As filed with the Securities and Exchange Commission on September 20, 1994.
Registration No. 33-____________
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________________
FHP INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
___________________
Delaware 33-0072502
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9900 Talbert Avenue, Fountain Valley, California 92708
(Address of principal executive offices)
TAKECARE SAVINGS AND RETIREMENT PLAN
(Full title of the plan)
Robert F. Murphy
Vice President and Associate General Counsel
9900 Talbert Avenue, Fountain Valley, California 92708
(Name and address of agent for service)
___________________
Telephone number, including area code, of agent for service: (714) 963-7233
___________________
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Proposed Proposed
maximum maximum
Title of Amount offering aggregate Amount of
securities to be price offering registration
to be registered registered per share price fee
- -----------------------------------------------------------------------------
Common Stock, 100,000(1),(2),(3) $26.8125(4) $2,681,250(4) $924.57(4)
par value $0.05 shares
per share
- -------------------------------------------------------------------------------
(1) This Registration Statement covers, in addition to the number of shares
of Common Stock stated above, other rights to purchase the shares of
Common Stock covered by the Prospectus and, in addition, pursuant to
Rule 416(c) under the Securities Act of 1933, an indeterminate amount
of interests to be offered or sold pursuant to the employee benefit
plan described herein.
(2) Each share is accompanied by a common share purchase right pursuant
to the Registrant's Amended and Restated Rights Agreement, dated
March 28, 1994, with American Stock and Transfer Company, as Rights
Agent.
(3) The shares of Common Stock, $0.05 par value, being registered consist
of shares to be acquired by the trustee exclusively on the open market
under the TakeCare Savings and Retirement Plan for the accounts of
participants.
(4) Pursuant to Rule 457(h), the maximum offering price, per share and in
the aggregate, and the registration fee were calculated based upon
the average of the high and low prices of the Common Stock on
September 14, 1994, as reported in the consolidated reporting system
of NASDAQ and published in the Western Edition of the Wall Street
Journal.
The Exhibit Index for this Registration Statement is at page 10.
=======================================================================
</TABLE>
<PAGE>
PART I
INFORMATION REQUIRED IN THE
SECTION 10(a) PROSPECTUS
The documents containing the information specified in Part I of Form
S-8 (plan information and registrant information) will be sent or given to
employees as specified by Rule 428(b)(1) of the Securities Act of 1933, as
amended (the "Securities Act"). Such documents need not be filed with the
Securities and Exchange Commission either as part of this Registration
Statement or as prospectuses or prospectus supplements pursuant to Rule 424
of the Securities Act. These documents, which include the statement of
availability required by Item 2 of Form S-8, and the documents incorporated
by reference in this Registration Statement pursuant to Item 3 of Form S-8
(Part II hereof), taken together, constitute a prospectus that meets the
requirements of Section 10(a) of the Securities Act.
<PAGE>
PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of FHP International Corporation (the
"Company") and the TakeCare Savings and Retirement Plan (the "Plan") filed
with the Securities and Exchange Commission are incorporated herein by
reference:
(a) The Company's Annual Report on Form 10-K for the Company's
fiscal year ended June 30, 1993;
(b) The Company's Quarterly Reports on Form 10-Q for the Company's
Quarterly Periods ended September 30, 1993, December 31, 1993
and March 31, 1994;
(c) The Company's Reports on Form 8-K dated April 5, 1994 and May
26, 1994 (as amended by Form 8-K/A dated August 29, 1994 and as
further amended by Form 8-K/A dated August 31, 1994);
(d) The 1993 and 1992 Annual Reports on Form 11-K relating to the
portion of the Plan formerly known as the Comprecare Tax
Deferred Savings Plan;
(e) The 1993 Annual Report on Form 11-K relating to the Plan
prior to its merger with the Comprecare Tax Deferred Savings
Plan; and
(f) The description of the Company's Common Stock contained in its
Registration Statement on Form S-4 dated May 2, 1994
(Registration No. 33-53431), and any amendment or report filed
for the purpose of updating such description.
All documents subsequently filed by the Company and the Plan pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Securities and Exchange Act of
1934, as amended (the "Exchange Act"), prior to the filing of a post-
effective amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold shall
be deemed to be incorporated by reference into the prospectus and to be a
part hereof from the date of filing of such documents. Any statement
contained herein or in a document, all or a portion of which is
incorporated or deemed to be incorporated by reference herein, shall be
deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so
modified or amended, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
The Company's Common Stock, par value $0.05 per share, (the "Common
Stock") is registered pursuant to Section 12 of the Exchange Act, and,
therefore, the description of securities is omitted.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The validity of the original issuance of the Common Stock registered
hereby is passed on for the Company by Robert F. Murphy, Vice President and
Associate General Counsel of the Company. Mr. Murphy is compensated by the
Company as an employee and is the holder of options to acquire shares of
Common Stock.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of Delaware allows for
indemnification of directors, employees and agents of a corporation against
expenses (including attorneys' fees) and other amounts paid in settlement
actually and reasonably incurred by them in connection with any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, in which any such person was or is a party
or is threatened to be made a party, if such person acted in good faith and
in a manner such person reasonably believed to be in or not opposed to the
best interest of the corporation and, with respect to any criminal action
or proceeding, if such person had no reasonable cause to believe his
conduct was unlawful. In the case of an action or suit by or in the right
of the corporation, such a person may not be indemnified in respect of any
claim, issue or matter as to which he has been adjudged liable for
negligence or misconduct in the performance of his duty to the Company,
unless and only to the extent the court in which such action or suit was
brought determines that such person is fairly and reasonably entitled to
indemnity for such expenses as such court may deem proper. In each case,
indemnification shall be made only upon specific authorization of a
majority of disinterested directors, by written opinion of independent
legal counsel or by the shareholders, unless the director, officer,
employee or agent has been successful on the merits or otherwise in defense
of any such action or suit, in which case he shall be indemnified without
such authorization.
The Certificate of Incorporation of the Company provides that
directors, officers and certain other persons will be indemnified to the
fullest extent permitted by Delaware law. In addition, the Company's
Bylaws provide for mandatory indemnification of directors and officers and
discretionary indemnification of employees. The Company is not required to
indemnify any person in a proceeding initiated by such person. The
Company's Certificate of Incorporation provides that the amendment or
repeal of the indemnification provisions does not apply to the liability of
any director of the Company with respect to acts or omissions of such
director prior to such amendment or repeal.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
See the attached Exhibit Index. The undersigned Company hereby
undertakes to submit the Plan and any amendment thereto to the Internal
Revenue Service ("IRS") in a timely manner and will make all changes
required by the IRS in order to qualify the Plan.
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the Registration Statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
do not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") that
are incorporated by reference in the Registration Statement;
(2) That, for the purpose of determining any liability under
the Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described in Item 6
above, 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 Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
<PAGE>
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 of the requirements for filing on Form S-8 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Fountain Valley,
State of California, on September 9, 1994.
By: /s/ Westcott W. Price III
------------------------------
Westcott W. Price III
Its: Chief Executive Officer and President
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints
Westcott W. Price III, Mark B. Hacken, Michael J. Weinstock, Robert F.
Murphy and Russell D. Phillips, Jr., his or her true and lawful attorneys-
in-fact and agents, each acting alone, with full powers of substitution and
resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign any and all amendments (including post-
effective 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, each acting alone, 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 to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
---------- ------ --------
/s/ Robert Gumbiner
---------------------
Robert Gumbiner Director September 9, 1994
/s/ Westcott W. Price III
- ---------------------------
Westcott W. Price III Chief Executive September 9, 1994
Officer, President
and Director
(Principal Executive
Officer)
/s/ Mark B. Hacken
------------------------
Mark B. Hacken
Chief Executive September 9, 1994
Officer, President
and Director
(Principal Executive
Officer)
/s/ Burke F. Gumbiner
- -------------------------
Burke F. Gumbiner Director September 9, 1994
- -------------------------
Warner Heineman Director* September __, 1994
/s/ Joseph F. Prevratil
- -------------------------
Joseph F. Prevratil Director* September 9, 1994
/s/ Richard M. Burdge, Sr.
- -------------------------
Richard M. Burdge, Sr. Director September 9, 1994
/s/ Jack R. Anderson
- -------------------------
Jack R. Anderson Director* September 9, 1994
/s/ Kenneth S. Ord
- ------------------------
Kenneth S. Ord Senior Vice President September 9, 1994
and Chief Financial
Officer (Principal
Financial Officer)
/s/ Valerie A. Fletcher
- ------------------------
Valerie A. Fletcher Controller (Principal September 9, 1994
Accounting Officer)
________________________
*Member of Compensation Committee
<PAGE>
The Plan. Pursuant to the requirements of the Securities Act of 1933,
as amended, the trustee has duly caused this Registration Statement to be
signed on behalf of the Plan by the undersigned, thereunto duly authorized,
in the City of San Jose, State of California, on September 12, 1994.
COMERICA BANK - CALIFORNIA
By: /s/ Marc Rebboah
---------------------------
Marc J. Rebboah
Its: Senior Vice President
By: /s/ Margaret Newby
-----------------------------
Margaret A. Newby
Its: Senior Trust Officer
<PAGE>
EXHIBIT INDEX
Exhibit Sequentially
Number Description Numbered Page
- --------- --------------------------------------- -------------
4.1 TakeCare Savings and Retirement Plan and
Trust Agreement (1992 Restatement).
4.2 Amendment No. 1 to the TakeCare Savings
and Retirement Plan and Trust
Agreement (1992 Restatement).
4.3 Amendment 1994-1 to the TakeCare Savings
and Retirement Plan and Trust Agreement
(1992 Restatement).
5. Opinion of Company Counsel (opinion re
legality).
23.1 Consent of Deloitte & Touche LLP (Consent of
Independent Accountants of the Registrant).
23.2 Consent of Ernst & Young LLP (San Francisco
Office) (Consent of Independent Accountants
of the Plan).
23.3 Consent of Ernst & Young LLP (Denver Office)
(Consent of Independent Accountants of the
Plan).
23.4 Consent of Company Counsel (included in
Exhibit 5).
24. Power of Attorney (included in this
Registration Statement under "Signatures").
TAKECARE SAVINGS
AND
RETIREMENT PLAN
AND
TRUST AGREEMENT
(1992 Restatement)
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1 Definitions. . . . . . . . . . . . . . . . . . . . 2
1.1 Act. . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Beneficiary. . . . . . . . . . . . .. . . . . . . 2
1.3 Board. . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Break in Service. . . . . . . . . . . . . . . . . . 2
1.5 Code. . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Committee. . . . . . . . . . . . . . . . . . . . . 2
1.7 Compensation. . . . . . . . . . . . . . . . . . . . 2
1.8 Disability. . . . . . . . . . . . . . . . . . . . . 3
1.9 Early Retirement Date. . . . . . . . . . . . . . . 4
1.10 Effective Date. . . . . . . . . . . . . . . . . . . 4
1.11 Employer. . . . . . . . . . . . . . . . . . . . . . 4
1.12 Entry Date. . . . . . . . . . . . . . . . . . . . . 4
1.13 Five Percent Owner. . . . . . . . . . . . . . . . . 4
1.14 Highly Compensated Employee. . . . . . . . . . . . 5
1.15 Hour of Service. . . . . . . . . . . . . . . . . . 7
1.16 Key Employee. . . . . . . . . . . . . . . . . . . . 7
1.17 Matching Contribution. . . . . . . . . . . . . . . 8
1.18 Non-Highly Compensated Employee. . . . . . . . . . 9
1.19 Non-Key Employee Participant. . . . . . . . . . . . 9
1.20 Normal Retirement Date. . . . . . . . . . . . . . . 9
1.21 Participant. . . . . . . . . . . . . . . . . . . . 9
1.22 Period of Severance. . . . . . . . . . . . . . . . 9
1.23 Plan. . . . . . . . . . . . . . . . . . . . . . . . 9
1.24 Plan Year. . . . . . . . . . . . . . . . . . . . . 9
1.25 Qualified Nonelective Contribution. . . . . . . . ..9
1.26 Required Beginning Date. . . . . . . . . . . . . . 9
1.27 Salary Deferral Contribution. . . . . . . . . . . . 10
1.28 Service. . . . . . . . . . . . . . . . . . . . . . 10
1.29 Severance from Service Date. . . . . . . . . . . . .10
1.30 Trust. . . . . . . . . . . . . . . . . . . . . . . 11
1.31 Trust Fund. . . . . . . . . . . . . . . . . . . . . 11
1.32 Trustee. . . . . . . . . . . . . . . . . . . . . . 11
1.33 Valuation Date. . . . . . . . . . . . . . . . . . . 11
1.34 Year of Service. . . . . . . . . . . . . . . . . . 11
SECTION 2 Participation. . . . . . . . . . . . . . . . . . . 12
2.1 Requirements for Participation. . . . . . . . . . . 12
2.2 Continuance of Participation. . . . . . . . . . . . 12
2.3 Participation Upon Re-employment. . . . . . . . . . 13
SECTION 3 Salary Deferral Contributions, Matching
Contributions, and Qualified Nonelective
Contributions. . . . . . . . . . . . . . . . . . . 14
3.1 Salary Deferral Contributions. . . . . . . . . . . 14
3.2 Limitations on Salary Deferral Contributions. . . . 20
3.3 Matching Contributions. . . . . . . . . . . . . . . 22
3.4 Limitation on Multiple Use of Deferrals. . . . . . 28
3.5 Payment of Contributions. . . . . . . . . . . . . . 30
SECTION 4 Rollover Contributions and Plan to Plan
Transfers. . . . . . . . . . . . . . . . . . . . . 32
4.1 Rollover Contributions. . . . . . . . . . . . . . . 32
4.2 Plan to Plan Transfers of Assets. . . . . . . . . . 32
SECTION 5 Allocations of Contributions and Income. . . . . . 34
5.1 Separate Accounts in Trust Fund. . . . . . . . . . 34
5.2 Duty of Employer. . . . . . . . . . . . . . . . . . 34
5.3 Allocation of Salary Deferral Contributions, Matching
Contributions, and Qualified Nonelective
Contributions. . . . . . . . . . . . . . . . . . . 35
5.4 Determination and Allocation of Income. . . . . . . 35
5.5 Limitation on Allocations. . . . . . . . . . . . . 37
SECTION 6 Vesting. . . . . . . . . . . . . . . . . . . . . . 40
6.1 Effect of Allocation. . . . . . . . . . . . . . . . 40
6.2 Vesting Requirements for Matching Contribution
Accounts. . . . . . . . . . . . . . . . . . . . . . 40
6.3 Forfeitures. . . . . . . . . . . . . . . . . . . . 42
6.4 Determination of Vested Interests. . . . . . . . . 45
6.5 Lost Participants. . . . . . . . . . . . . . . . . 45
SECTION 7 Service. . . . . . . . . . . . . . . . . . . . . . 46
7.1 Absence for Maternity or Paternity Reasons. . . . . 46
SECTION 8 Distribution of Benefits. . . . . . . . . . . . . . 48
8.1 Beneficiary. . . . . . . . . . . . . . . . . . . . 48
8.2 Early Retirement or Normal Retirement. . . . . . . 49
8.3 Terminated Participants. . . . . . . . . . . . . . 50
8.4 Disability. . . . . . . . . . . . . . . . . . . . . 51
8.5 Method and Timing of Distribution. . . . . . . . . 51
8.6 Death Benefits. . . . . . . . . . . . . . . . . . . 55
8.7 Retained Interests. . . . . . . . . . . . . . . . . 57
8.8 Distributions to Legally Disabled Persons. . . . . 57
8.9 Distribution of Accounts Upon Termination of Plan,
Sale of Assets or Sale of Subsidiary. . . . . . . . 57
8.10 Early Distributions. . . . . . . . . . . . . . . . 59
8.11 Hardship Distributions. . . . . . . . . . . . . . . 59
SECTION 9 Investment of Trust Fund. . . . . . . . . . . . . . 62
9.1 Investment Power. . . . . . . . . . . . . . . . . . 62
9.2 Investment Duties. . . . . . . . . . . . . . . . . 63
9.3 Party in Interest Transactions. . . . . . . . . . . 63
9.4 Investment Direction by Participants. . . . . . . . 64
9.5 Loans to Participants. . . . . . . . . . . . . . . 66
SECTION 10 Fiduciaries. . . . . . . . . . . . . . . . . . . . 70
10.1 Allocation of Authority. . . . . . . . . . . . . . 70
10.2 Board Authority. . . . . . . . . . . . . . . . . . 70
10.3 Committee Authority. . . . . . . . . . . . . . . . 70
10.4 Trustee's Authority. . . . . . . . . . . . . . . . 71
10.5 Discharge of Fiduciary Duties. . . . . . . . . . . 71
10.6 Liability. . . . . . . . . . . . . . . . . . . . . 72
10.7 Investment Manager. . . . . . . . . . . . . . . . . 73
10.8 Miscellaneous. . . . . . . . . . . . . . . . . . . 74
10.9 Plan Administrator. . . . . . . . . . . . . . . . . 74
SECTION 11 Administrative Committee. . . . . . . . . . . . . . 76
11.1 Selection. . . . . . . . . . . . . . . . . . . . . 76
11.2 Organization. . . . . . . . . . . . . . . . . . . . 76
11.3 Communications. . . . . . . . . . . . . . . . . . . 77
11.4 Indemnity. . . . . . . . . . . . . . . . . . . . . 77
11.5 Powers and Duties. . . . . . . . . . . . . . . . . 77
11.6 Funding Policy. . . . . . . . . . . . . . . . . . . 78
11.7 Claims Procedures. . . . . . . . . . . . . . . . . 78
11.8 Services. . . . . . . . . . . . . . . . . . . . . . 80
SECTION 12 Trustee. . . . . . . . . . . . . . . . . . . . . . 82
12.1 Control of Assets. . . . . . . . . . . . . . . . . 82
12.2 Trustee's Powers. . . . . . . . . . . . . . . . . 82
12.3 Accounting of Trustee. . . . . . . . . . . . . . . 83
12.4 Vacancies in Trusteeship. . . . . . . . . . . . . . 83
12.5 Approval of Accounts. . . . . . . . . . . . . . . . 84
12.6 Trustee's Fees and Expenses. . . . . . . . . . . . 85
12.7 Indemnity. . . . . . . . . . . . . . . . . . . . . 85
SECTION 13 Amendment and Termination. . . . . . . . . . . . . 86
13.1 Amendment. . . . . . . . . . . . . . . . . . . . . 86
13.2 Right to Terminate. . . . . . . . . . . . . . . . . 86
13.3 Effect of Termination. . . . . . . . . . . . . . . 87
13.4 Merger. . . . . . . . . . . . . . . . . . . . . . 88
SECTION 14 Miscellaneous. . . . . . . . . . . . . . . . . . . 89
14.1 Effect of Adoption. . . . . . . . . . . . . . . . . 89
14.2 Benefits. . . . . . . . . . . . . . . . . . . . . .89
14.3 Alienation. . . . . . . . . . . . . . . . . . . . .89
14.4 Irrevocability. . . . . . . . . . . . . . . . . . .90
14.5 Exclusive Benefit. . . . . . . . . . . . . . . . . 90
14.6 Duration of Trust. . . . . . . . . . . . . . . . . 91
14.7 Application of Act. . . . . . . . . . . . . . . . . 91
14.8 Mistake of Fact. . . . . . . . . . . . . . . . . . 91
14.9 Domestic Relations Orders. . . . . . . . . . . . . 92
14.10 Gender. . . . . . . . . . . . . . . . . . . . . . 92
14.11 Applicable Law. . . . . . . . . . . . . . . . . . 92
14.12 Effective Date. . . . . . . . . . . . . . . . . . 92
SECTION 15 Top-Heavy Plan Provisions. . . . . . . . . . . . . 93
15.1 Determination of Top-Heavy Status. . . . . . . . . 93
15.2 Top-Heavy Minimum Contributions. . . . . . . . . . 95
15.3 Alternative Top-Heavy Vesting Schedule. . . . . . 97
<PAGE>
INTRODUCTION
THIS TRUST AGREEMENT IS MADE and entered into on 1992,
between TAKECARE HEALTH PLAN, INC., a California corporation,
formerly known as TAKECARE corporation, and PACIFIC TRUST COMPANY
as Trustee.
TakeCare Corporation authorized the TakeCare Savings and
Retirement Plan (the "Plan") and a trust has been established for
the Plan under a plan document and trust agreement effective
December 1, 1988. The Plan has subsequently been amended.
TakeCare Health Plan, Inc. desires to revise the Plan and to set
it forth in a new restated instrument. The prior plan document
and trust agreement is restated and amended in its entirety by
this document, which shall be hereafter referred to as the Trust
Agreement.
The Trust Agreement sets forth the Plan and provides for
contributions by TakeCare Health Plan, Inc. and related employers
to the Trustee to be held in trust for the purposes of
subsequently distributing to employees or their beneficiaries the
corpus and income of the trust fund in accordance with the Plan
and to provide benefits as part of an accident and health plan
upon the termination of employment of a Participant due to
permanent disability.
The Trustee accepts the obligations of the trust as set
forth in this Trust Agreement.
THEREFORE, IT IS AGREED as follows:
SECTION 1
Definitions
The following terms as used in this Trust Agreement shall
have the meanings set forth below:
1.1 Act. The Employee Retirement Income Security Act of
1974, as amended.
1.2 Beneficiary. A person or other entity designated by
the terms of the Plan or by a Participant under Section 8.1 to
receive benefits under the Plan upon the death of the
Participant.
1.3 Board. The Board of Directors of TakeCare Health Plan,
Inc.
1.4 Break in Service. A twelve consecutive month period
beginning on the employee's Severance from Service Date or any
anniversary thereof and ending on the next succeeding anniversary
of such date during which the employee does not complete at least
one Hour of Service.
1.5 Code. The Internal Revenue Code of 1986, as amended.
1.6 Committee. The Administrative Committee appointed by
the Employer as provided in Section 11.
1.7 Compensation. Effective January 1, 1992, all
consideration paid to a Participant by the Employer during a Plan
Year with respect to the services of the Participant, including,
but not limited to, wages, salaries, fees, for professional
services and other amounts received for personal services
actually rendered in the course of employment with the Employer
but not including (except as provided below) contributions to the
Plan or other fringe benefits not normally included on an
Internal Revenue Service W-2 form, such as amounts realized in
connection with stock options and restricted stock or premiums
for group term life insurance; provided, however, that:
(a) For a Participant who first enters the Plan on an
Entry Date other than the first day of the Plan Year,
Compensation shall mean only that portion of the Compensation
paid to the Participant from such Entry Date to the end of such
Plan Year. The dollar limitations under Sections 1.7(b) and 5.5
applicable to such a Participant shall be reduced accordingly.
(b) Each Participant's Compensation for Plan purposes
shall be limited to the first $200,000 for any Plan Year (or such
greater amount in effect at the beginning of the Plan Year as
determined under Code Section 401(a)(17)).
(c) Compensation shall include, except as provided in
Sections 5.5 and 15.2(b), all amounts deferred under a code
Section 401(k) qualified cash or deferred arrangement and
elective contributions under a Code Section 125 cafeteria plan.
(d) In determining the Compensation of an employee,
the Family Aggregation provisions of Section 1.14 shall apply
except that aggregation shall be limited to the employee's spouse
and lineal descendants who have not attained age 19 before the
close of the Plan Year.
1.8 Disability. The permanent incapacity of a Participant
to perform the usual duties of his or her regular occupation with
the Employer by reason of physical or mental impairment, as
determined by the Committee upon the advice of a physician chosen
by the Committee and such determination shall be final and
conclusive for all purposes.
1.9 Early Retirement Date. The date prior to Normal
Retirement Date which is the later of (1) the Participant's
attainment of age 55 or (2) the fifth anniversary of the
Participant's commencement of employment with the Employer.
1.10 Effective Date. December 1, 1988.
1.11 Employer. TakeCare Health Plan, Inc. including
(a) any other member of a controlled group of corporations under
Code Section 414(b), a group of trades or businesses under common
control under Code Section 414(c), or an affiliated service group
under Code Section 414(m) of which the Employer is a member, or
(b) any other employer required to be aggregated with the
Employer under Code Section 414(o).
1.12 Entry Date. The first day of the month next following
or coincident with the date which is thirty days after the date
for which an employee is first credited with an Hour of service.
1.13 Five Percent Owner. A Participant who owns (or is
considered as owning under Code Section 318, as modified by Code
Section 416) more than five percent of the outstanding stock of
the Employer or stock possessing more than five percent of the
total combined voting power of all stock of the Employer. Code
Subsections 414(b), (c) and (m) shall not apply for purposes of
determining ownership in the Employer under this Section.
1.14 Highly Compensated Employee.
(a) An employee who performed services for the
Employer during the Plan Year and who during the Plan Year or
previous Plan Year (1) was at any time during such year a Five
Percent Owner; (2) received compensation from the Employer in
excess of $75,000 (adjusted as provided under Code Section
414(q)(1); (3) received Compensation from the Employer in excess
of $50,000 (adjusted as provided under Code Section 414(q)(1))
and was in the group consisting of the top 20 percent of the
active employees of the Employer when ranked on the basis of
Compensation during such Plan Year; or (4) was at any time an
officer of the Employer and either (A) was the highest paid
officer of the Employer during such Plan Year or (B) received
Compensation greater than fifty percent of the amount in effect
under Code Section 415(b)(1)(A) for such Plan Year, provided,
however, that no more than the greater of three employees or ten
percent of the employees of the Employer (but in no event to
exceed fifty employees) shall be deemed to be officers for this
purpose.
(b) The determination of the number of employees in
the top paid group under Subsection (a)(3) above and the number
of officers under Subsection (a)(4) above shall exclude employees
who (1) have not completed six months of service, (2) normally
work less than 17 1/2 hours per week, (3) normally work during not
more than six months during any year, (4) have not attained age
21 or (5) are included in a collective bargaining agreement
between the Employer and employee representatives if 90% or more
of the employees of the Employer are covered under collective
bargaining agreements and the Plan covers only those employees
who are not covered by such agreements.
(c) For purposes of those provisions of the Plan which
refer to Family Aggregation, any employee of the Employer who is,
on any day during a Plan Year, a spouse, lineal ascendant or
descendant, or spouse of a lineal ascendant or descendant of any
employee who during the Plan Year is (1) an active or former
employee and a Five Percent Owner or (2) one of the ten Highly
Compensated Employees paid the greatest Compensation during the
Plan Year, shall not be considered a separate employee, and any
Compensation paid to such employee (and any applicable
contribution or benefit on behalf of such employee) shall be
deemed to have been paid to or on behalf of such Five Percent
Owner or Highly Compensated Employee.
(d) For purposes of this Section, Subsections (b),
(c), (m), (n), and (o) of Code Section 414 shall first be applied
in determining who is an employee of the Employer.
(e) An employee who is not described in Subsections
(a)(2), (a)(3) or (a)(4) of this Section for the previous Plan
Year shall not be a Highly Compensated Employee with respect to
the Plan Year unless such employee is among the one hundred
active employees paid the greatest Compensation during such Plan
Year.
(f) For purposes of this Section, an employee shall
mean any individual who performs services for the Employer (other
than a nonresident alien who received no earned income as defined
in Code Section 911(d)(2) from his or her Employer that
constituted income from sources within the United States as
defined in Code Section 861(a)(3)) and who is either a common law
employee or a self-employed individual as defined in Code Section
401(c)(1). Employee shall also include a leased employee under
Code Sections 414(o)(2) and 414(n)(2) if such individual is not
covered under the Plan.
1.15 Hour of Service.
(a) An hour for which an employee is paid or is
entitled to payment by the Employer for the performance of
duties.
(b) Hours of Service will be credited for employment
with (1) other members of a controlled group of corporations
(under Code section 414(b)), a group of trades or businesses
under common control (under Code section 414(c)), or an
affiliated service group (under Code section 414(m)) of which the
Employer is a member and (2) any other employer required to be
aggregated with the Employer under Code Section 414(o). Hours of
Service will also be credited for any individual considered an
employee for purposes of the Plan under Code section 414(n).
With respect to any employee who would otherwise first be
credited with an Hour of Service on or after March 1, 1992 and on
or before May 1, 1992, Hours of Service (other than for purposes
of Section 1.12 will be credited for employment with Lincoln
National Services Administration Corporation.
1.16 Key Employee. For any Plan Year, any employee (or the
Beneficiary of any employee) who at any time during such Plan
Year or any of the four preceding Plan Years, is
(a) an officer of the Employer having an annual
Compensation greater than fifty percent of the amount in effect
under Code Section 415(b)(1)(A) for any such Plan Year, provided,
however, that no more than the greater of three employees or ten
percent of the employees of the Employer who have the largest
Compensation (but in no event to exceed fifty employees) shall be
deemed to be officers for this purpose; or
(b) one of the ten employees having annual
Compensation from the Employer of more than the limitation in
effect under Code Section 415(c)(1)(A) and owning both more than
a 1/2 percent ownership interest and the largest percentage
ownership interests in the Employer, provided, however, that if
two employees own the same interest in the Employer, the employee
having greater compensation shall be treated as owning a larger
interest; or
(c) a Five Percent Owner; or
(d) an owner of more than one percent of the
outstanding stock of the Employer or stock possessing more than
one percent of the total combined voting power of all stock of
the Employer having an annual Compensation from the Employer of
more than $150,000.
Ownership in the Employer for purposes of this Section may
be either direct or through attribution under Code Section 318,
as modified by Code Section 416. Code Subsections 414(b), (c)
and (m) shall not apply for purposes of determining ownership in
the Employer under this Section, but shall apply for purposes of
determining Compensation under this Section.
1.17 Matching Contribution. A contribution made by the
Employer to the Trust under Section 3.3 to partially match Salary
Deferral Contributions.
1.18 Non-Highly Compensated Employee. For any Plan Year,
an employee who is not a Highly Compensated Employee.
1.19 Non-Key Employee Participant. For any Plan Year, a
Participant (or the Beneficiary of any Participant) who is not a
Key Employee.
1.20 Normal Retirement Date. The sixtieth (60th) birthday
of a Participant.
1.21 Participant. An employee or former employee of the
Employer who has qualified for participation in the Plan and
whose Accounts hereunder have not subsequently been liquidated.
1.22 Period of Severance. A period of time commencing on an
employee's Severance from Service Date and ending on the earlier
of the date such employee dies or resumes employment with the
Employer.
1.23 Plan. The TakeCare Savings and Retirement Plan set
forth in this Trust Agreement.
1.24 Plan Year. The calendar year.
1.25 Qualified Nonelective Contribution. A contribution
made by the Employer to the Trust under Section 3.1(c) or 3.3(b).
1.26 Required Beginning Date. April 1 of the calendar year
following the calendar year in which the Participant attains age
70 1/2, provided, however, that for any Participant who (a) attained
age 70 1/2 before January 1, 1988 and (b) is not a Five Percent
owner at any time during the Plan Year ending with or within the
calendar year in which he or she attains age 66 1/2, or in any
subsequent Plan year, the Required Beginning Date shall be April
1 of the calendar year following the later of (1) the calendar
year in which the Participant attains the 70 1/2, or (2) the
calendar year in which the Participant retires, provided,
however, that the Required Beginning Date of such a Participant
who becomes a Five Percent Owner in a subsequent Plan Year shall
be April 1 of the calendar year following the calendar year in
which such Plan Year ends.
1.27 Salary Deferral Contribution. A contribution made by
the Employer to the Trust pursuant to a Salary Deferral Agreement
under Section 3.1.
1.28 Service. Subject to Section 7, the period of time
commencing on the date an employee first performs an Hour of
Service and ending on such employee's Severance from Service
Date, provided, however, that:
(a) if the employee severs from service by reason of a
quit, discharge or retirement and the employee then performs at
least one Hour of Service within twelve months of the employee's
Severance from Service Date, "Service" shall include the Period
of severance; and
(b) if the employee severs from service by reason of a
quit, discharge or retirement during an absence from service of
twelve months or less for any reason other than a quit, discharge
or retirement and then completes at least one Hour of Service
within twelve months of the date on which the employee was first
absent from service, "Service" shall include the Period of
Severance.
1.29 Severance from Service Date. Subject to Section 7,
the earlier of
(a) the date on which an employee quits, retires, is
discharged or dies, or
(b) the first anniversary of the first date of a
period in which an employee remains absent from Service (with or
without pay) with the Employer for any reason other than those
described in Subsection (a) (such as vacation, holiday, sickness,
disability, leave of absence approved by the Employer or layoff).
1.30 Trust. The trust created by this Trust Agreement.
1.31 Trust Fund. The total of all contributions made and
other assets transferred to the Trust, increased by income and
other appreciation derived therefrom, and decreased by losses and
other depreciations incurred thereon, benefits paid and expenses
of the Plan not paid by the Employer.
1.32 Trustee. Pacific Trust Company and its successor or
successors.
1.33 Valuation Date. The last day of each calendar quarter
and such other dates as the Committee may direct.
1.34 Year of Service. With respect to an employee, a
period of twelve months of Service commencing as of the later of
(a) the Effective Date or (b) the date for which the employee is
first credited with an Hour of Service where a month of Service
shall be credited for each calendar month in which an employee
has been credited with at least one Hour of Service.
<PAGE>
SECTION 2
Participation
2.1 Requirements for Participation.
(a) Each employee of the Employer is initially
eligible to participate in the Plan on his or her Entry Date,
provided, however, that he or she is not included in a unit of
employees covered by a collective bargaining agreement between
employee representatives and the Employer if retirement benefits
were the subject of good faith bargaining between the employee
representatives and the Employer.
(b) The Committee shall have discretionary authority
to determine the eligibility of employees to participate in the
Plan.
2.2 Continuance of Participation.
(a) A Participant shall participate in the Plan for
each Plan Year during which he or she is not included in a unit
of employees described in Section 2.1(a).
(b) A Participant's participation in the Plan and his
or her Salary Deferral Agreement under Section 3.1(a) shall be
suspended if he or she does not meet the requirement described in
Subsection (a) during a particular Plan Year, provided, however,
that the Participant shall again become a Participant as of the
date he or she ceases to be included in such a unit of employees
described in Section 2.1(a).
(c) A suspended Participant shall not participate in
the allocation under Sections 5.3 and 6.3 of Salary Deferral
Contributions, Matching Contributions, Qualified Nonelective
Contributions or Forfeitures, but such Participant's accounts in
the Trust Fund shall be subject to adjustment for the net income
or loss of the Trust Fund under Section 5.4.
2.3 Participation Upon Re-employment. A former employee
who is reemployed by the Employer shall become a Participant in
the Plan as of the date of his or her re-employment, but not
sooner than his or her Original Entry Date.
<PAGE>
SECTION 3
Salary Deferral Contributions, Matching Contributions, and
Qualified Nonelective Contributions
3.1 Salary Deferral Contributions.
(a) Salary Deferral Agreements.
(1) Each Participant may enter into a written
Salary Deferral Agreement with the Employer to provide for a
reduction in his or her Compensation (or a foregoing of an
increase in Compensation) that is not currently available to the
Participant and to have such amounts contributed to the Plan by
the Employer as a Salary Deferral Contribution on behalf of the
Participant. The Salary Deferral Agreement shall provide for a
Salary Deferral Contribution for a Participant in an amount equal
to from 1% to 20% of the Participant's Compensation for a Plan
Year.
(2) A Participant may revoke his or her Salary
Deferral Agreement by giving written notice to the Employer prior
to the beginning of the first pay period for which such
revocation is to become effective in accordance with such rules
as the committee may prescribe. If a Participant revokes his or
her Salary Deferral Agreement, he or she may not enter into a new
Salary Deferral Agreement which is effective prior to the
beginning of the calendar quarter following the calendar quarter
during which the revocation became effective.
(3) A Participant may elect to increase or
decrease the amount of his or her Salary Deferral Contribution as
of the beginning of a calendar quarter by giving written notice
to the Employer prior to the beginning of the calendar quarter
such increase or decrease is to become effective in accordance
with such rules as the committee may prescribe.
(4) The Salary Deferral Agreement of a Participant
who has received a hardship distribution pursuant to Section 8.11
or any other Code Section 401(k) qualified cash or deferred
arrangement maintained by the Employer shall be suspended for a
period of twelve months following the Participant's receipt of
the distribution.
(b) Salary Deferral Contributions.
(1) The Salary Deferral Contributions may be
provided for by payroll deduction and shall be paid over to the
Trustee by the Employer as of the earliest date on which the
Salary Deferral Contributions can be reasonably segregated from
the Employer's general assets, but in no event later than 90 days
from the date they would otherwise have been paid to the
Participant.
(2) The Committee shall have discretionary
authority to establish uniform and nondiscriminatory rules, and
from time to time to modify, change or interpret such rules,
governing the manner and method by which Salary Deferral
contributions may be made, changed or discontinued.
(c) Actual Deferral Percentage Tests. Subject to
Section 3.4, if the Salary Deferral Contributions made for any
Plan Year would cause the Plan to fail to meet the
nondiscrimination requirements of Code Section 401(k)(3) under
either of the following Actual Deferral Percentage Tests:
(1) The Actual Deferral Percentage Highly
Compensated Employees eligible to make Salary Deferral
Contributions is not more than the Actual Deferral Percentage for
all Non-Highly Compensated Employees eligible to make Salary
Deferral Contributions multiplied by 1.25; or
(2) The excess of the Actual Deferral Percentage
for the group of Highly Compensated Employees eligible to make
Salary Deferral Contributions over that of all Non-Highly
Compensated Employees eligible to make Salary Deferral
Contributions is not more than 2 percentage points and the Actual
Deferral Percentage for such Highly Compensated Employees is not
more than the Actual Deferral Percentage of all such Non-Highly
Compensated Employees multiplied by 2.0; then the Committee shall
report such failure to the Employer, which at its discretion
shall take any one or more of the following actions as is
necessary to enable the Plan to satisfy either Actual Deferral
Percentage Test:
(A) Direct the Committee to reduce the
Salary Deferral Contributions of the Highly Compensated Employees
for the remainder of the Plan Year,
(B) Direct the Committee to distribute
(without regard to Section 8 including any requirement therein
for Participant or spousal consent) the Excess Salary Deferral
Contributions of the Highly Compensated Employees, and income
allocable thereto (which shall be designated as such by the
Committee) to the Highly Compensated Employees after the end of
the Plan Year but no later than two and one-half months following
the last day of the Plan Year,
(C) Make a Qualified Nonelective
Contribution to the Plan, or
(D) Take such other action as shall be
permitted by Treasury Regulations.
(d) Calculation of Actual Deferral Percentage.
(1) The Actual Deferral Percentage for a group of
employees for a Plan Year shall be the average of such employees,
Actual Deferral Ratios (calculated separately to the nearest
hundredth of a percentage point for each employee).
(2) The Actual Deferral Ratio of a Non-Highly
Compensated Employee for a Plan Year shall be the amount of the
employee's Salary Deferral Contributions paid to the Plan (and,
to the extent permitted by Treasury Regulations, the amount
allocated to the employee's Qualified Nonelective Contribution
Account) for the Plan Year, divided by the employee's
Compensation for the Plan Year.
(3) The Actual Deferral Ratio of a Highly
Compensated Employee for a Plan Year shall be the sum of
(A) the employee's Salary Deferral
Contributions paid to the Plan for the Plan Year, plus
(B) the employee's elective contributions
and amounts treated as elective contributions under all other
cash or deferred arrangements maintained by the Employer (other
than a plan which may not be taken into account under Treasury
Regulations Section 1.40(k)-1(g)(1)(ii)(B)) for the Plan Year
(or, in the case of a cash or deferred arrangement which is part
of a plan, the plan year for such plan which ends with or within
the Plan Year), divided by the employee's Compensation for the
Plan Year.
(4) Salary Deferral Contributions paid, to the
Trust for the Plan Year (A) by Non-Highly Compensated Employees
which constitute Excess Deferrals under Section 3.2, or (B) which
have been distributed to the Participant pursuant to Section
5.5(d)(1) shall not be taken into account for purposes of this
Subsection (d).
(e) Family Aggregation Rules.
(1) If a Highly Compensated Employee eligible to
make Salary Deferral Contributions is subject to Family
Aggregation under Section 1.14, the combined Actual Deferral
Ratio for the family group (which is treated as one Highly
Compensated Employee) shall be determined by combining the Salary
Deferral Contributions, contributions described in Subsection
(d)(3)(B) and Compensation of all the family members eligible to
make Salary Deferral Contributions.
(2) The Salary Deferral Contributions and
Compensation of all members of such a family group of a Highly
Compensated Employee shall be disregarded in determining the
Actual Deferral Percentage for the group of Non-Highly
Compensated Employees.
(3) If an employee is required to be aggregated
as a member of more than one family group under the Plan, all
employees eligible to make Salary Deferral Contributions who are
members of such family groups shall be aggregated as one family
group under this Subsection (e).
(f) Calculation of Excess Salary Deferral
Contributions for Highly Compensated Employees.
(1) The Excess Salary Deferral Contribution for a
Highly Compensated Employee for a Plan Year is to be determined
by reducing the Actual Deferral Ratio of the Highly Compensated
Employee with the highest Actual Deferral Ratio to the extent
required to either:
(A) Satisfy either Actual Deferral
Percentage Test, or
(B) Cause such Highly Compensated Employee's
Actual Deferral Ratio to equal the Actual Deferral Ratio of the
Highly Compensated Employee with the next highest Actual Deferral
Ratio.
Such reduction shall be repeated until either
Actual Deferral Percentage Test is satisfied.
(2) The Excess Salary Deferral Contribution for
any Highly Compensated Employee shall be the Salary Deferral
contributions on behalf of such employee (determined prior to the
application of this Subsection (f)) less the amount determined by
multiplying such employee's Actual Deferral Ratio (determined
after application of this Subsection (f)) by such employee's
Compensation used in determining such ratio.
(3) The Excess Salary Deferral Contribution for
any Highly Compensated Employee shall in no event exceed the
amount of the Salary Deferral Contribution for such employee in a
Plan Year.
(4) The amount of the Excess Salary Deferral
contribution for any Highly Compensated Employee to be
distributed under Subsection (c) for a Plan Year shall be reduced
by any Excess Deferrals previously distributed to the Highly
Compensated Employee under Section 3.2 for his or her taxable
year ending with or within the Plan Year.
(5) In the case of a Highly Compensated Employee
whose Actual Deferral Ratio is determined under the Family
Aggregation rules of Subsection (e), the Actual Deferral Ratio of
the Highly Compensated Employee shall be reduced in accordance
with this Subsection (f) and the Excess Salary Deferral
Contributions for the family unit shall be allocated among the
family members in proportion to the Salary Deferral Contributions
of each of the family members that have been combined to
determine the Actual Deferral Ratio.
(g) Calculation of Income Allocable to Excess Salary
Deferral Contributions.
The income allocable to the Excess Salary Deferral
Contribution of a Highly Compensated Employee shall be the gain
or loss for the Plan Year determined with respect to the Excess
Salary Deferral Contribution under the method provided in Section
5.4(b).
3.2 Limitations on Salary Deferral Contributions.
(a) (1) The amount of Salary Deferral contributions
and any other elective deferrals as defined in Code Section
402(g)(3) for any participant made under the Plan and all other
plans maintained by the Employer shall not exceed $7,000 (or such
other amount as may be established under Code Section 402(g)(5))
for the Participant's taxable year, disregarding amounts which
have been distributed to the Participant pursuant to Section
5.5(d)(1) or Treasury Regulations Section 1.415-6(b)(6)(iv).
(2) If during a Participant's preceding taxable
year the Participant received a hardship distribution, within the
meaning of Code Section 401(k)(2)(B)(i)(IV), under Section 8.11
or any other plan maintained by the Employer, the amount
determined under Subsection (a)(1) shall be reduced by the amount
of the salary Deferral Contributions and any other elective
deferrals as defined in Code Section 402(g)(3) for the
Participant during his or her preceding taxable year under the
Plan and all other plans maintained by the Employer.
(b) Notwithstanding any other provision in this Trust
Agreement, Salary Deferral Contributions for a Participant in
excess of the limitation in Section 3.2(a) for the Participant's
taxable year, taking into account any other elective deferrals as
defined in Code Section 402(g)(3) made on behalf of the
Participant for such taxable year, ("Excess Deferrals") and any
income allocable to such Excess Deferrals, shall be distributed
to the Participant no later than the April 15 following the close
of such taxable year in accordance with any written notification
of Excess Deferrals received by the Plan that is submitted to the
Committee by the Participant on or before the March 1 following
the close of such taxable year. The Participant shall be deemed
to have submitted such a written notification requesting a
distribution to the extent of any Excess Deferrals for the
Participant for a taxable year, taking into account only Salary
Deferral Contributions and any other elective deferrals as
defined in Code Section 402(g)(3) for the Participant under the
Plan and all other plans maintained by the Employer.
(c) The income allocable to the Excess Deferrals of a
Participant shall be determined in a similar manner as is
provided in Section 3.1(g) but shall be based on the taxable year
of the Participant.
(d) The amount of Excess Deferrals to be distributed
under this Section 3.2 to a Participant for a taxable year shall
be reduced by any Excess Salary Deferral contributions previously
distributed to such Participant for the Plan Year beginning with
or within such taxable year.
(e) The corrective distribution of Excess Deferrals to
a Participant under this Section 3.2 for a taxable year shall in
no event exceed the amount of his or her Salary Deferral
Contributions for such taxable year.
3.3 Matching Contributions.
(a) Amount of Matching Contributions.
(1) For each Plan Year and, subject to Sections
3.1(c), 3.3(b) and 3.5(c), the Employer shall make Matching
Contributions to the Trust for a Participant equal to 35% of the
amount of Compensation which the Participant has deferred
pursuant to a Salary Deferral Agreement for the Plan Year,
provided, however, that the total Matching Contributions for a
Participant (exclusive of any additional Matching Contributions
under Sections 3.3(b)(2)(B) or 6.3(d)(5)) for a Plan Year shall
not exceed $2,000.
(2) If (A) the Salary Deferral Contribution of a,
Participant for a Plan Year is reduced under Sections 3.1(c),
3.2(b), 3.4 or 5.5(d)(1), and (B) the maximum amount of the
Matching Contributions for the Participant, as determined before
the reduction, is in excess of the maximum amount of the Matching
Contribution for the Participant, as determined after the
reduction, then an amount equal to such excess and income
allocable thereto (which shall be designated as such by the
Committee) shall be deducted from the Matching Contributions
allocated to the Matching Contribution Account of the Participant
for such Plan Year under Section 5.3 and shall be treated as a
forfeiture to be allocated in accordance with Section 6.3.
(3) The income allocable to the amount deducted
under Paragraph (2) shall be determined in a similar manner as is
provided in Section 3.1(g).
(b) Actual Contribution Percentage Tests. Subject to
Section 3.4, if the Matching Contributions made for any Plan Year
for a Participant would cause the Plan to fail to meet the
nondiscrimination requirements of Code Section 401(m) under
either of the following Actual Contribution Percentage Tests.
(1) The Actual Contribution Percentage for the
group of Highly Compensated Employees eligible to make Salary
Deferral Contributions is not more than the Actual Contribution
Percentage for all Non-Highly Compensated Employees eligible to
make Salary Deferral Contributions multiplied by 1.25; or
(2) The excess of the Actual Contribution
Percentage for the group of Highly Compensated Employees eligible
to make Salary Deferral Contributions over that of all Non-Highly
Compensated Employees eligible to make Salary Deferral
Contributions is not more than 2 percentage points and the Actual
Contribution Percentage for such Highly Compensated Employees is
not more than the Actual Contribution Percentage of all such Non-
Highly Compensated Employees multiplied by 2.0, then the
Committee shall report such failure to the Employer, which at its
discretion shall take any one or more of the following actions as
is necessary to enable the Plan to satisfy either Actual
Contribution Percentage Test:
(A) Direct the Committee to (i) distribute
(without regard to Section 8, including any requirement therein
for Participant or spousal consent) the vested portion of Excess
Matching Contributions of the Highly Compensated Employees and
income allocable thereto (which shall be designated as such by
the committee) to the Highly Compensated Employees after the end
of the Plan Year but no later than two and one-half months
following the last day of the Plan Year and (ii) treat the
non-vested portion of the Excess Matching Contributions of the
Highly Compensated Employees and income allocable thereto (which
shall be designated as such by the Committee) as a forfeiture to
be allocated in accordance with Section 6.3 after the end of the
Plan Year but no later than two and one-half months following the
last day of the Plan Year,
(B) Increase as necessary the Matching
contributions for Non-Highly Compensated Employees,
(C) Make a Qualified Nonelective
Contribution to the Plan, or
(D) Take such other action as shall be
permitted by Treasury Regulations.
(c) Calculation of Actual Contribution Percentage.
(1) The Actual Contribution Percentage for a
group of employees for a Plan Year shall be the average of the
Actual Contribution Ratios (calculated separately to the nearest
hundredth of a percentage point for each employee).
(2) The Actual Contribution Ratio of a Non-Highly
Compensated Employee for a Plan Year shall be the amount of the
Matching Contributions paid to the Plan on behalf of such
employee (and, to the extent permitted by Treasury Regulations,
the amount of the Salary Deferral Contributions and Qualified
Nonelective Contributions allocated to the Accounts of such
employee under Section 5.3) for the Plan Year, divided by the
employee's Compensation for the Plan Year.
(3) The Actual Contribution Ratio of a Highly
Compensated Employee shall be the sum of
(A) the Matching Contributions paid to the
Plan on behalf of such employee (and, to the extent permitted or
required by Treasury Regulations, the amount of the Salary
Deferral Contributions allocated to the Accounts of such employee
under Section 5.3) for the Plan Year and
(B) any matching contributions paid by the
Employer to any other plan maintained by the Employer (other than
a plan which may not be taken into account under Treasury
Regulations Section 1.401(m)-1(f)(1)(ii)) on behalf of such
employee during the Plan Year which ends with or within the Plan
Year, divided by the employee's Compensation for the Plan Year.
(4) Matching Contributions paid to the Plan on
behalf of an employee which have been treated as a forfeiture
under Subsection (a)(2) shall not be taken into account for
purposes of this Subsection (c).
(d) Family Aggregation Rules.
(1) If a Highly Compensated Employee eligible to
make Salary Deferral Contributions is subject to Family
Aggregation under Section 1.14, the combined Actual Contribution
Ratio for the family group (which is treated as one Highly
compensated Employee) shall be determined by combining the
Matching Contributions, contributions described in Subsection
(c)(3)(B), and Compensation of all the family members eligible to
make Salary Deferral Contributions.
(2) The Matching Contributions, Salary Deferral
Contributions, Qualified Nonelective Contributions and
Compensation of all members of such a family group of a Highly
Compensated Employee shall be disregarded in determining the
Actual Contribution Percentage for the group of Non-Highly
Compensated Employees.
(3) If an employee is required to be aggregated
as a member of more than one family group under the Plan, all
employees eligible to make Salary Deferral Contributions who are
members of such family groups shall be aggregated as one family
group under this Subsection (d).
(e) Calculation of Excess Matching Contributions for
Highly Compensated Employees.
(1) The Excess Matching Contribution for a Highly
Compensated Employee for a Plan Year is to be determined by
reducing the Actual Contribution Ratio of the Highly Compensated
Employee with the highest Actual Contribution Ratio to the extent
required to either
(A) Satisfy either Actual Contribution
Percentage Test, or
(B) Cause such Highly Compensated Employees
Actual Contribution Ratio to equal the Contribution Ratio of the
Highly Compensated Employee with the next highest Actual
Contribution Ratio.
Such reduction shall be repeated until either
Actual Contribution Percentage Test is satisfied.
(2) The Excess Matching Contribution for any
Highly Compensated Employee shall be the Matching Contributions
on behalf of such employee (determined prior to the application
of this Subsection (e)) less the amount determined by multiplying
such employee's Actual Contribution Ratio (determined after
application of this Subsection (e)) by such employees
Compensation used in determining such ratio.
(3) The Excess Matching Contribution for a Highly
Compensated Employee shall in no event exceed the amount of the
Matching Contributions for such employee in a Plan Year.
(4) In the case of a Highly Compensated Employee
whose Actual Contribution Ratio is determined under the Family
Aggregation rules of Subsection (d), the Actual Contribution
Ratio of the Highly Compensated Employee shall be reduced in
accordance with this Subsection (e) and the Excess Matching
Contributions for the family unit shall be allocated among the
family members in proportion to the Matching Contributions of
each of the family members that have been combined to determine
the Actual Contribution Ratio.
(f) Calculation of Income Allocable to Excess Matching
Contributions. The income allocable to the Excess Matching
Contribution of a Highly Compensated Employee shall be determined
in a similar manner as is provided under Section 3.1(g).
3.4 Limitation on Multiple Use of Deferrals.
(a) In the event that
(1) one or more Highly Compensated Employees are
eligible to make Salary Deferral Contributions; and
(2) the sum of the Actual Deferral Percentages
and Actual Contribution Percentages for Highly Compensated
Employees eligible to make Salary Deferral Contributions for a
Plan Year would exceed the aggregate limit of the greater of:
(A) the sum of:
(i) 125 percent of the greater of:
(I) the Actual Deferral Percentage of
the Non-Highly Compensated Employees eligible to make Salary
Deferral Contributions for the Plan Year, or
(II) the Actual Contribution Percentage
of the Non-Highly Compensated Employees eligible to make Salary
Deferral Contributions for the Plan Year, and
(ii) Two plus the lesser of (I) or (II) above
(in no event to exceed 200 percent of the lesser of (I) or (II)
above), or
(B) the sum of:
(i) 125 percent of the lesser of:
(I) the Actual Deferral Percentage of
the Non-Highly Compensated Employees eligible to make Salary
Deferral Contributions for the Plan Year, or
(II) the Actual Contribution Percentage
of the Non-Highly Compensated Employees eligible to make Salary
Deferral Contributions for the Plan Year, and
(ii) Two plus the greater of (I) or (II)
above (in no event to exceed 200 percent of the greater of (I) or
(II) above); and
(3) the Actual Deferral Percentage of the Highly
Compensated Employees eligible to make Salary Deferral
Contributions exceeds the amount determined under Section
3.1(c)(1); and
(4) the Actual Contribution Percentage of the
Highly Compensated Employees eligible to make Salary Deferral
Contributions exceeds the amount determined under Section
3.3(b)(1), then the Committee shall report such excess to the
Employer, which at its discretion shall take one of the following
actions as is necessary to eliminate the excess:
(A) Direct the Committee to reduce the
Actual Deferral Percentage of the group of Highly Compensated
Employees in the manner described in Section 3.1(c)(2)(B),
(B) Direct the Committee to reduce the
Actual Contribution Percentage of the group of Highly Compensated
Employees in the manner described in Section 3.3(b)(2)(A), or
(C) Make a Qualified Nonelective
Contribution to the Plan.
A reduction under Subparagraph (A) shall be
calculated and treated as an Excess Salary Deferral Contribution
under Section 3.1(f). A reduction under Subparagraph (B) shall
be calculated and treated as an Excess Matching Contribution
under Section 3.2(e).
(b) For purposes of this Section, the Actual Deferral
Percentage and the Actual Contribution Percentage of the group of
Highly Compensated Employees shall be determined after any
corrective distribution of Excess Salary Deferral contributions
under Section 3.1(c)(2)(A), Excess Deferrals under Section 3.2
and Excess Matching Contributions under Section 3.3(c)(2)(A).
3.5 Payment of Contributions.
(a) Salary Deferral Contributions for a Plan Year
shall be paid to the Trustee not later than two and one-half
months after such Plan Year, subject to Section 3.2(b)(1).
(b) Matching Contributions and Qualified Nonelective
Contributions for a Plan Year shall be paid to the Trustee no
later than the earlier of
(1) the last day for the filing of the Employer's
federal income tax return for said Plan Year, including
extensions actually granted, or
(2) twelve months after the close of the Plan
Year.
(c) The total amount of Salary Deferral Contributions,
Matching Contributions and Qualified Nonelective Contributions
for a Plan Year shall not be greater than the amount that may be
deducted under Code Section 404(a) in computing the Employer's
federal income taxes.
(d) The Trustee shall be under no duty to compute any
amount due from the Employer or to take any steps to collect the
same.
<PAGE>
SECTION 4
Rollover Contributions
and
Plan to Plan Transfers
4.1 Rollover Contributions.
(a) The Committee may direct the Trustee to receive
and hold for the benefit of a Participant a Rollover Contribution
from a qualified plan (which direction shall be exercised in a
nondiscriminatory manner) as described in Code Sections 402(a)(5)
or from an individual retirement account as described in Code
Section 408(d)(3), provided, that the Participant certifies to
the Trustee and the Committee that the transfer does so qualify
as a Rollover Contribution.
(b) The Trustee shall hold the assets received as a
Rollover Account of the Participant in the Plan. The assets of a
Rollover Account may be commingled for the purpose of investment
with other contributions and other assets of the Trust Fund held
for the benefit of the contributing Participant. A Rollover
Account shall be subject to the provisions of this Trust
Agreement concerning investment, administration and distribution.
(c) If at any time it is determined that any assets
transferred or received under the provisions of this Section do
not so qualify as a Rollover Contribution, then the Trustee shall
promptly transfer to the Participant the amount in such
Participant's Rollover Account.
4.2 Plan to Plan Transfers of Assets. Upon the written
request of a Participant entitled to a distribution hereunder,
the Trustee shall transfer the account balance or balances
hereunder of such Participant directly to another plan qualified
under Code Section 401(a). Neither the Committee nor the Trustee
shall have any duty to determine if any such transfer is proper
under the provisions of the Code or the other plan.
<PAGE>
SECTION 5
Allocations of Contributions and Income
5.1 Separate Accounts in Trust Fund.
(a) No Participant or Beneficiary shall have any
rights or interest in any specific assets in the Trust Fund
except as expressly set forth in this Trust Agreement.
(b) If a Participant enters into a Salary Deferral
Agreement with the Employer and a Salary Deferral Contribution is
made to the Plan on behalf of the Participant, the Committee
shall establish a separate Salary Deferral Account for the
Participant.
(c) If a Matching Contribution is made to the Plan on
behalf of a Participant, the Committee shall establish a separate
Matching Contribution Account for the Participant.
(d) If a Qualified Nonelective Contribution is made to
the Plan, the Committee shall establish a separate Qualified
Nonelective Contribution Account for each Participant entitled to
receive an allocation of the Qualified Nonelective Contribution
under Section 5.3(a).
(e) The Committee shall establish a separate Rollover
Account for each Participant for whose benefit assets have been
transferred to the Trust in accordance with Section 4.1.
(f) The creation of more than one Account for an
individual Participant is primarily for accounting purposes and
does not require a segregation of assets or funds to each such
Account of a Participant.
5.2 Duty of Employer. The Employer shall certify to the
Committee the amount of Salary Deferral Contributions, Matching
Contributions and Qualified Nonelective Contributions for each
Plan Year and the amount of Compensation for said Plan Year of
each employee who was eligible to participate in the Plan during
the Plan Year.
5.3 Allocation of Salary Deferral Contributions, Matching
Contributions, and Qualified Nonelective Contributions.
(a) Subject to the limitation in Section 5.5, the
Committee shall:
(1) As of the end of each pay period, allocate to
the Salary Deferral Account of each Participant the amount of the
Salary Deferral Contribution, if any, made on behalf of the
Participant,
(2) As of the end of each pay period, allocate to
the Matching Contribution Account of each Participant the amount
of the Matching Contribution, if any, made on behalf of the
Participant, and
(3) As of the end of each Plan Year, allocate the
Qualified Nonelective Contribution, if any, for such Plan Year to
the Qualified Nonelective Contribution Accounts of Non-Highly
Compensated Employee Participants for whom Salary Deferral
contributions were made during the Plan Year in proportion to the
compensation of each such Participant for the Plan Year.
5.4 Determination and Allocation of Income.
(a) As of each Valuation Date, and prior to the
allocation provided for in Section 5.3, the Trustee shall
determine the fair market value of the Trust Fund. The Trustee
shall notify the Committee of its determination of the net
appreciation or depreciation in the fair market value of the
Trust Fund since the last preceding Valuation Date and the amount
of the net income or loss of the Trust Fund during such period.
(b) The Committee shall determine and allocate to each
Account, including Participant's Forfeiture Accounts under
Section 6.3 (but not including a Limitation Suspense Account
under Section 5.5), the net appreciation or depreciation and net
income or loss in proportion to the amount in such Account prior
to such allocation.
(c) To the extent an Account has been invested in
accordance with the directions of the Participant or Beneficiary
under Sections 8.7 or 9.4, the Committee shall determine and
allocate to the Account the net appreciation or depreciation and
net income or loss of the investments held for such Account.
(d) The portion of a Participant's Forfeiture Account
which has been forfeited pursuant to the provisions of Section 6
shall not be considered in such an allocation for the period in
which the forfeiture was incurred.
(e) For the purposes of such allocation, the amount in
each Participant's Salary Deferral Account and Matching
Contribution Account prior to such allocation shall be reduced by
the Committee in an equitable manner to reflect the amount of the
contributions to each such Account which have been made during
the period ending on said Valuation Date in order to give effect
to the shorter period that such contributions have contributed to
the operating results of the Trust Fund.
(f) Each Account shall be adjusted for such allocation
of income or loss and appreciation or depreciation.
5.5 Limitation on Allocations.
(a) The maximum annual additions to a Participant's
Accounts in the Plan and in any other defined contribution plans
of the Employer for any Plan Year shall not exceed the lesser of
(1) $30,000 (or if greater, one-quarter of the dollar limitation
in effect under Code Section 415(b)(1)(A)) or (2) 25% of the
Participant's Compensation (as defined under Code Section 415
which excludes amounts deferred under a Code Section 401(k)
qualified cash or deferred arrangement and elective contributions
under a Code Section 125 cafeteria plan) for such Plan Year.
(b) For the purposes of this Section, annual additions
means the sum for any year of (1) the Participant's portion of
the Salary Deferral Contributions, Matching Contributions,
Qualified Nonelective Contributions and Employer contributions
allocated to his or her Accounts in such plans (but not including
any Excess Deferrals distributed to the Participant under Section
3.2(b)), (2) his or her Participant's contributions to such
plans, if any, (3) forfeitures allocated to his or her Accounts,
if any, (4) contributions allocated to the Participant's
individual medical benefit account, as defined in Code Section
415(1)(2), which is part of a pension or annuity plan maintained
by the Employer, and (5) amounts which are attributable to
post-retirement medical benefits allocated under a welfare
benefit fund (as defined in Code Section 419(e)) maintained by
the Employer to the separate account of a Participant who at any
time during the Plan Year or any preceding Plan Year was a Key
Employee.
(c) The Limitation Year of the Plan for the purpose of
determining Compensation and annual additions is the Plan Year.
(d) In the event that (as a result of the allocations
of forfeitures, a reasonable error in estimating a Participant's
Compensation, a reasonable error in determining the amount of
elective deferrals (within the meaning of Code Section 402(g)(3))
that may be made by a Participant under Code Section 415 or other
situations which the Internal Revenue Service finds applicable)
the annual additions to a Participant's Accounts in the Plan and
in any other defined contribution plans of the Employer for any
Plan Year would exceed the limitations set forth in this Section,
then:
(1) Salary Deferral Contributions of the
Participant for such Plan Year shall be distributed to the
Participant to the extent such excess amount would be reduced;
(2) any remaining excess amount shall be held
unallocated in a Limitation Suspense Account for reallocation to
the Accounts of the Participant and shall be used to reduce the
Matching Contributions and Qualified Nonelective Contributions
for the next Limitation Year (and succeeding Limitation Years as
necessary) which would otherwise be allocated on behalf of that
Participant if he or she satisfies the requirements for continued
participation under Section 2.2 as of the end of the next
Limitation Year (or any succeeding Limitation Year as may be
applicable);
(3) if the Participant does not satisfy the
requirements for continued participation under Section 2.2 as of
the end of the next Limitation Year (or any succeeding Limitation
Year as may be applicable), then such excess amounts derived from
the Matching Contributions and Qualified Nonelective
Contributions shall be held unallocated in a Limitation Suspense
Account for reallocation to the Accounts of all of the
Participants in the Plan (subject to the limitations of this
Section) during each succeeding Limitation Year until the amounts
in such Limitation Suspense Account are exhausted, and no Salary
Deferral Contributions, Matching Contributions or Qualified
Nonelective Contributions which would constitute an annual
addition shall be made to the Plan while such amount in the
Limitation Suspense Account cannot be allocated under this
Section. Such excess amounts shall be used to reduce the
Matching Contributions and Qualified Nonelective Contributions
for the next Limitation Year (and succeeding Limitation Years as
necessary) for all Participants in the Plan;
(4) a Limitation Suspense Account shall not share
in gains or losses of the Trust Fund under Section 5.4.
Unallocated excess amounts shall not be distributed to
Participants or former Participants. Upon termination of the
Plan, amounts held in the Limitation Suspense Account shall be
paid to the Employer.
<PAGE>
SECTION 6
Vesting
6.1 Effect of Allocation. Allocations to the Matching
Contribution Account of a Participant under Section 5 shall not
vest any right or title to any part of the Trust Fund in such,
Participant. The interest of Participants in their Salary
Deferral Accounts, Qualified Nonelective Contribution Accounts,
and Rollover Accounts, shall be fully vested at all times,
subject to Sections 3.1, 3.2, 3.4, 5.5, 14.4 and 14.8.
6.2 Vesting Requirements for Matching Contribution
Accounts.
(a) Subject to Sections 3.2, 3.4 and 15.3, when a
Participant has completed three Years of Service, 20% of the
amount then allocated to the Participant's Matching Contribution
Account shall become vested and nonforfeitable. At the end of
each of the next four Years of Service, an additional 20% of the
amounts then allocated to said Account shall become vested and
nonforfeitable, so that after seven Years of Service the full
amounts allocated to said Account shall become vested and
nonforfeitable.
(b) A Year of Service for the purpose of vesting shall
mean a Year of Service under Section 1.34.
(c) Upon the death of a Participant or termination of
employment upon attainment of Normal Retirement Date or Early
Retirement Date by a Participant, the full amount allocated to
his or her Matching Contribution Account shall become vested and
nonforfeitable. Upon the termination of employment of a
Participant due to permanent Disability, the full amount
allocated to his or her Matching Contribution Account shall
become vested and nonforfeitable as an accident and health
benefit without regard to the Participant's age or Years of
Service.
(d) Subject to Section 6.3(c), when a Participant
incurs 5 consecutive one-year Breaks in Service, following
termination of his or her employment by the Employer for any
reason except retirement at or after Normal Retirement Date or
Early Retirement Date, Disability or death, a Participant's
non-vested interest in his or her Matching Contribution Account
shall be forfeited under Section 6.3.
(e) In the case of a Participant who has 5 or more
consecutive one-year Breaks in Service, all Years of Service
after such Breaks in Service will be disregarded for the purpose
of determining the Participant's vested interest in benefits
accrued before such Breaks in Service. Such Participant's pre-
break service will count in determining the Participant's vested
interest in benefits accrued after such Breaks in Service only if
either:
(1) Such Participant has any vested interest in
his or her or Matching Contribution Account at the time of his or
her Severance from Service Date; or
(2) Upon returning to Service the number of
consecutive one-year Breaks in Service is less than the number of
Years of Service, provided, that such number of Years of Service
shall not include any Years of Service disregarded under this
provision because of prior Breaks in Service. Separate accounts
will be maintained for the Participant's pre-break and post-break
Matching Contribution Accounts. In the case of a Participant who
does not have 5 consecutive one-year Breaks in service, both the
pre-break and post-break Service will count in determining the
Participant's vested interest in benefits accrued before or after
the Breaks in Service.
(f) In the case of any Participant who has incurred a
one-year Break in Service, Years of Service before such break
will not be taken into account until the Participant has
completed a Year of Service after such Break in Service.
(g) A Participant's Years of Service before age 18
shall be disregarded in determining his or her vested interest.
6.3 Forfeitures.
(a) Upon the termination of employment of a
Participant by the Employer for any reason except retirement at
or after Normal Retirement Date or Early Retirement Date,
Disability or death, the nonvested portion of such Participant's
Matching Contribution Account shall be maintained as a separate
Account, called his or her Participant's Forfeiture Account.
Subject to Subsection (c), once a Participant has 5 consecutive
one-year Breaks in Service, the Participant's Forfeiture Account
shall be closed and the balance in said Account shall be
forfeited.
(b) If a terminated Participant who is reemployed
before he or she has incurred 5 consecutive one-year Breaks in
Service received no distribution from his or her Account between
the termination of such Participant's employment and his or her
reemployment, the balance in his or her Participant's Forfeiture
Account shall be reallocated to the Participant's Matching
Contribution Account. If a distribution of less than the
Participant's vested interest in his or her Matching Contribution
Account is made to a Participant from that Plan before the
Participant is 100 percent vested and the Participant has not
incurred 5 consecutive one-year Breaks in Service prior to re-
employment of the Participant by the Employer, his or her
Participant's Forfeiture Account attributable to amounts
contributed prior to such distribution shall be maintained as a
separate Account of the Participant and shall be subject to a
special rule for the purpose of determining vested interest. The
vested portion of such Account shall be an amount ("X")
determined by the formula: X = P (AB + (R x D)) - (R x D). For
purpose of applying the formula, P is the vested percentage at
the time of determination; AB is the account balance at that
time; D is the amount of the prior distribution; and R is the
ratio of the account balance at the time of determination to the
account balance after the prior distribution.
(c) (1) If a distribution is made to a terminated
Participant of the entire vested interest in his or her Matching
Contribution Account, the Participant's Forfeiture Account shall
be closed as of the end of Plan Year in which the distribution
was made, and the balance of the Participant's Forfeiture Account
shall then be forfeited, provided, however, that if the
Participant is subsequently re-employed by the Employer, the
Participant's Forfeiture Account shall be restored, unadjusted
for gains or losses, if the Participant repays the full amount Of
such distribution on or before the earlier of (A) five (5) years
after the first date on which the Participant is subsequently
re-employed by the Employer or (B) the close of the first period
of five (5) consecutive one-year Breaks in Service commencing
after the distribution. Restoration shall be made first from
Plan forfeitures and, if forfeitures are insufficient, the
Employer shall make an additional contribution in such amount as
is necessary for such restoration.
(2) For purposes of Subsection (c)(1), a
Participant who has no vested interest in his or her Matching
Contribution Account upon termination of employment with the
Employer, shall be deemed to have received a distribution of his
or her entire vested interest in such Account upon termination
and shall be deemed to have repaid the full amount of his or her
distribution upon re-employment by the Employer.
(d) The forfeited interests for a Plan Year shall be
applied as follows:
(1) First, to restore the Accounts of
Participants and Beneficiaries under Sections 6.3(c) and 6.5 to
the extent necessary;
(2) Second, to reduce and be allocated as part of
the Matching Contributions for the Plan Year to the extent
necessary;
(3) Third, to reduce and be allocated as part of
the Qualified Nonelective Contribution for the Plan Year to the
extent necessary;
(4) Fourth, to reduce and be allocated as part of
the Top-Heavy Minimum Contribution under Section 15.2 to the
extent necessary; and
(5) Fifth, to reduce and be allocated as part of
future Matching Contributions, provided, however, that any
amounts which have been forfeited under Section 3.3(b)(2)(A)(ii)
shall instead be allocated as additional Matching Contributions
to Non-Highly Compensated Employee Participants for whom Salary
Deferral Contributions were made during the Plan Year in
proportion to their Salary Deferral Contributions for the Plan
Year.
6.4 Determination of Vested Interests. When the
employment of a Participant by the Employer terminates, the
Committee shall have discretionary authority to determine the
vested interest of such Participant in his or her Matching
Contribution Account and shall so advise the Trustee.
Thereafter, the vested interest of the Participant shall be
distributed or retained as provided in Section 8.
6.5 Lost Participants. If a Participant's vested Account
becomes payable to the Participant, or, if applicable, to his or
her Beneficiary (including a surviving spouse or heirs at law
under Section 8.6), and the Committee is unable to find the
Participant or his or her Beneficiary after making reasonable
efforts to locate the Participant or Beneficiary, then the vested
portion of such Account shall be forfeited under Section 6.3 when
the Participant incurs a Break in Service or at such later date
as the Committee may decide. If the Participant or his or her
Beneficiary later presents a valid claim for benefits, the
Committee shall cause the vested account to be restored, first
from Plan forfeitures and then from Employer contributions.
<PAGE>
SECTION 7
Service
7.1 Absence for Maternity or Paternity Reasons.
(a) In the case of a Participant who is absent from
work for maternity or paternity reasons,
(1) the period from the first day of such absence
to the first anniversary thereof shall constitute Service;
(2) the Severance from Service Date shall be the
second anniversary of the first day of such absence; and
(3) the period between the first anniversary and
the second anniversary of the first day of such absence shall
constitute neither Service nor a Period of Severance.
(b) For purposes of Subsection (a), an absence from
work for maternity or paternity reasons means an absence
(1) by reason of the pregnancy of the
Participant;
(2) by reason of a birth of a child of the
Participant;
(3) by reason of the placement of a child with
the Participant in connection with the adoption of such child by
the Participant; or
(4) for purposes of caring for such child for a
period beginning immediately after such birth or placement.
(c) No credit for Service shall be given under
Subsection (a) unless the Participant furnishes to the Plan
Administrator such timely information as the Plan Administrator
may reasonably require to establish that the absence from work is
for such a pregnancy or placement and the number of days for
which there was such an absence.
<PAGE>
SECTION 8
Distribution of Benefits
8.1 Beneficiary.
(a) The spouse of a Participant shall be the
Beneficiary of the Participant's interests in the Plan in the
event of such Participant's death, unless the spouse consents
otherwise in writing. The spouse's written consent shall
acknowledge the effect of the consent and shall be witnessed by a
representative of the Plan designated by the Employer or a notary
public. If a Participant does not have a spouse or if his or her
spouse has validly consented to the designation of a different
Beneficiary, the Participant shall designate a Beneficiary (or
Beneficiaries) in a writing filed with the Committee.
(b) A Beneficiary or Beneficiaries may be changed from
time to time by written notice to the Committee, provided,
however, that if a Participant's spouse has consented under this
Section to the designation of a Beneficiary other than the
spouse, the Participant may not designate a different Beneficiary
without the consent of the spouse in accordance with this
Section. Any consent by a spouse to the designation of a
Beneficiary other than the spouse must acknowledge the specific
Beneficiary designated, including any class of Beneficiaries or
any contingent Beneficiaries. A spouse who has consented to such
a designation by a Participant shall have no right to revoke such
consent without the written consent of the Participant to such
revocation.
(c) In the absence of a valid designation of a
Beneficiary, the balance of the participant's Accounts shall be
paid to the spouse of the Participant or, if the Participant does
not have a surviving spouse, the sum shall be paid to those
persons entitled to succeed to the separate property of the
Participant under the laws of the state of the Participant's
residence then in effect as if the Participant died intestate.
In the absence of the designation by the Participant of a method
of payment to the Beneficiary, payments may be made in such form
and in such manner as the Beneficiary or other person entitled to
receive said sum shall determine.
8.2 Early Retirement or Normal Retirement.
(a) The distribution of the interest of a Participant
in the Plan shall normally commence as of the earlier of the
Participant's Early Retirement Date or Normal Retirement Date.
(b) If a Participant continues in the employ of the
Employer past the earlier of his or her Early Retirement Date or
Normal Retirement Date, the Participant shall continue to
participate in the Plan and no distribution of his or her
interest shall be made until the actual date of such
Participant's retirement, at which time the distribution of his
or her interest shall commence.
(c) A retired Participant may elect to delay the
commencement of distribution under Section 8.5, subject to
Section 8.5(f).
(d) The distribution of the interests of any
Participant in the Plans shall commence in any event not later
than his or her Required Beginning Date.
8.3 Terminated Participants.
(a) Subject to Subsection (c) and Section, 8.5(f), the
distribution of the vested interest in the Plan of a Participant
whose employment was terminated (other than by reason of his or
her retirement, Disability or death) shall normally commence as
of the earlier of the Participant's Early Retirement Date or
Normal Retirement Date as if the Participant had then retired,
unless the Participant elects to delay the commencement of such
distribution under Section 8.5.
(b) The distribution of the vested interest in the
Plan of a terminated Participant shall commence in any event not
later than his or her Required Beginning Date.
(c) The interest of a terminated Participant in the
Plan may be paid earlier than his or her Early Retirement Date or
Normal Retirement Date if requested by the Participant, provided,
however, that no portion of a Participant's interest in the Plan
shall be distributed prior to such Participant's attaining age
59 1/2, unless (1) by electing such a distribution, the Participant
agrees that neither the Employer, the Committee nor the Trustee
shall be liable for any tax or penalty resulting from such
distribution, (2) the distribution is made to a Beneficiary (or
to the Participant's estate) on or after the death of the
Participant, (3) the termination of employment is due to the
Participant's disability within the meaning of Code Section
72(m)(7), (4) the distribution is part of a series of
substantially equal periodic payments, made not less frequently
than annually, which begin after the Participant terminates
employment and that are made over a period equal to the life
expectancy of the Participant or the joint life expectancies of
the Participant and his or her designated Beneficiary, (5) the
distribution is made to the Participant after separation from
service after attainment of age 55, (6) the distribution is paid
to an alternative payee pursuant to a qualified domestic
relations order under Section 14.9, or (7) the distribution is on
account of Plan termination.
8.4 Disability. In the event of termination of a
Participant's employment by reason of his or her permanent
Disability, established under Section 1.8, prior to the
attainment of the earlier of Early Retirement Date or Normal
Retirement Date, the Participant shall be entitled to the
commencement of the distribution of his or her interest in the
Plan as an accident and health benefit. Such distribution may be
made as if the Participant had then retired, subject to Section
8.5(f).
8.5 Method and Timing of Distribution.
(a) Each Participant shall determine the distribution
of his or her interest in the Plan by selecting (subject to the
terms of this Section) one or more of the following methods of
distribution:
(1) the balance of a Participant's Accounts in
the Plan, or any part thereof, may be distributed to the
Participant in a lump sum in cash or in kind;
(2) the balance of a Participant's Accounts in
the Plan, or any part thereof, may be retained as an interest in
the Trust Fund payable in installments in cash or in kind over a
period of years, determined by the Participant under this Section
8; or
(3) any combination of the foregoing methods
which may be changed by the Participant at any time.
The Committee shall direct the Trustee to distribute
assets of the Trust Fund in accordance with the method of
distribution selected.
(b) The entire interest of the Participant in the Plan
(1) either will be distributed to the Participant
not later than his or her Required Beginning Date, or
(2) will be distributed to the Participant, and
his or her Beneficiaries, if applicable, commencing not later
than his or her Required Beginning Date over one of the following
periods (or a combination thereof):
(A) A period not extending beyond the life
expectancy of the Participant, or
(B) A period not extending beyond the joint
life and last survivor expectancy of the Participant and his or
her spouse or other designated Beneficiary.
(c) If a Participant's interest in the Plan is to be
distributed in installments, then, commencing with installments
paid on or after the Required Beginning Data with respect to such
Participant, the amount to be distributed each year shall be at
least equal to the quotient obtained by dividing the account
balance of the Participant at the beginning of such year by the
life expectancy of the Participant (or the joint and last
survivor expectancy of the Participant and his or her spouse or
other designated Beneficiary, if applicable). The life
expectancy of the Participant, or the joint life and last
survivor expectancy of the Participant and his or her spouse if
the spouse is the designated Beneficiary, may be recalculated
periodically over the life of the Participant, or the lives of
the Participant and his or her spouse, but not more frequently
than annually. If the Participant's designated Beneficiary is
other than his or her spouse, then the joint life expectancy of
the Participant and his or her designated Beneficiary may be
recalculated periodically over the life of the Participant, but
not more frequently than annually, in a manner, consistent with
Treasury Regulations, that takes into consideration the change in
life expectancy of the Participant but not the designated
Beneficiary.
(d) The distribution shall commence, unless the
Participant elects otherwise, not later than 60 days after the
later of the close of the Plan Year in which the Participant
(1) attains the earlier of Early Retirement Date or Normal
Retirement Date or (2) terminates his or her service with the
Employer, unless the amount of the distribution cannot be
determined by such day in which case payment of benefits,
retroactive to such day, will begin no later than 60 days after
the earliest date on which the amount of the distribution can be
determined.
(e) If the Participant's designated Beneficiary is
other than his or her spouse, the method of distribution chosen
by the participant shall be one which provides that at least 50%
of the present value of the Participant's interests will be paid
within the life expectancy of the Participant.
(f) If a Participant's vested interest does not exceed
$3,500, the distribution of such Participant's benefits shall be
made in a lump sum without the consent of the Participant as soon
as administratively feasible after the close of the Plan Year in
which the employment of the Participant terminates. If a
Participant's vested interest exceeds $3,500, the distribution of
such Participant's benefits may not be made without the consent
of the Participant. The Participant shall be provided, not more
than 90 days and not less than 30 days prior to the commencement
of the Participant's benefits, with a notice describing the
material features and explaining the relative values of the
optional methods of distribution and informing the Participant of
his or her right to defer commencement of benefits under this
Section 8.5. The consent of the Participant shall be made in
writing after the receipt of the notice required hereunder, but
not more than 90 days prior to the commencement of benefits.
(g) A Participant may elect to postpone the
commencement of his or her benefits but only until his or her
Required Beginning Date. Failure by a Participant to consent in
writing to an immediate distribution is an election to defer
benefits until the Participant's attainment of age 62.
(h) If the distribution of a Participant's interest in
the Plan is paid as a qualifying rollover distribution under Code
Section 402(a)(5)(E), then the Committee shall provide a written
"Rollover Notice" to the Participant that complies with Code
Section 402(f).
(i) In the event that the Employer makes additional
payments to the Trust which are allocable to a Participant after
distribution has commenced to the Participant or his or her
Beneficiary, then such additional amounts shall be distributed or
held in accordance with the method of distribution previously
selected by the Participant.
8.6 Death Benefits.
(a) Upon the death of a Participant to whom
distributions from the Plan have commenced under a method in
accordance with Section 8.5(b)(2), the remaining portion of the
Participant's interest in the Plan shall be distributed to the
Participant's Beneficiary at least as rapidly as under the method
of distribution being used as of the date of the Participant's
death, although the Beneficiary shall have the right to
accelerate payments unless the Participant shall have provided
otherwise in his or her Beneficiary designation.
(b) If a distribution upon a Participant's death is to
be made to his or her surviving spouse and distributions have not
commenced before the Participant's death in accordance with
Section 8.5(b)(2), then the portion of the Participant's interest
in the Plan payable to the spouse may be distributed commencing
no later than the date on which the participant would have
attained age 70 1/2 in minimum annual installments, calculated as
provided in Section 8.5(c) (including recalculation of the
surviving spouse's life expectancy), over a period not exceeding
the life expectancy of the spouse. If the surviving spouse dies
before the commencement of distributions, the portion of the
Participant's remaining interest in the Plan payable to such
spouse shall be paid within five years after the death of the
surviving spouse to the Beneficiary and in the manner previously
designated by the Participant, subject, however, to the rule
provided in Section 8.6(c) concerning payments over the life
expectancy of a designated beneficiary commencing within one
year.
(c) Upon the death of any other Participant before the
final distribution of the Participant's interest in the Plan, an
amount equal to the value of his or her remaining interest in the
Plan shall be paid to his or her Beneficiary within five years
after the death of the Participant in the manner designated by
the Participant, provided, however, that if the distribution of
any portion of a Participant's interest in the Plan is payable to
or for the benefit of an individual (other than a surviving
spouse as provided in Section 8.6(b)) designated as a Beneficiary
by the Participant, minimum annual payments, calculated as
provided in Section 8.5(c), may be made to such Beneficiary over
a period that does not exceed the life expectancy of the
Beneficiary, provided, that no recalculation of life expectancy
shall be permitted and payments must commence within one year of
the death of the Participant or such later date as may be
provided by Treasury Regulations.
(d) If a Participant designates that periodic
distributions shall be made to a minor child until the child
reaches majority and then to the Participant's surviving spouse,
then such distributions shall be treated as if paid to the
surviving spouse for the purposes of this Section.
8.7 Retained Interests.
(a) If a terminated, retired or disabled Participant
or Beneficiary retains an interest in the Trust Fund, the
proceeds of such account shall be distributed in accordance with
the direction of the Participant under this Section 8.
(b) A terminated, retired or disabled Participant or a
Beneficiary whose vested interest is retained in the Trust Fund
may elect to have a sum equivalent to the value of such vested
interest deposited in a certificate of deposit or savings account
or accounts in a bank or savings and loan association insured by
an instrumentality of the Federal Government (but no amount shall
be placed in such an account in excess of the insurance
provided). The interest on such a certificate or account shall
be allocated directly to the account of the Participant or
Beneficiary and shall be retained or distributed in accordance
with the direction of the participant under this Section 8.
8.8 Distributions to Legally Disabled Persons. In case of
any distribution to a minor or to a legally incompetent person,
the Committee may direct the Trustee that the same be made for
the benefit of such person directly to such person or to his or
her legal representative or to some near relative of such person
or that the Trustee shall use the same directly for the support,
maintenance or education of such person. The Trustee shall not
be required to see to the application by any third party of any
distributions made pursuant to this Section.
8.9 Distribution of Accounts Upon Termination of Plan,
Sale of Assets or Sale of Subsidiary. The interests of a
Participant in his or her Accounts shall be distributed in a lump
sum distribution at the request of the Participant upon the
occurrence of any of the following events:
(a) The termination of the Plan without the
establishment of a successor plan by the Employer. For purposes
of this Section 8.9(a), "successor plan" shall mean any defined
contribution plan, as defined in Code Section 414(i), other than
an employee stock ownership plan as defined in Code Sections
4975(e) or 409 or a simplified employee pension as defined in
code Section 408(k), which exists at the time the Plan is
terminated or within the period ending 12 months after the
distribution of all assets from the Plan, provided, however, that
if less than 2% of the employees of the Employer eligible to
participate in the Plan at the time of its termination are or
were eligible under another defined contribution plan described
herein at any time during the 24-month period commencing 12
months before the termination of the Plan, such plan shall not
constitute a successor plan;
(b) The Employer sells or otherwise disposes of at
least 85% of the assets used in a trade or business to another
unrelated corporation, the Participant continues employment with
such other corporation, the distribution is in connection with
such sale or disposition, and the Employer (but not the other
corporation) maintains the Plan after such sale or disposition;
or
(c) The Employer sells or otherwise disposes of a
subsidiary (within the meaning of Code Section 409(d)(3)) to an
unrelated entity other than the Employer, the Participant
continues employment with such subsidiary, the distribution is in
connection with such sale or disposition, and the Employer (but
not the other entity) maintains the Plan after such sale or
disposition.
8.10 Early Distributions. Subject to Section 8.5, a
Participant who has attained age 59 1/2 shall, upon written request
to the Committee, be entitled to receive a distribution or
distributions of his or her interests in the Plan.
8.11 Hardship Distributions.
(a) A Participant may apply for and receive a
distribution from his or her Salary Deferral Account as a
hardship distribution in accordance with this Section upon
incurring a hardship as determined by the Committee in a uniform
and nondiscriminatory manner. The determination of hardship by
the Committee shall be final and binding.
(b) The amount of a distribution made on account of
hardship shall not exceed the Participant's total Salary Deferral
Contributions as of the date of distribution, reduced by the
amounts of previous distributions on account of hardship.
(c) A distribution shall be made an account of
hardship only if the distribution both is made on account of an
immediate and heavy financial need of the Participant and is
necessary to satisfy such financial need.
(d) A distribution shall be deemed made on account of
an immediate and heavy financial need of the Participant if the
distribution is for:
(1) expenses for medical care described in Code
Section 213(d) previously incurred by the Participant, the
participant's spouse or any dependents of the Participant (as
defined in Code Section 152) or necessary for those persons to
obtain medical care described in Code Section 213(d),
(2) costs directly related to the purchase of a
principal residence for the Participant (excluding mortgage
payments),
(3) payment of tuition and related educational
fees for the next twelve months of post-secondary education for
the Participant or his or her spouse, children or dependents (as
defined in Code Section 152),
(4) payments necessary to prevent the eviction of
the Participant from his or her principal residence or the
foreclosure on the mortgage on that residence, or
(5) such other purposes as may be permitted by
the Commissioner of Internal Revenue.
(e) A distribution shall be deemed necessary to
satisfy the immediate and heavy financial need of the Participant
if all the following requirements are satisfied:
(1) the amount of the distribution does not
exceed the sum of (A) the amount required to relieve the need and
(B) an amount, not to exceed 20% of the amount of (A), necessary
to pay any federal, state, and local income taxes and penalties
reasonably anticipated to result from the distribution;
(2) the Participant has obtained all
distributions, other than hardship distributions, and all
nontaxable loans currently available under the Plan and all other
plans maintained by the Employer;
(3) the need cannot be satisfied from the
Participants's other resources which are reasonably available to
the Participant;
(4) the Participant is prohibited under a legally
enforceable instrument from deferring any amounts or making any
employee contributions to the Plan or to any other plan of
deferred compensation maintained by the Employer (other than a
mandatory employee contribution to a defined benefit plan) for a
period of twelve months after receipt of the distribution; and
(5) the amount of elective deferrals, as defined
in Code Section 402(g), which the Participant may elect to have
made in his or her taxable year immediately following the taxable
year in which the distribution is made is limited in each plan
maintained by the Employer in the manner set forth in Section
3.2(a)(2).
<PAGE>
SECTION 9
Investment of Trust Fund
9.1 Investment Power.
(a) Subject to Section 9.4, the Committee is granted
full power and authority in the investment and reinvestment of
the Trust Fund or any part thereof in any manner that it deems
advisable and in accordance with this Trust Agreement. Without
limiting the foregoing, the Committee may invest in bonds, common
and preferred stocks, shares of management type investment
companies as defined in the Investment Company Act of 1940,
annuity contracts, money market funds, savings accounts or
certificates of deposit in a savings bank or a savings and loan
association, or in other property whether real or personal.
(b) In the event that the Committee shall have
designated an Investment Manager with respect to the Trust Fund,
the Trustee shall invest the Trust Fund as directed by the
Investment Manager. Neither the Committee nor the Trustee shall
have any duty or obligation to provide investment advice or
recommendations with respect to investments directed by the
Investment Manager.
(c) The assets of the Trust may be invested in any
trust established and maintained as a medium for the collective
investment of funds of employee benefit trusts, including any
such collective trusts established and maintained by a Trustee,
with respect to which the Trust is an eligible participant. The
governing instrument of any such trust, as amended from time to
time, is hereby incorporated and made a part hereof as if set
forth herein.
(d) The indicia of ownership of any Trust assets shall
not be maintained outside the jurisdiction of the district courts
of the United States, except as authorized by Department of Labor
regulations.
9.2 Investment Duties. In directing the Trustee as to the
investment and reinvestment of the Trust Fund, the Committee (or
an Investment Manager) shall discharge its duties in accordance
with Section 10.5. Upon instructions by the Committee to make
any investment, the Trustee shall make such investment promptly,
and shall retain it until instructed by the Committee regarding
such investment. Upon instructions by the Committee to sell,
convey exchange, transfer, pledge, mortgage or otherwise dispose
of or encumber any real or personal property held by the Trust,
the Trustee shall comply promptly with such instructions. To the
extent permitted by law, the Trustee shall not be liable for the
making of any investment at the direction of the Committee, for
the retention of any such investment in the absence of directions
from the Committee to dispose of the same, or for the disposal or
encumbrance of any investment at the direction of the Committee.
9.3 Party in Interest Transactions. Except as provided in
Section 9.5 with respect to loans to Participants, a fiduciary
shall not cause the Plan to engage in a transaction if he or she
knows or should know that such transaction constitutes a direct
or indirect:
(a) sale or exchange, or leasing, of any property
between the Plan and a party in interest (as defined in Act
Section 3(14));
(b) lending of money or other extension of credit
between the Plan and, a party in interest;
(c) furnishing of goods, services or facilities
between the Plan and a party in interest; or
(d) transfer to, or use by, or for the benefit of, a
party in interest of any assets of the Plan.
9.4 Investment Direction by Participants.
(a) The Committee may establish reasonable rules and
procedures allowing for the exercise of control, within the
meaning of Section 404(c) of the Act and regulations issued
thereunder, by a Participant (or his or her Beneficiary or legal
representative, where applicable) over the investment of some or
all of the assets in the Participant's Accounts (but not
including a Participant's Forfeiture Account). All directions of
Participants provided in accordance with such rules and
procedures shall be transmitted by the Committee to the Trustee
and shall be followed by the Trustee in the investment of the
Trust Fund, provided, however, that the Committee shall not
transmit the directions and the Trustee shall not follow any such
direction if the Committee or the Trustee, as the case may be,
determines that implementation of such direction:
(1) Would not be in accordance with the terms of
the Plan insofar as the Plan is consistent with the Act;
(2) Would cause the Trustee to maintain the
indicia of ownership of assets of the Plan outside the
jurisdiction of the district courts of the United States, except
as permitted by Section 404(b) of the Act or regulations
thereunder;
(3) Would jeopardize the Plan's qualified status
under Code Section 401(a);
(4) Would result in a prohibited transaction
described in either Section 406 of the Act or Code Section 4975;
(5) Could result in a loss in excess of the
Participant's or Beneficiary's account balance;
(6) Would generate income that would be taxable
to the Plan; or
(7) Would or could cause any other result such
that the Trustee's failure to implement the direction will not
cause the Plan to fail to qualify under Department of Labor
Regulations as a plan described in Section 404(c) of the Act.
(b) The Committee and the Trustee shall have no
obligation to question any direction of Participants with respect
to investments, to review any securities or other property held
in the Trust Fund Accounts as a result of the directions of
Participants or to make suggestions or to provide advice to
Participants with respect to the investment or the retention or
disposition of any assets held in the Trust Fund Accounts.
(c) A Participant or Beneficiary shall not be deemed
to be a fiduciary by reason of his or her exercise of control
over assets in his or her Accounts under this Section 9.4 and no
person who is otherwise a fiduciary shall be liable for any loss,
or by reason of any breach, which results from such exercise of
control.
(d) Except as otherwise provided in Department of
Labor Regulations, a Participant's Accounts subject to the
Participant's exercise of control may be invested in "qualifying
employer securities" as defined in Section 407(d)(5) of the Act
without limitation as to the amount or percentage of the Trust
Fund which such securities constitute, to the extent permitted
under the rules and procedures established under Subsection (a).
(e) No portion of a Participant's Accounts which is
subject to a Participant's exercise of control may be invested in
any works of art, rugs, antiques, metals, gems, stamps, coins,
alcoholic beverages or any other tangible personal property
specified by the Secretary of the Treasury as a collectible.
(f) The Committee may charge the Accounts of a
Participant or Beneficiary for the reasonable expenses of
carrying out his or her investment directions under this Section
9.4. The Committee shall establish reasonable procedures to
inform Participants that such charges are made and to
periodically inform each Participant of the actual expenses
incurred with respect to his or her Accounts.
9.5 Loans to Participants.
(a) Upon receipt of a written Participant Loan
Application from a Participant in the form prescribed by the Plan
Administrator, the Plan Loan Administrator as designated by the
Employer may, in his or her discretion, direct the Trustee to
lend to any Participant on the security of the Participant's
Accounts in the Trust and on such terms as the Plan Loan
Administrator shall determine, an amount which, when added to the
outstanding balance of all other loans from all of the qualified
retirement plans of the Employer (as determined under Code
Section 414(b), (c) and (m)), to such Participant, shall not
exceed the lesser of (1) $50,000 (reduced by the excess, if any,
of the highest outstanding balance of loans from the Plan to such
Participant during the year period ending on the day before the
date on which the loan is made over the outstanding balance of
such loans on the date on which the loan is made) or (2) 50% of
the value of such Participant's then vested interests in such
accounts on the date such loan is made, provided, however, that
the minimum amount of a loan shall be $1,000.
(b) In exercising discretion to direct loans
hereunder, the Plan Loan Administrator shall at all times act in
a nondiscriminatory manner and shall consider only those factors
which would be considered in a normal commercial setting by an
entity in the business of making similar loans, including the
security given for the loan.
(c) Loans to a Participant shall be secured in
accordance with Section 14.3 by a lien on no more than 50% of the
value of the Participant's vested interest in his or her Accounts
in the Trust on the date of the loan or loans. The Participant
and, if applicable, his or her spouse, must consent in writing to
the loan, or to the renewal or modification of an outstanding
loan, and to the possible reduction in the Participant's vested
account balance in satisfaction of a loan in default, within the
90 day period prior to the making of the loan. The spouse's
written consent shall acknowledge the effect of the consent and
shall be witnessed by a representative of the Plan, as designated
by the Employer, or a notary public.
(d) Loans to a Participant shall be evidenced by
negotiable promissory notes which shall provide for repayment in
substantially equal periodic installments (not less frequently
than quarterly) over a period within 5 years, with interest at a
reasonable rate which is commensurate with prevailing interest
charged by entities in the business of lending money on similar
loans. Provided, however, that if the loan is used to acquire
any dwelling which within a reasonable time (determined at the
time the loan is made) is to be used as a principal residence of
the Participant, the loan may provide, subject to approval by the
Plan Loan Administrator, for repayment in periodic installments
over a period not in excess of 10 years.
(e) In determining the interest rate for loans to be
made hereunder, including any renewal or modification of
outstanding loans, the Plan Loan Administrator shall periodically
contact commercial lending entities to ascertain the currently
prevailing interest rates for similar loans taking into account
the type of collateral securing the loan.
(f) The failure of a Participant to make three
successive installment payments shall constitute an act of
default under the loan. In the event of default in the payment
of interest or principal on a loan, the Committee shall direct
the Trustee to take appropriate action to remedy the default
which may include suit on the note or foreclosure upon the
collateral, provided, however, that foreclosure on the
Participant's Accounts as collateral shall not occur until the
happening of an event permitting distribution of the
Participant's interest under the Plan.
(g) Each loan made to a Participant shall be
segregated from the general assets of the Trust Fund and shall be
charged against an Account or Accounts of such Participant. All
payments of principal and interest on a Participant loan shall be
credited directly to the appropriate account of the Participant.
<PAGE>
SECTION 10
Fiduciaries
10.1 Allocation of Authority. The authority to control and
manage the operation and administration of the Plan shall be
allocated between the Board, the Committee and the Trustee, who
are the named fiduciaries under the Act, as provided in this
Trust Agreement.
10.2 Board Authority. The Board shall have discretionary
authority to employ advisers and counsel (Section 10.8), to
appoint and remove members of the Committee (Section 11.1), to
appoint and remove a Trustee or successor Trustee (Section 12.4),
and to amend and terminate the Plan (Section 13).
10.3 Committee Authority. The Committee shall have
discretionary authority to determine eligibility to participate
in the Plan (Section 2.1), to make rules with respect to Salary
Deferral contributions and to regulate compliance with
nondiscrimination requirements (Sections 3.1, 3.2, 3.3 and 3.4),
to establish separate accounts for Participants (Section 5.1), to
allocate Salary Deferral Contributions, Matching Contributions,
Qualified Nonelective Contributions, and forfeitures (Sections
5.3 and 6.3(d)), to determine and allocate the amount of net
income or loss of the Trust (Section 5.4), to determine the
vested interest of a Participant (Section 6.4), to make a
determination of hardship (Section 8.11), to establish rules and
procedures for the exercise of control by a Participant or
Beneficiary over the assets in his or her Accounts (Section 9.4),
to appoint and delegate duties to an investment manager (Section
10.7), to employ advisers and counsel (Section 10.8), to appoint
one of its members the Plan Administrator (Section 10.9), to
furnish statements of account (Section 11.3), to construe the
Trust Agreement and determine questions thereunder (Section
11.5), to establish a funding policy for the Trust Fund (Section
11.6), to determine the rights of Participants and Beneficiaries
under the Plan (Section 11.7), to assume all rights, powers and
duties of the Employer upon termination of the Plan (Section
13.3), and to determine the Top Heavy status of the Plan (Section
15.1).
10.4 Trustee's Authority. The Trustee shall have
discretionary authority to establish the fair market value (and
determine net income or loss) of the Trust Fund (Section 5.4), to
invest and reinvest the principal and income of the Trust,
including as directed by the Committee or an Investment Manager
(Section 9.1), to invest and reinvest the principal and income of
the Trust in accordance with the directions of Participants and
Beneficiaries (Section 9.4), to employ advisers and counsel
(Section 10.8), to manage, control and hold the trust assets
(Section 12.1), to render accounts of their administration of the
Trust (Section 12.3), and to assume all rights, powers and duties
of the Employer upon termination of the Plan (Section 13.3).
10.5 Discharge of Fiduciary Duties. Except as provided in
Section 9.4, each fiduciary shall discharge his or her duties
with respect to the Plan solely in the interest of the
Participants and Beneficiaries and
(a) for the exclusive purpose of providing benefits to
Participants and their Beneficiaries;
(b) with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims;
and
(c) by diversifying the investments of the Trust Fund,
so as to minimize the risk of large losses, unless under the
circumstances it is clearly prudent not to do so; and
(d) in accordance with this Trust Agreement.
10.6 Liability.
(a) A fiduciary shall be liable for his or her own
breach of fiduciary responsibility as provided in the Act and
Section 10.5.
(b) A fiduciary shall be liable for a breach of
fiduciary responsibility by another fiduciary under the following
circumstances:
(1) if he or she knowingly participates in, or
knowingly undertakes to conceal, an act or omission of another
fiduciary knowing such act or omission is a breach;
(2) if, by his or her failure to comply with
Section 10.5 in the administration of the specific
responsibilities which give rise to his or her status as
fiduciary, he or she has enabled another fiduciary to commit a
breach; or
(3) if he or she has knowledge of a breach by
another fiduciary, unless he or she makes reasonable efforts
under the circumstances to remedy the breach.
(c) If an Investment Manager is designated under
Section 10.7, neither the Committee nor the Trustee shall be
liable for any act or omission of the Investment Manager in
carrying out its responsibilities, except to the extent that the
Committee violates Section 10.5:
(1) with respect to such designation;
(2) with respect to the establishment or
implementation of the procedures for the designation of an
Investment Manager; or
(c) in continuing the designation.
10.7 Investment Manager.
(a) The power to direct, control or manage the
investment of Trust assets, or a portion thereof, may be
delegated to an Investment Manager appointed by the Committee.
Such an Investment Manager, if appointed, shall have the power to
manage, acquire, or dispose of such assets of the Trust Fund and
it must acknowledge in writing that it is a fiduciary with
respect to the Trust Fund.
(b) An Investment Manager must be (1) a person who is
registered as an investment adviser under the Investment Advisers
Act of 1940; (2) a bank, as defined in that act; or (3) an insur-
ance company qualified to perform such services under the laws of
more than one state.
(c) If an Investment Manager has been appointed,
neither the Committee nor the Trustee shall be liable for acts or
omissions of such Investment Manager, except as provided in
Section 10.6, or be under an obligation to invest or otherwise
manage any asset of the Trust Fund which is subject to the
control of the Investment Manager.
10.8 Miscellaneous.
(a) Any person may serve in more than one fiduciary
capacity with regard to the Plan.
(b) A fiduciary may employ one or more persons,
including counsel, who need not be counsel for the Employer, to
render advice with regard to any responsibility such fiduciary
has under the Plan. The opinion of such counsel shall be full
and complete protection in respect to any action taken or
suffered by the fiduciaries hereunder in good faith and in
accordance with the opinion of such counsel, to the extent
permitted by the Act.
(c) The expenses of persons employed by the Committee
may be paid by the Employer, provided, however, that if they are
not paid by the Employer, they shall be paid by the Trustee from
the assets of the Trust Fund as an expense of the Plan and shall
be charged proportionately to the accounts of all Participants
and Beneficiaries.
10.9 Plan Administrator.
(a) The Committee may designate one of its members to
serve as Plan Administrator; otherwise, the Employer shall be the
Plan Administrator.
(b) The Plan Administrator shall have the duty and
authority to comply with the reporting and disclosure
requirements of Title I of the Act and shall serve as agent of
legal process in any dispute which may arise with respect to the
rights of the Employer, employees, Participants or Beneficiaries
under the Plan and Trust.
<PAGE>
SECTION 11
Administrative Committee
11.1 Selection.
(a) An Administrative committee of at least three
members appointed by the Board shall direct the administration of
the Plan. Subject to Section 13.3, Committee members shall serve
for such term as the Board may designate or until a successor has
been appointed or until removed by the Board. The Employer shall
notify the Trustee of the Committee members and of any changes in
the members.
(b) Committee members shall serve without
compensation. All reasonable expenses of the Committee may be
paid by the Employer, provided, however, that if they are not
paid by the Employer, they shall be paid by the Trustee from the
assets of the Trust Fund as an expense of the Plans and shall be
charged proportionately to the accounts of all Participants and
Beneficiaries.
11.2 Organization.
(a) The action of the Committee shall be determined by
the vote of a majority of its members, if there are more than two
members.
(b) The Committee may authorize one or more of its
members to execute documents on its behalf, including directions
to the Trustee with respect to the performance of the Trustee's
duties hereunder, and the Trustee, upon written notification of
such authorization, shall accept and rely upon such documents
until notified in writing that the authorization has been revoked
by the Committee. The Trustee shall not be deemed to be on
notice of any change in the membership of the Committee unless
notified of such change in writing by the Employer.
(c) A member of the Committee who is also a
Participant shall not vote on any matter relating solely to such
member.
11.3 Communications.
(a) The Committee shall keep on file a copy of this
Trust Agreement and any amendments thereto which the Committee
will permit a Participant to examine during reasonable hours,
together with other records pertaining to said Participant.
(b) The Committee shall furnish each Participant with
a statement of his or her interest in the Plan as of the last
preceding Valuation Date and such other information from time to
time as may be required by the Act.
11.4 Indemnity. To the extent permitted by the Act, the
Employer shall indemnify and save harmless each member of the
Committee against any and all expenses and liabilities arising
out of his or her membership on the Committee, excepting only
expenses and liabilities arising out of the member's own willful
misconduct.
11.5 Powers and Duties.
(a) The Committee shall have the powers and duties
specified in this Trust Agreement, and without limiting the
foregoing, shall have discretionary authority to construe this
Trust Agreement and to determine all questions that shall arise
hereunder, including questions submitted by the Trustee on all
matters necessary for them properly to discharge their duties and
powers.
(b) Subject to Section 11.7, the decisions of the
Committee made in good faith upon any matter within the scope of
its authority shall be final and binding upon the Employer,
Participants, Beneficiaries and all others, to the extent
permitted by the Act.
(c) The Committee at all times in making its decisions
shall act in a uniform and nondiscriminatory manner and may from
time to time set down or modify uniform rules of interpretation
and administration.
11.6 Funding Policy. The Committee shall establish a
funding policy for the Trust Fund. The Committee shall review
the funding policy each year just prior to the end of the Plan
Year for its appropriateness under the circumstances then
prevailing. Following a consideration of anticipated
contributions, income and distributions over a future period
chosen by the Committee and such other matters as the Committee
may deem relevant, the Committee shall determine a funding policy
for the Trust Fund bearing in mind both the short run and long
run needs and goals of the Plan. Such a funding policy shall be
communicated to the Trustee, or to the Investment Manager if one
shall have been appointed, so that investment policy can be
coordinated with the needs of the Plan.
11.7 Claims Procedures.
(a) The Committee in its discretion shall determine
the rights of Participants and Beneficiaries to benefits under
the Plan. In the event of a dispute over benefits, a Participant
or Beneficiary may file a written claim for benefits with the
Committee, provided that such claim is filed within 60 days of
the date the Participant or Beneficiary receives notification of
the Committee's determination.
(b) If a claim is wholly or partially denied, the
Committee shall provide the claimant with a notice of denial,
written in a manner calculated to be understood by the claimant
and setting forth:
(1) The specific reason(s) for such denial;
(2) Specific references to the pertinent Plan
provisions on which the denial is based;
(3) A description of any additional material or
information necessary for the claimant to perfect the claim with
an explanation of why such material or information is necessary;
and
(4) Appropriate information as to the steps to be
taken if the claimant wishes to submit his or her claim for
review. The notice of denial shall be given within a reasonable
time period but no later than 90 days after the claim is filed,
unless special circumstances require an extension of time for
processing the claim. If such extension is required, written
notice shall be furnished to the claimant within 90 days of the
date the claim was filed stating the special circumstances
requiring an extension of time and the date by which a decision
on the claim can be expected, which shall be no more than 180
days from the date the claim was filed. If no notice of denial
is provided as herein described, the claimant may appeal the
claim as though the claim had been denied.
(c) The claimant and/or his or her representative may
appeal the denied claim and may:
(1) Request a review upon written application to
the Board which shall thereupon appoint a special review
committee to hear the claim, none of whose members shall be a
member of the Committee;
(2) Review pertinent documents; and
(3) Submit issues and comments in writing to the
special review committee; provided that such appeal is made
within 60 days of the date the claimant receives notification of
the denied claim.
(d) Upon receipt of a request for review, the special
review committee shall within a reasonable time period but no
later than 60 days after receiving the request, provide written
notification of its decision to the claimant stating the specific
reasons and referencing specific plan provisions on which its
decision is based, unless special circumstances require an
extension of time for processing the review. If such an
extension is required, the special review committee shall notify
the claimant of such special circumstances and of the date, no
later than 120 days after the original date the review was
requested, on which the special review committee will notify the
claimant of its decision.
11.8 Services. The Committee may employ such investment
advisers, accountants, counsel, administrative assistants,
consultants and such clerical and other services as it may
require in carrying out the provisions of the Plan and their
administration, subject to the approval of the Employer. The
reasonable fees and charges for, and costs of, such services may
be paid by the Employer, provided, however, that if they are not
paid by the Employer, they shall be paid by the Trustee from the
assets of the Trust Fund as an expense of the Plan and shall be
charged proportionately to the accounts of all Participants and
Beneficiaries. The reasonable expenses and costs of Plan
administration that are incurred solely with respect to the
Accounts of an individual Participant or Beneficiary may, in the
discretion of the Committee, be charged directly to such
Accounts.
<PAGE>
SECTION 12
Trustee
12.1 Control of Assets.
(a) All assets of the Trust shall be held by the
Trustee in trust.
(b) The Trustee shall have exclusive authority and
discretion to manage and control the assets of the Plan, subject
to the proper directions of the Committee in accordance with the
Plan, except to the extent that: (1) authority has been
delegated to an Investment Manager under Section 10.7, in which
case the Trustee shall be subject to proper directions of the
Investment Manager which are made in accordance with the Plan, or
(2) investment power has been provided to Participants under
Section 9.4, in which case the Trustee shall be subject to the
proper directions of a Participant (or his or her Beneficiary or
legal representative, where applicable) made in accordance with
the Plan.
(c) If there are two or more Trustees, the action of
the Trustees shall be determined by a majority vote of the
Trustees then qualified and acting.
12.2 Trustee's Powers. In the discharge of its duties, the
Trustee shall have all the powers, authority, rights, and
privileges of an absolute owner of the Trust Fund and, without
limiting the foregoing, may receive, hold, manage, invest and
reinvest, sell, exchange, dispose of, encumber, hypothecate,
pledge, purchase property subject to an encumbrance, incur an
indebtedness as part of the purchase price of real or personal
property which may be encumbered to secure the payment of such
indebtedness, mortgage, lease, grant options respecting, repair,
alter, insure or distribute any and all property in the Trust
Fund; may borrow money, participate in reorganization, pay calls
and assessments, vote or execute proxies, exercise subscription
or conversion privileges and register in the name of a nominee
any securities in the Trust Fund; may renew, extend the due date,
compromise, arbitrate, adjust, settle, enforce or foreclose by
judicial proceedings or otherwise, or defend against the same,
any obligations or claims in favor of or against the Trust Fund;
may exercise options, employ agents; and, whether herein
specifically referred to or not, may do all such acts, take all
such actions and proceedings and exercise all such rights and
privileges as if the Trustee were the absolute owner of any and
all property in the Trust Fund.
12.3 Accounting of Trustee. Within a reasonable period
following the close of each Plan Year, the Trustee shall render
to the Employer an account of their administration of the Trust
during the preceding Plan Year, including the amount of the net
appreciation or depreciation of the Trust Fund during the
preceding Plan Year as determined by the Trustee.
12.4 Vacancies in Trusteeship.
(a) The Trustee may resign at any time upon thirty
days written notice to the Employer. The Board may add
additional Trustees and may remove one or all of the Trustees
without cause at any time upon thirty days written notice.
Resignation or removal of a Trustee shall not terminate the
Trust.
(b) In the event of a vacancy in a Trusteeship of this
Trust occurring at any time, the Employer shall appoint a
successor Trustee or Trustees who shall have all the powers and
duties herein conferred upon the original Trustee or Trustees.
(c) The title to all Trust property shall
automatically vest in a successor Trustee or Trustees without the
execution or filing of any instrument or the doing of any act,
but any resigning or removed Trustee or Trustees shall execute
all instruments and do all acts which would otherwise be
necessary to vest such title or record in any successor.
(d) The appointment of a successor Trustee or Trustees
may be effected either by amendment to this Trust Agreement or by
resolution of the Board without such amendment, the agreement of
such a successor Trustee or Trustees to act as such being
evidenced by execution of such amendment or of a certified copy
of such resolution.
12.5 Approval of Accounts. The written approval of any
account by the Employer shall be final as to all matters and
transactions stated or shown therein, and binding upon the
Employer, the Committee and all persons who shall then be or
thereafter become interested in the Trust, to the extent
permitted by the Act. Failure of the Employer to notify the
Trustee within ninety days after receipt of any account of its
disapproval of the account shall be the equivalent of written
approval.
12.6 Trustee's Fees and Expenses.
(a) The Trustee's fees for its services as Trustee
shall be such as may be mutually agreed upon by the Employer and
the Trustee, provided, however, that no individual Trustee who
receives full-time pay from the Employer shall receive any
compensation for his or her services as Trustee.
(b) The Trustee shall be entitled to reimbursement for
expenses reasonably incurred by it in carrying out its duties as
Trustee. The Trustee's fees and expenses may be paid by the
Employer, provided, however, that if they are not paid by the
Employer, they shall be paid by the Trustee from the assets of
the Trust Fund as an expense of the Plan and shall be charged
proportionately to the accounts of all Participants and
Beneficiaries.
12.7 Indemnity. To the extent permitted by the Act, the
Employer shall indemnify and save harmless the Trustee against
any and all expenses and liabilities arising out of its service
as Trustee, excepting only expenses and liabilities arising out
of the Trustee's own willful misconduct.
<PAGE>
SECTION 13
Amendment and Termination
13.1 Amendment. Board reserves the right at any time to
amend this Trust Agreement to any extent or in any manner that it
may deem advisable, including retroactively, by delivery to the
Trustee of a copy of said Amendment executed by the authorized
officers of the Employer; provided, however, that no amendment:
(a) shall have the effect of vesting in the Employer
any interest in any property held in the Trust;
(b) shall cause or permit any property held in the
Trust to be diverted to purposes other than the exclusive benefit
of the present or future Participants and their Beneficiaries;
(c) shall alter or increase the duties or the
liabilities of the Trustee without its written consent;
(d) shall adversely affect the then accrued or vested
benefits of any Participant, except when necessary to obtain or
retain the qualification of the Plan under Code Section 401(a),
or any amendment thereof; or
(e) shall eliminate an optional form of distribution
with respect to benefits attributable to service prior to the
effective date of the amendment (except as provided otherwise by
Treasury Regulations).
13.2 Right to Terminate.
(a) The Employer has established the Plan with the
bona fide intention to make its contributions indefinitely, but
it is not and shall not be under any obligation or liability
whatsoever to continue its contributions or to maintain the Plan
for any given length of time and the Employer may, in its sole
and absolute discretion, discontinue its contributions to the
Plan or terminate the Plan at any time without any liability
whatsoever.
(b) In the event of the termination of the Plan, all
Participants, or in the event of the complete discontinuance of
further contributions to the Plan by the Employer, all
Participants who are then employed by the Employer shall have a
fully vested interest in the amounts credited to their respective
Plan Accounts at the time of such termination or discontinuance.
(c) In the event of partial termination of the Plan,
the Participants affected by the partial termination shall have a
fully vested and nonforfeitable interest in the amounts credited
to their respective Plan Accounts at the time of partial
termination.
13.3 Effect of Termination.
(a) The Plan shall terminate upon the happening of any
of the following events--
(1) Delivery to the Trustee of a Notice of
Termination executed by the Employer specifying the date as of
which the Plan shall terminate; or
(2) Adjudication of the Employer as a bankrupt or
a general assignment by the Employer for the benefit of its
creditors or dissolution of the Employer.
(b) Upon the termination of the Plan, the assets of
the Trust Fund shall be held by the Trustee until they are
distributed according to the terms of this Trust Agreement. This
Trust shall continue in existence until all of the assets of the
Trust Fund are distributed.
(c) Upon the termination of the Plan and if so
provided by a resolution of the Board, all rights, powers and
duties to be exercised or performed by the Employer with respect
to the Plan shall terminate and shall thenceforth be exercised or
performed by the Trustee or the Committee, as specified by such
resolution.
(d) If the Employer ceases to exist as a separate
legal entity due to dissolution, liquidation, merger or
otherwise, then, unless provided otherwise by a resolution of the
Board, all rights, powers and duties to be exercised or performed
by the Employer shall terminate and shall thereafter be exercised
or performed by the Committee. All vacancies on the Committee
shall thereafter be filled by the remaining members of the
Committee.
13.4 Merger. The Plan may not be merged or consolidated
with any other plan, nor any of its assets or liabilities be
transferred to any other plan, unless each Participant in such
plan would (if such plan then terminated) receive a benefit
immediately after the merger, consolidation or transfer which is
equal to or greater than the benefit he or she would have been
entitled to receive immediately before the merger, consolidation
or transfer (if the Plan had then terminated).
<PAGE>
SECTION 14
Miscellaneous
14.1 Effect of Adoption. The adoption and maintenance of
the Plan and this Trust Agreement shall not be deemed to be a
contract between the Employer and any employee. Nothing herein
contained shall be deemed to give to any employee the right to be
retained in the employ of the Employer or to interfere with the
right of the Employer to discharge any employee at any time, nor
shall it interfere with an employee's right to terminate his or
her employment at any time.
14.2 Benefits. All benefits payable under the Plan shall
be paid or provided for solely from the Trust Fund and the
Employer assumes no liability or responsibility therefor.
14.3 Alienation.
(a) The interest hereunder of any Participant or a
Beneficiary shall not be alienable by the Participant or
Beneficiary either by assignment or by any other method and shall
not be subject to be taken by his or her creditors by any process
whatever.
(b) This Section shall not apply to the creation,
assignment or recognition of a right to any benefit payable with
respect to a Participant under a qualified domestic relations
order as determined under Section 14.9.
(c) The Trustee shall have a first lien on the vested
interest of a Participant in the Plan for any loans made to a
Participant under Section 9.5 and said lien shall be satisfied by
repayment of the loan by the Participant or by setoff up to the
amount of his or her vested interest upon the happening of an
event permitting distribution of the Participant's interest in
the Plan.
14.4 Irrevocability. The Trust shall be irrevocable.
However, the Plan is based upon the condition that it shall be
initially approved by the Internal Revenue Service as being
qualified under Code Section 401(a). In addition, a contribution
by the Employer under the Plan for each Plan Year is expressly
conditioned hereby on it being deductible for federal income tax
purposes. Therefore, if (a) upon an application for initial
qualification which is filed by the due date of the Employer's
federal income tax return for the Plan Year in which the Plan is
adopted (or such later date as may be permitted by the Secretary
of the Treasury), the Internal Revenue Service issues an adverse
determination with respect to the Plan's qualification, or
(b) the deductibility of any contributions is disallowed, the
Employer shall be permitted to recover from the Trust (1) any
contributions which have been made prior to any such
determination that the Plan is not qualified, or (2) any
contribution the deductibility of which shall be disallowed,
within one year of the denial of the qualification, or the
disallowance of the deduction, as the case may be. Any Salary
Deferral Contribution received from the Trust shall be
distributed by the Employer to the Participant for whom it was made.
14.5 Exclusive Benefit. In no event shall the principal or
income of the Trust be paid to or revert to the Employer, except
as provided in Sections 5.5, 14.4 or 14.8, or be used for any
purpose whatsoever other than the exclusive benefit of the
Participants or Beneficiaries.
14.5 Duration of Trust. Irrespective of any other
provisions of this instrument, the Trust provided for herein,
unless sooner terminated according to its terms, shall wholly
cease at the death of the last survivor of the persons entitled
to become Participants under it as of the date of its execution
and of any other persons now living who may become Participants
at any future time; provided, however, that if, as and when the
Trust shall not violate the rules against perpetuities as
prescribed by the laws of the State of California, then said
provisions shall be of no force and effect, and the Trust shall
continue in perpetuity unless otherwise terminated as herein
provided. Upon any termination pursuant to the foregoing
provisions, distributions which the Trustee, in the absence of
those provisions, would have made at a later date, shall be made
in accordance with the provisions of the Trust Agreement.
14.7 Application of Act. It is the intent of this Trust
Agreement to carry out the provisions of the Act and it shall be
so interpreted.
14.8 Mistake of Fact. In the event the Employer makes a
contribution to the Plan because of a mistake of fact, the
Employer shall be entitled to recover from the Trust the amount
contributed because of such mistake of fact within one year attar
the payment of such contribution. Trust income attributable to
the amount to be returned, however, shall not be paid to the
Employer, and Trust loss attributable thereto shall reduce the
amount to be so returned.
14.9 Domestic Relations Orders.
(a) Notwithstanding Section 8, distribution of a
Participant's interests in the Plan may be made in accordance
with any qualified domestic relations order (as defined in Code
Section 414(p)(1)).
(b) The Plan Administrator shall establish written
procedures to determine the qualified status of domestic
relations orders and to administer distributions under such
qualified orders in accordance with Code Section 414(p).
(c) The Plan Administrator shall notify Participants
and alternate payees of the receipt of domestic relations orders,
the procedure for determining their status and the results of
such determinations, as required by Code Section 414(p).
14.10 Gender. Words used herein in the masculine gender
may also include the feminine and, whenever appropriate, words
used herein in the singular may also include the plural.
14.11 Applicable Law. All matters respecting the validity,
effect, interpretation and administration of the Trust Agreement
shall be determined in accordance with the laws of the State of
California, except as provided in the Act.
14.12 Effective Date. The effective date of this Trust
Agreement as amended and restated is July 1, 1992, except as
otherwise provided herein.
<PAGE>
SECTION 15
Top-Heavy Plan Provisions
15.1 Determination of Top-Heavy Status.
(a) For each Plan Year, the Committee shall determine
whether the Plan is a Top-Heavy Plan.
(b) For purposes of such determination, the Committee
shall aggregate in an "Aggregation Group" all plans maintained by
the Employer which are qualified under Code Section 401 and
(1) in which at least one Participant is a Key Employee or
(2) which is a plan which enables any other plan of the Employer
in which at least one participant is a Key Employee to qualify
under Code Sections 401(a)(4) or 410. In addition, the Committee
may aggregate any qualified plan maintained by the Employer which
is not required to be included in the Aggregation Group by the
preceding sentence if the Aggregation Group would continue to
qualify under Code Section 401(a)(4) or 410 with such additional
plan being taken into account. If the Plan is included in an
Aggregation Group, then the Committee's determination regarding
such Aggregation Group shall be deemed, for all purposes under
this Trust Agreement, to be the Committee's determination
regarding the Plan.
(c) The Committee shall determine that the Plan is a
Top-Heavy Plan (or that any Aggregation Group of plans maintained
by the Employer is a Top-Heavy Group) if, as of the last day of
the Plan Year preceding the Plan Year for which the determination
is being made (the "Determination Date"), the aggregate of the
accounts of Key Employee Participants under the Plan (or under
all plans of the Aggregation Group) exceeds sixty percent of the
aggregate of the accounts of all Participants under the Plan (or
under all plans of the Aggregation Group), provided, however,
that with respect to an Aggregation Group, such determination
shall be based upon the account balances as of the Determination
Dates (as defined above) for such plans which are within the same
calendar year.
(d) In ascertaining the accounts of each Participant
for purposes of determining if the Plan is a Top-Heavy Plan as of
a Determination Date, the Committee shall take into account the
following:
(1) the balance in each of the Participant's
accounts in the Plan (or in all plans of the Aggregation Group)
on the last Valuation Date preceding the Determination Date,
except that, unless provided otherwise in regulations issued
under Code Section 416(g)(4)(A), any rollover contribution shall
not be taken into account;
(2) an adjustment for contributions actually made
after such Valuation Date but on or before the Determination
Date;
(3) the aggregate amount of any distributions
made to the Participant under the Plan (or under all plans of the
Aggregation Group during the five-year period ending on the
Determination Date, including any distributions under a
terminated plan which if it had not been terminated would have
required to be included in the Aggregation Group, provided,
however, that any distribution made after the last Valuation Date
preceding the Determination Date shall be excluded to the extent
the assets distributed were included in (1) above;
(4) if any Participant has not performed services
for the Employer at any time during the five year period ending
on the Determination Date, the account balances of such
Participant shall not be taken into account, provided, that if a
Participant returns to service for the Employer after a five year
period, such Participant's total account balance shall be taken
into account; and
(5) if any Participant is a Non-Key Employee
Participant with respect to the Plan Year containing the
Determination Date, but such Participant was a Key Employee
Participant with respect to any prior Plan Year, the account
balances of such Participant shall not be taken into account.
15.2 Top-Heavy Minimum Contributions.
(a) In the event that the Committee determines that
the Plan is a Top-Heavy Plan for a particular Plan Year then,
subject to Subsections (c) and (d), the Committee shall allocate
to an account, designated as a Top-Heavy Minimum Contribution
Account, of each Non-Key Employee Participant who has satisfied
the conditions of Section 2.2 for the Plan Year and is employed
by the Employer on the last day of the Plan Year an amount equal
to the percentage of such Participant's Compensation that equals
the lesser of (1) 3% or (2) the greatest percentage of
Compensation allocated as the sum of the Salary Deferral
Contributions, Matching Contributions, Qualified Nonelective
Contributions and forfeitures to the Accounts of a Key Employee
Participant for such Plan Year.
(b) Compensation of purposes of Subsection (a) shall
mean compensation as defined under Code Section 415 which
excludes amounts deferred under a Code Section 401(k) qualified
cash or deferred arrangement and elective contributions under a
Code Section 125 cafeteria plan.
(c) The amount which would otherwise be required to be
allocated under Subsection (a) to the Top-Heavy Minimum
Contribution Account of a Non-Key Employee Participant shall be
reduced by (1) the amount allocated to the Qualified Nonelective
Contribution Account of the Participant for the Plan Year and
(2) to the extent permitted by Treasury Regulations, the amount
allocated to the Matching Contribution Account of the Participant
for the Plan Year.
(d) The amount which would otherwise be required to be
allocated under Subsections (a) and (c) to the Top-Heavy Minimum
Contribution Account of a Non-Key Employee Participant shall not
be so allocated if that amount of Employer contributions and
forfeitures has been allocated to such Participant for the Plan
Year under any other defined contribution plan of the Employer
which is qualified under Code Section 401.
(e) The amounts necessary to make the allocation
required under Subsections (a) shall first be made from
forfeitures in accordance with Section 6.3(d) and then from
Employer contributions. Such Employer contributions shall be
made to the Plan within the time limits set forth in Section
3.5(b)(1) and shall be subject to the provisions of Section 5.5.
(f) A Non-Key Employee Participant's interest in his
or her Top-Heavy Minimum Contribution Account shall be subject to
the provisions of Sections 5.1(f), 5.4, 6.2, 6.3, 6.4 and 15.3 to
the same extent as those Sections are applicable to Matching
Contribution Accounts.
15.3 Alternative Top-Heavy Vesting Schedule.
(a) In the event that the Committee determines that
the Plan is a Top-Heavy Plan for a particular Plan Year, the
vesting schedule set forth in Section 6.2(a) of this Trust
Agreement shall not be operative for such Plan Year, and in lieu
thereof, the vesting schedule provided in this Section 15.3 shall
be operative for such Plan Year.
(b) When a Participant has completed two Years of
Service, 20% of the amount then allocated to his or her Matching
Contribution Account shall become vested and nonforfeitable,
regardless of when such amounts were contributed to the Plan. At
the end of each of the next four Years of Service, an additional
20% of the amount then allocated to said Account shall become
vested and nonforfeitable, so that after six Years of Service the
full amount allocated to such Account shall become vested and
nonforfeitable; provided, however, that the vesting schedule in
this Section 15.3 shall not apply to an Account of a Participant
who is not credited with at least one Hour of Service after the
first day of the first Plan Year for which the Plan is a
Top-Heavy Plan.
(c) In the event that the vesting schedule in
Subsection (b) is operative for any Plan Year, but is inoperative
for any succeeding Plan Year or Years because the Plan is not a
Top-Heavy Plan for such succeeding Plan Year or Years, the
following provisions shall become effective on the first day of
the Plan Year in which the vesting schedule under this Section
15.3 becomes inoperative:
(1) Any amount which is or has become vested and
nonforfeitable by reason of the effectiveness of the vesting
schedule in this Section 15.3 for a Plan Year shall remain vested
and nonforfeitable thereafter, regardless of whether the vesting
schedule in this Section 15.3 is applicable in succeeding Plan
Years; and
(2) A Participant having not less than 3 Years of
Service may elect to remain subject to the vesting schedule in
this Section 15.3 thereafter.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed
this TakeCare Savings and Retirement Plan and Trust Agreement
(1992 Restatement) as of the date first entered hereinabove.
TAKECARE HEALTH PLAN, INC.
By: /s/ R. Judd Jessup
----------------------------
By: /s/ Dennis Gates
----------------------------
EMPLOYER
PACIFIC TRUST COMPANY
By: _____________________________
Its: _____________________________
TRUSTEE
AMENDMENT NO. 1 TO THE
TAKECARE SAVINGS AND RETIREMENT PLAN
AND TRUST AGREEMENT
(1992 Restatement)
The TakeCare Savings and Retirement Plan and Trust Agreement
(1992 Restatement) is hereby amended as hereinafter set forth.
1. Section 1.7(c) is hereby amended to read as follows:
"(c) compensation shall include, except as
provided in Sections 3.1(a), 5.5 and 15.2(b), all
amounts deferred under a Code Section 401(k) qualified
cash or deferred arrangement and elective contributions
under a Code Section 125 cafeteria plan."
2. Section 1.12 is hereby amended to read as follows:
"1.12 Entry Date. (a) Except as provided in
subsections (b) and (c), the first day of the month
next following or coincident with the date which is
thirty days after the date for which an employee is
first credited with an Hour of Service.
(b) The Entry Date of an employee who customarily
performs from twenty to twenty-nine Hours of Service
per week shall be the first day of the month next
following or coincident with the date which is ninety
days after the date for which an employee is first
credited with an Hour of Service.
(c) The Entry Date of an employee who is either a
former employee of Lincoln National Services
Administration Corporation who is first credited with
an Hour of Service on or after March 1, 1992 and on or
before May 1, 1992 or a former employee of Comprecare
who became an employee of the Employer as a direct
result of the acquisition of Comprecare by the Employer
shall be the later of (1) the date for which the
employee is first credited with an Hour of Service
(without regard to the second paragraph of Section
1.15(b)) or (2) the date otherwise applicable under
subsection (a) or (b)."
3. The second paragraph of Section 1.15(b) is hereby
amended to read as follows:
"Effective March 1, 1992, Hours of Service will be
credited for employment with Lincoln National Services
Administration Corporation with respect to any employee
who would otherwise first be credited with an Hour of
Service on or after March 1, 1992 and on or before
May 1, 1992. Employees who were employed by Comprecare
and who became employees of the Employer as a direct
result of the acquisition of Comprecare by the Employer
shall receive full credit for all Hours of Service
completed as an employee of Comprecare in determining
participation and vesting under the Plan."
4. Section 1.27 is hereby amended to read as follows:
"1.27 Salary Deferral Contribution. A
contribution made by the Employer to the Trust under
Section 3.1 pursuant to a Salary Deferral Agreement or
a Code Section 125 cafeteria plan."
5. Section 1.34 is hereby amended to read as follows:
"1.34 Year of Service. With respect to an
employee, other than an employee who was employed by
Comprecare and became an employee of the Employer as a
direct result of the acquisition of Comprecare by the
Employer, a period of twelve months of Service
commencing as of the later of (a) the Effective Date or
(b) the date for which the employee is first credited
with an Hour of Service where a month of Service shall
be credited for each calendar month in which an
employee has been credited with at least one Hour of
Service. With respect to an employee who was employed
by Comprecare and became an employee of the Employer as
a direct result of the acquisition of Comprecare by the
Employer, a period of twelve months of Service
commencing as of the date for which the employee is
first credited with an Hour of Service where a month of
Service shall be credited for each calendar month in
which an employee has been credited with at least one
Hour of Service."
6. Section 2.1(a) is hereby amended to read as follows:
"Each employee of the Employer who customarily
performs twenty or more Hours of Service per week is
initially eligible to participate in the Plan on his or
her Entry Date, provided, however, that he or she is at
least eighteen (18) years of age, and he or she is not
included in a unit of employees covered by a collective
bargaining agreement between employee representatives
and the Employer if retirement benefits were the
subject of good faith bargaining between the employee
representatives and the Employer."
7. Section 2.2 is hereby amended to read as follows:
"2.2 Continuance of Participation.
(a) A Participant shall participate in the Plan
for each Plan Year during which he or she (1)
customarily performs twenty or more Hours of Service
per week and (2) is not included in a unit of employees
described in Section 2.1(a).
(b) A Participant's participation in the Plan and
his or her Salary Deferral Agreement under Section
3.1(a) shall be suspended if he or she does not meet
the requirements described in Subsection (a) during a
particular Plan Year, provided, however, that the
Participant shall again become a Participant as of the
date he or she again meets the requirements described
in Subsection (a).
(c) A suspended Participant shall not participate
in the allocation under Sections 5.3 and 6.3 of Salary
Deferral Contributions, Matching Contributions,
Qualified Nonelective Contributions or forfeitures, but
such Participant's accounts in the Trust Fund shall be
subject to adjustment for the net income or loss of the
Trust Fund under Section 5.4."
8. Section 3.1(a)(1) is hereby amended to read as follows:
"(1)(A) Each Participant may enter into a written
Salary Deferral Agreement with the Employer to provide
for a reduction in his or her Compensation (or a
foregoing of an increase in Compensation) that is not
currently available to the Participant and to have such
amounts contributed to the Plan by the Employer as a
Salary Deferral Contribution on behalf of the
Participant. The Salary Deferral Agreement shall
provide for a Salary Deferral Contribution for a
Participant in an amount equal to from 1% to 20% of the
Participant's Compensation for a Plan Year. For
purposes of the preceding sentence, 'Compensation'
shall mean Compensation as defined in Section 1.8, but
excluding elective contributions under a Code Section
125 cafeteria plan.
(B) Salary Deferral Contributions may also
be made to the Plan on behalf of the Participant under
a Code Section 125 cafeteria plan maintained by the
Employer in accordance with the rules and procedures
set forth under such cafeteria plan."
9. Section 3.1(a)(3) is hereby amended by the addition of
the following sentence:
"Notwithstanding the foregoing, an election to
commence or increase or decrease Salary Deferral
Contributions made during the last quarter of the 1992
calendar year may instead authorize the Employer to
deduct a specific dollar amount for any one or more
payroll periods during such quarter as specified by the
Participant, and shall be effective on the date on or
after such election as specified by the Participant."
10. Section 3.1(a)(4) is hereby amended to read as follows:
"(4) If a Participant has received a hardship
distribution pursuant to Section 8.11 or any other Code
Section 401(k) qualified cash or deferred arrangement
maintained by the Employer, then for a period of twelve
months following the Participant's receipt of the
distribution, the Salary Deferral Agreement of the
Participant shall be suspended and no Salary Deferral
Contributions shall otherwise be made on behalf of the
Participant."
11. Section 3.1(g) is hereby amended to read as follows:
"(g) Calculation of Income Allocable to Excess
Salary Deferral Contributions. The income allocable to
the Excess Salary Deferral Contribution of a Highly
Compensated Employee shall be the gain or loss for the
Plan Year determined with respect to the Excess Salary
Deferral Contribution, as determined in a consistent
and non-discriminatory manner under the method provided
in Section 5.4(b) or under any other method as shall be
permitted by Treasury Regulations."
12. Section 3.3(a)(1) is hereby amended to read as follows:
"(1) For each Plan Year and, subject to Sections
3.1(c), 3.3(b) and 3.5(c), the Employer shall make
Matching Contributions to the Trust for a Participant
equal to 35% of the amount of the Salary Deferral
Contributions contributed to the Plan on behalf of the
Participant for the Plan Year, provided, however, that
the total Matching Contributions for a Participant
(exclusive of any additional Matching Contributions
under Sections 3.3(b)(2)(B) or 6.3(d)(5)) for a Plan
Year shall not exceed $2,000."
13. Section 4.2 is hereby amended to read as follows:
"4.2 Plan to Plan Transfers of Assets.
(a)(1) Effective January 1, 1993 and
notwithstanding any provision of the Plan to the
contrary that would otherwise limit a Distributee's
election under this Section 4.2, a Distributee may
elect, at the time and in the manner prescribed by the
Committee, to have any portion of an Eligible Rollover
Distribution paid directly to an Eligible Retirement
Plan specified by the Distributee in a Direct Rollover.
(b) For purposes of this Section 4.2, the
following definitions shall apply:
(1) An 'Eligible Rollover Distribution' is any
distribution of all or any portion of the balance to
the credit of the Distributee, except that an Eligible
Rollover Distribution shall not include (A) any
distribution that is one of a series of substantially
equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
Distributee or the joint lives (or joint life
expectancies) of the Distributee and the Distributee's
designated Beneficiary, or for a specified period of
ten years or more; (B) any distribution to the extent
such distribution is required under Code Section
401(a)(9); and (C) the portion of any distribution that
is not includable in gross income (determined without
regard to the exclusion for net unrealized appreciation
with respect to employer securities).
(2) An 'Eligible Retirement Plan' is an individual
retirement account described in Code Section 408(a), an
individual retirement annuity described in Code Section
408(b), an annuity plan described in Code Section
403(a), or a qualified trust described in Code Section
401(a), that accepts the Distributee's Eligible
Rollover Distribution. However, in the case of an
Eligible Rollover Distribution to the Participant's
surviving spouse, an 'Eligible Retirement Plan' is an
individual retirement account or individual retirement
annuity.
(3) A 'Distributee' includes a Participant or
former Participant. In addition, the Participant's or
former Participant's surviving spouse and the
Participant's or former Participant's spouse or former
spouse who is the alternate payee under a qualified
domestic relations order, as defined in Code Section
414(p), is a Distributee with regard to the interest of
the spouse or former spouse.
(4) A 'Direct Rollover' is a payment by the Plan
to the Eligible Retirement Plan specified by the
Distributee.
(c) The Committee may require that a Distributee
requesting a Direct Rollover provide adequate
information in a timely manner that the account,
annuity or plan to which the Direct Rollover is to be
made is an Eligible Retirement Plan, and neither the
Committee nor the Trustee shall have any liability if
their reliance on such information is reasonable."
14. Section 9.5(c) is hereby amended to read as follows:
"(c) Loans to a Participant shall be secured in
accordance with Section 14.3 by a lien on no more than
50% of the value of the Participant's vested interest
in his or her Accounts in the Trust on the date of the
loan or loans. The Participant by obtaining a loan in
accordance with the terms of the Plan shall be deemed
to have consented to the possible reduction in the
Participant's vested account balance in satisfaction of
a loan in default."
15. This Amendment No. 1 to the TakeCare Savings and
Retirement Plan and Trust Agreement (1992 Restatement) shall be
effective as of July 1, 1992, except as otherwise provided.
IN WITNESS WHEREOF, this Amendment No. 1 to the TakeCare
Savings and Retirement Plan and Trust Agreement (1992
Restatement) has been executed on this _____ day of _________
1993.
TAKECARE, INC.
and Its Subsidiaries
By: /s/David Gates
-------------------------------
Its: Vice President - Finance
EMPLOYER
AMENDMENT NO. 2
TAKECARE SAVINGS AND RETIREMENT PLAN
AND TRUST AGREEMENT
WHEREAS, FHP International Corporation (the "Company")
maintains the TakeCare Savings and Retirement Plan and Trust
Agreement (the "Plan"); and
WHEREAS, the Plan is the result of a merger between the
Plan and the Comprecare Tax Deferred Savings Plan, and this
Amendment is intended to satisfy the requirements of the Tax
Reform Act of 1986 both for the merged Plan and for the two
component plans prior to the merger; and
WHEREAS, the Company desires to amend the Plan in order
to comply with the Tax Reform Act of 1986 and subsequent
legislation in order to submit the Plan to the Internal Revenue
Service to obtain a current determination letter concerning the
tax qualified status of the Plan and to make certain other
changes to the Plan and certain clarifications of the Plan
document.
NOW, THEREFORE, the Company hereby adopts this
Amendment 1994-1 to the Plan, effective as of June 17, 1994,
except as otherwise noted below, as follows:
1. Section 1.3 of the Plan is amended to read as
follows:
"1.3 Board. The Board of Directors of FHP International
Corporation."
2. Section 1.6 of the Plan is amended to read as
follows:
"1.6 Committee. The Administrative Committee appointed
by the Board pursuant to Section 11."
3. Subsection 1.7(b) of the Plan is amended to read as
follows:
"Notwithstanding the foregoing, the maximum amount of a
Participant's Compensation which shall be taken into account
under the Plan for any Plan Year ("Maximum Compensation
Limitation") shall be (a) $200,000 for Plan Years beginning on or
after January 1, 1989, and (b) $150,000 for Plan Years beginning
on or after January 1, 1994, such limitation adjusted at the same
time and in the same manner as under Sections 401(a)(17) and
415(d) of the Code. For any Plan Year of fewer than twelve
months, the Maximum Compensation Limitation shall be reduced to
the amount obtained by multiplying such limitation by a fraction
having a numerator equal to the number of months in the Plan Year
and a denominator equal to twelve."
4. Subsection 2.1(c) of the Plan is hereby amended to
read as follows, effective July 1, 1992:
"(c) If an employee of the Employer customarily
performs less than twenty Hours of Service per week, such
employee shall become eligible to participate in the Plan on
the January 1 or July 1 coinciding with or next following his
completion of 1,000 Hours of Service with the Employer, provided
that he or she is at least eighteen (18) years of age, and he
or she is not included in a unit of employees covered by a
collective bargaining agreement between employee representatives
and the Employer if retirement benefits were the subject of good
faith bargaining between the employee representatives and the
Employer."
5. Section 4.1(a) of the Plan is amended by adding a
new sentence at the end thereof to read as follows:
"Notwithstanding the preceding sentence, effective as
of January 1, 1993, a Participant may, in accordance with
procedures prescribed by the Committee, have any portion of an
"eligible rollover distribution" (as defined in Section
402(f)(2)(A) of the Code) paid directly to the Trust from
another trust qualified under Section 401(a) of the Code.
Notwithstanding the foregoing, the amount transferred to the
Trust must be in the form of cash."
6. Section 4.2(a)(1) of the Plan is hereby amended to
read as follows:
"(a)(1) Effective January 1, 1993 and notwithstanding
any provision of the Plan to the contrary that would otherwise
limit a Distributee's election under this Section 4.2, if a
Distributee will receive an Eligible Rollover Distribution of at
least $200, the Distributee may elect, at the time and in the
manner prescribed by the Committee, to have any portion of an
Eligible Rollover Distribution paid directly to an Eligible
Retirement Plan specified by the Distributee in a Direct
Rollover. Notwithstanding the preceding sentence, a Distributee
may not elect to have an Eligible Rollover Distribution of less
than $500 paid directly to an Eligible Retirement Plan unless the
Distributee elects to have his or her entire Eligible Rollover
Distribution paid directly to the Eligible Retirement Plan."
7. Section 6.2(c) of the Plan is amended by adding the
following sentence at the end thereof to read as follows:
"A Participant shall become 100% vested if, while
employed by the Employer, he attains his Normal Retirement Date."
8. Subsection 8.5(a) of the Plan is amended to read as
follows:
"(a) Each Participant shall determine the distribution
of his or her interest in the Plan by selecting (subject to the
terms of this Section) one or more of the following methods of
distribution:
(1) the balance of a Participant's Accounts in
the Plan, or any part thereof, may be distributed to the
Participant in a lump sum in cash;
(2) the balance of a Participant's Accounts in
the Plan, or any part thereof, may be retained as an interest in
the Trust Fund payable in installments in cash over a period of
years, determined by the Participant under this Section 8; or
(3) any combination of the foregoing methods
which may be changed by the Participant at any time.
The Committee shall direct the Trustee to distribute
assets of the Trust Fund in accordance with the method of
distribution selected."
9. Subsection 8.5(f) of the Plan is amended by adding
the following sentence at the end thereof:
"Notwithstanding anything else contained herein, if a
distribution is one to which sections 401(a)(11) and 417 of the
Code do not apply, such distribution may commence less than 30
days after the notice described in the preceding sentences is
given, provided that: (i) the Committee clearly informs the
Participant that the Participant has a right to a period of at
least 30 days after receiving the notice to consider the decision
of whether or not to elect a distribution (and, if applicable, a
particular distribution option), and (ii) the Participant, after
receiving the notice, affirmatively elects a distribution."
10. Subsection 8.5(h) of the Plan is amended to read
as follows:
"(h) If the distribution of a Participant's interest
in the Plan is paid as a qualifying rollover distribution under
Code Section 402(a)(5)(E) (or, effective as of January 1, 1993,
an eligible rollover distribution under Code Section 402(c)(4)),
then the Committee shall provide a written "Rollover Notice" to
the Participant that complies with Code Section 402(f)."
11. Section 9.4 of the Plan is amended by adding new
subsections (g), (h) and (i) at the end thereof to read as
follows:
"(g) The Committee shall provide to each Participant
or his or her Beneficiary the information described in Section
2550.404c-1(b)(2)(i)(B)(1) of the Department of Labor
Regulations. Upon request by a Participant or his or her
Beneficiary, the Committee shall provide the information
described in Section 2550.404c-1(b)(2)(i)(B)(2) of the Department
of Labor Regulations.
(h) With respect to Employer Stock held in a
Participant's Accounts, the Committee shall take such actions and
establish such procedures as it deems necessary to ensure the
confidentiality of information relating to the purchase, sale,
and holding of such Employer Stock, and the exercise of voting,
tender and similar rights with respect to stock by a Participant
or his or her Beneficiary. Notwithstanding the foregoing, such
information may be disclosed to the extent necessary to comply
with applicable state and federal laws. In the event of a tender
or exchange offer with respect to the Employer, or in the event
of a contested election with respect to the Board, the Employer
shall, at its own expense, appoint an independent fiduciary to
carry out the Committee's administrative functions with respect
to such stock. Such independent fiduciary shall not be an
"affiliate" of the Employer as such term is defined in
Section 2550.404c-1(e)(3) of the Department of Labor Regulations.
(i) The Committee may take such other actions or
implement such other procedures as it deems necessary or
desirable in order that the Plan comply with Section 404(c) of
ERISA."
12. Section 9 of the Plan is amended by adding a new
Section 9.6 at the end thereof to read as follows:
"9.6 Employer Stock.
(a) This Section 9.6 describes the provisions of the
Plan relating to the FHP Stock Fund and is effective as of June
17, 1994. To the extent that this Section 9.6 conflicts with any
other provision of the Plan, this Section shall govern.
(b) In addition to the Plan's other investment funds,
the Plan offers the FHP Stock Fund. Participants may designate
the portion of their accounts to be invested in the FHP Stock
Fund in accordance with Section 9.4 of the Plan as well as in
accordance with such other rules and procedures as may be
established by the Committee from time to time. Up to 100% of
the Trust assets may be invested in Employer Stock.
(c) Amounts invested in the FHP Stock Fund shall be
invested primarily in Employer Stock. Each Participant's
accounts shall be credited with a dollar value equivalent to the
value of the number of whole and fractional shares of Employer
Stock as can be purchased with the amount of such accounts that
the Participant has designated should be invested in the FHP
Stock Fund. Any residual amount of cash which cannot be invested
in Employer Stock shall remain in the FHP Stock Fund to be
invested in Employer Stock when a sufficient amount of cash has
been accumulated to purchase such Employer Stock. Cash
dividends, stock dividends and stock splits, if any, received by
the Trustee on the Employer Stock shall be credited to each
Participant's accounts invested in the FHP Stock Fund to the
extent of the Participant's proportional interest in the FHP
Stock Fund.
(d) If a Participant is entitled to receive a
distribution of his benefits under the Plan in accordance with
Section 8, the value of any amount of the Participant's accounts
in the FHP Stock Fund shall be distributed in cash in accordance
with the Participant's election made pursuant to Section 8.5. No
Participant shall be entitled to a distribution in the form of
Employer Stock. In determining the amount distributable to a
Participant, the value of any amount in the FHP Stock Fund shall
be determined as of the Valuation Date coinciding with or next
following the date the Participant files a request for
distribution from the Plan.
(e) In the event that a Participant's accounts are
invested in the FHP Stock Fund, the Participant is entitled to
direct the voting of a number of shares of Employer Stock which
have an equivalent dollar value to the Participant's accounts
invested in the FHP Stock Fund. Any shares of Employer Stock
with respect to which Participants do not direct the voting shall
be voted by the Trustee proportionally in the same manner as
those shares for which the Participants direct voting, unless the
Trustee is required by law to vote the shares by exercising the
Trustee's discretion. The Committee shall establish appropriate
procedures whereby Participants will be furnished a copy of the
proxy materials given to shareholders of the Company and may
direct voting on such Employer Stock.
(f) For purposes of this Section 9.6, "Employer Stock"
shall mean the common stock of FHP International Corporation. In
addition, "FHP Stock Fund" shall mean a pool of assets maintained
by the Trustee, invested primarily in Employer Stock."
13. Subsection 11.5(a) of the Plan is amended to read
as follows:
"(a) The Committee shall have the powers and duties
specified in this Trust Agreement, and without limiting the
foregoing, shall have full power and authority to construe and
interpret this Trust Agreement and to determine all questions
that shall arise hereunder, including questions submitted by the
Trustee on all matters necessary for them properly to discharge
their duties and powers."
14. Subsections 11.7(c) and (d) of the Plan are
amended to read as follows:
"(c) The claimant and/or his or her representative
may appeal the denied claim and may:
(1) Request a review upon written application to the
Committee;
(2) Review pertinent documents; and
(3) Submit issues and comments in writing to the
Committee; provided that such appeal is made within 60 days of
the date the claimant receives notification of the denied claim.
(d) Upon receipt of a request for review, the
Committee shall within a reasonable time period but no later than
60 days after receiving the request, provide written notification
of its decision to the claimant stating the specific reasons and
referencing specified plan provisions on which its decision is
based, unless special circumstances require an extension of time
for processing the review. If such an extension is required, the
Committee shall notify the claimant of such special circumstances
and of the date, no later than 120 days after the original date
the review was requested, on which the Committee will notify the
claimant of its decision."
15. The language of the first sentence of Section 13.1
prior to the colon appearing in that sentence is amended to read
as follows:
"13.1 Amendment. The Board or, if authorized by the
Board, the Committee, has the right to amend this Trust Agreement
by resolution at any time and, from time to time, to any extent
that it deems advisable; provided, however, that no amendment:"
IN WITNESS WHEREOF, the Company has caused its duly
authorized officer to execute this Amendment 1994-1 to the
TakeCare Savings and Retirement Plan and Trust Agreement on this
20th day of September, 1994.
FHP INTERNATIONAL CORPORATION
By: /s/ Robert F. Murphy
-----------------------------
Its: Vice President and Associate
General Counsel
----------------------------
September 8, 1994
FHP International Corporation
9900 Talbert Avenue
Fountain Valley, California 92708
Ladies and Gentlemen:
In my capacity as Associate General Counsel of FHP
International Corporation, a Delaware corporation (the
"Company"), I have examined the Registration Statement on Form
S-8 to be filed by the Company with the Securities and Exchange
Commission in connection with the registration under the
Securities Act of 1933, as amended, of 100,000 shares of the
Company's Common Stock, $0.05 par value per share (the "Shares"),
which are to be offered and sold pursuant to the TakeCare Savings
and Retirement Plan (the "Plan").
Based upon such examination and upon such matters of
fact and law as I have deemed relevant, I am of the opinion that
the Shares have been duly authorized and validly issued by all
necessary corporate action on the part of the Company and, are
fully paid and non-assessable.
I consent to the use of this opinion as an exhibit to
the Registration Statement.
Respectfully submitted,
/s/ Robert F. Murphy
_____________________________
Robert F. Murphy
Associate General Counsel
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of FHP International Corporation on Form S-8 (and the
related prospectus) pertaining to the TakeCare Savings and
Retirement Plan of the report of Deloitte & Touche dated
September 2, 1993 (September 15, 1993 as to Note 13), appearing
in and incorporated by reference in the Annual Report on Form 10-
K of FHP International Corporation for the year ended June 30,
1993.
/s/ Deloitte & Touche LLP
Costa Mesa, California
September 19, 1994
EXHIBIT 23.2
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration
Statement (Form S-8 and the related prospectus) pertaining to the
TakeCare Savings and Retirement Plan of FHP International
Corporation of our report dated April 22, 1994, with respect to
the financial statements and schedules of the TakeCare Savings
and Retirement Plan (the "Plan") included in the Plan's Annual
Report (Form 11-K) for the year ended December 31, 1993, filed
with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
September 16, 1994
San Francisco, California
EXHIBIT 23.3
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration
Statement (Form S-8 and the related prospectus) pertaining to the
TakeCare Savings and Retirement Plan of FHP International
Corporation of our reports dated September 8, 1994 and March 30,
1994, with respect to the financial statements and schedules of
the Comprecare Tax Deferred Savings Plan included in the
Comprecare Tax Deferred Savings Plan's Annual Reports (Form 11-K)
for the years ended December 31, 1993 and 1992, respectively, as
filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
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Ernst & Young LLP
Denver, Colorado
September 15, 1994
