This Plan was developed to allow certain employees of Shenandoah University to use before-tax
earning to purchase benefits under the Plan. The Plan enables employees to pay for benefits with
before-tax earnings while selecting benefits that are best suited to their own individual needs. The
Plan is effective October 1, 1993.

If you are a Full-Time, Part-Time Level II Faculty or a Staff Member who works a minimum of
20 hours per week on the effective date of the plan, then you are automatically eligible to
participate in the Plan

If not, you may participate in the Plan on the first day of the month following 30 days of
employment when you satisfy the eligibility requirements described above.

IRS regulations require enrollment in the plan before the plan year begins, or in the case of a new
employee, before they receive any benefits.

You merely select the options desired for eligible out-of-pocket premiums. In addition, any
pre-tax premiums to be used for reimbursement from the Health Care or Dependent Care
Accounts should be indicated. Once you elect which benefits you want, you sign the enrollment
form which contains a statement whereby you authorize your employer to reduce your taxable
wages for the purchase of the benefits as elected on your enrollment form.

The amount allocated towards the purchase of benefits is automatically deducted from your pay
each pay period on a pre-tax basis and the money is credited to your spending account(s).
Normally, a level amount is allocated for each pay period to total the annual allocation made by
you on the enrollment form.

Once you enroll in the Plan, you will not be permitted to change your benefit elections because
the IRS requires them to remain in effect until the end of the plan year. In other words, the benefit
elections are considered irrevocable, except when you experience a "change in family status."

The IRS has established the condition of irrevocability to help avoid abuse of Flexible Benefit
plans like this one. However, the following events qualify as a change in family status and would
entitle you to revoke a previous election and make a new election:

First, by paying premiums from your before-tax compensation, you will not pay social security,
federal income, or state income taxes on those amounts. In effect, you save the amount you would have
paid in taxes, which increases your spendable income.

Second, since the amount you allocate to purchase benefits will not be subject to social security
taxes, your contribution to social security will be lower. Consequently, when you begin drawing
social security, your benefits may be slightly reduced. To offset this, you may want to consider
investing a portion of your new tax savings (or increased spendable income) into your own
personal retirement plan or other investment option.

If you pay any portion of eligible group insurance premiums, you can pay these amounts with
pre-tax dollars instead of after-tax dollars. In addition to pre-tax insurance premiums, you may
make pre-tax premium payments into a Health Care Account or Dependent Care Account (these
accounts are also known as flexible spending accounts). Pre-tax premiums and flexible spending
accounts are governed by certain rules and regulations which are addressed next.

Plan Premiums. You may allocate dollars to make premium payments for health coverage under
the Health Insurance Plan or any other qualified benefits that may be offered by Shenandoah
University. If there is a change in the cost of the type of coverage you selected, your elections will
automatically be adjusted as required by the individual coverage's requirements.

Health Care Account. A Health Care Account is an account to which you can make pre-tax
payment of premiums for the reimbursement of health-related expenses incurred by you, your
spouse, or your dependents. The unique feature of a Health Care Account is that medical
expenses not covered by insurance can be paid for with before-tax dollars starting with the first
dollar of out-of-pocket expense; those individuals who itemize on their 1040 tax return must
first accumulate 7.5 % of their adjusted gross income before qualifying for a deduction (tax free
treatment).

Expenses eligible for reimbursement include deductibles and co-insurance amounts in the health
plan, dental and orthodontia expenses, vision care expenses, and other medical expenses not
covered by insurance. Some of these medical expenses may include, but are not limited to, the
following:

ambulance hire	anesthetist	artificial limbs and teeth
chiropodist	clinical chiropractor	contraceptives
dental	eye examinations	eyeglasses
diagnosis	doctors / hospital fees	guide dog for the blind
gynecologist	hearing devices	hospital fees
laboratory	nursing care	obstetrician
operations / related treatment	ophthalmologist	optician and optometrist
oral surgery	orthodontics	oxygen equipment
physiotherapist	nurses (LPN or RN)	prescription drugs
psychiatrist	radiologist	rental of medical equipment
second opinions	telephone for deaf	therapy
vasectomy	x-rays

Dependent Care Account. You may elect to make pre-tax payment of premiums to a
Dependent Care Account for reimbursement of dependent care expenses incurred during the
Plan Year. Your dependent care expenses will be reimbursed to the extent that you have made
premium payments into this account. To be eligible for reimbursement, your dependent care
expenses must be employment related and incurred by you for the care of your children under
13 years of age or other dependents who are not capable of caring for themselves. You should
be aware that the 1040 tax credit available for dependent care expenses may be more
advantageous for you. You should consult with a qualified tax advisor to determine the best
option for you.

Other than qualifying the eligibility of the expense, few restrictions exist. However, the following
guidelines apply:

Under current tax law, if day care expenses are paid out of after-tax pay, you may claim all or
part of those expenses as a credit on the federal tax return. For one dependent, a tax credit up
to $2,400 may be taken; for two or more dependents, the credit applies on up to $4,800 of
dependent care expenses. The amount of the tax credit varies from 20 % to 30 % of allowable
expense depending upon your income tax level.

In some situations, using the Dependent Care Account provides a greater tax advantage than
the 1040 tax credit. In other situations, this may not be true.

The Dependent Care Account and the 1040 tax credit can be used in combination, but not for
the same expenses. For example, if you had $2,000 of expenses for one dependent reimbursed
with pre-tax dollars and the total day care expenses were $3,000, then an additional $400 credit
could be taken on the tax return (for the the tax credit on your federal tax return, $2,400 is the
maximum allowed for one dependent).

If you are not sure which option you should use, you should discuss your situtation with a
qualified tax advisor.

After you pay for health related expenses or dependent care expenses out of your own pocket,
you should submit a claim to the plan administrator requesting reimbursement. The claim should
be made on a form provided by your employer.

If the expense is covered by any medical insurance plan or goes toward meeting the deductible,
you should first submit the expense to the medical insurance plan. After you file the claim with the
insurance company, you will receive back from the insurance company a explanation of benefits
(EOB), which you should attach to a completed Flexible Benefit Plan Reimbursement Request
(claim form) to allow the plan administrator to reimburse you for expenses not covered by
insurance.

If the expense is not eligible to be submitted to the medical insurance plan, a copy of a bill or
receipt must be included with the claim form to substantiate your claim. This is an IRS
regulation. In addition, the IRS will not allow a canceled check to serve as proof to substantiate
your claim.

Claims must be submitted within ninety (90) days after the last day of the Plan Year in which
the expense was incurred. All claims will be processed monthly.

The minimum payment amount for reimbursement checks is $25.00. Claims of less than this
amount may be submitted. However, no check will be issued until additional claims are submitted
which total $25.00, except that all claim amounts less than $25.00 will be paid and cleared from
the reimbursement account(s) every six (6) months.

Flex reimbursement checks are run on the 10th of each month, for valid reimbursement requests
submitted to the Personnel Office by the last business day of the preceding month. For example
a valid Flex Benefits Reimbursement form submitted to the Personnel Office by March 31st will
have a check issued on April 10th. Click here, to see the Employee Reimbursement checks
schedule.

Flex reimbursement checks are available in the Business Office after 2:00 P.M., on the 10th of
each month.

If your claim for reimbursement is denied, in whole or in part, you will receive a written
explanation of the reason for denial from the Servicing Agent. You may appeal your claim by
writing to the Servicing Agent and, if the claim is still in dispute, you should contact the individual
responsible for handling personnel matters.

You will receive a report with each reimbursement check you receive in payment for claims.
The report will show your remaining account balance.

You will also receive detailed Account Statements periodically. These reports will include a
detailed summary of all contributions, reimbursements and the current dollar balance in each
account in which you participate.

If There Is Money Remaining In My Health Care Account Or Dependent Care Account At
The End Of The Plan Year, Will I Get These Amounts Back ?

If unused dollars remain in either of your accounts at the end of the Plan Year, they are forfeit.
This is an IRS regulation.

The forfeited amounts will be used to offset future year's administrative costs of the Plan.

If I Terminate Participation In The Plan, May I Continue To Receive Benefits Under The Plan
For The Remainder Of The Plan Year ?

Upon termination of participation, you may continue to submit claims to your Health Care or
Dependent Care Accounts for reimbursement of eligible expenses incurred prior to the termination
of your employment and to the extent that such benefits are payable.

The Employer may amend or terminate the Plan. If the Plan is terminated, you and the Employer
will have only the financial obligations that have accrued up to the date of termimation. However,
the Plan can be terminated only for sound business reasons.

No. You may not transfer, sell, assign, pledge, attach, encumber, or subject, in any manner, a
benefit under the Plan.

This Plan is administered under a written Plan Document as approved by the governing body of
Shenandoah University. The Plan records will be maintained on the basis of the intial Plan Year
of October 1, 1993 through December 31, 1993. Subsequent Plan Years shall run from
January 1 through December 31. The Plan Administrator is Shenandoah University, Vice
President for Administration and Finance, with offices at 1460 University Drive, Winchester,
VA 22601. The Servicing Agent is the Personnel Office.

As a participant in the Flexible Benefit 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:

a) examine, without charge, at the plan administrator's office, all plan documents, and copies
of all documents filed by the plan with the U.S. Department of Labor, such as detailed annual reports
and plan descriptions.

b) obtain copies of all plan documents and other plan information upon request of the
plan administrator. The administrator may make a reasonable charge for the copies.

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.

No one, including your employer or any other person, may fire you or otherwise discriminate
against you in any way to prevent you from obtaining a benefit or exercising your rights under
ERISA.

Under ERISA, there are steps you can take to enforce your rights. For instance, if you request
materials from the plan and do not receive them within 30 days, you may file suit in a federal
court. In such a case, the court may request the plan administrator to provide 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 the 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 have
any questions about your Plan, you should contact 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.

The previous questions and answers give you a brief description of your Flexible Benefit Plan.
The complete Plan is a legal document which includes these provisions and numerous others.
In the event of any inconsistency between this description and the actual provisions of the Plan,
the Plan Document will govern.