EMPLOYER COPY
CALIFORNIA PENSION ADMINISTRATORS & CONSULTANTS, INC.
In conjunction with Xxxxxxxxxxx Funds
CLIENT SERVICE AGREEMENT
THIS AGREEMENT is made this 15 day of March, 1999, by and between California
Pension Administrators and Consultants, Inc., 00000 Xxxxx Xxxxxx Xxxxxxxxx,
Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx 00000 ("CALPAC"), and the Client Listed
below.
Client: Nettaxi, Inc.
0000 X. Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
In consideration of the mutual covenants expressed herein, the parties agree as
follows:
1. SERVICES PROVIDED: CALPAC will prepare and provide the Client with one
copy annually of the reports, tests, or other procedures listed in this
Agreement unless otherwise directed by the Client. Additional copies and
services specifically references will be subject to additional charges.
Set-Up Fee
1-50 Employees - New Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . $500
Annual Recordkeeping and Plan Administration
Annual Base Fee 401(k) Plan 1=50 Employees . . . . . . . . . . . . . . . . . . .$1,500
Other Fees
Loan Initiation Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $50
Annual Loan Administration Fee . . . . . . . . . . . . . . . . . . . . . . . . $50
Distribution Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $60
XXX Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250 per year per account
Fee for Additional Mutual Fund Families. . . . . . . . . . . . . . . . . . . . 250 per quarter per family
Fee for Frozen Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100 per quarter
Fee for excess funds (over 12) . . . . . . . . . . . . . . . . . . . . . . . . $400 per year
Consulting, audit support. . . . . . . . . . . . . . . . . . . . . . . . . . . $90-$150 per hour
Spanish Language Voice Response Unit . . . . . . . . . . . . . . . . . . . . . $250 annually
Spanish Language Enrollment Materials. . . . . . . . . . . . . . . . . . . . . $90 minimum
Spanish Language Enrollment Meetings . . . . . . . . . . . . . . . . . . . . . Up to $90 per meeting
Additional Annual Fees Applicable to Profit Sharing and Money Purchase Plans
Profit Sharing Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . $250
Money Purchase Plan Administration . . . . . . . . . . . . . . . . . . . . . . $250
For the above fees the following services are included:
Plan Compliance and Plan Administration
- Review and/or design of Plan(s)
- Plan and Trust document: (Use of California Pension plan document is assumed.
Submission to the IRS is billed separately.)
- Summary Plan Description
- Sample resolutions to adopt/amend plan
- Annual discrimination testing
- Annual top-heavy testing
- Completion of IRS Form 5500
Record keeping
- Plan setup and preparation for daily valuation system
- 401(k) deferrals, employer match and employer (3 money sources)
- Quarterly reports
- Quarterly participant statements
- Contributions as frequently as 26 per year
- Up to ten investment funds
- Participant Loan Processing
Education, Communications and Data Processing
- Enrollment meetings, materials and individualized illustrations*
- Electronic payroll data transmission**
- Interface of monthly reporting through Internet, E-mail and diskette media
- Voice Response Unit 800 number
All participant records should be submitted through electronic media and
reconciled to plan assets. Trust reconciliation work will be billed at $90 per
hour. Loan set-up fee is $10 per loan in excess of 10.
* For individualized deferral and results illustrations certain limitations
may apply. Such limits, when applicable, will be reviewed with the employer
regarding additional cost.
** A $10 per participant per payroll surcharge may be assessed if account and
payroll data is not transmitted electronically or on diskette.
1. CLIENT RESPONSIBLE FOR: The Client agrees to provide CALPAC with correct
and accurate information in a timely manner. The Client understands that a
vital part of CALPAC's services include preparation of information forms for the
Internal Revenue Service (IRS) and other governmental agencies which may include
the Department of Labor (DOL), and the Pension Benefit Guaranty Corporation
(PBGC). Returns are to be filed by the Client. Information requested from the
Client by CALPAC must be submitted by the due date specified by CALPAC in its
request. The Client understands that if Client does not provide CALPAC with
correct and accurate information in a timely manner and within the time limits
specified by CALPAC, THE Client and not CALPAC will be responsible for any
consequences, including but not limited to penalties and/or late fees incurred
for failure to file required returns and/or other information as may be required
by various governmental agencies. If any CALPAC service or report must be
revised, recalculated or amended as a result of incorrect or insufficient data
provided by the Client, or any of the Client's agents or representatives, CALPAC
shall be compensated by the client for any additional services or reports on a
time and charges basis at CALPAC's then prevailing hourly rates.
CALPAC assumes no responsibility for the accuracy and correctness of any records
or data provided by the Client or the Client's agents and representatives. The
Client assumes full responsibility for the accuracy and correctness of any
records or data provided by the Client to CALPAC. Such records and data
included, but are not limited to, employee census data, trust accounting data,
asset data and investment data.
The Client agrees that CALPAC is not a provider of legal advice, tax advice, or
investment advice. The Client agrees to seek the advice of an attorney,
accountant or other financial advisor for advice and counseling on legal issued
or the suitability of an investment. The Client agrees to verify any legal or
investment advice which it may incidentally receive from CALPAC in the course of
servicing the Plan. Such verification is the responsibility of the Client, and
may include seeking the advice of an attorney, accountant or financial advisor.
3. PRIOR SERVICE PROVIDERS: CALPAC assumes no responsibility for the
accuracy and correctness of any records or data provided by prior service
providers or trustees. CALPAC will rely on information provided by previous
service providers and trustees. The Client assumes all responsibility for the
accuracy and correctness of any records or data provided by prior service
providers or trustees, and the Client agrees to indemnify and hold CALPAC
blameless for any errors or omissions occurring prior to CALPAC becoming a
service provider.
4. TRUSTEE ACTIONS: Client agrees to indemnify and hold CALPAC blameless
for any and all errors or omissions which are the result of actions by the
Trustee.
5. PAYMENTS: The Client will pay CALPAC for services rendered. Payment
shall be by U.S. currency and may be in the form of a check, money order or
cash. CALPAC will xxxx Client for the costs and charges of services provided.
Client's payment is due CALPAC upon receipt of each billing statement.
Notwithstanding the foregoing if the client fails to receive a billing statement
from CALPAC, for any reason, Client will be responsible for timely and prompt
payment of amounts owed.
CALPAC will assess a late charge of any amounts owed by Client to CALPAC which
are more than thirty (30) days past due. The large charge will be 1.5% of the
outstanding balance due CALPAC for each month or part of a month that the
outstanding balance is more than thirty (30) days past due. Such late charges
shall be assessed and compounded for each month or part of a month that the
payments due CALPAC are more than thirty (30) days past due.
All fees and expenses may be deducted from the Client's trust account(s) if the
Client does not pay such fees and expenses within fifteen (15) days of the date
printed upon a statement for such fees and expenses. The Client cannot
reimburse the trust for such fees and expenses.
CALPAC may change its fees and charges upon thirty (30) days written notice to
the Client.
Any service not specifically described in this agreement or any of its
attachments may be performed by CALPAC on a time and charges basis by CALPAC's
then prevailing hourly rates. The Client agrees to promptly pay all such
charges within thirty (30) days of receipt of a billing statement from CALPAC.
In the event that the Client postpones or cancels the implementations or
operation of the Plan, the Client agrees to pay CALPAC for the actual time,
charges and expenses incurred by CALPAC in attempting to implement the Client's
plan.
The Client agrees to reimburse CALPAC for all extra ordinary out-of-pocket
expenses incurred by CALPAC in performing services for the Client. Such
out-of-pocket expenses may include, but are not limited to, long distance
telephone calls, facsimile transmissions, photocopying expenses, fees paid to
third parties, postage, shipping costs, and messenger services.
The Client shall be responsible to review cash billing statement from CALPAC,
and Client shall not receive credit for any alleged errors unless Client
notifies CALPAC in writing within sixty (60) days of the billing date.
The Client shall be responsible for all applicable personal, property, excise,
sales taxes and other assessments which may be incurred in the servicing of the
Plan.
The Client shall be responsible for all other transaction fees incurred by the
Plan, including but not limited to, broker's fees, commissions, appraisal fees,
mortgage servicing fees, title searches, and other such third-party fees.
6. EFFECTIVE DATE AND TERM: This Agreement shall take effect on the
execution hereof, and shall continue in force for a period of twelve (12)
months. This Agreement shall automatically renew for succeeding twelve (12)
month periods unless the Client or CALPAC gives written notice of non-renewal or
cancellation to the other. Such written notice must be sent to the addresses of
the Client or of CALPAC as indicated above, or as changed in subsequent periods.
This agreement may be terminated by either party, at any time, for any reason.
Any termination shall be subject to the notice requirements above, and CALPAC
shall be entitled to reimbursement for any services rendered prior to
termination. At time of termination of this Agreement, CALPAC and Client will
determine final termination/transfer services required of CALPAC and a separate
Agreement based on time and charges with a retainer paid in advance will apply.
7. CONVERSION DATES, BLACKOUT PERIOD, "GO LIVE" DATE: The Conversion Date
is the effective date of the conversion. It is the date of the final valuation
by the prior Recordkeeper. CALPAC assumes responsibility for processing payroll
contributions. On the Conversion Start Date, the prior Recordkeeper provides
CALPAC with conversion records consisting of participant financial data, a
reconciliation of participant assets to Trust assets, a Trust statement and hard
copy reports of plan records supporting the reconciliation. Typically, the
Conversion Start Date is 6 to 8 weeks after the Conversion Date. The period
between the Conversion Start Date and Conversion Date is the Blackout Period.
During the Blackout Period, all transactions except contribution processing will
be suspended. Participants will be unable to transfer existing balances, change
fund elections, or process loan/distribution requests. Plan Sponsors must
continue to make loan repayment deductions via payroll, in addition to enrolling
new participants, changing deferral rates and suspending contributions according
to plan parameters.
A Blackout Period is required because, initially, CALPAC does not know the
individual share balances for each participant or possesses any of the pertinent
data necessary to execute transactions on our system. This information must
first be provided by your prior Recordkeeper. After we receive the data, we
load it onto our system and make certain that the participant records and trust
account assets are in balance. We then "true up" any conversion reconciling
items. This entire process will normally take approximately 2 months. The
prior Recordkeeper may require up to 6-8 weeks to complete the valuation
and reconciliation. CALPAC then may require up to 45 days to convert the plan
to our system; 60 days if we must do a manual conversion.
Should your prior Recordkeeper be delayed in forwarding the requested
documentation to us, the Blackout Period will be extended and the go live date
will be delayed until 45 days after our receipt of the final valuation and
reconciliation.
The "Go-Live" Date is the date that the Blackout Period ends and we open our
Voice Response Unit to participants who can request transactions on daily basis.
Based upon information that you provide to us, we can schedule a tentative
"Go-Live" date, generally 3-4 months after the Conversion Date. However, please
communicate to the Participants that the "Go-Live" date is tentative, and is
subject to delays because we depend on the prior Recordkeeper to provide
complete and accurate data within our file on the scheduled Conversion Start
Date.
8. TELEPHONE MONITORING: CALPAC may record telephone calls to monitor the
quality of service provided to Client and to verify transaction information.
9. FORCE MAJEURE: CALPAC shall not be responsible for delays or failures in
the performance of its obligations hereunder resulting from circumstances beyond
CALPAC's reasonable control, including but not limited to acts of God, acts of
information providers, software providers, communication line failures,
governmental regulations and laws, riots, strikes, war or other disasters.
10. DEFAULT AND REMEDIES: Should the Client default in the performance of
any of its obligations under this Agreement, including without limitation, its
obligation to pay any required fees with thirty (30) days after such fees are
due, CALPAC may, in addition to and without excluding any other remedies
available to it, terminate servicing the Plan. The Client shall be liable for
the balance of all fees outstanding at the date of termination, for all costs of
collection, including attorney's fees, and for all other costs CALPAC may incur
in securing payment hereunder. The remedies contained in this paragraph are
cumulative and in addition to all other rights and remedies available to CALPAC
under this Agreement.
11. LIMITATION OF LIABILITY: CALPAC shall not have any liability or
obligation to the Client for any errors or omissions in servicing the Plan, nor
for any incidental or consequential damages incurred in connection with services
provided under this Agreement, except those arising solely from the actions of
CALPAC.
12. SUCCESSORS and ASSIGNS: This Agreement shall be binding upon the
successors and assigns of the parties. CALPAC may freely assign any duties,
rights or claims under this Agreement. The Client shall no assign any duties,
rights or claims under this Agreement without the prior written consent of
CALPAC, which shall not be unreasonably withheld. Any attempted assignment in
violation of this provision shall be void.
13. NOTICES: Both the Client and CALPAC agree to give written notice to the
other in the event either shall change address. Such notice shall be given no
later than forty-five (45) days after a change of address.
14. GOVERNING LAW: This Agreement will be governed by the laws of the State
of California.
15. SEVERABILITY: If any term or condition of this Agreement is held
invalid or unenforceable, the remaining terms and conditions shall remain in
full force and effect and shall not be affected thereby.
16. WAIVER: None of the provisions contained herein shall be deemed waived
because of previous failure to insist upon strict performance thereof.
17. ENTIRE AGREEMENT: This Agreement represents the entire agreement
between the parties. All other oral or written agreement, representations or
understandings are superseded hereby and merged into this Agreement.
THIS AGREEMENT ENTERED INT BY:
CLIENT: /s/ Xxxx Xxxxxxxx
------------------
Authorized Signature
Xxxx Xxxxxxxx
--------------
Name
President
---------
Title
CALPAC: /s/ X. Xxxxxx
------------------
Authorized Signature
X. Xxxxxx
----------
Name
President
---------
Title
SECTION HEADINGS
Section
Introduction 1
Executive Summary 2
About OppenheimerFunds 3
Developing a Portfolio Strategy 4
Plan Services and Administration 5
Fees for Administrative Services 6
Employee Education and Communication 7
The Next Steps 8
Why Custom Plus? 9
INTRODUCTION
In today's retirement market, plan sponsors and their needs are almost as
diverse as the participants themselves. There are some areas of retirement plan
service, however, which plan sponsors almost always identify as common areas of
concern:
- INVESTMENT OPTIONS: Are sufficient choices available? Do they cover a
broad range of objectives? Do the funds perform well? Do they provide
adequate, reliable returns? Do they stay on course to their objectives? Do
they have qualified management?
- RECORDKEEPING AND ADMINISTRATION: Are the fees reasonable? Are the
statements timely? Do they provide reliable information? Are periodic employer
reports supplied? Is assistance with regulatory compliance provided? Is
participant tax reporting handled correctly? Is the plan administration
accurate and flexible overall?
- PARTICIPANT EDUCATION AND COMMUNICATION: Do the plan materials provide
motivation to save for the future? Do they promote learning? Is in-depth fund
performance information provided? Is individual counseling and guidance
available?
OppenheimerFunds' knowledge, experience, technology, network of Third Party
Administrators and family of funds enable us to answer all of these questions
with a resounding "Yes!" Clients of OppenheimerFunds recognize the strength of
our:
- nearly 40 years in money management and mutual funds
- solid fund performance
- cohesive company philosophy and values
- more than 50 funds
- $80 billion in assets
- more than 3 million shareholder accounts
All of these factors contribute to OppenheimerFunds' answer to the problems of
custom plan administration: OppenheimerFunds Retirement Services Custom Plus.
Custom Plus is a complete 401(k) plan solution that satisfies even the most
demanding plan sponsor. It combines experienced investment management, flexible
recordkeeping, and a focus on participant education with OppenheimerFunds'
strong core values: excellence, caring, integrity, and team spirit. This
combination results in a comprehensive retirement program that assists plan
sponsors in helping employees plan for a financially secure retirement.
EXECUTIVE SUMMARY
OppenheimerFunds recognize Patil & Associates has many retirement plan providers
from which to choose. We believe, however, that after studying this proposal
carefully, you will agree: Custom Plus stands out from the competition.
Custom Plus1 combines the solid, established mutual funds of OppenheimerFunds
with the administrative and recordkeeping services of California Pension
Administrators & Consultants, and the guidance of your financial advisor, Xxxxx
Xxxx, MML Investors Services Inc. Working in concert, each member of your
Custom Plus team brings their special strengths and perspective to bear on your
plan, creating a solid platform of shared expertise that provides the support a
custom-designed retirement plan demands.
OppenheimerFunds' nearly 40 years in mutual fund management and history of
strong fund performance has made it a respected name in the investing arena.
Our broad range of funds provides choices that cover the risk/reward spectrum
and are diverse enough to satisfy any risk tolerance, regardless of the
demographics of your employees. In addition, our partnership approach ensures
that your costs are kept relatively low.
At OppenheimerFunds, we have carefully integrated our belief in The Right Way to
Invest and our Six Guiding Principles into the framework of Custom Plus. These
codes of conduct are at the heart of our business philosophy and are explained
in more detail on the pages that follow.
Your administrative burden as a plan sponsor will be visibly reduced by
California Pension Administrators & Consultants's responsiveness, efficiency,
and skilled plan administration.
Another facet of Custom Plus that will assist you in your fiduciary
responsibilities is the clear, uncomplicated employee education material that we
provide. Communications that motivate and educate are critical to the success
of any retirement plan. The materials provided by OppenheimerFunds will give
your employees the information they need to become responsible, knowledgeable
investors.
Custom Plus will erase your administrative burden while providing your employees
with a broad range of investments and motivating communications.
Custom Plus provides:
-----------------------
- Broad range of investment options
- Your choice of a quality independent third party administrator
- Low employer costs
- In-depth employee education
1Custom Plus is a collection of third party administrators and Xxxxxxxxxxx funds
from which a plan sponsor may choose to create a retirement plan that serves
it's particular needs.
ABOUT XXXXXXXXXXX FUNDS
At OppenheimerFunds, our commitment to excellence has guided us since we began
managing money in 1959 and continues to define us nearly 40 years later. Our
passion for excellence, dedication to caring, commitment to integrity, and team
spirit have provided a solid foundation for our efforts to deliver the
performance that our customers deserve. Today, we manage more than 50 mutual
funds, with assets of over $80 billion, and provide service to more than 3
million shareholder accounts.
OUR SIX GUIDING PRINCIPLES
Our range of mutual funds-one of the broadest available-can accommodate every
risk tolerance, investment style, and financial goal. Supporting the diversity
of our fund family are our Six Guiding Principles, which direct our efforts to
provide consistent long-term performance across a wide range of funds. Combined
with our unique Investment Approach, these principles represent the spirit and
motivating force behind The Right Way to Invest, our unique philosophy of
investing.
1. INSIST ON EXCELLENT, LONG-TERM PERFORMANCE. Performance is a mutual fund
company's reason for being. Performance is the driving force behind everything
we do, and we pursue it tenaciously, across the whole range of our funds.
2. DO WHAT YOU SAY YOU'RE GOING TO DO. Each of our funds has a stated
objective, a stated strategy for pursuing the objective and the discipline to
stick to all that's been stated. This is critical, because a mutual fund should
be only part of a broad financial plan. For that plan to be successful, all its
parts must perform.
3. EMBRACE A DISCIPLINED, COLLABORATIVE APPROACH TO INVESTING. Ultimately,
the responsibility for a fund's performance lies with the portfolio manager.
This accountability is a powerful incentive. When coupled with an environment
where insights and expertise are shared, where challenges to each other's
thinking are encouraged, it becomes an even more potent tool in the pursuit of
performance.
4. KNOW THE DIFFERENCE BETWEEN RISK AND RISKY. Risk is a natural, necessary
part of investing. It is the engine that drives reward. More importantly,
well-managed risk helps investors achieve their goals. Our unique risk
management system helps us to identify and manage risk, and helps us to deliver
the right balance of risk and reward for each fund.
5. ENCOURAGE FINANCIAL PLANNING AND PROFESSIONAL ADVICE. Investing without
a financial plan, like starting a journey without a map, is fraught with risk.
Every investor, novice or sophisticate, should have a financial plan and
professional advice in creating it. This advice will help avoid the
distractions of the short term, and instead, concentrate on long-term success.
6. BE USER-FRIENDLY. Investing with a mutual fund should be easy.
Communications should be honest, accurate and easy to understand; the mutual
fund company itself easy to work with. This commitment to service extends to
every facet of our firm and may help to explain why OppenehimerFunds is the only
mutual fund company ever to win the International Customer Service Association
Award of Excellence.
Years of successful mutual fund investing have taught us these principles. They
are our pledge. A pledge investors can depend on. A pledge that defines the
right way to invest, which we believe makes OppenheimerFunds the right way to
invest.
Our Investment Approach
We manage money based on a proven philosophy that distinguishes us from
companies that rely on either a "star manager" or "committee management" style.
Our Investment Approach weaves three key elements into one dynamic process to
help us try to meet our shareholders' goals and expectations:
--[Investment Approach Graphic]--
- DISCIPLINE. A clear direction and goal is the starting point for all our
portfolio management decisions. This means that every fund manager adheres to
the fund's stated investment objectives and policies and uses a consistent
investment style. In order to maintain product integrity, each fund's portfolio
manager articulates and operates within a disciplined investment process. This
process serves as the framework for security selection, risk management, and
buy/sell decisions.
- COLLECTIVE INSIGHT. This dimension of analytical balance assures that the
portfolio manager operates in collaboration with an expert team or research
professionals and specialists. Working together, this team constantly exchanges
investment ideas and information, resulting in more and better ideas for the
portfolio manager. Managers and analysts meet on a regular basis to share their
ideas and perspectives, as well as company and industry research.
- INDIVIDUAL ACCOUNTABILITY. Ultimately, each portfolio manager is held
responsible and accountable for decisions about security selection, risk
management, and investment strategy. Holding the portfolio manager accountable
for investment decisions helps ensure consistency in management approach.
Our dedication to the Six Guiding Principles and our unique Investment Approach
makes OppenheimerFunds The Right Way to Invest.
OUR FAMILY OF FUNDS
The OppenheimerFunds family of mutual funds provides a broad range of investment
options to meet virtually every level of risk tolerance and investment return
target. The options are diverse enough to address the demographics of your
employee population now and in the future.
There are 34 investment choices which are appropriate for retirement plans:
- 15 stock funds
- 10 stock and bond funds
- 7 bond funds
- 2 money market funds
These funds cover the entire risk/reward spectrum and permit customization of
your plan's investment options to satisfy the plan's investment policy.
Xxxxx has designed a diverse portfolio of plan investments for your
consideration. The details follow in the next section.
ADVANTAGES FOR YOUR EMPLOYEES
For plan participants, the array of fund choices permits them to tailor their
individual portfolio to their risk tolerance and saving priorities. The variety
enables each participant to design his or her own investment approach, and to
diversify to the degree he or she desires. They also enjoy the level of comfort
that comes with investing with a major financial services firm.
Participants may easily monitor the value of their investments by checking the
share prices of their funds each day in the newspaper, or on the
OppenheimerFunds Web site.
ADVANTAGES FOR THE PLAN SPONSOR
The availability of such a diverse group of investment options will put you well
on the road to satisfying the Department of Labor's ERISA Section 404( c)
regulations. By carefully selecting the plan's funds from OppenheimerFunds'
array, you will give participants an opportunity to influence the level of
return and degree of risk to which their accounts are subject, choose from among
investments which have different risk and return characteristics, and diversify
in order to reduce volatility. And, since there are 34 funds from which the
plan sponsor may choose, the "broad range" requirement of the Section 404( c)
regulations can be met without difficulty.
You also have the advantage of offering to your employees investment choices
managed by a firm that is established and respected in both the money management
and retirement plan arenas.
With OppenheimerFunds' distinctive Investment Approach and full commitment to
our Six Guiding Principles, you have the comfort of knowing that meeting the
investor's needs is our primary goal, and that our focus on that goal is
unwavering.
DEVELOPING A PORTFOLIO STRATEGY
Xxxxx Xxxx, MML Investors Services Inc. is pleased to present a portfolio
strategy for your consideration.
Xxxxx has carefully considered your plan's needs with respect to the number and
type of investment options to be made available to employees. 10 investment
options are proposed for your plan.
These were selected by Xxxxx to meet the goals and objectives on which
retirement plans need to focus:
- a primary investment objective of growth
- a secondary objective of protecting capital from inflation
- a long-term investment time horizon
- a proportional representation of the entire risk/reward spectrum
- a diversified portfolio
The fund selections described on the next page, taken as a group, meet these
goals. Furthermore, they offer an exciting range of options to your employees,
since each fund has a specific objective to which participants can relate their
individual tolerance for risk and their retirement savings goals.
THE PROPOSED PORTFOLIO
- The funds from the OppenheimerFunds family proposed for your plan are:
- XXXXXXXXXXX CAPITAL APPRECIATION FUND - invests for capital appreciation
primarily through investments in common stocks of undervalued growth companies.
- XXXXXXXXXXX DISCIPLINED VALUE FUND - seeks to long-term growth of capital
through investments in common stocks using a disciplined approach to buying and
selling based on price and earnings, and secondarily, current income.
- XXXXXXXXXXX EQUITY INCOME FUND - seeks current income plus potential for
capital appreciation through investments in high-dividend-paying stocks,
convertible securities and fixed-income securities.
- XXXXXXXXXXX GLOBAL FUND - offers potential for capital appreciation
through investments in foreign and U.S. companies by pursuing growth trends
worldwide.
- XXXXXXXXXXX INTERNATIONAL GROWTH FUND - seeks capital appreciation by
investing in non-U.S. equity securities.
- XXXXXXXXXXX LIMITED TERM GOVERNMENT FUND - invests for high current
income, preservation of capital and the maintenance of liquidity primarily
through U.S. government-backed obligations, including Treasury securities and
Xxxxxx Xxxx, and CMOs and other mortgage-backed securities.
- XXXXXXXXXXX MAIN STREET GROWTH & INCOME FUND - seeks high total return,
which includes current income and capital appreciation.
- XXXXXXXXXXX MONEY MARKET FUND - seeks current income with stability of
principal and liquidity through investments in money market instruments.
- XXXXXXXXXXX QUEST OPPORTUNITY VALUE FUND - offers potential for long-term
capital appreciation by investing primarily in common stocks, convertible bonds
and cash equivalents.
- XXXXXXXXXXX STRATEGIC INCOME FUND - offers high current income potential
by strategically allocating investments among U.S. government issues, foreign
debt securities and higher-yielding, lower-rated corporate bonds mainly by
investing in debt securities.
ADDITIONAL INVESTMENT OPTIONS
- None
RISK VS. REWARD SPECTRUM
FOR THE PROPOSED PORTFOLIO
Knowing where each of the OppenheimerFunds choices falls on the risk/reward
spectrum is very important. The funds are presented on a summary chart below.
This should be helpful in assessing the opportunities for diversification.
--[Risk/Reward for September 30, 193 to October 1, 1998 Graphic]--
This chart depicts results from ahypotehtical cumulative investment in Class A
at net asset value, without sales charge, allocating to Xxxxxxxxxxx Money Market
Fund, Xxxxxxxxxxx Limited-Term Government Fund, Xxxxxxxxxxx Strategic Income
Fund, Xxxxxxxxxxx Equity Income Fund, Xxxxxxxxxxx Main Street Income & Growth
Fund, Xxxxxxxxxxx Quest Opportunity Value Fund, Xxxxxxxxxxx Disciplined Value
Fund, Xxxxxxxxxxx Capital Appreciation Fund, Xxxxxxxxxxx International Growth
Fund, and Xxxxxxxxxxx Global Fund for the period from September 30, 1993 to
October 1, 1998, with the exception of Xxxxxxxxxxx International Growth Fund,
which is measured from inception (4/96). All dividends and capital gains
distributions were reinvested. The performance data are based on monthly total
return data from September 30, 1993 to October 1, 1998. The vertical axis of
the chart represents the average annual total return at net asset value for the
various portfolios over this time period. The horizontal axis of the chart
measures risk return over the stated time period. Standard deviation is a
statistical measure of the typical distance from which one month's total return
tends to vary from the average of all monthly returns for the 5 year period.
Past performance is not a guarantee of future results.
PLAN SERVICES AND ADMINISTRATION
A successful retirement plan involves a great deal more than just selecting the
most appropriate investment choices. Custom plus combines a broad array of
investment options with state-of-the-art administration and ongoing services
from California Pension Administrators & Consultants.2 Coupled with the
consultative and coordinating efforts provided by Xxxxx, your plan includes
complete services and administration under the Custom Plus umbrella.
ADMINISTRATION
Accurate and timely recordkeeping of participant transactions and plan-level
activities is critical to the overall success of any retirement plan.
Minimizing the plan sponsor's involvement in day-to-day administration, and
simplifying the process when the employer's attention is required are key
elements of Custom Plus. Your time is valuable, and it shouldn't be spent
monitoring the work of the recordkeeper, correcting errors, and making sure
transactions are processed correctly and on time.
With these concerns in mind, Xxxxx has carefully selected California Pension
Administrators & Consultants to provide the administrative services for your
plan. Only recordkeepers that have significant experience with custom plans,
are technologically advanced, and have a strong quality service orientation are
available through the Custom Plus program.
2Custom Plus third party administrators are not affiliated with, nor agent for,
OppenheimerFunds
CALIFORNIA PENSION ADMINISTRATORS & CONSULTANTS, INC.
INTRODUCTION
California Pension Administrators & Consultants, Inc. (CALPAC) is an
independent, privately owned firm of attorneys, actuaries, and retirement plan
professionals. CALPAC specializes in design, implementation and conversion,
administration, asset recordkeeping, and employee communication for all types of
retirement programs. Through commitment to quality consulting, creative design
and reliable service, we have built a staff of talented and diligent
professionals.
Founded in 1969 as a financial services company to provide individual choice in
asset selection for retirement planning, we service the broadest range of
self-directed investment options allowed by law.
CURRENT TECHNOLOGY
For all recordkeeping functions, a team of three individuals is responsible for
each client relationship. The components of the team depend on the type of
plan, number of participants, and services desired. For example, the completely
automated 401(k) will be implemented on our daily valuation system with voice
response. The team leader will be the compliance consultant, but because of the
heavy reliance on the daily valuation trust accounting system, a trust
accounting specialist will be involved with the account relationship. Each of
these two individuals has a fully trained back up and support staff. Any of
these individuals are accessible by clients.
CALPAC licenses its use of the ASC plan compliance system, TrustMark MBA3d Daily
Valuation trust accounting system and Hyperprep 5500 reporting system. Under
the terms of each licensing agreement, we are always operational on the most
currently available updated release.
We have report writer capabilities for special processing, which include
exporting ASCII files to word processing software.
AUTOMATED SYSTEMS EMPLOYEE AND EMPLOYER SUPPORT
The Voice Response Unit is available 23 hours per day (available in Spanish).
Office staff is available from 7:30 AM to 5:30 PM Pacific Time. Separate 800
number for each client can be easily accommodated if the case size so warrants.
The Voice Response Unit permits investment reallocation and a variety of inquiry
functions including loan modeling.
DESIGN AND INSTALLATION
Plan documents may be individually drafted for the client by their legal
representative. However, it has been our experience that a prototype plan
document pre-qualified by the Internal Revenue Service, usually provided
sufficient range of options for the client.
We sponsor both standard and non-standard regional prototype defined
contribution plans with elective provisions flexible enough to meet most plan
goals and objectives, thereby avoiding the additional start-up expense
associated with plan drafting. In addition to defined contribution plans, we
also service volume submitter defined benefit and general test plans.
Consulting - the single most important service we offer is effective design
consulting. It is essential that the retirement program be designed to respond
to both the client's current needs and to the changing environment in which the
business operates. The services provided with CALPAC vary from one plan sponsor
to another. In many instances, we provide a comprehensive evaluation and
analysis from which the appropriate plan design can be established.
ANNUAL COMPLIANCE AND ADMINISTRATION
To assist with the ongoing administration of a retirement program, CALPAC offers
the following services:
- Assist in year-end planning by estimating plan contributions
- Determine limitations on benefits under Section 415 of the Internal
Revenue Code
- Prepare the appropriate Annual Return in the Form 5500 series
- Prepare the required Summary Annual Report for distribution to
participants
- Prepare a summary report showing activity
- Perform the required anti-discrimination tests and provide guidance in
making any necessary adjustments. Additional ADP/ACP test runs are
available up request.
PARTICIPANT RECORDKEEPING
The 401(k) plan is only as successful as employees perceive it to be.
Information must be timely and records must be accurate. The planning process
for the installation of all plans include:
1. Initial Plan Set-up:Transfer of accounts (if applicable)
- Set-up of plan account and features (loans, vesting schedules, etc)
- Set-up of participant accounts and investment selection
2. Process:
- Contributions
- In-service withdrawals
- Loans
- Benefit payments
3. Transactions:
- As frequently as daily, changes processed for participant
4. Implement changes to Asset Allocation Portfolios:
- Rebalance individual portfolios on a monthly basis
- Reallocate (if necessary) individual portfolios on a monthly basis
5. Maintain:
- Employee personal data
- Employer plan data
6. Provide Reports:
- Monthly reports for trustees
- Monthly participant statements
- Ability for plan sponsor to be electronically linked via modem
PLAN COMMUNICATION
The challenge of communicating retirement plans is to help employees appreciate
the importance of building future financial security. One of our objectives it
to support the employer in achieving high levels of participation through
education. Some of the services we provide for employee and employer
communications are:
- Design general announcement to employees
- Prepare visual presentation for employee meetings
- Present the plan at employee meetings or train others to conduct employee
meetings
- Draft simplified employee brochures describing highlights of the plan
- Design employee enrollment/election forms
- Prepare designation of beneficiary and distribution forms
- Assist legal counsel in drafting required Summary Plan Description or
prepare the draft for legal counsel's review
- Prepare administrative manual of forms and procedures
- Analyze plan design based on changing business circumstances
PLAN IMPLEMENTATION
The controlled and effective implementation of a new qualified plan or the
conversion and transition of an existing plan are critical. Implementation
involves many complex investment, administrative, and communication issues. A
rigorous review of all plan details and operation will be undertaken in
connection with the set-up of the plan. Generally , the set-up of a new plan
takes between one and three months, where as a conversion may take three to six
months.
Implementation tasks include:
Assist with the selection of plan features and investment options, and
completing the Plan Adoption Agreement. Meet with the benefits department, and
if necessary, conferring with your management to develop final understanding of
all plan details and operation, communicating with your payroll processor to
coordinate information flow from payroll.
Load all participant and plan information onto the recordkeeping system and
testing for reliability to proceed on a continuing basis.
If converting a plan, work with existing trustee and recordkeeper to ensure
smooth transition of data and assets from a prior plan.
Check all systems/reports for accuracy prior to conversion/installation
sign-off.
REPORTS
Participant Level:
- Participant Certificate (annual vested interest update)
- Participant Statement
Plan Level:
- Allocation Report
- Plan Accounting
- Plan Digest
- Cross Reference
- Confirmation Letter
- Eligibility List
- Delinquent Loans
CALIFORNIA PENSION ADMINISTRATORS & CONSULTANTS, INC.
IN CONJUNCTION WITH XXXXXXXXXXX FUNDS
401(K) RETIREMENT PLAN FEE PROPOSAL
PLAN ADMINISTRATION AND PARTICIPANT RECORDKEEPING FEE SCHEDULE
Set-Up Fee
A. 1-50 Employees - New Plan $500
Conversion $1,000
B. 51-150 Employees - New Plan $500
Conversion $1,500
C. 151 + Employees - New Plan $500
Conversion $1,500+*
*subject to an individualized quote based on method of conversion and current
status of records
Annual Recordkeeping and Plan Administration
Annual Base Fee 401(k) Plan
A. $1,500
B. $2,500 plus $10 per participant
C. $3,800 plus $10 per participant
Other Fees:
Loan Initiation Fee $50
Annual Loan Administration Fee $50
Distribution Fee $60
XXX Fee $250 per year per account
Consulting, audit support $90 - $150 per hour
Spanish Language Voice Response Unit $250 annually
Spanish Language Enrollment Materials $90 minimum
Spanish Language Enrollment Meetings up to $90 per meeting
Additional Annual Fees Applicable to Profit Sharing
Or New Comparability Features Only
Profit Sharing Contribution $250
New Comparability Allocation $850
A discount may be quoted for more than one plan
For the above fees the following services are included:
Plan Compliance and Plan Administration
Review and/or design of Plan(s)
Plan and Trust document: (Use of California Pension plan document is assumed.
Submission to the IRS is billed separately.)
Summary Plan Description
Sample resolutions to adopt/amend plan
Annual discrimination testing
Annual top-heavy testing
Completion of IRS Form 5500
Record keeping
Plan setup and preparation for daily valuation system
401(k) deferrals, employer match and employer (3 money sources)
Quarterly reports
Quarterly participant statements
Contributions as frequently as 26 per year
Up to ten investment funds
Participant Loan Processing
Education, Communications and Data Processing
Enrollment meetings, materials and individualized illustrations*
Electronic payroll data transmission**
Interface of monthly reporting through Internet, E-mail and diskette media
Voice Response Unit 800 number
All participant records should be submitted through electronic media and
reconciled to plan assets. Trust reconciliation work will be billed at $90 per
hour. Loan set-up fee is $10 per loan in excess of 10.
*For individualized deferral and results illustrations certain limitations may
apply. Such limits, when applicable, will be reviewed with the employer
regarding additional cost.
**A $10 per participant per payroll surcharge may be assessed if account and
payroll data is not transmitted electronically or on diskette.
EMPLOYEE EDUCATION AND COMMUNICATION
Empowering your employees to make sound financial decisions about preparing for
retirement is vital to maintaining a successful retirement plan. Numerous
surveys have shown that employees want and need more information about
investing, and that the quality of the education and communication efforts is
directly related to plan participation rates and how well employees are
financially prepared for retirement.
Custom Plus combines a team approach to the goal of equipping employees with the
tools they need to actively plan for their financial future. All efforts are
coordinated to provide a continuous flow of practical, accurate, easy-to-read
information to your employees.
YOUR FINANCIAL ADVISOR
Your financial advisor will play a key role in getting the new plan off to a
running start by conducting the enrollment meetings.
OPPENHEIMERFUNDS
Supporting your financial advisor will be highly effective and comprehensive
educational material from OppenheimerFunds. Recognizing that education is the
foundation of a successful retirement planning effort, the materials focus on
helping employees develop realistic expectations, and on meeting those
expectations with practical solutions.
Among the materials employees may receive are:
- Enrollment Poster
This four-color poster, for display in the workplace, announces the date, time
and location of the enrollment meeting.
--[Enrollment Poster Graphic]-
- Payroll Stuffers
Provide quick highlights of major 401(k) benefits and are designed to generate
employee excitement and interest in the upcoming enrollment meeting.
--[Payroll Stuffers Graphic]-
- Retirement Planning Guide
Emphasizes the benefits of participating in a retirement plan, explains
diversification, and includes worksheets to assist in estimating saving needs.
--[Retirement Planning Guide Graphic]--
- Retirement Opportunities
A quarterly educational newsletter containing articles about planning and
investing for the future.
--[Retirement Opportunities Graphic]--
- Fund Performance Sheets
Easy-to-understand reviews of recent investment performance, fund strategy,
asset allocations and insights from the fund managers.
--[Fund Performance Sheets Graphic]-
- xxx.xxxxxxxxxxxxxxxx.xxx
------------------------
OppenheimerFunds' home page on the Internet provides tips on planning for
retirement as well as background on OppenheimerFunds and its investment
offerings.
--[xxx.xxxxxxxxxxxxxxxx.xxx Graphic]-
- A Successful Retirement: What Will It Take?
Helps participants plan, save and invest for retirement through the use of
worksheets, quizzes and explanations of key retirement and investment terms.
--[A Successful Retirement: What Will It Take? Graphic]--
- When You Retire or Change Jobs
This guide reviews the pros and cons of various options for taking a lump-sum
distribution from a qualified retirement plan.
--[ When You Retire or Change Jobs Graphic]-
- Getting Your Money's Worth
A new educational series that explores managing large sums of money generated by
an inheritance, severance package, divorce settlement or retirement plan
rollover.
--[ Getting Your Money's Worth Graphic]-
Of course, employees will also receive a prospectus for each fund available in
the plan and information about how those funds have performed.
A Coordinated Approach
By taking a coordinated, comprehensive approach to educating employees about
retirement planning, Custom Plus combines the expertise of investment
specialists to produce a campaign of useful, informative, and practical
information.
THE NEXT STEPS
California Pension Administrators & Consultants looks forward to working closely
with you to make this transition a seamless one. One call from you will get the
process moving.
THE FIRST STEP
Contact Xxxxx Xxxx about your decision to take advantage of Custom Plus, and
suggest a date on which you'd like to start the new plan. Xxxxx will notify
OppenheimerFunds and California Pension Administrators & Consultants.
THE NEXT STEP
OppenheimerFunds will work closely with Xxxxx Xxxx to coordinate the enrollment
process, and will include California Pension Administrators & Consultants in all
planning.
Xxxxx will work with you to schedule enrollment meetings and to identify what
materials would be appropriate for use in the meetings.
OppenheimerFunds will assign a Client Relationship Associate to your plan, and
he or she will work with Xxxxx and California Pension Administrators &
Consultants to develop a time frame for implementing the plan and to identify
any special considerations such as: existing plan assets, payroll schedules and
type of output, locations where enrollment sessions will need to be scheduled,
and recordkeeper data requirements.
The Client Relationship Associate will contact you to introduce himself or
herself, and your primary representative at California Pension Administrators &
Consultants. During each conversation with your Client Relationship Associate,
you'll be advised of what specific activities are occurring to move installation
of your plan forward, and any changes in the implementation schedule.
Your California Pension Administrators & Consultants representative will contact
you to discuss data submission procedures and any other issues that arise during
the installation phase.
YOUR PRIMARY CONTACT
Throughout the implementation phase, and on a continuing basis after the plan is
operating, your primary contact is Xxxxx Xxxx. Xxxxx will initiate action
regarding your questions and requests, and will follow through to make certain
that there are no unresolved issues.
WHY CUSTOM PLUS?
Although plan sponsors take into account many factors when considering 401(k)
plan providers, three issues consistently rise to the top of the list:
- Investment portfolio design and fun performance
- Plan administration and recordkeeping capabilities
- Employee education and communication
OppenheimerFunds Retirement Services Custom Plus is the right package to address
these issues, because:
- The OppenheimerFunds family of mutual funds has one of the broadest ranges
of mutual funds in the financial services industry. It encourages
diversification, and permits the investor to knowledgeably choose funds which
match his or her risk tolerance and financial goals. The OppenheimerFunds
family has a record of staying true to each fund's stated objectives.
- Recordkeeping is an integral part of the Custom Plus solution. California
Pension Administrators & Consultants's goal is to provide top quality service to
plan sponsors and individual investors at a reasonable price.
- We want investors in our funds to be informed about investing principles
and the particular funds into which they've chosen to place assets, and to have
the tools to build a solid financial future.
OppenheimerFunds, Xxxxx Xxxx, and California Pension Administrators &
Consultants look forward to working with you to establish a successful
retirement plan and to assist your employees in planning for retirement.
This proposal must be accompanied or proceeded by a prospectus of any of the
selected Xxxxxxxxxxx funds.
