As filed with the Securities and Exchange Commission on June 29, 1995.
The Registrant requests that the Registration Statement
become effective immediately upon filing pursuant to
Securities Act Rule 462.
Registration No. 33-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
____________________
SURGICAL CARE AFFILIATES, INC.
(Exact name of registrant as specified in its charter)
Delaware 62-1149229
(State or other juris- (I.R.S. Employer
diction of incorporation Identification No.)
or organization)
Suite 610
102 Woodmont Boulevard
Nashville, Tennessee 37205
(Address of Principal
Executive Office)
(Zip Code)
_____________________
Surgical Care Affiliates, Inc.
401(k) Retirement Plan
(Full title of the plan)
Copies to:
Joel C. Gordon, Chairman J. Reginald Hill, Esquire
Surgical Care Affiliates, Inc. Waller Lansden Dortch & Davis
Suite 610, 102 Woodmont Blvd. Nashville City Center
Nashville, Tennessee 37205 511 Union Street, Suite 2100
Nashville, Tennessee 37219-1760
(Name and address of agent for service)
________________
(615) 385-3541
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
Title of securities to be registered Common Stock, par value $.25 per share(1)
Amount to be registered 35,000 shares
Proposed maximum offering price per share (2) $18.625
Proposed maximum aggregate offering price (2) $651,875
Amount of registration fee $224.78
(1) In accordance with Rule 416(c) and General Instruction F of Form S-8,
this Registration Statement shall be deemed to register an
indeterminate amount of interests in the Surgical Care Affiliates,
Inc. 401(k) Retirement Plan that are separate securities and required
to be registered under the Securities Act.
(2) Estimated pursuant to Rule 457, solely for the purpose of calculating
the registration fee on the basis of the average of the high and low
prices of SCA Common Stock on the New York Stock Exchange on June 28,
1995.
I. INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS.
Item 1. Plan Information.*
Item 2. Registrant Information and Employee Plan
Annual Information.*
* Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from the registration statement in accordance
with Rule 428 under the Securities Act of 1933 and the Note to Part I
of Form S-8.
II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
The following documents filed with the Commission by the Company are
incorporated herein by reference as of the dates thereof;
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 (File No. 0-13364).
(b) All other reports filed by the Company pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") since December 31, 1994; and
(c) The description of SCA Common Stock contained in SCA's Registration
Statement on Form S-1 (File No. 2-88175) as amended, and as
incorporated by reference in SCA's Registration Statement on Form
8-A, filed on April 9, 1985, under Section 12 of the Exchange
Act.
All documents filed by the Company 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 securities then remaining unsold
are deregistered shall be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the date of filing such
documents.
Any statements contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes hereof to the
extent that a statement contained herein (or in any other subsequently filed
document which is also incorporated by reference herein) modifies or
supersedes such statement. Any statement so modified or superseded shall not
be deemed to constitute part hereof except as so modified or superseded.
Item 4. Description of Securities.
See Item 3(c) above
Item 5. Interests of Named Experts and Counsel.
Inapplicable
Item 6. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law provides, in part,
as follows:
(a) A corporation may 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 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, 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 corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not,
of itself, create a presumption that the person did not act in good faith
and in a manner which 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 reasonable cause to believe that his conduct was
unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor 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,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit 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 except that no indemni-
fication shall be made in respect of any claim, issue or matter as to which
such person shall have been judged to be liable to the corporation unless and
only to the extent that the Court of Chancery of the court in which such
action or suit was brought shall determine 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 of Chancery or such other Court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in subsections
(a) and (b) of this section. Such determination shall be made (1) by the board
of directors by a majority vote of a quorum consisting of directors who were
not parties to such action, suit or proceeding, or (2) if such quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses incurred by an officer or director in defending a civil or
criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or officer to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized in this section. Such expenses
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section, shall, unless otherwise provided when
authorized or ratified, 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 Corporations Certificates of Incorporation and Bylaws provide that the
Corporation shall indemnify its directors and officers to the fullest extent
permissible under Delaware law. The Corporation's Certificate of
Incorporation also provides that the Corporation's directors have no
personal liability to the Corporation or its shareholders for monetary damages
for any breach of fiduciary duty as a director, except: (i) for any
breach of the duty of loyalty to the Corporation or its shareholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) for liability under section 174 of the
Delaware General Corporation Law (involving certain unlawful dividends or stock
repurchases) or (iv) for any transaction from which the director derived an
improper personal benefit.
The Corporation has entered into Indemnification Agreements with its
directors and officers providing for the prompt indemnification "to
the fullest extent permitted by law" and for the prompt advancement of
expenses, including attorneys' fees and other costs, expenses and obligations
paid or incurred in connection with investigating, defending, being a witness
or participating in (including on appeal) any threatened, pending or completed
action, suit or proceeding related to the fact that such director or officer
is or was a director, officer, employee, agent or fiduciary of the Corporation
or is or was serving at the request of the Corporation as a director, officer,
employee, trustee, agent or fiduciary of another corporation, partnership,
joint venture, employee benefit plan trust or other enterprise, or by reason
of anything done or not done by a director or officer in any such capacity.
The indemnification Agreements also provide (i) that a director or officer is
automatically entitled to indemnification for expenses to the extent the
director or officer is successful in defending any indemnifiable claim whether
on the merits or otherwise, (ii) that the Corporation has the burden of
proving that a director or officer is not entitled to indemnification in any
particular case and negates certain presumptions that may otherwise be drawn
against a director or officer seeking indemnification in connection with the
termination of actions or proceedings, (iii) a mechanism through which a
director or officer may seek court relief in the event the Board of Directors
(or other person or body appointed by the Board of Directors) determines that
the director or officer would not be permitted to be indemnified under
applicable law (and therefore is not entitled to indemnification under the
Indemnification Agreement), (iv) that a director or officer is entitled to
indemnification against all expenses (including attorneys' fees) incurred in
seeking to collect an indemnity claim or advancement of expenses from the
Corporation or incurred in seeking to recover under a directors' and officers'
liability insurance policy, (v) that after there has been a change in
control in the Corporation, all Corporation determinations regarding a right
to indemnify, and the right to advancement of expenses, shall be made by
independent legal counsel, and (vi) that prior to a change in control of the
Corporation, a director or officer shall not be entitled to indemnity pursuant
to the Indemnification Agreement in connection with an action, suit or
proceeding initiated by the director or officer against the Corporation, or
its directors or officers unless the Corporation joins or consents to the
actions, suit or proceeding.
Under an insurance policy maintained by the Registrant, the Registrant is
insured for certain amounts which it may be obligated to pay directors and
officers by way of indemnity, and each director and officer of the Registrant
is insured against certain losses which he may incur by reason of his being a
director or officer or the Registrant and for which he is not indemnified by
the Registrant.
Item 7. Exemption from Registration Claimed.
Inapplicable
Item 8. Exhibits.
4. Surgical Care Affiliates, Inc. 401(k) Retirement Plan
23. Consent of Deloitte & Touche LLP
99. Agreement of Trustee
Item 9. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or 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;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change of such information in the
registration statement.
Provided, however, that paragraphs 1(i) and 1(ii) 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 Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
(2) That, for the purposes of determining any liability under the
Securities Act of 1934, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to section 15(d)
of the Securities Exchange Act of 1934) that is incorporated by reference in
the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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 Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than 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 Act and will be governed by the final adjudication
of such issue.
SIGNATURES
The Registrant
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all
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 Nashville, State of Tennessee, on June 28, 1995.
SURGICAL CARE AFFILIATES, INC.
BY: /s/ Joel C. Gordon
Joel C. Gordon, Chairman &
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signatures appears
below constitutes and appoints Joel C. Gordon and Tarpley B. Jones, and each
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this
registration statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully and to all intents
and purposes as he might or could do in person hereby ratifying and confirming
all that said attorneys-in-fact and agents, or their substitute or substi-
tutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registra-
tion statement has been signed by the following persons in the capacities and
on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ Joel C. Gordon Chairman of the Board, June 28, 1995
Joel C. Gordon Chief Executive Officer
(Principal Executive
Officer) & Director
/s/ Kenneth J. Melkus Vice Chairman & Director June 28, 1995
Kenneth J. Melkus
/s/ William J. Hamburg President & Director June 28, 1995
William J. Hamburg
/s/ Tarpley B. Jones Senior Vice President & June 28, 1995
Tarpley B. Jones Chief Financial Officer
(Principal Financial &
Accounting Officer)
/s/ Daniel E. Bruhl Director June 28, 1995
Daniel E. Bruhl
/s/ Lucius E. Burch III Director June 28, 1995
Lucius E. Burch III
/s/ Robert J. Fraiman Director June 28, 1995
Robert J. Fraiman
/s/ Andrew W. Miller Director June 28, 1995
Andrew W. Miller
/s/ Edwin J. Nighbert Director June 28, 1995
Edwin J. Nighbert
/s/Sister Josepha Schaeffer Director June 28, 1995
Sister Josepha Schaeffer
</TABLE>
THE PLAN
Pursuant to the requirements of the Securities Act of 1933, the trustees
(or other persons who administer the Surgical Care Affiliates, Inc. 401(k)
Retirement Plan) have duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Nashville, State of Tennessee, on June 28, 1995.
SURGICAL CARE AFFILIATES, INC. 401(k)
RETIREMENT PLAN
By: Third National Bank, Trustee
By: /s/ Robert G. Mayer
Title: Vice President & Trust Officer
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
<S> <C>
4. Surgical Care Affiliates, Inc. 401(k) Retirement Plan
23. Consent of Deloitte & Touche LLP
99. Agreement of Trustee
</TABLE>
EXHIBIT 4
This document constitutes part of a prospectus covering securities that have
been registered under the Securities Act of 1933.
SURGICAL CARE AFFILIATES, INC.
401(k) RETIREMENT PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE PAGE
<S> <C> <C>
I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
II ELIGIBILITY AND PARTICIPATION
2.01 Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.02 Entry and Participation. . . . . . . . . . . . . . . . . . . 20
2.03 Reemployment. . . . . . . . . . . . . . . . . . . . . . . . . 20
2.04 Acceptance. . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.05 Employees Who Are Officers, Shareholders or Highly
Compensated. . . . . . . . . . . . . . . . . . . . . . . . . 21
2.06 Absence in the Armed Services . . . . . . . . . . . . . . . . 21
2.07 Ineligible Class. . . . . . . . . . . . . . . . . . . . . . . 21
2.08 Transfers Among Employers which are Controlled Group Members. 21
III FINANCING OF PLAN AND INDIVIDUAL ACCOUNTS
3.01 Medium of Financing the Plan . . . . . . . . . . . . . . . . 22
3.02 Contributions . . . . . . . . . . . . . . . . . . . . . . . . 22
3.03 Elections . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.04 Suspension and Limitation of Contributions upon Withdrawal . 23
3.05 Nondiscrimination Test Compliance . . . . . . . . . . . . . . 23
3.06 Return or Forfeiture of Excess Contributions . . . . . . . . 26
3.07 Form and Manner of Employer Contributions . . . . . . . . . . 27
3.08 Prohibition of Reversion. . . . . . . . . . . . . . . . . . . 28
3.09 Participant's Election as to Investment Funds . . . . . . . . 28
3.10 Purchase of Employer Stock. . . . . . . . . . . . . . . . . . 29
3.11 Voting of Shares. . . . . . . . . . . . . . . . . . . . . . . 30
3.12 Options on Employer Stock. . . . . . . . . . . . . . . . . . 30
3.13 Voluntary Rollovers . . . . . . . . . . . . . . . . . . . . . 30
3.14 Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . 31
IV ALLOCATIONS TO INDIVIDUAL ACCOUNTS
4.01 Individual Accounts . . . . . . . . . . . . . . . . . . . . . 32
4.02 Account Adjustments . . . . . . . . . . . . . . . . . . . . . 32
4.03 Limitation on Allocations. . . .. . . . . . . . . . . . . . . 33
V BENEFITS
5.01 Payment of Benefits . . . . . . . . . . . . . . . . . . . . . 36
5.02 Early Retirement Benefit. . . . . . . . . . . . . . . . . . . 39
5.03 Normal Retirement Benefit.. . . . . . . . . . . . . . . . . . 39
5.04 Delayed Retirement Benefit. . . . . . . . . . . . . . . . . . 39
5.05 Disability Retirement Benefit.. . . . . . . . . . . . . . . . 39
5.06 Vested Benefit. . . . . . . . . . . . . . . . . . . . . . . . 39
5.07 Death Benefit . . . . . . . . . . . . . . . . . . . . . . . . 41
5.08 Withdrawal of Contributions . . . . . . . . . . . . . . . . . 43
5.09 Failure to Locate . . . . . . . . . . . . . . . . . . . . . . 44
VI MODIFICATIONS FOR TOP-HEAVY PLANS
6.01 Application of Provisions . . . . . . . . . . . . . . . . . . 45
6.02 Minimum Contribution . . . . . . . . . . . . . . . . . . . . 45
6.03 Accelerated Vesting . . . . . . . . . . . . . . . . . . . . . 46
VII FORM OF PAYMENT
7.01 Description of Optional Benefits . . . . . . . . . . . . . . 47
7.02 Election of Options . . . . . . . . . . . . . . . . . . . . . 48
7.03 Eligible Rollover Distributions. . .. . . . . . . . . . . . . 48
VIII PARTICIPATING EMPLOYERS
8.01 Participation by Other Employers. . . . . . . . . . . . . . . 49
8.02 Delegation of Authority. . . .. . . . . . . . . . . . . . . . 49
8.03 Employee Transfer . . . . . . . . . . . . . . . . . . . . . . 49
8.04 Discontinuance of Participation. . .. . . . . . . . . . . . . 49
8.05 Administrative Committee Authority. . . . . . . . . . . . . . 49
IX ADMINISTRATION OF PLAN
9.01 Plan Administrator. . . . . . . . . . . . . . . . . . . . . . 50
9.02 Claims Procedure. . . . . . . . . . . . . . . . . . . . . . . 51
9.03 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.04 Delegation of Authority. . . . . . . . . . . . . . . . . . . 52
9.05 Legal Incompetence. . . . . . . . . . . . . . . . . . . . . . 53
9.06 Correction of Errors. . . . . . . . . . . . . . . . . . . . . 53
9.07 Qualified Domestic Relations Order Procedure. . . . . . . . . 53
X AMENDMENT OR TERMINATION
10.01 Amendment of Plan . . . . . . . . . . . . . . . . . . . . . . 55
10.02 Termination of Plan . . . . . . . . . . . . . . . . . . . . . 56
10.03 Distribution upon Termination. . . . . . . . . . . . . . . . 56
10.04 Distribution Limitation . . . . . . . . . . . . . . . . . . . 56
10.05 Merger of Plan. . . . . . . . . . . . . . . . . . . . . . . . 57
10.06 Failure of Internal Revenue Service Qualification. . . . . . 57
XI MISCELLANEOUS
11.01 Liability of Employer . . . . . . . . . . . . . . . . . . . . 58
11.02 Spendthrift Clause. . . . . . . . . . . . . . . . . . . . . . 58
11.03 Successor to Business of Employer. . . . . . . . . . . . . . 58
11.04 Conflict of Provisions. . . . . . . . . . . . . . . . . . . . 58
11.05 Successors to Trustee. . . . .. . . . . . . . . . . . . . . . 59
11.06 Definition of Words. . . . . . . . . . . . . . . . . . . . . .59
11.07 Titles . . . . . . . . .. . . . . . . . . . . . . . . . . . . 59
11.08 Execution of the Plan . . . . . . . . . . . . . . . . . . . . 59
</TABLE>
A R T I C L E I
DEFINITIONS
As used herein, the following words and phrases shall have the
meaning indicated unless otherwise defined or required by the context:
Section 1.01 "Active Participant" shall mean, with respect to
any calendar quarter, a Participant who is employed on the last day of
the calendar quarter.
Section 1.02 "Administrative Committee" or "Committee" shall
mean the committee to which the administrative duties and
responsibilities under the Plan are delegated pursuant to Section 9.04
hereof.
Section 1.03 "Administrator" or "Plan Administrator" shall
mean, with respect to the Plan, the Sponsor.
Section 1.04 "Alternate Payee" shall mean 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.
Section 1.05 "Average Contribution Percentage for the
Prohibited Group" shall mean the average of the Contribution
Percentages of the Prohibited Group for a Plan Year as determined by
adding together the Contribution Percentages of each Participant who
is a member of the Prohibited Group for the Plan Year and dividing the
sum by the number of Participants who are members of the Prohibited
Group for that Plan Year.
Section 1.06 "Average Contribution Percentage for the
Protected Group" shall mean the average of the Contribution
Percentages for the Protected Group for a Plan Year as determined by
adding together the Contribution Percentages of each Participant who
is a member of the Protected Group for the Plan Year and dividing that
sum by the number of Participants who are members of the Protected
Group for that Plan Year.
Section 1.07 "Average Deferral Percentage for the Prohibited
Group" shall mean the average of the Deferral Percentages of the
Prohibited Group for a Plan Year as determined by adding together the
Deferral Percentages of each Participant who is a member of the
Prohibited Group for the Plan Year and dividing the sum by the number
of Participants who are members of the Prohibited Group for that Plan
Year.
Section 1.08 "Average Deferral Percentage for the Protected
Group" shall mean the average of the Deferral Percentages for the
Protected Group for a Plan Year as determined by adding together the
Deferral Percentages of each Participant who is a member of the
Protected Group for the Plan Year and dividing that sum by the number
of Participants who are members of the Protected Group for that Plan
Year.
Section 1.09 "Beneficiary" shall mean the designated
recipient or recipients who shall receive any benefits payable under the
Plan upon the death of a Participant. If a Beneficiary has not been
designated, the Trustee shall, upon the death of the Participant, pay
any benefit payable under the Plan to the Participant's estate.
Notwithstanding the preceding, if a Participant is married, his
Beneficiary shall be his spouse unless the Participant and his spouse
choose an alternate beneficiary in accordance with Section 5.07(b).
Section 1.10 "Board" shall mean the board of directors of the
Sponsor, or where there is reference to more than one Board, the
board of directors of each Employer.
Section 1.11 "Break in Employment" shall mean a
computation period during which an Employee has not been credited
with more than five hundred (500) Hours of Employment; for these
purposes, the computation period considered shall be determined in
the same manner as under Section 1.82.
Section 1.12 "Code" shall mean the Internal Revenue Code
of 1986 as in effect on the relevant date to be interpreted under this
Plan. Reference to any section of the Code shall include that section,
any valid regulation promulgated thereunder, and any comparable
section or sections of any future legislation that amends, supplements
or supersedes said section.
Section 1.13 "Compensation", shall mean the following for
each respective purpose under the Plan:
(a) Section 415 Compensation. For the purpose of applying the
limitations of section 415 of the Code, Compensation shall mean
the Participant's wages, salaries, and other amounts received
(without regard to whether an amount is paid in cash) for personal
services actually rendered in the course of employment with the
Employer to the extent that the amounts are includable in gross
income (including but not limited to commissions or compensation
for services on the basis of a percentage of profits, tips, bonuses,
fringe benefits, reimbursement and expense allowances) and such
other amounts as are included as Compensation under Treasury
Regulation section 1.415-2(d)(2). Compensation for this purpose
does not include the following: (1) Employer contributions to a
plan of deferred compensation to the extent that, before application
of the section 415 limits, such contributions are not includable in
the Employee's gross income for the taxable year in which
contributed (including amounts contributed pursuant to a salary
reduction agreement which are excludable from gross income
under sections 125, 402(e)(3) or 402(h) of the Code) or
distributions from a plan of deferred compensation; or (2) other
amounts which receive special tax benefits, such as premiums for
group term life insurance (but only to the extent such amounts are
not includable in the gross income of the Employee). At the
election of the Employer, Section 415 Compensation shall mean
any other definition of Compensation, consistently applied, which
is considered to be Compensation within the meaning of section
415(c)(3) of the Code.
(b) Section 414(s) Compensation. Section 414(s) Compensation shall
mean Section 415 Compensation as described hereinabove plus
any amount which is not includable in the gross income of the
Employee under sections 125, 402(e)(3), 402(h) or 403(b) of the
Code.
(c) Compensation Used to Determine Contributions. For purposes of
determining contributions under the Plan, Compensation shall
mean Section 414(s) Compensation which is attributable to the
period of his participation in the Plan for each Plan Year.
(d) Compensation Used in Discrimination Testing. For purposes of
applying the nondiscrimination tests under sections 401(k)(3) or
401(m)(3) of the Code, Compensation shall be Section 414(s)
Compensation as defined herein paid by the Employer to the
Employee for the Plan Year.
(e) Highly Compensated Employees. For purposes of determining
Highly Compensated Employees under section 414(q) of the Code
as defined in Section 1.47, Compensation shall mean Section
414(s) Compensation as defined herein paid by the Employer to
the Employee for the twelve (12)-month period preceding the
determination date.
(f) Compensation Limits. Compensation, for all purposes, shall
exclude amounts in excess of one hundred and fifty thousand
dollars ($150,000) (or such other amount as determined in
accordance with the cost-of-living adjustment procedures described
in section 415(d) of the Code). In determining Compensation of a
Highly Compensated Employee who is a Five Percent Owner or
among the ten (10) most highly compensated Employees for such
Plan Year, the Compensation of the Family Unit shall be
aggregated pursuant to sections 414(q)(6) and 401(a)(17) of the
Code. If as a result of the application of such rules the one
hundred and fifty thousand dollar ($150,000) limitation is exceeded,
then the limitation shall be prorated among the affected
Participants in proportion to each such Participant's Compensation
as determined under this Section prior to the application of this
limitation.
Section 1.14 "Contribution Percentage" shall mean, with
respect to any Participant, the ratio which is the result of dividing his
Compensation into the sum of the Matching Employer Contributions
(and Forfeitures allocable thereto) made on his behalf in a Plan Year,
pursuant to the terms of the Plan. In the event that any Highly
Compensated Employee who is a Participant hereunder is also eligible
for contributions subject to section 401(m) of the Code under another
plan maintained by the Employer or any Controlled Group Member, all
such contributions shall be included in determining his Contribution
Percentage, unless the plan to which such other contributions are
made is mandatorily disaggregated from this Plan under the rules of
section 401(m) of the Code and the regulations thereto.
Section 1.15 "Controlled Group Member" shall mean
(a) any corporation which is a member of a controlled group of
corporation (as defined by section 414(b) of the Code) of which the
Employer is a member,
(b) any other trade or business (whether or not incorporated) which is
under common control with respect to the Employer (as defined by
section 414(c) of the Code), or
(c) any organization which is a member of an affiliated service group
(as defined by section 414(m) of the Code);
but only for the period during which such other corporation, trade,
business or organization and the Employer are members of such
controlled group of corporation, are under such common control or
are serving as an affiliated service group. All employees of the
Controlled Group Members shall be treated as employed by a
single employer.
Section 1.16 "Credited Employment" shall mean the sum of
all an Employee's Years of Employment. Notwithstanding, an
Employee not entitled to a Vested Benefit as of a prior termination of
Employment shall be credited with the number of Years of Employment
prior to his Break in Employment for purposes of participation and
vesting only if the number of consecutive Breaks in Employment does
not exceed the greater of (a) five (5), or (b) the total number of Years
of Employment before the Break in Employment. Credited Employment
shall not be interrupted by, but shall not include, an authorized Leave
of Absence.
In the event a Participant becomes ineligible to participate because he
is no longer a member of the Eligible Class of Employees, or an
Employee who is not a member of the Eligible Class of Employees
becomes a member, Employment in the ineligible class shall be
included in determining his Credited Employment.
Section 1.17 "Deferral Percentage" shall mean, with respect
to any Participant, the ratio which is the result of dividing the sum of
contributions made on his behalf under Section 3.02(b), in a Plan Year,
by his Compensation. For these purposes, contributions taken into
account shall include only those which relate to Compensation that
either would have been received by the Employee in the Plan Year (but
for his election pursuant to Section 3.02(b)) or is attributable to
services performed by the Employee in the Plan Year and would have
been received by the Employee within two and one-half (2-1/2) months
after the close of the Plan Year (but for his election pursuant to Section
3.02(b)). In the event that any Highly Compensated Employee who is
a Participant hereunder is also eligible to make cash or deferred
contributions under another plan maintained by the Employer or any
Controlled Group Member, all such contributions shall be included in
determining his Deferral Percentage, unless the plan to which such
other contributions are made is mandatorily disaggregated from this
Plan under the rules of section 401(k) of the Code and the regulations
thereto.
Section 1.18 "Delayed Retirement Benefit" shall mean the
benefit to which a Participant is entitled at his Delayed Retirement
Date.
Section 1.19 "Delayed Retirement Date" shall mean, for each
Participant, any date after his Normal Retirement Date.
Section 1.20 "Determination Date" shall mean, for any Plan
Year subsequent to the first Plan Year, the last day of the preceding
Plan Year and, for the first Plan Year of the Plan, the last day of that
year.
Section 1.21 "Direct Rollover" shall mean a payment by the
Plan to the Eligible Retirement Plan specified by the Distributee.
Section 1.22 "Disability Retirement Benefit" shall mean the
benefit to which a Participant is entitled at his Disability Retirement
Date.
Section 1.23 "Disability Retirement Date" shall mean, for each
Participant, the first day of the month next following the Administrator's
determination that he is disabled.
Section 1.24 "Distributee" shall mean a Participant. In
addition, the Participant's surviving spouse and the Participant's
spouse or former spouse who is the Alternate Payee under a Qualified
Domestic Relations Order are Distributees with regard to the interest
of the spouse or former spouse.
Section 1.25 "Domestic Relations Order" shall mean a
judgment, decree, or order, including approval of a property settlement
agreement, made pursuant to state domestic relations law or
community property law that relates to the provision of child support or
alimony payments to, or marital property rights of, a spouse, former
spouse, child or other dependent of a Participant.
Section 1.26 "Early Retirement Benefit" shall mean the
benefit to which a Participant is entitled at his Early Retirement Date.
Section 1.27 "Early Retirement Date" shall mean, for each
Participant, the first day of any month coinciding with or following the
date on which he attains age fifty-five (55) and completes seven (7)
years of Credited Employment but before he reaches his Normal
Retirement Date.
Section 1.28 "Effective Date" shall mean the effective date of
this Plan which shall be January 1, 1994.
Section 1.29 "Eligible Class" shall mean all Employees of the
Employer exclusive of those individuals who would not be treated as
Employees but for the provisions of section 414(m) or (o) of the Code.
Section 1.30 "Eligible Rollover Distribution" shall mean any
distribution of all or any portion of the balance to the credit of the
Distributee, except that an Eligible Rollover Distribution does not
include: any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life
(or life expectancy) of the Distributee or the joint lives (or joint life
expectancies) of the Distributee and the Distributee's designated
beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under section
401(a)(9) of the Code; and the portion of any distribution that is not
includible in gross income.
Section 1.31 "Eligible Retirement Plan" shall mean an
individual retirement account described in section 408(a) of the Code,
an individual retirement annuity described in section 408(b) of the
Code, an annuity plan described in section 403(a) of the Code, or a
qualified trust described in section 401(a) of the Code, that accepts the
Distributee's Eligible Rollover Distribution. 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.
Section 1.32 "Employee" shall mean an individual employed
by the Employer or by any other employer required to be aggregated
with the Employer under sections 414(b), (c), (m) or (o) of the Code
and any Leased Employee, excluding individuals who are independent
contractors.
Section 1.33 "Employer" shall mean Surgical Care Affiliates,
Inc., a Delaware corporation with its principal place of business in
Nashville, Tennessee and each of its wholly owned subsidiaries which
has adopted the Plan pursuant to Article VIII hereof.
Section 1.34 "Employer Contributions" shall mean, if any,
Matching Employer Contributions.
Section 1.35 "Employer Contributions Account" shall mean
the Matching Employer Contributions Account.
Section 1.36 "Employer Stock" shall mean shares of voting
common stock issued by Surgical Care Affiliates, Inc., which shares
constitute "employer securities" as defined by section 409(l)(1) of the
Code.
Section 1.37 "Employer Stock Fund" shall mean an
investment fund the assets of which shall be invested in Employer
Stock. This fund may also hold cash or other securities pending
purchase of Employer Stock, subject to its availability.
Section 1.38 "Employment" shall mean the employment
relationship as an Employee of the Employer.
Section 1.39 "Employment Date" shall mean the date as of
which an Employee is credited with the first Hour of Employment upon
his initial Employment.
Section 1.40 "ERISA" shall mean Public Law 93-406, the
Employee Retirement Income Security Act, as in effect on the relevant
date to be interpreted under the Plan and regulations relative thereto.
Section 1.41 "Family Members" shall mean such Employee's
spouse (at any time during the Plan Year) and lineal ascendants and
descendants and their spouses.
Section 1.42 "Family Unit" shall mean such Employee's
spouse (at any time during the Plan Year) and lineal descendants who
have not attained age nineteen (19) as of the last day of the Plan Year.
Section 1.43 "Five-Percent Owner" shall mean any person
who owns (or is considered as owning within the meaning of section
318 of the Code) more than five percent (5%) of the outstanding stock
of the Employer or stock possessing more than five percent (5%) of the
total combined voting power of all stock of the Employer.
Section 1.44 "Forfeiture" shall mean the portion of a
Participant's Individual Account which is forfeited in accordance with
Section 5.06 before full vesting occurs or because of application of
Sections 3.05(b) or 4.03 hereof.
Section 1.45 "Fund" shall mean the assets of the Trust
established as part of this Plan in accordance with Section 3.01.
Section 1.46 "Fund Earnings" shall mean (a) the fair market
value of the Fund on the current Valuation Date minus (b) the fair
market value of the Fund on the Valuation Date that immediately
preceded the current Valuation Date and minus (c) all contributions
paid to the Fund from such preceding Valuation Date through the
current Valuation Date, plus (d) all benefits paid to Participants from
such preceding Valuation Date through the current Valuation Date and
plus (e) fees and expenses, if any, paid by the Fund. For purposes of
this paragraph only, the term "Fund" shall exclude the portion of the
Employer Stock Fund attributable to Employer Stock.
Section 1.47 "Highly Compensated Employee" shall mean
with respect to a Plan Year, any Employee who at any time during the
Plan Year or the preceding twelve (12) consecutive month period met
one of the criteria below:
(a) a Five-Percent Owner,
(b) an Employee receiving more than seventy-five thousand dollars
($75,000) in Compensation from the Employer,
(c) an Employee receiving more than fifty thousand dollars ($50,000)
in Compensation from the Employer and who, when all Employees
are ranked on the basis of Compensation, is in the group
consisting of the top twenty percent (20%) of Employees, or
(d) an officer of the Employer who received Compensation of more
than fifty percent (50%) of the dollar limit on annual benefits from
a defined benefit plan under Code section 415(b)(1)(A). If for any
year no officer of the Employer received Compensation in excess
of this level, the highest paid officer of the Employer shall be
treated as a Highly Compensated Employee, or
(e) a former Employee who separated from Employment prior to the
year containing the Determination Date, and who was a Highly
Compensated Employee during the year he
separated from Employment, or who was a Highly Compensated
Employee during any year, containing any Determination Date,
ending on or after the Employee's attainment of age fifty-five (55).
Notwithstanding, any Employee who is described under (b), (c) or (d)
above for the current Plan Year and who was not described as such for
the preceding twelve (12) consecutive month period shall be
considered a Highly Compensated Employee under (b), (c) or (d)
above only if, in the current Plan Year, such Employee is a member of
the group consisting of the top one hundred (100) paid Employees.
These criteria shall be applied in accordance with section 414(q) of the
Code and regulations thereunder as may be prescribed by the
Secretary of the Treasury. The dollar amounts prescribed under (b)
and (c) hereinabove will be adjusted according to procedures issued
by the Secretary of the Treasury.
Section 1.48 "Hour of Employment" shall mean the following:
(a) Each hour for which an Employee is paid, or entitled to payment
of Compensation as defined in this Article I, for the performance of
duties for the Employer or any other Controlled Group Member.
These hours will be credited to the Employee for the computation
period in which the duties are performed.
(b) Each hour for which an Employee is paid, or entitled to payment
of Compensation as defined in this Article I, by the Employer or
any other Controlled Group Member on account of a period of time
during which no duties are performed (irrespective of whether the
Employment relationship has terminated) due to vacation, holiday,
illness, incapacity (including disability), jury duty, military duty or
Leave of Absence; provided, however, that, with respect to this
subsection (b):
(1) no more than five hundred and one (501) Hours of
Employment shall be credited to an Employee on
account of any single continuous period during which
the Employee performs no duties (whether or not
such period occurs in a single computation period),
(2) hours for which an Employee is directly or indirectly
paid, or entitled to payment, on account of a period
during which no duties are performed shall not be
credited if such payment is made or due under a plan
maintained solely for the purpose of complying with
applicable workers' compensation, unemployment
compensation or disability insurance laws, and
(3) hours shall not be credited for a payment which
solely reimburses an Employee for medical or
medically-related expenses incurred by the
Employee.
For purposes of this subsection (b), a payment shall be deemed to
be made by or due from the Employer regardless of whether such
payment is made by or due from the Employer directly, or indirectly
through, among others, a trust fund, or insurer, to which the
Employer contributes or pays premiums and regardless of whether
contributions made or due to the trust fund, insurer or other entity
are for the benefit of particular Employees or are on behalf of a
group of Employees in the aggregate.
(c) Each hour for which an Employee is absent from work for any
period by reason of the pregnancy of the Employee, the birth of a
child of the Participant, placement of a child with the Employee in
connection with the adoption of such child by such Employee or for
purposes of caring for such child, but solely for determining
whether an Employee has incurred a Break in Employment. The
hours to be credited to such Employee in accordance with this
subsection (c) shall be the Hours of Employment which otherwise
would normally have been credited to such Employee but for such
absence, or in any case in which the Plan Administrator is unable
to determine such Hours of Employment, eight (8) Hours of
Employment per day of such absence; provided, however, that with
respect to this subsection (c):
(1) no more than five hundred and one (501) Hours of
Employment shall be credited to an Employee by
reason of any one (1) such pregnancy or placement,
(2) such hours shall be treated as Hours of Employment
in the Plan Year in which the absence from work
begins, if the Employee would be prevented from
incurring a Break in Employment in such Plan Year
solely because periods of absence are treated as
Hours of Employment, or in any other case, in the
immediately following year, and
(3) no Hours of Employment will be credited unless the
Employee furnishes to the Plan Administrator such
timely information as the Plan Administrator may
reasonably require to establish that the absence from
work is for reasons referred to in this subsection (c)
including a statement of the number of days for which
there was such an absence.
(d) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The
same hours shall not be credited both under subsection (a), (b) or
(c) and under this subsection. Hours credited for back pay under
this subsection with respect to periods described in subsection (b)
shall be subject to the limitations set forth in subsection (b). These
hours will be credited to the Employee for the computation period
or periods to which the award or agreement pertains rather than
the computation period in which the award, agreement or payment
is made.
The provisions of paragraphs (b) and (c) of 29 CFR 2530.200b-2 shall
be observed in crediting Hours of Employment under this Section,
which paragraphs are incorporated herein by reference.
Section 1.49 "Inactive Participant" shall mean a Participant
(including a former Participant who has a balance remaining in his
Individual Account) who is not classified as an Active Participant with
respect to a calendar quarter.
Section 1.50 "Individual Account" shall mean the amount of
the Fund standing to the credit of each Participant attributable to all
contributions made under the Plan together with adjustments allocable
thereto in accordance with the terms of the Plan.
Section 1.51 "Key Employee" shall mean any Employee,
former Employee or Beneficiary thereof, who, at any time during the
Plan Year containing the Determination Date or during any of the four
(4) preceding Plan Years, was:
(a) an officer of the Employer who received Compensation for the Plan
Year of more than fifty percent (50%) of the amount in effect under
section 415(b)(1)(A) for the calendar year in which such Plan Year
ends,
(b) one (1) of the ten (10) Employees having annual Compensation
greater than the dollar limitation in effect under section
415(c)(1)(A) of the Code and owning (or considered as owning
within the meaning of section 318 of the Code) both more than
one-half percent (.5%) interest and one of the ten (10) largest
interests in the Employer,
(c) a Five-Percent Owner, or
(d) a one percent (1%) owner of the Employer having annual
Compensation from the Employer of more than one hundred fifty
thousand dollars ($150,000).
For the purposes of paragraph (a), no more than fifty (50) Employees
(or, if less, the greater of three (3), or ten percent (10%), of the
Employees) shall be treated as officers. For the purposes of
paragraph (b), if two (2) Employees have the same interest in the
Employer, the Employee having greater annual Compensation shall be
treated as having the larger interest. For purposes of determining Key
Employees hereunder "Compensation" means Section 414(s)
Compensation. For the purposes of applying the terms of this
definition, the provisions of Code section 416(i) and regulations
thereunder are incorporated herein by reference.
Section 1.52 "Leased Employee" shall mean an individual
who is not employed by the Employer but shall be considered an
Employee of the Employer if:
(a) the services of the Leased Employee are provided pursuant to an
implied or express agreement between the Employer and a leasing
organization;
(b) the Leased Employee has performed such services for the
Employer on a substantially full-time basis for a period of at least
one (1) year; and
(c) such services are of a type actually or historically performed by
Employees of the Employer or by employees of an employer in the
business field of the Employer.
Provided however, that a Leased Employee shall not be considered an
Employee of the Employer if:
(d) such Leased Employee is covered by a plan maintained by the
leasing organization which is a qualified non-integrated money
purchase pension plan providing: (1) an employer contribution of
at least ten percent (10%) of the Leased Employee's
compensation, (2) full and immediate vesting, and (3) immediate
eligibility to participate for any Leased Employee who, in each plan
year during the four (4)-year period ending with the current plan
year, has compensation in excess of one thousand dollars
($1,000); and
(e) the number of Leased Employees do not constitute more than
twenty percent (20%) of the non-Highly Compensated Employees
of the Employer.
Section 1.53 "Leave of Absence" shall mean that period
during which the Participant is absent without compensation and for
which the Employer, in its sole discretion, has determined him to be on
a leave of absence rather than having terminated his employment.
Such discretion of the Employer shall be exercised in a
nondiscriminatory manner.
Section 1.54 "Limitation Year" shall mean the Plan Year.
Section 1.55 "Matching Employer Contributions" shall mean
the contributions, if any, made pursuant to Section 3.02(a) of the Plan.
Section 1.56 "Matching Employer Contributions Account" shall
mean the amount of the Fund standing to the credit of a Participant
which is attributable to the Matching Employer Contributions together
with adjustments allocable thereto under the terms of the Plan.
Section 1.57 "Non-Key Employee" shall mean an Employee
who is not a Key Employee.
Section 1.58 "Normal Retirement Age" shall mean, for each
Participant, age sixty-five (65).
Section 1.59 "Normal Retirement Benefit" shall mean the
benefit to which a Participant is entitled at his Normal Retirement Date.
Section 1.60 "Normal Retirement Date" shall mean, for each
Participant, the first day of the month coinciding with or following his
Normal Retirement Age.
Section 1.61 "Participant" shall mean any Employee who
becomes a Participant hereunder as provided in Article II.
Section 1.62 "Participant Tax-Deferred Contributions" shall
mean the contributions, if any, made pursuant to Section 3.02(b) of the
Plan.
Section 1.63 "Participant Tax-Deferred Contributions Account"
shall mean the amount of the Fund standing to the credit of a
Participant which is attributable to his Participant Tax-Deferred
Contributions, together with Fund Earnings allocable thereto under the
terms of the Plan.
Section 1.64 "Permissive Aggregation Group" shall mean the
Required Aggregation Group of plans plus any other plan or plans of
the Employer which, when considered as a group with the Required
Aggregation Group, would continue to satisfy the requirements of
sections 401(a)(4) and 410 of the Code.
Section 1.65 "Plan" shall mean the Surgical Care Affiliates,
Inc. 401(k) Retirement Plan, the Trust Agreement attached hereto as
Exhibit A and the Trust established under that Agreement.
Section 1.66 "Plan Year" shall mean the twelve (12) month
period ending on each December 31.
Section 1.67 "Prohibited Group" shall mean those
Participants, including Participants who are not making contributions to
the Plan, who are considered Highly Compensated Employees.
Section 1.68 "Protected Group" shall mean those
Participants,including Participants who are not making contributions to
the Plan, who are not members of the Prohibited Group.
Section 1.69 "Qualified Domestic Relations Order" shall mean
a Domestic Relations Order which 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 to a Participant
under the Plan and does not alter the amount or form of Plan benefits.
Any order that is qualified under this Section shall remain qualified with
respect to a successor plan of the Employer or a plan of a successor
employer.
(a) To be a Qualified Domestic Relations Order, a Domestic Relations
Order shall specify the following:
(1) the name and the 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 period to which such
order applies, and
(4) a statement that such order applies to this Plan.
(b) Such order shall not require:
(1) the Plan to provide any type or form of benefits, or
any option, not otherwise provided under the Plan, or
(2) the payment of benefits to an Alternate Payee which
are required to be paid to another Alternate Payee
under another order previously determined to be a
Qualified Domestic Relations Order.
(c) A Domestic Relations Order shall not be treated as failing to meet
the requirements of subparagraph (b)(1) above solely because
such order requires that payment of benefits be made to an
Alternate Payee:
(1) in the case of any payment before a Participant has
separated from Employment, on or after the date on
which the Participant attains (or would have attained)
the earliest retirement date,
(2) as if the Participant had retired on the date on which
such payment is to begin under such order (but
taking into account only the value of the Participant's
Individual Account on 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).
For this purpose, "earliest retirement date" shall mean the earlier
of: (i) the date on which the Participant is entitled to a distribution
under the Plan, or (ii) the later of the date the Participant attains
age fifty (50), or the earliest date on which the Participant could
begin receiving benefits under the Plan if he separated from
service.
(d) To the extent provided in a Qualified Domestic Relations Order, the
former spouse of a Participant shall be treated as a surviving
spouse for purposes of sections 401(a)(11) and 417 of the Code.
Section 1.70 "Reemployment Date" shall mean the date as
of which an Employee is credited with the first Hour of Employment
upon a resumption of Employment after an interruption in Employment.
Section 1.71 "Required Aggregation Group" shall mean (a)
each qualified plan of the Employer in which at least one (1) Key
Employee participates or participated at any time during the
determination period (regardless of whether the plan has terminated),
and (b) any other qualified plan of the Employer which enables a plan
described in (a) to meet the requirements of sections 401(a)(4) or 410
of the Code.
Section 1.72 "Retirement" shall mean any of the forms of
retirement set forth in Article V hereof (but shall not mean any payment
of a benefit hereunder pursuant to Section 5.06).
Section 1.73 "Sponsor" shall mean Surgical Care Affiliates,
Inc.
Section 1.74 "Top Heavy Plan" shall mean this Plan for any
Plan Year if, as of the Determination Date, any of the following
conditions exist:
(a) the Top Heavy Ratio for this Plan exceeds sixty percent (60%) and
this Plan is not part of any Required Aggregation Group or
Permissive Aggregation Group of plans,
(b) this Plan is a part of a Required Aggregation Group of plans but
not part of a Permissive Aggregation Group and the Top Heavy
Ratio for the group of plans exceeds sixty percent (60%), or
(c) this Plan is a part of the Required Aggregation Group and part of
a Permissive Aggregation Group of plans and the Top Heavy Ratio
for the Permissive Aggregation Group exceeds sixty percent (60%).
Section 1.75 "Top Heavy Ratio" shall mean, for this Plan and
any Required or Permissive Aggregation Group, as appropriate, a
fraction, the numerator of which is the sum of account balances under
this and any other defined contribution plan maintained by the
Employer (including any "simplified employee pension plan") plus, if the
Employer maintains or has maintained one (1) or more defined benefit
plans which during the five (5)-year period ending on the Determination
Date(s) has or has had any accrued benefits, the sum of the present
value of accrued benefits thereunder for all Key Employees as of the
Determination Date(s), and the denominator of which is the sum of the
account balances plus the present value of accrued benefits for all
participants as of the Determination Date(s), all determined in
accordance with section 416 of the Code and the regulations
thereunder. The accrued benefits and account balances in both the
numerator and denominator of the Top Heavy Ratio are increased to
include any distribution made in the five (5)-year period ending on the
Determination Date. The preceding sentence shall also apply to
distributions under a terminated plan which, if it had not been
terminated, would have been required to be included in a Required
Aggregation Group.
For purposes of the above, the value of account balances and the
present value of accrued benefits will be determined as of the most
recent valuation date that falls within or ends with the twelve
(12)-month period ending on the Determination Date, except as
provided in section 416 of the Code and the regulations thereunder.
The account balances and accrued benefits of a Participant (1) who is
not a Key Employee but who was a Key Employee in a prior year, or
(2) who has not been credited with at least one (1) Hour of
Employment with any employer maintaining the plan at any time during
the five (5)-year period ending on the Determination Date will be
disregarded. The account balances and accrued benefits of a former
Employee who has performed no services for the Employer during the
five (5)-year period ending on the Determination Date shall be
disregarded in determining whether the Plan is Top Heavy. The
calculation of the Top Heavy Ratio, and the extent to which
distributions, rollovers, and transfers are taken into account will be
made in accordance with section 416 of the Code and the regulations
thereunder. Employee contributions (other than deductible employee
contributions) and salary deferrals will be taken into account for
purposes of computing the Top Heavy Ratio. When aggregating plans,
the value of account balances and accrued benefits will be calculated
with reference to the Determination Dates that fall within the same
calendar year.
Section 1.76 "Transfer Account" shall mean the amount of the
Trust Fund standing to the credit of a Participant which is attributable
to funds transferred to this Plan on his behalf pursuant to Section 3.14
together with adjustments thereto under the terms of the Plan.
Section 1.77 "Trust Agreement" shall mean Exhibit A as
attached hereto and incorporated by reference as part of this Plan.
Section 1.78 "Trust Fund" shall mean the Fund.
Section 1.79 "Trustee" shall mean the party or parties
designated as such under the Trust Agreement.
Section 1.80 "Valuation Date" shall mean each December 31,
which is the last day of each Plan Year, March 31, June 30, September
30 and such other date or dates during a Plan Year selected by the
Administrator.
Section 1.81 "Vested Benefit" shall mean the portion of his
Individual Account value to which a Participant is entitled as
determined under Section 5.06.
Section 1.82 "Voluntary Rollover Account" shall mean the
amount of the Fund standing to the credit of a Participant which is
attributable to his voluntary rollover of funds pursuant to Section 3.13,
together with Fund Earnings allocable thereto under the terms of the
Plan.
Section 1.83 "Year of Employment" shall mean a Plan Year
during which an Employee has been credited with at least one
thousand (1,000) Hours of Employment.
A R T I C L E II
ELIGIBILITY AND PARTICIPATION
Section 2.01 Eligibility. Each Employee of the Employer who is a
member of the Eligible Class shall be eligible to participate in the Plan
upon the later of:
(a) the Effective Date,
(b) his Employment Date, or
(c) the date on which the Employer for which he is employed adopts
the Plan.
Section 2.02 Entry and Participation.
(a) Each Employee who is eligible shall become a Participant and
enter the Plan on the Effective Date.
(b) Each Employee who is eligible to become a Participant subsequent
to the Effective Date shall become a Participant and enter the Plan
on the January 1, April 1, July 1, or October 1 coincident with or
next following the date he shall have satisfied the conditions of
eligibility.
Section 2.03 Reemployment. Notwithstanding the foregoing
Section, an Employee who is reemployed and who was a Participant,
or who had satisfied the conditions of eligibility as of a prior termination
of Employment, shall become a Participant and enter the Plan on his
Reemployment Date.
Section 2.04 Acceptance. The Plan shall not be deemed to
constitute a contract between the Employer and an Employee; neither
shall it be a consideration nor an inducement for the Employment of
any Employee. No provisions of the Plan shall be deemed to abridge
or limit any managerial right of the Employer, give any Employee the
right to be retained in Employment, or to interfere with the right of the
Employer to discharge any Employee at any time regardless of the
effect which such discharge may have on him as a Participant. By his
act of participation in the Plan, each Participant on behalf of himself,
his heirs, his assigns and Beneficiary shall be deemed conclusively to
have agreed to and accepted the terms and conditions of the Plan.
Section 2.05 Employees Who Are Officers, Shareholders or
Highly Compensated. Employees who are either officers or
shareholders of the Employer or are highly compensated may
participate hereunder on and after the Effective Date only if they meet
the same eligibility requirements which must be met by other
Employees as stated herein in Section 2.01.
Section 2.06 Absence in the Armed Services. In the case of
an Employee or a Participant who is granted a Leave of Absence by
reason of service in the armed forces of the United States of America
and who returns to Employment on or before the expiration of ninety
(90) days after the date on which he is entitled to be released from
active duty in the armed forces (or at such other date as the law may
specify as to reemployment), such Employment, to the extent required
by law, shall be treated as continuous despite such absence.
Section 2.07 Ineligible Class. In the event an Employee who
is not a member of the Eligible Class of Employees becomes a
member of the Eligible Class, such Employee shall then participate
immediately if he had satisfied the service requirements and would
have previously become a participant had he been in the Eligible
Class.
In the event a Participant becomes ineligible to participate because he
is no longer a member of the Eligible Class of Employees, but he has
not incurred a Break in Employment, he shall participate immediately
upon his return to an Eligible Class of Employees. If such a Participant
incurs a Break in Employment, his eligibility to participate shall be
determined pursuant to Section 2.01 hereof.
Section 2.08 Transfers Among Employers which are
Controlled Group Members. A transfer of an Employee directly from
the Employer to another Controlled Group Member shall not constitute
a termination of Employment or an interruption in Credited
Employment; provided, however, that there shall be no duplication of
benefits. Upon the transfer of an employee from another Controlled
Group Member to an Employer, the years of employment with which
he was credited with the previous employer shall count as Years of
Employment under the Plan.
A R T I C L E III
FINANCING OF PLAN AND INDIVIDUAL ACCOUNTS
Section 3.01 Medium of Financing the Plan. Investment of
all contributions made under the Plan and all transactions of the Trust
Fund shall be made in accordance with the terms of the Trust
Agreement, as it may be amended from time to time, which shall
constitute a part of the Plan and which is attached hereto as Exhibit A.
Section 3.02 Contributions.
(a) Matching Employer Contributions. For each calendar quarter the
Employer may pay to the Trustee as a contribution to the Plan on
behalf of each Active Participant an amount equal to a percentage,
not to exceed one hundred percent (100%) of the Participant
Tax-Deferred Contributions. The amount of Participant Tax-
Deferred Contributions subject to these Matching Employer
Contributions is limited to six percent (6%) of Compensation for the
calendar quarter. The percentage of Matching Employer
Contribution may be revised from time to time by appropriate
action of the Board. For these purposes, Participant Tax-Deferred
Contributions shall mean Participant Tax-Deferred Contributions
remaining in the Trust after any corrective distribution pursuant to
Section 3.06.
(b) Participant Tax-Deferred Contributions. Each Participant may, but
is not required to, sign a written participation form (hereinafter
referred to as the "Participation Agreement"). The terms of the
Participation Agreement shall provide that the Participant agrees
to accept a reduction in Compensation from the Employer, subject
to the limitations hereinafter described, only not to exceed fifteen
percent (15%) of his Compensation for the Plan Year and not to
exceed the dollar limit in effect under section 402(g) of the Code
for any calendar year, but in no event less than fifteen dollars
($15) per pay period. In consideration of such Agreement, the
Employer will make a contribution to the Plan on behalf of the
Participant in an amount equal to the total amount by which the
Participant's Compensation from the Employer was reduced
pursuant to the Participation Agreement.
Section 3.03 Elections. Elections to make, resume or change
the amount of Participant Tax-Deferred Contributions hereunder shall
be made no later than ten (10) days prior to January 1, April 1, July 1,
or October 1 of each year and at such other time or times as shall be
uniformly and nondiscriminatorily established by the Plan Administrator;
such elections shall be effective as of the date with respect to which
the election is made. Elections to suspend or discontinue Participant
Tax-Deferred Contributions may be made at any time so long as notice
is given to the Employer at least ten (10) days prior to the date as of
which the election to suspend or discontinue is effective.
Section 3.04 Suspension and Limitation of Contributions upon
Withdrawal. Notwithstanding Sections 3.02(b) and 3.03 above, if a
Participant is granted a hardship withdrawal of funds from his
Participant Tax-Deferred Contributions Account pursuant to Section
5.08(b), then his Participant Tax-Deferred Contributions and his
contributions or salary deferrals to any other qualified plan maintained
by the Employer shall be suspended for a period of twelve (12) full
months following the date of such distribution. After the twelve (12)
month suspension period, his Participant Tax-Deferred Contributions
may resume on the next following January 1, April 1, July 1, or October
1 if and as so elected by the Participant pursuant to Section 3.03.
Further, in the calendar year following the year in which a Participant
receives a hardship withdrawal, the dollar limit described in Section
3.02(b) shall be reduced by the amount of the Participant's
Tax-Deferred Contributions for the calendar year of the withdrawal.
Section 3.05 Nondiscrimination Test Compliance. Each Plan
Year, the Plan Administrator shall monitor the annual additions to the
Individual Account of each Participant to ensure that each of the
following tests is satisfied:
(a) Nondiscrimination Test for Participant Tax-Deferred Contributions.
For each Plan Year,
(1) the Average Deferral Percentage of the Prohibited
Group shall not exceed the Average Deferral
Percentage of the Protected Group multiplied by one
and one-quarter (1.25), or
(2) the Average Deferral Percentage of the Prohibited
Group shall not exceed the Average Deferral
Percentage of the Protected Group multiplied by two
(2.0) and the excess of the Average Deferral
Percentage of the Prohibited Group over the
Protected Group shall not be more than two (2)
percentage points.
In the event that neither of these tests is satisfied, adjustments
shall be made pursuant to Section 3.06.
(b) Nondiscrimination Test for Matching Employer Contributions. For
each Plan Year,
(1) the Average Contribution Percentage of the
Prohibited Group shall not exceed the Average
Contribution Percentage of the Protected Group
multiplied by one and one-quarter (1.25), or
(2) the Average Contribution Percentage of the
Prohibited Group shall not exceed the lesser of the
Average Contribution Percentage of the Protected
Group multiplied by two (2.0) or the Average
Contribution Percentage of the Protected Group
increased by two (2) percentage points.
If necessary to ensure compliance with this requirement, the Plan
Administrator may direct that Participant Tax-Deferred
Contributions in the Plan Year also be taken into account in
calculating the Average Contribution Percentage, but only after the
requirements of Section 3.05(a) hereunder are met without regard
to such contributions.
In the event that neither of these tests is satisfied, adjustments
shall be made pursuant to Section 3.06.
(c) Nondiscrimination Test for Aggregate Contributions. If the Average
Deferral Percentage of the Prohibited Group exceeds the amount
described in Section 3.05(a)(1) and the Average Contribution
Percentage of the Prohibited Group exceeds the amount described
in Section 3.05(b)(1), the sum of the Average Deferral Percentage
of the Prohibited Group and the Average Contribution Percentage
of the Prohibited Group shall not exceed the aggregate limit
described hereinbelow. The aggregate limit is the greater of:
(1) the sum of (i) and (ii) where
(i) is one and one-quarter (1.25) multiplied by the
greater of
(A) the Average Deferral Percentage of the
Protected Group, or
(B) the Average Contribution Percentage of
the Protected Group, and
(ii) is the lesser of (A) or (B) above multiplied by
two (2), but in no event more than the lesser of
(A) or (B) above plus two (2) percentage points;
or
(2) the sum of (i) and (ii) where
(i) is one and one-quarter (1.25) multiplied by the
lesser of (1)(i) or (1)(ii) above, and
(ii) is the greater of (1)(i)(A) or (1)(i)(B) above
multiplied by two (2), but in no event more than
the greater of (1)(i)(A) or (1)(i)(B) above plus
two percentage points.
The Average Deferral Percentage and Average Contribution
Percentage of the Prohibited Group shall be determined after any
corrective distribution is made to ensure compliance with Sections
3.05(a) or 3.05(b) above. In the event the aggregate limit is
exceeded, adjustments shall be made pursuant to Section 3.06.
(d) Inclusion of Family Members. Aggregation shall be required with
respect to a Participant who, during the current Plan Year or the
preceding twelve (12) consecutive month period, is a Family
Member of a Five-Percent Owner who is a current or former
Employee or a Highly Compensated Employee who is among the
ten (10) most highly compensated Employees ranked on the basis
of Compensation paid by the Employer during such year. In this
event, the relevant contributions attributable to and Compensation
of all such Family Members and such Five-Percent Owner or such
Highly Compensated Employee shall be aggregated, and such
Participants shall be disregarded in determining the Average
Contribution Percentage and Average Deferral Percentage of the
Protected Group.
(e) Aggregation of Plans. In the event that this Plan satisfies the
requirements of sections 401(k), 401(m), 401(a)(4), or 410(b) of
the Code only if aggregated with one or more other plans, or if one
or more other plans satisfy the requirements of such sections of
the Code only if aggregated with this Plan, then this Section shall
be applied by determining the Average Deferral Percentage and
Average Contribution Percentage of Employees as if all such plans
were a single plan. Plans may be aggregated in order to satisfy
sections 401(k) or 401(m) of the Code only if they have the same
Plan Year.
For each Plan Year, the Plan Administrator shall maintain records
demonstrating that the requirements of this Section have been met.
Section 3.06 Return or Forfeiture of Excess Contributions. In
the event that contributions are credited to a Participant's Individual
Account in excess of the limitations described in Section 3.02(b) or
3.05 hereinabove, such excess contributions shall be disbursed to the
Participant or recharacterized as follows:
(a) Participant Tax-Deferred Contributions in excess of the dollar limit
described in Section 3.02(b) (including appropriate adjustments)
must be distributed to the Participant, along with Fund Earnings
allocated thereto, no later than April 15 following the calendar year
in which such contributions were made in order for the Plan to
remain qualified under section 401(a) of the Code. The excess
amount distributed hereunder shall be reduced by any excess
Participant Tax-Deferred Contributions previously distributed
pursuant to Section 3.06(b) hereinbelow for the Plan Year
beginning in the calendar year for which the distribution is being
made.
(b) Participant Tax-Deferred Contributions and Matching Employer
Contributions (including, for purposes of this Section, Forfeitures
allocable thereto) that exceed the maximum amount permitted by
the nondiscrimination tests described in Section 3.05 shall be
distributed to the Participant, along with Fund Earnings allocable
thereto no later than the last day of the following Plan Year.
Provided however, the excess Participant Tax-Deferred
Contributions distributed hereunder shall be reduced by excess
deferrals previously distributed pursuant to Section 3.06(a) for the
calendar year ending in the same Plan Year. If the excess
Matching Employer Contribution is not fully vested, such
non-vested portion shall constitute a Forfeiture and shall be
allocated as such according to Section 4.02(d), except that such
forfeited amounts shall not be allocated to the Individual Account
of a Participant whose contributions have been reduced for the
Plan Year under this subsection (b). The maximum amount of
Participant Tax-Deferred and Matching Employer Contributions
permitted under the limitations of Section 3.05 shall be determined
by reducing the amount of such contributions made on behalf of
Highly Compensated Employees in the order of their Deferral
Percentages and Contribution Percentages, beginning with the
highest. This determination of maximum amount shall be made in
accordance with the provisions of sections 1.401(k)-1(f)(2) and
1.401(m)-1(e)(2) of the regulations. If excess amounts described
hereunder are distributed more than two and one-half (2.5) months
after the last day of the Plan Year, an excise tax equal to ten
percent (10%) of such amounts shall be imposed on the Employer
in accordance with section 4979 of the Code.
(c) The Fund Earnings allocable to such excess contributions for the
Plan Year are determined by multiplying the Fund Earnings
allocable to the Participant Tax-Deferred Contributions Account (or
the Matching Employer Contributions Account as applicable) by a
fraction. The numerator of the fraction is the excess contribution
to the respective account for the Plan Year and the denominator
is the total account balance of the respective account as of the end
of the Plan Year, reduced by Fund Earnings allocable to such
account for the Plan Year.
The Fund Earnings allocable to excess contributions for the period
between the end of the Plan Year and the date of the corrective
distribution are equal to ten percent (10%) of the Fund Earnings
allocable to the excess contributions for the Plan Year as
determined under the preceding paragraph, multiplied by the
number of calendar months that have elapsed since the end of the
Plan Year. In this determination, a distribution on or before the
fifteenth day of the month will be treated as having been
distributed on the last day of the preceding month; a distribution
made after the fifteenth day of the month will be treated as having
been distributed on the last day of the month.
(d) The determination and correction of excess contributions of a
Highly Compensated Employee whose Deferral Percentage and
Contribution Percentage are determined under the family
aggregation rules described under Section 3.05(d) hereinabove
shall be made pursuant to the procedures described in section
1.401(k)-1(f)(5)(ii) and 1.401(m)-(1)(e)(2)(iii) of the regulations.
Section 3.07 Form and Manner of Employer Contributions.
Employer Contributions may be made on any date or dates the
Employer elects, but the total amount of its contribution for any Plan
Year shall be paid within the period described in section 404(a)(6) of
the Code. Although it is the intent of the Employer that its contributions
hereunder shall be regular and substantial, the Employer shall be
under no duty to contribute the same amount or to contribute the same
percentage of its profits for every Plan Year.
Section 3.08 Prohibition of Reversion. Subject to Section
4.03, the Employer Contributions to the Plan shall be made irrevocably
and it shall be impossible for the assets of the Plan to inure to the
benefit of the Employer or to be used in any manner other than for the
exclusive purpose of either providing benefits to Participants and
Beneficiaries or defraying reasonable expenses of administering the
Plan; provided, however, that nothing herein shall be construed to
prohibit the return to the Employer of all or part of a contribution as
follows:
(a) which is made by the Employer by a mistake of fact, provided the
return of such contribution is made within one (1) year after the
payment thereof;
(b) to the extent a deduction thereof under section 404 of the Code is
disallowed, provided the return of such contribution is limited to the
amount disallowed and is made within one year after the
disallowance; or
(c) which is conditioned upon initial Internal Revenue Service
qualification of the Plan under Section 10.06 hereof; provided the
return is made within one (1) year after the denial of qualification
of the Plan.
Section 3.09 Participant's Election as to Investment Funds.
(a) Initial Elections. Each Participant shall be entitled at the time of
enrollment in the Plan to make an election to direct how his
Individual Account under the Plan shall be invested in and among
the investment funds made available by the Administrator and an
Employer Stock Fund. Such election shall be made at the time of
enrollment and shall become effective as of the date of the
Participant's entry into the Plan. Each such election shall specify
the percentage of the Participant's Individual Account balance to
be invested in the funds.
Each election made pursuant to this Section shall remain effective
until such later date with respect to which a Participant shall make
a timely election pursuant to (b) or (c) hereof to change his
direction.
(b) Elections to Change Investment Direction. Each Participant shall
be entitled to change his direction as to how his Individual Account
under the Plan shall be invested in and among the funds by
making an election within a sufficient amount of time, as
established by the Administrator, before the date as of which the
change is to become effective. Each Participant shall be permitted
to change his investment direction on January 1, April 1, July 1, or
October 1 of each Plan Year and at such other time or times as
the Administrator, in a uniform and nondiscriminatory manner, may
elect.
(c) Election to Transfer Assets. Each Participant shall be entitled to
transfer assets between and among the funds by making an
election within a sufficient amount of time, as established by the
Administrator, before the date as of which the change is to become
effective. Such election to transfer assets shall specify the
percentage of the Participant's Individual Account balance to be
transferred and shall specify the funds involved. Each Participant
shall be entitled to elect such transfer as described herein as of
January 1, April 1, July 1, or October 1 of each Plan Year and at
such other time or times as the Administrator, in a uniform and
nondiscriminatory manner, may elect.
(d) Form of Elections. Each election made pursuant to this Section
shall be in writing and submitted to the Administrator on a form
supplied by the Administrator for such purposes at such time as
hereinabove provided.
Section 3.10 Purchase of Employer Stock.
(a) Subject to the provisions of paragraph (b) below, the Trustee shall
purchase shares of Employer Stock for the Employer Stock Fund
either (i) in the open market, or (ii) privately from any other person
or entity (including, without limitation, a Participant or an Employer)
at a price per share not in excess of the closing sale price on the
date of purchase as reported on the New York Stock Exchange, at
a price per share equal to the closing bid price on the date of
purchase as reported by that exchange, or if there were no such
trades on the date of purchase, at a price per share equal to the
closing price on the last day immediately preceding the date of
purchase on which shares of Employer Stock were traded on such
exchange.
(b) Notwithstanding the foregoing provisions of paragraph (a) above,
(i) in no event shall the Trustee purchase shares of Employer
Stock from a person or entity the sale by whom would subject such
person or entity to liability under Section 16(b) of the Securities
Exchange Act of 1934, as amended, and (ii) in the event that the
Trustee purchases shares of Employer Stock from any person or
entity that is a "party in interest" (within the meaning of Section
3(14) of ERISA), then such purchase shall satisfy in all respects
the provisions of Section 408(e) of ERISA (and the regulations
promulgated thereunder).
Section 3.11 Voting of Shares. If a Participant directs the
investment of any portion of his Individual Account in Employer Stock,
that Participant will receive all information provided to shareholders of
Employer Stock and will be entitled to direct the voting and exercise of
similar rights with respect to the shares of Employer Stock allocated to
his Individual Account as of the Valuation Date coincident with or
immediately preceding the record date for such vote or other action.
If the Participant fails to exercise his right to direct the voting of the
Employer Stock allocated to his Individual Account, such Employer
Stock will be voted by the Trustee in the same proportions as the
aggregate Employer Stock allocated to the Individual Accounts of those
Participants who do exercise their right to direct the voting of Employer
Stock. If a Participant fails to exercise his right to direct the tender of
Employer Stock in the event of a tender offer for Employer Stock, the
Employer Stock allocated to his Individual Account will not be tendered.
Activities relating to the purchase, sale, and exercise of voting and
similar rights with respect to Employer Stock allocated to the Individual
Accounts of Participants shall be the responsibility of the Trustee who
shall carry out such activities on a confidential basis.
Section 3.12 Options on Employer Stock. Shares of
Employer Stock held or distributed by the Trustee may include such
legend restrictions on transferability as the Employer may reasonably
require in order to assure compliance with applicable federal and state
securities laws. Except as otherwise provided in this Article III, no
shares of Employer Stock held or distributed by the Trustee may be
subject to a put, call or other option, or buy-sell or similar arrangement.
Section 3.13 Voluntary Rollovers. A Participant may transfer
(rollover) his interest in a plan qualified under sections 401(a) or
403(a) of the Code to this Plan. The rollover shall consist of a
contribution, comprised of cash and/or property, which is all or a
portion of an eligible rollover distribution with respect to which, unless
otherwise provided by law, all of the following conditions are met:
(a) the amount distributed from such plan is transferred to this Plan no
later than the sixtieth (60th) day after such distribution was
received by the Employee;
(b) the amount transferred to this Plan does not include any amounts
contributed by the Participant to the prior plan; and
(c) no part of the rollover is a distribution from a plan that was
required due to the age of the Participant pursuant to section
401(a)(9) of the Code; and
(d) the rollover of funds does not constitute a direct or indirect transfer
from a plan which was subject to the qualified joint and survivor
annuity requirements of sections 401(a)(11) and 417 of the Code.
Such rollover may also be made through an Individual Retirement Plan
qualified under section 408 of the Code, where the Individual
Retirement Plan was used solely as a conduit from the plan from which
the distribution was made and the rollover is made in accordance with
subsections (a) through (d) of this Section; provided, further, that the
amount so transferred does not include contributions made by the
Employee to the Individual Retirement Plan or earnings on such
contributions. Furthermore, a rollover of "accumulated deductible
employee contributions" (as defined by section 72(o) of the Code) may
be made if and to the extent permitted by the Secretary of the
Treasury.
Section 3.14 Transfers. Account balances in another plan
qualified under section 401(a) of the Code may be transferred to this
Plan. The Transfer Account may contain sub-accounts so that the
transferred contributions are segregated and maintained as in the plan
from which the funds were transferred. Accordingly, this may include
a sub-account for funds transferred from a tax-deferred employee
contributions account, employer contributions account or
non-deductible employee contributions account of the transferor plan.
A R T I C L E IV
ALLOCATIONS TO INDIVIDUAL ACCOUNTS
Section 4.01 Individual Accounts. On each Valuation Date
the Trustee shall determine the value of the Fund, at its fair market
value adjusted for appropriate accrual items, and the balances of all
Individual Accounts shall be brought up to date in accordance with this
Article so that the sum total of the balances of all Individual Accounts
shall equal the value of the Fund on such date. In determining the fair
market value of Employer Stock, the Trustee shall rely on the closing
bid price per share listed by the New York Stock Exchange as of the
close of the business day coinciding with or last preceding the
Valuation Date. All entries to Individual Accounts shall be conclusive
and binding on all Participants and Beneficiaries.
Section 4.02 Account Adjustments.
(a) Allocation of Contributions. As of each Valuation Date, the
Participant Tax-Deferred Contributions, Voluntary Rollover
Contributions, and Matching Employer Contributions Accounts of
each Participant shall be brought up to date and credited with
contributions made since the last Valuation Date, as applicable.
Participant Tax-Deferred Contributions may be considered
allocated as of any date within the Plan Year only if the allocation
is not contingent upon the participation of the Employee in the Plan
or the performance of any services on a date subsequent to the
date of allocation, and, the Participant Tax-Deferred Contribution
is actually paid to the Trust no later than the end of the twelve
(12)-month period immediately following the Plan Year to which the
contribution relates. The allocation of Employer Contributions shall
not be discontinued or decreased due to the Participant's
attainment of any age.
(b) Allocation of Fund Earnings. As of each Valuation Date, each
Participant's accounts shall be credited or charged with a share of
the Fund Earnings allocable to each such account in proportion to
the value of the account for the period since the last Valuation
Date, and debited by the amount of withdrawals, if any, made
since that Valuation Date. Adjustments may be made in an
equitable manner, to accurately reflect Fund Earnings based upon
an average account balance during the period.
(c) Allocation of Dividends. Dividends on Employer Stock (whether in
cash or stock) shall be allocated to each Participant's Individual
Account in the ratio that the number of shares of Employer Stock
in each respective account on the date that the dividends are
declared bears to the total number of shares of Employer Stock in
all such accounts as of such date.
(d) Forfeitures. Forfeitures which become available for reallocation
under the terms of Sections 3.05 or 5.06, shall be used to augment
the Matching Employer Contribution to the Matching Employer
Contributions Account.
Section 4.03 Limitation on Allocations.
(a) Annual Additions Limitation. Subject to further reduction under
subsections (b) and (c), the annual additions to the Individual
Account of a Participant shall not exceed the Maximum Permissible
Amount. For purposes of this Section, "annual additions" shall
mean, for any Limitation Year, reallocated Forfeitures plus the sum
of the Participant's Tax-Deferred Contributions and the
Participant's allocable share of Employer Contributions, all
determined prior to any corrective distribution or Forfeiture
pursuant to Section 3.06 and amounts allocated to an individual
medical account as defined in section 415(1)(2) of the Code, which
is part of a pension or annuity plan maintained by the Employer
and amounts derived from contributions paid or accrued, which are
attributable to post-retirement medical benefits, allocated to the
separate account of a Key Employee, as defined in section
419A(d)(3) of the Code, under a welfare benefit fund as defined in
section 419(e) of the Code maintained by the Employer.
(b) Maximum Permissible Amount. For any Limitation Year, the
Maximum Permissible Amount shall mean the lesser of:
(1) thirty thousand dollars ($30,000) (or such greater
amount according to the cost-of-living adjustment
permissible under section 415(d)(3) of the Code and
determined by the Commissioner of Internal Revenue
for the Limitation Year or, if greater, one-fourth (1/4)
of the limit for defined benefit plans as set forth in
section 415(b)(1) of the Code as in effect for the
Limitation Year), or
(2) twenty-five percent (25%) of the Compensation
received by the Participant from the Employer for the
Limitation Year.
If because of an amendment changing the Limitation Year, a short
Limitation Year is created, then the Maximum Permissible Amount will
not exceed thirty thousand dollars ($30,000)
multiplied by the following fraction:
Number of months in the short Limitation Year
----------------------
twelve (12)
(c) Aggregation of Plans. If, in addition to this Plan, the Employer
maintains another defined contribution plan, then the limitations
under section 415 of the Code shall apply as if such other plan and
this Plan were one (1) plan, and the limitation under subsection (a)
shall be reduced correspondingly by the amount of annual
additions (as defined in section 415(c) of the Code) allocated to
the account or accounts of a Participant covered under such other
plan.
(d) Disposition of Excess Amounts. If a reduction of amounts to be
allocated to a Participant's Individual Account is necessitated by
such facts and circumstances which the Commissioner finds justify
the application of the limits imposed by section 415 of the Code,
such reduction shall be as follows:
(1) the Participant Tax-Deferred Contributions in excess
of the limit shall be distributed to the Participant prior
to April 15 of the year following the year of deferral;
(2) the amount of such reduction consisting of Employer
Contributions shall be allocated and reallocated to the
Employer Contributions Accounts of other Participants
in accordance with Section 4.02(d) to the extent that
such amounts do not exceed the limitations of this
Section; and
(3) If such reductions cannot be allocated in the
foregoing manner, such reductions shall be allocated
to a suspense account and held therein until the next
Valuation Date and succeeding Valuation Dates as of
which such amounts can be either allocated or
credited under Section 4.02 until the amount in the
suspense account is exhausted. Notwithstanding the
foregoing, the Employer shall not contribute any
amount that would cause an allocation to the
suspense account as of the Valuation Date such
contribution is allocated. If the contribution is made
prior to the date as of which it is to be allocated, then
such contribution shall not exceed an amount that
would cause an allocation to the suspense account if
the date of contribution were the date of allocation;
and, provided further, that investment gains and
losses and other income shall not be allocated to the
suspense account. If a suspense account is in
existence at any time during a particular Limitation
Year, all amounts in the suspense account must be
allocated and reallocated to Participants' Employer
Contributions Accounts before any Employer
Contributions or Participant Tax-Deferred
Contributions may be made to the Plan for that
Limitation Year. Upon termination of the Plan, the
suspense account shall revert to the Employer to the
extent it may not then be allocated to any Individual
Account of a Participant.
A R T I C L E V
BENEFITS
Section 5.01 Payment of Benefits.
(a) Determination of Value.
The value of an Individual Account which is to be distributed
pursuant to the normal form of benefit described in Section 5.01(e)
below shall be determined as an amount equal to the balance of
such Individual Account as of the Valuation Date next preceding
the date of the termination of the Employment, or Retirement, of
the Participant, plus any contributions credited to his account since
that time, together with Fund Earnings credited or charged thereto
as of each subsequent Valuation Date up to and including the
Valuation Date which next precedes the date such determination
is made, less the sum of any distributions to such Participant since
such Valuation Date and less the portion of such account, if any,
which is to be paid to an Alternate Payee in accordance with the
terms of a Qualified Domestic Relations Order.
(b) General Conditions.
(1) Before payment of any benefit hereunder, the
Administrator may require that written application be
made by the Participant or Beneficiary, as the case
may be, and submitted to the Administrator in such
form and manner as it shall uniformly and
nondiscriminatorily prescribe.
(2) The Plan Administrator shall require the written
consent of the Participant prior to the commencement
of the distribution of any part of his benefit if the
value of such benefit is greater than three thousand
five hundred dollars ($3,500) and the distribution is to
be made prior to the time the Participant has reached
his Normal Retirement Age.
(3) Any payment made in accordance with the provisions
of the Plan to a Participant or Beneficiary, or to their
legal representative, shall, to the extent of the
method of computation as well as the amount thereof,
constitute full satisfaction of claims hereunder against
the Trustee, the Committee and the Administrator,
any of whom may require such Participant,
Beneficiary or legal representative, as a condition
precedent to such payment, to execute a receipt and
release therefor.
(4) The distribution of the Participant's entire interest in
the Plan will be made in a lump sum or in periodic
payments over a period not exceeding the life
expectancy of the Participant or the joint life
expectancy of the Participant and his designated
Beneficiary.
(5) Any benefits available under the Plan which are
protected benefits as defined under section 411(d)(6)
of the Code and the regulations promulgated
thereunder will be available to Participants without
regard to the Administrator's consent or discretion.
(c) Time of Payment. Benefits shall be paid as soon as is practicable
after the value thereof shall have been determined, and when a
Participant becomes eligible for a benefit, in accordance with the
terms of this Article V. Unless a Participant elects to defer the
payment of his benefits until a later date, the payment shall be
made or commenced not later than sixty (60) days after the close
of the Plan Year in which the later of the following events occurs:
(1) the Participant reaches his Normal Retirement Date,
(2) the tenth (10th) anniversary of the year in which the
Participant began participating in the Plan, or
(3) the Participant terminates his Employment with the
Employer.
(d) Required Distribution. Distribution of benefits shall commence no
later than April 1 following the calendar year in which the
Participant attains age seventy and one-half (70 1/2) without
regard to the actual date of Retirement or termination of
Employment. Provided however, for any Participant who is at least
age seventy and one-half (70 1/2) as of January 1, 1988 and who
was not a Five-Percent Owner at any time after attaining age sixty-
six and one-half (66 1/2), distribution of benefits shall commence
no later than the end of the taxable year in which the Participant
attains age seventy and one-half (70 1/2), or in which he retires,
whichever is later.
(e) Normal Form of Payment. Unless a Participant elects an optional
form of payment pursuant to Section 7.02, the form of payment of
a benefit under the Plan shall be a lump sum payment of the entire
nonforfeitable interest of the Participant in the Plan within one (1)
taxable year to the Participant or the Beneficiary, as the case may
be.
Distributions shall normally be made in cash; however a
Participant, a portion of whose Individual Account is invested in
Employer Stock, may elect to receive his distribution in whole
shares of Employer Stock held in his Individual Account and cash
equal to any fractional shares or in cash equal to the value of the
shares of Employer Stock that would otherwise be distributed. The
Employer Stock, including fractional shares, shall be valued on the
basis of the closing bid price per share listed by the New York
Stock Exchange as of the close of the business day last preceding
the date of distribution.
(f) Small Benefit Paid as Lump Sum. In the event that a Participant's
entire nonforfeitable benefit does not exceed three thousand five
hundred dollars ($3,500) at the time of termination of Employment,
the Plan Administrator shall direct the Trustee to distribute to the
Participant the entire nonforfeitable benefit in one lump sum no
later than the close of the second Plan Year following the Plan
Year in which the Participant terminated Employment. Provided
however, no distributions may be required after the annuity starting
date unless the Participant (and his spouse, as applicable)
consents in writing to such distribution. For these purposes, the
term "annuity starting date" means:
(1) the first day of the first period for which an amount is
payable as an annuity, or
(2) in the case of a benefit not payable in the form of an
annuity, the first day on which all events have
occurred which entitle the Participant to the benefit.
(g) Calculation of Life Expectancy. For the purposes of Sections
5.01(b)(4) and 5.01(d), payments will be calculated by using the
return multiples specified in section 1.72-9 of the regulations under
the Code. Life expectancy of a surviving spouse may be
recalculated annually; in the case of any other designated
Beneficiary, such life expectancy will be calculated only at the time
payment first commences. If the Beneficiary is not the spouse, at
least fifty percent (50%) of the amount to be distributed must be
paid within the life expectancy of the Participant.
Section 5.02 Early Retirement Benefit. Each Participant shall
be eligible to retire on or after his Early Retirement Date whereupon he
shall be entitled to an Early Retirement Benefit equal to the value of his
Individual Account.
Section 5.03 Normal Retirement Benefit. Each Participant
shall be eligible to retire on his Normal Retirement Date whereupon he
shall be entitled to a Normal Retirement Benefit equal to the value of
his Individual Account. The interest of a Participant in his Individual
Account shall be fully vested and nonforfeitable on the date the
Participant attains his Normal Retirement Age.
Section 5.04 Delayed Retirement Benefit. A Participant who
continues Employment beyond his Normal Retirement Date may retire
on his Delayed Retirement Date whereupon he shall be entitled to a
Delayed Retirement Benefit equal to the value of his Individual
Account.
Section 5.05 Disability Retirement Benefit. For purposes of
the Plan, a Participant shall be deemed to be disabled or under a
disability if he has a physical or mental condition which renders him
incapable of performing his usual and customary duties of Employment.
The decision as to the existence of a disability shall be made by the
Plan Administrator on the basis of competent medical opinion. A
Participant who has become disabled as defined in this Section shall
be retired on his Disability Retirement Date whereupon he shall be
entitled to a Disability Retirement Benefit equal to the value of his
Individual Account.
Section 5.06 Vested Benefit.
(a) Determination of Vested Benefit. If a Participant terminates
Employment other than because of his death or Retirement and if
he then does not become entitled to a benefit under any preceding
Section of this Article V, he shall be entitled to a Vested Benefit
under this Section equal to the vested value of his Individual
Account. Such vested value shall be determined as follows:
(1) The nonforfeitable percentage of his Employer
Contributions Account shall be determined according
to the following schedule:
<TABLE>
<CAPTION>
Years of Credited Percentage of
Employment at Termination Account Vested
<S> <C>
Less than 3 0%
3 20%
4 40%
5 60%
6 80%
7 or more 100%
</TABLE>
(2) The remainder of his Individual Account shall be fully
vested and nonforfeitable at all times. Notwithstanding any other
provision of the Plan to the contrary, the right of any Participant to
receive any benefits payable under this Section shall not be forfeited or
waived for any reason for which such Participant's Employment is
terminated, provided that such termination occurs after he has met the
requirements which would qualify him for benefits hereunder.
(b) Distribution of Vested Benefit. The Vested Benefit shall be payable
within sixty (60) days after the Valuation Date coincident with or
next following the date Employment is terminated or as soon
thereafter as is administratively feasible. However, if the value of
his vested Individual Account is greater than three thousand five
hundred dollars ($3,500), then the Vested Benefit may not be
distributed without the Participant's consent prior to the time he
attains what would have been his Normal Retirement Date. Any
portion of the Employer Contributions Account of the Participant
which is in excess of the nonforfeitable percentage thereof shall,
upon termination of the Participant's Employment under this
Section, be maintained until the Valuation Date coincident with or
following the earlier of
(1) the date on which the Vested Benefit is distributed, or
(2) the date on which the Participant incurs five (5)
consecutive one-year Breaks in Employment.
At that time, such excess shall constitute a Forfeiture and shall be
reallocated in accordance with Section 4.02(d). For purposes of
this Section, if the value of a Participant's Vested Benefit is zero,
the Participant shall be deemed to have received a distribution of
such Vested Benefit as of the Valuation Date coincident with or
next following the date on which he has incurred a Break in
Employment.
If a Participant who is partially but not fully vested at the time of his
termination of Employment and who has received or is deemed to
have received a distribution of the vested portion of his Individual
Account is reemployed before he has incurred five (5) consecutive
one-year Breaks in Employment, then the previously forfeited
portion of his Employer Contributions Account shall be restored
provided he repays the amount distributed to him from his
Employer Contributions Account before the earlier of the close of
the Plan Year in which he incurs his fifth consecutive one-year
Break in Employment following the date of distribution, or five (5)
years after the date on which he is reemployed by the Employer.
The Employer shall contribute to such Participant's Employer
Contributions Account an amount equal to the amount which he
previously forfeited and his vested interest shall be determined
thereafter as if he had not ceased Employment. Upon repayment,
the nonvested amount reinstated will not be less than the
nonvested amount in the Participant's Employer Contributions
Account at the time of distribution, unadjusted by any subsequent
gains or losses.
Section 5.07 Death Benefit.
(a) Benefit. In the event a Participant's death occurs while employed
by the Employer, then a death benefit equal to the full value of his
Individual Account shall be payable to the Beneficiary of the
Participant. In the event a Participant's death occurs after having
terminated Employment but before distribution of any benefit has
commenced, a death benefit equal to the portion of his Individual
Account to which he would otherwise have been entitled shall be
payable to the Beneficiary of the Participant.
(b) Designation of Alternate Beneficiary. A married Participant may
designate, in writing on forms provided by the Administrator, a
Beneficiary other than his spouse if (i) the Participant's spouse
consents in writing to such election, (ii) the spouse's consent
acknowledges the effect of such election and (iii) such election is
witnessed by the Plan Administrator or a Notary Public, or it is
established to the satisfaction of the Plan Administrator that the
consent required under (i) above may not be obtained because
there is no spouse or because the spouse cannot be located. Any
consent by a spouse (or assertion that the consent of a spouse
may not be obtained) under the preceding sentence shall be
effective only with respect to such spouse and any subsequent
change in the designation of the Beneficiary is invalid without a
new consent from the spouse. The election must designate a
Beneficiary (or a form of benefits) which designations may not be
changed without spousal consent; however, the consent of the
spouse may expressly permit designations by the Participant
without further consent by the spouse.
(c) Distribution Upon Death. Upon the death of the Participant, the
following distribution provisions shall take effect:
(1) If the Participant dies after distribution of his account
has commenced, the remaining portion of such
account will continue to be distributed at least as
rapidly as under the method of distribution being
used prior to the Participant's death.
(2) If the Participant dies before distribution of his
account commences, the Participant's entire account
will be distributed no later than five (5) years after the
Participant's death except to the extent that an
election is made to receive distributions in
accordance with (i) or (ii) below:
(i) If any portion of the Participant's account is
payable to a designated Beneficiary,
distributions may be made in substantially
equal installments over the life expectancy of
the designated Beneficiary. Such distribution
shall commence at such time as the Plan
Administrator shall determine, but no later than
sixty (60) days after the end of the Plan Year in
which death occurs, or one (1) year after the
date of death.
(ii) If the designated Beneficiary is the Participant's
surviving spouse, the date distributions are
required to begin in accordance with (i) above
shall not be earlier than the date on which the
Participant would have attained age seventy
and one-half (70 1/2), and, if the spouse dies
before payments begin, subsequent
distributions shall be made as if the spouse had
been the Participant.
(3) For purposes of (2) above, payments will be
calculated by use of the return multiples specified in
section 1.72-9 of the regulations. Life expectancy of
a surviving spouse may be recalculated annually;
however, in the case of any other designated
Beneficiary, such life expectancy will be calculated at
the time payment first commences without further
recalculation.
(4) For purposes of (1), (2) and (3) above, any amount
paid to a child of the Participant will be treated as if
it had been paid to the surviving spouse if the amount
becomes payable to the surviving spouse when the
child reaches the age of majority.
(5) Subject to the provisions of Section 5.01(e), the
Beneficiary may choose to receive payments in
accordance with Section 7.02.
(6) The Plan Administrator may require such proper
proof of death and such evidence of the right of any
person to receive payment of the vested benefits of
a deceased Participant as the Plan Administrator may
deem desirable. The Plan Administrator's
determination of death and of the right of any person
to receive payment shall be conclusive.
Any distribution hereunder shall be made in accordance with the
requirements of the regulations under Code section 401(a)(9), including
the minimum distribution incidental benefit requirements of section
1.401(a)(9)-2 of the proposed regulations.
Section 5.08 Withdrawal of Contributions. Withdrawals by a
Participant shall be permitted in accordance with the provisions of this
Section. Any such withdrawal shall be permitted at such time or times,
and in such manner and form, as shall be uniformly and
nondiscriminatorily established by the Plan Administrator.
(a) Employer Contributions. In-service withdrawals shall not be made
for any reason from the Matching Employer Contributions Account
of a Participant.
(b) Participant Tax-Deferred Contributions. In-service withdrawals
shall be permitted from the Participant Tax-Deferred Contributions
Account only upon demonstration of hardship, i.e., only if the
withdrawal is necessary in light of an immediate and heavy
financial need of the Participant. Such withdrawal shall not exceed
the amount required to meet the immediate financial need created
by the hardship (including amounts necessary to pay any federal,
state or local income taxes or penalties reasonably anticipated to
result from the distribution) and shall not reasonably be available
from other resources of the Participant.
The determination of an immediate and heavy financial need and
of the amount necessary to meet the need shall be made by the
Plan Administrator in accordance with the standards set forth in
Treasury Regulation 1.401(k)-0 and other rulings or notices
published by the Commissioner.
Under these standards, acceptable reasons for a hardship
withdrawal shall be limited to:
(1) medical expenses described in section 213(d) of the
Code incurred by the Participant, his spouse or his
dependents (as defined in section 152 of the Code);
(2) purchase (excluding mortgage payments) of a
principal residence for the Participant;
(3) payment of tuition and related educational fees for
the next twelve (12) months of post-secondary
education for the Participant, his spouse or his
dependents; or
(4) the need to prevent eviction of the Participant from
his principal residence or foreclosure on the
mortgage of the Participant's principal residence.
The amount of the hardship withdrawal shall be further limited to
the amount of Participant Tax-Deferred Contributions exclusive of
earnings allocable thereto.
(c) Voluntary Rollover Contributions. In-service withdrawals shall be
permitted from the Voluntary Rollover Accounts; provided,
however, that withdrawals may not be made more frequently than
once between Valuation Dates.
Section 5.09 Failure to Locate. If the Participant or
Beneficiary to whom benefits are to be distributed cannot be located,
and reasonable efforts have been made to find him, including sending
notification by certified or registered mail to his last known address,
then the Plan Administrator shall consider the balances in the
Participant's Individual Account forfeited, and such amounts shall be
reallocated in accordance with Section 4.02(d). In the event that such
Participant or Beneficiary is subsequently located, the balance in his
Individual Account at the time of forfeiture shall be reinstated and
distributed to him.
A R T I C L E VI
MODIFICATIONS FOR TOP-HEAVY PLANS
Section 6.01 Application of Provisions. Prior to the allocation
of contributions to Participant accounts pursuant to Section 4.02, the
Plan Administrator shall determine whether the Plan constitutes a Top
Heavy Plan. Should a determination be made that this Plan constitutes
a Top Heavy Plan, the provisions of this Article VI shall be applicable
notwithstanding any other provisions of this Plan to the contrary.
Section 6.02 Minimum Contribution. A minimum amount,
which is the sum of Employer contributions and forfeitures, shall be
provided to each Non-Key Employee who is employed on the last day
of the Plan Year. This minimum amount will be provided, even though
under other Plan provisions the Participant would not otherwise be
entitled to receive an allocation because of:
(a) his failure to complete one thousand (1,000) Hours of Employment
during the Plan Year,
(b) his failure to make contributions required for participation in the
Plan, or
(c) his level of Compensation.
The minimum amount required under this Section shall be equal to
three percent (3%) of the Participant's Compensation. If, however, the
sum of Employer contributions and forfeitures for any Key Employee
for such Plan Year, under this and any other defined contribution plan
required to be included in the Top Heavy Ratio and maintained by the
Employer, is less than three percent (3%) of such Key Employee's total
Compensation not in excess of one hundred and fifty thousand dollars
($150,000), then the minimum amount required need not exceed the
amount that results from multiplying each Participant's Compensation
by the highest contribution rate of any Key Employee covered by the
Plan.
Participant Tax-Deferred Contributions and Matching Employer
Contributions (and Forfeitures allocable thereto) made on behalf of Key
Employees shall be taken into account in determining the minimum
required amount. However, such contributions made on behalf of
Non-Key Employees shall not be treated as Employer contributions for
purposes of satisfying the minimum required amount as described
above.
There shall be disregarded for purposes of this Section, any
contributions or benefits under chapter 21 of the Code (relating to the
Federal Insurance Contributions Act), Title II of the Social Security Act,
or any other federal or state law.
Section 6.03 Accelerated Vesting. This Plan provides for a
graduated vesting schedule in Section 5.06. For any Plan Year in
which this Plan is deemed to be a Top Heavy Plan, the vesting
schedule shall be as follows:
<TABLE>
<CAPTION>
Years of Credited Percentage of
Employment at Termination Account Vested
<S> <C>
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
</TABLE>
Should this Plan, in a later year, not be deemed a Top Heavy Plan,
after previously being so categorized, the original vesting schedule
shall again be effective, except that the vested percentage attained
by Participants shall not be reduced thereby and Participants with
three (3) or more Years of Employment shall have the right to select
the schedule under which their Vested Benefit will be determined.
A R T I C L E VII
FORM OF PAYMENT
Section 7.01 Description of Optional Benefits.
Notwithstanding any statement herein to the contrary, in no event shall
election of any optional form of benefit be permitted which would
enable the Participant to elect irrevocably prior to Retirement to have
all or such part of his nonforfeitable interest in the Plan, which would
otherwise become available to him during his lifetime, paid to his
Beneficiary after his death in such a way that would cause the Plan to
fail to meet the requirements of section 401(a) of the Code. In
accordance with the above, the following optional forms shall be
available:
(a) Option A: Time Period Installments. Option A shall be defined as
a distribution, which shall begin at the Participant's Retirement or
termination, from the Individual Account balance of the Participant
payable in monthly, quarterly, semi-annual or annual installments,
over a specified period of years not in excess of twenty (20) years,
as elected by the Participant. The distribution in any year shall be
determined as a fraction of the remaining Individual Account value,
such fraction being determined as of the most recent Valuation
Date as one (1) divided by the remaining number of years of the
specified period, in accordance with the election of the Participant;
provided, however, that no arrangement may be made which would
result in a periodic payment of less than fifty dollars ($50.00).
Upon the death of the Participant after distributions commence
hereunder, the Beneficiary, if living, may similarly elect to receive
the balance of the Individual Account of the Participant in
installments over not more than five (5) years or in a lump sum,
and upon the Beneficiary's subsequent death, the balance, if any,
in the Individual Account of the Participant shall be paid in a lump
sum to the estate of the Beneficiary.
(b) Option B: Level Dollar Installments. Option B shall be defined as
a distribution, which shall begin at the Participant's Retirement or
termination, from the Participant's Individual Account balance in
level monthly, quarterly, semi-annual or annual installments of such
amount as elected by the Participant, payable until there is no
balance remaining in the Individual Account of the Participant. It
is further provided that the total annual amount of such
installments must equal not less than ten percent (10%) of the
value of the Individual Account as of the Valuation Date which
immediately precedes the date the distribution commences and
that no installment arrangement may be made which involves a
periodic payment of less than fifty dollars ($50.00), or which
involves payments over more than twenty (20) years. Upon the
death of the Participant while payments are being made under this
Option, the Beneficiary shall receive the balance of the Individual
Account in a lump sum.
Section 7.02 Election of Options. A Participant or Beneficiary
entitled to a benefit under the Plan may elect, upon written notice of
such election filed with the Administrator in such form and manner as
prescribed by the Administrator, to receive such benefit payable in
accordance with any one of the options provided above. The election
of any option may be revoked and a new option elected, but election
of any option hereunder shall be duly filed prior to the date benefits
would otherwise be paid or commenced, and in no event shall an
election be permitted after the initial distribution or commencement of
payment of any benefit.
Section 7.03 Eligible Rollover Distributions. Notwithstanding
any provision of the Plan to the contrary that would otherwise limit a
Distributee's election under this Article, a Distributee may elect, at the
time and in the manner prescribed by the Plan Administrator, to have
any portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the Distributee in a Direct
Rollover.
A R T I C L E VIII
PARTICIPATING EMPLOYERS
Section 8.01 Participation by Other Employers. Anything
contained herein to the contrary notwithstanding, with the consent of
the Sponsor, any wholly owned subsidiary of the Sponsor may
participate in this Plan and be known as a participating Employer.
Section 8.02 Delegation of Authority. With respect to all of
its relations with the Trustee and Administrative Committee for the
purpose of this Plan, such participating Employers and each of them
shall be deemed to have authorized and empowered the Sponsor to
execute the Plan on behalf of such Employer. Further, the participating
Employers and each of them shall be deemed to have authorized and
empowered the Sponsor to execute the trust agreement which
constitutes a part hereof, and any amendments to the Plan and to take
any other actions as he may deem necessary to implement and
maintain the Plan.
Section 8.03 Employee Transfer. In the event that an
Employee is transferred between participating Employers, the
Employee involved shall carry with him his accumulated years of
employment and eligibility. No such transfer shall effect a termination
of Employment hereunder, and the participating Employer to which the
Employee is transferred shall thereupon become obligated hereunder
with respect to such Employee in the same manner as was the
participating Employer from whom the Employee was transferred,
provided, however, that no duplication of benefits shall result.
Section 8.04 Discontinuance of Participation. Any
participating Employer may, with the consent of the Sponsor,
discontinue or revoke its participation in the Plan. At the time of any
such discontinuance or revocation, satisfactory evidence thereof and
of any applicable conditions imposed shall be delivered to the Trustee.
Section 8.05 Administrative Committee Authority. The
Administrative Committee shall have authority to make any and all
necessary rules binding upon all participating Employers and all
Participants, to effectuate the purpose of the Article.
A R T I C L E IX
ADMINISTRATION OF PLAN
Section 9.01 Plan Administrator. The Administrator of the
Plan shall have the sole power, duty and responsibility of directing the
administration thereof in accordance with the provisions herein set
forth. The Administrator shall have the sole and absolute right and
power to construe and to interpret the provisions of the Plan and to
administer it for the best interests of Employees including, but not
limited to, the following powers and duties:
(a) to construe any ambiguity and interpret any provision of the Plan
or supply any omission or reconcile any inconsistencies in such
manner as it deems proper;
(b) to determine eligibility to become a Participant in the Plan in
accordance with its terms;
(c) to decide all questions of eligibility for, and determine the amount,
manner, and time of payment of any benefits hereunder, and to
afford any person dissatisfied with such decision or determination,
upon written notice thereof, the right to a full and fair hearing
thereon;
(d) to establish uniform rules and procedures to be followed by
Participants and Beneficiaries in filing applications for benefits, in
furnishing and verifying proofs necessary to determine age, and in
any other matters required to administer the Plan;
(e) to adopt such reasonable accounting methods as it deems
necessary or desirable, and to receive and review the annual
allocation report on the Plan;
(f) to receive and review reports of the financial condition and of the
receipts and disbursements of the Fund from the Trustee, and to
determine and communicate to the Trustee the long-term and
short-term financial goals of the Plan;
(g) to file such reports and statements with, and to make such
disclosures to the Secretary of Labor or his delegate and the
Internal Revenue Service as required by law;
(h) to furnish to Participants and Beneficiaries such information and
statements, with respect to the Plan and their individual interests
therein, as required by law, and any additional information as it
deems to be appropriate; and
(i) to establish reasonable procedures for determining whether a
Domestic Relations Order is a Qualified Domestic Relations Order
pursuant to the Plan and the Retirement Equity Act.
All directions by the Administrator shall be conclusive on all parties
concerned, including the Trustee, and all decisions of the Administrator
as to the facts of any case and the meaning, intent, or proper
construction of any provision of the Plan, or as to any rule or regulation
in its application to any case shall be final and conclusive; provided,
however, that all rules and decisions of the Administrator shall be
uniformly and consistently applied to all Employees in similar
circumstances, and the Administrator shall have no power
administratively to add to, subtract from or modify any of the terms of
the Plan, or to change, add to or subtract from any benefits provided
by the Plan, or to waive or fail to apply any requirements of eligibility
for participation or for benefits under the Plan.
Section 9.02 Claims Procedure. If the Administrator shall
determine that benefits applied for by a Participant or Beneficiary shall
be denied either in whole or in part, the following provisions shall
govern:
(a) Notice of Denial. The Administrator shall, upon its denial of a
claim for benefits under the Plan, provide the applicant with written
notice of such denial setting forth (1) the specific reason or
reasons for the denial, (2) specific reference to pertinent Plan
provisions upon which the denial is based, (3) a description of any
additional material or information necessary for the claimant to
perfect the claim, and (4) an explanation of the claimant's rights
with respect to the claims review procedure as provided in
subsection (b) of this Section.
(b) Claims Review. Every claimant with respect to whom a claim is
denied shall, upon written notice of such denial, have the right to
(1) request a review of the denial of benefits by written notice
delivered to the Administrator, (2) review pertinent documents and
(3) submit issues and comments in writing.
(c) Decision on Review. The Administrator shall, upon receipt of a
request for review submitted by the claimant in accordance with
subsection (b), appoint a committee for the purpose of conducting
such review and provide the claimant with written notice of the
decision reached by the said committee setting forth the specific
reasons for the decision and specific references to the provisions
of the Plan upon which the decision is based. Such notice shall be
delivered to the claimant not later than sixty (60) days following the
receipt of the request of the claimant, or, in the event that the
Administrator shall determine that a hearing is needed, not later
than one hundred twenty (120) days following receipt of such
request.
Section 9.03 Records. All acts, determinations and
correspondence with respect to the Plan shall be duly recorded and all
such records, together with such other documents, including the Plan
and all amendments thereto, if any, pertinent to the Plan or the
administration thereof, shall be preserved in the custody of the
Administrator and shall at all reasonable times be made available to
Participants and Beneficiaries for examination.
Section 9.04 Delegation of Authority. The duties and
responsibilities of the Administrator as set forth in this Article and
elsewhere in the Plan may be delegated in whatever manner it
chooses, in whole or in part, to an Administrative Committee consisting
of such persons as the Administrator shall select. The Administrator
shall certify to the Trustee in writing as to the membership and extent
of authority of such Committee and any changes relative thereto as
may occur from time to time. The authority of the Committee shall be
deemed to be that of the Administrator to the extent so certified by the
Administrator. The Trustee shall be entitled to rely on the last such
certification received and to continue to rely thereon until subsequent
written certification to the contrary is received from the Administrator.
The Administrator shall indemnify and hold harmless the members of
the Committee, and each of them, from any liability arising from the
effects and consequences of their acts, omissions and conduct in their
official capacity with respect to the Plan and the administration thereof,
except to the extent that such liability shall result from their own willful
misconduct or gross negligence. The Administrator, or the
Administrative Committee to which it has delegated its duties and
responsibilities hereunder, may employ such competent agent or
agents as it may deem appropriate or desirable to perform such
ministerial duties or consultative or other services as the Administrator
or its Committee may deem necessary to facilitate the efficient and
proper administration of the Plan. The Administrator and its Committee
shall be entitled to rely upon all reports, advice and information
furnished by such agent or agents, and all action taken or suffered by
them in good faith in reliance thereon shall be conclusive upon all such
agents, Participants, Beneficiaries and other persons interested in the
Plan.
Section 9.05 Legal Incompetence. If any Participant or
Beneficiary is a minor, or is in the judgment of the Administrator
otherwise legally incapable of personally receiving and giving a valid
receipt for any payment due him hereunder, the Administrator may,
unless and until a claim shall have been made by a guardian or
conservator of such person duly appointed by a court of competent
jurisdiction, direct the Trustee that payment be made to such person's
spouse, child, parent, brother, sister or other person deemed by the
Administrator to be a proper person to receive such payment. Any
payment so made shall be a complete discharge of any liability under
the Plan for such payment.
Section 9.06 Correction of Errors. If any change in records
or error results in any Participant or Beneficiary receiving from the Plan
more or less than he would have been entitled to receive had the
records been correct or had the error not been made, the
Administrator, upon discovery of such error, shall correct the error by
adjusting, as far as is practicable, the payments in such a manner that
the benefits to which such person was correctly entitled shall be paid.
Section 9.07 Qualified Domestic Relations Order Procedure.
In the case of any Domestic Relations Order received by the Plan
Administrator, the Plan Administrator shall promptly notify the
Participant and the Alternate Payee of the receipt of such order and the
Plan's procedures for determining the qualified status of Domestic
Relations Orders, and within a reasonable period after receipt of such
order, the Plan Administrator shall determine whether such order is a
Qualified Domestic Relations Order and notify the Participant and each
Alternate Payee of such determination.
The Plan Administrator shall establish, in writing, reasonable
procedures to determine whether a Domestic Relations Order is a
Qualified Domestic Relations Order and if it is so determined,
procedures to administer the distribution of benefits to an Alternate
Payee. An Alternate Payee, or any person claiming to be an Alternate
Payee, shall be given the notice of the Plan's procedures for
determining whether a Domestic Relations Order is qualified and the
Plan's procedures for the distribution of benefits under Qualified
Orders. Furthermore, an Alternate Payee, or any person claiming to
be an Alternate Payee, shall be given the opportunity to designate a
representative to receive any notices or information concerning the
status of the Domestic Relations Order and/or the distribution of
benefits under any such order which is determined to be qualified.
During any period in which the issue of whether a Domestic Relations
Order is a Qualified Domestic Relations Order is being determined (by
the Plan Administrator, by a court of competent jurisdiction, or
otherwise), the Plan Administrator shall account separately for, in the
Plan or in an escrow account, the amounts which would have been
payable to the Alternate Payee during such period if the order had
been determined to be a Qualified Domestic Relations Order. If within
eighteen (18) months, it is determined that the order is not a Qualified
Domestic Relations Order, or the issue as to whether such order is a
Qualified Domestic Relations Order is not resolved, then the Plan
Administrator shall pay the segregated amounts (plus any interest
thereon) to the person or persons who would have been entitled to
such amounts if there had been no order.
Any determination that an order is a Qualified Domestic Relations
Order which is made after the close of the eighteen (18)-month period
shall be applied prospectively only.
If the Plan Administrator or any fiduciary acts in accordance with this
Section in treating a Domestic Relations Order as being (or not being)
a Qualified Domestic Relations Order, or taking action under this
Section, then the Plan's obligation to the Participant and each Alternate
Payee shall be discharged to the extent of any payment made pursuant
to the Code.
A R T I C L E X
AMENDMENT OR TERMINATION
Section 10.01 Amendment of Plan. The Administrator shall
have the right at any time to modify, alter or amend the Plan in whole
or in part by instrument in writing duly executed by the Administrator
and delivered to and acknowledged by the Trustee; provided, however,
that no amendment shall have the effect of causing or permitting any
part of the Fund to be used for or diverted to purposes other than for
the exclusive benefit of Participants and Beneficiaries and no
amendment shall have the effect of revesting in the Employer any
portion of the Fund. No amendment to the Plan shall decrease a
Participant's account balance or eliminate an optional form of
distribution. No amendment to the Plan shall reduce or restrict, either
directly or indirectly, any benefit which is a protected benefit as defined
under section 411(d)(6) of the Code and the regulations promulgated
thereunder. If an early retirement benefit or other optional retirement
benefit is changed by amendment, the benefits with respect to the
benefits accrued to the date of the amendment shall not be reduced for
any Participant who at any time on or after the amendment satisfied
the preamendment conditions for the benefit. No amendment to the
vesting schedule shall deprive a Participant of his nonforfeitable rights
to benefits accrued to the later of the date of the adoption of the
amendment or the effective date of such amendment. If the vesting
schedule of the Plan is amended, or if the Plan is amended in any way
which directly or indirectly affects the computation of a Participant's
nonforfeitable percentage of benefits, each Participant with at least
three (3) Years of Employment may elect, within a reasonable period
after such amendment is adopted, to have his nonforfeitable
percentage computed under the Plan without regard to such
amendment. The period during which the election may be made shall
commence on the date of adoption of the amendment and shall end on
the latest of:
(a) sixty (60) days after the amendment is adopted;
(b) sixty (60) days after the amendment is effective; or
(c) sixty (60) days after the Participant is given written notice of the
amendment by the Administrator.
No amendment shall operate to increase the duties and responsibilities
of the Trustee except by written instrument duly executed by and
between the Administrator and the Trustee.
Section 10.02 Termination of Plan. Although the Employer
expects the Plan to be continued indefinitely, it reserves the right at
any time to terminate the Plan by action of its Board and to discontinue
all contributions from time to time as it shall deem appropriate and
necessary, and such suspension of contributions shall not be
considered to be a termination of the Plan. In the event of termination
of the Plan or a complete discontinuance of contributions to the Plan,
the Administrator shall notify the Trustee in writing of such termination
and, prior to any distribution of assets hereunder, shall file notice with
the Internal Revenue Service.
Section 10.03 Distribution upon Termination. Upon termination
or partial termination of the Plan, or upon complete discontinuance of
contributions, the Individual Account of each affected Participant shall
become nonforfeitable without regard to the Section of Article V entitled
"Vested Benefit". The Administrator, by written notice of termination of
the Plan, shall direct the Trustee to reduce such assets of the Fund to
cash which are not designated by the Administrator to be retained for
distribution in kind. The Trustee shall cause a valuation of the Fund
to be made as of the date such assets are reduced to cash, at which
time the balances of Individual Accounts shall be brought up to date in
accordance with Section 4.02. Upon completion of such accounting
and receipt from the Administrator of directions as to the form of
distributions, the Trustee shall distribute the assets of the Fund to the
Participants or Beneficiaries, as the case may be, in accordance with
such directions.
Section 10.04 Distribution Limitation. Notwithstanding the
foregoing Section 10.03, funds attributable to Participant Tax-Deferred
Contributions may not be distributed earlier than upon one of the
following events:
(a) the Participant's retirement, death, disability or separation from
service;
(b) the termination of the Plan without the establishment of a
successor plan;
(c) the date of the sale or other disposition by the Employer to an
unrelated corporation of substantially all of the assets of the
Employer, but only with respect to an Employee who continues
employment with the corporation acquiring the assets;
(d) the date of the sale or other disposition by the Employer of its
interest in a subsidiary to an unrelated entity, but only with respect
to an Employee who continues employment with such subsidiary;
(e) the Participant's attainment of age fifty-nine and one-half (59 1/2);
or
(f) the Participant's hardship, as described in Section 5.08(b).
Section 10.05 Merger of Plan. In the event of any merger or
consolidation with, or transfer of assets or liabilities to, any other
retirement plan, the benefit hereunder to which a Participant or
Beneficiary is entitled (if the Plan subsequently terminated) shall,
immediately after such merger, consolidation or transfer, be equal to
or greater than such benefit would have been immediately before such
merger, consolidation or transfer (if the Plan had then terminated).
The limitations of Section 10.04 above continue to apply to amounts
attributable to Participant Tax-Deferred Contributions after such
amounts are transferred to another qualified plan of any employer.
Section 10.06 Failure of Internal Revenue Service
Qualification. This Plan is adopted by the Employer upon the condition
that it shall qualify initially under the applicable provisions of the Code.
Therefore, if the Plan fails to so qualify, as evidenced by receipt of a
letter to such effect from the Internal Revenue Service, then the
Employer reserves the following:
(a) in the case of the initial adoption and qualification of the Plan, the
right to withdraw and terminate the Plan hereunder whereupon no
Participant shall have any right or claim to any of the assets
hereunder which are derived from Employer contributions,
notwithstanding any other provision hereof; or
(b) the right to amend the Plan to the extent necessary to secure a
favorable determination that the Plan is so qualified.
A R T I C L E XI
MISCELLANEOUS
Section 11.01 Liability of Employer. No Employee,
Participant or Beneficiary shall have any right or claim to any benefit
under the Plan except in accordance with its provisions.
Section 11.02 Spendthrift Clause. No interest, right or claim
in or to any part of the Trust Fund or any payment therefrom shall be
assigned or alienated, transferable or subject to sale, mortgage,
pledge, hypothecation, garnishment, attachment, execution, or levy of
any kind whatsoever, and the Trustee shall not issue any certificate or
other documentation representing any interest, right or claim in or to
any part of the Trust Fund. Notwithstanding the preceding, payment
to an Alternate Payee pursuant to a Qualified Domestic Relations
Order and the withholding of federal income tax shall not be
considered an assignment or alienation of benefits under the Plan.
Section 11.03 Successor to Business of Employer. Any
successor to the business of the Employer may continue the Plan and
such successor shall thereupon succeed to all the rights, powers and
duties of the Employer hereunder. The Employment of any Employee
who has continued in the employ of such successor which maintains
the Plan shall not be deemed to have been terminated or severed for
any purpose hereunder.
In the event that the Employer is reorganized, or all or substantially all
of its assets are sold without any provision being made for the
continuance of this Plan by a successor to the business of the
Employer, the Plan shall terminate and the assets shall be distributed
as provided in Section 10.03 hereof.
Section 11.04 Conflict of Provisions. If any provision or term
of this Plan, or of the Trust Agreement entered into pursuant hereto,
is deemed to be substantively at variance with, or contrary to, any law
of the United States or other applicable state law, the provision of the
law shall be deemed to govern, but only to the extent necessary to
bring this Plan and Trust Agreement into compliance with such law;
provided, further, that no provision of state law shall be deemed to
govern if it would disqualify the Plan and Trust Agreement under
sections 401(a) and 501(a) of the Code.
Section 11.05 Successors to Trustee. The provisions of this
Plan, and of the Trust Agreement entered into pursuant hereto, shall
bind and inure to the benefit of the successors to the Trustee named
in said Agreement.
Section 11.06 Definition of Words. The masculine form of
pronouns is used herein in order to comply with generally accepted
grammatical rules, and the feminine form of pronouns shall be deemed
to be substituted herein where appropriate, and the plural shall be
substituted for the singular, in any place or places herein where the
context may require such substitution or substitutions.
Section 11.07 Titles. The titles of Articles and Sections are
included for convenience only and shall not be construed as a part of
the Plan or in any respect to affect or modify its provisions.
Section 11.08 Execution of the Plan. This document may be
executed in any number of counterparts and each fully executed
counterpart shall be deemed an original.
IN WITNESS WHEREOF, the Sponsor has caused the Plan to be
signed by its duly authorized officer and adopted as of this 1st day of
January, 1994.
SURGICAL CARE AFFILIATES, INC.
Attest:/s/ Judy C. Ernst By:/s/Tarpley B. Jones
Title:Senior Vice President,
Chief Financial Officer,
Secretary
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Surgical Care Affiliates, Inc. on Form S-8 of our reports dated February 22,
1995 and June 15, 1995, appearing in the Annual Report on Form 10-K of
Surgical Care Affiliates, Inc. for the year ended December 31, 1994 and in
the Annual Report on Form 11-K of Surgical Care Affiliates, Inc. 401(k)
Retirement Plan for the year ended December 31, 1994, respectively.
DELOITTE & TOUCHE LLP
Nashville, Tennessee
June 29, 1995
EXHIBIT 99
SURGICAL CARE AFFILIATES, INC.
401(K) RETIREMENT PLAN
EXHIBIT A
TRUST AGREEMENT
<TABLE>
<CAPTION>
I N D E X
A R T I C L E T I T L E P A G E
<S> <C> <C>
I THE TRUST
1.01 The Trust 2
II CONTRIBUTIONS TO TRUSTEE
2.01 Contributions to Trustee 3
III MANAGEMENT OF FUND
3.01 Investment Powers 4
3.02 Transactions Involving Employer Stock 5
3.03 Directed Investment of Accounts 5
3.04 Liability of Trustee 6
3.05 Court Actions 6
3.06 Appointment of Investment Manager 6
3.07 Payments from Trust Fund 7
IV FIDUCIARY RESPONSIBILITIES
4.01 Exclusive Benefit Rule 8
4.02 Prudent Man Rule 8
4.03 Prohibited Transactions 8
4.04 Conflict of Interest 8
4.05 Foreign Investments 9
4.06 Exemptions 9
V ACCOUNTING AND REPORTS
5.01 Accounts 10
5.02 Reports 10
VI PAYMENT OF BENEFITS
6.01 Payments 11
6.02 Direction of Committee 11
6.03 Impossibility of Performance 11
VII EXPENSES
7.01 Expenses 12
7.02 Taxes 12
VIII CHANGE OF TRUSTEE
8.01 Resignation, Removal or 13
Addition of Trustee
8.02 Transfer of Assets to a 13
Successor Trustee or
Other Medium of Funding
IX AMENDMENT OR TERMINATION
9.01 Amendment or Termination 14
X EXECUTION OF AGREEMENT 15
</TABLE>
THIS AGREEMENT (the "Agreement"), entered into by and
between Surgical Care Affiliates, Inc. (the "Sponsor"), a corporation
with its principal place of business in Nashville, Tennessee and Third
National Bank as Trustee (the "Trustee");
WITNESSETH THAT:
WHEREAS, the Sponsor has adopted the Surgical Care Affiliates,
Inc. 401(k) Retirement Plan which is intended to qualify as a defined
contribution plan under section 401(a) of the Internal Revenue Code
and as a cash or deferred arrangement under section 401(k) of the
Internal Revenue Code, for the exclusive benefit of Participants
thereunder and their Beneficiaries; and
WHEREAS, the Plan, of which this Trust Agreement forms an
integral part, provides that investment of all contributions made to
the Plan and all transactions thereunder shall be made under the
terms of a trust agreement as it may be amended from time to time;
NOW, THEREFORE, in consideration of the foregoing and of the
further obligations and undertaking as hereinafter set forth, it is
hereby agreed as follows:
A R T I C L E I
THE TRUST
Section 1.01 The Trust. The Sponsor, in accordance with
the terms of the Plan, hereby establishes this Trust, and whenever
the word "Plan" is used herein, it shall be deemed to include this
Agreement and the Trust established hereby. The Trust Fund (the
"Fund") shall consist of such cash and other property as shall be paid
or delivered from time to time to the Trustee, together with the
earnings and profits thereon. The Fund shall be held, managed, and
administered by the Trustee in trust without distinction between
principal and income in accordance with the provisions of this
Agreement. This Agreement shall be administered, construed and
enforced according to the laws of the State of Tennessee.
Defined terms, when used herein, shall have the same meaning
as in the Plan except where the context requires a different meaning
herein.
A R T I C L E II
CONTRIBUTIONS TO TRUSTEE
Section 2.01 Contributions to Trustee. Contributions shall
be paid to the Trustee from time to time in accordance with the terms
of the Plan. It shall be the duty of the Trustee to receive, hold,
invest, reinvest and distribute the Fund in accordance with the
provisions of this Agreement. The Trustee shall be under no duty to
enforce payment of any contribution to the Fund and shall not be
responsible for the adequacy of the Fund to meet and discharge any
liabilities under the Plan.
A R T I C L E III
MANAGEMENT OF FUND
Section 3.01 Investment Powers. The Trustee named
herein shall be responsible for the management of the Fund and the
Trustee shall, except as otherwise limited and restricted by the
provisions of this Agreement and of ERISA, be authorized and
empowered as follows:
(a) to invest and reinvest the principal and income of
that portion of the Fund for which it has investment responsibility in
its discretion in any and all stocks, bonds, notes, debentures,
mortgages, trust certificates, insurance company contracts and in
such other property, real or personal, investments and securities of
any kind, class or character, whether income-producing or not, as the
Trustee may deem suitable for the Trust, including savings accounts,
time deposits and units of any common trust fund of the Trustee
including the Plan of Special Investment Funds of Third National Bank
in Nashville for Qualified Employee Benefit Trusts which are hereby
incorporated by reference and made a part of this Agreement.
Notwithstanding any other provisions of this Agreement, the Trustee
may cause any part or all of the monies and assets of this Trust to be
commingled with the monies and assets of trusts created by others,
by causing such monies and assets to be invested as a part of any
of the Investment Funds created by said Plan and the monies and
assets of this Trust so added to any Investment Fund at any time
shall be subject to all of the provisions of said Plan as it is amended
from time to time;
(b) to keep in its discretion such portion of the Fund for
which it has investment responsibility in cash or cash balances as the
Trustee may from time to time deem to be in the best interest of the
Trust;
(c) to sell, exchange, convey, transfer or otherwise
dispose of any property held by it, by private contract or at public
auction;
(d) to vote or to refrain from voting upon any stocks,
bonds or other securities; to give general or special proxies or powers
of attorney with or without power of substitution; to exercise any
conversion privileges, subscription rights or other options and to
make any payments incidental thereto; to consent to or otherwise
participate in corporate reorganizations or other changes affecting
corporate securities and to delegate discretionary powers and to pay
any assessments or charges in connection therewith, and generally
to exercise any of the powers of an owner with respect to stocks,
bonds, securities or other property held in the Fund;
(e) to make, execute, acknowledge and deliver any and
all documents of transfer and conveyance and any and all other
instruments that may be necessary or appropriate to carry out the
powers herein granted;
(f) to register any investment of the Fund in its own
name or in the name of a nominee or nominees and to hold any
investment in bearer form, but the books and records of the Trustee
shall at all times show that all such investments are part of the Fund;
(g) to employ suitable agents and counsel to perform
various functions with respect to the operation of the Trust with
notification to the Sponsor, and to pay their reasonable expenses and
compensation.
Section 3.02 Transactions Involving Employer Stock.
(a) The Trust shall be empowered to acquire and hold
"qualifying employer securities" as defined in section 407(d) of ERISA
without limitation.
(b) The Trust shall invest in Employer Stock to the
extent so directed under Section 3.03 hereof subject to the
availability of Employer Stock for purchase.
(b) All purchases of Employer Stock shall be made at a
price which, in the judgement of the Trustee, does not exceed the
fair market value thereof as determined pursuant to Section 3.10 of
the Plan.
Section 3.03 Directed Investment of Accounts. Pursuant to
Section 3.09 of the Plan, Participants may direct the Trustee as to
the investment of their Individual Account balance in and among the
investment funds made available by the Administrator and an
Employer Stock Fund. Under this provision, Participants may, subject
to a procedure established and applied in a uniform,
nondiscriminatory manner, direct the Trustee in writing to invest their
Individual Account (or a specified portion thereof) in the specific
forms of investment permitted under the Plan; provided, however,
that Plan assets may not be invested in "collectibles" as that term is
defined in section 408(n)(2) of the Code or any tangible personal
property specified by the U.S. Secretary of Treasury for purposes of
this Code provision. The Trustee, in the course of acting upon the
investment election of the Participants, shall be authorized to invest
portions of the Fund in the investment funds so designated.
Section 3.04 Liability of Trustee.
(a) The Trustee shall be a "named fiduciary" under
ERISA with respect to the Plan and shall control and manage the
assets of the Plan to the extent and manner set forth in this Trust
and according to the fiduciary responsibilities as set out in Article IV
of this Trust; and, further, under the authority and discretion
permitted by ERISA and subject to the limitations and restrictions
imposed by ERISA. As governed by ERISA and the above stated
Trust provisions, the Trustee shall be liable for its failure to carry out
the terms of this Agreement, or any instructions of the Sponsor or its
agent, or any Participant, issued in accordance with this Agreement.
The Trustee shall not be responsible for relying upon advice given by
any competent counsel or other agent employed by the Trustee or
Sponsor, or for the making, retention, or sale of any investment or
reinvestment made by it or for any loss to or diminution of the Fund,
except due to its own negligence, willful misconduct, lack of good
faith, or conduct otherwise constituting a breach of fiduciary duty.
(b) The Trustee shall not be liable for acts or omissions
of another trustee (or other fiduciary under ERISA with respect to the
Plan) unless (i) the Trustee knowingly participates in, or knowingly
attempts to conceal the act or omission of the other trustee (or
fiduciary) and the Trustee knows the act or omission is a breach of
a fiduciary responsibility of the other trustee (or fiduciary), or (ii) the
Trustee has knowledge of a breach of fiduciary responsibility by the
other trustee (or fiduciary) and does not make reasonable efforts to
remedy this breach, or (iii) the Trustee's breach of its own fiduciary
responsibility permits the other trustee (or fiduciary) to commit the
breach. Except as set forth in the preceding sentence, the Trustee
shall not be liable for the acts or omissions of an Investment Manager
appointed pursuant to Section 3.06 hereof.
Section 3.05 Court Actions. The Trustee shall not be
required to receive any order or consent of any court as a prerequisite
to taking any action hereunder, or to file any court return or to report
to any court.
Section 3.06 Appointment of Investment Manager. The
Sponsor may employ an Investment Manager to manage the
investment and reinvestment of assets held in the Fund or terminate
an Investment Manager so employed. As used herein, "Investment
Manager" shall mean any person, whether natural or legal, which is
registered as an investment adviser under the Investment Advisers
Act of 1940, which has acknowledged in writing that it is a Fiduciary
with respect to the Plan, and whose extent of authority and
responsibility with respect to Fund investments has been identified
by written agreement with the Trustee. Such authority and
responsibility may extend to the making, acquisition, retention, sale
or other disposition of Fund investments to the same extent that the
Trustee is otherwise authorized and empowered under the terms of
this agreement.
Notwithstanding any other provision of this Agreement, if such
Investment Manager is employed in accordance with this Section, the
Trustee shall not have any discretionary authority or responsibility
with respect to the making, retention or disposition of any
investments or reinvestments of the Fund to the extent that such
authority and responsibility has been given to such Investment
Manager, but rather shall act upon and pursuant to the prudent
direction of the Investment Manager.
The Investment Manager may resign at any time by giving sixty
(60) days written notice to the Sponsor. The Investment Manager
can be removed by the Sponsor upon sixty (60) days prior written
notice to such Investment Manager or the Investment Manager may
be removed by the Sponsor at any time due to malfeasance on the
part of the Investment Manager. The Sponsor may designate and
appoint a successor to any such Investment Manager, or an
additional Investment Manager, which successor, or additional
Investment Manager, shall be bound by the provisions of this
Agreement and shall become a party hereto when written acceptance
of said appointment has been received by the Sponsor.
Section 3.07 Payments from Trust Fund. The Trustee shall
from time to time make payments out of the Trust Fund to such
persons, in such manner, in such amounts and for such purpose as
may be directed by the Plan Administrator and, upon any such
payment being made, the amount thereof shall no longer constitute
a part of the Trust Fund. The Trustee shall not be responsible for the
adequacy of the Trust Fund to meet and discharge any and all
liabilities under the Plan.
A R T I C L E IV
FIDUCIARY RESPONSIBILITIES
Section 4.01 Exclusive Benefit Rule. Subject to applicable
provisions of the Plan regarding contributions made under a mistake
of fact, contributions which are disallowed as a deduction under
section 404 of the Code, and contributions conditioned upon Internal
Revenue Service qualification of the Plan, it shall be impossible for
any part of the corpus or income of the Fund to be used for, or
diverted to, purposes other than for the exclusive benefit of
Participants and Beneficiaries, and the Trustee and the Administrator
shall discharge their respective duties under the Plan solely in the
interest of Participants and Beneficiaries and for the exclusive
purpose of providing benefits to Participants and their Beneficiaries
and of defraying reasonable expenses of administering the Plan.
Section 4.02 Prudent Man Rule. In discharging its duties,
the Trustee shall act with the 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 like character and with like aims as follows:
(a) by diversifying the investments of the Trust so as to
minimize the risk of large losses, unless under the
circumstances it is clearly prudent not to do so; and
(b) in accordance with the documents and instruments
governing the Plan insofar as such documents and
instruments are consistent with the provisions of
ERISA.
Section 4.03 Prohibited Transactions. The Trustee shall not
cause the Plan to engage in any transaction if it knows or should
know that such transaction constitutes, directly or indirectly, a
prohibited transaction under ERISA.
Section 4.04 Conflict of Interest. The Trustee shall not
engage in the following:
(a) dealing with the assets of the Plan in its own
interest or for its own account;
(b) in its individual or in any other capacity, acting in
any transaction involving the Plan or on behalf of a
party (or representing a party) where interests are
adverse to the interest of the Plan or the interest of
its Participants or Beneficiaries; or
(c) receiving any consideration for its own account
from any party dealing with the Plan in connection
with a transaction involving the assets of the Plan.
Notwithstanding the foregoing, however, nothing in this Section
shall be construed to preclude the Trustee from receiving
reimbursement of expenses properly and actually incurred in the
performance of its duties under the Plan.
Section 4.05 Foreign Investments. Except as authorized by
regulations issued by the Secretary of Labor, the Trustee shall not
maintain the indicia of ownership of any Plan assets outside the
jurisdiction of the District Courts of the United States.
Section 4.06 Exemptions. Nothing in this Article shall be
construed to preclude a transaction which is otherwise prohibited
hereunder or under ERISA, provided that the Trustee, or any other
interested party or parties, shall first apply to, and secure from, the
Secretary of Labor an exemption with respect to such transaction.
A R T I C L E V
ACCOUNTING AND REPORTS
Section 5.01 Accounts. The Trustee shall keep accurate
and detailed accounts of all investments, receipts, disbursements and
other transactions hereunder, and all accounts, books and records
relating thereto shall be open to inspection and audit at all reasonable
times by any person designated in writing by the Administrator. The
Fund may, at the Trustee's discretion, be administered on a unit
accounting basis and the value of a unit on the date of execution of
the Trust shall be as determined by the Trustee.
Section 5.02 Reports. Annually, or more frequently if
determined by the Trustee, required by law or requested by the
Administrator, the Trustee shall cause a valuation to be made of the
Fund at its fair market value. Within one hundred twenty (120) days
after the end of the Plan Year (or on such other date as may be
prescribed under regulations of the Secretary of Labor) and at the
time of each valuation during the Plan Year, the Trustee shall file with
the Administrator and certify the accuracy of a written statement
setting forth, for the valuation period, all investments, receipts,
disbursements, and such other information as the Trustee maintains
which the Administrator may require from time to time in order to
fulfill its obligations under applicable law. Upon the expiration of one
hundred eighty (180) days from the date of filing of the statement as
provided herein, the Trustee's liability for any inaccuracies or
omissions appearing upon the face of such statement shall cease,
except as otherwise may be provided by law and except with respect
to any inaccuracies or omissions as to which the Administrator shall
file with the Trustee written objection before the expiration of such
one hundred eighty (180)-day period.
To the extent consistent with applicable law, each transaction,
whether an increase or a decrease to the Fund, may be expressed in
terms of a number of units computed on the basis of the unit value
determined on the preceding valuation date. In the event that
transactions are reported in this manner, the Trustee shall state, in
addition to such other information as is required by law, the number
of units in the Trust and the value of a unit on the date of the
statement.
A R T I C L E VI
PAYMENT OF BENEFITS
Section 6.01 Payments. The Trustee shall make payments
from the Fund to such persons, in such manner and in such amounts
as the Administrator may direct in writing from time to time. The
Trustee shall be fully protected in acting upon any such written
direction without inquiry or investigation, and shall have no duty or
authority to determine the rights or benefits of any Participant or
Beneficiary under the Plan, or to inquire into the right or power of the
Administrator to direct any payment from the Fund. The
Administrator may give directions by drafts or other orders drawn on
the Trust and signed by such person or persons as the Administrator
may authorize in writing from time to time.
Section 6.02 Direction of Committee. The Trustee shall be
fully protected in relying upon the written certification of the
Administrator as to the membership and extent of authority of any
committee duly authorized to act on its behalf and in continuing to
rely thereon until subsequent certification is filed with the Trustee.
The Trustee shall be fully protected in relying and acting upon any
written direction of such committee whose membership and authority
have been certified to the Trustee, and in continuing to so act and
rely until subsequent certification that said authority has been
revoked or modified has been filed with the Trustee.
Section 6.03 Impossibility of Performance. In case it
becomes impossible for the Trustee to perform any act under the
Plan, that act shall be performed which in the judgment of the
Trustee or the Sponsor, respectively, will most nearly carry out the
intent and purpose of the Plan. All parties to this Agreement or all
parties in any way interested in the Plan shall be bound by any acts
performed under such conditions.
A R T I C L E VII
EXPENSES
Section 7.01 Expenses. The expenses incurred by the
Sponsor in the administration or revision of the Plan shall be paid
from the Fund, unless paid directly by the Sponsor. Such
compensation to the Trustee as may be agreed upon in writing from
time to time between the Sponsor and the Trustee and the expenses
incurred by the Trustee in the performance of its duties, including
professional fees of any person, firm or agent employed by the
Trustee to carry out the investment, management or administrative
functions hereunder, shall be paid from the Fund, unless paid directly
by the Sponsor.
Section 7.02 Taxes. The Trustee shall pay out of the Fund
taxes of any and all kinds including, without limitation, property taxes
and income taxes levied or assessed under existing or future laws
upon or with respect to the Trust, or any monies, securities or other
property forming a part thereof, or the income therefrom, subject to
the terms of any agreements or contracts made with respect to trust
investments which make other provision for such tax payments. The
Trustee may assume that any taxes assessed on or with respect to
the Trust or its income are lawfully assessed unless the Sponsor shall
in writing advise the Trustee that in the opinion of counsel for the
Sponsor such taxes are or may be unlawfully assessed. In the event
that the Sponsor shall so advise the Trustee, the Trustee will, if so
requested in writing by the Sponsor, contest the validity of such
taxes in any manner deemed appropriate by the Sponsor or its
counsel, in which event the Trustee agrees to execute all documents,
instruments, claims and petitions necessary or advisable in the
opinion of the Sponsor or its counsel for the refund, abatement,
reduction or elimination of any such taxes.
A R T I C L E VIII
CHANGE OF TRUSTEE
Section 8.01 Resignation, Removal or Addition of Trustee.
The Trustee may resign at any time by giving sixty (60) days written
notice to the Sponsor, and the Trustee can be removed by the
Sponsor upon sixty (60) days prior written notice to the Trustee. The
Sponsor may designate and appoint a successor to any such Trustee,
or an additional trustee, which successor, or additional trustee, shall
be bound by the provisions of this Agreement and shall become a
party hereto when written acceptance of said appointment has been
received by the Sponsor. If the Trustee has resigned or has been
removed, and if the Plan is to be continued, the Sponsor shall
designate a successor trustee, trustees or other medium of funding
pursuant to an agreement executed for such purpose. If the Sponsor
does not so designate such successor trustee, trustees or medium
of funding within sixty (60) days, the Trustee may apply to a court
of competent jurisdiction for purposes of securing the designation of
same. Upon the removal or resignation of the Trustee or the addition
of a new trustee, the Sponsor shall cause a reconciliation of all Trust
assets to be made and a certification shall be provided to all trustees
that such assets are complete and represent all assets of the Trust.
Section 8.02 Transfer of Assets to a Successor Trustee or
Other Medium of Funding. In the event the Sponsor wishes to
continue the Plan through a successor trustee or through another
medium of funding, it may, upon thirty (30) days written notice and
upon furnishing evidence of the continuation of the Plan through a
successor trustee, trustees or medium of funding, direct the Trustee
to transfer the assets of this Trust to said successor trustee, trustees
or medium of funding in which event the Trustee shall deliver in cash
or in kind the assets of this Trust, including such instruments of
conveyance and further assurance as may be reasonably required for
vesting in such successor trustee, trustees or other medium of
funding all right, title and interest of the Trustee in the Fund. The
transfer of assets under the circumstances above shall not, within
itself, be deemed a termination of the Plan, or a cessation of
Employer Contributions to the Plan. Upon the transfer to a successor
trustee or other medium of funding, the Sponsor shall cause a
reconciliation of all Trust assets to be made and a certification shall
be provided to all trustees that such assets are complete and
represent all assets of the Trust.
A R T I C L E IX
AMENDMENT OR TERMINATION
Section 9.01 Amendment or Termination. The
Administrator reserves the right at any time and from time to time to
amend, in whole or in part, any or all of the provisions of this
Agreement by written instrument signed by the Administrator and
delivered to and acknowledged by the Trustee, provided that no
amendment which affects the rights, duties or responsibilities of the
Trustee may be made without its written consent, and provided
further that no amendment shall authorize or permit any part of the
corpus or income of the Fund to be used for, or diverted to, purposes
other than for the exclusive benefit of Participants and their
Beneficiaries.
The Sponsor may at any time deliver written notice to the Trustee
that this Agreement is to be terminated. Upon receipt of such notice,
the Trustee shall within a reasonable time distribute the Fund in
accordance with the written directions of the Sponsor. Following
such distribution, this Trust shall terminate.
A R T I C L E X
EXECUTION OF AGREEMENT
This Agreement may be executed in any number of counterparts
and each fully executed counterpart shall be deemed an original.
IN WITNESS WHEREOF, the Sponsor and the Trustee have each
caused this Agreement to be duly executed as of the 30th day of
June, 1994.
SURGICAL CARE AFFILIATES, INC.
Attest:
By: /s/ Tarpley B. Jones
Title: Senior Vice President
THIRD NATIONAL BANK
Attest:/s/J. Buist Richardson, III
By: /s/Robert G. Mayer
Title: Vice President
