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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1997
Commission File Number 0-19506
UNITED WISCONSIN SERVICES, INC.
(Exact name of registrant as specified in its charter)
WISCONSIN 39-1431799
(State of Incorporation) (I.R.S. Employer
Indentification No.)
401 WEST MICHIGAN STREET, MILWAUKEE, WISCONSIN 53203-2896
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (414) 226-6900
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
---- ----
Number of shares of Common Stock outstanding as of July 31, 1997 was 16,446,192.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
UNITED WISCONSIN SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
JUNE 30, DECEMBER 31,
ASSETS 1997 1996
------ -------- -----------
(IN THOUSANDS)
Investments:
Bonds available for sale, at market $ 390,616 $ 394,615
Bonds held to maturity, at amortized cost 12,801 12,823
---------- ----------
Total bonds 403,417 407,438
Stocks, at market 62,707 59,685
---------- ----------
Total investments 466,124 467,123
Cash and cash equivalents 36,620 51,146
Receivables:
Due from affiliates 2,846 2,641
Other receivables 74,689 74,167
---------- ----------
Total receivables 77,535 76,808
Property and equipment - net 48,520 53,103
Goodwill and other intangibles 147,915 155,458
Other assets 34,995 32,482
---------- ----------
Total assets $ 811,709 $ 836,120
========== ==========
See Notes to Interim Consolidated Financial Statements
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UNITED WISCONSIN SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
JUNE 30, DECEMBER 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1996
------------------------------------ -------- ------------
(IN THOUSANDS)
Liabilities:
Medical and other benefits payable $ 213,277 $ 240,338
Advance premiums 53,821 51,514
Due to affiliates 84,066 74,005
Payables and accrued expenses 47,913 50,879
Other liabilities 37,864 49,941
Debt 55,188 55,788
---------- ----------
Total liabilities 492,129 522,465
Shareholders' equity:
Common stock (no par value, $1 stated value,
50,000,000 shares authorized, 16,429,018 and
16,293,995 shares issued and outstanding at
June 30, 1997 and December 31, 1996, respectively) 16,429 16,294
Paid-in capital 184,992 184,019
Retained earnings 112,066 107,073
Unrealized gains on investments 6,093 6,269
---------- ----------
Total shareholders' equity 319,580 313,655
---------- ----------
Total liabilities and shareholders' equity $ 811,709 $ 836,120
========== ==========
See Notes to Interim Consolidated Financial Statements
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UNITED WISCONSIN SERVICES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Revenues:
Health services revenues:
Premium revenue $ 379,434 $ 264,120 $ 768,042 $ 525,769
Other revenue 15,576 6,842 31,419 14,108
Investment results 11,363 9,750 21,208 22,239
---------- ---------- ---------- ----------
Total revenues 406,373 280,712 820,669 562,116
Expenses:
Medical and other benefits 303,948 216,267 614,118 437,706
Operating expenses 88,044 54,384 180,637 108,062
Profit sharing on joint ventures 257 3,973 1,102 8,393
Interest expense 2,409 869 4,626 1,739
Amortization of goodwill and other intangibles 2,464 158 4,905 316
---------- ---------- ---------- ----------
Total expenses 397,122 275,651 805,388 556,216
---------- ---------- ---------- ----------
Income before income tax expense 9,251 5,061 15,281 5,900
Income tax expense 3,688 1,866 6,348 2,413
---------- ---------- ---------- ----------
Net income $ 5,563 $ 3,195 $ 8,933 $ 3,487
========== ========== ========== ==========
Earnings per common share $ 0.34 $ 0.26 $ 0.55 $ 0.28
========== ========== ========== ==========
</TABLE>
See Notes to Interim Consolidated Financial Statements
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UNITED WISCONSIN SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
SIX MONTHS ENDED
JUNE 30,
-------------------------
1997 1996
----------- ----------
(IN THOUSANDS)
Operating activities:
Net income $ 8,933 $ 3,487
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 11,080 898
Realized investment gains (6,189) (7,484)
Deferred income tax expense (benefit) (920) 2,134
Changes in other operating accounts:
Medical and other benefits payable (27,061) (8,788)
Advance premiums 2,307 5,143
Due to/from affiliates 9,856 23,846
Other receivables (522) (3,326)
Funds held on behalf of affiliated reinsurers - (25,720)
Other - net (10,373) (7,218)
------- -------
Net cash used in operating activities (12,889) (17,028)
Investing activities:
Purchases of available for sale investments (246,206) (366,838)
Proceeds from sale of available for sale
investments 245,827 359,742
Proceeds from maturity of available for sale
investments 6,420 50,450
Purchases of held to maturity investments (1,266) (970)
Proceeds from maturity of held to maturity
investments 1,275 280
Proceeds from sale of property and equipment 1,117 -
Additions to property and equipment (1,878) (559)
Change in investment in unconsolidated affiliates (2,294) (116)
Change in other investments - (249)
------- -------
Net cash provided by investing activities 2,995 41,740
Financing activities:
Cash dividends paid (3,940) (3,024)
Common stock issued for options exercised 811 -
Common stock withheld for taxes on options
exercised (1,019) -
Tax benefit of options exercised 1,316 -
Repayment of debt (600) (10)
Net borrowings under line of credit agreement (1,200) 6,690
Repayment of note with affiliate - (50,000)
------- -------
Net cash used in financing activities (4,632) (46,344)
------- -------
Cash and cash equivalents:
Decrease during period (14,526) (21,632)
Balance at beginning of year 51,146 38,290
------- -------
Balance at end of period $36,620 $16,658
======= =======
See Notes to Interim Consolidated Financial Statements
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UNITED WISCONSIN SERVICES, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
-------------------------------
BASIS OF PRESENTATION - The accompanying consolidated financial statements
for United Wisconsin Services, Inc. (the Company) have been prepared in
accordance with generally accepted accounting principles. The financial
information included herein has been prepared by management without audit
by independent certified public accountants.
The unaudited financial statements include all adjustments and accruals
consisting only of normal recurring accrual adjustments which are,
in the opinion of management, necessary for a fair presentation of
the consolidated financial position and results of operations for
the interim periods. The results of operations for any interim period
are not necessarily indicative of results for the full year. The
unaudited interim consolidated financial statements should
be read in conjunction with the consolidated financial statements and
notes thereto for the year ended December 31, 1996, incorporated by
reference or included in the Company's Form 10-K, as filed with the
Securities and Exchange Commission.
EARNINGS PER COMMON SHARE - Earnings per common share are computed by
dividing net income by the weighted average number of common
shares outstanding. Weighted average common shares outstanding were
16,422,332 and 12,599,715 for the three months ended June 30, 1997
and 1996, respectively, and 16,380,208 and 12,599,715 for the
six months ended June 30, 1997 and 1996, respectively.
RECLASSIFICATIONS - Certain reclassifications have been made to the
consolidated financial statements for 1996 to conform with the 1997
presentation.
2. RECENT ACCOUNTING PRONOUNCEMENT
-------------------------------
In February 1997, the Financial Accounting Standards Board (the FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 128
"Earnings per Share", which becomes effective for financial statements
issued for periods ending after December 15, 1997. While management
continues to evaluate the impact of this new pronouncement, it is not
expected to have a material impact on the Company's disclosure of
earnings per share.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
OVERVIEW
United Wisconsin Services, Inc. (the Company) is a leading provider of
managed health care services and employee benefit products. The Company's three
primary product lines are (i) Health Maintenance Organization (HMO) products,
including Compcare Health Services Insurance Corporation (Compcare), Valley
Health Plan, Inc. (Valley), Unity Health Plans Insurance Corporation (Unity) and
certain point-of-service (POS) and other related products managed by Compcare
and Valley; (ii) small group managed care and life products sold through
American Medical Security Holdings, Inc. (AMS), which holds United Wisconsin
Life Insurance Company (UWLIC) and the companies held by the Company's former
joint venture partner, American Medical Security Group, Inc., and (iii)
specialty managed care products and services, including dental, life, disability
and workers' compensation products, managed care consulting, electronic claim
submission, pharmaceutical management and managed behavioral health services.
Operating results and statistics for these three product groups are presented
below for the periods noted.
SUMMARY OF OPERATING RESULTS AND STATISTICS
JUNE 30,
----------------
1997 1996
---- ----
Membership at end of period:
HMO products 287,855 260,853
AMS medical products 666,584 932,620
--------- ---------
Total medical products 954,439 1,193,473
AMS life products 310,911 448,124
Specialty managed care
products and services 1,280,694 1,127,113
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
--------------- ---------------
1997 1996 1997 1996
---- ---- ---- ----
Health services revenues (As a
percentage of the total):
HMO products 30.1% 38.6% 29.4% 38.8%
AMS products 63.2 51.3 64.0 51.1
Specialty managed care
products and services 7.7 11.2 7.6 11.2
Intercompany eliminations (1.0) (1.1) (1.0) (1.1)
----- ----- ----- -----
Total 100.0% 100.0% 100.0% 100.0%
----- ----- ----- -----
----- ----- ----- -----
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THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
--------------- --------------
1997 1996 1997 1996
---- ---- ---- ----
Operating statistics:
HMO products:
Medical loss ratio (1) 90.7% 90.5% 89.5% 90.4%
Operating expense
ratio (2) 9.2 9.0 9.4 9.2
AMS products:
Medical:
Medical loss
ratio (1) 78.0 79.2 78.5 81.4
Operating expense
ratio (2) 22.5 23.9 22.5 23.8
Life and other products:
Loss ratio (1) 47.6 35.2 45.1 37.9
Specialty managed care
products and services:
Loss ratio (1) 70.3 73.5 71.7 74.0
Consolidated:
Loss ratio (1) 80.1 81.9 80.0 83.3
Net income margin (3) 1.4 1.1 1.1 0.6
(1) Medical and other benefits as a percentage of premium revenue.
(2) Operating expenses as a percentage of premium revenue.
(3) Net income as a percentage of total revenues.
Reclassifications have been made to the product line amounts shown above
for 1996 to conform with the 1997 presentation. The life products sold by
AMS are now included in the AMS products category; previously, they were
included with specialty products and services. This reclassification was
made in conjunction with the AMS merger (AMS Merger), as discussed further
below.
The Company's revenues are derived primarily from premiums, while
medical benefits constitute the majority of expenses. Profitability is
directly affected by many factors including, among others, premium rate
adequacy, estimates of medical benefits, health care utilization, effective
administration of benefit payments, operating efficiency, investment returns
and federal and state laws and regulations.
RESULTS OF OPERATIONS
TOTAL REVENUES
Total revenues for the three months ended June 30, 1997 increased 44.8%
to $406.4 million from $280.7 million for the three months ended June 30,
1996. On a year-to-date basis, total revenues increased 46.0% to $820.7
million from $562.1 million for the six months ended June 30, 1996. These
increases were due primarily to increased health services revenues (premium
and other revenue) as a result of the AMS Merger, as discussed further below.
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HEALTH SERVICES REVENUES -- HMO health services revenues for the three
months ended June 30, 1997 increased 13.7% to $119.0 million from $104.7
million for the three months ended June 30, 1996. Average HMO medical
premium per member for the three months ended June 30, 1997 increased 3.1%
from the same period in the prior year. The average number of HMO medical
members for the three months ended June 30, 1997 increased 9.9% to 285,000
from 260,000 for the three months ended June 30, 1996.
HMO health services revenues for the six months ended June 30, 1997
increased 12.1% to $234.8 million from $209.3 million for the same period in
the prior year. Average HMO medical premium per member for the six months
ended June 30, 1997 increased 3.1% from the same period in the prior year.
The average number of HMO medical members for the six months ended June 30,
1997 increased 8.4% to 281,000 from 259,000 for the same period in the prior
year.
Health services revenues for AMS products for the three months ended
June 30, 1997 increased 79.7% to $249.8 million from $139.0 million for the
three months ended June 30, 1996. The increase in AMS health services
revenues was due primarily to the acquisition of the 88% of AMS that the
Company did not already own. Prior to the merger of the Company and AMS
effective December 3, 1996, the Company retained 50% of the premium revenue
and 50% of the profit (loss) on small group managed care and life business
sold by AMS. Following the AMS Merger, the Company retained 100% of the
health services revenues and 100% of the profit (loss) on small group managed
care and life business sold by AMS. The additional health services revenues
due to the AMS Merger accounted for $131.0 million of the increase in health
services revenues for the three months ended June 30, 1997. Excluding the
effects of the AMS Merger, AMS health services revenues for the three months
ended June 30, 1997 decreased 14.6% to $118.8 million from $139.0 million for
the three months ended June 30, 1996. While average medical premium per
member increased 15.5% for the three months ended June 30, 1997, compared
with the same period in the prior year, the average number of small group
medical members outstanding decreased 25.6% for the three months ended June
30, 1997 to 704,000 from 947,000 for the three months ended June 30, 1996.
Much of this membership decline was the result of AMS' efforts to return this
block of business to profitability. These steps included exiting
unprofitable markets in Texas and Kentucky and implementing substantial rate
increases for certain product lines which resulted in membership losses but
improved profitability on renewed business. Major sales initiatives are
underway at AMS in an effort to reverse this membership decline. As part of
that effort, AMS recently announced a strategic alliance with a marketer of
medical insurance to the small group market. Old Northwest Agents, Inc.
(ONA) of Minneapolis will be the exclusive marketer of AMS products in North
Carolina, South Carolina, Mississippi, Arkansas, and Louisiana. AMS and ONA
are also contemplating an expansion into new geographic areas where AMS does
not currently have a presence.
Health services revenues for AMS products for the six months ended June
30, 1997 increased 85.7% to $512.0 million from $275.7 million for the six
months ended June 30, 1996. The increase in AMS health services revenues was
due primarily to the acquisition of the
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88% of AMS that the Company did not already own, as previously discussed.
The additional health services revenues due to the AMS Merger accounted for
$267.8 million of the increase in health services revenues for the six months
ended June 30, 1997. Excluding the effects of the AMS Merger, AMS health
services revenues for the six months ended June 30, 1997 decreased 11.4% to
$244.2 million from $275.7 million for the six months ended June 30, 1996.
While average medical premium per member increased 14.3% for the six months
ended June 30, 1997, compared with the same period in the prior year, the
average number of small group medical members outstanding decreased 22.1% for
the six months ended June 30, 1997 to 744,000 from 954,000 for the six months
ended June 30, 1996. As previously discussed, this membership decline was
the result of AMS' turnaround strategy. Major sales initiatives are underway
at AMS in an effort to reverse this membership decline.
Health services revenues for specialty managed care products and
services for the three months ended June 30, 1997 decreased 0.6% to $30.2
million from $30.4 million for the three months ended June 30, 1996. This
decrease was due primarily to a decrease of $2.4 million in premiums assumed
under certain federal and state reinsurance programs. While participation in
these programs added premium revenue to the financial statements of the
Company, their contribution to net income was nominal. Excluding the impact
of the withdrawal from these government-sponsored reinsurance programs,
health services revenues for specialty managed care products and services for
the three months ended June 30, 1997 increased 7.9% to $29.8 million from
$27.6 million for the same period in the prior year. This increase was due
primarily to an increase of $1.0 million in managed behavioral health
revenues, an increase of $0.7 million in workers' compensation premiums, and
an increase of $0.6 million in dental premiums, all of which were driven by
membership increases.
Health services revenues for specialty managed care products and
services for the six months ended June 30, 1997 increased 0.8% to $60.7
million from $60.2 million for the six months ended June 30, 1996, due
primarily to a decrease of $4.7 million in premiums assumed under the
aforementioned reinsurance programs. Excluding the impact of the withdrawal
from these programs, health services revenues for specialty managed care
products and services for the six months ended June 30, 1997 increased 9.6%
to $59.9 million from $54.7 million for the same period in the prior year.
This increase was due primarily to an increase of $1.7 million in managed
behavioral health revenues, an increase of $1.4 million in workers'
compensation premiums, and an increase of $1.4 million in dental premiums,
all of which were driven by membership increases.
INVESTMENT RESULTS -- Investment results include investment income and
realized gains (losses) on investments. Investment results for the three
months ended June 30, 1997 increased 16.5% to $11.4 million from $9.8 million
for the three months ended June 30, 1996. On a year-to-date basis,
investment results decreased 4.6% to $21.2 million from $22.2 million for the
same
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period in the prior year. Average annual investment yields, excluding net
realized gains, were 6.2% and 5.8% for the three months ended June 30, 1997
and 1996, respectively. On a year-to-date basis, average annual investment
yields, excluding net realized gains, were 6.0% and 5.7% for the six months
ended June 30, 1997 and 1996, respectively. Investment gains are realized in
the normal investment process in response to market opportunities. Average
invested assets for the three months ended June 30, 1997 decreased 6.0% to
$492.7 million from $523.9 million for the three months ended June 30, 1996.
On a year-to-date basis, average invested assets decreased 5.6% to $499.7
million from $529.3 million for the six months ended June 30, 1996. The
decrease in average invested assets is due primarily to the decrease in
medical and other benefits payable resulting from the membership decline for
AMS products over the past year.
EXPENSE RATIOS
LOSS RATIO -- The consolidated loss ratio represents the ratio of
medical and other benefits to premium revenue for the Company on a
consolidated basis, and is therefore a blended ratio for medical, life,
dental, disability and other product lines. The consolidated loss ratio
improved to 80.1% for the second quarter of 1997, compared with 81.9% for the
second quarter of 1996. On a year-to-date basis, the consolidated loss ratio
improved to 80.0% for the first six months of 1997, compared with 83.3% for
the first six months of 1996. The consolidated loss ratio is influenced by
the component loss ratios for each of the Company's primary product lines, as
discussed below.
The medical loss ratio for HMO products for the three months ended June
30, 1997 was 90.7%, which was reasonably consistent with 90.5% for the same
period in the prior year. On a year-to-date basis, the medical loss ratio
for HMO products decreased to 89.5% from 90.4% for the same period in the
prior year. A more favorable pricing environment in 1997 and improved
results from medical management efforts produced lower loss ratios in the HMO
products division.
The medical loss ratio for AMS products for the three months ended June
30, 1997 was 78.0%, compared with 79.2% for the same period in 1996. On a
year-to-date basis, the medical loss ratio for AMS products was 78.5%,
compared with 81.4% for the same period in 1996. The lower loss ratios in
1997 reflect improvements in medical cost trends and pricing changes achieved
by AMS since the first quarter of 1996. AMS continues to re-price its
products and eliminate unprofitable business.
The loss ratio for AMS life and other products for the three months
ended June 30, 1997 was 47.6%, compared with 35.2% for the same period in
1996. On a year-to-date basis, the loss ratio for AMS life and other
products was 45.1%, compared with 37.9% for the same period in 1996. This
product category also includes accidental death and dismemberment (AD&D)
coverage. The increased loss ratio in 1997 is due to higher AD&D loss
experience on AMS' Texas occupational business. AMS is currently
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exiting that product line in Texas.
The loss ratio for specialty managed care products and services for the
three months ended June 30, 1997 was 70.3%, compared with 73.5% for the same
period in 1996. On a year-to-date basis, the loss ratio for specialty
managed care products and services decreased to 71.7%, compared with 74.0%
for the same period in 1996. The lower loss ratios in 1997 are due primarily
to the Company's withdrawal from the government-sponsored reinsurance
programs discussed previously, which were recorded at a near-100% loss ratio.
OPERATING EXPENSE RATIO - The operating expense ratio includes
commissions, administrative expenses, and premium taxes and other
assessments. The operating expense ratio for HMO products increased slightly
to 9.2% for the second quarter of 1997, compared with 9.0% for the second
quarter of 1996. On a year-to-date basis, the operating expense ratio for HMO
products also increased slightly to 9.4% from 9.2% for the six months ended
June 30, 1996.
The operating expense ratio for AMS medical products decreased to 22.5%
for the three months ended June 30, 1997 from 23.9% for the three months
ended June 30, 1996, due primarily to a decrease in commissions as a
percentage of premium revenue. On a year-to-date basis, the operating
expense ratio for AMS medical products decreased to 22.5% for the six months
ended June 30, 1997 from 23.8% for the six months ended June 30, 1996. The
operating expense ratio for AMS life products declined to 30.0% for the
second quarter of 1997, compared with 32.0% for the same period in the prior
year. On a year-to-date basis, the operating expense ratio for AMS life
products also declined to 29.9% for the six months ended June 30, 1997,
compared with 31.9% for the same period in the prior year. AMS products are
sold exclusively through independent agents who are compensated through
commissions. Over time, renewal business has gradually represented a larger
proportion of the total AMS medical and life business. Since renewal
commissions are typically lower than commissions on new sales, this has
contributed to the decrease in the ratios. AMS also continues to focus on
efforts to improve operating efficiency through process re-engineering and to
reduce staff commensurate with the decline in gross premium revenue.
Operating expenses related to specialty managed care products and
services increased 15.9% for the three months ended June 30, 1997 to $14.3
million from $12.3 million for the same period in the prior year. On a
year-to-date basis, operating expenses related to specialty managed care
products and services increased 19.2% for the six months ended June 30, 1997
to $28.7 million from $24.1 million for the same period in the prior year.
Increases in operating expenses are tied to health services revenues which
increased 7.9% for the three months ended June 30, 1997 over the same period
in 1996 and 9.6% for the six months ended June 30, 1997 over the same period
in 1996, excluding the impact of the decrease in assumed premiums related to
certain federal and state reinsurance programs. Of the remaining
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increase in operating expenses that is not due to growth in health services
revenues, the majority is due to higher expenses for services rendered by
behavioral health providers related to the Company's managed behavioral
health business.
OTHER EXPENSES
Profit sharing on joint ventures was $0.3 million for the three months
ended June 30, 1997, compared with $4.0 million for the three months ended
June 30, 1996. Of these balances, $0.3 million and $0.7 million for the
three months ended June 30, 1997 and 1996, respectively, represented profit
sharing expenses related primarily to the Unity and Valley joint ventures.
The remaining $3.3 million for the three months ended June 30, 1996 was due
to investment income and realized investment gains on funds held by the
Company on behalf of an insurance subsidiary of AMS. Following the AMS
Merger, the reinsurance agreement, which gave rise to this funds held
balance, was terminated effective December 31, 1996. On a year-to-date
basis, profit sharing on joint ventures was $1.1 million for the six months
ended June 30, 1997 and $8.4 million for the six months ended June 30, 1996.
Of these balances, $1.1 million and $1.5 million for the six months ended
June 30, 1997 and 1996, respectively, represented profit sharing expenses
related primarily to the Unity and Valley joint ventures. The remaining $6.9
million for the six months ended June 30, 1996 was due to investment income
and realized investment gains on funds held by the Company on behalf of an
insurance subsidiary of AMS, as previously discussed.
Interest expense increased to $2.4 million for the three months ended
June 30, 1997, compared with $0.9 million for the same period in the prior
year. Interest expense increased to $4.6 million for the six months ended
June 30, 1997, compared with $1.7 million for the same period in the prior
year. The increase is due primarily to interest expense on the $70.0 million
of borrowings from Blue Cross & Blue Shield United of Wisconsin (BCBSUW) to
fund the cash portion of the consideration for the AMS Merger. In
conjunction with the AMS Merger, the Company also recorded $150.0 million of
goodwill and other intangibles and $22.2 million of related deferred taxes.
Amortization of goodwill and other intangibles for the second quarter of 1997
totaled $2.5 million, including $2.3 million related to the AMS Merger plus
$0.2 million related to other acquisitions, compared with $0.2 million of
amortization expense for the three months ended June 30, 1996. On a
year-to-date basis, amortization of goodwill and other intangibles totaled
$4.9 million, including $4.6 million related to the AMS Merger plus $0.3
million related to other acquisitions, compared with $0.3 million of
amortization expense for the six months ended June 30, 1996.
NET INCOME
Consolidated net income for the three months ended June 30, 1997
increased to $5.6 million or $0.34 per share from $3.2 million or $0.26 per
share for the three months ended June 30,
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1996. Consolidated net income for the six months ended June 30, 1997
increased to $8.9 million or $0.55 per share from $3.5 million or $0.28 per
share for the six months ended June 30, 1996. The results for 1997 reflect
100% of the profit on the small group managed care and life business sold by
AMS, compared with 50% in 1996. The 1997 earnings per share calculation also
reflects the new shares issued in conjunction with the AMS Merger.
The Company's effective tax rate was 39.9% for the three months ended
June 30, 1997, compared with 36.9% for the three months ended June 30, 1996.
Excluding the impact of non-deductible goodwill related to the AMS Merger and
other acquisitions, the Company's effective tax rate for the three months
ended June 30, 1997 and 1996 was 37.1% and 36.1%, respectively. On a
year-to-date basis, the Company's effective tax rate was 41.5% for the six
months ended June 30, 1997, compared with 40.9% for the six months ended June
30, 1996. Excluding the impact of non-deductible goodwill related to the AMS
merger and other acquisitions, the Company's effective tax rate for the six
months ended June 30, 1997 and 1996 was 38.1% and 39.4%, respectively.
Deferred tax benefits have been recognized for identified intangibles related
to the AMS Merger.
LIQUIDITY AND CAPITAL RESOURCES
The Company's sources of cash flow consist primarily of health services
revenues and investment income. The primary uses of cash include medical and
other benefits and operating expense payments. Positive cash flows are
invested pending future payments of medical and other benefits and other
operating expenses. The Company's investment policies are designed to
maximize yield, preserve principal and provide liquidity to meet anticipated
payment obligations.
Historically, the Company has generated positive cash flow from
operations. For the six months ended June 30, 1997 and 1996, however, net
cash used in operating activities amounted to a use of $12.9 million and
$17.0 million, respectively. The decrease in cash flow is due primarily to
the decrease in medical and other benefits payable resulting from the
membership decline for AMS products over the past year. Due to periodic cash
flow requirements of certain subsidiaries, the Company made borrowings under
its bank line of credit ranging up to $8.5 million during the first six
months of 1997 to meet short-term cash needs. No balance was outstanding at
June 30, 1997.
The Company's investment portfolio consists primarily of investment
grade bonds and has a limited exposure to equity securities. At December 31,
1996, $407.4 million or 87.2% of the Company's total investment portfolio was
invested in bonds. At June 30, 1997, $403.4 million or 86.5% of the
Company's total investment portfolio was invested in bonds. The bond
portfolio had an average quality rating of Aa3 at December 31, 1996 and a
rating of A1 at June 30, 1997 by Moody's Investor Service, and the majority
of the bond portfolio was classified as available
14
<PAGE>
for sale. In accordance with Statement of Financial Accounting Standards
(SFAS) No. 115, bonds classified as available for sale are recorded on the
Company's balance sheet at market value. The market value of the total
investment portfolio, which includes stocks and bonds, exceeded amortized
cost by $10.1 million and $9.5 million at December 31, 1996 and June 30,
1997, respectively. Unrealized holding gains and losses on bonds classified
as available for sale are included as a component of shareholders' equity,
net of applicable deferred taxes. The Company has no investments in mortgage
loans, non-publicly traded securities (except for principal only strips of U.
S. Government securities), real estate held for investment or financial
derivatives.
Prior to the AMS Merger the Company owned 12% of the common stock of
AMS, which was recorded at cost of $1.4 million. Effective December 3, 1996,
the Company acquired the remaining 88% interest in AMS that it did not
already own. The acquisition was accomplished through the merger of AMS with
and into the Company pursuant to the terms of an Agreement and Plan of Merger
dated July 31, 1996, by and between AMS, BCBSUW, the Company and the two
principal AMS shareholders (individually and as trustees under a voting trust
for the other AMS shareholders). The Company was the surviving corporation
in the merger. The aggregate consideration for the merger was cash of $71.8
million, including expenses, and $98.7 million representing the market value
of 3,694,280 newly issued shares of Company common stock and options to
purchase Company common stock. Most of the cash came from $70.0 million
borrowed from BCBSUW, which, after the merger, owns approximately 38% of the
Company's common stock.
In December 1995, United Wisconsin Insurance Company (UWIC) borrowed
$65.0 million from BCBSUW under a Surplus Note Agreement, which was
guaranteed by the Company. The Surplus Note provided UWIC with regulatory
capital needed to replace capital paid to the Company in the form of a
dividend in December 1995. The dividend and Surplus Note were part of a
capital restructuring plan designed to transfer capital from UWIC to UWLIC to
support UWLIC's retention of the AMS medical business beginning in 1996. The
Company repaid $25.0 million in each of the first and second quarters of 1996
and the remainder was repaid in the third quarter of 1996.
The Company's anticipated expansion of its business requires capital
levels sufficient to support premium growth. The Company's compound annual
growth rate in premium revenue for the five years ended December 31, 1996 was
28.8%, due principally to the growth of AMS products. While the future rate
of growth is uncertain, growth in premium revenue is expected to continue.
From time to time, the Company makes capital contributions to its
subsidiaries to assist them in maintaining appropriate levels of capital and
surplus for regulatory and rating purposes. Insurance subsidiaries are
required to maintain certain levels of statutory capital and surplus. In
Wisconsin, where a large percentage of the Company's premium is written,
these levels are
15
<PAGE>
based upon the amount and type of premiums written and are calculated
separately for each subsidiary. As of June 30, 1997, statutory capital and
surplus for each of these insurance subsidiaries exceeded required levels.
In compliance with applicable state insurance regulations, certain
insurance subsidiaries have deposited securities with various states
aggregating $6.0 million at June 30, 1997. In addition, HMOs are required to
maintain a deposit with the State of Wisconsin for future assessments for HMO
insolvencies. As of June 30, 1997, the aggregate deposit for the Company's
consolidated HMOs was $4.8 million. States in which the insurance
subsidiaries are licensed to do business independently establish deposit
requirements. Increases in deposit levels, resulting in the segregation of
certain investments, may adversely affect the Company's liquidity.
The National Association of Insurance Commissioners (NAIC) has adopted
risk-based capital guidelines for both life and health insurers and for
property and casualty insurers. These guidelines currently apply only to
certain of the Company's subsidiaries. Those subsidiaries exceed the company
action level for NAIC risk-based capital guidelines. The NAIC is also
developing risk-based capital guidelines for health organizations, which
would apply to the Company's HMO subsidiaries. In addition, the Office of
the Commissioner of Insurance of the State of Wisconsin (OCI) and other state
regulators have the authority to establish capital and surplus requirements
for individual companies and may propose stricter capital and surplus
requirements.
In addition to internally generated funds and periodic borrowings on its
bank line of credit, the Company believes that additional financing to
facilitate long-term growth could be obtained through equity offerings, debt
offerings, financings from BCBSUW or other bank borrowings, as market
conditions may permit or dictate.
FORWARD LOOKING STATEMENTS
This report contains certain forward looking statements with respect to
the financial condition, results of operations and business of the Company.
Such forward looking statements are subject to inherent risks and
uncertainties that may cause actual results to differ materially from those
contemplated by such forward looking statements. Factors that may cause
actual results to differ materially from those contemplated by such forward
looking statements include, among others, rising health care costs, business
conditions and competition in the managed care industry, developments in
health care reform and other regulatory issues.
16
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the Company was held on May 28,
1997 for the purpose of electing four directors. Proxies for the
meeting were solicited pursuant to Section 14 (a) of the Securities
Exchange Act of 1934, as amended, and there was no solicitation in
opposition to the Board of Directors' solicitation.
All four of the Company's nominees were elected, each receiving the
vote indicated below:
Richard A. Abdoo: Thomas R. Hefty:
For 15,428,014 For 15,428,039
Withheld 27,581 Withheld 27,556
Abstain 0 Abstain 0
Broker Non-Votes 0 Broker Non-Votes 0
William R. Johnson: Carol N. Skornicka:
For 15,428,039 For 15,427,014
Withheld 27,556 Withheld 28,581
Abstain 0 Abstain 0
Broker Non-Votes 0 Broker Non-Votes 0
ITEM 5. OTHER INFORMATION
None
17
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3 Restated and Amended Bylaws of United Wisconsin Services,
Inc. dated May 28, 1997.
10.1 UWSI/BCBSUW 401(k) Plan (as amended and restated effective
January 1, 1997).
10.2 UWSI/BCBSUW Union Employees 401(k) Plan (as amended and
restated effective January 1, 1997).
11 Statement regarding computation of per share earnings.
(See Note 1 of Notes to Interim Consolidated Financial
Statements).
(b) Reports on Form 8-K
(1) Current Report on Form 8-K dated June 12, 1997, including
under Item 7 certain proforma financial information
contained in Registrant's Registration Statement on Form
S-3 (Registration No. 333-29425) filed June 17, 1997.
18
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATE: 8/11/97
--------------------------
\ UNITED WISCONSIN SERVICES, INC.
/s/ C. Edward Mordy
-------------------------------------------
C. Edward Mordy
Vice President and Chief Financial Officer
(Principal Financial Officer and
Chief Accounting Officer)
19
<PAGE>
UNITED WISCONSIN SERVICES, INC.
INDEX TO EXHIBITS
Sequential
Exhibit Page
Number Document Description Number
- ------ -------------------- ------
3 Restated and Amended Bylaws of United Wisconsin
Services, Inc. dated May 28, 1997. 21
10.1 UWSI/BCBSUW 401(k) Plan (as amended and restated
effective January 1, 1997). 53
10.2 UWSI/BCBSUW Union Employees 401(k) Plan (as
amended and restated effective January 1, 1997). 122
11 Statement regarding computation of per share
earnings. (See Note 1 of Notes to Interim
Consolidated Financial Statements).
20
<PAGE>
RESTATED AND AMENDED
BYLAWS OF
UNITED WISCONSIN SERVICES, INC.
MAY 28, 1997
ARTICLE I. OFFICES
SECTION 1. PRINCIPAL AND BUSINESS OFFICES. The Corporation may have such
principal and other business offices, either within or without the State of
Wisconsin, as the Board of Directors may designate or as the business of the
Corporation may require from time to time.
SECTION 2. REGISTERED OFFICE. The registered office of the Corporation
required by the Wisconsin Business Corporation Law to be maintained in the
State of Wisconsin may be, but need not be, identical to the principal office
in the state of Wisconsin; and the address of the registered office may be
changed from time to time by the Board of Directors or by the registered
agent. The business office of the registered agent of the Corporation shall
be identical to the registered office.
ARTICLE II. SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The Annual Meeting of the Shareholders shall
be held at the principal office of the Corporation in the City of Milwaukee,
Milwaukee County, Wisconsin, unless the Board of Directors shall designate
another location either within or without the State of Wisconsin. The Annual
Meeting shall take place on the last Wednesday of May each year or at such
other time and date within thirty days before or after said date as may be
fixed by or under the authority of the Board of Directors. If the day fixed
for the Annual Meeting shall be a legal holiday in the State of Wisconsin,
such meeting shall be held on the next succeeding business day. At such
meeting the Shareholders shall elect directors and transact such other
business as shall lawfully come before them.
A. ELECTORS AND OTHER BUSINESS. Nominations of persons for
election to the Board of Directors of the Corporation and the
proposal of business to be considered by the Shareholders may be
made at the Annual Meeting:
1. Pursuant to the Corporation's notice of meeting;
2. By or at the direction of the Board of Directors; or
3. By any Shareholder of the Corporation who is a shareholder of
record at the time of the giving of the notice provided for in
these Bylaws and who is entitled to vote at the meeting and
complies with the notice procedures set forth below.
<PAGE>
B. NOMINATIONS AND SUBMISSION OF BUSINESS MATTERS. For nominations
or other business to be properly before an Annual Meeting by a
shareholder, the Shareholder must have given timely notice
thereof in writing to the Secretary of the Corporation. Timely
notice is that notice which is received by the Secretary at the
Corporation's principal office not less than 60 days nor more
than 90 days prior to the last Wednesday in May, provided,
however, that in the event the date of the Annual Meeting is
advanced by more than 30 days or delayed by more than 60 days
from the last Monday in May, notice by the Shareholder, to be
timely, must be received as provided above not earlier than the
90th day prior to the date of such Annual Meeting and not later
than the close of business on the later of (x) the 60th day
prior to such Annual Meeting, or (y) the 10th day on which
public announcement of the date of such a meeting is first made.
Such Shareholder's notice shall be signed by the Shareholder of
record who intends to make the nomination or introduce the other
business (or his or her duly authorized proxy or other
representative), shall bear the date of signature of such
Shareholder or representative, and shall set forth:
1. The name and address, as they appear on the Corporation's
books, of such Shareholder and the beneficial owner(s), if
any, on whose behalf the nomination or proposal is made;
2. The class and number of shares of the Corporation which are
beneficially owned by such Shareholder or beneficial
owner(s);
3. A representation that such Shareholder is a holder of
record of shares entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to
make the nomination or introduce the other business
specified in the notice;
4. In the case of any proposed nomination for election or
reelection as a director:
(a) the name and residence address of the nominee;
(b) a description of all arrangements or understandings
between such Shareholder or beneficial owner(s) and
each nominee and any other person(s) (naming such
person(s)) pursuant to which the nomination is to be
made by the Shareholder;
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<PAGE>
(c) such other information regarding each nominee proposed
by such Shareholder as would be required to be
disclosed in solicitations of proxies for elections of
directors, or would be otherwise required to be
disclosed, in each case pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended,
including any information that would be required to be
included in a proxy statement filed pursuant to
Regulation 14A had the nominee been nominated by the
Board of Directors; and
(d) the written consent of each nominee to be named in a
proxy statement and to serve as a director of the
Corporation if so elected; and
5. In the case of any other business that such Shareholder
proposes to bring before the meeting,
(a) a brief description of the business desired to be
brought before the meeting, and, if the business
includes a proposal to amend these Bylaws, the
language of the proposed amendment;
(b) such Shareholder's and beneficial owner's(s') reasons
for conducting such business at such time; and
(c) any material interest in such business of such
Shareholder or beneficial owners(s).
Notwithstanding anything in the above paragraph to the contrary, in
the event that the number of directors to be elected to the Board of
Directors of this Corporation is increased and there is no public
announcement naming all of the nominees for director or specifying
the size of the increased Board of Directors made by the Corporation
at least 70 days prior to the last Wednesday in May, a Shareholder's
notice required by this Section shall also be considered timely, but
only with respect to nominees for new positions created by such
increase, if it is received by the Secretary at the Corporation's
principal office not later than the close of business on the 10th day
following the day on which such public announcement is first made by
the Corporation.
SECTION 2. SPECIAL MEETINGS. Special meetings of the Shareholders may be
called by the Chairman of the Board, and shall be called by the Secretary on
written request of a majority of members of the Board of Directors, or on
written request of the holders of at least 10 percent of
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<PAGE>
the Corporation's shares entitled to vote on a matter. The request shall be
signed, dated and delivered to the Secretary describing one or more purposes
for which the meeting is to be held. The Board of Directors shall set the
place of the meeting. If no such designation is made, the place of the
meeting shall be the principal business office of the Corporation in the
State of Wisconsin, but any meeting may be adjourned to reconvene at any
place designated by a vote of a majority of the shares represented thereat.
A. ELECTIONS AND OTHER BUSINESS. Nominations of persons for
election to the Board of Directors may be made at a Special
Meeting at which directors are to be elected pursuant to such
notice of meeting:
1. By or at the direction of the Board of Directors; or
2. By any Shareholder of the Corporation who:
(a) is a Shareholder of record at the time of giving
notice of the meeting,
(b) is entitled to vote at the meeting, and
(c) complies with the notice procedures set forth below.
B. NOMINATIONS AND SUBMISSION OF BUSINESS MATTERS. Only such
business as shall have been described in such notice shall be
conducted at the Special Meeting. Any Shareholder desiring to
nominate persons for election to the Board of Directors at a
Special Meeting shall cause written notice to be received by the
Secretary of the Corporation at its principal office not earlier
than 90 days prior to such Special Meeting and not later than
the close of business on the later of (x) the 60th day prior to
such Special Meeting or (y) the 10th day following the day on
which public announcement is first made of the date of such
Special Meeting and of the nominees proposed by the Board of
Directors to be elected at such meeting. Such written notice
shall be signed by the Shareholder of record who intends to make
the nomination (or his or her duly authorized proxy or other
representative), shall bear the date of signature of such
Shareholder or other representative, and shall set forth:
1. The name and address, as they appear on the Corporation's
books, of such Shareholder and the beneficial owner(s), if
any, on whose behalf the nomination is made;
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<PAGE>
2. The class and number of shares of the Corporation which are
beneficially owned by such Shareholder or beneficial
owner(s);
3. A representation that such Shareholder is a holder of
record of shares of the Corporation entitled to vote at
such meeting and intends to appear in person or by proxy at
the meeting to make the nomination specified in the notice;
4. The name and residence address of the person(s) to be
nominated;
5. A description of all arrangements or understandings between
such Shareholder or beneficial owner(s) and each nominee
and any other person(s) (naming such person(s)) pursuant to
which the nomination is to be made by such Shareholder;
6. Such other information regarding each nominee proposed by
such Shareholder as would be required to be disclosed in
solicitations of proxies for elections of directors, or
would be otherwise required to be disclosed, in each case
pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended, including any information that
would be required to be included in a proxy statement filed
pursuant to Regulation 14A had the nominee been nominated
by the Board of Directors; and
7. The written consent of each nominee to be named in a proxy
statement and to serve as a director of the Corporation if
so elected.
SECTION 3. NOTICE OF ANNUAL OR SPECIAL MEETING. Notice may be
communicated by telegraph, teletype, facsimile or other form of wire or
wireless communication, or by mail or private carrier, and, if these forms of
personal notice are impracticable, notice may be communicated by public
announcement. Such notice stating the place, day and hour of the meeting
and, in case of a special meeting, a description of each purpose for which
the meeting is called, shall be communicated or sent not less than 10 days
nor more than 60 days before the date of the meeting, by or at the direction
of the Chairman of the Board or the Secretary, or other Officer or persons
calling the meeting, to each shareholder of record entitled to vote at such
meeting. Written notice by the Corporation to its shareholders is effective
when mailed and may be addressed to the shareholder's address shown in the
Corporation's current record of shareholders.
SECTION 4. UNANIMOUS CONSENT WITHOUT MEETING. Any action that may be
taken at a meeting of the Shareholders may be taken without a meeting if a
consent in writing setting forth
-5-
<PAGE>
the action so taken shall be signed by all of the Shareholders entitled to
vote with respect to the subject matter thereof.
SECTION 5. CLOSING OF STOCK TRANSFER BOOKS OR FIXING OF RECORD DATE. A
"Shareholder" of the Corporation shall mean the person in whose name shares
are registered in the stock transfer books of the Corporation or the
beneficial owner of shares to the extent of the rights granted by a nominee
certificate on file with the Corporation. Such nominee certificates, if any,
shall be reflected in the stock transfer books of the Corporation. For the
purpose of determining Shareholders entitled to notice of or to vote at any
meeting of Shareholders or any adjournment thereof, or Shareholders entitled
to receive payment of any dividend, or in order to make a determination of
Shareholders for any other proper purpose, the Board of Directors may provide
that the stock transfer books shall be closed for a stated period but not to
exceed, in any case, 70 days. If the stock transfer books shall be closed
for the purpose of determining Shareholders entitled to the notice of or to
vote at a meeting of Shareholders, such books shall be closed for at least 10
days immediately preceding such meeting. In lieu of closing the stock
transfer books, the Board of Directors may fix in advance a date as the
record date for any such determination of Shareholders, such date in any case
to be not more than 70 days and, in case of a meeting of Shareholders, not
less than 10 days prior to the date on which the particular action requiring
such determination of Shareholders is to be taken. If the stock transfer
books are not closed and no record date is fixed for the determination of
Shareholders entitled to notice of or to vote at a meeting of Shareholders,
or Shareholders entitled to receive payment of a dividend, the close of
business on the date on which notice of the meeting is mailed or on the date
on which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination
of Shareholders. When a determination of Shareholders entitled to vote at
any meeting of Shareholders has been made as provided in this Section, such
determination shall be applied to any adjournment thereof except where the
determination has been made through the closing of the stock transfer books
and the stated period of closing has expired.
SECTION 6. VOTING RECORD. The Secretary shall, before each meeting of
Shareholders, make a complete list of the Shareholders entitled to vote at
such meeting, or any adjournment thereof, with the address of and the number
of shares held by each. Such record shall be produced and kept open at the
time and place of the meeting and shall be subject to the inspection of any
Shareholder during the whole time of the meeting for the purposes of the
meeting. The original stock transfer books shall be prima facie evidence as
to who are the Shareholders entitled to examine such record or transfer books
or to vote at any meeting of Shareholders. Failure to comply with the
requirements of this Section shall not affect the validity of any action
taken at such meeting.
SECTION 7. QUORUM. Shares entitled to vote as a separate voting group as
defined in the Wisconsin Business Corporation Law may take action on a matter
at a meeting only if a quorum of those shares exists with respect to that
matter. Unless the Articles of Incorporation or the
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<PAGE>
Wisconsin Business Corporation Law provide otherwise, a majority of the votes
entitled to be cast on the matter by a voting group constitutes a quorum of
that voting group for action on that matter.
Once a share is represented for any purposes at a meeting, other than
for the purpose of objecting to holding the meeting or transacting business
at the meeting, it is considered present for purposes of determining whether
a quorum exists for the remainder of the meeting and for any adjournment of
that meeting unless a new record date is or must be set for that adjourned
meeting.
If a quorum exists, action on a matter by a voting group is approved if
the votes cast within the voting group favoring the action exceed the votes
cast opposing the action, unless the Articles of Incorporation or the
Wisconsin Business Corporation Law require a greater number of affirmative
votes.
"Voting group" means any of the following:
A. All shares of one or more classes or series that under the
Articles of Incorporation or the Wisconsin Business Corporation
Law are entitled to vote and be counted together collectively on
a matter at a meeting of Shareholders.
B. All shares that under the Articles of Incorporation or the
Wisconsin Business Corporation Law are entitled to vote
generally on a matter.
Though less than a quorum of the outstanding shares are represented at a
meeting, a majority of the shares so represented may adjourn the meeting from
time to time without further notice. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified.
SECTION 8. PROXIES. At all meetings of Shareholders, a Shareholder
entitled to vote may vote in person or by proxy. A Shareholder may appoint a
proxy to vote or otherwise act for the Shareholder by signing an appointment
form, either personally or by his or her attorney-in-fact. Such proxy
appointment is effective when received by the Secretary of the Corporation
before or at the time of the meeting. Unless otherwise provided in the
appointment form of proxy, a proxy appointment may be revoked at any time
before it is voted, either by written notice filed with the Secretary or the
acting Secretary of the meeting or by oral notice given by the Shareholder to
the presiding officer during the meeting. The presence of a Shareholder who
has filed his or her proxy appointment shall not of itself constitute a
revocation. No proxy appointment shall be valid after eleven months from the
date of its execution, unless otherwise provided in the appointment form of
proxy. The Board of Directors shall have the power and authority to make
rules establishing presumptions as to the validity and sufficiency of proxy
appointments.
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<PAGE>
SECTION 9. VOTING OF SHARES. Each outstanding share shall be entitled to
one vote upon each matter submitted to a vote at a meeting of Shareholders,
except to the extent that the voting rights of the shares of any voting group
or groups are enlarged, limited or denied by the Articles of Incorporation.
SECTION 10. VOTING OF SHARES BY CERTAIN HOLDERS.
A. OTHER CORPORATIONS. Shares standing in the name of another
corporation may be voted either in person or by proxy, by the
president of such corporation or any other officer appointed by
such president. An appointment form of proxy executed by any
principal officer of such other corporation or assistant thereto
shall be conclusive evidence of the signer's authority to act,
in the absence of express notice to this Corporation, given in
writing to the Secretary of this Corporation, or the designation
of some other person by the Board of Directors or by the Bylaws
of such other corporation.
B. LEGAL REPRESENTATIVES AND FIDUCIARIES. Shares held by an
administrator, executor, guardian, conservator, trustee in
bankruptcy, receiver or assignee for creditors may be voted by
him, either in person or by proxy, without a transfer of such
shares into his or her name, provided that there is filed with
the Secretary before or at the time of meeting proper evidence
of his or her incumbency and the number of shares held by him,
either in person or by proxy. An appointment form of proxy
executed by a fiduciary shall be conclusive evidence of the
signer's authority to act, in the absence of express notice to
this Corporation, given in writing to the Secretary, that such
manner of voting is expressly prohibited or otherwise directed
by the document creating the fiduciary relationship.
C. PLEDGEES. A Shareholder whose shares are pledged shall be
entitled to vote such shares until the shares have been
transferred into the name of the pledgee, and thereafter the
pledgee shall be entitled to vote the shares so transferred;
provided, however, a pledgee shall be entitled to vote shares
held of record by the pledgor if the Corporation receives
acceptable evidence of the pledgee's authority to sign.
D. TREASURY STOCK AND SUBSIDIARIES. Neither treasury shares, nor
shares held by another corporation if a majority of the shares
entitled to vote for the election of directors of such other
corporation is held by this Corporation, shall be voted at any
meeting or counted in determining the total number of
outstanding shares entitled to vote, but shares of its own issue
held by this Corporation in a fiduciary capacity, or held by
such other
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<PAGE>
corporation in a fiduciary capacity, may be voted and
shall be counted in determining the total number of outstanding
shares entitled to vote.
E. MINORS. Shares held by a minor may be voted by such minor in
person or by proxy and no such vote shall be subject to
disaffirmance or avoidance, unless prior to such vote the
Secretary of the Corporation has received written notice or has
actual knowledge that such Shareholder is a minor. Shares held
by a minor may be voted by a personal representative,
administrator, executor, guardian or conservator representing
the minor if evidence of such fiduciary status, acceptable to
the Corporation, is presented.
F. INCOMPETENTS AND SPENDTHRIFTS. Shares held by an incompetent or
spendthrift may be voted by such incompetent or spendthrift in
person or by proxy and no such vote shall be subject to
disaffirmance or avoidance, unless prior to such vote the
Secretary of the Corporation has actual knowledge that such
Shareholder has been adjudicated an incompetent or spendthrift
or actual knowledge of judicial proceedings for appointment of a
guardian. Shares held by an incompetent or spendthrift may be
voted by a personal representative, administrator, executor,
guardian or conservator representing the minor if evidence of
such fiduciary status, acceptable to the Corporation, is
presented.
G. JOINT TENANTS. Share registered in the names of two or more
individuals who are named in the registration as joint tenants
may be voted in person or by proxy signed by any one or more of
such individuals if either (i) no other such individual or his
or her legal representative is present and claims the right to
participate in the voting of such shares or prior to the vote
files with the Secretary of the Corporation a contrary written
voting authorization or direction or written denial of authority
of the individual present or signing the appointment form of
proxy proposed to be voted, or (ii) all such other individuals
are deceased and the Secretary of the Corporation has no actual
knowledge that the survivor has been adjudicated not to be the
successor to the interests of those deceased.
SECTION 11. CONDUCT OF MEETINGS. The Chairman of the Board, or in the
Chairman's absence, the President, or, in their absence such Vice President as
is designated by the Board of Directors, shall call the meeting to order and
act as Chairperson of the meeting. Only persons nominated in accordance with
the procedures set forth in Article II, Sections 1 and 2, shall be eligible to
serve as Directors. Only such business as shall have been brought before a
meeting in accordance with the procedures set forth in Article II, Sections 1
and 2, shall be eligible to be conducted. The Chairperson of the meeting shall
have the power and duty to determine whether
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any nomination or any business proposed to be brought before the meeting was
made in accordance with the procedures set forth in Article II, Sections 1
and 2, and, if any proposed nomination or business is not in compliance
therewith, to declare that such defective proposal shall be disregarded.
SECTION 12. PUBLIC ANNOUNCEMENT. For purposes of Article II, Sections 1
and 2, "public announcement" shall mean disclosure in a press release reported
by the Dow Jones News Service, Associated Press, or comparable national news
service or in a document publicly filed by the Corporation with the Securities
and Exchange Commission pursuant to Section 13, 14, or 15(d) of the Securities
Exchange Act of 1934, as amended.
SECTION 13. INVALIDITY. The Chairperson, upon recommendation of the
Secretary, may reject a vote, consent, waiver, or proxy appointment, if the
Secretary or other officer or agent of the Corporation who is authorized to
tabulate votes, acting in good faith, has reasonable doubt about the validity
of the signature on it or about the signatory's authority to sign for the
Shareholder. The Corporation and its officer or agent who accepts or rejects
a vote, consent, waiver or proxy appointment in good faith and in accordance
with the Wisconsin Business Corporation Law shall not be liable for damages
to the Shareholders for consequences of the acceptance or rejection.
SECTION 14. WAIVER OF NOTICE. A Shareholder may waive any notice
required by the Wisconsin Business Corporation Law, the Articles of
Incorporation, or these Bylaws before or after the date and time stated in
the notice. The waiver shall be in writing and signed by the Shareholder
entitled to the notice, contain the same information that would have been
required in the notice under the Wisconsin Business Corporation Law (except
that the time and place of meeting need not be stated), and be delivered to
the Corporation for inclusion in the corporate records. A Shareholder's
attendance at any Annual Meeting or Special Meeting, in person or by proxy,
waives objection to all of the following: (a) lack of notice or defective
notice of the meeting, unless the Shareholder promptly upon arrival or at the
beginning of the meeting objects to holding, or transacting business at, the
meeting; and (b) consideration of a particular matter at the meeting that is
not within the purpose described in the meeting notice, unless the
Shareholder objects to considering the matter when it is presented.
ARTICLE III. BOARD OF DIRECTORS
SECTION 1. NUMBER OF DIRECTORS. The number of Directors of the
Corporation shall be nine (9), all of whom shall be nominated and elected by
the Shareholders as provided herein.
SECTION 2. TERM OF OFFICE. Elected Directors shall hold office for a
term of three (3) years and until their successors are elected and qualified,
except as otherwise provided in this Section or until their death,
resignation or removal. The Board of Directors shall be divided into
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three (3) classes of three (3) directors each. The term of office of the
first class of Directors shall expire at the first annual meeting after their
initial election and when their successors are elected and qualified, the
term of office of the second class shall expire at the second annual meeting
after their initial election and when their successors are elected and
qualified, and the terms of office of the third class shall expire at the
third annual meeting after their initial election and when their successors
are elected and qualified. At each annual meeting after the initial
classification of the Board of Directors, the class of Directors whose term
expires at the time of such election shall be elected to hold office until
the third succeeding annual meeting and until their successors are elected
and qualified.
SECTION 3. NOMINATIONS. Nominations for the election of directors shall
be made in accordance with the provisions of Article II, Sections 1 and 2
hereof, which requirements are hereby incorporated by reference in this
Article III, Section 3.
SECTION 4. REGULAR MEETINGS. A regular meeting of the Board of Directors
shall be held without other notice than this Bylaw immediately after, and at
the same place as, the Annual Meeting of Shareholders, for election of
corporate officers and transaction of other business. The Board of Directors
may provide by resolution the time and place for holding additional meetings
without other notice than such resolution.
SECTION 5. SPECIAL MEETINGS. Special Meetings of the Board of Directors
shall be held whenever called by the Chairman of the Board or the Secretary
upon written request of any three Directors. The Secretary shall give
sufficient notice of such meeting, to be not less than two (2) days, in
person or by mail or by telephone, telegraph, teletype, facsimile or other
form of wire or wireless communication as to enable the Directors so notified
to attend such meeting. The Chairman or Secretary who calls the meeting may
fix any place, within or without the State of Wisconsin, as the place for
holding any Special Meeting of the Board of Directors.
SECTION 6. WAIVER OF NOTICE. Whenever any notice whatsoever is required
to be given to any Director of the Corporation under the Articles of
Incorporation or Bylaws or any provisions of law, a waiver thereof in
writing, signed at any time, whether before or after the time of meeting, by
the Director entitled to such notice, shall be deemed equivalent to the
giving of such notice, and the Corporation shall retain copies of such
waivers in its corporate records. A director's attendance at or
participation in a meeting waives any required notice to him or her of the
meeting unless the Director at the beginning of the meeting or promptly upon
his or her arrival objects to holding the meeting and does not thereafter
vote for or assent to action taken at the meeting. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
Board of Directors need be specified in the notice or waiver of notice of
such meeting.
SECTION 7. QUORUM. A majority of the Directors in office for the time
being, and convened according to these Bylaws, shall constitute a quorum for
the transaction of business, but
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a majority of the directors present or participating (though less than a
quorum) may adjourn the meeting from time to time without further notice.
SECTION 8. VACANCIES. Vacancies, including those created by an increase
in the number of directors in the Board of Directors, may be filled by the
remaining Directors. A Director elected to fill a vacancy shall serve for
the unexpired term of his or her predecessor. In the absence of action by
the remaining Directors, the Shareholders may fill such vacancy at a Special
Meeting in accordance with the Articles of Incorporation, or by unanimous
consent according to these Bylaws.
SECTION 9. REMOVAL. The Shareholders may remove one or more directors,
with or without cause, at a meeting called for that purpose, the notice of
which reflects that purpose, in accordance with the Articles of Incorporation
of this Corporation.
SECTION 10. COMPENSATION. A director may receive such compensation for
services as is determined by resolution of the Board irrespective of any
personal interest of its members. A director also may serve the Corporation
in any other capacity and receive compensation therefore. The Board of
Directors also shall have authority to provide for or to delegate authority
to an appropriate committee to provide for reasonable pensions, disability or
death benefits and other benefits or payments, to Directors, Officers and
employees and to their estates, families, dependents or beneficiaries on
account of prior services rendered to the Corporation by such Directors,
Officers and employees.
SECTION 11. GENERAL POWERS. All corporate powers shall be exercised by
or under the authority of, and the business and affairs of the Corporation
shall be managed under the direction of, the Board of Directors, subject to
any limitation set forth in these Bylaws or the Articles of Incorporation.
SECTION 12. CONDUCT OF MEETINGS. The Chairman of the Board, or in the
Chairman's absence the President, or in their absence such Vice President as
is designated by the Board of Directors, shall call meetings of the Board of
Directors to order and shall act as Chairperson of the meeting. The
Secretary of the Corporation shall act as Secretary of all meetings of the
Board of Directors, but in the absence of the Secretary, the presiding
Officer may appoint an Assistant Secretary or any Director or other person
present or participating to act as Secretary of the meeting.
SECTION 13. MANNER OF ACTING. If a quorum is present or participating
when a vote is taken, the affirmative vote of a majority of directors present
or participating is the act of the Board of Directors or a committee of the
Board of Directors, unless the Wisconsin Business Corporation Law or the
Articles of Incorporation or these Bylaws require the vote of a greater
number of directors.
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SECTION 14. PRESUMPTION OF ASSENT. A Director of the Corporation who is
present at or participates in a meeting of the Board of Directors or a
committee thereof which he or she is a member, at which action on any
corporate matter is taken, shall be presumed to have assented to the action
taken unless his or her dissent shall be entered in the minutes of the
meeting or unless he or she shall file his or her written dissent to such
action with the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to the
Secretary of the Corporation immediately after the adjournment of the
meeting. Such right to dissent shall not apply to a Director who voted in
favor of such action.
SECTION 15. UNANIMOUS CONSENT WITHOUT MEETING. Any action required or
permitted by the Articles of Incorporation or Bylaws or any provision of law
to be taken by the Board of Directors at a meeting or by resolution may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by all of the Directors then in office.
SECTION 16. MEETING BY TELEPHONE OR BY OTHER COMMUNICATION TECHNOLOGY.
Meetings of the Board of Directors or committees may be conducted by telephone
or by other communication technology in accordance with Section 180.0820 of the
Wisconsin Business Corporation Law.
SECTION 17. COMMITTEES.
A. REGULAR COMMITTEES.
1. GENERAL DESCRIPTION. In order to facilitate the work of
the Board of Directors of this Corporation, the following
regular committees shall be elected from the membership of
the Board of Directors at the regular meeting held in May
of each year (or at such other time as the Board of
Directors may determine):
Executive Committee
Finance Committee
Management Review Committee
Audit Committee
Each committee shall have four members. The Chairman of
the Board of Directors, and in the Chairman's absence the
President, and in their absence, such Vice President as is
designated by the Board of Directors, shall submit
nominations for such committee memberships. Committee
members shall hold office until the next board meeting at
which Committee elections are conducted in accordance with
these Bylaws, and until their successors are elected and
qualified. Each Regular Committee of the Board of
Directors
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may exercise the authority of the full Board
within the scope of the duties and powers delegated to it
in these Bylaws, except that no committee of this Board
shall do any of the following:
(a) Authorize distributions;
(b) Approve or propose to shareholders action that the
Wisconsin Business Corporation Law requires be
approved by shareholders;
(c) Fill vacancies on the board of directors or, except as
provided herein, on any of its committees;
(d) Amend the Articles of Incorporation;
(e) Adopt, amend or repeal the Bylaws;
(f) Approve a plan of merger not requiring shareholder
approval;
(g) Authorize or approve reacquisition of shares, except
according to a formula or method prescribed by the
full Board; or
(h) Authorize or approve the issuance or sale or contract
for sale of shares or determine the designation and
relative rights, preferences and limitations of a
class or series of shares, except that the Board of
Directors may authorize a committee or a senior
executive officer of the Corporation to do so within
limits prescribed by the Board of Directors.
2. THE EXECUTIVE COMMITTEE. When the Board of Directors is
not in session, the Executive Committee shall have and may
exercise all of the powers of the full Board solely with
regard to those matters which are within the scope of the
Executive Committee's designated duties, as provided
herein. The Chairman of the Board of Directors shall be a
member of the Executive Committee.
The Executive Committee shall:
(a) Approve long range corporate and strategic plans,
including plans for any major borrowing or capital
raising programs;
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(b) Advise and consult with management on corporate
policies regarding reserving, reinsurance and other
liabilities;
(c) Approve the annual operating plan;
(d) Approve major changes in policy affecting new services
and programs; and
(e) Carry out such special assignments as the Board of
Directors may, from time to time, give to the
Executive Committee.
3. THE FINANCE COMMITTEE. When the Board of Directors is not
in session, the Finance Committee shall have and may
exercise all of the powers of the full Board solely with
regard to those matters which are within the scope of the
Finance Committee's designated duties, as provided herein.
The Chairman of the Board of Directors shall be a member of
the Finance Committee.
The Finance Committee shall:
(a) Approve investment policies and plans;
(b) Authorize and approve the investment of funds of the
Corporation;
(c) Consult with management regarding real estate,
accounts receivable and other assets;
(d) Determine the amount and types of all insurance that
should be carried by this Corporation and authorize
the purchase thereof;
(e) Advise and consult with the operating management in
the selection of the carriers of such insurance;
(f) Advise and consult with management on corporate tax policy;
and
(g) Carry out such special assignments as the Board of
Directors may, from time to time, give to the Finance
Committee.
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4. THE MANAGEMENT REVIEW COMMITTEE. When the Board of
Directors is not in session, the Management Review
Committee shall have and may exercise all of the powers of
the full Board solely with regard to those matters which
are within the scope of the Management Review Committee's
designated duties, as provided herein.
The Management Review Committee shall:
(a) Evaluate Senior Management (corporate officers)
performance against objectives;
(b) Approve Senior Management development programs;
(c) Approve the corporate compensation policy, including
making recommendations and decisions on any bonuses or
incentive plans, and establish the annual compensation
for the Chairman of the Board of Directors;
(d) Act as the Nominating Committee for officers and
directors and make recommendations to the Board for
types, methods and levels of directors' compensation;
(e) Administer the compensation plans for the officers,
directors, and key employees; and
(f) Carry out such special assignments as the Board of
Directors may, from time to time, give to the
Management Review Committee.
5. THE AUDIT COMMITTEE. When the Board of Directors is not in
session, the Audit Committee shall have and may exercise
all of the powers of the full Board solely with regard to
those matters which are within the scope of the Audit
Committee's designated duties, as provided herein.
The Audit Committee shall:
(a) Select and engage the independent certified public
accountants to audit the books, records and financial
transactions of the Corporation;
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(b) Review with the independent accountants the scope of
their examination, with particular emphasis on the
areas to which either the committee or the independent
accountants believe special attention should be
directed. The Audit Committee may have the
independent accountants perform such additional
procedures as the Committee or the auditors deem
necessary;
(c) Review and approve the annual plan for the financial
audit (internal audit) department;
(d) Review with the independent accountants the financial
statements and auditors' reports thereon;
(e) Review the management letter of the independent
accountants, and audit reports by the Corporation's
internal auditors to assure that appropriate action
has been taken by Senior Management as to each item
recommended;
(f) Encourage the independent accountants and the internal
auditors to communicate directly with the Chairman of
the Board and President or, if necessary, the Chairman
of the Audit Committee whenever any significant
recommendation has not been satisfactorily resolved at
the Senior Management level;
(g) Review the Conflict of Interest statements to assure
the Board of Directors that any conflict of interest
has been duly reported to and reviewed by Audit
Committee;
(h) Review and approve all related party transactions; and
(i) Carry out such special assignments as the Board of
Directors may, from time to time, give to the Audit
Committee.
B. SPECIAL COMMITTEES. In addition to the foregoing Regular
Committees, the Board of Directors may, from time to time,
establish Special Committees and specify the composition,
functions and authority of any such Special Committee.
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C. VACANCIES; TEMPORARY APPOINTMENTS. When, for any cause a
vacancy occurs in any Regular Committee, the remaining committee
members, by majority vote, may fill such vacancy by a temporary
appointment of a director on the Board not on the subject
committee to fill the vacancy until the next Board Meeting, at
which time the full Board shall fill the vacancy.
D. COMMITTEE MINUTES AND REPORTS. All of the foregoing committees
shall keep minutes and records of all of their meetings and
activities and shall report the same to the Board of Directors
at its next regular meeting. Such minutes and records shall be
available for inspection by the Directors at all times.
ARTICLE IV. OFFICERS
SECTION 1. GENERALLY. The principal Officers of the Corporation shall be
a Chairman of the Board (Chief Executive Officer), a President, one or more
Vice Presidents, a Secretary and a Treasurer. The Board of Directors shall
elect the principal officers annually at the Annual Meeting. All officers
shall hold office for a period of one year and until their successors are
duly elected and qualified, or until their prior death, resignation or
removal.
SECTION 2. REMOVAL. Any officer or agent may be removed by the Board of
Directors with or without cause whenever in its judgment the best interests
of the Corporation would be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Election
or appointment shall not of itself create contract rights.
SECTION 3. VACANCIES. A vacancy in any principal office because of
death, resignation, removal, or otherwise, shall be filled by the Board of
Directors for the unexpired portion of the term. The Board of Directors may,
from time to time, omit to elect one or more officers, or may omit to fill a
vacancy, and in such case, the designated duties of such officer, unless
otherwise provided in these Bylaws, shall be discharged by the Chairman of
the Board or such other officers as he or she may designate.
SECTION 4. CHAIRMAN OF THE BOARD. The Chairman of the Board, who shall
also be the Chief Executive Officer, shall preside at all meetings of the
Shareholders and of the Directors and shall do and perform such other duties
as from time to time may be assigned to that office by the Board of Directors.
SECTION 5. PRESIDENT. The President shall have general supervision of
the business and affairs of the Corporation. The President may sign and
execute all authorized bonds, notes, checks, contracts, or other obligations in
the name of the Corporation. The President shall
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perform such other duties as from time to time may be assigned to him or her
by the Board of Directors.
SECTION 6. VICE PRESIDENTS. Should the Chairman or the President be
absent or unable to act, the Board of Directors shall designate a Vice
President or other Officer to discharge the duties of the vacant office with
the same power and authority as is vested in that office. The Vice Presidents
shall perform such other duties as from time to time may be assigned to them by
the President or the Board of Directors.
SECTION 7. SECRETARY. The Secretary shall keep a record of the minutes
of the meetings of the Shareholders and of the Board of Directors. He or she
shall countersign all instruments and documents executed by the Corporation;
affix to instruments and documents the seal of the Corporation; keep in books
therefore the transactions of the Corporation; see that all notices are duly
given in accordance with the provisions of these Bylaws or as required by
law; and perform such other duties as usually are incident to such office or
may be assigned by the Chairman of the Board, the President or the Board of
Directors.
SECTION 8. TREASURER. The Treasurer, subject to the control of the Board
of Directors, shall collect, receive, and safely keep all monies, funds and
securities of the Corporation, and attend to all its pecuniary affairs. He
or she shall keep full and complete accounts and records of all its
transactions, of sums owing to or by the Corporation, and all rents and
profits in its behalf.
SECTION 9. ASSISTANTS AND ACTING OFFICERS. The Chairman of the Board,
the President and the Board of Directors shall have the power to appoint any
person to act as assistant to any officer, or as agent for the Corporation in
the officer's stead, or to perform the duties of such officer whenever for
any reason it is impracticable for the officer to act personally, and the
assistant or acting officer or other agent so appointed by the Chairman of
the Board, the President or the Board of Directors shall have the power to
perform all the duties of the office to which he or she is so appointed to be
assistant, or as to which he or she is so appointed to act, except as such
power otherwise may be defined or restricted by the Chairman of the Board,
the President or the Board of Directors.
SECTION 10. SALARIES. The salaries of the principal officers shall be
fixed from time to time by the Board of Directors or by a duly authorized
committee thereof, and no officer shall be prevented from receiving such
salary by reason of the fact that he or she is also a Director of the
Corporation.
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ARTICLE V. FUNDS OF THE CORPORATION
SECTION 1. FUNDS. All funds of the Corporation shall be deposited or
invested in such depositories or in such securities as may be authorized from
time to time by the Board of Directors or appropriate committee under
authorization of the Board of Directors.
SECTION 2. NAME. All investments and deposits of funds of the
Corporation shall be made and held in its corporate name, except that
securities kept under a custodial agreement or trust arrangement with a bank
or banking and trust company may be issued in the name of a nominee of such
bank or banking and trust company and except that securities may be acquired
and held in bearer form.
SECTION 3. LOANS. All loans contracted on behalf of the Corporation and
all evidences of indebtedness that are issued in the name of the Corporation
shall be under the authority of a resolution of the Board of Directors. Such
authorization may be general or specific.
SECTION 4. CONTRACTS. The Board of Directors may authorize one or more
officers, or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation. Such
authorization may be general or specific. In the absence of other
designation, all deeds, mortgages and instruments of assignment or pledge
made by the Corporation shall be executed in the name of the Corporation by
the Chairman of the Board, the President or one of the Vice Presidents and by
the Secretary or Treasurer; the Secretary, when necessary or required, shall
affix the corporate seal thereto; and when so executed no other party to such
instrument or any third party shall be required to make any inquiry into the
authority of the signing officer or officers.
SECTION 5. DISBURSEMENTS. All monies of the Corporation shall be
disbursed by check, draft, or written order only, and all checks and orders
for the payment of money shall be signed by such Officer or Officers as may
be designated by the Board of Directors. The Officers and employees of the
Corporation handling funds and securities of the Corporation shall give
surety bonds in such sums as the Board of Directors or appropriate committee
may require.
SECTION 6. PROHIBITED TRANSACTIONS. No directors or Officer of the
Corporation shall borrow money from the Corporation, or receive any
compensation for selling, aiding in the sale, or negotiating for the sale of
any property belonging to the Corporation, or for negotiating any loan for or
by the Corporation.
SECTION 7. VOTING OF SECURITIES OWNED BY THIS CORPORATION. Subject
always to the specific directions of the Board of Directors:
A. Any shares or other securities issued by any other corporation
and owned or controlled by this Corporation may be voted at any
meeting of security
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holders of such other corporation by the Chairman of the Board,
the President or in their absence any Vice President of this
Corporation who may be present and designated by the Board of
Directors; and
B. Whenever, in the judgment of the Chairman of the Board, the
President, or in their absence, a designated Vice President, it
is desirable for this Corporation to execute a proxy or written
consent in respect to any shares or other securities issued by
any other corporation and owned by this Corporation, such proxy
or consent shall be executed in the name of this Corporation by
the Chairman of the Board, the President, or a designated Vice
President of this Corporation in the order as provided in clause
A. of this Section, without necessity of any authorization by
the Board of Directors, affixation of corporate seal or
countersignature or attestation by another officer. Any person
or persons designated in the manner above stated as the proxy or
proxies of this Corporation shall have full right, power and
authority to vote the shares or other securities issued by such
other corporation and owned by this Corporation the same as such
shares or other securities might be voted by this Corporation.
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Certificates representing shares of
the Corporation shall be in such form, consistent with law, as shall be
determined by the Board of Directors. Such Certificates shall be signed by
the Chairman of the Board, the President, or a Vice President, and the
Secretary, or by another officer designated by the Chairman of the Board, the
President or the Board of Directors. All certificates for shares shall be
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered on the stock transfer books of the
Corporation. All certificates surrendered to the Corporation for transfer
shall be canceled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
canceled, except as provided in Section 6 of this Article VI.
SECTION 2. FACSIMILE SIGNATURES AND SEAL. The seal of the Corporation on
any certificates for shares may be a facsimile. The signature of the
Chairman of the Board, the President or other authorized officer upon a
certificate may be a facsimile if the certificate is manually signed on
behalf of a transfer agent, or a registrar, other than the Corporation itself
or an employee of the Corporation.
SECTION 3. SIGNATURE BY FORMER OFFICER. In case any officer who has
signed or whose facsimile signature has been placed upon any certificate for
shares shall have ceased to be such
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officer before such certificate is issued, it may be issued by the
Corporation with the same effect as if he or she were such officer at the
date of its issue.
SECTION 4. TRANSFER OF SHARES. Prior to due presentment of a certificate
for shares for registration of transfer, the Corporation may treat the
shareholder of such shares as the person exclusively entitled to vote, to
receive notifications and otherwise to have and exercise all the rights and
powers of an owner. Where a certificate for shares is presented to the
Corporation with a request to register for transfer, the Corporation shall
not be liable to the owner or any other person suffering loss as a result of
such registration of transfer if:
A. There were on or with the certificate the necessary
endorsements; and
B. The Corporation had no duty to inquire into adverse claims or
has discharged any such duty.
The Corporation may require reasonable assurance that said endorsements are
genuine and effective and in compliance with such other regulations as may be
prescribed by or under the authority of the Board of Directors:
SECTION 5. RESTRICTIONS ON TRANSFER. The face or reverse side of each
certificate representing shares shall bear a conspicuous notation of any
restriction imposed by the Corporation upon the transfer of such shares.
SECTION 6. LOST, DESTROYED OR STOLEN CERTIFICATES. Where the owner
claims that his or her certificate for shares has been lost, destroyed or
wrongfully taken, a new certificate shall be issued in place thereof if the
owner:
A. So requests before the Corporation has notice that such shares
have been acquired by a bona fide purchaser;
B. Files with the Corporation a sufficient indemnity bond; and
C. Satisfies such other reasonable requirements as may be
prescribed by or under the authority of the Board of Directors.
SECTION 7. CONSIDERATION FOR SHARES. The shares of the Corporation may
be issued for such consideration as shall be fixed from time to time by the
Board of Directors, provided that any shares having a par value shall not be
issued for a consideration less than the par value thereof. The
consideration to be received for shares may consist of any tangible or
intangible property or benefit to the Corporation, including cash, promissory
notes, services performed, contracts for services to be performed or other
securities of the Corporation. When the Corporation receives the
consideration for which the Board of Directors authorized the issuance
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of shares, the shares issued for that consideration are fully paid and
nonassessable, except as provided by Section 180.0622 of the Wisconsin Business
Corporation Law which may require further assessment for unpaid wages to
employees under certain circumstances. The Corporation may place in escrow
shares issued for a contract for future services or benefits or a promissory
note, or make other arrangements to restrict the transfer of the shares, and
may credit distributions in respect of the shares against their purchase
price, until the services are performed, the benefits are received or the
note is paid. If the services are not performed, the benefits are not
received or the note is not paid, the Corporation may cancel, in whole or in
part, the shares escrowed or restricted and the distributions credited.
SECTION 8. UNCERTIFICATED SHARES. In accordance with Section 180.0626 of
the Wisconsin Business Corporation Law, the Board of Directors may issue any
shares of any of its classes or series without certificates. The
authorization does not affect shares already represented by certificates
until the certificates are surrendered to the Corporation. Within a
reasonable time after the issuance or transfer of shares without
certificates, the Corporation shall send the Shareholder a written statement
of the information required on share certificates by Sections 180.0625 and
180.0627, if applicable, of the Wisconsin Business Corporation Law, and by
the Bylaws of the Corporation.
The Corporation shall maintain at its offices, or at the office of its
transfer agent, an original or duplicate stock transfer book containing the
names and addresses of all Shareholders and the number of shares held by each
Shareholder. If the shares are uncertificated, the Corporation shall be
entitled to recognize the exclusive right of a person registered on its books
as such, as the owner of shares for all purposes, and shall not be bound to
recognize any equitable or other claim to or interest in such shares on the
part of any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of the State of Wisconsin.
SECTION 9. TRANSFER AGENT AND REGISTRAR. The Corporation may maintain
one or more transfer offices or agencies, each in charge of a transfer agent
designated by the Board of Directors, where the shares of stock of the
Corporation shall be transferable. The Corporation also may maintain one or
more registry offices, each in charge of a registrar designated by the Board of
Directors, where such shares of stock shall be registered. The same person or
entity may be both a transfer agent and registrar.
SECTION 10. STOCK REGULATIONS. The Board of Directors shall have the
power and authority to make all such further rules and regulations not
inconsistent with the laws of the State of Wisconsin as it may deem expedient
concerning the issue, transfer and registration of certificates representing
shares of the Corporation.
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ARTICLE VII.
INDEMNIFICATION AND LIABILITY OF OFFICERS AND DIRECTORS
SECTION 1. INDEMNIFICATION.
A. Any person, or such person's estate or personal representative,
made or threatened with being made a party to any action, suit,
arbitration, or proceeding (civil, criminal, administrative, or
investigative, whether formal or informal), which involves
foreign, federal, state or local law, by reason of the fact that
such person is or was a Director or Officer of this Corporation
or of any corporation or other enterprise for which he or she
served at this Corporation's request as a director, officer,
partner, trustee, member of any decision-making committee,
employee, or agent, shall be indemnified by this Corporation for
all reasonable expenses incurred in the proceeding to the extent
he or she has been successful on the merits or otherwise.
B. In cases where a person described in subsection A. is not
successful on the merits or otherwise, this Corporation shall
indemnify such person against liability and reasonable expenses
incurred by him or her in any such proceeding, unless liability
was incurred because the person breached or failed to perform a
duty he or she owed to the Corporation and the breach or failure
to perform constituted any of the following:
1. A willful failure to deal fairly with the Corporation or
its Shareholders in connection with a matter in which the
Director or Officer had a material conflict of interest;
2. A violation of criminal law, unless the Director or Officer
had reasonable cause to believe his or her conduct was
lawful or no reasonable cause to believe his or her conduct
was unlawful;
3. A transaction from which the Director or Officer derived an
improper personal profit; or
4. Willful misconduct.
C. The determination whether indemnification shall be required
under subsection B. shall be made, at the selection of the
Director or Officer, according to one of the following methods:
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1. By a majority vote of a quorum of the Board of Directors
consisting of directors not at the time parties to the same
or related proceedings. If a quorum of disinterested
directors cannot be obtained, by majority vote of a
committee duly appointed by the Board of Directors and
consisting solely of two or more directors not at the time
parties to the same or related proceedings. Directors who
are parties to the same or related proceedings may
participate in the designation of members of the committee;
2. By independent legal counsel selected by a quorum of the
Board of Directors or its committee in the manner
prescribed in sub. 1. or, if unable to obtain such a quorum
or committee, by a majority vote of the full Board of
Directors, including Directors who are parties to the same
or related proceedings; or
3. By the court conducting the proceedings or another court of
competent jurisdiction, either on application by the
Director or Officer for an initial determination or on
application for review of an adverse determination under 1.
or 2., above.
D. The termination of a proceeding by judgment, order, settlement
or conviction, or upon a plea of no contest or an equivalent
plea, does not, by itself, create a presumption that
indemnification of the Director or Officer is not required.
E. A Director or Officer who seeks indemnification under this
Section shall make a written request to the Corporation.
F. Upon written request by a Director or Officer who is a party to
a proceeding described in subsection A., this Corporation may
pay or reimburse his or her reasonable expenses as incurred if
the Director or Officer provides the Corporation with all of the
following:
1. A written affirmation of his or her good faith belief that
he or she has not breached or failed to perform his or her
duties to the Corporation; and
2. A written undertaking, executed personally or on his or her
behalf, to repay the allowance, and reasonable interest
thereon, to the extent that it is ultimately determined
under subsections C. 1. or C. 2., above, that
indemnification is not required or to the extent that
indemnification is not ordered by a court under subsection
C. 3.,
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above. The undertaking under this subsection shall
be an unlimited general obligation of the Director or
Officer, may be accepted without reference to his or her
ability to repay the allowance, and may be secured or
unsecured.
G. This Article VII, Section 1 subsections A.-F., shall also apply
where a person, or such person's estate or personal
representative, is made or threatened with being made a party to
any proceeding described in subsection A. by reason of the fact
that such person is or was an Employee of the Corporation,
except that in addition to the categories of conduct set forth
in subsection B. in relation to which the Corporation has no
duty to indemnify, the Corporation also shall have no duty to
indemnify the Employee against liability and reasonable expenses
incurred by him or her in any such proceeding if liability was
incurred because the person breached or failed to perform a duty
he or she owed to the Corporation and the breach or failure to
perform constituted material negligence or material misconduct
in performance of the Employee's duties to the Corporation.
H. Unless a Director or Officer of this Corporation has knowledge
that makes reliance unwarranted, a Director or Officer, in
discharging his or her duties to the Corporation, may rely on
information, opinions, reports or statements, any of which may
be written or oral, formal or informal, including financial
statements and other financial data, if prepared or presented by
any of the following:
1. An officer or employee of the Corporation whom the Director
or Officer believes in good faith to be reliable and
competent in the matters presented;
2. Legal counsel, public accountants or other persons as to
matters the Director or Officer believes in good faith are
within the person's professional or expert competence; or
3. In the case of reliance by a Director, a committee of the
Board of Directors of which the Director is not a member if
the Director believes in good faith that the committee
merits confidence.
This subsection does not apply to the liability of a Director
for improper declaration of dividends, distribution of assets,
corporate purchase of its own shares, or distribution of assets
to shareholders during liquidation, or for corporate loans made
to an Officer or Director, under Wisconsin Business Corporation
Law Section 180.0832(1), or the reliance of a Director on
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financial information represented as correct by corporate officers or
independent or certified public accountants under Wisconsin
Business Corporation Law Section 180.0826.
I. In discharging his or her duties to the Corporation and in
determining what he or she believes to be in the best interest
of the Corporation, a Director or Officer may, in addition to
considering the effects of any action on Shareholders, consider
the following:
1. The effects of the action on employees, suppliers and
customers of the Corporation;
2. The effects of the action on communities in which the Corporation
operates; or
3. Any other factor the Director or Officer considers
pertinent.
SECTION 2. LIMITED LIABILITY OF DIRECTORS AND OFFICERS TO CORPORATION
AND SHAREHOLDERS.
A. Except as provided in subsection B. of this Section 2, a
Director or Officer is not liable to this Corporation, its
Shareholders, or any person asserting rights on behalf of the
Corporation or its Shareholders, for damages, settlements, fees,
fines, penalties or other monetary liabilities arising from a
breach of, or failure to perform, any duty resulting solely from
his or her status as a Director, unless the person asserting
liability proves that the breach or failure to perform
constitutes any of the following:
1. A willful failure to deal with the Corporation or its
Shareholders in connection with a matter in which the
Director had a material conflict of interest;
2. A violation of criminal law, unless the Director or Officer
had reasonable cause to believe his or her conduct was
lawful or no reasonable cause to believe his or her conduct
was unlawful;
3. A transaction from which the Director derived an improper
personal profit; or
4. Willful misconduct.
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B. This Section 2 does not apply to the liability of a Director or
Officer for improper declaration of dividends, distribution of
assets, corporate purchase of its own shares, or distribution of
assets to shareholders during liquidation, or for corporate
loans made to an Officer or Director, under Wisconsin Business
Corporation Law Section 180.0832(1).
SECTION 3. CODE OF ETHICS.
A. Directors, Officers and management employees shall exercise the
utmost good faith in all transactions touching upon their duties
to the Corporation and its property. In their dealings with and
on behalf of the Corporation they are held to a strict rule of
honesty and fair dealing between themselves and the Corporation.
They shall not use their positions, or knowledge gained
therefrom, so that a conflict may arise between the
Corporation's interest and that of the individual.
A "conflict of interest" transaction means a transaction with
the Corporation in which a Director of the Corporation has a
direct or indirect interest. The circumstances in which a
Director of the Corporation has an indirect interest in a
transaction include but are not limited to a transaction under
any of the following circumstances:
1. Another entity in which the Director has a material
financial interest or in which the Director is a general
partner is a party to the transaction; or
2. Another entity of which the Director is a director, officer
or trustee is a party to the transaction and the
transaction is, or because of its significance to the
Corporation should be, considered material by the Board of
Directors of the Corporation. A conflict of interest
transaction is not voidable by the Corporation solely
because of the Director's interest in the transaction if
any of the circumstances set forth in Section 180.0831 of the
Wisconsin Business Corporation Law are true or occur.
B. All acts of Directors, Officers and management employees shall
be for the sole benefit of the Corporation in any dealing which
may affect it adversely.
C. No Director, Officer or management employee shall accept any
favor which might influence his official act or which might
reflect upon his business conduct.
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D. Officers and management employees shall avoid outside employment or
activity which involves obligations which may compete with or be in
conflict with the interests of the Corporation.
E. A full disclosure of all facts of any transaction which is
subject to any doubt shall be made to the Chairman of the Board
or the President of the Corporation before consummating the
same.
F. A copy of this Article VII, Section 3, annually shall be
delivered to all Directors, Officers and management employees,
each of whom shall acknowledge receipt thereof to the Secretary
of the Corporation.
ARTICLE VIII. CORPORATE DIVIDENDS
The Board of Directors may from time to time declare dividends on its
outstanding shares in the manner and upon the terms and conditions provided by
law and its Articles of Incorporation.
ARTICLE IX. CORPORATE SEAL
The Board of Directors may provide a corporate seal which may be circular
in form and may have inscribed thereon the name of the Corporation and the
state of incorporation and the words "Corporate Seal."
ARTICLE X. FISCAL YEAR
The fiscal year shall be set by the Board of Directors.
ARTICLE XI. AMENDMENTS
SECTION 1. BY SHAREHOLDERS. These Bylaws may be altered, amended or
repealed and new Bylaws may be adopted by the Shareholders by affirmative vote
of not less than a majority of the shares present or represented at an annual
or special meeting of the Shareholders at which a quorum is in attendance.
SECTION 2. BY DIRECTORS. These Bylaws may also be altered, amended or
repealed and new Bylaws may be adopted by the Board of Directors by affirmative
vote of a majority of the number of Directors present at or participating in
any meeting at which a quorum is in attendance;
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but no bylaw adopted by the Shareholders shall be amended or repealed by the
Board of Directors if the bylaw so adopted so provides.
SECTION 3. IMPLIED AMENDMENTS. Any action taken or authorized by the
Shareholders or by the Board of Directors, which would be inconsistent with
the Bylaws then in effect but is taken or authorized by affirmative vote of
not less than the number of shares or the number of Directors required to
amend the Bylaws so that the Bylaws would be consistent with such action,
shall be given the same effect as though the Bylaws had been temporarily
amended or suspended so far, but only so far, as is necessary to permit the
specific action so taken or authorized.
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EXHIBIT 10.1
UWSI/BCBSUW 401(k) PLAN
(As Amended and Restated Effective January 1, 1997)
54
<PAGE>
UWSI/BCBSUW 401(k) PLAN
TABLE OF CONTENTS
PAGE
SECTION 1 - INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 IDENTITY OF THE PLAN: EFFECTIVE DATE. . . . . . . . . . . . . 1
1.2 ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 PURPOSE OF THE PLAN . . . . . . . . . . . . . . . . . . . . . 1
1.4 QUALIFIED PLAN INTENDED . . . . . . . . . . . . . . . . . . . 1
SECTION 2 - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 ACCOUNT: ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . 2
2.2 ADMINISTRATIVE COMMITTEE: COMMITTEE . . . . . . . . . . . . . 2
2.3 ADMINISTRATIVE DELEGATE . . . . . . . . . . . . . . . . . . . 2
2.4 ANNUAL ADDITION . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 AUTHORIZED LEAVE OF ABSENCE . . . . . . . . . . . . . . . . . 3
2.6 BENEFICIARY . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 BREAK IN SERVICE; ONE YEAR BREAK IN SERVICE . . . . . . . . . 3
2.8 CODE OR INTERNAL REVENUE CODE . . . . . . . . . . . . . . . . 3
2.9 COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.10 COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . 4
2.11 COMPENSATION REDUCTION ACCOUNT. . . . . . . . . . . . . . . . 4
2.12 COMPENSATION REDUCTION AGREEMENT. . . . . . . . . . . . . . . 4
2.13 COMPENSATION REDUCTION CONTRIBUTIONS . . . . . . . . . . . . 4
2.14 DEFERRED RETIREMENT DATE. . . . . . . . . . . . . . . . . . . 5
2.15 EFFECTIVE DATE. . . . . . . . . . . . . . . . . . . . . . . . 5
2.16 EMPLOYEE. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.17 EMPLOYEE CONTRIBUTION ACCOUNT . . . . . . . . . . . . . . . . 5
2.18 EMPLOYER. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.19 EMPLOYER MATCHING CONTRIBUTION ACCOUNT. . . . . . . . . . . . 6
2.20 EMPLOYER MATCHING CONTRIBUTIONS . . . . . . . . . . . . . . . 6
2.21 EMPLOYMENT COMMENCEMENT DATE. . . . . . . . . . . . . . . . . 6
2.22 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.23 FORFEITURE: FORFEITURE ACCOUNT. . . . . . . . . . . . . . . . 6
2.24 HIGHLY COMPENSATED EMPLOYEE . . . . . . . . . . . . . . . . . 7
2.25 HOUR OF SERVICE . . . . . . . . . . . . . . . . . . . . . . . 7
2.26 INVESTMENT ADVISER. . . . . . . . . . . . . . . . . . . . . . 8
2.27 LIMITATION YEAR . . . . . . . . . . . . . . . . . . . . . . . 8
2.28 NON-HIGHLY COMPENSATED EMPLOYEE . . . . . . . . . . . . . . . 8
2.29 NORMAL RETIREMENT AGE . . . . . . . . . . . . . . . . . . . . 8
2.30 NORMAL RETIREMENT DATE. . . . . . . . . . . . . . . . . . . . 8
2.31 PARTICIPANT . . . . . . . . . . . . . . . . . . . . . . . . . 9
55 i
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2.32 PERMANENT DISABILITY OR PERMANENTLY DISABLED. . . . . . . . . 9
2.33 PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.34 PLAN ADMINISTRATOR. . . . . . . . . . . . . . . . . . . . . . 9
2.35 PLAN YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.36 RE-EMPLOYMENT COMMENCEMENT DATE . . . . . . . . . . . . . . . 9
2.37 RETIREMENT: RETIRED . . . . . . . . . . . . . . . . . . . . . 9
2.38 SERVICE: YEAR OF SERVICE. . . . . . . . . . . . . . . . . . . 9
2.39 SEVERANCE FROM SERVICE DATE . . . . . . . . . . . . . . . . . 10
2.40 SPECIAL BENEFIT SCHEDULE. . . . . . . . . . . . . . . . . . . 10
2.41 TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.42 TRUST AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . 11
2.43 TRUST FUND. . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.44 TRUSTEES. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.45 VALUATION DATE. . . . . . . . . . . . . . . . . . . . . . . . 11
2.46 CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3 - ELIGIBILITY AND PARTICIPATION . . . . . . . . . . . . . . . . 13
3.1 ELIGIBLE EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . 13
3.2 PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . 13
3.3 PARTICIPATION FOLLOWING A BREAK IN SERVICE. . . . . . . . . . 13
3.4 EVIDENCE OF PARTICIPATION . . . . . . . . . . . . . . . . . . 13
3.5 DURATION OF PARTICIPATION . . . . . . . . . . . . . . . . . . 14
3.6 RIGHTS UPON TRANSFER. . . . . . . . . . . . . . . . . . . . . 14
SECTION 4 - CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . 15
4.1 NO CONTRIBUTIONS BY PARTICIPANTS. . . . . . . . . . . . . . . 15
4.2 COMPENSATION REDUCTION CONTRIBUTIONS. . . . . . . . . . . . . 15
4.3 PERMITTED RANGE OF COMPENSATION REDUCTION
CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . 15
4.4 EMPLOYER MATCHING CONTRIBUTIONS . . . . . . . . . . . . . . . 17
4.5 ORDER OF APPLICATION OF LIMITATIONS OF SECTIONS 4.3 - 4.4 . . 19
4.6 RIGHT TO SUSPEND. CHANGE, OR DISCONTINUE COMPENSATION
REDUCTION CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . 19
4.7 ROLLOVER CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . 19
4.8 GENERAL LIMITATION ON ANNUAL ADDITIONS. . . . . . . . . . . . 20
4.9 SPECIAL LIMITATION ON ANNUAL ADDITIONS. . . . . . . . . . . . 20
4.10 DISPOSITION OF EXCESS ANNUAL ADDITIONS. . . . . . . . . . . . 21
SECTION 5 - ACCOUNTING. . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.1 INDIVIDUAL ACCOUNTS OF PARTICIPANTS . . . . . . . . . . . . . 22
5.2 CREDITING OF EMPLOYER CONTRIBUTIONS AND FORFEITURES . . . . . 22
5.3 DEBITING OF DISTRIBUTIONS . . . . . . . . . . . . . . . . . . 22
5.4 SEPARATE INVESTMENT FUNDS . . . . . . . . . . . . . . . . . . 22
56 ii
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5.5 VALUATION OF ACCOUNTS . . . . . . . . . . . . . . . . . . . . 23
5.6 RETURN OF EMPLOYER CONTRIBUTIONS. . . . . . . . . . . . . . . 24
SECTION 6 - DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . 25
6.1 DISTRIBUTIONS UPON RETIREMENT, DEATH OR DISABILITY. . . . . . 25
6.2 DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT. . . . . . . . . 25
6.3 FORFEITURES . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.4 METHOD OF DISTRIBUTION. . . . . . . . . . . . . . . . . . . . 26
6.5 RESPONSIBILITIES AND DUTIES RELATIVE TO CURRENT RECORDS . . . 27
6.6 MANNER OF DISPOSING UNCLAIMED DISTRIBUTABLE INTEREST. . . . . 27
6.7 TIME OF DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . 27
6.8 WITHDRAWALS FROM INDIVIDUAL ACCOUNTS. . . . . . . . . . . . . 30
6.9 DISTRIBUTIONS TO ALTERNATE PAYEES . . . . . . . . . . . . . . 31
6.10 ELIGIBLE ROLLOVER DISTRIBUTIONS . . . . . . . . . . . . . . . 31
SECTION 7 - BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . . . . 32
7.1 DESIGNATION OF BENEFICIARY OR BENEFICIARIES . . . . . . . . . 32
7.2 MISSING BENEFICIARY(IES); RIGHT OF EMPLOYER TO MAKE A
PRESUMPTION OF DEATH. . . . . . . . . . . . . . . . . . . . . 33
SECTION 8 - LOANS TO PARTICIPANTS . . . . . . . . . . . . . . . . . . . . 34
8.1 PARTICIPANT LOANS . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 9 - ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . . 36
9.1 PLAN ADMINISTRATOR. . . . . . . . . . . . . . . . . . . . . . 36
9.2 THE ADMINISTRATIVE COMMITTEE. . . . . . . . . . . . . . . . . 36
9.3 EMPLOYMENT OF SERVICES BY THE COMMITTEE . . . . . . . . . . . 36
9.4 EXPENSES OF ADMINISTRATION. . . . . . . . . . . . . . . . . . 36
9.5 ACTS OF THE COMMITTEE . . . . . . . . . . . . . . . . . . . . 37
9.6 INTERPRETATIONS . . . . . . . . . . . . . . . . . . . . . . . 37
9.7 LIABILITY OF THE COMMITTEE. . . . . . . . . . . . . . . . . . 37
9.8 APPLICABLE LAW. . . . . . . . . . . . . . . . . . . . . . . . 38
9.9 PLAN FIDUCIARIES: ALLOCATION OF RESPONSIBILITIES AMONG
THEM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.10 RELIANCE ON CO-FIDUCIARIES. . . . . . . . . . . . . . . . . . 38
9.11 FIDUCIARY DUTIES. . . . . . . . . . . . . . . . . . . . . . . 39
9.12 PROHIBITED TRANSACTIONS TO BE AVOIDED . . . . . . . . . . . . 39
9.13 RECORDS AND REPORTS OF THE PLAN ADMINISTRATOR . . . . . . . . 39
9.14 DATA SUPPLIED BY EMPLOYER . . . . . . . . . . . . . . . . . . 39
9.15 PARTIAL EXCULPATION . . . . . . . . . . . . . . . . . . . . . 40
SECTION 10 - PROVISIONS RELATING TO PARTICIPANTS . . . . . . . . . . . . 41
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10.1 INFORMATION REQUIRED OF PARTICIPANTS . . . . . . . . . . . . 41
10.2 CLAIMS PROCEDURE . . . . . . . . . . . . . . . . . . . . . . 41
10.3 RIGHTS IN TRUST FUND . . . . . . . . . . . . . . . . . . . . 42
10.4 BENEFITS NOT ASSIGNABLE. . . . . . . . . . . . . . . . . . . 42
10.5 CONDITIONS OF EMPLOYMENT NOT AFFECTED BY PLAN. . . . . . . . 42
10.6 PAYMENTS PURSUANT TO A QUALIFIED DOMESTIC RELATIONS ORDER. . 43
SECTION 11 - MERGER OR CONSOLIDATION OF PLAN; TERMINATION; AMENDMENT. . . 44
11.1 MERGER, TRANSFER OR CONSOLIDATION OF PLAN WITH OTHER
PLANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.2 FUTURE OF THE PLAN; AMENDMENT. . . . . . . . . . . . . . . . 44
11.3 TERMINATION OF THE PLAN. . . . . . . . . . . . . . . . . . . 45
SECTION 12 - TOP HEAVY PLAN PROVISIONS . . . . . . . . . . . . . . . . . . 47
12.1 TOP HEAVY PLAN DEFINITIONS. . . . . . . . . . . . . . . . . . 47
12.2 MINIMUM CONTRIBUTION REQUIREMENT. . . . . . . . . . . . . . . 49
12.3 ADJUSTMENT TO OVERALL CODE SECTION 415 LIMITATIONS. . . . . . 49
SCHEDULE A - PARTICIPATING EMPLOYERS . . . . . . . . . . . . . . . . . . . 51
SCHEDULE B - EXCLUDED EMPLOYEE GROUPS. . . . . . . . . . . . . . . . . . . 52
SPECIAL BENEFIT SCHEDULE NO. 1 . . . . . . . . . . . . . . . . . . . . . . 53
SPECIAL BENEFIT SCHEDULE NO. 2 . . . . . . . . . . . . . . . . . . . . . . 56
SPECIAL BENEFIT SCHEDULE NO. 3 . . . . . . . . . . . . . . . . . . . . . . 57
SPECIAL BENEFIT SCHEDULE NO. 4 . . . . . . . . . . . . . . . . . . . . . . 61
58 iv
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SECTION 1 - INTRODUCTION
1.1 IDENTITY OF THE PLAN: EFFECTIVE DATE
The UWSI/BCBSUW 401(k) Plan is hereby amended and restated. The Plan
and Trust are intended to meet the requirements of Section 401(a) and 501(a) of
the Internal Revenue Code of 1986. The amended provisions of this Plan shall
apply only to an Employee who terminates employment on or after the effective
date of the amended provision. Unless otherwise stated, the amended provisions
of the Plan are effective January 1, 1997, except that the amendments relating
to daily recordkeeping, including, but not limited to, Sections 2.45, 4.2, 4.6,
and Section 5, shall be effective July 1, 1996.
1.2 ADMINISTRATION
The "Plan Administrator," within the meaning of ERISA, is the Company.
The Plan Administrator shall have duties and responsibilities under the Plan as
described in Section 9.
All books and records of the Plan are maintained on a Plan Year basis.
1.3 PURPOSE OF THE PLAN
The Plan, as herein amended and restated, is established and
maintained for the purpose of enabling Employees of the Employer to have a
portion of their compensation contributed on a tax-deferred basis to the Plan.
1.4 QUALIFIED PLAN INTENDED
The Employer intends that the Plan, as amended, restated and
redesignated effective January 1, 1997 (unless otherwise stated), and as the
same may from time to time be amended, shall constitute a qualified plan under
the provisions of the Internal Revenue Code of 1986, and shall be in full
compliance with the provisions of the Employee Retirement Income Security Act of
1974, as amended. The Employer intends to continue the Plan in effect
indefinitely, subject always, however, to the rights reserved by the Employer to
amend and terminate the Plan as herein set forth. Notwithstanding any provision
in this Plan to the contrary, contributions, benefits and service credit with
respect to qualified military service will be provided in accordance with
Section 414(u)(4) of the Code.
59 1
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SECTION 2 - DEFINITIONS
The following terms, when used herein and initially capitalized, shall
have the following meanings for all purposes of the Plan.
2.1 ACCOUNT: ACCOUNTS
"Account" (or Accounts) means the individual Account(s) maintained for
a Participant (as described in Section 5) to record his share of the
contributions made by the Employer and adjustments relating thereto, whether it
be the Participant's Compensation Reduction Account or Employer Matching
Contribution Account, Rollover Account, Transfer Account or his Employee
Contribution Account containing voluntary contributions made by Participants to
the Plan prior to January 1, 1985.
2.2 ADMINISTRATIVE COMMITTEE: COMMITTEE
"Administrative Committee" and "Committee" mean the Committee as
described in Section 9.
2.3 ADMINISTRATIVE DELEGATE
"Administrative Delegate" means one or more persons or institutions to
whom the Administrative Committee has delegated certain administrative functions
pursuant to a written agreement.
2.4 ANNUAL ADDITION
"Annual Addition", when used with reference to a Participant for any
Plan Year, means, for this Plan and any other profit-sharing or defined
contribution plan maintained by the Employer and qualified under Section 401(a)
of the Code, the sum of:
(A) Employer contributions, including any contributions to the
Participant's Compensation Reduction Account,
(B) Forfeitures, if any, and
(C) Voluntary non-deductible Employee contributions, if any.
For Plan Years beginning prior to January 1, 1987, voluntary non-
deductible contributions were considered Annual Additions to the extent they
exceeded the lesser of 6% of the Participant's Compensation or one-half of the
Participant's voluntary non-deductible contributions.
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2.5 AUTHORIZED LEAVE OF ABSENCE
"Authorized Leave of Absence" means any absence authorized by the
Employer for temporary disability or for other good cause provided that all
persons under similar circumstances must be treated alike in the granting of
such Authorized Leaves of Absence and provided further that the Participant
returns within the period of authorized absence.
An absence due to service in the Armed Forces of the United States
shall be considered an Authorized Leave of Absence provided that the absence is
caused by war or other emergency, or provided that the Employee is required to
serve under the laws of conscription in time of peace, and further provided that
the Employee returns to employment with the Employer within the period provided
by law.
2.6 BENEFICIARY
"Beneficiary" means the person or persons entitled to receive benefits
under this Plan by reason of death of a Participant, as more definitively
described in Section 7.
2.7 BREAK IN SERVICE; ONE YEAR BREAK IN SERVICE
"Break in Service", or a "One Year Break in Service", with respect to
an Employee means a period of one or more Plan Years during which a Participant
renders 500 or less Hours of Service during each such Plan Year.
In order to prevent a One Year Break in Service from occurring for
participation and vesting purposes, an Employee or Participant who is absent
from work due to a maternity/paternity leave of absence will be treated as
having completed the number of hours that normally would have been credited but
for the absence. Such Employee or Participant will be credited with no more than
501 Hours of Service in either the Plan Year in which the maternity/paternity
leave begins (if the crediting is necessary to prevent a Break in Service in
that Plan Year), or in the following year. For purposes of this paragraph, an
Employee or Participant will be deemed to be on a maternity/paternity leave of
absence if such person is absent from work due to: (a) the pregnancy of the
Employee or the Participant, (b) the birth of a child of the Employee or the
Participant, (c) the placement of a child with the Employee or the Participant
in connection with the adoption of a child, or (d) the Employee's or the
Participant's caring for such child for a period beginning immediately following
such birth or placement.
2.8 CODE OR INTERNAL REVENUE CODE
"Code" or "Internal Revenue Code" means the Internal Revenue Code of
1986, as amended.
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2.9 COMPANY
"Company" means United Wisconsin Services, Inc. and Blue Cross & Blue
Shield United of Wisconsin.
2.10 COMPENSATION
"Compensation" means, with reference to a Participant for any Plan
Year, a Participant's base pay for Service rendered to the Employer, sales and
persistency bonuses and any amount (I) deferred to this Plan or any other 401(k)
plan pursuant to a salary reduction agreement or (ii) contributed to a cafeteria
plan qualified under Section 125 of the Code; provided, however, that for Plan
Years beginning on or after January 1, 1994, Compensation shall not exceed
$150,000 (or such other amount as may be determined by the Secretary of Treasury
in accordance with Section 401(a)(17) of the Internal Revenue Service to reflect
increases in the cost-of-living); provided, further that for Plan Years
beginning on or after January 1, 1997, the rules of Code Section 414(q)(6)
(relating to aggregation of family members) shall not apply with respect to the
foregoing limitation. Compensation does not include overtime pay, profit
sharing and other bonuses and commissions earned by the Participant, and any
amount received by the Participant as severance pay.
2.11 COMPENSATION REDUCTION ACCOUNT
"Compensation Reduction Account" means the separate Account of a
Participant consisting of the value attributable to contributions, if any, made
under the Plan by the Employer at any time pursuant to a Compensation Reduction
Agreement signed by the Participant, increased by net gains and decreased by
net losses and distributions therefrom, all in accordance with the provisions of
the Plan.
2.12 COMPENSATION REDUCTION AGREEMENT
"Compensation Reduction Agreement" means the agreement between a
Participant and the Employer whereby the Participant elects to defer a portion
of his Compensation and the Employer agrees to contribute such amount to such
Participant's Compensation Reduction Account on behalf of the Participant in a
manner intended to satisfy the requirements of Section 401(k) of the Code.
2.13 COMPENSATION REDUCTION CONTRIBUTIONS
"Compensation Reduction Contributions" means the pre-tax contributions
made at the Participant's election pursuant to Section 4.2.
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2.14 DEFERRED RETIREMENT DATE
"Deferred Retirement Date" means the date on which a Participant
actually retires subsequent to the attainment of his Normal Retirement Date.
2.15 EFFECTIVE DATE
"Effective Date" means January 1, 1997.
2.16 EMPLOYEE
"Employee" means any person who is actively employed as a salaried or
hourly employee by an Employer which participates in this Plan (as set forth in
Schedule A to this Plan), and who (I) is not included in a unit of employees
covered by a collective bargaining agreement under which retirement benefits
are the subject of good faith bargaining, (ii) is not in a group of employees
specifically excluded from participating in the Plan (as set forth on Schedule B
to this Plan), and (iii) is receiving remuneration for personal services
rendered to such Employers (or would be receiving such remuneration except for
an authorized leave of absence). The term "Employee" shall not include a
"Leased Employee" as defined in Section 414(n) of the Code, except to the extent
required by law. Notwithstanding anything in this Plan to the contrary, persons
who are classified by an Employer as independent contractors shall not be
considered Employees eligible to participate in the Plan.
2.17 EMPLOYEE CONTRIBUTION ACCOUNT
"Employee Contribution Account" means the separate Account maintained
to hold voluntary contributions made by a Participant to the Plan prior to
January 1, 1985, increased by net gains and decreased by net losses and
distributions therefrom, all in accordance with the provisions of the Plan.
2.18 EMPLOYER
"Employer" means any Employers which are participating in this Plan as
set forth on Schedule A to this Plan.
For purposes of calculating the maximum benefit payable under Sections
4.8, 4.9, and 4.10, determining when a Break in Service or a One-Year Break in
Service has occurred under Section 2.7, determining Years of Service under
Section 2.38, determining a Participant's rights upon an employment transfer
under Section 3.6, and determining whether an Employee has completed the
eligibility service requirement under Section 3.2, the term "Employer" shall, to
the extent required by applicable law, include:
(1) any corporation other than the Company or an Employer, i.e.,
either a subsidiary corporation of an affiliated or associated corporation of
the Company or an
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Employer, which together with the Company or an Employer is a member of a
"controlled group" of corporations (as defined in Code Section 414(b));
(2) any organization which together with the Company or an Employer
is under "common control" (as defined in Code Section 414(c));
(3) any organization which together with the Company or an Employer
is an "affiliated service group" (as defined in Code Section 414(m)); or
(4) any other entity required to be aggregated with the Company or an
Employer pursuant to regulations under Code Section 414(o).
Notwithstanding the foregoing, the term Employer may, in the
discretion of the Committee, be defined to include an entity described in
paragraphs (1) through (4) above for any purpose under the Plan.
2.19 EMPLOYER MATCHING CONTRIBUTION ACCOUNT
"Employer Matching Contribution Account" means the separate Account of
a Participant consisting of Employer matching contributions allocated thereto,
increased by net gains and decreased by net losses and distributions therefrom,
all in accordance with the provisions of the Plan.
2.20 EMPLOYER MATCHING CONTRIBUTIONS
"Employer Matching Contributions" means the Employer Contributions
made pursuant to Section 4.4 based on the Compensation Reduction Contributions
made by a Participant.
2.21 EMPLOYMENT COMMENCEMENT DATE
"Employment Commencement Date" means the date on which an Employee
first performs an Hour of Service for the Employer.
2.22 ERISA
"ERISA" means the Employee Retirement Income Security Act of 1974, as
from time to time amended.
2.23 FORFEITURE: FORFEITURE ACCOUNT
"Forfeiture" or "Forfeiture Account" means that portion of a
Participant's Employer Matching Contribution Account to which he is not entitled
upon a distribution under the Plan, as more fully described in Section 6.3.
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2.24 HIGHLY COMPENSATED EMPLOYEE
A "Highly Compensated Employee" is, for Plan Years beginning on or
after January 1, 1997, any Employee who, during the current year or the
preceding year
(i) was a 5% owner (as defined in Code Section 416(I)); or
(ii) received Compensation from the Employer in excess of $80,000 (as
adjusted for cost-of-living by the Secretary of Treasury). Family members
(i.e., Employee's spouse, lineal ascendants or descendants, and the spouse of
such lineal ascendants or descendants) of a Highly Compensated Employee shall be
treated as separate Employees.
2.25 HOUR OF SERVICE
"Hour of Service" shall mean:
(A) Each hour for which an Employee is paid, or entitled to payment,
for the performance of duties for the Employer. These hours shall be credited to
the Employee for the computation period in which the duties are performed; and
(B) Each hour for which an Employee is paid, or entitled to payment
by the Employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has terminated)
due to vacation, personal day, holiday, illness, incapacity (including
disability), lay-off, jury duty, military duty or leave of absence. Hours under
this paragraph shall be calculated and credited pursuant to Section 2530.200b-2
of the Department of Labor Regulations which are incorporated herein by this
reference; and
(C) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The same Hours of
Service shall not be credited both under paragraphs (A) or (B), as the case may
be, and under this paragraph (C). These hours shall be credited to the Employee
for the computation period or periods to which the award or agreement pertains
rather than the computation period in which the award, agreement or payment is
made.
(D) Each hour for which the Employee is unpaid on account of a period
of time during which no duties are performed due to illness, incapacity
(including disability), layoff, military duty or leave of absence. Hours under
this paragraph shall be calculated and credited pursuant to Section 2530.200b-2
of the Department of Labor Regulations which are incorporated herein by this
reference.
(E) Notwithstanding the above, an Hour of Service shall not include
an Hour of Service on account of a period in which the Employee does not perform
any duties, if payment by the Employer on behalf of the Employee is pursuant to
a plan or program maintained solely for the purpose of complying with
applicable workers' compensation,
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unemployment compensation or disability insurance laws, or for any payment
which is made pursuant to a long-term disability program.
(F) For Hours of Service credited under either paragraphs (B) or (D),
no more than 501 Hours of Service shall be so credited to an Employee on account
of any single continuous period during which the Employee performs no duties
(whether or not such period occurs in a single computation period). In addition,
the same Hours of Service shall not be credited under both paragraphs (B) and
(D).
(G) Hours of Service for Employees under paragraphs (A), (B) and (C)
shall be determined by crediting each Employee with 45 Hours of Service for each
week in which the Employee would have been credited with at least 1 Hour of
Service under paragraphs (A), (B) and (C). However, for classes of Employees
paid on an hourly basis and for Employees for whom records of hours are
maintained, Hours of Service under paragraphs (A), (B) and (C) shall be
determined on the basis of hours for which Compensation is paid or due.
2.26 INVESTMENT ADVISER
"Investment Adviser" means a person or organization who is acting as
such with respect to the Trust Fund, in accordance with the terms of the Trust
Agreement. An Investment Adviser (other than a bank or insurance company) must
be registered as an Investment Adviser under the Investment Advisers Act of
1940 and must have acknowledged in writing that he is a Fiduciary with respect
to the Plan and the Trust.
2.27 LIMITATION YEAR
"Limitation Year" (as defined in Section 2.01 of Revenue Ruling 75-48)
means for purposes of the limitations on contributions as imposed by Section 415
of the Code, the Plan Year.
2.28 NON-HIGHLY COMPENSATED EMPLOYEE
A "Non-Highly Compensated Employee" shall mean any Employee who is not
a Highly Compensated Employee as defined in Section 2.24.
2.29 NORMAL RETIREMENT AGE
"Normal Retirement Age" means the date on which a Participant attains
age sixty-five (65).
2.30 NORMAL RETIREMENT DATE
"Normal Retirement Date" means the first day of the month coincident
with or next following the date as of which a Participant shall have attained
his Normal Retirement Age.
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2.31 PARTICIPANT
"Participant" means an Employee of the Employer who meets the
requirements of Section 3 for eligibility and participation in the Plan,
including a former active Participant who is entitled to benefits hereunder.
2.32 PERMANENT DISABILITY OR PERMANENTLY DISABLED
"Permanent Disability" or "Permanently Disabled," when used with
reference to a Participant, means his physical or mental condition which
persists for at least six continuous months and is such that, in the opinion of
the Employer, he is no longer capable of discharging the responsibilities of
his job assignment with the Employer or the duties of such other position or job
which it makes available to him and for which such Employee is qualified by
reason of his training, education or experience.
2.33 PLAN
"Plan" means the UWSI/BCBSUW 401(k) Plan, as amended from time to
time.
2.34 PLAN ADMINISTRATOR
The "Plan Administrator" is the Company. With respect to the Plan, the
Plan Administrator shall have the duties and responsibilities described in
Section 9 hereof.
2.35 PLAN YEAR
"Plan Year" means the annual accounting period designated as such for
purposes of the Plan by the Plan Administrator. The Plan Year commences on
January 1 and terminates on the next following December 31.
2.36 RE-EMPLOYMENT COMMENCEMENT DATE
"Re-employment Commencement Date" means the date on which an Employee
or a Participant first performs an Hour of Service for the Employer, following
his Severance from Service Date.
2.37 RETIREMENT: RETIRED
"Retirement" or "Retired" means the termination of a Participant's
employment with the Employer, for any reason other than death, on account of his
Permanent Disability or on or after his Normal Retirement Date.
2.38 SERVICE: YEAR OF SERVICE
"Service" and "Year of Service", for purposes of determining vesting
credit, mean:
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(A) an Employee shall receive credit for one Year of Service for each
full Plan Year of employment,
(B) for the Plan Year in which the Employee is initially employed or
for the Plan Year in which the Employee terminates employment, an Employee shall
receive credit for one Year of Service for the partial Plan Year if the Employee
completes 1,000 or more Hours of Service.
As of each June 30, all employees hired prior to the preceding
January 1 shall be credited with 1,000 Hours of Service for vesting purposes.
Employees who terminate prior to June 30 and who actually work 1,000 Hours
of Service will receive credit for a full year of vesting service.
Periods of temporary illness, temporary layoff and Authorized Leaves
of Absences shall not be deemed as breaking employment and shall be counted as
Years of Service. A Participant shall not receive more than one Year of Service
credit for any Plan Year irrespective of the number of Employers a Participant
is employed by during such Plan Year.
Notwithstanding the foregoing, if a Participant who is vested in a
portion or all of his Employer Matching Contribution Account incurs a Break in
Service (and subsequently is rehired), any Years of Service attributable to his
prior period of employment shall be reinstated as of his Re-employment
Commencement Date, provided he completes a Year of Service following his Re-
employment Commencement Date.
If a Participant who is not vested in his Employer Matching
Contribution Account incurs a Break in Service (and subsequently is rehired),
any Years of Service attributable to his prior period of employment shall be
restored as of his Re-employment Commencement Date only if the number of
consecutive One Year Breaks in Service is less than five (5) and the Participant
completes a Year of Service following his Re-employment Commencement Date.
2.39 SEVERANCE FROM SERVICE DATE
"Severance from Service Date" means the date on which a Participant
resigns, retires, is discharged or dies. The Severance from Service Date is
significant in determining continuity of employment in the determination of a
Break in Service and in the determination of a Participant's vested interest in
his Employer Matching Contribution Account.
2.40 SPECIAL BENEFIT SCHEDULE
"Special Benefit Schedule" means a set of supplementary Plan
provisions adopted by the Administrative Committee setting forth any special
Plan provisions in effect for a specific Employer or group of Employees covered
by the Plan. If any provisions contained
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in a Special Benefit Schedule conflict with the remaining provisions of the
Plan, the Special Benefit Schedule shall govern. The existence of Special
Benefit Schedules shall not be construed as the creation of different plans
for purposes of the Code or ERISA.
2.41 TRUST
"Trust" means, effective July 1, 1996, the UWSI/BCBSUW Defined
Contribution Plans Master Trust maintained in accordance with the terms of the
Trust Agreement as from time to time amended, which constitutes part of this
Plan.
2.42 TRUST AGREEMENT
"Trust Agreement" means that certain Trust Agreement made effective as
of July 1, 1996 by and between United Wisconsin Services, Inc., Blue Cross &
Blue Shield United of Wisconsin and American Express Trust Company under which
the Employer is settlor and America Express Trust Company is the Trustee, and
any successor to such Trust Agreement.
2.43 TRUST FUND
"Trust Fund" means, at time of reference, the assets of the Trust. The
term "Trust Fund" shall also mean, at time of reference, the assets or funds
held under a custodial account pursuant to an agreement between United Wisconsin
Services, Inc., Blue Cross & Blue Shield United of Wisconsin and an authorized
custodian.
2.44 TRUSTEES
"Trustees" means the fiduciaries designated as such in the Trust
Agreement, including all "Successor Trustees" at any time acting thereunder. If
the Plan's assets are held in a custodial account pursuant to a custodial
agreement, the term "Trustees" will be deemed to include any custodian named in
such agreement.
2.45 VALUATION DATE
"Valuation Date" means any day that the New York Stock Exchange is
open for business or any other date mutually agreed to by the Administrative
Committee and the Trustee.
2.46 CONSTRUCTION
Within this Plan document, as the same may be amended from time to
time, the masculine pronoun shall be deemed to include the feminine and the
neuter, and the single shall be deemed to include the plural whenever the
context requires. The words
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"terminate," "terminated," "termination of
employment," "retire," "retired," or "retirement" shall be interpreted to mean
the termination of employment or retirement of the Participant from employment
with all Employers and nonparticipating Employers.
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SECTION 3 - ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBLE EMPLOYEES
The Plan is applicable only to Employees of an Employer. Accordingly,
only eligible Employees who become Participants under the Plan shall have
benefits accrued hereunder.
3.2 PARTICIPATION
(A) Any Employee who was a Participant pursuant to the terms of the
Plan in effect on December 31, 1996 and who is actively employed by the Employer
on January 1, 1997 shall continue as a Participant in the Plan on January 1,
1997.
(B) With respect to any Employee who has not satisfied the
participation requirements under (A) on or after January 1, 1997, each such
Employee shall become a Participant in the Plan on the January 1, April 1, July
1, or October 1 coincident with or next following his completion of twelve (12)
consecutive months of service in which he completes 1,000 Hours of Service. In
the event an Employee fails to complete 1,000 Hours of Service during his
initial twelve (12) month period of employment, he shall become a Participant
on the January 1 next following his completion of 1,000 Hours of Service during
the Plan Year which contains the first anniversary (or succeeding anniversaries)
of his Employment Commencement Date (or Re-employment Commencement Date).
3.3 PARTICIPATION FOLLOWING A BREAK IN SERVICE
Any Participant who incurs a Break in Service (due to termination of
employment or otherwise) on and after the Effective Date (or any Participant who
had terminated his employment and subsequently returned to active employment
before incurring a Break in Service) shall be subject to the following rules for
determining his participation in the Plan:
(A) If the Participant is rehired before he has a Break in Service,
he shall again participate in the Plan as of his Re-employment Commencement
Date.
(B) If a Participant incurs a Break in Service and following that
Break in Service again completes a twelve (12) consecutive month period of
employment during which he works 1,000 Hours of Service, he shall again be
eligible to participate in the Plan on the date set forth in Section 3.2 as if
he were a new employee as of his Re-employment Commencement Date.
3.4 EVIDENCE OF PARTICIPATION
Upon completion of the requisite service requirements, the otherwise
eligible Employee shall become a Participant. The Plan Administrator shall
notify the Employee
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that he is eligible to be a Participant in the Plan, and the effective date
thereof. The Plan Administrator shall also furnish the Participant with the
forms and materials necessary in order for the Participant to elect to have
contributions made to his Compensation Reduction Account and to designate a
Beneficiary (or Beneficiaries) to whom distribution of his values in the Plan
should be made in the event of his death prior to the full receipt of his
interest in the Trust.
3.5 DURATION OF PARTICIPATION
An Employee who becomes a Participant shall continue to be a
Participant until he terminates employment. If a Participant has a One Year
Break in Service before he is entitled to receive (then or thereafter) a benefit
hereunder, he thereupon shall cease to be a Participant, and shall so remain
unless he again becomes a Participant as specified in Section 3.3.
3.6 RIGHTS UPON TRANSFER
(A) TRANSFERS TO NON-COVERED JOB CLASSIFICATION: If a Participant is
transferred to a job classification with the Employer whereby he is no longer
eligible to be covered under the Plan (as set forth in Section 3.1), such
Participant shall cease active participation in the Plan and, except to the
extent provided in Section 5.2, no further contributions will be made on his
behalf under this Plan from and after the effective date of the transfer. As
soon as administratively feasible after the date a Participant transfers to a
new job classification, the balance of such Participant's Accounts will be
transferred to a qualified plan maintained by the Employer for employees in the
non-covered job classification. Such Participant shall continue to vest in the
transferred Accounts balance at least as rapidly as such Participant vested
under this Plan.
(B) TRANSFERS TO COVERED JOB CLASSIFICATION: If an Employee is
transferred to a job classification whereby he is eligible to be covered under
the Plan (as set forth in Section 3.1), such Employee shall become a Participant
as of the later of his date of transfer or the date he satisfies the
requirements of Section 3.2. Such transferred Employee shall be credited with
Service for vesting purposes for any employment with the Employer before the
date of transfer, and shall continue to vest in any transferred account balance
at least as rapidly as such Employee vested under such other plan.
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SECTION 4 - CONTRIBUTIONS
4.1 NO CONTRIBUTIONS BY PARTICIPANTS
Voluntary after-tax contributions under the Plan shall not be required
or permitted of any Participant on or after January 1, 1985. However, an
Employee Contribution Account shall be maintained for Participants who made
voluntary after-tax contributions to the Plan prior to January 1, 1985.
4.2 COMPENSATION REDUCTION CONTRIBUTIONS
A Participant shall be eligible to have contributions made to his
Compensation Reduction Account as of the date on which he becomes a Participant
under Section 3.2. In order to have the Employer make a Compensation Reduction
Contribution on his behalf, a Participant must elect to make such contributions
by payroll deduction, or otherwise, to his Compensation Reduction Account.
Contributions to a Participant's Compensation Reduction Account shall at all
times be nonforfeitable and 100% vested.
Each eligible Participant may elect to have the Employer contribute
between 2% and 16% of his Compensation to his Compensation Reduction Account.
However, in the event the Administrative Committee determines that the Actual
Deferral Percentage Tests in Section 4.3(C) will not be passed, the percentage
of Compensation elected by a Highly Compensated Employee to be contributed to
his Compensation Reduction Account may be reduced to a level necessary to pass
the Actual Deferral Percentage Tests. No Participant shall be permitted to
contribute during any calendar year more than $7,000 (as adjusted for cost-of-
living in accordance with Code section 402(g)(5)) to his Compensation Reduction
Account.
These Compensation Reduction Contribution provisions shall not be
amended more than once every six months, other than to comport with changes in
the Code, ERISA, or the rules thereunder.
4.3 PERMITTED RANGE OF COMPENSATION REDUCTION CONTRIBUTIONS
The permitted range of Compensation Reduction Contributions with
respect to any year shall be determined on the basis of a Participant's total
Compensation (as defined in Section 2.10) for services rendered to the Employer
during the Plan Year. The Employer shall divide its respective Participants into
two groups -- Highly Compensated Employees and Non-Highly Compensated Employees,
respectively, as discussed herein following:
(A) HIGHLY COMPENSATED EMPLOYEES: Subject to Section 4.2, each
Participant who is a Highly Compensated Employee (as defined in Section 2.24)
may have the Employer make Compensation Reduction Account contributions on his
behalf under the Plan based on his projected annual earnings from the Employer;
provided, however, that the average Actual Deferral Percentage (as defined in
subsection (C)) for Participants who are Highly
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Compensated Employees, when compared to the average Actual Deferral
Percentage for all Participants who are Non-Highly Compensated Employees must
meet either of the two tests set forth in subsection (C) below.
(B) NON-HIGHLY COMPENSATED EMPLOYEES: Subject to Section 4.2, each
Participant who is a "Non-Highly Compensated Employee" (as defined in Section
2.28), may have the Employer make Compensation Reduction Account contributions
on his behalf under the Plan based on his projected annual earnings from the
Employer.
(C) ACTUAL DEFERRAL PERCENTAGE TESTS: Effective for Plan Years
beginning on or after January 1, 1987:
(1) The average Actual Deferral Percentage for all Participants
who are Highly Compensated Employees for the Plan Year shall not
exceed the average Actual Deferral Percentage for Participants who are
Non-Highly Compensated Employees for the Plan Year multiplied by 1.25,
or
(2) The average Actual Deferral Percentage for Participants who
are Highly Compensated Employees for the Plan Year shall not exceed
the average Actual Deferral Percentage for Participants who are Non-
Highly Compensated Employees for the Plan Year multiplied by two (2),
provided that the average Actual Deferral Percentage for Participants
who are Highly Compensated Employees does not exceed the average
Actual Deferral Percentage for Participants who are Non-Highly
Compensated Employees by more than two (2) percentage points (or such
lesser amount as the Secretary of Treasury may prescribe).
(3) For purposes of Paragraphs (1) and (2) above, the term
Actual Deferral Percentage means, with regard to Participants who, for
any Plan Year, are either considered to be Highly Compensated
Employees or Non-Highly Compensated Employees the ratio (calculated
separately for each Participant in such group) of the amount of
Compensation Reduction Account contributions actually paid to the
Trust on behalf of each Participant for such Plan Year to the
Participant's W-2 earnings (plus any deferrals made pursuant to Code
Sections 125 and 401(k)) for such Plan Year.
(D) EXCESS COMPENSATION REDUCTION CONTRIBUTIONS: If neither of the
requirements of subsection (C) is satisfied, then the Compensation Reduction
Contributions with respect to Highly Compensated Employees shall be reduced to
the extent necessary to meet the requirements of subsection (C)(1) or (C)(2),
whichever is met first. The contributions of Highly Compensated Employees
representing the highest total dollar amounts contributed shall be first reduced
in order to achieve the requirements of subsection (C)(1) or (C)(2). If
Compensation Reduction Contributions with respect to a Highly Compensated
Employee are reduced, the Excess Compensation Reduction Contributions shall be
distributed, subject to the following:
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(1) For purposes of this subsection, Excess Compensation
Reduction Contributions shall mean the amount by which Compensation
Reduction Contributions for Highly Compensated Employees have been
reduced under this subsection.
(2) Excess Compensation Reduction Contributions (adjusted for
income or losses allocable thereto as specified in paragraph (3), if
any) shall be distributed to Participants on whose behalf such excess
contributions were made for the Plan Year no later than the last day
of the following Plan Year. Furthermore, the Employer shall attempt to
distribute such amount by the fifteenth day of the third month
following the Plan Year for which the Excess Compensation Reduction
Contributions were made to avoid the imposition of an excise tax under
Code Section 4979.
(3) Income or losses allocable to Excess Compensation Reduction
Contributions shall be determined using the following methods:
(a) Income or losses allocable to Excess Compensation
Reduction Contributions for the Plan Year shall be determined by
multiplying the amount of income or loss for the Plan Year which
is allocable to Compensation Reduction Contributions by a
fraction. The numerator of the fraction is the Participant's
Excess Compensation Reduction Contributions for the Plan Year.
The denominator of the fraction is the total balance in the
Participant's Accounts attributable to Compensation Reduction
Contributions on the last day of the Plan Year, reduced by any
income (and increased by any losses) allocable to such total
amount for the Plan Year.
(b) Income or losses allocable to Excess Compensation
Reduction Contributions for the Plan Year following the Plan Year
for which the excess was contributed shall be equal to 10% of the
amount of income determined above, multiplied by the number of
calendar months that have elapsed in such subsequent Plan Year
prior to the distribution. In determining the number of calendar
months which have elapsed, any distribution made on or before the
fifteenth day of any month shall be treated as having been made
on the last day of the preceding month, and any distribution made
after the fifteenth day of any month shall be treated as having
been made on the first day of the next month.
4.4 EMPLOYER MATCHING CONTRIBUTIONS
(A) AMOUNT OF EMPLOYER MATCHING CONTRIBUTIONS: The Employer shall
make a matching contribution to the Trust which, when combined with amounts in
suspense accounts under Section 6.2 and Forfeitures under Section 6.3
attributable to matching contributions, shall equal a specified percentage of
each Participant's Compensation that is deferred pursuant to a Compensation
Reduction Agreement. The amount of the
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matching contribution shall be equal to 50% of the amount of Compensation
Reduction Contributions made on behalf of a Participant by the Employer for
the Plan Year; provided that Compensation Reduction Contributions in excess
of 5% of Compensation shall not be considered for purposes of determining the
amount of the matching contribution.
(B) NONDISCRIMINATION TESTS: Notwithstanding the foregoing, effective
for Plan Years beginning on and after January 1, 1987, the average Contribution
Percentage for all Participants who are Highly Compensated Employees, when
compared to the average Compensation Percentage for all Participants who are
Non-Highly Compensated Employees must meet either of the following two tests:
(1) The average Contribution Percentage for Participants who are
Highly Compensated Employees for the Plan Year shall not exceed the
average Contribution Percentage for Participants who are Non-Highly
Compensated Employees for the Plan Year multiplied by 1.25, or
(2) The average Contribution Percentage for Participants who are
Highly Compensated Employees for the Plan Year shall not exceed the
average Contribution Percentage for Participants who are Non-Highly
Compensated Employees for the Plan Year multiplied by two (2),
provided that the average Contribution Percentage for Participants
who are Highly Compensated Employees does not exceed the average
Contribution Percentage of Participants who are Non-Highly Compensated
Employees by more than two (2) percentage points (or such lesser
amount, as the Secretary of Treasury shall prescribe).
For purposes of the preceding two tests, the term "Contribution
Percentage" shall mean the ratio (expressed as a percentage) of the sum of all
Employer Matching Contributions under the Plan on behalf of a Participant for
the Plan Year, to such Participant's W-2 earnings, adjusted for Compensation
Reduction Contributions, for the Plan Year.
(C) EXCESS EMPLOYER MATCHING CONTRIBUTIONS: If neither of the
requirements of subsection (B) is satisfied, then the Employer Matching
Contributions with respect to Highly Compensated Employees shall be reduced to
the extent necessary to meet the requirements of paragraph (B)(1) or (B)(2),
whichever is met first. The contributions to the accounts of Highly Compensated
Employees representing the highest total dollar amounts contributed will be
first reduced in order to achieve the requirements of paragraph (B)(1) or
(B)(2). The adjustments shall be made by distributing the Participant's Employer
Matching Contributions (adjusted for income or losses attributable to such
contributions) as provided in this subsection.
(1) For purposes of this subsection, "Excess Employer Matching
Contributions" shall mean the amount by which Employer Matching
Contributions must be reduced under the first paragraph of this
subsection.
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(2) Excess Employer Matching Contributions (adjusted for income
or losses allocable thereto) shall be forfeited (if otherwise
forfeitable under the provisions of Section 6.2 if the Participant
were to terminate employment) on the last day of the Plan Year for
which the contributions were made, and shall be used, along with all
other Forfeitures arising in that Plan Year, to reduce Employer
Matching Contributions in accordance with Section 6.3. Excess Employer
Matching Contributions which are nonforfeitable (adjusted for income
or losses allocable thereto) shall be distributed to Participants on
whose behalf such excess contributions were made for the Plan Year no
later than the last day of the following Plan Year. Furthermore, the
Employer shall attempt to distribute such amount by the fifteenth day
of the third month following the Plan Year for which the Excess
Employer Matching Contributions were made to avoid the imposition on
the Employer of an excise tax under Code Section 4979.
(3) Income or losses allocable to Excess Employer Matching
Contributions shall be determined in the same manner specified for
Excess Compensation Reduction Contributions under Section 4.3(D)(3).
4.5 ORDER OF APPLICATION OF LIMITATIONS OF SECTIONS 4.3 - 4.4
Any reductions required in Participant contributions or Employer
Matching Contributions because of the multiple use of the limits in Section
4.3(C)(2) and 4.4(B)(2) shall be governed by Code section 401(m)(6).
4.6 RIGHT TO SUSPEND, CHANGE, OR DISCONTINUE COMPENSATION REDUCTION
CONTRIBUTIONS
A Participant may elect, before the payroll period in which the
election is to become effective, to increase or decrease the rate of the
contribution to his Compensation Reduction Account; such newly changed rate
shall be effective until changed by the Participant. A Participant may also
elect to have the Employer suspend making contributions to his Compensation
Reduction Account under the Plan altogether. Such changes shall be made by
telephonic or other electronic means and shall be effected as soon as
administratively feasible.
4.7 ROLLOVER CONTRIBUTIONS
Each Participant, and each other Employee who is not a Participant,
may apply in writing to the Employer (on the form provided for that purpose) to
make a Rollover Contribution to the Plan. The Employer will approve any such
requests which comply with the applicable requirements of the Code. Upon
approval by the Employer, the Rollover Contribution shall be deposited to the
Trust Fund and credited to such Participant's Rollover Account.
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4.8 GENERAL LIMITATION ON ANNUAL ADDITIONS
In no event shall the total Annual Addition for any Participant for
any Plan Year exceed the lesser of:
(A) $30,000 (or such other amount as adjusted for the cost-of-
living in accordance with Section 415(d) of the Code), or
(B) Twenty-five percent (25%) of such Participant's total
Compensation which is included in gross income for the Plan Year, plus on and
after January 1, 1998, any amounts contributed by the Employer pursuant to a
salary reduction agreement and which is not included in the Participant's gross
income under Code Sections 125 or 402(a)(8).
4.9 SPECIAL LIMITATION ON ANNUAL ADDITIONS
Prior to January 1, 2000 if the Participant is, or was, covered under
a defined benefit plan and a defined contribution plan maintained by the
Employer, the sum of the Participant's defined benefit plan fraction and defined
contribution plan fraction may not exceed 1.0 in any Plan Year.
The defined benefit plan fraction is a fraction, the numerator of
which is the sum of the Participant's projected annual benefits under all
defined benefit plans (whether or not terminated) maintained by the Employer,
and the denominator of which is the lesser of (i) 1.25 times the dollar
limitation of Section 415(b)(1)(A) of the Code in effect for the Plan Year, or
(ii) 1.4 times the Participant's average Compensation for the three consecutive
years that produces the highest average.
The defined contribution plan fraction is a fraction, the numerator of
which is the sum of the Annual Additions to the Participant's Accounts under all
defined contribution plans maintained by the Employer (whether or not
terminated) for the current and all prior Plan Years, and the denominator of
which is the sum of the lesser of the following amounts determined for such Plan
Year and for each prior Year of Service with the Employer: (i) 1.25 times the
dollar limitation in effect under Section 415 (c)(1)(A) of the Code for each
such Plan Year (as modified by Code Section 416(h) to the extent applicable if
the Plan is Top Heavy), or (ii) 1.4 times the amount which may be taken into
account under Section 415 (c)(1)(B) of the Code.
Projected annual benefit means the annual benefit to which the
Participant would be entitled under the terms of the Plan, if the Participant
continued employment until his Normal Retirement Age (or current age, if later)
and the Participant's Compensation for the Plan Year and all other relevant
factors used to determine such benefit remained constant until Normal Retirement
Age (or current age, if later).
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4.10 DISPOSITION OF EXCESS ANNUAL ADDITIONS
If the total Annual Additions for any Participant for any Plan Year
would otherwise exceed the maximum Annual Addition permitted under Sections 4.8
and 4.9, the excess amount will be disposed of as follows:
(A) First, by returning to such Participant, to the extent necessary,
any Compensation Reduction Contributions made on his behalf, with investment
gains attributable to such Compensation Reduction Contributions, to the extent
provided by current law and regulations;
(B) Second, any Excess Employer Matching Contributions are to be used
to (i) reduce Employer Matching Contributions for other eligible Participants
and (ii) if needed, restore previously forfeited Employer Matching
Contributions.
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SECTION 5 - ACCOUNTING
5.1 INDIVIDUAL ACCOUNTS OF PARTICIPANTS
The Employer shall establish and maintain for each Participant two (2)
separate Accounts, to be called, respectively, the Compensation Reduction
Account and the Employer Matching Contribution Account; each such Account shall
be credited or debited to the extent required by this Section 5. In addition,
where applicable, the Employer shall establish and maintain a Rollover Account,
as may be required under Section 4.7, an Employee Contribution Account (if
applicable) in accordance with Section 4.1, and an Employee Transfer Account to
reflect amounts transferred to this plan from another qualified plan for which a
Special Benefit Schedule is created. The Employer shall maintain adequate
records to reflect the interest of each Participant or Beneficiary in the
Trust, and shall disclose such information at least once annually. All entries
to such individual accounts shall be conclusive and binding upon all parties,
except that both arithmetical errors and errors resulting from mistakes in
procedure may be corrected by the Employer at any time.
5.2 CREDITING OF EMPLOYER CONTRIBUTIONS AND FORFEITURES
(A) MATCHING CONTRIBUTIONS: Employer Matching Contributions shall be
credited each payroll period to each Participant equal to 50% of a percentage
not in excess of 5% of the Participant's Compensation that is deferred pursuant
to a Compensation Reduction Agreement during such payroll period.
(B) COMPENSATION REDUCTION CONTRIBUTIONS: The Employer shall allocate
any Compensation Reduction Contribution to the Compensation Reduction Account of
any Participant who had a Compensation Reduction Contribution made on his behalf
on the date such funds are deposited in the Trust Fund.
(C) FORFEITURES: Forfeitures (as described in Section 6.3) shall be
used as soon as feasible to reduce subsequent Employer Matching Contributions.
5.3 DEBITING OF DISTRIBUTIONS
The amounts, if any, distributed or paid to or on behalf of a
Participant hereunder at any time shall, concurrent with such payment, be
debited against his Accounts, as applicable.
5.4 SEPARATE INVESTMENT FUNDS
(A) ADMINISTRATOR MAY ESTABLISH SEPARATE FUNDS: The Plan
Administrator may direct the Trustee to invest in one or more separate
investment funds, having different specific investment objectives as the Plan
Administrator shall from time to time determine. The Plan Administrator shall
determine and may from time to time redetermine the number of
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investment funds and the specific objectives of said funds and the
investments or kinds of investment which shall be authorized therefor. From
time to time the Plan Administrator may add or delete funds without amending
the Plan. Participants will be informed as to the various investment options
available. Employer Matching Contributions shall be invested in a United
Wisconsin Services, Inc. ("UWS") stock fund or as otherwise directed by the
Company in its discretion.
(B) PARTICIPANT DIRECTION PERMITTED: Each Participant has the right
to instruct the Plan Administrator to direct the Trustee to invest his Accounts
in one or more separate investment funds as established above. Notwithstanding
the foregoing or anything in this Plan to the contrary, no Participant subject
to the insider trading restrictions of Section 16 of the Securities Exchange Act
of 1934 may direct the Trustee to increase or decrease the amount of his account
which is invested in the UWS stock fund if, during the preceding six (6) month
period, he has directed a change in the opposite direction.
(C) ADMINISTRATOR TO ESTABLISH RULES: The Plan Administrator may at
any time make such uniform and nondiscriminatory rules as it determines are
necessary regarding the administration of this directed investment option. The
Plan Administrator shall develop and maintain rules governing the rights of
Participants to change their investment directions and the frequency with which
such changes can be made.
(D) INVESTMENT ADVISERS: The Plan Administrator may, from time to
time, retain the services of one or more persons or firms designated as
Investment Advisers for the management of (including the power to acquire and
dispose of) all or any part of the Trust, provided that each of such persons or
firms (a) is registered as an investment advisor under the Investment Advisers
Act of 1940, (b) is a bank (as defined in that Act), or an insurance company
qualified to perform manage, acquire, or dispose of trust assets under the laws
of more than one State of the United States. Each such Investment Adviser shall
acknowledge in writing that it is a fiduciary with respect to the assets of the
Trust under its authority and management.
The Plan Administrator has the authority to direct the Trustee to
invest all or a portion of the Trust Fund through any common or collective trust
fund or pooled investment fund, including collective investment funds maintained
by the Trustee or its successor, for the collective investment of funds held by
it in a fiduciary capacity.
5.5 VALUATION OF ACCOUNTS
As of each Valuation Date, all assets of the Trust Fund shall be
valued, net gains or losses shall be allocated, and additions to and withdrawals
from Account balances shall be processed in the following manner:
(A) The fair market value of securities and/or the other assets
comprising each investment fund designated by the Committee for direction of
investment by the participants of this Plan shall be computed. Each Account
balance shall be adjusted each
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Valuation Date by applying the closing market price of the investment fund on
the current Valuation Date to the share/unit balance of the investment fund
as of the close of business on the current Valuation Date.
(B) Any requests for additions or withdrawals made to or from a
specific designated investment fund by any Participant, including allocations of
contributions and forfeitures shall then be accounted for. In completing the
valuation procedure described above, such adjustments in the amounts credited to
such accounts shall be made on the Valuation Date to which the investment
activity relates. Contributions received by the Trustee pursuant to this Plan
shall not be taken into account until the Valuation Date coinciding with or next
following the date such contribution was both actually paid to the Trustee and
allocated among the accounts of Participants.
(C) Notwithstanding paragraphs A and B above, in the event a pooled
investment fund has created a designated fund for Participant investment
election in this Plan, valuation of the pooled investment fund and allocation of
earnings of the pooled investment fund shall be governed by the administrative
services agreement of such pooled investment fund. The provisions of any such
administrative services agreement shall be deemed a part of this Plan.
(D) It is intended that this Section operate to distribute among each
Account in the Trust Fund all income of the Trust Fund and changes in the value
of the assets of the Trust Fund.
5.6 RETURN OF EMPLOYER CONTRIBUTIONS
If an amount is contributed by the Employer due to a mistake of fact,
the Employer shall be entitled to recover such amount within one (1) year of the
date such contribution is made. If an amount is contributed by the Employer
which is disallowed as a deduction under Code Section 404, the Employer shall be
entitled to recover such amount within one (1) year of the date such deduction
is disallowed. Trust income attributable to the amount to be recovered shall not
be paid to the Employer, but Trust loss attributable thereto shall reduce such
amount.
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SECTION 6 - DISTRIBUTIONS
6.1 DISTRIBUTIONS UPON RETIREMENT, DEATH OR DISABILITY
If a Participant's Severance from Service Date occurs because of the
Participant's retirement, death or Permanent Disability, such Participant (or
his Beneficiary) shall be entitled to receive a distribution of 100% of his
Employer Matching Contribution Account, Compensation Reduction Account, Employee
Contribution Account (if any) and Rollover Account as soon as feasible following
his Severance from Service Date, provided such Participant complies with such
administrative procedures for distribution as are authorized by the
Administrative Committee. The balance of a Participant's Accounts upon
distribution shall be based on the value of such Accounts as of the Valuation
Date on which the administrative procedures authorized by the Committee for
distribution are completed.
6.2 DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT
If a Participant's Severance from Service Date occurs because of the
Participant's resignation or dismissal, such Participant shall be entitled to
receive a distribution of 100% of the balance of his Compensation Reduction
Account, Employee Contribution Account (if any) and Rollover Account (if any),
plus the vested percentage of his Employer Matching Contribution Account and
Transfer Account (if any) as soon as feasible following his Severance from
Service Date, provided such Participant complies with such administrative
procedures for distribution as are authorized by the Administrative Committee.
The balance of a Participant's Accounts upon distribution shall be based on the
value of such Accounts as of the Valuation Date on which the administrative
procedures authorized by the Committee for distribution are completed. The
vested percentage of his Employer Matching Contribution Account shall be
determined in accordance with the following schedule:
YEARS OF SERVICE COMPLETED
AT SEVERANCE FROM SERVICE DATE NONFORFEITABLE PERCENTAGE
------------------------------ -------------------------
Less than 1 Year 0%
1 but Less than 2 Years 20%
2 but Less than 3 Years 40%
3 but Less than 4 Years 60%
4 but Less than 5 Years 80%
5 Years or More 100%
Notwithstanding the above schedule, a Participant will be 100% vested in his
Employer Matching Contribution Account upon the attainment of his Normal
Retirement Age.
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6.3 FORFEITURES
That portion of the Employer Matching Contribution Account to which
the Participant is not entitled at his Severance from Service Date shall be
credited to his Forfeiture Account, established and maintained by the Employer
in the terminated Participant's name.
If the Participant does not return to employment as of the last day of
the calendar quarter in which his Severance from Service Date occurs, then the
credit balance to such Forfeiture Account shall, subject to the provisions of
Section 6.2 hereof, be a Forfeiture and shall, together with all other
applicable Forfeitures occurring during the same calendar quarter, be used to
reduce Employer matching contributions for the calendar quarter in which the
Forfeiture occurs, or in any subsequent calendar quarter.
If the Participant returns to the employment of the Employer prior to
incurring five (5) consecutive One Year Breaks in Service, any Forfeitures of
such Participant's Employer Matching Contribution Account which have been
previously forfeited shall be restored to the Participant's Employer Matching
Contribution Account effective as of the date the Participant repays the entire
amount of the distribution he received from his Employer Matching Contribution
Account under Section 6.2 upon his previous termination of employment. Such
repayment shall be made within the five (5) year period following the date of
the distribution and shall constitute the beginning balance in his new Employer
Matching Contribution Account.
If the Participant returns to employment with the Employer before the
end of the calendar quarter in which his Severance from Service Date occurs,
then the credit balance to such Forfeiture Account shall be transferred back to
his reconstituted Employer Matching Contribution Account.
6.4 METHOD OF DISTRIBUTION
(A) If a Participant is entitled to receive a distribution upon his
retirement, Permanent Disability or termination of employment, such distribution
shall be paid under one of the following forms:
(a) Lump sum distribution, or
(b) Equal installments to be paid over a period not exceeding
the lesser of fifteen (15) years or the life expectancy of the
Participant, or the joint life expectancy of the Participant and his
designated Beneficiary.
(c) Equal installments for a period not exceeding the life
expectancy of the Participant or the joint life expectancy of the
Participant and his designated Beneficiary.
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(B) If a Participant dies prior to receiving the balance in his
Accounts, and he is not married at the time of death, the remaining balance in
his Accounts will be distributed in a lump sum to his designated beneficiary. If
a Participant is married at the time of his death, his remaining balance in his
Accounts shall be paid to his surviving spouse, unless the spouse consents in
writing in accordance with Section 7.1 to the designation of another
Beneficiary.
6.5 RESPONSIBILITIES AND DUTIES RELATIVE TO CURRENT RECORDS
Each Participant, and each Beneficiary of a deceased Participant shall
file with the Employer from time to time, in writing, his post office address
and each change of post office address. Any communication, statement or notice
addressed to such person at his last post office address filed with the
Employer, or if no such address was filed, then at his last post office address
as otherwise shown in the Employer's records, if any, shall be binding on such
person for all purposes of the Plan, and neither the Employer nor the Trustee
shall be obliged to search for or ascertain the whereabouts or identity of any
Participant or Beneficiary.
6.6 MANNER OF DISPOSING UNCLAIMED DISTRIBUTABLE INTEREST
If all or any part of the interest of any Participant or Beneficiary
becomes distributable hereunder and the Plan Administrator, after a reasonable
search, cannot locate the Participant or his Beneficiary, if such Beneficiary is
entitled to payment, the vested Account balance shall be forfeited and
reallocated in accordance with Section 6.3 as of the day the Participant
incurred a Break in Service, or such later date as the Plan Administrator may
decide. If the Participant or his Beneficiary subsequently presents a valid
claim for benefits to the Plan Administrator, the Plan Administrator shall cause
the vested Account balance, equal to the amount which was forfeited under this
Section, to be restored.
6.7 TIME OF DISTRIBUTIONS
Notwithstanding any provision of the Plan to the contrary, the
following provisions of this Section shall be applicable with respect to the
payments of benefits to any Participant or Beneficiary:
(A) DISTRIBUTION PRIOR TO PARTICIPANT'S DEATH: Unless a Participant
elects otherwise, in no event shall payments commence later than 60 days
following the end of the Plan Year in which (I) the Participant reaches age 65,
(ii) the Participant terminates employment, or (iii) the Participant attains the
tenth (10th) anniversary of the date on which he commenced participation in the
Plan, whichever is later. In the case of a Participant who terminates
employment due to resignation or dismissal, the Participant may request payment
of his benefit at an earlier date. Notwithstanding the above, the entire vested
balance of a Participant's Accounts must not be distributed later than the date
set forth in paragraph (1) or paragraph (2) below, namely:
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(1) DISTRIBUTION IN A SINGLE SUM: Distribution of a
Participant's Accounts in a single sum must be effected no later than
April 1 of the calendar year immediately following the later of: the
calendar year in which the Participant attains age 70-1/2 or the
calendar year in which the Participant retires from active service
with the Employer. Notwithstanding the preceding sentence, any
Participant who attains age 70-1/2 and was a 5% owner at any time
during the Plan Year ending with or within the calendar year in which
such Participant attained age 70-1/2 or any subsequent Plan Year must
receive a distribution of his Accounts no later than April 1 of the
calendar year following the calendar year in which the Participant
attains age 70-1/2 .
(2) DISTRIBUTION BY PERIODIC PAYMENTS:
(a) If distribution is by periodic payments (by which term,
for purposes of this Section, is meant distribution in any form
other than a single sum, as described in paragraph (1) above)
then, distribution of the Participant's vested Accounts under the
Plan must commence not later than April 1 of the calendar year
immediately following the later of: the calendar year in which
the Participant attains age 70-1/2 or the calendar year in which
the Participant retires from active service with the Employer,
and must be spread over a period not greater than any of the
following, namely: (I) the remaining lifetime of the
Participant; or (ii) the remaining lifetime of the Participant
and a designated Beneficiary or contingent annuitant; or (iii) a
period not extending beyond the life expectancy of the
Participant, as determined by such life expectancy tables under
Regulations to Section 72 of the Code; or (iv) a period not
extending beyond the life expectancy of the Participant and a
designated Beneficiary or contingent annuitant, as determined by
such life expectancy tables, as aforesaid.
(b) If distribution shall be in accordance with clause
(iii) of the immediately preceding sentence of this paragraph
(2), then, in accordance with applicable governmental
regulations, the remaining life expectancy of the Participant --
and, if applicable, his spousal Beneficiary -- may be
redetermined each year, and the amount of periodic payments so
distributed may be annually adjusted accordingly.
(c) Notwithstanding the preceding, any Participant who
attains age 70-1/2 and was a 5% owner at any time during the
Plan Year ending with or within the calendar year in which such
Participant attained age 70-1/2, or any subsequent Plan Year,
must begin to receive a distribution of his Accounts no later
than April 1 of the calendar year following the calendar year in
which the Participant attains age 70-1/2 .
(d) Any Participant who is not a 5% owner, and attained age
70-1/2 prior to January 1, 1997, and who was required (or would
have been
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required) to commence distributions under the rules in effect
prior to January 1, 1997, may make an election (at such times
and in such form as may be prescribed by the Plan Administrator)
to suspend such distributions until the date of the Participant's
actual retirement.
(B) DISTRIBUTIONS AFTER PARTICIPANT'S DEATH: In the event of the
Participant's death, his entire or remaining interest under the Plan must be
distributed in accordance with either paragraph (1) or paragraph (2) below,
namely:
(1) DEATH AFTER COMMENCEMENT OF BENEFITs: If the Participant
shall die after commencement of his benefit payments under the Plan,
the remaining values must be distributed at least as rapidly as under
the method of distribution selected under paragraph (2) of subsection
(A) above in this Section.
(2) DEATH PRIOR TO COMMENCEMENT OF BENEFITS: If a Participant
shall die after retirement under the Plan but prior to the
commencement of benefit payments on that account hereunder, then, in
such event, the entire interest of the Participant must be
distributed within the 5-year period measured from the date of the
Participant's death; provided, however, that such "5 Year Rule" shall
not be applicable in the instances described in subparagraph (a) or
subparagraph (b), below:
(a) The "5 Year Rule" described above shall not apply if
the following three conditions are met at the date of death of
the Participant, namely: (I) if any portion of the Participant's
interest under the Plan is payable to, or for the benefit of, a
designated Beneficiary; and (ii) the portion of the Participant's
interest to which the Beneficiary is entitled will be distributed
over the remaining lifetime of the Beneficiary (or over a period
not extending beyond the remaining life expectancy of such
Beneficiary); and (iii) the distributions commence no later than
one year after the date of the Participant's death (or such later
date which the Secretary of the U.S. Treasury Department may,
under pertinent regulations, prescribe);
(b) The "5 Year Rule" described above shall not apply if
the following two conditions are met at the date of death of the
Participant, namely: (I) the portion of the Participant's
interest to which the surviving spouse is entitled will be
distributed over the remaining lifetime of the surviving spouse
(or over a period not extending beyond the life expectancy of the
surviving spouse); and (ii) the distributions commence no later
than the date as of which the Participant would have attained age
70-1/2. If the surviving spouse dies before the distributions to
such spouse begin, then the provisions of this paragraph (2) will
apply as if the spouse was the Participant.
(C) DISTRIBUTIONS TO MINOR CHILDREN: For purposes of subsections (A)
and (B), any amount paid to a child under the age of majority shall be treated
as if it had been paid to
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the surviving spouse if the amount becomes payable to the surviving spouse
when the child reaches the age of majority.
(D) INCIDENTAL DEATH BENEFITS: Notwithstanding the foregoing
subsections, all distributions shall be made in accordance with the incidental
death benefit requirements of Code Section 401(a)(9)(G) and the regulations
thereunder.
6.8 WITHDRAWALS FROM INDIVIDUAL ACCOUNTS
(A) A Participant may not withdraw any of the values in his
Employer Contribution Matching Account.
(B) A Participant may make a partial or total withdrawal from his
Employee Contribution Account at any time while remaining in the Service of the
Employer. Upon demonstrating a financial hardship, a Participant may withdraw
any contributions (but not earnings) that have been credited to his Compensation
Reduction Account subject to the following provisions. Effective for
withdrawals made on and after January 1, 1989, a withdrawal shall be considered
to have been made on account of a financial hardship if such withdrawal is (I)
made on account of an immediate and heavy financial need of the Participant and
(ii) is necessary to satisfy such financial need. The determination of the
existence of an immediate and heavy financial need and of the amount necessary
to meet the need (including amounts necessary to pay any federal, state, or
local income taxes or penalties reasonably anticipated to result from the
withdrawal) shall be made in a nondiscriminatory manner and after appropriate
documentation is submitted and only after the approval of the Committee.
(1) A withdrawal will be deemed to be made on account of an
immediate and heavy financial need of the Participant as defined by
the IRS regulations and which currently include:
(a) Medical expenses described in Code section 213(d) which
are incurred by the Participant, the Participant's spouse, or any
dependents of the Participant (as defined in Code Section 152);
or necessary for these persons to obtain medical care as
described in Code Section 213(d);
(b) Purchase (excluding mortgage payments) of a principal
residence for the Participant;
(c) Payment of tuition and related educational expenses for
the next twelve (12) months of post-secondary education for the
Participant, his or her spouse, children or dependents as defined
in Code Section 152; or
(d) The need to prevent the eviction of the Participant
from his principal residence or foreclosure on the mortgage of
the Participant's principal residence.
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(2) A withdrawal will be deemed necessary to satisfy an
immediate and heavy financial need of a Participant if the Employee
represents that the need cannot be relieved:
(a) Through reimbursement or compensation by insurance or
otherwise;
(b) By liquidation of the Participant's assets to the
extent that such liquidation would not cause an immediate and
heavy financial need;
(c) By cessation of Compensation Reduction Contributions
under the Plan; or
(d) By other distributions or loans from this Plan or any
other plan or by borrowing from commercial sources on reasonable
terms.
6.9 DISTRIBUTIONS TO ALTERNATE PAYEES
Notwithstanding the above, in the event any portion of a Participant's
Account becomes payable to an Alternate Payee because of a qualified domestic
relations order, such Alternate Payee may apply for and receive an immediate
distribution of the entire amount he is entitled to under the Plan as set forth
in Section 6.7.
6.10 ELIGIBLE ROLLOVER DISTRIBUTIONS
(A) DIRECT ROLLOVER. In the case of a distribution after December 31,
1992 that would be an eligible rollover distribution within the meaning of Code
Section 402 if made to the Participant or Beneficiary (distributee), the
distributee may elect, to the extent required by law and regulation and in the
manner prescribed by the Committee, to have such distribution paid directly to
an eligible retirement plan (as defined in Code Section 401(a)(31)). The amount
of such direct rollover shall be limited to the amount of the eligible rollover
distribution which would otherwise be includible in the distributee's gross
income in the absence of a direct transfer and without regard to the rollover
rules of Code Sections 402 and 403.
(B) WITHHOLDING. In the case of an eligible rollover distribution
which is not directly transferred to an eligible retirement plan pursuant to
Subsection (A) above, the Plan shall reduce the amount of the distribution (or
otherwise withhold) by the amount of the tax required to be withheld by law and
regulations.
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SECTION 7 - BENEFICIARIES
7.1 DESIGNATION OF BENEFICIARY OR BENEFICIARIES
Any Participant may, by instrument in writing, executed and delivered
to the Employer during his lifetime, designate a Beneficiary or Beneficiaries to
whom distribution of his interest in the Trust shall be made in the event of his
death prior to the receipt of his entire interest in the Trust, and he may
designate the proportions of his Accounts to be distributed to each such
designated Beneficiary if there be more than one. Any such designation may be
revoked or changed by the Participant or former Participant at any time, and
from time to time, by similar instruments in writing delivered as aforesaid.
Notwithstanding the preceding, in the event that a married Participant
desires to have his interest distributed to a Beneficiary other than his spouse,
his spouse must first consent in writing to this distribution and to the
specific Beneficiary. The spouse's consent must be witnessed by a Plan
representative or Notary Public and must acknowledge that the spouse is aware of
the effect of such consent.
The spousal consent specified herein shall not be required, however,
if (I) the Participant establishes, to the satisfaction of the Plan
representative, that such consent may not be obtained because there is no
spouse, or the spouse cannot be located, or (ii) such consent may, under U.S.
Treasury Department Regulations, be waived. Moreover, such spousal consent shall
in no event be transferable (i.e., it is applicable only to the spouse so
consenting, and not to any subsequent spouse of the Participant).
The spousal consent required for Beneficiary designations must be made
during the period beginning with the first day of the Plan Year in which the
Participant attains age 35 and ending on the date of the Participant's death;
provided, however, to the extent permitted under applicable regulations, the
spouse may validly consent to a Beneficiary designation prior to the first day
of the Plan Year in which the Participant attains age 35.
If there is no designated Beneficiary living upon the death of a
Participant or former Participant or if all such designated Beneficiaries die
prior to the full distribution of his interest, the then legal representative of
the last surviving of the Participant and the designated Beneficiaries, or if
the Employer fails to receive notice of the appointment of any such legal
representative within one year after such death, the heirs at law of such
survivor (in the proportions in which they would inherit his intestate personal
property) shall be the Beneficiary to whom the then remaining balance of such
interest shall be distributed.
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7.2 MISSING BENEFICIARY(IES); RIGHT OF EMPLOYER TO MAKE A PRESUMPTION OF
DEATH
If the Employer, after reasonable inquiry, is unable within one year
to determine whether or not a designated Beneficiary did in fact survive the
event that entitled him to receive distribution of any sum hereunder, it shall
be conclusively presumed that such Beneficiary did in fact die prior to such
event.
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SECTION 8 - LOANS TO PARTICIPANTS
8.1 PARTICIPANT LOANS
(a) ADMINISTRATION - Loans shall be made available in writing or by
any other means authorized by the Committee. Any Participant who is a "party in
interest" to the Plan, as that term is defined in Section 3(14) of ERISA
(hereinafter collectively referred to as "Eligible Borrowers"), may apply for a
loan from the Plan (hereinafter referred to as a Participant Loans). Eligible
Borrowers requesting a Participant Loan from the Plan may obtain and complete a
loan application. An Eligible Borrower may have only two loans outstanding from
this Plan at any one time and no loan shall be made in an amount less than
$1,000. Loans shall be made as soon as feasible following the request of the
Eligible Borrower. The approval or disapproval of any loan application filed
pursuant to this Section will be based on the requirements of ERISA, the Code,
the Plan and nondiscriminatory rules and procedures established by the
Committee.
(b) LIMITATIONS - The total amount of Participant Loans from the Plan
outstanding to any Eligible Borrower, when combined with all loans from all
Plans maintained by the Company and any Employer, shall not exceed the lesser
of: (I) $50,000 (reduced by principal repayments made during the previous year
on any Participant Loans from the Plan); or (ii) 1/2 of the Eligible Borrower's
vested, nonforfeitable interest in his Accounts under the Plan.
(c) TREATED AS INVESTMENT - All Participant Loans granted to an
Eligible Borrower under this Section will be considered investments of the
Accounts of such Eligible Borrower and the principal and interest payments made
by him will be credited to his Accounts. For purposes of determining the extent
to which the Eligible Borrower's Accounts share in Trust income, gains, losses
and expenses, if any, his Accounts' balances will be reduced by the unpaid
amount of any outstanding Participant Loan as of any appropriate valuation date.
(d) INTEREST - The interest rate charged on any Participant Loan
shall be a reasonable rate comparable to prevailing interest rates charged by
commercial lenders under similar circumstances.
(e) SECURITY - Participant Loans shall be secured by the Eligible
Borrower's Accounts under the Plan, except that no more than 50% of the value of
the Eligible Borrower's vested, nonforfeitable Accounts balances at the time the
Participant Loan is made may be used to secure the principal amount of all
Participant Loans of the Eligible Borrower.
(f) REPAYMENT - The repayment provisions of any Participant Loan will
be determined at the time the loan is made, subject to the requirements of this
Subsection and applicable law. Any Participant Loan shall provide for repayment
pursuant to a level amortization schedule with payments not less frequently than
quarterly. In no event, however, shall the term of any Participant Loan exceed
five (5) years. In order to receive
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a Participant Loan, an Eligible Borrower who is also an Employee of the
Company must agree, by means authorized by the Committee, to repay the loan
by having the Company withhold from the pay for the Eligible Borrower an
amount sufficient to meet any installment obligation of the loan, or any
portion thereof. Any and all amounts so withheld by the Company will be
remitted to the Trustee on a timely basis as an installment on the loan. An
Eligible Borrower shall be entitled to prepay the entire outstanding balance
of any Participant Loan without penalty at any time. In the event an Eligible
Borrower has not repaid the entire Participant Loan at his Severance from
Service Date, the Committee shall require that the Participant repay the loan
by check payable to the Plan or by such other means as may be mutually agreed
upon by the Committee and the Eligible Borrower. The Company shall remit
such repayments to the Trustee on a timely basis. Loan repayments will be
suspended under this Plan as permitted under Section 414(u)(4) of the Code.
(g) DISCLOSURE - Every Eligible Borrower who applies for a
Participant Loan will be entitled to receive a statement of the charges involved
in his loan transaction, including the dollar amount and annual interest rate of
the finance charge, and such other disclosure information as may be required by
applicable law.
(h) DEFAULT - Failure to pay principal and interest when due (or
within such grace periods as are permitted by applicable law) or any violation
of the terms of the note executed between the Plan and an Eligible Borrower
shall constitute an event of default. In the event of default, the Committee
shall have the right to declare any unpaid balance due and payable, and to
foreclose on any security interest. Further, at the earliest date on which an
Eligible Borrower is entitled to receive a distribution from the Plan in
accordance with ERISA and the Code, the Committee shall have the right to apply
the Eligible Borrower's interest in the Plan against the unpaid amount, which
amount shall in such event be considered a distribution to the Eligible
Borrower.
(i) LOAN GUIDELINES - The Committee shall issue written loan policy
guidelines, which shall form part of the Plan, describing the procedures and
conditions for making loans, and may revise those guidelines at any time, and
for any reason. The Committee shall have the complete discretion to approve or
disapprove any loan application filed pursuant to this Section. Any such
approval or disapproval will be based on the requirements of ERISA, the Code,
the Plan and nondiscriminatory rules and procedures established by the
Committee.
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SECTION 9 - ADMINISTRATION
9.1 PLAN ADMINISTRATOR
"The Plan Administrator," within the meaning of ERISA, is the Company.
The Company shall have complete charge of the administration of the Plan. The
Company is the "named fiduciary" within the meaning of ERISA.
The Plan Administrator shall have the authority to direct the Trustee
to invest all or a portion of the Trust Fund through any common or collective
trust fund or pooled investment fund, including collective investment funds
maintained by American Express Trust Company or its successor, for the
collective investment of funds held by it in a fiduciary capacity.
9.2 THE ADMINISTRATIVE COMMITTEE
The day-to-day administration of the Plan shall be the responsibility
of the Company's Employee Benefits Committee -- herein called the "Committee".
Each member of the Committee shall serve without remuneration, but shall be
reimbursed for expenses incurred in the performance of his duties.
The Committee shall also have the authority and discretion to engage
an Administrative Delegate who shall perform, without discretionary authority or
control, day-to-day administrative functions within the framework of policies,
interpretations, rules, practices, and procedures made by the Committee or other
Plan Fiduciary. Any action made or taken by the Administrative Delegate may be
appealed by an affected Participant to the Committee in accordance with the
claims review procedures provided in Section 10.2. Any decisions which call
for interpretations of Plan provisions not previously made by the Committee
shall be made only by the Committee. The Administrative Delegate shall not be
considered a fiduciary with respect to the services it provides.
9.3 EMPLOYMENT OF SERVICES BY THE COMMITTEE
The Committee may appoint a Secretary who may, but need not be, a
member of the Committee. The Committee may employ such agents and such clerical
and other services, and such legal counsel, other consultants, and accountants
as may, in the opinion of the Committee, be required for the purposes of
properly administering the Plan.
9.4 EXPENSES OF ADMINISTRATION
The Employer is not required, but may, at its discretion, pay the
expenses of administration of the Plan, including the fees and expenses of the
Trustee. If such expenses of administration are not so paid by the Employer,
they shall be paid by the Trustee from the Trust Fund. The Trustee, Investment
Adviser and recordkeeper of the Plan (collectively referred to as "Service
Providers") will receive reasonable compensation
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as may be agreed upon from time to time between the Company or the Committee
and such Service Providers. To the extent permitted by law, such
compensation shall be paid from the Trust Fund unless paid by the Company.
9.5 ACTS OF THE COMMITTEE
The Committee shall give to the Trustee any order, direction, consent
or advice required under the terms of the Plan or the Trust Agreement, and the
Trustee shall be entitled fully to rely on any instrument delivered to it
evidencing the action of the Committee as hereinabove described.
9.6 INTERPRETATIONS
The Committee shall have the exclusive right to make any finding of
fact necessary or appropriate for any purpose under the Plan including, but not
limited to, the determination of the eligibility for and the amount of any
benefit payable under the Plan. The Committee shall have the exclusive right to
interpret the terms and provisions of the Plan and to determine any and all
questions arising under the Plan or in connection with the administration
thereof, including, without limitation, the right to remedy or resolve possible
ambiguities, inconsistencies, or omissions, by general rule or particular
decision, with such interpretations or determinations to be finally conclusive
and binding on all parties affected thereby. The Committee shall make, or cause
to be made, all reports or other filings necessary to meet the reporting and
disclosure requirements of ERISA which are the responsibility of "plan
administrator" under ERISA. To the extent permitted by law, all findings of
fact, determinations, interpretations, and decisions of the Committee shall be
conclusive and binding upon all persons having or claiming to have any interest
or right under the Plan.
Notwithstanding any provision in the Plan to the contrary,
Compensation Reduction Agreements and cancellations or amendments thereto,
investment elections, changes or transfers, loans, withdrawal decisions, and any
other decision or election by a Participant (or Beneficiary) under the Plan may
be accomplished by electronic or telephonic means which are not otherwise
prohibited by law and which are in accordance with procedures and/or systems
approved or arranged by the Committee or its Administrative Delegate.
9.7 LIABILITY OF THE COMMITTEE
The members of the Committee, and each of them, shall be free from
liability for their acts and conduct in the administration of the Plan, and the
Employer shall indemnify them and hold them, and each of them, harmless from the
effects and consequences of their acts and conduct in their official capacity,
except to the extent that such effects and consequences result from their
failure to exercise ordinary care and reasonable diligence. In any event, the
Committee shall be deemed to have exercised ordinary care and reasonable
diligence if it shall have relied in good faith upon any written information
furnished to it by an Employee or Participant, the Employer, the Investment
Adviser, the
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Trustee, or by any actuary, employee benefit plan consultant, counsel,
accountant or other person employed, with or without remuneration, by the
Employer for purposes of the Plan.
9.8 APPLICABLE LAW
The Plan will be construed and enforced in accordance with the laws of
the State of Wisconsin and all provisions of the Plan will be administered in
accordance with the laws of the said State, to the extent not superseded by
ERISA.
9.9 PLAN FIDUCIARIES: ALLOCATION OF RESPONSIBILITIES AMONG THEM
Under ERISA and Regulations pursuant to ERISA, the Employer, the
Trustee, the Committee, the Plan Administrator and the Investment Adviser are
"Plan Fiduciaries." All Plan Fiduciaries shall have only those specific powers,
duties, responsibilities and obligations as are specifically given to them under
the Plan document and the Trust Agreement. In general, the Employer, acting
through a majority of its Board of Directors or its designated committee, shall
have the sole responsibility to terminate the Plan, in whole or in part, in
accordance with Section 11 hereof and sole responsibility to appoint and remove
the Trustee. The Plan Administrator shall have ultimate responsibility for the
administration of the Plan. The Committee shall determine an allocation of Plan
assets in consideration of Plan liabilities, establish investment guidelines,
select and evaluate money managers and investment alternatives and review and
approve investment transactions and strategy. The Committee shall also have
such other duties and responsibilities as are described in the applicable
provisions of this Section 9 together with such other duties and
responsibilities as may be delegated to them by a majority of the Board of
Directors of the Employer or its designated committee or the Plan Administrator
from time to time. The Trustee shall have the responsibility of the
administration of the Trust and for the custody and management of the assets
held in the Trust Fund to the extent provided in the Trust Agreement and any
contracts or agreements entered into by and between the Trustee and the
Investment Adviser.
9.10 RELIANCE ON CO-FIDUCIARIES
Each Fiduciary may rely upon any direction, information or action of
another Fiduciary as being proper under the Plan, and shall not, under normal
circumstances, be required to inquire into the propriety of any such direction,
information or action. Each Fiduciary shall be responsible for the proper
exercise of his own powers, duties, responsibilities and obligations under this
Plan and shall not be responsible for any breach of fiduciary responsibility by
another Fiduciary ("other Fiduciary") unless he participates knowingly in, or
knowingly undertakes to conceal an act or omission of such other Fiduciary,
knowing such act or omission is a breach; or by his failure to comply with
Section 9 hereof in the administration of his specific responsibilities
hereunder he has enabled such other Fiduciary to commit a breach; or he has
knowledge of a breach by such other Fiduciary and fails to make reasonable
efforts under the circumstances to
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remedy the breach. No Fiduciary guarantees the Trust Fund in any manner
against investment loss or depreciation in asset value.
9.11 FIDUCIARY DUTIES
All fiduciaries shall discharge their duties solely and exclusively in
the interest of the Participants and Beneficiaries and for the exclusive
purposes of providing benefits to Participants and their Beneficiaries and
defraying the reasonable expenses of administering the Plan and Trust. They
shall discharge their duties 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.
9.12 PROHIBITED TRANSACTIONS TO BE AVOIDED
The Fiduciaries shall not do any action prohibited under or in
violation of Part 4 of Title I of ERISA or which would subject any person or the
Employer to imposition of a tax under Section 4975 of the Code.
9.13 RECORDS AND REPORTS OF THE PLAN ADMINISTRATOR
The Plan Administrator shall prepare, or cause to be prepared, and
shall furnish, or cause to be furnished, to Participants and Beneficiaries, and
to the Secretary of Labor or his delegate, and to the Secretary of the Treasury
or his delegate, such plan descriptions, summaries, annual and other reports,
registration statements, notifications and other documents as may be required by
ERISA and the Code and regulations thereunder. The Plan Administrator shall
exercise such authority and responsibility as it deems appropriate in order to
comply with ERISA and the Code and regulations thereunder relating to records
of the Service of all Participants and the percentage of their Accounts which is
nonforfeitable under the Plan.
9.14 DATA SUPPLIED BY EMPLOYER
The Employer shall advise the Committee, in writing, of all data which
may be reasonably necessary in order to properly credit the Employer
Contribution Matching Accounts or Compensation Reduction Accounts of
Participants and to determine the proper allocation of respective Employer
contributions; or to determine the eligibility, Compensation, Service, and other
matters required to be determined relating to Employees of the Employer. The
Plan Administrator or Committee shall be fully protected in acting upon any such
data.
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9.15 PARTIAL EXCULPATION
The Committee or the Plan Administrator (as appropriate) shall incur
no personal liability of any nature in connection with any failure to act or in
respect of any act taken in good faith in the management and administration of
the Plan and in carrying out the directions of the Employer, except as may
otherwise be provided by ERISA. The Committee or the Plan Administrator shall be
indemnified and held harmless by the Employer from and against any such
personal liability, including all expenses reasonably incurred in its defense.
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SECTION 10 - PROVISIONS RELATING TO PARTICIPANTS
10.1 INFORMATION REQUIRED OF PARTICIPANTS
Each Participant, and, if applicable, each Beneficiary of a deceased
Participant, shall furnish the Committee (or the Plan Administrator) with such
information as the Committee (or the Plan Administrator) shall deem necessary
and desirable for purposes of administering the Plan, and the provisions of the
Plan relating to any payments hereunder to or on account of any Participant,
former or deceased Participant are conditional upon such person's furnishing
promptly such true, full and complete information as the Committee (or the Plan
Administrator) may request.
10.2 CLAIMS PROCEDURE
(A) APPLICATIONS FOR BENEFITS NOT REQUIRED: A formal request for a
distribution under the Plan is not required of any Participant or Beneficiary
entitled thereto.
(B) CLAIMS FOR BENEFITS NOT RECEIVED: Any claim for benefits not
received shall be made in writing to the Committee (or the Plan Administrator).
The Committee (or the Plan Administrator) shall consider such claim and shall,
within sixty (60) days next following receipt of same either approve it or deny
it. If the Committee (or the Plan Administrator) shall deny such claim, it
shall, by written notice directed to the claimant at the address shown on the
claim (or in the absence thereof, the last known address of the claimant, as
shown on the records of the Employer) inform the claimant of such denial,
including in such written notice, as a minimum, the following:
(1) The specific reason or reasons for the denial;
(2) Reference to the specific provisions of the Plan, on which
such denial is based;
(3) A description of any additional material or information
necessary for the claimant to perfect his claim and a brief
description of why such additional information is necessary; and
(4) A brief explanation of the appeals procedure which is
available to him, which, in essence, is described in paragraph (C)
below.
(C) APPEALS PROCEDURE FOLLOWING INITIAL DENIAL OF CLAIM: Each
claimant whose claim for a benefit under the Plan has been denied shall have the
right to appeal the decision to the Committee (or the Plan Administrator) in
accordance with the following procedures:
(1) Such appeal must be in writing, over the signature of the
claimant whose claim was so denied, and filed with the Committee (or
the Plan Administrator),
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addressed and delivered within the 60-day period next following the
initial denial of same, either by hand or by the United States Postal
Service, postage fully prepaid.
(2) The claimant, or his duly authorized representative (such
as, but not by way of limitation, legal counsel) shall have the right
at all reasonable times to examine Plan documents related to his
claim and to submit to the Committee (or the Plan Administrator),
issues, comments and responses, provided that they shall be in writing
and delivered to the Committee (or the Plan Administrator) as
described in subparagraph (1) above.
(3) The Committee (or the Plan Administrator) shall render its
decision as promptly as practicable, but not later than sixty (60)
days after receipt of the claimant's appeal from the initial denial by
the Committee (or the Plan Administrator).
(D) NATURE OF CONTENT OF WRITTEN NOTICES TO CLAIMANTS:
Notwithstanding any provision hereof to the contrary, all written notices to
claimants regarding their claims for benefits under the Plan, shall be expressed
in terms calculated to be understood by the average claimant and shall include
specific reasons for the decision -- whether for or against the claimant -- and
specific references to the pertinent provisions of the Plan on which the
decision was based.
10.3 RIGHTS IN TRUST FUND
No Participant or other person shall have any interest in, or right
to, any part of the earnings of the Trust Fund, or any rights under the Trust
Fund, or any part of the assets thereof, except as and to the extent expressly
provided in the Plan.
10.4 BENEFITS NOT ASSIGNABLE
Except as provided in Code Section 401(a)(13), no Account in the Trust
Fund shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, or charge, and any attempt to so anticipate,
alienate, sell, transfer, assign, pledge, encumber or charge the same shall be
null and void; nor shall any such account be liable for, or subject to, the
debts, contracts, liabilities, engagement, or torts of the person entitled to
such Account.
10.5 CONDITIONS OF EMPLOYMENT NOT AFFECTED BY PLAN
The establishment and maintenance of the Plan shall not be construed
as conferring any legal rights upon any Employee to the continuation of his
employment by the Employer, nor shall the Plan interfere with the right of the
Employer to discharge any Employee or Participant.
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10.6 PAYMENTS PURSUANT TO A QUALIFIED DOMESTIC RELATIONS ORDER
Notwithstanding the provisions of Section 10.4, the Plan will
recognize a "qualified domestic relations order" which shall be a judgment,
decree or order (including approval of a property settlement agreement) that
meets the requirements of (A), (B), and (C) below:
(A) the order must relate to child support, alimony, property rights
to a spouse, former spouse, child or dependent of a Participant, and must be
issued pursuant to a state domestic relations law;
(B) the order must include (1) the name and address of the Participant
and alternate payee, (2) the amount or percentage of benefits payable to the
alternate payee (or the manner in which the amount or percentage is to be
determined), (3) the period or number of payments involved, and (4) the exact
name of the plan to which the order applies; and
(C) the order cannot require a type or form of benefit or option not
otherwise offered under the Plan, cannot require the Plan to provide increased
benefits (determined on an actuarial basis), and cannot affect benefits already
the subject of a previous qualified domestic relations order.
A distribution to an alternate payee will be made at the time
described in Section 6.9.
The Committee shall notify any Participant and alternate payee of the
receipt of any order by the Plan and shall inform such Participant and alternate
payee of the Plan's procedures for determining whether the order meets the
requirements described above in this Section 10.6. Such procedures shall comply
with the requirements set forth in Code Section 414(p) and Section 206(d) of
ERISA, and any written guidelines that may be issued by the Committee, which
shall form part of the Plan, describing the procedures for determining qualified
domestic relations orders.
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SECTION 11 - MERGER OR CONSOLIDATION OF PLAN; TERMINATION; AMENDMENT
11.1 MERGER, TRANSFER OR CONSOLIDATION OF PLAN WITH OTHER PLANS
The Plan may be merged or consolidated with or the assets transferred
from or to any other retirement plan or program. In the event that the Plan
shall be merged or consolidated with, or the assets thereof transferred from or
to, any such retirement plan or program, then the benefits standing to the
credit of each Participant, former Participant, Beneficiary or other person
entitled to benefits hereunder at that time which would become payable if the
Plan were then terminated, shall not be diminished as a result of such merger,
consolidation or transfer of assets, and such merger, consolidation or transfer
of assets shall comply in all respects with Section 414(l) of the Code.
11.2 FUTURE OF THE PLAN; AMENDMENT
The Company does hereby expressly and specifically reserve the sole
and exclusive right at any time by action of the Committee to amend, modify, or
terminate the Plan. The Committee's right of amendment, modification, or
termination as aforesaid shall not require the assent, concurrence, or any other
action by any Employer notwithstanding that such action may relate in whole or
in part to persons in the employ of the Employer. However, no such modification
or amendment shall permit any part of the Trust Fund, other than such part as is
required to be disbursed in order to meet expenses involved in its termination,
to be used for, or diverted to, purposes other than for the exclusive benefit of
the Participants, their Beneficiaries, or their estates, and provided further,
that no such modification or amendment shall operate to reduce or eliminate the
Account of any Participant or other person acquired prior to the effective date
of such modification or amendment unless such Participant or other person and
all such persons shall have consented to such modification or amendment, in
writing.
If the Plan's vesting schedule is amended, or the Plan is amended in
any way that directly or indirectly affects the computation of the Participant's
nonforfeitable percentage or if the Plan is deemed amended by an automatic
change to or from a top-heavy vesting schedule, each Participant with at least
three (3) years of Service with the Employer may elect, within a reasonable
period after the adoption of the amendment or change, to have the nonforfeitable
percentage computed under the Plan without regard to such amendment or change.
The period during which the election may be made shall commence with the date
the amendment is adopted or deemed to be made and shall end in the latest of:
(1) sixty (60) days after the amendment is adopted, (2) sixty (60) days after
the amendment becomes effective, or (3) sixty (60) days after the Participant is
issued written notice of the amendment by the Employer. Furthermore, no
amendment to the Plan shall have the effect of decreasing a Participant's vested
interest determined without regard to such amendment as of the later of the date
such amendment is adopted or the date it becomes effective.
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11.3 TERMINATION OF THE PLAN
While each Employer contemplates carrying out the provisions of the
Plan indefinitely with respect to its Employees, no Employer shall be under any
obligation or liability whatsoever to maintain the Plan for any minimum or other
period of time. The Company does hereby expressly and specifically reserve the
sole and exclusive right at any time by action of the Board of Directors of the
Company to terminate the Plan. The Company's right of termination as aforesaid
shall not require the assent, concurrence, or any other action by any Employer
notwithstanding that such action by the Company may relate in whole or in part
to persons in the employ of the Employer.
The Plan may be terminated in whole or in part at any time by
appropriate action of the Board of Directors of the Company or its designee.
Upon any termination of the Plan in its entirety, or with respect to any
Employer, the Company shall give written notice thereof to the Plan
Administrator, the Trustee, and any Employer involved.
In the event an Employer terminates its connection with the Plan, or
in the event an Employer is dissolved, liquidated, or shall by appropriate legal
proceedings be adjudged bankrupt or declared insolvent, or in the event judicial
proceedings of any kind result in the involuntary dissolution of an Employer,
the Plan shall be terminated with respect to such Employer. The merger,
consolidation, or reorganization of an Employer, or the sale by it of all or
substantially all of its assets, shall not terminate the Plan if there is
delivery to such Employer by the Employer's successor or by the purchaser of all
or substantially all of the Employer's assets, of a written instrument
requesting that the successor or purchaser be substituted for the Employer and
agreeing to perform all the provisions hereof which such Employer is required to
perform. Upon the receipt of said instrument, with the approval of the Company,
the successor, or the purchaser shall be substituted for such Employer herein,
and such Employer shall be relieved and released from any obligations of any
kind, character, or description herein or in any trust agreement imposed upon
it.
In the event of any such full or partial termination of the Plan, or
the permanent discontinuance of contributions hereunder, the rights of each
Participant to the credit balance of his individual Accounts then held under the
Plan shall be fully vested and nonforfeitable. As promptly as practicable after
any such event, the Plan Administrator shall direct distribution of the assets
of the Trust Fund -- after allowance for the expenses of any such termination or
discontinuance -- as then constituted, in the amount required to pay to each
Participant concerned the credit balance, if any, to his Accounts, determined as
of the date of such termination or discontinuance, and shall direct
distribution of the assets of the Trust Fund in the proportion which the credit
balances to all Participants' Accounts bear to each other, without reference to
the period of Service of the Participants.
Such distribution shall be effected, at the advice and direction of
the Plan Administrator, in respect of all Participants affected, either by (I)
the immediate distribution of the amounts then due and payable to the
Participants -- or, if applicable, to their
103 45
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Beneficiaries -- or (ii) by retaining their Accounts hereunder and effecting
distributions thereof in accordance with the provisions of Section 6.4.
104 46
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SECTION 12 - TOP HEAVY PLAN PROVISIONS
12.1 TOP HEAVY PLAN DEFINITIONS
Definitions relating to Top Heavy Plan provisions are as follows:
(A) TOP HEAVY: This Plan shall be considered "Top Heavy" if, as of
the Determination Date, the aggregate of the Accounts of Key Employees under the
Plan exceeds sixty percent (60%) of the aggregate of the Accounts of all
Participants under the Plan, as determined in accordance with Code Section
416(g). Such determination shall be made after aggregating all other plans of
the Employer which are included in the Required Aggregation Group and after
aggregating any other such plan(s) of the Employer which may be included in the
Permissive Aggregation Group, if such permissive aggregation thereby eliminates
the Top Heavy status of any plan within such Permissive Aggregation Group. The
Plan shall be deemed "Super Top Heavy" if, as of the Determination Date, the
Plan would meet the test specified above for being a Top Heavy plan if ninety
percent (90%) were substituted for sixty percent (60%) in each place it appears
in this subsection (A).
Any rollover contribution by a Participant shall not be taken into
account in determining whether the Plan is Top Heavy (or whether any aggregation
group which includes the Plan is a Top Heavy group).
If any Participant is a Non-Key Employee with respect to the Plan for
any Plan Year, but such Participant was a Key Employee with respect to the Plan
for any prior Plan Year, any Account balance of such Participant shall not be
taken into account for purposes of determining whether the Plan is Top Heavy.
Notwithstanding the above, if an individual has not performed services
for the Employer at any time during the 5-year period ending on the
Determination Date, any Account balance of such individual shall not be taken
into account in determining whether the Plan is Top Heavy.
(B) DETERMINATION DATE: For purposes of determining whether the Plan
is Top Heavy for a particular Plan Year, "the Determination Date" shall be the
last day of the Plan Year.
(C) TOP HEAVY VALUATION DATE: For purposes of determining the value
of the Plan Accounts under this Section 12, the "Top Heavy Valuation Date",
shall be the same date as the Determination Date.
(D) KEY EMPLOYEE: A Key Employees is any Employee (including a
Beneficiary of such Employee) who at any time during the Plan Year or any of the
four (4) preceding Plan Years is one of the following:
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<PAGE>
(1) An officer of the Employer or an Affiliated Employer (but in
no event shall more than fifty (50) Employees, or if less, the
greater of three (3) or ten percent (10%) of all Employees be taken
into account under this paragraph (1) as Key Employees).
Notwithstanding, an officer of the Employer will not be considered a
Key Employee under this subsection unless he earned more than one-
half (1/2) times an amount equal to the dollar limit under Code
Section 415(b)(1)(A) adjusted each Plan Year to take into account any
applicable cost-of-living adjustment provided for that year pursuant
to regulations promulgated by the Secretary of the Treasury or his
delegate under Section 415(d) of the Code;
(2) One of the ten (10) Employees owning (or considered as owning
within the meaning of Code Section 318) both a one-half percent
(1/2%) interest and the largest interests of the Employer if such
Employee's annual Compensation is in excess of the dollar limit
(adjusted for cost-of-living) as set forth in Code Section
415(c)(1)(A);
(3) A person owning (or considered as owning within the meaning
of Code Section 318) more than five percent (5%) of the total combined
voting power of the Employer; or
(4) A person who has an annual Compensation from the Employer of
more than one hundred fifty thousand dollars ($150,000) and would be
described in paragraph (3) hereof if one percent (1%) were substituted
for five percent (5%). Notwithstanding, for purposes of applying Code
Section 318 to the provisions of this subsection (D), subparagraph (C)
of Code Section 318(a)(2) shall be applied by substituting five
percent (5%) for fifty percent (50%). In addition, the rules of
subsections (b), (d) and (m) of Code Section 414 shall not apply for
purposes of determining ownership in the Employer under this
subsection (D).
(E) NON-KEY EMPLOYEE: A "Non-Key Employee" is any Employee (including
a Beneficiary of such Employee) who is not a Key Employee.
(F) REQUIRED AGGREGATION GROUP: For purposes of determining whether
the Plan is Top Heavy for a particular Plan Year, the "Required Aggregation
Group" shall include (1) each qualified plan of the Employer in which at least
one Key Employee participates or participated at any time during the
determination period (regardless of whether the plan has terminated) and (2) any
other qualified plan of the Employer which enables a plan described in (1)
above, to meet the requirements of Sections 401(a)(4) or 410 of the Code.
(G) PERMISSIVE AGGREGATION GROUP: For purposes of determining whether
the Plan is Top Heavy for a particular Plan Year, the "Permissive Aggregation
Group" shall include the Required Aggregation Group of plans plus any other
plans of the Employer which when considered as a group with the Required
Aggregation Group, would continue to satisfy the requirements of Sections
401(a)(4) and 410 of the Code.
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<PAGE>
12.2 MINIMUM CONTRIBUTION REQUIREMENT
The minimum contribution allocation for such Plan Year for each
Participant who is a Non-Key Employee shall be in an amount equal to at least
three percent (3%) of such Participant's Compensation for such Plan Year. Such
Non-Key Employee shall receive a minimum contribution allocation regardless of
whether he completed 1,000 Hours of Service within such Plan Year.
Notwithstanding the foregoing minimum contribution requirement as
outlined above, such contribution shall be reduced in the following
circumstances:
(A) The percentage minimum contribution required hereunder shall
in no event exceed the percentage contribution made for the Key
Employee for whom such percentage is the highest for the Plan Year
after taking into account contributions or benefits under other
qualified plans in this Plan's Required Aggregation Group; and
(B) No minimum contribution will be required (or the minimum
contribution will be reduced, as the case may be) for a Participant
under this Plan for any Plan Year if the Employer maintains another
qualified plan under which a minimum benefit or contribution is being
accrued or made for such year in whole or in part for the Participant
in accordance with Code Section 416(c).
12.3 ADJUSTMENT TO OVERALL CODE SECTION 415 LIMITATIONS
If, during any Limitation Year, the Plan is Top Heavy, the Plan
Administrator shall apply the limitations of Section 4.8 to the Participant by
substituting 1.0 for 1.25 each place it appears in the fractions described in
that Section. This Section 12.4 shall apply only if:
(1) The Plan could satisfy Section 12.2 if four percent (4%) were
substituted for three percent (3%); and
(2) The Plan is not Super Top Heavy.
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<PAGE>
IN WITNESS WHEREOF, United Wisconsin Services, Inc., and Blue Cross
& Blue Shield United of Wisconsin, by their duly authorized officers, have
caused these presents to be signed on this ____ day of __________________, 1997.
UNITED WISCONSIN SERVICES, INC.
----------------------------------
BLUE CROSS & BLUE SHIELD UNITED OF
WISCONSIN
----------------------------------
CORPORATE SEAL
ATTEST:
- ------------------------------------------
Secretary
- --------------------
108 50
<PAGE>
SCHEDULE A - PARTICIPATING EMPLOYERS
(As of January 1, 1993)
Blue Cross & Blue Shield United of Wisconsin
United Wisconsin Services, Inc.
United Wisconsin Insurance Company
Compcare Health Services Insurance Corporation
Take Control, Inc.
United Wisconsin Life Insurance Company
Valley Health Plan, Inc.
Meridian Resource Corporation
United Wisconsin Proservices, Inc.
(As of January 1, 1995)
Blue Cross & Blue Shield United of Wisconsin
United Wisconsin Services, Inc.
United Wisconsin Insurance Company
Compcare Health Services Insurance Corporation
(Including West Allis Dental Group)
Meridian Managed Care, Inc. (formerly Take Control, Inc.)
United Wisconsin Life Insurance Company
Valley Health Plan, Inc.
Meridian Resource Corporation
United Wisconsin Proservices, Inc.
Meridian Marketing Services, Inc.
Hometown Insurance Services, Inc.
(As of January 1, 1997)
Blue Cross & Blue Shield United of Wisconsin
United Wisconsin Services, Inc.
United Wisconsin Insurance Company
Compcare Health Services Insurance Corporation
Meridian Managed Care, Inc. (formerly Take Control, Inc.)
Valley Health Plan, Inc.
Meridian Resource Corporation
United Wisconsin Proservices, Inc.
Meridian Marketing Services, Inc.
Hometown Insurance Services, Inc.
United Heartland, Inc.
109 51
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SCHEDULE B - EXCLUDED EMPLOYEE GROUPS
(As of January 1, 1993)
West Allis Dental Group (a division of Compcare Health Services Insurance
Corporation)
(As of January 1, 1995)
HMO of Wisconsin Insurance Corporation
HMO-W, Inc.
United Heartland, Inc.
(As of January 1, 1997)
Accountable Health Plans, Inc.
Accountable Health Plan of the Carolinas, Inc.
Advance Medical Security, Inc.
American Medical Security Holdings, Inc.
American Medical Security, Inc.
AMS HMO Holdings, Inc.
AMS Provider Partnerships, Inc.
American Medical Security Health Plans, Inc.
American Medical Security Insurance Company
American Medical Security Insurance Company of Georgia
American Medical Security Health Plan, Inc. (DBA American Medical Healthcare)
Atlantic Health Plans, Inc.
CNR Health, Inc.
Community Health Plan, Inc.
Continental Plan Services, Inc.
Crescent Medical Partnerships, Inc.
HMO-W, Inc.
Nurse Healthline, Inc.
Personal Physician Care, Inc.
U&C Real Estate Partnership
United Wisconsin Life Insurance Company
Unity Health Plans Insurance Corporation (formerly HMO of Wisconsin Insurance
Corporation)
Unity HMO of Illinois, Inc.
110 52
<PAGE>
SPECIAL BENEFIT SCHEDULE NO. 1
West Allis Dental Group Retirement Plan
Pursuant to Section 2.40 of the Plan, this Special Benefit Schedule is
made a part of the Plan as of the Effective Date set forth below and supersedes
any provisions of the Plan which are not consistent with this Special Benefit
Schedule.
1. PARTICIPANTS COVERED: This Special Benefit Schedule modifies and
supplements the provisions of the Plan in connection with the transfer of assets
into the Plan from the West Allis Dental Group Retirement Plan (the "West Allis
Plan"). The Participants covered by this Special Benefit Schedule are the
Participants who immediately prior to the Effective Date were participants in
the West Allis Plan.
2. EFFECTIVE DATE: December 31, 1994.
3. ELIGIBILITY: A participant in the West Allis Plan immediately
prior to the Effective Date shall become a Participant in the Plan on the
Effective Date but shall not receive any Employer Matching Contributions under
the Plan for the 1994 Plan Year. Any other employee of the West Allis Dental
Group operating unit of Compcare Health Services Insurance Corporation shall
become eligible to participate in the Plan on the later of the Effective Date or
the date such employee would otherwise become eligible to participate in
accordance with the provisions of Section 3 of the Plan.
4. TRANSFER OF ASSETS: The West Allis Plan shall be terminated and
the assets of the West Allis Plan transferred to the Plan effective December 31,
1994, and the assets and liabilities of the West Allis Plan shall become the
assets and liabilities of the Plan effective with the transfer of assets and
liabilities, in accordance with Section 414 (l) of the Code. Effective with the
date of the asset transfer, the provisions of the Plan shall apply to the
transferred account balances from the West Allis Plan, with the modifications
set forth below.
5. VESTING: A Participant covered by this Special Benefit Schedule
shall at all times be 100% vested in his Account Balance attributable to his
transferred account balance from the West Allis Plan. Service of Participants
covered by this Special Benefit Schedule shall include service with the West
Allis Dental Group.
6. SPECIAL DISTRIBUTION PROVISIONS: The provisions of this paragraph
6 shall apply only with respect to that portion of a Participant's benefit which
is attributable to amounts transferred to this Plan from the West Allis Plan.
(a) Notwithstanding Section 6.4 of the Plan, a Participant shall
receive his benefits as follows:
(i) A Participant who is entitled to receive a distribution
upon his Retirement, Permanent Disability, or termination of
employment, shall, unless
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<PAGE>
the Participant elects otherwise in accordance with Section (v)
below, receive his benefits in the Qualified Joint and Survivor
Annuity Form. The Qualified Joint and Survivor Annuity Form
means, for a Participant who has a spouse, an annuity for the
life of the Participant with a survivor annuity for the life of
the Participant's spouse, where the survivor annuity is 50% of
the amount of the annuity payable during the joint lives of the
Participant and the Participant's spouse. The Qualified Joint and
Survivor Annuity form means, for a Participant who has no spouse,
an annuity for the life of the Participant.
(ii) A Participant's death benefit shall be paid in the
form of a Qualified Pre-retirement Survivor Annuity for a
Participant who has a spouse to whom he has been continuously
married throughout the one-year period ending on the date of his
death. The Qualified Pre-retirement Survivor Annuity means a life
annuity payable to the surviving spouse of a Participant who dies
before benefits become payable under the Plan. The Beneficiary
of a Participant who does not have a spouse who is entitled to a
Qualified Pre-retirement Survivor Annuity shall receive a single
sum payment.
(iii) The optional forms of retirement benefit shall include
the following, in addition to the benefit forms described in
Section 6.4(A) of the Plan:
(A) A straight life annuity.
(B) Single life annuities with periods certain of five,
ten, and fifteen years.
(C) Survivorship life annuities with survivorship
percentages of 50, 66 2/3, or 100.
(iv) Any optional forms of death benefit shall include the
benefit forms described in Section 6.4(B) of the Plan and any
annuity that is an optional form of retirement benefit.
(v) Any election of an optional form of benefit must be made
in writing by the Participant during the election period. If the
Participant is married, the election must be consented to by the
Participant's spouse and must meet the following requirements:
(A) The spouse must consent to a specific beneficiary
and a particular form of benefit. The spouse's consent must
acknowledge the effect of such election and be witnessed by
a Plan representative or a notary public. Such consent will
not be required if it is established to the Administrative
Committee that the required consent cannot be obtained
because the spouse cannot be located, or other circumstances
that may be prescribed by Treasury regulations. The
112 54
<PAGE>
election may be revoked by the Participant in writing
without the consent of the spouse at any time during the
election period described in subparagraph (B) below. Any new
election must comply with the requirements of this
subparagraph (A). A former spouse's waiver shall not be
binding on a new spouse.
(B) The election period to waive the Qualified Joint
and Survivor Annuity form shall be the 90-day period, the
last day of which is the "annuity starting date." For
purposes of this Section, "annuity starting date" means the
first day of the first period for which an amount is
received as an annuity. Any elections may not be changed
after the Participant's annuity starting date.
(C) A Participant's failure to waive the Qualified
Joint and Survivor Annuity form will not result in a
decrease in any Plan accrued benefit with respect to such
Participant.
(D) An election to waive the Qualified Pre-retirement
Survivor Annuity form may be made at any time. An election
to waive the Qualified Preretirement Survivor Annuity form
which is made before the first day of the Plan Year in which
he reaches age 35 shall become invalid on such date, unless
the Participant's employment terminates prior to such date.
(vi) The Committee shall furnish the Participant and the
Participant's spouse a written explanation in non-technical
language of the Qualified Joint and Survivor Annuity form of
benefit, the Qualified Pre-retirement Survivor Annuity form of
benefit, the optional forms of retirement benefits and the right
of the Participant and the Participant's spouse to defer
distributions. The written explanation of the Qualified Joint and
Survivor Annuity shall be provided no less than 30 days and no
more than 90 days before the annuity starting date. The written
explanation of the Qualified Pre-retirement Survivor Annuity
shall be given to Participants in the period beginning on the
first day of the Plan Year the Participant attains age 32 and
ending on the last day of the Plan Year the Participant attains
age 35, or, if earlier, when the Participant terminates
employment.
(b) The Participant's Early Retirement Date shall be the date as
of which he has attained 55 and terminated employment. The Participant
shall be fully vested as of such Early Retirement Date and shall be
entitled to receive benefits from the Plan as of such date.
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<PAGE>
SPECIAL BENEFIT SCHEDULE NO. 2
Hometown Insurance Services Employees
Pursuant to Section 2.40 of the Plan, this Special Benefit Schedule is made a
part of the Plan as of the January 1, 1995 and supersedes any provisions of the
Plan which are not consistent with this Special Benefit Schedule. The
Participants covered by this Special Benefit Schedule are the Participants
listed below ("Hometown Employees") who were employed by the Employer (doing
business as Hometown Insurance Services) on December 31, 1994.
Chris Bruni Cindy Olson
Tom Burns Bruce Ohlsen
Bev Comer George Tervalon
Debrah Gunderson Lisa Tranberg
Richard Laufenberg Christine Walder
Jim Malicki
1. A Hometown Employee may elect to participate in the Plan as of the later of
(i) January 1, 1995 or (ii) the first day of the calendar quarter coincident or
next following the first anniversary of his date of hire with HMO of Wisconsin
Insurance Corporation, HMO-W, Inc., University Health Care, Inc., U-Care HMO,
Inc., or Unity Health Plans Insurance Corporation (a "Hometown Related
Employer").
2. For purposes of determining pursuant to Section 6.2 the vested percentage
of his Employer Matching Contributions Account, the Plan shall recognize, in
addition to his Service with an Employer on and after January 1, 1995, all
periods of a Participant's employment with a Hometown Related Employer prior to
January 1, 1995.
114 56
<PAGE>
SPECIAL BENEFIT SCHEDULE NO. 3
United Heartland, Inc. Savings Plan
United Heartland, Inc. Pension Plan
Pursuant to Section 2.40 of the Plan, this Special Benefit Schedule is
made a part of the Plan as of the Effective Date set forth below and supersedes
any provisions of the Plan which are not consistent with this Special Benefit
Schedule.
1. PARTICIPANTS COVERED: This Special Benefit Schedule modifies and
supplements the provisions of the Plan in connection with the transfer of assets
into the Plan from the United Heartland, Inc. Savings Plan ("UH Savings Plan")
and the United Heartland, Inc. Pension Plan ("UH Pension Plan") (collectively,
the "UH Plans"). The Participants covered by this Special Benefit Schedule are
the Participants who immediately prior to the Effective Date were participants
in the UH Plans.
2. EFFECTIVE DATE: December 31, 1996.
3. ELIGIBILITY: A participant in the UH Plans immediately prior to
the Effective Date shall become a Participant in the Plan on the Effective Date.
Any other employee of United Heartland, Inc. shall become eligible to
participate in the Plan on the later of the Effective Date or the date such
employee would otherwise become eligible to participate in accordance with the
provisions of Section 3 of the Plan.
4. TRANSFER OF ASSETS: The UH Plans shall be terminated and the
assets of the UH Plans transferred to the Plan effective as of the Effective
Date and the assets and liabilities of the UH Plans shall become the assets and
liabilities of the Plan effective with the transfer of assets and liabilities,
in accordance with Section 414(l) of the Code. Effective with the date of the
asset transfer, the provisions of the Plan shall apply to the transferred
account balances from the UH Plans, with the modifications set forth in this
Special Benefit Schedule.
5. VESTING: A Participant covered by this Special Benefit Schedule
shall at all times be 100% vested in his Account balance attributable to salary
deferrals in his transferred account balance from the UH Savings Plan. As of
the Effective Date, a Participant covered by this Special Benefit Schedule
actively employed by United Heartland, Inc. on the Effective Date shall become
vested in his transferred account balance from the UH Savings Plan attributable
to matching contributions in the same manner as his Employer Matching
Contribution Account under Section 6.2. As of the Effective Date, a Participant
covered by this Special Benefit Schedule actively employed by United Heartland,
Inc. on the Effective Date shall become vested in his transferred account
balance from the UH Pension Plan in the same manner as his Employer Matching
Contribution Account under Section 6.2. Participants covered by this Special
Benefit Schedule who are NOT actively employed by United Heartland, Inc. on the
Effective Date shall be fully vested only after completing five (5) Years of
Service. For vesting purposes hereunder, Service of Partici-
115 57
<PAGE>
pants covered by this Special Benefit Schedule shall include service with
United Heartland, Inc., as computed under the elapsed time method used by the
UH Plans.
6. SPECIAL DISTRIBUTION PROVISIONS: The provisions of this paragraph
6 shall apply only with respect to that portion of a Participant's benefit which
is attributable to amounts transferred to this Plan from the UH Plans.
(a) Notwithstanding Section 6.4 of the Plan, a Participant shall
receive his benefits as follows:
(i) A Participant who is entitled to receive a distribution upon
his Retirement, Permanent Disability, or termination of employment,
shall, unless the Participant elects otherwise in accordance with
Section (v) below, receive his benefits in the Qualified Joint and
Survivor Annuity form. The Qualified Joint and Survivor Annuity form
means, for a Participant who has a spouse, an annuity for the life of
the Participant with a survivor annuity for the life of the
Participant's spouse, where the survivor annuity is 50% of the amount
of the annuity payable during the joint lives of the Participant and
the Participant's spouse. The Qualified Joint and Survivor Annuity
form means, for a Participant who has no spouse, an annuity for the
life of the Participant.
(ii) A Participant's death benefit shall be paid in the form of
a Qualified Pre-retirement Survivor Annuity for a Participant who has
a spouse to whom he has been continuously married throughout the one-
year period ending on the date of his death. The Qualified Pre-
retirement Survivor Annuity means a life annuity payable to the
surviving spouse of a Participant who dies before benefits become
payable under the Plan. The Beneficiary of a Participant who does not
have a spouse who is entitled to a Qualified Pre-retirement Survivor
Annuity shall receive a single sum payment.
(iii) The optional forms of retirement benefit shall include the
following, in addition to the benefit forms described in Section
6.4(A) of the Plan:
(A) A straight life annuity.
(B) Single life annuities with periods certain of five, ten,
and fifteen years.
(C) Survivorship life annuities with survivorship
percentages of 50, (66- 2/3), or 100.
(iv) Any optional forms of death benefit shall include the
benefit forms described in Section 6.4(B) of the Plan and any annuity
that is an optional form of retirement benefit.
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<PAGE>
(v) Any election of an optional form of benefit must be made in
writing by the Participant during the election period. If the
Participant is married, the election must be consented to by the
Participant's spouse and must meet the following requirements:
(A) The spouse must consent to a specific beneficiary and a
particular form of benefit. The spouse's consent must acknowledge
the effect of such election and be witnessed by a Plan
representative or a notary public. Such consent will not be
required if it is established to the Administrative Committee
that the required consent cannot be obtained because the spouse
cannot be located, or other circumstances that may be prescribed
by Treasury regulations. The election may be revoked by the
Participant in writing without the consent of the spouse at any
time during the election period described in subparagraph (B)
below. Any new election must comply with the requirements of this
subparagraph (A). A former spouse's waiver shall not be binding
on a new spouse.
(B) The election period to waive the Qualified Joint and
Survivor Annuity form shall be the 90-day period, the last day
of which is the "annuity starting date." For purposes of this
Section, "annuity starting date" means the first day of the first
period for which an amount is received as an annuity. Any
elections may not be changed after the Participant's annuity
starting date.
(C) A Participant's failure to waive the Qualified Joint
and Survivor Annuity form will not result in a decrease in any
Plan accrued benefit with respect to such Participant.
(D) An election to waive the Qualified Pre-retirement
Survivor Annuity form may be made at any time. An election to
waive the Qualified Preretirement Survivor Annuity form which is
made before the first day of the Plan Year in which he reaches
age 35 shall become invalid on such date, unless the
Participant's employment terminates prior to such date.
(vi) The Committee shall furnish the Participant and the
Participant's spouse a written explanation in non-technical
language of the Qualified Joint and Survivor Annuity form of
benefit, the Qualified Pre-retirement Survivor Annuity forms of
benefit, the optional forms of retirement benefits and the right
of the Participant and the Participant's spouse to defer
distributions. The written explanation of the Qualified Joint and
Survivor Annuity shall be provided no less than 30 days and no
more than 90 days before the annuity starting date. The written
explanation of the Qualified Pre-retirement Survivor Annuity
shall be given to Participants in the period beginning on the
first day of the Plan Year the Participant attains age 32 and
ending on the last day of the Plan Year the Participant attains
age 35, or if earlier when the Participant terminates employment.
117 59
<PAGE>
(b) The Participant's Early Retirement Date with respect to the UH
Savings Plan shall be the date as of which he has attained age 55, completed six
(6) years of service, and terminated employment. The Participant shall be fully
vested as of such Early Retirement Date and shall be entitled to receive
benefits from the Plan as of such date.
(c) A Participant covered by this Special Benefit Schedule shall be
entitled to receive a Hardship Distribution pursuant to Section 6.8 of the Plan
with respect to his Employer Matching Contribution Account in addition to such
other Accounts from which Hardship Distributions are otherwise available under
the Plan.
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SPECIAL BENEFIT SCHEDULE NO. 4
EDS Deferred Compensation Plan
Pursuant to Section 2.40 of the Plan, this Special Benefit Schedule
for former Electronic Data Systems Corporation ("EDS") employees is made a part
of the Plan as of the Effective Date set forth below and supersedes any
provisions of the Plan which are not consistent with this Special Benefit
Schedule.
1. PARTICIPANTS COVERED: This Special Benefit Schedule modifies and
supplements the provisions of the Plan in connection with the transfer of assets
into the Plan from the EDS Deferred Compensation Plan (the "EDS Plan"). The
Participants covered by this Special Benefit Schedule are the Participants who
immediately prior to the Effective Date were participants in the EDS Plan.
2. EFFECTIVE DATE: January 1, 1997.
3. ELIGIBILITY: A participant in the EDS Plan immediately prior to
the Effective Date shall become a Participant in the Plan on the Effective Date.
4. TRANSFER OF ASSETS: Certain assets of the EDS Plan shall be
transferred to the Plan and the assets and liabilities of the EDS Plans shall
become the assets and liabilities of the Plan effective with the transfer of
assets and liabilities, in accordance with Section 414 (l) of the Code.
Effective with the date of the asset transfer, the provisions of the Plan shall
apply to the transferred account balances from the EDS Plan, with the
modifications set forth in this Special Benefit Schedule.
5. VESTING: A Participant covered by this Special Benefit Schedule
shall at all times be 100% vested in his Account balance transferred from the
EDS Plan. For vesting purposes hereunder, Service of Participants covered by
this Special Benefit Schedule shall include service with EDS.
6. SPECIAL DISTRIBUTION PROVISIONS: The provisions of this paragraph
6 shall apply only with respect to that portion of a Participant's benefit which
is attributable to amounts transferred to this Plan from the EDS Plan.
(a) Notwithstanding Section 6.4 of the Plan, a Participant shall
receive his benefits as follows:
(i) A Participant who is entitled to receive a distribution upon
his Retirement, Permanent Disability, or termination of employment,
shall, unless the Participant elects otherwise in accordance with
Section (v) below, receive his benefits in the Qualified Joint and
Survivor Annuity form. The Qualified Joint and Survivor Annuity form
means, for a Participant who has a spouse, an annuity for the life of
the Participant with a survivor annuity for the life of the
Participant's spouse, where the survivor annuity is 50% of the amount
of the annuity payable during the joint lives
119 61
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of the Participant and the Participant's spouse. The Qualified Joint
and Survivor Annuity form means, for a Participant who has no spouse,
an annuity for the life of the Participant.
(ii) A Participant's death benefit shall be paid in the form of
a Qualified Pre-retirement Survivor Annuity for a Participant who has
a spouse to whom he has been continuously married throughout the one
(1) year period ending on the date of his death. The Qualified Pre-
retirement Survivor Annuity means a life annuity payable to the
surviving spouse of a Participant who dies before benefits become
payable under the Plan. The Beneficiary of a Participant who does not
have a spouse who is entitled to a Qualified Pre-retirement Survivor
Annuity shall receive a payment in one of the optional forms
identified in (iii) below.
(iii) The optional forms of retirement benefit shall include a
straight life annuity in addition to the benefit forms described in
Section 6.4(A) of the Plan.
(iv) Any optional forms of death benefit shall include the
benefit forms described in Section 6.4(b) of the Plan and any annuity
that is an optional form of retirement benefit.
(v) Any election of an optional form of benefit must be made in
writing by the Participant during the election period. If the
Participant is married, the election must be consented to by the
Participant's spouse and must meet the following requirements:
(A) The spouse must consent to a specific beneficiary and a
particular form of benefit. The spouse's consent must
acknowledge the effect of such election and be witnessed by a
Plan representative or a notary public. Such consent will not be
required if it is established to the Administrative Committee
that the required consent cannot be obtained because the spouse
cannot be located, or other circumstances that may be prescribed
by Treasury regulations. The election may be revoked by the
Participant in writing without the consent of the spouse at any
time during the election period described in subparagraph (B)
below. Any new election must comply with the requirements of
this subparagraph (A). A former spouse's waiver shall not be
binding on a new spouse.
(B) The election period to waive the Qualified Joint and
Survivor Annuity form shall be the 90-day period, the last day of
which is the "annuity starting date." For purposes of this
Section, "annuity starting date" means the first day of the first
period for which an amount is received as an annuity. Any
elections may not be changed after the Participant's annuity
starting date.
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(C) A Participant's failure to waive the Qualified Joint and
Survivor Annuity form will not result in a decrease in any Plan
accrued benefit with respect to such Participant.
(D) An election to waive the Qualified Pre-retirement
Survivor Annuity form may be made at any time. An election to
waive the Qualified Preretirement Survivor Annuity form which is
made before the first day of the Plan Year in which he reaches
age 35 shall become invalid on such date, unless the
Participant's employment terminates prior to such date.
(vi) The Committee shall furnish the Participant and the
Participant's spouse a written explanation in non-technical language
of the Qualified Joint and Survivor Annuity form of benefit, the
Qualified Pre-retirement Survivor Annuity forms of benefit, the
optional forms of retirement benefits and the right of the Participant
and the Participant's spouse to defer distributions. The written
explanation of the Qualified Joint and Survivor Annuity shall be
provided no less than 30 days and no more than 90 days before the
annuity starting date. The written explanation of the Qualified Pre-
retirement Survivor Annuity shall be given to Participants in the
period beginning on the first day of the Plan Year the Participant
attains age 32 and ending on the last day of the Plan Year the
Participant attains age 35, or if earlier when the Participant
terminates employment.
(b) The Participant's Early Retirement Date shall be the date as of
which he has attained Age 55 and terminated employment. The Participant shall
be fully vested as of such Early Retirement Date and shall be entitled to
receive benefits from the Plan as of such date.
(c) A Participant covered by this Special Benefit Schedule shall be
entitled to receive the Hardship Distribution pursuant to Section 6.8 of the
Plan with respect to the Participant's entire Account as of December 31, 1988 in
addition to such other Accounts from which Hardship Distributions are available
under the Plan.
(d) A Participant covered by this Special Benefit Schedule shall be
entitled to receive in- service withdrawals at age 59-1/2.
7. SPECIAL ACCOUNT PROVISIONS: An Employee Contribution Account shall
be established under the Plan to hold any voluntary contributions made to the
EDS Plan and the earnings thereon. Such Employee Contribution Account shall be
subject to the withdrawal provisions of Section 6.8 of the Plan.
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EXHIBIT 10.2
UWSI/BCBSUW Union Employees 401(k) Plan
(As Amended and Restated Effective January 1, 1997)
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UWSI/BCBSUW Union Employees 401(k) Plan
TABLE OF CONTENTS
SECTION 1 - INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . 1
1.1 IDENTITY OF THE PLAN; EFFECTIVE DATE. . . . . . . . . . . . . 1
1.2 ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 PURPOSE OF THE PLAN . . . . . . . . . . . . . . . . . . . . . 1
1.4 QUALIFIED PLAN INTENDED . . . . . . . . . . . . . . . . . . . 1
SECTION 2 - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 2
2.1 ACCOUNT: ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . 2
2.2 ADMINISTRATIVE COMMITTEE: COMMITTEE . . . . . . . . . . . . . 2
2.3 ADMINISTRATIVE DELEGATE . . . . . . . . . . . . . . . . . . . 2
2.4 ANNUAL ADDITION . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 AUTHORIZED LEAVE OF ABSENCE . . . . . . . . . . . . . . . . . 3
2.6 BENEFICIARY . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 BREAK IN SERVICE: ONE YEAR BREAK IN SERVICE . . . . . . . . . 3
2.8 CODE OR INTERNAL REVENUE CODE . . . . . . . . . . . . . . . . 3
2.9 COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.10 COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . 4
2.12 COMPENSATION REDUCTION AGREEMENT. . . . . . . . . . . . . . . 4
2.13 COMPENSATION REDUCTION CONTRIBUTIONS. . . . . . . . . . . . . 4
2.14 DEFERRED RETIREMENT DATE. . . . . . . . . . . . . . . . . . . 5
2.15 EFFECTIVE DATE. . . . . . . . . . . . . . . . . . . . . . . . 5
2.16 EMPLOYEE. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.17 EMPLOYEE CONTRIBUTION ACCOUNT . . . . . . . . . . . . . . . . 5
2.18 EMPLOYER . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.19 EMPLOYER MATCHING CONTRIBUTION ACCOUNT. . . . . . . . . . . . 6
2.20 EMPLOYER MATCHING CONTRIBUTIONS . . . . . . . . . . . . . . . 6
2.21 EMPLOYMENT COMMENCEMENT DATE. . . . . . . . . . . . . . . . . 6
2.22 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.23 FORFEITURE; FORFEITURE ACCOUNT. . . . . . . . . . . . . . . . 7
2.24 HIGHLY COMPENSATED EMPLOYEE . . . . . . . . . . . . . . . . . 7
2.25 HOUR OF SERVICE . . . . . . . . . . . . . . . . . . . . . . . 7
2.26 INVESTMENT ADVISER. . . . . . . . . . . . . . . . . . . . . . 8
2.27 LIMITATION YEAR . . . . . . . . . . . . . . . . . . . . . . . 8
2.28 NON-HIGHLY COMPENSATED EMPLOYEE . . . . . . . . . . . . . . . 8
2.29 NORMAL RETIREMENT AGE . . . . . . . . . . . . . . . . . . . . 9
2.30 NORMAL RETIREMENT DATE. . . . . . . . . . . . . . . . . . . . 9
2.31 PARTICIPANT . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.32 PERMANENT DISABILITY OR PERMANENTLY DISABLED. . . . . . . . . 9
2.33 PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.34 PLAN ADMINISTRATOR. . . . . . . . . . . . . . . . . . . . . . 9
2.35 PLAN YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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2.36 RE-EMPLOYMENT COMMENCEMENT DATE . . . . . . . . . . . . . . . 10
2.37 RETIREMENT: RETIRED . . . . . . . . . . . . . . . . . . . . . 10
2.38 SERVICE: YEAR OF SERVICE. . . . . . . . . . . . . . . . . . . 10
2.39 SEVERANCE FROM SERVICE DATE . . . . . . . . . . . . . . . . . 11
2.40 TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.41 TRUST AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . 11
2.42 TRUST FUND. . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.43 TRUSTEES. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.44 VALUATION DATE. . . . . . . . . . . . . . . . . . . . . . . . 12
2.45 CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 3 - ELIGIBILITY AND PARTICIPATION . . . . . . . . . . . . . 13
3.1 ELIGIBLE EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . 13
3.2 PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . 13
3.3 PARTICIPATION FOLLOWING A BREAK IN SERVICE. . . . . . . . . . 13
3.4 EVIDENCE OF PARTICIPATION . . . . . . . . . . . . . . . . . . 14
3.5 DURATION OF PARTICIPATION . . . . . . . . . . . . . . . . . . 14
3.6 RIGHTS UPON TRANSFER. . . . . . . . . . . . . . . . . . . . . 14
SECTION 4 - CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . 15
4.1 NO CONTRIBUTIONS BY PARTICIPANTS. . . . . . . . . . . . . . . 15
4.2 COMPENSATION REDUCTION CONTRIBUTIONS. . . . . . . . . . . . . 15
4.3 PERMITTED RANGE OF COMPENSATION REDUCTION
CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . 16
4.4 EMPLOYER MATCHING CONTRIBUTIONS . . . . . . . . . . . . . . . 18
4.5 ORDER OF APPLICATION OF LIMITATIONS OF SECTIONS 4.3 &
4.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.6 RIGHT TO CHANGE, DISCONTINUE OR SUSPEND COMPENSATION
REDUCTION CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . 20
4.7 ROLLOVER CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . 20
4.8 GENERAL LIMITATION ON ANNUAL ADDITIONS. . . . . . . . . . . . 20
4.9 SPECIAL LIMITATION ON ANNUAL ADDITIONS. . . . . . . . . . . . 20
4.10 DISPOSITION OF EXCESS ANNUAL ADDITIONS. . . . . . . . . . . . 21
SECTION 5 - ACCOUNTING. . . . . . . . . . . . . . . . . . . . . . . 22
5.1 INDIVIDUAL ACCOUNTS OF PARTICIPANTS . . . . . . . . . . . . . 22
5.2 CREDITING OF EMPLOYER CONTRIBUTIONS AND FORFEITURES . . . . . 22
5.3 DEBITING OF DISTRIBUTIONS . . . . . . . . . . . . . . . . . . 22
5.4 SEPARATE INVESTMENT FUNDS . . . . . . . . . . . . . . . . . . 22
5.5 VALUATION OF ACCOUNTS . . . . . . . . . . . . . . . . . . . . 23
5.6 RETURN OF EMPLOYER CONTRIBUTIONS. . . . . . . . . . . . . . . 24
SECTION 6 - DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . 25
6.1 DISTRIBUTIONS UPON RETIREMENT, DEATH OR DISABILITY. . . . . . 25
6.2 DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT. . . . . . . . . 25
6.3 FORFEITURES . . . . . . . . . . . . . . . . . . . . . . . . . 26
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6.4 METHOD OF DISTRIBUTION. . . . . . . . . . . . . . . . . . . . 26
6.5 RESPONSIBILITIES AND DUTIES RELATIVE TO CURRENT
RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.6 MANNER OF DISPOSING UNCLAIMED DISTRIBUTABLE INTEREST. . . . . 27
6.7 TIME OF DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . 27
6.8 WITHDRAWALS FROM INDIVIDUAL ACCOUNTS. . . . . . . . . . . . . 30
6.9 DISTRIBUTIONS TO ALTERNATE PAYEES . . . . . . . . . . . . . . 31
6.10 ELIGIBLE ROLLOVER DISTRIBUTIONS . . . . . . . . . . . . . . . 31
SECTION 7 - BENEFICIARIES . . . . . . . . . . . . . . . . . . . . . 33
7.1 DESIGNATION OF BENEFICIARY OR BENEFICIARIES . . . . . . . . . 33
7.2 MISSING BENEFICIARY(IES); RIGHT OF EMPLOYER TO MAKE
PRESUMPTION OF DEATH. . . . . . . . . . . . . . . . . . . . . 34
SECTION 8 - PARTICIPANT LOANS . . . . . . . . . . . . . . . . . . . 35
8.1 PARTICIPANT LOANS . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 9 - ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . 37
9.1 PLAN ADMINISTRATOR. . . . . . . . . . . . . . . . . . . . . . 37
9.2 THE ADMINISTRATIVE COMMITTEE. . . . . . . . . . . . . . . . . 37
9.3 EMPLOYMENT OF SERVICES BY THE COMMITTEE . . . . . . . . . . . 37
9.4 EXPENSES OF ADMINISTRATION. . . . . . . . . . . . . . . . . . 38
9.5 ACTS OF THE COMMITTEE . . . . . . . . . . . . . . . . . . . . 38
9.6 INTERPRETATIONS . . . . . . . . . . . . . . . . . . . . . . . 38
9.7 LIABILITY OF THE COMMITTEE. . . . . . . . . . . . . . . . . . 39
9.8 APPLICABLE LAW. . . . . . . . . . . . . . . . . . . . . . . . 39
9.9 PLAN FIDUCIARIES; ALLOCATION OF RESPONSIBILITIES AMONG
THEM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.10 RELIANCE ON CO-FIDUCIARIES. . . . . . . . . . . . . . . . . . 40
9.11 FIDUCIARY DUTIES. . . . . . . . . . . . . . . . . . . . . . . 40
9.12 PROHIBITED TRANSACTIONS TO BE AVOIDED . . . . . . . . . . . . 40
9.13 RECORDS AND REPORTS OF THE PLAN ADMINISTRATOR . . . . . . . . 40
9.14 DATA SUPPLIED BY EMPLOYER . . . . . . . . . . . . . . . . . . 41
9.15 PARTIAL EXCULPATION . . . . . . . . . . . . . . . . . . . . . 41
SECTION 10 - PROVISIONS RELATING TO PARTICIPANTS. . . . . . . . . . 42
10.1 INFORMATION REQUIRED OF PARTICIPANTS. . . . . . . . . . . . . 42
10.2 CLAIMS PROCEDURE. . . . . . . . . . . . . . . . . . . . . . . 42
10.3 RIGHTS IN TRUST FUND. . . . . . . . . . . . . . . . . . . . . 43
10.4 BENEFITS NOT ASSIGNABLE . . . . . . . . . . . . . . . . . . . 43
10.5 CONDITIONS OF EMPLOYMENT NOT AFFECTED BY PLAN . . . . . . . . 44
10.6 PAYMENTS PURSUANT TO A QUALIFIED DOMESTIC RELATIONS
ORDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 11 - MERGER OR CONSOLIDATION OF PLAN; TERMINATION;
AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . 45
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11.1 MERGER, TRANSFER OR CONSOLIDATION OF PLAN WITH OTHER
PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.2 FUTURE OF THE PLAN: AMENDMENT . . . . . . . . . . . . . . . . 45
11.3 TERMINATION OF THE PLAN . . . . . . . . . . . . . . . . . . . 46
SECTION 12 - TOP HEAVY PLAN PROVISIONS. . . . . . . . . . . . . . . 47
12.1 TOP HEAVY PLAN DEFINITIONS. . . . . . . . . . . . . . . . . . 47
12.2 MINIMUM CONTRIBUTION REQUIREMENT. . . . . . . . . . . . . . . 49
12.3 ADJUSTMENT TO OVERALL IRC SECTION 415 LIMITATIONS . . . . . . 49
127
<PAGE>
SECTION 1 - INTRODUCTION
1.1 IDENTITY OF THE PLAN; EFFECTIVE DATE
The UWSI/BCBSUW Union Employees 401(k) Plan is hereby amended and
restated. The Plan and Trust are intended to meet the requirements of Section
401(a) and 501(a) of the Internal Revenue Code of 1986. The amended provisions
of this Plan shall apply only to an Employee who terminates employment on or
after the effective date of the amended provisions. Unless otherwise stated,
the amended provisions of this Plan are effective January 1, 1997 except that
the amendments relating to daily recordkeeping, including but not limited to
Sections 2.44, 4.2, 4.6, and Section 5 shall be effective July 1, 1996.
1.2 ADMINISTRATION
The "Plan Administrator," within the meaning of ERISA, is the Company.
The Plan Administrator shall have duties and responsibilities under the Plan as
described in Section 9.
All books and records of the Plan are maintained on a Plan Year basis.
1.3 PURPOSE OF THE PLAN
The Plan, as herein amended and restated, is established and
maintained for the purpose of enabling Employees of the Employer to have a
portion of their compensation contributed on a tax-deferred basis to the Plan.
1.4 QUALIFIED PLAN INTENDED
The Employer intends that the Plan, as amended and restated effective
January 1, 1997, (unless otherwise stated) and as the same may from time to time
be amended, shall constitute a qualified plan under the provisions of the
Internal Revenue Code of 1986, and shall be maintained in full compliance with
the provisions of the Employee Retirement Income Security Act of 1974, as
amended. The Employer intends to continue the Plan in effect indefinitely,
subject always, however, to the rights reserved by the Employer to amend and
terminate the Plan as herein set forth. Notwithstanding any provision in this
Plan to the contrary, contributions, benefits and service credit with respect to
qualified military service will be provided in accordance with Section 414(u)(4)
of the Code.
1
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SECTION 2 - DEFINITIONS
The following terms, when used herein and initially capitalized, shall have the
following meanings for all purposes of the Plan.
2.1 ACCOUNT: ACCOUNTS
"Account" (or Accounts) means the individual Account(s) maintained for
a Participant (as described in Section 5) to record his share of the
contributions made by the Employer and adjustments relating thereto, whether it
be the Participant's Compensation Reduction Account or Employer Matching
Contribution Account, Rollover Account, Transfer Account or his Employee
Contribution Account containing voluntary contributions made by Participants to
the Plan prior to January 1, 1988.
2.2 ADMINISTRATIVE COMMITTEE: COMMITTEE
"Administrative Committee" and "Committee" means the Committee as
described in Section 9.
2.3 ADMINISTRATIVE DELEGATE
"Administrative Delegate" means one or more persons or institutions to
whom the Administrative Committee has delegated certain administrative functions
pursuant to a written agreement.
2.4 ANNUAL ADDITION
"Annual Addition," when used with reference to a Participant for any
Plan Year, means, for this Plan and any other profit-sharing or defined
contribution plan maintained by the Employer and qualified under Section 401(a)
of the Internal Revenue Code, the sum of:
(A) Employer contributions, including any contributions to the
Participant's Compensation Reduction Account,
(B) Forfeitures, if any, and
(C) Voluntary non-deductible Employee contributions, if any.
For Plan Years beginning prior to January 1, 1987, voluntary non-
deductible contributions were considered Annual Additions to the extent they
exceeded the lesser of 6% of the Participant's Compensation or one-half of the
Participant's voluntary non-deductible contributions.
2
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2.5 AUTHORIZED LEAVE OF ABSENCE
Authorized Leave of Absence" means any absence authorized by the
Employer for temporary disability or for other good cause provided that all
persons under similar circumstances must be treated alike in the granting of
such Authorized Leave of Absence and provided further that the Participant
returns within the period of authorized absence.
An absence due to service in the Armed Forces of the United States
shall be considered an Authorized Leave of Absence provided that the absence is
caused by war or other emergency, or provided that the Employee is required to
serve under the laws of conscription in time of peace, and further provided that
the Employee returns to employment with the Employer within the period provided
by law.
2.6 BENEFICIARY
"Beneficiary" means the person or persons entitled to receive benefits
under this Plan by reason of death of a Participant, as more definitively
described in Section 7.
2.7 BREAK IN SERVICE: ONE YEAR BREAK IN SERVICE
"Break in Service", or a "One Year Break in Service", with respect to
an Employee means a period of one or more Plan Years during which a Participant
renders 500 or less Hours of Service during each such Plan Year.
In order to prevent a One Year Break in Service from occurring for
participation and vesting purposes, an Employee or Participant who is absent
from work due to a maternity/paternity leave of absence will be treated as
having completed the number of hours that normally would have been credited but
for the absence. Such Employee or Participant will be credited with no more
than 501 Hours of Service in either the Plan Year in which the maternity/
paternity leave begins (if the crediting is necessary to prevent a Break in
Service in that Plan Year), or in the following year. For purposes of this
paragraph, an Employee or Participant will be deemed to be on a maternity/
paternity leave of absence if such person is absent from work due to: (a) the
pregnancy of the Employee or the Participant, (b) the birth of a child of the
Employee or the Participant, (c) the placement of a child with the Employee or
the Participant in connection with the adoption of a child, or (d) the
Employee's or the Participant's caring for such child for a period beginning
immediately following such birth or placement.
2.8 CODE OR INTERNAL REVENUE CODE
"Code" or "Internal Revenue Code" means the Internal Revenue Code of
1986, as amended.
3
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2.9 COMPANY
"Company" means United Wisconsin Services, Inc., and Blue Cross & Blue
Shield United of Wisconsin.
2.10 COMPENSATION
"Compensation" means with reference to a Participant for any Plan
Year, a Participant's base pay from an Employer, and any amount (i) deferred to
this Plan or any other 401(k) Plan pursuant to a salary reduction agreement or
(ii) contributed to a cafeteria plan qualified under Section 125 of the Code;
provided, however, that for Plan Years beginning on or after January 1, 1994,
Compensation shall not exceed $150,000 (or such other amount as may be
determined by the Secretary of Treasury in accordance with Section 401(a)(17) of
the Internal Revenue Service to reflect increases in the cost-of-living);
provided, further, that for Plan Years beginning on and after January 1, 1997,
the rules of Code Section 414(q)(6) (relating to aggregation of family members)
shall not apply with respect to the foregoing limitation. Compensation does not
include overtime pay, profit sharing and other bonuses earned by the
Participant, nor does it include any amount received by the Participant as
severance pay.
2.11 COMPENSATION REDUCTION ACCOUNT
"Compensation Reduction Account" means the separate Account of a
Participant consisting of the value attributable to contributions, if any, made
under the Plan by the Employer at any time pursuant to a Compensation Reduction
Agreement signed by the Participant, increased by net gains and decreased by net
losses and distributions therefrom, all in accordance with the provisions of the
Plan.
2.12 COMPENSATION REDUCTION AGREEMENT
"Compensation Reduction Agreement" means the agreement between a
Participant and the Employer whereby the Participant elects to defer a portion
of his Compensation and the Employer agrees to contribute such amount to such
Participant's Compensation Reduction Account on behalf of the Participant in a
manner intended to satisfy the requirements of Section 401(k) of the Code.
2.13 COMPENSATION REDUCTION CONTRIBUTIONS
"Compensation Reduction Contributions" means the pre-tax contributions
made at the Participant's election pursuant to Section 4.2
4
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2.14 DEFERRED RETIREMENT DATE
"Deferred Retirement Date" means the date on which a Participant
actually retires subsequent to the attainment of his Normal Retirement Date.
2.15 EFFECTIVE DATE
"Effective Date" means January 1, 1997.
2.16 EMPLOYEE
"Employee" shall mean a person who is actively employed by the
Employer as an hourly employee who is included in a unit of employees covered
by a collective bargaining agreement under which retirement benefits are the
subject of good faith bargaining and who is receiving remuneration for personal
services rendered to the Employer (or would be receiving such remuneration
except for an Authorized Leave of Absence). The term "Employee" shall not
include a "Leased Employee" as defined in Section 414(n) of the Code, except to
the extent required by law. Notwithstanding anything in this Plan to the
contrary, persons who are classified by an Employer as independent contractors
shall not be considered Employees eligible to participate in the Plan.
2.17 EMPLOYEE CONTRIBUTION ACCOUNT
"Employee Contribution Account" means the separate Account maintained
to hold voluntary contributions made by a Participant to the Plan prior to
January 1, 1988, increased by net gains and decreased by net losses and
distributions therefrom, all in accordance with the provisions of the Plan.
2.18 EMPLOYER
"Employer" means Blue Cross & Blue Shield United of Wisconsin, United
Wisconsin Services, Inc., and any other entity to which participation in the
Plan has been extended.
For purposes of calculating the maximum benefit payable under Sections
4.8, 4.9, and 4.10, determining when a Break in Service or a One-Year Break in
Service has occurred under Section 2.7, determining Years of Service under
Section 2.38, determining a Participant's rights upon an employment transfer
under Section 3.6, and determining whether an Employee has completed the
eligibility service requirement under Section 3.2, the term "Employer" shall, to
the extent required by applicable law, include:
(1) any corporation other than the Company or an Employer, (i.e.,
either a subsidiary corporation of an affiliated or associated corporation of
the Company or an Employer),
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which together with the Company or an Employer is a member of a "controlled
group" of corporations (as defined in Code Section 414(b));
(2) any organization which together with the Company or an Employer is
under "common control" (as defined in Code Section 414(c));
(3) any organization which together with the Company or an Employer is
an "affiliated service group" (as defined in Code Section 414(m)); or
(4) any other entity required to be aggregated with the Company or an
Employer pursuant to regulations under Code Section 414(o).
Notwithstanding the foregoing, the term Employer may, in the
discretion of the Committee, be defined to include an entity described in
paragraphs (1) through (4) above for any purpose under the Plan.
2.19 EMPLOYER MATCHING CONTRIBUTION ACCOUNT
"Employer Matching Contribution Account" means the separate Account of
a Participant consisting of Employer Matching Contributions allocated thereto,
increased by net gains and decreased by net losses and distributions therefrom,
all in accordance with the provisions of the Plan.
2.20 EMPLOYER MATCHING CONTRIBUTIONS
"Employer Matching Contributions" means the Employer Contributions
made pursuant to Section 4.4 based on the Compensation Reduction Contributions
made by a Participant.
2.21 EMPLOYMENT COMMENCEMENT DATE
"Employment Commencement Date" means the date on which an Employee
first performs an Hour of Service for the Employer.
2.22 ERISA
"ERISA" means the Employee Retirement Income Security Act of 1974, as
from time to time amended.
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2.23 FORFEITURE; FORFEITURE ACCOUNT
"Forfeiture" or "Forfeiture Account" means that portion of a
Participant's Employer Matching Contribution Account to which he is not entitled
upon a distribution under the Plan, as more fully described in Section 6.3.
2.24 HIGHLY COMPENSATED EMPLOYEE
A "Highly Compensated Employee" is, effective for Plan Years beginning
on or after January 1, 1997, any Employee who, during the current year or the
preceding year
(i) was a 5% owner (as defined in Code Section 416(i)); or
(ii) received Compensation from the Employer in excess of $80,000 (as
adjusted for cost-of-living by the Secretary of Treasury). Family members
(i.e., Employee's spouse, lineal ascendants or descendants, and the spouse of
such lineal ascendants or descendants) of a Highly Compensated Employee shall be
treated as separate Employees.
2.25 HOUR OF SERVICE
"Hour of Service" shall mean:
(A) Each hour for which an Employee is paid, or entitled to payment,
for the performance of duties for the Employer. These hours shall be credited
to the Employee for the computation period in which the duties are performed;
and
(B) Each hour for which an Employee is paid, or entitled to payment
by the Employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has terminated)
due to vacation, personal day, holiday, illness, incapacity (including
disability), lay-off, jury duty, military duty or leave of absence. Hours under
this paragraph shall be calculated and credited pursuant to Section 2530.200b-2
of the Department of Labor Regulations which are incorporated herein by this
reference; and
(C) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The same Hours of
Service shall not be credited both under paragraphs (A) or (B), as the case may
be, and under this paragraph (C). These hours shall be credited to the Employee
for the computation period or periods to which the award or agreement pertains
rather than the computation period in which the award, agreement or payment is
made.
(D) Each hour for which the Employee is unpaid on account of a period
of time during which no duties are performed due to illness, incapacity
(including disability), layoff,
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military duty or leave of absence. Hours under this paragraph shall be
calculated and credited pursuant to Section 2530.200b-2 of the Department of
Labor Regulations which are incorporated herein by this reference.
(E) Notwithstanding the above, an Hour of Service shall not include
an Hour of Service on account of a period in which the Employee does not perform
any duties, if payment by the Employer on behalf of the Employee is pursuant to
a plan or program maintained solely for the purpose of complying with applicable
workers' compensation, unemployment compensation or disability insurance laws,
or for any payment which is made pursuant to a long-term disability program.
(F) For Hours of Service credited under either paragraphs (B) or (D),
no more than 501 Hours of Service shall be so credited to an Employee on account
of any single continuous period during which the Employee performs no duties
(whether or not such period occurs in a single computation period). In addition,
the same Hours of Service shall not be credited under both paragraphs (B) and
(D).
(G) Hours of Service for Employees under paragraphs (A), (B) and (C)
shall be determined by crediting each Employee with 45 Hours of Service for each
week in which the Employee would have been credited with at least one (1) Hour
of Service under paragraphs (A), (B) and (C). However, for classes of Employees
paid on an hourly basis and for Employees for whom records of hours are
maintained, Hours of Service under paragraphs (A), (B) and (C) shall be
determined on the basis of hours for which Compensation is paid or due.
2.26 INVESTMENT ADVISER
"Investment Adviser" means a person or organization who is acting as
such with respect to the Trust Fund, in accordance with the terms of the Trust
Agreement. An Investment Adviser (other than a bank or insurance company) must
be registered as an Investment Adviser under the Investment Advisers Act of 1940
and must have acknowledged in writing that he is a fiduciary with respect to the
Plan and the Trust.
2.27 LIMITATION YEAR
"Limitation Year" (as defined in Section 2.01 of Revenue Ruling 75-48)
means for purposes of the limitations on contributions as imposed by Section 415
of the Code, the Plan Year.
2.28 NON-HIGHLY COMPENSATED EMPLOYEE
A "Non-Highly Compensated Employees" shall mean any Employee who is
not a Highly Compensated Employee as defined in Section 2.24.
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2.29 NORMAL RETIREMENT AGE
"Normal Retirement Age" means the date on which a Participant attains
age sixty-five (65).
2.30 NORMAL RETIREMENT DATE
"Normal Retirement Date" means the first day of the month coincident
with or next following the date as of which a Participant shall have attained
his Normal Retirement Age.
2.31 PARTICIPANT
"Participant" means an Employee of the Employer who meets the
requirements of Section 3 for eligibility and participation in the Plan,
including a former active Participant who is entitled to benefits hereunder.
2.32 PERMANENT DISABILITY OR PERMANENTLY DISABLED
"Permanent Disability" or "Permanently Disabled", when used with
reference to a Participant, means his physical or mental condition which
persists for at least six continuous months and is such that, in the opinion of
the Employer, he is no longer capable of discharging the responsibilities of his
job assignment with the Employer or the duties of such other position or job
which it makes available to him and for which such Employee is qualified by
reason of his training, education or experience.
2.33 PLAN
"Plan" means the UWSI/BCBSUW Union Employees 401(k) Plan, as amended
from time to time.
2.34 PLAN ADMINISTRATOR
The "Plan Administrator" is the Company. With respect to the Plan, the
Plan Administrator shall have the duties and responsibilities described in
Section 9 hereof.
2.35 PLAN YEAR
"Plan Year" means the annual accounting period designated as such for
purposes of the Plan by the Plan Administrator. The Plan Year commences on
January 1 and terminates on the next following December 31.
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2.36 RE-EMPLOYMENT COMMENCEMENT DATE
"Re-employment Commencement Date" means the date on which an Employee
or a Participant first performs an Hour of Service for the Employer, following
his Severance from Service Date.
2.37 RETIREMENT: RETIRED
"Retirement" or "Retired" means the termination of a Participant's
employment with the Employer, for any reason other than death, on account of his
Permanent Disability or on or after his Normal Retirement Date.
2.38 SERVICE: YEAR OF SERVICE
"Service" and "Year of Service", for purposes of determining vesting
credit, means:
(A) an Employee shall receive credit for one (1) Year of Service for
each full Plan Year of employment,
(B) for the Plan Year in which the Employee is initially employed or
for the Plan Year in which the Employee terminates employment, an Employee shall
receive credit for one (1) Year of Service for the partial Plan Year of
employment if the Employee completes 1,000 or more Hours of Service.
As of each June 30, all employees hired prior to the preceding January
1 shall be credited with 1,000 Hours of Service for vesting purposes. Employees
who terminate prior to June 30 and who actually work 1,000 Hours of Service will
receive credit for a full year of vesting service.
"Service" and "Year of Service", for purposes of determining the
amount of salary reduction contributions that an eligible Participant can make
under Section 4.2 of the Plan, means that an Employee shall receive credit for
one (1) Year of Service for each one-year period beginning on the Employee's
Employment Commencement Date and anniversaries thereof until the Employee's
Severance from Service.
Periods of temporary illness, temporary layoff and Authorized Leaves
of Absences shall not be deemed as breaking employment and shall be counted as
Years of Service.
Notwithstanding the foregoing, if a Participant who is vested in a
portion or all of his Employer Matching Contribution Account incurs a Break in
Service (and subsequently is rehired), any Years of Service attributable to his
prior period of employment shall be reinstated as of his Re-employment
Commencement Date, provided he completes a Year of Service following his Re-
employment Commencement Date.
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A Participant shall not receive more than one (1) Year of Service
credit for any Plan Year irrespective of the number of Employers a Participant
is employed by during such Plan Year.
If a Participant who is not vested in his Employer Matching
Contribution Account incurs a Break in Service (and subsequently is rehired),
any Years of Service attributable to his prior period of employment shall be
restored as of his Re-employment Commencement Date only if the number of
consecutive one (1) Year Breaks in Service is less than five (5) and the
Participant completes a Year of Service following his Re-employment Commencement
Date.
2.39 SEVERANCE FROM SERVICE DATE
"Severance from Service Date" means the date on which a Participant
resigns, retires, is discharged or dies. The Severance from Service Date is
significant in determining continuity of employment in the determination of a
Break in Service and in the determination of a Participant's vested interest in
his Employer Matching Contribution Account.
2.40 TRUST
"Trust" means effective July 1, 1996, the UWSI/BCBSUW Defined
Contribution Plans Master Trust maintained in accordance with the terms of the
Trust Agreement as from time to time amended, with constitutes part of this
Plan.
2.41 TRUST AGREEMENT
The term "Trust Agreement" means that certain Trust Agreement made
effective as of such date by and between United Wisconsin Services, Inc., Blue
Cross Blue Shield United of Wisconsin and American Express Trust Company under
which the Employer is the settlor and American Express Trust Company is the
Trustee and any successor to such Trust Agreement.
2.42 TRUST FUND
"Trust Fund" means, at time of reference, the assets of the Trust. The
term "Trust Fund" shall also mean, at time of reference, the assets or funds
held under a custodial account pursuant to an agreement between United Wisconsin
Services, Inc., Blue Cross & Blue Shield United of Wisconsin and an authorized
custodian.
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2.43 TRUSTEES
"Trustees" means the fiduciaries designated as such in the Trust
Agreement, including all "Successor Trustees" at any time acting thereunder. If
the Plan's assets are held in a custodial account pursuant to a custodial
agreement, the term "Trustees" will be deemed to include any custodian named in
such agreement.
2.44 VALUATION DATE
"Valuation Date" means any day that the New York Stock Exchange is
open for business or any other date mutually agreed upon in writing by the
Administrative Committee and the Trustee.
2.45 CONSTRUCTION
Within this Plan document, as the same may be amended from time to
time, the masculine pronoun shall be deemed to include the feminine and neuter,
and the singular shall be deemed to include the plural whenever the context
requires. The words "terminate," "terminated," "termination of employment,"
"retire," "retired," or "retirement" shall be interpreted to mean the
termination of employment or retirement of the Participant from employment with
all Employers.
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SECTION 3 - ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBLE EMPLOYEES
The Plan is applicable only to Employees of the Employer. Accordingly,
only eligible Employees who become Participants under the Plan shall have
benefits accrued hereunder.
3.2 PARTICIPATION
(A) Any Employee who was a Participant pursuant to the terms of the
Plan in effect on December 31, 1996 and who is actively employed by the Employer
on January 1, 1997 shall continue as a Participant in the Plan on January 1,
1997.
(B) With respect to any Employee who has not satisfied the
participation requirements under (A) on or after January 1, 1997, each such
Employee shall become a Participant in the Plan on the January 1, April 1, July
1, or October 1 coincident with or next following his completion of twelve (12)
consecutive months of service in which he works 1,000 Hours of Service. In the
event an Employee fails to complete 1,000 Hours of Service, during his initial
twelve (12) month period of employment, he shall become a Participant on the
January 1 next following his completion of 1,000 Hours of Service during the
Plan Year which contains the first anniversary (or succeeding anniversaries) of
his Employment Commencement Date (or Re-employment Commencement Date).
3.3 PARTICIPATION FOLLOWING A BREAK IN SERVICE
Any Participant who incurs a Break in Service (due to termination of
employment or otherwise) on and after the Effective Date (or any Participant who
had terminated his employment and subsequently returned to active employment
before incurring a Break in Service) shall be subject to the following rules for
determining his participation in the Plan:
(A) If the Participant is rehired before he has a Break in Service, he
shall again participate in the Plan as of his Re-employment Commencement Date.
(B) If a Participant incurs a Break in Service and following that
Break in Service again completes a twelve (12) consecutive month period of
employment during which he works 1,000 Hours of Service, he shall again be
eligible to participate in the Plan on the date set forth in Section 3.2 as if
he were a new employee as of his Re-employment Commencement Date.
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3.4 EVIDENCE OF PARTICIPATION
Upon completion of the requisite service requirements, the otherwise
eligible Employee shall become a Participant. The Plan Administrator shall
notify the Employee that he is eligible to be a Participant in the Plan, and the
effective date thereof. The Plan Administrator shall also furnish the
Participant with the forms and materials necessary in order for the Participant
to elect to have contributions made to his Compensation Reduction Account and to
designate a Beneficiary (or Beneficiaries) to whom distribution of his values in
the Plan should be made in the event of his death prior to the full receipt of
his interest in the Trust.
3.5 DURATION OF PARTICIPATION
An Employee who becomes a Participant shall continue to be a
Participant until he terminates employment. If a Participant has a one (1) Year
Break in Service before he is entitled to receive (then or thereafter) a benefit
hereunder, he thereupon shall cease to be a Participant, and shall so remain
unless he again becomes a Participant as specified in Section 3 3.
3.6 RIGHTS UPON TRANSFER
(A) TRANSFERS TO NON-COVERED JOB CLASSIFICATION: If a Participant is
transferred to a job classification with the Employer whereby he is no longer
eligible to be covered under the Plan (as set forth in Section 3.1), such
Participant shall cease active participation in the Plan and, except to the
extent provided in Section 5.2, no further contributions will be made on his
behalf under this Plan from and after the effective date of the transfer. As
soon as administratively feasible after the date the Participant transfers to a
new job classification, the balance of such Participant's Accounts will be
transferred to a qualified plan maintained by the Employer for employees in the
job classification that renders them ineligible for coverage under this Plan.
Such Participant shall continue to vest in the transferred Accounts balance at
least as rapidly as such Participant vested under this Plan.
(B) TRANSFERS TO COVERED JOB CLASSIFICATION: If an Employee is
transferred to a job classification whereby he is eligible to be covered under
the Plan (as set forth in Section 3.1), such Employee shall become a Participant
as of the later of his date of transfer or the date he satisfies the
requirements of Section 3.2. Such transferred Employee shall be credited with
Service for vesting purposes for any employment with the Employer before the
date of transfer, and shall continue to vest in any transferred account balance
at least as rapidly as such Employee vested under such other plan.
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SECTION 4 - CONTRIBUTIONS
4.1 NO CONTRIBUTIONS BY PARTICIPANTS
Voluntary after-tax contributions under the Plan shall not be required
or permitted of any Participant on or after January 1, 1988. However, an
Employee Contribution Account shall be maintained for Participants who made
voluntary after-tax contributions to the Plan prior to January 1, 1988.
4.2 COMPENSATION REDUCTION CONTRIBUTIONS
A Participant shall be eligible to have contributions made to his
Compensation Reduction Account as of the date on which he becomes a Participant
under Section 3.2. In order to have the Employer make a Compensation Reduction
Contribution on his behalf, a Participant must elect to make such contributions
by payroll deduction, or otherwise, to his Compensation Reduction Account.
Contributions to a Participant's Compensation Reduction Account shall at all
times be nonforfeitable and 100% vested.
Each eligible Participant may elect to have the Employer contribute a
percentage of his Compensation to his Compensation Reduction Account in
accordance with the following schedule:
Percent of Compensation
Years of Service that may be Deferred
---------------- --------------------
1 but less than 2 1%
2 but less than 3 1% or 2%
3 but less than 4 1%, 2%, or 3%
4 but less than 5 1%, 2%, 3% or 4%
5 or more 1%, 2%, 3%, 4%, 5%,
6%, 7%, 8%, 9%, 10%,
11%, 12%, or 12-1/2%
However, in the event the Administrative Committee determines that the
Actual Deferral Percentage Tests in Section 4.3(C) will not be passed, the
percentage of monthly compensation elected by a Highly Compensated Employee to
be contributed to his Compensation Reduction Account may be reduced to a level
necessary to pass the Actual Deferral Percentage tests. No Participant shall be
permitted to contribute during any calendar year more than $7,000 (as adjusted
for cost-of-living in accordance with Code Section 402(g)(5)) to his
Compensation Reduction Account.
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4.3 PERMITTED RANGE OF COMPENSATION REDUCTION CONTRIBUTIONS
The permitted range of Compensation Reduction Contributions with
respect to any year shall be determined on the basis of a Participant's total
Compensation (as defined in Section 2.10) for services rendered to the Employer
during the Plan Year. The Employer shall divide its respective Participants into
two groups - - Highly Compensated Employees and Non-Highly Compensated
Employees, respectively, as discussed herein following:
(A) HIGHLY COMPENSATED EMPLOYEES: Subject to Section 4.2, each
Participant who is a Highly Compensated Employee (as defined in Section 2.24)
may have the Employer make Compensation Reduction Account contributions on his
behalf under the Plan based on his projected annual earnings from the Employer;
provided, however, that the average Actual Deferral Percentage (as defined in
subsection (C)) for Participants who are Highly Compensated Employees, when
compared to the average Actual Deferral Percentage for all Participants who are
Non-Highly Compensated Employees must meet either of the two tests set forth in
subsection (C) below.
(B) NON-HIGHLY COMPENSATED EMPLOYEES: Subject to Section 4.2, each
Participant who is a "Non-Highly Compensated Employee" (as defined in Section
2.28), may have the Employer make Compensation Reduction Account contributions
on his behalf under the Plan based on his projected annual earnings from the
Employer.
(C) ACTUAL DEFERRAL PERCENTAGE TESTS: Effective for Plan Years
beginning on or after January 1, 1987:
(1) The average Actual Deferral Percentage for all Participants
who are Highly Compensated Employees for the Plan Year shall not
exceed the average Actual Deferral Percentage for Participants who are
Non-Highly Compensated Employees for the Plan Year multiplied by 1.25,
or
(2) The average Actual Deferral Percentage for Participants who
are Highly Compensated Employees for the Plan Year shall not exceed
the average Actual Deferral Percentage for Participants who are Non-
Highly Compensated Employees for the Plan Year multiplied by two (2),
provided that the average Actual Deferral Percentage for Participants
who are Highly Compensated Employees does not exceed the average
Actual Deferral Percentage for Participants who are Non-Highly
Compensated Employees by more than two (2) percentage points (or such
lesser amount as the Secretary of Treasury may prescribe).
(3) For purposes of Paragraphs (1) and (2) above, the term
"Actual Deferral Percentage" means, with regard to Participants who,
for any Plan Year, are either considered to be Highly Compensated
Employees or Non-Highly Compensated Employees the ratio (calculated
separately for each Participant in such group) of the
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amount of Compensation Reduction Account contributions actually paid
to the Trust on behalf of each Participant for such Plan Year to the
Participant's W-2 earnings (plus any deferrals made pursuant to Code
Sections 125 and 401(k)) for such Plan Year.
(D) EXCESS COMPENSATION REDUCTION CONTRIBUTIONS: If neither of the
requirements of subsection (C) is satisfied, then the Compensation Reduction
Contributions with respect to Highly Compensated Employees shall be reduced, to
the extent necessary to meet the requirements of subsection (C)(1) or (C)(2),
whichever is met first. The contributions of Highly Compensated Employees
representing the highest total dollar amounts contributed shall be first reduced
in order to achieve the requirements of subsection (C)(1) or (C)(2). If
Compensation Reduction Contributions with respect to a Highly Compensated
Employee are reduced, the excess Compensation Reduction Contributions shall be
distributed, subject to the following:
(1) For purposes of this subsection, excess Compensation
Reduction Contributions shall mean the amount by which Compensation
Reduction Contributions for Highly Compensated Employees have been
reduced under this subsection.
(2) Excess Compensation Reduction Contributions (adjusted for
income or losses allocable thereto as specified in paragraph (3), if
any) shall be distributed to Participants on whose behalf such excess
contributions were made for the Plan Year no later than the last day
of the following Plan Year. Furthermore, the Employer shall attempt to
distribute such amount by the fifteenth day of the third month
following the Plan Year for which the excess contributions were made
to avoid the imposition of an excise tax under Code Section 4979.
(3) Income or losses allocable to excess Compensation Reduction
Contributions shall be determined using the following methods:
(a) Income or losses allocable to excess Compensation
Reduction Contributions for the Plan Year shall be determined by
multiplying the amount of income or loss for the Plan Year which
is allocable to Compensation Reduction Contributions by a
fraction. The numerator of the fraction is the Participant's
excess Compensation Reduction Contributions for the Plan Year.
The denominator of the fraction is the total balance in the
Participant's Accounts attributable to Compensation Reduction
Contributions on the last day of the Plan Year, reduced by any
income (and increased by any losses) allocable to such total
amount for the Plan Year.
(b) Income or losses allocable to excess Compensation
Reduction Contributions for the Plan Year following the Plan Year
for which
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the excess was contributed shall be equal to 10% of the
amount of income determined above, multiplied by the number of
calendar months that have elapsed in such subsequent Plan Year
prior to the distribution. In determining the number of calendar
months which have elapsed, any distribution made on or before the
fifteenth day of any month shall be treated as having been made
on the last day of the preceding month, and any distribution made
after the fifteenth day of any month shall be treated as having
been made on the first day of the next month.
4.4 EMPLOYER MATCHING CONTRIBUTIONS
(A) AMOUNT OF EMPLOYER MATCHING CONTRIBUTIONS: The Employer shall
make a matching contribution to the Trust which, when combined with amounts in
suspense accounts under Section 4.9 and Forfeitures under Section 6.3
attributable to matching contributions, shall equal a specified percentage of
each Participant's Compensation that is deferred pursuant to a Compensation
Reduction Agreement. The amount of the matching contribution shall be equal to
50% of the amount of Compensation Reduction Contributions (excluding
Compensation Reduction Contributions in excess of 5% of a Participant's
Compensation) made on behalf of a Participant by the Employer for the Plan Year.
(B) NONDISCRIMINATION TESTS: Notwithstanding the foregoing, effective
for Plan Years beginning on and after January 1, 1987, the average Contribution
Percentage for all Participants who are Highly Compensated Employees, when
compared to the average Compensation Percentage for all Participants who are
Non-Highly Compensated Employees must meet either of the following two tests:
1) The average Contribution Percentage for Participants who are
Highly Compensated Employees for the Plan Year shall not exceed the
average Contribution Percentage for Participants who are Non-Highly
Compensated Employees for the Plan Year multiplied by 1.25, or
(2) The average Contribution Percentage for Participants who are
Highly Compensated Employees for the Plan Year shall not exceed the
average Contribution Percentage for Participants who are Non-Highly
Compensated Employees for the Plan Year multiplied by two (2),
provided that the average Contribution Percentage for Participants who
are Highly Compensated Employees does not exceed the average
Contribution Percentage of Participants who are Non-Highly Compensated
Employees by more than two (2) percentage points (or such lesser
amount as the Secretary of Treasury shall prescribe).
For purposes of the preceding two tests, the term "Contribution
Percentages" shall mean the ratio (expressed as a percentage) of the sum of all
Employer Matching
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Contributions under the Plan on behalf of a Participant for the Plan Year, to
such Participant's W-2 earnings, adjusted for salary reduction contributions,
for the Plan Year.
(C) Excess Employer Matching Contributions: If neither of the
requirements of subsection (B) is satisfied, then the Employer Matching
Contributions with respect to Highly Compensated Employees shall be reduced, to
the extent necessary to meet the requirements of paragraph (B)(1) or (B)(2),
whichever is met first. The contributions to the accounts of Highly Compensated
Employees representing the highest total dollar amounts contributed will be
first reduced in order to achieve the requirements of paragraph (B)(1) or
(B)(2). The adjustments shall be made by distributing the Participant's
Employer Matching Contributions (adjusted for income or losses attributable to
such contributions) as provided in this subsection.
(1) For purposes of this subsection, "Excess Employer Matching
Contributions" shall mean the amount by which Employer Matching
Contributions must be reduced under the first paragraph of this
subsection.
(2) Excess Employer Matching Contributions (adjusted for income
or losses allocable thereto) shall be forfeited (if otherwise
forfeitable under the provisions of Section 6.2 if the Participant
were to terminate employment) on the last day of the Plan Year for
which the contributions were made, and shall be used, along with all
other Forfeitures arising in that Plan Year, to reduce Employer
Matching Contributions in accordance with Section 6.3. Excess Employer
Matching Contributions which are non-forfeitable (adjusted for income
or losses allocable thereto) shall be distributed to Participants on
whose behalf such excess contributions were made for the Plan Year no
later than the last day of the following Plan Year. Furthermore, the
Employer shall attempt to distribute such amount by the fifteenth day
of the third month following the Plan Year for which the excess
contributions were made to avoid the imposition on the Employer of an
excise tax under Code Section 4979.
(3) Income or losses allocable to excess contributions shall be
determined in the same manner specified for excess Compensation
Reduction Contributions under Section 4.3(D)(3).
4.5 ORDER OF APPLICATION OF LIMITATIONS OF SECTIONS 4.3 & 4.4
Any reductions required in Participant contributions or Employer
Matching Contributions because of the multiple use of the limits in Section
4.3(C)(2) and 4.4(B)(2) shall be governed by Code Section 401(m)(6).
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4.6 RIGHT TO CHANGE, DISCONTINUE OR SUSPEND COMPENSATION REDUCTION
CONTRIBUTIONS
A Participant may elect to increase or decrease the rate of the
contribution to his Compensation Reduction Account; such newly changed rate
shall be effective until changed by the Participant. A Participant may also
elect to have the Employer suspend making contributions to his Compensation
Reduction Account under the Plan altogether. Such changes shall be made by
telephonic or other electronic means and shall be effected as soon as
administratively feasible.
4.7 ROLLOVER CONTRIBUTIONS
Each Participant, and each other Employee who is not a Participant,
may apply in writing to the Employer (on the form provided for that purpose) to
make a Rollover Contribution to the Plan. The Employer will approve any such
requests which comply with the applicable requirements of the Code. Upon
approval by the Employer, the Rollover Contribution shall be deposited to the
Trust Fund and credited to such Participant's Rollover Account.
4.8 GENERAL LIMITATION ON ANNUAL ADDITIONS
In no event shall the total Annual Addition for any Participant for
any Plan Year exceed the lesser of:
(A) $30,000 (or such other amount as adjusted for the cost-of-
living in accordance with Section 415(d) of the Code), or
(B) Twenty-five percent (25%) of such Participant's total
Compensation which is included in gross income for the Plan Year, plus
on or after January 1, 1998, any amounts contributed by the Employer
pursuant to a salary reduction agreement and which is not included in
the Participant's gross income under Code Sections 125 or 402(a)(8).
4.9 SPECIAL LIMITATION ON ANNUAL ADDITIONS
Prior to January 1, 2000, if the Participant is, or was, covered under
a defined benefit plan and a defined contribution plan maintained by the
Employer, the sum of the Participant's defined benefit plan fraction and defined
contribution plan fraction may not exceed 1.0 in any Plan Year.
The defined benefit plan fraction is a fraction, the numerator of
which is the sum of the Participant's projected annual benefits under all
defined benefit plans (whether or not terminated) maintained by the Employer,
and the denominator of which is the lesser of (i)
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1.25 times the dollar limitation of Section 415(b)(1)(A) of the Code in
effect for the Plan Year, or (ii) 1.4 times the Participant's average
Compensation for the three consecutive years that produces the highest
average.
The defined contribution plan fraction is a fraction, the numerator of
which is the sum of the Annual Additions to the Participant's Accounts under all
defined contribution plans maintained by the Employer (whether or not
terminated) for the current and all prior Plan Years, and the denominator of
which is the sum of the lesser of the following amounts determined for such Plan
Year end for each prior Year of Service with the Employer: (i) 1.25 times the
dollar limitation in effect under Section 415 (c)(1)(A) of the Code for each
such Plan Year (as modified by Code Section 416(h) to the extent applicable if
the Plan is Top Heavy), or (ii) 1.4 times the amount which may be taken into
account under Section 415 (c)(1)(B) of the Code.
Projected annual benefit means the annual benefit to which the
Participant would be entitled under the terms of the Plan, if the Participant
continued employment until his Normal Retirement Age (or current age, if later)
and the Participant's Compensation for the Plan Year and all other relevant
factors used to determine such benefit remained constant until Normal Retirement
Age (or current age, if later).
4.10 DISPOSITION OF EXCESS ANNUAL ADDITIONS
If the total Annual Additions for any Participant for any Plan Year
would otherwise exceed the maximum Annual Addition permitted under Sections 4.8
and 4.9, the excess amount will be disposed of as follows:
(A) First, by returning to such Participant, to the extent necessary,
any Compensation Reduction Contributions made on his behalf, with investment
gains attributable to such Compensation Reduction Contributions, to the extent
provided by current law and regulations;
(B) Second, any Excess Employer Matching Contributions are to be used
to (i) reduce Employer Matching Contributions for other eligible Participants,
or (ii) if needed, restore previously forfeited Employer Matching Contributions.
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SECTION 5 - ACCOUNTING
5.1 INDIVIDUAL ACCOUNTS OF PARTICIPANTS
The Employer shall establish and maintain for each Participant two (2)
separate Accounts, to be called, respectively, the Compensation Reduction
Account and the Employer Matching Contribution Account; each such Account shall
be credited or debited to the extent required by this Section 5. In addition,
where applicable, the Employer shall establish and maintain a Rollover Account,
as may be required under Section 4.7 and an Employee Contribution Account (if
applicable) in accordance with Section 4.1. The Employer shall maintain adequate
records to reflect the interest of each Participant or Beneficiary in the Trust,
and shall disclose such information at least once annually. All entries to such
individual Accounts shall be conclusive and binding upon all parties, except
that both arithmetical errors and errors resulting from mistakes in procedure
may be corrected by the Employer at any time.
5.2 CREDITING OF EMPLOYER CONTRIBUTIONS AND FORFEITURES
(A) MATCHING CONTRIBUTIONS: Employer Matching Contributions shall be
credited each payroll period to each Participant equal to 50% of the
Participant's Compensation Reduction Contributions (excluding Compensation
Reduction Contributions in excess of 5% of the Participant's Compensation)
during such payroll period.
(B) COMPENSATION REDUCTION CONTRIBUTIONS: The Employer shall allocate
any Compensation Reduction Contribution to the Compensation Reduction Account of
any Participant who had a Compensation Reduction Contribution made on his behalf
on the date such funds are deposited in the Trust Fund.
(C) FORFEITURES: Forfeitures (as described in Section 6.3) shall be
used as soon as feasible to reduce subsequent Employer Matching Contributions.
5.3 DEBITING OF DISTRIBUTIONS
The amounts, if any, distributed or paid to or on behalf of a
Participant hereunder at any time shall, concurrent with such payment, be
debited against his Accounts, as applicable.
5.4 SEPARATE INVESTMENT FUNDS
(A) ADMINISTRATOR MAY ESTABLISH SEPARATE FUNDS: The Plan Administrator
may direct the Trustee to invest in one or more separate investment funds,
having different specific investment objectives as the Plan Administrator shall
from time to time determine. The Plan Administrator shall determine and may from
time to time redetermine the number of
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investment funds and the specific objectives of said funds and the
investments or kinds of investment which shall be authorized therefor. From
time to time the Plan Administrator may add or delete funds without amending
the Plan. Participants will be informed as to the various investment options
available.
(B) PARTICIPANT DIRECTION PERMITTED: Each Participant has the right to
instruct the Plan Administrator to direct the Trustee to invest his Accounts in
one or more separate investment funds as established above.
(C) ADMINISTRATOR TO ESTABLISH RULES: The Plan Administrator may at
any time make such uniform and nondiscriminatory rules as it determines are
necessary regarding the administration of this directed investment option. The
Plan Administrator shall develop and maintain rules governing the rights of
Participants to change their investment directions and the frequency with which
such changes can be made.
(D) INVESTMENT ADVISERS: The Plan Administrator may, from time to
time, retain the services of one or more persons or firms designated as
Investment Adviser for the management of (including the power to acquire and
dispose of) all or any part of the Trust, provided that each of such persons or
firms (a) is registered as an investment advisor under the Investment Advisers
Act of 1940, (b) is a bank (as defined in that Act), or an insurance company
qualified to perform manage, acquire, or dispose of trust assets under the laws
of more than one State of the United States. Each such Investment Adviser shall
acknowledge in writing that it is a fiduciary with respect to the assets of the
Trust under its authority and management.
The Plan Administrator has the authority to direct the Trustee to
investment all or a portion of the Trust Fund through any common or collective
trust fund or pooled investment fund, including collective investment funds
maintained by the Trustee, or its successor, for the collective investment of
funds held by it in a fiduciary capacity.
5.5 VALUATION OF ACCOUNTS
As of each Valuation Date, all assets of the Trust Fund shall be
valued, net gains or losses shall be allocated, and additions to and withdrawals
from Account balances shall be processed in the following manner:
(A) The fair market value of securities and/or the other assets
comprising each investment fund designated by the Committee for direction of
investment by the participants of this Plan shall be computed. Each Account
balance shall be adjusted each Valuation Date by applying the closing market
price of the investment fund on the current Valuation Date to the share/unit
balance of the investment fund as of the close of business on the current
Valuation Date.
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(B) Any requests for additions or withdrawals made to or from a
specific designated investment fund by any Participant, including allocations of
contributions and forfeitures shall then be accounted for. In completing the
valuation procedure described above, such adjustments in the amounts credited
to such accounts shall be made on the Valuation Date to which the investment
activity relates. Contributions received by the Trustee pursuant to this Plan
shall not be taken into account until the Valuation Date coinciding with or next
following the date such contribution was both actually paid to the Trustee and
allocated among the accounts of Participants.
(C) Notwithstanding paragraphs A and B above, in the event a pooled
investment fund is created as a designated fund for Participant investment
election in this Plan, valuation of the pooled investment fund and allocation of
earnings of the pooled investment fund shall be governed by the administrative
services agreement of such pooled investment fund. The provisions of any such
administrative services agreement shall be deemed a part of this Plan.
(D) It is intended that this Section operate to distribute among each
Participant Account in the Trust Fund, all income of the Trust Fund and changes
in the value of the assets of the Trust Fund.
5.6 RETURN OF EMPLOYER CONTRIBUTIONS
If an amount is contributed by the Employer due to a mistake of fact,
the Employer shall be entitled to recover such amount within one (1) year of the
date such contribution is made. If an amount is contributed by the Employer
which is disallowed as a deduction under Code Section 404, the Employer shall be
entitled to recover such amount within one (1) year of the date such deduction
is disallowed. Trust income attributable to the amount to be recovered shall not
be paid to the Employer, but Trust loss attributable thereto shall reduce such
amount.
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SECTION 6 - DISTRIBUTIONS
6.1 DISTRIBUTIONS UPON RETIREMENT, DEATH OR DISABILITY
If a Participant's Severance from Service Date occurs because of the
Participant's retirement, death or Permanent Disability, such Participant (or
his Beneficiary) shall be entitled to receive a distribution of 100% of his
Employer Matching Contribution Account, Compensation Reduction Account, Employee
Contribution Account (if any) and Rollover Account as soon as feasible following
his Severance from Service Date, provided such Participant complies with such
administrative procedures for distribution as are authorized by the
Administrative Committee. The balance of a Participant's Accounts upon
distribution shall be based on the value of such Accounts as of the Valuation
Date on which the administrative procedures authorized by the Committee for
distribution are completed.
6.2 DISTRIBUTIONS UPON TERMINATION OF EMPLOYMENT
If a Participant's Severance from Service Date occurs because of the
Participant's resignation or dismissal, such Participant shall be entitled to
receive a distribution of 100% of the balance of his Compensation Reduction
Account, Employee Contribution Account (if any) and Rollover Account (if any),
plus the vested percentage of his Employer Matching Contribution Account and
Transfer Account (if any) as soon as feasible following his Severance from
Service Date, provided such Participant complies with such administrative
procedures for distribution as are authorized by the Administrative Committee.
The balance of a Participant's Accounts upon distribution shall be based on the
value of such Accounts as of the Valuation Date on which the administrative
procedures authorized by the Committee for distribution are completed. The
vested percentage of his Employer Matching Contribution Account shall be
determined in accordance with the following schedule:
YEARS OF SERVICE COMPLETED
AT SEVERANCE FROM SERVICE DATE NONFORFEITABLE PERCENTAGE
------------------------------ -------------------------
Less than 1 Year 0%
1 but Less than 2 Years 20%
2 but Less than 3 Years 35%
3 but Less than 4 Years 50%
4 but Less than 5 Years 65%
5 but less than 6 Years 80%
6 Years or More 100%
Notwithstanding the above schedule, a Participant will be 100% vested in his
Employer Matching Contribution Account upon the attainment of his Normal
Retirement Age.
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6.3 FORFEITURES
That portion of the Employer Matching Contribution Account to which
the Participant is not entitled at his Severance from Service Date shall be
credited to his Forfeiture Account, established and maintained by the Employer
in the terminated Participant's name.
If the Participant does not return to employment as of the last day of
the calendar quarter in which his Severance from Service Date occurs, then the
credit balance to such Forfeiture Account shall, subject to the provisions of
Section 6.2 hereof, be a Forfeiture and shall, together with all other
applicable Forfeitures occurring during the same calendar quarter, be used to
reduce Employer Matching Contributions for the calendar quarter in which the
Forfeiture occurs, or in any subsequent calendar quarter.
If the Participant returns to the employment of the Employer prior to
incurring five (5) consecutive One Year Breaks in Service, any Forfeitures of
such Participant's Employer Matching Contribution Account which have been
previously forfeited shall be restored to the Participant's Employer Matching
Contribution Account effective as of the date the Participant repays the entire
amount of the distribution he received from his Employer Matching Contribution
Account under Section 6.2 upon his previous termination of employment. Such
repayment shall be made within the five (5) year period following the date of
the distribution and shall constitute the beginning balance in his new Employer
Matching Contribution Account.
If the Participant returns to employment with the Employer before the
end of the calendar quarter in which his Severance from Service Date occurs,
then the credit balance to such Forfeiture Account shall be transferred back to
his reconstituted Employer Matching Contribution Account.
6.4 METHOD OF DISTRIBUTION
(A) If a Participant is entitled to receive a distribution upon his
retirement, Permanent Disability or termination of employment, such distribution
shall be paid under one of the following forms:
(a) Lump sum distribution, or
(b) Equal installments to be paid over a period not exceeding the
lesser of fifteen (15) years and the life expectancy of the
Participant, or the joint life expectancy of the Participant and his
designated Beneficiary.
(c) Equal installments for a period not exceeding the life
expectancy of the Participant or the joint life expectancy of the
Participant and his designated beneficiary
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(B) If a Participant dies prior to receiving the balance in his
Accounts, and he is not married at the time of death, the remaining balance in
his Accounts will be distributed in a lump sum to his designated beneficiary. If
a Participant is married at the time of his death, his remaining balance in his
Accounts shall be paid to his surviving spouse, unless the spouse consents in
writing in accordance with Section 7.1 to the designation of another
Beneficiary.
6.5 RESPONSIBILITIES AND DUTIES RELATIVE TO CURRENT RECORDS
Each Participant, and each Beneficiary of a deceased Participant shall
file with the Employer from time to time, in writing, his post office address
and each change of post office address. Any communication, statement or notice
addressed to such person at his last post office address filed with the
Employer, or if no such address was filed, then at his last post office address
as otherwise shown in the Employer's records, if any, shall be binding on such
person for all purposes of the Plan, and neither the Employer nor the Trustee
shall be obliged to search for or ascertain the whereabouts or identity of any
Participant or Beneficiary.
6.6 MANNER OF DISPOSING UNCLAIMED DISTRIBUTABLE INTEREST
If all or any part of the interest of any Participant or Beneficiary
becomes distributable hereunder and the Plan Administrator, after a reasonable
search, cannot locate the Participant or his Beneficiary, if such Beneficiary is
entitled to payment, the vested Account balance shall be forfeited and
reallocated in accordance with Section 6.3 as of the day the Participant
incurred a Break in Service, or such later date as the Plan Administrator may
decide. If the Participant or his Beneficiary subsequently presents a valid
claim for benefits to the Plan Administrator, the Plan Administrator shall cause
the vested Account balance, equal to the amount which was forfeited under this
Section, to be restored.
6.7 TIME OF DISTRIBUTIONS
Notwithstanding any provision of the Plan to the contrary, the
following provisions of this Section shall be applicable with respect to the
payments of benefits to any Participant or Beneficiary:
(A) DISTRIBUTION PRIOR TO PARTICIPANT'S DEATH: Unless a Participant
elects otherwise, in no event shall payments commence later than 60 days
following the end of the Plan Year in which (i) the Participant reaches age 65,
(ii) the Participant terminates employment, or (iii) the Participant attains the
tenth (10th) anniversary of the date on which he commenced participation in the
Plan, whichever is later. In the case of a Participant who terminates employment
due to resignation or dismissal, the Participant may request payment of his
benefit at an earlier date. Notwithstanding the above, the entire vested
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balance of a Participant's Accounts must not be distributed later than the
date set forth in paragraph (1) or paragraph (2) below, namely:
(1) DISTRIBUTION IN A SINGLE SUM: Distribution of a Participant's
Accounts in a single sum must be effected no later than April 1 of the
calendar year immediately following the later of: the calendar year in
which the Participant attains age 70-1/2, or the calendar year in
which the Participant retires from active service with the Employer.
Notwithstanding the preceding sentence, any Participant who attains
age 70-1/2 and was a 5% owner at any time during the Plan Year ending
with or within the calendar year in which such Participant attained
age 70-1/2 or any subsequent Plan Year must receive a distribution of
his Accounts no later than April 1 of the calendar year following the
calendar year in which the Participant attains age 70-1/2.
(2) DISTRIBUTION BY PERIODIC PAYMENTS:
(a) If distribution is by periodic payments (by which term,
for purposes of this Section, is meant distribution in any form
other than a single sum, as described in paragraph (1) above)
then, distribution of the Participant's vested Accounts under the
Plan must commence not later than April 1 of the calendar year
immediately following the later of: the calendar year in which
the Participant attains age 70-1/2 or the calendar year in which
the Participant retires from active service with the Employer,
and must be spread over a period not greater than any of the
following, namely: (i) the remaining lifetime of the Participant;
or (ii) the remaining lifetime of the Participant and a
designated Beneficiary or contingent annuitant; or (iii) a period
not extending beyond the life expectancy of the Participant, as
determined by such life expectancy tables under Regulations; to
Section 72 of the Code; or (iv) a period not extending beyond the
life expectancy of the Participant and a designated Beneficiary
or contingent annuitant, as determined by such life expectancy
tables, as aforesaid.
(b) If distribution shall be in accordance with clause (iii)
of the immediately preceding sentence of this paragraph (2),
then, in accordance with applicable governmental regulations, the
remaining life expectancy of the Participant -- and, if
applicable, his spousal Beneficiary -- may be redetermined each
year, and the amount of periodic payments so distributed may be
annually adjusted accordingly.
(c) Notwithstanding the preceding, any Participant who
attains age 70-1/2 and was a 5% Owner at any time during the Plan
Year ending with or within the calendar year in which such
Participant attained age 70-1/2, or any subsequent Plan Year,
must begin to receive a distribution of his Accounts
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no later than April 1 of the calendar year following the calendar
year in which the Participant attains age 70-1/2.
(d) Any Participant who is not a 5% owner, and attained age
70-1/2 prior to January 1, 1997, and who was required (or would
have been required) to commence distributions under the rules in
effect prior to January 1, 1997, may make an election (at such
time or in such form as may be prescribed by the Plan
Administrator) to suspend such distributions until the date of
the Participant's actual retirement.
(B) DISTRIBUTIONS AFTER PARTICIPANT'S DEATH: In the event of the
Participant's death, his entire or remaining interest under the Plan must be
distributed in accordance with either paragraph (1) or paragraph (2) below,
namely:
(1) DEATH AFTER COMMENCEMENT OF BENEFITS: If the Participant
shall die after commencement of his benefit payments under the Plan,
the remaining values must be distributed at least as rapidly as under
the method of distribution selected under paragraph (2) of subsection
(A) above in this Section.
(2) DEATH PRIOR TO COMMENCEMENT OF BENEFITS: If a Participant
shall die after retirement under the Plan but prior to the
commencement of benefit payments on that account hereunder, then, in
such event, the entire interest of the Participant must be distributed
within the 5-year period measured from the date of the Participant's
death; provided, however, that such "5 Year Rule" shall NOT be
applicable in the following instances described in subparagraph (a) or
subparagraph (b), below:
(a) The "5 Year Rule" described above shall not apply if the
following three conditions are met at the date of death of the
Participant, namely: (i) if any portion of the Participant's
interest under the Plan is payable to, or for the benefit of, a
designated Beneficiary; and (ii) the portion of the Participant's
interest to which the Beneficiary is entitled will be distributed
over the remaining lifetime of the Beneficiary (or over a period
not extending beyond the remaining life expectancy of such
Beneficiary); and (iii) the distributions commence no later than
one year after the date of the Participant's death (or such later
date which the Secretary of the U.S. Treasury Department may,
under pertinent regulations, prescribe);
(b) The 5 Year Rules described above shall not apply if the
following two conditions are met at the date of death of the
Participant, namely: (i) the portion of the Participant's
interest to which the surviving spouse is entitled will be
distributed over the remaining lifetime of the surviving spouse
(or over a period not extending beyond the life expectancy of the
surviving spouse);
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and (ii) the distributions commence no later than the date as of
which the Participant would have attained age 70-1/2. If the
surviving spouse dies before the distributions to such spouse
begin, then the provisions of this paragraph (2) will apply as if
the spouse was the Participant.
(C) DISTRIBUTIONS TO MINOR CHILDREN: For purposes of subsections (A)
and (B), any amount paid to a child under the age of majority shall be treated
as if it had been paid to the surviving spouse if the amount becomes payable to
the surviving spouse when the child reaches the age of majority.
(D) INCIDENTAL DEATH BENEFITS: Notwithstanding the foregoing
subsections, all distributions shall be made in accordance with the incidental
death benefit requirements of Code Section 401(a)(9)(G) and the regulations
thereunder.
6.8 WITHDRAWALS FROM INDIVIDUAL ACCOUNTS
(A) A Participant may not withdraw any of the values in his Employer
Contribution Matching Account.
(B) A Participant may make a partial or total withdrawal from his
Employee Contribution Account at any time while remaining in the Service of the
Employer. Upon demonstrating a financial hardship, a Participant may withdraw
any contributions (but not earnings) that have been credited to his Compensation
Reduction Account subject to the following provisions. Effective for
withdrawals made on or after January 1, 1989, a withdrawal shall be considered
to have been made on account of a financial hardship if such withdrawal is (i)
made on account of an immediate and heavy financial need of the Participant and
(ii) is necessary to satisfy such financial need. The determination of the
existence of an immediate and heavy financial need and of the amount necessary
to meet the need (including amounts necessary to pay any federal, state, or
local income taxes or penalties reasonably anticipated to result from the
withdrawal) shall be made in a nondiscriminatory manner and after appropriate
documentation is submitted and only after the approval of the Committee.
(1) A withdrawal will be deemed to be made on account of an
immediate and heavy financial need of the Participant as defined by
the IRS regulations and which currently include:
(a) Medical expenses described in Code Section 213(d) which
are incurred by the Participant, the Participant's spouse, or any
dependents of the Participant (as defined in Code Section 152) or
necessary for these persons to obtain medical care as described
in Code Section 213(d);
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(b) Purchase (excluding mortgage payments) of a principal
residence for the Participant;
(c) Payment of tuition and related educational expenses for
the next twelve (12) months of post-secondary education for the
Participant, his or her spouse, children or dependents as defined
in Code Section 152; or
(d) The need to prevent the eviction of the Participant from
his principal residence or foreclosure on the mortgage of the
Participant's principal residence.
(2) A withdrawal will be deemed necessary to satisfy an immediate
and heavy financial need of a Participant if the Employee represents
that the need cannot be relieved:
(a) Through reimbursement or compensation by insurance or
otherwise;
(b) By liquidation of the Participant's assets to the extent
that such liquidation would not cause an immediate and heavy
financial need;
(c) By cessation of Compensation Reduction Contributions
under the Plan; or
(d) By other distributions or loans from this Plan or any
other plan or by borrowing from commercial sources on reasonable
terms.
6.9 DISTRIBUTIONS TO ALTERNATE PAYEES
Notwithstanding the above, in the event any portion of a Participant's
Account becomes payable to an alternate Payee because of a qualified domestic
relations order, such Alternate Payee may apply for and receive an immediate
distribution of the entire amount he is entitled to under the Plan as set forth
in Section 6.7.
6.10 ELIGIBLE ROLLOVER DISTRIBUTIONS
(A) DIRECT ROLLOVER. In the case of a distribution after December 31,
1992 that would be an eligible rollover distribution within the meaning of Code
Section 402 if made to the Participant or Beneficiary ("distributee"), the
distributee may elect, to the extent required by law and regulation and in the
manner prescribed by the Committee, to have such distribution paid directly to
an eligible retirement plan (as defined in Code Section 401 (a)(31)). The amount
of such direct rollover shall be limited to the amount of the eligible rollover
distribution which would otherwise be includible in the distributee's gross
income
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in the absence of a direct transfer and without regard to the rollover rules
of Code Sections 402 and 403.
(B) WITHHOLDING. In the case of an eligible rollover distribution
which is not directly transferred to an eligible retirement plan pursuant to
Subsection (A) above, the Plan shall reduce the amount of the distribution (or
otherwise withhold) by the amount of the tax required to be withheld by law and
regulations.
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SECTION 7 - BENEFICIARIES
7.1 DESIGNATION OF BENEFICIARY OR BENEFICIARIES
Any Participant may, by instrument in writing, executed and delivered
to the Employer during his lifetime, designate a Beneficiary or Beneficiaries to
whom distribution of his interest in the Trust shall be made in the event of his
death prior to the receipt of his entire interest in the Trust, and he may
designate the proportions of his Accounts to be distributed to each such
designated Beneficiary if there be more than one. Any such designation may be
revoked or changed by the Participant or former Participant at any time, and
from time to time, by similar instruments in writing delivered as aforesaid.
Notwithstanding the preceding, in the event that a married Participant
desires to have his interest distributed to a Beneficiary other than his spouse,
his spouse must first consent in writing to this distribution and to the
specific Beneficiary. The spouse's consent must be witnessed by a Plan
representative or Notary Public and must acknowledge that the spouse is aware of
the effect of such consent.
The spousal consent specified herein shall not be required, however,
if (i) the Participant establishes, to the satisfaction of the Plan
representative, that such consent may not be obtained because there is no
spouse, or the spouse cannot be located, or (ii) such consent may, under U.S.
Treasury Department Regulations, be waived. Moreover, such spousal consent shall
in no event be transferable (i.e., it is applicable only to the spouse so
consenting, and not to any subsequent spouse of the Participant).
The spousal consent required for Beneficiary designations must be made
during the period beginning with the first day of the Plan Year in which the
Participant attains age 35 and ending on the date of the Participant's death;
provided, however, to the extent permitted under applicable regulations, the
spouse may validly consent to a Beneficiary designation prior to the first day
of the Plan Year in which the Participant attains age 35.
If there is no designated Beneficiary living upon the death of a
Participant or former Participant or if all such designated Beneficiaries die
prior to the full distribution of his interest, the then legal representative of
the last surviving of the Participant and the designated Beneficiaries, or if
the Employer fails to receive notice of the appointment of any such legal
representative within one year after such death, the heirs at law of such
survivor (in the proportions in which they would inherit his intestate personal
property) shall be the Beneficiary to whom the then remaining balance of such
interest shall be distributed.
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7.2 MISSING BENEFICIARY(IES); RIGHT OF EMPLOYER TO MAKE A PRESUMPTION OF
DEATH
If the Employer, after reasonable inquiry, is unable within one year
to determine whether or not a designated Beneficiary did in fact survive the
event that entitled him to receive distribution of any sum hereunder, it shall
be conclusively presumed that such Beneficiary did in fact die prior to such
event.
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SECTION 8 - PARTICIPANT LOANS
8.1 PARTICIPANT LOANS
(A) ADMINISTRATION - Loans shall be made available in writing or by
any other means authorized by the Committee. Any Participant who is a "party in
interest" to the Plan as that term is defined in Section 3(14) of ERISA
(hereinafter collectively referred to as "Eligible Borrowers"), may apply for a
loan from the Plan (hereinafter referred to as a "Participant Loan"). Eligible
Borrowers requesting a Participant Loan from the Plan may obtain and complete a
loan application. An Eligible Borrower may have only two loans outstanding from
this Plan at any one time and no loan shall be made in an amount less than
$1,000. Loans may be made as soon as administratively feasible following the
request of the Eligible Borrower. The approval or disapproval of any loan
application filed pursuant to this Section will be based on the requirements of
ERISA, the Code, the Plan and nondiscriminatory rules and procedures established
by the Committee.
(B) LIMITATIONS - The total amount of Participant Loans from the Plan
outstanding to any Eligible Borrower, when combined with all loans from all
Plans maintained by the Company and any Employer, shall not exceed the lesser
of: (i) $50,000,00 (reduced by principal repayments made during the previous
year on any Participant Loans from the Plan); or (ii) 1/2 of the Eligible
Borrower's vested, nonforfeitable interest in his Accounts under the Plan.
(C) TREATED AS INVESTMENT - All Participant Loans granted to an
Eligible Borrower under this Section will be considered investments of the
Accounts of such Eligible Borrower and the principal and interest payments made
by him will be credited to his Accounts. For purposes of determining the extent
to which the Eligible Borrower's Accounts share in Trust income, gains, losses
and expenses, if any, his Accounts' balances will be reduced by the unpaid
amount of any outstanding Participant Loan as of any appropriate Valuation Date
(D) INTEREST - The interest rate charged on any Participant Loan
shall be a reasonable rate comparable to prevailing interest rates charged by
commercial lenders under similar circumstances.
(E) SECURITY - Participant Loans shall be secured by the Eligible
Borrower's Accounts under the Plan, except that no more than 50% of the value of
the Eligible Borrower's vested, nonforfeitable Accounts balances at the time the
Participant Loan is made may be used to secure the principal amount of all
Participant Loans of the Eligible Borrower.
(F) REPAYMENT - The repayment provisions of any Participant Loan will
be determined at the time the loan is made, subject to the requirements of this
Subsection and applicable law. Any Participant Loan shall provide for repayment
pursuant to a level amorti-
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zation schedule with payments not less frequently than quarterly. In no
event, however, shall the term of any Participant Loan exceed five (5) years.
In order to receive a Participant Loan, an Eligible Borrower who is also an
Employee of the Company must agree to repay the loan by having the Company
withhold from the pay for the Eligible Borrower an amount sufficient to meet
any installment obligation of the loan, or any portion thereof. Any and all
amounts so withheld by the Company will be remitted to the Trustee on a
timely basis as an installment on the loan. An Eligible Borrower shall be
entitled to prepay the entire outstanding balance of any Participant Loan
without penalty at any time. In the event an Eligible Borrower has not
repaid the entire Participant Loan at his Severance from Service Date, the
Committee shall require that the Participant repay the loan by check payable
to the Plan or by such other means as may be mutually agreed upon by the
Committee and the Eligible Borrower. The Company shall remit such payments
to the Trustee on a timely basis. Loan repayments will be suspended under
this Plan as permitted under Section 414(u)(4) of the Code.
(G) DISCLOSURE - Every Eligible Borrower who applies for a
Participant Loan will be entitled to receive from the Committee a statement of
the charges involved in his loan transaction, including the dollar amount and
annual interest rate of the finance charge, and such other disclosure
information as may be required by applicable law.
(H) DEFAULT - Failure to pay principal and interest when due (or
within such grace periods as are permitted by applicable law) or any violation
of the terms of the note executed between the Plan and an Eligible Borrower
shall constitute an event of default. In the event of default, the Committee
shall have the right to declare any unpaid balance due and payable, and to
foreclose on any security interest. Further, at the earliest date on which an
Eligible Borrower is entitled to receive a distribution from the Plan in
accordance with ERISA and the Code, the Committee shall have the right to apply
the Eligible Borrower's interest in the Plan against the unpaid amount, which
amount shall in such event be considered a distribution to the Eligible
Borrower.
(I) LOAN GUIDELINES - The Committee shall issue written loan policy
guidelines, which shall form part of the Plan, describing the procedures and
conditions for making loans, and may revise those guidelines at any time, and
for any reason. The Committee shall have the complete discretion to approve or
disapprove any loan application filed pursuant to this Section. Any such
approval or disapproval will be based on the requirements of ERISA, the Code,
the Plan and nondiscriminatory rules and procedures established by the
Committee.
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SECTION 9 - ADMINISTRATION
9.1 PLAN ADMINISTRATOR
The "Plan Administrator", within the meaning of ERISA, is the Company.
The employer shall have complete charge of the administration of the Plan. The
Company is the "named fiduciary" within the meaning of ERISA.
The Plan Administrator shall have the authority to direct the Trustee
to invest all or a portion of the Trust Fund through any common or collective
trust fund or pooled investment fund, including collective investment funds
maintained by American Express Trust Company or its successor, for the
collective investment of funds held by it in a fiduciary capacity.
9.2 THE ADMINISTRATIVE COMMITTEE
The day-to-day administration of the Plan shall be the responsibility
of the Company's Employee Benefits Committee -- herein called the "Committee".
Each member of the Committee shall serve without remuneration, but shall be
reimbursed for expenses incurred in the performance of his duties.
The Committee shall also have the authority and discretion to engage
an Administrative Delegate who shall perform, without discretionary authority or
control, day-to-day administrative functions within the framework of policies,
interpretations, rules, practices, and procedures made by the Committee or other
Plan Fiduciary. Any action made or taken by the Administrative Delegate may be
appealed by an affected Participant to the Committee in accordance with the
claims review procedures provided in Section 10.2. Any decisions which call
for interpretations of Plan provisions not previously made by the Committee
shall be made only by the Committee. The Administrative Delegate shall not be
considered a fiduciary with respect to the services it provides.
9.3 EMPLOYMENT OF SERVICES BY THE COMMITTEE
The Committee may appoint a Secretary who may, but need not be, a
member of the Committee. The Committee may employ such agents and such clerical
and other services, and such legal counsel, other consultants, and accountants
as may, in the opinion of the Committee, be required for the purposes of
properly administering the Plan.
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9.4 EXPENSES OF ADMINISTRATION
The Employer is not required, but may, at its discretion, pay the
expenses of administration of the Plan, including the fees and expenses of the
Trustee. If such expenses of administration are not so paid by the Employer,
they shall be paid by the Trustee from the Trust Fund. The Trustee, Investment
Adviser and recordkeeper of the Plan (collectively referred to as "Service
Providers") will receive reasonable compensation as may be agreed upon from time
to time between the Company or the Committee and such Service Providers. To the
extent permitted by law, such compensation shall be paid from the Trust Fund
unless paid by the Company.
9.5 ACTS OF THE COMMITTEE
The Committee shall give to the Trustee any order, direction, consent
or advice required under the terms of the Plan or the Trust Agreement, and the
Trustee shall be entitled fully to rely on any instrument delivered to it
evidencing the action of the Committee.
9.6 INTERPRETATIONS
The Committee shall have the exclusive right to make any finding of
fact necessary or appropriate for any purpose under the Plan including, but not
limited to, the determination of the eligibility for and the amount of any
benefit payable under the Plan. The Committee shall have the exclusive right to
interpret the terms and provisions of the Plan and to determine any and all
questions arising under the Plan or in connection with the administration
thereof, including, without limitation, the right to remedy or resolve possible
ambiguities, inconsistencies, or omissions, by general rule or particular
decision, with such interpretations or determinations to be finally conclusive
and binding on all parties affected thereby. The Committee shall make, or cause
to be made, all reports or other filings necessary to meet the reporting and
disclosure requirements of ERISA which are the responsibility of "plan
administrator" under ERISA. To the extent permitted by law, all findings of
fact, determinations, interpretations, and decisions of the Committee shall be
conclusive and binding upon all persons having or claiming to have any interest
or right under the Plan. Notwithstanding the foregoing, certain day-to-day
administrative functions may be delegated pursuant to a written agreement to an
Administrative Delegate.
Notwithstanding any provision in the Plan to the contrary,
Compensation Reduction Agreements and cancellations or amendments thereto,
investment elections, changes or transfers, loans, withdrawal decisions, and any
other decision or election by a Participant (or Beneficiary) under the Plan may
be accomplished by electronic or telephonic means which are not otherwise
prohibited by law and which are in accordance with procedures and/or systems
approved or arranged by the Committee or its Administrative Delegate.
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9.7 LIABILITY OF THE COMMITTEE
The members of the Committee, and each of them, shall be free from
liability for their acts and conduct in the administration of the Plan, and the
Employer shall indemnify them and hold them, and each of them, harmless from the
effects and consequences of their acts and conduct in their official capacity,
except to the extent that such effects and consequences result from their
failure to exercise ordinary care and reasonable diligence. In any event, the
Committee shall be deemed to have exercised ordinary care and reasonable
diligence if it shall have relied in good faith upon any written information
furnished to it by an Employee or Participant, the Employer, the Investment
Adviser, the Trustee, or by any actuary, employee benefit plan consultant,
counsel, accountant or other person employed, with or without remuneration, by,
the Employer for purposes of the Plan.
9.8 APPLICABLE LAW
The Plan will be construed and enforced in accordance with the laws of
the State of Wisconsin and all provisions of the Plan will be administered in
accordance with the laws of the said State, to the extent not superseded by
ERISA.
9.9 PLAN FIDUCIARIES; ALLOCATION OF RESPONSIBILITIES AMONG THEM
Under ERISA and Regulations made pursuant to ERISA, the Employer, the
Trustee, the Committee, the Plan Administrator and the Investment Adviser are
"Plan Fiduciaries." All Plan Fiduciaries shall have only those specific powers,
duties, responsibilities and obligations as are specifically given to them under
the Plan document and the Trust Agreement. In general, the Employer, acting
through a majority of its Board of Directors or its designated committee, shall
have the sole responsibility to terminate the Plan, in whole or in part, in
accordance with Section 11 hereof and sole responsibility to appoint and remove
the Trustee. The Plan Administrator shall have ultimate responsibility for the
administration of the Plan. The Committee shall determine an allocation of Plan
assets in consideration of Plan liabilities, establish investment guidelines,
select and evaluate money managers and investment alternatives and review and
approve investment transactions and strategy. The Committee shall also have
such other duties and responsibilities as are described in the applicable
provisions of this Section 9 together with such other duties and
responsibilities as may be delegated to them by a majority of the Board of
Directors of the Employer or its designated committee or the Plan Administrator
from time to time. The Trustee shall have the responsibility of the
administration of the Trust and for the custody and management of the assets
held in the Trust Fund to the extent provided in the Trust Agreement and any
contracts or agreements entered into by and between the Trustee and the
Investment Adviser.
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9.10 RELIANCE ON CO-FIDUCIARIES
Each Fiduciary may rely upon any direction, information or action of
another Fiduciary as being proper under the Plan, and shall not, under normal
circumstances, be required to inquire into the propriety of any such direction,
information or action. Each Fiduciary shall be responsible for the proper
exercise of his own powers, duties, responsibilities and obligations under this
Plan and shall not be responsible for any breach of-fiduciary responsibility by
another Fiduciary ("other Fiduciary") unless he participates knowingly in, or
knowingly undertakes to conceal an act or omission of such other Fiduciary,
knowing such act or omission is a breach; or by his failure to comply with
Section 9 hereof in the administration of his specific responsibilities
hereunder he has enabled such other Fiduciary to commit a breach; or he has
knowledge of a breach by such other Fiduciary and fails to make reasonable
efforts under the circumstances to remedy the breach. No Fiduciary guarantees
the Trust Fund in any manner against investment loss or depreciation in asset
value.
9.11 FIDUCIARY DUTIES
All Fiduciaries shall discharge their duties solely and exclusively in
the interest of the Participants and Beneficiaries and for the exclusive
purposes of providing benefits to Participants and their Beneficiaries and
defraying the reasonable expenses of administering the Plan and Trust. They
shall discharge their duties 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.
9.12 PROHIBITED TRANSACTIONS TO BE AVOIDED
The Fiduciaries shall not do any action prohibited under or in
violation of Part 4 of Title I of ERISA or which would subject any person or the
Employer to imposition of a tax under Section 4975 of the Code.
9.13 RECORDS AND REPORTS OF THE PLAN ADMINISTRATOR
The Plan Administrator shall prepare, or cause to be prepared, and
shall furnish, or cause to be furnished, to Participants and Beneficiaries, and
to the Secretary of Labor or his delegate, and to the Secretary of the Treasury
or his delegate, such plan descriptions, summaries, annual and other reports,
registration statements, notifications and other documents as may be required by
ERISA and the Code and regulations thereunder. The Plan Administrator shall
exercise such authority and responsibility as it deems appropriate in order to
comply with ERISA and the Code and regulations thereunder relating to records of
the Service of all Participants and the percentage of their Accounts which is
nonforfeitable under the Plan.
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9.14 DATA SUPPLIED BY EMPLOYER
The Employer shall advise the Committee, in writing, of all data which
may be reasonably necessary in order properly to credit the Employer
Contribution Matching Accounts or Compensation Reduction Accounts of
Participants and to determine the proper allocation of respective Employer
contributions; or to determine the eligibility, Compensation, Service, and other
matters required to be determined relating to Employees of the Employer. The
Plan Administrator or Committee shall be fully protected in acting upon any such
data.
9.15 PARTIAL EXCULPATION
The Committee or the Plan Administrator (as appropriate) shall incur
no personal liability of any nature in connection with any failure to act or in
respect of any act taken in good faith in the management and administration of
the Plan and in carrying out the directions of the Employer, except as may
otherwise be provided by ERISA. The Committee or the Plan Administrator shall be
indemnified and held harmless by the Employer from and against any such personal
liability, including all expenses reasonably incurred in its defense.
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SECTION 10 - PROVISIONS RELATING TO PARTICIPANTS
10.1 INFORMATION REQUIRED OF PARTICIPANTS
Each Participant, and, if applicable, each Beneficiary of a deceased
Participant, shall furnish the Committee (or the Plan Administrator) with such
information as the Committee (or the Plan Administrator) shall deem necessary
and desirable for purposes of administering the Plan, and the provisions of the
Plan relating to any payments hereunder to or on account of any Participant,
former or deceased Participant are conditional upon such person's furnishing
promptly such true, full and complete information as the Committee (or the Plan
Administrator) may request.
10.2 CLAIMS PROCEDURE
(A) APPLICATIONS FOR BENEFITS NOT REQUIRED: A formal request for a
distribution under the Plan is not required of any Participant or Beneficiary
entitled thereto.
(B) CLAIMS FOR BENEFITS NOT RECEIVED: Any claim for benefits not
received shall be made in writing to the Committee (or the Plan Administrator).
The Committee (or the Plan Administrator) shall consider such claim and shall,
within 60 days next following receipt of same either approve it or deny it. If
the Committee (or the Plan Administrator) shall deny such claim, it shall, by
written notice directed to the claimant at the address shown on the claim (or in
the absence thereof, the last known address of the claimant, as shown on the
records of the Employer) inform the claimant of such denial, including in such
written notice, as a minimum, the following:
(1) The specific reason or reasons for the denial;
(2) Reference to the specific provisions of the Plan, on which
such denial is based;
(3) A description of any additional material or information
necessary for the claimant to perfect his claim and a brief
description of why such additional information is necessary; and
(4) A brief explanation of the appeals procedure which is
available to him, which, in essence, is described in paragraph (C)
below.
(C) APPEALS PROCEDURE FOLLOWING INITIAL DENIAL OF CLAIM: Each
claimant whose claim for a benefit under the Plan has been denied shall have the
right to appeal the decision to the Committee (or the Plan Administrator) in
accordance with the following procedures:
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(1) Such appeal must be in writing, over the signature of the
claimant whose claim was so denied, and filed with the Committee (or
the Plan Administrator), addressed and delivered, within the 60-day
period next following the initial denial of same, either by hand or by
the United States Postal Service, postage fully prepaid.
(2) The claimant, or his duly authorized representative (such as,
but not by way of limitation, legal counsel) shall have the right at
all reasonable times to examine Plan documents related to his claim
and to submit to the Committee (or the Plan Administrator), issues,
comments and responses, provided that they shall be in writing and
delivered to the Committee (or the Plan Administrator) as described in
subparagraph (1) above.
(3) The Committee (or the Plan Administrator) shall render its
decision as promptly as practicable, but not later than 60 days after
receipt of the claimant's appeal from the initial denial by the
Committee (or the Plan Administrator).
(D) NATURE OF CONTENT OF WRITTEN NOTICES TO CLAIMANTS:
Notwithstanding any provision hereof to the contrary, all written notices to
claimants regarding their claims for benefits under the Plan, shall be expressed
in terms calculated to be understood by the average claimant and shall include
specific reasons for the decision -- whether for or against the claimant -- and
specific references to the pertinent provisions of the Plan on which the
decision was based.
10.3 RIGHTS IN TRUST FUND
No Participant or other person shall have any interest in, or right
to, any part of the earnings of the Trust Fund, or any rights under the Trust
Fund, or any part of the assets thereof, except as and to the extent expressly
provided in the Plan.
10.4 BENEFITS NOT ASSIGNABLE
Except as provided in Code Section 401(a)(13), no Account in the Trust
Fund shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, or charge, and any attempt to so anticipate,
alienate, sell, transfer, assign, pledge, encumber or charge the same shall be
null and void; nor shall any such account be liable for, or subject to, the
debts, contracts, liabilities, engagement, or torts of the person entitled to
such Account.
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10.5 CONDITIONS OF EMPLOYMENT NOT AFFECTED BY PLAN
The establishment and maintenance of the Plan shall not be construed
as conferring any legal rights upon any Employee to the continuation of his
employment by the Employer, nor shall the Plan interfere with the right of the
Employer to discharge any Employee or Participant.
10.6 PAYMENTS PURSUANT TO A QUALIFIED DOMESTIC RELATIONS ORDER
Notwithstanding the provisions of Section 10.4, the Plan will
recognize a "qualified domestic relations order" which shall be a judgment,
decree or order (including approval of a property settlement agreement) that
meets the requirements of (A), (B), and (C) below:
(A) the order must relate to child support, alimony, property rights
to a spouse, former spouse, child or dependent of a Participant, and must be
issued pursuant to a state domestic relations law;
(B) the order must include (i) the name and address of the
Participant and alternate payee, (ii) the amount or percentage of benefits
payable to the alternate payee (or the manner in which the amount or percentage
is to be determined), (iii) the period or number of payments involved, and (iv)
the exact name of the plan to which the order applies; and
(C) the order cannot require a type or form of benefit or option not
otherwise offered under the Plan, cannot require the Plan to provide increased
benefits (determined on an actuarial basis), and cannot affect benefits already
the subject of a previous qualified domestic relations order.
A distribution to an alternate payee will be made at the time described in
Section 6.9.
The Committee shall notify any Participant and alternate payee of the
receipt of any order by the Plan and shall inform such Participant and alternate
payee of the Plan's procedures for determining whether the order meets the
requirements described above in this Section 10.6. Such procedures shall comply
with the requirements set forth in Code Section 414(p) and Section 206(d) of
ERISA, and any written guidelines that may be issued by the Committee, which
shall form part of the Plan, describing the procedures for determining qualified
domestic relation orders.
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SECTION 11 - MERGER OR CONSOLIDATION OF PLAN; TERMINATION; AMENDMENT
11.1 MERGER, TRANSFER OR CONSOLIDATION OF PLAN WITH OTHER PLANS
The Plan may be merged or consolidated with or the assets transferred
from or to any other retirement plan or program. In the event that the Plan
shall be merged or consolidated with, or the assets thereof transferred from or
to, any such retirement plan or program then the benefits standing to the credit
of each Participant, former Participant, Beneficiary or other person entitled to
benefits hereunder at that time which would become payable if the Plan were then
terminated, shall not be diminished as a result of such merger, consolidation or
transfer of assets, and such merger, consolidation or transfer of assets shall
comply in all respects with Section 414(1) of the Code.
11.2 FUTURE OF THE PLAN: AMENDMENT
The Employer hopes and expects to continue the Plan indefinitely, but
necessarily reserves the right, at any time, to discontinue its contributions to
the Trust, as herein provided. While each Employer contemplates carrying out
the provisions of the Plan indefinitely with respect to its Employees, no
Employer shall be under any obligation or liability whatsoever to maintain the
Plan for any minimum or other period of time. The Company does hereby expressly
and specifically reserve the sole and exclusive right at any time by action of
the Committee to amend, modify, or terminate the Plan. The Committee's right of
amendment, modification, or termination as aforesaid shall not require the
assent, concurrence, or any other action by any Employer notwithstanding that
such action by the Company may relate in whole or in part to persons in the
employ of the Employer. However, no such modification or amendment shall permit
any part of the Trust Fund to be used for, or diverted to, purposes other than
for the exclusive benefit of the Participants, their Beneficiaries, or their
estates, and provided further, that no such modification or amendment shall
operate to reduce or eliminate the Account of any Participant or Beneficiary
acquired prior to the effective date of such modification or amendment unless
such Participant or Beneficiary and all such persons shall have consented to
such modification or amendment, in writing.
If the Plan's vesting schedule is amended, or the Plan is amended in
any way that directly or indirectly affects the computation of the Participant's
nonforfeitable percentage or if the Plan is deemed amended by an automatic
change to or from a top-heavy vesting schedule, each Participant with at least
three (3) years of Service with the Employer may elect, within a reasonable
period after the adoption of the amendment or change, to have the nonforfeitable
percentage computed under the Plan without regard to such amendment or change.
The period during which the election may be made shall commence with the date
the amendment is adopted or deemed to be made and shall end in the latest of:
(1) sixty (60) days after the amendment is adopted, (2) sixty (60) days after
the amendment becomes effective, or (3) sixty (60) days after the Participant is
issued written notice of the
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amendment by the Employer. Furthermore, no amendment to the Plan shall have
the effect of decreasing a Participant's vested interest determined without
regard to such amendment as of the later of the date such amendment is
adopted or the date it becomes effective.
11.3 TERMINATION OF THE PLAN
The Plan may be terminated in whole or in part at any time by
appropriate action of the Board of Directors of the Company or its designee.
Upon any termination of the Plan in its entirety, or with respect to any
Employer, the Company shall give written notice thereof to the Plan
Administrator, the Trustee, and any Employer involved.
In the event an Employer terminates its connection with the Plan, or
in the event an Employer is dissolved, liquidated, or shall by appropriate legal
proceedings be adjudged bankrupt or declared insolvent, or in the event judicial
proceedings of any kind result in the involuntary dissolution of an Employer,
the Plan shall be terminated with respect to such Employer. The merger,
consolidation, or reorganization of an Employer, or the sale by it of all or
substantially all of its assets, shall not terminate the Plan if there is
delivery to such Employer by the Employer' successor or by the purchaser of all
or substantially all of the Employer's assets, of a written instrument
requesting that the successor or purchaser be substituted for the Employer and
agreeing to perform all the provisions hereof which such Employer is required to
perform. Upon the receipt of said instrument, with the approval of the Company,
the successor, or the purchaser shall be substituted for such Employer herein,
and such Employer shall be relieved and released from any obligations of any
kind, character, or description herein or in any trust agreement imposed upon
it.
In the event of any such full or partial termination of the Plan, or
the permanent discontinuance of contributions hereunder, the rights of each
Participant to the credit balance of his individual Accounts then held under the
Plan shall be fully vested and nonforfeitable. As promptly as practicable after
any such event, the Plan Administrator shall direct distribution of the assets
of the Trust Fund -- after allowance for the expenses of any such termination or
discontinuance -- as then constituted, in the amount required to pay to each
Participant concerned the credit balance, if any, to his Accounts, determined as
of the date of such termination or discontinuance, and shall direct distribution
of the assets of the Trust Fund in the proportion which the credit balances to
all Participants' Accounts bear to each other, without reference to the period
of Service of the Participants.
Such distribution shall be effected, at the advice and direction of
the Plan Administrator, in respect of all Participants affected, either by (i)
the immediate distribution of the amounts then due and payable to the
Participants -- or, if applicable, to their Beneficiaries -- or (ii) by
retaining their Accounts hereunder and effecting distributions thereof in
accordance with the provisions of Section 6.4.
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SECTION 12 - TOP HEAVY PLAN PROVISIONS
12.1 TOP HEAVY PLAN DEFINITIONS
Definitions relating to Top Heavy Plan provisions are as follows:
(A) TOP HEAVY: This Plan shall be considered "Top Heavy" if, as of
the Determination Date, the aggregate of the Accounts of Key Employees under the
Plan exceeds sixty percent (60%) of the aggregate of the Accounts of all
Participants under the Plan, as determined in accordance with Code Section
416(g). Such determination shall be made after aggregating all other plans of
the Employer which are included in the Required Aggregation Group and after
aggregating any other such plan(s) of the Employer which may be included in the
Permissive Aggregation Group, if such permissive aggregation thereby eliminates
the Top Heavy status of any plan within such Permissive Aggregation Group. The
Plan shall be deemed "Super Top Heavy" if, as of the Determination Date, the
Plan would meet the test specified above for being a Top Heavy plan if ninety
percent (90%) were substituted for sixty percent (60%) in each place it appears
in this subsection (A).
Any rollover contribution by a Participant shall not be taken into
account in determining whether the Plan is Top Heavy (or whether any aggregation
group which includes the Plan is a Top Heavy group).
If any Participant is a Non-Key Employee with respect to the Plan for
any Plan Year, but such Participant was a Key Employee with respect to the Plan
for any prior Plan Year, any Account balance of such Participant shall not be
taken into account for purposes of determining whether the Plan is Top Heavy.
Notwithstanding the above, if an individual has not performed services
for the Employer at any time during the 5-year period ending on the
Determination Date, any Account balance of such individual shall not be taken
into account in determining whether the Plan is Top Heavy.
(B) DETERMINATION DATE: For purposes of determining whether the Plan
is Top Heavy for a particular Plan Year, the "Determination Date" shall be the
last day of the Plan Year.
(C) TOP HEAVY VALUATION DATE: For purposes of determining the value
of the Plan Accounts under this Section 12, the "Top Heavy Valuation Date",
shall be the same date as the Determination Date.
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(D) KEY EMPLOYEE: A "Key Employee" is any Employee (including a
Beneficiary of such Employee) who at any time during the Plan Year or any of the
four (4) preceding Plan Years is one of the following:
(1) An officer of the Employer or an Affiliated Employer (but in
no event shall more than fifty (50) Employees, or if less, the greater
of three (3) or ten percent (10%) of all Employees be taken into
account under this paragraph (1) as Key Employees). Notwithstanding,
an officer of the Employer will not be considered a "Key Employee"
under this subsection unless he earned more than one-half (1/2) times
an amount equal to the dollar limit under Code Section 415(b)(1)(A)
adjusted each Plan Year to take into account any applicable cost-of-
living adjustment provided for that year pursuant to regulations
promulgated by the Secretary of the Treasury or his delegate under
Section 415(d) of the Code:
(2) One of the ten (10) Employees owning (or considered as
owning within the meaning of Code Section 318) both a 1/2% interest
and the largest interests of the Employer if such Employee's annual
Compensation is in excess of the dollar limit (adjusted for cost-of-
living) as set forth in paragraph (D)(1) hereof;
(3) A person owning (or considered as owning within the meaning
of Code Section 318) more than five percent (5%) of the total combined
voting power of the Employer; or
(4) A person who has an annual Compensation from the Employer of
more than one hundred fifty thousand dollars ($150,000) and would be
described in paragraph (3) hereof if one percent (1%) were substituted
for five percent (5%). Notwithstanding, for purposes of applying Code
Section 318 to the provisions of this subsection (D), subparagraph (C)
of Code Section 318(a)(2) shall be applied by substituting five
percent (5%) for fifty percent (50%). In addition, the rules of
subsections (b), (d) and (m) of Code Section 414 shall not apply for
purposes of determining ownership in the Employer under this
subsection (D).
(E) NON-KEY EMPLOYEE: A "Non-Key Employee" is any Employee (including
a Beneficiary of such Employee) who is not a Key Employee.
(F) REQUIRED AGGREGATION GROUP: For purposes of determining whether
the Plan is Top Heavy for a particular Plan Year, the "Required Aggregation
Group" shall include (1) each qualified plan of the Employer in which at least
one Key Employee participates or participated at any time during the
determination period (regardless of whether the plan has terminated) and (2) any
other qualified plan of the Employer which enables a plan described in (1)
above, to meet the requirements of Sections 401(a)(4) or 410 of the Code.
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(G) PERMISSIVE AGGREGATION GROUP: For purposes of determining whether
the Plan is Top Heavy for a particular Plan Year, the "Permissive Aggregation
Group" shall include the Required Aggregation Group of plans plus any other
plans of the Employer which when considered as a group with the Required
Aggregation Group, would continue to satisfy the requirements of Sections
401(a)(4) and 410 of the Code.
12.2 MINIMUM CONTRIBUTION REQUIREMENT
The minimum contribution allocation for such Plan Year for each
Participant who is a Non-Key Employee shall be in an amount equal to at least
three percent (3%) of such Participant's Compensation for such Plan Year. Such
Non-Key Employee shall receive a minimum contribution allocation regardless of
whether he completed 1,000 Hours of Service within such Plan Year.
Notwithstanding the foregoing minimum contribution requirement as
outlined above, such contribution shall be reduced in the following
circumstances:
(A) The percentage minimum contribution required hereunder shall
in no event exceed the percentage contribution made for the Key
Employee for whom such percentage is the highest for the Plan Year
after taking into account contributions or benefits under other
qualified plans in this Plan's Required Aggregation Group; and
(B) No minimum contribution will be required (or the minimum
contribution will be reduced, as the case may be) for a Participant
under this Plan for any Plan Year if the Employer maintains another
qualified plan under which a minimum benefit or contribution is being
accrued or made for such year in whole or in part for the Participant
in accordance with Code Section 416(c).
12.3 ADJUSTMENT TO OVERALL IRC SECTION 415 LIMITATIONS
If, during any Limitation Year, the Plan is Top Heavy, the Plan
Administrator shall apply the limitations of Section 4.8 to the Participant by
substituting 1.0 for 1.25 each place it appears in the fractions described in
that Section. This Section 12.3 shall apply only if:
(1) The Plan could satisfy Section 12.2 if four percent (4%) were
substituted for three percent (3%); and
2) The Plan is not Super Top Heavy.
49
176
<PAGE>
IN WITNESS WHEREOF, United Wisconsin Services, Inc., and Blue Cross &
Blue Shield United of Wisconsin, by their duly authorized officers, have caused
these presents to be signed on this _____ day of ______________________, 1997.
UNITED WISCONSIN SERVICES, INC.
--------------------------------------------
BLUE CROSS & BLUE SHIELD UNITED OF WISCONSIN
--------------------------------------------
CORPORATE SEAL
ATTEST:
- -----------------------------------------
Secretary
50
177
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT JUNE 30, 1997 (UNAUDITED) AND THE CONSOLIDATED
STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED) AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 390,616
<DEBT-CARRYING-VALUE> 12,801
<DEBT-MARKET-VALUE> 12,865
<EQUITIES> 62,707
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 466,124
<CASH> 36,620
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 811,709
<POLICY-LOSSES> 0
<UNEARNED-PREMIUMS> 53,821
<POLICY-OTHER> 213,277
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 55,188
0
0
<COMMON> 16,429
<OTHER-SE> 303,151
<TOTAL-LIABILITY-AND-EQUITY> 811,709
768,042
<INVESTMENT-INCOME> 21,208
<INVESTMENT-GAINS> 0
<OTHER-INCOME> 31,419
<BENEFITS> 614,118
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 180,637
<INCOME-PRETAX> 15,281
<INCOME-TAX> 6,348
<INCOME-CONTINUING> 8,933
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,933
<EPS-PRIMARY> .55
<EPS-DILUTED> .55
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
