EXHIBIT 99.14A
THE XXXXXXX PLAN
SECTION 403(b)(7)' CUSTODIAL ACCOUNT AGREEMENT
Section 1. Introduction
The Custodial Account established hereby is created pursuant to Section
403(b)(7) of the Code in order to provide a retirement benefit for the Employee
named in the Application, which is made a part of this Agreement, through
investment in the securities of one or more Funds.
Section 2. Definitions
The following terms shall have the following meanings unless the context clearly
indicates otherwise:
(a) Agreement. This Agreement, as amended from time to time, including the
Application, which is incorporated herein by reference.
(b) Application. The Custodial Account application form made available by the
Custodian for the purpose of establishing an account described in Section
403(b)(7) of the Code that permits investments in shares of one or more of the
Funds.
(c) Beneficiary. The person(s) designated as such by the Employee in the
Application, or in such other manner permitted by this Agreement.
(d) Church. A "church" or a "qualified church-controlled organization" within
the meaning of Section 3121(w)(3)(A) or (B), of the Code respectively.
(e) Code. The Internal Revenue Code of 1986, as amended.
(f) Custodial Account. The custodial account established by this Agreement.
(g) Custodian. National Westminster Bank NJ, or any successor thereto who
accepts appointment pursuant to the terms of this Agreement.
(h) Elective Deferrals. With respect to any calendar year, the sum of --
(i) employer contributions under a qualified cash or deferred arrangement
(as defined in Section 401(k) of the Code), to the extent not includible in
gross income under Section 402(a)(8) of. the Code,
(ii) employer contributions to a simplified employee pension (as defined in
- Section 408(k) of the Code), to the extent not includible in gross income
under Section 402(h)(i)(B) of the Code, and
(iii) employer contributions to an annuity or custodial account described
in Section 403(b) of the Code pursuant to a salary reduction agreement
(within the meaning of Section 3121(a)(5)(D) of the Code), other than a
contribution made pursuant to a one-time irrevocable election made by the
Employee at the time of initial eligibility to enter into such an
agreement, or pursuant to a similar arrangement involving a one-time
irrevocable election specified in regulations, rulings or other
administrative pronouncements issued by the Department of the Treasury.
(i) Eligible Employee. Each Employee of the Employer other than
(i) nonresident aliens described in Section 410(b)(3)(C) of the Code,
(ii) students performing services described in Section 3121(b)(10) of the
Code,
(iii) employees who normally work less than 20 hours per week,
(iv) employees who are participants in an eligible deferred compensation
plan described in Section 457 of the Code, or a cash or deferred
arrangement described in Section 401(k) of the Code, maintained by the
Employer, or who are eligible to contribute to another custodial account or
to an annuity described in Section 403(b) of the Code established pursuant
to a plan maintained by the Employer, and
(v) such other classes of employees which may be excluded for purposes of
Section 403(b)(12)(A)(ii) of the
Code pursuant to regulations, rulings or other administrative
pronouncements issued by the Department of the Treasury.
(j) Eligible Retirement Plan. An individual retirement account or individual
retirement annuity described in Section 408(a) or (b) of the Code, respectively,
or an annuity or custodial account described in Section 403(b) of the Code.
(k) Eligible Rollover Distribution. Any distribution from the Custodial Account
on or after January 1, 1993, to the Employee, the Employee's surviving spouse,
or a spouse or former spouse of the Employee who is an alternate payee (within
the meaning of Section 414(p)(8) of the Code) with respect to the Custodial
Account, other than -
(i) any distribution which is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or
life expectancy) of the Employee, the Employee's surviving spouse or such
alternate payee, the joint lives (or joint life expectancies) of the
Employee and the Employee's designated Beneficiary, or for a specified
period of 10 years or more,
(ii) any distribution to the extent such distribution is required under
Section 403(b)(10) of the Code,
(iii) any distribution that is not includible in gross income (without
regard to Section 403(b)(8) of the Code), and
(iv) any other distribution that is not an "eligible rollover distribution"
within the meaning of regulations under Section 402(c)(4) of the Code.
(1) Employee. The individual identified as such in the Application.
(m) Employer. The entity identified as such in the Application, which must be -
(i) a State, a political subdivision of a State, or an agency or
instrumentality of one or more of the foregoing, but only if the Employee
performs services for an educational organization described in Section
170(b)(1)(A)(ii) as an employee of such State or other entity, or
(ii) an entity described in Section 501(c)(3) of the Code and exempt from
tax under Section 501(a) of the Code.
(n) ERISA. The Employee Retirement Income Security Act of 1974, as amended.
(o) Fund. The Xxxxxxx Plan or any other regulated investment company within the
meaning of Section 851(a) of the Code for which Xxxxxxx Partners, Ltd. or
Covenant Funds, Inc. serves as the investment adviser and which the Custodian
has agreed to hold pursuant to this Agreement.,
(p) Qualified Organization. Any educational organization, hospital, home health
service agency, health and welfare service agency, church, convention or
association of churches, or an organization described in Section
414(e)(3)(B)(ii) of the Code.
(q) Required Beginning Date. April 1 of the calendar year following the calendar
year in which the Employee attains age 70 1/2; except that if the Employee
attained age 70 1/2 before January 1, 1988, or in the case of a Custodial
Account established pursuant to a governmental plan or a plan maintained by a
Church, the Required Beginning Date shall be April 1 of the calendar year
following the later of the calendar year in which the Employee attains age 70
1/2 or the calendar year in which he or she retires.
(r) Year of Service. Each full year during which the Employee was a full-time
employee of the Employer and a fraction of a year (determined in accordance with
regulations, rulings or other administrative pronouncements issued by the
Department of the Treasury) for each full year during which the Employee was a
part-time employee of the Employer and for each part of a year during which the
Employee was a full-time or part-time employee of the Employer. For this
purpose, all Years of Service by a duly ordained, commissioned, or licensed
minister of a church, or a lay person, as an employee of a church, a convention
or association of churches, or an organization described in Section
414(e)(3)(B)(ii) of the Code, shall be considered as Years of Service with one
employer.
Section 3. Contributions
(a) Contributions to the Custodial Account may be made by the Employer as a
benefit in addition to cash compensation and mar also be made by the Employee
through the Employer pursuant to a salary reduction agreement. All contributions
must be made in cash.
(b) The Custodian shall have no obligation to compel the Employer or the
Employee to make any contribution, nor shall the Custodian be required to notify
the Employer or Employee if any contribution made exceeds the limitations of
Section 402(g), Section 403(b)(2) or Section 415 of the Code.
(c) (i) Elective Deferrals to the Custodial Account in any calendar year shall
not exceed the greater of $7,000 (as adjusted by the Secretary of the
Treasury for years after 1987) or $9,500; provided, however, if the
Employer is a Qualified Organization, and the Employee has completed at
least 15 Years of Service, this limitation shall be increased by the lesser
of the following amounts:
(1) $3,000,
(2) $15,000 reduced by the total amount of increases pursuant to this
clause for all previous years, or
(3) the excess of $5,000 multiplied by the number of such Years of
Service over the Elective Deferrals made by the Employer on behalf of
the Employee in prior years.
(ii) Elective Deferrals to the Custodial Account in any calendar year, when
combined with other Elective Deferrals made on behalf of the Employee under
all plans, contracts or arrangements of the Employer, may not exceed $7,000
(as adjusted by the Secretary of the Treasury for years after 1987),
increased by the amount of Elective Deferrals made to the Custodial Account
and any other annuities or custodial accounts described in Section 403(b)
of the Code on behalf of the Employee under a plan maintained by the
Employer, but not to an amount in excess of the limitation set forth in
subparagraph (i), above.
(d) A transfer of cash from an existing annuity or custodial account described
in Section 403(b) of the Code may be made to the Custodial Account, provided
that the terms of such annuity or custodial account permit such transfer. Any
cash transferred hereunder shall be invested by the Custodian in accordance with
written instructions received from the Employee; provided, however, that the
amount transferred may be invested only in securities of one or more Funds.
Written instructions accompanying any such transfer shall state that the amount
being transferred is a transfer from an annuity or custodial account described
in Section 403(b) of the Code and shall set forth the name, title or other
designation of such custodial account or annuity, as the case may be.
(e) The Employee may make a rollover contribution (including a direct rollover)
to the Custodial Account of all or a portion of the cash proceeds of any
distribution from -
(i) another annuity or custodial account described in Section 403(b) of the
Code, provided the amount of such contribution would not be included in the
Employee's gross income pursuant to Section 403(b)(8) of the Code as a
result of such rollover contribution, or
(ii) an individual retirement account or annuity described in Section 408
of the Code, provided the amount of such contribution would not be included
in the Employee's gross income pursuant to Section 408(d)(3) of the Code as
a result of such rollover contribution. Any cash contributed hereunder
shall be invested by the Custodian in accordance with written instructions
received from the Employee; provided, however, that the amount contributed
may be invested only in securities of one or more Funds.
(f) Unless the Employer is a Church --
(i) the Employer must permit each Eligible Employee to elect to make
contributions of more than $200 pursuant to a salary reduction agreement to
one or more annuities or custodial accounts described in Section 403(b) of
the Code, and
(ii) with respect to contributions to this Custodial Account and other
annuities and custodial accounts described in Section 403(b) of the Code,
other than contributions made pursuant to salary reduction agreements, the
Employer's plan pursuant to which this Custodial Account is established
must meet the requirements of Sections 401(a)(4), (5), (17) and (26),
Section 401(m) and Section 410(b) of the Code in the same manner as if such
plan were a plan described in Section 401(a) of the Code, in accordance
with Section 403(b)(12)(A) of the Code.
For purposes of this subsection (f), a contribution to an annuity or a custodial
account shall be treated as not made pursuant to a salary reduction agreement if
it is made pursuant to a one-time irrevocable election made by the Employee at
the time of initial eligibility to participate in the plan of which such annuity
or custodial account is a part or is made pursuant to a similar arrangement
involving a one-time irrevocable election specified in regulations, rulings or
other administrative pronouncements issued by the Department of the Treasury.
Section 4. The Custodial Account
(a) The Custodian shall maintain or cause to have maintained a record of the
Custodial Account. The interest of the Employee in the Custodial Account shall
at all times be nonforfeitable and the assets therein shall not be commingled
with the property of others; provided, however, that investment in securities of
a Fund shall not be considered commingling. Contributions to the Custodial
Account, and the income thereon, may not be used for or diverted to purposes
other than the exclusive benefit of the Employee and his or her Beneficiary.
(b) If the Custodial Account is determined to constitute part of a plan subject
to Title I of ERISA, the Employer shall be responsible for ensuring that such
plan complies at all 1 times with the applicable requirements of ERISA. Neither
a Fund, its investment advisor or distributor, the Custodian, nor any of their
affiliates shall be the "administrator" (as defined in Section (16)(A) of ERISA)
of such plan.
Section 5. Investments
(a) The Custodian shall invest all contributions less unpaid custodial fees in
the securities of the Fund(s) specified in the Application. The Custodian or its
nominee shall be the holder of record and the Employee shall be the beneficial
owner of all such securities and any other property in the Custodial Account.
The Custodian shall have no investment responsibility or discretion with respect
to this Custodial Account. The selection of Funds with respect to both the
investment of contributions previously made and those to be made in the future
may be changed upon receipt by the Custodian of written instructions from the
Employee (or the Beneficiary following the death of the Employee), requesting
such change, subject to the requirement that the minimum investment in any Fund
shall not be smaller than the minimum amount, if any, required for investment in
the securities of any selected Fund. Investments may be divided between or among
two or more Funds.
(b) All cash dividends and capital gain distributions received upon assets in
the Custodial Account shall be reinvested bathe securities of the issuing Fund
and credited to the Custodial Account. In the event that, with respect to any
such dividends and distributions, the Custodian as holder of record may elect to
receive such dividend or distribution in either additional shares, cash or other
property, the Custodian shall elect to receive such distribution in additional
shares. Sales and other charges attributable to the acquisition of securities
shall be charged to the Custodial Account.
(c) The Custodian shall deliver or cause to be delivered to the Employee all
notices, prospectuses, financial statements, proxies, voting instruction cards,
and proxy soliciting requests relating to securities held in the Custodial
Account. The Custodian in its capacity as such shall not vote any shares of the
Fund held hereunder except in accordance with the written instructions of the
Employee.
(d) Whenever the Custodian requires cash for any purpose provided in this
Agreement, it is authorized to redeem proportionately shares held in the Funds
in an amount sufficient to provide the required cash.
Section 6. Distributions from the Custodial Account
(a) The Custodian will, upon receiving written notice from the Employee (or from
the Beneficiary following the Employee's death) of the Employee's, attainment of
age 59-1/2, disability (as defined in Section 72(m)(7) of the Code), separation
from service from the Employer, financial hardship (determined in accordance
with Section 403(b)(7) of the Code and any regulations issued thereunder) or
death, distribute all or a portion of the assets of the Custodial Account in
cash in the manner and at the time specified in such written notice; provided,
however, that the Employee (or Beneficiary following the Employee's death) shall
provide substantiation of such event
in such form and manner as required by the Custodian.
(b) Distributions on account of financial hardship will be permitted only from
the balance of the Custodial Account as of December 31, 1988, and from salary
reduction contributions made subsequent to that date, but not earnings or other
contributions subsequent thereto.
(c) The Employee shall have the right, prior to completion of distribution of
the entire Custodial Account, by written notice signed by the Employee and
delivered to the Custodian, to designate, revoke or change a designation of a
Beneficiary. Except as ordered by a court of competent jurisdiction, if a
designation of Beneficiary is in effect at the time of the Employee's death, the
balance in the Custodial Account will be distributed to such Beneficiary in
accordance with a method described in Section 7 below, as selected by the
Beneficiary, upon receipt of the Custodian of proof of death of the Employee. If
prior to completion of such distribution the Beneficiary dies, any remaining
balance in the Custodial Account shall be distributed to the Beneficiary's
estate. If no such Beneficiary is designated in accordance herewith or if such
Beneficiary dies before the Employee dies, the Employee's Beneficiary shall be
his or her estate.
(d) If the distributed of any Eligible Rollover Distribution from the Custodial
Account elects to have such distribution paid directly to an Eligible Retirement
Plan and specifies the Eligible Retirement Plan to which such distribution is to
be paid (in such form and manner as the Custodian may prescribe), such
distribution shall be made in the form of a direct rollover by the Custodian to
the Eligible Retirement Plan so specified, in any manner permitted by
regulations, rulings and other administrative pronouncements issued by the
Department of the Treasury.
Section 7. Minimum Distributions to Employee
(a) The entire value of the Custodial Account shall be distributed or commence
to be distributed, no later than the Employee's Required Beginning Date, over
(i) the life of the Employee, or the lives of the Employee and his or her
designated Beneficiary, or
(ii) a period certain not extending beyond the life expectancy of the
Employee, or the joint and last survivor expectancy of the Employee and his
or her designated Beneficiary.
(b) The amount to be distributed each year, beginning with the calendar year
prior to the year in which the Employee attains the Required Beginning Date and
for each succeeding calendar year, shall not be less than the quotient obtained
by dividing the Employee's Custodial Account balance at the beginning of such
year by the lesser of -
(i) the life expectancy of the Employee (or the joint life expectancy of
the Employee and his or her designated Beneficiary, if applicable), or
(ii) if the Employee's spouse is not the designated Beneficiary, the
applicable divisor determined from the table set forth in Q&A-4 of Section
1.401(a)(9)-2 of the Proposed Income Tax Regulations. Distributions after
the death of the Employee shall be distributed using the applicable life
expectancy as the relevant divisor without regard to Section 1.401(a)(9)-2
of the Proposed Income Tax Regulations.
(c) Life expectancy is 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 Employee by the time distributions are required to
begin, life expectancies shall be recalculated annually. Such election shall be
irrevocable by the Employee and shall apply to all subsequent years. The life
expectancy of a non-spouse Beneficiary may not be recalculated. Instead, life
expectancy will be calculated using the attained age of such Beneficiary during
the calendar year prior to the year in which the Employee attains the Required
Beginning Date, and payments for subsequent years shall be calculated based on
such life expectancy reduced by one for each calendar year which has elapsed
since the calendar year life expectancy was first calculated.
Section 8. Minimum Distributions Upon Death of Employee
(a) If the Employee dies on or after his or her Required Beginning Date, the
remaining portion of such interest shall continue to be distributed at least as
rapidly as under the method of distribution being used prior to the Employee's
death. If the Employee dies before his or her Required Beginning Date,
distribution of the
Employee's entire interest shall be completed by December 31 of the calendar
year containing the fifth anniversary of the Employee's death except to the
extent that an election is made by the Employee's designated Beneficiary to
receive distributions in accordance with (i) or (ii) below:
(i) If the Employee's interest is payable to a designated Beneficiary, then
the entire interest of the Employee may be distributed over a certain
period 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 Employee died.
(ii) If the designated Beneficiary is the Employee's surviving spouse, the
date distributions are required to begin in accordance with (i) above shall
not be earlier than the later of (1) December 31 of the calendar year
immediately following the calendar year in which the Employee died or (2)
December 31 of the calendar year in which the Employee would have attained
age 70 1/2.
(c) The amount to be distributed each year pursuant to paragraph (b), above,
shall be not less than the quotient obtained by dividing the Employee's
Custodial Account balance at the beginning of such year by the life expectancy
of the designated Beneficiary.
(d) Life expectancy is computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations. For purposes of
distributions beginning after the Employee's death, and if the Employee's
surviving spouse is the designated Beneficiary, unless otherwise elected by the
surviving spouse by the time distributions are required to begin, the surviving
spouse's life expectancy shall be recalculated annually. Such election shall be
irrevocable by the surviving spouse and shall apply to all subsequent years. In
the case of any other designated Beneficiary, or in the case of a surviving
spouse who does makes such an election, life expectancies shall be calculated
using the attained age of such Beneficiary during the calendar year in which
distributions are required to begin pursuant to this Section, and payments for
any subsequent calendar year shall be calculated based on such life expectancy
reduced by one for each calendar year which has elapsed since the calendar year
life expectancy was first calculated.
(d) If the designated Beneficiary is the Employee's surviving spouse, the
surviving spouse may elect to treat the Custodial Account as his or her own for
purposes of Section 7 and this Section Section 9. Resignation or Removal of the
Custodian
(a) The Custodian may resign at any time after the expiration of 30 days from
the date of mailing written notice of resignation to The Xxxxxxx Plan and the
Employee. The Custodian may be removed by The Xxxxxxx Plan at any time after the
expiration of 30 days from the date of mailing of written notice of removal to
the Custodian and the Employee. Any notice hereunder shall specify the effective
date of such resignation or removal.
(b) Upon receipt of notice of resignation or removal a successor custodian may
be appointed by The Xxxxxxx Plan, which successor shall be a bank or other
qualified person within the meaning of Section 401(f)(2) of the Code. If no such
successor custodian is appointed prior to the effective date of the Custodian's
resignation or removal, the Custodian may, but shall not be required to, appoint
a qualified successor custodian. If a qualified successor custodian is appointed
the Custodian shall pay over to such successor the assets of the Custodial
Account and all records pertaining thereto and notify the Employer and Employee
of such appointment and the transfer of assets and records. In connection with
such transfer, however, the Custodian is authorized to reserve such sum of money
as is necessary for the payment of its accrued fees.
(c) The Custodian shall terminate the Custodial Account if no qualified
successor custodian has been appointed prior to the effective date of its
resignation or removal. Termination of the Custodial Account shall be effected
by distributing the assets of the Custodial Account by a single sum payment in
cash. Upon completion of such distribution, the Custodian shall be relieved from
all further liability with respect to all amounts so distributed.
Section 10. Fees and Charges
(a) The fees of the Custodian as set forth in the Application shall be paid when
due. Such
fees may be revised by the Custodian after 60 days written notice thereof to The
Xxxxxxx Plan and the Employee (or the Beneficiary following the death of the
Employee).
(b) Any taxes levied or assessed upon or in respect of the Custodial Account,
including any transfer taxes incurred in the investment or reinvestment of the
assets of the Custodial Account, and any custodial fees shall be paid from the
assets of the Custodial Account from available cash and in the absence thereof
the Custodian shall liquidate such securities held in the Custodial Account as
are necessary to pay any such taxes and fees in full.
(c) All other administrative expenses incurred by the Custodian in the
performance of its duties, including fees for legal services rendered to the
Custodian and the compensation to the Custodian, shall constitute a charge upon
the assets of the Custodial Account. Custodian is hereby authorized to redeem or
liquidate sufficient assets of the Custodial Account to pay any of the foregoing
items.
Section 11. Amendment
The Employee and the Custodian hereby delegate to The Xxxxxxx Plan the right to
amend this Agreement by submitting a copy of any such amendment to the Employer,
the Employee and the Custodian; provided, however, the duties and
responsibilities of the Custodian shall not be changed without its prior
consent.
Section 12. Miscellaneous
(a) Except as provided by law or by a qualified domestic relations order as
defined in Section 414(p) of the Code, any right or benefit hereunder shall not
be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any such right or benefit shall
not in any way be subject to the debts, contracts, liabilities, engagements or
torts of the person who is entitled to such right or benefit, nor shall such
right or benefit be subject to attachment or legal process for or against such
person. Except as otherwise provided by law, the assets held in the Custodial
Account are not subject to the claims of the Employer's creditors.
(b) The Custodian has appointed Fund/Plan Services, Inc. as its agent for
receiving contributions to the Custodial Account and for receiving all written
notices required to be forwarded to the Custodian pursuant to this Agreement.
(c) The Custodian shall be fully protected in acting upon any written order,
Beneficiary designation or-other instrument of the Employee or the Employer
believed by the Custodian to be genuine and to have been properly executed and
upon which it acts in good faith in taking or omitting to take any action.
(d) Upon the expiration of a 30-day period after furnishing to the Employee
written confirmation of a transaction or transactions, the Custodian shall be
released and discharged from all liability and accountability to the Employee or
any third party with respect to such transaction or transactions, except with
respect to a transaction or transactions concerning which the Employee files
written objections with the Custodian within such 30-day period.
(e) Notwithstanding any other provision hereof, the Custodian shall have no
responsibility for
(i) the initial or continued qualification of the Custodial Account under
Section 403(b)(7) of the Code;
(ii) determining the amount of or collecting any contribution;
(iii) determining the amount, character, or timing of any distribution to
the Employee or the Beneficiary other than as instructed pursuant to
Sections 6, 7 and 8 of this Agreement;
(iv) determining the amount of any limitation applicable to the Employee
under Section 402(g), Section 403(b)(2) or Section 415 of the Code; or
(v) determining whether any person or persons other than the Employee's
designated Beneficiary may be entitled, under applicable law, to receive
amounts from the Custodial Account on account of the death of the Employee.
(f) The Custodian shall not be responsible for any liability arising out of this
Agreement except such liability as is
occasioned by the Custodian's own negligence or willful misconduct. The
Custodian shall not be responsible for any action or non-action taken in
accordance with written instructions or notice received pursuant this Agreement
and may rely upon and shall be protected in acting upon any written order from
the Employer or Employee or any other notice, request, consent, certificate,
Beneficiary designation or other instrument reasonably believed by the Custodian
to be genuine and to have been properly executed hereunder.
(g) The Custodian shall not be obligated 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.
(h) The Custodian will submit reports to the Internal Revenue Service and to the
Employer or Employee in such manner and containing such information as may be
prescribed by the Internal Revenue Service.
(i) This Agreement shall be construed under the laws of the Commonwealth of
Pennsylvania except to the extent any such law is superseded by laws of the
United States.
(j) If any provision of this Agreement is held invalid or unenforceable, its
invalidity or unenforceability shall not affect any other provision of this
Agreement, and this Agreement shall be construed and enforced as if such
provision had not been included.
(k) This Agreement shall become effective upon the effective date set forth in
the Application when the Application is countersigned by or on behalf of the
Custodian.
