Spousal
consent shall be obtained no earlier than the beginning of the 90 day
period that ends on the date on which the loan is to be so secured.
The consent must be in writing, must acknowledge the effect of the
loan, and must be witnessed by a plan representative or notary public.
Such consent shall thereafter be binding with respect to the
consenting spouse or any subsequent spouse with respect to that loan.
A new consent shall be required if the account balance is used for
renegotiation, extension, renewal, or other revision of the loan.
F. In the event of default, foreclosure on the note and attachment of
security will not occur until a distributable event occurs in the
Plan.
If a valid spousal consent has been obtained in accordance with Section
6.07 E, then, notwithstanding any other provisions of this Plan, the
portion of the Participant's Vested Individual Account used as a security
interest held by the Plan by reason of a loan outstanding to the
Participant shall be taken into account for purposes of determining the
amount of the account balance payable at the time of death or distribution,
but only if the reduction is used as repayment of the loan. If less than
100% of the Participant's Vested Individual Account (determined without
regard to the preceding sentence) is payable to the surviving spouse, then
the account balance shall be adjusted by first reducing the Vested
Individual Account by the amount of the security used as repayment of the
loan, and then determining the benefit payable to the surviving spouse.
No loan to any Participant can be made to the extent that such loan when
added to the outstanding balance of all other loans to the Participant
would exceed the lesser of (a) $50,000 reduced by the excess (if any) of
the highest outstanding balance of loans during the one year period ending
on the day before the loan is made, over the outstanding balance of loans
from the Plan on the date the loan is made, or (b) 50% of the present value
of the nonforfeitable Individual Account of the Participant or, if greater,
the total Individual Account up to $10,000. For the purpose of the above
limitation, all loans from all plans of the Employer and other members of a
group of employers described in Sections 414(b), 414(c), and 414(m) of the
Code are aggregated. Furthermore, any loan shall by its terms require that
repayment (principal and interest) be amortized in level payments, not less
frequently than quarterly, over a period not extending beyond 5 years from
the date of the loan, unless such loan is used to acquire a dwelling unit
which within a reasonable time (determined at the time the loan is made)
will be used as the principal residence of the Participant. An assignment
or pledge of any portion of the Participant's interest in the Plan and a
loan, pledge, or assignment with respect to any insurance contract
purchased under the Plan, will be treated as a loan under this paragraph.
The Plan Administrator shall administer the loan program in accordance with
a written document. Such written document shall include, at a minimum, the
following: (i) the identity of the person or positions authorized to
administer the Participant loan program; (ii) the procedure for applying
for loans; (iii) the basis on which loans will be approved or denied; (iv)
limitations (if any) on the types and amounts of loans offered; (v) the
procedure under the program for determining a reasonable rate of interest;
(vi) the types of collateral which may secure a Participant loan; and (vii)
the events constituting default and the steps that will be taken to
preserve Plan assets in the event of such default.
6.08 JOINT AND SURVIVOR ANNUITY REQUIREMENTS
A. If the Employer has elected the Employer Mandatory Contribution option
in Section 5 of the Adoption Agreement, the provisions of this Section
shall apply to any Participant who is credited with at least one Hour
of Eligibility Service with the Employer on or after August 23, 1984
and as is provided for Section 6.02(C).
B. Qualified Joint and Survivor Annuity - Unless an optional form of
benefit is selected pursuant to a qualified election within the 90-day
period ending on the annuity starting date, a married Participant's
Vested balance will be paid in the form of a qualified joint and
survivor annuity and an unmarried Participant's Vested 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 Pre-retirement Survivor Annuity - Unless an optional form of
benefit has been selected within the election period pursuant to a
qualified election, if a Participant dies before the annuity starting
date then the Participant's Vested balance shall be applied toward the
purchase of an annuity for the life of the surviving spouse. The
surviving spouse may elect to have such annuity distributed within a
reasonable period after the Participant's death.
D. Definitions
1. Election Period - The period which begins on the first day of the
Plan Year in which the Participant attains age 35 and ends on the
date of the Participant's death. If a Participant separates from
service prior to the first day of the Plan Year in which age 35
is attained, with respect to the account balance as of the date
of separation, the election period shall begin on the date of
separation.
2. Pre-age 35 waiver - A Participant who will not yet attain age 35
as of the end of any current Plan Year may make special qualified
election to waive the qualified pre-retirement 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
pre-retirement survivor annuity in such terms as are comparable
to the explanation required under Section 6.08(E)(1). Qualified
pre-retirement survivor annuity coverage will be automatically
reinstated as of the first day of the Plan Year in which the
Participant attains age 35. Any new waiver on or after such date
shall be subject to the full requirements of this Section 6.08.
3. Earliest Retirement Age - The earliest date on which, under the
Plan, the Participant could elect to receive retirement benefits.
4. Qualified Election - A waiver of a qualified joint and survivor
annuity or a qualified pre-retirement survivor annuity. Any
waiver of a qualified joint and survivor annuity or a qualified
pre-retirement survivor annuity shall not be effective unless:
(a) the Participant's spouse consents in writing to the election,
(b) the election designates a specific Beneficiary, including any
class of beneficiaries or any contingent beneficiaries, which may
not be changed without spousal consent (or the spouse expressly
permits designations by the Participant without any further
spousal consent); (c) the spouse's consent acknowledges the
effect of the election; and (d) the spouse's consent is witnessed
by a plan representative or notary public. Additionally, a
Participant's waiver of the qualified joint and survivor annuity
shall not be effective unless the election designates a form of
benefit payment which may not be changed without spousal consent
(or the spouse expressly permits designations by the Participant
without any further spousal consent). If it is established to
the satisfaction of a plan representative that there is no spouse
or that the spouse cannot be located, a waiver will be deemed a
qualified election.
Any consent by a spouse obtained under this provision (or
establishment that the consent of a spouse may not be obtained)
shall be effective only with respect to such spouse. A consent
that permits designations by the Participant without any
requirement of further consent by such spouse must acknowledge
that the spouse has the right to limit consent to a specific
Beneficiary, and a specific form of benefit where applicable, and
that the spouse voluntarily elects to relinquish either or both
of such rights. A revocation of a prior waiver may be made by a
Participant without the consent of the spouse at any time before
the commencement of benefits. The number of revocations shall
not be limited. No consent obtained under this provision shall
be valid unless the Participant has received notice as provided
in Section 6.08(E) below.
5. Qualified Joint and Survivor Annuity - An immediate annuity for
the life of the Participant with a survivor annuity for the life
of the spouse which is 50% 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 beneficiary which can be purchased
with the Participant's vested account balance.
6. Spouse (surviving spouse) - The spouse or surviving spouse of the
Participant, provided that a former spouse will be treated as the
spouse or surviving spouse and a current spouse will not be
treated as the spouse or surviving spouse to the extent provided
under a qualified domestic relations order as described in
Section 414(p) of the Code.
7. Annuity Starting Date - The first day of the first period for
which an amount is paid as an annuity or any other form.
8. Vested Balance - The aggregate value of the Participant's Vested
balances derived from Employer and Employee contributions
(including rollovers).
E. Notice Requirements
1. In the case of a qualified joint and survivor annuity, the Plan
Administrator shall no less than 30 days and not more than 90
days prior to the annuity starting date provide each Participant
a written explanation of: (a) the terms and conditions of a
qualified joint and survivor annuity; (b) the Participant's right
to make and the effect of an election to waive the qualified
joint and survivor annuity form of benefit; (c) the rights of a
Participant's spouse; and (d) the right to make, and the effect
of, a revocation of a previous election to waive the qualified
joint and survivor annuity.
2. In the case of a qualified pre-retirement annuity the Plan
Administrator shall provide each Participant within the
applicable period for such Participant a written explanation of
the qualified pre-retirement survivor annuity in such terms and
in such manner as would be comparable to the explanation provided
for meeting the requirements of Section 6.08(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 6.08(E)(3) ceases to apply
to the Participant; (d) a reasonable period ending after this
Section 6.05 first applies to the Participant. Notwithstanding
the foregoing, notice must be provided within a reasonable period
ending after separation from service in the case of a Participant
who separates from service before attaining age 35.
For purposes of applying the preceding paragraph, a reasonable
period ending after the enumerated events described in (b), (c)
and (d) is the end of the two-year period beginning one year
prior to the date the applicable event occurs, and ending one
year after that date. In the case of a Participant who separates
from service before the Plan Year in which age 35 is attained,
notice shall be provided within the two-year period beginning one
year prior to separation and ending one year after separation.
If such a Participant thereafter returns to employment with the
Employer, the applicable period for such Participant shall be
redetermined.
3. Notwithstanding the other requirements of this Section 6.08(E),
the respective notices prescribed by this Section 6.08(E), need
not be given to a Participant if (a) the Plan "fully subsidizes"
the costs of a qualified joint and survivor annuity or qualified
pre-retirement survivor annuity, and (b) the Plan does not allow
the Participant to waive the qualified joint and survivor annuity
or qualified pre-retirement survivor annuity and does not allow a
married Participant to designate a nonspouse beneficiary. For
purposes of this Section 6.08(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 Participants
failure to elect another benefit.
F. Transitional Rules
1. Any living Participant not receiving benefits on August 23, 1984,
who would otherwise not receive the benefits prescribed by the
previous subsections of this Section 6.08 must be given the
opportunity to elect to have the prior subsections of this
Section apply if such Participant is credited with at least one
Hour of Service under this Plan or a predecessor plan in a Plan
Year beginning on or after January 1, 1976, and such Participant
had at least 10 Years of Vesting Service when he or she separated
from service.
2. Any living Participant not receiving benefits on August 23, 1984,
who was credited with at least one Hour of Service under this
Plan or a predecessor plan on or after September 2, 1974, and who
is not otherwise credited with any service in a Plan Year
beginning on or after January 1, 1976, must be given the
opportunity to have his or her benefits paid in accordance with
Section 6.08(F)(4).
3. The respective opportunities to elect (as described in Section
6.08(F)(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 6.08(F)(2)
and any Participant who does not elect under Section 6.08(F)(1)
or who meets the requirements of Section 6.08(F)(1) except that
such Participant does not have at least 10 Years of Vesting
Service when he or she separates from service, shall have his or
her benefits distributed in accordance with all of the following
requirements if benefits would have been payable in the form of a
life annuity:
a. Automatic Joint and Survivor Annuity - If benefits in the form of
a life annuity become payable to a married Participant who:
(1) begins to receive payments under the Plan on or after Normal
Retirement Age; or
(2) dies on or after Normal Retirement Age while still working for
the Employer; or
(3) separates from service on or after attaining Normal Retirement
Age (or the qualified early retirement age) and after satisfying
the eligibility requirements for the payment of benefits under
the Plan and thereafter dies before beginning to receive such
benefits;
then such benefits will be received under this Plan in the form
of a qualified joint and survivor annuity, unless the Participant
has elected otherwise during the election period. The election
period must begin at least 6 months before the Participant
attains qualified early retirement age and ends not more than 90
days before the commencement of benefits. Any election hereunder
will be in writing and may be changed by the Participant at any
time.
b. Election of Early Survivor Annuity - A Participant who is
employed after attaining the qualified early retirement age will
be given the opportunity to elect, during the election period, to
have a survivor annuity payable on death. If the Participant
elects the survivor annuity, payments under such annuity must not
be less than the payments which would have been made to the
spouse under the qualified joint and survivor annuity if the
Participant had retired on the day before his or her death. Any
election under this provision will be in writing and may be
changed by the Participant at any time. The election period
begins on the later of (1) the 90th day before the Participant
attains the qualified early retirement age, or (2) the date on
which participation begins, and ends on the date the Participant
terminates employment.
c. For purposes of Section 6.08(F)(4):
(1) Qualified early retirement age is the latest of:
(a) the earliest date, under the Plan, on which the Participant may
elect to receive retirement benefits,
(b) the first day of the 120th month beginning before the Participant
reaches Normal Retirement Age, or
(c) the date the Participant begins participation.
(2) Qualified joint and survivor annuity is an annuity for the life
of the Participant with a survivor annuity for the life of the
spouse as described in Section 6.08(D)(4) of this Plan.
SECTION SEVEN CLAIMS PROCEDURE
7.01 FILING A CLAIM FOR PLAN DISTRIBUTIONS
A Participant or Beneficiary who desires to make a claim for the Vested
Portion of the Participant's Individual Account shall file a written
request with the Plan Administrator on a form to be furnished to him by the
Plan Administrator for such purpose. The request shall set forth the basis
of the claim. The Plan Administrator is authorized to conduct such
examinations as may be necessary to facilitate the payment of any benefits
to which the Participant or Beneficiary may be entitled under the terms of
the Plan.
7.02 DENIAL OF CLAIM
Whenever a claim for a Plan distribution by any Participant or Beneficiary
has been wholly or partially denied, the Plan Administrator must furnish
such Participant or Beneficiary written notice of the denial within 60 days
of the date the original claim was filed. This notice shall set forth the
specific reasons for the denial, specific reference to pertinent Plan
provisions on which the denial is based, a description of any additional
information or material needed to perfect the claim, an explanation of why
such additional information or material is necessary and an explanation of
the procedures for appeal.
7.03 REMEDIES AVAILABLE
The Participant or Beneficiary shall have 60 days from receipt of the
denial notice in which to make written application for review by the Plan
Administrator. The Participant or Beneficiary may request that the review
be in the nature of a hearing. The Participant or Beneficiary shall have
the right to representation, to review pertinent documents and to submit
comments in writing. The Plan Administrator shall issue a decision on such
review within 60 days after receipt of an application for review as
provided for in Section 7.02. Upon a decision unfavorable to the
Participant or Beneficiary, such Participant or Beneficiary shall be
entitled to bring such actions in law or equity as may be necessary or
appropriate to protect or clarify his right to benefits under this Plan.
SECTION EIGHT PLAN ADMINISTRATOR
8.01 EMPLOYER IS PLAN ADMINISTRATOR
A. The Employer shall be the Plan Administrator unless the managing body
of the Employer designates a person or persons other than the Employer
as the Plan Administrator and so notifies the Custodian. The Employer
shall also be the Plan Administrator if the person or persons so
designated cease to be the Plan Administrator.
B. If the managing body of the Employer designates a person or persons
other than the Employer as Plan Administrator, such person or persons
shall serve at the pleasure of the Employer and shall serve pursuant
to such procedures as such managing body may provide. Each such
person shall be bonded as may be required by law.
8.02 POWERS AND DUTIES OF THE PLAN ADMINISTRATOR
A. The Plan Administrator may, by appointment, allocate the duties of the
Plan Administrator among several individuals or entities. Such
appointments shall not be effective until the party designated accepts
such appointment in writing.
B. The Plan Administrator shall have the authority to control and manage
the operation and administration of the Plan. The Plan Administrator
shall administer the Plan for the exclusive benefit of the
Participants and their Beneficiaries in accordance with the specific
terms of the Plan.
C. The Plan Administrator shall be charged with the duties of the general
administration of the Plan, including, but not limited to, the
following:
1. To determine all questions of interpretation or policy in a
manner consistent with the Plan's documents and the Plan
Administrator's construction or determination in good faith shall
be conclusive and binding on all persons except as otherwise
provided herein or by law. Any interpretation or construction
shall be done in a nondiscriminatory manner and shall be
consistent with the intent that the Plan shall continue to be
deemed a qualified plan under the terms of Section 403(b) of the
Code, as amended from time-to-time, and shall comply with the
terms of ERISA, as amended from time-to-time;
2. To determine all questions relating to the eligibility of
Employees to become or remain Participants hereunder;
3. To compute the amounts necessary or desirable to be contributed
to the Plan;
4. To compute the amount and kind of benefits to which a Participant
or Beneficiary shall be entitled under the Plan and to direct the
Custodian with respect to all disbursements under the Plan, and,
when requested by the Custodian, to furnish the Custodian with
instructions, in writing, on matters pertaining to the Plan and
the Custodian may rely and act thereon;
5. To maintain all records necessary for the administration of the
Plan;
6. To be responsible for preparing and filing such disclosure and
tax forms as may be required from time-to-time by the Secretary
of Labor or the Secretary of the Treasury; and
7. To furnish each Employee, Participant or Beneficiary such
notices, information and reports under such circumstances as may
be required by law.
D. The Plan Administrator shall have all of the powers necessary or
appropriate to accomplish his duties under the Plan, including, but
not limited to, the following:
1. To appoint and retain such persons as may be necessary to carry
out the functions of the Plan Administrator;
2. To appoint and retain counsel, specialists or other persons as
the Plan Administrator deems necessary or advisable in the
administration of the Plan;
3. To resolve all questions of administration of the Plan;
4. To establish such uniform and nondiscriminatory rules which it
deems necessary to carry out the terms of the Plan;
5. To make any adjustments in a uniform and nondiscriminatory manner
which it deems necessary to correct any arithmetical or
accounting errors which may have been made for any Plan Year; and
6. To correct any defect, supply any omission or reconcile any
inconsistency in such manner and to such extent as shall be
deemed necessary or advisable to carry out the purpose of the
Plan.
8.03 EXPENSES AND COMPENSATION
All reasonable expenses of administration including, but not limited to,
those involved in retaining necessary professional assistance may be paid
from the assets of the Fund. Alternatively, the Employer may, in its
discretion, pay such expenses. The Employer shall furnish the Plan
Administrator with such clerical and other assistance as the Plan
Administrator may need in the performance of his duties.
8.04 INFORMATION FROM EMPLOYER
To enable the Plan Administrator to perform his duties, the Employer shall
supply full and timely information to the Plan Administrator (or his
designated agents) on all matters relating to the Compensation of all
Participants, their regular employment, retirement, death, Disability or
Termination of Employment, and such other pertinent facts as the Plan
Administrator (or his agents) may require. The Plan Administrator shall
advise the Custodian of such of the foregoing facts as may be pertinent to
the Custodian's duties under the Plan. The Plan Administrator (or his
agents) is entitled to rely on such information as is supplied by the
Employer and shall have no duty or responsibility to verify such
information.
SECTION NINE AMENDMENT AND TERMINATION
9.01 RIGHT OF EMPLOYER TO AMEND THE PLAN
The Employer may (1) change the choice of options in the Adoption
Agreement, (2) add overriding language in the plan when such language is
necessary to meet the current business needs of the Employer.
An Employer who wishes to amend the Plan to change the options it has
chosen in the Adoption Agreement must complete and deliver a new Adoption
Agreement to the Custodian.
The Employer further reserves the right to replace the Plan in its entirety
by adopting another retirement plan which the Employer designates as a
replacement plan.
9.02 LIMITATION ON POWER TO AMEND
No amendment to the Plan shall be effective to the extent that it has the
effect of decreasing a Participant's accrued benefit. For purposes of this
paragraph, a plan amendment which has the effect of decreasing a
Participant's Individual Account or eliminating an optional form of benefit
with respect to benefits attributable to service before the amendment shall
be treated as reducing an accrued benefit. Furthermore, if the vesting
schedule of a Plan is amended, in the case of an Employee who is a
Participant as of the later of the date such amendment is adopted or the
date it becomes effective, the Vested percentage (determined as of such
date) of such Employee's Individual Account derived from Employer
Contributions will not be less than the percentage computed under the Plan
without regard to such amendment.
9.03 AMENDMENT OF VESTING SCHEDULE
If the Plan's vesting schedule is amended, or the Plan is amended in any
way that directly or indirectly affects the computation of the
Participant's Vested percentage, or if the Plan is deemed amended by an
automatic change to or from a top-heavy vesting schedule, each Participant
with at least 3 Years of Vesting Service with the Employer may elect,
within the time set forth below, to have the Vested percentage computed
under the Plan without regard to such amendment.
For Participants who do not have at least 1 Hour of Service in any Plan
Year beginning after December 31, 1988, the preceding sentence shall be
applied by substituting "5 Years of Vesting Service" for "3 Years of
Vesting Service" where such language appears.
The Period during which the election may be made shall commence with the
date the amendment is adopted or deemed to be made and shall end the later
of:
A. 60 days after the amendment is adopted;
B. 60 days after the amendment becomes effective; or
C. 60 days after the Participant is issued written notice of the
amendment by the Employer or Plan Administrator.
9.04 PERMANENCY
The Employer expects to continue this Plan and make the necessary
contributions thereto indefinitely, but such continuance and payment is not
assumed as a contractual obligation. Neither the Adoption Agreement nor
the Plan nor any amendment or modification thereof nor the making of
contributions hereunder shall be construed as giving any Participant or any
person whomsoever any legal or equitable right against the Employer, of the
Custodian except as specifically provided herein, or as provided by law.
9.05 METHOD AND PROCEDURE FOR TERMINATION
The Plan may be terminated by the Employer at any time by appropriate
action of its managing body. Such termination shall be effective on the
date specified by the Employer. The Plan shall terminate if the Employer
shall be dissolved, terminated, or declared bankrupt. Written notice of
the termination and effective date thereof shall be given to the Custodian,
Plan Administrator, Participants and Beneficiaries of deceased
Participants, and the required filings (such as the Form 5500 series and
others) must be made with the Internal Revenue Service and any other
regulatory body as required by current laws and regulations. Until all of
the assets have been distributed from the Fund, the Employer must keep the
Plan in compliance with current laws and regulations by (a) making
appropriate amendments to the Plan and (b) taking such other measures as
may be required.
9.06 CONTINUANCE OF PLAN BY SUCCESSOR EMPLOYER
Notwithstanding the preceding Section 9.05, a successor of the Employer may
continue the Plan and be substituted in the place of the present Employer.
The successor and the present Employer must execute a written instrument
authorizing such substitution and the successor must complete and sign a
new Adoption Agreement.
SECTION TEN MISCELLANEOUS
10.01 STATE COMMUNITY PROPERTY LAWS
The terms and conditions of this Plan shall be applicable without regard to
the community property laws of any state.
10.02 HEADINGS
The headings of the Plan have been inserted for convenience of reference
only and are to be ignored in any construction of the provisions hereof.
10.03 GENDER AND NUMBER
Whenever any words are used herein in the masculine gender they shall be
construed as though they were also used in the feminine gender in all cases
where they would so apply, and whenever any words are used herein in the
singular form they shall be construed as though they were also used in the
plural form in all cases where they would so apply.
10.04 PLAN MERGER OR CONSOLIDATION
In the case of any merger or consolidation of the Plan with, or transfer of
assets or liabilities of such Plan to, any other plan, each Participant
shall be entitled to receive benefits immediately after the merger,
consolidation, or transfer (if the Plan had then terminated) which are
equal to or greater than the benefits he would have been entitled to
receive immediately before the merger, consolidation, or transfer (if the
Plan had then terminated). The Custodian has the authority to enter into
merger agreements or agreements to directly transfer the assets of this
Plan but only if such agreements are made with Custodians of other
retirement plans described in Section 401(a) of the Code.
10.05 STANDARD OF FIDUCIARY CONDUCT
The Employer, Plan Administrator, Custodian and any other fiduciary under
this Plan shall discharge their duties with respect to this Plan solely in
the interests of Participants and their Beneficiaries and with the care,
skill, prudence and diligence under the circumstances then prevailing that
a prudent man acting in like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character and with like aims.
No fiduciary shall cause the Plan to engage in any transaction known as a
"prohibited transaction" under ERISA.
10.06 GENERAL UNDERTAKING OF ALL PARTIES
All parties to this Plan and all persons claiming any interest whatsoever
hereunder agree to perform any and all acts and execute any and all
documents and papers which may be necessary or desirable for the carrying
out of this Plan and any of its provisions.
10.07 AGREEMENT BINDS HEIRS, ETC.
This Plan shall be binding upon the heirs, executors, administrators,
successors and assigns, as those terms shall apply to any and all parties
hereto, present and future.
SECTION ELEVEN MATCHING CONTRIBUTIONS
11.00 DEFINITIONS
The following words and phrases when used in the Plan with initial capital
letters shall, for the purposes of this Plan, have the meanings set forth
below unless the context indicates that other meanings are intended.
11.01 AVERAGE CONTRIBUTION PERCENTAGE (ACP)
Means, for a specified group of Participants for a Plan Year, the average
of the ratios (calculated separately for each Participant in such group) of
(1) the amount of Matching Contributions actually paid over to the Fund on
behalf of such Participant for the Plan Year to (2) the Participant's
Compensation for such Plan Year (taking into account only that Compensation
paid to the Employee during the portion of the Plan Year he was an eligible
Participant).
11.02 CONTRIBUTING PARTICIPANT
Means a Participant who has enrolled as a Contributing Participant pursuant
to Section 11.08 and on whose behalf the Employer is contributing Elective
Deferrals to the Plan.
11.03 CONTRIBUTION PERCENTAGE
Means the ratio (expressed as a percentage) of the Participant's
Contribution Percentage Amounts to the Participant's Compensation for the
Plan Year (taking into account only that Compensation paid to the Employee
during the portion of the Plan Year he was an eligible Participant).
11.04 ELIGIBLE PARTICIPANT
Means any Employee who is eligible to make an Elective Deferral or to
receive a Matching Contribution (including Forfeitures thereof).
11.05 EXCESS AGGREGATE CONTRIBUTIONS
Means, with respect to any Plan Year, the excess of:
A. The aggregate Contribution Percentage Amounts taken into account in
computing the numerator of the Contribution Percentage actually made
on behalf of Highly Compensated Employees for such Plan Year, over
B. The maximum Contribution Percentage Amounts permitted by the ACP test
(determined by reducing contributions made on behalf of Highly
Compensated Employees in order of their Contribution Percentages
beginning with the highest of such percentages).
11.06 EXCESS CONTRIBUTIONS
Means, with respect to any Plan Year, the excess of:
A. The aggregate amount of Employer Contributions actually taken into
account in computing the ACP of Highly Compensated Employees for such
Plan Year, over
B. The maximum amount of such contributions permitted by the ACP test
(determined by reducing contributions made on behalf of Highly
Compensated Employees in order of the ACP's, beginning with the
highest of such percentages).
11.07 MATCHING CONTRIBUTION
Means an Employer contribution made to this or any other defined
contribution plan on behalf of a Participant on account of a Participant's
Elective Deferrals, under a plan maintained by the Employer.
11.08 CONTRIBUTING PARTICIPANT
A. REQUIREMENTS TO ENROLL AS A CONTRIBUTING PARTICIPANT
Each Employee who becomes a Participant may enroll as a Contributing
Participant. A Participant shall be eligible to enroll as a
Contributing Participant on the Entry Date as of which he enters the
Plan. If a Participant does not enroll at that time, he may enroll on
the first day of any subsequent Plan Year, or, if the Plan
Administrator shall permit in a uniform and nondiscriminatory manner,
on any subsequent Entry Date. A Participant who wishes to enroll as a
Contributing Participant must complete, sign and file a salary
reduction agreement with the Plan Administrator.
B. MODIFICATION OF SALARY REDUCTION AGREEMENT BY A CONTRIBUTING
PARTICIPANT
A Contributing Participant may modify his salary reduction agreement
to increase or decrease (within the limits placed on Elective
Deferrals in the Adoption Agreement) the amount of his Compensation
deferred into the Plan. Such modification may only be made once per
Plan Year. A Contributing Participant who desires to make such a
modification shall complete, sign and file a new salary reduction
agreement with the Plan Administrator at least thirty days before the
modification is to become effective.
C. WITHDRAWAL AS A CONTRIBUTING PARTICIPANT
A Participant who desires to withdraw as a Contributing Participant
shall give written notice of withdrawal to the Plan Administrator at
least thirty days (or such lesser period of days as the Plan
Administrator shall permit in a uniform and nondiscriminatory manner)
before the effective date of withdrawal. A Participant shall cease to
be a Contributing Participant upon his Termination of Employment, or
on account of termination of the Plan.
D. RETURN AS A CONTRIBUTING PARTICIPANT AFTER WITHDRAWAL
A Participant who has withdrawn as a Contributing Participant under
Section 11 may not again become a Contributing Participant until the
first day of the first Plan Year following the effective date of his
withdrawal as a Contributing Participant.
11.09 CONTRIBUTIONS BY EMPLOYER
The Employer shall make contributions to the Plan in accordance with the
contribution formulas specified in the Adoption Agreement.
11.10 NONDISCRIMINATION TESTING
A. Limits on Highly Compensated Employees - The Average Contribution
Percentage (hereinafter "ACP") for Participants who are Highly
Compensated Employees for each Plan Year and the ACP for Participants
who are not Highly Compensated Employees for the same Plan Year must
satisfy one of the following tests:
1. The ACP for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the ACP for Participants who are
not Highly Compensated Employees for the same Plan Year
multiplied by 1.25; or
2. The ACP for Participants who are Highly Compensated Employees for
the Plan Year shall not exceed the ACP for Participants who are
not Highly Compensated Employees for the same Plan Year
multiplied by 2, provided that the ACP for the Participants who
are Highly Compensated Employees does not exceed the ACP for
Participants who are not Highly Compensated Employees by more
than 2 percentage points.
B. Special Rules
1. For purposes of this Section 11.10, the Contribution Percentage
for any Participant who is a Highly Compensated Employee and who
is eligible to have Contribution Percentage Amounts allocated to
his or her Individual Account under two or more plans described
in Section 401(a) of the Code, or arrangements described in
Section 401(k) or 403(b) of the Code that are maintained by the
Employer, shall be determined as if the total of such
Contribution Percentage Amounts was made under each plan. If a
Highly Compensated Employee participates in two or more cash or
deferred arrangements that have different plan years, all cash or
deferred arrangements ending with or within the same calendar
year shall be treated as a single arrangement.
2. For purposes of determining the Contribution Percentage of a
Participant who is a 5% owner or one of the 10 most highly paid
Highly Compensated Employees, the Contribution Percentage Amounts
and Compensation of such Participant shall include the
Contribution Percentage Amounts and Compensation for the Plan
Year of family members, (as defined in Section 414(q)(6) of the
Code). Family members, with respect to Highly Compensated
Employees, shall be disregarded as separate Employees in
determining the Contribution Percentage both for Participants who
are not Highly Compensated Employees and for Participants who are
Highly Compensated Employees.
3. For purposes of determining the Contribution Percentage test,
Employee Contributions are considered to have been made in the
Plan Year in which contributed to the Fund. Matching
Contributions will be considered made for a Plan Year if made no
later than the end of the 12 month period beginning on the day
after the close of the Plan Year.
4. The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP test.
5. 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.
11.11 DISTRIBUTION PROVISIONS
A. Distributions from the Plan are subject to the provisions of Section 6
and the provisions of this Section 11. In the event of a conflict
between the provisions of Section 6 and Section 11, the provisions of
Section 11 shall control.
B. DISTRIBUTION REQUIREMENTS
Elective Deferrals and income allocable to each are not distributable
to a Participant or his or her Beneficiary or Beneficiaries, in
accordance with such Participant's or Beneficiary or Beneficiaries'
election, earlier than upon separation from service, death, or
disability. Such amounts may also be distributed upon the attainment
of age 59 1/2.
C. DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS
1. General Rule - Notwithstanding any other provision of this Plan,
Excess Aggregate Contributions, plus any income and minus any
loss allocable thereto, shall be forfeited, if forfeitable, or if
not forfeitable, distributed no later than the last day of each
Plan Year to Participants to whose accounts such Excess Aggregate
Contributions were allocated for the preceding Plan Year. Excess
Aggregate Contributions of Participants who are subject to the
family member aggregation rules shall be allocated among the
family members in proportion to the Employee and Matching
Contributions (or amounts treated as Matching Contributions) of
each family member that is combined to determine the combined
ACP. If such Excess Aggregate Contributions are distributed more
than 2 1/2 months after the last day of the Plan Year in which
such excess amounts arose, a 10% excise tax will be imposed on
the Employer maintaining the Plan with respect to those amounts.
Excess Aggregate Contributions shall be treated as annual
additions under the Plan.
2. Determination of Income or Loss - Excess Aggregate Contributions
shall be adjusted for any income or loss up to the date of
distribution. The income or loss allocable to Excess Aggregate
Contributions is the sum of: (1) income or loss allocable to the
Participant's Employee Contribution account, Matching
Contribution account (if any) and Elective Deferral account for
the Plan Year multiplied by a fraction, the numerator of which is
such Participant's Excess Aggregate Contributions for the year
and the denominator is the Participant's Individual Account
balance(s) attributable to Contribution Percentage Amounts
without regard to any income or loss occurring during such Plan
Year; and (2) 10% of the amount determined under (1) multiplied
by the number of whole calendar months between the end of the
Plan Year and the date of distribution, counting the month of
distribution if distribution occurs after the 15th of such month.
Notwithstanding the preceding sentence, the Plan Administrator
may compute the income or loss allocable to Excess Aggregate
Contributions in the manner described in Section 4 (i.e., the
usual manner used by the Plan for allocating income or loss to
Participants' Individual Accounts), provided such method is used
consistently for all Participants and for all corrective
distributions under the Plan for the Plan Year.
3. Forfeitures of Excess Aggregate Contributions - Forfeitures of
Excess Aggregate Contributions may either be reallocated to the
accounts of Contributing Participants who are not Highly
Compensated Employees or applied to reduce Employer
Contributions.
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 Matching Contribution
account.
11.12 VESTING
A. 100% VESTING ON CERTAIN CONTRIBUTIONS
The Participant's accrued benefit derived from Elective Deferrals is
nonforfeitable.
B. FORFEITURES AND VESTING OF MATCHING CONTRIBUTIONS
Matching Contributions shall be Vested in accordance with the vesting
schedule selected for Matching Contributions in the Adoption
Agreement. In any event, Matching Contributions shall be fully Vested
at Normal Retirement Age, upon the complete or partial termination of
the Plan, or upon the complete discontinuance of Employer
Contributions. Notwithstanding any other provision of the Plan,
Matching Contributions may be forfeited if the contributions to which
they relate are Excess Elective Deferrals or Excess Aggregate
Contributions.
Any forfeitures of Matching Contributions which are allocated to
Participants' Accounts shall be made in accordance with the provision
selected in the Adoption Agreement.
