<PAGE> 1
As filed with the Securities and Exchange Commission on October 15, 1996
Registration No. 333-_______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
MEDPARTNERS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 63-1151076
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
3000 GALLERIA TOWER, SUITE 1000
BIRMINGHAM, ALABAMA 35244
(Address of Principal Executive Offices)
(Zip Code)
CAREMARK INTERNATIONAL INC. 401 CARE RETIREMENT SAVINGS PLAN
(Full Title of the Plan)
LARRY R. HOUSE
CHAIRMAN OF THE BOARD, PRESIDENT
AND CHIEF EXECUTIVE OFFICER
MEDPARTNERS, INC.
3000 GALLERIA TOWER, SUITE 1000
BIRMINGHAM, ALABAMA 35244
(Name and Address of Agent for Service)
(205) 733-8996
(Telephone Number, including Area Code, of Agent for Service)
The Commission is requested to send copies of all notices and other
communications to:
ROBERT E. LEE GARNER, ESQ. J. BROOKE JOHNSTON, JR., ESQ.
JAMES HOWARD SINNOTT, ESQ. SR. VICE PRESIDENT AND GENERAL COUNSEL
HASKELL SLAUGHTER & YOUNG, L.L.C MEDPARTNERS, INC
1200 AMSOUTH/HARBERT PLAZA 3000 GALLERIA TOWER, SUITE 1000
1901 SIXTH AVENUE NORTH BIRMINGHAM, ALABAMA 35244
BIRMINGHAM, ALABAMA 35203 TEL: (205) 733-8996
TEL: (205) 251-1000 FAX: (205) 982-7709
FAX: (205) 324-1133
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
========================================================================================================================
Proposed Maximum Proposed Maximum
Title of Securities Amount to be Offering Price Aggregate Offering Amount of
to be Registered Registered Per Share Price Registration Fee
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value 500,000 $ 23.75(3) $ 11,875,000(3) $ 4,094.83
$.001 per share (including shares(2)
Common Stock Purchase Rights)(1)
========================================================================================================================
</TABLE>
(1) The Common Stock Purchase Rights (the "Rights") are attached to and trade
with the common stock of MedPartners, Inc. The value, if any, attributable
to the Rights is reflected in the market price of the Common Stock of
MedPartners, Inc.
(2) Maximum number of shares which may be issued by MedPartners, Inc., formerly
MedPartners/Mullikin, Inc. ("MedPartners") pursuant to the Caremark
International Inc. 401 CARE Retirement Savings Plan which has been assumed
by MedPartners under the terms of the Plan and Agreement of Merger by and
among MedPartners, its wholly-owned subsidiary, PPM Merger Corporation
and Caremark International Inc.
(3) Determined pursuant to Rule 457(h) under the Securities Act of 1933 solely
for the purpose of calculating the registration fee and represents the last
sale price of the Common Stock of MedPartners as reported on the New York
Stock Exchange Composite Transaction Tape on October 11, 1996.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
MedPartners, Inc., a Delaware corporation (from November 28, 1995 to
September, 1996, known as MedPartners/Mullikin, Inc.) (the "Company"), hereby
incorporates by reference into this registration statement on Form S-8 (the
"Registration Statement") the following documents which have heretofore been
filed by the Company with the Securities and Exchange Commission (the
"Commission"):
(a) The Company's Prospectus filed as part of the Company's
Registration Statement on Form S-1 (Reg. No. 333-12465),
as filed with the Commission on October 3, 1996.
(b) The description of securities to be registered contained in
the Registration Statement filed with the Commission on Form
8-B under the Exchange Act and declared effective on November
29, 1995, including any amendment or reports filed for the
purpose of updating such description.
(c) All other reports filed by the Company pursuant to Section
13(a) or 15(d) of the Exchange Act since November 29, 1995.
(d) All documents subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 and 15(d) of the Exchange Act prior
to the filing of a post-effective amendment which indicates
that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference into this Registration
Statement and to be a part hereof from the date of filing of
such documents.
Any statements contained in a document incorporated by reference
herein shall be deemed to be modified or superseded for purposes hereof to the
extent that a statement contained herein (or in any other subsequently filed
document which is also incorporated by reference herein) modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed to
constitute a part of this Prospectus except as so modified or superseded.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
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ITEM 5. INTERESTS OF NAMED EXPERTS & COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 102(b)(7) of the DGCL grants corporations the right to limit
or eliminate the personal liability of their directors in certain circumstances
in accordance with provisions therein set forth. The Company's Restated
Certificate of Incorporation contains a provision eliminating or limiting
director liability to the Company and its stockholders for monetary damages
arising from acts or omissions in the director's capacity as a director. The
provision does not, however, eliminate or limit the personal liability of a
director (i) for any breach of such director's duty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under the Delaware
statutory provision making directors personally liable, under a negligence
standard, for unlawful dividends or unlawful stock purchases or redemptions, or
(iv) for any transaction from which the director derived an improper personal
benefit. This provision offers persons who serve on the Board of Directors of
the Company protection against awards of monetary damages resulting from
breaches of their duty of care (except as indicated above). As a result of
this provision, the ability of the Company or a stockholder thereof to
successfully prosecute an action against a director for a breach of his duty of
care is limited. However, the provision does not affect the availability of
equitable remedies such as an injunction or rescission based upon a director's
breach of his duty of care. The SEC has taken the position that the provision
will have no effect on claims arising under the federal securities laws.
Section 145 of the DGCL grants corporations the right to indemnify
their directors, officers, employees and agents in accordance with the
provision therein set forth. The Company's Amended and Restated By-laws
provide for mandatory indemnification rights, subject to limited exceptions, to
any director, officer, employee, or agent of the Company who, by reason of the
fact that he or she is a director, officer, employee, or agent of the Company
is involved in a legal proceeding of any nature. Such indemnification rights
include reimbursement for expenses incurred by such director, officer,
employee, or agent in advance of the final disposition of such proceeding in
accordance with the applicable provisions of the DGCL.
The Company has agreed to indemnify its directors and executive
officers against liability incurred by them by reason of their services as a
director to the fullest extent allowable under applicable law. In addition,
the Company has purchased insurance containing customary terms and conditions
as permitted by Delaware law on behalf of its directors and officers, which may
cover liabilities under the Securities Act of 1933.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
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<PAGE> 4
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
- -------------- ----------------------
<S> <C>
(4)-1 MedPartners/Mullikin, Inc. Stockholders' Rights Plan, filed as Exhibit (4)-1 to the
Company's Registration Statement on Form S-4 (Registration No. 333-00774) is hereby
incorporated by reference.
(4)-2 Caremark International Inc. 401 CARE Retirement Savings Plan
(5) Opinion of Haskell Slaughter & Young, L.L.C. as to legality of the shares of MedPartners,
Inc. Common Stock being registered.
(23)-1 Consent of Ernst & Young LLP, Independent Auditors
(23)-2 Consent of Price Waterhouse LLP, Independent Accountants
(23)-3 Consent of Haskell Slaughter & Young, L.L.C. (contained in the opinion of counsel filed as
Exhibit 5 to this Registration Statement).
24 Powers of Attorney (set forth on the signature page of this Registration Statement).
</TABLE>
ITEM 9. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or
most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information
set forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in the amount of securities
offered (if the total dollar value of securities offered would not
exceed that
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<PAGE> 5
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) under
the Securities Act if, in the aggregate, the changes in amount and
price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective Registration Statement.
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
provided, however, that paragraphs (a)(1)(i) and (ii) do not apply if
the registration statement is on Form S-3, S-8, or F-3, and the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to Section 13
or 15(d) of the Exchange Act that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability
under the Act, each such post- effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions or, otherwise, the Registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
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<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Birmingham, State of Alabama, on October 15,
1996.
MEDPARTNERS, INC.
By Larry R. House
-------------------------------------
Larry R. House
Chairman of the Board, President and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Larry R. House and Harold O. Knight,
Jr., and each or either of them, his true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement
and any subsequent registration statements relating to the offering to which
this Registration Statement relates, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
and to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or either
of them, or their or his substitutes or substitute, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
Chairman of the Board, President October 15, 1996
Larry R. House and Chief Executive Officer
- ------------------------------------------- and Director (Principal Executive
Larry R. House Officer)
Executive Vice President and October 15, 1996
Harold O. Knight, Jr. Chief Financial Officer
- ------------------------------------------- (Principal Financial and
Harold O. Knight, Jr. Accounting Officer)
Richard M. Scrushy Director October 15, 1996
- -------------------------------------------
Richard M. Scrushy
</TABLE>
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<TABLE>
<S> <C> <C>
Larry D. Striplin, Jr. Director October 15, 1996
- -------------------------------------------
Larry D. Striplin, Jr.
Charles W. Newhall III Director October 15, 1996
- -------------------------------------------
Charles W. Newhall III
Ted H. McCourtney, Jr. Director October 15, 1996
- -------------------------------------------
Ted H. McCourtney, Jr.
Walter T. Mullikin, M.D. Director October 15, 1996
- -------------------------------------------
Walter T. Mullikin, M.D.
John S. McDonald, J.D. Director October 15, 1996
- -------------------------------------------
John S. McDonald, J.D.
Richard J. Kramer Director October 15, 1996
- -------------------------------------------
Richard J. Kramer
Rosalio J. Lopez, M.D. Director October 15, 1996
- -------------------------------------------
Rosalio J. Lopez, M.D.
C.A. Lance Piccolo Director October 15, 1996
- -------------------------------------------
C.A. Lance Piccolo
Thomas W. Hodson Director October 15, 1996
- -------------------------------------------
Thomas W. Hodson
Roger L. Headrick Director October 15, 1996
- -------------------------------------------
Roger L. Headrick
Harry M. Jansen Kraemer, Jr. Director October 15, 1996
- -------------------------------------------
Harry M. Jansen Kraemer, Jr.
</TABLE>
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<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description of Exhibit Page Number
- ---------- ---------------------- -----------
<S> <C>
(4)-1 MedPartners/Mullikin, Inc. Stockholders' Rights Plan, filed as
Exhibit (4)-1 to the Company's Registration Statement on Form S-
4 (Registration No. 333-00774) is hereby incorporated by
reference.
(4)-2 Caremark International Inc. 401 CARE Retirement Savings Plan.
(5) Opinion of Haskell Slaughter & Young, L.L.C. as to legality of
the shares of MedPartners, Inc. Common Stock being registered.
(23)-1 Consent of Ernst & Young LLP, Independent Auditors.
(23)-2 Consent of Price Waterhouse LLP, Independent Accountants.
(23)-3 Consent of Haskell Slaughter & Young, L.L.C. (contained in the
opinion of counsel filed as Exhibit 5 to this Registration
Statement).
24 Powers of Attorney (set forth on the signature page of this
Registration Statement).
</TABLE>
<PAGE> 1
EXHIBIT 4.2
CAREMARK INTERNATIONAL INC.
401 CARE RETIREMENT SAVINGS PLAN
(EFFECTIVE AS OF OCTOBER 1, 1993)
SECTION 1
GENERAL
1.1. HISTORY, PURPOSE AND EFFECTIVE DATE. Effective as of November
30, 1992, Caremark International Inc., a Delaware corporation (the "Company"),
adopted Baxter International Inc. and Subsidiaries Incentive Investment Plan
(the "Baxter Plan") for the benefit of its eligible employees and the eligible
employees of its subsidiaries. Effective as of October 1, 1993, the "Effective
Date" as set forth herein, the Baxter Plan has been amended, restated and
continued in the form of the Baxter Plan and Caremark International Inc. 401
CARE Retirement Savings Plan (the "Plan"). The following provisions constitute
an amendment, restatement and continuation of the Baxter Plan in the form of
the Plan as of the Effective Date. The Plan is intended to qualify as a
profit-sharing plan under section 401(a) of the Internal Revenue Code of 1986,
as amended (the "Code"), and as a qualified cash or deferred arrangement under
section 401(k) of the Code. The Plan is intended to constitute a single plan
for purposes of section 414(l) of the Code.
1.2. RELATED COMPANIES AND EMPLOYERS. The term "Related Company"
means any corporation or trade or business during any period during which it
is, along with the Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in sections 414(b) and
(c), respectively, of the Code, a member of an affiliated service group as
described in section 414(m) of the Code or is otherwise treated as a single
employer with the Company pursuant to section 414(o) of the Code. The Company
and each Related Company, which, with the Company's consent, adopts the Plan
are referred to below collectively as the "Employers" and individually as an
"Employer".
1.3. TRUST AGREEMENT, PLAN ADMINISTRATION. All contributions made
under the Plan will continue to be held, managed and controlled by one or more
trustees (the "Trustee") acting under a trust which forms a part of the Plan.
The terms of the trust as in effect on the Effective Date are set forth in a
Trust Agreement known as Caremark International Inc. Master Trust (the
"Trust"). The authority to control and manage the operation and administration
of the Plan is vested in a Committee as described in subsection 12.1. The
members of the Committee shall be "named fiduciaries", as described in section
402 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), with respect to their authority under the Plan. Except as otherwise
expressly provided in paragraph 12.1(f), the Company shall be the Administrator
of the Plan and shall have the rights, duties and obligations of an
"administrator" as that term is defined in section 3(16)(A) of ERISA and of a
"plan administrator" as that term is defined in section 414(g) of the Code.
1.4. PLAN YEAR. The term "Plan Year" means the calendar year.
<PAGE> 2
1.5. APPLICABLE LAWS. The Plan shall be construed and administered
in accordance with the internal laws of the State of Illinois to the extent
that such laws are not preempted by the laws of the United States of America.
1.6. GENDER AND NUMBER. Where the context admits, words in any
gender shall include any other gender, words in the singular shall include the
plural and the plural shall include the singular.
1.7. NOTICES. Any notice or document required to be filed with the
Committee under the Plan will be properly filed if delivered or mailed by
registered mail, postage prepaid, to the Committee, in care of the Company at
its principal executive offices or otherwise provided to the Committee (or its
designee) in such form as it may from time to time determine. Any notice
required under the Plan may be waived by the person entitled to notice.
1.8. FORM AND TIME OF ELECTIONS. Unless otherwise specified herein,
each election permitted to be made by any Participant or other person entitled
to benefits under the Plan, and any permitted modification or revocation
thereof, shall be in writing or such other form determined by the Committee and
shall be filed with the Committee or such other person or entity designated by
the Committee at such times and in such form as the Committee shall require.
1.9. EVIDENCE. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting
on it considers pertinent and reliable, and signed, made or presented by the
proper party or parties.
1.10. ACTION BY EMPLOYERS. Any action required or permitted to be
taken by any Employer that is a corporation shall be by resolution of its Board
of Directors, or by a duly authorized officer of the Employer. Any action
required or permitted to be taken by any Employer that is a partnership shall
be by a general partner of such partnership or by a duly authorized officer
thereof.
1.11. NO REVERSION TO EMPLOYERS. No part of the corpus or income of
the Trust shall revert to any Employer or be used for, or diverted to, purposes
other than for the exclusive benefit of Participants and other persons entitled
to benefits under the Plan, except as specifically provided in the Trust
Agreement.
1.12. PLAN SUPPLEMENTS. The provisions of the Plan as applied to any
Employer or any group of employees of any Employer may, with the consent of the
Company, be modified or supplemented from time to time by the adoption of one
or more Supplements. Each Supplement shall form a part of the Plan as of the
Supplement's effective date. In the event of any inconsistency between a
Supplement and the Plan document, the terms of the Supplement shall govern.
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<PAGE> 3
SECTION 2
PARTICIPATION IN PLAN
2.1. ELIGIBILITY FOR PARTICIPATION. Subject to the terms and
conditions of the Plan, each employee of an Employer will become a
"Participant" in the Plan on the first day of the calendar month coincident
with or next following the Effective Date on which he meets the following
requirements:
(a) he has completed one Year of Service (as defined in
subsection 3.1);
(b) is not a member of a collective bargaining unit as to
which retirement benefits have been the subject of good faith
bargaining unless the Plan has been extended to the collective
bargaining unit under a currently effective collective bargaining
agreement; and
(c) he is not an Excluded Employee (as defined in
subsection 2.5).
Subject to the terms and conditions of the Plan, other than the provisions of
paragraph (a) next above:
(1) each individual who, immediately prior to the
Effective Date, was an employee of an Employer and was a participant
in the Baxter Plan shall become a "Participant" as of the Effective
Date; and
(2) each individual who becomes an employee of an
Employer after the Effective Date and prior to January 1, 1994 and
who, immediately prior thereto, was employed by Baxter International
Inc. ("Baxter") or any of its affiliates and was a participant in the
Baxter Plan shall become a "Participant" as of the first day of the
calendar month coincident with or next following the date on which he
satisfies the requirements of paragraphs (b) and (c) next above.
Individuals who become Participants pursuant to paragraphs (1) or (2) next
above shall be referred to for certain purposes herein as "Transferred
Participants".
2.2. INACTIVE PARTICIPATION. Once an eligible employee becomes a
Participant in the Plan, he will remain a Participant as long as he continues
to have an Account balance under the Plan for all purposes of the Plan except
as follows:
(a) after his Termination Date (as defined in subsection
9.3), he shall not be considered a Participant for purposes of the
contribution provisions of Sec-
3
<PAGE> 4
tions 4 and 5 and the loan and withdrawal provisions of section 10
(except as otherwise specifically provided therein); and
(b) his Accounts shall not be adjusted in accordance with
Section 7 for periods after his Distribution Date (as defined in
paragraph 11.1(c)) if distribution is made in any form other than a
series of installments as permitted pursuant to subsection 11.1.
2.3. PLAN NOT CONTRACT OF EMPLOYMENT. The Plan does not constitute
a contract of employment, and participation in the Plan will not give any
employee or Participant the right to be retained in the employ of any Employer.
The Plan does not give any employee or Participant any right or claim to any
benefit under the Plan, unless such right or claim has specifically accrued
under the terms of the Plan.
2.4. LEASED EMPLOYEES. If a person satisfies the requirements of
section 414(n) of the Code and applicable Treasury regulations for treatment as
a "Leased Employee", such Leased Employee shall not be eligible to participate
in this Plan or in any other plan maintained by an Employer or Related Company
which is qualified under section 401(a) of the Code; provided, however that, to
the extent required by section 414(n) of the Code and applicable Treasury
regulations, such person shall be treated as if the services performed by him
in such capacity were performed by him as an employee of a Related Company
which has not adopted the Plan; and provided further that no such service shall
be credited:
(a) for any period during which not more than 20% of the
workforce of the Employers and the Related Companies that is not
Highly Compensated (as defined in subsection 8.12) consists of Leased
Employees and the Leased Employee is a participant in a money purchase
pension plan maintained by the leasing organization which (i) provides
for a nonintegrated employer contribution of at least 10% of
compensation, (ii) provides for full and immediate vesting, and (iii)
covers all employees of the leasing organization (beginning with the
date they become employees), other than those employees excluded under
section 414(n)(5) of the Code; or
(b) for any other period unless the Leased Employee
provides satisfactory evidence to the Employer or Related Company that
he meets all of the conditions of this subsection 2.4 and applicable
law required for treatment as a Leased Employee.
2.5. EXCLUDED EMPLOYEE. For purposes of this Section 2, the term
"Excluded Employee" means:
(a) an employee of an Employer who is employed in an
Excluded Division (as indicated in Exhibit A hereto);
4
<PAGE> 5
(b) an employee of an Employer who is not a United States
citizen and who is employed at an Employer's facility in the United
States or one of its possessions solely on the understanding that such
United States employment is temporary for purposes of training or
familiarization with such facility or with such Employer's operations
or practices;
(c) an employee of an Employer who is not employed at an
Employer's facilities within the United States or its possessions;
provided, however, that an employee of an Employer who is a citizen of
the United States and who is employed at an Employer's facilities
outside of the United States or its possessions shall not be
considered an Excluded Employee if the Committee determines that the
requirements of section 404(a), 406 and 407 of the Code are satisfied
with respect to the employee and that participation in the Plan by
such employee would not adversely affect the qualified status of the
Plan under section 401(a) of the Code; or
(d) an employee of an Employer who is a member of a group
to which the Plan has not been extended or who is otherwise designated
as an Excluded Employee by an Employer (as indicated in Exhibit B
hereto).
SECTION 3
SERVICE
3.1. YEAR OF SERVICE. The term "Year of Service" means with respect
to any employee or Participant:
(a) for purposes of subsection 2.1 of the Plan, the
12-consecutive-month period commencing on the date on which the
employee first completes an Hour of Service and each
12-consecutive-month period commencing on each anniversary thereof, if
he completes at least 1,000 Hours of Service (as defined in subsection
3.2) during any such 12 month period; and
(b) for all other purposes of the Plan, any Plan Year
during which he completes at least 1,000 Hours of Service.
Each Transferred Participant shall be credited with Years of Service as of the
Effective Date (or, if later, the date on which he becomes a Participant) equal
to the Years of Service credited to him immediately prior to the Effective Date
(or, if later, the date on which he becomes a Participant) in accordance with
the terms of the Baxter Plan as in effect immediately prior to the Effective
Date (or, if later, the date on which he becomes a Participant).
5
<PAGE> 6
3.2. HOUR OF SERVICE. The term "Hour of Service" means with respect
to any employee, each hour for which he is paid or entitled to payment for the
performance of duties for an Employer or a Related Company or for which back
pay, irrespective of mitigation of damages has been awarded to the employee or
agreed to by an Employer or a Related Company, subject to the following:
(a) An employee shall be credited with the number of
regularly scheduled working hours included in the time period on the
basis of which payment to the employee is calculated for any period
during which he performs no duties for an Employer or a Related
Company (irrespective of whether the employment relationship has
terminated) by reason of a vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty or leave of
absence but for which he is directly or indirectly paid or entitled to
payment by an Employer or a Related Company; provided, however, that
an employee who is receiving severance payments from an Employer or a
Related Company on account of the employees termination of employment
shall be credited with the number of regularly scheduled working hours
in a six month period, regardless of the actual period for which or
during which severance payments are made to such employee; and
provided further that an employee shall not be credited with more than
501 Hours of Service under this paragraph (a) for any single
continuous period during which he performs no duties for an Employer
or Related Company. Payment considered for purposes of the foregoing
sentence shall include payments unrelated to the length of the period
during which no duties are performed but shall not include payments
made solely as reimbursement for medically-related expenses or solely
for the purpose of complying with applicable workers' compensation,
unemployment compensation or disability insurance laws.
(b) To the extent not credited in accordance with the
foregoing provisions of this subsection 3.2, an employee shall be
credited with the number of regularly scheduled working hours included
in the time period on the basis of which payment to the employee is
calculated for any period during which he performs no duties for an
Employer or a Related Company by reason of voluntary or involuntary
military service in the armed forces of the United States, but not
exceeding the period required under law and pertaining to veterans'
reemployment rights; provided, however, that if the employee fails to
report to work with an Employer or Related Company at the end of such
absence during which he has reemployment rights under the law, the
Employee shall not receive credit for hours on such leave pursuant to
this paragraph (b).
(c) To the extent not credited in accordance with the
foregoing provisions of this subsection 3.2, an employee shall be
credited with the number of regularly scheduled working hours included
in the time period (not to exceed six months) on the basis of which
payment to the employee is calculated for any period during which he
performs no duties for an Employer or a Related
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Company by reason of a family leave or disability leave approved by his
Employer.
Subject to the foregoing provisions of this subsection 3.2, as of the first day
any calendar month during which an employee is required to be credited with at
least one Hour of Service, he shall be credited with 190 Hours of Service for
such month.
3.3. ONE YEAR BREAK IN SERVICE. The term "One Year Break in
Service" means, with respect to any employee or Participant, any Plan Year
during which he completes fewer than 501 Hours of Service; provided, however,
that in no event shall an employee or Participant incur a One Year Break in
Service for any Plan Year if (a) he is employed by an Employer or Related
Company as of the last day of that Plan Year; (b) it is the Plan Year in which
he commences a Maternity or Paternity Absence (as defined below); or (c) it is
the Plan Year immediately following the Plan Year in which he commences a
Maternity or Paternity Absence. A "Maternity or Paternity Absence" means any
period during which the employee is absent from active employment with an
Employer or Related Company by reason of the employee's pregnancy, the birth of
a child of the employee or the placement of a child with the employee in
connection with the employee's adoption of such child, and, in each case, the
care of such child immediately after its birth or placement.
SECTION 4
BEFORE-TAX AND ROLLOVER CONTRIBUTIONS
4.1. BEFORE-TAX CONTRIBUTIONS. Subject to the terms and conditions
of the Plan, the limitations set forth in Section 8 and such additional rules
as the Committee may establish on a uniform and nondiscriminatory basis, for
any payroll period a Participant may elect to have his salary or wages reduced
and a corresponding amount contributed on his behalf to the Plan by his
Employer as a "Before-Tax Contribution", which amount shall not be less than 1%
nor more than 12% (in whole percentages) of his Eligible Compensation (as
defined in subsection 4.5) for that payroll period.
4.2. PAYMENT OF BEFORE-TAX CONTRIBUTIONS. Before-Tax Contributions
shall be paid to the Trustee by an Employer on the earliest date on which such
contributions can reasonably be segregated from the Employer's general assets,
but not later than 90 days after the date on which such amounts would otherwise
have been payable to the Participant.
4.3. VARIATION, DISCONTINUANCE AND RESUMPTION OF BEFORE-TAX
CONTRIBUTIONS. Subject to such rules and restrictions as the Committee may
establish on a uniform and nondiscriminatory basis, effective as of the first
day of a payroll period (and not more frequently than once during any calendar
month) a Participant may elect to change his Before-Tax Contribution rate
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(but not retroactively) within the limits specified in subsection 4.1, to
discontinue having Before-Tax Contributions made for him or to have them
resumed.
4.4. ROLLOVER CONTRIBUTIONS. A Participant or an employee who
otherwise meets the requirements of subsection 2.1 other than paragraph (a)
thereof may, with the consent of the Committee, make a Rollover Contribution
(as defined below) to the Trustee of the Plan. The term "Rollover Contribution"
means:
(a) a cash contribution to the Plan by the Participant or
employee of amounts distributed from a qualified plan described in
section 401(a) of the Code (or distributed from an individual
retirement account and constituting a "rollover contribution" as
described in section 408(d)(3) of the Code) and made within 60 days of
receipt of such amount; or
(b) a cash payment made to the Plan by another qualified
plan described in section 401(a) of the Code as a direct rollover (as
contemplated by section 401(a)(31) of the Code) on behalf of and at
the direction of the Participant or employee,
provided such distributed or directly rolled over amounts are permitted to be
rolled over to a qualified plan under the applicable provisions of the Code as
then in effect. The Committee may request from the Participant or employee such
documents as it considers necessary or desirable to establish that the rollover
contribution satisfies the foregoing requirements. If an employee who is not
otherwise a Participant makes a Rollover Contribution to the Plan, he shall be
treated as a Participant only with respect to his Rollover Contribution Account
(as defined in subsection 7.1) until he has met all of the requirements for
Plan participation set forth in subsection 2.1. The portion of a Participant's
interest under the Plan which is attributable to his Rollover Contributions
shall be fully vested and nonforfeitable at all times.
4.5. ELIGIBLE COMPENSATION. For purposes of this Section 4 and
Section 5, a Participant's "Eligible Compensation" means:
(a) the employee's or Participant's earnings which are
reported as taxable income on the employee's or Participant's Form W-2
for the portion of the Plan Year during which he is eligible to
participate in the Plan,
PLUS
(b) any amount which is contributed by an Employer for
the Plan Year while the Participant is eligible to participate in the
Plan pursuant to a salary reduction agreement and which is not
includable in the gross income of the Participant under section 125 or
402(e)(3) of the Code,
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REDUCED BY
(c) any amounts reported on the employee's Form W-2 for
the portion of the Plan Year during which he is eligible to
participate in the Plan as imputed income arising from the Employer's
moving expense reimbursement policies, the Employer's life insurance
plans or the Employer's other fringe benefit plans, amounts paid to
replace benefits not provided under any qualified retirement plan due
to the contribution or benefit limitations or nondiscrimination
requirements of the Code and the following amounts, paid, accrued or
________: flex credits and flex cash (other than amounts included
pursuant to paragraph (b)), long term disability pay, employee
referral awards, invention fees and awards, cash or non-cash prizes or
awards, executive perquisite allowances, technical achievement awards,
tax equalization payments to expatriates, relocation expense
reimbursements, travel allowances, automobile allowances, promotional
awards, mortgage differential payments, Christmas gifts, attendance
awards, pay for unused sick time, discretionary awards, hiring
bonuses, contest pay, tuition reimbursements, business expense
reimbursements, retention bonuses, income from the sale of stock,
incentives from the exercise of stock options, stock appreciation
rights, restricted stock rights, interest earnings on deferred
compensation and deferred bonuses.
Notwithstanding the foregoing, only 85 percent of the amount that would
otherwise be considered Eligible Compensation for purposes of the Plan shall be
considered Eligible Compensation with respect to any employee or Participant
who is a commissioned sales representative who is not reimbursed for expenses.
4.6. LIMITATION ON AMOUNT OF COMPENSATION TAKEN INTO ACCOUNT FOR
ANY PLAN YEAR. Notwithstanding any other provision of the Plan to the contrary,
the amount of Eligible Compensation that may be taken into consideration for
any Plan Year shall not exceed $200,000 or such other amount as may be
permitted for any such year under section 401(a)(17) of the Code, taking into
account for purposes of such limitation any proration required in situations
where "family members" (as defined in sections 401(a)(17) and 414(g)(6) of the
Code) and their Eligible Compensation must be aggregated, or where Eligible
Compensation is computed with respect to a period of less than a full year
(other than on account of mid-year commencement or cessation of active
participation in the Plan).
4.7. TRANSFERRED EMPLOYEES. Subject to the limitations of the Plan,
in the event that a Participant is transferred from an Employer to a Related
Company that is not an Employer, the Participant shall not be permitted to make
Before-Tax Contributions for periods thereafter unless and until he is again
employed by an Employer (through a transfer or otherwise) or the Related
Company becomes an Employer.
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SECTION 5
EMPLOYER CONTRIBUTIONS
5.1. EMPLOYER MATCHING CONTRIBUTIONS. Subject to the terms and
conditions of the Plan and the limitations of Section 8, for each payroll
period, each Employer shall make an "Employer Matching Contribution" to the
Plan on behalf of each Participant for whom Before-Tax Contributions under the
Plan were made for that payroll period in an amount which is equal to 100% of
the Before-Tax Contributions made by that Employer on behalf of the Participant
for that payroll period that do not exceed 3% of such Participant's Eligible
compensation for that payroll period.
5.2. LIMITATIONS ON AMOUNT OF CONTRIBUTIONS. In no event shall the
sum of any Before-Tax Contributions and Employer Matching Contributions made by
an Employer for any Plan Year exceed the limitations imposed by section 404 of
the Code on the maximum amount deductible on account thereof by the Employer
for that year.
5.3. PAYMENT OF EMPLOYER MATCHING CONTRIBUTIONS. Each Employer's
Employer Matching Contributions under the Plan for any Plan Year shall be paid
to the Trustee, without interest, no later than the time prescribed by law for
filing the Employer's federal income tax return, including any extensions
thereof.
5.4. VERIFICATION OF CONTRIBUTIONS. If, for any reason, it becomes
necessary to verify the correctness of any amounts or calculations relating to
any Employer's contributions under the Plan for any period, the certificate of
a qualified public accountant selected by the Company with respect thereto
shall be conclusive on all persons.
5.5. FORFEITURE OF EMPLOYER MATCHING CONTRIBUTIONS. Notwithstanding
any other provision of the Plan, any unvested portion of an Employer Matching
Contribution attributable to Before-Tax Contributions that are distributed as
excess deferrals or excess contributions in accordance with subsections 8.6 or
8.8 shall be forfeited and applied in accordance with subsection 11.9.
SECTION 6
INVESTMENT OF THE TRUST FUND
6.1. INVESTMENT FUNDS. One or more "Investment Funds" may be
established under the Trust from time to time for the investment of
Participants' Accounts (as defined in subsection 7.1). As of the Effective
Date, the Investment Funds are as follows:
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(a) a "Fixed Income Fund" which shall be invested and
reinvested primarily in high quality investment contracts and other
short to medium stable fixed income securities;
(b) a "Balanced Fund" which shall be invested and
reinvested primarily in stocks, bonds and cash-like securities;
(c) an "S&P 500 Index Fund" which shall be invested and
reinvested primarily in stocks of large U.S. Companies;
(d) a "Company Stock Fund" which shall consist of the
following two subfunds:
(i) the "Caremark Stock Fund" which shall be
invested and reinvested primarily in common stock of the
Company purchased by the Trustee in the open market or by
private purchase from the Company or others at the fair market
value at the time of purchase as determined by the Trustee;
and
(i) the "Baxter Stock Fund" which shall be
invested primarily in common stock of Baxter; provided,
however, that no amounts may remain invested in the fund after
December 31, 1994;
(e) a "Capital Growth Fund" which shall be invested and
reinvested primarily in stocks of mid-size U.S. companies; and
(f) a "Loan Fund" which shall consist only of promissory
notes evidencing loans to Participants in accordance with subsection
10.1.
Unless a Participant elects otherwise in accordance with subsection 6.3, the
portion of a Participant's Accounts that were invested in the Investment Funds
available under the Plan immediately prior to the Effective Date shall be
invested as follows as of the Effective Date:
(1) amounts invested in the Investment Protection Fund
shall be invested in the Fixed Income Fund;
(2) amounts invested in the Composite Fund shall be
invested in the Balanced Fund;
(3) amounts invested in the General Equity Fund shall be
invested in the S&P 500 Index Fund;
(4) amounts invested in the Company Stock Fund shall be
invested in the appropriate subfund under the Company Stock Fund; and
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(5) amounts invested in promissory notes shall be
invested in the Loan Fund.
6.2. INVESTMENT FUND ACCOUNTING. The Committee shall maintain or
cause to be maintained separate subaccounts for each Participant in each of the
Investment Funds to separately reflect his interests in each such Investment
Fund and the portion thereof that is attributable to each of his Accounts.
6.3. INVESTMENT FUND ELECTIONS. At the time that a Participant
enrolls in the Plan and effective as of the first day of any payroll period
thereafter (but not retroactively and no more frequently than once during any
calendar month), each Participant may, subject to such rules and restrictions
as the committee may establish on a uniform and nondiscriminatory basis,
specify the percentage, in multiples of 5%, of Before-Tax Contributions and
Rollover Contributions thereafter made on his behalf that are to be invested in
each of the Investment Funds (other than the Loan Fund and the Baxter Stock
Fund). Employer Matching Contributions attributable to any Before-Tax
Contributions shall be invested in the same manner as the Before-Tax
Contributions to which they relate. During any period in which no Participant
direction is on file with the Committee, contributions made on behalf of a
Participant shall be invested in the Fixed Income Fund. Notwithstanding the
foregoing provisions of this subsection 6.3, a Participant may not elect to
invest any amounts in the Caremark Stock Fund prior to December 1, 1993.
6.4. TRANSFERS BETWEEN INVESTMENT FUNDS. As of any date (but not
retroactively and no more frequently than once during any calendar month), a
Participant may elect to transfer, in multiples of 5% (25% with respect to the
Baxter Stock Fund), the value of his Accounts held in any Investment Fund
(other than the Loan Fund) to any other Investment Fund (other than the Loan
Fund or the Baxter Stock Fund) then made available to such Participant;
provided, however, that a Participant may not elect to transfer any amounts to
the Caremark Stock Fund prior to December 1, 1993.
6.5. SPECIAL RULE FOR BAXTER STOCK FUND. To the extent that amounts
remain invested in the Baxter Stock Fund on December 31, 1994, such amounts
shall be transferred to the other Investment Funds in the proportion in which
the Participant's Accounts are then invested and shall thereafter be subject to
investment at the direction of the Participant in accordance with the
provisions of this section 6.
6.6. TEMPORARY INVESTMENT. Notwithstanding the foregoing provisions
of this Section 6, contributions, Account balances, and earnings thereon may be
temporarily invested in one or more short-term investment vehicles as
established under the Trust for the purpose of facilitating the making of
contributions, Investment Fund elections, and Investment Fund transfers.
6.7. LIABILITY OF TRUSTEE, COMMITTEE AND EMPLOYERS. None of the
Trustee, the Committee or the Employers are liable or responsible for any loss
resulting to an Account by reason of any investment or reinvestment at the
direction of a Participant; and the Trustee is
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relieved of any duty to review, from time to time, any investment made at the
direction of a Participant.
SECTION 7
PLAN ACCOUNTING
7.1. PARTICIPANTS' ACCOUNTS. The Committee shall maintain or cause
to be maintained the following "Accounts" (and any necessary subaccounts
thereunder) in the name of each Participant:
(a) a "Before-Tax Account", which shall reflect
Before-Tax Contributions, if any, made on his behalf under the Plan
and the balance in his Basic Before-Tax Account and Supplemental
Before-Tax Account under the Plan as of the Effective Date, and the
income, losses, appreciation and depreciation attributable thereto;
(b) an "Employer Matching Account", which shall reflect
Employer Matching Contributions, if any, made on his behalf under the
Plan, and the income, losses, appreciation and depreciation
attributable thereto;
(c) a "Rollover Account", which shall reflect Rollover
Contributions, if any, made by him under the Plan, and the income,
losses, appreciation and depreciation attributable thereto; and
(d) with respect to each Transferred Participant, to the
extent applicable:
(i) a "Profit Sharing Account", which shall
reflect the balance in his Profit Sharing Account as of the
Effective Date, and the income, losses, appreciation and
depreciation attributable thereto; and
(ii) a "Supplemental After-Tax Account", which
shall reflect the balance in his Supplemental After-Tax
Account, Pre-1983 Mandatory Contribution Account and his
Pre-1983 Voluntary Contribution Account as of the Effective
Date, and the income, losses, appreciation and depreciation
attributable thereto.
Reference to a Participant's "Accounts" means his Before-Tax Account, Employer
Matching Account, Rollover Account and, to the extent applicable, his Profit
Sharing Account and Supplemental After-Tax Account. Reference to the "balance"
in any Account as of any date means the sum of the cash balance and the value
(as described in subsection 7.3) of each type
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of property held in that Account on that date. The Accounts and subaccounts
provided for in this subsection 7.1 shall be for accounting purposes only, and
there shall be no segregation of assets.
7.2. ADJUSTMENT FOR INVESTMENT EXPERIENCE. Amounts credited to a
Participant's Accounts shall share in earnings and losses for the period
commencing on the date they are transferred to the Trustee, without regard to
the date as of which they are credited to the Participant's Accounts.
7.3. VALUATION. For purposes of the Plan, the value of any property
held under or distributed from the Plan as of any date shall be the fair market
value (as determined by the Trustee) of the property on that date, or as of the
most recent prior date on which it was valued by the Trustee. The Trustee shall
value property held under the Plan in accordance with rules established by them
provided that all property under the Plan on the last day of each Plan Year
shall be valued by the Trustee as of that date.
7.4. ALLOCATION AND CREDITING OF CONTRIBUTIONS. Subject to the
provisions of Section 8, Before-Tax Contributions, Employer Matching
Contributions and Rollover Contributions on behalf of a Participant for any
period shall be credited to that Participant's appropriate Accounts as of the
last day of the payroll period during which such contributions were made. For
purposes of this Section 7, all Employer contributions for any Plan Year which
are made after the close of the Plan Year will be considered to have been made
on the last day of that Plan Year regardless of when paid to the Trustee.
7.5. STATEMENT OF PLAN INTEREST. As soon as practicable after the
last day of each Plan Year, and at such other times as the Committee may deem
appropriate, the Committee shall provide each Participant with a statement
reflecting the balances of his Accounts.
SECTION 8
LIMITATIONS ON COMPENSATION,
CONTRIBUTIONS AND ALLOCATIONS
8.1. REDUCTION OF CONTRIBUTION RATES. To conform the operation of
the Plan to sections 401(a)(4), 401(k)(3), 401(m)(2), 402(g) and 415(c) of the
Code, the Committee may unilaterally modify or revoke any Before-Tax
Contribution election made by a Participant pursuant to subsection 4.1 or may
reduce (to zero if necessary) the level of Employer Matching Contributions to
be made on behalf of any Highly Compensated Participant pursuant to subsection
5.1.
8.2. COMPENSATION FOR LIMITATION/TESTING PURPOSES. "Compensation"
for purposes of this Section 8 shall mean:
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(a) the Participant's wages (as defined in section
3401(a) of the Code for purposes of income tax withholding at the
source, but determined without regard to any rules that limit the
remuneration included in wages based on the nature or location of the
employment or the services performed); plus
(b) any elective contributions made on the Participant's
behalf for the year under the Plan or any plan maintained by an
Employer or Related Company which are excludable from the
Participant's gross income by reason of section 125 or 402(e)(3) of
the Code,
up to a maximum amount for the Plan Year of $200,000 or such other amount as
may be permitted for any such year under section 401(a)(17) of the Code, taking
into account for purposes of such limitation any proration required in
situations where "family members" (as defined in sections 401(a)(17) and
414(q)(6) of the Code) and their Compensation must be aggregated or where
Compensation is computed with respect to a period of less than a full year
(other than on account of raid-year commencement or cessation of active
participation in the Plan).
8.3. LIMITATIONS ON ANNUAL ADDITIONS. Notwithstanding any other
provisions of the Plan to the contrary, a Participant's Annual Additions (as
defined below) for any Plan Year under the Plan and any other defined
contribution plan of any Employer or a Related Company or Section 415 Affiliate
(as defined below, which plans are collectively referred to herein as "Related
Defined Contribution Plans") shall not exceed an amount equal to the lesser of:
(a) $30,000 (or, if greater, 1/4 of the dollar limitation
in effect under section 415(b)(1)(A) of the Code); or
(b) 25 percent of the Participant's Compensation for that
Plan Year (determined without regard to either paragraph 8.2(b) or the
limitation under section 401(a)(17) of the Code for that Plan Year),
calculated as if each Section 415 Affiliate were a Related Company.
In applying the foregoing limitation, the Annual Additions to a Participant's
accounts under any Related Defined Contribution Plans which constitute money
purchase pension plans and then the Annual Additions under any Related Defined
Contribution Plans (other that money purchase pension plans) shall be limited
before the Annual Additions to his Accounts are limited pursuant to the
foregoing provisions of this subsection 8.3, to the extent such actions are not
inconsistent with the terms of the Related Defined Contribution Plans. The term
"Annual Additions" means, with respect to any Participant for any Plan Year,
the sum of all contributions (excluding rollover contributions) and forfeitures
allocated for such year to a Participant's Accounts under the Plan pursuant to
subsection 7.4 and to a Participant's accounts under any Related Defined
Contribution Plans, regardless of whether any such amounts (or portions
thereof) are subsequently distributed in accordance with subsections 8.8, 8.10
or 8.11, and employer contributions allocated for a Plan Year to any individual
medical account (as defined in section
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415(l) of the Code) of a Participant under a defined benefit plan and any
amount allocated for a Plan Year to the separate account of a Participant for
payment of post-retirement medical benefits under a funded welfare benefit plan
(as described in section 419A(d)(2) of the Code) which is maintained by an
Employer, Related Company or Section 415 Affiliate. A "Section 415 Affiliate"
means any entity that would be a Related Company if the ownership test of
sections 414(b) and (c) of the Code was 50% rather than 80%.
8.4. EXCESS ANNUAL ADDITIONS. If, as a result of the allocation of
forfeitures, a reasonable error in estimating a Participant's Compensation, a
reasonable error in determining the amount of elective deferrals (within the
meaning of section 402(g) of the Code) or such other mitigating circumstances
as the Commissioner of Internal Revenue shall prescribe, the Annual Additions
for a Participant for a Plan Year exceed the limitations set forth in
subsection 8.3, the excess amounts shall be treated, as necessary, in
accordance with Treas. Reg. Section 1.4156(b)(6)(i), after any Before-Tax
Contributions are first returned. Any Before-Tax Contributions that are
returned in accordance with this subsection 8.4 shall be disregarded for
purposes of subsections 8.6, 8.7 and 8.11.
8.5. COMBINED PLAN LIMITATION. If a Participant also participates
in any defined benefit plan (as defined in section 415(k) of the Code)
maintained by an Employer, Related Company or Section 415 Affiliate, the
aggregate benefits payable to, or on account of, the Participant under such
plan together with this Plan shall be determined in a manner consistent with
section 415(e) of the Code. The benefit provided for the Participant under the
defined benefit plan shall be adjusted to the extent necessary so that the sum
of the "defined benefit fraction" and the "defined contribution fraction" (as
such terms are defined in section 415(e) of the Code and applicable regulations
thereunder) calculated with regard to such Participant does not exceed 1.0. For
purposes of this subsection 8.5, all qualified defined benefit plans (whether
or not terminated) of the Employers, Related Companies, and Section 415
Affiliates shall be treated as one defined benefit plan.
8.6. $7,000 LIMITATION. In no event shall the Before-Tax
Contributions for a Participant under the Plan (together with elective
deferrals under any other cash-or-deferred arrangement maintained by an
Employer or a Related Company) for any taxable year exceed $7,000 or such other
amount as may be permitted under section 402(g) of the Code. If, during any
taxable year, a Participant is also a participant in another cash or deferred
arrangement, and if his elective deferrals under such other arrangement,
together with his Before-Tax Contributions, exceed the maximum amount permitted
for the Participant for that year under section 402(g) of the Code, the
Participant, not later than March 1 following the close of such taxable year,
may request the Committee to direct the Trustee to distribute all or a portion
of such excess to him, with any allocable gains or losses for that Plan Year
determined in accordance with any reasonable method adopted by the Committee
for that Plan Year that either (a) conforms to the accounting provisions of
Section 7 and is consistently applied to the distribution of excess
contributions under this subsection 8.6 and subsections 8.8, 8.10 and 8.11 to
all affected Participants, or (b) satisfies any alternative method set forth in
applicable Treasury regulations. Any such request shall be in writing and shall
include adequate proof of the
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existence of such excess, as determined by the Committee in its sole
discretion. If the Committee is so notified, such excess amount shall be
distributed to the Participant no later than the April 15 following the close
of the Participant's taxable year. In addition, if the applicable limitation
for a Plan Year happens to be exceeded with respect to this Plan alone, or this
Plan and another plan or plans of the Employers and Related Companies, the
Committee shall direct such excess Before-Tax contributions (with allocable
gains or losses) to be distributed to the Participant as soon as practicable
after the Committee is notified of the excess deferrals by the Company, an
Employer or the Participant, or otherwise discovers the error (but not later
than the April 15 following the close of the Participant's taxable year).
Notwithstanding the foregoing provisions of this subsection 8.6, the dollar
amount of any distribution due hereunder shall be reduced by the dollar amount
of any Before-Tax Contributions previously distributed to,the same Participant
pursuant to subsection 8.8; provided, however, that for purposes of subsections
8.3 and 8.7, the correction under this subsection 8.6 shall be deemed to have
occurred before the correction under subsection 8.8. Amounts distributed in
accordance with this subsection 8.6 shall not be treated as Annual Additions
for purposes of subsection 8.3.
8.7. SECTION 401(K)(3) TESTING. For any Plan Year, the amount by
which the average of the Deferral Percentages (as defined below) of each
eligible employee who is Highly Compensated (as defined in subsection 8.12)
(the "Highly Compensated Group Deferral Percentage") exceeds the average of the
Deferral Percentages of each eligible employee who is not Highly Compensated
(the "Non-highly Compensated Group Deferral Percentage") shall be less than or
equal to either (i) a factor of 1.25, or (ii) both a factor of 2 and a
difference of 2. The "Deferral Percentage" for any eligible employee for a Plan
Year shall be determined by dividing the sum of his Before-Tax Contributions
for the year by his Compensation for the year, subject to the following:
(a) any employee eligible to participate in the Plan at
any time during a Plan Year (without regard to any suspension imposed
by any other provision hereunder) shall be counted, regardless of
whether any Before-Tax Contributions are made on his behalf for the
year;
(b) the Deferral Percentage for any Highly Compensated
employee who is eligible to participate in the Plan and who is also
eligible to make other elective deferrals under one or more other
plans described in section 401(k) of the Code maintained by an
Employer or a Related Company for a plan year that ends with or within
the same calendar year as the Plan Year (other than a plan or
arrangement subject to mandatory disaggregation under applicable
Treasury regulations), shall be determined as if all such elective
deferrals were made on his behalf under the Plan;
(c) for purposes of determining the Deferral Percentage
of a Highly Compensated Participant who is a 5-percent owner (as
defined in section 416(i)(1)(B) of the Code) of an Employer or a
Related Company or one of the ten most highly-paid employees of all
the Employers and Related Companies, the
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Before-Tax Contributions and Compensation of such Participant shall
include the Before-Tax Contributions and Compensation for the Plan
Year of his family members (as defined in section 414(q)(6) of the
Code), and any such family members shall be disregarded as separate
employees in determining the Highly Compensated and Non-highly
Compensated Group Deferral Percentages;
(d) excess Before-Tax Contributions distributed to a
Participant under subsection 8.6 shall be counted in determining such
Participant's Deferral Percentage, except in the case of a
distribution to a non-Highly Compensated Participant required to
comply with section 401(a)(30) of the Code; and
(e) in the event that this Plan satisfies the
requirements of sections 401(k), 401(a)(4), or 410(b) of the Code only
if aggregated with one or more other plans, or if one or more other
plans satisfy the requirements of such sections of the Code only if
aggregated with this Plan, then this subsection 8.7 shall be applied
as if all such plans were a single plan; provided, however, that such
plans may be aggregated in order to satisfy section 401(k) of the Code
only if they have the same plan year.
Application of the provisions of this subsection 8.7 shall be made in
accordance with the requirements of section 401(k)(3) of the Code and
applicable regulations thereunder.
8.8. CORRECTION UNDER SECTION 401(K) TEST. In the event that the
Highly Compensated Group Deferral Percentage for any Plan Year does not
initially satisfy one of the tests referred to in subsection 8.7, the Committee
shall direct the Trustee to distribute to Highly Compensated Participants
enough of their Before-Tax Contributions under the leveling method described in
applicable Treasury regulations with any allocable gains or losses for such
Plan Year determined in accordance with any reasonable method adopted by the
Committee for that Plan Year that either (a) conforms to the accounting
provisions of Section 7 and is consistently applied to making corrective
distributions under this subsection 8.8 and subsections 8.6, 8.10 and 8.11 to
all affected Participants, or (b) satisfies any alternative method set forth in
applicable Treasury regulations, so that the Highly Compensated Group Deferral
Percentage meets one of the tests referred to in subsection 8.7. The amount to
be distributed to any Participant pursuant to this subsection 8.8 shall be
reduced by the amount of any Before-Tax Contributions distributed to him for
such Plan Year pursuant to subsection 8.6. The Committee shall make any
necessary distributions after the close of the Plan Year for which the excess
Before-Tax Contributions were made and no later than the close of the Plan Year
following the Plan Year for which the excess Before-Tax Contributions were
made.
8.9. CODE SECTION 401(M)(2) TESTING. For any Plan Year, the amount
by which the average of the Contribution Percentages (as defined below) of each
eligible employee who is Highly Compensated (the "Highly Compensated Group
Contribution Percentage") exceeds the average of the Contribution Percentages
of each eligible employee who is not Highly Compensated (the "Non-highly
Compensated Group Contribution Percentage") shall be less than
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or equal to either (i) a factor of 1.25, or (ii) both a factor of 2 and a
difference of 2. The "Contribution Percentage" for any eligible employee for a
Plan Year shall be determined by dividing his Employer Matching Contributions
for the year by his Compensation for the year, subject to the following special
rules:
(a) any employee eligible to participate in the Plan at
any time during a Plan Year in accordance with subsection 2.1 (without
regard to any suspension imposed by any other provision hereunder)
shall be counted, regardless of whether any Employer Matching
Contributions are made for him for the year;
(b) the Contribution Percentage for any Highly
Compensated employee who is eligible to participate in the Plan and
who is also eligible to participate in one or more other qualified
plans maintained by an Employer or a Related Company with after-tax or
matching contributions and with a plan year that ends with or within
the Plan Year (other than a plan subject to mandatory disaggregation
under applicable Treasury regulations) shall be determined as if all
such contributions were made under the Plan;
(c) for purposes of determining the Contribution
Percentage of a Highly Compensated Participant who is a 5-percent
owner of an Employer or a Related Company or one of the ten most
highly-paid employees of all the Employers and Related Companies, the
Employer Matching Contributions and Compensation of such Participant
shall include the Employer Matching Contributions and Compensation for
the Plan Year of his family members (as defined in section 414(g)(6)
of the Code), and any such family members shall be disregarded as
separate employees in determining the Highly Compensated and
Non-Highly Compensated Group Contribution Percentages; and
(d) in the event that this Plan satisfies the
requirements of sections 401(m), 401(a)(4), or 410(b) of the Code only
if aggregated with one or more other plans, or if one or more other
plans satisfy the requirements of such sections of the Code only if
aggregated with this Plan, then this subsection 8.9 shall be applied
as if all such plans were a single plan; provided, however, that such
plans may be aggregated in order to satisfy section 401(m) of the Code
only if they have the same plan year.
Application of the provisions of this subsection 8.9 shall be made in
accordance with the requirements of section 401(m) of the Code and the
regulations thereunder.
8.10. CORRECTION UNDER SECTION 401(M) TEST. In the event that the
Highly Compensated Group Contribution Percentage for any Plan Year does not
initially satisfy one of the tests referred to in subsection 8.9, the Committee
shall direct the Trustee to distribute to Highly Compensated Participants
enough of their Employer Matching Contributions under the leveling method
described in applicable Treasury regulations with any allocable gains or losses
deter-
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<PAGE> 20
mined in accordance with any reasonable method adopted by the Committee for
that Plan Year that either (a) conforms to the accounting provisions of Section
7 and is consistently applied to making corrective distributions under this
subsection 8.10 and subsections 8.6, 8.8 and 8.11 to all affected Participants
or (b),satisfies any alternative method set forth in applicable Treasury
regulations, so that the Highly Compensated Group Contribution Percentage meets
one of the tests referred to in subsection 8.9. Notwithstanding the foregoing
provisions of this subsection 8.10, any excess Employer Matching Contributions
that are not vested in accordance with subsection 9.1 or which are attributable
to excess Before-Tax Contributions that are distributed in accordance with
subsection 8.6 or 8.8 shall be forfeited and shall be treated in the same
manner as any other forfeiture under the Plan. The Committee shall make any
necessary distribution after the close of the Plan Year for which the excess
Employer Matching Contributions were made and no later than the close of the
Plan Year following the Plan Year for which such excess contributions were
made.
8.11. MULTIPLE USE OF ALTERNATIVE LIMITATION. Notwithstanding any
other provision of this Section 8, if the sum of the Highly Compensated Group
Deferral Percentage and the Highly Compensated a)Group Contribution Percentage
exceeds the aggregate limit (as defined in Treas. Reg. Section
1.401(m)-2(b)(3)), then the leveling method of correction prescribed in
subsection 8.10 shall be continued until the limitation set forth in Treas.
Reg. Section 1.401(m)-2(b) is satisfied for such Plan Year.
8.12. HIGHLY COMPENSATED. An employee or Participant shall be
"Highly Compensated" for any Plan Year if, during that Plan Year or the
preceding Plan Year, he:
(a) was at any time a 5 percent owner of an Employer or a
Related Company;
(b) received Compensation in excess of $75,000 (indexed
for cost-of-living adjustments under section 415(d) of the Code);
(c) received compensation in excess of $50,000 (indexed
for cost-of-living adjustments under section 415(d) of the Code), and
was in the top-paid group of employees (as defined below) for such
year; or
(d) was at any time an officer of an Employer or Related
Company and received Compensation greater than 50 percent of the
amount in effect under section 415(b)(1)(A) of the Code for such year,
provided that the officers taken into account under this paragraph (d)
shall be limited to 50, or if less, the greater of 3 or 10% of the
employees of all the Employers and Related Companies;
provided, however, that an employee in category (b), (c) or (d) above for the
current Plan Year who does not fall within at least one such category for the
preceding Plan Year shall not be considered Highly Compensated for the current
Plan Year unless he is also among the 100 most highly-paid employees of all the
Employers and Related Companies for such current year. For
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<PAGE> 21
purposes of this subsection 8.12, a family member of a 5-percent owner of an
Employer or a Related Company or one of the 10 most highly compensated
employees of all the Employers and Related Companies shall not be treated as a
separate employee, and any Compensation paid to such family member shall be
deemed to be paid instead to the related 5-percent owner or highly compensated
employee. An employee shall be considered to be in the "top-paid group" of
employees for any year if such employee is in the group consisting of the top
20 percent of the active employees of all the Employers and Related Companies
when ranked on the basis of Compensation paid during such year. In determining
the total number of active employees in a year, the following provisions shall
apply:
(1) the term "employee" shall include a leased employee
who is treated as an employee pursuant to the provisions of section
414(n)(2) of the Code, other than any individual who is covered by a
safe-harbor plan described in section 414(n)(5) of the Code; and
(2) the following employees shall be disregarded:
employees who have not attained age 21 by the end of the year;
employees who by the end of the year have not completed 6 months of
service (including service in the immediately preceding year);
employees who normally work less than 17-1/2 hours per week; employees
who normally work less than 6 months during any year; and non-
resident aliens with no U.S. source income.
SECTION 9
VESTING AND TERMINATION DATES
9.1. DETERMINATION OF VESTED INTEREST. A Participant shall at all
times have a fully vested, nonforfeitable interest in his Before-Tax Account,
Rollover Account, Profit Sharing Account and Supplemental After-Tax Account.
The interest of a Participant in his Employer Matching Account shall become
fully vested and nonforfeitable in accordance with the following schedule:
Years of Service Vested Percentage
---------------- -----------------
Less than 1 0%
1 but less than 2 20%
2 but less than 3 40%
3 but less than 4 60%
4 but less than 5 80%
5 or more 100%
9.2. ACCELERATED VESTING. Notwithstanding the foregoing provisions
of this Section 9:
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(a) A Participant shall have a fully vested,
nonforfeitable interest in all his Accounts when he attains age 65, or
separates from service after attaining age 55, dies or becomes
permanently disabled while employed by an Employer or a Related
Company. For purposes of the Plan, a Participant's employment will be
considered to have terminated on account of permanent disability if he
is disabled for purposes of the Social Security Act, as evidenced by
his receipt of Social Security Disability Benefits.
(b) In the event of the Plan's termination (in accordance
with subsection 13.2), partial termination (as determined under
applicable law and regulations), or the complete discontinuance of
Employer contributions to the Plan, each affected Participant shall
have a fully vested, nonforfeitable interest in all his Accounts.
(c) If a Participant ceases to be employed by the
Employers and Related Companies due to the sale by the Company of the
stock or substantially all of the assets of his Employer, the balances
in all of his Accounts shall become fully vested and nonforfeitable
unless an arrangement is made between the Company and the purchaser of
such stock or assets for periods of service with the purchaser after
the effective date of the sale to be treated as Years of Service for
vesting purposes hereunder. The foregoing sentence shall not apply to
any Participant or group of Participants who cease to be employed by
the Employers and Related Companies solely due to (i) the sale by the
Company of some but less than all of the assets of an Employer, (ii)
the closing of a plant or facility due to consolidation or the
relocation of the plant or facility, or (iii) a reduction of workforce
applicable to one or more of the Employers or Related Companies.
9.3. TERMINATION DATE. A Participant's "Termination Date" shall be
the date on which his employment with the Employers and the Related Companies
is terminated for any reason.
SECTION 10
LOANS AND WITHDRAWALS OF CONTRIBUTIONS
10.1. LOANS TO PARTICIPANTS. The Committee, upon request by a
Participant who is an employee of an Employer or Related Company or who is
otherwise required to be given the opportunity to borrow under applicable
regulations, in such form as the Committee may require, may authorize a loan to
be made to the Participant from his Accounts, subject to the following:
(a) No loan shall be made to a Participant if,
immediately after such loan, the sum of the outstanding balances
(including principal and interest) of the
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<PAGE> 23
loan made to him under this Plan and under any other qualified
retirement plans maintained by the Employers and Related Companies
would exceed the lesser of:
(i) $50,000, reduced by the excess, if any, of:
(1) the highest outstanding balance of all loans to the
Participant from the plans during the one year period ending on
the day immediately before the date on which the loan is made;
over
(2) the outstanding balance of loans from the plans to
the Participant on the date on which such loan is made; or
(ii) one-half of the aggregate vested interest of
the Participant under all such plans,
and no loan shall be made to a Participant if the aggregate amount of
the loan and the outstanding balance of any other loans to the
Participant from the Plan world exceed one-half of the total vested
balance of the Participant's Accounts under the Plan as of the date
the loan is made.
(b) Each loan to a Participant shall be charged against
the vested balance in his Accounts in the following order: Before-Tax
Account, Employer Matching Account, Profit Sharing Account, Rollover
Account and Supplemental After-Tax Account. Each loan shall be charged
against each Investment Fund in which such Accounts are invested in
the same ratio as the value of his interest in such Fund with respect
to the applicable Account bears to the total of all his interest in
that Account.
(c) Each loan shall be evidenced by a written note
providing for:
(i) a reasonable repayment period of not less than one
and not more than 5 years from the date of the loan (or 10 years in
the case of a loan which is used to acquire a dwelling which,
within a reasonable period of time, will be used as the
Participant's principal residence);
(ii) a reasonable rate of interest;
(iii) substantially equal payments of principal and
interest over the term of the loan no less frequently than
quarterly;
(iv) a minimum loan amount of $500; and
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<PAGE> 24
(v) such other terms and conditions as the Committee
shall determine.
(d) A Participant shall not be permitted to have more
than five (5) loans from the Plan outstanding at any time.
(e) Promissory notes shall be held by the Trustee in the
Loan Fund.
(f) Payments of principal and interest to the Trustee
with respect to any loan to a Participant shall:
(i) reduce the outstanding balance with respect to
that loan;
(ii) reduce the balance of the Loan Fund holding the
promissory note reflecting that loan;
(iii) be credited to the Participant's applicable
Accounts inversely to the manner in w which the loan was charged
to such Accounts pursuant to paragraph (b) above; and
(iv) be invested in the Investment Funds (other than
the Loan Fund) in accordance with his current investment directions.
(g) A Participant's obligation to repay a loan (or loans)
from the Plan shall be secured by the Participant's vested interest in
his Accounts.
(h) The Committee may, from time to time, establish loan
origination fees and loan administrative fees which may be charged to
the Participant's Accounts under the Plan, pro rata.
(i) During the Participant's employment with the
Employers, loan repayments will be made by payroll deductions. After
termination of employment or during any other period when payroll
deduction is not possible or is not permitted under applicable law,
repayment will be made by personal check, and at the discretion of the
Committee, in accordance with rules uniformly applied by it, the
Accounts of Participants who make loan payments by this method will be
charged with the cost of processing such checks.
(j) The loan may be prepaid in full at any time without
penalty.
(k) Any outstanding loan of a Participant shall become
immediately due and payable upon his termination of employment with
the Employers and Related companies. If the outstanding balance of
principal and interest on any loan is not paid at the expiration of
its term, upon acceleration in accordance with the
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<PAGE> 25
preceding sentence or if any payment of principal or interest is not
paid within 90 days of its due date, a default shall occur and the
Trustee shall apply all or a portion of the Participant's vested
interest in the Plan in satisfaction of such outstanding obligation,
but only to the extent such vested interest (or portion thereof) is
then distributable under the terms of the Plan. If necessary to
satisfy the entire outstanding obligation, such application of the
Participant's vested interest may be executed in a series of actions
as amounts credited to the Participant's Accounts become distributable
under the terms of the Plan.
(l) If distribution is to be made to a Participant or his
Beneficiary in accordance with Section 11, the outstanding promissory
note of the Participant shall be canceled and the unpaid balance of
the loan, together with any accrued interest thereon, shall be treated
as a distribution to or on behalf of the Participant immediately prior
to commencement of such distribution under Section 11.
(m) The Committee shall establish uniform procedures for
applying for a loan, evaluating loan applications, and setting
reasonable rates of interest and fees. Such procedures shall be
communicated to Participants by means of separate written documents,
the relevant portions of which are incorporated herein by reference.
10.2. WITHDRAWALS DURING EMPLOYMENT. A Participant whose Termination
Date has not yet occurred may elect to withdraw all or part of his interest in
his Accounts (other than amounts invested in the Loan Fund) in accordance with
the following:
(a) As of any date occurring prior to his Termination
Date, a Participant may elect to withdraw all or a portion of the
total value of his Supplemental After-Tax Account and Profit Sharing
Account. The amount to be withdrawn from such Accounts must be a whole
dollar amount. The withdrawal shall be made from the above Accounts in
the following order:
(i) all contributions credited to the Participant's
Supplemental After-Tax Contribution Account, less all such
contributions previously withdrawn or distributed;
(ii) all contributions credited to the Participant's
Profit Sharing Account, less all such contributions previously
withdrawn or distributed; and
(iii) earnings credited to each of the Accounts in the
same order.
(b) As of any date after attaining age 59-1/2, a
Participant may elect to withdraw all or a portion of his Account
balances; provided, however, that if
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<PAGE> 26
the Participant is a participant any other plan of the Company which
is qualified under section 401(a) of the Code from which a lump sum
payment would be aggregated with a lump sum payment from the Plan
pursuant to section 402(d)(4)(C) of the Code, then no withdrawal shall
be permitted under this paragraph (b) until the Participant elects to
take a withdrawal from such other Plan.
(c) In the event of a Hardship (as described in
subsection 10.3), a Participant may elect to withdraw all or a portion
of the Before-Tax Contributions credited to his Before-Tax Account and
the Rollover Contributions credited to his Rollover Account; provided,
however, that no withdrawal shall be permitted under this paragraph
(c) until the Participant has taken all withdrawals permitted under
paragraphs (a) and (b).
10.3. HARDSHIP WITHDRAWALS. A withdrawal will not be considered to
be made on account of "Hardship" unless the following requirements are met:
(a) The withdrawal is requested because of an immediate
and heavy financial need of the Participant, and will be so deemed if
the Participant represents that the withdrawal is for:
(i) expenses for medical care described in section
213(d) of the Code incurred by the Participant, the
Participant's spouse or any dependent of the Participant (as
defined in section 152 of the Code) or necessary for such
persons to obtain such medical care;
(ii) the purchase (excluding mortgage payments) of a
principal residence of the Participant;
(iii) payment of tuition and related educational fees for
the next 12 months of post-secondary education for the
Participant or his spouse, children or dependents;
(iv) payments necessary to prevent the eviction of the
Participant from his principal residence or foreclosure on the
mortgage of the Participant's residence; or
(v) any other circumstances of immediate and heavy
financial need identified as such in revenue rulings, notices
or other documents of the Internal Revenue Service of general
applicability.
(b) The withdrawal is necessary to satisfy the immediate
and heavy financial need of the Participant and will be so deemed if
all of the following requirements are satisfied:
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<PAGE> 27
(i) the Participant represents that the withdrawal is
not in excess of the amount of an immediate and heavy
financial need (taking into account any amounts necessary to
pay any federal, state or local income taxes or penalties
anticipated to result from the withdrawal);
(ii) the Participant has obtained all withdrawals and
distributions (other than Hardship withdrawals described in
this subsection 10.3) and all nontaxable loans currently
available under the Plan and all other plans maintained by the
Employers and Related Companies;
(iii) notwithstanding any other provisions of the Plan,
Before-Tax Contributions and Employer Matching Contributions
on behalf of the Participant shall be suspended for a period
of 12 months after the Participant makes a Hardship withdrawal
described in this subsection 10.3 and the Participant shall be
prohibited from making any contributions for the same period
to any other deferred compensation plan of an Employer or
Related Company (whether or not qualified) other than a health
or welfare plan; and
(iv) in the Participant's taxable year immediately
following the taxable year of the Hardship withdrawal, the
Before-Tax Contributions made on behalf of the Participant
shall not exceed the applicable limit under subsection 8.6 for
such next taxable year less the amount of Before-Tax
Contributions contributed on behalf of the Participant for the
taxable year of the Hardship withdrawal.
A Participant shall not fail to be treated as an eligible employee for
purposes of subsections 8.7 and 8.9 merely because of the application
of subparagraph 10.3(b)(iv) above.
(c) The determination of whether a Participant has
demonstrated Hardship in accordance with the provisions of paragraphs
(a) and (b) shall be made by the Committee.
SECTION 11
DISTRIBUTIONS
11.1. DISTRIBUTIONS TO PARTICIPANTS AFTER TERMINATION OF EMPLOYMENT.
Except as otherwise specifically provided in this Section 11, if a
Participant's Termination Date occurs (for a reason other than death), the
vested portions of his Accounts shall be distributed in accordance with the
following provisions of this subsection 11.1:
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(a) If the value of the vested portions of the
Participant's Accounts does not exceed $3,500 determined as of his
Termination Date, such vested portions, less any outstanding loan
balance distributable in accordance with paragraph 10.1(k), shall be
distributed to him as soon as practicable after his Termination Date,
in a lump sum cash payment.
(b) If the value of the vested portions of the
Participant's Accounts exceeds $3,500, determined as of his
Termination Date, such vested portions, less any outstanding loan
balance distributable in accordance with paragraph 10.1(k), shall be
distributed (or shall begin to be distributed) to the Participant on
(or as soon as practicable after) the Distribution Date (as described
below) he elects by one of the following methods chosen by the
Participant:
(i) by payment in a lump sum;
(ii) by payment in a series of substantially equal
annual or more frequent installments for a period not
exceeding the life expectancy of the Participant or the life
expectancy of the Participant and his Beneficiary; or
(iii) by purchase from an insurance company and
distribution to him of an annuity contract providing for
periodic distributions to him for life or to him and his
spouse for their joint lives, subject to the provisions of
subsection 11.3;
provided, however, that if the value of the vested portions of the
Participant's Accounts are reduced to less than $3,500 as of any date
prior to a Distribution Date selected by the Participant, on account
of investment losses or payment to an alternate payee pursuant to a
qualified domestic relations order, such reduced Account balance shall
be distributed to the Participant as soon as practicable after such
date in accordance with paragraph (a) next above.
(c) A Participant's "Distribution Date" shall mean the
date coincident with or following a Participant's Termination Date as
of which a payment in any form is made pursuant to this Section 11,
without regard to any reasonable administrative delay, which date
shall be no later than the later of the April 1st of the first
calendar year after the year in which he attains age 70-1/2 or his
Termination Date; provided, however, that if payment is to be made in
the form of an annuity pursuant to clause (b)(iii) above, the
Distribution Date shall be no later than the date payment is
irrevocably made on behalf of the Participant to the insurance company
issuing the annuity contract.
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11.2. DISTRIBUTIONS TO BENEFICIARIES. Subject to the following
provisions of this Section 11, the following rules shall apply if a Participant
dies while any vested portions of his Accounts remain undistributed:
(a) If the Participant dies before benefit payments to
him have commenced or an annuity contract has been purchased, the
vested portions, if any, of his Accounts, less any outstanding loan
balance distributable in accordance with paragraph 10.1(l), shall be
distributed as soon as practicable after the date of his death, to his
Beneficiary (as defined in subsection 11.5) in a lump sum payment.
(b) If a Participant dies after benefit payments to him
have commenced, the vested portions, if any, of his Accounts shall
continue to be distributed to his Beneficiary in accordance with the
method of distribution selected by the Participant; provided, however,
that the Beneficiary may elect to have such vested balance paid in a
lump sum payment as soon as practicable after the Participant's death.
11.3. SPECIAL RULES GOVERNING ANNUITY ELECTIONS. If a married
Participant elects distribution in the form of an annuity pursuant to clause
11.1(b)(iii), the following rules shall apply with respect to the distribution
of the vested portions of his Accounts and shall supersede any other provision
of the Plan to the contrary:
(a) The vested portions of the Participant's Accounts,
less any outstanding loan balance distributable in accordance with
paragraph 10.1(k), shall be used to purchase from an insurance company
a nontransferable Joint and Survivor Annuity (that is, an annuity
payable for the life of the Participant with a survivor annuity
payable for the life of his spouse which is equal to 50% of the amount
of the annuity payable during the joint lives of the Participant and
his spouse) unless he elects another form of payment available under
subsection 11.1(b) with Spousal Consent (as defined in subsection
11.6) to such form during the 90-day period immediately preceding his
Distribution Date, which Distribution Date shall be no earlier than 30
days after his receipt of the Retirement Election Information (as
described in subsection 11.4).
(b) During the period between his election of an annuity
and his Distribution Date, no loan may be made to the Participant
pursuant to subsection 10.1, no amount may be withdrawn by the
Participant pursuant to subsection 10.2 and no amount may be
distributed the Participant pursuant to 11.1 in any form other than a
Joint and Survivor Annuity without Spousal Consent.
(c) Subject to the provisions of paragraph (d) below, if
the Participant dies during the period between his election of an
annuity and his Distribution Date, the vested portions of his Accounts
(less any amounts credited to the Loan
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<PAGE> 30
Fund which shall be distributed in accordance with subsection 10.1(1))
shall be paid to his spouse in the form of a life annuity beginning as
of the date the Participant would have attained age 65 or, if the
spouse so elects, as soon as practicable after the Participant's
death; provided, however, that the spouse may elect to have such
vested portions distributed in any of the other forms of payment
available under subsection 11.1(b).
(d) The provisions of paragraph (c) will not apply and
distribution upon the death of the Participant shall be made in
accordance with subsection 11.2 if, during the period between the
Participant's election of an annuity and his death, the Participant
elects another form of payment available under subsection 11.1(b) with
Spousal Consent and such Spousal Consent acknowledges that such
consent to the Participant's election of another form of payment
constitutes consent to the Participant's waiver of a qualified
pre-retirement survivor annuity payable to the spouse in accordance
with section 417 of the Code and otherwise conforms to the provisions
of subsection 11.6.
(e) A Participant may revoke his election pursuant to his
subsection 11.3 and may make a new election of any form of
distribution permitted under paragraph 11.1(b) at any time during the
90-day period ending on his Distribution Date; provided, however,
that if the effect of such revocation is to select a distribution form
other than a Joint and survivor Annuity, it shall be ineffective
without Spousal Consent to the new distribution form.
11.4. RETIREMENT ELECTION INFORMATION. If a Participant elects an
annuity form of payment pursuant to subsection 11.1(b)(iii), the Committee
shall make Retirement Election Information (as described below) available to a
Participant no less than 30 and no more than 90 days before his Distribution
Date. For purposes of the Plan, the term "Retirement Election Information"
means:
(a) a written description of the terms and conditions of
the Joint and Survivor Annuity and the relative financial effect of
distribution of the Participant's Accounts in that from and in the
form of a life annuity;
(b) a notification of the Participant's right to revoke
distribution in accordance with subsection 11.3 and the spouse's
right, if any, with respect to that revocation;
(c) a notification of the Participant's right to rescind
a prior revocation of distribution in the form of a Joint and Survivor
Annuity and the effect thereof; and
(d) a general description of the eligibility conditions
and other material features of the optional forms of distribution
under the Plan (as set forth in sub-
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section 11.3(b)) and information explaining the relative values of
such optional forms of distribution.
The Committee shall make Retirement Election Information available to a
Participant by one of the following methods:
(1) personal delivery to him;
(2) first class mail, postage prepaid, addressed to the
Participant at his last known address as shown on his Employer's
records; or
(3) permanent posting on a bulletin board located at the
Participant's work site, if he is not a retired or terminated
Participant.
11.5. BENEFICIARY DESIGNATIONS. The term "Beneficiary" shall mean
the Participant's surviving spouse. If, however, the Participant is not
married, or if the Participant is married but his spouse consents to the
designation of a person other than his spouse, the term "Beneficiary" shall
mean such person or persons as the Participant designates to receive the vested
portions of his Accounts upon his death. Such designation may be made, revoked
or changed (without the consent of any previously designated Beneficiary except
his spouse) only by an instrument signed by the Participant and filed with the
Committee prior to his death, subject to the provisions of this Section 11. In
default of such designation, or at any time when there is no surviving spouse
and no existing Beneficiary designated by the Participant, his Beneficiary
shall be his surviving children (per stirpes) or, if he has no children, the
estate of the last to die of the Participant or his designated Beneficiary;
provided, however, that if the Participant's Beneficiary is the Participant's
surviving spouse, then any benefits which remain to be paid after the death of
the surviving spouse shall be paid to the estate of the surviving spouse. If a
Participant designates two or more Beneficiaries and if one or more of the
Beneficiaries dies, then, unless the designation provides otherwise, the
deceased Beneficiaries' share of the Participant's Accounts shall be paid to
the surviving Beneficiaries, in equal shares. For purposes of the Plan, the
term "spouse" means the person to whom the Participant is married at the
relevant time.
11.6. SPOUSAL CONSENT. Any election or other action by a Participant
under the Plan which, by its terms, requires "Spousal Consent" shall be
effective only if:
(a) the Participant's spouse consents in writing to such
election or other action;
(b) in the case of a Spousal Consent to a Beneficiary
designation, such designation specifies the nonspouse beneficiary
(including any class of beneficiaries or any contingent beneficiaries)
who will receive the benefit, which beneficiary or beneficiaries may
not be changed without Spousal Consent, or the consent expressly
permits designations by the Participant without any requirement
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of further consent by the spouse; provided, however, that if the
designated Beneficiary is a trust, the Participant's spouse need only
consent to the designation of the trust and need not consent to the
designation of trust beneficiaries or any changes of trust
beneficiaries;
(c) in the case of a waiver of the Joint and Survivor
Annuity, the election specifies the optional form of distribution
elected instead of the Joint and Survivor Annuity, which form of
distribution may not be changed without Spousal Consent (except back
to a Joint and Survivor Annuity) or the consent permits the
Participant to change the form of distribution without any requirement
of further consent by the spouse; and
(d) the consent acknowledges the effect of the election
or other action and is witnessed either by a notary public or a Plan
representative appointed or approved by the Committee;
provided, however, that, unless otherwise provided by a qualified domestic
relations order within the meaning of section 414(p) of the Code, no Spousal
Consent shall be required if:
(1) the Participant and his spouse are legally separated
or the Participant has been abandoned (within the meaning of local
law) and the Participant has a court order to such effect; or
(2) it is established to the satisfaction of a Plan
representative appointed or approved by the Committee that Spousal
Consent cannot be obtained because there is no spouse, because the
spouse cannot be located or because of such other circumstances as the
Secretary of the Treasury may prescribe in regulations.
A spouse's consent in accordance with this subsection 11.6 shall be
irrevocable.
11.7. LIMITS ON COMMENCEMENT AND DURATION OF DISTRIBUTIONS. The
following distribution rules shall be applied in accordance with sections
401(a)(9) and 401(a)(14) of the Code and applicable regulations thereunder,
including the minimum distribution incidental benefit requirement of Treas.
Reg. Section 1.401(a)(9)-2, and shall supersede any other provision of the Plan
to the contrary:
(a) Unless the Participant elects otherwise, in no event
shall distribution commence later than 60 days after the close of the
Plan Year in which the latest of the following events occurs: the
Participant's attainment of age 65; the 10th anniversary of the year
in which the Participant began participating in the Plan; or the
Participant's Termination Date.
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(b) Notwithstanding any other provision herein to the
contrary, the Participant's Accounts shall be distributed no later
than his "Required Beginning Date", that is, April 1 of the calendar
year following the calendar year in which he attains age 70-1/2;
provided, however, that if the Participant attained age 70-1/2 prior
to January 1, 1988 (during a Plan Year when he was not a five-percent
owner, as described in section 416 of the Code), his Required
Beginning Date shall be delayed until his Termination Date.
(c) Distribution payments shall be made over the life of
the Participant or over the lives of such Participant and his
Beneficiary (or over a period not extending beyond the life expectancy
of such Participant or the life expectancy of such Participant and his
Beneficiary).
(d) If a Participant dies after distribution of his
vested interest in the Plan has begun, the remaining portion of such
vested interest, if any, shall be distributed to his Beneficiary at
least as rapidly as under the method of distribution used prior to the
Participant's death.
(e) If a Participant dies before distribution of his
vested interest in the Plan has begun, distribution of such vested
interest to his Beneficiary shall be completed by December 31 of the
calendar year in which the fifth anniversary of the Participant's
death occurs; provided, however, that this five-year rule shall not
apply to a natural person designated as Beneficiary by the Participant
or under the specific terms of the Plan, if:
(i) such vested interest will be distributed over the
life of such designated Beneficiary (or over a period not
extending beyond the life expectancy of such Beneficiary), and
(ii) such distribution to the Beneficiary begins not later
than December 31 of the calendar year following the calendar
year in which the Participant died or, if such Beneficiary is
the Participant's surviving spouse, not later than December 31
of the calendar year following the calendar year in which the
Participant would have attained age 70-1/2.
(f) If the Participant's surviving spouse is his
Beneficiary and such spouse dies before distribution to such spouse
begins, paragraph (e) shall be applied as if the surviving spouse were
the Participant.
(g) For purposes of paragraphs (d) and (e), distribution
of a Participant's vested interest in the Plan is considered to begin
on his Required Beginning Date; provided, however, that distribution
irrevocably begun in the form of an annuity shall be considered to
begin on the date it actually commences.
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(h) For purposes of this subsection 11.7, the life
expectancy of a Participant or a Beneficiary will be determined in
accordance with Tables V and VI of Treas. Reg. Section 1.72-9, and
will not be recalculated.
11.8. TREATMENT OF PARTIALLY VESTED ACCOUNTS. If a Termination Date
occurs with respect to a Participant who is not fully vested in his Employer
Matching Account (as determined under Section 9), the following rules shall
apply:
(a) The unvested portions of his Employer Matching
Account shall be forfeited as of the earlier of the date as of which
the vested portion of his Accounts is distributed to him or the date
the Participant incurs five consecutive One Year Breaks in service.
(b) If a forfeiture occurs on account of the distribution
of the vested portion of the Participant's Accounts, and the
Participant is reemployed by an Employer or Related company before he
incurs five consecutive One Year breaks in Service, the Employer
Matching Contributions and earnings thereon forfeited under paragraph
(a) above shall be restored, without adjustment for earnings and
losses after the forfeiture, as soon as practicable after his
reemployment.
(c) If the Participant is reemployed by an Employer or
Related Company after he incurs five consecutive One Year Breaks in
Service, such reemployment shall have no effect on the forfeiture
under paragraph (a) above.
(d) The restoration referred to in paragraph (b) above
shall be made first from current forfeitures, if any, under the Plan
and then, if necessary, from a special Employer contribution to the
Plan.
(e) A restoration pursuant to paragraph (b) above shall
not be considered an Annual Addition for purposes of subsection 8.3.
(f) If a Participant who is reemployed by an Employer or
Related Company prior to incurring five consecutive One Year Breaks in
Service received a distribution of the vested portions of his Employer
Matching Account, the amount restored under paragraph (b) above shall
be maintained in separate subaccounts within the Participant's
Employer Matching Account and his vested interest in each subaccounts
shall be determined by adding the amount of the prior distribution
from the applicable Account to his separate subaccount balance before
applying the vesting provisions of subsection 9.1 and then subtracting
the amount of the prior distribution from the amount derived after
application of such provisions.
11.9. APPLICATION OF FORFEITURES. Any forfeiture of Employer
Matching Contributions and earnings thereon during a Plan Year pursuant to
subsection 11.8 shall be used to reduce the
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amount of Employer Matching Contributions for the Plan Year in which such
forfeiture occurs of the Employer that originally made the forfeited Employer
Matching Contributions.
11.10. FORM OF PAYMENT. Disbursements from the Company Stock Fund or
the Baxter Stock Fund shall be made in full shares of common stock to the
extent possible, (or, at the request of the Participant or Beneficiary, in
cash) and the fractional share balance, if any, in the applicable stock Fund
and the balance in the other Investment Funds shall be made in cash while
distributions from the Loan Fund shall be made in the form of the promissory
notes then held on behalf of the Participant under the Loan Fund.
11.11. FACILITY OF PAYMENT. Notwithstanding the foregoing provisions
of this Section 11, if, in the Committee's opinion, a Participant or
Beneficiary is under a legal disability or is in any way incapacitated so as to
be unable to manage his financial affairs, the Committee may direct the Trustee
to make payment to a relative or friend of such person for his benefit until
claim is made by a conservator or other person legally charged with the care of
his person or his estate. Thereafter, any benefits under the Plan to which such
Participant or Beneficiary is entitled shall be paid to such conservator or
other person legally charged with the care of his person or his estate.
11.12. INTERESTS NOT TRANSFERABLE. The interests of Participants and
other persons entitled to benefits under the Plan are not subject to the claims
of their creditors and may not be voluntarily or involuntarily assigned,
alienated or encumbered, except in the case of loans made under the Plan and
qualified domestic relations orders that relate to the provision of child
support, alimony or marital rights of a spouse, child or other dependent and
which meet such other requirements as may be imposed by section 414(p) of the
Code or regulations issued thereunder. Notwithstanding any other provision of
the Plan to the contrary, such domestic relations order may permit distribution
of the entire portion of the vested Account balance of a Participant awarded to
his alternate payee, in a lump sum payment as soon as practicable after the
Committee determines that such order is qualified, without regard to whether
the Participant would himself be entitled under the terms of the Plan to
withdraw or receive a distribution of such vested amount at that time.
11.13. ABSENCE OF GUARANTY. None of the Committee, the Trustee, or
the Employers in any way guarantee the Trust Fund from loss or depreciation.
The Employers do not guarantee any payment to any person. The liability of the
Trustee to make any payment is limited to the available assets of the Trust
Fund.
11.14. WITHDRAWAL AND DISTRIBUTION ELECTIONS. Withdrawals and
distributions in accordance with subsection 10.2 or Section 11 to a Participant
who has not attained age 65 shall be subject to the following:
(a) such Participant shall be informed, not less than 30
and not more than 90 days before the date as of which such withdrawal
or distribution is to be
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made, of his right to defer distribution or withdrawal in accordance
with the provisions of the applicable subsection; and
(b) no election to commence distribution prior to the
Participant's 65th birthday shall be effective unless it is made in
writing after the Participant has received the notice described in
paragraph (a) next above and not more than 90 days before the date as
of which the distribution is made.
11.15. MISSING PARTICIPANTS OR BENEFICIARIES. Each Participant and
each designated Beneficiary must file with the Committee from time to time in
writing his post office address and each change of post office address. Any
communication, statement or notice addressed to a Participant or designated
Beneficiary at his last post office address filed with the Committee, or, in
the case of a Participant, if no address is filed with the Committee, then at
his last post office address as shown on the Employers' records, will be
binding on the Participant and his designated Beneficiary for all purposes of
the Plan. None of the Committee, the Employers nor the Trustee will be required
to search for or locate a Participant or designated Beneficiary.
11.16. DIRECT ROLLOVER. Notwithstanding any provision of the
Plan to the contrary that would otherwise limit a distributee's election under
this subsection, a distributee may elect, at the time and in the manner
prescribed by the Plan Committee, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by the
distributee in a direct rollover. For purposes of this subsection 11.16, the
following definitions shall apply:
(a) An "eligible rollover distribution" means any
distribution of all or any portion of the balance to the credit of the
distributes, except that an eligible rollover distribution does not
include: any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the joint lives
(or joint life expectancies) of the distributee and the distributee's
designated Beneficiary, or for a specified period of ten years or
more; any distribution to the extent such distribution is required
under section 401(a)(9) of the Code; and the portion of any
distribution that is not includable in gross income (determined
without regard to the exclusion for net unrealized appreciation with
respect to employer securities).
(b) An "eligible retirement plan" means an individual
retirement account described in section 408(a) of the code, an
individual retirement annuity described in section 408(b) of the Code,
an annuity plan described in section 403(a) of the Code or a qualified
trust described in section 401(a) of the Code, that accepts the
distributee's eligible rollover distribution; provided, however, in
the case of an eligible
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rollover distribution to the surviving spouse, an eligible retirement
plan is an individual retirement account or individual retirement
annuity.
(c) A "distributee" means an employee or former employee
and the employee's or former employee's surviving spouse and the
employee's or former employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined
in section 414(p) of the Code, are distributees with regard to the
interest of the spouse or former spouse.
(d) A "direct rollover" means a payment by the Plan to
the eligible retirement plan specified by the distributee.
11.17. SPECIAL DEFERRED COMMENCEMENT PROVISIONS. Notwithstanding
the foregoing provisions of this Section 11 (other than the provisions of
subsection 11.7 hereof), the Committee may defer the commencement of
distribution of any Participant's Account in accordance with the following:
(a) The Committee may defer the commencement of distribution
for a period of up to 12 months if it determines that such deferral
is in the best interests of Participants as a whole because of
unforeseeable Plan liquidity demands, because of extraordinary
changes in the value of Plan assets which have not yet been reflected
in Participants' Account balances, for any reasonable procedural
delays or for any similar reasons.
(b) The Committee may, but shall not be required to,
defer commencement of distribution of any Participant's Accounts until
the first day of the month following the date on which distribution
would otherwise commence pursuant to this Section 11, provided that
such deferral authority shall be exercised in a uniform and
nondiscriminatory manner.
(c) The Committee may defer commencement of any Participant's
Accounts for the duration of any period during which there exists a
dispute or uncertainty regarding the proper amount or payee of such
Accounts.
11.18. DISTRIBUTION ONLY UPON SEPARATION FROM SERVICE.
Notwithstanding any other provision of the Plan to the contrary, a Participant
may not commence distribution of his Before-Tax Account pursuant to this
Section 11, even though he has otherwise had a Termination Date under
subsection 9.3, unless or until he also has a "separation from service" within
the meaning of section 401(k)(2)(B) of the Code. The foregoing restriction
shall not apply, however, if the Participant's Termination Date occurs in
connection with the sale by an Employer to an unrelated corporation of at least
85 percent of the assets of a trade or business, or the sale of its interest in
a subsidiary to an unrelated entity, provided (a) the Participant remains
employed in such trade or business or by such subsidiary after the sale, (b)
the Employer continues to maintain the Plan after the sale, (c) no transfer of
the Participant's
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Accounts occurs,or is scheduled to occur after the sale pursuant to subsection
13.3 to a plan of such subsidiary or of the purchaser of such assets (or any
entity affiliated therewith, and (d) the Participant receives distribution of
his Account balances under the Plan in a lump sum by the end of the second
calendar year after the year in which the sale occurs.
SECTION 12
THE COMMITTEE
12.1. MEMBERSHIP AND AUTHORITY. The Committee referred to in
subsection 1.3 shall consist of one or more members appointed by the Company's
Board of Directors. Except as otherwise specifically provided in this section
12, in controlling and managing the operation and administration of the Plan,
the Committee shall act by a majority of its then members, by meeting or by
writing filed without meeting, and shall have the following discretionary
authority, powers, rights and duties in addition to those vested in it
elsewhere in the Plan or Trust, and any decision made by the Committee pursuant
to this subsection 12.1 (or any other provision of the Plan granting it such
authority) shall be final:
(a) to adopt such rules of procedure and regulations as,
in its opinion, may be necessary for the proper and efficient
administration of the Plan and as are consistent with the provisions
of the Plan;
(b) to enforce the Plan in accordance with its terms and
with such applicable rules and regulations as may be adopted by the
Committee;
(c) to conclusively determine all questions arising under
the Plan, including the power to determine the eligibility of
employees and the rights of Participants and other persons entitled to
benefits under the Plan and their respective benefits, and to remedy
any ambiguities, inconsistencies or omissions of whatever kind;
(d) to maintain and keep adequate records concerning the
Plan and concerning its proceedings and acts in such form and detail
as the Committee may decide;
(e) to direct all payments of benefits under the Plan;
(f) to perform the functions of a "plan administrator" as
defined in section 414(g) of the Code, for purposes of Section 7 and
for purposes of establishing and implementing procedures to determine
the qualified status of domestic relations orders (in accordance with
the requirements of section 414(p) of the Code) and to administer
distributions under such qualified orders;
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(g) to employ agents, attorneys, accountants or other
persons (who may also be employed by or represent the Employers) for
such purposes as the Committee considers necessary or desirable to
discharge its duties;
(h) to establish a claims procedure in accordance with
section 503 of ERISA; and
(i) to determine the investment policy of the Plan and
the Trust and to modify the investment provisions of the Plan to
conform to the policy established by the Committee from time to time.
The certificate of a majority of the members of the Committee that the
Committee has taken or authorized any action shall be conclusive in favor of
any person relying on the certificate.
12.2. ALLOCATION AND DELEGATION OF COMMITTEE RESPONSIBILITIES AND
POWERS. In exercising its authority to control and manage the operation and
administration of the Plan, the Committee may allocate all or any part of its
responsibilities and powers to any one or more of its members and may delegate
all or any part of its responsibilities and powers to any person or persons
selected by it. Any such allocation or delegation may be revoked at any time.
Any member or delegate exercising Committee responsibilities and powers under
this subsection shall periodically report to the Committee on its exercise
thereof and the discharge of such responsibilities.
12.3. UNIFORM RULES. In managing the Plan, the Committee shall
uniformly apply rules and regulations that may be adopted by it to all persons
similarly situated.
12.4. INFORMATION TO BE FURNISHED TO COMMITTEE. The Employers and
Related Companies shall furnish the Committee such data and information as may
be required for it to discharge its duties. The records of the Employers and
Related Companies as to an employee's or Participant's period of employment,
termination of employment and the reason therefor, leave of absence,
reemployment and Compensation shall be conclusive on all persons unless
determined to be incorrect. Participants and other persons entitled to benefits
under the Plan must furnish to the Committee such evidence, data or information
as the Committee considers desirable to carry out the Plan.
12.5. COMMITTEE'S DECISION FINAL. To the extent permitted by law,
any interpretation of the Plan and any decision on any matter within the
discretion of the Committee made by the Committee in good faith shall be
binding on all persons. A misstatement or other mistake of fact shall be
corrected when it becomes known, and the Committee shall make such adjustment
on account thereof as it considers equitable and practicable.
12.6. EXERCISE OF COMMITTEE'S DUTIES. Notwithstanding any other
provisions of the Plan, the Committee shall discharge its duties hereunder
solely in the interests of the Participants and other persons entitled to
benefits under the Plan, and:
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(a) for the exclusive purpose of providing benefits to
Participants and other persons entitled to benefits under the Plan;
and
(b) with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims.
12.7. REMUNERATION AND EXPENSES. No remuneration shall be paid from
the Plan to any Committee member as such. However, the reasonable expenses
(including the fees and expenses of persons employed by it in accordance with
paragraph 12.1(g)) of a Committee member incurred in the performance of a
Committee function shall be reimbursed by the Employers.
12.8. INDEMNIFICATION OF THE COMMITTEE. The Committee and the
individual members thereof shall be indemnified by the Employers against any
and all liabilities, losses, costs and expenses (including legal fees and
expenses) of whatsoever kind and nature which may be imposed on, incurred by or
asserted against the Committee or its members by reason of the performance of a
Committee function if the Committee or such members did not act dishonestly or
in willful violation of the law or regulation under which such liability, loss,
cost or expense arises.
12.9. RESIGNATION OR REMOVAL OF COMMITTEE MEMBER. A Committee member
may resign at any time by giving ten days' advance written notice to the
Employers, the Trustee and the other Committee members. The Company may remove
a committee member by giving advance written notice to him, the Trustee and the
other Committee members.
12.10. APPOINTMENT OF SUCCESSOR COMMITTEE MEMBERS. The Company's
Board of Directors may fill any vacancy in the membership of the Committee and
shall give prompt written notice thereof to the other Committee members, the
other Employers and the Trustee. While there is a vacancy in the membership of
the Committee, the remaining committee members shall have the same powers as
the full Committee until the vacancy is filled.
SECTION 13
AMENDMENT AND TERMINATION
13.1. AMENDMENT. While the Company expects to continue the Plan, it
necessarily reserves the right, subject to the provisions of the Trust
Agreement, to terminate the Plan or to amend the Plan from time to time, except
that no amendment will reduce a Participant's interest in the Plan to less than
an amount equal to the amount he would have been entitled to receive if he had
resigned from the employ of the Employers and the Related Companies on the day
of
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the amendment and no amendment will eliminate an optional form of benefit with
respect to a Participant or Beneficiary except as otherwise permitted by law.
13.2. TERMINATION. The Plan will terminate as to all of the
Employers on any day specified by the Company if advance written notice of the
termination is given to the other Employers. Employees of any Employer shall
cease active participation in the Plan (and will be treated as inactive
Participants in accordance with subsection 2.2) on the first to occur of the
following:
(a) the date on which that Employer, by appropriate
action communicated in writing to the Company, ceases to be a
contributing sponsor of the Plan;
(b) the date that Employer is judicially declared
bankrupt or insolvent; or
(c) the dissolution, merger, consolidation,
reorganization or sale of that Employer, or the sale by that Employer
of all or substantially all of its assets, except that, subject to the
provisions of subsection 13.3, with the consent of the Company, in any
such event arrangements may be made whereby the Plan will be continued
by any successor to that Employer or any purchaser of all or
substantially all of that Employer's assets, in which case the
successor or purchaser will be substituted for the Employer under the
Plan.
13.3. MERGER AND CONSOLIDATION OF THE PLAN, TRANSFER OF PLAN ASSETS.
The Committee in its discretion may direct the Trustee to transfer all or a
portion of the assets of this Plan to another defined contribution plan of the
Employers or Related Companies which is qualified under section 401(a) of the
Code or, in the event of the sale of stock of an Employer or a 11 or a portion
of the assets of an Employer, to a qualified plan of an employer which is not a
Related Company. In the case of any merger or consolidation with, or transfer
of assets and liabilities to, any other plan, provision shall be made so that
each affected Participant in the Plan on the date thereof (if the Plan,
as.applied to that Participant, then terminated) would receive a benefit
immediately after the merger, consolidation or transfer which is equal.to or
greater than the benefit he would have been entitled to receive immediately
prior to the merger, consolidation or transfer if the Plan, as applied to him,
had then terminated.
13.4. DISTRIBUTION ON TERMINATION AND PARTIAL TERMINATION. Upon
termination or partial termination of the Plan, all benefits under the Plan
shall be paid to the Participant in a lump sum as soon as practicable following
such,termination, subject to the provisions of subsection 11.1 and subject to a
Participant's consent to commencement of benefits that are not immediately
distributable.
13.5. NOTICE OF AMENDMENT, TERMINATION OR PARTIAL TERMINATION.
Affected Participants will be notified of an amendment, termination or partial
termination of the Plan as required by law.
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SUPPLEMENT A
TO
CAREMARK INTERNATIONAL INC.
401 CARE RETIREMENT SAVINGS PLAN
(Top-Heavy)
<TABLE>
<S> <C>
Application A-1. This Supplement A to Caremark International Inc. 401 CARE Retirement Savings Plan (the
"Plan") shall be applicable on and after the date on which the Plan becomes Top-Heavy (as
described in subsection A-4).
Definitions A-2. Unless the context clearly implies or indicates the contrary, a word, term or phrase used
or defined in the Plan is similarly used or defined for purposes of this Supplement A.
Affected
Participant A-3. For purposes of this Supplement A, the term "Affected Participant" means each Participant
who is employed by an Employer or a Related Company during any Plan Year for which the Plan is
Top-Heavy, subject to the following:
(a) For any such Plan Year, the term "Affected Participant" shall include any employee of an
Employer who is not a Participant solely because he failed to make any Before-Tax
Contributions.
(b) The term "Affected Participant" shall not include any Participant who is covered by a
collective bargaining agreement if retirement benefits were the subject of good faith
bargaining between his Employer and his collective bargaining representative.
Top-Heavy A-4. The Plan shall be "Top-Heavy" for any Plan Year if, as of the Determination Date for that
year (as described in paragraph (a) next below), the present value of the benefits attributable
to Key Employees (as defined in subsection A-5) under all Aggregation Plans (as defined in
subsection A-8) exceeds 60% of the present value of all benefits under such plans. The
foregoing determination shall be made in accordance with the provisions of section 416 of the
Code. Subject to the preceding sentence:
(a) The Determination Date with respect to any plan for purposes of determining Top-Heavy
status for any plan year of that plan shall be
</TABLE>
A-1
<PAGE> 43
<TABLE>
<S> <C>
the last day of the preceding plan year or, in the case of the first plan year of
that plan, the last day of that year. The present value of benefits as of any
Determination Date shall be determined as of the accounting date or valuation date
coincident with or next preceding the Determination Date. If the plan years of all
Aggregation Plans do not coincide, the Top-Heavy status of the Plan on any Determination
Date shall be determined by aggregating the present value of Plan benefits on that date
with the present value of the benefits under each other Aggregation Plan determined as of
the Determination Date of such other Aggregation Plan which occurs in the same calendar
year as the Plan's Determination Date.
(b) Benefits under any plan as of any Determination Date shall include the amount of any
distributions from that plan made during the plan year which includes the Determination
Date (including distributions under a terminated plan which, if it had not been
terminated would have been required to be included in an aggregation group) or during any
of the preceding four plan years, but shall not include any amounts attributable to
employee contributions which are deductible under section 219 of the Code, any amounts
attributable to employee-initiated rollovers or transfers made after December 31, 1983
from a plan maintained by an unrelated employer, or, in case of a defined contribution
plan, any amounts attributable to contributions made after the Determination Date unless
such contributions are required by section 412 of the Code or are made for the plan's
first plan year.
(c) Benefits attributable to a participant shall include benefits paid or payable to a
beneficiary of the participant, but shall not include benefits paid or payable to any
participant who has not performed services for an Employer or Related Company during any
of the five plan years ending on the applicable Determination Date; provided, however,
that if a participant performs no services for five years and then performs services, the
benefits attributable to such participant shall be included.
(d) The accrued benefit of any participant who is a Non-Key Employee with respect to a plan
but who was a Key Employee with respect to such plan for any prior plan year shall not be
taken into account.
(e) The accrued benefit of a Non-Key Employee shall be determined under the method which is
used for accrual purposes for all plans of the Employer and Related Companies; or, if
there is not such method, as if the benefit accrued not more rapidly than the slowest
accrual rate permitted under section 411(b)(1)(c) of the Code.
</TABLE>
A-2
<PAGE> 44
<TABLE>
<S> <C>
(f) The present value of benefits under any defined benefit plan shall be determined using
the same actuarial assumptions as those on applied for purposes of determining the
actuarial equivalent of optional benefits under the applicable plan, except that the
interest rate shall be five percent.
Key-Employee A-5. The term "Key Employee" means an employee or deceased employee (or beneficiary of such
deceased employee) who is a Key Employee within the meaning ascribed to that term by section
416(i) of the Code. Subject to the preceding sentence, the term Key Employee includes any
employee or deceased employee (or beneficiary of such deceased employee) who at any time during
the plan year which includes the Determination Date or during any of the four preceding plan
years was:
(a) an officer of any Employer or Related Company with Compensation in excess of 50 percent
of the amount in effect under section 415(b)(1)(A) of the Code for the calendar year in
which that year ends; provided, however, that the maximum number of employees who shall
be considered Key Employees under this paragraph (a) shall be 50, or if lesser, the
greater of 3 or 10% of the total number of employees of the Employers and the Related
Companies disregarding excludable employees under Code section 414(q)(8);
(b) one of the 10 employees owning the largest interests in any Employer or any Related
Company (disregarding any ownership interest which is less than 1/2 of one percent),
excluding any employee for any plan year whose Compensation did not exceed the applicable
amount in effect under section 415(c)(1)(A) of the Code for the calendar year in which
that year ends;
(c) a 5% owner of any Employer or of any Related Company; or
(d) a 1% owner of any Employer or any Related Company having compensation in excess of
$150,000.
Compensation A-6. The term "Compensation" for purposes of this Supplement A generally means compensation
within the meaning of section 415(c)(3) for that year not exceeding $200,000 or such other
amount as may be permitted for any year under Code section 401(a)(17). However, solely for
purposes of determining who is a Key Employee, the term "Compensation" means compensation as
defined in Code section 414(q)(7).
</TABLE>
A-3
<PAGE> 45
<TABLE>
<S> <C>
Non-Key Employee A-7. The term "Non-Key Employee" means any employee (or beneficiary of a deceased employee) who
is not a Key Employee.
Aggregation Plan A-8. The term "Aggregation Plan" means the Plan and each other retirement plan (including any
terminated plan) maintained by an Employer or Related Company which is qualified under section
401(a) of the Code and which:
(a) during the plan year which includes the applicable Determination Date, or during any of
the preceding four plan years, includes a Key Employee as a participant;
(b) during the plan year which includes the applicable Determination Date or, during any of
the preceding four plan years, enables the Plan or any plan in which a Key Employee
participates to meet the requirements of section 401(a)(4) or 410 of the Code; or
(c) at the election of the Employer, would meet the requirements of sections 401(a)(4) and
410 if it were considered together with the Plan and all other plans described in
paragraphs (a) and (b) next above.
Required
Aggregation
Plan A-9. The term "Required Aggregation Plan" means a plan described in either paragraph (a) or (b)
of subsection A-8.
Permissive
Aggregation
Plan A-10. The term "Permissive Aggregation Plan" means a plan described in paragraph(c) of
subsection A-8.
Vesting A-11. For any Plan Year during which the Plan is Top-Heavy the vesting schedule of subsection
9.1 shall continue to apply with respect to an Affected Participant's Employer Matching
Account.
Minimum
Contribution A-12. For any Plan Year during which the Plan is Top-Heavy, the minimum amount of Employer
contributions and forfeitures, excluding elective contributions as defined in section 401(k) of
the Code and employer matching contributions as defined in section 401(m) of the Code,
allocated to the Accounts of each Affected Participant who is employed by an Employer or
Related Company on the last day of that year (whether or not he has completed 1,000 Hours of
Service during that year), who is a Non-Key Employee and who is not entitled to a minimum
benefit for that year under any defined benefit Aggregation Plan which is top-heavy, nor is
entitled to a minimum benefit for that year under any other defined
</TABLE>
A-4
<PAGE> 46
<TABLE>
<S> <C>
contribution Aggregation Plan maintained by the Employer shall, when expressed as a percentage
of the Affected Participant's Compensation, be equal to the lesser of:
(a) 3%; or
(b) the percentage at which Employer contributions (including Employer contributions made
pursuant to a cash or deferred arrangement) and forfeitures are allocated to the Accounts
of the Key Employee for whom such percentage is greatest.
For purposes of the preceding sentence, compensation earned while a member of a group of
employees to whom the Plan has not been extended shall be disregarded. Paragraph (b) next above
shall not be applicable for any Plan Year if the Plan enables a defined benefit plan described
in paragraph A-8(a) or A-8(b) to meet the requirements of section 401(a)(4) or 410 for that
year. Employer contributions for any Plan Year during which the Plan is Top-Heavy shall be
allocated first to non-Key Employees until the requirements of this subsection A-12 have been
met and, to the extent necessary to comply with the provisions of this subsection A-12,
additional contributions shall be required of the Employers.
Aggregate
Benefit Limit A-13. For any Plan Year during which the Plan is Top-Heavy, paragraphs (2)(B) and (3)(B) of
section 415(e) of the Code shall be applied by substituting "1.0" for "1.25".
</TABLE>
A-5
<PAGE> 47
EXHIBIT A
EXCLUDED DIVISIONS
As of the Effective Date, the following are Excluded Divisions for
purposes of the Plan:
None
A-6
<PAGE> 48
EXHIBIT B
EXCLUDED EMPLOYEES
As of the Effective Date, the following classes of employees are not
eligible to participate in the Plan:
Employees who are designated by an Employer as temporary employees.
Employees of an Employer who perform services primarily for the
Company's Physician Resources Division with respect to Kelsey-Seybold
Medical Group, P.A.
Employees of an Employer who perform services primarily for the
Company's Physician Resources Division with respect to Oklahoma City
Clinic, A Professional Corporation
A-7
<PAGE> 1
EXHIBIT (5)
[HASKELL SLAUGHTER & YOUNG L.L.C.
LETTERHEAD]
October 15, 1996
MedPartners, Inc.
3000 Galleria Tower, Suite 1000
Birmingham, Alabama 35244-2331
Re: Registration Statement on Form S-8 - Caremark International Inc.
401 CARE Retirement Savings Plan
Our File No. 48367-012
Gentlemen:
We have served as counsel for MedPartners, Inc., formerly
MedPartners/Mullikin, Inc., a Delaware corporation, (the "Company"), in
connection with the registration under the Securities Act of 1933, as amended,
of an aggregate of 500,000 shares (the "Shares") of the Company's authorized
Common Stock, par value $.001 per share, to be issued to participants in the
Caremark International Inc. 401 CARE Retirement Savings Plan (the "Plan")
pursuant to the Company's Registration Statement on Form S-8 (the "Registration
Statement"). This opinion is furnished to you pursuant to the requirements of
Form S-8.
In connection with this opinion, we have examined and are familiar with
originals or copies (certified or otherwise identified to our satisfaction) of
such documents, corporate records and other instruments relating to the
incorporation of the Company and to the authorization and issuance of the
Shares and the authorization and adoption of the Plan as we have deemed
necessary and appropriate.
Based upon the foregoing, and having regard for such legal
considerations as we have
<PAGE> 2
MedPartners, Inc.
October 15, 1996
Page 2
deemed relevant, it is our opinion that:
1. The Shares have been duly authorized.
2. Upon issuance, sale and delivery of the Shares as contemplated
in the Registration Statement and the Plan, the Shares will be
legally issued, fully paid and nonassessable.
We do hereby consent to the reference to our firm under the heading
"Legal Matters" in the Registration Statement and to the filing of this Opinion
as an Exhibit thereto.
Very truly yours,
HASKELL SLAUGHTER & YOUNG, L.L.C.
By /s/ Robert E. Lee Garner
------------------------------
Robert E. Lee Garner
RELG/jhs/nld
<PAGE> 1
EXHIBIT (23)-1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8) pertaining to the Caremark International Inc. 401 CARE
Retirement Savings Plan of our report dated February 22, 1996, with respect to
the consolidated financial statements of MedPartners/Mullikin, Inc. included
in its Annual Report (Form 10-K) for the year ended December 31, 1995, filed
with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Birmingham, Alabama
October 15, 1996
<PAGE> 1
EXHIBIT (23)-2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 pertaining to the Caremark International
Inc. 401 CARE Retirement Savings Plan of our report dated January 24, 1996,
except as to the third paragraph of Note 14, which is dated as of March 19,
1996, which appears on page F-29 of Amendment No. 1 to Form S-4, Registration
Statement (Registration No. 333-09767).
PRICE WATERHOUSE LLP
Chicago, Illinois
October 15, 1996
