<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 10, 1997
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
IDX SYSTEMS CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
VERMONT 03-0222230
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S.Employer Identification No.)
incorporation or organization)
1400 SHELBURNE ROAD, P.O. BOX 1070, SOUTH BURLINGTON, VERMONT 05403
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
PHAMIS, INC. AMENDED AND RESTATED 1983 COMBINED NONQUALIFIED AND INCENTIVE
STOCK OPTION PLAN
PHAMIS, INC. 1993 COMBINED INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN
AS AMENDED THROUGH MAY 14, 1996
PHAMIS, INC. 1994 NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
AS AMENDED THROUGH JANUARY 1, 1996
PHAMIS, INC. SALARY SAVINGS AND DEFERRAL PLAN AND TRUST
AS AMENDED THROUGH FEBRUARY 22, 1996
PHAMIS, INC. CAIN OPTION AGREEMENT
- --------------------------------------------------------------------------------
(Full title of the plans)
RICHARD E. TARRANT
PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
IDX SYSTEMS CORPORATION
1400 SHELBURNE ROAD, P.O. BOX 1070, SOUTH BURLINGTON, VERMONT 05403
- --------------------------------------------------------------------------------
(Name and address of agent for service)
(802) 862-1022
- --------------------------------------------------------------------------------
(Telephone number, including area code, of agent for service)
Copy to:
-------
ROBERT W. BAKER, JR. PETER B. TARR
IDX SYSTEMS CORPORATION HALE AND DORR LLP
1400 SHELBURNE ROAD 60 STATE STREET
P.O. BOX 1070 BOSTON, MASSACHUSETTS 02109
SOUTH BURLINGTON, VT 05403 (617) 526-6000
(802) 862-1022
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================
PROPOSED PROPOSED
TITLE OF MAXIMUM MAXIMUM
SECURITIES AMOUNT OFFERING AGGREGATE AMOUNT OF
TO BE TO BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED (#) SHARE ($) PRICE ($) FEE ($)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PHAMIS, INC. AMENDED AND RESTATED 13,200 5.27 69,564.00 21.08
1983 COMBINED NONQUALIFIED AND 23,355 5.75 134,291.25 40.69
INCENTIVE STOCK OPTION PLAN(1)(2) 75,495 5.82 439,280.90 133.15
45,723 6.58 300,857.34 91.17
- -----------------------------------------------------------------------------------------------
PHAMIS, INC. 500 5.75 2,875.00 .87
1993 COMBINED INCENTIVE AND 65,747 6.58 432,615.26 131.10
NONQUALIFIED STOCK OPTION PLAN AS 39,000 6.27 244,530.00 74.10
AMENDED THROUGH MAY 14, 1996(1)(2) 3,000 12.33 36,990.00 11.21
1,500 17.30 25,950.00 7.86
69,000 20.73 1,430,370.00 433.45
4,500 21.75 97,875.00 29.66
1,500 22.60 33,900.00 10.27
1,000 22.95 22,950.00 6.95
5,000 23.12 115,600.00 35.03
64,417 23.19 1,493,830.23 452.68
1,500 24.49 36,735.00 11.13
500 24.66 12,330.00 3.74
1,000 25.63 25,630.00 7.77
115,715 26.03 3,012,061.45 912.75
2,000 26.63 53,260.00 16.14
2,500 27.25 68,125.00 20.64
500 28.68 14,340.00 4.35
2,000 28.92 57,840.00 17.53
1,000 30.68 30,680.00 9.30
4,166 32.55 135,603.30 41.09
53,000 32.88 1,742,640.00 528.07
16,500 37.62 620,730.00 188.10
1,000 38.88 38,880.00 11.78
250 39.11 9,777.50 2.96
- -----------------------------------------------------------------------------------------------
PHAMIS, INC. 2,000 16.44 32,880.00 9.96
1994 NONEMPLOYEE DIRECTOR STOCK OPTION 3,000 25.52 76,560.00 23.20
PLAN AS AMENDED THROUGH JANUARY 1,
1996(1)(2) 3,000 26.18 78,540.00 23.80
- -----------------------------------------------------------------------------------------------
PHAMIS, INC.
SALARY SAVINGS AND DEFERRAL PLAN AND 240,000 $ 33.578 $8,058,720.00 $2,442.03
TRUST AS AMENDED THROUGH FEBRUARY 22,
1996(1)(3)
- -----------------------------------------------------------------------------------------------
PHAMIS, INC. 3,000 5.82 17,460.00 5.29
CAIN OPTION AGREEMENT(1)(2)
- -----------------------------------------------------------------------------------------------
TOTAL 865,568 19,004,371.23 5,758.91
===============================================================================================
</TABLE>
(1) Pursuant to the Agreement and Plan of Merger (the "Agreement") dated as of
March 25, 1997 by and among the Registrant, Penguin Acquisition
Corporation, a Washington corporation and wholly-owned subsidiary of the
Registrant, and PHAMIS, Inc., a Washington corporation ("PHAMIS"), the
Registrant effectively assumed all of the outstanding options to purchase
common stock, $.0025 par value per share, of PHAMIS ("PHAMIS Common Stock")
under the PHAMIS' Amended and Restated 1983 Combined Nonqualified and
Incentive Stock Option Plan, 1993 Combined Incentive and Nonqualified Stock
Option Plan as amended through May 14, 1996, 1994 Nonemployee Director
Stock Option Plan as amended through January 1, 1996 and Stock Option
Agreement dated August 20, 1990 with Michael Cain. In addition, all shares
of PHAMIS Common Stock held in PHAMIS' Salary Savings and Deferral Plan and
Trust as amended through February 22, 1996 were converted into shares of
the Registrant's Common Stock as set forth in the Agreement.
(2) All such shares are issuable upon exercise of outstanding options with
fixed exercise prices. Pursuant to Rule 457(h)(1) under the Securities Act
of 1933, the aggregate offering price and the fee have been computed upon
the basis of the price at which the options may be exercised.
(3) Price estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and (h) under the Securities Act of 1933, and based
on the average of the high and low prices of the Registrant's Common Stock
on July 9, as quoted on the Nasdaq National Market.
EXPLANATORY NOTE
This Registration Statement has been prepared in accordance with the
requirements of Form S-8 which relate to the Registrant's Common Stock offered
pursuant to the: (1) PHAMIS, Inc. Amended and Restated 1983 Combined
Nonqualified and Incentive Stock Option Plan; (2) PHAMIS, Inc. 1993 Combined
Incentive and Nonqualified Stock Option Plan as amended through May 14, 1996;
(3) PHAMIS, Inc. 1994 Nonemployee Director Stock Option Plan as amended through
January 1, 1996; (4) PHAMIS, Inc. Salary Savings and Deferral Plan and Trust as
amended through February 22, 1996; and (5) PHAMIS, Inc. Stock Option Agreement
dated August 20, 1990 with Michael Cain.
<PAGE>
PART I. INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The information required by Part I of Form S-8 is included in
documents sent or given to participants in the: (1) PHAMIS, Inc. Amended and
Restated 1983 Combined Nonqualified and Incentive Stock Option Plan; (2) PHAMIS,
Inc. 1993 Combined Incentive and Nonqualified Stock Option Plan as amended
through May 14, 1996; (3) PHAMIS, Inc. 1994 Nonemployee Director Stock Option
Plan as amended through January 1, 1996; (4) PHAMIS, Inc. Salary Savings and
Deferral Plan and Trust as amended through February 22, 1996 (the "Plans"); and
(5) PHAMIS, Inc. Stock Option Agreement dated August 20, 1990 with Michael Cain
(the "Agreement") of IDX Systems Corporation, a Vermont corporation (the
"Registrant"), pursuant to Rule 428(b)(1) of the Securities Act of 1933, as
amended (the "Securities Act").
I-1
<PAGE>
PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
---------------------------------------
The Registrant is subject to the informational and reporting
requirements of Sections 13(a), 14 and 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). The following documents, which are on file with
the Commission, are incorporated in this Registration Statement by reference:
(a) The Registrant's latest annual report filed pursuant to Section
13(a) or 15(d) of the Exchange Act or the Registrant's latest prospectus filed
pursuant to Rule 424(b) under the Securities Act, that contains audited
financial statements for the Registrant's latest fiscal year for which such
statements have been filed.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the Registrant document
referred to in (a) above.
(c) The description of the Common Stock, $.01 par value per share
("Common Stock"), which is contained in the Registrant's Registration Statement
on Form 8-A filed on September 19, 1995 pursuant to Section 12(g) of the
Exchange Act, including any amendment or report filed for the purpose of
updating such description.
All documents subsequently filed by the Registrant pursuant to
Sections 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 shares offered hereby have
been sold or which deregisters all shares then remaining unsold, shall be deemed
to be incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing of such documents.
Item 4. Description of Securities
-------------------------
Not applicable.
Item 5. Interests of Named Experts and Counsel
--------------------------------------
General Counsel to the Registrant, Robert W. Baker, Jr., holds 1,069
shares of the Registrant's Common Stock and options to acquire, in the
aggregate, 46,371 shares of the Registrant's Common Stock.
Item 6. Indemnification of Directors and Officers
-----------------------------------------
Sections 8.50 through 8.58 of the Vermont Business Corporation Act
contain provisions governing the indemnification of corporate directors and
officers. In general, the statute permits a corporation to indemnify any person
who was or is a party to or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation), by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
entity, against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation. With respect to any criminal action or proceeding, the indemnified
individual must
II-1
<PAGE>
have had no reasonable cause to believe his conduct was unlawful. With respect
to action or suits by or in the right of the corporation, such indemnification
is limited to expenses (including attorney's fees) actually and reasonably
incurred by such person in connection with the defense or settlement of such
action or suit. Indemnification is not permitted with respect to any claim,
issue or matter as to which such person has been adjudged to be liable to the
corporation unless and only to the extent that the court in which such action or
suit was brought determines upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the court
shall deem proper. Additionally, a corporation is required to indemnify its
directors and officers against expenses to the extent that such directors or
officers have been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to above or in defense of any claim, issue
or matter therein.
Indemnification can be made by a corporation only upon a determination
made in the manner prescribed by the statute that indemnification is proper in
the circumstances because the party seeking indemnification has met the
applicable standard of conduct as set forth in the Vermont Business Corporation
Act. That statutory indemnification is not deemed to be exclusive of any other
rights to which those seeking indemnification may be entitled under any bylaw,
agreement, vote of shareholders or disinterested directors, or otherwise. A
corporation also has the power to purchase and maintain insurance on behalf of
any person covering any liability incurred by such person in his capacity as a
director, officer, employee or agent of the corporation, or arising out of his
status as such, whether or not the corporation would have the power to indemnify
him against such liability. The indemnification provided by the Vermont
Business Corporation Act, unless otherwise provided when authorized or ratified,
continues as to a person who has ceased to be a director, officer, employee or
agent and inures to the benefit of the heirs, executors and administrators of
such a person.
The Registrant's By-Laws generally allow indemnification of officers
and directors to the fullest extent permitted by law.
The Registrant has obtained directors' and officers' liability
insurance coverage from Genesis Insurance Co. The policy covers up to
$2,000,000 for each claim during each policy year, and up to $25,000 of
corporate reimbursement.
Pursuant to Section 4.15 of the Agreement and Plan of Merger dated as
of March 25, 1997 (the "Merger Agreement") with Penguin Acquisition Corporation,
a Washington corporation and wholly-owned subsidiary of IDX, and PHAMIS, Inc., a
Washington corporation, the Registrant, for a period of three years after the
effective time of the Merger, has agreed that any of PHAMIS, Inc.'s directors
and officers who subsequently become directors or officers of the Registrant
shall be covered by the directors' and officers' liability insurance, if any,
applicable to the then current directors and officers of the Registrant.
The Registrant has entered into a Tax Indemnification Agreement with
certain persons that were shareholders of the Registrant while it was an S
corporation (the "Existing Shareholders") that provides for, among other things,
the indemnification of the Registrant by such shareholders for any federal and
state income taxes (including interest) incurred by the Registrant if for any
reason the Registrant is deemed to be treated as a C corporation during any
period which it reported its taxable income as an S corporation. The Tax
Indemnification Agreement further provides for the cross-indemnification of the
Registrant and of each Existing Shareholder for any losses or liabilities with
respect to certain additional taxes (including interest and, in the case of
Existing Shareholders, penalties) resulting from the Registrant's operations
during the period in which it was an S corporation.
II-2
<PAGE>
The Amended and Restated Consulting/Employment Agreement between the
Registrant and Dr. Tufo provides that the Registrant will indemnify Dr. Tufo
against all costs and expenses, reasonably incurred by him in connection with
any action, suit or other proceeding, to which he is a party in his capacity as
a director, officer, shareholder, consultant, or employee of the Registrant,
except for expenses and costs incurred because of Dr. Tufo's gross negligence or
willful misconduct.
Item 7. Exemption from Registration Claimed
-----------------------------------
Not applicable.
Item 8. Exhibits
--------
The Exhibit Index immediately preceding the exhibits is attached
hereto and incorporated herein by reference.
Item 9. Undertakings
------------
(a) The undersigned Registrant hereby undertakes:
(i) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
A. To include any prospectus required by Section 10(a)(3) of
the Securities Act;
B. To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or
the 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; and
C. To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement of any material change to such information in the
Registration Statement;
provided, however that paragraphs (A) and (B) do not apply if the
-------- -------
Registration Statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d)
of the Exchange Act that are incorporated by reference in the Registration
Statement.
(ii) That, for the purpose of determining any liability under the
Securities 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.
(iii) 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.
(b) The Registrant hereby undertakes that, for purposes of determining
any liability under the Securities 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
II-3
<PAGE>
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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the provisions described under "Item 6 -
Indemnification of Directors and Officers" above, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the 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 Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
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 South Burlington, State of Vermont, on July 10, 1997.
IDX SYSTEMS CORPORATION
By: /s/ Richard E. Tarrant
----------------------------------
Richard E. Tarrant
President and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of IDX Systems Corporation,
hereby severally constitute and appoint Richard E. Tarrant, John A. Kane, Robert
W. Baker, Jr., Esq. and Peter B. Tarr, Esq., and each of them singly, our true
and lawful attorneys with full power to them, to sign for us and in our names,
in the capacities indicated below, the Registration Statement filed herewith,
and any and all amendments to said Registration Statement and generally to do
all such things in our names and behalf in our capacities as officers and
directors to enable IDX Systems Corporation to comply with the Securities Act of
1933, as amended, and all requirements of the Securities and Exchange
Commission, hereby ratifying and confirming our signatures as they may be signed
by our said attorneys, or any of them, to said Registration Statement and any
and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title (Capacity) Date
--------- ---------------- ----
/s/ Richard E. Tarrant President, Chief Executive July 10, 1997
- ----------------------- Officer and Director
Richard E. Tarrant (Principal Executive
Officer)
/s/ John A. Kane Vice President, Finance and July 10, 1997
- ----------------------- Administration, Chief Financial
John A. Kane Officer and Treasurer (Principal
Financial Officer and Principal
Accounting Officer)
/s/ Robert H. Hoehl Director July 10, 1997
- -----------------------
Robert H. Hoehl
/s/ Paul L. Egerman Director July 10, 1997
- -----------------------
Paul L. Egerman
/s/ Henry M. Tufo, M.D. Director July 10, 1997
- -----------------------
Henry M. Tufo, M.D.
II-5
<PAGE>
/s/ Stuart H. Altman Director July 10, 1997
- -----------------------
Stuart H. Altman, Ph.D.
/s/ Steven M. Lash Director July 10, 1997
- ------------------------
Steven M. Lash
/s/ Frank T. Sample Director July 10, 1997
- ------------------------
Frank T. Sample
/s/ Malcolm A. Gleser Director July 10, 1997
- ------------------------
Malcolm A. Gleser, M.D., Ph.D.
II-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Page
- ------- ------- ----
<S> <C> <C>
4.1 PHAMIS, Inc. Amended and Restated 1983
Combined Nonqualified and Incentive
Stock Option Plan
4.2 PHAMIS, Inc. 1993 Combined Incentive
and Nonqualified Stock Option
Plan as amended through May 14,1996
4.3 PHAMIS, Inc. 1994 Nonemployee Director
Stock Option Plan as amended through
January 1, 1996
4.4 PHAMIS, Inc. Salary Savings and Deferral
Plan and Trust as amended through
February 22, 1996
4.5 PHAMIS, Inc. Stock Option Agreement dated
August 20, 1990 with Mr. Michael Cain
*4.6 Second Amended and Restated Articles of
Incorporation of the Registrant
*4.7 Second Amended and Restated By-Laws
of the Registrant
*4.8 Specimen Certificate of Common Stock
of the Registrant
5.1 Opinion of Robert W. Baker, Jr., Esq.,
General Counsel to the Registrant
23.1 Consent of Robert W. Baker, Jr., Esq.
(included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP
24.1 Power of Attorney (included on the
signature page of this Registration
Statement)
</TABLE>
- ---------------
* Previously filed with the Commission as an Exhibit to the Registrant's
Registration Statement on Form S-1, File No. 33-97104, which was originally
filed with the Commission September 19, 1995 and is incorporated herein by
reference.
II-7
<PAGE>
Exhibit 4.1
-----------
PHAMIS, INC.
AMENDED AND RESTATED
1983 COMBINED NONQUALIFIED AND INCENTIVE STOCK OPTION PLAN
SECTION 1. Purpose. The purpose of the Phamis, Inc. 1983 Combined
-------
Nonqualified and Incentive Stock Option Plan, as amended and restated (this
"Plan") is to enable Phamis, Inc. (the "Company") to attract and retain the
services of people with training, experience and ability and to provide
additional incentive to such persons by granting them an opportunity to
participate in the ownership of the Company.
SECTION 2. Administration. This Plan shall be administered by the
--------------
Board of Directors of the Company (the "Board") or, in the event the Board shall
appoint and/or authorize a Compensation Committee to administer this Plan, by
such committee. The administrator of this Plan shall hereinafter be referred to
as the "Plan Administrator." A member of the Board (or the Compensation
Committee) may be eligible to participate in or receive or hold options under
this Plan; provided, however, that no member of the Board or the Compensation
Committee shall vote with respect to the granting of an option hereunder to
himself or herself, as the case may be.
Except for the terms and conditions explicitly set forth in this Plan, the
Plan Administrator shall have the authority, in its discretion, to determine all
matters relating to the options to be granted under this Plan, including
selection of the individuals to be granted options, the number of shares to be
subject to each option, the exercise price, and all other terms and conditions
of the options. Grants under this Plan need not be identical in any respect,
even when made simultaneously. The interpretation and construction by the Plan
Administrator of any terms or provisions of this Plan or any option issued
hereunder, or of any rule or regulation promulgated in connection herewith,
shall be conclusive and binding on all interested parties. The Board or the Plan
Administrator in its sole discretion, may grant incentive stock options
("Incentive Stock Options") as such term is defined in Section 422A of the
Internal Revenue Code of 1986, as amended, (the "Code") and/or nonqualified
stock options ("Nonqualified Stock Options"). The term option when used in this
Plan should refer to Incentive Stock Options and Nonqualified Stock Options,
collectively.
SECTION 3. Stock Subject to this Plan. The stock subject to this
--------------------------
Plan shall be the Company's Common Stock, par value $.0025 (the "Common Stock"),
presently authorized but unissued or now held or subsequently acquired by the
Company as treasury shares. Subject to adjustment as provided in Section 7
hereof, the aggregate amount of Common Stock to be delivered upon the exercise
of all options granted under this Plan shall not exceed eight hundred fifty
thousand (850,000) shares. If any option granted under this Plan shall expire
or terminate for any reason without having been
-1-
<PAGE>
exercised in full, the unpurchased shares subject thereto shall thereupon again
be available for purposes of this Plan.
SECTION 4. Eligibility. An option may be granted to any individual
-----------
who, at the time the option is granted, is an employee, director, consultant or
independent contractor of the Company or any related corporation provided that
persons who are not employees will only be eligible to receive Nonqualified
Stock Options. Any individual to whom an option is granted under this Plan
shall be referred to hereinafter as "Optionee."
SECTION 5. Terms and Conditions of Options. Options granted under
-------------------------------
this Plan shall be evidenced by written agreements which shall contain such
terms, conditions, limitations and restrictions as the Plan Administrator shall
deem advisable and which are not inconsistent with this Plan. Notwithstanding
the foregoing, all such options shall include or incorporate by reference the
following terms and conditions:
5.1 Number of Shares and Price. The maximum number of shares that
--------------------------
may be purchased pursuant to the exercise of each option and the price per share
at which such option is exercisable (the "exercise price") shall be as
established by the Plan Administrator, provided that the Plan Administrator
shall act in good faith to establish exercise prices and the exercise price for
an Incentive Stock Option shall not be less than the fair market value per share
of the Common Stock at the time the option is granted.
5.2 Term and Maturity. Subject to the restrictions contained in
-----------------
Section 6, the term of each option shall be as established by the Plan
Administrator and, if not so established, shall be ten years from the date it is
granted but in no event shall the term of any Incentive Stock Option exceed ten
years. To insure that the Company will achieve the purpose and receive the
benefits contemplated in this Plan, any option granted to any employee shall,
unless the condition of this sentence is waived or modified by resolution
adopted by the Plan Administrator, be exercisable according to the following
schedule:
<TABLE>
<CAPTION>
Date On and After Which Option Portion of Total Option Which
is Exercisable is Exercisable
---------------------------------------------------------------
<S> <C>
For each month of Optionee's 1.667% times the number of
continuous employment by the months of Optionee's
corporation from the date of continuous employment by the
grant up to and including the corporation from the date of
60th month grant
After the 60th month 100%
</TABLE>
Any Nonqualified Stock Option which is granted to non-employees shall be
exercisable according to the schedule determined by the Plan Administrator at
the time of the grant of the Nonqualified Stock Option.
-2-
<PAGE>
5.3 Exercise. Subject to the vesting schedule described in
--------
subsection 5.2 above, each option may be exercised in whole or in part;
provided, however, that no fewer than five hundred (500) shares (or the
remaining shares then purchasable under the option, if less than five hundred
(500) shares) may be purchased upon any exercise of option rights hereunder and
that only whole shares will be issued pursuant to the exercise of any option.
During an Optionee's lifetime, any options granted under this Plan are personal
to him or her and are exercisable solely by such Optionee. Options shall be
exercised by delivery to the Company of written notice of the number of shares
with respect to which the option is exercised, together with the exercise price,
in cash or bank certified or cashier's check, for the Common Stock being
purchased. If permitted by the Plan Administrator, and to the extent permitted
by applicable laws and regulations (including, but not limited to, federal tax
and securities laws and regulations), an option may be exercised by delivery of
shares of the capital stock of the Company held by the Optionee having a fair
market value equal to the exercise price, such fair market value to be
determined in good faith by the Board.
5.4 Non-transferability of Option. Options granted under this Plan
-----------------------------
and the rights and privileges conferred hereby may not be transferred, assigned,
pledged, or hypothecated in any manner (whether by operation of law or
otherwise) other than by will or by the applicable laws of descent and
distribution, and shall not be subject to execution, attachment, or similar
process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of any option under this Plan or of any right or privilege conferred
hereby, contrary to the provisions hereof, or upon the sale or levy or any
attachment or similar process upon the rights and privileges conferred hereby,
such option shall thereupon terminate and become null and void.
5.5 Termination of Employment. If the Optionee ceases to be employed
-------------------------
by, or in the case of a non-employee director of, the Company or any related
corporation for any reason other than death or total disability, the Optionee's
option shall terminate at the end of the three (3) month period following such
cessation of employment or directorship (unless by its terms it sooner
terminates and expires) as to all shares for which it has not theretofore been
exercised, unless the Plan Administrator by resolution adopted prior to or
within thirty (30) days after the effective date of such cessation of employment
or directorship waives the conditions of this subsection 5.5. If, however, the
Optionee does not exercise his or her option within three (3) months after
cessation of employment or directorship, the Incentive Stock Option will no
longer be treated as an incentive stock option under the Code, and will generate
ordinary income if exercised after that time. If an Optionee ceases to be
employed by, or a director of, the Company or any related corporation because of
a total disability, the Optionee's option shall not terminate until the end of
the twelve (12) month period following such cessation of employment or
directorship (unless by its terms it sooner terminates and expires). As used in
this Plan, the term "total
-3-
<PAGE>
disability" refers to a mental or physical impairment of the Optionee which is
expected to result in death or which has lasted or is expected to last for a
continuous period of twelve (12) months or more and which causes the Optionee to
be unable, in the opinion of the Company and two independent physicians, to
perform his or her duties as an employee or director of the Company and to be
engaged in any substantial gainful activity. Total disability shall be deemed
to have occurred on the first day after the Company and the two independent
physicians have furnished their opinion of total disability to the Plan
Administrator. For purposes of this subsection 5.5, a transfer of employment or
directorship between or among the Company and/or any related corporation shall
not be deemed to constitute a cessation of employment or directorship with the
Company or any of its related corporations. As used herein, the term "related
corporation" (other than a parent corporation) shall mean any corporation (other
than the Company) in an unbroken chain of corporations ending with the Company,
if stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock of each of the corporations other than the Company
is owned by one of the other corporations in such chain. When referring to a
parent corporation, the term "related corporation" shall mean any corporation in
an unbroken chain of corporations ending with the employer corporation if, at
the time of the granting of the option, each of the corporations other than the
employer corporation owns stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
5.6 Death of Optionee. If an Optionee dies while he or she is
-----------------
employed by, or a director of, the Company or any related corporation, or within
the three (3) month period (or twelve (12) month period in the case of totally
disabled employees and directors) following cessation of such employment or
directorship, options held by such employee or director may, to the extent that
the Optionee would have been entitled to exercise such option, be exercised
within one year after his or her death by the personal representative of his or
her estate or by the person or persons to whom the Optionee's rights under the
option shall pass by will or by the applicable laws of descent and distribution.
5.7 Status of Shareholder. Neither the Optionee nor any person or
---------------------
persons to whom the Optionee's rights and privileges under the option may pass
shall be, or have any of the rights or privileges of, a shareholder of the
Company with respect to any of the shares issuable upon the exercise of any
option granted under this Plan unless and until such option has been exercised.
5.8 Continuation of Employment. Nothing in this Plan or in any
--------------------------
option granted pursuant to this Plan shall confer upon any Optionee any right to
continue in the employ, or be a director of the Company or of a related
corporation, or to interfere in any way with the right of the Company or of any
such related corporation to terminate his or her employment or directorship at
any time.
-4-
<PAGE>
5.9 Modification and Amendment of Option. Subject to the
------------------------------------
requirements of Code Section 422A and to the terms and conditions and within the
limitations of this Plan, the Plan Administrator may modify or amend outstanding
option granted under this Plan. The Plan Administrator shall not, however,
modify or amend any outstanding Incentive Stock Option so as to specify a lower
exercise price for the option. The modification or amendment of an outstanding
option shall not, without the consent of the option holder, alter, impair or
diminish any of his or her rights or any of the obligations of the Company under
such option.
5.10 Limitation on Amount of Grants of Incentive Stock Options. The
---------------------------------------------------------
aggregate fair market value (determined at the time of grant) of stock with
respect to which Incentive Stock Options under the Plan and under all other
incentive stock option plans (within the meaning of Section 422A of the Code) of
the Company or any parents or subsidiaries are exercisable for the first time by
the employee during any calendar year shall not exceed $100,000. This
limitation does not apply to Nonqualified Stock Options.
SECTION 6. Exercise Price and Term of Incentive Stock Options Granted
----------------------------------------------------------
to Greater than Ten Percent Shareholders. If Incentive Stock Options are
- ----------------------------------------
granted under this Plan to employees who own more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or any
related corporations, the term of such Incentive Stock Options shall not exceed
five (5) years and the exercise price shall be not less than one hundred ten
percent (110%) of the fair market value of the Common Stock at the time the
Incentive Stock Option is granted.
SECTION 7. Adjustments Upon Charges in Capitalization. The aggregate
------------------------------------------
number and class of shares on which options may be granted under this Plan, the
number and class of shares covered by each outstanding option and the exercise
price per share thereof (but not the total price), and each such option, shall
all be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock of the Company resulting from a split-up or
consolidation of shares or any like capital adjustment, or the payment of any
stock dividend, or any other increase or decrease in the number of shares of
Common Stock of the Company without the receipt of consideration by the Company.
7.1 Effect of Liquidation or Reorganization.
---------------------------------------
7.1.1 Cash, Stock or Other Property for Stock. Except as provided
---------------------------------------
in subsection 7.1.2, upon a merger, consolidation, acquisition of property or
stock, separation, reorganization or liquidation of the Company, as a result of
which the shareholders of the Company receive cash, stock or other property in
exchange for their shares of Common Stock, any option granted hereunder shall
terminate, but, provided that if the Optionee shall have held the option for a
period of one year from the date of grant or such shorter period as the Board
may determine, the Optionee shall have the right immediately prior to any such
merger, consolidation, acquisition of property or stock,
-5-
<PAGE>
separation, reorganization or liquidation to exercise his or her option in whole
or in part whether or not the vesting requirements set forth in the option
agreement have been satisfied.
7.1.2 Conversion of Options on Stock for Stock Exchange. If the
-------------------------------------------------
shareholders of the Company receive capital stock of another corporation
("Exchange Stock") in exchange for their shares of Common Stock in any
transaction involving a merger, consolidation, acquisition of property or stock,
separation or reorganization, all options granted hereunder shall terminate in
accordance with the provisions of subsection 7.1.1 unless the Board and the
corporation issuing the Exchange Stock, in their sole discretion and subject to
any required action by the shareholders of the Company and such corporation,
agree that all such options granted hereunder are converted into options to
purchase shares of Exchange Stock. The amount and price of such options shall
be determined by adjusting the amount and price of the options granted hereunder
in the same proportion as used for determining the number of shares of Exchange
Stock the holders of the Common Stock receive in such merger, consolidation,
acquisition of property or stock, separation or reorganization. The vesting
schedule set forth in the option agreement shall continue to apply to the
options granted for the Exchange Stock.
7.2 Fractional Shares. In the event of any adjustment in the number
-----------------
of shares covered by any option, any fractional shares resulting from such
adjustment shall be disregarded and each such option shall cover only the number
of full shares resulting from such adjustment.
7.3 Determination of Board to be Final. All such adjustments shall
----------------------------------
be made by the Board, and its determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive.
SECTION 8. Securities Regulation. Shares shall not be issued with
---------------------
respect to an option granted under this Plan unless the exercise of such option
and the issuance and delivery of such shares pursuant thereto shall comply with
all relevant provisions of law, including, without limitation, any applicable
state securities laws, the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance. Inability of the Company to obtain
from any regulatory body having jurisdiction, the authority deemed by the
Company's counsel to be necessary for the lawful issuance and sale of any shares
hereunder shall relieve the Company of any liability in respect of the
nonissuance or sale of such shares as to which such requisite authority shall
not have been obtained.
As a condition to the exercise of an option, the Company may require the
Optionee to represent and warrant at the time of any such exercise that the
shares are being purchased only for
-6-
<PAGE>
investment and without any present intention to sell or distribute such shares
if, in the opinion of counsel for the Company, such a representation is required
by any relevant provision of the aforementioned laws. At the option of the
Company, a stop-transfer order against any shares of stock may be placed on the
official stock books and records of the Company, and a legend indicating that
the stock may not be pledged, sold or otherwise transferred unless an opinion of
counsel is provided (concurred in by counsel for the Company) stating that such
transfer is not in violation of any applicable law or regulation, may be stamped
on stock certificates in order to assure exemption from registration. The Plan
Administrator may also require such other action or agreement by the Optionees
as may from time to time be necessary to comply with the federal and state
securities laws. THIS PROVISION SHALL NOT OBLIGATE THE COMPANY TO UNDERTAKE
REGISTRATION OF THE OPTIONS OR STOCK HEREUNDER.
Should any of the Company's capital stock of the same class as the stock
subject to options granted hereunder be listed on a national securities
exchange, all stock issued hereunder if not previously listed on such exchange
shall be authorized by that exchange for listing thereon prior to the issuance
thereof.
SECTION 9. Amendment and Termination.
-------------------------
9.1 Board Action. The Board may at any time suspend, amend or
------------
terminate this Plan, provided that except as set forth in Section 7, the
approval of the holders of a majority of the Company's outstanding shares of
voting capital stock is necessary in order to adopt any amendment which will:
(a) increase the number of shares which are to be reserved for
the issuance of options under this Plan;
(b) extend the term of the options; or
(c) permit the granting of options to persons other than those
presently permitted to receive options under this Plan.
9.2 Automatic Termination. Unless sooner terminated by the Board,
---------------------
this Plan shall terminate ten (10) years from the earlier of (a) the date on
which this Plan is adopted or (b) the date on which this Plan is approved by the
shareholders of the Company. No option may be granted after such termination,
or during any suspension of this Plan. The amendment or termination of this
Plan shall not, without the consent of the option holder, alter or impair any
rights or obligations under any option theretofore granted under this Plan.
SECTION 10. Effectiveness of this Plan. This Plan shall become effective
--------------------------
upon adoption by the Board so long as it is approved by the holders of a
majority of the Company's outstanding shares of voting capital stock at any time
within twelve (12) months before or after the adoption of this Plan.
-7-
<PAGE>
SECTION 11. Right of First Refusal. Options granted after November
----------------------
14, 1988 and the Common Stock acquired upon the exercise of such options
("Restricted Shares") shall be subject to the following right of first refusal.
Prior to the transfer of Restricted Shares by an Optionee, the Optionee shall
give the Company written notice ("Notice") of the proposed transfer, which
Notice shall state the number of Restricted Shares proposed to be transferred,
the name of the proposed purchaser, the proposed purchase price and the proposed
terms and conditions of the transfer. The Company shall have the right to
purchase such Restricted Shares on the same terms and conditions as set forth in
the Notice, provided that the Company must give the Optionee written notice of
its intention to purchase such Restricted Shares within 45 days from the date of
the receipt of such Notice by the Company. If the Company does not elect to
purchase the Restricted Shares, the Optionee may effect the transfer of the
Restricted Shares to the purchaser identified in the Notice and upon the terms
and conditions set forth in the Notice, provided that such transfer must be
completed within 90 days from the date the Notice was first received by the
Company, and further provided that such transfer is otherwise allowable under
Section 8.
Adopted by the Board of Directors on May 10, 1983 and approved by the
shareholders on June 2, 1983. First Restatement as of April 15, 1987, and
Second Restatement as of November 14, 1988 and amended as of December 21, 1989.
The final Restatement reflects the amendment adopted by the Board of Directors
on March 21, 1991, and approved by the shareholders of the Company on May 17,
1991.
-8-
<PAGE>
Exhibit 4.2
-----------
Phamis, Inc.
1993 Combined Incentive and Nonqualified
Stock Option Plan
SECTION 1. Purpose. The purpose of the Phamis, Inc., 1993 Combined
-------
Incentive and Nonqualified Stock Option Plan (the "Plan") is to enable Phamis,
Inc. (the "Company") to attract and retain the services of people with training,
experience and ability and to provide additional incentive to such persons by
granting them an opportunity to participate in the ownership of the Company.
SECTION 2. Stock Subject to Plan. The stock subject to this Plan
---------------------
shall be the Company's common stock, par value $.0025 per share (the "Common
Stock"), presently authorized but unissued or now held or subsequently acquired
by the Company as treasury shares. Subject to adjustment as provided in Section
10, the aggregate amount of Common Stock reserved for issuance or delivery upon
exercise of all options granted under this Plan shall not exceed 900,000 shares
of Common Stock. If any option granted under this Plan shall expire or
terminate for any reason without having been exercised in full, the unpurchased
shares subject thereto shall thereupon again be available for purposes of this
Plan.
SECTION 3. Administration. The Plan shall be administered by the
--------------
Board of Directors of the Company, in accordance with the following terms and
conditions:
3.1 General Authority. Subject to the express provisions of the
-----------------
Plan, the Board of Directors shall have the authority, in its discretion, to
determine all matters relating to options to be granted under the Plan,
including the selection of individuals to be granted options, the number of
shares to be subject to each option, the exercise price, the term, whether such
options shall be immediately exercisable or shall become exercisable in
increments over time, and all other terms and conditions thereof. Grants under
this Plan to persons eligible need not be identical in any respect, even when
made simultaneously. The Board of Directors may from time to time adopt rules
and regulations relating to the administration of the Plan. The interpretation
and construction by the Board of Directors of any terms or provisions of this
Plan or any option issued hereunder, or of any rule or regulation promulgated
in connection herewith, shall be conclusive and binding on all interested
parties. The Board of Directors in its sole discretion, may grant incentive
stock options ("Incentive Stock Options") as such term is defined in Section
422(b) of the Internal Revenue Code of 1986, as amended, (the "Code") and/or
nonqualified stock options ("Nonqualified Stock Options"). A Nonqualified Stock
Option is a stock option which is not an Incentive Stock Option. The type of
1
<PAGE>
option granted, whether an Incentive Stock Option or a Nonqualified Stock Option
shall be clearly identified by the Board of Directors when granted. The term
option when used in this Plan should refer to Incentive Stock Options and
Nonqualified Stock Options, collectively.
3.2 Directors. A member of the Board of Directors may be
---------
eligible to participate in or receive or hold options under this Plan; provided,
however, that no member of the Board of Directors shall vote with respect to the
granting of an option hereunder to himself or herself, as the case may be.
3.3 Delegation to a Committee. Notwithstanding the foregoing,
-------------------------
the Board of Directors, if it so determines, may delegate to a committee of the
Board of Directors any or all authority for the administration of the Plan, and
thereafter references to the Board of Directors in this Plan shall be deemed to
be references to the committee to the extent provided in the resolution
establishing the committee.
3.4 Persons Subject to Section 16(b). Notwithstanding anything
--------------------------------
in the Plan to the contrary, the Board of Directors, in its absolute discretion,
may bifurcate the Plan so as to restrict, limit or condition the use of any
provision of the Plan to participants who are officers and directors subject to
Section 16(b) of the Securities Exchange Act of 1934, as amended, (the "1934
Act") without so restricting, limiting or conditioning the Plan with respect to
other participants.
3.5 Replacement of Options. The Board of Directors, in its
----------------------
absolute discretion, may grant options subject to the condition that options
previously granted at a higher or lower exercise price under the Plan be
cancelled or exchanged in connection with such grant. The number of shares
covered by the new options, the exercise price, the term and the other terms and
conditions of the new option, shall be determined in accordance with the Plan
and may be different from the provisions of the cancelled or exchanged options.
Alternatively, the Board of Directors may, with the agreement of the Optionee,
amend previously granted options to establish the exercise price at the then
current fair market value of the Company's Common Stock.
3.6 Loans to Optionees. The Board of Directors, in its absolute
------------------
discretion, may provide that the Company loan to Optionees sufficient funds to
exercise any option granted under the Plan and/or to pay withholding tax due
upon exercise of such option. The Board of Directors shall have the authority
to make such determinations at the time of grant or exercise and shall establish
repayment terms thereof, including installments, maturity and interest rate.
2
<PAGE>
SECTION 4. Eligibility. Options may be granted only to persons who,
-----------
at the time the option is granted, are employees, directors, consultants or
advisors of the Company or any of its present or future parent or subsidiary
corporations (hereafter a "Parent" or "Subsidiary"). Any individual to whom an
option is granted under this Plan shall be referred to hereinafter as
"Optionee". Any Optionee may receive one or more grants of options as the Board
of Directors as shall from time to time determine, and such determinations may
be different as to different Optionees and may vary as to different grants.
Optionees who are not employees will only be eligible to receive Nonqualified
Stock Options. No optionee shall be granted options in any calendar year in
excess of 50% of the shares of Common Stock issuable under this Plan pursuant to
Section 2 hereof, as amended from time to time.
SECTION 5. Terms and Conditions of Options. Options granted under
-------------------------------
this Plan shall be evidenced by written agreements which shall contain such
terms, conditions, limitations and restrictions as the Board of Directors shall
deem advisable and which are not inconsistent with this Plan. Each option
granted hereunder shall clearly indicate whether it is an Incentive Stock Option
or a Nonqualified Stock Option. Notwithstanding the foregoing, all such options
shall include or incorporate by reference the following terms and conditions:
5.1 Number of Shares. The maximum number of shares that may be
----------------
purchased pursuant to the exercise of each option and the price per share at
which such option is exercisable (the "exercise price") shall be as established
by the Board of Directors, provided that the exercise price of Incentive Stock
Options shall not be less than the fair market value per share of the Common
Stock at the time the option is granted. The exercise price of Nonqualified
Stock Options may be greater or less than the fair market value per share of the
Common Stock at the time the option is granted.
5.2 Fair Market Value. For the purposes of this Plan, fair
-----------------
market value shall mean, on any given date, the applicable description below
unless the Committee otherwise determines in good faith the fair market value of
the Stock:
(a) If the Common Stock is traded on the New York Stock
Exchange or the American Stock Exchange, the average of the closing prices of
the Common Stock on such exchange on which such Common Stock is traded for the
ten trading day period immediately preceding the date as of which Fair Market
Value is being determined, or on the next preceding ten trading day period on
which such Common Stock is traded if no Common Stock was traded during such
immediately preceding period; or
(b) If the Common Stock is not traded on the New York
Stock Exchange or the American Stock Exchange, but is reported
3
<PAGE>
on the NASDAQ National Market System or another NASDAQ Automated Quotation
System, and market information is published on a regular basis, then Fair Market
Value shall be the average of the closing prices of the Common Stock, as so
published, over the ten trading day period immediately preceding the date as of
which Fair Market Value is being determined, or the average over the next
preceding ten trading day period on which such prices were published if no
Common Stock was traded during such immediately preceding period; or
(c) If market information is not so published on a regular
basis, then Fair Market Value shall be the average of the high bid and low asked
prices of the Common Stock in the over-the-counter market over the ten trading
day period immediately preceding the date as of which Fair Market Value is being
determined or over the next preceding ten trading day period on which such high
bid and low asked prices were recorded, as reported by a generally accepted
reporting service; or
(d) If the Common Stock is not publicly traded, Fair
Market Value shall be the value determined in good faith by the Board of
Directors.
5.3 Duration of Options. Subject to the restrictions contained
-------------------
in Section 9, the term of each option shall be established by the Board of
Directors and, if not so established, shall be ten years from the date it is
granted, but in no event shall the term of any Incentive Stock Option exceed ten
years.
5.4 Exercisability. Each option shall prescribe the install-
--------------
ments, if any, in which an option granted under the Plan shall become
exercisable. The Board of Directors, in its absolute discretion, may waive or
accelerate any installment requirement contained in outstanding options. In no
case may an option be exercised as to less than 100 shares at any one time (or
the remaining shares covered by the option if less than 100) during the term of
the option. Only whole shares shall be issued pursuant to the exercise of any
option.
5.5 Incentive Stock Option. Any option which is issued as an
----------------------
Incentive Stock Option under this Plan, shall, notwithstanding any other
provisions of this Plan or the option terms to the contrary, contain all of the
terms, conditions, restrictions, rights and limitations required to be an
Incentive Stock Option, and any provision to the contrary shall be disregarded.
SECTION 6. Nontransferability of Options. Options granted under this
-----------------------------
Plan and the rights and privileges conferred hereby may not be transferred,
assigned, pledged or hypothecated in any manner (whether by operation of law or
otherwise) other than by will or
4
<PAGE>
the applicable laws of descent and distribution, and shall not be subject to
execution, attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of any option under this Plan or any
right or privilege conferred hereby, contrary to the provisions hereof, or upon
the sale or levy or any attachment or similar process, such option thereupon
shall terminate and become null and void. During an Optionee's lifetime, any
options granted under this Plan are personal to him or her and are exercisable
solely by such Optionee.
SECTION 7. Certain Limitations Regarding Incentive Stock Options.
-----------------------------------------------------
The grant of Incentive Stock Options shall be subject to the following special
limitations:
7.1 Limitation on Amount of Grants. In no event shall any
------------------------------
Optionee be granted Incentive Stock Options that in the aggregate (together with
all other Incentive Stock Options granted by the Company or any Parents or
Subsidiaries) entitle the Optionee to purchase, in any calendar year during
which such options first become exercisable, stock of the Company, any Parent or
any Subsidiary having a fair market value (determined as of the time such
options are granted) in excess of $100,000. No limitation shall apply to
Nonqualified Stock Options.
7.2 Grants to 10% Shareholders. Incentive Stock Options may be
--------------------------
granted to a person who, at the time the option is granted, owns more than 10%
of the total combined voting power of all classes of stock of the Company and
any Parent or Subsidiary only if (i) the exercise price is at least 110% of the
fair market value of the stock at the time of grant, and (ii) the option is not
exercisable more than five years from the date of grant.
SECTION 8. Exercise of Options. Options shall be exercised in
-------------------
accordance with the following terms and conditions:
8.1 Procedure. Options shall be exercised by delivery to the
---------
Company of written notice of the number of shares with respect to which the
option is exercised.
8.2 Payment. Payment of the option price shall be made in full
-------
within 5 business days of the notice of exercise of the option and shall be in
cash or bank-certified or cashier's checks, or personal check if permitted by
the Board of Directors. To the extent permitted by applicable laws and
regulations (including, but not limited to, federal tax and securities laws and
regulations), an option may be exercised by delivery of shares of Common Stock
of the Company held by the Optionee having a fair market value equal to the
exercise price, such fair market value to be determined in good faith by the
Board of Directors.
5
<PAGE>
If the Company's Common Stock is registered under the 1934 Act,
and if permitted by the Board of Directors, and to the extent permitted by
applicable laws and regulations, (including, but not limited to, federal tax and
securities laws and regulations) an option also may be exercised by delivery of
a properly executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company the amount of sale or loan proceeds to
pay the exercise price.
8.3 Federal Withholding Tax Requirements. Upon exercise of an
------------------------------------
option, the Optionee shall, upon notification of the amount due and prior to or
concurrently with the delivery of the certificates representing the shares, pay
to the Company amounts necessary to satisfy applicable federal, state and local
withholding tax requirements or shall otherwise make arrangements satisfactory
to the Company for such requirements. Such arrangements may include payment of
the appropriate withholding tax in shares of stock of the Company having a fair
market value equal to such withholding tax, either through delivery of shares
held by the Optionee or by reduction in the number of shares to be delivered to
the Optionee upon exercise of such option.
SECTION 9. Termination of Employment, Disability and Death.
-----------------------------------------------
9.1 General. If the employment of the Optionee by the Company,
-------
a Parent or a Subsidiary shall terminate by retirement or for any reason other
than death, disability or cause as hereinafter provided, the option may be
exercised by the Optionee at any time prior to the expiration of three months
after the date of such termination of employment (unless by its terms the option
sooner terminates or expires), but only if, and to the extent the Optionee was
entitled to exercise the option at the date of such termination.
9.2 Disability. If the employment of the Optionee by the
----------
Company, a Parent or a Subsidiary is terminated because of the Optionee's
disability (as herein defined), the option may be exercised by the Optionee at
any time prior to the expiration of one year after the date of such termination
(unless by its terms the option sooner terminates or expires), but only if, and
to the extent the Optionee was entitled to exercise the option at the date of
such termination. For purposes of this section, an Optionee will be considered
to be disabled if the Optionee is unable to engage in any substantial gainful
activity by reason of any medically determinable mental or physical impairment
which can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than 12 months.
9.3 Death. In the event of the death of an Optionee while in
-----
the employ of the Company, a Parent or a Subsidiary, the option shall be
exercisable on or prior to the expiration of one
6
<PAGE>
year after the date of such death (unless by its terms the option sooner
terminates and expires), but only if and to the extent the Optionee was entitled
to exercise the option at date of such death and only by the Optionee's personal
representative if then subject to administration as part of the Optionee's
estate, or by the person or persons to whom such Optionee's rights under the
option shall have passed by the Optionee's will or by the applicable laws of
descent and distribution.
9.4 Termination for Cause. If the Optionee's employment with
---------------------
the Company, a Parent or a Subsidiary is terminated for cause, any option
granted hereunder shall automatically terminate as of the first advice or
discussion thereof, and such Optionee shall thereupon have no right to purchase
any shares pursuant to such option. "Termination for Cause" shall mean dismissal
for dishonesty, conviction or confession of a crime punishable by law (except
minor violations), intoxication while at work, fraud, misconduct or disclosure
of confidential information.
9.5 Waiver or Extension of Time Periods. The Board of Directors
-----------------------------------
shall have the authority, prior to or within the times specified in this Section
9 for the exercise of any such option, to extend such time period or waive in
its entirety any such time period to the extent that such time period expires
prior to the expiration of the term of such option. In addition, the Board of
Directors may grant, pursuant to a specific resolution adopted at the time of
grant, modify or eliminate the time periods specified in this Section 9.
However, no Incentive Stock Option may be exercised after the expiration of ten
(10) years from the date such option is granted. If an Optionee holding an
Incentive Stock Option exercises such option, by permission, after the
expiration of the time period specified in this Section 9, the option will no
longer be treated as an Incentive Stock Option under the Code and shall
automatically be converted into a Nonqualified Stock Option.
9.6 Termination of Options. To the extent that the option of
----------------------
any deceased Optionee or of any Optionee whose employment is terminated shall
not have been exercised within the limited periods prescribed in this Section 9,
all further rights to purchase shares pursuant to such option shall cease and
terminate at the expiration of such period. No Incentive Stock Option may be
exercised after the expiration of ten (10) years from the date such option is
granted, notwithstanding any provision to the contrary.
9.7 Non-employee Optionees. Options granted to Optionees who
----------------------
are not employees of the Company, a Parent or a Subsidiary at the time of grant
shall not be subject to the provisions of this Section 9, except as specifically
provided in the option.
SECTION 10. Option Adjustments.
------------------
7
<PAGE>
10.1 Adjustments Upon Changes in Capitalization. The aggregate
------------------------------------------
number and class of shares on which options may be granted under this Plan, the
number and class of shares covered by each outstanding option and the exercise
price per share thereof (but not the total price), and all such options, shall
each be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock of the Company resulting from a stock split-up,
spin-off or combination of shares or any like capital adjustment, or the payment
of any stock dividend in shares.
10.2 Effect of Certain Transactions. Except as provided in
------------------------------
subsection 10.3, upon a merger, consolidation, acquisition of property or stock,
separation, reorganization or liquidation of the Company, as a result of which
the shareholders of the Company receive cash, stock or other property in
exchange for their shares of Common Stock, any option granted hereunder shall
terminate, but, provided that the Optionee shall have the right immediately
prior to any such merger, consolidation, acquisition of property or stock,
separation, reorganization or liquidation to exercise his or her option in whole
or in part whether or not the vesting requirements set forth in the option
agreement have been satisfied.
10.3 Conversion of Options on Stock for Stock Exchange. If the
-------------------------------------------------
shareholders of the Company receive capital stock of another corporation
("Exchange Stock") in exchange for their shares of Common Stock in any
transaction involving a merger, consolidation, acquisition of property or stock,
separation or reorganization, all options granted hereunder shall terminate in
accordance with the provision of subsection 10.2 unless the Board of Directors
and the corporation issuing the Exchange Stock, in their sole and arbitrary
discretion and subject to any required action by the shareholders of the Company
and such corporation, agree that all such options granted hereunder are
converted into options to purchase shares of Exchange Stock. The amount and
price of the such options shall be determined by adjusting the amount and price
of the options granted hereunder in the same proportion as used for determining
the number of shares of Exchange Stock the holders of the Common Stock receive
in such merger, consolidation, acquisition of property or stock, separation or
reorganization. The vesting schedule set forth in the option agreement shall
continue to apply to the options granted for the Exchange Stock.
10.4 Fractional Shares. In the event of any adjustment in the
-----------------
number of shares covered by any option, any fractional shares resulting from
such adjustment shall be disregarded and each such option shall cover only the
number of full shares resulting from such adjustment.
10.5 Determination of Board of Directors to be Final. All such
-----------------------------------------------
adjustments shall be made by the Board of Directors and
8
<PAGE>
its determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive.
SECTION 11. Securities Regulations.
----------------------
11.1 Compliance. Shares shall not be issued with respect to an
----------
option granted under this Plan unless the exercise of such option and the
issuance and delivery of such shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, any applicable state
securities laws, the Securities Act of 1933, as amended, the 1934 Act, the rules
and regulations promulgated thereunder, and the requirements of NASDAQ or any
stock exchange upon which the shares may then be listed, and shall further be
subject to the approval of counsel for the Company with respect to such
compliance. Inability of the Company to obtain from any regulatory body having
jurisdiction, the authority deemed by the Company's counsel to be necessary for
the lawful issuance and sale of any shares hereunder, shall relieve the Company
of any liability in respect of the nonissuance or sale of such shares as to
which such requisite authority shall not have been obtained.
11.2 Representations by Optionee. As a condition to the
---------------------------
exercise of an option, the Company may require the Optionee to represent and
warrant at the time of any such exercise that the shares are being purchased
only for investment and without any present intention to sell or distribute such
shares, if, in the opinion of counsel for the Company, such representation is
required by any relevant provision of the laws referred to in Section 11.1. At
the option of the Company, a stop transfer order against any shares of stock may
be placed on the official stock books and records of the Company, and a legend
indicating that the stock may not be pledged, sold or otherwise transferred
unless an opinion of counsel was provided (concurred in by counsel for the
Company) stating that such transfer is not in violation of any applicable law or
regulation, may be stamped on the stock certificate in order to assure exemption
from registration. The Board of Directors may also require such other action or
agreement by the Optionees as may from time to time be necessary to comply with
the federal and state securities laws. This provision shall not obligate the
Company to undertake registration of options or stock hereunder.
SECTION 12. Employment Rights. Nothing in this Plan or any option or
-----------------
right granted pursuant hereto shall confer upon any Optionee any right to be
continued in the employment of the Company, a Parent or any Subsidiary of the
Company or to remain a director, or to interfere in any way with the right of
the Company, a Parent or any Subsidiary, in its sole discretion, to terminate
such Optionee's employment at any time or to remove the Optionee as a director
at any time.
9
<PAGE>
SECTION 13. Amendment and Termination.
-------------------------
13.1 Action by Shareholders. The Plan may be terminated,
----------------------
modified or amended by the shareholders of the Company.
13.2 Action by Board of Directors. The Board may at any time
----------------------------
suspend, amend or terminate this Plan, provided that, to the extent required for
compliance with Rule 16b-3 promulgated under Section 16(b) of the 1934 Act,
Section 422 of the Code or by any applicable law or regulation, the Company's
shareholders must approve any amendment which will:
(a) Increase the number of shares in the aggregate which
may be sold pursuant to options granted under the Plan;
(b) Increase the period during which options may be
granted or exercised;
(c) Change the eligibility of persons allowed to be
granted Incentive Stock Options under the Plan; or
(d) Change the terms of the Plan which causes the Plan to
lose its qualification as an incentive stock option plan under Section 422(b) of
the Code.
No termination, suspension or amendment of the Plan may, without
the consent of each Optionee to whom any option shall theretofore have been
granted, adversely affect the rights of such Optionees under such options.
13.3 Automatic Termination. Unless the Plan shall theretofore
---------------------
have been terminated as herein provided, this Plan shall terminate ten (10)
years from the earlier of: (i) the date on which the Plan is adopted; or (ii)
the date on which this Plan is approved by the shareholders of the Company. No
option may be granted after such termination, or during any suspension of this
Plan. The amendment or termination of this Plan shall not, without the consent
of the Optionee, alter or impair any rights or obligations under any option
theretofore granted under this Plan.
SECTION 14. Compliance With Section 16 of the 1934 Act. With respect
------------------------------------------
to persons subject to Section 16 of the 1934 Act, transactions under this Plan
are intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the 1934 Act. To the extent any provision of this Plan or
action by Plan administrators fails to comply, it shall be deemed null and void
to the extent permitted by law and deemed advisable by Plan administrators.
SECTION 15. Effective Date of the Plan. This Plan shall become
--------------------------
effective on the date of its adoption by the Board of
10
<PAGE>
Directors of the Company and options may be granted immediately thereafter but
no option may be exercised under the Plan unless and until the Plan shall have
been approved by the shareholders within 12 months after the date of adoption of
the Plan by the Board of Directors. If such approval is not obtained within
such period the Plan and any options granted thereunder shall be null and void.
11
<PAGE>
FIRST AMENDMENT TO
THE PHAMIS INC.
1993 COMBINED INCENTIVE AND NONQUALIFIED
STOCK OPTION PLAN
THIS AMENDMENT to the PHAMIS Inc. 1993 Combined Incentive and Nonqualified
Stock Option Plan (the "Plan") is made by PHAMIS Inc. (the "Company") on this
____ day of _________________, 1996, but is to be effective January 1, 1996.
RECITALS:
WHEREAS, the common stock of the Company is actively traded in a public
market and the Company desires to modify the methodology stated in the Plan for
determining the fair market value of the Company's stock;
NOW, THEREFORE, the Plan is hereby amended by restating Section 5.2 as
follows:
5.2 Fair Market Value. For the purposes of this Plan, fair market
-----------------
value shall mean, on any given date, the applicable description below unless the
Committee otherwise determines in good faith the fair market value of the Stock:
(a) If the Common Stock is traded on the New York Stock
Exchange or the American Stock Exchange, the closing price of the Common Stock
on such exchange on which such Common Stock is traded on the date as of which
fair market value is being determined, or on the next preceding day on which
such Common Stock is traded if no Common Stock was traded on such date; or
(b) If the Common Stock is not traded on the New York Stock
Exchange or the American Stock Exchange, but is reported on the NASDAQ National
Market System or another NASDAQ Automated Quotation System, and market
information is published on a regular basis, then fair market value shall be the
closing price of the Common Stock, as so published, on the date as of which fair
market value is being determined, or on the next preceding day on which such
prices were published if no Common Stock was traded on such date; or
(c) If market information is not so published on a regular
basis, then fair market value shall be the average of the high bid and low asked
prices of the Common Stock in the over-the-counter market on the date as of
which fair market value is being determined or on the next preceding day on
which such high bid and low asked prices were recorded, as reported by a
generally accepted reporting service, if no Common Stock was traded on such
date; or
(d) If the Common Stock is not publicly traded, fair market
value shall be the value determined in good faith by the Board of Directors.
<PAGE>
IN WITNESS WHEREOF, the undersigned authority has executed this amendment
on the day and year first written above.
PHAMIS INC.
By:
----------------------------------
Its:
----------------------------------
-2-
<PAGE>
SECOND AMENDMENT TO
THE PHAMIS INC.
1993 COMBINED INCENTIVE AND NONQUALIFIED
STOCK OPTION PLAN
THIS AMENDMENT to the PHAMIS Inc. 1993 Combined Incentive and Nonqualified
Stock Option Plan (the "1993 Plan") is made by PHAMIS Inc. (the "Company") on
this 24th day of April, 1996, and is effective immediately.
RECITALS:
WHEREAS, pursuant to Section 3.3 of the 1993 Plan, the Board of Directors
has previously delegated to the Compensation Committee the full administration
of the 1993 plan;
WHEREAS, the Compensation Committee believes that it is in the Company's
best interest to revise the Company's current policy with regard to vesting of
option grants made under the 1993 plan;
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Vesting Schedule. All options granted under the 1993 Plan shall,
----------------
unless otherwise noted in the resolutions relating to any specific option grant,
be subject to the following vesting provisions:
25% of the shares subject to the option shall be vested one year from the
date of option grant;
50% of the shares subject to the option shall be vested two years from the
date of option grant;
75% of the shares subject to the option shall be vested three years from
the date of option grant; and
100% of the shares subject to the option shall be vested four years from
the date of the option grant.
IN WITNESS WHEREOF, the undersigned authority has executed this amendment
as of the day and year first written above.
PHAMIS INC.
By:
-----------------------------------
Its:
----------------------------------
<PAGE>
THIRD AMENDMENT TO
THE PHAMIS INC.
1993 COMBINED INCENTIVE AND NONQUALIFIED
STOCK OPTION PLAN
THIS AMENDMENT to the PHAMIS Inc. 1993 Combined Incentive and Nonqualified
Stock Option Plan (the "Plan") is made by PHAMIS Inc. (the "Company") on this
14th day of May, 1996, and is effective immediately.
RECITALS:
WHEREAS, under the terms of the Plan, options may be granted to employees,
directors, consultants or advisors of the Company or any subsidiary, up to an
aggregate of 400,000 shares;
WHEREAS, the Board of Directors and shareholders believe that it is in the
Company's best interest to approve the amendments to allow the Company to
continue to grant options under the Plan to secure for the company the benefits
of additional incentive inherent in the ownership of its Common Stock by key
employees of the Company and its subsidiaries and to help the Company and its
subsidiaries secure and retain the services of key employees;
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Increase of the Number of Shares Reserved for Issuance. The
------------------------------------------------------
aggregate amount of Common Stock reserved for issuance under Section 2 of the
Plan shall be increased by 500,000 shares, from 400,000 to 900,000 shares.
IN WITNESS WHEREOF, the undersigned authority has executed this amendment
as of the day and year first written above.
PHAMIS INC.
By:
-----------------------------------
Its:
----------------------------------
<PAGE>
Exhibit 4.3
-----------
PHAMIS, INC.
1994 NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
SECTION 1. Purpose. The purpose of this Nonemployee Director Stock Option
-------
Plan (the "Plan") is to enable Phamis, Inc., a Washington corporation (the
"Company"), to attract and retain as nonemployee directors individuals with
superior training, experience and ability and to provide additional incentive to
such nonemployee directors by giving them an opportunity to participate in the
ownership of the Company.
SECTION 2. Shares Subject to the Plan. Except as provided in Section 10,
--------------------------
the maximum number of shares covered by options granted under the Plan shall not
exceed 25,000 shares of the Company's common stock, par value $0.0025 per share
("Common Stock"). In the event any option under the Plan expires or is
cancelled or is terminated and is unexercised in whole or in part, the shares
allocable to the unexercised portion may again be subject to an option under the
Plan.
SECTION 3. Administration. Subject to the express provisions of the Plan,
--------------
the Plan shall be administered by the Board of Directors of the Company. The
Board of Directors shall have the power to construe the provisions of the Plan,
to determine all questions arising thereunder, to adopt rules and regulations
for the administration of the Plan, and to otherwise carry out the terms of the
Plan. The interpretation of any provisions of the Plan by the Board of
Directors shall be final. All options granted under the Plan shall be
nonstatutory options not intended to qualify with Section 422 of the Internal
Revenue Code of 1986, as amended.
The Board of Directors shall have no authority or discretion as to (i) the
eligibility of persons who are to receive options under the Plan, (ii) the price
or amount of shares covered by options granted under the Plan, or (iii) the
timing of grants of options under the Plan. All of these matters are
specifically governed by the provisions of the Plan.
The Board of Directors may delegate to a committee of the Board of
Directors any or all of its authority for administration of the Plan and, if
such delegation occurs, all references to the Board of Directors in this Plan
shall be deemed references to the committee to the extent provided in the
resolution establishing the committee.
SECTION 4. Duration of the Plan. The Plan shall be effective as of the
--------------------
date the Plan is approved by the Company's Board of Directors ("Board"),
provided that the Plan is approved by the shareholders of the Company. Options
granted under the Plan
-1-
<PAGE>
prior to such shareholder approval shall be and are made subject to defeasance
by the failure of the shareholders to approve the Plan. The Plan shall continue
in effect until the earlier of (a) ten years from the date of the first grant of
options hereunder or (b) the termination of the Plan by action of the Board.
The Board shall have the right to suspend or terminate the Plan at any time
except with respect to any options then outstanding under the Plan.
SECTION 5. Initial Grant of Options. Each individual who is a nonemployee
------------------------
director of the Company on the closing date of the Company's initial public
offering of Common Stock and who has not been an employee of the Company or any
of its subsidiaries during the 12 months preceding such date shall be granted
upon execution of the underwriting agreement an option to acquire 1,000 shares
of Common Stock. The exercise price of such options shall be equal to the
initial public offering price ("Initial Public Offering Price") as set forth on
the cover page of the final prospectus for the Company's initial public
offering. Subject to Section 10(b), each option granted pursuant to this
Section 5 shall become fully exercisable one year after the date the option is
granted if the director (optionee) attends at least 75% of the aggregate of (a)
the total number of the meetings of the Company's Board of Directors occurring
between the date of such director's election in 1994 ("Election Date") and one
year after the Election Date and (b) the total number of meetings held by all
committees of the Board of Directors on which the director served occurring
between the Election Date and one year after the Election Date. If the director
(optionee) does not attend at least 75% of such meetings, such options shall not
be exercisable.
SECTION 6. Annual Grants of Options.
------------------------
(a) Eligibility. Notwithstanding and in addition to Section 5 above,
-----------
options shall be granted automatically each year under the Plan to each
individual who is a nonemployee director of the Company the day following the
annual meeting of the shareholders, commencing with the 1995 annual meeting
("Eligibility Date"), while this Plan is in effect and who has not been an
employee of the Company or any of its subsidiaries at any time during the 12
months immediately preceding the Eligibility Date.
(b) Number of Shares: Exercise Price. On the Eligibility Date, each
--------------------------------
eligible director shall be granted an option to acquire 1,000 shares of Common
Stock. The exercise price for options granted pursuant to this Section 6 shall
be the fair market value of the Common Stock. For the purposes of this Plan,
fair market value shall mean, on any given date, the applicable description
below unless the Committee otherwise determines in good faith the fair market
value of the Stock:
-2-
<PAGE>
i. If the Common Stock is traded on the New York Stock Exchange
or the American Stock Exchange, the average of the closing prices of the
Common Stock on such exchange on which such Common Stock is traded for the
ten trading day period immediately preceding the date as of which Fair
Market Value is being determined, or on the next preceding ten trading day
period on which such Common Stock is traded if no Common Stock was traded
during such immediately preceding period; or
ii. If the Common Stock is not traded on the New York Stock
Exchange or the American Stock Exchange, but is reported on the NASDAQ
National Market System or another NASDAQ Automated Quotation System, and
market information is published on a regular basis, then Fair Market Value
shall be the average of the closing prices of the Common Stock, as so
published, over the ten trading day period immediately preceding the date
as of which Fair Market Value is being determined, or the average over the
next preceding ten trading day period on which such prices were published
if no Common Stock was traded during such immediately preceding period; or
iii. If market information is not so published on a regular
basis, then Fair Market Value shall be the average of the high bid and low
asked prices of the Common Stock in the over-the-counter market over the
ten trading day period immediately preceding the date as of which Fair
Market Value is being determined or over the next preceding ten trading day
period on which such high bid and low asked prices were recorded, as
reported by a generally accepted reporting service; or
iv. If the Common Stock is not publicly traded, Fair Market
Value shall be the value determined in good faith by the Board of
Directors.
(c) Exercisability. Subject to Section 10(b), each option shall be
--------------
fully exercisable one year after the date the option is granted if the director
(optionee) attended at least 75% of the aggregate of (a) the total number of the
meetings of the Company's Board of Directors during the calendar year in which
the option was granted and (b) the total number of meetings held by all
committees of the Board of Directors on which the director served during the
calendar year in which the option was granted. If the director (optionee) does
not attend at least 75% of such meetings, such options shall not be exercisable.
In no case may an option be exercised as to less than 100 shares at any one time
(or the remaining shares covered by the option if less than 100) during the term
of the option. Only whole shares shall be issued pursuant to the exercise of
any option.
-3-
<PAGE>
SECTION 7. Duration of Options. Except as provided below, each option
-------------------
granted under this Plan shall continue in effect for a period of ten years
following the date of grant ("Expiration Date"). In the event that an optionee
ceases to be a director of the Company for whatever reason, all outstanding
options held by such director shall expire on the earlier of the option's
original Expiration Date or one year from such director's last day of service as
a director.
SECTION 8. Nonassignability. No option shall be assignable or
----------------
transferable by the optionee except by will or by the laws of descent and
distribution of the state or country of the optionee's domicile at the time of
death or, to the extent permitted by Rule 16b-3 promulgated under Section 16 of
the Securities Exchange Act of 1934, as amended, without consideration to or on
behalf of immediate family members.
SECTION 9. Exercise of Option. Shares may be purchased or acquired
------------------
pursuant to an option granted hereunder only upon receipt by the company of
notice of exercise in writing from the optionee, specifying the number of shares
as to which the optionee desires to exercise the option and the date on which
the optionee desires to complete the transaction, and, unless in the opinion of
counsel satisfactory to the Company such a representation is not required in
order to comply with the Securities Act of 1933, as amended, containing a
representation that it is the optionee's present intention to acquire the shares
for investment and not with a view to, or in connection with, any distribution
thereof. On or before the date specified for completion of the purchase of
shares pursuant to an option, the optionee must have paid the company therefor
the full purchase price of said shares in cash, in previously acquired stock of
the Company or a combination of cash and previously acquired stock. No shares
shall be issued until full payment therefor has been made and a participant
shall have none of the rights of a shareholder until shares are issued to such
participant.
SECTION 10. Changes in Capital Structure.
----------------------------
(a) Except as provided in subsection (b) hereof, in the event that the
outstanding shares of Common stock are hereafter increased or decreased or
changed into or exchanged for a different number or kind of shares or other
securities of the Company or of another corporation, by reason of any
reorganization, merger, consolidation, reclassification, stock split-up, spin-
off, combination of shares, or dividend payable in shares, proportionate
adjustment shall be made by the Board in the number and kind of shares for the
purchase of which options may be granted under the Plan. In addition, the Board
shall make proportionate adjustment in the number and kind of shares as to which
outstanding options, or portions thereof then unexercised, shall be exercisable
as well
-4-
<PAGE>
as a corresponding proportionate adjustment in the exercise price per share
under each option. Such adjustment, if any, made by the Board shall be final,
binding and conclusive.
(b) In the event of dissolution or liquidation of the Company or a
merger or consolidation in which the Company is not the surviving corporation,
in lieu of providing for options as provided for above in this Section 10, the
Board shall provide a 30-day period immediately prior to such event during which
optionees shall have the right to exercise options in whole or in part without
any limitations on exercisability.
SECTION 11. Amendment of Plan. The Board may at any time and from time
-----------------
to time modify or amend this Plan in such respect as it shall deem advisable
because of changes in the law while the Plan is in effect or for any other
reason, provided, however, that except as provided in Section 10 hereof, no
change in an option already granted to an optionee shall be made without the
written consent of such optionee if such change would adversely affect the
rights of such optionee under such option. Unless approved by a vote of
shareholders owning not less than a majority of all shares present, or
represented, at an annual meeting or a special meeting called for the purpose of
such approval, no amendment or change shall be made in the Plan by the Board
which would cause the Plan to no longer comply with Rule 16b-3 or any successor
rule or other regulatory requirement.
SECTION 12. Approvals. The obligations of the Company under this Plan
---------
shall be subject to the approval of such state or federal authorities or
agencies, if any, as may have jurisdiction in the matter. Shares shall not be
issued with respect to an option unless the exercise and the issuance and
delivery of the shares shall comply with all relevant provisions of law,
including, without limitation, any applicable state securities laws, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the Internal Revenue Code of 1986, as amended, the respective rules and
regulations promulgated thereunder, and the requirements of any stock exchange
upon which the shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance. Inability
of the Company to obtain from any regulatory body having jurisdiction authority
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any shares hereunder shall relieve the Company of any liability for the
nonissuance or sale of such shares. The Board may require any action or
agreement by an option holder as may from time to time be necessary to comply
with the federal and state securities laws. The Company shall not be obligated
to register options, or stock granted or purchased under the Plan.
-5-
<PAGE>
SECTION 13. Limitation as to Directorship. Neither the Plan, nor the
-----------------------------
granting of an option, nor any other action taken pursuant to the Plan shall
constitute or be evidence of any agreement or understanding, express or implied,
that a nonemployee director has a right to continue as a director of the Company
for any period of time.
SECTION 14. Issue and Transfer Taxes. The Board may agree to require
------------------------
the Company to pay issuance or transfer taxes on shares issued pursuant to the
exercise of an option under the Plan.
SECTION 15. Holding Period. Each nonemployee director who exercises
--------------
Options granted under this Plan shall hold the shares of Common Stock acquired
upon exercise of such Options for six months after the date on which the each
such Option was granted. An individual holding Common Stock acquired hereunder
who disposes of such shares prior to the expiration of the six month holding
period shall notify the Company in writing prior to such disposition.
SECTION 16. Governing Law. The Plan shall be governed and construed in
-------------
accordance with the internal laws of the state of Washington without reference
to the principles of conflicts of law thereof.
-6-
<PAGE>
FIRST AMENDMENT TO
THE PHAMIS INC.
1994 NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
THIS AMENDMENT to the PHAMIS Inc. 1994 Nonemployee Director Stock Option
Plan (the "Plan") is made by PHAMIS Inc. (the "Company") on this ____ day of
_________________, 1996, but is to be effective January 1, 1996.
RECITALS:
WHEREAS, the common stock of the Company is actively traded in a public
market and the Company desires to modify the methodology stated in the Plan for
determining the fair market value of the Company's stock;
NOW, THEREFORE, the Plan is hereby amended by restating Section 6(b) as
follows:
(b) Number of Shares: Exercise Price. On the Eligibility Date, each
--------------------------------
eligible director shall be granted an option to acquire 1,000 shares of Common
Stock. The exercise price for options granted pursuant to this Section 6 shall
be the fair market value of the Common Stock. For the purposes of this Plan,
fair market value shall mean, on any given date, the applicable description
below unless the Committee otherwise determines in good faith the fair market
value of the Stock:
i. If the Common Stock is traded on the New York Stock Exchange
or the American Stock Exchange, the closing price of the Common Stock on
such exchange on which such Common Stock is traded on the date as of which
fair market value is being determined, or on the next preceding day on
which such Common Stock is traded if no Common Stock was traded on such
date; or
ii. If the Common Stock is not traded on the New York Stock
Exchange or the American Stock Exchange, but is reported on the NASDAQ
National Market System or another NASDAQ Automated Quotation System, and
market information is published on a regular basis, then fair market value
shall be the closing price of the Common Stock, as so published, on the
date as of which fair market value is being determined, or on the next
preceding day on which such prices were published if no Common Stock was
traded on such date; or
iii. If market information is not so published on a regular
basis, then fair market value shall be the average of the high bid and low
asked prices of the Common Stock in the over-the-counter market on the date
as of which fair market value is being determined or on the next preceding
day on which such high bid and low asked prices were recorded, as reported
by a generally accepted reporting service, if no Common Stock was traded on
such date; or
7
<PAGE>
iv. If the Common Stock is not publicly traded, fair market
value shall be the value determined in good faith by the Board of
Directors.
IN WITNESS WHEREOF, the undersigned authority has executed this amendment
on the day and year first written above.
PHAMIS INC.
By:
--------------------------------
Its:
--------------------------------
8
<PAGE>
Exhibit 4.4
-----------
PHAMIS INC.
SALARY SAVINGS AND DEFERRAL PLAN AND TRUST
Amended and Restated Effective January 1, 1994
<PAGE>
PHAMIS INC.
SALARY SAVINGS AND DEFERRAL PLAN
(Amended and Restated Effective January 1, 1994)
Table of Contents
-----------------
Page
PREAMBLE....................................................... 1
ARTICLE I
NATURE OF PLAN
1.1 Purpose............................................. 1
ARTICLE II
DEFINITIONS AND CONSTRUCTION
2.1 Accounts............................................ 3
2.2 Accrued Benefit..................................... 4
2.3 Actual Deferral Percentage.......................... 4
2.4 Actual Matching Percentage.......................... 4
2.5 Administration Committee or Committee............... 5
2.6 Allocation Period................................... 5
2.7 Alternate Payee..................................... 5
2.8 Annual Addition..................................... 5
2.9 Beneficiary......................................... 6
2.10 Break in Service.................................... 6
2.11 Code................................................ 6
2.12 Company............................................. 6
2.13 Compensation........................................ 6
2.14 Considered Compensation............................. 7
2.15 Deferral Limitation................................. 7
2.16 Determination Year.................................. 7
2.17 Disabled or Disability.............................. 8
2.18 Eligibility Computation Period...................... 8
2.19 Eligibility Service................................. 8
2.20 Eligible Employee................................... 8
2.21 Employee............................................ 8
2.22 Employee Contribution............................... 8
2.23 Employer............................................ 8
2.24 Employment Commencement Date........................ 8
2.25 Employer Contribution............................... 8
2.26 ERISA............................................... 9
2.27 Fiscal Year......................................... 9
2.28 Forfeiture.......................................... 9
i
<PAGE>
2.29 Former Participant.................................. 9
2.30 Highly Compensated Employee......................... 9
2.31 Hour of Service..................................... 10
2.32 Leave of Absence.................................... 12
2.33 Limitation Year..................................... 13
2.34 Matching Contribution............................... 13
2.35 Nonelective Contribution............................ 13
2.36 Normal Retirement Age............................... 13
2.37 Parental Absence.................................... 13
2.38 Participant......................................... 13
2.39 Plan................................................ 14
2.40 Plan Entry Date..................................... 14
2.41 Plan Year........................................... 14
2.42 Profit Sharing Contribution......................... 14
2.43 Qualified Domestic Relations Order.................. 14
2.44 Qualified Employer Contributions.................... 15
2.45 Re-Employed Employee................................ 15
2.46 Related Employer.................................... 15
2.47 Related Plan........................................ 16
2.48 Required Commencement Date.......................... 16
2.49 Rollover Contribution............................... 16
2.50 Salary Deferral Contribution........................ 16
2.51 Service............................................. 16
2.52 Trust............................................... 16
2.53 Trust Agreement..................................... 16
2.54 Trustee............................................. 16
2.55 Valuation Date...................................... 16
2.56 Vested Accrued Benefit.............................. 16
2.57 Vesting Service..................................... 17
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Eligibility.......................................... 18
3.2 Eligibility Service.................................. 18
3.3 Participation - Re-Employed Employees................ 18
3.4 Notice of Participation.............................. 19
3.5 Rollover Contributions............................... 19
ARTICLE IV
EMPLOYER CONTRIBUTIONS
4.1 Employer Contributions............................... 20
4.2 Employer Contribution Limitation..................... 20
4.3 Determination of Contribution........................ 21
4.4 Time and Method of Payment of Employer
Contributions...................................... 21
4.5 Limitations on Matching Contribution................. 21
4.6 Return of Employer Contributions..................... 26
ii
<PAGE>
ARTICLE V
PARTICIPANT CONTRIBUTIONS AND ROLLOVERS
5.1 Participant Election to Defer Considered
Compensation....................................... 27
5.2 Limitation on Salary Deferral Contributions for
Highly Compensated Employees....................... 27
5.3 Distribution of Excess Deferrals..................... 31
5.4 Rollover Contributions and Trust Transfers........... 31
5.5 Employee Contributions............................... 32
ARTICLE VI
ALLOCATIONS
6.1 Participant's Accounts............................... 33
6.2 Charging of Payments and Distributions............... 33
6.3 Allocation of Earnings to Accounts................... 33
6.4 Allocation of Employer Contributions................. 33
6.5 Participants to Whom Nonelective Contributions
Shall be Allocated................................. 34
6.6 Dates Contributions Considered Made.................. 34
6.7 Allocation Does Not Create Rights.................... 35
6.8 Equitable Allocations................................ 35
6.9 Limitation on Annual Additions....................... 35
6.10 Special 410(b) Allocation............................ 37
6.11 Special Valuation.................................... 37
ARTICLE VII
TERMINATION OF SERVICE - PARTICIPANT VESTING
7.1 Normal Retirement.................................... 38
7.2 Early Retirement..................................... 38
7.3 Disability........................................... 38
7.4 Death................................................ 38
7.5 Termination of Service Prior to Normal
Retirement Age..................................... 38
7.6 Years of Vesting Service............................. 38
7.7 Forfeiture Occurs and Restoration of Non-Vested
Accrued Benefit.................................... 39
7.8 Termination, Partial Termination, or Complete
Discontinuance of Employer Contributions........... 39
ARTICLE VIII
TIME AND METHOD OF PAYMENT OF BENEFITS
8.1 Time of Payment...................................... 41
8.2 Method of Payment.................................... 43
8.3 Deferral of Payments................................. 44
8.4 Involuntary and Voluntary Payments................... 44
8.5 Qualified Domestic Relations Orders.................. 45
8.6 Payment in the Event of Legal Disability............. 46
8.7 Accounts Charged..................................... 46
8.8 Payments Only from Trust............................. 46
8.9 Unclaimed Account Procedure.......................... 46
iii
<PAGE>
8.10 Restrictions on Distributions....................... 47
8.11 Securities Law Restrictions......................... 48
ARTICLE IX
PARTICIPANT LOANS
9.1 Loans to Participants: Basic Terms and Limits....... 50
9.2 Instruments and Security for Loans.................. 51
9.3 Loan Provisions Incorporated by Reference........... 52
9.4 Payment of Expenses................................. 52
ARTICLE X
IN-SERVICE WITHDRAWALS
10.1 In-Service Withdrawal From Accounts................. 53
10.2 Hardship Withdrawals................................ 53
10.3 Age 59 1/2.......................................... 55
10.4 Normal Retirement Age............................... 55
10.5 Sale of Trade or Business or Subsidiary............. 55
ARTICLE XI
TOP HEAVY PLAN PROVISIONS
11.1 Top Heavy Rules Applied............................. 56
11.2 Additional Definitions.............................. 56
11.3 Additional Limitation - Defined Benefit Plan........ 59
11.4 Minimum Benefit..................................... 60
11.5 Termination of Service Prior to Normal
Retirement Age.................................... 62
ARTICLE XII
EMPLOYER ADMINISTRATIVE PROVISIONS
12.1 Information......................................... 63
12.2 No Liability........................................ 63
12.3 Employer Action..................................... 63
12.4 Indemnity........................................... 63
12.5 Amendment to Vesting Schedule....................... 63
ARTICLE XIII
ADMINISTRATION COMMITTEE
13.1 Appointment......................................... 65
13.2 Term................................................ 65
13.3 Compensation........................................ 65
13.4 Powers of the Administration Committee.............. 65
13.5 Investment Powers................................... 66
13.6 Manner of Action.................................... 67
13.7 Authorized Representative........................... 67
13.8 Exclusive Benefit................................... 67
13.9 Interested Member................................... 67
iv
<PAGE>
13.10 Funding Policy...................................... 67
13.11 Books and Records................................... 67
ARTICLE XIV
PARTICIPANT ADMINISTRATIVE PROVISIONS
14.1 Beneficiary Designation............................. 68
14.2 No Beneficiary Designation.......................... 68
14.3 Personal Data to Administration Committee........... 68
14.4 Address for Notification............................ 68
14.5 Place of Payment and Proof of Continued
Eligibility....................................... 68
14.6 Alienation.......................................... 69
14.7 Litigation Against the Trust........................ 69
14.8 Information Available............................... 69
14.9 Beneficiary's Right to Information.................. 69
14.10 Claims Procedure.................................... 69
14.11 Appeal Procedure for Denial of Benefits............. 70
14.12 No Rights Implied................................... 71
ARTICLE XV
FIDUCIARY DUTIES
15.1 Fiduciaries......................................... 72
15.2 Allocation of Responsibilities...................... 72
15.3 Procedures for Delegation and Allocation of
Responsibilities.................................. 73
15.4 Allocation of Fiduciary Liability................... 73
ARTICLE XVI
DISCONTINUANCE AMENDMENT AND TERMINATION
16.1 Discontinuance...................................... 75
16.2 Amendment........................................... 75
16.3 Termination......................................... 75
16.4 Termination, Partial Termination, or Complete
Discontinuance of Employer Contributions.......... 75
16.5 Amendment Procedures................................ 76
16.6 Procedure on Termination............................ 76
16.7 Merger.............................................. 76
16.8 Notice of Change in Terms........................... 77
ARTICLE XVII
THE TRUST
17.1 Purpose of the Trust................................ 78
17.2 Appointment of Trustee.............................. 78
17.3 Exclusive Benefit of Participants................... 78
17.4 Benefits Supported Only By the Trust................ 78
17.5 Rights to Trust Assets.............................. 78
v
<PAGE>
ARTICLE XVIII
MISCELLANEOUS
18.1 Execution of Receipts and Releases.................. 79
18.2 No Guarantee of Interests........................... 79
18.3 Payment of Expenses................................. 79
18.4 Employer Records.................................... 79
18.5 Interpretations and Adjustments..................... 79
18.6 Uniform Rules....................................... 79
18.7 Evidence............................................ 79
18.8 Severability........................................ 79
18.9 Notice.............................................. 80
18.10 Waiver of Notice.................................... 80
18.11 Successors.......................................... 80
18.12 Headings............................................ 80
18.13 Governing Law....................................... 80
ARTICLE XIX
EMPLOYER PARTICIPATION
19.1 Adoption by Employer................................ 81
19.2 Withdrawal by Employer.............................. 81
19.3 Adoption Contingent Upon Initial and Continued
Qualification..................................... 81
19.4 No Joint Venture Implied............................ 82
vi
<PAGE>
PHAMIS INC.
SALARY SAVINGS AND DEFERRAL PLAN
(Amended and Restated Effective January 1, 1994)
PREAMBLE
--------
WHEREAS, effective October 16, 1984, PHAMIS Inc. (the "Company")
established the PHAMIS Inc. Salary Savings and Deferral Plan (the "Plan") by
adopting the Washington Mutual Savings Bank Master 401(k) Plan and Trust
Agreement;
WHEREAS, the Company adopted the First Amendment to the Plan effective
October 16, 1984 and obtained a favorable determination from the Internal
Revenue Service regarding the qualification of the Plan under the Code on
October 28, 1985;
WHEREAS, the Company amended and restated the Plan on August 1, 1992 by
adopting the IPC Pension Services Co., Inc. Defined Contribution Prototype Plan
and Trust Agreement, generally effective on January 1, 1987 and January 1, 1989,
as necessary to comply with the requirements of the Tax Reform Act of 1986;
WHEREAS, the Company amended the Plan effective January 1, 1993 and
November 1, 1993;
WHEREAS, Company now desires to completely amend and restate the Plan to be
an individually designed plan, effective January 1, 1994, and to comply with the
Unemployment Compensation Amendments of 1992, effective January 1, 1993, the
Revenue Reconciliation Act of 1993, effective January 1, 1994, and other
applicable laws and regulations promulgated thereunder, effective on such dates
required thereby; and
WHEREAS, the Company further desires to amend the Plan, effective
_____________, 1994, to provide for certain direction of investments in the
common stock of the Company;
NOW, THEREFORE, the Plan is hereby amended and restated as follows, to be
generally effective the first day of January, 1994, and the dates recited above:
ARTICLE I
NATURE OF PLAN
--------------
1.1 Purpose. The Company established and maintains the Plan in order to
-------
aid Eligible Employees accumulate capital for their retirement. The Company
intends that the Plan continue to be qualified under section 401(a) of the Code,
with a cash or deferred arrangement qualified under section 401(k) of the Code
and a trust exempt from taxation under section 501(a) of the
1
<PAGE>
Code. Pursuant to the requirements of section 401(a)(27) of the Code, the
Company also intends that the Plan be a profit-sharing plan. The provisions of
this Plan (as herein amended and restated) shall generally apply only to an
Employee, former Employee, Participant, or Former Participant whose Service with
the Employer terminates on or after January 1, 1994, and as otherwise provided
herein. The rights of any Employee, former Employee, Participant or Former
Participant whose Service with the Employer terminated before January 1, 1994,
and as otherwise provided herein, shall be governed by the Plan as it existed
prior to this amendment and restatement.
- -------------------------
End of Article I
2
<PAGE>
ARTICLE II
DEFINITIONS AND CONSTRUCTION
----------------------------
For the purpose of this Plan, the following definitions shall apply unless
the context requires otherwise. Words used in the masculine gender shall apply
to the feminine, where applicable, and wherever the context of the Plan
dictates, the plural shall be read as the singular and the singular as the
plural. The words "Article" or "Section" in this Plan shall refer to an Article
or Section of this Plan unless specifically stated otherwise. Compounds of the
word "here," such as "herein" and "hereof" shall be construed to refer to
another provision of this Plan, unless otherwise specified or required by the
context. It is the intention of the Employer that the Plan be qualified under
the provisions of the Code and ERISA and that all its provisions shall be
construed to that result.
In determining the time within which an event or action is to take place
for purposes of the Plan, no fraction of a day shall be considered, and any act,
the performance of which would fall on a Saturday, Sunday, holiday or other non-
business day, may be performed on the next following business day.
2.1 Accounts. Separate accounts maintained to record the Accrued Benefits
--------
of Participants under the Plan, which include the following or any others that
are established by the Administration Committee or the Trustee:
(a) Employee Contribution Account. Consists of the balance of Salary
-----------------------------
Deferral Contributions, if any, recharacterized as Employee Contributions
pursuant to the Section 5.2, and the income, gain, and losses allocated thereto,
and less distributions made therefrom.
(b) Matching Account. Includes Matching Contributions made by the
----------------
Employer pursuant to Section 4.1(b) and allocated to the Participant pursuant to
Section 6.4(c), and the income, gain, and losses allocated thereto and less
distributions made therefrom.
(c) Profit Sharing Account. Includes Profit Sharing Contributions
----------------------
made by the Employer pursuant to Section 4.1(c) and allocated to the Participant
pursuant to Section 6.4(d), together with the income, gain, and losses allocated
thereto and less distributions made therefrom.
(d) Rollover Account. Includes Rollover Contributions made by a
----------------
Participant or Employee in accordance with Section 5.4 of the Plan, and the
income, gain, and losses allocated thereto, and less distributions made
therefrom.
(e) Salary Deferral Account. Includes the sum of (i) Salary Deferral
-----------------------
Contributions made by the Employer in accordance with Section 4.1(a) and
allocated to the Participant pursuant to Section 6.4(b), and (ii) Nonelective
Contributions made by the Employer pursuant to Section 4.1(d) and allocated to
the Participant pursuant to Section6.4(e), together with the income, gain, and
losses allocated thereto and less distributions therefrom.
3
<PAGE>
2.2 Accrued Benefit. The amount allocated to a Participant's Accounts as
---------------
of any date.
2.3 Actual Deferral Percentage. For a specified group of Eligible
--------------------------
Employees (who have satisfied the eligibility requirements of Article III) the
average (arithmetic mean) of the ratios (calculated separately for each Eligible
Employee in such group to the nearest .01%) of: (i) the amount of all Salary
Deferral Contributions actually contributed to the Trust on behalf of such
Employee and allocated to his Salary Deferral Account for such Plan Year, and
such Matching Contributions, Nonelective Contributions, and Profit Sharing
Contributions, if any, for such Plan Year, as may qualify for aggregation
hereunder under section 401(k)(3)(D)(ii) of the Code, that may be designated by
the Administration Committee under this Section as includible in this
computation for this Plan Year, to (ii) the Considered Compensation of the
Employee during the Plan Year, such average of ratios being multiplied by 100.
(a) To the extent that the Administration Committee elects, pursuant
to the above paragraph, to take Matching Contributions, Nonelective
Contributions, or Profit Sharing Contributions (that meet the requirements of
the applicable Treasury Regulations) into account in computing the Actual
Deferral Percentage, the Actual Matching Percentage tests under Section 4.5 must
still be computed and satisfied separately, and in doing so the Employer shall
disregard the Matching Contributions, Nonelective Contributions, or Profit
Sharing Contributions used in computing the Actual Deferral Percentage for such
Plan Year.
(b) For purposes of this Section, the ratio calculated for any
Eligible Employee who is a Highly Compensated Employee for the Plan Year and who
is eligible to have Salary Deferral Contributions allocated to his account under
two or more plans or arrangements described in section 401(k) of the Code that
are maintained by an Employer or a Related Employer shall be determined as if
all such contributions were made under a single arrangement. Further, in the
event that this Plan satisfies the requirements of sections 401(a)(4) or 410(b)
(other than section 410(b)(2)(A)(ii)) of the Code only if aggregated with one or
more other plans, or if one or more other plans satisfy the requirements of
sections 401(a)(4) or 410(b) (other than section 410(b)(2)(A)(ii)) of the Code
only if aggregated with this Plan, the Actual Deferral Percentage shall be
determined by calculating the ratio for each Eligible Employee as if all such
plans were a single plan. Moreover, if two or more plans are permissively
aggregated for purposes of section 401(k) of the Code, the aggregated plans must
also satisfy sections 401(a)(4) and 410(b) of the Code as though they were a
single plan.
2.4 Actual Matching Percentage. For a specified group of Eligible
--------------------------
Employees (who have satisfied the eligibility requirements of Article III) the
average (arithmetic mean) of the ratios (calculated separately for each Eligible
Employee in such group to the nearest .01%) of: (i) the sum of all Matching
Contributions and Employee Contributions actually contributed to the Trust on
behalf of such Employee and allocated to his Matching Account or Employee
Contribution Account for such Plan Year, and, in accordance with applicable
Treasury Regulations, such Salary Deferral Contributions, Nonelective
Contributions, or Profit Sharing Contributions if any, as may be designated by
the Administration Committee under this Section as includible in this
computation for this Plan Year, to (ii) the Considered Compensation of the
Employee during the Plan Year, such average of ratios being multiplied by 100.
4
<PAGE>
(a) To the extent that the Administration Committee elects, pursuant
to the above paragraph, to take Salary Deferral Contributions, Nonelective
Contributions, or Profit Sharing Contributions into account in computing the
Actual Matching Percentage for such Plan Year, the Actual Deferral Percentage
tests under Section 5.2 must still be computed and satisfied separately, and in
doing so, the Employer shall disregard Salary Deferral Contributions,
Nonelective Contributions, and Profit Sharing Contributions used in computing
the Actual Matching Percentage for such Plan Year.
(b) For purposes of this Section, the ratio calculated for any
Eligible Employee who is a Highly Compensated Employee for the Plan Year and who
is eligible to have Matching Contributions or Employee Contributions allocated
to his account under two or more plans or arrangements described in section
401(a) of the Code that are maintained by an Employer or a Related Employer
shall be determined as if all such contributions were made under a single
arrangement. Further, in the event that this Plan satisfies the requirements of
sections 401(a)(4) or 410(b) (other than section 410(b)(2)(A)(ii)) of the Code
only if aggregated with one or more other plans, or if one or more other plans
satisfy the requirements of sections 401(a)(4) or 410(b) (other than section
410(b)(2)(A)(ii)) of the Code only if aggregated with this Plan, the Actual
Matching Percentage shall be determined by calculating the ratio for each
Eligible Employee as if all such plans were a single plan. Moreover, if two or
more plans are permissively aggregated for purposes of section 401(m) of the
Code, the aggregated plans must also satisfy sections 401(a)(4) and 410(b) of
the Code as though they were a single plan.
2.5 Administration Committee or Committee. The committee specified under
-------------------------------------
Section 13.1, as from time to time constituted, to be the administrator of the
Plan within the meaning of section 3(16)(A) of ERISA. If a Committee is not
appointed, the Company shall be the Committee.
2.6 Allocation Period. The period between Valuation Dates.
-----------------
2.7 Alternate Payee. Any spouse, former spouse, child, or other dependent
---------------
of a Participant who is recognized by a Qualified Domestic Relations Order as
having a right to receive all, or a portion of, the benefits payable under the
Plan with respect to such Participant.
2.8 Annual Addition. The sum of the following additions to a
---------------
Participant's Accounts for the Limitation Year:
(a) Employer contributions,
(b) Employee contributions, and
(c) Forfeitures, plus
(d) contributions during the Limitation Year allocated to any
individual medical benefit account (within the meaning of sections 415(l) and
419A(d)(2) of the Code) that is established for the Participant.
5
<PAGE>
For purposes of this Section, Employer and Employee contributions shall be
determined without regard to any Rollover Contributions.
2.9 Beneficiary. Any person or fiduciary designated by a Participant who
-----------
is or may become entitled to a benefit under the Plan following the death of the
Participant; provided, that in the case of a married Participant, the
Participant's Beneficiary shall be the Participant's surviving spouse unless the
Participant's spouse (i) consents in writing to the designation of another party
as Beneficiary of all or a part of the benefit to which the Participant may
become entitled under the Plan, (ii) such election designates a Beneficiary (or
a form of benefits) which may not be changed without spousal consent (or the
consent of the spouse expressly permits designations by the Participant without
any requirement of further spousal consent), (iii) the spouse's consent
acknowledges the effect of such election, and (iv) such consent is witnessed by
a notary public or a member of the Administration Committee. Such spousal
consent shall not be required if it is established to the satisfaction of the
Administration Committee that such consent cannot be obtained because the spouse
cannot be located or because of such other circumstances as the Secretary of the
Treasury may prescribe by regulations. Any consent by a spouse hereunder shall
be effective only with respect to that spouse.
2.10 Break in Service. A Plan Year during which an Employee or Participant
----------------
does not complete more than 500 Hours of Service, determined as of the end of
the Plan Year.
2.11 Code. The Internal Revenue Code of 1986, as amended.
----
2.12 Company. PHAMIS Inc. and its successors and assigns.
-------
2.13 Compensation. For purposes of determining the identity of Highly
------------
Compensated Employees, the limitation on Annual Additions, the Actual Deferral
Percentage, the Actual Matching Percentage and the Top Heavy Plan provisions, a
Participant's wages, salaries, fees for professional services, and other amounts
received (without regard to whether or not an amount is paid in cash) for
personal services actually rendered in the course of employment with an Employer
as an Employee to the extent that the amounts are includible in gross income
(including, but not limited to, commissions paid salesmen, overtime pay,
compensation for services on the basis of a percentage of profits, commissions
on insurance premiums, tips, bonuses, fringe benefits, reimbursements, and
expense allowances), but excluding the following:
(a) Employer contributions to a plan of deferred compensation to the
extent contributions are not included in gross income of the Participant for the
taxable year in which contributed, or on behalf of the Participant to a
simplified employee pension plan to the extent such contributions are deductible
under the Code, and any distributions from a plan of deferred compensation
whether or not includible in the gross income of the Participant when
distributed (except for amounts received from an unfunded, nonqualified plan in
the year such amounts are includible in the Employee's gross income);
(b) for purposes of the limitations on Annual Additions only, amounts
realized from the exercise of a nonqualified stock option, or when restricted
stock (or property) held by
6
<PAGE>
the Participant becomes freely transferable or is no longer subject to a
substantial risk of forfeiture;
(c) amounts realized from the sale, exchange or other disposition of
stock acquired under a qualified stock option; and
(d) other amounts that receive special tax benefits, or contributions
made by the Employer (whether or not under a salary reduction agreement) towards
the purchase of a 403(b) annuity contract (whether or not the contributions are
excludable from the gross income of the Participant).
For purposes of the limitation on Annual Additions, Compensation, as defined
above, taken into account for a Limitation Year, is the Compensation actually
paid or made available to the Participant during such year. For the purposes of
determining the identity of Highly Compensated Employees, the Actual Deferral
Percentage, the Actual Matching Percentage and the Top Heavy Plan provisions,
Compensation shall also include any amounts excluded from gross income of an
Employee under sections 125, 402(e)(3) (402(a)(8) prior to January 1, 1993),
402(h)(1)(B), or 403(b) of the Code. Effective for Plan Years beginning before
January 1, 1994, Compensation for all purposes in excess of $200,000 (as
adjusted at the same time and the same manner as under section 415(d) of the
Code) shall be disregarded. Effective for Plan Years beginning on or after
January 1, 1994, Compensation for all purposes in excess of $150,000 (adjusted
as provided in section 401(a)(17)(B) of the Code) shall be disregarded.
2.14 Considered Compensation. For purposes of making contributions and
-----------------------
allocations hereunder, "Considered Compensation" shall mean Compensation,
subject to the following adjustments:
(a) Amounts contributed by the Employer pursuant to a salary reduction
agreement that are not includible in gross income of the Employee under sections
125, 402(e)(3) (402(a)(8) prior to January 1, 1993), 402(h) or 403(b) of the
Code shall be added.
(b) Only amounts actually paid an Employee during the period he is a
Participant for services performed as an Eligible Employee shall be included.
(c) Amounts reimbursed by the Employer for relocation expenses of an
Employee shall be excluded.
2.15 Deferral Limitation. The $7,000 limitation specified in section
-------------------
402(g) of the Code, subject to cost of living adjustments, that applies to
salary reduction elections for each calendar year. The Deferral Limitation for
1994 is $9,240, $8,994 for 1993, $8,728 for 1992, $8,475 for 1991, $7,979 for
1990, and $7,627 for 1989.
2.16 Determination Year. The Plan Year for which a determination is being
------------------
made of who is a Highly Compensated Employee.
7
<PAGE>
2.17 Disabled or Disability. A Participant is Disabled when the Committee
----------------------
determines, in its sole and absolute discretion, that the Participant has become
totally and permanently disabled and unable to engage in any occupation for wage
or profit. The Committee may require a Participant to submit to a medical
examination in order to confirm Disability. The Committee may also rely on the
determination of Disability by the Social Security Administration.
2.18 Eligibility Computation Period. The twelve-month period beginning
------------------------------
with an Eligible Employee's Employment Commencement Date; provided, however,
that if an Eligible Employee does not satisfy the provisions of Section 3.2
during his initial twelve-months of Service, the Eligibility Computation Period
shall be the Plan Year, beginning with the first Plan Year that begins after his
Employment Commencement Date.
2.19 Eligibility Service. The period of Service of an Employee which is
-------------------
used to determine the Employee's eligibility to participate herein, determined
in accordance with the provisions of Section 3.2.
2.20 Eligible Employee. (1) Any Employee of the Company who is at least
-----------------
age 18 and is not covered by a collective bargaining agreement, and (2) an
Employee of any other Employer who is at least age 18, provided that such
Employee is a member of a classification of Employees designated by the Employer
as eligible to participate in this Plan in connection with such Employer's
adoption of this Plan pursuant to the terms of Article XIX. Provided, however,
that employees who are paid on a piece-work basis or who are temporary employees
are not Eligible Employees.
2.21 Employee. An employee of an Employer. In addition, the term
--------
"Employee" shall mean any leased employee (within the meaning of section
414(n)(2) of the Code) that section 414(n) of the Code requires the Employer to
treat as an employee, but only to the extent coverage of such leased employee is
necessary to maintain the qualification of the Plan. However, a person who is a
nonresident alien who receives no earned income (within the meaning of section
911(d)(2) of the Code from the Employer which constitutes income from sources
within the United States (within the meaning of section 861(a)(3) of the Code)
shall not be considered an Employee.
2.22 Employee Contribution. The balance, if any, of Salary Deferral
---------------------
Contributions recharacterized as Employee Contributions and allocated to a
Participant's Employee Contribution Account pursuant to the provisions of
Section 5.2.
2.23 Employer. The Company and any Related Employer which has adopted the
--------
Plan pursuant to the terms of Article XIX.
2.24 Employment Commencement Date. The date on which an Employee first
----------------------------
performs an Hour of Service for the Employer.
2.25 Employer Contribution. A contribution made by the Employer pursuant
---------------------
to Section 4.1.
8
<PAGE>
2.26 ERISA. The Employee Retirement Income Security Act of 1974, as
-----
amended.
2.27 Fiscal Year. The fiscal year of the Employer.
-----------
2.28 Forfeiture. As to a Participant, the amount that is not part of his
----------
Vested Accrued Benefit upon his termination of Service, determined pursuant to
Section 7.5. Forfeitures with respect to a Plan Year is the aggregate of each
such Forfeiture that occurs during a Plan Year, as provided in Section 7.7(a).
2.29 Former Participant. Any individual, other than a Re-Employed
------------------
Employee, who has been a Participant, but who has terminated Service, and who
has not yet received the entire benefit to which he is entitled under the Plan.
2.30 Highly Compensated Employee.
---------------------------
(a) An Employee, a former Employee who separated from Service prior to
the Determination year and who was a Highly Compensated Employee for either (i)
such former Employee's year of separation from Service or (ii) any Determination
Year ending on or after the Member's 55th birthday, or an employee of a Related
Employer, who, during the Plan Year for which Sections 4.5 or 5.2 are being
applied or during the preceding Plan Year
--
(1) was at any time a 5% owner (as defined in section 416(i)(1)
of the Code),
(2) received Compensation in excess of $75,000 (as indexed at the
same time and in the same manner as under section 415(d) of the Code),
(3) received Compensation in excess of $50,000 (as indexed at the
same time and in the same manner as under Code section 415(d)) and was in
the group of employees of the Employer and all Related Employers consisting
of the top 20% of employees when ranked on the basis of Compensation paid
during such Plan Year ("Top Paid Group"), or
(4) was at any time an officer and received Compensation greater
than 50% of the amount in effect under section 415(b)(1)(A) of the Code for
such Plan Year.
(b) However, notwithstanding the above, in the case of the Plan Year
for which Sections 4.5 or 5.2 are being applied, an employee not described in
subparagraphs (a)(2), (a)(3), or (a)(4) of this Section for the preceding Plan
Year (without regard to this sentence) shall not be treated as described in any
of the said subparagraphs for the Determination Year unless such employee is a
member of the group consisting of the 100 employees of the Employer and all
Related Employers paid the greatest Compensation during the Determination Year.
(c) For purposes of determining the number of employees in the Top
Paid Group for a Plan Year, the following employees, as described in sections
414(q)(8) and (11) of the Code, shall be excluded:
9
<PAGE>
(1) those who have not completed six months of Service;
(2) those who normally work less than 17 1/2 hours per week;
(3) those who normally work during not more than six months
during any year;
(4) those who have not attained age 21;
(5) those subject to a collective bargaining agreement; and
(6) nonresident aliens with no earned income from sources within
the United States.
(d) A determination of whether an employee is an officer for purposes
of this Section shall be made based on the responsibilities of the employee with
the Employer or a Related Employer. Of those employees determined to be
officers, no more than 50 employees (or, if less, the greater of three employees
or 10% of the employees, excluding all employees described in section 414(a)(8)
of the Code) shall be treated as officers for purposes of this Section.
Further, if no officer receives the level of Compensation described in
subparagraph (a)(4) of this Section, the highest paid officer of the group of
employers consisting of the Employer and all Related Employers shall be treated
as a Highly Compensated Employee described in subparagraph (a)(4).
(e) If any individual is a member of the family of a 5% owner or of a
Highly Compensated Employee in the group consisting of the ten Highly
Compensated Employees paid the greatest Compensation during the Determination
Year, then (i) such individual shall not be considered a separate employee, and
(ii) any Compensation paid to such individual and any Employer or Employee
contributions made on behalf of such individual shall be treated as if it were
paid to or on behalf of the 5% owner or Highly Compensated Employee. For
purposes of the immediately preceding sentence, the term "family" means, with
respect to any employee, such employee's spouse and lineal ascendants or
descendants and the spouses of such lineal ascendants or descendants. However,
for purposes of determining the Compensation of an Employee, the term "family"
shall include only the spouse of the Employee and any lineal descendants of the
Employee who have not attained age 19 before the close of the Determination
Year. For purposes of complying with the provisions of Sections 4.5 and 5.2,
the Employer Contributions, Employee Contributions, Salary Reduction
Contributions and Compensation of such family member and the Highly Compensated
Employee shall be treated according to the respective provisions of Sections
4.5(d) and 5.2(d).
2.31 Hour of Service.
---------------
(a) Each hour for which the Employee or Participant is either
directly or indirectly paid or entitled to payment by an Employer or a Related
Employer for the performance of duties or for reasons (such as vacation,
holiday, sickness, incapacity, layoff, jury duty, military duty, or leave of
absence) other than for the performance of duties (irrespective
10
<PAGE>
of whether the employment relationship has terminated), and each hour for which
back pay, irrespective of mitigation of damages, has been awarded to the
Employee or Participant or agreed to by an Employer. The number of Hours of
Service to be credited to an Employee or Participant because of his being
entitled to payment for reasons other than for the performance of duties shall
be determined in accordance with section 2530.200b-2(b) of the Department of
Labor Regulations. Notwithstanding the preceding sentence, not more than 501
Hours of Service shall be credited to any Employee or Participant during any
computation period for any single, continuous period during which the Employee
or Participant performs no duties. In addition, an hour of service performed
for a Related Employer during the time that (i) the Related Employer is a
Related Employer and (ii) any other Related Employer maintains or adopts the
Plan, that if performed for an Employer would be an Hour of Service, and any
hour with respect to such a Related Employer that would be an Hour of Service if
it were creditable pursuant to this Section with respect to an Employer shall be
considered an Hour of Service performed for the Employer.
(b) The Administration Committee shall credit Hours of Service with
respect to any Employee or Participant in the following manner:
(1) Hours of Service for which an Employee or Participant is
either directly or indirectly paid or entitled to payment by an Employer
for the performance of duties shall be credited for the Plan Year in which
the Employee performs the duties.
(2) Hours of Service for which an Employee or Participant is
either directly or indirectly paid or entitled to payment by an Employer
for reasons (such as vacation, holiday, sickness, incapacity, layoff, jury
duty, military duty, or leave of absence) other than for the performance of
duties shall be credited as follows:
(A) If payment for such Hours of Service is calculated on
the basis of units of time (such as hours, days, weeks, or months),
such Hours of Service shall be credited to the Plan Year(s) in which
the period during which no duties are performed occurs, beginning with
the first unit of time to which the payment relates.
(B) If payment for such Hours of Service is not calculated
on the basis of units of time, such Hours of Service shall be credited
to the Plan Year in which the period during which no duties are
performed occurs, or, if the period during which no duties are
performed extends beyond one Plan Year, such Hours of Service shall be
allocated between not more than the first two Plan Years on any
reasonable basis which is consistently applied.
(3) Hours of Service for which back pay has been awarded to an
Employee or Participant or agreed to by an Employer shall be credited for
the Plan Year(s) in which the award or the agreement pertains rather than
for the Plan Year in which the award, agreement, or payment is made.
11
<PAGE>
(c) The Committee shall determine Hours of Service from records of
hours worked and hours for which payment is made or due according to one of the
following methods:
(1) If an Employee is compensated on an hourly basis, his Hours
of Service shall be each Hour of Service actually completed;
(2) If an Employee is compensated on other than an hourly basis,
for each of the following periods in such Employee would be credited with
at least one Hour of Service, hours shall be determined at the rate of 45
hours per week if he is compensated on a weekly basis, at the rate of 90
hours for every two weeks if he is compensated on a bi-weekly basis, at the
rate of 95 hours for every semi-monthly period if he is compensated on a
semi-monthly basis, and at the rate of 190 hours for each month if he is
compensated on a monthly basis.
(d) Solely for purposes of determining whether an Employee or
Participant has incurred a Break in Service under Section 3.2, an Employee or
Participant shall be credited with eight hours for each day (to a maximum of 40
hours per week) that the Employee or Participant is on any unpaid Leave of
Absence. In no event shall hours credited under the preceding sentence be
counted as Hours of Service for purposes of computing a Participant's Vested
Accrued Benefit derived from Employer Contributions or for purposes of
determining whether a Participant is eligible to share in the allocation of
Employer Contributions under Article VI. In addition, an Employee or Participant
who incurs a Parental Absence shall be treated as an Employee or Participant on
an unpaid Leave of Absence for purposes of the first sentence of this paragraph;
provided, however, that Hours of Service credited to an Employee or Participant
as a result of a Parental Absence shall be credited only in the Plan Year in
which such Parental Absence commences unless such Employee or Participant would
not have incurred a Break in Service during such Plan Year without being
credited with Hours of Service for such Parental Absence, in which case such
Hours of Service shall be credited for the Plan Year immediately following the
Plan Year in which the Parental Absence commences. The Hours of Service to be
credited in connection with such Parental Absence shall be the Hours of Service
that otherwise would normally have been credited to the Employee or Participant
but for such absence or, in any case in which the Administration Committee is
unable to determine the number of Hours of Service that would otherwise normally
have been credited to such Employee or Participant, eight Hours of Service per
day of absence, provided that the total number of hours so treated as Hours of
Service for any period of Parental Absence shall not exceed 501 Hours of
Service.
2.32 Leave of Absence. Any period of absence from the active employment of
----------------
an Employer specifically granted to the Employee in writing in accordance with a
uniform policy, consistently applied, or military service under circumstance in
which the Employee has reemployment rights under Federal law, subject to the
following conditions:
(a) Absence from the active Service of the Employer by reason of Leave
of Absence granted by the Employer because of accident, illness, or military
service or for any other reason granted by the Employer on the basis of a
uniform policy applied without discrimination will not terminate an Employee's
Service, provided he returns to the active
12
<PAGE>
employment of the Employer at or prior to the expiration of his leave, or, if
not specified therein, within the period of time which accords with the
Employer's policy with respect to permitted absences.
(b) Absence from the active Service of the Employer because of
engagement in military service under circumstances in which the Employee has
reemployment rights under Federal law will be considered a Leave of Absence
granted by the Employer and will not terminate the Service of an Employee if he
returns to the active employment of the Employer within 90 days from and after
discharge or separation from such engagement or, if later, within the period of
time during which he has re-employment rights under any applicable Federal law.
(c) If any such Employee who is on Leave of Absence pursuant to
paragraphs (a) or (b) above does not return to the active Service of the
Employer at or prior to the expiration of his Leave of Absence, his Service will
be considered terminated as of the date on which his Leave of Absence began;
provided, however, that if such Employee is prevented from his timely return to
the active employment of the Employer because of his permanent disability or his
death, he shall be treated under the Plan as though he returned to active
Service immediately preceding the date of his permanent disability or his death.
2.33 Limitation Year. The 12 consecutive month period beginning on January
---------------
1 and ending on December 31.
2.34 Matching Contribution. A contribution made by the Employer pursuant
---------------------
to Section 4.1(b).
2.35 Nonelective Contribution. A contribution made by the Employer
------------------------
pursuant to Section 4.1(d).
2.36 Normal Retirement Age. Attainment of age 65.
---------------------
2.37 Parental Absence. Any period of absence from the active Service of an
----------------
Employer which commences on or after January 1, 1985:
(a) by reason of the pregnancy of the Employee;
(b) by reason of the birth of a child of the Employee;
(c) by reason of the placement of a child with the Employee in
connection with the adoption of such child by the Employee; or
(d) for purposes of caring for such child for a period beginning
immediately following such birth or placement.
2.38 Participant. An Eligible Employee, other than a Former Participant,
-----------
who has satisfied the requirements of Article III or has made a Rollover
Contribution to the Plan; provided, however, that an Employee or former Employee
who becomes a Participant solely by
13
<PAGE>
virtue of making a Rollover Contribution at a time when he has not satisfied the
requirements of Section 3.1 or Section 3.3 shall not (i) be eligible to elect
pursuant to Section 5.1 to defer any portion of his Considered Compensation,
(ii) be eligible to receive an allocation of Employer Contributions pursuant to
Section 6.4, or (iii) be eligible to receive a forfeiture allocation pursuant to
Section 4.2 until such individual satisfies the requirements of Section 3.1 or
Section 3.3 and is deemed a Participant for purposes of Sections 4.5 and 5.2.
2.39 Plan. The PHAMIS Inc. Salary Savings and Deferral Plan, as embodied
-----
herein and as amended from time to time.
2.40 Plan Entry Date. Each January 1, April 1, July 1, and October 1.
---------------
2.41 Plan Year. The 12 consecutive month period beginning on January 1 and
---------
ending on December 31 of each year.
2.42 Profit Sharing Contribution. A contribution made by the Employer
---------------------------
pursuant to Section 4.1(c).
2.43 Qualified Domestic Relations Order. An order entered on or after
----------------------------------
January 1, 1985, that creates or recognizes the existence of an Alternate
Payee's right to, or assigns to an Alternate Payee the right to, receive all or
a portion of the benefits payable with respect to a Participant under the Plan,
does not require the Plan to provide any type or form of benefit, or any option,
not otherwise provided under the Plan, does not require the Plan to provide
increased benefits (determined on the basis of actuarial value), does not
require the payment of benefits to an Alternate Payee that are required to be
paid to another Alternate Payee under another order previously determined to be
a Qualified Domestic Relations Order, and that has the following
characteristics:
(a) A judgment, decree, or order (including one that approves a
property settlement agreement) that relates to the provision of child support,
alimony payments, or marital property rights to a spouse, former spouse, child,
or other dependent of a Participant and is rendered under a state (within the
meaning of section 7701(a)(10) of the Code) domestic relations law (including a
community property law).
(b) The order must clearly specify:
(1) the name and last known mailing address (if any) of the
Participant and the name and mailing address of each Alternate Payee
covered by the order;
(2) the amount or percentage of the Participant's benefits to be
paid by the Plan to each such Alternate Payee, or the manner in which such
amount or percentage is to be determined;
(3) the number of payments or payment period to which such order
applies; and
14
<PAGE>
(4) specifically specifies that it is applicable with respect to
this Plan.
(c) In the case of any payment before a Participant has separated from
Service, an order will not be treated as failing to be a Qualified Domestic
Relations Order solely because such order requires the payment of benefits be
made to an Alternate Payee:
(1) in the case of any payment before a Participant has separated
from Service, on or after the date on which the Participant is entitled to
a distribution under the Plan or on or after the later of the date the
Participant attains age 50 or the earliest date on which the Participant
could begin receiving benefits under the Plan if the Participant separated
from Service,
(2) as if the Participant had retired on the date on which
payment is to commence under such order (taking into account only the
present value of benefits actually accrued as of such date), and
(3) in any form in which such benefits may be paid under the Plan
to the Participant (other than in the form of a joint and survivor annuity
with respect to the Alternate Payee and his or her subsequent spouse).
(d) In addition, the Administration Committee shall treat any order
entered prior to January 1, 1985, as a Qualified Domestic Relations Order if the
Committee is paying benefits pursuant to such order on such date, and the
Committee may treat any other order entered prior to January 1, 1985, as a
Qualified Domestic Relations Order even if such order does not satisfy the
requirements of this Section.
2.44 Qualified Employer Contributions. Employer Contributions that both
--------------------------------
(i) qualify for aggregation for Code section 401(k) or 401(m) discrimination
testing purposes, pursuant to sections 401(k)(3)(1) (ii) or 401(m)(3) of the
Code, and (ii) were in fact aggregated for such purposes.
2.45 Re-Employed Employee. An Employee who (i) previously separated from
--------------------
Service or service with a Related Employer with a nonforfeitable interest in his
Matching Account or Profit Sharing Account or (ii) previously separated from
Service or service with a Related Employer without a nonforfeitable interest in
his Matching Account or Profit Sharing Account but who resumes Service or
service with a Related Employer before his number of consecutive Breaks in
Service equals or exceeds the greater of five or his number of years of Vesting
Service prior to his separation from Service or separation from service with a
Related Employer.
2.46 Related Employer. Any business entity that is, along with an
----------------
Employer, (i) a member of a controlled group of corporations (as defined by
section 414(b) of the Code, with such section being modified, for purposes of
Section 6.9, in accordance with section 415(h) of the Code), (ii) a member of a
group of trades or businesses (whether or not incorporated) that are under
common control (as defined by section 414(c) of the Code, with such section
being modified, for purposes Section 6.9, in accordance with section 415(h) of
the Code), (iii) a
15
<PAGE>
member of an affiliated service group (as defined by section 414(m) of the
Code), or (iv) any other entity described by Treasury Regulations promulgated
under section 414(o) of the Code.
2.47 Related Plan. Any other defined contribution plan (as defined in
------------
section 415(k) of the Code) maintained by the Employer or any Related Employer.
2.48 Required Commencement Date. The April 1st of the calendar year
--------------------------
following the calendar year in which the Participant attains age 70 1/2.
However, for a Participant who is not a 5% owner of the Employer, who attained
age 70 1/2 during 1988 and had not retired by January 1, 1989, the Required
Commencement Date shall be April 1, 1990. This rule shall have no effect upon
any life expectancy calculation for the Participant. In addition, for a
Participant who attained age 70 1/2 before January 1, 1988 and is not a 5% owner
------
of the Employer, the Required Commencement Date shall be April 1 of the calendar
year following the later of the calendar year in which the Participant attains
-----
age 70 1/2 or retires.
2.49 Rollover Contribution. A transfer of assets according to sections
---------------------
402(c) (402(a)(5) prior to January 1, 1993), 403(a)(4) or 408(d)(3)(A)(ii) of
the Code.
2.50 Salary Deferral Contribution. A contribution made by the Employer
----------------------------
pursuant to Section 4.1(a).
2.51 Service. Any period of time the Employee is employed by an Employer,
-------
including any period the Employee is on Leave of Absence authorized by the
Employer under a uniform, nondiscriminatory policy applicable to all Employees.
The Plan shall treat service of an Employee with a predecessor or Related
Employer as Service with an Employer to the extent required by section 414(a) of
the Code.
2.52 Trust. The trust related to the Plan, as it may be amended from time
-----
to time, to hold, administer, and invest the contributions made under the Plan,
and all property of every kind held or acquired by the Trustee under the Trust
Agreement.
2.53 Trust Agreement. The agreement between the Company and the Trustee or
---------------
any successor Trustee establishing the Trust and specifying the duties of the
Trustee.
2.54 Trustee. The person or entity from time to time appointed as Trustee
-------
under the Trust Agreement.
2.55 Valuation Date. Each March 31, June 30, September 30, and December
--------------
31. The Committee may also designate any additional date as a special Valuation
Date.
2.56 Vested Accrued Benefit. The percentage of a Participant's Accrued
----------------------
Benefit to which he becomes entitled upon an event of distribution hereunder,
determined in accordance with Article VII.
16
<PAGE>
2.57 Vesting Service. The period of Service of an Employee which is used
---------------
to determine the Employee's nonforfeitable interest in his Matching Account and
his Profit Sharing Account, determined in accordance with the provisions of
Section 7.6.
- -------------------------
End of Article II
17
<PAGE>
ARTICLE III
ELIGIBILITY AND PARTICIPATION
-----------------------------
3.1 Eligibility. Each Eligible Employee who was a Participant in the Plan
-----------
on the effective date of this amendment and restatement shall continue to be a
Participant hereunder. Each other Eligible Employee may become a Participant in
the Plan on the Plan Entry Date (if employed on that date) that coincides with
or immediately follows the date upon which he completes one year of Eligibility
Service. Effective January 1, 1994, however, each Eligible Employee may become
a Participant in the Plan on the Plan Entry Date (if employed on that date) that
coincides with or immediately follows the date upon which he completes one Hour
of Service.
3.2 Eligibility Service.
-------------------
(a) General. For purposes of determining an Employee's eligibility to
-------
participate in the Plan, except as provided in Section 3.2(b) below, an Employee
shall be credited with one year of Eligibility Service at the end of an
Eligibility Computation Period in which he completes both (i) 12 months of
Service and (ii) 1,000 Hours of Service with the Employer or a Related Employer.
(b) After Separation from Service. In the case of an Employee who
-----------------------------
separates from Service and who resumes Service, but not as a Re-Employed
Employee, years or months of Eligibility Service credited to such Employee for
Service performed prior to his resumption of Service shall be disregarded. For
purposes of this Section 3.2, in the case of an Employee who separates from
Service and who resumes Service, but not as a Re-Employed Employee, Employment
Commencement Date shall mean the date on which an Employee first performs an
Hour of Service for the Employer following the close of the last Plan Year in
which the Employee incurred a Break in Service.
3.3 Participation - Re-Employed Employees. A Re-Employed Employee who is
-------------------------------------
an Eligible Employee shall re-enter the Plan as a Participant:
(a) If he was a Participant prior to his separation from Service, the
day he performs his first Hour of Service as a result of his return to Service,
or
(b) If he was not a Participant prior to his separation from Service,
on the later of (1) the first Plan Entry Date after he has completed the
requisite Eligibility Service specified in Section 3.1 (counting any Service
previously credited under Section 3.2(a) and not subsequently disregarded under
Section 3.2(b)), taking into account, where relevant, any prior Service, or (2)
his reemployment commencement date.
Any other Employee whose Service terminates and who is subsequently re-employed
shall commence participation in accordance with the provisions of Sections 3.1
and 3.2.
18
<PAGE>
3.4 Notice of Participation. Within a reasonable time following the date
-----------------------
upon which an Eligible Employee becomes eligible to become a Participant, but
prior to his Plan Entry Date, the Administration Committee shall give such
Eligible Employee reasonable notice of his pending commencement of participation
in the Plan. Such notice shall include forms on which the Eligible Employee may
make the election provided in Section 5.1 of this Plan. By his participation, a
Participant shall be deemed to have agreed to abide by the provisions of the
Plan.
3.5 Rollover Contributions. An Employee shall become a Participant on the
----------------------
date a Rollover Contribution is made on his behalf, if he has not already become
a Participant, solely for purposes of such Rollover Contribution. However, such
Employee shall not be eligible to make Participant contributions or receive an
allocation of Employer Contributions until he has satisfied the general
requirements of this Article III.
- -------------------------
End of Article III
19
<PAGE>
ARTICLE IV
EMPLOYER CONTRIBUTIONS
----------------------
4.1 Employer Contributions. Subject to the limitations specified in
----------------------
Section 4.2, each Employer shall make the contributions provided for in Section
4.1(a) for each Limitation Year ending with or within its Fiscal Year. In
addition, subject to the limitations specified in Section 4.2 for each such
Limitation Year, each Employer may also make additional contributions, in its
sole and absolute discretion, as described in subsections (b), (c) and (d) of
this Section 4.1. The Employer Contributions made for any Limitation Year shall
or may be as follows:
(a) Salary Deferral Contribution. A Salary Deferral Contribution that
----------------------------
equals the aggregate amount by which Participants have elected, in accordance
with the provisions of Section 5.1, to reduce their Considered Compensation for
the Plan Year that ends with or immediately after the Limitation Year.
(b) Matching Contribution. A Matching Contribution by the Employer
---------------------
that is subject to the limitations of Section 4.5 and that is 50% of the Salary
Deferral Contribution elected by a Participant pursuant to Section 5.1(a) (and
that is not subsequently distributed pursuant to Sections 5.2 or 5.3) that does
not exceed $2,000 in any Plan Year.
(c) Profit Sharing Contribution. A Profit Sharing Contribution in an
---------------------------
amount, if any, determined by the Employer, in its sole and absolute discretion.
(d) Nonelective Contribution. A Nonelective Contribution in an
------------------------
amount, if any, determined by the Employer in its sole and absolute discretion.
4.2 Employer Contribution Limitation.
--------------------------------
(a) Notwithstanding the provisions of Section 4.1, the aggregate
amount of Salary Deferral Contributions, Matching Contributions, Nonelective
Contributions, and Profit Sharing Contributions for each Limitation Year shall
not exceed either the total amount deductible under section 404 of the Code, or
the sum of:
(1) The aggregate of the limitations prescribed by Section 6.9
for all Participants entitled to share in the allocation of such Employer
Contributions under Section 6.4, and
(2) The sum of any amounts that have been erroneously unallocated
with respect to Employees who were or would have been entitled to share in
the allocation of Employer Contributions but for the failure to credit such
Participants with Hours of Service that are determined during the
Limitation Year to be creditable, to the extent such contribution was not
made in a preceding Limitation Year.
20
<PAGE>
If either of the above limitations would be exceeded for any Limitation Year,
the Employer shall reduce its Employer Contributions to the extent necessary to
satisfy such limitations, in the following order of reduction: (i) to the extent
permitted by law without jeopardizing the qualification of either the Plan or
the cash or deferred arrangement thereunder, Salary Deferral Contributions,
starting with the Participant(s) with the highest Actual Deferral Percentage,
(ii) Profit Sharing Contributions, (iii) Matching Contributions, and (iv)
Nonelective Contributions.
(b) Forfeitures arising during a Limitation Year shall be applied to
reduce Employer Contributions for the Limitation Year in which such Forfeitures
occur and shall be deemed to be Employer Contributions for such Limitation Year;
provided, however, that Forfeitures shall not reduce Salary Deferral
Contributions. Forfeitures used to reduce Employer Contributions shall be
deemed to reduce Employer Contributions in the following order: first,
restoration of accrued benefits as provided in Section 7.7(b), second,
Nonelective Contributions, third, Matching Contributions, and fourth, Profit
Sharing Contributions. In addition, Forfeitures may also be applied to pay the
administration expenses of the Plan, as provided in Section 18.3. If Forfeitures
arising during the Limitation Year exceed the aggregate limitations prescribed
by Section 6.9 for all Participants entitled to share in the allocation of
Employer Contributions for the Limitation Year plus any amounts described in
Section 4.2(a)(2), the amount of such excess Forfeitures shall held unallocated
in a suspense account in accordance with Section 6.9(d) and treated as
Forfeitures arising during the next Limitation Year.
4.3 Determination of Contribution. Each Employer, from its records, shall
-----------------------------
determine the amount of any contributions to be made by it to the Trust under
the terms of the Plan.
4.4 Time and Method of Payment of Employer Contributions. Each Employer
----------------------------------------------------
shall pay Salary Deferral Contributions to the Trustee on the earliest date on
which such contributions can by reasonably segregated from the Employer's
general assets, not to exceed the earlier of (a) 90 days from the date on which
such amounts would otherwise have been payable to the Participant in cash (in
the case of amounts withheld by the Employer from a Participant's wages) or (b)
the end of the 12-month period immediately following the Plan Year to which the
contributions relate. The Employer may pay the remainder of its contribution
for each Plan Year in one or more installments. The Employer's contribution for
any Plan Year shall be due on the last day of its Fiscal Year with or within
which such Plan Year ends, and, unless paid before, shall be payable then or as
soon thereafter as practicable, but not later than the time prescribed by law
for filing the Employer's federal income tax return (including extensions
thereof) for such Fiscal Year, without interest. If the contribution is on
account of the Employer's preceding Fiscal Year, the contribution shall be
accompanied by the Employer's signed statement to the Trustee that payment is on
account of such Fiscal Year. Contributions may be paid in cash, or other
property, as the Employer may determine, including qualifying employer real
property and qualifying employer securities (as defined in sections 407 and 408
of ERISA). Property shall be valued at its fair market value at the time of
contribution. All contributions for each Plan Year shall be deemed to be paid
as of the earlier of the actual date of payment or the last day of such Plan
Year.
4.5 Limitations on Matching Contribution. For each Plan Year, the Plan
------------------------------------
shall satisfy the nondiscrimination tests in section 401(m) of the Code and
Treasury Regulations promulgated
21
<PAGE>
thereunder. This Code section and corresponding regulations are hereby
incorporated by this reference.
(a) Limitations. Notwithstanding the provisions of Sections 4.1 and
-----------
5.2(c)(3), the Actual Matching Percentage for the Highly Compensated Employees
with respect to any Plan Year shall not exceed the greater of (1) or (2):
(1) The Actual Matching Percentage for the Eligible Employees who
are not Highly Compensated Employees multiplied by 1.25, or
(2) The Actual Matching Percentage for the Eligible Employees who
are not Highly Compensated Employees multiplied by two provided that the
Actual Matching Percentage for the Highly Compensated Employees may not
exceed the Actual Matching Percentage for the Eligible Employees who are
not Highly Compensated Employees by more than two percentage points, but
subject to the aggregate limitation rules of Section 4.5(b).
(b) Aggregate Limit. If one or more Highly Compensated Employees are
---------------
eligible for contributions that are tested under both this Section 4.5 and
Section 5.2, multiple use of the Actual Matching Percentage alternative limit
set forth in Section 4.5(a)(2) shall be limited so that the disparity in the
aggregated Actual Deferral Percentage and Actual Matching Percentage of such
Highly Compensated Employees does not exceed that of all other Participants by
more than the aggregate limit. Except as provided in this Section, the
"aggregate limit," for purposes of this Section 4.5(b), is the greater of the
following:
(1) The sum of:
(A) 1.25 multiplied by the greater of (i) the Actual
Deferral Percentage of the group of Participants who are not Highly
Compensated Employees for the Plan Year, or (ii) the Actual Matching
Percentage of the group of Participants who are not Highly Compensated
Employees for the Plan Year, and
(B) Two plus the lesser of (i) or (ii) above; provided,
however, that this amount shall not exceed 2.0 multiplied by the
lesser of (i) or (ii) above.
(2) The sum of:
(A) 1.25 multiplied by the lesser of (i) the Actual Deferral
Percentage of the group of Participants who are not Highly Compensated
Employees for the Plan Year, and (ii) the Actual Matching Percentage
for the group of Participants who are not Highly Compensated Employees
for the Plan Year; and
22
<PAGE>
(B) Two plus the greater of (i) and (ii) in the immediately
preceding subparagraph; provided, however, that this amount shall not
exceed 2.0 multiplied by the greater of (i) or (ii) above.
Amounts in excess of the aggregate limit shall be treated as excess
contributions and adjusted as provided in Section 4.5(c). For purposes of
applying this multiple use limit, the Actual Matching Percentage and the Actual
Deferral Percentage shall be determined after any required distributions of
excess contributions and deferrals under Sections 4.5(c), 5.2(c), and 5.3, and
any recharacterizations of excess contributions under Section 5.2(c)(3).
(c) Adjustments for Excess Contributions. A distribution which is
------------------------------------
made pursuant to the adjustments described in this Section 4.5(c) may be made
notwithstanding any other provision of the Plan.
(1) Determination of Excess Contributions. If at any time during
-------------------------------------
a Plan Year, the Actual Matching Percentage for the Highly Compensated
Employees would exceed, if not adjusted in accordance with the limitations
of this Section, the amounts allowed under Section 4.5(a), the "excess
contributions" (hereinafter defined) for the Plan Year may be eliminated by
the Administration Committee by (i) refunding Employee Contributions and/or
Matching Contributions plus earnings (or less losses) thereon for the Plan
----
Year, (ii) forfeiting Matching Contributions that are not vested, or (iii)
a combination of the above, until the Actual Matching Percentage for the
Highly Compensated Employees does not exceed the limits of Section 4.5(a).
"Excess contributions" shall mean, with respect to the Plan Year, the
excess of (i) the aggregate amount of Employee Contributions and Matching
Contributions (and any other contributions considered in determining the
Actual Matching Percentage) actually paid over to the Trust (or which,
absent the limitations of Section 4.5(a), would have been paid over to the
Trust) on behalf of Highly Compensated Employees for such Plan Year, over
(ii) the maximum amount of such Employee Contributions and Matching
Contributions (and any other contributions considered in determining the
Actual Matching Percentage) permitted under the limitations of Section
4.5(a).
Refund or reduction of excess contributions shall be made according to any
of the following methods, alone or in combination, as determined by the
Administration Committee, and in accordance with sections 401(a)(4) and
401(m) of the Code (and regulations thereunder):
(A) Refund of Unmatched Employee Contributions. Any
------------------------------------------
Employee Contributions which are not matched by Matching Contributions
or any other contributions considered in determining the Actual
Matching Percentage (plus earnings or less losses thereon as specified
in Sections 4.5(c)(3) and 4.5(c)(4) below) shall be refunded
(according to the leveling method specified in Section 4.5(c)(2)
below) to such Highly Compensated Employees until the limits of
Section 4.5(a) are satisfied.
23
<PAGE>
(B) Forfeiture of Unvested Matching Contributions. Any
---------------------------------------------
Matching Contributions contributed to a Highly Compensated Employee's
Matching Account which are not vested shall be treated as a Forfeiture
until the limits of Section 4.5(a) are satisfied.
(C) Refund of Matching Contributions and Matched Employee
-----------------------------------------------------
Contributions. If, after applying paragraph (A) above, the limits of
-------------
Section 4.5(a) are not satisfied, the Administration Committee shall
refund such excess contributions (including earnings and losses as
specified in Sections 4.5(c)(3) and 4.5(c)(4)) to the applicable
Highly Compensated Employees by alternately applying paragraphs (i)
and (ii) below on an equal dollar-for-dollar basis, until the limits
of Section 4.5(a) are satisfied.
(i) Refund (according to the leveling method specified
in Section 4.5(c)(2)) the amount of Matching Contributions that
have been contributed by the Employer, and
(ii) Refund (according to the leveling method specified
in Section 4.5(c)(2)) the portion of Employee Contributions that
were matched.
(2) Leveling Method. The amount of excess contributions to be
---------------
refunded to each Highly Compensated Employee under Sections 4.5(c)(1)(A) or
4.5(c)(1)(C) above is to be determined by the following leveling method,
under which the Actual Matching Percentage of the Highly Compensated
Employee with the highest Actual Matching Percentage is reduced to the
extent required to (i) enable the Plan to satisfy the limitations of
Section 4.5(a) or (ii) cause such Highly Compensated Employee's Actual
Matching Percentage to equal the Actual Matching Percentage of the Highly
Compensated Employee with the next highest Actual Matching Percentage,
whichever occurs first. This process (in conjunction with the proportional
reduction of Matching Contributions under Section 4.5(c)(1)(C)(i)) must be
repeated until the Plan satisfies the limitations of Section 4.5(a). All
refunds from a Participant's Salary Deferral Account shall be charged first
against Salary Deferral Contributions for the calendar year that includes
the first day of the Plan Year, and then, to the extent necessary, charged
against Salary Deferral Contributions for the calendar year that includes
the last day of the Plan Year. All refunds shall be distributed by the
Trustee to the Highly Compensated Employees within 2 1/2 months after the
close of the Plan Year in which such excess contributions arose, if
administratively feasible, and within 12 months after the close of such
Plan Year, at the latest.
The excess contributions identified by application of the preceding
paragraph shall be distributed to the Highly Compensated Employees whose
Actual Matching Percentages were reduced.
(3) Determination of Earnings and Losses for the Plan Year. The
------------------------------------------------------
earnings or losses allocable to excess contributions for the applicable
Plan Year shall be
24
<PAGE>
determined by multiplying the total income (or loss) allocable to the
Participant's Employee Contribution Account for the applicable Plan Year by
a fraction, the numerator of which is the excess contribution on behalf of
the Participant for the applicable Plan Year and the denominator of which
is the balance of the Participant's Employee Contribution Account on the
last day of the applicable Plan Year (prior to any refund of excess
contributions) reduced by the income or gain (or increased by the loss)
allocable to such total amount for the Plan Year.
(4) Income Allocable to Excess Contributions. The income
----------------------------------------
allocable to excess contributions, for purposes of Section 4.5(c)(3), shall
include all earnings and appreciation, including such items as interest,
dividends, rent, royalties, gains from the sale of property, appreciation
in the value of stock, bonds, annuity and life insurance contracts, and
other property, without regard to whether or not such appreciation has been
realized.
(d) Special Rules For Family Members.
--------------------------------
(1) If an eligible Highly Compensated Employee is subject to the
family aggregation rules of Code section 414(q)(6) because such Employee is
either a 5% owner or one of the ten most highly compensated employees, the
combined Actual Matching Percentage for the family group (which is treated
as one Highly Compensated Employee) shall be determined by combining
Matching Contributions, Employee Contributions, Compensation, and any
amounts considered in determining the Actual Matching Percentage, of all
the eligible family members.
(2) The Matching Contributions, Employee Contributions,
Compensation and any amounts considered in determining the Actual Matching
Percentage of all family members are disregarded for purposes of
determining the Actual Matching Percentage for both the group of Highly
Compensated Employees and the group of Employees that are not Highly
Compensated Employees, except to the extent taken into account under
Section 4.5(d)(1) above.
(3) If an Employee is required to be aggregated as a member of
more than one family group in the Plan, all Eligible Employees who are
members of those family groups that include that Employee are aggregated as
one family group in accordance with Sections 4.5(d)(1) and 4.5(d)(2).
(4) The determination and correction of excess contributions of a
Highly Compensated Employee whose Actual Matching Percentage is determined
under the family aggregation rules of this Section 4.5(d) is accomplished
by reducing the Actual Matching Percentage as required under Section 4.5(c)
and allocating the excess aggregate contributions for the family group
among the family members in proportion to the Employee Contributions and
Matching Contributions (and amounts treated as the same) for each such
family member.
25
<PAGE>
4.6 Return of Employer Contributions. Upon an Employer's request, a
--------------------------------
contribution which was (a) made upon a mistake of fact, (b) conditioned upon
initial qualification of the Plan, or (c) conditioned upon deductibility of the
contribution under section 404 of the Code, shall be returned to the Employer
within one year after payment of the contribution, denial of the initial
qualification, or disallowance of the deduction (to the extent disallowed), as
the case may be; provided, however, the amount returned shall be the excess of
the amount contributed over the amount which would have been contributed if
there had been no mistake of fact or a mistake in determining the amount of the
deduction. Any earnings on the excess contribution amount shall not be returned
to the Employer, although any losses thereon will reduce the amount so returned.
The entire amount may be returned if the Plan, from its inception, fails to be a
qualified plan, within the meaning of section 401(a) of the Code.
- -------------------------
End of Article IV
26
<PAGE>
ARTICLE V
PARTICIPANT CONTRIBUTIONS AND ROLLOVERS
---------------------------------------
5.1 Participant Election to Defer Considered Compensation.
-----------------------------------------------------
(a) Subject to the provisions of Section 5.2, a Participant may elect:
(1) To receive his entire Considered Compensation in cash; or
(2) To defer a portion of his Considered Compensation, not to
exceed the Deferral Limitation for a calendar year. Such an election must
be a specified whole percentage that does not exceed 15% of a Participant's
Considered Compensation. The Employer shall contribute the amount deferred
to the Trust as a Salary Deferral Contribution to be allocated, for the
Participant's benefit, to his Salary Deferral Account.
The Deferral Limitation above shall be decreased by any salary deferrals under
section 401(k) of the Code made by a Participant under any Related Plan, to the
extent that any "excess deferrals" (as defined in Section 5.3) are allocated to
this Plan pursuant to Section 5.3.
(b) An Employee must make an election under this Section 5.1 to defer
the receipt of Compensation on the form and within the time prescribed by the
Committee. The deferral election shall become effective as of the first Plan
Entry Date that is coincident with or immediately follows the date that the
Employee becomes an Eligible Employee, or, if the initial election is not filed
in a timely manner, as soon as is administratively feasible after such Plan
Entry Date.
(c) A Participant may prospectively modify a deferral election made
hereunder to be effective on any Plan Entry Date, or prospectively revoke a
deferral election effective on any payroll date, by providing written notice of
such modification to the Administration Committee in the time and manner
prescribed by the Committee.
5.2 Limitation on Salary Deferral Contributions for Highly Compensated
------------------------------------------------------------------
Employees. For each Plan Year, the Plan shall satisfy the nondiscrimination
- ---------
tests in section 401(k)(3) of the Code and the Treasury Regulations promulgated
thereunder. This Code section and regulations are hereby incorporated by this
reference.
(a) Limitations. Notwithstanding the provisions of Section 5.1, the
-----------
Actual Deferral Percentage for the Highly Compensated Employees with respect to
any Plan Year shall not exceed the greater of (1) or (2):
(1) The Actual Deferral Percentage for the Eligible Employees who
are not Highly Compensated Employees multiplied by 1.25, or
(2) The Actual Deferral Percentage for the Eligible Employees who
are not Highly Compensated Employees multiplied by two provided that the
Actual Deferral
27
<PAGE>
Percentage for the Highly Compensated Employees may not exceed the Actual
Deferral Percentage for the Eligible Employees who are not Highly
Compensated Employees by more than two percentage points, but subject to
the aggregate limitation rules of Section 5.2(b).
(b) Aggregate Limit. If one or more Highly Compensated Employees are
---------------
eligible for contributions that are tested under both Section 4.5 and this
Section 5.2, multiple use of the Actual Deferral Percentage alternative limit
set forth in Section 5.2(a)(2) shall be limited so that the disparity in the
aggregated Actual Deferral Percentage and Actual Matching Percentage of such
Highly Compensated Employees does not exceed that of all other Participants by
more than the aggregate limit. For purposes of this Section 5.2(b), the
"aggregate limit" is determined by the greater of the following:
(1) The sum of:
(A) 1.25 multiplied by the greater of (i) the Actual
Deferral Percentage of the group of Participants who are not Highly
Compensated Employees for the Plan Year, or (ii) the Actual Matching
Percentage of the group of Participants who are not Highly Compensated
Employees for the Plan Year; and
(B) Two plus the lesser of (i) or (ii) above; provided,
however, that this amount shall not exceed 2.0 multiplied by of the
lesser of (i) or (ii) above.
(2) The sum of:
(A) 1.25 multiplied by the lesser of (i) the Actual Deferral
Percentage of the group of Participants who are not Highly Compensated
Employees for the Plan Year, and (ii) the Actual Matching Percentage
for the group of Participants who are not Highly Compensated Employees
for the Plan Year; and
(B) Two plus the greater of (i) and (ii) in the immediately
preceding subparagraph; provided, however, that this amount shall not
exceed two multiplied by the greater of (i) or (ii) above.
Amounts in excess of the aggregate limit shall be treated as excess
contributions and adjusted as provided in Section 5.2(c). For purposes of
applying this multiple use limit, the Actual Matching Percentage and the Actual
Deferral Percentage shall be determined after any required distributions of
excess contributions and deferrals under Sections 4.5(c), 5.2(c), and 5.3, and
any recharacterizations of excess contributions under Section 5.2(c)(3).
(c) Adjustments for Excess Contributions. If the Actual Deferral
------------------------------------
Percentage for the Highly Compensated Employees exceeds or is reasonably
expected by the Committee to
28
<PAGE>
exceed the amounts allowed under Section 5.2(a), the Committee shall, in its
sole and absolute discretion, do one or more of the following:
(1) Prospective Reduction of Excess Contributions. As often as
---------------------------------------------
the Committee elects, and at any time during a Plan Year, it shall
prospectively reduce the amount of Considered Compensation to be deferred
pursuant to Section 5.1(a) by each Highly Compensated Employee who has
elected pursuant to Section 5.1(a) to defer a portion of his Considered
Compensation until the Actual Deferral Percentage for Highly Compensated
Employees will not exceed the limits of Section 5.2(a).
(2) Refund of Excess Contributions.
------------------------------
(A) Refund the portion of each Highly Compensated Employee's
Salary Deferral Contribution that constitutes a portion of the excess
contribution (hereinafter defined) for the Plan Year, plus earnings
----
(or less losses) thereon for the Plan Year until the Actual Deferral
Percentage for the Highly Compensated Employees does not exceed the
limits of Section 5.2(a) with all refunds from a Participant's Salary
Deferral Account to be charged first against Salary Deferral
Contributions for the calendar year that includes the first day of the
Plan Year, and then, to the extent necessary, charged against Salary
Deferral Contributions for the calendar year that includes the last
day of the Plan Year. All such refunds shall be distributed by the
Trustee to the Employee within two and one-half months after the close
of the Plan Year in which the excess contribution arose, if
administratively possible, and within 12 months after the close of
such Plan Year at the latest. For purposes of this Section 5.2(c),
"excess contribution" shall mean, with respect to any Plan Year, the
excess of (i) the aggregate amount of Salary Deferral Contributions
(and any other amounts considered in determining the Actual Deferral
Percentage) actually paid over to the Trust on behalf of Highly
Compensated Employees for such Plan Year, over (ii) the maximum amount
of such Salary Deferral Contributions (and any other amounts
considered in determining the Actual Deferral Percentage) permitted
under the limitations of Section 5.2(a).
The amount of excess contributions for each Highly Compensated
Employee is to be determined by the following leveling method, under
which the Actual Deferral Percentage of the Highly Compensated
Employee with the highest Actual Deferral Percentage is reduced to the
extent required to (i) enable the Plan to satisfy the limitations of
Sections 5.2(a), or (ii) cause such Highly Compensated Employee's
Actual Deferral Percentage to equal the Actual Deferral Percentage of
the Highly Compensated Employee with the next highest Actual Deferral
Percentage, whichever occurs first. This process must be repeated
until the Plan satisfies the limitations of Section 5.2(a).
The provisions of this Section 5.2(c)(2) shall be applied after the
provisions of Section 5.3 and any distributions thereunder. Any
distribution made pursuant to
29
<PAGE>
this Section 5.2(c)(2) may be made notwithstanding any other provision
of this Plan.
(B) Determination of Earnings and Losses for Plan Year. The
--------------------------------------------------
earnings or losses allocable to excess contributions for the
applicable Plan Year shall be determined by multiplying the total
income (or loss) allocable to the Participant's Salary Deferral
Account for the applicable Plan Year by a fraction, the numerator of
which is the excess contribution on behalf of the Participant for the
applicable Plan Year and the denominator of which is the balance of
the Participant's Salary Deferral Account on the last day of the
applicable Plan Year (prior to any refund or redistribution of excess
contributions), reduced by the income or gain (or increased by the
loss) allocable to such total amount for the Plan Year.
(C) Income Allocable to Excess Contributions. The income
----------------------------------------
allocable to excess contributions, for purposes of Section
5.2(c)(2)(B), shall include all earnings and appreciation, including
such items as interest, dividends, rent, royalties, gains from the
sale of property, appreciation in the value of stock, bonds, annuity
and life insurance contracts, and other property, without regard to
whether such appreciation has been realized.
(3) Recharacterization of Excess Contributions. The Committee
------------------------------------------
may reduce the portion of each Highly Compensated Employee's Salary
Deferral Contribution that constitutes a portion of the excess contribution
(as defined and determined in accordance with Section 5.2(c)(2)(A)) for the
Plan Year, plus earnings (or less losses) thereon for the Plan Year, until
the Actual Deferral Percentage for the Highly Compensated Employees does
not exceed the limits of Section 5.2(a) and recharacterize the reduction
amounts as Employee Contributions (and earnings thereon) and credit such
recharacterized amounts to the appropriate Participants' Employee
Contribution Account for the same Plan Year as the year in which the Salary
Deferral Contributions being recharacterized were made. Such
recharacterizations shall be charged first against Salary Deferral
Contributions for the calendar year that includes the first day of the Plan
Year, and then, to the extent necessary, charged against Salary Deferral
Contributions for the calendar year that includes the last day of the Plan
Year. However, as required under section 1.401(k)-1(f)(3)(iii)(B) of the
Treasury Regulations, such Salary Deferral Contributions may be
recharacterized only to the extent that a Highly Compensated Employee could
have otherwise made Employee Contributions to the Plan.
The Employer or Committee shall report recharacterized excess contributions
as Employee Contributions to the Internal Revenue Service and the
Participant, by timely providing to the Employer and Participant such forms
as the Commissioner of the Internal Revenue Service shall designate, and
shall timely take such other action as the Commissioner of the Internal
Revenue Service shall require. Recharacterization will be deemed to have
occurred on the date on which the last of those Highly Compensated
Employees with excess contributions to be recharacterized is notified in
the manner specified in this Section 5.2(c)(3). However, notwithstanding
anything to the contrary
30
<PAGE>
above, excess contributions may not be recharacterized after 2 1/2 months
after the close of the Plan Year to which the recharacterization relates.
The provisions of this Section 5.2(c)(3) shall be applied after the
provisions of Section 5.3 and any distributions thereunder. Any
recharacterization made pursuant to this Section 5.2(c)(3) may be made
notwithstanding any other provision of this Plan.
(d) Special Rules For Family Members.
--------------------------------
(1) If an eligible Highly Compensated Employee is subject to the
family aggregation rules of section 414(q)(6) of the Code because such
Employee is either a 5% owner or one of the ten most highly compensated
employees, the combined Actual Deferral Percentage for the family group
(which is treated as one Highly Compensated Employee) shall be determined
by combining Salary Deferral Contributions, Compensation, and amounts (such
as Nonelective Contributions) treated as Salary Deferral Contributions of
all the eligible family members.
(2) The Salary Deferral Contributions, Compensation and amounts
treated as Salary Deferral Contributions of all family members are
disregarded for purposes of determining the Actual Deferral Percentage for
the group of Employees that are not Highly Compensated Employees, except to
the extent taken into account under Section 5.2(d)(1) above.
(3) If an Employee is required to be aggregated as a member of
more than one family group in the Plan, all Eligible Employees who are
members of those family groups that include that Employee are aggregated as
one family group in accordance with Sections 5.2(d)(1) and 5.2(d)(2).
(4) The determination and correction of excess contributions of a
Highly Compensated Employee whose Actual Deferral Percentage is determined
under the family aggregation rules of this Section 5.2(d) is accomplished
by reducing the Actual Deferral Percentage as required under Section 5.2(c)
and allocating the excess contributions for the family group among the
family members in proportion to the Salary Deferral Contributions (and
amounts treated as the same) for each such family member.
5.3 Distribution of Excess Deferrals. If a Participant is required to
--------------------------------
include in his gross income for a calendar year elective deferrals (as defined
in section 402(g)(3) of the Code) which exceed the Deferral Limitation, such
amounts shall be treated as "excess deferrals" and shall be distributed to the
Participant. The Administration Committee shall distribute such excess
deferral, adjusted for any income or losses allocable to such amount (determined
in accordance with the principles of Section 5.2(c)(2)) for the Plan Year in
question not later than the April 15th following the calendar year in which the
excess deferrals were made, or such later time as permitted by the Code or in
Treasury Regulations. Any distribution made pursuant to this Section 5.3 may be
made notwithstanding any other provision of this Plan.
5.4 Rollover Contributions and Trust Transfers. An Employee may make a
------------------------------------------
Rollover Contribution to the Plan of any nonforfeitable interest he has in
assets attributable to
31
<PAGE>
contributions made by an employer under another plan that is qualified under
section 401(a) of the Code.
(a) Rollover Contributions shall be made in cash or non-cash property
acceptable to the Trustee. Rollover Contributions shall be separately accounted
for and are at all times nonforfeitable. Before accepting a Rollover
Contribution, the Committee may require a Participant to furnish satisfactory
evidence that the proposed contribution is in fact a Rollover Contribution which
the Code permits an employee to make to a plan qualified under section 401(a) of
the Code.
(b) The Trustee may accept a transfer of assets from another plan that
is qualified under section 401(a) of the Code. In such an event, the Committee
shall determine the appropriate Accounts of the affected Participants or shall
establish new Accounts to allocate such assets. If the Trustee accepts an asset
transfer that would require the Plan to provide any benefit, pursuant to section
411(d)(6) of the Code or otherwise, that is not provided for in the Plan on the
date of such transfer, the Committee may establish new Accounts to preserve the
protected benefits of the affected Participants. The provisions of Section 16.7
shall apply if the Trustee accepts any trust-to-trust transfer of assets.
5.5 Employee Contributions. Employee Contributions shall consist solely
----------------------
of Salary Deferral Contributions recharacterized as Employee Contributions by
the Committee pursuant to Section 5.2(c)(3), and shall only be permitted to the
extent allowable under section 1.401(k)-1(f)(3)(iii)(B) of the Treasury
Regulations. As of the last Valuation Date for each Plan Year, the Committee
shall allocate and credit, for the Plan Year preceding such Valuation Date, each
Participant's Employee Contributions deemed to have been made during such Plan
Year, plus earnings and gains and less any losses for such Plan Year on Employee
Contributions, to the contributing Participant's Employee Contribution Account.
- -------------------------
End of Article V
32
<PAGE>
ARTICLE VI
ALLOCATIONS
-----------
6.1 Participant's Accounts. The Administration Committee shall establish
----------------------
for each Participant one or more of the Accounts described in Section 2.1, as
appropriate, to which shall be allocated the proper Employer Contributions and,
if applicable, Employee Rollover Contributions, together with the income, gain,
and losses allocable thereto and less the distributions therefrom. The
establishment of separate Accounts shall not require a segregation of the Trust
assets.
6.2 Charging of Payments and Distributions. On each Valuation Date, all
--------------------------------------
payments, distributions and loans made under the Plan since the immediately
preceding Valuation Date to or for the benefit of a Participant or his
Beneficiary shall be charged to the proper Accounts of such Participant.
6.3 Allocation of Earnings to Accounts. The charges and allocations to
----------------------------------
Accounts provided for in this Section shall be performed separately with respect
to each Account. On each Valuation Date, after allocating charges pursuant to
Section 6.2 and prior to allocating Profit Sharing Contributions or Matching
Contributions made to the Trust during the immediately preceding Allocation
Period, Trust earnings and realized and unrealized gains and losses that are
attributable to each Participant's Account shall be allocated according to the
actual investment experience for each such Account.
6.4 Allocation of Employer Contributions. With respect to Salary Deferral
------------------------------------
Contributions and Matching Contributions, as of the last day of the Allocation
Period in which such Salary Deferral Contributions occurred and, with respect to
all other Employer Contributions, as of the last Valuation Date for each Plan
Year, the Administration Committee shall:
(a) First, determine the aggregate limitation prescribed by Section
-----
6.9 for all Participants entitled to share in the allocation of Employer
Contributions for the Limitation Year ending within the Plan Year.
(b) Next, as of each Valuation Date, allocate to each Participant's
----
Salary Deferral Account a portion of the total Salary Deferral Contributions to
be allocated on such Valuation Date the amount of Salary Deferral Contributions
authorized by the Participant, in accordance with Section 5.1, during the
immediately preceding Allocation Period; provided that the amount allocated to a
Highly Compensated Employee's Salary Deferral Account for a given Limitation
Year shall be subject to the limitations of Section 5.2.
(c) Next, for those Participants who have authorized Salary Deferral
----
Contributions and who have completed one year of Vesting Service, as of each
Valuation Date allocate to each such Participant's Matching Contribution Account
a portion of the total Matching Contributions to be allocated during the
immediately preceding Allocation Period that equals the percentage, if any, of
such Participant's Salary Deferral Contributions for such Plan
33
<PAGE>
Year to be contributed as Matching Contribution under Section 41(b); provided
that the amount allocated to the Matching Account of a Highly Compensated
Employee for a given Plan Year shall be subject to the limitations of Section
4.5.
(d) Next, as of the last Valuation Date for each Plan Year, allocate,
----
for the Plan Year preceding such Valuation Date, Profit Sharing Contributions
among the Profit Sharing Accounts of Participants who completed one year of
Vesting Service during the Plan Year, or who terminated employment with the
Employer during the Plan Year by reason of death, Disability, or retirement,
such allocation to be pro rata according to the ratio that each such
--- ----
Participant's Considered Compensation for the Plan Year bears to the Considered
Compensation of all Participants entitled to such allocation of the Profit
Sharing Contribution for such Plan Year.
(e) (1) Next, unless otherwise provided in an adoption agreement,
----
each Plan Year for which an Nonelective Contribution is made, the Employers
shall divide such contribution into one or more separate tiers, as
determined in their sole discretion.
(2) If the Nonelective Contribution is divided into more than
one tier, each succeeding tier shall be allocated, as of the last Valuation
Date of the Plan Year, to the Salary Deferral Account of each non-Highly
Compensated Employee entitled thereto by Section 6.5 who, after
disregarding the Employees receiving an allocation from a previous tier,
elected the lowest percentage of Salary Deferral Contributions for such
year, in the ratio that the Considered Compensation of each such non-Highly
Compensated Employee bears to the Considered Compensation of all such non-
Highly Compensated Employees who are entitled to receive an allocation from
that tier.
(3) The allocation formula under this Section 6.4(e) shall be
employed so that the contribution and allocation to each tier results in
the Actual Deferral Percentage (or, at the election of the Administration
Committee, the Actual Matching Percentage) for that tier being raised by a
certain percentage, as determined by the Employers, provided that the
percentage increase for each succeeding tier shall in no event be greater
than such increase for any preceding tier.
6.5 Participants to Whom Nonelective Contributions Shall be Allocated.
-----------------------------------------------------------------
Unless otherwise provided in an adoption agreement, the Nonelective
Contributions for any Plan Year shall be allocated among and credited to the
Salary Deferral Accounts of Eligible Employees who were not Highly Compensated
Employees and who have satisfied the requirements of Article III prior to or
during the Plan Year and completed a Year of Vesting Service during the Plan
Year; provided, however,that any Employee who was a Participant during the Plan
Year, who terminated employment with the Employer, and who, immediately
thereafter, commenced employment with a Related Employer shall be eligible for
an allocation of Nonelective Contributions in such year, provided that such
Employee completes a Year of Vesting Service during the Plan Year (aggregating
his Service with the Employer and the Related Employer).
6.6 Dates Contributions Considered Made. For purposes of this Article VI,
-----------------------------------
Nonelective Contributions, and Profit Sharing Contributions under the Plan for
any Plan Year
34
<PAGE>
shall be considered to have been made on the last day of that year, unless paid
sooner to the Trustee. Salary Deferral Contributions, Matching Contributions,
Rollover Contributions, and Employee Contributions under the Plan for any Plan
Year shall be considered to have been made on the Valuation Date falling on the
last day of the Allocation Period in which the Rollover Contribution was made or
to which the Participant elections pursuant to Section 5.1(a) giving rise to the
Salary Deferral Contributions, or through recharacterization of such
contributions, giving rise to Employee Contributions, relate. Notwithstanding
anything in this Section to the contrary, earnings, gains and losses shall be
allocated and determined pursuant to Section 6.3.
6.7 Allocation Does Not Create Rights. No Participant shall acquire any
---------------------------------
right to or interest in any specific asset of the Trust as a result of the
allocations provided for in the Plan.
6.8 Equitable Allocations. If the Committee in good faith determines that
---------------------
certain expenses of administration paid by the Trustee during the Plan Year
under consideration are not general, ordinary, and usual and should not
equitably be borne by all Participants, but should be borne only by certain
individual Participants on whose behalf specific expenses were incurred, the net
earnings and adjustments in value of the accounts shall be increased by the
amounts of such expenses, and the Committee shall make suitable adjustments by
debiting the particular Account or Accounts of such one or more Participants,
Former Participants, or Beneficiaries; provided, however, that any such
adjustment must be nondiscriminatory and consistent with the provisions of
section 401(a) of the Code.
6.9 Limitation on Annual Additions.
------------------------------
(a) General. Notwithstanding any other provision of the Plan, the
-------
Annual Addition to a Participant's Accounts for any Limitation Year may not
exceed an amount equal to the lesser of:
(1) $30,000 or, if greater, 25% of the dollar limitation in
effect under section 415(b)(1)(A) of the Code; or
(2) 25% of the Participant's Compensation for the Limitation
Year; provided, however, that this limitation shall not apply to any
contributions for post-retirement medical benefits treated as Annual
Additions under section 419A(f)(2) of the Code or any other amount treated
as an Annual Addition under section 415(l)(1) of the Code.
(b) Additional Limitation - Related Plan. If a Participant also
------------------------------------
participates in a Related Plan, any reductions required by section 415 of the
Code shall be made first from the Related Plan if such Related Plan provides for
the same, and, if not, the maximum amount allocable to a Participant's Accounts
for the Limitation Year as specified in paragraph (a) of this Section 6.9 shall
be reduced by the amount of the Annual Addition made with respect to the
Participant for the Limitation Year under any Related Plan.
(c) Additional Limitation - Defined Benefit Plan. If a Participant
--------------------------------------------
also participates in one or more qualified defined benefit plans (as defined in
section 414(j) of the
35
<PAGE>
Code) maintained by the Employer or any Related Employer, the maximum amount
otherwise allocable to his Accounts under paragraphs (a) and (b) of this Section
6.9 shall be reduced to the extent necessary to ensure that the sum of the
"Defined Benefit Fraction" for the Limitation Year plus the "Defined
Contribution Fraction" for the Limitation Year does not exceed 1.0. The Defined
Benefit Fraction for a Limitation Year shall be a fraction (a) the numerator of
which shall be the projected annual benefit of the Participant under such
defined benefit plan or plans (determined as of the close of the year) and (b)
the denominator of which shall be an amount equal to the lesser of: (i) the
product of 1.25 multiplied by the dollar limitation in effect for such year
under section 415(b)(1)(A) of the Code or (ii) the product of 1.4 multiplied by
the amount which may be taken into account for such year under section
415(b)(1)(B) of the Code with respect to such Participant. The Defined
Contribution Fraction for a Limitation Year shall be a fraction (a) the
numerator of which shall be the sum of the annual additions (as defined in
section 415(c)(2) of the Code) to the Participant's accounts under all defined
contribution plans maintained by the Employer or Related Employer as of the
close of the Limitation Year, and (b) the denominator of which shall be the sum
of the lesser of the following amounts determined for each such plan for the
Limitation Year and for each prior year of service with the Employer: (i) the
product of 1.25 multiplied by the dollar limitation in effect for such year
under section 415(c)(1)(A) of the Code (determined without regard to section
415(c)(6) of the Code) or (ii) the product of 1.4 multiplied by the amount that
may be taken into account under section 415(c)(1)(B) of the Code with respect to
such individual under the defined contribution plans for the Limitation Year.
Notwithstanding the foregoing, the provisions of this paragraph (c) shall only
apply if such defined benefit plan or plans do not provide for a reduction of
benefits to ensure that the sum of the Defined Benefit Fraction for such
Limitation Year and the Defined Contribution Fraction for such Limitation Year
does not exceed 1.0.
(d) Correction of Excess Annual Additions. If the foregoing
-------------------------------------
limitations on Annual Additions would be exceeded in a Limitation Year for any
Participant as a result of (i) the allocation of Forfeitures, (ii) a reasonable
error in estimating a Participant's Compensation, (iii) a reasonable error in
determining the amount of Salary Deferral Contributions that may be made with
respect to a Participant, or (iv) any other facts and circumstances that would
justify correction of excess Annual Additions, the Administration Committee
shall, consistently with Treas. Reg. (S) 1.415-6(b)(6), correct such excess
Annual Additions as follows:
(1) First, the amount of Employee Contributions allocated to a
Participant's Accounts during the Limitation Year, and earnings thereon,
that are in excess of the limits provided in this Section shall be
distributed to the Participant.
(2) Next, the amount of Salary Deferral Contributions allocated
to a Participant's Accounts during the Limitation Year, and earnings
thereon, that are in excess of the limits provided in this Section shall be
distributed to the Participant.
(3) Next, any other excess Annual Additions shall be credited to
a suspense account and held there unallocated and used to reduce Employer
Contributions for that Participant's Accounts in the next Limitation Year
(and succeeding Limitation
36
<PAGE>
Years, as necessary) if that Participant is covered by the Plan as of the
end of the Limitation Year. However, if that Participant is not covered by
the Plan as of the end of the Limitation Year, then such excess Annual
Additions shall be held unallocated in a suspense account for the
Limitation Year and allocated and reallocated in the next Limitation Year
to the Accounts of all Participants, as consistent with the provisions of
section 1.415-6(b)(6) of the Treasury Regulations. Furthermore, the excess
Annual Additions shall be used to reduce Employer Contributions for the
next Limitation Year (and succeeding Limitation Years, as necessary) for
all of the remaining Participants in the Plan. In the event of termination
of the Plan, amounts credited to the a suspense account shall, to the
extent permitted by this Section, be allocated among the Accounts of
Participants in the ratio that each such Participant's Compensation for the
Plan Year in which the termination occurs bears to the Compensation of all
such Participants for that Plan Year. Upon termination of the Plan, any
amounts remaining in a suspense account that cannot be allocated to
Participants' Accounts shall revert to the Employer.
6.10 Special 410(b) Allocation. Notwithstanding the conditions and
-------------------------
requirements of this Article VI for a Participant to share in allocations of
Employer Contributions, Participants who (i) earned more than 500 Hours of
Service during a Plan Year and (ii) are not otherwise excludable from coverage
testing under section 410(b) of the Code ("Includible Participants") shall be
deemed eligible to share in the allocation of contributions for such Plan Year
to the extent required for the Plan to satisfy the requirements of section
410(b) of the Code. To determine which Includible Participants, if any, are to
be deemed eligible to share in such allocations, the Administration Committee
shall rank Includible Participants according to the number of Hours of Service
credited to each. The Committee shall determine the number of Includible
Participants, selected in order of ranking, to be deemed eligible for an
allocation of contributions under this Article VI so that the Plan satisfies
section 410(b) of the Code (and/or other Code requirements) for the Plan Year.
6.11 Special Valuation. While it is contemplated that the Trust will be
-----------------
valued by the Trustee and allocations made only on the Valuation Date, should it
be necessary to make distributions under the provisions hereof, and the
Administration Committee, in good faith determines that, because of (a) an
extraordinary change in general economic conditions, (b) the occurrence of some
casualty radically affecting the value of the Trust or a substantial part
thereof, or (c) an abnormal fluctuation in the value of the Trust has occurred
since the end of the preceding Plan Year, the Administration Committee may, in
its sole discretion, to prevent the payee from receiving a substantially greater
or lesser amount than what he would be entitled to, based on current values,
cause a revaluation of the Trust to be made and a reallocation of the interests
therein as of the date the payee's right of distribution becomes fixed. The
Administration Committee's determination to make such special valuation and the
valuation of the Trust as determined by the Trustee shall be conclusive and
binding on all persons ever interested hereunder.
- -------------------------
End of Article VI
37
<PAGE>
ARTICLE VII
TERMINATION OF SERVICE - PARTICIPANT VESTING
--------------------------------------------
7.1 Normal Retirement. A Participant who remains in the Service of the
-----------------
Employer after attaining Normal Retirement Age shall continue to participate in
Employer Contributions until the date of his actual retirement, and his Accrued
Benefit shall be fully vested and nonforfeitable. Upon termination of Service,
the Administration Committee shall direct the Trustee to make payment of the
full value of the Participant's Accrued Benefit to him at such times and in such
manner as provided in Article VIII hereof. The value of the Participant's
Accrued Benefit shall be determined as of the Valuation Date prior to or
coincident with the date of distribution. However, if Employer Contributions
are allocated to the Participant's Accounts after such Valuation Date for the
Plan Year in which the Participant receives a distribution on account of
retirement, then the value of the Participant's Accrued Benefit shall be
adjusted to reflect such additional allocations.
7.2 Early Retirement. There is no additional early retirement benefit
----------------
under the Plan.
7.3 Disability. A Participant who becomes Disabled shall be fully vested
----------
in his Accrued Benefit, determined as of the Valuation Date coincident with or
immediately preceding the date of distribution. However, if Employer
Contributions are allocated to the Participant's Accounts after such Valuation
Date for the Plan Year in which the Participant receives a distribution on
account of Disability, then the value of the Participant's Accrued Benefit shall
be adjusted to reflect such additional allocations.
7.4 Death. Upon the death of a Participant, he shall become fully vested
-----
in his Accrued Benefit, determined as of the Valuation Date coincident with or
immediately preceding the date of distribution. However, if Employer
Contributions are allocated to the Participant's Accounts after such Valuation
Date for the Plan Year in which the Beneficiary receives a distribution on
account of the Participant's death, then the value of the Participant's Accrued
Benefit shall be adjusted to reflect such additional allocations.
7.5 Termination of Service Prior to Normal Retirement Age. The value of a
-----------------------------------------------------
Participant's Accrued Benefit shall be determined as of the Valuation Date
coincident with or immediately preceding the date payment of the Accrued Benefit
commences. However, if Employer Contributions are allocated to the
Participant's Accounts after such Valuation Date, the value of the Participant's
Accrued Benefit shall be adjusted to reflect such additional allocations. A
Participant shall have a 100% Vested Accrued Benefit after termination of
Service that is not after death, Disability or Normal Retirement Age.
7.6 Years of Vesting Service. For purposes of vesting under Section 7.5,
------------------------
a year of Vesting Service shall mean any Plan Year during which a Participant
completes at 1,000 Hours of Service with the Employer or a Related Employer. In
the case of an Employee who separates from Service and who resumes employment
with the Employer, but not as a Re-Employed Employee, years of Vesting Service
prior to his resumption of employment shall be disregarded. If a Participant
incurs five consecutive Breaks in Service, Service after such Breaks in Service
38
<PAGE>
shall not increase the Participant's nonforfeitable percentage in his Accrued
Benefit derived from Employer Contributions that accrued prior to such five
consecutive Breaks in Service.
7.7 Forfeiture Occurs and Restoration of Non-Vested Accrued Benefit.
---------------------------------------------------------------
(a) Forfeiture Occurs. A Forfeiture of a Participant's Accrued
-----------------
Benefit shall occur as of the earlier of (i) in the case where the Participant
does not receive a distribution of his entire Vested Accrued Benefit (or
receives it after the close of the second Plan Year following his termination of
Service), on the last day of the Plan Year in which the Participant first incurs
five consecutive Breaks in Service as the result of the termination of his
Service or (ii) immediately upon receipt of his distribution if the Participant
receives a distribution of his entire Vested Accrued Benefit (including a deemed
cash-out of $0) as the result of his termination of Service (provided such
distribution, if any, is made not later than the close of the second Plan Year
following the Participant's termination of Service). If only one of the events
identified in the preceding sentence occurs, the event that occurs shall be
deemed the first to occur. The Committee shall determine a Participant's
Forfeiture, if any, solely by reference to the vesting schedule of Section 7.5.
(b) Restoration of Non-Vested Accrued Benefit. If a Participant
-----------------------------------------
incurs a Forfeiture by reason of Section 7.7(a)(ii) and returns to Service prior
to incurring five consecutive Breaks in Service, the amount of the Forfeiture
shall be restored (unadjusted for any gains or losses) as part of such
individual's Accrued Benefit and credited to an Employer Contribution account,
hereinafter called the "Restoration Account," if the Participant repays to the
Plan the full amount of the distribution prior to the earlier of (1) the Plan's
termination, or (2) the lapse of five years following the Participant's
reemployment by the Employer or a Related Employer (provided that the
Participant must be an Employee at the time of repayment). If the Participant
received a deemed cash-out of $0, he shall be deemed to have repaid the
distribution upon reemployment. As of the Valuation Date immediately following
such repayment, and prior to any allocation of Trust earnings, Forfeitures, or
Employer Contributions specified in Article VI, the amount of a Participant's
previous Forfeiture (the "Restoration Amount") shall be allocated to his
Restoration Account. The Restoration Amount shall be credited first against
Forfeitures arising for the Plan Year, and if such Forfeitures are not
sufficient to satisfy the Restoration Amount in full, the Restoration Amount
shall be further credited against Trust income and gain for the Plan Year, and
if the Restoration Amount thereafter still remains unsatisfied in full, the
remainder of such amount shall be satisfied out of Employer Contributions for
the Plan Year. The Restoration Amount shall not be deemed an Annual Addition. In
addition, the Employer may make an Employer Contribution for the purpose of
restoring a Forfeiture even though the Employer has no profits. The Committee
shall give timely notice to any rehired Employee, if such Employee is eligible
to make a repayment, of his right to make such repayment before the expiration
of the periods of the occurrence of the events specified above, and such notice
shall also include an explanation of the consequences of not making such
repayment.
7.8 Termination, Partial Termination, or Complete Discontinuance of
---------------------------------------------------------------
Employer Contributions. Notwithstanding any other provision in this Plan, in
- ----------------------
the event of a termination or partial termination of the Plan, or a complete
discontinuance of Employer Contributions under
39
<PAGE>
the Plan, all affected Participants shall have a fully vested interest in their
Accrued Benefit determined as of the date of such event. The value of the
Accrued Benefit shall be determined on the date the Accrued Benefit becomes
fully vested, as if such date was the Valuation Date for the Limitation Year in
which the termination, partial termination, or complete discontinuance of
Employer Contributions occurs. The Committee shall interpret and administer
this Section 7.8 consistently with Section 16.4 and in accord with the intent
and scope of the Treasury regulations promulgated under section 411(d)(3) of the
Code.
- --------------------------
End of Article VII
40
<PAGE>
ARTICLE VIII
TIME AND METHOD OF PAYMENT OF BENEFITS
--------------------------------------
8.1 Time of Payment.
---------------
(a) Normal Retirement. In the event of normal retirement, within the
-----------------
meaning of Section 7.1 hereof, payment of a Participant's Vested Accrued Benefit
shall commence as soon as administratively feasible after the Valuation Date
that coincides with or next follows the date that the Participant terminates
Service, unless the Participant elects to defer payment (subject to the
restrictions of Section 8.4).
(b) Death or Disability. In the event of death or Disability, except
-------------------
in the case of a distribution deferred pursuant to Section 8.4, payment of the
Participant's Vested Accrued Benefit shall commence as soon as administratively
feasible after the Valuation Date that coincides with or next follows death or
the determination by the Administration Committee that the Participant is
Disabled. Notwithstanding these provisions, in the event of the death of a
Participant in which his spouse is named as his Beneficiary, payment shall
commence at such time as requested by said spouse, or, in the event of
Disability, the time requested by the Participant.
(c) Other Termination of Service. Upon a Participant's termination of
----------------------------
Service for any reason other than retirement, Disability, or death, the Trustee
shall generally hold the Participant's Vested Accrued Benefit in Trust until the
Participant's Normal Retirement Age, at which time the Trustee shall commence
distribution of the Participant's Vested Accrued Benefit in accordance with the
provisions of Section 8.1(a) and Section 8.2. However, a Participant may obtain
earlier distribution of his Vested Accrued Benefit in accordance with Section
8.4.
(d) Limitation on Time of Payment. Notwithstanding any contrary
-----------------------------
provisions in the Plan, and unless the Participant otherwise elects, the Trustee
shall commence distribution of the Participant's Vested Accrued Benefit not
later than 60 days after the close of the Plan Year in which the latest occurs:
(i) the date the Participant attains Normal Retirement Age; (ii) the tenth
anniversary of the year in which the Participant commenced participation in the
Plan; and (iii) the date the Participant terminates Service with his Employer.
(1) Notwithstanding the provisions above to the contrary, the
Vested Accrued Benefit of each Participant (i) shall be distributed to such
Participant not later than the Required Commencement Date or (ii) shall be
distributed, commencing not later than the Required Commencement Date, in
accordance with Treasury regulations, over the life of such 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). If distributions
under the Plan have commenced with respect to a Participant and the
Participant dies before his entire interest has been distributed to him but
after his Required Commencement Date (except in the case of certain
annuities under Prop. Treas. Reg. (S) 1.401(a)(9)-1 B-5(b), or its
41
<PAGE>
successor, in which case the Participant could have died before or after
his Required Commencement Date), the remaining portion of such interest
shall be distributed at least as rapidly as such interest would have been
distributed to him under the method of distribution in effect under the
immediately preceding sentence at the Participant's death.
(2) If the Participant dies before the distribution of his
interest has commenced in accordance with (ii) of the first sentence of the
above paragraph, or, except as provided above, if distribution of the
Participant's interest has commenced but the Participant dies prior to his
Required Commencement Date, then, except as provided below, his entire
interest shall be distributed to his Beneficiary by December 31 of the
calendar year which contains the fifth anniversary of the date of the
Participant's death. Notwithstanding the preceding sentence, unless the
designated Beneficiary elects to receive payments under the preceding
sentence, if any portion of the Participant's interest is payable to (or
for the benefit of) a designated Beneficiary, then such portion shall be
distributed in accordance with Treasury regulations over the life of such
designated Beneficiary or over a period not extending beyond the life
expectancy of such Beneficiary, commencing not later than December 31 of
the calendar year immediately following the calendar year in which the
Participant died. Notwithstanding the required commencement date in the
preceding sentence, if the designated Beneficiary is the surviving spouse
of the Participant, the deceased Participant's interest shall be
distributed or commence to be distributed to such surviving spouse on or
before the later of the following: (1) December 31 of the calendar year
immediately following the calendar year in which the Participant died, and
(2) December 31 of the calendar year in which the Participant would have
attained age 70 1/2. However, if the surviving spouse dies before the
distributions to such spouse commence (or before such distributions are
deemed to commence under Prop. Treas. Reg. (S) 1.401(a)(9)-1, C-6, or its
successor), the distribution of the interest of the deceased Participant
shall be made over such period, and shall begin at such time, as would be
required under the above rules, as if the surviving spouse were the
Participant. In applying this rule, the date of death of the surviving
spouse shall be substituted for the date of death of the Participant.
However, in such case, the special surviving spouse death distribution
rules are not available to the surviving spouse of the deceased
Participant's surviving spouse. For purposes of this Section 8.1(d), except
in the case of a life annuity, the life expectancy of the Participant and
his spouse may be redetermined but not more frequently than annually. In
addition, pursuant to regulations prescribed by the Secretary of the
Treasury, any amount paid to a child of the Participant shall be treated as
if it had been paid to the surviving spouse of the Participant if such
amount will become payable to the surviving spouse upon such child's
attainment of majority (or other designated event permitted under
regulations prescribed by the Secretary of the Treasury). For the purposes
of this paragraph, the term "Beneficiary" shall only include individuals.
Notwithstanding the foregoing provisions of this paragraph, nothing in this
paragraph shall permit any Participant or Beneficiary to elect any form of
distribution not otherwise expressly permitted under this Plan; but rather,
the Committee may at any time modify any form of the distribution elected
by a Participant or Beneficiary to ensure compliance with this paragraph.
42
<PAGE>
(3) In addition to the above rules, any payments payable to the
Participant or his Beneficiary must also satisfy the minimum incidental
death benefit rules of the Treasury regulations promulgated under section
401(a)(9) of the Code. Payments in the form of a life annuity for the life
of the Participant, or payments in the form of a qualified joint and
survivor annuity for the joint lives of the Participant and his spouse,
shall automatically satisfy these rules.
(4) Rules that are similar to the above rules shall apply in the
case that benefits are provided through an annuity contract.
(5) Notwithstanding any other provision herein to the contrary,
distributions hereunder will be made in accordance with the Treasury
Regulations promulgated under section 401(a)(9) of the Code, including
Treas. Reg. (S) 1.401(a)(9)-2, including any grandfather or transitional
rules thereunder. Furthermore, any provisions contained herein which
reflect section 401(a)(9) of the Code shall override any distribution
options in the Plan inconsistent therewith.
8.2 Method of Payment. After all required accounting adjustments, the
-----------------
Trustee, in accord with the direction of the Administration Committee, shall
make payment of the Participant's Vested Accrued Benefit in cash, common stock
of the Company (but only to the extent his Accounts are so invested), shares of
mutual funds (but only to the extent his Accounts are invested in mutual funds
that permit in-kind distributions upon a Direct Rollover described in Section
8.2(c)(4)), or a combination thereof, under one of the following methods, as
elected by the Participant or Beneficiary:
(a) By payment in a lump sum.
(b) By payment in monthly, quarterly or annual installments over a
fixed reasonable period of time, not exceeding the life expectancy of the
Participant, or the joint life and last survivor of the Participant and his
Beneficiary.
(c) This Section 8.2(c) applies to distributions made on or after
January 1, 1993. Notwithstanding any contrary provision of the Plan that would
otherwise limit a distributee's election under this Section 8.2(c), a
distributee may elect at the time and in the manner prescribed by the
Administration 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. The terms used in this Section 8.2 are defined
as follows:
(1) Eligible rollover distribution. Any distribution of all or
any portion of the balance to the credit of the distributee, except that it
does not include:
(A) Any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee or
the joint lives (or joint life expectancies) of the distributee and
the distributee's designated beneficiary, or for a specified period of
ten years or more.
43
<PAGE>
(B) Any distribution to the extent it is required under section
401(a)(9) of the Code.
(C) The portion of any distribution that is not includible
in gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to Employer securities).
(2) Eligible retirement plan.
(A) An individual retirement account described in section
408(a) of the Code.
(B) An individual retirement annuity described in section
408(b) of the Code.
(C) An annuity plan described in section 403(a) of the Code.
(D) A qualified trust described in section 401(a) of the
Code that accepts the distributee's eligible rollover distribution.
(E) However, in the case of an eligible rollover
distribution to a surviving spouse, an eligible retirement plan is an
individual retirement account or individual retirement annuity.
(3) Distributee. A Participant or Former Participant, his
surviving spouse, or his spouse or former spouse who is the alternate payee
under a Qualified Domestic Relations Order.
(4) Direct rollover. A payment by the Plan to the eligible
retirement plan specified by the distributee.
8.3 Deferral of Payments. Should a Participant's Accounts be retained in
--------------------
the Trust after the date on which his participation ends and he has become a
Former Participant, the Accounts may continue to be treated as a part of the
Trust. The Accounts will be credited (or debited) with their share of the net
income (or loss) attributable to the investments of such Accounts but shall not
be credited with any further Employer Contributions.
8.4 Involuntary and Voluntary Payments. Notwithstanding the provisions of
----------------------------------
this Article VIII, if a Participant's Vested Accrued Benefit does not exceed
$3,500 at the time he would be eligible to receive a distribution due to
termination of Service (adjusted for any prior distributions), the
Administration Committee shall direct the Trustee to distribute the
Participant's Vested Accrued Benefit (including a deemed distribution of $0) to
the Participant or his Beneficiary in a lump sum as soon as administratively
feasible following the Valuation Date that coincides with or next follows the
Participant's termination of Service. If value of the Participant's Vested
Accrued Benefit exceeds $3,500 (adjusted for any prior distributions), a Plan
distribution generally may not occur before the Participant's Normal Retirement
Age
44
<PAGE>
(except in the case of death) unless he files a written request with the
Committee for the payment of his Vested Accrued Benefit.
(a) A Participant may receive a distribution of his Vested Accrued
Benefit that exceeds $3,500 (adjusted for any prior distributions) by filing a
request with the Committee for payment to be made soon as administratively
feasible after the Valuation Date following the Committee's receipt of said
request. In connection with such request, the Committee shall provide the
Participant with written notice of his right to consent to such distribution, as
required under the Code, no more than 90 days prior to the date the distribution
is made.
(b) If the distribution is one to which sections 401(a)(11) and 417 of
the Code do not apply, such distribution may, if otherwise administratively
feasible, commence immediately after the Committee provides written notice to
the Participant of his right to consent to a distribution prior to Normal
Retirement Age (as required by Treas. Reg. (S) 1.411(a)-11(c)), provided that:
(1) the Committee clearly informs the Participant of his right to
a 30 day period to consider whether or not to elect a distribution and
distribution option; and
(2) the Participant, after receiving the notice, affirmatively
elects a distribution.
(c) Upon the Participant's death after termination of Service, payment
of his Vested Accrued Benefit shall be made in accordance with Section 8.1(b).
8.5 Qualified Domestic Relations Orders. The Administration Committee
-----------------------------------
shall establish reasonable procedures for determining the existence of a
Qualified Domestic Relations Order and to administer distributions under the
same. In the event that the Committee receives a written order that purports to
be a Qualified Domestic Relations Order, the following procedures shall apply:
(a) The Committee shall promptly notify the appropriate Participant
and any purported Alternate Payee of the receipt of such order and the
Committee's procedures for determining whether such order is a Qualified
Domestic Relations Order.
(b) During any period in which it is being determined (by the
Committee, by a court of competent jurisdiction, or otherwise) if an order is a
Qualified Domestic Relations Order, the Committee shall direct the Trustee to
segregate in a separate account or in an escrow account the amount that would
have been payable to the Alternate Payee during such period if the order is
determined to be a Qualified Domestic Relations Order.
(c) If the order (or modification thereof) is determined to be a
Qualified Domestic Relations Order within 18 months, the Committee shall direct
the Trustee to pay the segregated account (and any earnings or interest thereon)
or the balance held in the escrow account, as applicable, to the Alternate Payee
according to the provisions of the Qualified Domestic Relations Order, or in the
form elected by the Alternate Payee under the Plan. An
45
<PAGE>
Alternate Payee may elect to receive a distribution as soon as administratively
feasible after the Committee has determined that an order is a Qualified
Domestic Relations Order.
(d) If, within the aforesaid 18 month period, it is determined that
the order is not a Qualified Domestic Relations Order, or if such determination
has not been made, the Committee shall pay the amounts in the said segregated
account or escrow account, including interest, to the person(s) who would have
been entitled to such amounts if there had been no such order.
(e) Any determination that an order is a Qualified Domestic Relations
Order which is made after the close of the aforesaid 18 month period shall be
applied prospectively only.
8.6 Payment in the Event of Legal Disability. Payments to any
----------------------------------------
Participant, Former Participant, or Beneficiary shall be made to the recipient
entitled thereto in person or upon his personal receipt, in form satisfactory to
the Committee, except when the recipient entitled thereto shall be under a legal
disability, or, in the sole judgment of the Committee, shall otherwise be unable
to apply such payment in furtherance of his own interest and advantage. The
Committee may, in such event, in its sole discretion, direct all or any portion
of such payments to be made in any one or more of the following ways:
(a) To such person directly;
(b) To the guardian of his person or his estate;
(c) To a relative or friend of such person, to be expended for his
benefit; or
(d) To a custodian for such person under any Uniform Gifts to Minors
Act.
The decision of the Committee, in each case, will be final, binding, and
conclusive upon all persons ever interested hereunder. The Committee shall not
be obliged to see to the proper application or expenditure of any payment so
made. Any payment made pursuant to the power herein conferred upon the
Committee shall operate as a complete discharge of all obligations of the
Trustee and the Committee, to the extent of the distributions so made.
8.7 Accounts Charged. The Committee shall charge all distributions made
----------------
to a Participant or to his Beneficiary from his Accounts against the Accounts of
the Participant when made.
8.8 Payments Only from Trust. All benefits of the Plan shall be payable
------------------------
solely from the Trust and neither the Employer, Committee, nor Trustee shall
have any liability or responsibility therefor except as expressly provided
herein.
8.9 Unclaimed Account Procedure. Neither the Trustee nor the
---------------------------
Administration Committee shall be obliged to search for or ascertain the
whereabouts of any Participant or Beneficiary. The Committee, by certified or
registered mail addressed to his last known address
46
<PAGE>
of record with the Committee or the Employer, shall notify any Participant or
Beneficiary that he is entitled to a distribution under this Plan, and the
notice shall state the provisions of this Section. If (i) the Participant's
Vested Accrued Benefit is (a) $3,500 or less or (b) greater than $3,500 and he
has attained Normal Retirement Age, and (ii) the Participant or Beneficiary
fails to claim his benefits or make his whereabouts known in writing to the
Committee within the earlier of (i) the date that is immediately prior to three
years (adjusted according to the abandonment period of the escheat laws of the
applicable state) after the date of notification, or (ii) the date the
Participant attains the Required Commencement Date, the Plan benefit of such
Participant or Beneficiary will be treated as follows (to the extent otherwise
permitted under ERISA or the Code):
(a) If the whereabouts of the Participant is unknown but the
whereabouts of the Participant's Beneficiary then is known to the Committee, the
Committee may direct the Trustee to make distribution to the Beneficiary.
(b) If the whereabouts of the Participant and his Beneficiary then is
unknown to the Committee, but the whereabouts of one or more relatives by
adoption, blood, or marriage of the Participant is known to the Committee, the
Committee may direct the Trustee to distribute the Participant's benefits to any
one or more of such relatives and in such proportions as the Committee
determines.
(c) If the Committee does not know the whereabouts of any of the above
persons within the time limits prescribed above, then the benefit shall be
treated as a Forfeiture hereunder, provided that the benefit shall be reinstated
in the event that the Participant or Beneficiary ever makes a claim therefor.
Either upon or prior to the occurrence of the Forfeiture under this Section
8.9, the Committee may then notify the Social Security Administration or the
Internal Revenue Service Disclosure Staff of the Participant's (or
Beneficiary's) failure to claim the distribution to which he is entitled. The
Committee may request the Social Security Administration or the Internal Revenue
Service Disclosure Staff to notify the Participant (or Beneficiary) in
accordance with the procedures it has established for this Purpose.
(d) While payment is pending, the Committee may direct the Trustee to
hold the Participant's benefits in a segregated account invested at the
discretion of the Committee. However, after a Forfeiture has occurred under
this Section 8.9, a Participant or Beneficiary who seeks a reinstatement of
the forfeited amount shall only be entitled to the minimum return required by
law (which may be 0%). The segregated account shall be entitled to all income it
earns and shall bear all expense and loss it incurs. Any payment made pursuant
to this provision shall operate as a complete discharge of all obligations of
the Trustee and the Committee, to the extent of the distributions so made.
8.10 Restrictions on Distributions. Notwithstanding anything to the
-----------------------------
contrary above, a Participant's Salary Deferral Account, and any amounts in any
other employer contribution accounts attributable to Qualified Employer
Contributions, and any earnings thereon, shall not be distributed before the
first to occur of the following events:
47
<PAGE>
(a) the Participant's retirement;
(b) his death;
(c) his permanent disability;
(d) his termination of employment;
(e) his attainment of age 59 1/2;
(f) with respect to a Participant's Salary Deferral Contributions and
pre-1989 earnings thereon only, his incurring a financial hardship;
(g) the termination of the Plan, provided that neither the Employer
nor a Related Employer maintains a successor plan;
(h) the disposition, to a corporation that is not a Related Employer,
of substantially all of the assets (within the meaning of Code section
409(d)(2)) used by the Employer in the trade or business in which the
Participant is employed, provided that the Participant continues employment with
the transferee corporation and the Employer continues to maintain the Plan; or
(i) the disposition, to a corporation that is not a Related Employer,
of the Employer's interest in a subsidiary in which the Participant is employed,
provided that the Participant continues employment with the subsidiary and the
Employer continues to maintain the Plan.
A distribution may be made under (g), (h), or (i) above only if it constitutes a
total distribution of the Participant's entire account balance in all Accounts
and the account balances under any other profit-sharing plans of the Employer or
a Related Employer.
8.11 Securities Law Restrictions. If at the time shares of Company Stock
---------------------------
are to be distributed to a Participant (or, in the event of his death, his
Beneficiary), to the extent deemed necessary or desirable by the Administration
Committee, the Administration Committee may, as a condition precedent to the
distribution of such shares, require from the Participant (or his Beneficiary)
such written representations, if any, concerning his (or their) intentions with
regard to the retention or disposition of the Company Stock being distributed or
such written covenants and agreements, if any, as to the manner of any such
disposition of such shares as, in the opinion of the Administration Committee,
may be necessary to ensure that any such disposition by such Participant (or his
Beneficiary) will not result in a violation of the Securities Act of 1933, as
amended, or any similar or superseding statute or statutes, or any other
applicable statute, statutes, or regulations then in effect. The Trustee may
stamp or imprint on the stock certificates issued to a Participant (or his
Beneficiary) pursuant to a distribution from the Trust a legend referring to the
provisions of the immediately preceding sentence and to any
48
<PAGE>
representations, covenants, or agreements made by the Participant (or his
Beneficiary) with respect thereto.
- -------------------------
End of Article VIII
49
<PAGE>
ARTICLE IX
PARTICIPANT LOANS
-----------------
9.1 Loans to Participants: Basic Terms and Limits. In the event that the
---------------------------------------------
Administration Committee decides to permit Plan loans, it may authorize the
Trustee to make a loan to any Participant (or any other person that must be
eligible for Plan loans under ERISA, the Code or regulations and rulings
promulgated thereunder) that is within the following limits:
(a) The loan must be made out of the Participant's Accounts cannot be
less than $1,000 (or the amount stated in the Loan Procedures Document
referenced in Section 9.3) and cannot exceed, when added to the outstanding
balance of all other loans to such Participant, the lesser of:
(1) $50,000, reduced by the excess, if any, of (i) the highest
outstanding balance of loans to such Participant from the Plan during the
12 consecutive month period ending on the day before the date such loan is
made, over (ii) the outstanding balance of loans to such Participant from
the Plan on the day the loan is made, or
(2) The greater of (i) 1/2 of the value of the Participant's
Vested Accrued Benefit, or (ii) $10,000.
(b) The limitation on loans that may be made from this Plan shall be
calculated to take into account the Participant's nonforfeitable benefits and
loans under all plans with which this Plan must be aggregated for purposes of
sections 414(b), (c), (m) and (o) of the Code, with all such plans to be treated
as a single plan and with the limitations above applying to the total of all
nonforfeitable benefits under all such plans. For purposes of this Section, the
value of a Participant's Vested Accrued Benefit shall be determined as of the
Valuation Date coincident with or immediately preceding the date the loan is
made.
(c) No loan shall be made to a Participant unless both the Participant
and his spouse (at the date the loan is made), if any, consent in writing within
90 days prior to the making of the loan to (1) the making of the loan, (2) the
set-off of the Participant's Vested Accrued Benefit upon acceleration or default
under the loan, and (3) the distribution or deemed distribution of all or a part
of the Participant's Account necessary to effect the set-off. The written
consent of the Participant's spouse to the loan, set-off and distribution or
deemed distribution provisions must acknowledge the effect of the loan, set-off
and distribution or deemed distribution provisions and must be witnessed by a
member of the Committee or a notary public. For purposes of any required
spousal consent, and any other applicable loan limitation, any renegotiation,
extension, renewal, or other revision of a loan shall be treated as a new loan
made on the date of the renegotiation, extension, renewal or revision.
(d) All Participant loans shall, by their terms, be repaid within five
years from the dates on which they are made, unless the loan is used to acquire
any dwelling unit which (within a reasonable time) is to be used as a principal
residence of the Participant, in which
50
<PAGE>
event repayment shall be made within a reasonable period of time (determined as
of the date the loan is made), which may be greater than five years.
(e) All loans shall be accelerated and immediately due in full upon a
Participant's termination of Service (unless such Participant is otherwise
mandatorily eligible for Plan loans under ERISA, the Code or regulations and
rulings promulgated thereunder). If the Participant does not repay the loan at
the time of acceleration, the Trustee shall have the right to set-off, as
described above.
(f) All loans shall be made at interest rates then currently prevalent
for loans from a commercial lending institution under circumstances similar to
the circumstances under which the loan is being made, or at a reasonable
interest rate if such currently prevalent rate is not "reasonable" under section
4975(d)(1)(D) of the Code. Except as may be allowed under regulations
promulgated by the Secretary of the Treasury, all loans shall be made on the
basis of substantially level amortization over the term of the loan, with
payments due not less frequently than quarterly.
9.2 Instruments and Security for Loans. Each loan hereunder shall be
----------------------------------
evidenced by a promissory note and secured by a security agreement, mortgage,
deed of trust, or such other security instruments as the Committee may require.
All such instruments shall contain, in addition to the provisions specifically
required by this Article IX, such repayment, default, and remedial terms as may
be determined by the Committee.
(a) Security for loans hereunder shall be provided by (i) the pledge
of a Participant's Vested Accrued Benefit and (ii) the pledge of such additional
collateral as the Committee may require in order for the loan to be adequately
secured. In determining the adequacy of the security for the loan, no more than
50% of the present value of a Participant's Vested Accrued Benefit may be
considered as security for the outstanding balance of all Plan loans, calculated
immediately after the origination of a loan hereunder. Further, if because of a
decrease in the value of a Participant's Vested Accrued Benefit, the Committee
believes a loan to be inadequately secured, it shall either require the
Participant to post security in addition to the value of his Vested Accrued
Benefit or demand accelerated, including immediate, payment of the loan. An
assignment for security of a Participant's Vested Accrued Benefit shall be
limited as provided in Section 14.6.
(b) The default provisions of the instruments relating to a loan shall
provide that upon default a loan may be set off against the Participant's
Accounts at the earliest time permitted by applicable law. Moreover, as a
condition precedent to obtaining a loan hereunder, each Participant and his then
spouse, if any, must request and consent, in writing, to a distribution from his
Accounts to the fullest extent necessary and permissible by law to effect such
set-off. For purposes of setting off account balances upon default of a Plan
loan, Employee Contributions and Rollover Contributions (to the extent that such
does not represent amounts received in a trust-to-trust transfer), but not
earnings on any such contributions unless otherwise required by law, may be
distributed at any time, and Profit Sharing Contributions, Matching
Contributions, and earnings on Employee Contributions, Rollover Contributions
that were not received in a trust-to-trust transfer, Profit Sharing
Contributions and Matching Contributions (but
51
<PAGE>
only to the extent such contributions and earnings do not represent Qualified
Employer Contributions and earnings thereon) may be distributed when such funds
have been allocated to the Participant's Account for at least two years. Salary
Deferral Contributions, Nonelective Contributions, Qualified Employer
Contributions and earnings thereon, may only be distributed according to the
provisions of Section 8.10. Rollover Contributions (and earnings thereon) that
are attributable to trust-to-trust transfers may be distributed pursuant to the
rules applicable to the type of contribution(s) represented by such trust-to-
trust transfer.
(c) The Committee shall provide for the repayment of the loan through
payroll deduction over the term of the loan, and, except as expressly provided
otherwise in a Participant's promissory note, or as otherwise restricted by law,
any revocation or modification of a payroll deduction authorization without the
Committee's consent shall automatically constitute an event of default under
such loan. Each promissory note and security instrument shall be delivered to
the Trustee for the benefit of the borrowing Participant's Accounts. The amount
borrowed by a Participant shall be considered an investment made by the Trustee
from such Participant's Accounts in such combination thereof as is appropriate.
The interest on the loan shall be allocated to the Participant's appropriate
Account or Accounts and any losses incurred as a result of the making of the
loan shall also be allocated to such Account or Accounts.
9.3 Loan Provisions Incorporated by Reference. For purposes of satisfying
-----------------------------------------
the requirements of section 2550.408b-1(d) of the Labor Regulations, the
Committee shall adopt a Loan Procedures Document (herein so called) that
contains the following provisions:
(a) A procedure for applying for loans.
(b) The basis on which loans will be approved or denied that are in
addition to the conditions stated herein.
(c) Limitations (if any) on the types and amount of loans offered.
(d) The types of collateral which may secure a Participant loan.
This document, after being duly adopted by the Committee according to its normal
adoption procedures, shall be incorporated in the Plan by this reference as if
fully set forth herein. As provided in Section 16.2, the Committee shall have
the power to amend and modify the Loan Procedures Document.
9.4 Payment of Expenses. If a Participant's application for a loan is
-------------------
approved, the Participant shall be required to pay all reasonable and necessary
expenses incurred in the making and administration of the loan, including, but
not limited to, attorney's fees. The amount to be paid shall be determined by
the Committee and shall be paid at the time and in the form prescribed thereby.
- -------------------------
End of Article IX
52
<PAGE>
ARTICLE X
IN-SERVICE WITHDRAWALS
----------------------
10.1 In-Service Withdrawal From Accounts. To the extent permitted by this
-----------------------------------
Article X, a Participant may withdraw any amount from his Accounts not in excess
of his Vested Accrued Benefit by filing a written request for a withdrawal in
accordance with the rules established by the Administration Committee. The
payment of the amount to be withdrawn shall occur as soon as administratively
feasible on or after the Valuation Date following receipt and approval of such
request.
10.2 Hardship Withdrawals.
--------------------
(a) General. A Participant shall be entitled to make withdrawals from
-------
his Accounts prior to termination of Service in the case of and to the extent
required by a hardship, subject to the limitations and conditions of this
Section. A "hardship" shall exist if a withdrawal is necessary to satisfy an
immediate and heavy financial need of the Participant, and is in an amount
necessary to satisfy the financial need.
(1) Subject to the limitations stated herein, any hardship
withdrawal shall first be made first from the Participant's Employee
Contribution Account, next from his Rollover Account, next from his Salary
Deferral Account, next from his Matching Account, and next from his Profit
Sharing Account.
(2) Hardship withdrawals from a Participant's Salary Deferral
Account are limited to the Participant's total Salary Deferral
Contributions as of the date of the withdrawal, plus amounts treated as
such under Treas. Reg. (S) 1.401(k)-1(b)(5) and earnings on all such
amounts through December 31, 1988 (or the market value of the Participant's
Salary Deferral Account, if less) less the amount of previous hardship
withdrawals. These limitations also apply to amounts that are attributable
to salary reduction contributions and qualified employer contributions or
qualified employer contributions made to another plan in which the
Participant participated that are received by the Trust in a trust-to-trust
transfer described in Section 5.4(b).
(3) Hardship determinations shall be made according to the
standards set forth below subsections (b), (c) and (d). These standards
shall be modified in accordance with revenue rulings, notices, and other
documents of general applicability published by the Internal Revenue
Service to expand the list of deemed immediate and heavy financial needs
and additional methods for distributions to be deemed necessary to satisfy
an immediate and heavy financial need.
(b) Immediate and Heavy Financial Need. A financial need shall not
----------------------------------
fail to qualify as immediate and heavy merely because such need was reasonably
foreseeable or voluntarily incurred by the Participant. A hardship withdrawal
must be on account of one or more of the following:
53
<PAGE>
(1) Medical expenses described in section 213(d) of the Code
previously incurred by the Participant, the Participant's spouse, or any
dependents of the Participant (as defined in section 152 of the Code) or
necessary for those persons to obtain medical care described in section
213(d) of the Code.
(2) Costs directly related to the purchase of a principal
residence for the Participant, excluding mortgage payments.
(3) Payment of tuition and related educational fees for the next
12 months of post-secondary education for the Participant, the
Participant's spouse, the Participant's children, or the Participant's
dependents (defined in section 152 of the Code).
(4) The need to prevent the (a) eviction of the Participant from
his or her principal residence, or (b) foreclosure on the mortgage of the
Participant's principal residence.
(c) Withdrawal Necessary to Satisfy Financial Need. A withdrawal will
----------------------------------------------
be treated as necessary to satisfy a financial need only if:
(1) The withdrawal is not in excess of the amount of the
immediate and heavy financial need of the Participant, which may include
amounts necessary to pay federal, state or local income taxes or penalties
reasonably anticipated to result from the withdrawal.
(2) The Participant has obtained all distributions, other than
hardship withdrawals, and all nontaxable loans currently available under
all plans maintained by the Employer or a Related Employer.
(d) Limitations on Contributions After Withdrawal. Upon obtaining a
---------------------------------------------
hardship withdrawal, the Participant shall be subject to the following:
(1) The Participant's Salary Reduction Contributions to the Plan,
or elective contributions to any other plan of the Employer or a Related
Employer, for the Participant's taxable year immediately following the
taxable year of the hardship distribution shall be limited to the Deferral
Limit for the year, minus the amount of the Participant's Salary Reduction
Contributions for the taxable year of the hardship withdrawal.
(2) The Participant's Salary Reduction Contributions, Employee
Contributions and elective contributions and employee contributions to all
other plans maintained by the Employer or a Related Employer shall be
suspended for 12 months after the receipt of a hardship withdrawal.
(A) The "other plans" of the Employer or a Related Employer
to which this provision means all qualified and nonqualified plans of
deferred
54
<PAGE>
compensation maintained by the Employer or a Related Employer. This
includes stock option, stock purchase and similar plans, or a cash or
deferred arrangements that is part of a cafeteria plan, within the
meaning of section 125 of the Code.
(B) This limitation does not apply to (i) the mandatory
employee contribution portion of a defined benefit plan, (ii) a health
or welfare benefit plan, including one that is part of a cafeteria
plan within the meaning of section 125 of the Code, (iii) a cashless
exercise of a stock option, or similar right, or (iv) the exercise of
a stock appreciation right, or similar right, that does not involve or
require the expenditure of Participant funds.
(e) Participant Representations. In determining if certain objective
---------------------------
standards identified in this Section are satisfied, the Committee may rely on
written representations by the Participant, unless the Committee has actual
knowledge that such conditions are not satisfied.
(f) No Redeposit of Hardship Withdrawal. A Participant shall not be
-----------------------------------
permitted to recontribute to or redeposit in his Accounts any portion of the
amounts withdrawn by reason of hardship.
10.3 Age 59 1/2. A Participant who is employed by an Employer has a
----------
continuing election to withdraw all or any portion of his Vested Accrued Benefit
attributable to his Salary Deferral Account, Employee Contribution Account, and
Rollover Account upon attainment of age 59 1/2.
10.4 Normal Retirement Age. A Participant who is employed by an Employer
---------------------
has a continuing election to withdraw all or any portion of his Vested Accrued
Benefit upon attainment of Normal Retirement Age.
10.5 Sale of Trade or Business or Subsidiary. If the Company or an
---------------------------------------
Employer sells substantially all of the assets (within the meaning of section
409(d)(2) of the Code) used in a trade or business or sells a subsidiary (within
the meaning of section 409(d)(3) of the Code), a Participant who continues
employment with the acquiring entity is eligible for a distribution of his
Vested Accrued Benefit attributable to his Salary Deferral Account, Employee
Contribution Account and Matching Account as if he terminated employment,
determined in a manner consistent with section 401(k)(10) of the Code and
applicable Treasury regulations.
- -------------------------
End of Article X
55
<PAGE>
ARTICLE XI
TOP HEAVY PLAN PROVISIONS
-------------------------
11.1 Top Heavy Rules Applied. Notwithstanding any provisions of this Plan
-----------------------
to the contrary, if the Plan is a Top Heavy Plan during any Plan Year, the
provisions of this Article XI shall apply.
11.2 Additional Definitions. The following definitions apply only for
----------------------
purposes of this Article XI:
(a) "Aggregation Employee" shall mean any employee of the Aggregation
--------------------
Employer, including any leased employees (within the meaning of section 414(n)
of the Code). For this purpose, an individual formerly employed by an
Aggregation Single Employer shall be deemed an Aggregation Employee.
(b) "Aggregation Employer" shall mean the Employer and all other
--------------------
employers aggregated pursuant to sections 414(b), (c) or (m) of the Code.
(c) "Aggregation Single Employer" shall mean an employer that sections
---------------------------
414(b), 414(c), and 414(m) of the Code require be aggregated with the Employer
and other employers and treated as a single employer.
(d) "Determination Date" shall mean, with respect to any plan year,
------------------
the last day of the preceding plan year, except in the case of the first plan
year, in which event the Determination Date shall be the last day of such plan
year. Whenever it is necessary to determine the value of accrued benefits as of
a given Determination Date, such value shall be determined as of the Valuation
Date that immediately precedes the Determination Date.
(e) "Key Employee" shall mean any Aggregation Employee or former
------------
Aggregation Employee (including any deceased employee) who at any time during
the current plan year or any of the four preceding plan years, is or was:
(1) An officer of the Aggregation Employer having an annual
Compensation greater than 50% of the dollar limitation in effect under
section 415(b)(1)(A) of the Code for the calendar year in which the plan
year ends;
(2) One of the ten employees of an Aggregation Single Employer
having annual compensation for the plan year from such Aggregation Single
Employer of more than the dollar limitation in effect under section
415(c)(l)(A) of the Code and owning (or considered as owning within the
meaning of section 318 of the Code) or having owned during the plan year
containing the Determination Date or any of the four immediately preceding
plan years both more than a 1/2% interest and the largest interests in
such Aggregation Single Employer, and if two such employees have the same
interest in the employer, the employee having the greater annual
compensation from the employer shall be treated as having a larger
interest;
56
<PAGE>
(3) A 5% owner of an Aggregation Single Employer or
(4) A 1% owner of an Aggregation Single Employer having
compensation of more than $150,000.
In addition, the term "Key Employee" shall mean the beneficiary of any
Aggregation Employee or former Aggregation Employee defined above in this
Section 112(e) as being a Key Employee.
For the purposes of determining which Aggregation Employees or former
Aggregation Employees, if any, are or were officers of the Aggregation Employer,
whether an individual is an officer shall be based on his responsibilities with
respect to the Aggregation Single Employer or Aggregation Employers by whom he
is directly employed, and of such individuals initially deemed officers, no more
than 50 Aggregation Employees, or, if lesser, the greater of three Aggregation
Employees or 10% of the Aggregation Employees of the Aggregation Employer, shall
be treated as officers. In addition, for plan years beginning after February
28, 1985, sole proprietorships, partnerships, associations, corporations,
trusts, and labor organizations may have officers; and any person who is an
administrative executive in regular and continued service shall be deemed an
officer, subject to the above limitations. For purposes of determining the
number of officers taken into account under clause (i), Aggregation Employees
that are described in section 414(q)(8) of the Code shall be excluded.
The number of employees that the Aggregation Employer has for the plan year
containing the Determination Date with respect to a plan shall be the greatest
number of employees the Aggregation Employer had during that plan year or any of
the preceding four plan years. A "5% owner" shall mean, if the Aggregation
Single Employer is a corporation, any person who owns (or is considered as
owning within the meaning of section 318 of the Code) more than 5% of the
outstanding stock of the Aggregation Single Employer or stock possessing more
than 5% of the total combined voting power of all stock of the Aggregation
Single Employer and, if the Aggregation Single Employer is not a corporation,
any employee who owns more than 5% of the capital or profits interest in the
Aggregation Single Employer. A "1% owner" shall mean, if the Aggregation Single
Employer is a corporation, any person who owns (or is considered as owning
within the meaning of section 318 of the Code) more than 1% of the outstanding
stock of the Aggregation Single Employer or stock possessing more than 1% of the
total combined voting power of all stock of the Aggregation Single Employer and,
if the Aggregation Single Employer is not a corporation, any employee who owns
more than 1% of the capital or profits interest in the Aggregation Single
Employer. For purposes of applying the attribution rules of section 318 of the
Code, section 318(a)(2)(C) of the Code shall be applied by substituting "5%" for
"50%" each time that term appears in said section. In the case of an entity
other than a corporation, ownership shall be attributed as under section 318 of
the Code, except that capital or profits interests shall be substituted for
stock interests. If an employee's ownership interest in an employer changes
during a plan year, his ownership interest for such plan year is the largest
interest he owned at any time during the year. An Employee or individual who is
not described above as being a Key Employee, including a former Key Employee, is
not a Key Employee.
57
<PAGE>
(f) "Permissive Aggregation Group" shall mean a plan or a group of
----------------------------
plans that must be aggregated in the Required Aggregation Group and any other
plan or plans of an Aggregation Employer if the group would continue to satisfy
the requirements of sections 401(a)(4) and 410 of the Code with such additional
plan being taken into account. Benefits under such plans shall be aggregated by
adding together the present values of the accrued benefits (determined
separately for each plan as of each plan's Determination Date) and adding
together the results for each plan as of the Determination Dates for such plans
that fall within the same calendar year.
(g) "Plan" shall mean a plan that satisfies the requirements of
----
section 401(a) of the Code.
(h) "Plan Year" shall mean the plan year of a plan of an Aggregation
---------
Single Employer.
(i) "Required Aggregation Group" shall mean a group of plans
--------------------------
consisting of (i) each plan of the Aggregation Employer in which a Key Employee
participates during the plan year containing the Determination Date for such
plan or has participated during any of the immediately preceding four plan years
and (ii) any other plan of the Aggregation Employer that enables any of such
plans to satisfy the requirements of section 401(a)(4) or 410 of the Code.
Benefits under such plans shall be aggregated by adding together the present
values of the accrued benefits (determined separately for each plan as of each
plan's Determination Date) and adding together the results for each plan as of
the Determination Dates for such plans that fall within the same calendar year.
(j) "Top Heavy Plan" shall mean the Plan for a given Plan Year if the
--------------
Plan is not a member of a Required Aggregation Group (because there are no other
plans that must be aggregated with the Plan) and if the sum (determined as of
the Determination Date for the Plan) of the present value of the cumulative
Accrued Benefits (determined in accordance with Treas. Reg. (S) 1.416-1) for Key
Employees of the Employer exceeds 60% of a similar sum determined for all
Employees. If for a given Plan Year the Plan is a member of a Required
Aggregation Group, the Plan shall be a Top Heavy Plan for such Plan Year if, as
of the Plan's Determination Date for such Plan Year, both the Required
Aggregation Group and the Permissive Aggregation Group that include the Plan are
Top Heavy Groups (herein so called). A "Top Heavy Group" is any Required
Aggregation Group or Permissive Aggregation Group if the sum (determined as of
the Determination Dates for the plans in such group that fall within the same
calendar year) of (i) the present value of the accrued benefits (determined in
accordance with Treas. Reg. (S) 1.416-1) for Key Employees under all defined
benefit plans (within the meaning of section 414(j) of the Code) included in
such group and (ii) the accrued benefits (determined in accordance with Treas.
Reg. (S) 1.416-1) of Key Employees under all defined contribution plans (within
the meaning of section 414(i) of the Code) included in such group exceeds 60% of
a similar sum determined for all Aggregation Employees. For the purpose of
determining the present value of the accrued benefit of any employee, the
present value shall be increased, as required by Treas. Reg. (S) 1.416-1, by the
aggregate distributions made with respect to such Employee under the plan during
the five year period ending on the Determination Date for such plan, and under
any terminated plan that, if it had not been
58
<PAGE>
terminated, would have been included in the Required Aggregation Group.
Notwithstanding the foregoing provisions of this Section 11.2(j), if any
individual has not performed services for any employer maintaining the plan at
any time during the five year period ending on the Determination Date for such
plan, any accrued benefit for such individual (and the account of such
individual) shall not be taken into account.
Except to the extent provided in Regulations of the Secretary of the Treasury,
any Rollover Contribution (or similar transfer) initiated by an Employee and
made after December 31, 1983, to a plan shall not be taken into account with
respect to the transferee plan for purposes of determining whether such plan is
a Top Heavy Plan (or whether any aggregation group which includes such plan is a
Top Heavy Group). If any individual is not a Key Employee with respect to a
plan in the aggregation group for any plan year, but such individual was a Key
Employee with respect to a plan in the aggregation group for any prior plan
year, any accrued benefit for such Employee and the account of such employee
shall not be taken into consideration in making a determination of the top heavy
status of the plan. Each plan in a Top Heavy Group shall be deemed a Top Heavy
Plan.
(k) "Super Top Heavy Plan" shall mean a Top Heavy Plan if the plan
--------------------
would be a Top Heavy Plan if "90%" were substituted for "60%" each place it
appears in Section 11.2(j) above.
11.3 Additional Limitation - Defined Benefit Plan.
--------------------------------------------
(a) Super Top Heavy Plan Years. If during a Plan Year this Plan is a
--------------------------
Super Top Heavy Plan and a Participant also participates in one or more
qualified defined benefit plans (within the meaning of section 414(j) of the
Code) maintained by the Employer or a Related Employer, the maximum amount
otherwise allocable to his Accounts under Section 6.4 for any Limitation Year
that contains any portion of the Plan Year during which this Plan is a Super Top
Heavy Plan shall be reduced to the extent necessary to ensure that the sum of
the Defined Benefit Fraction (within the meaning of Section 6.9(c)) for the
Limitation Year plus the Defined Contribution Fraction (within the meaning of
Section (6.9(c), for the Limitation Year does not exceed 1.0. For this purpose
the Defined Benefit Fraction shall have a denominator that shall be an amount
equal to the lesser of: (i) the product of 1.0 multiplied by the dollar
limitation in effect for such year under section 415(b)(1)(A) of the Code or
(ii) the product of 1.4 multiplied by the amount that may be taken into account
for such year under section 415(b)(1)(B) of the Code with respect to such
Participant. The Defined Contribution Fraction shall have a denominator that
shall be the sum of the lesser of the following amounts determined for each
defined contribution plan maintained by the Employer or a Related Employer as of
the close of the Limitation Year and in which the Participant has an account for
the Limitation Year and for each prior year of service with the Employer: (i)
the product of 1.0 multiplied by the dollar limitation in effect for such year
under section 415(c)(1)(A) of the Code (determined without regard to section
415(c)(6) of the Code) or (ii) the product of 1.4 multiplied by the amount that
may be taken into account under section 415(c)(1)(B) of the Code with respect to
such individual under such defined contribution plans for the Limitation Year.
59
<PAGE>
(b) Top Heavy Plan Years. If during a Plan Year this Plan is a Top
--------------------
Heavy Plan but not a Super Top Heavy Plan, the provisions of Section 11.3(a)
shall nevertheless be applicable to the Plan and the Plan shall be deemed a
Super Top Heavy Plan for the purposes of Section 11.3(a) if either of the
following conditions are satisfied:
(1) The Employer fails to make a contribution for the Plan Year
for the benefit of each non-Key Employee Participant who is employed by the
Employer on the last day of the Plan Year; or
(2) The Employer's contribution for the Plan Year allocated to
any non-Key Employee's Employer contribution accounts, when aggregated with
the amounts of the Employer's contributions for the Plan Year allocated to
such non-Key Employee's accounts under all other defined contribution plans
(within the meaning of section 414(i) of the Code) maintained by the
Employer, and when expressed as a percentage of such non-Key Employee's
Compensation for the Plan Year, is less than the lesser of: (i) 4% or (ii)
the "highest applicable percentage for the Plan Year." For purposes of this
Section 11.3(b), the "highest applicable percentage for the Plan Year" is
the greatest percentage that can be obtained with respect to the group of
Key Employee Participants for the Plan Year as a result of dividing with
respect to each Key Employee Participant (i) the aggregate for the Plan
Year of the Employer's contributions allocated to such Key Employee
Participant's Employer Contribution Account and to such Key Employee
Participant's accounts under all other defined contribution plans (within
the meaning of section 414(i) of the Code) maintained by the Employer by
(ii) such Key Employee Participant's Compensation for the Plan Year.
(c) Special Rule. Notwithstanding the foregoing provisions of this
------------
Section 11.3, if for any Plan Year the Plan is a Top Heavy Plan or Super Top
Heavy Plan, the sum of the Defined Benefit Fraction (within the meaning of
Section 6.9(c)) and the Defined Contribution Fraction (within the meaning of
Section 6.9(c)) for a Limitation Year may in the case of a Participant exceed
1.0 (but not l.25) if, but only if, there are no further benefit accruals for
that individual under any defined benefit plan (within the meaning of section
414(j) of the Code) maintained by the Employer or a Related Employer and no
further annual additions (within the meaning of section 415(c)(2) of the Code)
for that individual under any defined contribution plan (within the meaning of
section 414(i) of the Code) maintained by the Employer or any Related Employer
until the sum of such fractions satisfies the rules of section 415(e) of the
Code using the 1.0 factor for that individual.
11.4 Minimum Benefit. Notwithstanding the provisions of Article VI, and
---------------
except as provided in the last paragraph of this Section 11.4, during any Plan
Year in which this Plan is a Top Heavy Plan, the Employer shall make an
aggregate contribution to this Plan and any Related Plan for the benefit of each
Participant who is an Employee and is not a Key Employee and who was in the
Service of the Employer on the last day of the Plan Year in an amount which when
allocated to the accounts of each Participant who is not a Key Employee and
expressed as a percentage of each such Participant's compensation, is equal to
or exceeds the lesser of: (i) 3% of such non-Key Employee Participant's
compensation; or (ii) a percentage of such non-Key Employee Participant's
compensation, such percentage being equal to the
60
<PAGE>
percentage at which contributions and Forfeitures are made under the Plan for
such year for the Key Employee for whom such percentage is the highest. The
amount to be allocated to non-Key Employee Participants pursuant to this Section
11.4 shall include any amounts otherwise allocable under Section 6.4 (except for
Salary Deferral Contributions) and shall not be in addition thereto. Salary
Deferral Contributions cannot be used to satisfy the minimum contribution
requirement for non-Key Employees under this Section 11.4. An Employee who is
not a Key Employee may not fail to accrue a minimum benefit under this Section
11.4 because either (1) such Employee is otherwise excluded from participation
(or accrues no benefit) merely because the Employee's Compensation is less than
a stated amount or (2) the Employee is otherwise excluded from participation (or
accrued no benefit) merely because of a failure to make mandatory Employee
contributions.
For Plan Years beginning after December 31, 1988, Salary Deferral Contributions
allocated to non-Key Employees shall be disregarded for purposes of determining
minimum benefits under this Section 11.4.
Notwithstanding the preceding provisions of this Section 11.4, if the Employer
maintains during a Plan Year two or more defined contribution plans (within the
meaning of section 414(i) of the Code), one of which is a money purchase pension
plan (within the meaning of Treas. Reg. (S) 1.401-1(b)(1)(i)), the minimum
Employer Contribution and benefits required by this Section 11.4 on behalf a
Participant who is not a Key Employee and who participates in both the money
purchase pension plan and this Plan shall, unless provided otherwise in the
money purchase pension plan, be provided under the money purchase pension plan
to the extent such plan provides for an Employer Contribution sufficient to
satisfy such minimum, and only to the extent that such minimum is not provided
under the money purchase pension plan shall any portion of such minimum
contribution and benefits be provided under this Plan. If the Participant
participates in two or more such defined contribution plans that are not money
purchase pension plans and one of such plans requires Employer Contributions for
a plan year but the other plan does not require Employer Contributions for a
plan year, the minimum Employer Contribution and benefits required by this
Section 11.4 shall be provided under the plan that requires Employer
Contributions, and only to the extent such minimum is not provided under such
plan shall such minimum be provided under the plan or plans that do not require
Employer Contributions. If during a Plan Year, the Employer maintains this Plan
and a defined benefit plan (within the meaning of section 414(j) of the Code)
and a Participant who is not a Key Employee participates in both of such plans,
then if such Participant is entitled to accrue a benefit under such defined
benefit plan with respect to such Plan Year, and such Participant has accrued a
benefit equal to or in excess of 2% multiplied by his number of years of
Eligibility Service (as defined in Section 3.2) (excluding years of Eligibility
Service accrued during Plan Years, if any, commencing prior to January 1, 1984,
and Plan Years during which the Plan was not a Top Heavy Plan) multiplied by the
Participant's average compensation during the five consecutive year period
during which the Participant had the greatest aggregate compensation from the
Employer, the Employer shall not be required to provide for such Participant
under this Plan the minimum benefit otherwise required under this Section 11.4;
provided, however, that if this Plan requires or is amended to require an
Employer Contribution for a Plan Year, the minimum benefit accrual under the
defined benefit plan shall be offset by the benefits provided under this Plan
for such Plan Year as provided in Treas. Reg. (S) 1.416-1, M-12. If this
becomes
61
<PAGE>
a Top Heavy Plan for a Plan Year, but not a Super Top Heavy Plan, and the
Employer makes contributions on behalf of a Participant under both this Plan and
a defined benefit plan (within the meaning of section 414(j) of the Code) and
the Employer wishes to use a factor of 1.25 rather than 1.0 as a limitation on
the sum of the Defined Contribution Fraction (within the meaning of Section
6.9(c)) and Defined Benefit Fraction (within the meaning of Section 6.9(c)) for
the Limitation Year, then the defined benefit plan minimum benefit accrual
specified above shall be increased by one percentage point (up to a maximum of
ten percentage points) for each year of Eligibility Service (within the meaning
of Section 3.2) within which a Plan Year during which this Plan was a Top Heavy
Plan or Super Top Heavy Plan ended; provided that no such year of Eligibility
Service completed during a Plan Year beginning prior to January 1, 1984, shall
be counted for such purpose. Nothing in this Section 11.4 shall prohibit the
Employer from making contributions in excess of the minimums stated herein
provided such contributions are otherwise in accordance with the provisions of
the Plan or other plan pursuant to which they are made.
11.5 Termination of Service Prior to Normal Retirement Age. If during any
-----------------------------------------------------
Plan Year a Participant has performed at least one Hour of Service for the
Employer and the Plan is a Top Heavy Plan, such Participant's Vested Accrued
Benefit attributable to his Matching Account and Profit Sharing Account upon
termination of Service for any reason before Normal Retirement Age (except death
or Disability) shall be 100% of his Accrued Benefit.
Notwithstanding any of the foregoing, if during any prior Plan Year the Plan was
a Top Heavy Plan and in any subsequent Plan Year the Plan ceases to be a Top
Heavy Plan, the rights of a Participant who had performed at least one Hour of
Service during the Period the Plan was a Top Heavy Plan in and to his Accrued
Benefit attributable to his Matching Account shall not be less than his vested
rights during the period that the Plan was a Top Heavy Plan. Provided, further,
any Participant who has three or more Years of Service at the beginning of a
Plan Year in which the Plan ceases to be a Top Heavy Plan shall have the right
to elect, within a reasonable time of the beginning of the Plan Year in which
the Plan ceases to be a Top Heavy Plan, to have his non-forfeitable percentage
under this Plan computed in accordance with the schedule applicable to Plan
Years in which the Plan is a Top Heavy Plan. Any election made under this
Section 11.5 shall be made in the manner specified by Section 12.5 as if such
change in vesting schedule had been made by way of an amendment.
- -------------------------
End of Article XI
62
<PAGE>
ARTICLE XII
EMPLOYER ADMINISTRATIVE PROVISIONS
----------------------------------
12.1 Information. Each Employer shall, upon request or as may be
-----------
specifically required hereunder, furnish or cause to be furnished, all of the
information or documentation which is necessary or required by the
Administration Committee and Trustee to perform their respective duties and
functions under the Plan. Each Employer's records as to the current information
the Employer furnishes to the Committee and Trustee shall be conclusive as to
all persons.
12.2 No Liability. Subject to Articles XII and XVII, the Employer assumes
------------
no obligation or responsibility to any of the Employees, Participants, or
Beneficiaries for any act of, or failure to act, on the part of the Committee or
the Trustee.
12.3 Employer Action. Any action required of an Employer may be by
---------------
resolution of its board of directors or by any person authorized to act on
behalf of the Employer.
12.4 Indemnity. The Company shall indemnify and save harmless the
---------
Committee, and its members, and each of them, from and against any and all loss
resulting from liability to which the Committee, or its members, may be
subjected by reason of any act or conduct (except willful or reckless
misconduct), in their official capacities in the administration of the Plan or
Trust or both, including all expenses reasonably incurred in their defense, in
case the Company fails to provide such defense.
12.5 Amendment to Vesting Schedule. Although the Employer reserves the
-----------------------------
right to amend the vesting schedule at any time, the Employer shall not amend
the vesting schedule (and no amendment shall be effective) if the amendment
would reduce the nonforfeitable percentage of any Participant's Accrued Benefit
derived from Employer Contributions (determined as of the later of the date the
Employer adopts the amendment, or the date the amendment becomes effective) to a
percentage less than the nonforfeitable percentage computed under the Plan
without regard to the amendment.
In the event the vesting schedule of this Plan is amended, any Participant who
has completed at least three years of Vesting Service may elect to have his
Accrued Benefit computed under the Plan without regard to such amendment by
notifying the Committee in writing during the election period hereinafter
described. The election period shall begin on the date such amendment is
adopted and shall end no earlier than the latest of the following dates:
(a) The date which is 60 days after the day such amendment is
adopted;
(b) The date which is 60 days after the day such amendment becomes
effective; or
(c) The date which is 60 days after the day the Participant is given
written notice of such amendment by the Committee.
63
<PAGE>
Any election made pursuant to this Section shall be irrevocable. The Committee,
as soon as practicable, shall forward a true copy of any amendment to the
vesting schedule to each affected Participant, together with an explanation of
the effect of the amendment, the appropriate form upon which the Participant may
make an election to remain under the vesting schedule provided under the Plan
prior to the amendment, and notice of the time within which the Participant must
make an election to remain under the prior vesting schedule.
- -------------------------
End of Article XII
64
<PAGE>
ARTICLE XIII
ADMINISTRATION COMMITTEE
------------------------
13.1 Appointment. The Company may appoint an Administration Committee to
-----------
administer the Plan and direct Plan investments. The Company may appoint more
than one committee for such purposes. In the absence of such appointments, the
Company shall function as the Committee.
13.2 Term. Each member of each Committee shall serve until his successor
----
is appointed. Any member of the Committee may be removed by the Company, with
or without cause, which shall have the power to fill any vacancy which may
occur. A member may resign upon written notice to the Company.
13.3 Compensation. The members of the Committee shall serve without
------------
compensation for services as such, but the Company shall pay all expenses of the
members of the Committee, including the expenses for any bond required under
section 412 of ERISA. To the extent such expenses are not paid by the Company,
they shall be paid by the Trustee from the Trust.
13.4 Powers of the Administration Committee. The Committee shall have the
--------------------------------------
following powers and duties:
(a) To direct the administration of the Plan in accordance with the
provisions herein set forth;
(b) To adopt rules of procedure and regulations necessary for the
administration of the Plan provided the rules are not inconsistent with the
terms of the Plan;
(c) To interpret the provisions of the Plan and determine all
questions with respect to rights of Employees, Participants, and Beneficiaries
under the Plan, including but not limited to rights of eligibility of an
Employee to participate in the Plan, the value of a Participant's Accrued
Benefit, and the Vested Accrued Benefit of each Participant.
(d) To interpret and enforce the terms of the Plan and the rules and
regulations it adopts;
(e) To direct the Trustee with respect to the crediting and
distribution of the Trust and all other matters within its discretion as
provided in the Trust Agreement;
(f) To direct the Trustee to transfer assets to another trust which
constitutes a qualified trust under section 401(a) of the Code and to accept
transfers of assets from other trusts which constitute qualified trusts under
sections 401(a) and 501(a) of the Code;
(g) To review and render decisions with respect to a claim for, (or
denial of a claim for) a benefit under the Plan;
65
<PAGE>
(h) To furnish the Employer with information which the Employer may
require for tax or other purposes;
(i) To engage the service of counsel (who may, if appropriate, be
counsel for the Employer) and agents whom it may deem advisable to assist it
with the performance of its duties;
(j) To prescribe procedures to be followed by distributees in
obtaining benefits;
(k) To receive from the Employer and from Employees such information
as shall be necessary for the proper administration of the Plan;
(l) To receive and review reports of the financial condition and of
the receipts and disbursements of the Trust from the Trustee;
(m) To maintain, or cause to be maintained, separate Accounts in the
name of each Participant to reflect the Participant's Accrued Benefit under the
Plan;
(n) To select a secretary, who need not be a member of the Committee;
and
(o) To interpret and construe the Plan.
The Committee shall have no power to add to, subtract from, or modify any of the
terms of the Plan, or to change or add to any benefits provided by the Plan, or
to waive or fail to apply any requirements of eligibility for a benefit under
the Plan. Nonetheless, the Committee shall have absolute discretion in the
exercise of its powers in this Plan. All exercises of power by the Committee
hereunder shall be final, conclusive and binding on all interested parties,
unless found by a court of competent jurisdiction, in a final judgment that is
no longer subject to review or appeal, to be arbitrary and capricious.
13.5 Investment Powers. The Administration Committee shall also have the
-----------------
following powers and duties with respect to the investment of the Trust:
(a) To direct the Trustee in the investment, reinvestment, and
disposition of the Trust, including the investment of up to 100% of the Trust in
"qualifying employer securities" (as defined in section 407(d)(5) of ERISA)
without regard to the limitations of sections 407(a)(2), (3), or (4) of ERISA,
as provided in the Trust Agreement;
(b) To receive and review reports of the financial condition and of
the receipts and disbursements of the Trust from the Trustee;
(c) To furnish the Employer with information which the Employer may
require for tax or other purposes;
66
<PAGE>
(d) To engage the services of an Investment Manager or Managers (as
defined in section 3(38) of ERISA), each of whom shall have full power and
authority to manage, acquire or dispose (or direct the Trustee with respect to
acquisition or disposition) of any Plan asset under its control; and
(e) To interpret and construe the Plan with respect to the investment,
reinvestment, and disposition of Plan assets.
13.6 Manner of Action. The decision of a majority of the members of the
----------------
Administration Committee appointed and qualified shall control. In case of a
vacancy in the membership of the Committee, the remaining members may exercise
any and all of the powers, authorities, duties, and discretion conferred upon
the Committee. The Committee may, but need not, call or hold formal meetings.
Any decisions made or action taken pursuant to written approval of a majority of
the then members shall be sufficient. The Committee shall maintain adequate
records of its decisions.
13.7 Authorized Representative. The Committee may authorize any one of
-------------------------
its members, or its secretary, to sign on its behalf any notices, directions,
applications, certificates, consents, approvals, waivers, letters, or other
documents. The Committee must evidence this authority by an instrument signed
by all its respective members and filed with the Trustee.
13.8 Exclusive Benefit. The Committee shall administer the Plan for the
-----------------
exclusive benefit of the Participants and their Beneficiaries.
13.9 Interested Member. No member of the Committee may decide or
-----------------
determine any matter concerning the distribution, nature, or method of
settlement of his own benefits under the Plan unless there is only one person
acting alone in the capacity as the Committee.
13.10 Funding Policy. The Committee shall review, not less often than
--------------
annually, all pertinent Employee information and Plan data in order to establish
the funding policy of the Plan and to determine the appropriate methods of
carrying out the Plan's objectives. The Committee shall communicate annually to
the Trustee and to the Plan Investment Manager(s) (herein so-called), if any,
the Plan's short-term and long-term financial needs so investment policy can be
coordinated with Plan financial requirements.
13.11 Books and Records. The Committee shall maintain, or cause to be
-----------------
maintained, records which will adequately disclose at all times the state of the
Trust and of each separate interest therein. The books, forms, and methods of
accounting shall be the responsibility of the Committee.
- -------------------------
End of Article XIII
67
<PAGE>
ARTICLE XIV
PARTICIPANT ADMINISTRATIVE PROVISIONS
-------------------------------------
14.1 Beneficiary Designation. Subject to the limitations of Section 2.9,
-----------------------
each Participant may from time to time designate, in writing, a Beneficiary to
whom the Trustee shall pay his Accrued Benefit in the Trust in the event of his
death. The Administration Committee shall prescribe the form for the written
designation of Beneficiary and, upon the Participant's filing the form with the
Committee, it shall revoke all designations filed prior to that date by the same
Participant. A Participant may designate multiple and/or contingent
Beneficiaries.
14.2 No Beneficiary Designation. Subject to the limitations of Section
--------------------------
2.9, if a Participant fails to name a Beneficiary in accord with Section 14.1,
or if the Beneficiary named by a Participant predeceases him, the Beneficiary
shall be, first, his spouse at the time of his death, or if he has no surviving
spouse, then to his surviving children (including adopted children) in equal
shares, or if the Participant has no surviving children, then to his surviving
parents in equal shares, or if the Participant has no surviving parents, then to
his estate. If the Participant dies after distributions have commenced
hereunder but before a complete distribution of his Vested Accrued Benefit, then
the Trustee shall pay the such Accrued Benefit in a lump sum to the legal
representative of the estate of the last to die of the Participant and his
Beneficiary. The Committee, in its sole discretion, shall direct the Trustee as
to whom the Trustee shall make payment under this Section.
14.3 Personal Data to Administration Committee. Each Participant and
-----------------------------------------
Beneficiary must furnish to the Committee evidence, data, or information as the
Committee considers necessary or desirable for the purpose of administering the
Plan. The provisions of this Plan are effective for the benefit of each
Participant upon the condition precedent that each Participant will promptly
furnish full, true, and complete evidence, data, and information when requested
by the Committee, provided the Committee shall advise each Participant of the
effect of his failure to comply with its request.
14.4 Address for Notification. Each Participant and each Beneficiary of a
------------------------
deceased Participant shall file with the Committee, in writing, his post office
address, and each subsequent change of such post office address. Any payment or
distribution hereunder, and any communication addressed to a Participant or his
Beneficiary, at the last address filed with the Committee, or if no address has
been filed, then the last address indicated on the records of the Employer shall
be deemed to have been delivered to the Participant or his Beneficiary on the
date that such distribution or communication is deposited in the United States
Mail, postage prepaid.
14.5 Place of Payment and Proof of Continued Eligibility. Any check
---------------------------------------------------
representing payment hereunder and any communication addressed to an Employee, a
former Employee, a retired Employee, or Beneficiary at his last address filed
with the Committee, or if no such address has been filed, then at his last
address as indicated on the records of the Employer, shall be deemed to have
been delivered to such person on the date on which such check or communication
is deposited in the United States mail. If the Committee, for any reason, is in
68
<PAGE>
doubt as to whether benefit payments are being received by the person entitled
thereto, it shall, by registered mail addressed to the person concerned, at his
address last known to the Committee, notify such person that all unmailed and
future retirement income payments shall be henceforth withheld until he provides
the Committee with evidence of his continued life and his proper mailing
address.
14.6 Alienation. Except as provided under a Qualified Domestic Relations
----------
Order, no benefit payable under the Plan shall be subject in any manner to
alienation, sale, transfer, assignment, pledge, encumbrance, charge,
garnishment, execution, or levy of any kind, either voluntary or involuntary
prior to actually being received by the person entitled to the benefit under the
terms of the Plan. The Trust shall not in any manner be liable for, or subject
to, the debts, contracts, liabilities, engagements, or torts of any person
entitled to benefits hereunder, except to the extent that under a Qualified
Domestic Relations Order the Trustee is required to pay a portion of a
Participant's Accrued Benefit to an Alternate Payee. In the event an Employer
or the Trustee receives written notice of an adverse claim to a benefit
distributable to a Participant, Former Participant or Beneficiary, the Trustee
may suspend payment(s) of such benefit until such matter is resolved to the
satisfaction of the Trustee.
14.7 Litigation Against the Trust. If any legal action filed against the
----------------------------
Trustee, an Employer, or the Committee, or against any member or members of the
Committee or the Employer, by or on behalf of any Participant or Beneficiary,
results adversely to the Participant or to the Beneficiary, the Trustee shall
reimburse itself, the Employer, the Committee and its members, or the Employer,
all costs and fees expended by it or them by surcharging all costs and fees
against the sums payable under the Plan to the Participant or to the
Beneficiary, but only to the extent a court of competent jurisdiction
specifically authorizes and directs any such surcharges and only to the extent
permitted under section 401(a)(13) of the Code.
14.8 Information Available. Any Participant in the Plan or any
---------------------
Beneficiary may examine copies of the Plan description, latest annual report,
any bargaining agreement, this Plan and Trust, contract, or any other instrument
under which the Plan was established or is operated. The Committee will
maintain all of the items listed in this Section in its office, or in such other
place or places as it may designate from time to time in order to comply with
the regulations issued under ERISA, for examination during reasonable business
hours. Upon the written request of a Participant or Beneficiary the Committee
shall furnish him with a copy of any item listed in this Section. The Committee
may make a reasonable charge to the requesting person for the copy so furnished.
14.9 Beneficiary's Right to Information. A beneficiary's right to (and
----------------------------------
the Committees', or a Trustee's duty to provide to the Beneficiary) information
or data concerning the Plan shall not arise until he first becomes entitled to
receive a benefit under the Plan.
14.10 Claims Procedure. Prior to or upon becoming entitled to receive a
----------------
benefit hereunder, a Participant or Beneficiary shall file a claim for such
benefit with the Committee at the time and in the manner prescribed thereby.
However, subject to the restrictions of Section 8.4, the Committee may direct
the Trustee to commence payment of a Participant's or Beneficiary's
69
<PAGE>
benefits hereunder without requiring the filing of a claim therefor, if the
Committee has knowledge of such Participant's or Beneficiary's whereabouts.
14.11 Appeal Procedure for Denial of Benefits. The Committee shall provide
---------------------------------------
adequate notice in writing to any Participant or to any Beneficiary ("Claimant")
whose claim for benefits under the Plan the Committee has denied. Such notice
must be sent within 90 days of the date the claim is received by the Committee
unless special circumstances require an extension of time for processing the
claim. Such extension shall not exceed 90 days and no extension shall be
allowed unless, within the initial 90 day period, the claimant is sent an
extension notice indicating the special circumstances requiring the extension
and specifying a date by which the Committee expects to render its decision.
The Committee's notice of denial to the Claimant shall set forth:
(a) The specific reason or reasons for the denial;
(b) Specific references to pertinent Plan provisions on which the
Committee based its denial;
(c) A description of any additional material and information needed
for the Claimant to perfect his claim and an explanation of why the material or
information is needed;
(d) A statement that the Claimant may:
(1) Request a review upon written application to the Committee;
(2) Review pertinent Plan documents;
(3) Submit issues and comments in writing; and
(e) That any appeal the Claimant wishes to make of the adverse
determination must be in writing to the Committee within 60 days after receipt
of the Committee's notice of denial of benefits. The Committee's notice must
further advise the Claimant that his failure to appeal the action to the
Committee in writing within the 60 day period will render the Committee's
determination final, binding, and conclusive.
If the Claimant should appeal to the Committee, he, or his duly authorized
representative, may submit, in writing, whatever issues and comments he, or his
duly authorized representative, feels are pertinent. The Committee shall re-
examine all facts related to the appeal and make a final determination as to
whether the denial of benefits is justified under the circumstances. The
Committee shall advise the Claimant in writing of its decision on his appeal,
the specific reasons for the decision, and the specific Plan provisions on which
the decision is based. The notice of the decision shall be given within 60 days
of the Claimant's written request for review, unless special circumstances (such
as a hearing) would make the rendering of a decision within the 60 day period
infeasible, but in no event shall the Committee render a decision regarding the
denial of a claim for benefits later than 120 days after its receipt of a
request for review. If an
70
<PAGE>
extension of time for review is required because of special circumstances,
written notice of the extension shall be furnished to the claimant prior to the
date the extension period commences.
The Committee's notice of denial of benefits shall identify the name of each
member of the Committee and the name and address of the Committee member to whom
the Claimant may forward his appeal.
14.12 No Rights Implied. Nothing contained in this Plan, or with respect
-----------------
to the establishment of the Trust, or any modification or amendment to the Plan
or Trust, or in the creation of any Account, or the payment of any benefit,
shall give any Employee, Participant, or any Beneficiary any right to continue
employment, any legal or equitable right against an Employer, or Employee of the
Employer, or against the Trustee, or its agents or employees, except as
expressly provided by the Plan, the Trust or ERISA.
- -------------------------
End of Article XIV
71
<PAGE>
ARTICLE XV
FIDUCIARY DUTIES
----------------
15.1 Fiduciaries. The "Fiduciaries" of the Plan shall consist of the
-----------
following:
(a) The Administration Committee;
(b) The Trustee; and
(c) Such other person or persons that are designated to carry out
fiduciary responsibilities under the Plan in accordance with Section 15.3
hereof.
Any person or group of persons may serve in more than one fiduciary capacity
with respect to the Plan. A Fiduciary may employ one or more persons to render
advice with regard to any responsibility such Fiduciary has under the Plan.
15.2 Allocation of Responsibilities. The powers and responsibilities of
------------------------------
the Fiduciaries are hereby allocated as indicated below:
(a) Company. The Company shall be responsible for all functions
-------
assigned or reserved to it under the Plan and Trust Agreement. Any authority
assigned or reserved to the Company under the Plan and Trust Agreement shall be
exercised by resolution of the appropriate representatives of the Company, or
action by a delegate thereof.
(b) Administration Committee. The Committee shall have the
------------------------
responsibility and authority to control (i) the operation and administration of
the Plan, and (ii) the investment of the Trust in accordance with the terms of
the Plan and Trust Agreement, except with respect to duties and responsibilities
specifically allocated to other fiduciaries. The Committee shall have the
authority to issue written directions to the Trustee to the extent provided in
the Trust Agreement. The Trustee shall follow the Committee's directions unless
it is clear that the actions to be taken under those directions would be
violations of applicable fiduciary standards or would be contrary to the terms
of the Plan or Trust Agreement.
(c) Trustee. The Trustee shall have the duties and responsibilities
-------
set out in the Trust Agreement, subject, however, to direction by the Committee
as set out in the Trust Agreement.
(d) Allocations. Powers and responsibilities may be allocated to
-----------
other Fiduciaries in accordance with Section 15.3 hereof, or as otherwise
provided herein or in the Trust Agreement.
This Article is intended to allocate to each Fiduciary the individual
responsibility for the prudent execution of the functions assigned to it, and
none of such responsibilities or any other responsibility shall be shared by two
or more of such Fiduciaries unless such sharing shall be provided by a specified
provision of the Plan or Trust Agreement.
72
<PAGE>
15.3 Procedures for Delegation and Allocation of Responsibilities.
------------------------------------------------------------
Fiduciary responsibilities may be allocated as follows:
(a) The Committee may specifically allocate responsibilities to a
specified member or members of the Committee, or to a subcommittee.
(b) The Committee may designate a person or persons other than a
Fiduciary to carry out fiduciary responsibilities under the Plan (this authority
shall not cause any person or persons employed to perform ministerial acts and
services for the Plan to be deemed fiduciaries of the Plan).
(c) The Committee may appoint an Investment Manager or managers to
manage (including the power to acquire and dispose of) the assets of the Plan
(or a portion thereof).
(d) If at any time there be more than one Trustee serving under the
Trust Agreement, such Trustees may allocate specific responsibilities,
obligations, or duties among themselves in such manner as they shall agree.
Any allocation of responsibilities pursuant to this Section shall be made by
filing a written notice thereof with the Committee specifically designating the
person or persons to whom such responsibilities or duties are allocated and
specifically setting out the particular duties and responsibilities with respect
to which the allocation or designation is made.
15.4 Allocation of Fiduciary Liability.
---------------------------------
(a) Co-Trustees. In the event that there are two or more Trustees
-----------
serving under the Trust Agreement, each should use reasonable care to prevent a
Co-Trustee from committing a breach of fiduciary responsibility and they shall
jointly manage and control assets of the Plan, except that in the event of an
allocation of responsibilities, obligations, or duties, a Trustee to whom such
responsibilities, obligations, or duties have not been allocated shall not be
liable to any person by reason of this Section, either individually or as a
Trustee, for any loss resulting to the Plan arising from the acts or omissions
on the part of the Trustee to whom such responsibilities, obligations, or duties
have been allocated.
(b) Liability Where Allocation is in Effect. To the extent that
---------------------------------------
fiduciary responsibilities are specifically allocated by a Fiduciary, or
pursuant to the express terms hereof, to any person or persons, then such
Fiduciary shall not be liable for any act or omission of such person in carrying
out such responsibility except to the extent that the Fiduciary violated this
Article (i) with respect to such allocation or designation, (ii) with respect to
the establishment or implementation of the procedure for making such an
allocation or designation, (iii) in continuing the allocation or designation, or
(iv) the Fiduciary would otherwise be liable in accordance with this Section
15.4.
(c) No Responsibility for Employer Action. Neither the Trustee nor
------------------------------------------
the Committee shall have any obligation nor responsibility with respect to any
action required by
73
<PAGE>
the Plan to be taken by the Employer, any Participant or Eligible Employee, nor
for the failure of any of the above persons to act or make any payment or
contribution, or to otherwise provide any benefit contemplated under this Plan.
(d) No Duty to Inquire. Neither the Trustee nor the Committee shall
------------------
have any obligation to inquire into or be responsible for any action or failure
to act on the part of the others.
(e) Liability of Trustee Where Investment Manager Appointed. If an
-------------------------------------------------------
Investment Manager has been appointed pursuant to Section 15.3 hereof, then
neither the Trustee nor the Committee shall be liable for the acts or omissions
of such Investment Manager, or be under any obligation to invest or otherwise
manage any assets of the Plan which are subject to the management of such
Investment Manager.
(f) Successor Fiduciary. No Fiduciary shall be liable with respect to
-------------------
any breach of fiduciary duty if such breach was committed before he became a
Fiduciary or after he ceased to be a Fiduciary.
- -------------------------
End of Article XV
74
<PAGE>
ARTICLE XVI
DISCONTINUANCE AMENDMENT AND TERMINATION
----------------------------------------
16.1 Discontinuance. The Company shall have the right, at any time,
--------------
without prior notice and without cause, to suspend or discontinue its
contributions under the Plan.
16.2 Amendment. The Company shall have the right at any time, and from
---------
time to time, without prior notice and without cause, to amend the Plan in any
manner. In addition, the Administrative Committee is authorized to amend the
Loan Procedures Document referenced in Section 9.3 by a majority vote of the
Committee members or by such other procedure described in the Loan Procedure
Document. All amendments shall be in writing and shall state the date to which
it is either retroactively or prospectively effective. Notwithstanding the
provisions of this Section, no amendment shall:
(a) Except as provided for in Section 4.6, authorize or permit any of
the Trust (other than the part which is required to pay taxes and administration
expenses) to be used for or diverted to purposes other than for the exclusive
benefit of the Participants or their Beneficiaries;
(b) Cause or permit any portion of the Trust to revert to or become
the property of the Employer;
(c) Increase duties or responsibilities of the Trustee or the
Committee without the written consent of the affected Trustee or the affected
member or members of the Committee.
16.3 Termination. The Company shall have the right, without prior notice
-----------
and without cause, to terminate the Plan at any time. The Plan shall terminate
upon the first to occur of the following:
(a) The date terminated by action of the Company; or
(b) The dissolution, merger, consolidation, or reorganization of the
Company or the sale by the Company of all or substantially all of its assets,
unless the successor or purchaser makes provision to continue the Plan, in which
event the successor or purchaser shall be substituted as the Company under this
Plan.
16.4 Termination, Partial Termination, or Complete Discontinuance of
---------------------------------------------------------------
Employer Contributions. Notwithstanding any other provision in this Plan, in
- ----------------------
the event of a termination or partial termination of the Plan, or a complete
discontinuance of Employer Contributions under the Plan, all affected
Participants shall have a fully vested interest in their Accrued Benefit
determined as of the date of such event. The value of the Accrued Benefit shall
be determined on the date the Accrued Benefit becomes fully vested, as if such
date was the Valuation Date for the Limitation Year in which the termination,
partial termination, or complete discontinuance of Employer Contributions
occurs. The Administration Committee shall interpret and administer
75
<PAGE>
this Section 16.4 consistently with Section 7.8 and in accord with the intent
and scope of the Treasury regulations issued under section 411(d)(3) of the
Code.
16.5 Amendment Procedures. Pursuant to section 402(b)(3) of ERISA, the
--------------------
Company must comply with the following procedures before an amendment to the
Plan is effective, except as specified in Section 16.3(b):
(a) The Company may modify or terminate the Plan only by a written
amendment that is authorized by the Company.
(b) The Company's authorization of the amendment must be evidenced by
any of the following: (i) a resolution of the board of directors; (ii) execution
of the amendment by the chief executive officer or president of the Company; or
(iii) ratification of the amendment by a resolution of the board of directors or
written approval by the chief executive officer or president of the Company;
provided, however, that the Loan Procedures Document may also be amended by the
Committee according to the procedures stated therein.
(c) Notice of an amendment that terminates the Plan must be provided
to the Trustee.
(d) The Company need not provide notice of the amendment to Plan
participants or employees, except as may be required by section 204(h) of ERISA.
16.6 Procedure on Termination. In the event of termination of the Plan or
------------------------
permanent discontinuance of Employer Contributions, the Employer shall cause any
unallocated assets to be allocated to Participant Accounts in the manner
specified in the Treasury regulations promulgated under section 411 of the Code.
Moreover, the Company shall, in its sole discretion, authorize any one of the
following procedures:
(a) Continue Plan. To continue the Plan in operation in all respects
-------------
until the Trustee has distributed all benefits under the Plan, except that no
further persons shall become Participants, no further Employer Contributions
shall be made, all Accounts shall be fully vested, and no further payments shall
be made except in distribution of the Trust and payment of administration
expenses; or
(b) Liquidate Plan. Subject to the limitations contained herein, to
--------------
wind up and liquidate the Plan and Trust and distribute the assets thereof,
after deduction of all expenses, to the Participants, Former Participants, and
Beneficiaries in accordance with their respective Accounts as then constituted.
If the Employer makes no election before termination, then this subsection (b)
will govern distribution of the Trust.
16.7 Merger. The Trustee shall not consent to, or be a party to, any
------
merger or consolidation with another plan, or to a transfer of assets or
liabilities to another plan, unless immediately after the merger, consolidation,
or transfer, the surviving Plan, if it then terminated, would provide to each
Participant a benefit equal to or greater than the benefit each
76
<PAGE>
Participant would have received had the Plan terminated immediately before the
merger, consolidation, or transfer.
16.8 Notice of Change in Terms. The Administration Committee, within the
-------------------------
time prescribed by ERISA and applicable regulations, shall furnish all
Participants and Beneficiaries a summary descriptive of any material amendment
to the Plan or notice of discontinuance of contributions or termination of the
Plan and all other information required by ERISA to be furnished without charge.
- -------------------------
End of Article XVI
77
<PAGE>
ARTICLE XVII
THE TRUST
---------
17.1 Purpose of the Trust. A Trust has been created and will be
--------------------
maintained for the purposes of the Plan, and the assets thereof shall be
invested in accordance with the terms of the Trust Agreement. All contributions
will be paid into the Trust, and all benefits under the Plan will be paid from
the Trust.
17.2 Appointment of Trustee. Trustee(s) shall be appointed by the Company
----------------------
to administer the Trust. The Trustee's obligations, duties, and
responsibilities shall be governed solely by the terms of the Trust Agreement.
17.3 Exclusive Benefit of Participants. Subject to Section 4.6, the Trust
---------------------------------
will be used and applied only in accordance with the provisions of the Plan to
provide the benefits thereof, and no part of the corpus or income of the Trust
shall be used for or diverted to purposes other than for the exclusive benefit
of the Participants and their Beneficiaries and with respect to expenses of
administration. The Company reserves the right to recover any amounts held in a
suspense account at the termination of the Trust that cannot be used to reduce
Employer Contributions in the year of termination because of the limitations
contained in Section 6.9 of the Plan and section 415 of the Code.
17.4 Benefits Supported Only By the Trust. Any person having any claim
------------------------------------
under the Plan will look solely to the assets of the Trust for satisfaction.
17.5 Rights to Trust Assets. No Employee shall have any right to, or
----------------------
interest in, any assets of the Trust upon termination of his employment or
otherwise, except as provided from time to time under this Plan, and then only
to the extent of the benefits payable under the Plan to such Employee out of the
assets of the Trust. Except as otherwise may be provided under Title IV of
ERISA, all payments of benefits as provided for in this Plan shall be made
solely out of the assets of the Trust and none of the Fiduciaries shall be
liable therefor in any manner.
- -------------------------
End of Article XVII
<PAGE>
ARTICLE XVIII
MISCELLANEOUS
-------------
18.1 Execution of Receipts and Releases. Any payment to any Participant,
----------------------------------
or to his legal representative or Beneficiary, in accordance with the provisions
of the Plan, shall to the extent thereof be in full satisfaction of all claims
hereunder against the Plan and Trust. The Administration Committee may require
such Participant, legal representative, or Beneficiary, as a condition precedent
to such payment, to execute a receipt and release therefor in such form as it
shall determine.
18.2 No Guarantee of Interests. Neither the Trustee, the Administration
-------------------------
Committee, nor the Company guarantee the Trust from loss or depreciation. The
Company does not guarantee the payment of any money which may be or becomes due
to any person from the Trust. The liability of the Committee and the Trustee to
make any payment from the Trust is limited to the then available assets of the
Trust.
18.3 Payment of Expenses. Except as provided below, all expenses incident
-------------------
to the administration and protection of the Plan and Trust, including but not
limited to legal, accounting, and Trustee fees, may be paid by the Employer, or,
in the absence of such payments (which are not obligatory), shall be paid from
the Trust, and until paid, shall constitute a first and prior claim and lien
against the Trust. Such expenses may be paid out of Forfeitures in the Trust
that occur each Plan Year. However, any and all expenses relating to settlor
functions that arise from the creation, design or termination of the Plan must
be paid by the Employer and may not be paid from the Trust.
18.4 Employer Records. Records of an Employer as to an Employee's or
----------------
Participant's period of employment, termination of employment and the reason
therefor, leaves of absence, reemployment, and Compensation will be conclusive
on all persons, unless determined to be incorrect.
18.5 Interpretations and Adjustments. To the extent permitted by law, an
-------------------------------
interpretation of the Plan and a decision on any matter within a Fiduciary's
discretion made in good faith is binding on all persons. A misstatement or
other mistake of fact shall be corrected when it becomes known and the person
responsible shall make such adjustment on account thereof as he considers
equitable and practicable.
18.6 Uniform Rules. In the administration of the Plan, uniform rules will
-------------
be applied to all Participants similarly situated.
18.7 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.
18.8 Severability. In the event any provision of the Plan shall be held
------------
to be illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions of the
<PAGE>
Plan, but shall be fully severable and the Plan shall be construed and enforced
as if the illegal or invalid provision had never been included herein.
18.9 Notice. Any notice required to be given herein by the Trustee, an
------
Employer, or the Administration Committee, shall be deemed delivered, when (a)
personally delivered, or (b) placed in the United States mails, in an envelope
addressed to the last known address of the person to whom the notice is given.
18.10 Waiver of Notice. Any person entitled to notice under the Plan may
----------------
waive the notice.
18.11 Successors. The Plan shall be binding upon all persons entitled to
----------
benefits under the Plan, their respective heirs and legal representatives, upon
each Employer, its successors and assigns, and upon the Trustee, the
Administration Committee, and their successors.
18.12 Headings. The titles and headings of Articles and Sections are
--------
included for convenience of reference only and are not to be considered in
construction of the provisions hereof.
18.13 Governing Law. All questions arising with respect to the provisions
-------------
of this Agreement shall be determined by application of the laws of the State of
Washington except to the extent Washington law is preempted by federal law.
- -------------------------
End of Article XVIII
<PAGE>
ARTICLE XIX
EMPLOYER PARTICIPATION
----------------------
19.1 Adoption by Employer. Subject to the further provisions of this
--------------------
Article, any entity which is a member of the same controlled group of
corporations or trades or businesses under common control (as defined in
sections 414(b) or 414(c) of the Code) as the Company, now in existence or
hereafter formed or acquired, or is approved by the Company, and which is
otherwise legally eligible, may, with the consent and approval of the board of
directors of the Company, by formal resolution or decision of its own board of
directors, adopt the Plan and the Trust and, if deemed necessary by the Company,
execute an Adoption Agreement, for all or any classification of its employees.
Such adoption shall be effectuated and evidenced by a formal resolution of the
board of directors of the Company consenting to and containing or incorpo rating
by reference such formal resolution or decision of the adopting corporation.
The adoption resolution or decision shall become, as to such adopting
corporation and its employees, a part of the Plan as then or subsequently
amended. It shall not be necessary for the adopting corporation to sign or
execute the Plan document, but, if deemed necessary by the Company, such
corporation must complete and execute an Adoption Agreement. The effective date
of the Plan for any such adopting corporation shall be that stated in the
resolution or decision of adoption of the adopting corporation, and from and
after such effective date, the adopting corporation shall assume all the rights,
obligations and liabilities of an Employer hereunder. The administrative powers
and control of the Company, as now or hereafter provided in the Plan, including
the Company's sole right of amendment of the Plan and Trust and of appointment
and removal of the Administration Committee, and Trustee, together with their
successors, shall not be diminished by reason of the participation of any such
adopting corporation in the Plan and Trust.
19.2 Withdrawal by Employer. Any Employer by action of its board of
----------------------
directors and notice to the Company and the Trustee, may withdraw from the Plan
and Trust at any time without affecting other Employers not withdrawing, by
complying with the provisions of the Plan. Termination of the Plan as it
relates to an Employer upon its withdrawal shall be governed by the provisions
of Article XVI. A withdrawing Employer may arrange for the continuation by
itself or its successor of this Plan and Trust in separate form for its own
Employees with such amendments, if any, as it may deem proper, or it may arrange
for continuation of the Plan and Trust by merger with an existing plan and trust
qualified under sections 401(a) and 501(a) of the Code and transfer of such
portion of the Trust assets as the Committee determines are allocable to the
Employer and its employees who are Participants. The Company may in its absolute
discretion, by resolution of its board of directors, terminate an Employer's
participation at any time when (1) the Employer ceases to be a member of the
Company's controlled group of corporations, (2) in the Company's judgment such
Employer fails or refuses to discharge its obligations under the Plan following
such prior notice and opportunity to cure as may be appropriate under the
circumstances, or (3) in the Company's judgment, such Employer should not be
allowed to continue to participate.
19.3 Adoption Contingent Upon Initial and Continued Qualification. The
------------------------------------------------------------
adoption of the Plan and Trust by a corporation as provided in Section 19.1 is
made contingent and subject
<PAGE>
to the condition precedent that the adopting corporation meets all the statutory
requirements for qualified plans under the Code for its Employees. The adopting
corporation may, or at the request of the Company shall, request an initial
letter of determination from the appropriate District Director of Internal
Revenue to the effect that the Plan and Trust, as herein set forth or as amended
with respect to the adopting corporation, satisfy the requirements of the
applicable federal statutes for tax qualification purposes for such adopting
corporation and its employees. In the event the Plan or the Trust in its
operation becomes disqualified for any reason as to such adopting corporation
and its employees, the portion of the Trust allocable to them shall be
segregated as soon as is administratively feasible, pending either (1) the
prompt requalification of the Plan and Trust as to such corporation and its
employees to the satisfaction of the Internal Revenue Service, so as not to
affect the continued qualified status of the Plan and Trust as to all other
Employees, or (2) as provided in Section 19.2 above, the prompt withdrawal of
such corporation from this Plan and Trust and a continuation by itself or its
successor of a plan and a trust separately from this Plan and Trust, or by
merger with another existing qualified plan and trust with a transfer of its
said segregated portion of Trust assets, or (3) the prompt termination of the
Plan and Trust as to itself and its employees.
19.4 No Joint Venture Implied. The adoption of the Plan by any Employer
------------------------
shall not create a joint venture or partnership relation between it and any
other Employer. Any rights, duties, liabilities and obligations assumed or
incurred hereunder by any Employer, or imposed upon any Employer by the
provisions of the Plan, shall relate to and affect such Employer alone.
- -------------------------
End of Article XIX
<PAGE>
IN WITNESS WHEREOF, PHAMIS Inc. has caused this instrument to be
executed on this 23rd day of November, 1994, but to be effective as of the
dates first written above.
PHAMIS INC.
By: /s/ Frank T. Sample
--------------------------------------
Its: Chief Executive Officer
--------------------------------------
<PAGE>
FIRST AMENDMENT TO
THE PHAMIS INC.
SALARY SAVINGS AND DEFERRAL PLAN
RECITALS:
WHEREAS, PHAMIS, Inc. (the "Company") has established the PHAMIS, Inc.
Salary Savings and Deferral Plan (the "Plan") for the benefit of its employees
and recently amended and restated the Plan to comply with the Tax Reform Act of
1986, the Unemployment Compensation Amendments of 1992, and the Revenue
Reconciliation Act of 1993;
WHEREAS, the Company has requested that the Internal Revenue Service issue
a favorable determination letter regarding the tax-qualified status of the Plan;
WHEREAS, the Service has conditioned its issuance of a favorable
determination upon the adoption of certain amendments to the restated Plan; and
WHEREAS, the Company desires to satisfy such conditions and may amend the
Plan at any time pursuant to Section XVI thereof;
AMENDMENTS
NOW, THEREFORE, effective generally January 1, 1989, and such other dates
required to satisfy the requirements of Internal Revenue Code of 1986, the Plan
is amended as follows:
1. Section 2.20 of the Plan is amended to read in its entirety as follows:
2.20 Eligible Employee. (1) Any Employee of the Company who is
-----------------
at least age 18 and is not covered by a collective bargaining
agreement and (2) an Employee of any other Employer who is at least
age 18, provided that such Employee is a member of a classification of
Employees designated by the Employer as eligible to participate in
this Plan in connection with such Employer's adoption of this Plan
pursuant to the terms of Article XIX.
<PAGE>
IN WITNESS WHEREOF, the undersigned authority has executed this amendment
pursuant to the authorization of the Company.
PHAMIS INC.
By: /s/ Gregg W. Blodgett
------------------------------------
Its: Vice President-Finance
------------------------------------
-2-
<PAGE>
SECOND AMENDMENT TO
THE PHAMIS INC.
SALARY SAVINGS AND DEFERRAL PLAN
THIS AMENDMENT to the PHAMIS Inc. Salary Savings and Deferral Plan (the
"Plan") is made by PHAMIS Inc. (the "Company") on this 22nd day of
February, 1996.
RECITALS:
WHEREAS, the Company has merged the assets of the ESOP into the Plan on
October 1, 1995, and desires to amend the Plan in order to preserve certain
protected benefits with respect to the assets of the ESOP that have been merged
into the Plan; and
WHEREAS, the Company desires to further amend the Plan to increase the
maximum matching contribution that can be made on behalf of a Plan participant;
NOW, THEREFORE, the Plan is hereby amended as follows:
1. Effective October 1, 1995, a new Section 2.1(f) is added as follows:
(f) ESOP Account. Includes assets transferred to the Plan on behalf
------------
of a participant in the PHAMIS Inc. Employee Stock Ownership Plan on October 1,
1995, in accordance with Section 5.4(c) of the Plan, and the income, gain, and
losses allocated thereto, and less distributions made therefrom.
2. Effective October 1, 1995, Section 3.1 is restated as follows:
3.1 Eligibility. Each Eligible Employee who was a Participant in the Plan
-----------
on the effective date of this amendment and restatement shall continue to be a
Participant hereunder. Each Employee or former Employee who was a participant
in the PHAMIS Inc. Employee Stock Ownership Plan on October 1, 1995, shall
become a Participant in this Plan on such date. Each other Eligible Employee
may become a Participant in the Plan on the Plan Entry Date (if employed on that
date) that coincides with or immediately follows the date upon which he
completes one year of Eligibility Service. Effective January 1, 1994, however,
each Eligible Employee may become a Participant in the Plan on the Plan Entry
Date (if employed on that date) that coincides with or immediately follows the
date upon which he completes one Hour of Service.
3. Effective January 1, 1996, the following provision shall replace
Section 4.1(b):
(b) Matching Contribution. A Matching Contribution by the Employer
---------------------
that is subject to the limitations of Section 4.5 and that is 50% of the Salary
Deferral Contribution elected by a Participant pursuant to Section 5.1(a) (and
that is not subsequently distributed pursuant to Sections 5.2 or 5.3) that does
not exceed $1,500 in any Plan Year. Prior to January
<PAGE>
1, 1996, the Matching Contribution by the Employer to any Participant's Account
could not exceed $1,000 in any Plan Year.
4. Effective October 1, 1995, the following new paragraph is added to
Section 5.4:
(c) On October 1, 1995, this Plan was merged with the assets of the
PHAMIS Inc. Employee Stock Ownership Plan (the "ESOP"). Each participant in the
ESOP shall be a Participant in this Plan on the date of the merger and the
benefits of each such Participant shall be held in the ESOP Account established
hereunder. In addition to the rights provided in this Plan, each Participant
shall with respect to his ESOP Account be entitled to the benefits provided
under the ESOP to the extent that such benefits are required to be maintained
hereunder pursuant to section 411(d)(6) of the Code. The benefit of each
Participant in his ESOP Account shall not be less hereunder than the benefit the
such Participants would have received had the ESOP terminated immediately before
the merger with this Plan.
IN WITNESS WHEREOF, the Company has adopted this amendment on the day and
year first written above.
PHAMIS INC.
By: /s/ Gregg W. Blodgett
-------------------------------------
Its: Vice President-Finance
-------------------------------------
-2-
<PAGE>
PHAMIS INC.
SALARY SAVINGS AND DEFERRAL TRUST
Effective Date: December 1, 1994
<PAGE>
PHAMIS INC.
SALARY SAVINGS AND DEFERRAL TRUST
---------------------------------
TABLE OF CONTENTS
Page
ARTICLE I
TITLE, DEFINITIONS, AND ACCEPTANCE OF TRUST
<TABLE>
<CAPTION>
<C> <S> <C>
1.1 Title........................................................... 2
1.2 Definitions..................................................... 2
1.3 Word Usage...................................................... 3
1.4 Acceptance of Trust............................................. 3
ARTICLE II
PLAN AND TRUST COMPLEMENTARY
2.1 Complementary................................................... 5
2.2 Intent to Qualify............................................... 5
ARTICLE III
CONTRIBUTIONS
3.1 Contributions................................................... 6
3.2 Commingling of Funds............................................ 6
3.3 Contributions Not Recoverable................................... 6
ARTICLE IV
PAYMENTS FROM TRUST
4.1 Distributions................................................... 7
4.2 Direction by Committee.......................................... 7
4.3 Exclusive Benefit of Participants............................... 7
4.4 Liability for Payments.......................................... 7
4.5 Return of Employer Contributions................................ 7
4.6 Payment in the Event of Disability or Incapacity................ 7
ARTICLE V
POWERS OF THE TRUSTEE
5.1 Trustee's Powers................................................ 9
5.2 Collective Investment Trust..................................... 11
5.3 Asset Transfers................................................. 12
5.4 Power to Do All Necessary Acts.................................. 12
5.5 Separate Investment Funds....................................... 12
</TABLE>
i
<PAGE>
<TABLE>
<C> <S> <C>
5.6 Short Term Investments.......................................... 12
5.7 Ancillary Trustee............................................... 13
5.8 Securities Laws................................................. 13
ARTICLE VI
DIRECTED INVESTMENTS
6.1 General......................................................... 14
6.2 Participant Directed Investments................................ 15
6.3 Investment Manager.............................................. 17
6.4 Investment of Matching Contributions............................ 18
ARTICLE VII
ADMINISTRATIVE PROVISIONS
7.1 Accounts and Records........................................... 19
7.2 Committee Action............................................... 19
7.3 Valuation of Trust............................................. 19
7.4 Employer Action................................................ 19
7.5 Court Proceedings.............................................. 19
7.6 Parties to Litigation.......................................... 19
7.7 Third Party.................................................... 20
7.8 Authorization with Respect to Taxes............................ 20
7.9 Consultation With Counsel...................................... 20
7.10 No Interest in Employer........................................ 20
7.11 Fees and Expenses.............................................. 20
7.12 Bonding of Trustee............................................. 20
7.13 Rule Against Perpetuities...................................... 20
ARTICLE VIII
FIDUCIARY DUTIES
8.1 General Fiduciary Standards.................................... 22
8.2 Allocation of Responsibilities................................. 22
8.3 Liability Among Co-Fiduciaries................................. 22
8.4 Reliance on Written Instrument................................. 24
8.5 Liability for Payment of Funds................................. 24
8.6 Trustee Indemnification........................................ 24
ARTICLE IX
SUBSTITUTION OF TRUSTEE
9.1 Trustee........................................................ 25
9.2 Resignation.................................................... 25
9.3 Removal........................................................ 25
9.4 Judicial Appointment........................................... 25
</TABLE>
ii
<PAGE>
<TABLE>
<C> <S> <C>
9.5 Succession of Trustee.......................................... 25
9.6 Merger of the Trustee.......................................... 25
ARTICLE X
AMENDMENT AND TERMINATION
10.1 Amendment...................................................... 26
10.2 Termination.................................................... 26
10.3 Amendment and Termination Procedures........................... 26
10.4 Suspension of Contributions.................................... 27
10.5 Merger or Consolidation........................................ 27
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Continuation by Successor...................................... 28
11.2 Limitation on Participants' Rights............................. 28
11.3 Receipt or Release............................................. 28
11.4 Alienation..................................................... 28
11.5 Accounting Period.............................................. 28
11.6 Title to Assets................................................ 28
11.7 Headings....................................................... 29
11.8 Governing Law.................................................. 29
11.9 Venue.......................................................... 29
11.10 Reliance on Communications..................................... 29
11.11 Execution and Counterparts..................................... 29
</TABLE>
iii
<PAGE>
PHAMIS INC.
SALARY SAVINGS AND DEFERRAL TRUST
---------------------------------
THIS AGREEMENT OF TRUST is made this 23rd day of November, 1994, by and
among PHAMIS Inc., a Washington corporation (the "Company") and Gregg Blodgett,
Kathy Dellplain, and Malcolm Gleser (collectively, the "Trustee").
RECITALS
--------
WHEREAS, effective October 16, 1984, the Company established a profit-
sharing plan and trust known as the PHAMIS Inc. Salary Savings and Deferral Plan
and Trust (the "Plan"), which has been amended from time to time;
WHEREAS, contemporaneously herewith, the Company has completely amended and
restated the Plan to be a separate plan document and to comply with the
requirements of the Tax Reform Act of 1986, the Unemployment Compensation
Amendments of 1992, the Revenue Reconciliation Act of 1993, and other applicable
laws and regulations promulgated thereunder;
WHEREAS, the Company desires to amend the trust provisions of the Plan as a
separate trust agreement, to be known as the PHAMIS Inc. Salary Savings and
Deferral Trust (the "Trust" or "Trust Agreement")
WHEREAS, effective __________________, 1994, the Company further desires to
amend the Trust so that Employer "matching" contributions are invested in common
stock of the Company and that neither the Trustee nor any fiduciary of the Plan
shall have any discretionary authority for the investment of such matching
contributions;
WHEREAS, certain of the original trustees of the Plan have resigned their
trusteeship, and have been replaced by the individual trustees executing this
Trust Agreement;
NOW, THEREFORE, the Company and the Trustee hereby amend and restate the
Trust Agreement to read as follows:
1
<PAGE>
ARTICLE 1
TITLE, DEFINITIONS, AND ACCEPTANCE OF TRUST
-------------------------------------------
1.1 Title. This Trust Agreement shall be known as the PHAMIS Inc. Salary
-----
Savings and Deferral Trust.
1.2 Definitions. For the purpose of this Trust, the following definitions
-----------
shall apply unless the context requires otherwise:
(a) "Beneficiary" shall mean any person or fiduciary designated by a
-----------
Participant pursuant to the terms of the Plan who is or may become entitled to a
benefit under the Plan following the death of the Participant.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
----
(c) "Committee" shall mean the administration committee appointed by
---------
the Company to administer the Plan under the terms thereof.
(d) "Company" shall mean PHAMIS Inc. and its successors and assigns.
-------
(e) "Employer" shall mean the Company and any other entity that is in a
--------
controlled group of corporation with the Company, as defined in section 414(b)
of the Code, or that is under common control with the Company, as defined in
section 414(c) of the Code, and which has adopted the Plan.
(f) "Employer Securities" shall mean "qualifying employer securities"
-------------------
(as such term is defined in section 407(d)(5) of ERISA) of the Company, or a
related entity.
(g) "ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended.
(h) "Fiduciary" shall mean the Trustee, the Committee, the Investment
---------
Manager, and such other entities that are designated to carry out fiduciary
responsibilities hereunder.
(i) "Investment Funds" shall mean the separate funds for investment of
----------------
Trust assets that are established by the Committee for the direction by Plan
participants of the investment of their respective account balances under the
Plan. An Investment Fund may be a fund invested in Employer Securities, a mutual
fund, an investment contract, or a fund managed by the Trustee or an Investment
Manager. In addition, an Investment Fund may also be a self-directed brokerage
account with a broker-dealer designated by the Committee and that is subject to
such other restrictions and limitations imposed by the Committee. The Committee
may add new Investment Funds and eliminate existing Investment Funds at any
time.
2
<PAGE>
(j) "Investment Manager" shall mean an investment manager that is
------------------
defined in section 3(38) of ERISA and is appointed by the Committee (with no
duty on the part of the Trustee to determine if the appointee is qualified to be
an Investment Manager) to manage a Separate Account. Such Investment Manager
shall be (a) registered as an investment adviser under the Investment Advisers
Act of 1940, (b) a bank, as defined in the Investment Advisers Act of 1940, or
(c) an insurance company qualified to manage, acquire or dispose of plan assets
under the laws of more than one state. The Trustee shall be an Investment
Manager with respect to those Investment Funds for which it agrees to retain
responsibility for investment.
(k) "Participant" shall mean an Employee or former Employee who has an
-----------
account balance under the Plan, other than a Former Participant.
(l) "Plan" shall mean the PHAMIS Inc. Salary Savings and Deferral Plan,
----
as amended from time to time. With the consent of the Company, Trustee, and
sponsoring Employer, the term "Plan" may also include any other tax qualified
defined contribution plan established or maintained by an Employer. Where the
context of this Trust so requires, "Plan" shall mean each individual defined
contribution plan that is invested hereunder.
(m) "Prior Trustee" shall mean the individuals who formerly served as
-------------
trustees of the Plan prior to the date of this Trust Agreement.
(n) "Trust" shall mean the Salary Savings and Deferral Trust, as
-----
embodied herein, and as amended from time to time, and all property of every
kind held or acquired by the Trustee under the Trust Agreement.
(o) "Trust Agreement" shall mean this agreement between the Company and
---------------
the Trustee, or any successor Trustee, as amended.
(p) "Trustee" shall mean Gregg Blodgett, Kathy Dellplain, and Malcolm
-------
Gleser, collectively, or the individual, individuals, entity or entities from
time to time appointed as successor Trustee hereunder.
1.3 Word Usage. Words used in the masculine shall apply to the feminine
----------
where applicable, and wherever the context of the Plan dictates, the plural
shall be read as the singular and the singular as the plural. The words
"herein," "hereinafter," "hereof" and other conjunctive uses of the word "here"
shall be construed as a reference to another portion of this agreement setting
forth the provisions of the Trust. Uses of the term "Section" or "Article" as
a cross-reference shall be to other Sections or Articles contained in the Trust
unless the context requires otherwise or otherwise specifically stated.
1.4 Acceptance of Trust. The Trustee, by the affixing of its signature to
-------------------
this Trust Agreement, accepts the Trust created by this Trust Agreement, upon
the terms and conditions of this Trust Agreement, to all of which the parties
hereto agree, and the Participants (and, where applicable, the participants of
other qualified defined contribution plans sponsored by an Employer), and all
those persons claiming through or under any of them, shall be deemed to have
agreed. Nothing contained in the Plan (or in such other plans), either
expressly or by
3
<PAGE>
implication, shall be deemed to impose any powers, duties, or responsibilities
on the Trustee, other than those set out in this Trust Agreement. The Trustee
hereby accepts this Trust and agrees to continue to hold the Trust assets
previously held by the Prior Trustee, and all additions and accretions thereto,
subject to all the terms and conditions of this Trust Agreement.
_________________________
End of Article I
4
<PAGE>
ARTICLE II
PLAN AND TRUST COMPLEMENTARY
----------------------------
2.1 Complementary. This Trust Agreement forms a part of each Plan
-------------
sponsored by an Employer and for which the Employer has chosen the medium of
this Trust to fund benefits and invest assets of such Plan. However,
notwithstanding any inference to the contrary contained in the Plan, the
Trustee's rights, powers, titles, duties, responsibilities, discretion, and
immunities shall be governed solely by this Trust Agreement without reference to
the provisions of the Plan.
2.2 Intent to Qualify. The Plan and Trust are intended to satisfy the
-----------------
requirements of sections 401 and 501 of the Code and the requirements of the
ERISA, and all provisions hereof shall be construed to that result.
_________________________
End of Article II
5
<PAGE>
ARTICLE II
CONTRIBUTIONS
-------------
3.1 Contributions. In general, all Employer contributions made to the
-------------
Trust are conditioned by the Employer on the deductibility of such contribution
under section 404 of the Code in the year for which such contribution is made.
The Trustee shall hold all assets previously held by the Prior Trustee and all
contributions which are delivered to it in cash, Employer Securities, or in
other property acceptable to the Trustee. All transferred assets so received,
together with all other contributions and transfers received hereunder, and all
income and any other increments thereon, shall be held, managed, and
administered by the Trustee pursuant to the terms of the Trust without
distinction between principal and income. The Trustee shall be accountable to
the Employer for the funds contributed to it by the Employer (or on behalf of
the Employer), but shall have no duty to administer the Plan nor to determine
that the contributions received from the Employer (or on behalf of the Employer)
comply with the provisions of the Plan or that the assets of the Trust are
adequate to provide any benefit payable pursuant to the Plan. The Trustee shall
not be obligated to collect any contributions from the Employer.
3.2 Commingling of Funds. Unless otherwise directed by the Committee, the
--------------------
Trustee shall hold, invest, and administer the Trust assets as a single fund
without identification of any part of the Trust assets to the Employer or to any
Participant or group of Participants or their Beneficiaries. Nonetheless, the
Trustee shall keep separate accounting records for each Plan that is invested
through this Trust. Notwithstanding the commingling of Trust assets for
investment purposes contemplated in this Section 3.2, the assets of each
separate defined contribution plan invested hereunder shall only be available to
pay the liabilities of such separate plan, and each such plan shall be treated
as a "single plan," as defined in the Treasury Regulations promulgated under
section 414(l) of the Code.
3.3 Contributions Not Recoverable. Except in circumstances in which
-----------------------------
contributions are required or permitted to be returned to an Employer by the
provisions of the Plan, as permitted or required by ERISA or by the Code, no
part of the principal or income of this Trust shall be used for, or diverted to,
purposes other than the exclusive benefit of Participants or Beneficiaries and
defraying reasonable expenses of administering the Plan and Trust.
_________________________
End of Article III
6
<PAGE>
ARTICLE IV
PAYMENTS FROM TRUST
-------------------
4.1 Distributions. Payments shall be made from the Trust by the Trustee to
-------------
such persons, in such manner, at such times, and in such amounts as the
Committee shall from time to time direct in writing.
4.2 Direction by Committee. The Trustee shall not be liable for any
----------------------
distribution made by it pursuant to direction of the Committee. If any
distribution made by the Trustee is returned unclaimed, the Trustee shall notify
the Committee and shall dispose of the distribution as the Committee shall
direct in writing. The Trustee shall not be obligated to inquire as to whether
any payee or distributee is entitled to any payment or whether the distribution
is proper or within the terms of the Plan, or as to the manner of making any
payment or distribution. The Trustee shall be accountable only to the Committee
for any payment or distribution made by it on the written order or direction of
the Committee.
4.3 Exclusive Benefit of Participants. Subject to Section 4.5 hereof, it
---------------------------------
shall be impossible, at any time, for any part of the Trust, other than such
part as is required to pay taxes and administration expenses, to revert to an
Employer, or to be used for, or diverted to, purposes other than for the
exclusive benefit of the Participants, Former Participants, or their
Beneficiaries prior to the satisfaction of all liabilities under the Plan.
Subject to Section 4.5, it shall be impossible for an Employer to recover any
portion of the Trust. The term "liability" as used herein includes both fixed
and contingent obligations owed to the Participants and their Beneficiaries.
4.4 Liability for Payments. The liability of the Trustee to make payments
----------------------
from the Trust is limited to the available assets of the Trust.
4.5 Return of Employer Contributions. Notwithstanding any provisions
--------------------------------
herein to the contrary, upon an Employer's request, a contribution which was
made upon a mistake of fact or conditioned upon either initial qualification of
the Plan or deductibility of the contribution under section 404 of the Code
shall be returned to the Employer within one year after payment of the mistaken
contribution, failure of the Plan to be qualified or disallowance of the
deduction (to the extent disallowed), as the case may be. In addition, refunds
shall be permitted to the extent consistent with the requirements of sections
403(c) or (d) of ERISA.
_________________________
End of Article IV
7
<PAGE>
ARTICLE IV
POWERS OF THE TRUSTEE
---------------------
5.1 Trustee's Powers . Subject to the provisions of Article VI, the Trustee
-----------------
shall have the following authority and powers, without being limited by any
state statute or state rule of law regarding investments by trustees, with
respect to any and all moneys, securities, or other property at any time held by
it and constituting part of the Trust hereunder:
(a) Investments. To retain in its original form without liability for
-----------
so doing, any and all property delivered or transferred to Trustee from any
source whatever, and from time to time to invest and reinvest all or any part of
the Trust corpus in bonds, debentures, promissory notes, common or preferred
stocks, with or without par value, real estate, guaranteed investment contracts
and other similar arrangements offered by insurance companies, and other
additional property. Up to 100% of the assets of the Trust may be invested in
Employer Securities.
(b) Common Funds. To invest in an undivided interest, or undivided
------------
interests, in common with any other trust, however created, or any other
individual, including investments in so-called "common funds," or in
partnerships or joint ventures, operated or created by any person, trust or
corporation. The records of the Trustee shall at all times show such Trust's
interest in the corpus and income from each such common investment, common fund,
partnership or joint venture, and if there be a common fund, partnership or
joint venture, its records shall likewise show the interest of each investor.
(c) Sales. At any time and for any reason, by either public offering or
-----
private negotiation, for such price and on such terms, with such covenants of
warranty and with such security for deferred payments as the Trustee shall deem
reasonable, to sell, exchange, assign, transfer or otherwise dispose of all or
any part of any real or personal property belonging to the Trust, with authority
to grant options for the purchase thereof, and in such manner as the Trustee
shall deem proper, to partition between the Trustee and any other person or
persons, any property in which the Trust shall hold an undivided interest. No
purchaser of or co-tenant in any such property shall ever be obliged to see to
the application of any money or other proceeds paid or delivered to the Trustee
upon any such sale. In connection with the conveyance of property, the Trustee
may procure and pay for policies of title insurance.
(d) Leases. To rent or lease real or personal property held in trust and
------
to make a lease to commence in the future or to extend beyond the termination of
the Trust, or to grant to the lessee an option, exercisable during or at the
termination of the lease or of any extension thereof, to purchase the leased
property.
(e) Real Estate. To acquire any real estate or estate in land by
-----------
purchase or lease, or as a result of any foreclosure, liquidation or other
salvage of any investment previously made, or otherwise; to improve, develop,
manage, administer or operate any real estate held in trust hereunder; to
construct, alter, repair, reconstruct, wreck, or remove buildings, structures
8
<PAGE>
or improvements on any such real estate; to settle boundary lines and easements
and other rights with respect to such real estate; to partition and to join with
co-owners and others in dealing with such real estate in any way.
(f) Oil and Gas. To enter into and to execute, on such terms as the Trustee
-----------
shall deem proper, oil, gas, and other mineral leases, unitization, pooling and
repressurization agreements, and any and all other agreements and instruments
pertaining to the development, production, conservation, processing, or sale, of
oil, gas, and other minerals; provided, however, that Trustee shall never drill
any oil or gas well, but the Trustee is hereby authorized to enter into
contracts whereby a well may be drilled for it, if and only if, some interest in
the property will be accepted in full payment of the cost of drilling.
(g) Collections and Claims. To collect and receipt for any and all amounts
----------------------
ever payable in respect of any property at any time held in trust hereunder, and
likewise, subject to the consent of the Employer or Committee, to settle or
compromise any and all disputes, of every kind and character, in respect of the
administration of a trust, or any property held in trust, or the rights of any
person interested hereunder (but not of the Employer or the Committee), and in
addition, any and all other claims of every kind and character, in favor of or
against the trust or the Trustee, including, but not limited to, taxes of every
kind.
(h) Borrowing. To borrow money or to guaranty (by guaranty, co-signature,
---------
take-out letter or otherwise) the borrowing of money by any person or entity to
enable the Trustee to do whatever it is hereby expressly, or impliedly,
authorized to do, and to secure payment of such indebtedness or contingent
indebtedness in such manner as it shall deem proper. No lender shall be
required to see to the propriety of trustee's action in borrowing or to the use
of the money borrowed.
(i) Incorporations. To form, or be a party to the formation of, a
--------------
corporation, should the Trustee deem it advantageous in the administration of
the Trust, or any part of the corpus thereof, and to subscribe and pay for the
Trust's part of the stock, either in cash or property or partly one and partly
the other.
(j) Corporate Stock. To vote, in person or by proxy, any stocks or other
---------------
properties having voting rights; to exercise any options, rights, or privileges
pertaining to any property held in trust hereunder; to participate in, support,
or oppose any liquidation, merger, reorganizations or consolidation affecting
any part of the property held in trust hereunder, and in connection therewith to
take any action which an individual could take with respect to property owned
outright by such individual, including the payment of expenses or assessments,
the deposit of stock, securities, or property with a protective or
reorganization committee and to delegate to such committee powers with respect
thereto, the acceptance or retention of new stock, securities, or property
received in pursuance thereof, and the payment of such amounts of money as may
seem advisable in connection with any such protective or reorganization
committee. The Trustee may or, if directed by the Committee, shall permit Plan
participants to direct the voting of Employer Securities allocated to their
accounts in accordance with procedures established by the Committee and to the
extent consistent with ERISA.
9
<PAGE>
(k) Banks. If the Trustee is a bank, to contract or otherwise enter into
-----
transactions between itself as Trustee and as a bank, between itself as Trustee
and the Employer, its subsidiaries and affiliates or any of them, or between
itself as Trustee and any other institution for which it then, theretofore or
thereafter may be acting as Trustee, subject to the provisions of ERISA and any
other relevant law.
(l) Deposits of Cash. To deposit cash for purposes of paying benefits
----------------
under the Plan in any depository, without liability for paying interest thereon,
including the banking department of the Trustee or its affiliate and any
organization acting as a fiduciary with respect to the Trust, as long as the
Trustee deems such to be advisable for the Trust.
(m) Use of Nominee. To cause any investment held in trust hereunder to
--------------
be registered in, or transferred into, the name of any trustee, or the name of
the nominee or nominees (including the Company) of the Trustee, or to retain
them unregistered or in form permitting transferability by delivery, but the
books and records of the Trustee shall at all times show that all such
investments are part of the property held in trust hereunder.
(n) Agents. To employ and compensate such agents, accountants, brokers,
------
attorneys-in-fact, attorneys-at-law, tax specialists, realtors, appraisers and
other assistants, and advisers deemed by the Trustee necessary or appropriate
for the proper administration of the Trust created hereunder.
(o) Documents. To make, execute, and deliver any and all deeds, leases,
---------
mortgages, contracts, waivers, releases, guaranties, pledges, powers of attorney
or other instruments in writing necessary or proper for the accomplishment of
any of the powers herein granted or considered incident to the purpose of the
Trust.
(p) Mortgages. To renew or extend or participate in the renewal or
---------
extension of any debt or mortgage, upon such terms as may be deemed advisable by
the Trustee, and to agree to a reduction in the rate of interest thereon or to
any other modification or change in the terms thereof or of any guarantee
pertaining thereto, in any manner and to any extent that may be deemed in the
best interest of the Trust; to waive any default, whether in the performance of
any guarantee, or to enforce any such default in such manner and to such extent
as may be deemed advisable; to exercise and enforce any and all rights of
foreclosure and to exercise and enforce, in any action, suit or proceedings at
law or in equity, any rights or remedies in respect of any debt, mortgage, or
guarantee.
(q) General Authorization. To transact any business whatever connected
---------------------
with the Trust.
5.2 Collective Investment Trust. In addition to the powers granted in
---------------------------
Section 5.1 hereof, the Trustee is expressly authorized to invest all or any
portion of the assets comprising the Trust in any collective investment trust
which at the time of the investment provides for the pooling of the assets of
plans described in section 401(a) of the Code. This authorization applies only
if the Trustee has received satisfactory evidence to the effect that the that
the Internal Revenue Service has determined that the collective investment trust
is exempt from Federal
10
<PAGE>
income tax. The provisions of the collective investment trust agreement, as
amended by the Trustee from time to time, are by this reference incorporated as
a part of the Plan and this Trust to the extent that such provisions are
consistent with the provisions of this Trust Agreement. The provisions of the
collective investment trust shall govern any investment of Trust assets in that
trust, only, but the provisions of this Trust Agreement shall otherwise control
all aspects of the Trustee's performance.
Notwithstanding any other provision of this Trust Agreement, the Trustee
may cause any part or all of the money or other property of this Trust to be
commingled with the money or other property of trusts created by others by
causing such assets to be invested as a part of any one or more of the funds
created by the bank trust, and assets of this Trust so added to all of the
provisions of the bank trust, as it is from time to time amended.
5.3 Asset Transfers. The Trustee may transfer assets either to or from the
---------------
Trust and another plan and trust which satisfies the requirements of sections
401(a) and 501(a) of the Code. Asset transfers shall be made in accordance with
Section 5.4 of the Plan.
5.4 Power to Do All Necessary Acts. Enumeration of any power herein shall
------------------------------
not be by way of limitation but shall be cumulative and construed as full and
complete power in favor of the Trustee. In addition to the authority
specifically herein granted, the Trustee shall have such power to do all acts as
may be deemed necessary for full and complete administration of the Trust and in
order to carry out the purposes of this Trust Agreement.
5.5 Separate Investment Funds . The Committee may direct the Trustee to
--------------------------
maintain separate Investment Funds to which each Plan participant may allocate
portions of his accounts in the Plan for investment therein. As of the
valuation dates for each Plan limitation year, the Trustee shall allocate and
credit the net income (or net loss) of the portions of each Investment Fund
allocable to each Plan, to the extent that the assets of each Plan are invested
in such Investment Funds. In the event that the Committee directs the Trustee
to maintain one or more separate Investment Funds, as provided in Article VI,
the Trustee shall have no duty or authority with respect to decisions regarding
the selection of Investment Funds or the direction of the investment of Trust
into the Investment Funds. Except as provided in Section 5.6, and until such
time as it is directed otherwise in writing by the Committee, the Trustee shall
have no duty or authority to exercise any of the powers granted to it by this
Article V with respect to those Investment Funds for which it is not the
Investment Manager, other than the timely and prudent execution of written
investment directions from the Committee.
5.6 Short Term Investments . Notwithstanding the provisions of Section 5.5,
-----------------------
the Trustee shall invest for short term purposes any cash in its custody that is
subject to and pending deposit into an Investment Fund in bonds, notes and other
evidences of indebtedness, United States Treasury bills, commercial paper,
banker's acceptances and certificates of deposit, undivided interests or
participations therein and (if subject to withdrawal on a daily or weekly basis)
participations in common or collective funds composed thereof and regulated
investment companies, such short term investment to be at the Trustee's
discretion.
11
<PAGE>
5.7 Ancillary Trustee. Whenever and as often as the Trustee deems such
-----------------
action desirable, it may by written instrument appoint any person or corporation
in any state of the United States to act as "Ancillary Trustee" (herein so
called) with respect to any portion of the Trust then held or about to be
acquired on behalf of the Trust. Each such Ancillary Trustee shall have such
rights, powers, duties, and discretions as are delegated to it by the Trustee,
but shall exercise the same subject to limitations or further directions of the
Trustee as shall be specified in the instrument evidencing its appointment. The
Ancillary Trustee may resign or may be removed by the Trustee as to all or any
portion of the assets so held at any time or from time to time by written
instrument delivered one to the other, and the Trustee may thereupon appoint
another Ancillary Trustee as successor to whom such assets shall be transferred,
or may itself receive such assets in termination of the Ancillary Trusteeship to
that extent. Each Ancillary Trustee shall be accountable solely to the Trustee.
The Trustee may pay the Ancillary Trustee reasonable compensation and may
absolve it from any requirement that it post bond or other security.
5.8 Securities Laws. If the Trustee invests any part of the Trust in any
---------------
stock or security of the Employer, and the Trustee thereafter elects to dispose
of such investment, or any part thereof, under circumstances which, in the
opinion of counsel for the Trustee, requires registration of the securities
under the federal Securities Act of 1933 or qualification of the securities
under the securities laws of any state, the Employer, at its own expense, will
take or cause to be taken any and all such action as may be necessary or
appropriate to effect such registration or qualification or otherwise necessary
to effect a sale of such securities in compliance with applicable federal and
state securities laws.
_________________________
End of Article V
12
<PAGE>
ARTICLE VI
DIRECTED INVESTMENTS
--------------------
6.1 General.
-------
(a) Committee Powers. Although the Trustee is authorized under Article V
----------------
to invest the Trust, the Committee shall, to the exclusion of the Trustee, have
full authority to direct the investment and administration of the Trust. The
Trustee is required to follow written investment instructions which it receives
from the Committee. Without limiting the generality of the Committee's powers
granted hereunder, and subject to Section 6.1(b) hereof, such powers include the
authority:
(1) to direct the Trustee to invest all or any portion of the Trust
in notes or other obligations of an Employer;
(2) to direct the Trustee to purchase from or sell to an Employer or
any member of the Committee, notes or other obligations of the Employer, or
lease to or from any such persons or the Employer any real or personal property;
(3) to direct the Trustee as to the purchase, retention, sale, or
voting of Employer Securities;
(4) to direct the Trustee as to the sale or retention of any
investment and with regard to the exercise of the Trustee's powers with respect
thereto;
(5) to determine the terms of any investment, lease, sale, or other
disposition; and
(6) to direct the Trustee to maintain separate Investment Funds and
to direct the Trustee as to the investment in each separate Investment Fund.
(b) Committee Direction. Except to the extent provided in Sections
-------------------
6.1(a) and 6.1(b), the Trustee shall timely and prudently make every sale,
investment or retention of investment and otherwise act in the exercise of its
powers with respect to the Trust as directed by the Committee in writing.
However, to the extent that the Trustee has not received such written directions
to the contrary, it shall have all powers granted to it by Article V and shall
invest and administer the Trust accordingly. Once a separate Investment Fund has
been established, the Trustee shall have no duty to ascertain if the Committee
desires the Trustee to recommence exercising its general investment powers with
regard to such Investment Fund, other than those duties specified in Sections
5.5 and 5.6, and those duties the Trustee assumes as an Investment Manager under
Section 6.3.
(c) Participant Directions. To the extent that Participants are
----------------------
permitted to direct the investment of their accounts under the Plan in the
Investment Funds, such investment
13
<PAGE>
instructions shall given pursuant to procedures established by the Administrator
and in accordance with Section 6.2.
6.2 Participant Directed Investments
---------------------------------
(a) Conditional Effectiveness. If the Committee so notifies the Trustee,
-------------------------
all or any portion of the Trust will be subject to Participants' investment
directions according to this Section. The Committee may further elect for any
such portion of the Trust to be administered consistent with the regulations and
announcements issued under section 404(c) of ERISA.
(b) Directed Investments. Except as provided in subsections (c) and (j),
--------------------
and except to the extent of a loan from a Participant's Account, a Participant
may direct the investment of his accounts in the Plan (the "Directed Accounts")
into any of the Investment Funds.
(c) Percentage Limitations. Participants are permitted to direct that up
----------------------
to 10% of their salary deferral contributions (described in Section 5.1 of the
Plan) be invested in an Employer Securities fund. Otherwise, Participant's
investment directions must be in the percentages and in increments of his
Directed Accounts that are specified by the Committee. A Participant's
directions must cover the entire amount of his Account, except to the extent
that a loan is considered a directed investment according to the Plan. The
Committee may specify a minimum percentage or amount that a Participant may
transfer from one Investment Fund to another.
(d) Participant Directions Limited. A Participant's directed investments
------------------------------
under this Section may not exceed the total value of the Participant's Accounts
corresponding to the Directed Account. A Participant may invest his Directed
Accounts in the Investment Funds selected by the Committee. The Committee may
cause the Trustee to limit Participants' investment choices to an
administratively efficient number of specific types of investments or funds. The
Committee may designate administratively convenient times for Participants to
exercise their rights under this Section.
(e) Communication of Directions. To the extent that a Participant may
---------------------------
direct investments according to the Plan and the Trust, investment directions
must be communicated to the Committee within a reasonable period of time prior
to the date Investment Funds are valued or according to procedures established
by the Administrator. A Participant's investment directions under this Section
are continuing directions until a timely request for a change in investments is
received by the Committee. The Committee may change and announce a different
minimum notice period for Participant directions (and direction changes) under
this Section or any of its subsections and also to change and announce the date
or one or more dates during the year on which Participant directions will be
executed.
(f) Separation from Service. If a Participant is separated from service
-----------------------
and his Directed Account is to be distributed in installments or if distribution
is to be delayed more than six months after the normal payment date for a lump-
sum distribution, the Trustee may invest that Participant's postponed
distribution account in cash or the short-term fund.
14
<PAGE>
(g) Charges and Expenses. If not paid by the Company, a Participant's
--------------------
Directed Account may be charged for the reasonable expenses of carrying out his
investment directions, provided that reasonable procedures are established to
inform the Participant of any charges. Each Participant must also receive
periodic reports on the actual expenses incurred with respect to his Directed
Account.
(h) Investment Information. If the Committee has elected for the Plan to
----------------------
be treated as an ERISA 404(c) plan, the Committee will provide Participants with
sufficient information concerning the Investment Funds to permit the Participant
to make an informed investment decision and such other information required or
permitted to be disclosed under Labor Regulation section 2550.404c-1.
(i) Selection of Investment Fund. The Committee may designate one or
----------------------------
more Investment Funds from which the Participant may choose for investment of
his Directed Account.
(j) Right to Decline. Any Fiduciary may decline to implement any
----------------
Participant direction under this Section which, if implemented
(1) would not be in accordance with the documents and
instruments governing the Plan, insofar as such documents are consistent
with Title I of ERISA;
(2) would cause the Trustee to maintain indicia of ownership of any
asset of the Plan outside the jurisdiction of the district courts other than
as permitted by section 404(b) of ERISA and Labor Reg. (S) 404b-1;
(3) would jeopardize the plan's tax-qualified status under section
401(a) of the Code;
(4) would result in a direct or indirect:
(A) sale, exchange or lease of property (other than Employer
Securities) between the Employer and the Plan;
(B) loan to the Employer or an affiliate; or
(C) acquisition or sale of any Employer real property (as
defined in section 407(d)(2) of ERISA);
(5) would result in a prohibited transaction described in section
406 of ERISA or section 4975 of the Code for which there is no applicable
exemption;
(6) would result in a loss in excess of the Participant's Account
balance; or
(7) would generate taxable income to the Trust.
15
<PAGE>
(k) Definitions. For purposes of this Section, the following definitions
-----------
apply:
(1) Directed Account means the Accounts or portion of Accounts over
----------------
which the Participant exercises investment control.
(2) Investment Manager means, for purposes of this Section, (i) an
-----------------
Investment Manager as defined in Article I hereof, and (ii) any person who
exercises discretionary authority or control over the assets of the Plan or
a Look-Through Investment or who provides investment advice with respect to
such assets for a fee.
(3) Look-Through Investment means an Investment Fund which is
-----------------------
(A) an investment company described in section 3(a) of the
Investment Company Act of 1940, or a series investment company described
in section 18(f) of such Act, or any of the segregated portfolios of such
company;
(B) a common or collective trust fund or a pooled investment
fund maintained by a bank, a bank deposit, or a guaranteed investment
contract of a bank;
(C) a pooled separate account or a guaranteed investment
contract of an insurance company qualified to do business in a state; or
(D) any entity whose assets include Plan assets by reason to the
Plan's investment in the entity.
(l) Employer Securities. If the Committee elects for the Plan to be
-------------------
administered consistently with 404(c) with respect to an Investment Fund that is
invested in Employer Securities, the Committee shall ensure that the procedures
required under Labor Reg. (S) 2510.404c-1(d)(2)(ii)(E)(4) are sufficient to
safeguard the confidentiality of the information described therein, and that
such procedures are being followed. The Committee shall appoint an independent
fiduciary to carry out the activities described in the preceding sentence in
those situations in which the Committee determines that there is a potential for
under Employer influence upon Participants with regard to the exercise of direct
or indirect shareholder rights.
6.3 Investment Manager. The Committee may appoint one or more Investment
------------------
Managers to exercise full investment management authority with respect to all or
a portion of the assets of the Trust and to authorize payment of the fees and
expenses of such Investment Manager from the assets of the Trust.
(a) If the Committee exercises this right, it shall certify in
writing to the Trustee and such Investment Manager the appointment and the scope
of the duties and responsibilities of the Investment Manager. Upon its
appointment, the Investment Manager shall certify and acknowledge in writing to
the Committee and the Trustee that he is a fiduciary with respect to the Plan
and Trust, and that he has assumed the duties and responsibilities conferred
upon him by the Committee.
16
<PAGE>
(b) The duties, responsibilities, and authority of any such
Investment Manager may be revoked or modified by the Committee at any time by
written notice to such Investment Manager and to the Trustee. Any Investment
Manager duly appointed and authorized by the Committee, shall, during the period
of his appointment, possess fully and absolutely those powers, rights, and
duties of the Trustee (to the extent delegated by the Committee and to the
extent permissible under the terms of this Trust Agreement) with respect to the
investment or reinvestment of that portion of the plan assets over which such
Investment Manager has investment management authority.
(c) During any period of time when such Investment Manager (other
than the Trustee) is so appointed and serving, and with respect to those assets
of the Trust over which such Investment Manager exercises investment management
authority, the Trustee's responsibility shall be limited to holding such assets
as a custodian, providing accounting services, disbursing benefits as
authorized, and executing such investment instructions only as directed in
writing by such Investment Manager.
(d) Except as otherwise provided by ERISA, the Trustee shall not be
responsible for any acts or omissions of such Investment Manager, unless the
Trustee is the Investment Manager. Any certificates or other instruments duly
signed by such Investment Manager (or the authorized representative of such
Investment Manager), which reasonably evidence any instruction, direction or
order of such Investment Manager with respect to the investment of those assets
of the plan over which the Investment Manager has investment management
authority shall be accepted by the Trustee as conclusive proof thereof. The
Trustee shall also be entitled to act in good faith upon any notice,
instruction, direction, order, certificate, opinion, letter, telegram, or other
document reasonably believed by the Trustee to be genuine and to be by such
Investment Manager (or the authorized representative of such Investment
Manager). Except as otherwise provided by ERISA, the Trustee shall not be liable
for any action taken or omitted by such Investment Manager or for any mistakes
of judgment or other action made, taken or omitted by the Trustee in good faith
upon written direction of such Investment Manager.
6.4 Investment of Matching Contributions. Notwithstanding any provision of
------------------------------------
the Plan and Trust, all Employer contributions to the Plan that are based on
salary deferral contributions elected by Participants to the Plan (i.e.,
"matching contributions") shall be invested in Employer Securities. Neither the
Trustee nor any other fiduciary of the Plan or Trust shall have any
discretionary authority with respect to directing the investment of such
Employer matching contributions. To the extent that Employer Securities are not
otherwise available in the Trust for such investment, the Trustee shall acquire
Employer Securities as soon as administratively feasible from the Company or any
holder of Employer Securities.
_________________________
End of Article VI
17
<PAGE>
ARTICLE VII
ADMINISTRATIVE PROVISIONS
-------------------------
7.1 Accounts and Records. The Trustee shall maintain accurate records and
--------------------
accounts of all transactions hereunder, which shall be available at all
reasonable times for inspection or audit by any person designated by the
Committee.
7.2 Committee Action. Any part of the authority reserved by the Committee
----------------
in this Trust Agreement may be exercised by any authorized agent, representative
or member of the Committee.
7.3 Valuation of Trust. The Trustee shall value the Trust as of each
------------------
valuation date under the Plan to determine the fair market value of the assets
of each plan invested hereunder. The Trustee shall value the Trust on such
other date(s) as may be necessary for the purpose of the Plan and Trust.
(a) If separate Investment Funds are established hereunder, as of the
valuation date for each Plan limitation year, the Trustee shall allocate and
credit the net income (or net loss) to each plan invested hereunder to the
extent invested in each such Investment Fund.
(b) If the Trustee believes it cannot value any asset which is held with
respect to a separate Investment Fund, it shall give written notice thereof to
the Committee on or before the valuation date for the Plan year for which the
valuation is being done. The Committee shall employ the necessary consultants,
secure a valuation and provide a copy of such valuation to the Trustee. The
Trustee shall be fully protected in valuing such assets based on the valuation
provided to it by the Committee.
7.4 Employer Action. Any action by an Employer hereunder, pursuant to the
---------------
Plan, shall be evidenced by a copy of a resolution of its board of directors or
other governing body, or by written instrument executed by any person authorized
by the Employer to take such action, and the Trustee shall be fully protected in
acting in accordance with such written instrument or resolution delivered to it.
7.5 Court Proceedings. The Trustee may institute, maintain, or defend any
-----------------
litigation necessary in connection with the administration of the Trust,
provided that if the litigation is not against the Committee, the Employer or
any of their agents, the Trustee shall not be obligated by this Trust Agreement
to do so unless it shall have been indemnified to its satisfaction against all
expenses and liabilities which it may sustain or reasonably anticipate by reason
thereof.
7.6 Parties to Litigation. Except as otherwise provided by ERISA, only the
---------------------
Company, the Committee, the Trustee, and any appropriate Employer shall be
necessary parties to any court proceeding involving the Trustee or the Trust.
No Participant or Beneficiary shall be entitled to any notice of process unless
required by ERISA. Any final judgment entered in
18
<PAGE>
any proceeding shall be binding upon the Company, each Employer, the Committee,
the Trustee, Participants, and Beneficiaries.
7.7 Third Party. No person dealing with the Trustee shall be obligated to
-----------
see to the proper application of any money paid or property delivered to the
Trustee, or to inquire whether the Trustee has acted pursuant to any of the
terms of the Plan. Each person dealing with the Trustee may act upon any
notice, request, or representation in writing by the Trustee, or by the
Trustee's duly authorized agent, and shall not be liable to any person
whomsoever in so doing. The certificate of the Trustee that it is acting in
accordance with the Plan shall be conclusive in favor of any person relying on
the certificate.
7.8 Authorization with Respect to Taxes. The Trustee may pay out of the
-----------------------------------
Trust all real and personal property taxes, income taxes, and other taxes of any
and all kinds levied or assessed under existing or future laws against the
Trust, or against the Trustee by reason of its office. The Trustee is further
authorized, but not required, to withhold from distributions to any payee such
sum necessary to cover Federal and state taxes for which the Trustee may be
liable, which are, or may be, assessed with regard to the amount distributable
to such payee. Prior to making any payment or distribution hereunder, the
Trustee may require such releases or other documents from any lawful taxing
authority and may require such indemnity from any payee or distributee as the
Trustee shall reasonably deem necessary for its protection.
7.9 Consultation With Counsel. The Trustee may consult with legal counsel,
-------------------------
who may be counsel for the Company, if appropriate, with respect to any of its
rights, duties, or obligations hereunder.
7.10 No Interest in Employer. Neither the creation of this Trust nor
-----------------------
anything contained in this Trust Agreement shall be construed as giving any
person entitled to benefits hereunder or other employee of an Employer any
equity or other interest in the assets, business, or affairs of the Employer.
7.11 Fees and Expenses . Except as otherwise provided herein or in the Plan,
------------------
the Trustee shall be reimbursed for all of its expenses and shall be paid such
reasonable fees as may be agreed upon from time to time by the Company and the
Trustee. Such fees and compensation shall be paid from the Trust if not paid by
the Company.
7.12 Bonding of Trustee . Unless the Trustee is a corporation, the Company
-------------------
shall obtain a fidelity bond, or other security, for the performance of the
Trustee's powers and duties hereunder that, at least, satisfies the requirements
of ERISA and any other applicable law, unless the Trustee is exempt from such
bonding requirement by ERISA.
7.13 Rule Against Perpetuities . The Trust created hereunder is intended to
--------------------------
be permanent unless otherwise prohibited by law. However should it be
determined that the rule against perpetuities applies to this Trust, then,
unless previously terminated, this Trust shall terminate and cease to exist 21
years after the death of the last survivor of the Beneficiaries (including
Participants and Former Participants) of the Trust living on the date of its
creation at which time the Trustee shall forthwith wind up the affairs of the
Trust and distribute to the
19
<PAGE>
then Participants and Beneficiaries the entire Trust according to their
beneficial interests therein; and provided further, that if at the time of
distribution required because of a rule against perpetuities, the Trust may be
continued in force without violation of such rule or any other laws of the
applicable state, then the Trust will remain in effect until otherwise
terminated as provided herein.
_________________________
End of Article VII
20
<PAGE>
ARTICLE VIII
FIDUCIARY DUTIES
----------------
8.1 General Fiduciary Standards. Pursuant to the requirements of ERISA,
----------------------------
the Trustee shall discharge duties specifically allocated to it hereunder solely
in the interest of the Participants and their beneficiaries and
(a) For the exclusive purpose of providing benefits to Participants and
their Beneficiaries and defraying reasonable expenses of administering the Plan;
(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; and
(c) In accordance with the documents and instruments governing the
Trust, insofar as such documents and instruments are consistent with the
provisions of Title I of ERISA.
8.2 Allocation of Responsibilities. The Trustee shall have the
------------------------------
responsibilities and duties specified in this Trust Agreement, subject, however,
to direction by the Committee as specified herein.
(a) Certain provisions of the Plan are intended to allocate to each
Fiduciary the individual responsibility for the prudent execution of the
functions assigned to it, and none of such responsibilities or any other
responsibility shall be shared by two or more of such Fiduciaries unless such
sharing shall be provided for in a provision of this Trust Agreement or the
Plan.
(b) With the consent of the Committee, the Fiduciaries of the Plan may
allocate their responsibilities and duties in accordance with the terms of the
Plan. Any allocation of fiduciary responsibilities pursuant to this Section
shall be made by filing a written notice thereof with the Committee which
specifically designates the person or persons to whom such responsibilities or
duties are allocated and specifically setting out the particular duties and
responsibilities with respect to which the allocation or designation is made.
8.3 Liability Among Co-Fiduciaries.
------------------------------
(a) General. Except for any liability which may exist under ERISA, the
-------
Trustee shall not be liable for the breach of a fiduciary duty or responsibility
by another Fiduciary of the Plan except in the following circumstances:
(1) It participates knowingly in, or knowingly undertakes to
conceal, an act or omission of such other Fiduciary, knowing such act or
omission is a breach;
21
<PAGE>
(2) By its failure to comply with the general fiduciary standards
set out in Section 8.1 hereof in the performance of its specific
responsibilities which give rise to its status as a Fiduciary, it has
enabled such other Fiduciary to commit a breach; or
(3) It has knowledge of a breach by such other Fiduciary and it
does not undertake reasonable efforts under the circumstances to remedy
the breach.
(b) Co-Trustees. In the event that there are two or more Trustees serving
-----------
under this Trust Agreement, each should use reasonable care to prevent a co-
Trustee from committing a breach of fiduciary responsibility and they shall
jointly manage and control assets of the Plan, except that in the event of an
allocation of responsibilities, obligations, or duties, a Trustee to whom such
responsibilities, obligations, or duties have not been allocated shall not be
liable to any person by reason of this Section, either individually or as a
Trustee, for any loss resulting to the Plan arising from the acts or omissions
on the part of the Trustee to whom such responsibilities, obligations, or duties
have been allocated.
(c) Liability When Allocation is in Effect. To the extent that fiduciary
--------------------------------------
responsibilities are specifically allocated by the Trustee to any person or
persons, then the Trustee shall not be liable for any act or omission of such
person in carrying out such responsibility except to the extent that the Trustee
violated Section 8.1 hereof (i) with respect to such allocation or designation,
(ii) with respect to the establishment or implementation of the procedure for
making such an allocation or designation, (iii) in continuing the allocation or
designation, or (iv) the Trustee would otherwise be liable in accordance with
this Section.
(d) Liability Resulting from Committee and Employer Direction. Except to
---------------------------------------------------------
the extent provided by law, the Trustee shall not be liable for any action taken
or omitted in good faith upon written direction of the Committee or the
Employer. If at any given time the Committee or the Employer should fail to
give written directions or instructions to the Trustee as provided in this Trust
Agreement, the Trustee shall act or refrain from acting without such directions
or instructions and may exercise its own discretion and judgment as seems
appropriate and advisable under the circumstances in carrying out the purposes
of this Trust Agreement. In addition, if the Employer or Committee were
required hereunder to give written direction or instruction to the Trustee and
failed or refused to do so within a reasonable time after receiving notice from
the Trustee, then the Trustee may exercise its own reasonable discretion and
judgment in carrying out its responsibilities hereunder and, except to the
extent required by law, shall not be liable to the Employer or Committee in so
doing.
(e) No Responsibility for Employer Action. The Trustee shall not have any
-------------------------------------
obligation or responsibility with respect to any action required by the Plan to
be taken by the Employer, any Participant or eligible Employee, or for the
failure of any of the above persons to act or make any payment or contribution,
or to otherwise provide any benefit contemplated under the Plan, nor shall the
Trustee, or the Committee be required to collect any contribution required under
the Plan, or determine the correctness of the amount of any Employer
contribution.
22
<PAGE>
(f) No Duty to Inquire. Except as specified in Section 8.3(a), the
------------------
Trustee shall have no obligation to inquire into or be responsible for any
action or failure to act on the part of any other Fiduciary.
(g) Liability of Trustee Where Investment Manager Appointed. If an
-------------------------------------------------------
Investment Manager has been appointed hereunder, except as otherwise provided by
law, the Trustee shall not be liable for the acts or omissions of such
Investment Manager, or be under any obligation to invest or otherwise manage any
assets of the Trust which are subject to the management of such Investment
Manager.
(h) Successor Fiduciary. The Trustee shall not be liable with respect to
-------------------
any breach of fiduciary duty if such breach was committed before he became a
Trustee or after he ceased to be a Trustee.
8.4 Reliance on Written Instrument . The Trustee shall be fully protected
-------------------------------
in acting upon any instrument, certificate, resolution, instruction, direction,
order, opinion, letter, telegram, or other document believed by it to be
genuine, and to be signed or presented by the proper person or persons, and the
Trustee shall be under no duty to make any investigation or inquiry as to any
statement contained in any such writing but may accept the same as conclusive
evidence of the truth and accuracy of the statements therein contained.
8.5 Liability for Payment of Funds . The Trustee shall not be liable for
-------------------------------
its action in making payment or delivery of any cash or other property to any
person at the written direction of the Committee and, in the event of
litigation, the Trustee shall not be liable for declining to make delivery
thereof until final adjudication shall be made in a court of competent
jurisdiction or by agreement of the parties. The Trustee, at its discretion,
may bring any action in the nature of an interpleader, but shall not be
obligated to do so.
8.6 Trustee Indemnification . If the Trustee is an individual or
------------------------
individuals, he shall be indemnified and held harmless by the Company against
expenses reasonably incurred or imposed on the Trustee in connection with, or
resulting from, the defense of such action, suit, or proceeding or in connection
with, or resulting from, any appeal therein, except with respect to matters as
to which it is adjudged in such action, suit, or proceeding that the Trustee is
liable for reckless or willful misconduct in the performance of his duties. As
used herein, the term "expenses" shall include all obligations incurred by any
such person for the payment of money including, without limitation, attorneys'
fees, awards, judgments, fines, penalties, and amounts paid in satisfaction of
judgment or in settlement of any such action, suit, or proceeding, to the extent
such expenses are not otherwise covered by insurance or other right of
indemnification. As used herein, "individual" means a private person.
_________________________
End of Article VIII
23
<PAGE>
ARTICLE XI
SUBSTITUTION OF TRUSTEE
-----------------------
9.1 Trustee. The Trustee shall be determined from time to time by the
-------
Company. The Trustee shall serve until a successor Trustee shall be named by
the Company, or until the Trustee's dissolution, resignation, death or removal,
in which event the Company shall name a successor Trustee; provided that if the
Trustee is a group of individuals, the Company is not required to name a
successor Trustee so long as there is at least one Trustee. The word "Trustee"
as used herein shall include the original and any successor Trustee or Trustees.
9.2 Resignation. The Trustee, or any individual who is a Trustee, may
-----------
resign at any time upon giving 60 days' written notice in advance to the Company
and the Committee unless such notice shall be waived.
9.3 Removal. The Company may remove the Trustee, or any individual who is
-------
a Trustee, with or without cause by giving 60 days' written notice in advance to
the Trustee unless such notice shall be waived.
9.4 Judicial Appointment. If the Company and the Committee fail to name a
--------------------
successor trustee within a reasonable time after the Trustee's dissolution,
resignation, or removal, the Trustee may request a court of competent
jurisdiction to name a successor trustee.
9.5 Succession of Trustee. Each successor Trustee shall succeed to the
---------------------
title to the Trust vested in its predecessor by accepting in writing its
appointment as successor Trustee and filing the acceptance with the former
Trustee and the Company without the signing or filing of any further statement.
The resigning or removed Trustee, upon receipt of acceptance in writing of the
Trust by the successor Trustee, shall execute all documents and do all acts
necessary to vest the title of record in any successor Trustee. Each successor
Trustee shall have and enjoy all of the powers, both discretionary and
ministerial, conferred under this Trust Agreement upon its predecessor. No
successor Trustee shall be liable for any act or failure to act of any
predecessor Trustee.
9.6 Merger of the Trustee. If a corporate Trustee should, before or after
---------------------
qualification, change its name, become consolidated or merged with another
corporation or otherwise should reorganize, any resulting corporation which
succeeds to the fiduciary business of such Trustee shall become a Trustee
hereunder in lieu of such corporate Trustee.
_________________________
End of Article IX
24
<PAGE>
ARTICLE X
AMENDMENT AND TERMINATION
-------------------------
10.1 Amendment. The Company shall have the right at any time by an
---------
instrument in writing to amend the Trust in any manner, provided no amendment
shall:
(a) Authorize or permit any of the Trust (other than the part which is
required to pay taxes and administration expenses) to be used for or diverted to
purposes other than for the exclusive benefit of the Participants or their
Beneficiaries.
(b) Cause or permit any portion of the Trust to revert to or become the
property of the Employer (except for those situations described in Section 4.5).
(c) Except as may be otherwise required by law, increase duties or
responsibilities of the Trustee without the written consent of the Trustee.
Any amendment made hereto by the Company pursuant to the provisions of this
Section shall be deemed to have been made by any Employer that has previously
adopted this Trust without the necessity of such Employer taking any formal
action with respect to such amendment.
10.2 Termination. The Trust may be terminated at any time by the Company by
-----------
delivery to the Trustee of a copy of a resolution specifying such termination,
or by delivery of written notice of the intent to terminate the Plan or Trust.
In the event of termination of the Trust, the Trustee shall distribute all
property then constituting the Trust, less any amounts constituting charges
against the Trust, in such manner and at such times as may be directed in
writing by the Committee. This Trust shall automatically terminate when no cash
or other property remains in the Trust.
10.3 Amendment and Termination Procedures. Pursuant to section 402(b)(3) of
------------------------------------
ERISA, the Company must comply with the following procedures before an amendment
to the Trust is effective:
(a) The Trust may only be modified or terminated by a written amendment
that is authorized by the Company, or as otherwise provided in this Article X.
(b) The Company's authorization of the amendment must be evidenced by
any of the following: (i) a resolution of the board of directors; (ii) execution
of the amendment by the chief executive officer, president or secretary of the
Company; or (iii) ratification of the amendment by a resolution of the board of
directors or written approval by the chief executive officer, president or
secretary of the Company.
(c) Notice of an amendment that terminates the Trust or modifies the
duties of the Trustee must be provided to the Trustee.
25
<PAGE>
(d) The Company need not provide notice of the amendment to Plan
participants or employees, except as may be required by section 204(h) of ERISA.
10.4 Suspension of Contributions. Nothing in this Trust Agreement shall be
---------------------------
construed to prevent an Employer from suspending contributions to the Trust for
any period whatsoever or permanently. Such a suspension, whether temporary or
permanent, shall not, of itself, terminate the Trust.
10.5 Merger or Consolidation. The Plan and this Trust shall not be merged
-----------------------
or consolidated with, nor shall its assets or liabilities be transferred to, any
other plan unless (a) the transferee or successor plan is a qualified plan
within the meaning of section 401(a) of the Code, and (b) each Participant in
the transferee or successor plan (if the transferee or successor plan then
terminated) would receive a benefit immediately after the merger, consolidation
or transfer which is equal to or greater than the benefit such Participants,
respectively, would have been entitled to receive under the Plan immediately
before the merger, consolidation, or transfer (if the Plan had been terminated).
Where the foregoing requirement is satisfied, the Company or the Committee may
direct that the Plan be merged, consolidated with, or transfer its assets and
liabilities to another qualified plan.
_________________________
End of Article X
26
<PAGE>
ARTICLE XI
MISCELLANEOUS PROVISIONS
------------------------
11.1 Continuation by Successor. Any entity succeeding to the interest of an
-------------------------
Employer by sale, transfer, merger, bankruptcy, or otherwise may elect, with the
consent of the Company, to continue this Trust by adopting this Trust Agreement
and assuming the duties and responsibilities of the Plan and Trust. Any entity
that similarly succeeds to the interest of the Company shall automatically be
treated as the Company hereunder.
11.2 Limitation on Participants' Rights. Participation in this Trust shall
----------------------------------
not give any Employee the right to be retained as an Employee of an Employer or
any right to interest in this Trust other than as herein provided. Each
Employer reserves the right to dismiss any Employee without any liability for
any claim either against this Trust, except to the extent provided herein, or
against the Employer. All benefits payable hereunder shall be provided solely
from the assets of the Trust.
11.3 Receipt or Release. Any payment to any Participant or Beneficiary in
------------------
accordance with the provisions of this Trust shall, to the extent thereof, be in
full satisfaction of all claims against the Company, the Trustee, the Committee,
and any Employer, and the Trustee may require such Participant or Beneficiary,
as a condition precedent to such payment, to execute a receipt and release to
such effect.
11.4 Alienation. Except as determined by the Committee in the case of a
----------
qualified domestic relations order (as defined in section 414(p) of the Code),
(a) the benefits, proceeds, payments, or claims of any Participant or
Beneficiary payable from the Trust assets shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
charge, garnishment, execution, or levy of any kind, either voluntary or
involuntary, including any such liability which is for alimony or other payments
for support of a spouse or former spouse, (b) any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber, garnish, levy, or otherwise
dispose of or execute upon any right or benefit payable hereunder shall be null
and void, and (c) the Trust assets shall not in any manner be liable for or
subject to the debts, contracts, liabilities, engagements, or torts of any
Participant entitled to benefits hereunder and such benefits shall not be
considered an asset of the Participant in the event of his insolvency or
bankruptcy.
11.5 Accounting Period. This fiscal year of the Trust for accounting
-----------------
purposes is the 12 month period beginning January 1 and ending December 31 of
each year.
11.6 Title to Assets. The legal and equitable title and ownership of all
---------------
assets at any time constituting a part of the Trust shall be and remain with the
Trustee and neither an Employer nor any Participant shall ever have any legal or
equitable estate therein, save and except that a Participant shall be entitled
to receive distributions as and when lawfully made under the terms hereof, and
an Employer may receive a return of contributions to the extent provided for in
Section 4.5.
27
<PAGE>
11.7 Headings. The titles and headings of Articles and Sections are
--------
included for convenience of reference only and are not to be considered in
construction of the provisions hereof.
11.8 Governing Law. All questions arising with respect to the provisions of
-------------
this Trust Agreement shall be determined by application of the laws of the State
of Washington except to the extent Washington law is superseded by federal law.
11.9 Venue. All legal actions arising under this Trust or with respect to
-----
the relationship between the Trustee, the Employer or the Committee, or any of
their employees, agents, officers, or directors, shall be brought in a court of
competent subject-matter jurisdiction in the State of Washington, County of
King. The Trustee, the Employer and the Committee hereby agree to accept
service of, make appearance in, and be subject to the jurisdiction of said
court.
11.10 Reliance on Communications. In acting upon instructions hereunder, the
--------------------------
Trustee may rely upon any communications that it believes to be genuine and
presented by an authorized person.
11.11 Execution and Counterparts. This Trust Agreement may be executed in
--------------------------
multiple counterparts, each of which shall be deemed an original.
_________________________
End of Article XI
28
<PAGE>
PHAMIS, INC. SALARY DEFERRAL SAVINGS PLAN
LOAN PROCEDURES DOCUMENT
------------------------
This document is the "Loan Procedures Document" referenced in the
Phamis, Inc. Salary Deferral Savings Plan (the "Plan") and is intended to comply
with section 2550.408b-1(d) of the Department of Labor Regulations. Pursuant to
the Article IX of the Plan, this document constitutes a part of the Plan. In
addition to the terms and conditions contained in Article IX and other
provisions of the Plan, the following provisions shall apply to Participant
loans:
1. Loan Application Procedure. Any Plan participant may apply for a
--------------------------
participation loan (a "Loan") by sending a written request therefor to the
administration committee of the Plan (the "Committee") on the form prescribed by
the Committee. Such request shall state the amount desired to be borrowed, the
purpose for which the Loan proceeds will be used and any facts and circumstances
that the participant wishes the Committee to consider in deciding whether to
grant or deny such Loan. A Plan participant must pay a Loan administration fee
of $100 to the Committee at the time of the Loan is disbursed, or any such
higher fee charged to the Committee by a third-party administrator of the Plan,
which may be deducted from the Loan amount.
2. Basis for Granting or Denying Loans. The authority to grant or deny a
-----------------------------------
Loan shall be vested in the Committee. In deciding whether to grant or deny a
Loan, the Committee shall consider only those factors that would be considered
in a normal commercial setting by an entity in the business of making similar
types of loans.
3. Limiting on Loans. there are no limitations on the types of Loans
-----------------
offered except as otherwise stated herein, in the Plan, or as required by
section 72(p) of the Code or other applicable law. The amount of a Loan must be
at least $1,000 and may not exceed 50% of a Plan participant's vested accrued
benefit.
4. Procedure for Determining Interest Rate. In determining the
---------------------------------------
"Prevailing Interest Rate" (defined as the rate available for similar loans on
commercially reasonable terms), the Administration Committee shall contact at
least two commercial lending institutions.
5. Collateral. The Committee shall not grant a Loan if the Loan is not
----------
"adequately secured" (as required by applicable law). In addition, as provided
in the Plan, if, during the term of the Loan, the value of the collateral
securing the Loan decreases so that the Loan is no longer "adequately secured,"
then the Committee may require the participant to provide additional collateral
for the Loan. The Committee will consider the following as collateral for a
loan:
a. The value of a Plan participant's vested accrued benefit.
1
<PAGE>
b. If the Loan is for the acquisition of the participant's primary
residence, the value of such primary residence, provided that the Plan is
able to acquire acceptable evidence of a security interest therein (e.g.
deed of trust, mortgage).
6. Terms of Repayment. As provided in Article IX of the Plan, a loan
------------------
generally must be repaid through level amortization over a period that does not
exceed five years. However, if the loan is for the purpose of acquiring the
participant's primary residence, the period for repayment of the loan must be
reasonable, as determined by the Committee, but in all events shall not exceed
30 years. All loans must be repaid through automatic payroll deduction.
[Prepayment]
7. Default. Upon the occurrence of a "Default" (as hereinafter defined or
-------
as otherwise specified in the Plan), the Plan may accelerate the indebtedness
outstanding under a Loan and exercise the rights and remedies specified in the
Plan, the rights and remedies available to a creditor under applicable law, and
any additional rights and remedies that my be specified in the promissory note,
mortgage, deed of trust, or other instruments evidencing the Participant's Loan
or any security therefor (collectively, the "Loan Papers"). "Default" means the
occurrence of any one or more of the following events: (a) the failure or
refusal of the Participant to pay any portion of the Loan, as the same becomes
due in accordance with the terms of such Participant's Loan Papers, (b) the
failure or refusal of the Participant to punctually and properly perform,
observe, and comply with any provision of any of the Loan Papers, or (c) such
other events as may be stated in such Participant's Loan Papers.
8. Amendment. This Loan Procedures Document may be amended by the
---------
Committee in a writing that is approved by a majority of the members of the
Committee. An amendment must be in writing that is executed by any member of the
Committee pursuant to such Committee approval. The Committee may, but need not
provide notice of an amendment to Plan participants, the Plan trustee, Phamis,
Inc., or any other party. In addition, the Company may amend this Loan
Procedures Document in accordance with the provisions for Plan amendments set
forth in the Plan.
IN WITNESS WHEREOF, Phamis, Inc. has adopted this Loan Procedures
Document, to be effective for all loans granted or renewed at any time prior to
January 1, 1994, on this________day of_____________, 1994.
PHAMIS, INC.
______________________
2
<PAGE>
IN WITNESS WHEREOF, this Trust Agreement has been executed below, which may
be in multiple counterparts, each of which shall be deemed an original, as of
the date first written above.
A S T H E C O M P A N Y
- - - - - - - - - - - -
PHAMIS INC.
/s/ Frank T. Sample
By: _________________________________
A S T R U S T E E
- - - - - - - - -
__________________________________
Gregg Blodgett
/s/ Kathy Dellplain
__________________________________
Kathy Dellplain
/s/ Malcolm Gleser
__________________________________
Malcolm Gleser
29
<PAGE>
IN WITNESS WHEREOF, this Trust Agreement has been executed below, which may
be in multiple counterparts, each of which shall be deemed an original, as of
the date first written above.
A S T H E C O M P A N Y
- - - - - - - - - - - -
PHAMIS INC.
By: _________________________________
A S T R U S T E E
- - - - - - - - -
/s/ Gregg Blodgett
__________________________________
Gregg Blodgett
__________________________________
Kathy Dellplain
__________________________________
Malcolm Gleser
29
<PAGE>
Exhibit 4.5
-----------
PHAMIS, Inc.
Stock Option Letter Agreement
August 20, 1990
Mr. Michael Cain
PHAMIS, Inc.
419 Second Avenue South
Seattle, WA 98104
Dear Michael:
We are pleased to inform you that you have been selected by the Board of
Directors of PHAMIS, Inc. (the "Company") to receive a non-qualified option for
the purchase of 3,000 shares of the Company's Common Stock at an exercise price
of $4.25 per share. The grant of the option is not being made pursuant to the
Company's 1983 Incentive Stock Option Plan (the "Plan") but as a separate option
agreement with you. Your option shall have the following terms:
1. Vesting. A five-year vesting provision, implemented on a monthly basis,
-------
subject to Mr. Cain continuing to be either an employee of the Company or a
part-time consultant for the Company.
2. Plan Provisions: Your option shall terminate in the event of a liquidation
---------------
or reorganization of the Company in an identical manner to options granted
under the Plan, as set forth in Section 7.1 of the Company's Plan. The
Company shall also have a right of first refusal to purchase shares
resulting from your exercise of the option identical to those contained in
Section 11 of the Company's Plan (see copy attached).
3. Exercise. During your lifetime only you can exercise the option. Your
--------
option shall terminate 90 days after you cease to be either a Company
employee or part-time consultant for the Company for any reason whatsoever.
Subject to this limitation, the personal representative of your estate or
the beneficiary thereof following your death may exercise your option. You
may use the Notice of Exercise of Incentive Stock Option in the form
attached to this Stock Option Letter Agreement when you exercise the
option.
4. Transfer of Option. The option is not transferable except by will or the
------------------
applicable laws of descent and distribution.
<PAGE>
Mr. Michael Cain
August 20, 1990
Page Two
The date of the grant of the option is July 1, 1990.
Your particular attention is directed to Section 8 of the Plan which describes
certain important conditions relating to federal and state securities laws that
is also incorporated by reference into this option and that must be satisfied
prior to the issuance of any shares pursuant to this option.
Please execute the Acceptance and Acknowledgement set forth below on the
enclosed copy of this Agreement and return it to the undersigned.
Very truly yours,
PHAMIS, Inc.
By /s/ Malcolm A. Gleser
---------------------------------
Malcolm A. Gleser, President
Acceptance and Acknowledgement
I accept the stock option described above and acknowledge receipt of a copy of
this letter.
Dated: 12/11/90 /s/ Michael W. Cain
-------------------- ----------------------------
Michael W. Cain
<PAGE>
Notice of Exercise of Incentive Stock Option
PHAMIS, Inc.
419 Second Avenue South
Seattle, WA 98104
I hereby exercise my incentive stock option granted me by PHAMIS, Inc. (the
"Company"), subject to all the terms and provisions thereof and of the 1983
Incentive Stock Option Plan referred to therein and notify the Company of my
desire to purchase________________shares of Common Stock of the Company at the
exercise price of $4.25 per share which were offered to me pursuant to said
option.
I hereby represented that the______________shares of Common Stock to be
delivered to me pursuant to this exercise are being acquired by me for my own
account, for investment, and not with a view to resale or distribution.
Dated:_________________________
Signed:________________________
Michael Cain
<PAGE>
Exhibit 5.1
-----------
[Letterhead of IDX Systems Corporation]
July 10, 1997
IDX Systems Corporation
1400 Shelburne Road
P.O. Box 1070
South Burlington, VT 05403
Attention: John A. Kane, Chief Financial Officer
Dear Mr. Kane:
I have assisted in the preparation of a Registration Statement on Form S-8
(the "Registration Statement"), to be filed with the Securities and Exchange
Commission, relating to an aggregate of
shares of Common Stock, $.01 par value per share (the "Shares"), of IDX Systems
Corporation (the "Company"), issued or issuable under the: (1) PHAMIS, Inc.
Amended and Restated 1983 Combined Nonqualified and Incentive Stock Option Plan;
(2) PHAMIS, Inc. 1993 Combined Incentive and Nonqualified Stock Option Plan as
amended through May 14, 1996; (3) PHAMIS, Inc. 1994 Nonemployee Director Stock
Option Plan as amended through January 1, 1996; (4) PHAMIS, Inc. Salary Savings
and Deferral Plan and Trust as amended through February 22, 1996 (the "Plans");
and (5) PHAMIS, Inc. Stock Option Agreement dated August 20, 1990 with Mr.
Michael Cain (the "Agreement").
I have examined the Second Amended and Restated Articles of Incorporation
and the Second Amended and Restated By-Laws of the Company and all amendments
thereto, the Registration Statement and originals, or copies certified to my
satisfaction, of such records of meetings, written actions in lieu of meetings,
or resolutions adopted at meetings, of the directors and stockholders of the
Company, and such other documents and instruments as in my judgment are
necessary or appropriate to enable me to render the opinions expressed below.
In examination of the foregoing documents, I have assumed the genuineness
of all signatures and the authenticity of all documents submitted to me as
originals, the conformity to original documents of all documents submitted to me
as certified or photostatic copies, and the authenticity of the originals of
such latter documents.
Based upon and subject to the foregoing, I am of the opinion that the
Shares issuable under the Plans and the Agreement have been duly and validly
authorized for issuance and, when issued against payment therefor in accordance
with the terms of the Plans or the Agreement, as the case may be, will be duly
issued, fully paid and non-assessable.
I advise you that I am a member of the Bar of Vermont and that,
accordingly, I express no opinion on the laws of any jurisdiction other than
Vermont.
I hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement.
Very truly yours,
/s/ Robert W. Baker, Jr.
Robert W. Baker, Jr.
Vice President and General Counsel
<PAGE>
Exhibit 23.2
------------
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
Form S-8 pertaining to the PHAMIS, Inc. Amended and Restated 1983 Combined
Nonqualified and Incentive Stock Option Plan, PHAMIS, Inc. 1993 Combined
Incentive and Nonqualified Stock Option Plan as amended through May 14, 1996,
PHAMIS, Inc. 1994 Nonemployee Director Stock Option Plan as amended through
January 1, 1996, PHAMIS, Inc. Salary Savings and Deferral Plan and Trust as
amended through February 22, 1996 and the PHAMIS, Inc. Cain Option Agreement of
IDX Systems Corporation, of our report dated February 5, 1997, with respect to
the consolidated financial statements of IDX Systems Corporation included in its
Annual Report (Form 10-K) for the year ended December 31, 1996.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Boston, Massachusetts
July 7, 1997
