AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 31, 1999
REGISTRATION NO. 333-
==========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
______________________
ADVANCE PARADIGM, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 75-2493381
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
545 EAST JOHN CARPENTER FREEWAY 75062
SUITE 1570 (Zip Code)
IRVING, TEXAS
(Address of principal executive offices)
ADVANCE PARADIGM, INC. 401(K) PLAN
(Full title of the plan)
DAVID D. HALBERT
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
545 EAST JOHN CARPENTER FREEWAY, SUITE 1570
IRVING, TEXAS 75062
(972) 830-6199
(Name and address, including zip code, and
telephone number of agent for service)
Copies to:
J. KENNETH MENGES, JR., P.C.
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P
1700 PACIFIC AVENUE, SUITE 4100
DALLAS, TEXAS 75201-4675
(214) 969 -2800
______________________
CALCULATION OF REGISTRATION FEE
======================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT TO BE OFFERING AGGREGATE AMOUNT OF
TITLE OF SECURITIES REGISTERED PRICE PER OFFERING REGISTRATION
TO BE REGISTERED (1) SHARE (2) PRICE (2) FEE
- ------------------- ------------ ---------- ---------- ------------
Common Stock, $0.01
par value
("Common Stock") 30,000 $58.22 $1,746,600 $515.25
(1) This Registration Statement also covers any additional shares that may
hereafter become purchasable as a result of the adjustment provisions
of the Plans.
(2) Estimated solely for the purpose of computing the registration fee
pursuant to Rule 457(c) and (h). The calculation of the proposed
maximum offering price is based upon the average of the high and low
sales prices of the Common Stock of Advance Paradigm, Inc. on March 30,
1999, as reported by the Nasdaq National Market.
==========================================================================
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents constituting Part I of this Registration Statement will
be sent or given to employees of Advance Paradigm, Inc. (the "Company") as
specified by Rule 428(b)(1) promulgated under the Securities Act of 1933,
as amended (the "Securities Act").
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Securities and
Exchange Commission (the "Commission") are incorporated by reference in
this Registration Statement:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1998, which contains audited financial statements for
the fiscal year ended March 31, 1998.
(2) The Company's Quarterly Reports on Form 10-Q for the
quarters ended June 30, 1998, September 30, 1998 and December 31,
1998.
(3) The Company's Definitive Proxy Statement pursuant to
Schedule 14A filed with the Commission on July 29, 1998.
(4) The description of the Company's Common Stock contained in
the Company's registration statement on Form S-1 (No. 333-06931) filed
with the Commission on June 26, 1996, as amended by Amendment No. 1
thereto filed with the Commission on July 10, 1996, Amendment No. 2
thereto filed with the Commission on September 11, 1996, Amendment No.
3 thereto filed with the Commission on September 30, 1996, and
Amendment No. 4 thereto filed with the Commission on October 8, 1996,
the Company's registration statement filed pursuant to Rule 462(b) and
the final prospectus, dated October 8, 1996, filed with the Commission
pursuant to Rule 424(b)(4) under the Securities Act.
In addition, all documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), prior to the filing of a post-
effective amendment to this Registration Statement which indicates that all
securities offered hereby have been sold or which deregisters all
securities 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. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein modifies or
supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a
part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The validity of the issuance of the shares of Common Stock offered by
this Registration Statement will be passed upon for the Company by Akin,
Gump, Strauss, Hauer & Feld, L.L.P.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company, a Delaware corporation, is empowered by Section 145 of
the Delaware General Corporation Law (the "Delaware Act"), subject to the
procedures and limitations stated therein, to indemnify certain parties.
Section 145 of the Delaware Act provides in part that a corporation shall
have the power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding (other than an action by or in the right of the
corporation) by reason of the fact that such person 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 other enterprise, against expenses (including
attorneys' 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, and with
respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. Similar indemnity is authorized for such
persons against expenses (including attorneys' fees) actually and
reasonably incurred in defense or settlement of any threatened, pending or
completed action or suit by or in the right of the corporation, if such
person acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation, and provided
further that (unless a court of competent jurisdiction otherwise provides)
such person shall not have been adjudged liable to the corporation. Any
such indemnification may be made only as authorized in each specific case
upon a determination by the stockholders or disinterested directors that
indemnification is proper because the indemnitee has met the applicable
standard of conduct. Where an officer or a director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director actually or reasonably incurred. Section 145 provides further
that indemnification pursuant to its provisions is not exclusive of other
rights of indemnification to which a person may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise.
Article 9 of the Company's Certificate of Incorporation, as amended
(the "Certificate"), provides that the Company shall indemnify any and all
persons whom it has the power to indemnify under Section 145 of the
Delaware Act to the fullest extent permitted under such section, and such
indemnity shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
The right to indemnification under Article 9 of the Certificate is a
contract right which includes, with respect to directors and officers, the
right to be paid by the Company the expenses incurred in defending any such
proceeding in advance of its disposition; provided, however, that, if the
General Corporation Law of the State of Delaware requires, the payment of
such expenses incurred by a director or officer in advance of the final
disposition of a proceeding shall be made only upon delivery to the Company
of an undertaking, by or on behalf of such director or officer, to repay
all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under Article 9 or
otherwise.
As set forth below, Article 8 of the bylaws of the Company (the
"Bylaws") provides for indemnification of directors, officers, employees
and agents, and Section 8.7 of the Bylaws provides for the authority to
purchase insurance with respect to indemnification of directors, officers,
employees and agents.
Article 8 of the Bylaws provides that the Company shall indemnify any
person who was or is a party 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 Company) by reason of the fact that he is or was a
director, officer, employee or agent of the Company, or is or was serving
at the request of the Company as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' 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 Company, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe his conduct was unlawful, to the fullest
extent permitted by Delaware law.
Section 7 of the Underwriting Agreement among the Company, the
Underwriters and the Selling Stockholders provides for the indemnification
by the Company of the Underwriters and each person, if any, who controls
any Underwriter from and against any and all losses, claims, damages or
liabilities to which such indemnified parties or any of them may become
subject. The Underwriting Agreement also provides that the Underwriters
shall similarly indemnify the Company, its directors, officers, Selling
Stockholders and controlling persons, as set forth therein.
The Company maintains directors' and officers' liability insurance in
accordance with Delaware law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
See Index to Exhibits, attached hereto.
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) 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. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) 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.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The undersigned 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 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 foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in
the 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.
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 Irving, State of Texas on March
30, 1999.
ADVANCE PARADIGM, INC.
By:/S/ DAVID D. HALBERT
----------------------------------------
David D. Halbert
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities indicated on March 30, 1999.
SIGNATURE TITLE
/S/ DAVID D. HALBERT Chairman of the Board, President
- -------------------------- and Chief Executive Officer
David D. Halbert
/S/ JON S. HALBERT Chief Operating Officer, Executive Vice
- -------------------------- President and Director
Jon S. Halbert
/S/ DANNY PHILLIPS Chief Financial Officer, Senior Vice
- -------------------------- President, Secretary and Treasurer
Danny Phillips (Principal Financial and Accounting
Officer)
/S/ PETER M. CASTLEMAN Director
- --------------------------
Peter M. Castleman
/S/ ROGERS K. COLEMAN Director
- --------------------------
Rogers K. Coleman
/S/ STEPHEN L. GREEN Director
- --------------------------
Stephen L. Green
/S/ JEFFREY R. JAY Director
- --------------------------
Jeffrey R. Jay
/S/ KENNETH J. LINDE Director
- --------------------------
Kenneth J. Linde
/S/ MICHAEL D. WARE Director
- --------------------------
Michael D. Ware
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
4.1 Advance Paradigm, Inc. 401(k) Plan Summary Plan Description
5.1 Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P. (included in
Exhibit 5.1)
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933.
Advance Paradigm, Inc.
401(k) Plan
Summary Plan Description
April 1, 1999
TABLE OF CONTENTS
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . 1
Available Information . . . . . . . . . . . . . . . . . . . . . 2
INTRODUCTION TO YOUR PLAN . . . . . . . . . . . . . . . . . . . 3
GENERAL INFORMATION ABOUT YOUR PLAN . . . . . . . . . . . . . . 4
Employer/Plan Sponsor . . . . . . . . . . . . . . . . . . . . . 4
and Plan Administrator . . . . . . . . . . . . . . . . . . . . 4
Employer's Tax ID Number. . . . . . . . . . . . . . . . . . . . 4
Plan Trustee(s) . . . . . . . . . . . . . . . . . . . . . . . . 4
Plan Name . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Plan Number . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Plan Effective/Restatement Date . . . . . . . . . . . . . . . . 4
Original Effective Date . . . . . . . . . . . . . . . . . . . . 4
Employer Tax Year . . . . . . . . . . . . . . . . . . . . . . . 4
Plan Year End . . . . . . . . . . . . . . . . . . . . . . . . . 4
Type of Recordkeeping . . . . . . . . . . . . . . . . . . . . . 4
Type of Plan. . . . . . . . . . . . . . . . . . . . . . . . . . 4
OBTAINING ACCOUNT INFORMATION BY PHONE OR INTERNET. . . . . . . 5
ELIGIBILITY AND PARTICIPATION . . . . . . . . . . . . . . . . . 6
Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Predecessor Service . . . . . . . . . . . . . . . . . . . . . . 6
Participation Requirements. . . . . . . . . . . . . . . . . . . 6
Entry Date. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
YOUR CONTRIBUTIONS TO THE PLAN. . . . . . . . . . . . . . . . . 7
Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . 7
Elective Deferrals. . . . . . . . . . . . . . . . . . . . . . . 7
Making and Modifying 401(k) Elections . . . . . . . . . . . . . 7
Investment of Contributions . . . . . . . . . . . . . . . . . . 7
YOUR EMPLOYER'S CONTRIBUTIONS TO THE PLAN. . . . . . . . . . . 8
Employer Matching Contributions . . . . . . . . . . . . . . . . 8
Eligibility for Employer Matching Contributions . . . . . . . . 8
Employer Profit Sharing Contributions . . . . . . . . . . . . . 9
Eligibility for Employer Profit Sharing Contributions . . . . . 9
Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Predecessor Service . . . . . . . . . . . . . . . . . . . . . . 9
Year of Service for Vesting Defined . . . . . . . . . . . . . . 9
Vesting of Elective Deferrals . . . . . . . . . . . . . . . . . 9
Vesting Schedule for Employer 401(k) Matching and
Profit Sharing Contributions . . . . . . . . . . . . . . . 9
Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . 9
BENEFITS UNDER YOUR PLAN. . . . . . . . . . . . . . . . . . . .10
Normal Retirement Age . . . . . . . . . . . . . . . . . . . . .10
Disability. . . . . . . . . . . . . . . . . . . . . . . . . . .10
In-Service Distributions. . . . . . . . . . . . . . . . . . . .10
Hardship Withdrawals: . . . . . . . . . . . . . . . . . . . . .10
Events Which Qualify for a Hardship Distribution. . . . . . . .10
Tax Consequences for Receiving a Distribution or Withdrawal . .11
Loan Availability . . . . . . . . . . . . . . . . . . . . . . .11
Loan Requirements . . . . . . . . . . . . . . . . . . . . . . .11
Loan Limitations. . . . . . . . . . . . . . . . . . . . . . . .11
Loan Repayments . . . . . . . . . . . . . . . . . . . . . . . .11
Tax Consequences of Plan Loans. . . . . . . . . . . . . . . . .11
Death Benefits. . . . . . . . . . . . . . . . . . . . . . . . .12
Distributions Upon Death. . . . . . . . . . . . . . . . . . . .12
Forms of Benefit. . . . . . . . . . . . . . . . . . . . . . . .13
Top-Heavy Defined . . . . . . . . . . . . . . . . . . . . . . .13
Top-Heavy Rules . . . . . . . . . . . . . . . . . . . . . . . .13
Vesting Schedule for Top-Heavy. . . . . . . . . . . . . . . . .14
Rollovers or Transfers. . . . . . . . . . . . . . . . . . . . .14
Period of Severance . . . . . . . . . . . . . . . . . . . . . .14
Qualified Domestic Relations Orders . . . . . . . . . . . . . .15
Plan Amendment or Termination . . . . . . . . . . . . . . . . .16
TAX CONSEQUENCES ASSOCIATED WITH THE PLAN . . . . . . . . . . .16
STATEMENT OF ERISA RIGHTS . . . . . . . . . . . . . . . . . . .17
CLAIMS PROCEDURES . . . . . . . . . . . . . . . . . . . . . . .18
PENSION BENEFIT GUARANTY CORPORATION. . . . . . . . . . . . . .18
APPENDIX TO SUMMARY PLAN DESCRIPTION. . . . . . . . . . . . . A-1
INVESTMENT INFORMATION. . . . . . . . . . . . . . . . . . . . A-1
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . A-3
No Guarantee of Fund Results. . . . . . . . . . . . . . . . . A-3
Voice Response System . . . . . . . . . . . . . . . . . . . . A-3
Restrictions on Resale. . . . . . . . . . . . . . . . . . . . A-3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Advance Paradigm, Inc. (the Company) has amended the Plan to allow you to
invest in the Common Stock, $0.01 par value, of the Company (the Company
Stock) beginning April 1, 1999. The addition of Company Stock as an
investment option under the Plan requires that a Registration Statement be
filed with the Securities and Exchange Commission covering the Company
Stock to be purchased under the terms of the Plan.
The Company has filed with the Commission a Registration Statement on Form
S-8 to register 30,000 shares of Company Stock and related participation
interests in the Plan. The Registration Statement covering 30,000 shares
of Company Stock and related participation interests was filed on March 31,
1999 (Form S-8 File No. 333-______). This Summary Plan Description (SPD),
the current Appendix to the SPD and any subsequent Appendix to the SPD, and
the documents incorporated by reference in the Registration Statement on
Form S-8 for the Plan constitute a prospectus that meets the requirements
of Section 10(a) of the Securities Act of 1933. The following documents
filed by the Company with the Commission are incorporated by reference in
the Registration Statement:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1998, which contains audited financial statements
for the fiscal year ended March 31, 1998.
(2) The Company's Quarterly Reports on Form 10-Q for the quarters
ended June 30, 1998, September 30, 1998 and December 31, 1998.
(3) The Company's Definitive Proxy Statement pursuant to Schedule 14A
filed with the Commission on July 29, 1998.
(4) The description of the Company Stock contained in the Company's
registration statement on Form S-1 (No. 333-06931) filed with the
Commission on June 26, 1996, as amended by Amendment No. 1
thereto filed with the Commission on July 10, 1996, Amendment No.
2 thereto filed with the Commission on September 11, 1996,
Amendment No. 3 thereto filed with the Commission on September
30, 1996, and Amendment No. 4 thereto filed with the Commission
on October 8, 1996, the Company's registration statement filed
pursuant to Rule 462(b) and the final prospectus, dated October
8, 1996, filed with the Commission pursuant to Rule 424(b)(4)
under the Securities Act.
In addition, all documents subsequently filed pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934 after the date
of this SPD and prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which dereregisters
all securities then remaining unsold, shall be deemed to be incorporated by
reference into this SPD and to be a part hereof from the date of filing of
such documents.
A copy of the Company's annual report to stockholders for each fiscal year,
and copies of all reports, proxy statements, and other communications
distributed to stockholders of the Company generally, will be delivered to
each employee who receives this SPD unless such employee otherwise receives
a copy of such annual report as a stockholder of the Company, in which case
the Company will furnish a copy to the employee on written request.
The Company will provide without charge to each person to whom a copy of
this SPD is delivered, upon the written or oral request of any such person,
a copy of any or all of the above documents incorporated by reference in
the Registration Statement (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference into the
information or documents which the SPD incorporates).
Requests should be directed to:
Plan Administrator of the Advance Paradigm, Inc. 401(k) Plan
c/o Director, Human Resources
Advance Paradigm, Inc.
545 E. John Carpenter Freeway, Suite 1570
Irving, Texas 75062
Telephone Number: (972) 830-6199
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934 and in accordance therewith files periodic reports and
other information with the Commission. Reports, proxy statements and other
information filed by the Company with the Commission can be inspected
without charge at the public reference facilities maintained by the
Commission, at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's regional offices located in
the Seven World Trade Center, New York, New York 10048, and at the CitiCorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of such material can also be obtained from the Public Reference
Section of the Commission, Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at its public reference facilities in New
York, New York, and Chicago, Illinois, at prescribed rates. In addition,
the Commission maintains a Web site on the World Wide Web, and copies of
such material may be accessed at this Web site (http://www.sec.gov). The
Common Stock of the Company is traded on the NASDAQ National Market System.
Additional updating information with respect to the securities and Plan may
be provided in the future to Plan participants by means of appendices to
the SPD and amendments to such appendices.
THE SHARES OF COMPANY STOCK TO BE ISSUED TO PARTICIPANTS IN THE
PLAN HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSION OR
ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS SPD, WHICH IS CONSIDERED TO BE PART OF A PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
INTRODUCTION TO YOUR PLAN
Your Employer has instituted this Plan to reward efforts made by Employees
who contribute to the overall success of the Company. The Plan is
exclusively for the benefit of Participants and their Beneficiaries. The
purpose of the Plan is to help you build financial security for your
retirement and to help protect you and your Beneficiaries in the event of
your death or Disability.
This Plan is a 401(k) plan. It offers you a built-in savings system
through pre-tax payroll deductions. It also offers attractive tax
advantages, the freedom to choose investments according to your needs, the
flexibility to change your investments as your needs change, and a way to
build capital for a secure retirement.
Under the terms of this Plan, you may choose to defer a portion of your
current salary, which your Employer then contributes to the plan on a pre-
tax basis. Contributions are not subject to Federal income tax, and in
most cases are also exempt from state or local income taxes. Since your
contributions are not subject to Federal income tax, your taxable income is
reduced. See the heading "Tax Consequences Associated with the Plan" for
additional information relating to taxes and Plan participation.
The laws governing plans like this one contain many provisions that may
affect your retirement. You should contact your Plan Administrator with
any questions about the Plan before you make any decisions related to your
retirement. For specific tax advice, you should contact your tax advisor.
This SPD summarizes the key features of your Plan, and your rights,
obligations and benefits under the Plan. Some of the statements made in
this SPD are dependent on this Plan being "qualified," or approved by the
Internal Revenue Service. Please contact your Plan Administrator with any
questions you may have after you have read this summary.
Every effort has been made to make this description as accurate as
possible. However, this booklet is not a Plan document. THIS SPD IS NOT
MEANT TO INTERPRET, EXTEND, OR CHANGE THE PROVISIONS OF THE PLAN IN ANY
WAY. THE TERMS OF THE PLAN ARE STATED IN AND WILL BE GOVERNED IN EVERY
RESPECT BY THE PLAN DOCUMENT. Your right to any benefit depends on the
actual facts and the terms and conditions of the Plan document, and no
rights accrue by reason of any statement in this summary. A copy of the
Plan document is available at the principal office of your Employer for
inspection. You, your Beneficiaries, or your legal representatives may
request to inspect the Plan Document at any reasonable time.
The Plan Administrator has the exclusive discretionary authority to
construe the terms of the Plan and to determine eligibility for all
benefits. Any determination or interpretations of this Plan adopted by the
Plan Administrator in good faith shall be binding on all parties.
GENERAL INFORMATION ABOUT YOUR PLAN
EMPLOYER/PLAN SPONSOR Advance Paradigm, Inc.
AND PLAN ADMINISTRATOR 545 E. John Carpenter Freeway, Suite 1570
Irving, TX 75062
(972) 830-6199
EMPLOYER'S TAX ID NUMBER: 75-2493381
PLAN TRUSTEE(S): Merrill Lynch Trust Company
300 Davidson Avenue
2nd Floor West
Somerset, New Jersey 08873
PLAN NAME: Advance Paradigm, Inc. 401(k) Plan
PLAN NUMBER: 001
PLAN EFFECTIVE/
RESTATEMENT DATE: October 1, 1998 [401(k) and Profit Sharing]
ORIGINAL EFFECTIVE DATE: January 1, 1994 [401(k) and Profit Sharing]
EMPLOYER TAX YEAR: April 1st through March 31st
PLAN YEAR END: December 31st
TYPE OF RECORDKEEPING: Contract Administration
TYPE OF PLAN: 401(k) with profit sharing
The Plan Administrator keeps the records for the Plan, and is responsible
for the interpretation and administration of the Plan. All Plan Records
will be kept on the basis of the Plan Year. The Plan Administrator may
hire a third party record keeper to perform the administrative functions of
the Plan. If you have questions about the Plan, you should write to the
Plan Administrator, in care of the 401(k) Plan Committee. THE PLAN
ADMINISTRATOR AND THE TRUSTEES ARE DESIGNATED AS THE AGENTS FOR SERVICE OF
LEGAL PROCESS.
A committee comprised of officers and employees of the Company or a
Participating Affiliate has been appointed by the Board of Directors of the
Company to perform some administrative functions for the Plan
Administrator. You should direct any correspondence intended for the Plan
Administrator to the attention of the "401(k) Plan Committee" at the above
address for the Plan Administrator.
OBTAINING ACCOUNT INFORMATION BY PHONE OR INTERNET
TO ASSIST YOU IN USING THE PLAN MORE EFFECTIVELY, AN INTERACTIVE TELEPHONE
FEATURE AND AN INTERNET FEATURE IS AVAILABLE.
The Plan offers an interactive telephone feature, referred to as "Voice
Response System," which permits you to access information regarding your
Plan accounts and initiate investment fund changes through the use of a
personal identification number ("PIN") assigned to you by the Plan.
Because your PIN allows access to your accounts, keep it confidential. The
Plan's "interactive telephone feature" is maintained as a toll-free ("1-
800") telephone line at Merrill Lynch which you may use to request current
information regarding your Plan accounts, including the value of your
accounts and the amount available for withdrawal or a loan. The telephone
number for the Voice Response System is listed in the current Appendix to
this SPD. Written confirmation of your Voice Response System changes will
be sent to you. All actions initiated or taken through the Voice Response
System regarding your Plan accounts must comply with the notice and timing
requirements relating to a particular action. You may not use the Voice
Response System to change your contribution rate, to stop or resume your
contributions, or to request a withdrawal. You should contact your Human
Resources Representative to obtain a withdrawal from the Plan while you are
still working, in which case, appropriate withdrawal and rollover election
forms will be sent to you.
In addition, the Merrill Lynch website allows on-line transactions for you
to change your investment direction, transfer funds between investments,
select a Goal Manager service (to direct future investments or to transfer
existing assets). To access these services via the Internet, from
Infoplace select Self Service/Benefit Provider Links/Merrill Lynch
401(k)/About My Account/Transactions (lower left hand menu). You can also
access it through the Web in general at www.benefits.ml.com. Remember, you
must have your Social Security Number and PIN # to access these services.
If you have any questions or if you encounter problems accessing your
account, please call Merrill Lynch at 800/229-9040. If this number
changes, you will be provided a current Appendix to this SPD to provide the
new telephone number for Internet access instructions.
If you wish to change investment fund elections either through the Voice
Response System or the Internet, the changes will be effective as of the
close of business on the day you request the change.
ELIGIBILITY AND PARTICIPATION
ELIGIBILITY: All Employees of the Employer are eligible to
participate in this Plan except Employees who
are members of a union who bargained
separately for retirement benefits during
negotiations.
PREDECESSOR SERVICE: Service with the following Predecessor
Employers will be counted toward eligibility
to participate in the Plan: Advance Paradigm
Clinical Services, Inc.; Advance Paradigm
Data Services, Inc.; Advance Paradigm Mail
Services, Inc.; Innovative Medical Research,
Inc.; for Employees hired before 10/1/98,
Blue Cross-BlueShield of Maryland; for
Advance Homecare, service to 7/8/97; Baumel-
Eisner Neuromedical Institute; and Integrated
Pharmaceutical Services, but only for
Employees hired on or about April 1, 1999
from Integrated Pharmaceutical Services as a
result of an acquisition by Advance Paradigm
of a portion of the assets of such company.
PARTICIPATING AFFILIATES: Advance Paradigm Clinical Services, Inc.;
Advance Paradigm Data Services, Inc.; Advance
Paradigm Mail Services, Inc.; Innovative
Medical Research, Inc.; Baumel-Eisner
Neuromedical Institute.
PARTICIPATION REQUIREMENTS: If you are not excluded from participation
due to the above, you will become eligible to
participate after attaining age 21 and
completing 1/2 of a Year of Service.
Since the service requirement is less than
one year, you are not required to complete a
specific number of Hours of Service during
the service period. Instead, your service
will be measured by the length of time you
are employed. You will become eligible to
participate in the Plan on the Entry Date
next following your 6 month anniversary of
your date of hire. For example: If your Date
of Hire is 12/15/96, you satisfy the six-
month eligibility requirement on 6/14/97 and
become eligible to participate in the Plan on
the next Entry Date which is 7/1/97.
If you do not meet the eligibility
requirements, you will not be eligible to
participate in the Plan.
ENTRY DATE: You will become a Participant in the Plan on
the Entry Date coincident with or next
following the date you meet the participation
requirements. The Entry Dates for this Plan
are the first day of the first, fourth,
seventh and tenth month of the Plan Year.
YOUR CONTRIBUTIONS TO THE PLAN
COMPENSATION: Compensation means the total salary or wages
paid to you as shown on your W-2 but
increased by all deferrals you make to this
Plan and to your Employer's cafeteria plan,
to a maximum of $160,000*.
For the first year you participate in the
Plan, only Compensation earned after your
Entry Date will be used to determine your
share of your Employer's Contribution.
ELECTIVE DEFERRALS: 15% of Annual Compensation, to a maximum of
$10,000* per calendar year.
* Adjusted periodically for cost of living by
the IRS.
This limitation is an aggregate limit that
applies to all deferrals you make to this
Plan and to any other elective deferral plan,
including tax-sheltered annuity contracts,
simplified pension plans, or other 401(k)
plans.
MAKING AND MODIFYING
401(K) ELECTIONS: You may discontinue deferrals at any time,
upon written notice to the Plan
Administrator. Your instructions to cease
Elective Deferrals will be implemented as of
the first payroll period following the date
you notify your Plan Administrator.
To resume your Elective Deferral
Contribution, you must provide written notice
to your Plan Administrator, and wait until
the next quarterly Entry Date.
You may increase or decrease your Elective
Deferral Contribution Percentage on any
quarterly Entry Date.
INVESTMENT OF
CONTRIBUTIONS: As a Participant in this Plan, you direct the
investment of your account(s). Your Plan
provides a menu of investment options from
which you may select your investments. You
may modify your investment elections,
transfer existing account balances, and
obtain information regarding your investments
on a daily basis.
The Plan Administrator has selected investment funds in which you and the
other participants may choose to invest. A Company Stock Fund has been
added as an investment option beginning April 1, 1999. A brief description
of each current investment fund available under the Plan is contained in
the Appendix to this SPD. There is no minimum or maximum percentage of
your Plan account which may be invested in the Company Stock Fund or any
other investment fund offered under the Plan; however, investment advisors
often recommend that participants consider diversifying investments and not
investing more than 20% of their overall investment assets in the stock of
a single company.
The Plan Administrator or the 401(k) Plan Committee may from time to time
add new investment funds or eliminate existing investment funds AND MAY
CHANGE OR ADD AN ADDITIONAL INVESTMENT MANAGER. You will be notified in
the event any such action is taken by the Plan Administrator.
The investment options range from a relatively low risk fund generally with
lower returns, to a higher risk equity fund, with a potential for higher
returns.
Before you make your investment decision, you should carefully consider
your investment goals. The Plan Administrator will provide you with
information in a current Appendix to the SPD that summarizes the general
investment goals and the past investment performance of the investment
funds as they exist from time to time. In addition, you may request from
the Plan Trustee(s) copies of prospectuses, financial statements or any
other materials relating to the funds, to the extent such information is
provided to this Plan, and a description of the annual operating expenses
of each fund, such as investment management fees, administration fees and
transaction costs. The Company intends to pay the administrative costs of
the Plan, such as Trustee and accounting fees, but reserves the right to
have the Plan pay part or all of such costs at any future time.
This Plan is intended to constitute a plan described in section 404(c) of
the Employee Retirement Income Security Act of 1974, as amended (ERISA) and
Title 29 of the Code of Federal Regulations section 2550.404c-1. As a
result, the fiduciaries of this Plan may be relieved of liability for any
losses which are the direct and necessary result of investment instructions
given by you or your beneficiary.
You will receive written reports on the status of your Plan account on a
quarterly basis, and you may obtain daily information on a daily basis by
using the Voice Response System or the Internet site.
You should be aware that your investment decisions will ultimately affect
the retirement benefits to which you will become entitled. Your Employer
and the Plan Trustee(s) cannot provide you with investment advice, nor are
they obligated to reimburse any participant for any investment loss that
may occur as a result of his or her investment decisions. There is no
guarantee that any of the investment options available in this Plan will
retain their value or appreciate. You should also remember that all
investments have some element of risk. Therefore, you should select your
investments based on your own financial and retirement needs. In addition,
it is important to remember that, like the stock market, stock investments
can go down as well as up. If that should happen, as it probably will from
time to time, the dollar value of all amounts invested in stock will
decrease.
YOUR EMPLOYER'S CONTRIBUTIONS TO THE PLAN
EMPLOYER MATCHING
CONTRIBUTIONS: Your Employer may, in its discretion, make a
contribution to the Plan known as a 401(k)
Matching Contribution. Your Employer's 401(k)
Matching Contribution, if any, will be an
amount not to exceed 50% of the first 6% of
your Compensation contributed as an Elective
Deferral.
ELIGIBILITY FOR EMPLOYER
MATCHING CONTRIBUTIONS: Any Participant who makes an Elective
Deferral Contribution will be eligible to
receive an Employer Matching Contribution.
EMPLOYER PROFIT SHARING
CONTRIBUTIONS: Your Employer may, in its discretion, make a
contribution to the Plan known as a Profit
Sharing Contribution. Your share of the
Employer's Profit Sharing Contribution, if
any, will be allocated to your account based
on the ratio that your Compensation bears to
the total Compensation of all Participants
eligible for a share of this Contribution.
ELIGIBILITY FOR EMPLOYER
PROFIT SHARING CONTRIBUTIONS: Any Participant who is employed during the
Plan Year will be eligible to share in the
allocation of the Employer Profit Sharing
Contribution made for that Plan Year.
VESTING: Vesting means that for each Year of Service
you complete, you become entitled to all or a
portion of your Employer Contributions
Account(s). For purposes of determining your
vested account balance, all of your Years of
Service, beginning on your date of hire, will
be counted.
PREDECESSOR SERVICE: Service with the following Predecessor
Employers will be counted for vesting
purposes: Advance Paradigm Clinical
Services, Inc.; Advance Paradigm Data
Services, Inc.; Advance Paradigm Mail
Services, Inc.; Innovative Medical Research,
Inc.; for Employees hired before 10/1/98,
Blue Cross-BlueShield of Maryland; for
Advance Homecare, service to 7/8/97; Baumel-
Eisner Neuromedical Institute; and Integrated
Pharmaceutical Services, but only for
Employees hired on or about April 1, 1999
from Integrated Pharmaceutical Services as a
result of an acquisition by Advance Paradigm
of a portion of the assets of such company.
YEAR OF SERVICE FOR VESTING
DEFINED: You will have completed a Year of Service for
vesting purposes on each anniversary of your
date of hire with your Employer.
VESTING OF ELECTIVE
DEFERRALS: You are always 100% vested in your Elective
Deferrals.
VESTING SCHEDULE FOR EMPLOYER 401(K) MATCHING AND PROFIT SHARING
CONTRIBUTIONS
VESTED PERCENTAGE YEARS OF SERVICE
1 25%
2 50%
3 75%
4 100%
If this is an amended or restated Plan, your vested percentage cannot be
less than your vested percentage prior to the amendment or restatement of
this Plan.
FORFEITURES: If you terminate service prior to being fully
vested in your Employer Contribution
Account(s), you forfeit the amount in which
you are not vested. Forfeitures will be used
to reduce future Employer Contributions to
the Plan.
BENEFITS UNDER YOUR PLAN
NORMAL RETIREMENT AGE: Your Normal Retirement Age is age 65. You are
100% vested in your Employer Contribution
Account(s) if you leave employment with
Advance Paradigm on or after your Normal
Retirement Age.
DISABILITY: You will be considered to be disabled if your
injury or medical condition causes you to be
unable to perform your usual and customary
duties for your Employer for a continuous
period of at least twelve months. If your
account exceeds $5,000, payment of benefits
will begin as soon as feasible after you
attain Normal Retirement Age. You may,
however, elect for benefit payments to begin
as soon as feasible after your Disability
Retirement Date. If your account does not
exceed $5,000, benefit payments will begin as
soon as feasible after your Disability
Retirement Date.
You are 100% vested in your Employer
Contribution Account(s) if you are deemed
disabled.
IN-SERVICE DISTRIBUTIONS: As an active Participant in the Plan, you
may, upon attaining age 59 1/2, submit a
written application to the Plan Administrator
to withdraw all or a portion of your vested
account balance.
HARDSHIP WITHDRAWALS: As an active Participant in the Plan, you may
submit a written application to the Plan
Administrator for a hardship withdrawal of a
portion of your vested account balance, if
you are experiencing an immediate and heavy
financial need. The amount of your
withdrawal may not exceed the amount of your
financial need.
EVENTS WHICH QUALIFY FOR A
HARDSHIP DISTRIBUTION: 1. To cover medical expenses incurred by
you, your spouse or your dependents;
2. For the purchase of a principal residence
(excluding mortgage payments);
3. For the payment of tuition and related
educational fees for the next twelve months
of post-secondary education for you, your
spouse, your children or your dependents;
4. For the payment of amounts necessary to
prevent eviction from or foreclosure on your
principal residence.
All other forms of financial assistance,
including loans from this Plan, must be
explored and exhausted before a Hardship
Distribution can be made.
If you take a hardship withdrawal, your Elective Deferral Contributions
will be suspended for a period of twelve months following the date of the
withdrawal. When you recommence your Elective Deferral Contributions, the
amount which may be contributed in that calendar year is reduced by the
amount of the Elective Deferral Contributions you made in the calendar year
in which you took a hardship withdrawal.
TAX CONSEQUENCES FOR
RECEIVING A DISTRIBUTION
OR WITHDRAWAL: Distribution or withdrawal of all or a
portion of your vested account balance will
be subject to ordinary income taxes and may
be subject to early distribution penalties.
Please consult your tax advisor prior to
taking any distribution or withdrawal.
LOAN AVAILABILITY: An active Participant in the Plan may request
a loan from the Plan. The loan amount is
available by calling the Voice Response
System. A loan allows you to borrow money
from your account without incurring a
penalty. You must repay the loan with
interest, on an after-tax basis, usually
through payroll deductions.
Once you request a loan, your Employer will
review the loan request and if Employer
approves the loan, after the Employer
receives a signed spousal consent form, if
you are married, you will receive a check
with an attached promissory note. By
endorsing the check, you agree to the terms
and repayment conditions in the promissory
note.
LOAN REQUIREMENTS: 1. Loans are available to all participants
in the Plan on a uniform and
nondiscriminatory basis.
2. Loans must bear a reasonable rate of
interest. You can call the Voice Response
System to determine the interest rate.
3. The loan must be adequately secured.
4. There is a $1,000 minimum for loans from
the Plan.
LOAN LIMITATIONS: You may borrow any amount up to 50% of your
vested account balance. However, your loan
can be no more than $50,000 minus your
highest outstanding loan amount during the
prior 12 months. If you borrow from the
plan, the amount you borrow is no longer
invested in the investment funds.
LOAN REPAYMENTS: Repayment of a loan must be made at least
quarterly, on an after-tax basis, in level
payments of principal and interest. The loan
must be repaid within five years or within
10 years if the purpose of the loan is for
the purchase of your primary residence. As
the loan payments are made, they are invested
in accordance with your instruction for new
contributions.
TAX CONSEQUENCES OF PLAN
LOANS: If you fail to make loan repayments when they
are due, you may be considered to have
defaulted on the loan. Defaulting on a loan
may be considered a distribution to you from
the Plan, resulting in taxable income and
possible tax penalties to you and may
ultimately reduce your benefit from the Plan.
If you terminate employment with Advance
Paradigm while you have a loan, the
outstanding balance will be taxed to you
unless you repay it on or before your last
day of employment.
DEATH BENEFITS: Your Employer Contribution Account(s) become
100% vested upon your death. Your
Beneficiary will be entitled to receive your
account balance. If you are married at the
time of your death, your surviving spouse is
your Beneficiary unless you elect otherwise
in writing (with the consent of your spouse);
you establish to the satisfaction of the Plan
Administrator that your spouse cannot be
located; or your spouse has validly waived
any right to the death benefit.
If you want to designate a Beneficiary other
than your spouse, (an "alternate
Beneficiary") you must do so on a form
provided by the Plan Administrator. You may
revoke or change this designation at any time
by filing written notice with the Plan
Administrator; however, your spouse must
consent, in writing, to any alternate
Beneficiary. A Notary Public or Plan
official must witness your spouse's consent.
It is important that you notify the Plan
Administrator of any change in your marital
status or change in your Beneficiary
designation.
DISTRIBUTIONS UPON DEATH: If death occurs before Retirement Benefits
begin, your Beneficiary may choose to defer
payment, or to receive payment based on the
following general guidelines:
Payment may be made in the form of a joint
life or period certain life annuity for
Participants who transferred money from a
prior plan where this option was available;
Payment may be made in installments payable
in cash or in kind, or part in cash and part
in kind over a period not to exceed your
lifetime, or the joint expected future
lifetime (based on actuarial tables) of you
and your spouse;
The entire sum must be distributed no later
than the last day of the year in which the
fifth anniversary of your death occurs, if
your Beneficiary is not your surviving
spouse;
If your Beneficiary is your spouse, payment
may be postponed until December 31st of the
calendar year in which you would have
attained age 65;
Payment may be made in installments, as
described above, beginning on or before the
December 31st following the year in which you
die.
If death occurs after Retirement Benefits begin, but before your entire
Retirement Benefit has been paid, the remaining portion of your Retirement
Benefit will continue in the same form and for the same period as you
originally elected unless your Beneficiary requests that the payments be
accelerated. In any case, payments will continue to be made at least as
rapidly as such payments were being made prior to your death.
If you fail to designate an alternate
Beneficiary, or your alternate Beneficiary
does not survive you, the benefit payable
from this Plan as a result of your death will
be payable to your Surviving Spouse. If you
have no Surviving Spouse, the death benefit
will be paid to your estate.
If the value of your account is $5,000 or
less, death benefits will be distributed to
your Beneficiary without your Beneficiary's
consent as soon as practicable following your
death.
FORMS OF BENEFIT: The normal form of payment with respect to
your vested account balance under this Plan
is a lump sum. If your account balance is
$5,000 or less, you will receive a lump sum
distribution as soon as feasible following
the date you terminated employment. If your
account balance is greater than $5,000, you
(and your spouse, if applicable) must give
written consent before the distribution can
be made.
An optional form of payment with respect to
your vested account balance is installments
payable in cash or in kind, or part in cash
and part in kind over a period not to exceed
your lifetime, or the joint lifetime of you
and your spouse.
If you transferred money from a prior plan,
another form of benefit may be available.
You should consult with your tax advisor
regarding those options.
You may request that all or part of any taxable distribution you receive
from the Plan, other than an annuity, installments paid over 10 or more
years, or required distributions after age 70-1/2 (or if you are not a 5%
owner of the Employer, your termination of employment, if later), be rolled
over directly from the Trustees to the trustee or custodian of an eligible
retirement plan. For this purpose, an "eligible retirement plan" includes
an individual retirement account or annuity, or your new employer's
qualified plan, if the plan accepts rollovers. The Plan Administrator will
notify you if any amount to be distributed to you is an eligible rollover
distribution. Special tax withholding rules apply to any portion of the
eligible rollover distribution which is not rolled over directly to an
eligible retirement plan.
You should remember to keep the Plan Administrator informed of your address
and the name and current address of your Beneficiary.
TOP-HEAVY DEFINED: A plan becomes Top-Heavy when 60% or more of
the Plan's assets are allocated to Key
Employees. Key Employees are certain owners
or officers of your Employer. If the Plan
becomes Top-Heavy certain rules apply.
TOP-HEAVY RULES: A minimum contribution will be required to
Non-Key Employees. This contribution is the
lesser of three percent (3%) of Compensation;
or the largest percentage of Compensation
contributed by the Employer on behalf of Key
Employees. If you are a Participant in more
than one plan maintained by your Employer,
you may not be entitled to minimum benefits
in more than one plan.
VESTING SCHEDULE FOR
TOP-HEAVY: Vesting schedule outlined earlier will apply.
ROLLOVERS OR TRANSFERS: You must submit a written request to your
Plan Administrator, who will determine
whether a rollover or transfer is acceptable.
You may make such a contribution to this Plan
prior to being eligible for the Plan. Any
amount rolled over or transferred to this
Plan cannot include personal IRA
contributions. Prior to making a rollover or
transfer, you should consult with your tax
advisor.
PERIOD OF SEVERANCE: Under the elapsed time method, your Years of
Service for vesting purposes run from the
date you first perform an Hour of Service for
your Employer until your severance from
service date. A Period of Severance begins on
the earlier of:
The date you quit, retire, are discharged, or
die, or the first anniversary of the first
date of a period in which you remain absent
from service with your Employer (with or
without pay) for any reason other than
quitting, retirement, discharge, or death.
These reasons include vacation, holiday,
sickness, disability, leave of absence, or
layoff.
If you are absent on military leave, you will
not be considered to have a Period of
Severance if you return to work within 90
days of your release from military duty, or
any longer period during which your
reemployment rights are protected by law.
If you are on an authorized leave of absence
(in accordance with standard personnel
policies), you will not be considered to have
a Period of Severance if you return to work
immediately upon the expiration of such leave
of absence.
If you are on a leave of absence because of
maternity or paternity, you will not be
considered to have a Period of Severance
until the second anniversary of the first
date of your leave. For example, if you went
on maternity leave on October 1, 1995, you
would not be considered to have severed
service with your Employer if you returned to
work and performed an Hour of Service before
October 1, 1997. If you did not return to
work on or before October 1, 1997, you would
incur a Period of Severance.
If you are reemployed after you incur a
Period of Severance and you were vested when
you terminated employment, upon your
reemployment, you will be immediately
eligible for the Plan, and you will be vested
at the same percentage as when you left.
If you are reemployed after you incur a
Period of Severance and you were not vested
when you terminated employment, you will lose
credit for service you completed prior to
your termination if your absence is five
years or longer.
If you are reemployed within five years after
you incur a Period of Severance, and you
received a full or partial distribution
(including a "deemed" distribution if you had
a $0 account balance), you may return as a
Participant at the same vested percentage as
when you left, provided you repay the amount
distributed to you within five years of the
date you are reemployed. After repayment,
your account balance will be restored to its
original amount as though there had been no
distribution, and any amount forfeited when
you left will be replaced by your Employer.
If you are reemployed after you incur a five-
year Period of Severance, you will not be
given the opportunity to repay the amount
distributed to you and your vested percentage
will be determined based on your Years of
Service beginning on your date of
reemployment.
If you terminate service prior to becoming a
Participant in the Plan, you will be treated
as a new employee upon your reemployment. To
participate, you must meet the Eligibility
Requirements.
QUALIFIED DOMESTIC RELATIONS
ORDERS: As a general rule, your account balance may
not be assigned. This means that your
accounts cannot be sold, used as collateral
for a loan, given away, or otherwise
transferred. In addition, your creditors may
not attach, garnish or otherwise interfere
with your account.
An exception to this general rule is a
"qualified domestic relations order" or QDRO.
A QDRO is a court order that can require the
Plan Administrator to pay a portion of your
account balance to your former spouse, child
or other dependent.
If you intend to get a divorce and you
anticipate that the divorce order will award
a portion of your Plan accounts to your
spouse, please contact the Plan
Administrator. The Plan Administrator will
provide you with a copy of the Plan's
qualified domestic relations order procedures
and explain the manner in which the order
will be reviewed to determine if it qualifies
under the Internal Revenue Code. You are
urged to send the Plan Administrator copies
of proposed domestic relations orders for
review prior to entry by a court to avoid any
unnecessary delays and complications
regarding your accounts.
PLAN AMENDMENT OR
TERMINATION: Your Employer, by action of its Board of
Directors, reserves the right to amend the
Plan at any time. However, no amendment can
deprive you of any vested benefits.
Your Employer also reserves the right to
terminate the Plan. If the Plan is
terminated, you will be 100% vested in your
total account balance under the Plan.
TAX CONSEQUENCES ASSOCIATED WITH THE PLAN
THE COMPANY BELIEVES THAT THE PLAN AND RELATED TRUST AS AMENDED AND
RESTATED ARE QUALIFIED UNDER SECTIONS 401(A) AND 501(A) OF THE CODE. THE
TAX CONSEQUENCES OF A QUALIFIED PLAN INCLUDE:
1. Contributions made by the Company (including your salary deferral
contributions) on your behalf are not taxable to you when they are
made. You do not report them as income at that time.
2. Any investment earnings or profits received by the Trustee and
allocated to your accounts are not tax-able when they are realized by
the trust fund or allocated to your accounts.
3. When distribution of your accounts is made to you, you will be taxed
in that year, but will in many instances qualify for advantageous tax
treatment. You will be informed of these rules and penalties for
underpay-ment of estimated taxes by the Trustee when you become
eligible to receive a distribution from the Plan.
4. With certain exceptions, distributions and withdraw-als from your
accounts before you reach age 59-/1/2 are subject to an additional excise
tax equal to 10% of the taxable amount of the distribution or
withdrawal. Under one of these exceptions, you will not be subject to
the 10% tax penalty if you receive a distribution of your accounts
after you reach age 55 and have terminated employment with the Company
and all Employers.
5. Your participation in the Plan may affect your abili-ty to make tax-
deductible contributions to an individual retirement account. You
should contact your personal tax ad-visor for further information
regarding this rule.
6. When you terminate employment, the Plan Administrator will give you a
special tax notice that has been prepared by the Internal Revenue
Service describing in general terms, the tax consequences associated
with your distribution. Since tax laws are complex and subject to
change, you should consult your personal tax advisor before you
receive any benefits to determine how the dis-tribution may affect you
and to obtain advice on directing the Plan Administrator on the manner
of distribution.
STATEMENT OF ERISA RIGHTS
As a Participant in the Plan, you are entitled to certain rights and
protection under the Employee Retirement Income Security Act of 1974
(ERISA). Your Employer may not fire you or discriminate against you to
prevent you from obtaining a benefit from the Plan or exercising your
rights under ERISA.
ERISA provides that all Plan Participants shall be entitled to:
Examine, without charge, at your Plan Administrator's office, all Plan
documents, insurance contracts, if any, and copies of all documents filed
by your Plan with the U. S. Department of Labor, such as annual reports and
Plan descriptions.
Obtain copies of all Plan documents and other Plan information upon written
request to your Plan Administrator. Your Plan Administrator may impose a
reasonable charge for the copies.
Receive a summary of the Plan's annual financial report. Your Plan
Administrator is required by law to provide each Participant with a copy of
the Plan's Summary Annual Report.
Obtain an annual statement telling you whether you have a right to receive
a benefit under the Plan, and if so, what your benefits would be if you
stop working for your Employer now. If you do not have a right to a benefit
under the Plan, the statement must tell you how many years you have to work
to get a benefit under the Plan. The Plan may require a written request
for this statement, but it must be provided free of charge.
File suit in Federal court if any materials requested are not received
within 30 days of your request unless the materials were not sent because
of matters beyond the control of your Plan Administrator. The court may
require your Plan Administrator to pay you up to $100 per day for each
day's delay until the materials are received by you.
In addition to creating rights for Plan participants, ERISA imposes
obligations upon the persons who are responsible for the operation of the
Plan. These persons are referred to as "fiduciaries". Fiduciaries must
act solely in the interest of Plan Participants and Beneficiaries and must
exercise prudence in the performance of their plan duties. Fiduciaries who
do not comply with ERISA may be removed and required to make good any
losses they have caused the Plan.
If Plan fiduciaries are misusing the Plan's assets or if you are
discriminated against for asserting your rights, as a Participant in the
Plan, you have the right to file suit in a Federal court or to request
assistance from the U.S. Department of Labor. If you are successful in
your lawsuit, the court may require the other party to pay your legal
costs, including attorney's fees. If you are unsuccessful in your lawsuit,
or the court finds your action frivolous, the court may order you to pay
these costs and fees.
CLAIMS PROCEDURES
When you terminate employment, you must complete a form that notifies the
Plan Administrator that you are making a claim for benefits. Your Employer
has a supply of these forms. Ideally this form should be completed on or
before your final day of work. This way, your Employer can send your claim
for benefits right away for processing.
If, after your claim for benefits is processed, you have questions or
disagree with the calculation of your benefit, you must notify the Plan
Administrator in writing. Unless the Plan Administrator establishes and
communicates to participants other claims procedures, the following
procedures will apply: The Plan Administrator will, within 90 days (or
within 180 days if special circumstances exist) notify you in writing of
its decision. If your claim for a Plan benefit is denied in whole or in
part, you must receive a written explanation of the reason for the denial.
That notification will include:
How your benefit was calculated;
The specific reason that your claim is denied (in whole or in part) if
it is denied;
Specific references to Plan provisions on which the denial is based;
A description of any additional material or information necessary for
you to perfect your claim and an explanation of why such information
is necessary;
An explanation of the Plan's claim review procedure.
Within 60 days after you receive notice of the denial of part or all of
your claim for benefits, you may file a written appeal with the Plan
Administrator. You may seek representation by an attorney or other
representation of your choosing. You may submit written and oral evidence
and arguments in support of your claim. You may review all relevant
documents. The Plan Administrator generally makes a final decision within
60 days of your appeal. The Plan Administrator's decision will include the
specific reasons for its decision and specific references to Plan
provisions on which the decision is based.
PENSION BENEFIT GUARANTY CORPORATION
The type of Plan your Employer has adopted is a defined contribution plan.
Therefore, the Plan is NOT subject to or insured by the Pension Benefit
Guaranty Corporation (PBGC).
IF YOU HAVE ANY QUESTIONS ABOUT THIS STATEMENT OR ABOUT YOUR RIGHTS UNDER
ERISA, YOU SHOULD CONTACT THE NEAREST OFFICE OF THE PENSION AND WELFARE
BENEFITS ADMINISTRATION, U.S. DEPARTMENT OF LABOR, LISTED IN YOUR TELEPHONE
DIRECTORY OR THE DIVISION OF TECHNICAL ASSISTANCE AND INQUIRIES, PENSION
AND WELFARE BENEFIT ADMINISTRATION, U.S. DEPARTMENT OF LABOR, 200
CONSTITUTION AVENUE, N.W., WASHINGTON, D.C. 20210.
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933.
APRIL 1,1999
APPENDIX TO SUMMARY PLAN DESCRIPTION
This Appendix supplements the Summary Plan Description (SPD) dated April
1, 1999 that has been provided to all employees of Advance Paradigm, Inc.
(the "Company") and its subsidiaries eligible to participate in the Advance
Paradigm, Inc. 401(k) Plan (the "Plan"). The information contained in this
Appendix is to be read in conjunction with the SPD. To the extent that the
information contained in this Appendix is inconsistent with information
contained in the SPD, the information contained in this Appendix supersedes
and replaces the corresponding information in the SPD. If you have
misplaced or discarded your SPD, please request an additional booklet from
your Employer's Human Resources Department and one will be provided or you
can access it through Infoplace.
INVESTMENT INFORMATION
Your salary deferral contributions, matching contributions made by your
Employer, any profit sharing contributions made to the Plan and rollover
contributions will be invested in accordance with your directions in one or
more of the following funds:
MERRILL LYNCH RETIREMENT
PRESERVATION TRUST * Seeks to provide preservation of capital,
liquidity and current income at levels that are
typically higher than those provided by money
market funds.
TOTAL RETURNS (%)(BASED ON CALENDAR YEAR)
1996 1997 1998
---- ---- ----
6.40 6.56 6.55
JOHN HANCOCK STRATEGIC
INCOME FUND Seeks high current income through flexible
investments among international fixed-income
securities, U.S. government issues and high-
yielding corporate bonds.
TOTAL RETURNS (%)(BASED ON CALENDAR YEAR)
1996 1997 1998
---- ---- ----
11.73 12.64 5.37
MERRILL LYNCH BASIC VALUE
FUND, INC. Seeks capital appreciation, and secondarily,
income, by investing primarily in equities that
appear to be undervalued.
TOTAL RETURNS (%)(BASED ON CALENDAR YEAR)
1996 1997 1998
---- ---- ----
17.50 29.21 11.34
MERRILL LYNCH FUNDAMENTAL
GROWTH FUND Seeks long-term growth of capital, by investing
in a diversified portfolio of equity securities
placing particular emphasis on companies that
have exhibited above-average growth rates in
earnings.
TOTAL RETURNS (%)(BASED ON CALENDAR YEAR)
1996 1997 1998
---- ---- ----
18.69 31.63 34.47
* The investment performance listed for this option does not reflect the
operating expenses charged to the Plan. The operating expenses charged are
based on the amount of Plan assets invested in the fund from time to time.
The range of fees is from 1% for investments up to $100,000 to 0.13% for
investments of $100,000,001. The fee charged to the Plan will probably be
between .5% and 1%.
LORD ABBETT DEVELOPING
GROWTH FUND** Seeks to provide long-term capital appreciation
by investing primarily in a diversified
portfolio of small company stocks with long-
range growth potential.
TOTAL RETURNS (%) (BASED ON CALENDAR YEAR)
1996 1997 1998
---- ---- ----
22.31 30.78 8.27
GAM INTERNATIONAL FUND Seeks capital appreciation through investing in
equity markets worldwide, excluding that of the
USA.
TOTAL RETURNS (%)(BASED ON CALENDAR YEAR)
1996 1997 1998
---- ---- ----
8.98 29.07 6.82
SELIGMAN COMMUNICATIONS
AND INFORMATION FUND
Seeks capital appreciation by investing
primarily in securities of companies operating
in all aspects of the communications,
information, and related industries.
TOTAL RETURNS (%)(BASED ON CALENDAR YEAR)
1996 1997 1998
---- ---- ----
11.94 22.95 33.92
ADVANCE PARADIGM COMPANY
STOCK FUND Invests solely in Company Stock. The Company
Stock is traded on the NASDAQ National
Marketsystem under the symbol "ADVP." The
closing bid prices for the Company Stock on the
last business day of the listed year is:
YEAR END STOCK PRICES
1996 1997 1998
---- ---- ----
$20.75 $31.75 $35.00
MERRILL LYNCH GOALMANAGER
SERVICE If you are not sure which of the above
investment options to select, or in precisely
what proportion, a GoalManager model portfolio
is a tool that can assist you in managing your
long-term financial objectives. There are five
model portfolios from which to choose:
CONSERVATIVE; CONSERVATIVE TO MODERATE;
MODERATE; MODERATE TO AGRESSIVE; and AGRESSIVE.
The model portfolios are rebalanced on a
quarterly basis to return to the original asset
mix.
** Performance listed for this option is Class A share performance for
illustrative purposes only because Class P shares are new. The performance
represents an operating expense for the Class A shares that is
approximately 0.16% less than the Class P shares. Had Class P shares been
available, the historical performance would have been lower.
You may choose one GoalManager Model Portfolio in addition to the other
investment options in the Plan. You are provided periodically with
summaries of each fund containing more detailed information that the above
summaries, except for the Company Stock Fund, for which bid and asked
prices are quoted each weekday in the Wall Street Journal; Company Stock
prices are also available from the Voice Response System and via the
Internet site.
Shares of Company Stock will be purchased at market prices in transactions
over securities exchanges as soon as practicable after receiving
contributions to the Company Stock Fund. The purchase price of the Company
Stock will include brokerage fees and commissions, transfer taxes, and
related expenses. Brokers who make such transactions are selected by the
Trustee. However, the Trustee may also purchase newly issued or treasury
stock from the Company at such prices and on such terms as it deems proper.
The closing price for the Company Stock on March 16, 1999 was $55.
There is no guarantee as to the rate of return or preservation of principal
for contributions made to the Company Stock Fund. Dividends (if any) and
other distributions received on Company Stock, net of Plan expenses
attributable to Company Stock held in the Fund, will be reinvested in
Company Stock by the Trustee, and each participant's accounts invested in
the Company Stock Fund will be credited with the proportionate number of
shares.
VOTING RIGHTS
To the extent participant's Plan accounts are invested in Company Stock,
each participant may instruct the Trustee how to vote shares of Company
Stock. In addition, each participant may decide whether or not to tender
shares of Company Stock held in his Plan accounts in case of a tender
offer. Before each stockholder's meeting, each participant will receive
the voting materials necessary to vote shares of Company Stock held in his
Plan accounts. The Company has established procedures that are intended to
ensure that each participant's voting and, if applicable, his tender
instructions relating to shares of Company Stock are confidential by
providing that voting and tender forms are sent directly to each
participant by the Company's transfer agent and by providing that his
instructions are sent directly back to the transfer agent. The transfer
agent then tabulates the instructions and forwards the results to the
Trustee for its action. Subject to its fiduciary responsibilities under
ERISA, the Trustee will vote shares that are not voted by participants in
the same proportion as shares voted by participants and will not tender
shares for which no instructions are received.
NO GUARANTEE OF FUND RESULTS
No assurance can be given that the results of the various investment funds
in future periods will be the same or similar to those reflected in the
foregoing paragraphs with respect to fund results in prior periods.
Changes in the market value of underlying securities and interest and
dividend income, among other things, may cause the rates of return and
therefore the value of participants' accounts constantly to vary, sometimes
significantly. Accordingly, no past period is necessarily indicative of
future performance.
VOICE RESPONSE SYSTEM
1-800-922-9945 is the toll-free telephone number maintained by the Trustee
to enable you to access information regarding your Plan accounts through
the use of the Voice Response System and a personal identification number
("PIN"). You may access your account information via the Internet site as
explained in the SPD.
RESTRICTIONS ON RESALE
There are generally no restrictions on resale of Company Stock acquired
pursuant to the Plan except for employees who are deemed to be "affiliates"
of the Company, and directors or officers of the Company who are subject to
Section 16 of the Securities Exchange Act of 1934. An affiliate may resell
Company Stock acquired under the Plan either pursuant to a registration
statement or pursuant to Rule 144 or another applicable exemption under the
Securities Act of 1933. For purposes of reselling, an affiliate is
basically defined as a control person or one who, directly or indirectly,
has the power to direct or cause the direction of the management and
policies of the Company. Under Section 16 of the Securities Exchange Act
of 1934, any profit realized by a director or officer of the Company
through the purchase and sale, or any sale and purchase, of any equity
security of the Company within a period of six months might be recoverable
by the Company. If an employee thinks that he or she might be an affiliate
of the Company, or subject to the provisions of Section 16 of the
Securities Exchange Act of 1934, an attorney should be consulted to
determine what steps should be taken to accomplish any such resale under
securities laws.
EXHIBIT 5.1
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
ATTORNEYS AT LAW
a registered limited liability partnership
including professional corporations
1700 PACIFIC AVENUE
SUITE 4100
DALLAS, TEXAS 75201-4675
(214) 969-2800
FAX (214) 969-4343
WRITER'S DIRECT DIAL NUMBER (214) 969 - 2800
March 31, 1999
Advance Paradigm, Inc.
545 E. John Carpenter Freeway
Suite 1570
Irving, Texas 75062
Ladies and Gentlemen:
We have acted as counsel to Advance Paradigm, Inc., a Delaware
corporation (the "Company"), in connection with the proposed registration
of 30,000 shares of the Company's Common Stock, $.01 par value (the "Common
Stock"), as described in a registration statement on Form S-8 relating to
the Common Stock to be issued under the 401(k) Plan (the "Plan"), which
registration statement is to be filed with the Securities and Exchange
Commission.
We have, as counsel, examined such corporate records, certificates and
other documents and reviewed such questions of law as we have deemed
necessary, relevant or appropriate to enable us to render the opinions
listed below. In rendering such opinions, we have assumed the genuineness
of all signatures and the authenticity of all documents examined by us. As
to various questions of fact material to such opinions, we have relied upon
representations of the Company.
Based upon such examination and representations, we advise you that,
in our opinion:
A. The shares of Common Stock to be issued under the Plan which are
to be registered pursuant to the Registration Statement have been duly and
validly authorized by the Company.
B. The shares of Common Stock to be issued under the Plan which are
to be registered pursuant to the Registration Statement, when issued and
delivered in accordance with the Plan, will be validly issued, fully paid
and non-assessable.
We consent to the reference to this firm in the Registration Statement
and to the filing of this opinion as Exhibit 5.1 to the Registration
Statement.
Sincerely,
/s/ Akin, Gump, Strauss, Hauer & Feld, L.L.P.
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Form S-8 of our reports dated May 15,
1998 included in Advance Paradigm, Inc.'s Form 10-K for the year ended
March 31, 1998 and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Dallas, Texas
March 31, 1998
